Hohenberg v. Ferrero USA, Inc

Filing 114

MOTION for Settlement Motion for Final Approval of Class Action Settlement, MOTION for Attorney Fees Motion for Attorneys' Fees, Costs, and Incentive Awards by Athena Hohenberg, Laura Rude-Barbato. (Attachments: # 1 Memo of Points and Authorities in Support of Motion for Final Settlement Approval (Redacted Version), # 2 Memo of Points and Authorities in Support of Motion for Approval of Attorneys' Fees, Costs, and Incentive Awards (Redacted Version), # 3 Declaration of Ronald A. Marron, # 4 Declaration of Jack Fitzgerald, # 5 Declaration of Athena Hohenberg, # 6 Declaration of Laura Rude-Barbato, # 7 Affidavit of Charlene Young)(Fitzgerald, John) (ag).

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1 2 3 4 5 6 7 LAW OFFICES OF RONALD A. MARRON, APLC RONALD A. MARRON (175650) ron @consumersadvocates.com MAGGIE REALIN (263639) maggie@consumersadvocates.com B. SKYE RESENDES (278511) skye@consumersadvocates.com 3636 4th Avenue, Suite 202 San Diego, California 92103 Telephone: (619) 696-9006 Facsimile: (619) 564-6665 8 THE WESTON FIRM GREGORY S. WESTON (239944) greg@westonfirm.com JACK FITZGERALD (257370) jack@westonfirm.com MELANIE PERSINGER (275423) mel@westonfirm.com COURTLAND CREEKMORE (182018) courtland@westonfirm.com 1405 Morena Blvd. Suite 201 San Diego, CA 92110 Telephone: (619) 798-2006 Facsimile: (480) 247-4553 9 Class Counsel 10 UNITED STATES DISTRICT COURT 11 SOUTHERN DISTRICT OF CALIFORNIA 12 Case No. 11-cv-00205 H KSC Pleading Type: Class Action 13 14 15 16 IN RE FERRERO LITIGATION PLAINTIFFS’ MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT 17 18 19 20 21 REDACTED VERSION FOR PUBLIC FILING Judge: The Honorable Marilyn L. Huff Hearing: July 9, 2012 Time: 10:30 a.m. Location: Courtroom 13 22 23 24 25 26 27 28 In re Ferrero Litigation, Case No. 3:11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 TABLE OF CONTENTS 2 TABLE OF AUTHORITIES .................................................................................................................... iii 3 INTRODUCTION ..................................................................................................................................... 1 4 5 6 FACTUAL BACKGROUND .................................................................................................................... 2 I. 7 HISTORY OF THE LITIGATION ................................................................................... 2 A. The Parties and Complaint ..................................................................................... 2 B. The Copycat Glover Action ................................................................................... 3 10 C. Ferrero’s Attempts to Transfer this Action to its Back Yard ................................. 3 11 D. Ferrero’s Motions to Dismiss are Largely Unsuccessful ....................................... 4 E. Plaintiffs Engage Ferrero and Third Parties in Substantial Discovery .................. 4 14 F. Plaintiffs Obtain Class Certification ...................................................................... 5 15 G. The Parties’ Negotiations Regarding Settlement ................................................... 5 8 9 12 13 16 II. THE TERMS OF THE SETTLEMENT ............................................................................ 6 17 18 A. Injunctive Relief..................................................................................................... 6 19 B. Cash Refunds ......................................................................................................... 7 C. Attorneys’ Fees, Expenses and Incentive Awards ................................................. 8 22 D. The Notice Program ............................................................................................... 8 23 E. Notice to the California Attorney General ............................................................. 9 20 21 24 REASONS THE SETTLEMENT WARRANTS FINAL APPROVAL ................................................. 10 25 26 I. STANDARD FOR GRANTING FINAL APPROVAL .................................................. 10 27 II. THE COURT SHOULD GRANT THE SETTLEMENT FINAL APPROVAL ............. 11 28 i In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL A. The Strength of Plaintiffs’ Case ........................................................................... 11 B. The Risk, Expense, Complexity, and Likely Duration of Further Litigation Favor Final Approval ........................................................................................... 12 C. The Risk of Maintaining Class Action Status Through Trial Favors Final Approval .............................................................................................................. 13 6 D. The Amount Offered in Settlement Favors Final Approval ................................ 13 7 E. The Stage of the Pleadings and Extent of Discovery Favor Final Approval ....... 15 F. The View of Experienced Counsel Favors Final Approval ................................. 15 10 G. The Class’ Reaction to the Proposed Settlement Favors Final Approval ............ 16 11 H. The Presence of a Governmental Participant ....................................................... 17 I. Other Factors ........................................................................................................ 17 1 2 3 4 5 8 9 12 13 14 III. THE BALANCED FACTORS WEIGH IN FAVOR OF FINAL APPROVAL ............. 17 15 CONCLUSION ........................................................................................................................................ 18 16 17 18 19 20 21 22 23 24 25 26 27 28 ii In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 2 TABLE OF AUTHORITIES CASES 3 Boyd v. Bechtel Corp., 485 F. Supp. 610 (N.D. Cal. 1979) .................................................................................................... 16 4 Churchill Vill., LLC. v. Gen. Elec., 5 361 F.3d 566 (9th Cir. 2004) ....................................................................................................... 10, 17 6 City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974)............................................................................................................... 13 7 8 Class Plaintiffs v. City of Seattle, 955 F.2d 1268 (9th Cir. 1992) .......................................................................................................... 10 9 Cotton v. Hinton, 10 559 F.2d 1326 (5th Cir. 1977) ........................................................................................................... 13 11 Curtis- Bauer v. Morgan Stanley & Co., Inc., 12 2008 U.S. Dist. LEXIS 85028 (N.D. Cal. Oct. 22, 2008).................................................................. 10 13 Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) ........................................................................................................... 10 14 15 In re Chicken Antitrust Litig. Am. Poultry, 669 F.2d 228 (5th Cir. 1982) ............................................................................................................ 