Rawa v. Monsanto Company
Filing
58
MEMORANDUM AND ORDER GRANTING FINAL APPROVAL OF CLASS SETTLEMENT : IT IS HEREBY ORDERED that plaintiffs Motion for Final Approval of the Class Action Settlement is GRANTED, as provided herein. (ECF No. 42 .) IT IS FURTHER ORDERED that Plaintiffs Motion for Attorney Fees, Costs, and Service Awards is GRANTED in part, as provided herein. (ECF No. 43 .) IT IS FURTHER ORDERED that the parties and the Claims Administrator shall implement the Settlement Agreement in accordance with its terms and this Courts rulings herein. Signed by District Judge Audrey G. Fleissig on 05/25/2018. (KCB)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
JOSHUA RAWA, ELISABETH MARTIN, ROBERT
RAVENCAMP, AMY WARD, CYNTHIA DAVIES,
CHRISTOPHER ABBOTT, OWEN OLSON,
JEANNIE A. GILCHRIST, ZACHARY SHOLAR,
MATTHEW MYERS, JOHN W. BEARD, JR., and
MICHAEL OVERSTREET on behalf of themselves,
all others similarly situated, and the general public,
Plaintiffs,
Case No. 4:17CV01252 AGF
Consolidated with Martin v. Monsanto,
Case No. 4:17CV02300 AGF
v.
MONSANTO COMPANY,
Defendant.
MEMORANDUM AND ORDER
GRANTING FINAL APPROVAL OF CLASS SETTLEMENT
This consumer class action came before the Court for a hearing on April 17, 2018,
on Plaintiffs’ motion for approval of a nationwide class settlement, and on Plaintiffs’
separate motion for attorney’s fees, litigation costs, and service awards for class
representatives. Counsel for the parties and for Objector James Migliaccio appeared in
person; a representative of the Claims Administrator appeared by telephone. Defendant
Monsanto Company (“Monsanto”) consents to the motion to approve the settlement, and
opposes the amount of attorney’s fees requested. For the reasons set forth below, the
class will be certified and the settlement agreement will be approved, with attorney’s fees
set at 28% of the settlement fund. The requests for notice and administration cost,
litigation costs, and service awards will be granted, and a modified cy pres distribution
will be ordered.
BACKGROUND
In Rawa v Monsanto Co., 4:17CV01252 AGF, filed on April 5, 2017, Plaintiffs
claimed that Monsanto engaged in misleading practices by overstating on several of its
Roundup Concentrate products’ labels, the number of gallons of spray solution the
concentrates would make, in violation of the Missouri Merchandising Practices Act
(“MMPA”). Briefly, on the front of the containers near the top, a small separate label
stated, “Makes Up to” a certain number of gallons. On the back of the containers, a
multipage booklet label was attached. On the front of the booklet label was a symbol
indicating that the label could be peeled back, with the instruction, “OPEN,” in the top
right corner. When the front of the booklet label was peeled back as instructed, the
booklet advised as to different dilution options, the least concentrated of which would
yield the “up to” amount noted on the front label. Plaintiffs, who were purchasers of the
products, sought damages and asserted jurisdiction under the Class Action Fairness Act
(“CAFA”).
On October 13, 2016, approximately six months before the case was filed here,
another putative class action challenging the same practices as to the same products,
Martin v. Monsanto, 4:17CV2300 AGF, was filed in the Central District of California.
Martin was brought under the Magnuson Moss Warranty Act (“MMWA”), on behalf of
a nationwide class; and under various California consumer protection laws, on behalf of
a California subclass. The district court in California denied Monsanto’s motion to
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dismiss the state law claims for failure to state a claim, and on March 24, 2017, certified
a statewide California class with respect to the state law claims. The Martin plaintiffs
did not seek certification of a class with respect to their MMWA claim. The Martin
plaintiffs initially estimated that damages for the California class were $22 million, but
then corrected the amount to approximately $15.5 million, based on information from
Monsanto that a certain product that was included in the damages estimate did not have
an offending label.
Plaintiffs’ counsel in Martin and Rawa were the same. On August 22, 2017, in
light of a tentative nationwide settlement, the parties in Martin jointly requested that
Martin be transferred to this Court, and on August 23, the California district court
granted the motion, finding good cause, in part because “transfer will promote an
efficient and economical consideration of the proposed nationwide settlement, and
transfer will not affect the substantive rights of the [California] class certified in this
action.” Martin, ECF No. 108.
Upon transfer to this Court, Martin was provisionally consolidated with Rawa
and on September 22, 2017, an Amended Consolidated Class Action Complaint was
filed herein. Meanwhile, according to Plaintiffs’ counsel’s declaration dated October 4,
2017, nine related actions were filed in other states. After the nationwide settlement
agreement was reached, Plaintiff’s counsel herein reached out to each of the plaintiffs in
the nine related actions. All agreed that the nationwide settlement was strong, and worth
supporting. Thus, each of these plaintiffs was referred to Plaintiffs’ counsel, to be added
to the consolidated complaint, and their original actions were dismissed. ECF 32-1 at 3.
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The consolidated complaint proposes the following nationwide class:
All persons in the United States, who, during the Class Period,1 purchased
in the United States, for personal or household use certain Roundup
Concentrate products whose neck or shoulder label stated that the product
“makes up to” a specified number of gallons.
The consolidated complaint alleges that class members would have paid from 40% to
50% less for the concentrate products had they paid the market price for the number of
gallons of spray solution actually received. The 12 representative Plaintiffs are from ten
states: Missouri, California, Illinois, Kentucky, Colorado, North Carolina, Indiana,
Georgia, Tennessee, and Pennsylvania. They include the Plaintiffs in Rawa, Martin, and
the other related cases.
Two causes of action are asserted in the consolidated complaint – one under the
MMPA and one under the MMWA. ECF No. 28. On October 4, 2017, Plaintiffs, with
Monsanto’s consent, moved for preliminary approval of a proposed nationwide class
settlement, pursuant to a Settlement Agreement signed that day (ECF No. 32-1 at 7-23),
providing for a common fund of $21.5 million. By Order dated December 6, 2017, the
Court granted the motion. The Court conditionally certified the proposed class for
settlement purposes only (the “Settlement Class”). The Court also approved the parties’
selection of a Claims Administrator, approved the form and content of the proposed
Class Notice and the proposed method of its dissemination, and set a schedule for the
1
“Class Period” refers to a time period not to exceed the applicable statute of
limitations for the false advertising law in the state where each claimant is domiciled,
triggered by the date the complaint was filed in Martin for California residents, and by
the date the complaint was filed in Rawa for all other states’ residents.
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notice period, the opt out and objection periods, and a final approval hearing. ECF No.
41. The approved notice form advised Settlement Class members how to file claims.
The notice also advised, among other things, that if funds remained in the common fund
after all (valid) claims and expenses were paid, “any remaining amounts will be donated
cy pres to one or more Court-approved organizations, meaning the remaining funds will
be donated to organizations that promote the interests of absent class members.” ECF
No. 39-1 at 2. The proposed cy pres recipients were disclosed on the settlement website.
The Settlement Agreement provides for a payout to an individual claimant of onehalf the average retail price of the product(s) he or she purchased. The Settlement
Agreement provides that claims are limited to 20 units per household and limits refunds
to those who submitted a Claim Form that has been reviewed and validated by the
Claims Administrator. Proof of purchase was not required. The Agreement states that
the Claims Administrator retained sole discretion in accepting or rejecting a Claim
Form. It further provides that payments to claimants are subject to pro-rata reduction,
depending on the total valid claims submitted. Class counsel and class representatives
were to request fees and service awards to be paid from the common fund, and
Monsanto could oppose such requests. And the Agreement states, “Costs for
settlement, notice, claims administration, incentive fees, and any other fees, including
attorney’s fees, will be paid from the Common Fund.” ECF No. 32-1 at 15.
The Agreement includes a “quick pay provision,” providing that the “the Claims
Administrator shall pay to Class Counsel from the Common Fund the amount of
attorneys’ fees and costs awarded by the Court within seven (7) calendar days of entry of
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Judgment, notwithstanding the filing of any appeals, or any other proceedings which
may delay the effective date of the settlement or a final judgment in the case . . . .” ECF
No. 32-1 at 15.
In support of their motion for approval of the settlement, Plaintiffs assert that the
evidence suggests the Settlement Class consists of about 541,000 members. ECF No. 49
at 1 n.2. Extensive and varied notice procedures were employed by the Claims
Administrator, as set forth in its March 13, 2018 declaration. The Claims Administrator
established a settlement website with general information, important deadlines, and
downloadable forms; and established an automated toll-free helpline. The website and
helpline number were listed in the over 123,000 mailed and emailed notices sent to
potential class members. ECF No. 42-3. In addition, the Claims Administrator
implemented print publication notice, keyword search notice, social media notice, and
online video and online radio notice. ECF. No. 42-2.
By declaration dated March 23, 2018, the Claims Administrator stated that it had
received approximately 94,000 claims. The Claims Administrator disallowed claims for
various reasons, including claims filed out of time and beyond the limitations period.
“[P]ursuant to its standard practice to evaluate claims to ensure that [claims] are not
fraudulent,” the Claims Administrator excluded certain claims as fraudulent, such as
when multiple claims were filed from the same IP address. Based on its analysis of
sales and use data, the Claims Administrator also determined that a disproportionate
number of the largest containers – which paid the largest claim amounts – were asserted
by some claimants, suggesting fraud. Accordingly, the Claims Administrator excluded
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any claims for over 18 bottles for Super Concentrate 53.7 oz., over 16 bottles for Super
Concentrate 64 oz., and over 14 bottles for Super Concentrate 128 oz.
According to Plaintiffs’ counsel’s April 14, 2018 sworn declaration, as of April
13, 2018, this resulted in 70,628 validated claims, valued at $10,774,061, which
represents a claims rate of approximately 13%. ECF No. 54-1 at 6. As of March 31,
2018, notice and administration costs were $630,944. Id. By separate motion, Plaintiffs
seek attorney’s fees of one-third of the common fund, which would result in fees of
$7,166,666; notice and administration costs which would be approximately the amount
noted above; litigation expenses of approximately $97,614; and service awards to the
representative Plaintiffs totaling $42,500, including a $10,000 award for the
representative Plaintiff in Martin.
If the Court were to award the full amount of attorney’s fees, litigation expenses,
notice and administration costs, and service awards that Plaintiffs have requested,
approximately (depending on final amounts of costs and expenses) $2,788,218 of the
common fund would remain. The parties have suggested that this remainder be
distributed cy pres to four recipients: 30% to the National Consumer Law Center
(“NCLC”); 30% to the Better Business Bureau’s National Advertising Division; 20% to
Gateway Greening (a nonprofit that educates and empowers people to strengthen their
communities through gardening and urban agriculture in the St. Louis, Missouri, area);
and 20% to Kids Gardening (a nonprofit that seeks to improve nutritional attitudes and
educational outcomes through garden-based learning, nationally). This suggestion was
posted on the settlement website.
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Monsanto consents to the motion for final approval of the settlement in all
respects except attorney’s fees. Monsanto agrees that class counsel is entitled to
reasonable attorney’s fees from the common fund, but argues for an award of no more
than the “standard” 25% of the class fund, which would amount to $5,375,000 in
attorney’s fees. Monsanto states that while “a great result was achieved” for the
Settlement Class, the vast majority of the time spent by class counsel (1,703 hours
through March 12, 2018) was limited to a single case that took only a year from the date
of filing to a signed settlement agreement, with only two fact and two expert depositions
conducted.
According to Plaintiffs, only ten Settlement Class members opted out. Two
individuals have filed objections to the Settlement Agreement: James Migliaccio and
Patrick Sweeney. Migliaccio is a member of the class from California. In his written
objection, he argues that the nationwide Settlement Class should not be certified because
the approximately 51,000 California class members are positioned for a greater recovery
than class members from other states, because, he contends, California has stronger
consumer protection laws. Thus, he argues, the California members received inadequate
representation. He further argues that Plaintiffs’ counsel made no showing that Missouri
law would apply to all proposed class members, and if differing state laws applied, the
questions of law or fact common to all class members would not predominate over
questions affecting only some members.
Migliaccio also argues that the Claim Administrator’s change in the number of
bottles of Roundup Concentrate a claimant could claim is an improper “rewriting” of the
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Settlement Agreement. Migliaccio also objects to payment of more than $7 million in
attorney’s fees for less than a year’s work. He argues that this amount in attorney’s fees
would result in an average billing rate of approximately $2,700 an hour (adding the
hours spent by attorneys in the related cases), and a lodestar disclosure should be
required. Objector Sweeney only objects to the request for attorney’s fees, arguing that
the fees should be no higher than 25% of the common fund. He also argues that the
quick-pay provision “escalates the natural conflict between class counsel and class
members.” ECF No. 48 at 2.
Plaintiffs assert, and the Objectors do not dispute, that Sweeney filed a claim for
one bottle of Roundup Concentrate Plus 32 oz., for which he will be issued a refund of
$11; and Migliaccio filed a claim for five bottles of Roundup Super Concentrate 35 oz.,
for which he will be issued a refund of $105. Plaintiffs argue that Migliaccio’s objection
to class certification and approval of the settlement should be overruled, in light of a
recent Eighth Circuit case, Keil v. Lopez, 862 F.3d 685 (8th Cir. 2017) (affirming
approval of a nationwide class settlement in a consumer false advertising case), that
rejected an argument similar to Migliaccio’s based on differing consumer protection
laws in different states whose citizens were members of a nationwide class.2
2
Migliaccio states that he is represented by local counsel Peter Woods, but is also
represented by Christopher Bandas and Robert Clore, who reserve the right to make an
appearance. ECF No. at 4-5. Plaintiffs bring to the Court’s attention that Bandas and
Sweeney are serial or “professional” objectors whose objections numerous courts have
found meritless. ECF No. 49 at 2-7.
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With respect to Migliaccio’s argument that the Claims Administrator “rewrote”
the Settlement Agreement, Plaintiffs first argue that Migliaccio lacks standing to bring
this argument because his refund for the five bottles he purchased is unaffected by the
change, and more fundamentally, the statement in the Settlement Agreement that claims
are limited to 20 units per household does not mean that all claims for 20 units would be
honored, regardless of their validity.
Prior to the hearing, the Court required Plaintiffs’ counsel to submit detailed
billing statements and hourly rates. Counsel submitted unredacted billing records for in
camera review, as well as redacted records for the parties. The records show a lodestar
amount of $1,136,390. ECF No. 54.
At the hearing, counsel for the parties represented that Monsanto has revised its
labeling of Roundup concentrate products in response to the Martin case and this action.
Counsel for the parties and the Claims Administrator described the notice and claims
process, including that claimants did not have to provide proofs of purchase. Counsel
and the Claims Administrator explained how decisions were made to minimize
fraudulent claims. They explained the propensity for fraudulent claims, based on the
Claims Administrator’s experience, given that no proof of purchase was required, the
settlement was announced on various websites, and the recovery level was relatively
high. They explained how fraud was detected as to certain claims, based primarily on
the volume of claims filed from a single online filing site, the amount of Roundup
Concentrate supposedly purchased that exceeded “heavy use” for households (a usage
amount based on years of studies and giving the claimants the benefit of the doubt), and
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the disproportionate number of claims for the items with the highest refunds. Fraud was
also detected in other ways such as claims for purchases from areas where the products
were not sold.
