Consumer Law

New Mini-Wheats settlement gets preliminary OK; deal value dropped, but not attorney fees


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Kellogg’s has agreed to a new settlement in a consumer class action that pays the same attorney fees, despite a lower value than an earlier proposal.

U.S. District Judge Irma Gonzalez gave preliminary approval to the deal earlier this month in a suit claiming Kellogg’s made false advertising claims about Frosted Mini-Wheats. Yet she noted some concerns in the May 3 order (PDF). “How is it that the value to the class dropped approximately 75 percent, while requested attorneys’ fees appear nearly constant?” she wrote.

The plaintiffs had disputed claims that Frosted Mini-Wheats cereal was clinically shown to improve attentiveness by 20 percent. The original deal, valued at about $8.5 million to the class, provided $2 million in attorney fees and money for claims administration. The San Francisco-based 9th U.S. Circuit Court of Appeals had nixed the deal last year because of cy pres provisions calling for $5.5 million in food donations to feed the needy. “The only relationship between this lawsuit and feeding the indigent is that they both involve food in some way,” the panel said at the time.

The original deal reimbursed class members $5 for each future box of cereal they buy, with a cap of $15. Attorney fees amounted to $2,100 an hour, according to the 9th Circuit, which expressed concern about the level.

The new deal pays $1.5 million to 2 million for attorney fees and claims administration, leaving $2 million to 2.5 million for the class, Gonzalez said. Consumers will get up to $15 for cereal purchases, but the amount will increase up to $45 per person if money remains in the settlement fund, according to the proposed settlement (PDF). Any money left over will go to three groups: Consumer Watchdog, Consumers Union and the Center for Science in the Public Interest.

Gonzalez noted that her approval is only preliminary and unresolved concerns could result in a finding that the settlement is inadequate.

The law firm Blood Hurst & O’Reardon has documents on its website, while has a story.

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