13 16 In re Ferrero Litig., 17 2011 U.S. Dist. LEXIS 97488 (S.D. Cal. Aug. 29, 2011) ................................................................... 4 18 19 In re Ferrero Litig., 278 F.R.D. 552 (S.D. Cal. 2011) ......................................................................................................... 1 20 In re Ferrero Litig., 768 F. Supp. 2d 1074 (S.D. Cal. 2011) ................................................................................................ 4 21 22 In re Ferrero Litig., 794 F. Supp. 2d 1107 (S.D. Cal. 2011) ................................................................................................ 4 23 In re Heritage Bond Litig., 24 2005 U.S. Dist. LEXIS 13555 (C.D. Cal. June 10, 2005) ................................................................. 11 25 In re Nutella Mktg. & Sales Practices Litig., 804 F. Supp. 2d 1374 (J.P.M.L. 2011)................................................................................................. 4 26 27 In re Omnivision Techs., 559 F. Supp. 2d 1036 (N.D. Cal. 2007) ...................................................................................... 13, 16 28 iii In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 2 3 In re Pac. Enter. Sec. Litig., 47 F.3d 373 (9th Cir. 1995) ......................................................................................................... 10, 16 In re Portal Software Secs. Litig., 2007 U.S. Dist. LEXIS 88886 (N.D. Cal. Nov. 26, 2007)................................................................. 12 4 In re Warner Comm’s Sec. Litig., 618 F. Supp. 735 (S.D.N.Y. 1985) ................................................................................................... 15 5 6 In re Wireless Tel. Fed. Cost Recovery Fees Litig., 396 F.3d 922 (8th Cir. 2005) ............................................................................................................. 12 7 Knight v. Red Door Salons, Inc., 8 2009 U.S. Dist. LEXIS 11149 (N.D. Cal. Feb. 2, 2009) .................................................................. 16 9 Linney v. Cellular Ala. P’ship, 1997 U.S. Dist. LEXIS 24300 (N.D. Cal. July 18, 1997) .................................................................. 11 10 11 Linney v. Cellular Alaska P’ship, 151 F.3d 1234 (9th Cir. 1998) .................................................................................................... 10, 11 12 13 Mazza v. Am. Honda Motor Co., 666 F.3d 581 (9th Cir. 2012) ............................................................................................................. 13 14 Milstein v. Huck, 15 600 F.Supp. 254 (E.D.N.Y. 1984) .................................................................................................... 13 16 Nat’l Rural Telcoms. Coop. v. Directv, Inc., 221 F.R.D. 523 (C.D. Cal. 2004) .......................................................................................... 11, 12, 15 17 18 Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615 (9th Cir. 1982) ...................................................................................................... passim 19 Rodriguez v. West Publ’g Corp., 20 2007 U.S. Dist. LEXIS 74767 (C.D. Cal. Sept. 10, 2007)........................................................... 12, 17 21 22 Stevens v. Safeway, Inc., 2008 U.S. Dist. LEXIS 17119 (C.D. Cal. Feb. 25, 2008).................................................................. 16 23 24 STATUTES 25 28 U.S.C. § 1715 ........................................................................................................................................ 9 26 Cal. Bus. & Prof. Code §§ 17200, et seq. .................................................................................................. 1 27 Cal. Bus. & Prof. Code §§ 17500, et seq. .................................................................................................. 1 28 iv In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 2 Cal. Civ. Code §§ 1750, et seq................................................................................................................... 1 FEDERAL RULES 3 4 5 6 Fed. R. Civ. P. 23(e)(2) ............................................................................................................................ 10 OTHER AUTHORITIES 5 W. Moore, MOORE’S FEDERAL PRACTICE, § 23.85[2][e] (Matthew Bender 3d ed.) ............................ 15 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 v In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 Plaintiffs Athena Hohenberg and Laura Rude-Barbato, on behalf of themselves and all others 2 similarly situated, respectfully submit this Memorandum in support of their Motion for Final Settlement 3 Approval. 4 INTRODUCTION Athena Hohenberg commenced this action 1 on February 1, 2011 on behalf of herself and all 5 6 others similarly situated, against Ferrero U.S.A., Inc., alleging false advertising on behalf of a putative 7 nationwide class. On February 4, 2011, Laura Rude-Barbato filed a related class action against 8 Ferrero. 2 On March 22, 2010, the Court consolidated Hohenberg and Rude-Barbato in an action styled 9 In re Ferrero Litigation, appointing Plaintiffs’ counsel, the Law Offices of Ronald A. Marron and the 10 Weston Firm, Interim Class Counsel. (Dkt. No. 11.) In the currently-operative Complaint, Plaintiffs 11 plead claims for violation of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §§ 12 17200, et seq., False Advertising Law (“FAL”), id. §§ 17500, et seq., and Consumer Legal Remedies 13 Act (“CLRA”), Cal. Civ. Code §§ 1750, et seq., and for breach of express and implied warranties. (First 14 Amended Consolidated Complaint (“FACC”), Dkt. No. 45.) Plaintiffs allege Ferrero deceptively 15 marketed its Nutella® Hazelnut Spread (“Nutella”) as a healthy breakfast food, especially for children, 16 despite its high saturated fat and sugar content. Id. ¶¶ 2, 7-8. 17 On November 15, 2011, the Court granted Plaintiffs’ motion to certify a class comprised of “all 18 persons who, on or after August 1, 2009, bought one or more Nutella® products in the state of 19 California for their own or household use rather than resale or distribution” (the “Class”). (Order 20 Granting Motion for Class Certification (“Cert. Order”), Dkt. No. 95 at 13. 3) Less than two weeks later, 21 the parties reached a settlement agreement during a second Settlement Conference before then 22 Magistrate Judge Cathy Ann Bencivengo. (See Dkt. No. 97.) On January 19, 2012, the parties filed a 23 motion seeking preliminary approval of the proposed Settlement (Dkt. Nos. 105-107), which the Court 24 granted on January 23, 2012, directing that notice be given to Class Members and setting out a schedule 25 26 1 Originally styled Hohenberg v. Ferrero U.S.A., Inc., No. 3:11-cv-00205-H-CAB (S.D. Cal.). 27 2 Originally styled Rude-Barbato v. Ferrero U.S.A., Inc., No. 3:11-cv-00249-DMS-BLM (S.D. Cal.) 3 Published at In re Ferrero Litig., 278 F.R.D. 552 (S.D. Cal. 2011). 