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Dennis v. Kellogg Co.

United States District Court, Ninth Circuit

November 14, 2013

HARRY DENNIS and JON KOZ, individually and on behalf of those similarly situated, Plaintiffs,
v.
KELLOGG CO., Defendant.

AMENDED ORDER: 1. GRANTING MOTION FOR FINAL SETTLEMENT APPROVAL, ATTORNEYS' FEES, AND INCENTIVE AWARDS; [Doc. No. 101] 2. OVERRULING ALL OBJECTIONS AND DENYING OBJECTOR'S FEE REQUEST

M. JAMES LORENZ, District Judge.

Upon motion of the parties [Doc. No. 137], the Order of September 10, 2013 [Doc. No. 115] is hereby vacated and replaced with this Amended Order which addresses Plaintiffs' motion for final settlement approval and attorneys' fees and costs, as well as several objections, one of which also requests attorneys' fees. For the reasons below, the Court GRANTS Plaintiffs' motion in its entirety, OVERRULES all objections, and DENIES objector's request for attorneys' fees.

BACKGROUND

This is a consumer class action alleging Defendant Kellogg Company made false and unsubstantiated representations in advertising and labeling its Frosted Mini-Wheats cereal products. The action originally settled with the approval of this Court on April 5, 2011. [ See Doc. No. 49.] Under the original settlement, all claims[1] were released in exchange for:

• a $2.75 million cash fund for distribution to class members on a claims-made basis;
• Kellogg distributing, pursuant to the cy pres doctrine, $5.5 million of food products to charities to feed the indigent;
• Kellogg refraining from using the challenged representations in advertising for three years; and
• approximately $2 million in attorneys' fees and costs.

The original settlement's value thus totaled approximately $10.5 million. With attorney and claims administration fees and costs subtracted, the value totaled approximately $8.5 million.

But on September 4, 2012, the Ninth Circuit reversed the final settlement approval order, vacated the judgment and award of attorneys' fees, and remanded for further proceedings, finding that the cy pres award under the terms of the original settlement failed to target the plaintiff class. See Dennis v. Kellogg Company, 697 F.3d 858, 869 (9th Cir. 2012). While the asserted claims concern fair competition and consumer protection, the original cy pres award would benefit the indigent. The Ninth Circuit reasoned that "[t]his noble goal... has little or nothing to do with the purposes of the underlying lawsuit or the class of plaintiffs involved." Id. at 866.

On remand, the parties negotiated a revised settlement, which the Court preliminarily approved on May 3, 2013. [Doc. No. 95.] Under the revised settlement, all claims arising out of the challenged advertising are released in exchange for:

• a $4 million cash fund for distribution to class members on a claims-made basis, any remaining balance of which to be distributed equally, pursuant to the cy pres doctrine, among recipients Consumers Union, Consumer Watchdog, and the Center for Science in the Public Interest; and
• Kellogg refraining from using the challenged representations in advertising for three years.

The revised settlement's value thus totals $4 million plus the value of the agreed injunctive relief. Minus requested attorneys' fees and expenses of $1 million as well as approximately $900, 000 in claims notice and administration costs, the cash value to the class totals approximately $2.1 million. From this cash fund, class members that submit a valid claim are entitled to cash distributions of between $5 and $45. In its preliminary approval order, the Court ordered the settling parties to address the revised settlement's diminished value yet seemingly unchanged attorneys' fees and expenses.

Notice issued and out of a putative class of hundreds of thousands only 6 objections were submitted. [ See Doc. Nos. 102 (filing by Obj. Henderson, 103 (joint filing by Objs. Jan and Onzen), 105 (filing by Obj. Santiago), 107 and 109 (filings by Obj. Cicero), 113-1, Ex. 3 (Obj. by Kutchka), 113-1, Ex. 4 (Obj. by Sagaribay)] The settling parties filed reply briefs addressing the objections as well as the Court's concerns. [Doc. Nos. 112, 113.] As to the Court's concerns, Plaintiffs explain that although the combined, total fees and costs appear unchanged, the cost of notice has increased due to expanded notice to the class while the requested fees have decreased by 50%. On September 9, 2013, the Court heard oral argument on behalf of the settling parties and objectors.

For the reasons below, the Court:

• GRANTS final settlement approval;
• GRANTS certification of the settlement class;
• GRANTS class counsel's request for attorneys' fees and costs;
• GRANTS the requested incentive awards to the class representatives;
• OVERRULES all objections; and
• DENIES objector's request for ...

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