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Pirate's Booty settlement struck



Overlawyered has the broad outlines, but the press coverage of the Pirate's Booty class action, if anything, has understated how outrageous the case and settlement was. This was not a case where lawyers uncovered the truth, and brought a recalcitrant defendant to justice. Rather, journalists discovered the error in fat-content in the product labels; Robert's immediately apologized for the error and corrected it; and then free-riding lawyers sued in four different states, with the New York class action being certified on a nationwide basis first, even though New York consumer fraud law (with its curious lack-of-reliance requirement) does not apply to consumers outside of the state, and other legal theories would require individualized reliance determinations.

Robert's, the defendant, was required to issue $3.5 million in 20% discount coupons over the course of about two and a half years—but the coupons were to be issued to the general public, rather than to the class. In other words, the plaintiffs sought to claim as a class benefit justifying the attorneys' fees the very marketing Robert's was likely doing anyway. The court noted the irony that injured class members "having sought a low-fat, low-calorie snack food...would be the least likely to purchase the Products again now that their higher fat and caloric content has been revealed [and] would be the least likely to reap any benefit from the distribution of discount coupons."

Precedent of interest to class-action specialists on both sides: an objecting class member who had opted out of the settlement was permitted to opt back in to make her objection, overruling the decision of the trial court to the contrary. The case is Klein v. Robert's American Gourmet Food, Inc., __ N.Y.S.2d __, 2006 WL 240592 (A.D. 2d Dept. Jan. 31, 2006).

The plaintiffs' attorney was Robert I. Lax. The Nassau County judge who approved the settlement was Ute Wolff Lally.

 

 


Rafael Mangual
Project Manager,
Legal Policy
rmangual@manhattan-institute.org

Katherine Lazarski
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.