In advance of a July 9, 2012, hearing before a federal court in New Jersey to approve the settlement of claims that Ferrero USA, Inc. misled consumers about nutritive value in its ads for Nutella®, a hazelnut spread purportedly containing high fat and sugar levels, a number of class members have filed objections that challenge class notice, most of the settlement terms and the fee award to plaintiffs’ counsel. In re: Nutella Mktg. & Sales Practices Litig., No. 11-cv-1086 (FLW). Additional details about the proposed settlement appear in Issue 437 of this Update.  

Class member Clark Hampe, for example, complains that the settlement fund “has a claims procedure that caps the total number of claims that can be made and the maximum amount of compensation for class members. Then, if these arbitrary maximums are satisfied, the settlement is vague about what happens next. Either funds will be paid to a court-approved charity, or they will go in a supplemental distribution to class members. A class notice must be sufficiently definite to inform class members of all material aspects of the settlement. Here, there are too many loose ends concerning what happens to overflow settlement funds.” He also contends that the attorney’s fee award “is grossly excessive.”  

Amy Ades notes that plaintiffs’ counsel fail to disclose what percentage of damages the net settlement fund of $1.36 million represents, reporting that a California court, which is also poised to settle Nutella®-related claims, “recognized that 10.1% of American households purchased Nutella in the 52 weeks before December 2010 and that Nutella’s sales from 2007-2012 totaled $213,693,000. Thus, it is likely that the amount of money going to the class in this proposed Settlement represents a mere token of potential damages.”  

Ades also complains that requiring Ferrero to place information about the amount of calories, saturated fat, sodium and sugar per serving size on the front of its package labels, “provides no new information to the consumer as these facts are presently listed on the back panel of the jar label.” She is further concerned that some of the actions Ferrero is required to take expire in a short period of time and that the company is not obligated to “remove or replace the jars of Nutella on the store shelves with the current labels and it can continue to distribute and sell Nutella jars with the current labels for the indefinite time (at least four months) it takes them to produce new labels.”  

Ades objects to the $20 limit on individual recoveries regardless of the number of jars purchased during the class period and further contends that class counsel has failed to show that $3.75 million in fees, 68 percent of the total settlement, is warranted given “the modest, and largely temporary non-cash changes and . . . limited work done to benefit the class.” She also challenges the class notice, stating “It does not disclose the limitations on the word changes, nor the temporary nature thereof, nor the amount of class counsel’s expenses that will reduce the amount available to the class.”  

Objector Gary Sibley argues that no effort has been made to give individual notice, cy pres should not be part of the settlement, class members are receiving limited economic benefits, and “[i]n the agreed injunction, Defendant does no more than agree to follow current law and not misrepresent its services; this is already required of the Defendant under current law. The injunctive relief touts changes to the product label, new television commercials and website changes. These changes are of little to no value.” He argues that notice should have been attached to product labels and that class counsel fees are unreasonable because “the value of the settlement to the class in impermissibly overstated and the fee itself is excessive.”