After suing L’Oreal USA Inc. for false advertising, plaintiffs lawyers negotiated a settlement in which they would get almost $1 million in fees while class members waived any right to classwide damages. After initially giving his preliminary approval, a judge has now rejected that proposed deal, siding with objections raised by Ted Frank’s Center for Class Action Fairness.
In a 33-page decision issued Wednesday, U.S. District Judge John Bates in Washington, D.C., refused to grant final approval to a settlement in a class action brought on behalf of purchasers of several L’Oreal hair products. Bates wrote that the settlement “creates the impression of unfairness” because it “provides no monetary relief while rewarding counsel handsomely.” The judge also agreed with CCAF that the lead plaintiffs shouldn’t be allowed to bind absent class members without providing notice or an opportunity to opt out.
The plaintiffs—represented by Mehri & Skalet, Halunen & Associates and the Mehdi Firm—alleged that L’Oreal labeled the products “salon-only” despite knowing that its distributors often sell the products to mass retailers against its wishes. The company had agreed to an injunction requiring it to gradually phase out the “salon-only” label. The company also agreed not to object to a request for $950,000 in attorney fees and costs. In exchange, the lead plaintiffs signed away the right of all class members to seek classwide damages. (Member would still have been able to seek individual damages, but doing so would likely be prohibitively expensive). L’Oreal is represented by Patterson Belknap Webb & Tyler.
The plaintiffs firms stated in court filings that they “reluctantly” concluded that they didn’t have a viable claim for money damages, so the injunction was the best possible result. They also defended their $950,000 fee request, claiming they formulated the number after “contentious, arm’s length negotiation” with L’Oreal’s lawyers.
Plaintiffs lawyer Clayton Halunen of Halunen & Associates did not immediately respond to a request for comment. In an e-mail, CCAF founder Ted Frank wrote that “the court is to be commended for protecting the absent class members.”