AUSTIN – The U.S. District Court for the Southern District of California has rejected a proposed settlement of a class action lawsuit filed against Similasan Corp. that alleges false and deceptive labeling of Similasan’s homeopathic products.
Under the proposed settlement in Allen v. Similasan Corp., class attorneys and two plaintiffs would have been paid, but affected consumers would not have received any monetary compensation and would have been required to waive their claims against the company.
In an amici curiae brief filed on July 28, the attorneys general of Texas, Arizona, Arkansas, Louisiana, Michigan, Nebraska, Nevada and Wyoming asked the court to reject the settlement as unfair, unreasonable, and inadequate for consumers.
“Only the defendant, class counsel and the named plaintiffs receive particularized value from the deal, which fails to protect the absent class members,” the attorneys general said in their brief. “Indeed, if all absent class members had opted out of the settlement, they would have benefitted just as equally and there would have been no change in the way in which the injunctive provisions would be implemented.”
In its order, the court noted the attorneys general brief and cited it in reaching the conclusion that the settlement should be rejected. Quoting the attorneys general, the court recognized that, “all class members are giving up all of their non-personal injury monetary claims against the defendant without receiving any compensation different from the public at large.”
“Class actions should be a means to make injured persons whole, not a tool to enrich lawyers at the expense of the very injured persons they claim to represent,” Texas attorney general Ken Paxton said in a statement following the release of the court’s opinion.
The attorneys general said the proposed settlement was imbalanced and the notice plan was inadequate, resulting in only about 150 total recorded demonstrations of interest in the settlement.
“Failing to make a more robust effort to inform absent class members of the terms of the proposed settlement, thereby giving those class members the chance to salvage their claims, results in absent class members losing most of their damages claims without additional value in return,” the brief said.
In addition, the attorneys general said a prospective injunction in the case was focused solely on future additional disclosures and failed to directly benefit the absent members of the class compared with the public at large. For example, the brief said revised labels will eventually be provided on all future packaging, and a required website will be available to all consumers, not just members of the class.
In her ruling, U.S. District Judge Cynthia Bashant said that if the class members would have known and understood the terms of the proposed settlement, “they would know that they would be better off opting out, since they would receive the same benefits of the injunctive relief in the settlement agreement, but would not be giving up their right to sue.”
Bashant said only one class member opted out of the settlement, supporting the judge’s concern that class members had not seen the notice of the settlement or had not understood its ramifications.