Daniel Greenberg v. Procter & Gamble Company
724 F.3d 713
| 6th Cir. | 2013Background
- Class action over Pampers "Dry Max" diapers alleging diaper-rash-related harms for purchases from Aug 2008–Oct 2011; 12 consolidated cases.
- Before formal discovery or opposition to P&G’s motion to dismiss, parties negotiated a settlement and sought class certification under Rule 23(b)(2) (no opt-outs).
- Settlement: named plaintiffs get $1,000 per affected child; unnamed class members receive only a reinstated one-box refund program (receipt/UPC required), two years of limited website and label language about diaper rash, and small charity/contribution payments; class counsel to receive $2.73 million in fees.
- Objector Greenberg filed extensive objections arguing the settlement primarily benefits counsel and named plaintiffs, deprives unnamed members of meaningful relief and opt-out rights, and that named plaintiffs and counsel failed adequacy duties.
- District court held a <1-hour fairness hearing, approved settlement and fees, and entered an order largely adopting the parties’ proposed form; Greenberg appealed.
- Sixth Circuit majority reversed: found the injunctive and refund relief to unnamed class members largely illusory, concluded the $2.73M fee and the $1,000 incentive payments created preferential treatment and misaligned incentives, and held the district court abused its discretion in certifying the settlement class and approving the deal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the settlement is fair and adequate under Rule 23 | Settlement provides meaningful injunctive relief (label/website) plus refund program; fees reasonable given risks | Claims weak; settlement is a fair compromise that preserves individuals’ rights to sue for actual damages; fees reflect value and work | Reversed: settlement not fair — relief to unnamed members is illusory and does not justify $2.73M fee; district court abused discretion |
| Whether certification under Rule 23(b)(2) was proper (no opt-outs) | (Plaintiffs) Injunctive relief predominates and justifies (b)(2) certification | (P&G) (b)(2) certification appropriate because relief is primarily injunctive and settlement preserves certain individual claims | Reversed: (b)(2) improper in context because predominant relief was monetary/illusory and unnamed members were deprived of opt-out; settlement treated differently named vs. unnamed members |
| Whether named plaintiffs and class counsel adequately represented the class under Rule 23(a)(4) | Incentive awards are permissible and reflect named plaintiffs’ contributions; class representatives will prosecute class interests | Incentive awards needed to induce participation; representatives active in litigation | Reversed: named plaintiffs inadequate — $1,000/child payments likely made them whole and misaligned incentives with unnamed members, so representation was not adequate |
| Whether the district court properly approved class counsel fees | Fees reflect settlement value and counsel’s role | Fees are reasonable given settlement and risks; counsel did work | Reversed as part of fairness determination: $2.73M fee is disproportionate given the minimal value to unnamed class members, counsel’s limited litigation activity, and lack of proof of class benefit |
Key Cases Cited
- Strong v. BellSouth Telecomm., 137 F.3d 844 (5th Cir. 1998) (settling defendant cares about total liability; allocation between class relief and fees not of defense interest)
- In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768 (3d Cir. 1995) (courts must scrutinize fiduciary obligations in settlement classes; risk of attorneys favoring fees over class relief)
- Creative Montessori Learning Ctrs. v. Ashford Gear LLC, 662 F.3d 913 (7th Cir. 2011) (heightened attention to class counsel’s fiduciary role in settlements)
- Vassalle v. Midland Funding LLC, 708 F.3d 747 (6th Cir. 2013) (settlement unfair when it gives preferential treatment to named plaintiffs or counsel while giving perfunctory relief to unnamed members)
- Weinberger v. Great N. Nekoosa Corp., 925 F.2d 518 (1st Cir. 1991) (attorneys may recommend settlements that benefit them financially at expense of class)
- Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003) (unreasonably high fees suggest defendant obtained concessions in merits provisions)
- Dennis v. Kellogg Co., 697 F.3d 858 (9th Cir. 2012) (courts must be vigilant for indications counsel pursued self-interest in settlements)
- In re Aqua Dots Prods. Liab. Litig., 654 F.3d 748 (7th Cir. 2011) (criticizing settlement that imposes class transaction costs to obtain a refund already on offer)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (courts must give heightened attention to Rule 23 requirements in settlement classes)
- Radcliffe v. Experian Info. Solutions, 715 F.3d 1157 (9th Cir. 2013) (incentive awards that significantly exceed absent members’ recovery can create divergence of interests)