Wesson Oil $8 Million Class Deal Scrapped After Reexamination

Conagra Brands Inc. and Wesson Oil consumers must rework a false-ad deal after an $8 million class settlement that included nearly $7 million in attorneys’ fees was rejected by a federal district court in California after a renewed look.

The settlement agreement “includes too many indicators that class counsel’s and Conagra’s self-interest unduly influenced the outcome of the negotiations,” the U.S. District Court for the Central District of California said.

The disproportion between the class recovery and the the lawyers’ fees is “staggering,” with class claims totaling less than $1 million while class counsel received almost seven times that amount, Judge Cormac J. Carney said Wednesday. This is especially concerning given the parties’ knowledge that the claims rate would be low, he said.

Robert Briseño and others sued in 2011, alleging Wesson Oil was deceptively labeled “100% natural” because it contained genetically modified ingredients. Some 11 statewide classes were certified.

Conagra agreed in 2018 to an uncapped settlement that provided claimants 15 cents for each product purchased. The company, which had stopped using the “natural” label in 2017 and later sold the product line, also agreed not to resume using “100% natural” should it reacquire the brand.

The parties reached the settlement by accepting a proposal from mediator Magistrate Judge Douglas F. McCormick.

University of Chicago law professor M. Todd Henderson objected to the settlement and later appealed.

In June, the U.S. Court of Appeals for the Ninth Circuit said the deal “reeks of collusion,” and directed the district court to reevaluate.

Fewer than 1% of the 15 million class members submitted claims, meaning the bulk of the money would go disproportionately to the plaintiffs’ lawyers. Additionally, Conagra agreed not to challenge class counsel’s request for $6.85 million in fees and costs, and a “kicker” clause gave remaining funds back to the company if the fees were reduced, the appeals court said.

None of these concerning terms is a “per se death knell” to the settlement, the district court said. But taking all of them together and adding McCormick’s explanation that his proposal was based on what the parties would accept, it’s “too likely that self-interest, even if not purposeful collusion, seeped its way into the parties’ settlement terms,” the court said.

Class counsel’s rejection of an offer with equal payments of $4 million each to the class and the lawyers “adds to” the court’s discomfort with this deal, Carney said.

And the valueless injunction underscores the concerning disparity in recovery between the class and class counsel, the court said.

Milberg Coleman Bryson Phillips Grossman PLLC, Tadler Law LLP, and DiCello Levitt Gutzler LLC are class counsel. Alston & Bird LLP represented Conagra Brands, formerly known as ConAgra Foods. Hamilton Lincoln Law Institute’s Center for Class Action Fairness represented Henderson.

The case is Briseno v. ConAgra Foods Inc., C.D. Cal., No. 11-5379, 12/22/21.