Alexia Keil v. Paul Lopez
862 F.3d 685
| 8th Cir. | 2017Background
- Blue Buffalo faced a 2015 class action alleging false representations that certain pet foods contained no chicken/poultry by‑product meal; claims included MMWA, warranty, unjust‑enrichment, and consumer‑protection claims under eight states. Class counsel estimated ~3.5 million households.
- Blue Buffalo denied liability but discovered mislabeled ingredients from some suppliers and filed third‑party indemnity claims against those suppliers.
- Parties negotiated and, after mediation, agreed to a $32 million settlement fund: $8M requested for fees, $1.4M for administration, and ~$22.6M for class payments; recoveries paid cash under two claim options (higher with receipts) and subject to pro rata top‑up; no reversion to defendant.
- Court preliminarily approved the settlement and notice plan; Heffler Claims Group provided notice to ~87% of the class; only ~3% of class members submitted claims (105,173) before the claim deadline, producing a pro rata increase so valid claimants received more than initial per‑claim caps.
- Fourteen timely objectors challenged approval and/or the fee award; district court approved the settlement and awarded the full requested $8M in fees; objectors appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court abused discretion by failing to explain settlement approval (Van Horn factors) | Lopez/McCoy: court’s order lacked analysis of two Van Horn factors and thus required remand | Blue Buffalo/class: record contained facts showing fairness so remand not required | Court: though explanation was terse and omitted discussion of two factors, the record supplied needed information; no abuse of discretion; affirmed |
| Whether settlement was fair/reasonable overall (Van Horn factors) | Objectors: settlement provided modest recovery, low claims rate indicates poor class outcome | Class/defendant: litigation risks, multistate complexity, immediate cash + injunctive relief, and pro rata top‑up made settlement substantial | Court: weighed merits (uncertain success at trial), complexity, minimal opposition; three factors favor, one neutral; settlement fair, reasonable, adequate; affirmed |
| Whether settlement must allocate differently by state law strength | Nadola: New Jersey (treble damages) and other states stronger—equal per‑claim distribution unfair; district court should have analyzed state‑by‑state valuation | Class: settlement evaluated as whole; differing individual valuations are inherent and opt‑out protects claimants | Court: Nadola had standing but court rejected merit; parties may settle global valuation; district court did not abuse discretion |
| Whether $8M fee (25% of fund) was excessive | Lopez/McCoy/Sibley: fee ~2.7x lodestar and excessive given low 3% claims rate and recovery | Class: 25% is within typical range; no reversion to defendant; lodestar cross‑check supports multiplier; Johnson factors support award | Court: district court properly used percentage‑of‑benefit and cross‑checked lodestar; fee reasonable; affirmed |
| Whether administrative costs should be excluded from benefit base for fee calc | Lopez/Sibley: administrative $1.4M not a class benefit and should be excluded (citing Redman) | Class: Eighth Circuit permits including administration costs in benefit; no showing costs were unjustifiable | Court: follows circuit precedent allowing admin costs in benefit; appellants made no showing of excess; affirmed |
| Whether scheduling objections before fee motion violated Rule 23(h) | Sibley: setting objection deadline before fee motion filing denied meaningful opportunity to object, violating Rule 23(h)(2) | Class: notice disclosed fee cap ($8M); objection opportunity provided; any error harmless | Held: District court erred in scheduling (Mercury/Redman rule correct) but error was harmless here because appellants’ fee challenges lack merit and would not have changed outcome; fee award affirmed |
Key Cases Cited
- Marshall v. National Football League, 787 F.3d 502 (8th Cir. 2015) (standard for reviewing class settlement approval)
- Van Horn v. Trickey, 840 F.2d 604 (8th Cir. 1988) (four Van Horn factors for settlement fairness)
- In re Flight Transportation Corp. Securities Litigation, 730 F.2d 1128 (8th Cir. 1984) (reviewing settlement approval based on record)
- In re Wireless Telephone Federal Cost Recovery Fees Litigation, 396 F.3d 922 (8th Cir. 2005) (weighing uncertainty of litigation against settlement benefits)
- Devlin v. Scardelletti, 536 U.S. 1 (2002) (class‑member interest in settlement and standing discussion)
- Mercury Interactive Corp. v. Mercury Interactive Corp. Securities Litigation, 618 F.3d 988 (9th Cir. 2010) (Rule 23(h) requires objection opportunity after full fee motion filed)
- Redman v. RadioShack Corp., 768 F.3d 622 (7th Cir. 2014) (administrative costs and timing of fee notice issues)