Antitrust Law Daily Wrap Up, ADVERTISING—C.D. Cal.: Tennis racquet manufacturer settles class action for $4.5M, (Apr 8, 2015)

By Greg Hammond, J.D.

Consumers have settled a false advertising class action lawsuit against tennis racquet manufacturer Babolat VS North America, Inc. for $4.5 million. The federal district court in Riverside, California granted the consumers’ motion for final approval, finding the settlement to be fair, reasonable, and adequate (Ahdoot v. Babolat VS North America, Inc., April 6, 2015, Phillips, V.).

Background. Consumers Payam Ahdoot and Brandon Clark purchased certain tennis racquets allegedly endorsed by a number of tennis players, such as Rafael Nadal and Andy Roddick. The consumers alleged that Babolat misrepresented that racquets available for purchase by the public were identical to the racquets used on the professional tennis tour by professional players. However, in reality, the racquets used by professional players were much different than those available to the public, the consumers claimed. Ahdoot and Clark brought claims, in part, under California’s Unfair Competition Law, Consumer Legal Remedies Act, and False Advertising Law.

The parties reached a settlement agreement after discovery, providing each settlement class member, submitting a valid claim and a proof of purchase, with $50 for each adult racquet and $25 for each junior racquet for each qualifying transaction. Class members without a racquet serial number or proof of purchase will also be entitled to reimbursement of $20 for each adult racquet and $10 for each junior racquet obtained through a qualifying transaction up to a maximum of three racquets per person.

Specifically, Babolat has agreed to establish a non-reversionary fund of $4.5 million that will make the following payments, subject to court approval: (1) attorney fees of $1.125 million, representing 25 percent of the gross settlement fund; (2) costs of up to $150,000; (3) incentive awards of $5,000 for each named plaintiff; and (4) estimated settlement administration expenses of between $133,000 and $240,000. The net settlement fund is therefore an estimated $3,092,340.57.

The consumers moved for final approval of the settlement and for attorney fees, costs, incentive awards, and settlement administration expenses. Babolat filed a notice of non-opposition.

Fair, adequate, reasonable settlement. The court granted the consumers’ motion for final approval of the settlement, concluding that all of the Torrisi factors weighed in favor of finding the settlement fair, reasonable, and adequate. Specifically the court found: (1) Babolat’s agreement to provide a 25-34 percent refund for each racquet, along with its agreement to change its advertising and business practices, suggested the consumers’ case had merit; (2) continued litigation would “undoubtedly” be expensive and complex, given the significant risks to class members concerning their ability to succeed on the merits or to prove damages; (3) there was a risk that class certification might not be maintained before entry of final judgment; (4) the amount of recovery each class member may recuperate weighed in favor of reasonableness; (5) significant discovery, involving over 30,000 documents, was undertaken by both parties; (6) class counsel has significant experience litigating class action cases; (7) as of February 24, 2014, over 17,000 class members filed valid claim forms, and no class member objected to the settlement; and (8) there was no reason to believe that the settlement was the product of collusive bargaining, particularly because it was reached with the assistance of a mediator. The court additionally found that the parties executed the class notice in accordance with the court’s preliminary approval order, and the court therefore found that notice was reasonable as to its content and the method of communication.

Fees, costs, awards. Lastly, the court approved the request for attorney fees, costs, incentive awards, and settlement administrative expenses. The attorney fees represented 25 percent of the settlement proceeds, which is the benchmark award that should be given in common fund cases. Using the percentage-of-the-fund method and lodestar method, the court concluded that the attorney fees are reasonable. While the court initially approved up to $150,000 in actual litigation costs, class counsel ultimately requested and provided an accounting for $78,134, which was deemed reasonable by the court. The incentive award of $5,000 to each named plaintiff also was deemed reasonable. Finally, the settlement administration costs of $194,524 were found reasonable, which fell in between the previously allotted range of $113,219 to $218,757.

The case is number CV 13-02823-VAP (VBKx).

Attorneys: Amy Tai Wootton (Hamner Law Offices APC) for Payam Ahdoot. Brent E. Johnson (Holland and Hart LLP) for Babolat VS North America Inc.

Companies: Babolat VS North America, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews