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Consumers may get nothing out of the Nestle Purina dog treat settlement

Following the initial excitement of the proposed settlement in the nationwide class action lawsuit against Nestle Purina in the poisoned pet treats case, consumers started to worry. After doing some basic math, they began to question if consumers would be adequately or fairly compensated for the illness and death of their pets due to the contaminated Waggin’ Train and Canyon Creek Ranch pet treats considering the number of members in the class. Despite assurances that consumers could recover “up to 100% of certain economic damages,” consumers are not convinced.

Even the putative class representatives do not believe that the settlement will be adequate to pay these claims. In a recent comment on Poisoned Pets about the proposed settlement, plaintiff Terry Safranek wrote:

“According to our lawyers and [Nestle Purina’s], the amount should be able to pay out at 100%. Not that I believe that for one single second.”

The most glaring deficiency in the parties’ request for preliminary settlement approval is that no information has been provided that would enable the court to quantify the potential recovery for the class at trial or compare that potential recovery against the settlement amount.

Millions vs. billions

It is not surprising that the parties have glossed over this point, however, because the evidence indicates that the potential recovery could be in excess of $1 billion – a far cry from the parties’ proposed $6.5 million settlement.

In an affidavit, Nestle Purina stated that between 2011 and 2012:

“Waggin’ Train revenue from sales of Waggin’ Train and Canyon Creek Ranch brand jerky dog treats in Missouri exceeded $7.5 million.”

Extrapolating from the 2011 – 2012 sales figures in Missouri, it can be estimated that nationwide sales of the products for the six-year time period from 2007 (when the FDA first warned the harmful nature of the products) to January 2013 (when the products were finally recalled) were approximately $1.125 billion.

Further, it also is extremely conservative because the proposed settlement class is temporally unlimited and would include purchases dating further back than 2007.

Less than zero

The value of the proposed nationwide settlement becomes even more objectionable when considering that the net recovery for class members may be almost zero.

Before the class recovers even one dollar, the $6.5 million gross settlement fund will be reduced by attorneys’ fees (up to $2,145,000), litigation expenses (up to $100,000) and incentive awards for the named plaintiffs ($120,000). This leaves a net settlement fund of $4.135 million that will be further reduced by the costs of a claims administration process, which may consume most or all of the remaining settlement proceeds, which could almost completely wipe out the remaining amount of the settlement fund.

Glaring deficiencies

In addition to these glaring deficiencies, the parties have failed to provide other basic, but crucial, information related to the proposed settlement. For example, the parties have not provided any estimate (let alone evidence) of the expected number of class members, nor have they provided any evidence regarding the value of claims other than the purchase claims (i.e., claims for recompense of pet injuries, deaths, and health screenings). Without this additional information, it is impossible for the court to compare the value of the proposed settlement with a reasonable estimate of the class’s likely recovery.

Quality assurance practices: Who wins?

While the parties and their attorneys tout the significance of the injunctive relief of the “quality assurance practices” imposed on Nestle Purina to justify settlement approval, the victory is hollow because the Waggin’ Train months ago implemented the “quality assurance practices” called for under the proposed settlement when they brought the dog treats back to the market. And, even if the quality assurance practices could be credited as an achievement of the settlement, the “value” assigned to the injunctive relief should have little, if any, bearing on the court’s final approval determination.

Instead, Nestle Purina has been milking the quality assurance impositions to their benefit, using their “quality assurance practices” as a marketing tool by assuring potential consumers of the quality and safety of their products.

Because consumer class actions are primarily driven by the recovery of damages and attorneys’ fees, the proposed “quality assurance practices” changes will not aid the class in any significant way, as consumers (class members) have already been deceived by the labeling and marketing of Nestle Purina’s pet treat products.

Limitations on the loss of a pet

Because the deaths and injuries caused by the contaminated pet food all involved animals, the law views the situation differently than it would if humans had died. The law in most U.S. states views pets as property. Any negligent act, which causes harm or death to an animal, is treated as property damage, not personal injury.

While the law supports arguments over the illness and death of humans resulting from a product entitled to damages for emotional distress and loss of companionship, the illness or death of an animal entitles pet parents far less: At most, a pet parent will only be able to recover the “fair market value” of the pet and veterinary expenses.

Attorneys have attempted to argue that pets are “special property” – that is, they have some intrinsic value to their owners not measured by their market price –such as unique family heirlooms and other items with value that are not easily reduced to dollars and cents, but unfortunately, that argument yet to be successfully applied to pets.

Does the settlement survive scrutiny?

The disparity in the values of potential recovery and settlement demonstrates that the proposed settlement cannot survive scrutiny. A settlement fund of $6.5 million seems inadequate in the face of alleged losses of such magnitude. But what can consumers do if they think the proposed settlement is inadequate, unfair and unreasonable?

Enter the objectors

Connie Curts, a Missouri resident who has been prosecuting her own separate class action against Nestle Purina and Waggin’ Train, has moved to intervene in the federal district court in Illinois and has filed objections to the proposed class settlement. Ms. Curts filed and Initial Objections to Preliminary Approval of Class Settlement and Certification of Nationwide Class in June. In the Motion to Intervene, it states:

…The proposed nationwide settlement is objectionable in many respects…Most significantly, the settlement reflects a paltry net recovery (perhaps as little as no money at all) on the claims of hundreds of thousands of consumers with total damages of $1 billion or more…

If other members of the class smell a sell-out they should object to approval of the proposed settlement. Consumers have an opportunity to voice their opinion to the court who will be making the final settlement of the class by recommending that the judge reject the approval of a settlement involving such a meager recovery.

A chance to have your say

Do you think the settlement is fair? If not, then you must tell the court that you object to the proposal. If you have comments about, object to or disagree with, any aspect of the proposed settlement, you should express your views to the court in writing. All you have to do is state, in writing, your reasons for your, the basis for any such objections, and provide a statement of whether you intend to appear at the Final Approval Hearing, either with or without counsel. You must include in the objection:

  • Your name, address, and telephone number,
  • a brief explanation of your comment or reason for objection,
  • if you are represented by counsel,
  • provide proof that you are a Settlement Class Member (such as proof of purchase, proof of injury or death of pet, or sworn declaration under penalty of perjury),
  • it must state that it relates to any one of the following actions: Adkins et al. v. Nestlé Purina PetCare Company, et al., Case No. 1:12-cv-02871 (N.D. Ill.); Matin v. Nestlé Purina PetCare Company, et al., Case No. 1:13-cv-01512 (N.D. Ill.); or Gandara v. Nestlé Purina PetCare Company, et al., Case No. 1:13-cv-04159 (N.D. Ill.),
  • it must be signed by you,
  • it must be postmarked on or before May 25, 2015 and mailed to:

    Clerk of Court
    Everett McKinley Dirksen United States Courthouse
    219 South Dearborn Street
    Chicago, IL 60604

In addition, you must also send a copy of your comment or objection by first-class mail to the attorneys for the settlement class and the attorneys for the defendants listed below, not later than May 25, 2015:

Attorneys for Defendants
Craig A. Hoover
E. Desmond Hogan
Miranda L. Berge
Hogan Lovells US LLP
555 13th Street, NW
Washington, D.C. 20004

Attorney for Settlement Class
Stuart A. Davidson
Robbins Geller Rudman & Dowd LLP
120 E. Palmetto Park Road, Suite 500
Boca Raton, FL 33432
Email: sdavidson@rgrdlaw.com
Tel: (561) 750-3000

If you have any questions about the proposed settlement I urge you to read the FAQ page on the Dog Treat Product Settlement website.

Final thoughts

Even if a presumption of fairness applied, the proposed settlement should not be approved.

If consumers do not object and instead file a claim, they forfeit all rights to future litigation. In short, whatever paltry compensation consumers receive, if any, will be buying their silence for eternity.

It is my opinion that the proposed nationwide class settlement does not fairly, adequately, and reasonably compensate the class as a whole.

SOURCES:
Dog Treat Product Settlement
Connie Curts Objections to Proposed Class Settlement
Connie Curts Motion to Intervene

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Mollie Morrissette

Mollie Morrissette, the author of Poisoned Pets, is an animal food safety expert and consumer advisor. Help support her work by making a donation today.

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