28 1 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 for Plaintiffs to file this instant Motion for Final Settlement Approval, and their concurrently-filed 2 Motion for Approval of Attorneys’ Fees, Costs and Incentive Awards (see Dkt. No. 108). 3 FACTUAL BACKGROUND 4 I. HISTORY OF THE LITIGATION 5 A. 6 Plaintiffs are Class Representatives, and their counsel is Class Counsel for the certified Class. The Parties and Complaint 7 (Cert. Order at 13.) Plaintiffs repeatedly purchased Nutella in California during the class period. 8 (FACC ¶¶ 10-11, 24, 26, 29-30.) They allege that Nutella contains 70% saturated fat and sugar, the 9 consumption of which have been shown to cause serious health problems like heart disease and type-2 10 diabetes. Id. ¶¶ 8, 24-25, 35-43. To this end, Plaintiffs contend that Nutella is comparable with foods 11 like hot fudge topping and candy bars. Id. ¶¶ 28, 100. 12 Despite these malignant effects, Plaintiffs allege that, during the class period, Nutella’s label 13 stated it was “[a]n example of a tasty yet balanced breakfast[.]” Id. ¶¶ 27, 31. In addition, Plaintiffs 14 alleged that Ferrero consistently advertised Nutella as healthy on Nutella’s website 15 (www.NutellaUSA.com), id. ¶¶ 78-89, and in nationally-aired television commercials, id. ¶¶ 90-96. 16 Finally, Plaintiffs alleged that Ferrero deceptively categorized Nutella as a nut spread for placement in 17 grocery stores despite that the product is more like cake icing. Id. ¶ 98. 18 In sum, Plaintiffs allege that: 19 Ferrero has engineered a long-standing, pervasive and multi-faceted marketing campaign focusing on the purported “nutritional” value of Nutella® as a breakfast food for children. . . . These claims are misleading because Nutella® contains high levels of saturated fats, sugar, oil, . . . and other objectionable ingredients . . . which harm the heart by raising blood cholesterol and blood sugar levels . . . . [T]he nutritional value claimed, if any, is not derived from Nutella®, but instead is dependent on whatever other foods . . . are supposed to be consumed along with Nutella®. . . . But Nutella’s® actual nutritional facts are comparable to other foods that are definitively not considered a part of a “balanced” breakfast, like candy bars and cake icing. . . . Ferrero also made representations [that] Nutella® is especially beneficial to children. Ferrero did and intended to convey with its statements and images that Nutella® is a wholesome and healthful product, when in fact consuming Nutella® daily, a behavior Ferrero implies through its advertising is healthful and not harmful, could create a substantial health risk, raise cholesterol levels, cause disease, damage the heart, and increase the risk and severity of type-2 diabetes. Ferrero’s encouragement of the daily consumption of Nutella® by children is especially insidious because of the devastating effects on children’s growth and health from high amounts of saturated fat [and] sugar . . . . 2 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 20 21 22 23 24 25 26 27 28 1 Id. ¶¶ 99-101. 2 Finally, Plaintiffs allege they relied on Ferrero’s advertising in purchasing Nutella for 3 household use, including for their children, id. ¶¶ 104-106, and that they were reasonably diligent 4 consumers who exercised reasonable diligence in purchasing, using and consuming Nutella, id. ¶¶ 1155 18. 6 B. 7 On February 27, 2011, Alabama resident Marnie Glover, represented by counsel based in part in The Copycat Glover Action 8 San Diego, filed a “copycat” action in the District of New Jersey. Glover’s complaint copied 29 9 paragraphs verbatim from Hohenberg’s complaint (e.g., a quarter of its 121 paragraphs). 4 On April 12, 10 2011, Glover filed a motion with the Judicial Panel on Multidistrict Litigation to centralize this action 11 with hers, in the District of New Jersey. (MDL No. 2248.) On July 26, 2011, two days before the 12 hearing Glover’s transfer motion, a second plaintiff, Jamie Kaczmarek, filed an action in New Jersey, 13 which was copied verbatim from the Glover complaint (including identical typographical errors), 14 except for the plaintiff-specific allegations. 5 Kaczmarek was represented by counsel who frequently 15 work together with Glover’s counsel. Nevertheless, despite his duty of candor, Glover’s counsel began 16 the hearing by advising the Panel that “since we filed our papers, . . . an action . . . has been recently 17 filed in the District of New Jersey” by “[d]ifferent plaintiffs’ lawyers,” without disclosing that the 18 Kaczmarek action was filed at the behest of and with the assistance of Glover’s attorneys. (See 19 Fitzgerald Decl., Ex. 1 at 3.) 20 C. 21 On March 24, 2011, Ferrero filed a motion to transfer this action to the District of New Jersey Ferrero’s Attempts to Transfer this Action to its Back Yard 22 (Dkt. No. 19), which Plaintiffs opposed (Dkt. No. 33). Then, on April 4, 2011, Ferrero asked the Court 23 to stay discovery while the transfer motion was pending (Dkt. No. 21), which Plaintiffs opposed (Dkt. 24 No. 22). The Court denied both Ferrero’s stay motion (Dkt. No. 24), and, on May 11, 2011, its transfer 25 motion, because Plaintiffs had demonstrated that “all of the Jones factors are either neutral or weigh 26 4 27 See Glover v. Ferrero U.S.A., Inc., No. 3:11-cv-01086-FLW-DEA (D.N.J.), Dkt. No. 1. 5 See Kaczmarek v. Ferrero U.S.A., Inc., No.3: 11-cv-04353-FLW-TJB (D.N.J.), Dkt. No. 1. 28 3 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 against transfer.” (Dkt. No. 37 at 9. 6) Meanwhile, Glover filed her MDL motion on April 12 despite 2 that there were just two cases (this one and her copy), and that Ferrero’s transfer motion, seeking 3 identical relief, was still pending. Plaintiffs opposed centralization (alternatively requesting that the 4 actions be centralized before this Court), and the JPML found in their favor. (Dkt. No. 63. 7) 5 D. 6 Ferrero first moved to dismiss the action on April 18, 2011. (Dkt. No. 30.) Plaintiffs opposed on Ferrero’s Motions to Dismiss are Largely Unsuccessful 7 May 31, 2011 (Dkt. No. 39) and Ferrero filed its reply on June 13 (Dkt. No. 42). On June 30, 2011, the 8 Court issued its Order, finding one challenged advertising claim preempted, and holding Plaintiffs had 9 insufficiently pled reliance on Nutella’s website, but otherwise upholding Plaintiffs’ claims under the FAL, 10 CLRA, and all three prongs of the UCL, as well as for breach of express and implied warranties. (Dkt. No. 11 43. 8) The Court gave Plaintiffs leave to amend, which they did by filing on July 7, 2011 the FACC. 12 Ferrero filed a second motion to dismiss on July 18, 2011. (Dkt. No. 48.) Plaintiffs opposed on 13 August 15, 2011 (Dkt. No. 61), and Ferrero filed its reply on August 22. (Dkt. No. 67.) Addressing the 14 relatively novel issue of the contours of Tobacco II’s holding concerning the presumption of reliance that 15 arises where there is a long-term advertising campaign, the Court denied Ferrero’s motion. (Dkt. No. 69. 