Suchanek et al v. Sturm Foods, Inc. et al

Filing 435

ORDER: Defendants' objections to Plaintiffs' proposed plan for allocation of the common fund and the language of the claim forms are OVERRULED. The parties SHALL submit a proposed settlement agreement on or before September 26, 2019. Signed by Chief Judge Nancy J. Rosenstengel on 9/12/2019. (jmp2)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
LINDA SUCHANEK, RICHARD
MCMANUS, CAROL CARR, PAULA
GLADSTONE, EDNA AVAKIAN,
CHARLES CARDILLO, BEN CAPPS,
DEBORAH DIBENDETTO, and CAROL
RITCHIE,
Plaintiffs,
v.

Case No. 3:11-CV-00565-NJR-RJD

STURM FOODS, INC. and
TREEHOUSE FOODS, INC.,
Defendants.

MEMORANDUM AND ORDER
ROSENSTENGEL, Chief Judge:
This consumer fraud class action has been pending since June 28, 2011 (Doc. 1). On
the eve of trial, after eight years of litigation, the parties agreed to settle the claims for $25
million, common fund, with no reversion to Defendants. Unfortunately, the parties have
been unable to finalize the settlement agreement because of disputes over distribution of
the common fund and the language on the claim forms (Docs. 429-32). They jointly seek
the Court’s guidance (Doc. 427).
DAMAGES UNDER THE RELEVANT STATUTES
Plaintiffs consist of consumers from eight states who purchased Defendants’
product Grove Square Coffee (“GSC”). Each state has its own consumer fraud statute that

Page 1 of 7

calls for different damages:
Alabama: actual damages, or the sum of $100, whichever is greater; and treble
damages in consideration of the amount of actual damages, the frequency of the
unlawful acts, the number of persons affected, and whether the acts were
intentional. ALA. CODE § 8-19-10.
California: actual damages (at least $1,000), an injunction, restitution, and
punitive damages. CAL. CIV. CODE § 1780.
Illinois: actual damages. 815 ILCS § 505/10a.
New Jersey: “appropriate legal or equitable relief,” along with “threefold the
damages sustained by any person in interest.” N.J. STAT. ANN. § 56:8-19.
New York: actual damages or fifty dollars, whichever is greater, and treble
damages if the violation was knowing or willful. N.Y. GEN. BUS. LAW § 349(h).
North Carolina: treble damages are assessed automatically; “the measure of
damages used should further the purpose of awarding damages, which is to
restore the victim to his original condition, to give back to him that which was lost
as far as it may be done by compensation in money.’” Belk, Inc. v. Meyer Corp. U.S.,
679 F.3d 146, 165 (4th Cir. 2012).
South Carolina: actual damages; treble damages if the court finds a knowing or
willful violation. S.C. CODE ANN. § 39-5-140.
Tennessee: actual damages; treble damages when the violation was knowing or
willful. Menuskin v. Williams, 145 F.3d 755, 768 (6th Cir. 1998).
PLAINTIFFS’ PROPOSED ALLOCATION PLAN
Plaintiffs propose the following allocation of the common fund:
6.3 Payments to Class Members shall be calculated by the Settlement
Administrator pursuant to the Plan of Allocation as follows: All Class
members will be required to submit a Claim Form which requests the
following information in box form: (1) approximate date of purchase;
(2) likely retailer where purchase was made; (3) quantity of GSC that was
purchased; and (4) total amount paid. Alabama class members will receive
a maximum of $100 per Claim Form regardless of the number of units
purchased; New York class members will receive a maximum of $500 per
Claim Form regardless of the number of units purchased; Class members
Page 2 of 7

from the remaining six states will receive a minimum of $25 per purchase,
up to a maximum of three purchases, for a maximum total of $75 per Claim
Form.
To the extent there are additional sums left over after the initial claim
period, the Claims Administrator is authorized to make additional
distributions in similar amounts to those Class Members who submitted
Claim Forms. If there are not sufficient funds to make a full distribution,
then the Claims Administrator shall make pro rata adjustments in the
amount of the distributions.
6.4 Cy Pres Distribution: If there are remaining funds after distribution of
settlement awards to claimants, the Claims Administrator will request a list
of names from Defendants of those consumers who already received
refunds from Defendants and provide an additional payment of $50 to that
consumer.
To the extent there are any remaining funds, for a period of six months, the
Claims Administrator is authorized to pay claims from consumers in the
United States from any other state where the GSCs were sold, who
purchased the GSCs during the Class period, and who have submitted a
Claim Form; these claims will be paid in the same manner as claims were
paid from the six states described above; the Claims Administrator is
authorized to make pro rata adjustments to these distributions if required;
To the extent there are any remaining funds, Plaintiffs’ counsel will submit
the names of several organizations as potential beneficiaries of any further
cy pres distribution. Defendants will submit other potential beneficiaries of
any cy pres distribution:
The parties agree that the Court will make the determination regarding any
cy pres distribution in amounts to various charities.
(Doc. 430, pp. 4-5).
DEFENDANTS’ OBJECTIONS
Defendants object to Plaintiffs’ proposed plan but assure they “do not seek to
reduce the overall amount they agreed to pay . . . Nor do they seek a reversion of any of
that amount.” Nonetheless, Defendants argue Plaintiffs’ plan: (1) creates a disparity

