On Tuesday, the Ninth Circuit Court of Appeals reversed the district court’s approval of the settlement in a class action lawsuit alleging that the labeling on bottles of Wesson Oil was false and misleading.
The suit, filed in 2011 by consumer Robert Briseño and others, claimed that Conagra, Inc. was misleading consumers by labeling Wesson Oil “100% Natural” when its ingredients contained genetically modified organisms. Litigation continued for years, and it was not until October 2019 that a settlement was reached. Under the terms of the deal, Conagra was prohibited from continuing to market Wesson Oils as “natural” absent future regulation, and the company provided Wesson Oil consumers from several states with 15 cents for each bottle of purchased by households submitting valid claims. The settlement also proposed a fund of $575,000 to be allocated to New York and Oregon class members as compensation for statutory damages under those states’ consumer protection laws, and a fund of $10,000 to compensate households submitting valid proof-of-purchase receipts for more than thirty purchases of Wesson Oil, with class counsel paying any non-funded claims from any attorney fees awarded in this case.
However, plaintiff M. Todd Henderson filed a notice of appeal in November 2019, arguing that the attorneys received over 88 percent of the class’s recovery compensation, that the case smelled of collusion and that the stipulated value of the injunctive relief was “illusory,” as Conagra had sold Wesson Oil to The J.M. Smucker Company in May of 2017.
“To find value in this Settlement’s injunction is equivalent to finding value in Conagra’s agreement to refrain from marketing Coca-Cola or Big Macs or any other company’s product,” Henderson claimed in court documents. “The possibility to inflate a settlement value by defendant’s agreeing to refrain from doing things they would never have done anyway is infinite.”
In the opinion issued by Circuit Judge Kenneth Lee, the court agreed with Henderson’s claims, stating, “We can perhaps sum up this case as ‘How to Lose a Class Action Settlement in 10 Ways.’ The parties crammed into their settlement agreement a bevy of questionable provisions that reeks of collusion at the expense of the class members: Class counsel will receive seven times more money than the class members; an injunction touted by an expert as worth tens of millions of dollars appears worthless; the defendant agrees not to challenge the plaintiffs’ attorneys’ fees amount; any reduction in those fees by the court reverts to the defendant; and on and on.”
The case was remanded back to the the Central District of California to be considered again in light of the appellate court’s decision.