Fee Recovery of $1,125,000 – Less Than Requested – Survived Objector Challenges, Where Fees Based on Percentage of Recovery (Common Fund) and Independent Injunctive Relief Payment By Defendant.
Above: Ein Glas Nutella-Nussnougatcreme. Creator: Rainer Zenz at de.wikipedia. Creative Commons Attribution-Share Alike 3.0 Germany license.
The Third Circuit Court of Appeals, in In re Nutella Marketing and Sales Practice Litig., Nos. 12-3456 et al. (3d Cir. Sept. 29, 2014) (nonprecedential), dealt with objectors challenging a fee award to class counsel in a lawsuit alleging deceptive marketing of chocolate-hazelnut spread by Nutella. (Personally, whether Nutella is a healthy, balanced, and nutritious part of breakfast will not affect our buying decisions).
The basic settlement involved distribution of $2.5 million to class members, generally coming to $4 per jar up to a maximum of $20 subject to some deductions if the maximum settlement was exceeded, plus injunctive relief to “clean up” the alleged deceptive marketing. The parties agreed, under provisions in the settlement agreement (including a “clear sailing” clause), that class counsel would request (1) 30% of the gross settlement amount of fees (paid from the settlement fund going to the class), and (2) no more than $3 million to be paid by defendant/its insurer separately with respect to the injunctive relief. In the end, the district judge granted class counsel $625,000 (25% of the common fund) and $500,000 (to be paid by defendant/its insurer on the injunctive relief, an 80% reduction from the request).
The Third Circuit affirmed the fee determination, effectively overruling challenges by objectors. It also found no abuse of discretion in the district court requiring that a $22,500 appeal bond be filed on behalf of 10 objectors.