Richardson v. L'Oreal USA, Inc., 991 F. Supp. 2d 181

Background

Plaintiffs move for conditional class certification for settlement and final approval; court previously preliminarily approved settlement and certified settlement class.
Settlement class includes all consumer purchasers from Aug 30, 2008 to June 27, 2013; excludes retailers, stylists, and certain parties; relief is injunctive: remove offending labels for at least five years with potential resumption after a 60% mass-market reduction.
L’Oréal allegedly labeled salon-only products that were sold in mass-market outlets; plaintiffs seek injunctive relief regarding labeling/advertising; case originated in Northern District of California and was refiled here for broader product scope.
Settlement releases class-wide damages claims but preserves individual damages actions; plaintiffs’ counsel may receive up to $950,000 in fees; incentive awards of $1,000 per class representative; notice disseminated via USA Today and a website.
Three objections were raised, including Melissa Holyoak’s comprehensive challenge; fairness hearing held October 11, 2013.
Court denies final class certification and final settlement approval, finding issues with standing, cohesiveness, and the propriety of the damages release under Rule 23(b)(2).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing to seek injunctive relief	Ligon et al. claim likelihood of future injury from mislabeling supports standing.	CCAF argues lack of imminent future injury given knowledge of deception.	Plaintiffs have standing to seek injunctive relief.
Rule 23(b)(2) class certification viability	Class treatment appropriate for injunctive relief and uniform relief across the class.	Damages release and lack of cohesive injury undermine (b)(2) suitability.	Class certification not appropriate under Rule 23(b)(2) due to damages release and cohesiveness concerns.
Intra-class cohesiveness for (b)(2) certification	Intra-class interests align under injunctive relief; representative claims arise from common mislabeling.	Mass-market and salon purchasers have divergent interests; lack of cohesiveness and potential conflicts.	Intra-class conflicts preclude cohesiveness required for (b)(2) certification.
Settlement fairness, reasonableness, and adequacy	Settlement provides injunctive relief and avoids litigation risk.	Fee award and incentive structure may be unfair; class-wide damages release lacks justification.	Settlement not fair, reasonable, and adequate.
Effect of release on absent class members' rights	Damages claims are preserved for individuals; class-wide damages release is necessary to obtain injunctive relief.	Damages release binds absent members without opt-out, risking due process concerns under Shutts and Wal-Mart.	Release of class-wide damages claims without adequate due process is improper; certification and approval denied on this basis.

Key Cases Cited

Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (U.S. Supreme Court 1997) (settlement-only class certification requires heightened scrutiny)
Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (U.S. Supreme Court 2011) (issues with damages claims under Rule 23(b)(2); need for opt-out for monetary relief)
Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (U.S. Supreme Court 1985) (due process and opt-out rights in nationwide settlements)
In re Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369 (D.D.C. 2002) (guides scrutiny of settlement terms in complex class actions)
Ries v. Arizona Beverages USA LLC, 287 F.R.D. 523 (N.D. Cal. 2012) (standing to seek injunctive relief and likelihood of future harm)
Kottaras v. Whole Foods Mkt., Inc., 281 F.R.D. 16 (D.D.C. 2012) (damages-centric class actions and related cert. concerns)
Cobell v. Salazar, 679 F.3d 909 (D.C. Cir. 2012) (incentive awards and adequacy considerations in class actions)
LivingSocial Mktg. & Sales Practice Litig., No. 11-472, 2013 WL 1181489 (D.D.C. 2013) (settlement fairness factors in post-certification context)