Federal judge refuses to approve settlement in L'Oreal case, calling it 'not fair'

By Jessica M. Karmasek | Nov 8, 2013

WASHINGTON (Legal Newsline) -- A federal judge, in a decision Wednesday, refused to grant final approval to a settlement in a class action brought against L'Oreal for misleading labels on several hair product brands.

Judge John Bates for the U.S. District Court for the District of Columbia concluded that final certification of the class and final approval of the settlement -- which would have given the lawyers nearly $1 million in fees while requiring class members to waive their right to class-wide damages -- are "not warranted."

Bates, in his 33-page memorandum opinion, called the settlement "not fair, reasonable and adequate" and said the arguments raised by the plaintiffs to show that the settlement is fair were "unconvincing."

"Plaintiffs get attorney's fees, defendant gets a near-bulletproof release, and class members get... an injunction," the judge wrote.

"In the end, stripping the procedural right to bring a damages class action from absent class members without their knowledge or consent -- and effectively precluding their damages claims -- is not proper."

Bates noted that the agreement on fees is, itself, a sign that the settlement may not be fair to the class.

"The settlement provides no monetary relief while rewarding counsel handsomely," he wrote.

"This is not a case where the representative plaintiffs had to spend significant amounts of time helping counsel to prepare a detailed factual complaint; instead, the burden on the representative plaintiffs was relatively low."

The judge continued, "Set against the recovery obtained on behalf of the absent class members, incentive awards of $1,000 are unfair."

The lawsuit, filed in April and settled in June, focused on purportedly misleading labels on several L'Oreal hair product brands. Namely, the company described some its products as "salon-only," when, in fact, the products also were sold in retail stores like Target, Kmart and Walgreens.

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.

The company claims that the products are sold outside of salons without its permission.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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