Antitrust Law Daily Wrap Up, ADVERTISING—D.N.J.: Final settlement approved in Dreamfields “healthy” pasta dispute, (Oct 21, 2014)

By Greg Hammond, J.D.

Pasta maker Dakota Growers Pasta Company, Inc. and purchasers of its “healthy alternative” pasta have obtained final approval of a settlement, disposing of false advertisement claims under the New Jersey Consumer Fraud Act. Dakota Growers will pay $5 million to class members who submit a valid claim form, and an additional $2.9 million in attorneys’ fees (Mirakay v. Dakota Growers Pasta Company, Inc., October 20, 2014, Pisano, J.).

Background. Purchasers of Dakota Growers’ Dreamfields pasta alleged that the company deceptively marketed, advertised, and sold Dreamfields as a “healthy alternative to traditional pasta”; that the pasta has a lower glycemic index than traditional pasta; and that it contains only five grams of digestible carbohydrates. The parties engaged in mediation, and a settlement agreement was reached in which Dakota Growers would pay: (1) $5 million to the class members; (2) $2.9 million in attorneys’ fees and expenses; and (3) a $20,000 incentive award to the proposed class representatives. Under the agreement, class members who purchased the Dreamfields pasta in-store can recover $1.99 for each box purchased during the class period, with a 15 box limit; and class members who purchased the pasta online can recover $1.99 for each box purchased during the class period, without a box limit. In addition, Dakota Growers agreed to preliminary injunctive provisions, requiring the company to remove the allegedly false claims from its packaging. The consumers moved for final settlement approval and for attorneys’ fees and expenses.

Class certification. The court first determined that the pasta purchasers met the four requirements of Rule 23(a)—numerosity, commonality, typicality, and adequacy of representation—as well as the predominance and superiority requirements of Rule 23(b)(3). Specifically, the court found: (1) millions of boxes of Dreamfields pasta were purchased annually in the United States, and the number of class members would exceed the necessary amount to satisfy the numerosity requirement; (2) common questions of law and fact existed, because the class members were all subjected to the same advertised claims regarding Dreamfields’ nutritional quality and were damaged by paying the price premium for the product; (3) the typicality requirement was met because all of the class members’ claims arose from the same alleged misrepresentations; and (4) the named plaintiffs’ interests were sufficiently aligned with the interests of the absent class members, and the class’ counsel are qualified to represent the class.

Additionally, the predominance factor of Rule 23(b)(3) was met, as the main questions in this case relate to Dakota Growers’ labels, marketing, and advertising—which contain the same, nationally disseminated messages—and whether the labels and advertising violated the law. Lastly, the court concluded that the superiority requirement was met, as individual members have little interest in controlling the prosecution, and it is highly desirable to concentrate the claims, given the thousands of individual trials that could otherwise potentially burden the court’s resources.

Settlement approval. The court next determined that the settlement is fair, reasonable, and adequate, as all nine Girsh factors favored the settlement. Specifically, it determined that: (1) continuing litigation would be costly in both time and money; (2) only seven class members requested exclusion from the class; (3) the parties have conducted extensive research and discovery into the factual and legal basis for the claims; (4) the parties have accounted for the risks of continued litigation; (5) continued litigation would present risks on both liability and class certification; (6) certification of a nationwide class outside of settlement could be difficult; (7) the settlement allows class members to receive virtually 100 percent of their damages per purchase, for up to 15 in-store purchases and unlimited online purchases, as well as injunctive relief; and (8) the settlement is reasonable in light of the best possible recovery and the risks the parties would face if the case went to trial. Determining the settlement to be fair, reasonable, and adequate, the court granted the motions for final approval and for attorneys’ fees and expenses.

The case number is 13-cv-4429 (JAP).

Attorneys: Daniel Thomas Gluck (Zaremba Brownell & Brown PLLC) for Joseph Mirakay. Lorna A. Dotro (Coughlin Duffy LLP) for Dakota Growers Pasta Company, Inc.

Companies: Dakota Growers Pasta Company, Inc.

Cases: Advertising NewJerseyNews