In addition to the decision to exclude claims for more than 18, 16, and 14 bottles,
respectively, of the three largest products, the Claims Administrator also disallowed a
claim in its entirety if it sought a refund for more than 20 bottles. But this only
accounted for a small number of disallowed claims, as the vast majority of claims were
filed online and the online process did not allow more than 20 units to be claimed.
Plaintiffs’ counsel, counsel for Monsanto, and counsel for Migliaccio all
presented their respective arguments on all aspects of the case, including the amount of
attorney’s fees that should be allowed. Counsel for Monsanto represented that
Monsanto would not be willing to amend the Settlement Agreement to give claimants
more than 50% of the purchase price of the Roundup concentrate they bought, to reduce
the cy pres remainder. He stated that 50% of the purchase price constitutes at least a
100% recovery, that the term was a material part of the Settlement Agreement, and that
an increase would result in a windfall to claimants.
DISCUSSION
Settlement Class Certification
As noted above, the Court conditionally certified the proposed nationwide class
for settlement purposes. Final certification is governed by Federal Rule of Civil
Procedure 23(b), which provides that class certification is proper only if the four
conditions of Rule 23(a) are met and, as relevant here, “the court finds that questions of
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law or fact common to class members predominate and that a class action is superior to
other available methods for fairly and efficiently adjudicating the controversy.” Fed. R.
Civ. P. 23(b). The four conditions of Rule 23(a) are “(1) the class is so numerous that
joinder of all members is impracticable; (2) there are questions of law or fact common to
the class; (3) the claims or defenses of the representative parties are typical of the claims
or defenses of the class; and (4) the representative parties will fairly and adequately
protect the interests of the class.” Fed. R. Civ. P. 23(a); see also Comcast Corp. v.
Behrend, 569 U.S. 27, 33 (2013); In re Hyundai & Kia Fuel Econ. Litig., 881 F.3d 679,
690 (9th Cir. 2018).
The Court finds that final class certification under Rule 23 is appropriate because
(1) the class members are so numerous that joinder of all class members is
impracticable; (2) there are questions of law and fact common to the class; (3) the claims
of Plaintiffs as Class Representatives are typical of the claims of the class; and (4)
Plaintiffs and their counsel fairly and adequately represent and protect the interests of all
Settlement Class members. Plaintiffs’ counsel is competent and experienced in class
action litigation, and specifically in litigation involving false and misleading advertising.
The fact that some states may have stronger consumer protection laws than others does
not undermine the Court’s conclusion on any of the four Rule 23(a) requirements, as will
be addressed below in assessing the overall fairness of the settlement.
Turning to the requirements of Rule 23(b), the Court concludes that questions of
law or fact common to the Settlement Class members predominate over any questions
affecting only individual Settlement Class members. Questions of law and fact common
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to the proposed Settlement Class include questions such as whether the claimed “Makes
up to” amount of gallons was material to purchasers, whether a reasonable consumer
would open the sealed pamphlet on the Roundup Concentrate products that might have
alerted the consumer to a different solution yield, and the proper amount of damages.
And all proposed Settlement Class members were allegedly subjected to the same
misleading and deceptive conduct when they purchased the Roundup Concentrates, and
allegedly suffered economic injury because the Roundup Concentrates at issue are
misrepresented in the same manner.
Moreover, class treatment is superior to other options for resolution of the
controversy because the relief sought for each proposed Settlement Class member is
small, such that, absent representative litigation, it would be infeasible for members to
redress the wrongs done to them. Thus, the Court grants final certification to the
Settlement Class, under Rule 23(a) and (b). The Court reaffirms the Preliminary
Approval Order appointing the Plaintiffs as Class Representatives and appointing The
Law Office of Jack Fitzgerald, PC, and Jackson and Foster LLC, as well as their current
attorneys, as Class Counsel.
Approval of Nationwide Class Settlement
“The court’s role in reviewing a negotiated class settlement is . . . to ensure that
the agreement is not the product of fraud or collusion and that, taken as a whole, it is
fair, adequate, and reasonable to all concerned.” Keil, 862 F.3d at 693.
To determine whether a settlement is “fair, reasonable, and adequate,”
district courts must analyze . . . four factors . . . (1) the merits of the
plaintiff’s case, weighed against the terms of the settlement; (2) the
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defendant’s financial condition; (3) the complexity and expense of further
litigation; and (4) the amount of opposition to the settlement.
Id. (citing Van Horn v. Trickey, 840 F.2d 604, 607 (8th Cir.1988)). “The single most
important factor in determining whether a settlement is fair, reasonable, and adequate is
a balancing of the strength of the plaintiff’s case against the terms of the settlement.”
Van Horn, 840 F.2d at 607.
1. Merits of Plaintiffs’ Case Weighed Against the Terms of the Settlement
As for the first factor, the outcome of going to trial would not be certain if the
settlement is not approved. Although Plaintiffs survived motions to dismiss their state
law claims and prevailed on their motion for class certification in the Martin case, they
would still have to prevail at trial and contend with any appeals. There are several issues
that remain contested, including whether Defendant’s purported misrepresentations were
material, and the extent of damages. The Settlement Agreement provides for direct
benefits to the class, with class members who submitted valid claims receiving an
amount equal to or in excess of their out-of-pocket loss. Indeed, the percentage of
recovery per unit purchased exceeds the amount of recovery in Plaintiffs’ expert
damages report, and far exceeds Defendant’s damages analysis. In addition, Monsanto
changed its labelling in response to the litigation.
