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Mayhew v. Kas Direct, LLC

United States District Court, S.D. New York

June 26, 2018

TANYA MAYHEW, TANVEER ALIBHAI, and TARA FESTA, individually on behalf of themselves and all others similarly situated, Plaintiffs,
v.
KAS DIRECT, LLC, and S.C. JOHNSON & SON, INC., Defendants.

          OPINION AND ORDER

          Vincent L. Briccetti United States District Judge

         Plaintiffs Tanya Mayhew, Tanveer Alibhai, and Tara Festa bring this action, on behalf of themselves and members of a purported nationwide class, asserting claims of (i) deceptive business practices in violation New York General Business Law (“GBL”) § 349; (ii) false advertising in violation of GBL § 350; (iii) unlawful, unfair, and fraudulent business practices in violation of California's Unfair Competition Law; (iv) violation of California's False Advertising Law; (v) violation of Florida's Deceptive and Unfair Trade Practices Act; (vi) breach of New York's warranty laws; (vii) violation of the Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq.; (vii) violation of the consumer protection and trade practices laws of thirty-nine additional states; and (ix) unjust enrichment.

         Now pending before the Court are two motions.

         First, plaintiffs seek an order (i) granting preliminary approval of the parties' amended settlement agreement; (ii) approving the form and manner of notice to the settlement class; (iii) directing notice to the settlement class; (iv) enjoining the prosecution of litigation asserting any claims released in the settlement agreement; and (v) scheduling a final fairness hearing for the consideration and approval of the settlement. (Doc. #99).

         Second, Tarina Skeen, Cheyenne Blanusa, Malissa Brown, Natalie Vidal, and Christina Timmermeier, named plaintiffs in a separate class action pending in this district, Skeen, et al. v. KAS Direct, LLC d/b/a Babyganics, 17 CV 4119 (RJS), seek an order permitting them to intervene. (Doc. #113).

         For the following reasons, plaintiffs' motion is GRANTED, and proposed intervenors' motion is DENIED.

         The Court has subject matter jurisdiction under 28 U.S.C. § 1332(d)(2).

         BACKGROUND

         This putative class action was commenced by plaintiffs Mayhew, Alibhai, and Festa, on behalf of themselves and others similarly situated. Plaintiffs purchased household cleaning and baby care products sold by defendants under the trade mark “Babyganics.” According to plaintiffs, the name Babyganics is intended to convey to consumers that defendants' products are organic, although the products in fact contain synthetic ingredients. Further, plaintiffs allege defendants' Babyganics sunscreens are labeled “mineral-based, ” but in fact contain non-mineral, chemical compounds. In addition, plaintiffs allege defendants' Babyganics products are marketed as “natural, ” despite the inclusion of synthetic ingredients.

         Plaintiffs allege consumers paid a premium for Babyganics products in reliance on defendants' claims that the products were organic, mineral-based, or natural, and were injured in the amount of the purchase price or premium paid.

         I. Procedural History

         Before commencing this action, plaintiffs' counsel sent a demand letter and proposed complaint to defendant KAS Direct, LLC (“KAS”). The parties corresponded for several months regarding potential settlement of plaintiffs' claims, and on August 10, 2016, attended a mediation with David Rotman, Esq., of Gregorio, Haldeman & Rotman. The parties were unable to agree, and plaintiffs filed the initial complaint in this action on September 7, 2016.

         On March 30, 2017, after exchanging discovery, including defendants' sales figures, product lines, internal testing information, and consumer surveys, the parties attended a second mediation, this time with Michael Young, Esq., of JAMS in New York. The parties did not agree to a settlement, but continued negotiating after the mediation. Following approximately twelve weeks of continued discussions, the parties reached an agreement on relief for the class, after which they agreed to attorneys' fees as well as monetary awards for the named plaintiffs.

         On August 4, 2017, plaintiffs filed an amended complaint (Doc. #37) and a motion for preliminary approval of the settlement. (Doc. #38).

         Subsequently, three groups of proposed intervenors moved to intervene: (i) Skeen, Blanusa, Brown, Vidal, and Timmermeier (the “Tear Free Intervenors”) moved on August 11, 2017; (ii) David Machlan moved on August 18, 2017; and (iii) Laura Carroll, Katharine Exo, Armand Ryden, and Katharine Shaffer (the “SPF Intervenors”) moved on August 25, 2017.

         On October 5, 2017, the parties attended a third mediation with Mr. Young of JAMS. Counsel for the proposed intervenors were invited to attend, but only Machlan's counsel did. Afterward, the parties advised the Court they intended to amend their motion for preliminary approval of the settlement agreement to address the proposed intervenors' claims.

