Ang v. Bimbo Bakeries USA, Inc.

Background

Alex Ang and Lynn Streit brought a consumer class action against Bimbo Bakeries USA, Inc., alleging that the company’s baked goods were sold with false, misleading, or deceptive labels. The allegations concerned, among other things, use of the American Heart Association’s “Heart-Check Mark,” claims that products were an “excellent source of whole grain,” labeling products as “bread” despite added coloring, and “100% Whole Wheat” labeling for products allegedly made with non-whole-wheat flour.

The plaintiffs asserted claims under California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedies Act. They sought injunctive relief and statutory damages and proposed representing four California consumer classes. The court previously narrowed the claims through a partial dismissal order, certified four classes under Federal Rule of Civil Procedure 23(b)(2), and denied certification of the proposed damages class under Rule 23(b)(3).

The parties executed a settlement in December 2019. The proposed settlement provided injunctive relief requiring changes to challenged product-labeling statements and formulations. It also included a release of claims held by absent class members, including equitable claims certified for class treatment.

Notice and Settlement Concerns

Federal Rule of Civil Procedure 23(e) requires court approval of a class settlement. Before granting preliminary approval, a court considers whether the settlement appears to result from informed, non-collusive negotiations, avoids improper preferential treatment, falls within the range of possible approval, and has no obvious deficiencies. The court may not rewrite the agreement; the settlement must stand or fall as a whole.

The court repeatedly raised concerns that the proposed release covered claims that had not been certified and that absent class members would receive no notice or opportunity to object or opt out. After the parties revised the release, absent class members still would have released certified equitable claims without receiving notice or an opportunity to object to the settlement’s adequacy.

The parties argued that notice was unnecessary because the settlement provided only injunctive relief. The court rejected that reasoning. It explained that notice would allow absent class members to understand how the settlement affected their rights, object if they believed the settlement was inadequate, and comment on anticipated requests for attorneys’ fees and incentive awards.

Ruling

The parties later proposed publication on Class Counsel’s websites. Judge Haywood S. Gilliam, Jr. found a fundamental disconnect between that proposal and the need for adequate notice. An absent class member would have little reason to know to visit Class Counsel’s websites for information about the settlement, and the parties did not explain why notice could not also appear on Bimbo’s websites or another forum likely to reach class members.

The court concluded that the proposed notice plan was effectively no notice and did not adequately protect absent class members’ rights. It therefore denied the motion for preliminary approval of class action settlement. The court also set a telephonic case management conference for April 14, 2020, and directed counsel to submit a proposal for moving the case toward resolution.