My Take on the Proposed Nutella Settlement
I'll admit to being a bit of an idealist. (You're shocked, SHOCKED, at that admission, no doubt.)
I understand that one often may not be able to win in a particular trial court, regardless of how right one is on the law or the facts. But I generally believe in the power of a well-written appeal to right such wrongs. And personally, I'd rather spend my money establishing that I am right on the law than spend the same amount settling and sweeping a bad decision under the rug. In my experience, hard-fought appellate victories pay future dividends as opponents (and potential opponents) understand your values and level of commitment.
And yet, when confronted with a completely BS case that no real human being cares about, and a bad decision that -- while clearly contrary to governing law -- could be effectively erased for not a lot of money, it's understandable that many corporate defendants would elect to quickly end the litigation and return to the business of selling their product.
Except that that rewards those who file BS cases, which really sticks in my craw.
Like I said, I'm an idealist.
Regular readers of my blog know that I think the Nutella litigation is just that: nuts. The ingredients for the delicious product are disclosed right on the label. The stuff even tastes cloyingly sweet, for Pete's sake! The idea that a parent could say with a straight face -- let alone under oath -- that she did not know the product contained lots of sugar and oils and Nutella's manufacturer somehow hid that fact from her is patently ridiculous. Read the Nutrition Facts on the label! And frankly, anything that a parent can use to get a kid to sit down and actually have breakfast in the morning is a good thing.
Different law firms had filed competing Nutella class actions in New Jersey and California. The Judicial Panel on Multidistrict Litigation refused to consolidate them into an MDL, which I posted about. I even noted that the California federal court refused to dismiss the complaint. The legal competition in the competing cases was fierce; the plaintiffs from California unsuccessfully sought to intervene in the New Jersey action -- twice -- for the sole purpose of moving to dismiss it. I was especially unhappy to report that the California court had seen fit to certify a class around Thanksgiving, as I knew that the handwriting probably was on the wall. The defendant subsequently agreed to a nationwide settlement of the New Jersey actions.
On January 10, class counsel in the New Jersey action moved for preliminary approval of a nationwide class action settlement that would enjoin the defendant from describing Nutella as part of a nutritious breakfast, require the defendant to make certain "disclosures" on its label and website, and establish a settlement fund of $2.5 million that would not revert to the defendant.
This is how you know that no one really believes there was mass deception involving Nutella: claimants can submit claims for cash reimbursements for up to 5 jars of Nutella at $4 per jar (or a total of $20), and yet they clearly don't expect even $2.5 million in claims. Indeed, the settlement fund is supposed to pay for claim administration and part of the attorneys' fees! And if the claims exceed the fund, they will be reduced on a pro rata basis.
And let's look at the attorneys' fees, shall we? According to class counsel's brief, while the class gets only part of the $2.5 million settlement fund and some meaningless injunctive relief ("meaningless" because no one was ever really deceived in the first place), the attorneys get two things: (1) up to $3,000,000 from the defendant and its insurers, and (2) up to 30% of the settlement fund (or $750,000) as attorneys' fees plus reimbursement of expenses from the settlement fund. That's not bad compensation for the attorneys, when you consider that the "case has been pending for approximately one year" and "is in an early stage of the litigation," according to class counsel's brief. Apparently class counsel has reviewed 53,000 pages of documents produced by the defendant and taken 2 depositions. At nearly $4 million, that's nice work, if you can get it -- particularly where the class itself actually stands to gain less than $2 million.
As I said before, I fully understand why one might agree to settle a truly BS claim like the ones in Nutella with just such a settlement. In many respects, it makes a whole lot of sense.
But it still sticks in my craw.
Amen, brother.