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Nutella class action spreads love on plaintiffs' lawyers

6/1/2012 COMMENTS (0)

If a federal judge approves a $2.5 million nationwide class action settlement next month over the allegedly deceptive marketing of Nutella as a healthy breakfast food, consumers who purchased the creamy spread will be eligible for a refund, albeit a very modest one. They can get $4 for every jar of Nutella purchased over the roughly four years of the class period, with a $20 maximum.

But the deal is sweeter for the plaintiffs' lawyers. Much sweeter.

Last week, class counsel in the case filed an application for nearly $4 million in fees and expenses. The lawyers are seeking 30 percent of the $2.5 million cash settlement -- or roughly $750,000 -- plus expenses totaling $78,888. In addition, the U.S. unit of Ferrero, the Italian maker of Nutella, has agreed to pay class counsel $3 million in fees to cover non-monetary relief that the plaintiffs' lawyers obtained for the class, which included changes to the marketing campaign of Nutella. The fees must be approved by U.S. District Judge Freda Wolfson of Trenton, New Jersey, who has scheduled a hearing on July 9 to address the fairness of the settlement.

Lawyers from two firms that served as lead counsel -- Carella, Byrne, Cecchi, Olstein, Brody & Agnello and Scott and Scott -- did not return calls seeking comment.

Typically, class action lawyers seek roughly a third of any settlement, so the 30 percent of the $2.5 settlement million that the Nutella lawyers want is not unusual. But what is a bit surprising is the additional $3 million, which won't come out of the settlement fund. Instead, according to the fee application, the money will come from either Ferrero or its insurance carrier.

The class attorneys argue that the fee is justified because of the effect their work had on the marketing campaign of Nutella. The crux of the case alleged that Nutella was deceptively marketed to consumers as a "wholesome" food that could be served as part of a "balanced" and "healthy" breakfast. In the settlement, Ferrero agreed to revise some of its marketing material. For example, it said it would change the back panel of the Nutella label by removing the phrase "An example of a tasty yet balanced breakfast" and replace it with "Turn a balanced breakfast into a tasty one." Class counsel trumpeted the change in their fee application.

"As a result, going forward, the consumer no longer will be exposed to false messaging about the nutritional value of the product," they wrote.

Perhaps not surprisingly, others are a bit more dubious of the litigation's value. Russell Jackson, a partner at Skadden, Arps, Slate, Meagher & Flom, didn't mince words in a post for his Consumer Class Actions & Mass Torts blog in January, when the settlement was first submitted in court.

"The idea that a parent could say with a straight face -- let alone under oath -- that she did not know the product contained lots of sugar and oils and Nutella's manufacturer somehow hid that fact from her is patently ridiculous," he wrote. "Read the Nutrition Facts on the label!"

(Reporting by Andrew Longstreth)

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