"It's understandable that it could make economic sense for a defendant to settle a series of class actions after years of litigation. But this settlement's so-called 'equitable' relief involving the defendant's advertising and labeling makes it crystal clear that these lawsuits were not based on any real fraud at all," writes J. Russell Jackson on his Consumer Class Actions & Mass Torts blog.
Jackson writes about a $35 million settlement filed by Dannon in federal court in response to class actions over its advertising of the health benefits of some of its yogurt products (a California suit was filed in January). The class members may receive $15 to $100 depending on whether they can provide proof of purchase. The attorneys indicate in the settlement agreement that they want $10 million -- plus expenses.
However, as Jackson points out, the statements made by Dannon and challenged in the lawsuits were not false. "The settlement allows Dannon to say practically the same thing it always has said," he wrote. "The lawsuits obviously were lawyer-invented, and although they may have survived some motions to dismiss, the settlement's equitable relief demonstrates that the defendant's statements were backed up by real science."
He concludes:
"Is this another instance of regulation by litigation in which the only ones who really benefit are class counsel, who seek to take more than $10 million of the settlement fund in fees and expenses?"