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Richardson v. L'Oreal Usa, Inc.

United States District Court, District Circuit

June 27, 2013

ALEXIS RICHARDSON, et al.,
v.
L'ORÉAL USA, INC., Defendant. individually and on behalf of all others similarly situated, Plaintiffs,

MEMORANDUM OPINION

JOHN D. BATES, District Judge.

In this case, plaintiffs allege that defendant L'Oreal USA, Inc., falsely and deceptively labeled several products as available exclusively in salons. The parties have moved for preliminary approval of a proposed settlement and preliminary certification of the settlement class. After careful consideration of the supporting memorandum and the accompanying exhibits, the Court will grant the motion for preliminary approval of the settlement and preliminary certification of the settlement class.

BACKGROUND

Plaintiffs filed this action on April 15, 2013, alleging that defendant L'Oreal falsely and deceptively labeled its Matrix Biolage, Redken, Kerastase, and Pureology products as available only in salons when the products can be purchased in non-salon retail establishments including Target, Kmart, and Walgreens. See Compl. [Docket Entry 1] ¶¶ 1, 29 (Apr. 15, 2013). Plaintiffs allege that the salon-only label implies a superior quality product and builds a cachet that allows L'Oreal to demand a premium price. See id. ¶ 27. Plaintiffs acknowledge that L'Oreal has developed a campaign to fight the diversion-i.e., the sale of salon-only products through stores that do not have a salon-for each of the product lines at issue in this litigation. See id. ¶¶ 30-37. But plaintiffs allege that, despite L'Oreal's efforts, the products are available in non-salon establishments, and argue that L'Oreal's labeling and advertising for these products is hence deceptive and misleading. See id. ¶ 46.

Soon after filing this case, the parties filed a motion for preliminary approval of their proposed settlement. The terms of the proposed Settlement Agreement include the following:

• Settlement Class: A Settlement Class of "all consumers nationwide who purchased the L'Oreacute;al Products for personal, family or household use on or after August 30, 2008." The Class excludes a few specific categories of consumers, such as those who purchased the products for resale, stylists, salon owners, those employed by L'Oreal or by plaintiffs' counsel, and Court staff connected to this action. See Proposed Settlement Agreement [Docket Entry 9-2] ¶ 1.13 (May 15, 2013).
• Relief: The settlement provides for injunctive relief only. L'Oreal will remove the contested claims from U.S. advertising and from labeling on products for U.S. distribution, except for certain products also sold or distributed in European countries using the same packaging; L'Oreal will not use the claims for at least five years, and, after five years, it may resume using the claims in markets with a 60% reduction from 2012 levels of non-salon sales; L'Oreal will cease manufacturing labels for U.S. products that carry the claims and will remove the claims from websites and promotion materials shortly after the agreement becomes effective, but it will not destroy products or product packaging in its inventory. Id . ¶ 2.4.
• Treatment of Class Representatives: Class representatives will petition for an incentive award of no more than $1000 each. Id . ¶ 2.5.
• Attorneys' Fees: L'Oreal will not oppose an application by plaintiffs' counsel for attorneys' fees, costs, and expenses up to $950, 000. The Agreement provides that the award of fees is separate from settlement; if the Court approves only a lower fee award, the remainder of the settlement will remain binding. Id . ¶ 2.6.
• Notice: Because L'Oreal lacks records to identify the vast majority of consumers who purchased the relevant products and where such purchases were made, the parties will publish a short-form notice in the legal notices section of USA Today for one week in the Monday-Thursday edition. The notice will refer proposed class members to a comprehensive website that will contain additional information, including a copy of the proposed agreement. Objections by class members will have to be filed no fewer than 30 days prior to the Fairness Hearing. Id . ¶¶ 3.2, 3.5.
• Release: Upon final approval of the settlement, class members will release L'Oreal from liability for the alleged conduct or any related conduct, except as to individual (as opposed to class-wide) claims for monetary relief. Id . ¶ 4.6.

ANALYSIS

I. Preliminary Approval of Proposed Settlement

"Preliminary approval of a proposed settlement to a class action lies within the sound discretion of the court." See In re Vitamins Antitrust Litig., No. 99-197 , 1999 WL 1335318, at *5 (D.D.C. Nov. 23, 1999). The Court will generally grant preliminary approval of a class action settlement if it appears to fall "within the range of possible approval" and "does not disclose grounds to doubt its fairness or other obvious deficiencies, such as unduly preferential treatment of class representatives or of segments of the class, or excessive compensation for attorneys." Trombley v. Nat'l City Bank , 759 F.Supp.2d 20, 23 (D.D.C. 2011) (internal quotation marks omitted); see also Newberg on Class Actions, § 11:25 (4th ed. 2013). The Court will consider (1) whether the proposed settlement appears to be "the product of serious, informed, non-collusive negotiations, " (2) whether it falls within the range of ...


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