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Allen v. Similasan Corp.

United States District Court, S.D. California

April 12, 2017

KIM ALLEN, LAINIE RIDEOUT and KATHLEEN HAIRSTON, on behalf of themselves, all others similarly situated, and the general public, Plaintiffs,


          Cynthia Bashant United States District Judge

         Plaintiffs Lainie Rideout and Kathleen Hairston and Defendant Similasan Corporation (the “Parties”) have entered into a Settlement Agreement to resolve this Class Action litigation. For the reasons discussed below, the Court GRANTS the Parties' Joint Motion (ECF No. 257) and preliminarily approves the Settlement Agreement. The Court sets the matter for Final Hearing on August 7, 2017 at 10:30 a.m.

         I. BACKGROUND

         Plaintiffs filed a class action Complaint on behalf of a California and Florida class[1], alleging that Similasan engaged in false or deceptive labeling of its homeopathic products. (ECF No. 58, Third Amended Complaint (“TAC”).)

         The Court granted Plaintiffs' motion for class certification, certifying two classes: all purchasers of Similasan homeopathic products in California with respect to Nasal Allergy Relief or Sinus Relief (first class) and all purchasers of Similasan homeopathic products in California with respect to Allergy Eye Relief, Earache Relief, Dry Eye Relief and Pink Eye Relief (second class). (ECF No. 143.)

         The Court granted in part Similasan's Motion for Summary Judgment, limiting the time period of recovery and dismissing the claims for injunctive relief. (ECF Nos. 142, 247.) The Parties previously attempted a settlement that involved injunctive relief only, which was rejected by the Court. (ECF Nos. 202, 223.)

         After lengthy negotiations, motion practice and discovery, the Parties now submit a second Joint Motion for Preliminary Approval of Class Settlement. (ECF No. 257.)


         A. The Settlement Agreement

         The Parties propose that this Court certify as a class:

[All] purchasers of all Similasan Corporation homeopathic Products nationwide for personal or household use and not for resale, as listed in Exhibit A to this Agreement, from February 10, 2008 to the present.

Settlement Agreement § 2.6.[2]

         Thus, the proposed class expands the class beyond the originally certified class to include all purchasers nationwide, instead of just in California, and expands the products beyond the original nasal, sinus, eye and ear relief to a wide swath of Similasan homeopathic products. See Exhibit A to the Settlement Agreement (ECF No. 257-4).

         Similasan will establish a Fund of $700, 000. (Settlement Agreement § 5.1.2.) Class members may submit a claim form with a declaration that they purchased a class product that did not provide any relief. (Settlement Agreement § 6.2.) Alternatively, class members may submit a proof of purchase for each class product purchased. Id. Claimants without a proof of purchase are limited to one claim. Claimants with a valid proof of purchase may submit a claim for each class product purchased. Id.

         The payment of the costs of notice, administration and distribution of the settlement, attorneys' fees, expenses and representative award will be paid from the fund. (Settlement Agreement §§ 7.2.3, 7.3.3.) Class counsel will request reimbursement for expenses and up to 25% of the fund for attorneys' fees. (Settlement Agreement § 5.1.4.) Counsel will also request $2500 each or $5000 total for the representative plaintiffs. (Settlement Agreement § 5.1.3.)

         Claimants submitting a proof of purchase are entitled to full repayment of their purchase price. Claimants submitting a declaration are entitled to reimbursement, which counsel estimates will be at least $3.50. (Dixon Decl. ¶ 30.) This amount represents approximately 50% of the average retail price of each Class Product. (Declaration of Michele Gillette, ECF No. 257-6 (“Gillette Decl.”) ¶7.) If there are any remaining amounts in the settlement fund, after payment of claims, costs and attorneys' fees, these amounts will be distributed on a pro rata basis to class members who have made a claim. (Settlement Agreement § 5.1.5.)

         In addition to the monetary consideration for the Settlement, Similasan has also agreed to make label changes to its products, providing more information to future purchasers of the products, something the Plaintiffs sought at the outset. (Settlement Agreement § 5.2.)