9) 16 Accordingly, on September 12, 2011, Ferrero filed its Answer. (Dkt. No. 70.) 17 E. 18 Discovery began in this case with an April 29, 2011 Rule 26(f) conference. (Dkt. No. 38 at 1.) Plaintiffs Engage Ferrero and Third Parties in Substantial Discovery 19 Over the next few months, Plaintiffs served two sets of document requests (on March 23 and October 12) 20 and two sets of interrogatories (on March 23 and June 8). Ferrero provided responses on April 8 and July 21 15, and Class Counsel reviewed the many documents it produced. (Fitzgerald Decl. ¶ 2-3.) 22 Ferrero also served Plaintiffs with interrogatories on July 25, to which Plaintiffs responded on 23 August 29. Ferrero served Plaintiffs document requests on August 31 and Plaintiffs responded on October 24 3, including by producing nearly 500 pages of documents. Id. ¶ 4. Plaintiffs also propounded subpoenas on 25 6 Published at In re Ferrero Litig., 768 F. Supp. 2d 1074, 1082 (S.D. Cal. 2011). 26 7 Published at In re Nutella Mktg. & Sales Practices Litig., 804 F. Supp. 2d 1374 (J.P.M.L. 2011). 27 8 Published at In re Ferrero Litig., 794 F. Supp. 2d 1107 (S.D. Cal. 2011). 9 Published at In re Ferrero Litig., 2011 U.S. Dist. LEXIS 97488 (S.D. Cal. Aug. 29, 2011). 28 4 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 nine third-parties from who they obtained documents, including Ferrero vendors, distributors, advertising 2 agencies, and consultants. Ferrero subpoenaed Costco for records of Plaintiffs’ purchases. Id. ¶ 5. As a 3 result, Class Counsel reviewed thousands of documents. Id. 4 On April 14, 2011, Class Counsel traveled to New Jersey to depose Ferrero’s CEO, Bernard 5 Kreilmann. Although the deposition’s focus was on issues relating to Ferrero’s motion to transfer, the 6 deposition provided valuable merits discovery as well (for example, Nutella sales, its manufacturing and 7 distributing process, and the identify of knowledgeable witnesses). Id. ¶ 6. On July 26, 2011, Class 8 Counsel traveled to Portland to depose Ferrero’s Nutella spokesperson, purported childhood nutrition 9 expert Connie Evers, and on October 4, 2011, Class Counsel travelled back to New Jersey to depose 10 Isabelle Lambotte, a former Nutella nutritional consultant for Ferrero. Id. Ferrero took Plaintiffs’ 11 depositions on September 29 and 30, 2011. Id. ¶ 7. 12 F. 13 On August 1, 2011, Plaintiffs moved for Class Certification (Dkt. No. 51), which Ferrero Plaintiffs Obtain Class Certification 14 opposed (Dkt. No. 76). Plaintiffs filed their reply (Dkt. No. 83), and Ferrero moved to strike it (Dkt. 15 No. 89), which Plaintiffs opposed (Dkt. No. 90). The Court held a hearing on November 7, 2011, after 16 which, with the Court’s leave, both parties submitted supplemental briefing. (Dkt. Nos. 92, 94.) On 17 November 15, 2011, the Court granted Plaintiffs’ motion, certified the Class, appointed Plaintiffs Class 18 Representatives, and appointed Class Counsel. (Dkt. No. 95.) 19 G. 20 The parties began informal settlement discussions in March 2011, and later that summer attempted The Parties’ Negotiations Regarding Settlement 21 to schedule a joint mediation, though the lack of cooperation with counsel for Glover resulted in delays. 22 (See Fitzgerald Decl. at ¶¶ 9-12.) 23 After Plaintiffs filed their Class Certification Motion on August 1 (Dkt. No. 51) and the Court 24 denied Ferrero’s Motion to Dismiss on August 29 (Dkt. No. 69), the Court ordered an Early Neutral 25 Evaluation conference on October 19, 2011, before Judge Bencivengo (Dkt. No. 71). Two weeks before 26 the ENE, on October 4, 2012, Plaintiffs sent Ferrero a 6-page Memorandum of Understanding (“MOU”) 27 constituting an offer of settlement. (Fitzgerald Decl. at ¶ 13.) The MOU suggested injunctive relief 28 comprised of advertising modifications and a common fund to reimburse Class Members. It did not 5 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 discuss attorneys’ fees with any specificity, only generally noting that settlement was not conditioned on 2 Court approval of a fee request. Id. On October 12, Ferrero said it would discuss the offer further during 3 the ENE the following week. Id. 4 As with the MOU, the ENE discussions centered around the substantive relief for the class, and 5 attorneys’ fees were not discussed. Id. at ¶ 13. It quickly became apparent, however, that the parties were, 6 at that point—when Plaintiffs’ class certification motion was still pending—far apart in how they valued 7 the case and whether (and how) Ferrero should modify its behavior. Id. The parties nevertheless agreed, 8 following the ENE, to attend a private mediation together with the Glover plaintiffs. Id. This occurred on 9 November 2, 2011, when the parties attended a private mediation session before the Honorable Nicholas 10 H. Politan (Ret.) in West Palm Beach, Florida. Again, there was progress, but no resolution. Id. ¶ 14. 11 During November, the parties continued to negotiate through periodic email and telephone 12 communications, finally agreeing on approximately November 14, 2011 on most the injunctive relief 13 provisions embodied in the Settlement Agreement. Id. at ¶ 15. However, there were still disagreements 14 over some injunctive relief suggested by both parties, and no agreement on the monetary terms of the 15 settlement. Id. 16 On November 28, the parties attended a second Settlement Conference before Judge Bencivengo. 17 After several hours of negotiation, and with Judge Bencivengo’s ample assistance, the parties finally 18 agreed on all the terms reflected in the Settlement Agreement.10 Id. ¶ 16. Thus the Settlement was the 19 result of vigorous and protracted arms-length negotiations, including dozens of written and telephone 20 communications, two settlement conferences with Judge Bencivengo, and a separate private mediation 21 session before a well-respected former federal judge. 22 II. 23 THE TERMS OF THE SETTLEMENT A. Injunctive Relief 24 The Settlement provides the Class and public with substantial injunctive relief by ensuring 25 Nutella’s nutritional content is prominently and fully disclosed on the front of its label, and by requiring 26 27 10 Attached as Exhibit 1 to the Declaration of Gregory S. Weston dated January 19, 2012 (Dkt. No. 107). 28 6 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 Ferrero to cease using television, print, web and label advertisements that misleadingly suggest Nutella is 2 healthy, especially for children. 3 Product Label: For at least two years or until inconsistent with future government regulations, 4 Nutella must participate in the Grocery Manufacturers Association’s “Facts Up Front” (also called 5 “Nutrition Keys”) front-of-packaging labeling initiative, requiring its front label to disclose in a prominent 6 standardized graphic its per-serving calorie, saturated fat, sodium and sugar content. (Settlement 7 Agreement, ¶ 40A, Ex. E (mechanical)). Ferrero will also remove from Nutella’s label the phrase, “An 8 example of a tasty yet balanced breakfast.” Id. ¶ 40B. 9 Television Advertisements: By July 2012, Ferrero must cease airing the television advertisements 10 Plaintiffs challenged (referred to as “Mom,” “Pass” and “Silence” (see FACC ¶¶ 90-96 (transcriptions))). 