Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Cal.: $550K settlement approved in propane overcharge class action, (Apr 18, 2016)

By Greg Hammond, J.D.

The federal district court in San Diego has granted final approval of a $550,000 class action settlement, disposing of claims that two propane service providers overcharged customers, in violation of California’s False Advertising Law (FAL) and Unfair Competition Law (UCL). The settlement was fair, reasonable, and adequate, according to the court (Fontes v. Heritage Operating, L.P., April 14, 2016, Anello, M.).

A consumer filed the class action, alleging that Heritage Operating, L.P. and AmeriGas advertised that customers would be charged after each delivery of propane based on the “laid-in cost”—the cost of the purchase of propane from defendants’ suppliers plus the cost of delivery in trucks to class members—plus an additional amount agreed to between each customer and the defendants. The consumer, however, claimed that the defendants inflated the true price of their laid-in cost to class members, and that the customers were therefore overcharged for each gallon of propane they purchased. The complaint consequently alleged violations of the FAL and UCL.

After significant investigation and informal discovery, as well as a full-day of private mediation, the parties reached a settlement in which the defendants would create a non-reversionary common fund of $550,000. Under the terms of the agreement, High Volume Class members (those who purchased more than 35,000 gallons of propane during the class period) would receive approximately 75 percent of their calculated net overcharges, an average payment of $10,300 each. Remaining class members who purchased less than 35,000 gallons of propane during the class period will receive approximately 84 percent of their calculated net overcharges as a result of the settlement, an average payment of $431 each.

The court determined that the settlement was fair, reasonable, and adequate, given the risk of maintaining class action status through trial, the stage of litigation, the settlement amount, the fair and adequate representation of the class during settlement negotiations, and that none of the 706 class members objected or requested an exclusion.

In addition, the court granted the consumer’s motion for attorney fees of $165,000—approximately 30 percent of the settlement fund—as well as litigation costs of more than $19,000 and a class representative incentive award of $5,000. The attorney fees were reasonable, according to the court, because good results were achieved; continued litigation may have been risky; counsel providing skilled, high quality work and represented the class on a contingent fee; the award is similar to those made in other cases; and a lodestar cross-check supports the reasonableness of the award.

The case is No. 14cv1413-MMA (NLS).

Attorneys: James M. Treglio (Clark & Treglio) for Edward Fontes. John Mittelbach (Munger Tolles & Olson LLP) for Heritage Operating, L.P. and Amerigas.

Companies: Heritage Operating, L.P.; Amerigas

Cases: Advertising StateUnfairTradePractices CaliforniaNews