Third Circuit Remands Pet Food MDL Settlement
The Third Circuit Court of Appeals has agreed, for the most part, with the resolution of multidistrict litigation claims against pet food manufacturers involving the melamine contamination and recall of their products in 2007. In re: Pet Food Prods. Liab. Litig., Nos. 08-4741 & 08-4779 (3d Cir., decided December 16, 2010). Further details about the settlement agreement appear in Issue 283 of this Update. The court determined that certification of a settlement class was appropriate and that most of the settlement’s terms were fair and reasonable.
Because the district court agreed with the settlement’s cap of “purchase
claims,” that is, “claims solely for reimbursement of the costs associated with
the purchase of a Recalled Pet Food Product by a Settlement Class Member
who has not been reimbursed for such costs to date,” without “the information
necessary to evaluate the value and allocation of the Purchase Claims,”
the appeals court vacated and remanded on this issue only. Apparently, the
settling parties simply assumed that “the ‘vast majority’ of people who wanted
refunds for the purchase of recalled pet food had already returned the food
to retailers or called the toll-free numbers of manufacturers and received a
refund.” They also apparently “believed that the ‘vast majority’ of the 60 million
units of recalled pet food was never sold to consumers.”
According to the Third Circuit, these beliefs, without more, such as sales information and data about the amount of refunds already paid to consumers, rendered the court “unable to determine whether the $250,000 allocation was a fair and adequate settlement of the Purchase Claims given the risks of establishing liability and damages and the likely return to the class of continued litigation.” On remand, “the settling parties should either produce the relevant information or demonstrate that it is unavailable or that producing it would be unfeasible.”
The court agreed with a concurring judge who also dissented that, although it could consider the reasonableness of the attorney’s fees without formal objections or briefing, the district court “discharged adequately its responsibility to assess” their reasonableness. The concurring judge opined that the record did not support a 31 percent fee ($7.44 million) and would have remanded for reconsideration of this issue as well.