Kellogg $13 Million Cereal False-Ad Deal Gets Early Approval

June 16, 2021, 3:59 PM

Kellogg Sales Co. consumers secured a California federal court’s preliminary approval of a $13 million class deal on their second attempt to resolve allegations that certain cereals were deceptively portrayed as healthful despite a purportedly high sugar content.

Attorneys’ fee issues, an overly broad release of claims, a reversion to Kellogg of unclaimed funds, and other problems plagued the initially proposed deal, which offered a $12 million fund and $8.25 million worth of vouchers, Judge Lucy H. Koh of the U.S. District Court for the Northern District of California said last year.

The second time around, the deal eliminated the coupon component, increased the cash, and narrowed the release and settlement class.

The average cash award is predicted to be $16.09, plaintiffs said in a March filing that sought initial approval. And no funds would revert to the company, with any leftover money going equally to the American Heart Association and the UCLA Resnick Center for Food Law and Policy.

Plaintiffs’ attorneys plan to request up to 30% of the fund, or $3.9 million, for fees and expenses. They will also seek service awards of $10,000 for Stephen Hadley and $5,000 for each of the other four lead plaintiffs.

The plaintiffs and Kellogg have now cured the previously identified defects, a Tuesday order said.

Covered products are certain Raisin Bran, Raisin Bran Crunch, Smart Start Antioxidants, and Frosted Mini-Wheats cereals. The nationwide deal covers those who bought the products between Aug. 29, 2012, and May 1, 2020.

Koh set a final approval hearing for Nov. 18.

The suit is one of three similar proposed class suits against cereal companies in the Northern District of California.

A $15 million class settlement with Post Foods LLC was preliminarily approved by Judge Judge William H. Orrick in February. Plaintiffs recently sought final approval.

But in 2019, Judge Jeffrey S. White dismissed the third suit, against General Mills Inc. In September 2020, the plaintiffs voluntarily dropped their appeal in the Ninth Circuit.

Law Office of Jack Fitzgerald PC and Jackson & Foster LLC were appointed class counsel. Jenner & Block LLP represented Kellogg.

The case is Hadley v. Kellogg Sales Co., N.D. Cal., No. 5:16-cv-04955, 6/15/21.

To contact the reporter on this story: Julie Steinberg in Washington at jsteinberg@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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