Ninth Circuit Rejects Objections to Nutella Settlement

Ninth Circuit Rejects Objections to Nutella Settlement Photo: Ferrero

A federal appeals court panel has brushed off objections to a settlement between a class of consumers and the maker of Nutella, ruling that an award of about $1 million for plaintiffs’ counsel was proper even though it was double the amount available to allegedly wronged consumers.

A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit on July 16 affirmed the a lower court’s approval of the $1.5 million settlement of Hohenberg v. Ferrero, a class action accusing Ferrero USA Inc. of false advertising by portraying the chocolate-hazelnut spread Nutella as a healthy breakfast option.

Three class members had lodged objections to the deal, which allocated about $550,000 to reimburse plaintiffs Nutella they had purchased since Aug. 1, 2009; $17,500 to named plaintiffs; and $1.01 million for attorneys’ fees and costs. The objectors called the attorneys’ awards “self-dealing” that amounted to “massive overreaching.”

They also objected to the named plaintiffs’ backpedaling on what had been the lawsuit’s key goal: An injunction barring Ferrero from marketing and labeling Nutella as a nutritious, wholesome choice for breakfast or snacks. In the complaint, to illustrate the point, the plaintiffs compared two tablespoons of Nutella to two tablespoons of Smucker’s Hot Fudge Microwave dessert topping, and described the hot fudge as far lower in calories, calories from fat, saturated fat and sugar.

But the settlement ultimately approved by the U.S. District Court for the Southern District of California contains what the objectors consider only a minor rhetorical rollback by the company: “Ferrero will modify the back panel of the label for Nutella (the ‘Information Panel’) by removing the phrase ‘An example of a tasty yet balanced breakfast’ and replacing it with ‘Turn a balanced breakfast into a tasty one,’ ” according to settlement documents.

In their appeal, the objectors argued that there was inadequate notice of the request for attorney fees; that the injunctive relief doesn’t justify a fee award; that the district court failed to adequately explain its approval of the fee award; and that the district court failed to consider whether class counsel adequately represented the class.

The appellate panel—Ninth Circuit Chief Judge Alex Kozinski and circuit judges Stephen Trott and Consuelo Callahan—found no merit in any of those claims, concluding the class received ample notice of the fees request, that those fees were reasonable, that the injunctive relief was “meaningful,” and that no “serious questions” were raised about the competency of counsel.

Plaintiffs’ counsel are Melanie Rae Persinger, John Fitzgerald IV, and Gregory Weston of The Weston Firm; Courtland Creekmore of Scott Cole & Associates; Beatrice Skye Resendes and Ronald Marron of Law Offices of Ronald Marron; Gregory Weston of The Weston Firm; Maggie Realin of The Markham Law Firm; and Margarita Salazar of the Law Offices of Margarita Salazar.

Lisa Hoffman is a contributor to law.com.

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