In advance of a July 9, 2012, hearing before a federal court in New Jersey to approve the settlement of claims that Ferrero USA, Inc. misled consumers about nutritive value in its ads for Nutella®, a hazelnut spread purportedly containing high fat and sugar levels, a number of class members have filed objections that challenge class notice, most of the settlement terms and the fee award to plaintiffs’ counsel. In re: Nutella Mktg. & Sales Practices Litig., No. 11-1086 (D.N.J.). Additional details about the proposed settlement appear in Issue 437 of this Update.

Class member Clark Hampe, for example, complains that the settlement fund
“has a claims procedure that caps the total number of claims that can be
made and the maximum amount of compensation for class members. Then,
if these arbitrary maximums are satisfied, the settlement is vague about what
happens next. Either funds will be paid to a court-approved charity, or they
will go in a supplemental distribution to class members. A class notice must
be sufficiently definite to inform class members of all material aspects of the
settlement. Here, there are too many loose ends concerning what happens to
overflow settlement funds.” He also contends that the attorney’s fee award “is
grossly excessive.”

Amy Ades notes that plaintiffs’ counsel fail to disclose what percentage of
damages the net settlement fund of $1.36 million represents, reporting
that a California court, which is also poised to settle Nutella®-related claims,
“recognized that 10.1% of American households purchased Nutella in the 52
weeks before December 2010 and that Nutella’s sales from 2007-2012 totaled
$213,693,000. Thus, it is likely that the amount of money going to the class in
this proposed Settlement represents a mere token of potential damages.”
Ades also complains that requiring Ferrero to place information about the
amount of calories, saturated fat, sodium and sugar per serving size on the
front of its package labels, “provides no new information to the consumer
as these facts are presently listed on the back panel of the jar label.” She is
further concerned that some of the actions Ferrero is required to take expire
in a short period of time and that the company is not obligated to “remove or
replace the jars of Nutella on the store shelves with the current labels and it
can continue to distribute and sell Nutella jars with the current labels for the
indefinite time (at least four months) it takes them to produce new labels.”

Ades objects to the $20 limit on individual recoveries regardless of the
number of jars purchased during the class period and further contends that
class counsel has failed to show that $3.75 million in fees, 68 percent of the
total settlement, is warranted given “the modest, and largely temporary
non-cash changes and . . . limited work done to benefit the class.” She also
challenges the class notice, stating “It does not disclose the limitations on the word changes, nor the temporary nature thereof, nor the amount of class
counsel’s expenses that will reduce the amount available to the class.”

Objector Gary Sibley argues that no effort has been made to give individual
notice, cy pres should not be part of the settlement, class members are
receiving limited economic benefits, and “[i]n the agreed injunction, Defendant
does no more than agree to follow current law and not misrepresent
its services; this is already required of the Defendant under current law. The
injunctive relief touts changes to the product label, new television commercials
and website changes. These changes are of little to no value.” He argues
that notice should have been attached to product labels and that class
counsel fees are unreasonable because “the value of the settlement to the
class in impermissibly overstated and the fee itself is excessive.”

About The Author

For decades, manufacturers, distributors and retailers at every link in the food chain have come to Shook, Hardy & Bacon to partner with a legal team that understands the issues they face in today's evolving food production industry. Shook attorneys work with some of the world's largest food, beverage and agribusiness companies to establish preventative measures, conduct internal audits, develop public relations strategies, and advance tort reform initiatives.