Klein v. Robert's American Gourmet Food, Inc.

28 A.D.3d 63, 808 N.Y.S.2d 766
CourtAppellate Division of the Supreme Court of the State of New York
DecidedJanuary 31, 2006
StatusPublished
Cited by29 cases

This text of 28 A.D.3d 63 (Klein v. Robert's American Gourmet Food, Inc.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Klein v. Robert's American Gourmet Food, Inc., 28 A.D.3d 63, 808 N.Y.S.2d 766 (N.Y. Ct. App. 2006).

Opinion

[65]*65OPINION OF THE COURT

Fisher, J.

On this appeal, we are presented with a challenge to the certification of a nationwide, settlement-only class action involving, inter alia, claims of fraud and the violation of sections 349 and 350 of the General Business Law. The facts are largely undisputed.

The defendant Robert’s American Gourmet Food, Inc. (hereinafter Robert) created and distributed snack food products under the brand names Pirate’s Booty™, Fruity Booty™, and Veggie Booty™ (hereinafter the products). The products were manufactured by the defendant Keystone Food Products (hereinafter Keystone).

When it became known that the fat and caloric content of the products was substantially higher than advertised, lawsuits alleging, inter alia, fraud, and deceptive trade practices were instituted in state courts in New York, California, Florida, and New Jersey. In April 2002, the plaintiffs in this case commenced such an action in the Supreme Court, Nassau County, on behalf of themselves and others similarly situated. They moved for class certification, and soon began settlement negotiations with the defendants and with counsel representing the plaintiffs in other actions pending across the country. Those negotiations resulted in a proposed “Stipulation And Agreement of Compromise and Settlement,” dated November 1, 2002, and later amended (hereinafter the settlement).

The settlement, among other things, required Robert to issue and redeem a total of $3.5 million in discount coupons for the purchase of Robert’s snack food products. The coupons were to be redeemed at the point of purchase, and each was to be in an amount equaling approximately 20% of the retail price of the product purchased. The coupons were to be distributed at a rate reasonably calculated to result in the redemption of approximately $780,000 per six-month period. In addition, the products were to be tested for fat and caloric content at monthly, and later at quarterly, intervals, and the results were to be reported to class counsel for a period of four years. In exchange, all class members who did not exclude themselves from the class would be enjoined from bringing suit against the defendants on any of the claims asserted in the various pending cases, other than personal injury claims. Lastly, the settlement authorized the payment of up to $790,000 in attorney’s fees.

By order entered November 6, 2002, the Supreme Court, in effect, conditionally certified a class (hereinafter the class) for [66]*66settlement purposes only. The class consisted of “all persons in the United States who, between January 1, 1999 and October 1, 2002 . . . purchased at retail any of the following products distributed by Robert’s American Gourmet Food, Inc.[:] Pirate’s Booty™, Fruity Booty™, or Veggie Booty™ snack foods.” The Supreme Court also approved the notice of pendency and settlement of class action (hereinafter the notice), and set January 10, 2003, as the date for a “Settlement Fairness Hearing” (hereinafter the fairness hearing). Additionally, the order established procedures and deadlines for class members to opt out of the class or to file objections to the proposed settlement up to and including January 2, 2003.

The appellant was the plaintiff in an individual action commenced in the Supreme Court, New York County, asserting essentially the same claims against the same defendants. Because she was a retail purchaser of one or more of the products, she became a member of the class in this action as well. As such, she filed an objection to the settlement, contending, among other things, that it provided insufficient value to class members, that it contained no injunction against, or admission of liability by, the defendants, that the proposed notice was inadequate, and that the proposed attorney’s fees were excessive. The appellant subsequently filed a supplemental objection raising substantially the same issues.

Apart from the appellant, only a handful of other members of the class filed objections. One objector withdrew her objection prior to the fairness hearing in exchange for small changes to the settlement’s monitoring provisions and the payment of $33,000 in fees to her attorney out of the $790,000 fund previously requested by the plaintiffs’ counsel. At the fairness hearing, another objector withdrew her objection in exchange for a commitment by the defendants, inter alia, to publish a summary notice of the settlement (hereinafter the summary notice) in a national newspaper within 15 days of the settlement’s approval, and to pay her attorney $25,000 in fees out of the same $790,000 fund. As part of the agreement with that objector, the plaintiffs’ attorney represented to the court that class members would be given an additional 30 days from the publication of the summary notice to opt out “despite the fact that the settlement [will have] been approved.” The summary notice was published in the January 23, 2003, edition of USA TODAY, and gave class members until February 26, 2003, to opt out of the class.

[67]*67On or about January 13, 2003, the appellant filed a second supplemental objection, expressing the additional concern that the settlement as drafted could be discharged in any subsequent bankruptcy proceeding. Apparently, that concern was never considered by the Supreme Court because it had already issued a final order and judgment which was entered the following day. The Supreme Court, inter alia, (1) certified the action as a class action for settlement purposes, (2) approved the settlement as fair, reasonable, adequate, and in the best interests of the class members, (3) dismissed the complaint, (4) enjoined class members from prosecuting as against the defendants any claims released under the terms of the settlement, and (5) awarded $790,000 in attorney’s fees to be paid to the plaintiffs’ attorneys and distributed in accordance with the terms of the settlement.

On the day the final order and judgment was entered, the appellant moved to vacate it in a motion styled as one for leave to renew the plaintiffs’ motion for class certification and approval of the settlement. The following day, January 15, 2003, the appellant informed Keystone in writing that she intended to opt out of the class, and separately served a formal opt-out notice. As a consequence, the plaintiffs and the defendants opposed the appellant’s motion on the ground that she lacked standing because she had opted out and was no longer a member of the class.

On or about February 3, 2003, the appellant informed the defendants and the plaintiffs in writing that she had “reconsidered” her position and was now rescinding her prior opt-out notice. The same day, however, the Supreme Court denied her motion on the ground that, by filing an opt-out notice, she had lost standing to assert objections to the settlement. Thereafter, the Supreme Court denied the appellant’s motion for leave to renew and reargue. These appeals followed.

I

As a threshold matter, we hold that, under the circumstances presented here, the appellant should have been afforded standing to assert her objection to the settlement, both because her purported opt-out notice was defective and untimely, and because, in any event, her written request to opt back in was submitted before the final deadline for the submission of requests for exclusion.

The notice attached to the Supreme Court’s original order conditionally certifying the class provided for an opt-out period [68]

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Bluebook (online)
28 A.D.3d 63, 808 N.Y.S.2d 766, Counsel Stack Legal Research, https://law.counselstack.com/opinion/klein-v-roberts-american-gourmet-food-inc-nyappdiv-2006.