The federal government has asked a federal judge to crumble a deal to end a false labeling class action lawsuit against Lenny & Larry’s, the makers of high-protein cookies, saying the settlement is far too lopsided, as it leaves attorneys with more than $1 million and consumers with perhaps a few crumbs, should they be lucky enough to land a cut of $3 million worth of free cookies.
On Feb. 15, attorneys from the U.S. Department of Justice’s Consumer Protection Branch filed a motion in Chicago federal court, asking U.S. District Judge Robert W. Gettleman to deny the settlement deal.
“The proposed settlement is fatally lopsided,” the DOJ lawyers wrote. “Indeed, it is difficult to imagine a less balanced settlement than one where most of the money goes to class counsel and administrative costs, while class members get far less than their counsel and the general public gets over $3 million in free cookies.”
The case has been argued in the U.S. District Court for the Northern District of Illinois since February 2017. At that time, plaintiffs accused Lenny & Larry’s of falsely labeling its “Complete Cookie” product, saying the cookies contain less protein than the cookie makers claimed.
U.S. District Judge Robert Gettleman
Plaintiffs have been represented in the action by attorneys Edward A. Wallace and Tyler J. Story, of the firm of Wexler Wallace LLP, of Chicago; Nick Suciu III, of Barbat Mansour & Suciu PLLC, of Bloomfield Hills, Mich.; and Steven Wasserman, Kathryn S. Marshall and Karin R. Leavitt, of the Wasserman Law Group, of Tarzana, Calif.
Named plaintiffs in the action include Lori Cowen, Rochelle Ibarrola, Ava Adames, Amanda Wells and Barbara Whalen.
The parties presented Judge Gettleman with a preliminary settlement agreement in October 2018. A fairness hearing was scheduled for March.
Under the terms of the settlement, the attorneys asked the judge to approve $1.1 million in attorney fees and $37,399 in litigation expenses. Each of the named plaintiffs would receive $1,500 each.
The settlement would set up a $350,000 fund, from which Lenny & Larry’s would pay eligible consumers $10-$20 each. Class members could also choose to receive up to $30 in free cookies.
The bulk of the settlement, however, would be paid through about $3.15 million in “free product” – bags of cookies distributed to Lenny & Larry’s vendors, including retailers The Vitamin Shoppe and GNC, among others.
In a memorandum accompanying the motion for settlement last fall, lawyers for the plaintiffs and Lenny & Larry’s asserted: “Courts routinely approve class action settlements whereby a defendant agrees to distribute free product in lieu of monetary compensation.”
The Department of Justice lawyers, however, disagreed with the parties’ assertion the deal is beneficial to anyone but Lenny & Larry’s and the plaintiffs’ lawyers.
“This cookie giveaway does not benefit class members at all,” the DOJ wrote. “Instead, it is effectively a promotional opportunity for Lenny & Larry’s and their longstanding health food retailers to draw in consumers with free samples.”
The government lawyers also criticized the proposed attorney fee award for the plaintiffs’ lawyers.
The Justice Department asserted the plaintiffs’ lawyers’ fee request is based on the settlement’s total purported value of $5 million – a sum the government asserts is a fiction.
“A more accurate calculation shows that class counsel’s fee request is, in reality, an outlandish 70 percent of the net settlement – not the 24 percent they suggest to the Court,” the Justice Department wrote.
They said the fee award would “far exceed” the amount allowed under precedent established by the U.S. Seventh Circuit Court of Appeals, which holds sway over federal district courts in Illinois, Indiana and Wisconsin.
The government lawyers asserted the fee award should range from $228,000-$463,000.
“… This court has an independent obligation to carefully assess proposed class action settlements to determine whether the result for class members is fair, reasonable, and adequate,” the Justice Department wrote. “The settlement here fails that assessment and this Court should accordingly reject it.”
Lenny & Larry’s has been represented in the action by attorneys Kimberly L. Buffington and Robert L. Wallan, of the firm of Pillsbury Winthrop Shaw Pittman LLP, of Los Angeles, and David M. Schultz and Todd P. Stelter, of Hinshaw & Culbertson LLP, of Chicago.