This is a strong result in the face of an uncertain trial outcome. Weighing the
uncertainty of relief against the immediate benefit in the settlement, as well as the
remuneration that equals or exceeds out-of-pocket loss, this factor favors approving the
settlement. See, e.g., Khoday v. Symantec Corp., No. 11-CV-180 (JRT/TNL), 2016 WL
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1637039, at *5 (D. Minn. Apr. 5, 2016), Rep. & Recommendation adopted, No. 11-CV0180 (JRT/TNL), 2016 WL 1626836 (D. Minn. Apr. 22, 2016), aff’d sub nom. Caligiuri
v. Symantec Corp., 855 F.3d 860 (8th Cir. 2017); see also Keil, 862 F.3d at 695-96
(holding that the first factor weighed in favor of approving a nationwide settlement
because “although the district court certified the class for purposes of settlement, it is
uncertain whether, if the case proceeded to trial, this multistate class of consumers
would have created intractable management problems requiring the district court to
decertify it”).
Further, the amount of the common fund negotiated by Plaintiffs is excellent,
providing full recovery for claimants. As noted above, extensive and varied notice
procedures were employed by the Claims Administrator, and the claim rate of
approximately 13% is quite high, further tipping this factor in favor of approval. See
Keil, 862 F. 3d at 696 (noting, in discussing first factor, that “a claim rate as low as 3
percent is hardly unusual in consumer class actions and does not suggest unfairness”).
2. Defendant’s Financial Condition
With respect to Monsanto’s financial condition, Monsanto voluntarily agreed to
the payment amount in the Settlement Agreement, and there is no indication that
Monsanto’s financial condition would prevent it from making all the payments called for
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or any damages awarded following trial. As such, this factor is neutral. See Marshall v.
Nat’l Football League, 787 F.3d 502, 512 (8th Cir. 2015).3
3. Complexity and Expense of Further Litigation
Third, the complexity and expense of further litigation could be significant.
Plaintiffs are not certain to prevail at trial, with substantial questions posed on issues of
materiality and damages. Further, “[c]lass actions, in general, place an enormous burden
of costs and expense upon parties.” See id. Absent approval of the settlement, what
remains is one or more trials, perhaps in multiple forums, which are likely to be lengthy
and complex, with an unpredictable outcome and post-trial motions and appeals, all
while class members remain uncompensated and litigation time, stress, fees, and costs
increase for both sides. See id.
4. Amount of Opposition to the Settlement
Notwithstanding the large size of the Settlement Class and the extensive public
notice, there are only two Objectors. The Objectors do not contend that the Settlement
Agreement is the product of fraud or collusion. While both Objectors argue that
attorney’s fees of one-third of the settlement fund are excessive, there is only one
objection to the other aspects of the Settlement Agreement. This weighs in favor of
approval. See Keil, 862 F.3d at 698 (finding that 14 objections where class consisted of
3
One could argue that Monsanto’s financial condition tips in favor of approval, as
absent a nationwide settlement, Monsanto has the resources to vigorously litigate the
various cases.
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approximately 3.5 million households were “miniscule”). It is also telling that the
plaintiffs in the related cases all joined in the settlement.
In sum, three factors weigh in favor of approval and one is neutral. The Court
further finds that the Settlement Agreement is the result of serious, informed, noncollusive arms-length negotiations, involving experienced counsel familiar with the legal
and factual issues of this case.
After careful consideration of the claims process employed, the Court also finds
that the Claims Administrator acted properly and within its discretion to accept or
decline claims. The Court accepts the Claims Administrator’s assessment as to the
propensity for fraud, and for the reasons discussed above, finds that the procedures to
exclude untimely claims and those deemed fraudulent were reasonable. See Mullins v.
Direct Digital, LLC, 795 F.3d 654, 667 (7th Cir. 2015) (“[Courts] can rely, as they have
for decades, on claim administrators, various auditing processes, sampling for fraud
detection, follow-up notices to explain the claims process, and other techniques tailored
by the parties and the court to take into account the size of the claims, the cost of the
techniques, and an empirical assessment of the likelihood of fraud or inaccuracy.”).
Migliaccio’s argument based on the fact that the settlement’s allocation plan
distributes the fund equally among class members of all states, without accounting for
the varying strengths of different states’ unfair trade practice statutes, is rejected based
on the Eighth Circuit’s decision in Keil, which held that a nationwide class action
settlement need not account for differences in state law, and further, that a district court
need not consider evidence regarding the valuation of claims under the laws of different
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states. Keil, 862 F.3d at 700. The district court’s obligation is “to evaluate the
plaintiffs’ case in its entirety rather than on a claim-by-claim basis.” Id. Moreover, at
the hearing, Migliaccio was unable to identify any material difference between
California law and the law of other states that would offer California claimants a greater
measure of damages. The Court also rejects Migliaccio’s argument, based on an
unsigned and unadmitted statement by another attorney previously involved in Martin,
that Plaintiffs’ counsel had a conflict of interest.
