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Rawa v. Monsanto Co.

United States District Court, E.D. Missouri

May 25, 2018




         This consumer class action came before the Court for a hearing on April 17, 2018, on Plaintiffs' motion for approval of a nationwide class settlement, and on Plaintiffs' separate motion for attorney's fees, litigation costs, and service awards for class representatives. Counsel for the parties and for Objector James Migliaccio appeared in person; a representative of the Claims Administrator appeared by telephone. Defendant Monsanto Company (“Monsanto”) consents to the motion to approve the settlement, and opposes the amount of attorney's fees requested. For the reasons set forth below, the class will be certified and the settlement agreement will be approved, with attorney's fees set at 28% of the settlement fund. The requests for notice and administration cost, litigation costs, and service awards will be granted, and a modified cy pres distribution will be ordered.


         In Rawa v Monsanto Co., 4:17CV01252 AGF, filed on April 5, 2017, Plaintiffs claimed that Monsanto engaged in misleading practices by overstating on several of its Roundup Concentrate products' labels, the number of gallons of spray solution the concentrates would make, in violation of the Missouri Merchandising Practices Act (“MMPA”). Briefly, on the front of the containers near the top, a small separate label stated, “Makes Up to” a certain number of gallons. On the back of the containers, a multipage booklet label was attached. On the front of the booklet label was a symbol indicating that the label could be peeled back, with the instruction, “OPEN, ” in the top right corner. When the front of the booklet label was peeled back as instructed, the booklet advised as to different dilution options, the least concentrated of which would yield the “up to” amount noted on the front label. Plaintiffs, who were purchasers of the products, sought damages and asserted jurisdiction under the Class Action Fairness Act (“CAFA”).

         On October 13, 2016, approximately six months before the case was filed here, another putative class action challenging the same practices as to the same products, Martin v. Monsanto, 4:17CV2300 AGF, was filed in the Central District of California. Martin was brought under the Magnuson Moss Warranty Act (“MMWA”), on behalf of a nationwide class; and under various California consumer protection laws, on behalf of a California subclass. The district court in California denied Monsanto's motion to dismiss the state law claims for failure to state a claim, and on March 24, 2017, certified a statewide California class with respect to the state law claims. The Martin plaintiffs did not seek certification of a class with respect to their MMWA claim. The Martin plaintiffs initially estimated that damages for the California class were $22 million, but then corrected the amount to approximately $15.5 million, based on information from Monsanto that a certain product that was included in the damages estimate did not have an offending label.

         Plaintiffs' counsel in Martin and Rawa were the same. On August 22, 2017, in light of a tentative nationwide settlement, the parties in Martin jointly requested that Martin be transferred to this Court, and on August 23, the California district court granted the motion, finding good cause, in part because “transfer will promote an efficient and economical consideration of the proposed nationwide settlement, and transfer will not affect the substantive rights of the [California] class certified in this action.” Martin, ECF No. 108.

         Upon transfer to this Court, Martin was provisionally consolidated with Rawa and on September 22, 2017, an Amended Consolidated Class Action Complaint was filed herein. Meanwhile, according to Plaintiffs' counsel's declaration dated October 4, 2017, nine related actions were filed in other states. After the nationwide settlement agreement was reached, Plaintiff's counsel herein reached out to each of the plaintiffs in the nine related actions. All agreed that the nationwide settlement was strong, and worth supporting. Thus, each of these plaintiffs was referred to Plaintiffs' counsel, to be added to the consolidated complaint, and their original actions were dismissed. ECF 32-1 at 3.

         The consolidated complaint proposes the following nationwide class:

All persons in the United States, who, during the Class Period, [1] purchased in the United States, for personal or household use certain Roundup Concentrate products whose neck or shoulder label stated that the product “makes up to” a specified number of gallons.

         The consolidated complaint alleges that class members would have paid from 40% to 50% less for the concentrate products had they paid the market price for the number of gallons of spray solution actually received. The 12 representative Plaintiffs are from ten states: Missouri, California, Illinois, Kentucky, Colorado, North Carolina, Indiana, Georgia, Tennessee, and Pennsylvania. They include the Plaintiffs in Rawa, Martin, and the other related cases.

         Two causes of action are asserted in the consolidated complaint - one under the MMPA and one under the MMWA. ECF No. 28. On October 4, 2017, Plaintiffs, with Monsanto's consent, moved for preliminary approval of a proposed nationwide class settlement, pursuant to a Settlement Agreement signed that day (ECF No. 32-1 at 7-23), providing for a common fund of $21.5 million. By Order dated December 6, 2017, the Court granted the motion. The Court conditionally certified the proposed class for settlement purposes only (the “Settlement Class”). The Court also approved the parties' selection of a Claims Administrator, approved the form and content of the proposed Class Notice and the proposed method of its dissemination, and set a schedule for the notice period, the opt out and objection periods, and a final approval hearing. ECF No. 41. The approved notice form advised Settlement Class members how to file claims. The notice also advised, among other things, that if funds remained in the common fund after all (valid) claims and expenses were paid, “any remaining amounts will be donated cy pres to one or more Court-approved organizations, meaning the remaining funds will be donated to organizations that promote the interests of absent class members.” ECF No. 39-1 at 2. The proposed cy pres recipients were disclosed on the settlement website.