11 Ferrero will replace those commercials with new ones that have been reviewed and vetted on multiple 12 occasions by Class Counsel. (Settlement Agreement ¶ 41.)11 13 Nutella Website: Ferrero has modified the Nutella website to remove all content referencing or 14 attributable to Connie Evers, and language on the “Nutella and Nutrition,” “About Nutella,” and 15 “Breakfast Builder” subpages have been modified consistent with Exhibit H to the Settlement Agreement, 16 to address the “balanced” statements at issue in this case. Id. ¶ 42. 17 B. 18 Ferrero has established a $550,000 common fund from which it will pay class notice, claims Cash Refunds 19 expenses, and restitution to class members, of $4.00 per Nutella jar, up to a maximum of $20 per class 20 member, without proof of purchase, subject to pro rata reduction if the claims exceed the fund. Id. ¶¶ 21E, 21 43, 47-48. Because the class notice and claims administration are being coordinated between this and the 22 Glover 49-state settlement, with costs divided proportionately according to each class’s share of sales, the 23 California Class’s notice and administration costs are modest, about $70,250. (See Fitzgerald Decl. ¶ 52.) 24 25 26 27 11 While Class Counsel agreed to review and provide input into the revised advertising as a term of settlement, the Settlement Agreement does not release future claims. 28 7 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 C. 2 The Settlement provides that “Class Counsel will apply for a Fee Award from the Gross Settlement Attorneys’ Fees, Expenses and Incentive Awards 3 Fund . . . [and] Defendant shall neither object to nor challenge” the application. (Settlement Agreement ¶ 4 51.) In addition, Ferrero has agreed that, subject to Court approval, “Defendant or its insurance carrier” 5 will pay Class Counsel, “in connection with the Injunctive Relief described above,” an “Injunctive Fee 6 Award” up to $900,000, which is “[i]n addition to and separate from” the monetary relief. Id. ¶ 50. Finally, 7 subject to the Court’s approval, in recognition of Plaintiffs’ time and effort expended on behalf of the 8 Class, the Settlement Agreement provides that Plaintiffs may seek incentive awards to be paid from the 9 common fund. Id. ¶ 56. 10 D. 11 The Court approved the parties’ proposed Notice Plan as meeting the requirements of applicable The Notice Program 12 law and Due Process. (Dkt. No. 108 at 4 ¶ 2.) The Notice Plan has now been fully implemented in 13 accordance with the Court’s Preliminary Approval Order. (See Young Aff. ¶¶ 3-4.) Because Defendants 14 do not sell Nutella directly to consumers, they did not did have the mailing addresses for Class 15 Members; accordingly, notice was effected through publication in targeted periodicals, online, and via a 16 dedicated website. The Class Notice was designed to provide potential Class Members with 17 information regarding the litigation and Settlement, and to inform them of their rights. The notice 18 contains information about the nature of the lawsuit, Class Members’ legal rights, the Settlement’s 19 relief and benefits, the Settlement’s release, how to file a claim, and how to opt-out, object and exercise 20 other rights under the Settlement. (See Settlement Agreement, Ex. C (the “Class Notice”), Dkt. No. 21 107-1 at 58.) The Class Notice also directed Class Members to a website dedicated to the Settlement, 22 www.NutellaClassActionSettlement.com, which the Class Members could use to obtain a copy of the 23 detailed Class Notice, Claim Form and other case documents such as the Complaint, the full Settlement 24 Agreement, the Order Granting Class Certification, and the Court’s Preliminary Approval Order. 25 (Young Aff. ¶ 4 & Ex. 4.) In addition, Class Members could submit their claim directly via the 26 settlement website. Id. 27 28 8 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 The Class Notice appeared in numerous print sources, as follows: 2 DATE PUBLICATION PAGE CIRCULATION April 16, 2012 issue People Magazine 63 3,450,000 May 2012 issue 3 Woman’s Day 138 3,250,000 May 2012 issue Parents 172 2,200,000 May 2012 issue Ser Padre 51 800,000 4 5 6 7 8 Id. ¶ 3, Ex. 2. Class notice was also published online as follows: 9 DATE PUBLICATION IMPRESSIONS April 6 - 20, 2012 24/7 Real Media Network, Parenting Channel 5,000,000 April 6 - 20, 2012 Facebook 10,000,000 10 11 12 13 Id. ¶ 2. 14 Aside from formal notice, the Settlement Agreement has received considerable media attention 15 in recent weeks, including being featured on Good Morning America (which interviewed Ms. Rude16 Barbato), ABC News, CBS News, npr.org, and many other popular outlets. (Marron Decl. ¶¶ 6-7; 17 Fitzgerald Decl. ¶¶ 18-19.) A Google News search for “Nutella” on May 22, 2012, showed 6,310 18 stories about the Settlement in the past month, and a standard Google search for “Nutella AND 19 Settlement” generated more than 2.6 million hits. (Fitzgerald Decl. ¶ 19.) Such exposure undoubtedly 20 increased the number of Class Members notified of the settlement. 21 E. 22 In compliance with the attorney general notification provision of the Class Action Fairness Act, Notice to the California Attorney General 23 28 U.S.C. § 1715, Ferrero provided notice of the Settlement to the Attorney General of the California 24 on January 25, 2012. Id. ¶ 20. The notice packet sent to the Attorney General included a complete 25 copies of the Master Consolidated Complaint, Preliminary Approval Motion and supporting documents, 26 and the Order Granting Preliminary Approval, notice of the July 9 Fairness Hearing, and a definition of 27 the Settlement Class. Id. ¶ 21 & Ex. 2. To date, the California Attorney General has not requested 28 9 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 further information or indicated an intent to object. Id. ¶ 23. The 90-day window between Attorney 2 General Notice and when a final approval order may be entered has already expired. 3 REASONS THE SETTLEMENT WARRANTS FINAL APPROVAL 4 I. STANDARD FOR GRANTING FINAL APPROVAL 5 The Court may approve a class action settlement upon “finding that it is fair, reasonable, and 6 adequate.” Fed. R. Civ. P. 23(e)(2); see also Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615, 7 625 (9th Cir. 1982). In assessing the fairness, adequacy, and reasonableness of a settlement, courts 8 balance: 9 10 11 12 (1) the strength of the plaintiffs’ case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to the proposed settlement. 13 Churchill Vill., LLC. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) (citing Hanlon v. Chrysler Corp., 14 150 F.3d 1011, 1026 (9th Cir. 1998)). “The relative degree of importance to be attached to any 15 particular factor will depend upon and be dictated by the nature of the claims advanced, the types of 16 relief sought, and the unique facts and circumstances presented by each individual case.” Officers for 17 Justice, 688 F.2d at 625. 