The Court concludes that the settlement is fair, reasonable, and adequate. The
Court will next address the issues of attorney’s fees and a cy pres distribution.
Attorney’s Fees
In class action settlement cases,
[c]ourts utilize two main approaches to analyzing a request for attorney
fees. Under the ‘lodestar’ methodology, the hours expended by an attorney
are multiplied by a reasonable hourly rate of compensation so as to produce
a fee amount which can be adjusted, up or down, to reflect the
individualized characteristics of a given action. Another method, the
‘percentage of the benefit’ approach, permits an award of fees that is equal
to some fraction of the common fund that the attorneys were successful in
gathering during the course of the litigation. It is within the discretion of
the district court to choose which method to apply, as well as to determine
the resulting amount that constitutes a reasonable award of attorney’s fees
in a given case. To determine the reasonableness of a fee award under
either approach, district courts may consider relevant factors from the
twelve factors listed in Johnson v. Georgia Highway Express, 488 F.2d
714, 719-20 (5th Cir. 1974).
Keil, 862 F.3d at 701 (citations omitted).
A lodestar check can help a court determine if use of percentage of the benefit
method results in a reasonable fee award. Huyer v. Buckley, 849 F.3d 395, 399 (8th Cir.
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2017). The twelve Johnson factors are (1) the time and labor required; (2) the novelty
and difficulty of the questions; (3) the skill required to perform the legal service
properly; (4) the preclusion of other employment by the attorney due to acceptance of
the case; (5) the customary fee for similar work in the community; (6) whether the fee is
fixed or contingent; (7) time limitations imposed by the client or the circumstances; (8)
the amount involved and the results obtained; (9) the experience, reputation, and ability
of the attorneys; (10) the undesirability of the case; (11) the nature and length of the
professional relationship with the client; and (12) awards in similar cases. Johnson, 488
F.2d at 719-20.
Upon careful consideration of all relevant factors, the parties’ arguments,
Plaintiff’s counsel’s billing records, and the case law, specifically in the Eighth Circuit,
on attorney’s fees in class action settlements, the Court concludes that a fee award of
28% of the common fund is just and reasonable in this case. This results in an award of
$6,020,000. Among the Johnson factors most favoring this award are the novelty and
uncertainty of the claims, the skill required by counsel to perform the work properly,
especially on a nationwide basis, time limits imposed in the Martin case while it was
pending in California, the experience and ability of the attorneys, and significantly, the
large amount involved and excellent result achieved. The corresponding lodestar
multiplier of 5.3 is still quite high compared to similar cases in this circuit.4 See, e.g.,
4
The lodestar multiplier if one third of the common fund were awarded in attorney’s
fees would be 6.3. From their fee award, Class counsel will also reimburse the plaintiff’s
attorneys in the related cases some amount.
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Keil (approving attorney’s fee award of 25% of $32 million settlement fund, with
lodestar multiplier of 2.7). The Court does not perceive this award as “penalizing”
Plaintiffs’ counsel for resolving the case relatively quickly; nor can the amount
reasonably be seen as insufficient to entice competent counsel to undertake class action
consumer fraud cases.
On the other hand, the Court does not believe this award is too high. Plaintiffs’
counsel took on a case with little precedent and handled the Martin case in a speedy and
efficient manner, including in obtaining class certification within a little over five
months of filing the lawsuit. Plaintiffs’ counsel negotiated an excellent settlement for
the class and promptly and efficiently obtained the approval of the plaintiffs in the
similar lawsuits filed in other jurisdiction to join the settlement, rather than pursue
protracted proceedings through a multidistrict litigation process. And Plaintiffs’ counsel
ensured an effective notice process, achieving a 13% claim rate.
In response to Sweeney’s conclusory objection, the Court notes that the quick-pay
provision will not harm the claimants given the structure of the Settlement. And courts
routinely approve quick-pay provisions such as that contained in the Settlement
Agreement here. See, e.g., Pelzer v. Vassalle, 655 F. App’x 352, 365 (6th Cir. 2016)
(“The quick-pay provision does not harm the class members in any discernible way, as
the [benefit amounts] available to the class will be the same regardless of when the
attorneys get paid.”); In re: Whirlpool Corp. Front–loading Washer Prod. Liab. Litig.,
No. 1:08-WP-65000, 2016 WL 5338012, at *21 (N.D. Ohio Sept. 23, 2016) (“The
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essential purpose of a quick-pay clause is to disincentivize lawyers who are
‘professional objectors.”).
Notice and Administration Costs, Litigation Costs, and Service Awards
The Court will award these items in the amounts requested. The Court finds the
amounts are reasonable. With respect to the service awards, “[c]ourts often grant
service awards to named plaintiffs in class action suits to promote the public policy of
encouraging individuals to undertake the responsibility of representative lawsuits,” and
courts in this circuit regularly grant service awards of $10,000 or greater. Caligiuri, 855
F.3d at 867 (citation omitted). The Court approves service awards to the Class
Representatives of $10,000 to Elizabeth Martin, $5,000 each to Joshua Rawa and Robert
Ravencamp, and $2,500 each to Amy Ward, Cynthia Davies, Christopher Abbott, Owen
Olson, Jeannie Gilchrist, Zachary Sholar, Matthew Myers, John Beard, and Michael
Overstreet. Although the service award to Martin is sizeable, Martin participated in
drafting the complaint in the Martin case, reviewed the demand letter sent to Monsanto
on her behalf, participated in discovery, and sat for a five and one-half hour deposition
in support of the class certification motion. See ECF No. 43-2 at 7-9.
