Spectrum Brands Investors Want Final Nod for $32 Million Deal

Spectrum Brands Holdings Inc., related entities, and investors who say the consumer goods conglomerate misled them about the success of a facilities consolidation plan asked a federal judge in Wisconsin to sign off on their $32 million settlement.

The cash deal “represents a significant percentage of the realistic maximum recoverable damages,” the Spectrum investors said in a memo filed in support of their final settlement approval bid in the U.S. District Court for the Western District of Wisconsin.

The company now known as Spectrum formed after a 2018 merger between HRG Group Inc. and Spectrum Brands Holdings. The former changed its name to Spectrum, and the latter became Spectrum Brands Legacy Inc.

Judge James D. Peterson in 2021 rejected the investors’ first settlement attempt because the notice at the start of the suit didn’t mention that the proposed class included pre-merger HRG stock purchasers and the deal arbitrarily discounted their claims. The current settlement follows an order severing the claims of those other investors.

The deal allows the investors to avoid a “serious risk” that the court would have granted Spectrum’s motion to dismiss their complaint, the Monday memo says. And although an expert for the investors estimated maximum recoverable damages at around $300 million, damages might have been “as little as $6.2 million” if analysis from Spectrum’s expert won out at trial, even if the investors were otherwise victorious.

Lead counsel Bernstein Litowitz Berger & Grossmann LLP in a separate Monday memo asked for 15% of the settlement fund—$4.8 million—in attorneys’ fees. The firm also wants more than $326,500 as reimbursement of its litigation expenses.

Paul, Weiss, Rifkind, Wharton & Garrison LLP, Holland & Knight LLP, Foley & Lardner LLP, and Quarles & Brady LLP represent Spectrum.

The case is In re Spectrum Brands Sec. Litig., W.D. Wis., No. 3:19-cv-00347, final settlement approval motion filed 2/7/22.