18 There is a strong judicial policy in favor of the pretrial settlement of class actions. See Churchill 19 Vill., 361 F.3d at 576; In re Pac. Enter. Sec. Litig., 47 F.3d 373, 378 (9th Cir. 1995); Class Plaintiffs v. 20 City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992); Linney v. Cellular Alaska P’ship, 151 F.3d 1234, 21 1238 (9th Cir. 1998) (“[S]trong judicial policy [ ] favors settlements, particularly where complex class 22 action litigation is concerned.” (quoting Officers for Justice, 688 F.2d at 626)). Thus, while approval of 23 the settlement is committed to the sound discretion of the court, Class Plaintiffs, 955 F.2d at 1276, “the 24 court must also be mindful of the Ninth Circuit’s policy favoring settlement . . . .” Curtis- Bauer v. 25 Morgan Stanley & Co., Inc., 2008 U.S. Dist. LEXIS 85028, at *12 (N.D. Cal. Oct. 22, 2008) (citation 26 omitted). 27 A district court’s review of a proposed settlement is “limited to the extent necessary to reach a 28 reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion 10 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and 2 adequate to all concerned.” Officers for Justice, 688 F.2d at 625. A “presumption of fairness arises 3 where: (1) counsel is experienced in similar litigation; (2) settlement was reached through arm’s length 4 negotiations; [and] (3) investigation and discovery are sufficient to allow counsel and the court to act 5 intelligently.” In re Heritage Bond Litig., 2005 U.S. Dist. LEXIS 13555, at *11 (C.D. Cal. June 10, 6 2005); Linney v. Cellular Ala. P’ship, 1997 U.S. Dist. LEXIS 24300 (N.D. Cal. July 18, 1997), aff’d, 7 151 F.3d 1234 (9th Cir. 1998). (See also Order Granting Preliminary Approval, Dkt. No. 108 at 4 8 (“Settlements that follow sufficient discovery and genuine arms-length negotiation are presumed fair.” 9 (quoting Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 528 (C.D. Cal. 2004)))). 10 II. THE COURT SHOULD GRANT THE SETTLEMENT FINAL APPROVAL 11 The Settlement is fair, reasonable and adequate and thus satisfies the standard for final approval. 12 After considerable discovery and pre-trial motions, the parties reached the settlement through 13 protracted and vigorous arms-length negotiations. Counsel for both parties are experienced in litigation 14 of consumer class actions and have zealously and competently litigated the issues in this case. The 15 Settlement was not motivated by any fraud or collusion. Finally, all relevant factors favor settlement of 16 this action and demonstrate that the proposed settlement is fair, reasonable, and adequate. 17 A. 18 Although Plaintiffs believe their claims are meritorious, they acknowledge they faced The Strength of Plaintiffs’ Case 19 substantial obstacles to proving Ferrero’s liability at trial. For example, the parties dispute whether 20 Ferrero’s claims were deceptive, an issue central to Plaintiffs’ case. Resolution of this question would 21 be the subject of competing expert testimony, requiring analysis by medical and consumer marketing 22 experts, for example through the use of surveys. Thus, Plaintiffs’ ability to prove liability at trial is 23 unclear. The Court itself highlighted this uncertainty at the class certification hearing: 24 • “[S]o here’s someone who gets Nutella. The ingredients are right on the jar. It’s not like tobacco, where it’s potentially addictive . . . .” (Tr. of Nov. 7, 2011 Hrg., Dkt. No. 93 at 3.) • “[If] she continued to use [Nutella], . . . is restitution appropriate or not[?]” (Id. at 23.) • “You said puffery, puffery, advertising. And I will say it’s a close call on that. It’s not one that’s just definitely all in one -- on one side.” (Id. at 27.) 25 26 27 28 11 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 Accordingly, this factor weights in favor of final approval. See In re Portal Software Secs. 2 Litig., 2007 U.S. Dist. LEXIS 88886, at *7-8 (N.D. Cal. Nov. 26, 2007) (“[T]he strength of plaintiffs’ 3 case, somewhat favors settlement because plaintiffs’ remaining claims are tenuous. Plaintiffs assert that 4 establishing liability and damages at trial would be difficult because of the uncertainties associated with 5 proving its claims, which are ‘exacerbated by the unpredictability of a lengthy and complex jury trial.’” 6 (record citation omitted)). 7 8 9 B. The Risk, Expense, Complexity, and Likely Duration of Further Litigation Favor Final Approval Plaintiffs’ claims involve numerous complex legal issues, and the costs and risks associated 10 with litigating this action would require extensive resources and Court time. “[A]voiding a trial and 11 inevitable appeals in this complex . . . suit strongly weigh in support of approval of the Settlement, 12 rather than prolonged and uncertain litigation.” Rodriguez v. West Publ’g Corp., 2007 U.S. Dist. LEXIS 13 74767, at *27-28 (C.D. Cal. Sept. 10, 2007). Indeed, “unless the settlement is clearly inadequate, its 14 acceptance and approval are preferable to lengthy and expensive litigation with uncertain results.” Nat’l 15 Rural Telecomms. Coop v. DIRECTV, Inc., 221 F.R.D. 523, 526 (C.D. Cal. 2004). 16 Here, while Defendant’s challenges to the pleadings and class certification were largely 17 unsuccessful, a number of potential obstacles remained before any relief could be obtained absent 18 settlement: a summary judgment motion in Defendants’ favor, a decision by the jury or the Court for 19 Defendants on liability and/or damages, and post-judgment appeals. Moreover, as discussed above, a 20 complex case such as this would require costly expert testimony from both sides. Absent settlement, 21 litigation would likely continue for years before Class Members would see any recovery, which would 22 not be guaranteed. 23 By contrast, the Settlement provides a real and immediate benefit to Class Members who 24 purchased Nutella in packaging bearing allegedly false and deceptive claims, as well as the general 25 public, without the challenges and risks of trial. Courts have acknowledged that settlements of class 26 actions are favored when they provide an immediate benefit to the class without the risk and expense 27 involved in continued litigation. See In re Wireless Tel. Fed. Cost Recovery Fees Litig., 396 F.3d 922, 28 933 (8th Cir. 2005). Accordingly, this factor weighs in favor of final approval. See Officers for Justice, 12 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 688 F.2d at 626; Milstein v. Huck, 600 F.Supp. 254, 267 (E.D.N.Y. 1984) (“The expense and possible 2 duration of the litigation are major factors to be considered in evaluating the reasonableness of this 3 settlement”). 4 C. 5 While Plaintiffs obtained a certified class, there is no guarantee certification would survive The Risk of Maintaining Class Action Status Through Trial Favors Final Approval 6 through trial. This risk was distinctly highlighted by the Ninth Circuit’s recent decision in Mazza v. Am. 7 Honda Motor Co., 666 F.3d 581 (9th Cir. 2012), which has served as the impetus for a number of 8 decertification or related motions. By contrast, in settling the action, Ferrero effectively accedes to 9 certification and “there is much less risk of anyone who may have actually been injured going away 10 empty-handed.” In re Omnivision Techs., 559 F. Supp. 2d 1036, 1041-42 (N.D. Cal. 2007). 