Thus, in addition to attorney’s fees of $6,020,000, the following amounts will be
paid from the common fund: notice and administration costs of $630,944, litigation costs
of $97,614, and $42,500 in service awards to the representative Plaintiffs. The Court
recognizes that the administration and litigation costs will increase slightly, depending
on remaining tasks for the Claims Administrator and Plaintiffs’ counsel.
Cy Pres Award
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In light of the above rulings, approximately $3,934,881 million will remain in the
common fund. In David P. Oetting, Class Representative v. Green Jacobson, P.C., 775
F.3d 1060 (8th Cir. 2015), the Eighth Circuit expressed its concerns, and those of other
federal courts, with cy pres distributions of unclaimed class action settlement funds. The
appellate court discussed with approval the American Law Institute (“ALI”) cy pres
criteria:
A court may approve a settlement that proposes a cy pres remedy . . . . The
court must apply the following criteria in determining whether a cy pres
award is appropriate:
(a) If individual class members can be identified through reasonable effort,
and the distributions are sufficiently large to make individual distributions
economically viable, settlement proceeds should be distributed directly to
individual class members.
(b) If the settlement involves individual distributions to class members and
funds remain after distributions (because some class members could not be
identified or chose not to participate), the settlement should presumptively
provide for further distributions to participating class members unless the
amounts involved are too small to make individual distributions
economically viable or other specific reasons exist that would make such
further distributions impossible or unfair.
(c) If the court finds that individual distributions are not viable based upon
the criteria set forth in subsections (a) and (b), the settlement may utilize a
cy pres approach. The court, when feasible, should require the parties to
identify a recipient whose interests reasonably approximate those being
pursued by the class. If, and only if, no recipient whose interest reasonably
approximate those being pursued by the class can be identified after
thorough investigation and analysis, a court may approve a recipient that
does not reasonably approximate the interests being pursued by the class.
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Id. at 1063-62.
The Eighth Circuit agreed with the Fifth Circuit that “‘[b]ecause the settlement
funds are the property of the class, a cy pres distribution to a third party of unclaimed
settlement funds is permissible only when it is not feasible to make further distributions
to class members, except where an additional distribution would provide a windfall to
class members with liquidated-damages claims that were 100 percent satisfied by the
initial distribution.’” Id. at 1064 (quoting Klier v. Elf Atochem N. Am., Inc., 658 F.3d
468, 473-82 (5th Cir. 2011)). The Eighth Circuit noted that a class should be notified of a
cy pres proposal before a cy pres recipient is chosen, and the Court emphasized that
“when a district court concludes that a cy pres distribution is appropriate . . . such a
distribution must be for the next best use . . . for indirect class benefit,” and “for uses
consistent with the nature of the underlying action and with the judicial function.” Id. at
1067; see also Caligiuri, 855 F.3d at 866-67; In re Airline Ticket Comm’n Antitrust Litig.,
307 F.3d 679, 682-84 (8th Cir. 2002) (holding that “the unclaimed funds should be
distributed for a purpose as near as possible to the legitimate objectives underlying the
lawsuit, the interests of class members, and the interests of those similarly situated”).
The Eighth Circuit directed that district courts “carefully weigh all considerations,
including the geographic scope of the underlying litigation, and make a thorough
investigation to determine whether a recipient can be found that most closely
approximates the interests of the class.” Id. (citation omitted).
The Court is not unmindful of criticisms that have been levied against cy pres
awards in the class action context. See Marek v. Lane, 571 U.S. 1003, 134 S. Ct. 8, 9
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(2013) (Roberts, J., noting that there exist “fundamental concerns surrounding the use
of [cy pres] remedies in class action litigation, including when, if ever, such relief should
be considered; how to assess its fairness as a general matter; whether new entities may
be established as part of such relief; if not, how existing entities should be selected; what
the respective roles of the judge and parties are in shaping a cy pres remedy; how closely
the goals of any enlisted organization must correspond to the interests of the class; and
so on”); Martin H. Redish, Cy Pres Relief and the Pathologies of the Modern Class
Action: A Normative and Empirical Analysis, 62 Fla. L. Rev. 617 (July 2010).
Nonetheless, the Court finds such an award to be appropriate here for several
reasons. First, the identification and distribution process was fair and reasonable. The
Claims Administrator made proper and extensive efforts to notify potential claimants,
resulting in a high claims rate of 13%. The claims process was favorable to claimants,
as they could submit claims easily on line, and no proof of purchase was required.
Rather than a nominal or nonexistent return to claimants – the source of much of the
criticism of cy pres awards – claimants are receiving what the parties have reasonably
characterized as at least 100% of their damage amounts. In addition, the class action
resulted in a further benefit to the class, as Monsanto changed its product labelling.
With regard to the second ALI factor, while a further distribution to claimants is
mechanically feasible, the Court concludes that an additional distribution to class
members who filed valid claims would provide a windfall to them, as they are already
getting the full amount of their out-of-pocket damages by the proposed distribution.
