Pinkberry, the frozen yogurt chain known for its addictive sour flavor, long lines, and cultish band of devotees (Paris Hilton, Lindsay Lohan, much of the city of Los Angeles), reached a preliminary settlement in class action lawsuit earlier this month. The suit, filed in California last year, alleged that Pinkberry's fro-yo was neither "yogurt", nor "all natural", as the company had previously claimed.

As part of the settlement, Pinkberry denies any wrongdoing, but will pay $750,000 to two charities (the Los Angeles Regional Food Bank and Para Los Ninos) and pony up legal fees and a $5,000 reward to the plaintiff, reports The New York Times. Under California law, the article goes on to explain, a product can't be marketed as frozen yogurt unless: "it's made from milk that is fermented with certain bacteria, mixed off-site rather than in stores, and sold with its ingredients prominently displayed."

A company spokeswoman told the Times that the Pinkberry's owners, failed restaurateur and a former bouncer, were unaware of some of the state laws.

After the lawsuit was filed, Pinkberry posted its ingredients online and began mixing its product off-site. Among the 23 ingredients that go into making so-called Crackberry's original flavor? Propylene glycol esters, magnesium oxide, tocopherol, and maltodextrin. A cocktail of emulsifiers, acidifiers, preservatives, and fillers. One scientist's disconcerting analysis: "They are there to make something smooth, sweet and tangy that would otherwise be gritty and flavorless in a frozen state." Yum!

Ron Graves, Pinkberry's CEO, told the Times, "In the company's early days some of its point-of-sale material contained the words 'all-natural'—which was an honest mistake by the founders." The company's first store opened in January, 2005.

April has been a mixed bag for Pinkberry. Time Out New York readers voted it the best new yogurt, "officially ending Tasti-D[-Lite]'s icy grip on NYC fro-yo." And, just as the settlement was being announced, the National Yogurt Association quelled long-standing suspicions that its frozen yogurt wasn't actually yogurt at all. Emulsifiers and acidifiers aside, the trade group gave the product its "live and active culture seal." Pinkberry also recently celebrated the opening of its 50th store, this one in Newport Beach. (There are already 39 locations in New York and Southern California).

We last covered Pinkberry in October when Maveron, Starbucks founder Howard Schultz's VC firm, led a $27.5 million series A investment round that will go toward rapidly scaling up the chain for a possible IPO.

It's hard to say how this settlement will affect sales, particularly with competitors like Red Mango barking at its heels.'s Grub Street dropped by a local Pinkberry to get reactions to the news. Customers, at least those waiting in line, seemed either unaware or undeterred. The Los Angeles-based chain certainly bounced back quickly when the evening news broadcast footage of mice scampering around one of its Manhattan shops.

Are there any Pinkberry addicts out there perturbed by what's in their yogurt? What would you do if your company made claims about a product that turned out to be misleading? Do you think this will hamper the chain's expansion?