Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Jamba Juice “all natural” labeling class settlement given final approval, (May 5, 2015)

By Edward L. Puzzo, J.D.

The federal district court in San Francisco has granted final approval to a settlement, including injunctive relief, in a class action arising from “all natural’ labeling on Jamba Juice frozen smoothie kits (Lilly v. Jamba Juice Company, May 1, 2015, Tigar, J.).

In June 2013, plaintiffs Aleta Lilly and David Cox filed a putative class action lawsuit against restaurant retailer Jamba Juice and specialty snack food maker Inventure Foods, after purchasing certain varieties of their at-home frozen smoothie kits. The plaintiffs asserted that the smoothie kits, labeled and marketed as “all natural,” contained ingredients—ascorbic acid, xanthan gum, steviol glycosides, modified corn starch, and gelatin—that consumers would not have understood to be “natural,” in violation of California’s Consumer Legal Remedies Act (CLRA), False Advertising Law (FAL), and Unfair Competition Law (UCL).

The parties reached a proposed settlement containing a stipulated injunction that would require the defendants to re-label the challenged products to delete “all natural” references on the product packaging or advertising, without requiring the defendants to remove or recall any of the challenged products in the market or inventory, and allowing them to exhaust all existing packaging inventory.

On March 18, 2015, the court granted preliminary approval of the parties’ proposed settlement for injunctive relief and conditionally certified the putative class for the purposes of determining the issue of liability. The court also concluded that class notice was not necessary for settlement approval as the settlement was for injunctive relief only and class members would retain their claims for individual damages.

The plaintiffs then moved for final approval of the settlement agreement and further moved for an award of attorney’s fees and costs.

Evaluating settlement. In reviewing the proposed settlement, the court found that liability hinged on reasonableness, raising a significant risk of non-recovery. The uncertainty of monetary recovery was a factor that weighed in favor of approval of the settlement.

Balancing the risk of continued litigation against the certainty and immediacy of recovery from the settlement, this factor also supported final approval because the settlement would result in complete relabeling of the challenged products. Continued litigation could not result in any greater injunctive relief to the class and would only deprive the class of immediate relief, stated the court. Another factor in support of final approval was the extensive amount of formal discovery conducted by plaintiffs.

Attorney fees. California courts apply the lodestar method to a statutory attorney fee award, assessing the time expended on the litigation multiplied by the reasonable hourly rate, reduced or enhanced by factors such as the case complexity and quality of representation. Based upon evidence of over 1,500 billable hours, hourly rates comparable to that charged by firms of similar expertise in the Northern District of California, and a willingness by plaintiffs’ attorneys to accept a 35% reduction in the lodestar amount, the court approved attorneys’ fees in the amount of $410,637. Class counsel was also awarded $14,326 in litigation expenses.

The case is No. 13-cv-02998-JST.

Attorneys: Danielle A. Stoumbos (Finkelstein Thompson LLP) and Marc Lawrence Godino (Glancy Prongay & Murray LLP) for Aleta Lilly. Robert Stephen Niemann (Keller & Heckman LLP) for Jamba Juice Company and Inventure Foods, Inc.

Companies: Jamba Juice Company; Inventure Foods, Inc.

Cases: Advertising StateUnfairTradePractices CaliforniaNews