Antitrust Law Daily Wrap Up, ADVERTISING—9th Cir.: Approval of $550,000 Nutella settlement, fee award upheld, (Jul 17, 2014)

By Jody Coultas, J.D.

A settlement agreement and attorney fee award resolving class actions brought against Ferrero USA, Inc. for falsely advertising and labeling its Nutella product was properly approved by a district court, the U.S. Court of Appeals in San Francisco has held (In re: Ferrero Litigation, July 16, 2014, Per Curiam).

Two California consumers brought class actions alleging that Ferrero was misleadingly advertising Nutella as a healthy breakfast food. After a class of California consumers was certified, the parties entered into a settlement agreement that created a $550,000 monetary fund to partially reimburse class members and required Ferrero to revise its advertising campaign and Nutella label. The district court approved the settlement and awarded attorney’s fees.

Three class members objected to the settlement, and appealed the district court’s approval of the settlement.

The district court did not err in approving the settlement or awarding attorney’s fees, according to the court. Class members had adequate notice of the terms of the settlement and class counsel’s request for attorneys’ fees. The objectors failed to raise any serious questions as to the adequacy of class counsel, and there was no specific challenge to the hours or rates submitted by counsel. The settlement was reached after class certification, through settlement conferences with judicial officers, and produced both monetary and injunctive relief for the class. Thus, there was no concern of collusion as argued by the objectors. The fact that the settlement contained a “clear sailing” provision and a provision reverting unpaid attorneys’ fees to Ferrero rather than to the class, two factors that may indicate collusion, did not concern the court given the rest of the terms of the agreement.

The attorney fees were not awarded in error, according to the court. The objectors argued that the district court erred in awarding attorney fees based on the injunctive relief obtained in the settlement, arguing that the value of injunctive relief was too speculative to be ascertainable and did not benefit class members. The settlement provided for substantial injunctive relief requiring Ferrero to revise its advertising campaign and labels. The district court had discretion to award attorneys’ fees using the lodestar method rather than the “percentage of the fund” calculation method. The lodestar method does not require a determination of the “value” of particular injunctive relief. The objectors could not show that the injunctive relief in this case was not meaningful and consistent with the relief requested.

The cases are Nos. 12-56469 and 12-56478.

Attorneys: Jack Fitzgerald (The Weston Firm) for Athena Hohenberg. Colleen Bal (Wilson Sonsini Goodrich & Rosati) for Ferrero USA, Inc.

Companies: Ferrero USA, Inc.

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