Berni v. Barilla G. e R. Fratelli, S.p.A.

ALESSANDRO BERNI, GIUISEPPE SANTOCHIRICO, MASSIMO SIMIOLI,and DOMENICO SALVATI, on behalf of themselves and all others similarly situated, Plaintiffs, v. BARILLA G. e R. FRATELLI, S.p.A.,and BARILLA AMERICA INC. d/b/a BARILLA USA, Defendants.

16-CV-4196 (ST)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

June 3, 2019

MEMORANDUM AND ORDER

TISCIONE, United States Magistrate Judge:

For the reasons set forth herein, the Court GRANTS the parties' Motion for Final Settlement Approval.

BACKGROUND

This case is about the allegedly misleading empty space or "slack fill" in certain of Defendant Barilla America Inc.'s ("Barilla") specialty pasta products.¹ Plaintiffs, who purchased these products, claim that this slack fill misleads consumers into believing that they are receiving more pasta than they actually are.

Plaintiffs filed the complaint in this action on July 28, 2016, ECF No. 1, and an amended complaint on December 5, 2016, ECF No. 26 ("Am. Compl."). Plaintiffs claim that Barilla's use of slack fill in its specialty pasta boxes constitutes a deceptive business practice in violation ofN.Y. Gen. Bus. Law § 349(a). Am. Compl. ¶¶ 47-54. They also claim, apparently in equity, that Barilla's sale of these products led to the company's unjust enrichment. Am. Compl. ¶¶ 55-57. Plaintiffs' amended complaint seeks, among other relief, compensatory and punitive damages and an injunction requiring Barilla "to repackage the specialty pastas without non-functional slack fill." Am. Compl. at 18.

Barilla filed a motion to dismiss the amended complaint on April 14, 2017. ECF No. 33. Barilla argued, essentially, that it is not plausible that a reasonable consumer would be deceived by the empty space contained in the specialty pasta boxes, that Plaintiffs lacked standing, and that the Court lacked jurisdiction over Barilla's Italian parent company. Id.

While the motion to dismiss was pending, the Court held three separate settlement conferences. See Minute Entries, ECF Nos. 40-42. Both parties appeared at each of these. At the third settlement conference, the parties reached a settlement agreement in principle. ECF No. 43. On April 19, 2018, the parties consented to the jurisdiction of this Court, ECF No. 51, and the case was referred to the Court by the District Court, ECF No. 52. On June 12, 2018, upon the parties' joint motion, the Court issued an order granting preliminary certification of the settlement class, approving the settlement, and directing issuance of notice to the class. ECF No. 57.

After notice was issued, one objection to final approval of the settlement was filed. ECF No. 62. Mr. Adam E. Schulman, Esq. ("Mr. Schulman"), an attorney with the Center for Class Action Fairness, a non-profit advocacy group that opposes selected class action settlements, filed the objection.² Id. at 1. The parties each filed responses to Mr. Schulman's objection. See ECF No. 65 ("Pls.' Resp. to Obj."), ECF No. 67 ("Def.'s Resp. to Obj.").

The Court held a Fairness Conference on December 17, 2018 at which attorneys for the parties and Mr. Schulman appeared. See ECF No. 68. The Court heard oral argument on the objections raised by Mr. Schulman and on the overall fairness of the proposed settlement agreement. The Court reserved decision on the parties' motion for final approval of the settlement to consider the issues discussed at the Fairness Conference. Id.

The Settlement Agreement

The parties' proposed settlement agreement defines the class as:

All consumers in the United States and all U.S. territories (including, but not limited to, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the Northern Mariana Islands, and the other territories and possessions of the United States), who purchased one or more of the Products from July 28, 2010 until the date of the preliminary approval of the settlement of this litigation [June 12, 2018]. Excluded from the Class are persons who timely and properly exclude themselves from the Class as provided in the Settlement Agreement.

ECF No. 60-1 ("Settlement Agreement") ¶ 6.1. The Products, in turn, are defined as:

(a) All pasta products sold or marketed by Barilla containing less than one pound (16 ounces) of pasta including but not limited to Specialty Pastas which include all Gluten Free, Whole Grain, ProteinPlus, and White Fiber products or products described as Better For You.

(b) Any new varieties of these specific product lines yet to be sold or marketed.

Id. ¶ 1.21.