         The Settlement Agreement provides for a payout to an individual claimant of one-half the average retail price of the product(s) he or she purchased. The Settlement Agreement provides that claims are limited to 20 units per household and limits refunds to those who submitted a Claim Form that has been reviewed and validated by the Claims Administrator. Proof of purchase was not required. The Agreement states that the Claims Administrator retained sole discretion in accepting or rejecting a Claim Form. It further provides that payments to claimants are subject to pro-rata reduction, depending on the total valid claims submitted. Class counsel and class representatives were to request fees and service awards to be paid from the common fund, and Monsanto could oppose such requests. And the Agreement states, “Costs for settlement, notice, claims administration, incentive fees, and any other fees, including attorney's fees, will be paid from the Common Fund.” ECF No. 32-1 at 15.

         The Agreement includes a “quick pay provision, ” providing that the “the Claims Administrator shall pay to Class Counsel from the Common Fund the amount of attorneys' fees and costs awarded by the Court within seven (7) calendar days of entry of Judgment, notwithstanding the filing of any appeals, or any other proceedings which may delay the effective date of the settlement or a final judgment in the case . . . .” ECF No. 32-1 at 15.

         In support of their motion for approval of the settlement, Plaintiffs assert that the evidence suggests the Settlement Class consists of about 541, 000 members. ECF No. 49 at 1 n.2. Extensive and varied notice procedures were employed by the Claims Administrator, as set forth in its March 13, 2018 declaration. The Claims Administrator established a settlement website with general information, important deadlines, and downloadable forms; and established an automated toll-free helpline. The website and helpline number were listed in the over 123, 000 mailed and emailed notices sent to potential class members. ECF No. 42-3. In addition, the Claims Administrator implemented print publication notice, keyword search notice, social media notice, and online video and online radio notice. ECF. No. 42-2.

         By declaration dated March 23, 2018, the Claims Administrator stated that it had received approximately 94, 000 claims. The Claims Administrator disallowed claims for various reasons, including claims filed out of time and beyond the limitations period. “[P]ursuant to its standard practice to evaluate claims to ensure that [claims] are not fraudulent, ” the Claims Administrator excluded certain claims as fraudulent, such as when multiple claims were filed from the same IP address. Based on its analysis of sales and use data, the Claims Administrator also determined that a disproportionate number of the largest containers - which paid the largest claim amounts - were asserted by some claimants, suggesting fraud. Accordingly, the Claims Administrator excluded any claims for over 18 bottles for Super Concentrate 53.7 oz., over 16 bottles for Super Concentrate 64 oz., and over 14 bottles for Super Concentrate 128 oz.

         According to Plaintiffs' counsel's April 14, 2018 sworn declaration, as of April 13, 2018, this resulted in 70, 628 validated claims, valued at $10, 774, 061, which represents a claims rate of approximately 13%. ECF No. 54-1 at 6. As of March 31, 2018, notice and administration costs were $630, 944. Id. By separate motion, Plaintiffs seek attorney's fees of one-third of the common fund, which would result in fees of $7, 166, 666; notice and administration costs which would be approximately the amount noted above; litigation expenses of approximately $97, 614; and service awards to the representative Plaintiffs totaling $42, 500, including a $10, 000 award for the representative Plaintiff in Martin.

         If the Court were to award the full amount of attorney's fees, litigation expenses, notice and administration costs, and service awards that Plaintiffs have requested, approximately (depending on final amounts of costs and expenses) $2, 788, 218 of the common fund would remain. The parties have suggested that this remainder be distributed cy pres to four recipients: 30% to the National Consumer Law Center (“NCLC”); 30% to the Better Business Bureau's National Advertising Division; 20% to Gateway Greening (a nonprofit that educates and empowers people to strengthen their communities through gardening and urban agriculture in the St. Louis, Missouri, area); and 20% to Kids Gardening (a nonprofit that seeks to improve nutritional attitudes and educational outcomes through garden-based learning, nationally). This suggestion was posted on the settlement website.

