Prescott v. Bayer HealthCare Pharmaceuticals Inc.

Background

Steven Prescott and Mike Xavier brought a proposed class action against Bayer Healthcare LLC and Beiersdorf, Inc. The plaintiffs alleged that the defendants’ Coppertone sunscreen products were misleadingly labeled “mineral-based” because the products contained chemical active ingredients as well as mineral active ingredients.

The plaintiffs moved for preliminary approval of a proposed class-action settlement. Because the class had not yet been certified, the court applied a heightened review of whether the settlement was fair, adequate, and reasonable, including closer scrutiny for possible collusion or conflicts of interest.

Reasons for Denial

The court denied the motion without prejudice for five reasons:

1. Overbroad release. The settlement agreement released claims relating broadly to the products’ performance, advertising, labeling, and packaging. The court held that the release needed to be limited to claims based on the same factual basis as the lawsuit—claims concerning the purchase of Coppertone sunscreen products bearing a “mineral-based” label. The court also found that the agreement’s definition of released parties was too broad and did not allow class members to determine which parties would be released. In addition, the agreement included a waiver under California Civil Code section 1542, and the court found that the agreement did not clearly show whether class members knowingly accepted that waiver.

2. Proposed cy pres beneficiary. The settlement provided for a $2.25 million common fund. After valid claims, attorneys’ fees, litigation expenses, service awards, and administrative expenses were paid, any remaining funds would go to Look Good Feel Better. The parties said they selected that organization because it targets cancer and the products are often used to avoid cancer. The court nevertheless found that the parties had not adequately explained why there was no collusion or conflict of interest involving Look Good Feel Better, Bayer, or counsel.

3. Administrative expenses and attorneys’ fees. The agreement allowed up to $530,000 plus postage for notice and claims-administration costs, approximately 23 percent of the settlement fund. The court found that the parties had not provided enough information about comparable market bids and costs in similar consumer class actions. The parties also requested up to one-third of the fund for attorneys’ fees and costs. Because that amount exceeded the Ninth Circuit’s stated 25 percent benchmark, the court required better explanations and comparable cases supporting the request.

4. Class notice. The proposed notice plan was designed to reach at least 70 percent of the class through online advertising, targeted search-term advertising, and a press release. The court found it unclear why the plan targeted only 70 percent, what could be done to reach the remaining class members, and whether the administrator could use mailing, email, or other methods. The notices also did not explain how class members could access the case docket through the federal court’s electronic records system or in person, as required by Northern District of California guidance.

5. Claim forms. The proposed settlement did not provide an estimate of how many class members were expected to submit claims, identify the examples supporting that estimate, or otherwise provide the information required by the Northern District’s procedural guidance.

Disposition

The court concluded that it could not determine that the proposed settlement was fundamentally fair, adequate, and reasonable. It therefore DENIED without prejudice the plaintiffs’ motion for preliminary approval of the class settlement. The court also set a telephonic further case-management conference for May 26, 2021, and required a joint case update by May 19, 2021.