Antitrust Law Daily Wrap Up, ADVERTISING—S.D. Cal.: Final approval of settlement revised in class action against Kellogg’s cereal advertising, (Nov 18, 2013)

By Linda O’Brien, J.D., LL.M.

The federal district court in San Diego has revised its final approval to the settlement of a class action brought against Kellogg Company alleging false and unsubstantiated representations in advertising and labeling of one of its cereal products (Dennis v. Kellogg Co., November 14, 2013, Lorenz, M.). The court granted the plaintiffs’ motion for final settlement approval, certification of the settlement class, class counsel’s attorney fees and costs, and incentive awards to the class representatives. All objections and objectors’ request for attorneys’ fees were denied.

Kellogg manufactured Frosted Mini-Wheats cereal products. A class of consumers alleged that Kellogg made false and unsubstantiated representations in advertising that the cereal was scientifically proven to improve children’s cognitive functions for several hours after breakfast. The parties reached a settlement agreement which was approved by the court on April 5, 2011. The Ninth Circuit Court of Appeals reversed the final settlement approval order on September 4, 2012, and remanded the case. Upon remand, the parties negotiated a revised settlement, preliminarily approved on May 3, 2013, and given final approval on September 10, 2013.

Final approval of the settlement. The settlement provided for a settlement fund of $4 million, which was fair and adequate and resulted in individual payouts to claimants of $5 to $45. The court considered the settlement a favorable result given the significant costs and risks presented by continued litigation. Class counsel had substantial experience litigating class actions and their endorsement weighed in favor of final approval. The court noted that the reaction of the class was almost entirely positive. Additionally, the settlement was reached through mediation and no aspect of the negotiations suggested collusion.

The court also overruled the six objections to the settlement as meritless and denied the objector’s request for attorneys’ fees.

Attorney fees and expenses. The requested amounts for class counsel constituted 25 percent of the cash fund with compared favorably with both federal and state (California) benchmarks. The claims notice and administration costs also appeared reasonable, the court determined.

Incentive awards to class representatives. The court also found that incentive awards the class representatives were warranted. The class representatives risked reputations and exposure to joint and several liability for counterclaims. Further, the class representatives actively assisted the class counsel and their efforts and involvement protected and benefited the class as a whole.

The case is No. 09-CV-1786-L (WMC).

Attorneys: Andrew S. Friedman (Bonnett, Fairbourn, Friedman & Balint, PC) for Harry Dennis. Brent Caslin (Jenner & Block LLP) for Kellogg Co.

Companies: Kellogg Co.

Cases: Advertising StateUnfairTradePractices CaliforniaNews