Citing his lack of assurance that the proposed settlement is “fundamentally fair, adequate, and reasonable,” Magistrate Judge Nathanael Cousins of the Northern District of California on Thursday denied preliminary approval of a settlement in a class action against Bayer Healthcare LLC and Beiersdorf Inc. which alleged the defendants’ “mineral-based” sunscreen label was deceiving to consumers, as the products additionally contain chemical ingredients.
Mike Xavier and Steven Prescott brought the lawsuit against the defendants on Jan. 1, 2020, alleging violations of California laws governing unfair competition, false advertising, and consumer protections, as well as breach of express warranty and unjust enrichment. The plaintiffs claimed that the product labels for various mineral-based kids sunscreens under the brand Coppertone misled consumers, “exposing babies and children to harmful chemical-based ingredients hidden in their sunscreens by fraudulently passing them off as safe mineral-based ingredients.” After the court denied dismissal to the defendants three times, the parties began settlement negotiations.
Following an April 21 hearing on the plaintiffs’ motion for preliminary settlement approval, the court said it cannot yet approve the settlement for administrative and procedural reasons and because “the proposed release in the settlement is overbroad, … the parties lack an explanation regarding a non-collusive relationship to the cy pres beneficiary … (and) the justification for the exceeding administrative expenses and attorneys’ fees request is inadequate.”
The court reasoned that “sweeping language” in the proposed settlement agreement’s releases rendered the settlement overbroad, particularly the failure to narrowly identify which products caused the dispute.
“The parties must narrow the scope of the release in the settlement agreement to be more specific about the claims being released to specify that it only pertains to claims about the purchase of Coppertone sunscreen products that contain a ‘mineral-based’ label,” the court said.
Another contributor to the overbroad nature of the proposed settlement was how the parties were identified, the court noted, which included, “Defendants and each and all of their predecessors in interest, former, present and future direct and indirect subsidiaries . . . successors … whether specifically named and whether or not participating in the settlement by payment or otherwise.” The court said this description is not particular enough “to ascertain which party is released from future claims.”
According to the court, the parties also failed to prove that no collusion nor conflict of interest exists between Bayer and the cy pres beneficiary, Look Good Feel Better, which would receive the remaining funds from the settlement after all necessary fees and awards are paid to class members and attorneys. The court is looking for more of a specific explanation for the purported lack of collusion and conflict of interest.
The court is also pushing for additional reasoning behind the proposed distribution of class member and attorney payouts; the parties wanted one-third of the settlement fund to go toward attorneys’ fees, which is a departure from the Ninth Circuit’s 25% ceiling for attorneys’ fees.
Clarkson Law Firm P.C. and Moon Law APC represent the plaintiffs. Sidley Austin LLP represents the defendants.
