Schneider v. Chipotle Mexican Grill, Inc.

Background

Plaintiffs brought this consumer class action alleging that Chipotle falsely or misleadingly advertised its food products as “non-GMO” and “GMO free.” They alleged that Chipotle’s meat and dairy products came from animals fed genetically engineered or genetically modified feed and that its soft drinks contained corn syrup, which they alleged was genetically modified. Plaintiffs claimed that they would not have bought the products, or would have paid less for them, if they had known the alleged facts.

The complaint asserted ten causes of action under California, Maryland, Florida, and New York consumer-protection laws, as well as claims for unjust enrichment, misrepresentation, and declaratory relief. The Florida claim was later removed from the amended complaint. The court previously denied Chipotle’s motion for summary judgment, certified classes of consumers in California, Maryland, and New York, and appointed named plaintiffs and class counsel. Chipotle later moved to decertify the classes, but the parties reached a settlement before that motion was decided.

Settlement Terms and Notice

The settlement covered people in the United States who purchased Chipotle food products in its restaurants between April 27, 2015, and June 30, 2016, subject to stated exclusions, including people who timely opted out. Chipotle agreed to pay a $6,500,000 non-reversionary common fund. After the settlement was amended, each valid claim was valued at $4 rather than $2. A class member could submit up to five valid claims without proof of purchase or ten with proof of purchase, and each household was limited to fifteen claims. The parties estimated that class members could receive approximately $2,865,896 in total. Settlement checks not cashed within 120 days would be donated equally to Public Justice and Public Counsel.

The notice program used digital advertising, a settlement website, People magazine, and the East Bay Times. The court found that the notice plan was implemented and satisfied the applicable requirements. The court noted that it received one objection to the settlement, concerning class counsel’s fees, and one timely request for exclusion. It also considered letters raising concerns about the settlement amount and claimed damages under the Federal Trade Commission Act, but found that those matters did not require rejection of the settlement.

Final Settlement Approval

The court evaluated the settlement under Federal Rule of Civil Procedure 23, which requires court approval of a class settlement and a finding that it is fair, reasonable, and adequate. The court considered the litigation risks, the risk of losing class certification, the settlement amount, the extensive discovery, counsel’s experience, and the class members’ response. It found that continued litigation would involve substantial risks, delay, and expense; that the $6.5 million fund was within a reasonable range; and that the proposed residual-funds distribution served interests related to the alleged consumer harm.

The court also found no evidence that the settlement resulted from improper collusion or conflicts of interest. It concluded that the settlement was fair, adequate, and reasonable and that class members received adequate notice. The court therefore granted the motion for final approval of the class action settlement.

Attorneys’ Fees, Costs, and Incentive Awards

Class counsel requested $1,950,000 in fees, equal to 30 percent of the settlement fund, and $636,556.28 in costs. The court approved the requested fees, finding that the requested amount was below counsel’s calculated lodestar—the hours reasonably worked multiplied by reasonable hourly rates—and that the requested costs were reasonably incurred. The court granted the motion for attorneys’ fees in the amount of $1,950,000 and granted the motion for costs in the amount of $636,556.28.

The named plaintiffs requested $5,000 incentive awards each. The court found that an incentive award of $5,000, or any amount, was unwarranted under the circumstances, including the small payments available to other class members and the court’s concerns about the settlement’s earlier allocation of funds. The court therefore denied the request for incentive awards. Overall, the motion for fees, costs, expenses, and incentive awards was granted in part and denied in part.

Disposition

Judge Haywood S. Gilliam, Jr. directed the parties to implement the settlement and file a stipulated final judgment within 21 days. The opinion did not decide whether Chipotle’s labeling was actually false or misleading; it approved the parties’ settlement of those claims.