In re Conagra Foods, Inc.

Docket number: 11-cv-5379-CJC (C.D. Cal.)
Appellate case number: 19-56297 (9th Cir.)

The Center for Class Action Fairness (CCAF) represented Prof. Todd Henderson, who objected to a settlement that provides him $4.50 and all class members put together less than one seventh of the $6.85 million attorneys’ fee request. The settling parties claimed that the settlement was worth over $27 million because Conagra agreed to an injunction that it will not market Wesson Oil as “natural”—but Conagra sold off Wesson prior to reaching the settlement! The injunction did nothing unless Conagra reacquires a business it strategically sold. Henderson argued that the stipulated $27 million valuation is a ruse plaintiffs’ attorneys bargained for to justify taking over 85% of the settlement value.

The underlying lawsuit alleged that Wesson Oils were falsely marketed as “100% natural” under the laws of several states because the oils were derived in part from genetically modified crops.

Under the settlement, class members in the eleven covered states have until August 22 to claim 15 cents per bottle of Wesson Oil purchased over a 7-to-11 year period ending July 2017 (depending on state). The settlement also provides a $575,000 fund for claimants in two of the states, Oregon and New York, to compensate for the statutory damages available in these states. Class members who don’t save their grocery receipts for 10 years can claim up to 30 bottles without proof of purchase, for a total payment of $4.50. As of July 19, the settlement would only pay $865,563.65 to class members—less than one seventh what their attorneys have requested.

The settlement includes clear sailing and kicker for $6.85 million in attorneys’ fees. This means Conagra has agreed not to oppose the fee request, and that if the court awards less than $6.85 million, Conagra keeps the difference. Class attorneys rationalize their fee request because they claim the injunction is worth $27-30 million, but the injunction does nothing unless Conagra requires Wesson Oil, and the “100% natural” claim was removed from the product over two years ago without requiring class members to give up their claims.

In fact, the settlement is worth about $8 million. If it were a pizza, counsel has offered to give one slice to the class and keep the rest for themselves. Rule 23(e) rejects such unfair treatment, as does Ninth Circuit law—and the objector.

On December 10, 2019 Judge Cormac Carney granted final approval to the settlement over Henderson’s objection. He has appealed to the Ninth Circuit and was supported by an amicus brief from 13 state attorneys general. The oral argument occurred over Zoom on December 7, 2020.

On June 1, 2021, the Ninth Circuit reversed and remanded the settlement as Henderson had asked. Rather than return to the table to renegotiate the settlement the Ninth Circuit rejected and described as “How to Lose a Class Action in 10 Ways,” on remand, the settling parties resubmitted the same settlement for review, claiming the Ninth Circuit misunderstood the role the negotiator played in the settlement process. On December 3, Henderson responded by renewing his objection to the illegal settlement and fee request, noting the settlement be should judged objectively. Because the settlement still fails Federal and Ninth Circuit law in “10 Ways,” Henderson asked that the Court reject the settling parties request for final settlement approval.

Upon remand, the parties filed a declaration from the mediator confirming that he did not evaluate the settlement for fairness to the class, but rather proposed the compromise based on his “evaluation of the terms that had the best chance of being accepted by both sides.” Following a hearing, the district court agreed with Henderson that the settlement was unfair and denied final approval on December 22, 2021.

The court found: “The fact that attorneys will receive nearly $7 million while the class receives less than $1 million is too disproportionate to ignore.”

HLLI successfully opposed class counsel’s motion for reconsideration in February 2022.

The parties reached a new settlement that contains no revision provision. On September 20, 2023, the district court approved the improved settlement and found that Henderson’s efforts “produced a significant increase in the settlement amount.” The claims made settlement would have paid at most $993,919 (likely less after administration), but as approved the class is guaranteed $2 million, with none of the amount reverting to the defendant.

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