         Plaintiffs filed the instant motion for preliminary approval on November 21, 2017, and only the Tear Free Intervenors have renewed their motion to intervene.

         III. Tear Free Intervenors

         As noted above, the Tear Free Intervenors are named plaintiffs in Skeen, et al. v. KAS Direct, LLC d/b/a Babyganics, 17 CV 4119 (RJS).

         The complaint in Skeen alleges KAS's Babyganics bath products are labeled “tear free, ” gentle, non-allergenic, and safe for infants and children when in fact they contain chemicals and ocular irritants. Further, the complaint allege KAS has received numerous consumer complaints regarding injuries cause by its “tear free” products, but has not recalled, relabeled, or reformulated them. The complaint alleges consumers are misled by Babyganics false and deceptive “tear free” labeling, and asserts claims for fraud, negligent misrepresentation, unjust enrichment, violation of Florida and California's consumer protection laws, and violation of the Magnuson-Moss Warranty Act.

         On November 7, 2017, proceedings in Skeen were stayed pending the outcome of plaintiffs' motion for preliminary approval of the settlement agreement in this action. (17 CV 4119, Doc. #36).

         IV. Proposed Settlement

         The proposed amended settlement (the “Agreement”) is on behalf of a class of all persons or entities in the United States who made retail purchases of any Babyganics product marketed and sold in the United States between September 7, 2010, and the date the Court enters preliminary approval.

         The Agreement provides for a settlement fund of $2, 215, 000. Class members are entitled to receive a 100% refund for any Babyganics products for which they have proof of purchase, and a partial refund for up to eight Babyganics products for which they do not have proof of purchase. Refunds are subject to pro rata upward or downward adjustment, depending on the No. of claims filed.

         In addition, the Agreement provides for changes to the labeling and advertising of Babyganics products. First, for as long as defendants' products are marketed as Babyganics, the front label of the products will include a statement referring consumers to the back label for a list of which ingredients are organic and which are not. Second, the front label of Babyganics products will not include the word “natural.” Third, defendants will maintain a product page on their website explaining that sunscreens marketed as “mineral-based” also include chemical ingredients, and will include a reference to the website on the back label of all sunscreen products. Fourth, defendants will conduct batch testing of all “SPF 50” sunscreens to ensure active ingredient levels match or exceed those expressed on the package, and will report the results of such tests to plaintiffs' counsel. Fifth, certain Babyganics products labeled “tear free” will include a back label indicating that the products should not be applied directly to the eye, that eyes should be flushed with water if the product is applied directly to the eye, and that the product should be kept out of reach of children absent adult supervision. Finally, defendants will not use the statement “Plant-Based Ingredients” on the label of its pre-moistened wipe products unless the wipe substrates are made with material derived entirely from plants or the package lists the ingredients of the wipe substrate.

         The Agreement also provides that the following will be paid out of the settlement fund: (i) $3, 500 service awards to each of the named plaintiffs; (ii) up to $416, 475.50 to the settlement administrator for notice and claim administration expenses; and (iii) up to $733, 333.33 in attorneys' fees.

         In addition, with the exception of personal injury claims, the Agreement purports to release the following:

any and all suits, actions, claims, liens, demands, actions, causes of action, obligations, rights, damages, or liabilities of any nature whatsoever, contingent or absolute, matured or unmatured, including Unknown Claims (as defined below), whether arising under any international, federal, state, or local statute, ordinance, common law, regulation, principle of equity or otherwise, that actually were, or could have been, asserted in the Litigation, including, but not limited to, claims which are based on any assertion or contention that the packaging of Covered Products, including the labels, or Advertising based on the content of those labels were inaccurate, misleading, false, deceptive or fraudulent.

(Wiener Decl. Ex. 1: Agreement ¶ 32). In addition, the Agreement specifically releases the claims asserted by proposed intervenor Machlan in Machlan v. S.C. Johnson, Inc., 17 CV 2442 (N.D. Cal.), the Tear Free Intervenors in Skeen, and the SPF Intervenors in Carroll v. S.C. Johnson & Son, Inc., 17 CV 5828 (N.D.Ill.).

         DISCUSSION

         I. Motion to Intervene

         Tear Free Intervenors assert they are entitled to intervene as of right because have an interest in the action that may be impaired if the settlement is preliminarily approved, and they are not adequately represented. The Tear Fear Intervenors also assert permissive intervention is appropriate.

         The Court disagrees.

         With regard to intervention as of right, Fed.R.Civ.P. ...


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