Class Notification Ongoing in Diamond Walnut Settlement of Omega-3 Fraud Claims

Under a court order preliminarily approving a settlement of consumer fraud
claims involving purported health benefit labeling used to sell Diamond
Foods walnuts, the class notification program has apparently begun. Zeisel v.
Diamond Foods, Inc., No. 10-01192 (N.D. Cal., preliminary approval
order entered January 30, 2012). The court previously certified a nationwide
class of consumers who have until July 30, 2012, to opt out of or object to the
settlement. Additional details about the certification ruling appear in Issue
397 of this Update. The deadline for filing a claim is September 7.

While the company admits no wrongdoing, it has ceased using the disputed
product labels and has removed a “Live Well” section from its website. It also
agreed to cease using unqualified health claims, but reserves “the right to
use the FDA-approved qualified health claim for walnuts, any language or
symbols developed by or in conjunction with the American Heart Association
(‘AHA’) and any truthful and not misleading statements regarding the health
benefits of its Walnut Products” at the company’s discretion and in compliance
with state and federal laws.

Class members without proof of purchase may recover $8.25 for each of up to
three 3-pound bags of walnuts purchased through a single retailer or $3.25
for each of up to five of any other size bags. Those with proof of purchase
may submit claims for more than three 3-pound bags and five bags of any
other size to a maximum of 24 bags. Diamond will distribute any residual
restitution to third party food banks. The company has reserved the right to
withdraw from the agreement if the submitted claims total more than $2.6
million or more than 300 settlement class members opt out. It has also agreed
not to oppose an application for $850,000 for attorney’s fees and expenses,
including a $5,000 incentive award to the named plaintiff. The court will
conduct a final approval hearing in August.