Last spring, a federal court judge approved a $10.6 million settlement in a false advertising class action suit against Kellogg, where the plaintiffs alleged that Kellogg deceptively advertised that its Frosted Mini-Wheats could improve children’s cognitive function and memory retention.
Earlier this month, an attorney for class members, not class counsel, objected to the settlement and argued to the 9th Circuit that approval should be reversed because the deal is “unfair” and has “obvious flaws.”
A class of plaintiffs challenged Kellogg’s claims, including that Frosted Mini-Wheats cereal was “clinically shown to improve children’s attentiveness by nearly 20%.” Under the terms of the settlement, Kellogg agreed to provide $2.75 million for consumer refunds, make a $5.5 million charitable food donation, and promise to stop making similar ad claims.
However, the settlement terms didn’t meet the goals of the suit, the challengers’ attorneys argued.
Although the litigation involved claims made about children’s attentiveness, memory, and other cognitive functions, the charitable donation was slated for adult organizations, which is “inconsistent with the purposes for which the lawsuit was filed, in that they duped children and the parents of children who eat Frosted Mini-Wheats,” attorney Janine Menhennet, representing one of the objectors, told the 9th Circuit panel, according to Courthouse News.
“Just off the top of my head, it occurs to me perhaps serving school breakfast programs in neighborhoods which are dramatically underfunded would serve the class a lot better than serving high fiber cereal to adults,” she told the court.
Menhennet also suggested that Kellogg may have already planned the charitable donation and it was not a new contribution based solely on the case. In addition, she questioned the cost of the class attorneys’ fees, which she calculated at $2,100 per hour.
In response, class counsel Timothy Blood described the settlement as an “outstanding result.” He also defended the attorneys’ fees as reasonable given the amount of work in the case and the ongoing appeal, as the dollar amount was determined even as work remained on the case.
Kellogg’s attorney Kenneth Lee argued that the case was really about the “nutritional value” of the cereal. Therefore, the charitable donation was reasonable, he said. When asked whether the donation was part of an existing practice, Lee told the panel that the company would fulfill its promise. Ninth Circuit Judge Stephen Trott expressed skepticism at the answer, noting that “It seems to me you’re asking us to trust the same people who told everybody that their kids would get smarter if they ate Frosted Mini-Wheats.”
To read the brief objecting to the settlement, click here.
Why it matters: As currently approved, the settlement is not atypical in a false advertising class action. It includes a cash payment to consumers, a charitable donation, and injunctive relief along with attorneys’ fees. If the 9th Circuit were to reverse the approval, it could signal to litigants that courts may require a closer nexus between the settlement terms and the intent of the suit.