And requiring that a windfall be distributed to class members in consumer cases like
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this, where class members are not required to provide any proof of purchase, would only
serve to encourage fraudulent claims. Of course, the alternative of structuring the
settlement in a manner that provides a reversion to the Defendant is even less attractive;
here the large settlement fund negotiated by Plaintiffs serves to deter like conduct in the
future, which confers an indirect but significant benefit to the class members.
Lastly, the class was notified of a potential cy pres distribution, although not of
the actual amount, in the notice sent by the Claims Administrator; and was notified of
the recipients suggested by the parties, on the settlement website. No class member
objected to the concept of a cy pres award or to the proposed recipients. In sum, the
Court concludes that a cy pres distribution of approximately $3.9 million is reasonable.
The Court further concludes that the first two organizations suggested by the
parties as cy pres recipients are well tailored to the nature of this lawsuit. Furthermore,
they are nationwide organizations, as appropriate for a case that involves a nationwide
harm. See In re Airline Ticket, 3017 F.3d at 683-84. Numerous courts have approved
cy pres awards to the NCLC in nationwide consumer class actions claiming false
advertising. See, e.g., Miller v. Ghirardelli Chocolate Co., No. 12-CV-04936-LB, 2015
WL 758094, at *8 (N.D. Cal. Feb. 20, 2015).5 The Better Business Bureau’s National
5
The court in Miller described the NCLC as follows:
The [NCLC] advocates on behalf of consumers, providing legal services
and aid, and representing them on matters of interest before Congress and
state legislatures and by filing amicus briefs in courts. In 2009, it published
“Consumer Protection in the States: A 50–State Report on Unfair and
Deceptive Acts and Practices Statutes,” which analyzed and summarized
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Advertising Division monitors national advertising in all media for good and services,
enforcing high standards of truth and accuracy, and accepts complaints from consumers.
However, as laudable as Gateway Greening and Kids Gardening appear to be, the
former serves to benefit only St. Louis residents, and neither charitable organization can
fairly be characterized as the “next best use,” or addresses the harm alleged, namely, the
misleading of consumers.
Accordingly, the Court will order that 50% of the funds available for cy pres
distribution be paid to the National Consumer Law Center, and 50% paid to the Better
Business Bureau’s National Advertising Division.
Notice of Disallowed Claims
The Court does have some concern with respect to the notification process for
disallowed claims. At the hearing, the Claims Administrator confirmed that consistent
with its normal practices, no notice has been provided to those claimants whose claims
were disallowed. Rather, the Claims Administrator intended to post on the website that
claims checks had been distributed, advise that the claims of those who had not received
a check had likely been disallowed, and provide information for such individuals to
make further inquiry of the Claims Administrator. Although the Court, in general, does
the unfair-and-deceptive-acts-and-practices (UDAP) laws that protect
consumers in each state and the District of Columbia, spotlighted
limitations in these laws and in their enforcement, and made proposals for
reform. It also provides help to litigation counsel representing persons with
incomes below 200% of the federal poverty line in matters involving
consumer sales and services.
Miller, 2015 WL 758094, at * 8.
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not quarrel with granting the Claims Administrator sole discretion in accepting or
rejecting Claim Forms, here the Court believes that some further notice and an
opportunity to substantiate a claim should be provided with respect to certain of the
disallowed claims. Of primary concern are the non-electronic claims for more than 20
units that were disallowed in their entirety, and those class members whose claims were
impacted by the Claims Administrator’s exclusion of claims for over 18 bottles for
Super Concentrate 53.7 oz., over 16 bottles for Super Concentrate 64 oz., and over 14
bottles for Super Concentrate 128 oz.
Specifically, the Claims Administrator will be required to post on the website the
date on which distribution is being made, advise that certain claims have been
disallowed, and provide a description of the types of claims disallowed. This notice
should advise the class members of the decision to reduce the maximum number of units
per household with respect to the larger products. Class members whose claims have
been disallowed for reasons such as submitting non-electronic claims for more than 20
units, or submitting claims for more than the reduced number of units of the larger
concentrates, should be given at least 60 days from the distribution date to submit
tangible proof of their purchases, such as verifiable receipts.
At the hearing, Monsanto recognized that a reserve could be established to cover
any previously disallowed claims that might hereafter be allowed by the Claims
Administrator based on appropriate proof of purchase. The parties are directed to confer
with the Claims Administrator with respect to an appropriate reserve amount, and within
fourteen (14) days of the date of this Order, advise the Court of the proposed reserve
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amount and proposed procedure and language to notify claimants how they could
substantiate disallowed claims. Once a proposal by the parties is approved by the
Court, the Court will dismiss the case and enter judgment.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that plaintiff’s Motion for Final Approval of the
Class Action Settlement is GRANTED, as provided herein. (ECF No. 42.)
IT IS FURTHER ORDERED that Plaintiff’s Motion for Attorney Fees, Costs,
and Service Awards is GRANTED in part, as provided herein. (ECF No. 43.)
IT IS FURTHER ORDERED that the parties and the Claims Administrator shall
implement the Settlement Agreement in accordance with its terms and this Court’s
rulings herein.
Dated this 25th day of May, 2018.
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
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