General Mills Fruit Snack Label Deal Nixed for Collusion Concern

General Mills Inc. and consumers must rework a false ad settlement that would have required label changes on cartoon fruit snacks but provided no money to class members and $725,000 to their attorneys’ for fees and costs, a California federal court said.

Crystal Hilsley, Adrienne Morris, and others alleged numerous products contain dl-malic acid, an artificial flavor, despite label assurances that they contain no artificial flavors.

The settlement includes all three indicia of potential collusion between attorneys for the company and the plaintiffs, the U.S. District Court for the Southern District of California said June 4.

The plaintiffs’ lawyers would receive a disproportionate amount of the settlement, the deal included a “clear sailing” arrangement under which General Mills agreed not to oppose a fee request up to a certain amount, and all fees not awarded by the court would revert to the defendant, the court said.

Class counsel’s request for $725,000 “appears excessive on its face,” the court said. The legal work in this action consisted of investigating and drafting an initial complaint, defending a motion to dismiss, written discovery without depositions, and settlement negotiations.

On the other hand, the agreement provided no meaningful benefit to the class, the court said.

The settlement abandoned the plaintiffs’ request for monetary relief, the court said. The plaintiffs didn’t address the monetary damages they would recover had they prevailed on the merits, raising the question whether the settlement was based on a substantive analysis of their case, it said.

Under the proposal, General Mills promised to change the product packaging to display an asterisk next to the ‘No Artificial Flavors’ claim directing consumers to the company’s website, the court said. The website would include additional information, for example that the product may contain synthetic malic acid.

The label change here differed from that in an approved settlement and $272,000 attorneys’ fee involving the maker of SweeTARTS, which agreed to remove the phrase “no artificial flavors” from SweetTARTS packages and to identify dl-malic acid as an ingredient, the court said.

Judge M. James Lorenz also allowed David Hayes, a plaintiff in a nearly identical suit in the Northern District of Illinois, to intervene to “protect the class members” from what Hayes called “a facially unfair settlement.”

Last week, the U.S. Court of Appeals for the Ninth Circuit threw out an $8 million Wesson Oil false ad deal over collusion concerns.

The Elliott Law Firm and the Law Offices of Ronald A. Marron represented the Hilsley plaintiffs. Law Offices of Todd M. Friedman PC in Woodland Hills, Cal., represented Hayes. Perkins Coie LLP represented General Mills.

The case is Hilsley v. General Mills, Inc., S.D. Cal., No. 3:18-cv-00395, 6/4/21.