PASADENA, Calif. (CN) - An attorney urged the 9th Circuit to reject a $10.6 million settlement for a class which claimed Kellogg falsely advertised its Frosted Mini-Wheats as improving kids' memory and attentiveness.
Advertisements for Kellogg's Frosted Mini-Wheats cited clinical studies that claimed the cereal improved cognitive function and memory in children by close to 20 percent. When the Federal Trade Commission found that these representations were false or misleading, a class of consumers filed suit.
Without admitting any wrongdoing, Kellogg reached a settlement with the class, and a San Diego federal judge approved that deal in April 2011.
The settlement included a fund of $2.75 million to refund claims, a $5.5 million charitable food donation, and an injunction that bars Kellogg from making similar advertising claims. Kellogg also agreed to pay attorneys' fees and other costs.
Facing objections from some class representatives, the matter went before a three-judge panel of the 9th Circuit on Thursday,
Attorney Janine Menhennet, who represents objector Stephanie Berg, called the settlement "unfair" and claimed it had "some real obvious flaws."
Contributing $5.5 million worth of cereal to organizations for needy adults was "inconsistent with the purposes for which the lawsuit was filed, in that they duped children and the parents of children who eat Frosted Mini-Wheats," said Menhennet, an attorney with the Law Offices of Darrell Palmer.
"Just off the top of my head, it occurs to me perhaps serving school breakfast programs in neighborhoods which are dramatically underfunded would serve the class a lot better than serving high fiber cereal to adults," Menhennet said.
Though Kellogg agreed to a $5.5 million contribution, there was no indication that the pledge would not be included in "what they already do," the lawyer added.
Menhennet also asked the court to take a look at attorneys' fees for class counsel, claiming the figure would surely amount to about $2,100 per hour.
"That doesn't represent a market rate in any market, as far as I can tell," Menhennet said.
Class counsel Timothy Blood, however, called the settlement an "outstanding result," given the likelihood of losing class certification.
"Frankly, it's the kind of settlement the court should embrace," said Blood, an attorney with Blood Hurst & O'Reardon.
Blood also defended fees award, noting that his firm had gone through an appeal, negotiated a settlement, and that the fees were locked in - even if he did more work on the case.
The three-judge panel pressed Blood and Kellogg's attorney on the $5.5 million charitable contribution to the poor, which it said seemed disconnected to false-advertising claims.
Kellogg attorney Kenneth Lee countered that the case was about the "nutritional value" of the cereal and that it was therefore reasonable for the company to make a food contribution to the poor.
"This complaint was about statements about the nutritional value of cereal, we are providing nutritious cereal to charities that will serve children ... and these children will benefit from these nutritious cereals," said Lee, of Jenner and Block.
Judge Stephen Trott asked Lee: "How do we know you're not going to include this in what you would otherwise give, and therefore not feel any lash from it?"
Lee said that he could only represent that Kellogg would make good on the contribution.
Trott responded: "It seems to me you're asking us to trust the same people who told everybody that their kids would get smarter if they ate frosted Mini-Wheats."
Christopher Bandas of Corpus Christi, Texas represents the other objector in the case, Omar Rivero.
For more information on the case, Courthouse News has copies of the reply briefs from Kellogg and other members of the class.
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