The settlement agreement provides no damages to the class members. Instead, it provides that Barilla will modify the packaging of the specialty pastas to include a minimum fill line and a disclaimer noting that there is empty space in the box. Id. ¶ 2.1; see also ECF No. 60-4 (Proposed New Packaging). Because only injunctive relief is provided to the class, the parties seek certification of the class pursuant to Rule 23(b)(2). Settlement Agreement ¶ 2.1. While notice and an opportunity to opt out of the settlement are normally not required for a 23(b)(2) class, Wal-MartStores, Inc. v. Dukes, 564 U.S. 338, 362 (2011), the settlement agreement here provides these safeguards. See Settlement Agreement at 11-13.

In exchange for the injunctive relief, the class members release:

all causes of action, claims, suits, debts, damages, judgments, liabilities, demands and controversies whatsoever—whether matured or unmatured, now known or unknown, liquidated or unliquidated, at law or in equity, whether before a local, state or federal court, or state or federal administrative agency, commission, arbitrator(s) or otherwise—that the class members now have or may have, and for all times up to and including the date of final approval of the settlement, for all claims that were asserted or could have been asserted in the Action relating to the amount of pasta contained in a package of pasta and the packaging of the Products.

Id. ¶ 1.23.

Besides the injunctive relief, Barilla agrees not to oppose class counsel's application for an award of up to $450,000 in costs and attorney's fees, id. ¶ 2.2, nor the four named Plaintiffs' application for $1,500 incentive awards each, id. ¶ 7.3.

DISCUSSION

A. Standard of Review of Proposed Class Action Settlements

In the Second Circuit, "[t]here is a 'strong judicial policy in favor of settlements, particularly in the class action context.'" In re MetLife Demutualization Litig., 689 F. Supp. 2d 297, 330 (E.D.N.Y. 2010) (quoting McReynolds v. Richards-Cantave, 588 F.3d 790, 803 (2d Cir. 2009)). "[C]lass action suits readily lend themselves to compromise because of the difficulties of proof, the uncertainties of the outcome, and the typical length of the litigation." Id.

Nonetheless, before approving a class action settlement, the district court must conclude that the proposed class meets the requirements for class certification set forth in Rule 23(a) and the relevant subsection of Rule 23(b). In re Am. Int'l Grp., Inc. Sec. Litig., 689 F.3d 229, 239 (2d Cir. 2012) [hereinafter AIG]. The court, "[c]onfronted with a request for settlement-only class certification . . . need not inquire whether the case, if tried, would present intractable managementproblems, for the proposal is that there be no trial." Id. (quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997)). "At the same time, however . . . 'other specifications of [Rule 23]—those designed to protect absentees by blocking unwarranted or overbroad class definitions—demand undiluted, even heightened, attention.'" Id. (quoting Amchem, 521 U.S. at 620). "Thus, in the context of settlement, Rules 23(a) and (b) continue to serve the purpose of 'focus[ing] court attention on whether a proposed class has sufficient unity so that absent members can fairly be bound by decisions of class representatives.'" Id. (quoting Amchem, 521 U.S. at 621).

In determining whether the class should be certified, the district court must determine that the terms of the proposed settlement are "fair, reasonable, and adequate." Fed. R. Civ. P. 23(e)(2). That determination rests in the discretion of the district court. Denney v. Deutsche Bank AG, 443 F.3d 253, 273 (2d Cir. 2006). In exercising its discretion, the district court must engage in careful balancing but "must stop short of the detailed and thorough investigation that it would undertake if it were actually trying the case." City of Detroit v. Grinnell Corp., 495 F.2d 448, 462 (2d Cir. 1974) [hereinafter Grinnell], abrogated on other grounds by Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000). Additionally, when considering the benefits achieved by a settlement, courts must keep in mind that "there is a range of reasonableness with respect to a settlement—a range which recognizes the uncertainties of law and fact in any particular case and the concomitant risks and costs necessarily inherent in taking any litigation to completion." Newman v. Stein, 464 F.2d 689, 693 (2d Cir. 1972).

As such, "[i]t cannot be overemphasized that neither the trial court in approving the settlement nor [the Second Circuit] in reviewing that approval have the right or the duty to reach any ultimate conclusions on the issues of fact and law which underlie the merits of the dispute." Grinnell, 495 F.2d at 456. "Defendants in class action suits are entitled to settle claims pendingagainst them on a class-wide basis even if a court believes that those claims may be meritless, provided that the class is properly certified under Rules 23(a) and (b) and the settlement is fair under Rule 23(e)." AIG, 689 F.3d at 243-44; see also Sullivan v. DB Investments, Inc., 667 F.3d 273, 310 (3d Cir. 2011) (en banc) ("[W]ere we to mandate that a class include only those alleging 'colorable' claims, we would effectively rule out the ability of a defendant to achieve 'global peace' by obtaining releases from all those who might wish to assert claims, meritorious or not. We need not take judicial notice of the fact that...