A federal judge on Wednesday refused to grant final approval to a class action settlement over claims that L’Oréal USA Inc. included misleading labels on some of its hair products, finding that the proposed settlement was not fair to the majority of Class Members.
Plaintiff Alexis Richardson initially filed the class action lawsuit in April, alleging that L’Oréal marketed some of its high-end hair products as “available only in salons,” even though they were sold in stores such as Target, Walgreens and other retail stores. Richardson argued that this labeling implies a superior quality product that allows L’Oréal to charge a premium price.
The L’Oréal hair product class action settlement was preliminarily approved on June 27, 2013. Under the terms of the proposed class action settlement, L’Oréal would be barred from marketing its products as “salon-only.” The proposed class action settlement did not offer Class Members any monetary award and precluded them from filing another class action lawsuit seeking monetary damages from L’Oréal in the future. Several Class Members filed objections to the class action settlement, arguing that the terms were unfair.
U.S. District Judge John Bates agreed with the objections, finding that the L’Oréal class action settlement would pay the attorneys for earning Class Members only a “limited” benefit. Judge Bates found that the class action settlement was unfair because the attorneys would be compensated while the majority of Class Members would not receive a monetary award, and consumers would be prohibited from seeking damages as a class, even if they had previously been unaware about this class action settlement.
“The settlement provides no monetary relief while rewarding counsel handsomely,” Judge Bates said in his Nov. 6 decision. “Moreover, the result achieved here could be characterized as worse than ‘settling’: Counsel seeks to release class members’ originally asserted classwide damages claims for precisely nothing. Regardless of the implications for calculating attorneys’ fees, the amount requested by plaintiffs and agreed to by L’Oréal creates the impression of unfairness.”
The L’Oréal hair product class action lawsuit initially sought monetary damages, but the claim was dropped during the settlement negotiations. While the class action settlement released L’Oréal from all future class action lawsuits related to the “salon-only” marketing issue, it did not release the company from individual actions.
Judge Bates found that the probability of a small monetary reward would prevent individuals from taking legal action against L’Oréal. Further, the class action settlement would essentially bar individuals who were unaware of the class action lawsuit from seeking monetary damages.
“It does not comport with due process to bind a plaintiff who is not before a court, and who is perhaps even unaware of a judgment, as to money damages claims, without notifying her of the suit and giving her a chance to opt out,” Judge Bates said. “Otherwise, that plaintiff might be surprised to learn that someone else has bargained away her damages claim without her knowing about it or having any say in it.”