A federal court in California has issued an order granting the motion for preliminary approval of a class settlement in five lawsuits alleging that Naked Juice Co. misrepresented its beverages as “All Natural” and “Non-GMO.” Pappas v. Naked Juice Co. of Glendora, Inc., No. 11-8276 (U.S. Dist. Ct., C.D. Cal., order entered August 7, 2013).
According to the court, the proposed settlement was reached after the defendant’s motion to dismiss was granted in part, extensive and contentious discovery was undertaken, and four mediation sessions occurred under the guidance of an experienced retired judge. Under the terms of the settlement, the company will pay $9 million into a settlement fund that will be used to make cash payments to class members and pay the costs of notice and settlement administration, attorney’s fees—not to exceed $3.1 million—and expenses, and incentive awards—$2,500 each for four of the five named plaintiffs.
Class members with purchase receipts dated during the class period can recover up to $75 each, and those without receipts can recover between $5 and $45. Remaining funds will be distributed to cy pres recipients identified as the Mayo Clinic (50%), National Association of IOLTA Programs (24%) and equal, pro rata shares to seven legal aid organizations (combined 25%). The court also noted that Naked Juice is required to adopt certain practices and make certain changes to its labeling and substantiation at an additional cost valued at some $1.4 million. The notice procedures include Internet and print programs.
One of the named plaintiffs, who did not seek an incentive award and will not be receiving one due to her lack of involvement in the proceedings, objected to the settlement, claiming that class counsel fees are too high, the cy pres recipients are improper and the notice is insufficient. According to the court, counsel fees, which will not be finally determined until later in the proceedings are not per se unreasonable or “greater than the percentage of fees and costs awarded in other consumer products class actions.”
The court also found that the cy pres recipients are all proper as “sufficiently related to the underlying claims to warrant their receipt of potential cy pres awards.” The legal organizations declared that they would use the funds for consumer protection work, and the Mayo Clinic stated that it would use the funds to “support its nationwide education and research efforts around nutrition, vitamins, and food and beverage labels.” The court further determined that the class notice was sufficient, because the Internet ad campaign was not limited geographically and it was sophisticated and designed to target likely class members.