         In return for these benefits, all class members will release all claims arising from the allegations in the operative complaint concerning the class products. (Settlement Agreement § 8.) Class members will not waive any right to pursue personal injury claims or to redress their claims, if any, with any governmental agency. (Id.)


         The Settlement Agreement proposes posting notice on a Settlement website, providing the required CAFA notice to state Attorneys General and United States Attorneys, submitting online advertising on Facebook targeted to reach likely homeopathy users (10 million impressions), publishing a press release on PR Newswire's website and publishing notice four times in the “San Diego Union-Tribune” newspaper. (Settlement Agreement §§ 7.2, 7.3.)

         III. ANALYSIS

         The Ninth Circuit maintains a “strong judicial policy” that favors the settlement of class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). However, Federal Rule of Civil Procedure 23(e) first “require[s] the district court to determine whether a proposed settlement is fundamentally fair, adequate, and reasonable.” In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 458 (9th Cir. 2000) (citing Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)). Where the “parties reach a settlement agreement prior to class certification, courts must peruse the proposed compromise to ratify both the propriety of the certification and the fairness of the settlement.” Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). In these situations, settlement approval “requires a higher standard of fairness and a more probing inquiry than may normally be required under Rule 23(e).” Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012) (internal quotation marks omitted).

         A. Class Certification

         Before granting preliminary approval of a class-action settlement, the Court must first determine whether the proposed class can be certified. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997) (indicating that a district court must apply “undiluted, even heightened, attention [to class certification] in the settlement context” in order to protect absentees). The class action is “an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 348 (2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 700-01 (1979)).

         In order to justify a departure from that rule, “a class representative must be part of the class and ‘possess the same interest and suffer the same injury' as the class members.” Id. (citing E. Tex. Motor Freight Sys., Inc. v. Rodriguez, 431 U.S. 395, 403 (1977)). In this regard, Rule 23 contains two sets of class-certification requirements set forth in Rule 23(a) and (b). United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union v. ConocoPhillips Co., 593 F.3d 802, 806 (9th Cir. 2010). “A court may certify a class if a plaintiff demonstrates that all of the prerequisites of Rule 23(a) have been met, and that at least one of the requirements of Rule 23(b) have been met.” Otsuka v. Polo Ralph Lauren Corp., 251 F.R.D. 439, 443 (N.D. Cal. 2008).

         “Rule 23(a) provides four prerequisites that must be satisfied for class certification: (1) the class must be so numerous that joinder of all members is impracticable; (2) questions of law or fact exist that are common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.” Otsuka, 251 F.R.D. at 443 (citing Fed.R.Civ.P. 23(a)). “A plaintiff must also establish that one or more of the grounds for maintaining the suit are met under Rule 23(b), including: (1) that there is a risk of substantial prejudice from separate actions; (2) that declaratory or injunctive relief benefitting the class as a whole would be appropriate; or (3) that common questions of law or fact predominate and the class action is superior to other available methods of adjudication.” Id. (citing Fed.R.Civ.P. 23(b)).

         The Parties seek class certification under Rule 23(b)(3). In the context of a proposed settlement class, questions regarding the manageability of the case for trial are not considered. See Wright v. Linkus Enters., Inc., 259 F.R.D. 468, 474 (E.D. Cal. 2009) (citing Amchem Prods., Inc., 521 U.S. at 620 (1997) (“Confronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems . . . for the proposal is that there be no trial.”)).

         In this case, the Court previously found that both the requirements of Rule 23(a) and 23(b)(3) had been met. (ECF No. 143.) Expansion of the class to include all purchasers nationwide as well as purchasers of additional products does not change this analysis. The new class is more numerous than the originally certified one and the representation is equally adequate. Furthermore, Similasan's conduct appears to be uniform across the United States as well as across the wide variety of products: it sold products bearing representations about the products' effectiveness. As the Court previously found, given the uniformity of the efficacy representations, small differences in the labeling are insignificant. This new class still presents common questions of fact and law, the claims and defenses of the representative parties are equally typical and the common questions of law or fact ...

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