Page 3 of 7

between the class members from New York and Alabama and the class members from
the remaining six states; and (2) potentially compensates non-class members and
individuals who would provide no release to Defendants in exchange for a portion of the
fund.
Defendants state the parties agreed Defendants would pay 12.5% of their potential
exposure, and Plaintiffs’ plan awards New York and Alabama class members the full
amount of statutory damages, as if those plaintiffs prevailed on the merits. According to
Defendants, this leaves less funds for the remaining subclasses, and the second round of
distribution would exacerbate this disparity. Defendants propose that the Alabama class
members receive a maximum of $50 for an approved claim form, regardless of the
amount of GCS purchased; New York class members receive a maximum of $100 for an
approved claim form, regardless of the amount of GCS purchased; and the remaining
class members receive a maximum of $20 per approved claim form. Defendants propose
that after this distribution, the remaining funds should be distributed to a charity or food
bank, under the Court’s direction.
Defendants also disagree about the language in Plaintiffs’ proposed claim form
because it: (1) states, “If you purchased Grove Square Coffee, you could get a $25-$500
payment from a class action settlement;” (2) lacks any requirement that the class members
attest to being deceived by GSC’s packaging; and (3) lacks any requirement that the class
members attest their statements are made under penalty of perjury. Defendants argue the
forms “invite fraud” by referencing the dollar amount, and potentially include non-class
members who purchased GSC online or were not deceived by the product. Defendants
Page 4 of 7

want the form to require a sworn statement from the claimant that they were misled by
the packaging; the approximate date of purchase; the likely retail store where they
purchased GSC; the quantity they purchased; and the total amount paid.
DISCUSSION
Federal Rule of Civil Procedure 23(e) requires Court-approval of class action
settlements to safeguard the rights of absent class members. Approval of a settlement
involves three stages and two hearings. 4 William B. Rubenstein, Newberg on Class Actions
§ 13:1 (5th ed.). First, the parties present the proposed settlement to the court for
“preliminary approval.” Id. Second, if the Court preliminarily approves the settlement,
notice is sent to the class members and they are given an opportunity to object to the
terms of the settlement during a fairness hearing. Id. Third, the Court determines whether
to give “final approval” to the settlement and holds a final fairness hearing. Id. The
ultimate inquiry is whether the settlement is “fair, reasonable, and adequate.” Fed. R. Civ.
P. 23(e)(2).
In determining whether a settlement is fair, reasonable, and adequate, the Court
must evaluate the allocation of funds among class members. Lucas v. Vee Pak, Inc., No. 12CV-09672, 2017 WL 6733688, at *13 (N.D. Ill. Dec. 20, 2017). There are often unclaimed
funds from the settlement and the Court has discretion over their distribution. 4 William
B. Rubenstein, Newberg on Class Actions § 12:28 (5th ed.). Unclaimed funds are commonly
distributed in one of four ways:
1) Reversionary fund—unclaimed funds revert to the defendant.

Page 5 of 7

2) Pro rata redistribution—unclaimed funds are redistributed among the
class members who did file claims.
3) Escheat—unclaimed funds go to the state or federal government.
4) Cy pres—unclaimed funds are sent to a charity whose goals are
consistent with the underlying cause of action.
Id.
At the current juncture, the Court is not determining whether to preliminarily
approve the settlement; the parties have not even been able to reach an agreement on the
terms of the settlement. Instead, the Court is offering its opinion about specific portions
of Plaintiffs’ proposed plan, in order to facilitate a final settlement agreement that may
be submitted for preliminary approval at a later time.
After considering the parties’ briefing and the applicable law, the Court finds that
Plaintiffs’ proposed plan is appropriate. As an initial matter, Defendants have no real
interest in the allocation of the common fund because they agreed to pay $25 million with
no reversion. Similarly, Defendants’ argument that Plaintiffs’ plan unfairly favors two
subclasses over the others or compensates non-class members will be appropriately
raised, if at all, by members of the class. Ultimately, it is unclear why Defendants are
wrangling over the allocation of the funds when the matter appears to be entirely
inconsequential to them from a financial standpoint or otherwise.
Also, the Court agrees with Plaintiffs’ position regarding the language of the claim
forms. Defendants want to require claimants to complete sworn statements and specify
where and when they purchased GCS. But the class period begins in September 2010 and
the likelihood of a consumer remembering these details about an $8 box of coffee they
Page 6 of 7

purchased almost a decade ago is slim. To the extent Defendants are concerned about
fraud, Plaintiffs have retained a settlement administrator that is experienced in creating
and overseeing the claims process in class actions. According to Plaintiffs, the
administrator has a “robust fraud identification protocol.” Finally, the Court rejects
Defendants’ proposal to require claimants to state they were misled by the GSC
packaging because it would improperly insert a reliance requirement in the claims form.
In sum, Defendants’ objections to Plaintiffs’ proposed plan for allocation of the
common fund and the language of the claim forms are OVERRULED. The parties
SHALL submit a proposed settlement agreement on or before September 26, 2019.
IT IS SO ORDERED.
DATED: September 12, 2019
___________________________
NANCY J. ROSENSTENGEL
Chief U.S. District Judge

Page 7 of 7