11 Accordingly, this factor weighs in favor of final approval. See id. 12 D. 13 “[I]t is the very uncertainty of outcome in litigation and avoidance of wasteful and expensive The Amount Offered in Settlement Favors Final Approval 14 litigation that induce consensual settlements. The proposed settlement is [thus] not to be judged against 15 a hypothetical or speculative measure of what might have been achieved by the negotiators.” Officers 16 for Justice, 688 F.2d at 625. Rather, “the very essence of a settlement is compromise, ‘a yielding of 17 absolutes and an abandoning of highest hopes.’” Id. at 624 (quoting Cotton v. Hinton, 559 F.2d 1326, 18 1330 (5th Cir. 1977)). “The fact that a proposed settlement may only amount to a fraction of the 19 proposed recovery does not, in and of itself, mean the settlement is grossly inadequate and should be 20 disapproved.” City of Detroit v. Grinnell Corp., 495 F.2d 448, 455 (2d Cir. 1974). Instead, to assess the 21 reasonableness of a proposed settlement seeking monetary relief, the “inquiry into fairness should 22 contrast settlement rewards with likely rewards if case goes to trial” and consider that “costs of further 23 litigation and risks of proof difficulties militate in favor of settlement approval.” In re Chicken Antitrust 24 Litig. Am. Poultry, 669 F.2d 228, 240 (5th Cir. 1982). 25 Here, the $550,000 monetary amount offered in settlement is a component of the settlement, and 26 not even the main one, which is the extensive advertising modifications. Nevertheless, $550,000 is a 27 substantial figure under the circumstances. That amount will be used only for California Nutella 28 purchasers. For California, affected sales through the end of 2010 (the period Ferrero provided sales 13 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 figures for) amount to $ . 12 The fund thus covers approximately %. If one considers that 2 class members might only be entitled to some portion of their purchases as restitution if Plaintiffs 3 prevailed at trial, however (e.g., if the Court determines Nutella had some value notwithstanding 4 deceptive labeling such that Ferrero would be entitled to some equitable offset), that number would 5 increase. Ferrero might also have argued that damages should be limited to its profits rather than its 6 revenue. Given the typical thin margins on grocery products, this would have greatly reduced the 7 amount of recovery at trial. 8 That the fund is substantial for this class is also highlighted by its disproportionately large size 9 compared to the 49-State Fund in the Glover action of $2,500,000: although California had only 12.5% 10 of the affected sales, its $550,000 fund is 18% of the overall settlement fund for all class members 11 nationwide ($3,050,000). Put another way, the California Fund 44% larger than its proportion of sales. 12 The retail price of Nutella during the class period was quite low, typically around $3.49 per 13- 13 ounce jar. Class Members, however, may obtain up to $20 in reimbursements based on a $4 valuation 14 (to account for retail price fluctuations and inflation), and without proof of purchase. Moreover, if the 15 average Class Member purchased one jar of Nutella every month during the 30-month class period, 16 their entitlement to a refund for five jars represents a recovery of approximately 17% of their maximum 17 possible recovery at trial, if the Court awarded full refunds for all Nutella purchases during the period, 18 which is probably a remote possibility. Thus, even though class members will recover for a limited 19 20 21 22 23 24 25 26 27 28 12 Because August is the second month of the third quarter, we calculated this by adding 2010 sales ($ ) to 2/3 of Q3 2009 sales ($ ) and Q4 2009 sales ($ ). We then calculated California’s 12.5% share. (See Dkt. No. 95 at 10 (“sales of Nutella® in California are approximately 12.5% of national sales”) (record citation omitted)). Plaintiffs previously filed Nutella sales information under seal. (See Dkt. No. 22-1, Ex. D; Dkt. No. 95 at 4, 10 (referring to evidence of Nutella sales).) Plaintiffs requested that Ferrero de-designate the sales information as “confidential” under the Protective Order for purposes of this Motion so that the public and Class Members might be able to fairly and fully evaluate the strength of the Settlement, but Ferrero declined. Ferrero has agreed as a compromise, however, that if any member of the public or Class Member, other than a competitor of Ferrero, wishes to review the unredacted version of this memorandum or the concurrently-filed memorandum in support of Plaintiffs’ application for attorney fees, costs and incentive awards, he or she may do so by contacting Class Counsel and signing an agreement to abide by the terms of the Protective Order entered in this action (Dkt. No. 32). 14 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 number of purchases, their recovery from the settlement fund might well be significantly more than 2 they would receive if they prevailed at trial. 3 At bottom, the amount of compensation each class member will receive represents a 4 compromise of disputed claims reached following extensive arms-length negotiations, but it is not 5 insubstantial, especially considering the risks, resources needed, and delays inherent in continuing to 6 litigate the action. Accordingly, this factor weighs in favor of final approval. 7 E. 8 “A court is more likely to approve a settlement if most of the discovery is completed because it The Stage of the Pleadings and Extent of Discovery Favor Final Approval 9 suggests that the parties arrived at a compromise based on a full understanding of the legal and factual 10 issues surrounding the case.” Nat’l Rural Telecomms. Coop., 221 F.R.D. at 527 (quoting 5 W. Moore, 11 MOORE’S FEDERAL PRACTICE, § 23.85[2][e] (Matthew Bender 3d ed.))). The greater the amount of 12 discovery taken and the more advanced the stage of the pleadings, the more likely it is the parties have 13 “a clear view of the strengths and weaknesses of their cases.” Young v. Polo Retail, LLC, 2007 U.S. 14 Dist. LEXIS 27269, at *12 (N.D. Cal. Mar. 28, 2007) (quoting In re Warner Comm’s Sec. Litig., 618 F. 15 Supp. 735, 745 (S.D.N.Y. 1985)). 16 In this case, the first settlement offer was made in October 2011, more than seven months after 17 the litigation had begun. At the time settlement was reached, Plaintiffs had served two sets of requests 18 for the production of documents, two sets of interrogatories, nine third-party subpoenas, and conducted 19 three depositions. Class Counsel reviewed thousands of documents. Ferrero served document requests 20 and interrogatories, too, and Plaintiffs responded. Ferrero also served a subpoena and deposed both 21 Plaintiffs. Most importantly, by the time the parties reached settlement, the Class had been certified. 