WASHINGTON (CN) - L'Oreal can settle false advertising claims over supposedly salon-only products that are sold in stores by changing its labels, a federal judge ruled.
Alexis Richardson had led a class against the cosmetics company on behalf of consumers who purchased L'Oreal's Matrix Biolage, Redken, Kerastase and Pureology products after August 30, 2008.
The April 2013 complaint alleged that L'Oreal deceptively labeled the products as "available only in salons" while nevertheless stocking them in Target, Kmart and other non-salon retail establishments.
"Plaintiffs allege that the salon-only label implies a superior quality product and builds a cachet that allows L'Oréal to demand a premium price," according to the settlement-approval ruling filed Thursday.
The plaintiffs had filed the suit in Washington, D.C., after resolving related claims from an earlier action in the Northern District of California.
"In the course of those negotiations, L'Oréal provided plaintiffs with extensive documents and information relating to its anti-diversion and labeling practices," U.S. District Judge John Bates wrote.
"But plaintiffs allege that, despite L'Orèal's efforts, the products are available in non-salon establishments, and argue that L'Orèal's labeling and advertising for these products is hence deceptive and misleading."
As part of the settlement, class representatives can petition for no more than $1,000 each, and L'Oréal will pay up to $950,000 in attorney fees, costs and expenses. The settlement otherwise provides only injunctive relief.
In his approval order, Bates explained the class's reasons for not trying to certify a damages class.
"First, assessing the value of the salon-only claims to consumers would be difficult, and L'Oréal has never attempted to do so," the ruling states. "Second, assessing damages on a class-wide basis would be even more difficult - the information provided during the negotiation process revealed substantial price variations among retailers and in different regions, and indicated that non-salon retailers often sell the products at a lower price than do salon retailers, making damages to those purchasing the product in non-salon establishments difficult to analyze."
Bates said he would defer to counsel's assessment.
"And class members will retain their right to seek damages in individual actions, dispelling many concerns about foregone payments," he added. "In these circumstances, an equitable-relief-only settlement may be approved."
If the settlement wins final approval, L'Oreal will remove the "salon only" label from all of its U.S. advertising and labeling on products distributed in the states.
It will also discontinue manufacturing the labels for its U.S. products, and it will remove the "salon-only" claims from its websites and from any promotion materials.
Both parties have agreed to publish legal notices in USA Today for one week, referring class members to a website that contains a copy of the proposed agreement. Any objections to the settlement must be filed before the Fairness Hearing on October 11, 2013, when the final settlement will be approved.
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