In re VNGR Beverage, LLC Litigation

Background

The plaintiffs brought a putative class action on behalf of purchasers of Poppi Prebiotic Soda. They alleged that VNGR Beverage, LLC marketed Poppi as “gut healthy” because it contained prebiotic dietary fiber, but that the representation was misleading because of the products’ low fiber content, high sugar content, and use of agave inulin. The operative complaint asserted claims under the California Consumers Legal Remedies Act, California False Advertising Law, California Unfair Competition Law, and common-law claims for fraud, deceit, misrepresentation, unjust enrichment, and breach of express and implied warranties.

The cases were related and consolidated over time. After the parties negotiated and finalized a settlement, the court terminated a pending motion to dismiss and allowed the plaintiffs to file a third amended consolidated complaint before seeking preliminary settlement approval.

Proposed Settlement

The settlement provides for an $8,900,000 non-reversionary payment by VNGR Beverage, LLC. The fund will cover approved attorneys’ fees and costs, settlement administration expenses, incentive payments to the named plaintiffs, and payments to class members with approved claims.

The settlement class covers people who purchased one or more Poppi products in the United States between January 23, 2020, and the Settlement Notice Date, for household use and not for resale or distribution. Approved claims would pay $0.75 per single can, $3.00 per four-pack, $6.00 per eight-pack, and $9.00 per 12-pack or 15-pack. Each approved household claim would receive at least $5.00, subject to available funds, while a claim without proof of purchase would generally be capped at $16.00 unless the settlement fund permitted increased payments, in which case the cap could rise to $80. Any remaining funds would go to Feeding America as the proposed cy pres recipient, meaning a recipient of residual settlement funds when direct distribution to class members is not practicable.

The settlement would release claims related to the labeling, advertising, or formulation of the products during the specified period, but would not release class members’ personal-injury claims. Class members who do not opt out would release the covered claims even if they do not submit a claim or receive a payment. Class Counsel could apply for fees of up to 30% of the gross settlement amount, and could seek incentive awards of up to $5,000 for each named plaintiff; the court reserved those decisions for final approval.

Provisional Class Certification

The court found that the proposed settlement class satisfied Federal Rule of Civil Procedure 23. It found numerosity because joining the estimated hundreds of thousands of class members would be impracticable; commonality because the case presented common questions about VNGR’s “gut health” claims; typicality because the plaintiffs and class members purchased the same products and were exposed to the same representations; and adequacy because the court found no actual conflicts and found that the plaintiffs and counsel had vigorously prosecuted the case.

The court also found that common issues predominated and that a class action was the superior method for resolving the dispute. It appointed the plaintiffs as class representatives and appointed Bursor & Fisher, P.A. and Gutride Safier LLP as class counsel.

Preliminary Approval Analysis

The court applied the heightened review required for a settlement reached before class certification. It preliminarily found that the settlement resulted from serious, informed, non-collusive negotiations, did not provide improper preferential treatment, fell within the range of possible approval, and had no obvious deficiencies.

The court noted that the proposed 30% attorneys’ fee request exceeded the Ninth Circuit’s 25% benchmark. However, it found no clear-sailing agreement because VNGR reserved the right to oppose the fee request, and the settlement was non-reversionary. The court stated that it would determine the appropriate fees and incentive awards at the final approval stage.

The court also found a sufficient connection between Feeding America and the settlement class because Feeding America provides meals and nutrition education and advocates for food and nutrition assistance. The court concluded that the settlement amount was reasonable at the preliminary stage, in part because the proposed payments per can could exceed the plaintiffs’ estimated recovery at trial and because the plaintiffs identified substantial risks in continuing the litigation.

Notice Plan and Required Changes

The court approved the proposed notice process as reasonably calculated to inform class members. The plan included email notice to identifiable class members, digital advertising, publication in regional editions of USA Today, a settlement website, and a toll-free telephone number and email address.

The court required the notices and claim form to define “Household” and explain that multiple claims from people in the same household would be combined and treated as one claim rather than rejected. Counsel submitted revised notices, and the court found those revisions adequate.

The court also required all notices to state specifically that class members could object to the attorneys’ fees motion and to requests for incentive awards, and to state the deadlines for those motions and objections.

Disposition

The court GRANTS the motion for preliminary approval. It preliminarily approves the settlement, provisionally certifies the settlement class, appoints the class representatives and class counsel, and directs the parties to implement the notice plan with the required edits. The parties must meet and confer and submit a schedule for notice, fee and incentive-payment motions, objections and opt-outs, the final-approval motion, and the final fairness hearing.