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Conagra-Wesson Oil Settlement Value, Fees Get 9th Cir. Weighing

Dec. 4, 2020, 11:00 AM

An advertising-related class settlement with Conagra Brands Inc. that gives $1 million to Wesson Oil consumers, nearly $6 million in fees to their attorneys, and conditional injunctive relief, is set for a Dec. 7 test at the Ninth Circuit.

The case presents the intertwined issues of how to value injunctive relief—in this instance changes to a product’s label—and how much attorneys should be awarded for their work on class settlements.

Plaintiff Robert Briseño is expected to tell the U.S. Court of Appeals for the Ninth Circuit during oral argument that the deal, reached after eight years of litigation and finally approved in 2019, provides significant value to the class and should be upheld—fees and all.

The litigation began in 2011, when plaintiffs alleged the “100% natural” representation on Wesson Oils was misleading because they were made from genetically modified ingredients. Some 11 statewide classes were certified.

In 2017, Conagra stopped marketing the product with the “100% natural” label.

“It involved eight years of contentious litigation prior to settlement, two contested class certification motions, major Daubert disputes, multiple dispositive motions, substantial discovery, an interlocutory appeal to this Court, and an attempt to seek U.S. Supreme Court review,” Briseño said in filings.

The parties agreed in November 2018 to a settlement which gave consumers 15 cents for each product purchased. It allowed up to 30 claims without proof of purchase, and unlimited units with proof.

The plaintiffs’ attorneys got nearly $7 million in fees and costs.

Arguing in favor of the fee award, Briseño says the label change came about because of the litigation. Conagra stopped using the “100% Natural” label months after losing a class certification appeal in the Ninth Circuit, he says.

Briseño also says Conagra agreed to pay fees separate from the settlement, and only agreed to pay half of the lawyers’ nearly $11.5 million lodestar—their time on the case multiplied by their hourly rates.

Objectors Doubt Value

But law professor M. Todd Henderson, represented by Ted Frank of the Hamilton Lincoln Law Institute’s Center for Class Action Fairness, is expected to tell the appeals panel that the deal should be scrapped because the only item of value—the cash—favors the attorneys.

The injunctive relief has no real worth, Henderson says in a filing, because Conagra changed its label before the settlement and then divested the product line in February 2019 before the deal was finalized. The settlement provides that Conagra won’t resume marketing Wesson Oil as “natural” should it reacquire the brand.

Class claims totaled only $993,919, Henderson says. Therefore, the allocation of the only concrete relief, approximately $7.9 million, overwhelmingly favors class counsel at the expense of the class in violation of Ninth Circuit precedent, he said.

Conagra’s Position

Conagra told the court in its own filing that it takes no position with respect to the plaintiffs’ attorneys’ fee and expense application. However, it wants to be sure key terms of the settlement aren’t mischaracterized at oral argument.

Conagra says the settlement isn’t a concession of liability and that it continues to deny that its decision to change its Wesson Oil labels was in any way related to the litigation.

The injunctive relief provision in the settlement is a conditional, prospective one, the company says.

“Considering these provisions, any attempt to assign value to Conagra’s decision to drop the ‘natural’ claim from the Wesson labels in July 2017 is an inappropriate overreach and directly contradicts Conagra’s express position in the settlement agreement,” according to the company.

Unique Case, Common Issues

Observers say the case highlights common issues in consumer litigation. However, the Wesson Oil litigation itself is unique, said defense attorney Keri E. Borders of Mayer Brown in Los Angeles, who isn’t involved in this case.

Unlike many food false ad cases, this one was litigated for years, and much more aggressively than a run-of-the-mill suit of its kind, she said.

Given that, Borders said she wasn’t surprised to see the fee amount. She also said that, as a practical matter, “there is something to be said for allowing parties to settle.”

No real damage was done to an individual consumer from the company’s alleged misrepresentations, Borders said. But the cases are expensive to litigate and defendants want to resolve them. “Injunctive relief is a sound way to go. If that’s not going to be sufficient, how do they resolve?” she said.

This case was a “perfect storm,” Borders said: A low claims rate, and, correspondingly, a low payout. The years of litigation resulted in an outsize-looking attorneys’ fee. But “peel back the onion and you see where the fee came from,” she said.

Attorneys for both plaintiffs and companies are watching this case closely, she said.

But, because of its unusual nature, the Ninth Circuit is likely to issue a narrow opinion, rather than “a big pronouncement” about attorneys’ fees, Borders said.

Laura Smith, legal director of the consumer group Truthinadvertising.org, said the issues in the Wesson Oil settlement are similar to those present in a number of class settlements that TINA.org has challenged.

“Because there is no one-size-fits-all formula for determining the value of injunctive relief, it is easily manipulable,” she said.

The group isn’t involved in the Wesson Oil case.

Objectors play an important policing role in such deals because, “at the settlement stage, the parties to the lawsuit have reached an agreement and thus no longer have an adversarial relationship,” Smith said.

“This means that courts can look only to objectors to illuminate any potential issues with the settlement,” she said.

Samuel Issacharoff of NYU Law School and others represent the plaintiffs. Frank represents Henderson. Alston & Bird LLP represents Conagra.

The case is Briseno v. Conagra Brands, inc., 9th Cir., No. 19-56297, argument 12/7/20.

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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