Court Denies Settlement Approval in Fruit Snack Flavoring Lawsuit Citing Possible Collusion

The Southern District of Florida denied a request for it to grant preliminary approval to a settlement in a class-action lawsuit filed by a consumer against General Mills Inc. purporting that the company’s fruit snacks falsely claimed to have no artificial ingredients. On Friday, the court determined that the large amount allotted for attorneys’ fees in the settlement, with no award to the class, hinted at possible collusion.

According to the plaintiffs, the defendant falsely claimed that its fruit-flavored snacks were naturally flavored and did not contain any artificial flavorings, however, the snacks contained malic acid. The plaintiffs alleged that the malic acid resembled the characterizing fruit flavor and reinforced it.

The lawsuit was filed by Crystal Hilsley on behalf of a class of California consumers; another complaint filed against Motts LLC about fruit snacks manufactured by General Mills but sold under the Motts LLC brand was incorporated into this action as part of an earlier settlement along with other matters, and the California class was expanded to a nationwide class. These changes were reflected in an amended complaint.

According to the court’s order, David Hayes, the plaintiff in a Northern District of Illinois putative class action lawsuit with similar allegations, asked to intervene in this lawsuit to contest the settlement and its fairness. The court granted this motion from Hayes, while denying the motion for a settlement.

Under the proposed settlement, General Mills would include on the packaging marks to direct a consumer to its website to “learn more” about its “no artificial flavors” claim, where the company would disclose that the flavors come from natural sources, that the natural flavors match the U.S. Food and Drug Administration requirements, and that the malic acid which the products may contain is not intended to to be a flavor but was approved by the FDA as a “flavor enhancer, a flavoring agent or adjuvant, or as a pH control agent.”

Additionally, under the settlement the defendant agreed to not object to a $725,000 request for attorneys’ fees and a $5,000 award for four named plaintiffs. The nationwide class, including all members of the class who do not object, would also release all claims and would no longer be able to request monetary relief.

The court agreed with Hayes that the settlement agreement would not protect the interests of the class, citing that class counsel would be receiving “a disproportionate distribution of the settlement,” that the agreement provided for separate attorneys fees, and that the parties arranged for fees not awarded to be sent back to the defendant rather than to a class fund.

“Although the $725,000 sum was negotiated with a mediator’s assistance,” the order said, “this, by itself, is not sufficient to assure that the attorneys’ fee amount was the product of collusion-free negotiations in light of the clear sailing and kicker provisions.”

In the order, the court said that the attorneys’ fee amount “appears excessive on its face” and that the agreement does not provide a benefit to the class, abandoning requests for relief for the class in the complaint. The court noted Hayes’ claims that the settlement “fails to protect the significant interest of the Class in obtaining monetary relief.”

Counsel for the plaintiffs includes The Elliott Law Firm and the Law Office of Ronald Marron. General Mills and other defendant entities are represented by Perkins Coie. Hayes, the intervenor, is represented by the Law Offices of Todd M. Friedman.