Federal Court Rejects Challenge to Cy Pres Distribution in Frosted Mini-Wheats® Suit

A federal court in California recently granted a motion for final approval
of a class action settlement in litigation involving allegations that Kellogg
Co. fraudulently claimed that its Frosted Mini-Wheats® cereal “was clinically
shown to improve children’s attentiveness by nearly 20%.” Dennis v. Kellogg
Co., No. 09-01786 (S.D. Cal., decided April 5, 2011). Additional
information about the case appears in Issue 368 of this Update.

Two class members objected to the settlement, challenging the cy pres relief,
which will provide money remaining from the $2.75 million settlement fund
to “appropriate charities,” as well as donated food items valued at $5.5 million
to charities feeding the indigent. According to the objectors, class counsel
owes a fiduciary duty to the class and “[s]omewhere along the way, Class
Counsel lost sight of that duty and became an advocate for some unnamed
third party charity.” The objectors also argued that the “food donation allows
the defendants to settle cheaply while simultaneously inflating the value of
the settlement to justify higher attorneys’ fees.” They objected to the lack of an
identified cy pres recipient.

The court determined that because individual notice to a nationwide class
was nearly impossible and because “nationwide saturation notice campaigns
would be prohibitively expensive,” cy pres distribution was particularly apt.
The court also rejected the objectors’ assertions that the claims relief (at a
maximum value of three boxes of cereal) would not make all class members
completely whole and that attorney’s fees of $2.4 million, or 19 percent of the
settlement fund, were excessive.