         Monsanto consents to the motion for final approval of the settlement in all respects except attorney's fees. Monsanto agrees that class counsel is entitled to reasonable attorney's fees from the common fund, but argues for an award of no more than the “standard” 25% of the class fund, which would amount to $5, 375, 000 in attorney's fees. Monsanto states that while “a great result was achieved” for the Settlement Class, the vast majority of the time spent by class counsel (1, 703 hours through March 12, 2018) was limited to a single case that took only a year from the date of filing to a signed settlement agreement, with only two fact and two expert depositions conducted.

         According to Plaintiffs, only ten Settlement Class members opted out. Two individuals have filed objections to the Settlement Agreement: James Migliaccio and Patrick Sweeney. Migliaccio is a member of the class from California. In his written objection, he argues that the nationwide Settlement Class should not be certified because the approximately 51, 000 California class members are positioned for a greater recovery than class members from other states, because, he contends, California has stronger consumer protection laws. Thus, he argues, the California members received inadequate representation. He further argues that Plaintiffs' counsel made no showing that Missouri law would apply to all proposed class members, and if differing state laws applied, the questions of law or fact common to all class members would not predominate over questions affecting only some members.

         Migliaccio also argues that the Claim Administrator's change in the number of bottles of Roundup Concentrate a claimant could claim is an improper “rewriting” of the Settlement Agreement. Migliaccio also objects to payment of more than $7 million in attorney's fees for less than a year's work. He argues that this amount in attorney's fees would result in an average billing rate of approximately $2, 700 an hour (adding the hours spent by attorneys in the related cases), and a lodestar disclosure should be required. Objector Sweeney only objects to the request for attorney's fees, arguing that the fees should be no higher than 25% of the common fund. He also argues that the quick-pay provision “escalates the natural conflict between class counsel and class members.” ECF No. 48 at 2.

         Plaintiffs assert, and the Objectors do not dispute, that Sweeney filed a claim for one bottle of Roundup Concentrate Plus 32 oz., for which he will be issued a refund of $11; and Migliaccio filed a claim for five bottles of Roundup Super Concentrate 35 oz., for which he will be issued a refund of $105. Plaintiffs argue that Migliaccio's objection to class certification and approval of the settlement should be overruled, in light of a recent Eighth Circuit case, Keil v. Lopez, 862 F.3d 685 (8th Cir. 2017) (affirming approval of a nationwide class settlement in a consumer false advertising case), that rejected an argument similar to Migliaccio's based on differing consumer protection laws in different states whose citizens were members of a nationwide class.[2]

         With respect to Migliaccio's argument that the Claims Administrator “rewrote” the Settlement Agreement, Plaintiffs first argue that Migliaccio lacks standing to bring this argument because his refund for the five bottles he purchased is unaffected by the change, and more fundamentally, the statement in the Settlement Agreement that claims are limited to 20 units per household does not mean that all claims for 20 units would be honored, regardless of their validity.

         Prior to the hearing, the Court required Plaintiffs' counsel to submit detailed billing statements and hourly rates. Counsel submitted unredacted billing records for in camera review, as well as redacted records for the parties. The records show a lodestar amount of $1, 136, 390. ECF No. 54.

         At the hearing, counsel for the parties represented that Monsanto has revised its labeling of Roundup concentrate products in response to the Martin case and this action. Counsel for the parties and the Claims Administrator described the notice and claims process, including that claimants did not have to provide proofs of purchase. Counsel and the Claims Administrator explained how decisions were made to minimize fraudulent claims. They explained the propensity for fraudulent claims, based on the Claims Administrator's experience, given that no proof of purchase was required, the settlement was announced on various websites, and the recovery level was relatively high. They explained how fraud was detected as to certain claims, based primarily on the volume of claims filed from a single online filing site, the amount of Roundup Concentrate supposedly purchased that exceeded “heavy use” for households (a usage amount based on years of studies and giving the claimants the benefit of the doubt), and the disproportionate number of claims for the items with the highest refunds. Fraud was also detected in other ways such as claims for purchases from areas where the products were not sold.

         In addition to the decision to exclude claims for more than 18, 16, and 14 bottles, respectively, of the three largest products, the Claims Administrator also disallowed a claim in its entirety if it sought a refund for more than 20 bottles. But this only accounted for a small number of disallowed claims, as the vast majority of claims were filed online and the online process did not allow more than 20 units to be claimed.

         Plaintiffs' counsel, counsel for Monsanto, and counsel for Migliaccio all presented their respective arguments on all aspects of the case, including the amount of attorney's fees that should be allowed. Counsel for Monsanto represented that Monsanto would not be willing to amend the Settlement Agreement to give claimants more than 50% of the purchase price of the Roundup concentrate they bought, to reduce the cy pres remainder. He stated that 50% of the purchase price constitutes at least a 100% recovery, that the term was a material part of the Settlement Agreement, and that an increase would result in a windfall to claimants.


         Settlement ...

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