22 And the parties had obtained the input of Judge Bencivengo on the relative strengths and weaknesses of 23 their cases at the October ENE and again at the November Settlement Conference. “As a result, the true 24 value of the class’ claims was well known.” Young, 2007 U.S. Dist. LEXIS 27269, at *12. Accordingly, 25 this factor weighs in favor of final approval. 26 F. 27 In contemplating the preliminary approval of a proposed settlement, “[t]he recommendations of The View of Experienced Counsel Favors Final Approval 28 plaintiffs’ counsel should be given a presumption of reasonableness.” Knight v. Red Door Salons, Inc., 15 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 2009 U.S. Dist. LEXIS 11149, at *11 (N.D. Cal. Feb. 2, 2009) (citing Boyd v. Bechtel Corp., 485 F. 2 Supp. 610, 622 (N.D. Cal. 1979)). Indeed, “Parties represented by competent counsel are better 3 positioned than courts to produce a settlement that fairly reflects each party’s expected outcome in 4 litigation.” Stevens v. Safeway, Inc., 2008 U.S. Dist. LEXIS 17119, at *25-26 (C.D. Cal. Feb. 25, 2008) 5 (citing In re Pac. Enters. Secs. Litig., 47 F.3d at 378). Thus, “the Court should not without good cause 6 substitute its judgment for [counsel’s].” Boyd, 485 F. Supp. at 622. 7 Plaintiffs’ counsel believes that the injunctive relief afforded by the Settlement provides Class 8 members and the public with a substantial and important benefit by ensuring that Nutella’s nutritional 9 content is fully disclosed and that advertisements cease to suggest a misleading connection between 10 Nutella and children’s health. Additionally, the Settlement provides for refunds to Class members to be 11 withdrawn from a $550,000 fund. Plaintiff’s counsel believes the combination of monetary and 12 injunctive relief provides substantial value to Class members. (Marron Decl. ¶¶ 2-5; Fitzgerald Decl. ¶¶ 13 24-27.) There “is nothing to counter the presumption that counsel’s recommendation is reasonable.” 14 Knight, 2009 U.S. Dist. LEXIS 11149, at *11. 15 Moreover, “[i]n addition to being familiar with the present dispute, Plaintiffs’ counsel has 16 considerable expertise in . . . consumer and class action litigation,” id. The Court has, on two separate 17 occasions, found that Class Counsel is “well qualified to represent the interests of the purported class 18 and to manage this litigation.” (Dkt. No. 11 at 4; see also Dkt. No. 95 at 7.). Accordingly, this factor 19 weighs in favor of final approval. See In re Omnivision Techs., 559 F. Supp. 2d at 1043. 20 G. 21 The Class has reacted entirely positively to the Settlement. The large circulations of the various The Class’ Reaction to the Proposed Settlement Favors Final Approval 22 printed publications in which the notice was published, combined with the online publication, resulted 23 in Notice being disseminated to 24.7 million people nationwide and, proportionately, approximately 3 24 million in California. (Young Aff. ¶ 3.) Millions more received notice through the thousands of online 25 and television news stories about the Settlement. Unsurprisingly, the claims volume is high, with 26 55,504 individual claims for 259,362 jars of Nutella as of May 23, 2012, with still another two weeks 27 left in the claims period (ending July 5, 2012). Id. ¶ 10. 28 16 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 Of the potential class members, there has been just a single opt-out of the California class 2 (0.00002% of the 55,504 claimants and a much smaller percentage of total class members 13). Id. ¶ 9 & 3 Ex. 5. And, as the docket reflects, none have so far objected. This weighs in favor of final approval. 4 See, e.g., Rodriguez, 563 F.3d at 967 (objection rate of 0.014 (e.g. 1.4%) supported approval of the 5 settlement); Churchill Vill., 361 F.3d at 577 (affirming approval of a class action settlement where 6 90,000 class members received notice, and 45 objections were received (0.05% rate)). 7 H. 8 No government entity participated in the Settlement. As noted above, however, California’s The Presence of a Governmental Participant 9 Attorney General was notified of the terms of the Settlement and has not indicated an intention to object. 10 This provides assurance that consumer protection authorities believe the California Settlement is fair. 11 Consequently, this factor favors final approval. 12 I. 13 Some courts have considered the process by which settlement was reached and the involvement Other Factors 14 of the named plaintiffs in the process in considering whether a proposed settlement is fair and 15 reasonable. See Young, 2007 U.S. Dist. LEXIS 27269, at *13. Here, settlement discussions were not 16 only protracted over several months, intensive, and arms’ length, they were also overseen by Judge 17 Bencivengo during two separate settlement conferences. Both Plaintiffs attended both conferences 18 where they were active participants, including in the final decision to accept the terms embodied in the 19 Settlement Agreement. (Marron Decl. ¶ 8; Fitzgerald Decl. ¶¶ 14, 17.) Both factors weigh in favor of 20 final approval. 21 III. THE BALANCED FACTORS WEIGH IN FAVOR OF FINAL APPROVAL 22 “Ultimately, the district court’s determination [regarding the fairness and adequacy of a 23 proposed settlement] is nothing more than an amalgam of delicate balancing, gross approximations and 24 rough justice.” Officers for Justice, 688 F.2d at 625 (citation omitted). “[I]t must not be overlooked that 25 26 13 0.00003% to be exact. See Dkt. No. 95 at 4 (noting “10.1% of American households purchased Nutella® during . . . 2010”). The U.S. Population in 2010 was 308,745,538, and California’s population 27 37,253,956, or 12%. Thus, California Class Members should have number 12% of 30,874,554 (which is 28 10.1% of the U.S. population), or 3,704,946. 17 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL 1 voluntary conciliation and settlement are the preferred means of dispute resolution. This is especially 2 true in complex class action litigation.” Id. Here, all relevant factors weigh in favor of final approval of 3 the Settlement, especially when considered in toto. 4 5 CONCLUSION Plaintiffs’ Motion for Final Approval should, respectfully, be granted. 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 DATED: May 25, 2012 Respectfully Submitted, /s/ Jack Fitzgerald Jack Fitzgerald THE WESTON FIRM GREGORY S. WESTON JACK FITZGERALD MELANIE PERSINGER COURTLAND CREEKMORE 1405 Morena Blvd., Suite 201 San Diego, CA 92109 Telephone: (619) 798-2006 Facsimile: (480) 247-4553 LAW OFFICES OF RONALD A. MARRON, APLC RONALD A. MARRON MAGGIE REALIN B. SKYE RESENDES 3636 4th Street, Suite 202 San Diego, CA 92103 Telephone: (619) 696-9006 Facsimile: (619) 564-6665 Class Counsel 21 22 23 24 25 26 27 28 18 In re Ferrero Litigation, Case No. 11-CV-00205-H-KSC MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION FOR FINAL APPROVAL

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