Following objections raised by the United States and others, the parties in a class action matter involving Lenny & Larry’s cookies filed an amended proposed settlement that would direct additional value toward consumer plaintiffs, the Department of Justice today announced.
“Congress passed the Class Action Fairness Act to stop questionable settlements that benefit lawyers instead of injured consumers,” said Principal Deputy Associate Attorney General Jesse Panuccio. “As part of our efforts to protect consumers, the Department of Justice will continue to object to settlements that are not fair, reasonable, and adequate.”
“The Class Action Fairness Act is designed to help ensure that class action settlements do not unreasonably benefit attorneys or third parties at the expense of the consumers involved,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice will continue to take action when we see unsuitable class action settlements.”
Plaintiffs in the case, Cowen et al. v. Lenny & Larry’s, Inc., alleged that labels for the defendant’s “The Complete Cookie” product included inaccurate nutritional information. Under the original proposed settlement reached between the parties and filed in October 2018, individual class members would have received pro rata shares of a $350,000 cash fund or up to $30 in free cookies. The defendant also agreed to distribute free cookies worth about $3 million to the general public through giveaways at certain health food stores. Based on the purported total value of the settlement, class counsel sought $1.1 million in attorney’s fees, which the defendant agreed not to oppose.
In a Statement of Interest filed Feb. 15, 2019, the United States argued that the court should reject the settlement because it directed most of its value toward non-class members and attorney’s fees rather than to consumer plaintiffs. The parties thereafter filed an amended proposed settlement on April 2, 2019. Under the amended settlement, individual class members would receive shares of a $889,000 cash fund, or up to $35 in free cookies. Class counsel now seek approximately $410,000 in attorney’s fees. The case is pending in U.S. District Court for the Northern District of Illinois, which must approve any final settlement.
The Class Action Fairness Act of 2005 provides the Attorney General and state officials an opportunity to review federal class action settlements before district courts grant final approval. The United States recently filed an amicus brief in another class action case pending before the Sixth Circuit Court of Appeals, Chapman et al. v. Tristar Products, Inc. The government argued that the Chapman settlement unfairly awarded millions of dollars to attorneys but provided consumers with little more than nearly worthless coupons.
Trial Attorney Kendrack Lewis of the Civil Division’s Consumer Protection Branch represents the United States in the matter. Additional information about the Consumer Protection Branch and its enforcement efforts may be found at www.justice.gov/civil/consumer-protection-branch.
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