Context:

• • The case began after Valisure, an analytical pharmacy, filed an FDA citizen petition in October 2022 claiming it found high benzene levels in various brands’ spray products, including IGK’s.
  • Benzene is classified as a known human carcinogen by the EPA, IARC, and other agencies based on evidence linking it to blood disorders like leukemia.
  • While some benzene exposure is unavoidable due to environmental sources, the FDA says benzene should not be used in drug or cosmetic products due to its toxicity.
  • For unavoidable benzene, the FDA has said it should be limited to 2 ppm to minimize risk, the threshold plaintiffs alleged IGK products exceeded.
  • According to the Food, Drug, and Cosmetic Act, a cosmetic product is deemed “adulterated” if it contains any harmful substances that could cause injury when used as directed or in the customary manner.

Key Takeaways:

• • Scrutinize the ingredient lists and safety testing of your favorite cosmetic products to spot any red flags or potentially harmful chemicals.
  • Be aware that just because a contaminant like benzene isn’t listed doesn’t necessarily mean it isn’t present, as it may be an undisclosed byproduct of manufacturing.
  • If a cosmetic product you use is subject to a recall, stop using it immediately and check the brand’s website for refund or replacement options.
  • Consider choosing cosmetics and personal care products from brands that emphasize non-toxic ingredients, rigorous safety screening, and transparency about their manufacturing and testing protocols to minimize contamination risks.
  • Stay informed about cosmetic safety news, FDA updates, and product recalls to learn about any adulteration issues with items you use.

Elements and Applications:

• • FAL: Plaintiff must show (1) defendant engaged in advertising; (2) the advertisement was untrue or misleading; and (3) plaintiff suffered injury because of reliance. Here, alleging failure to disclose benzene made LBP’s ads misleading.
  • UCL: Focuses on whether the alleged conduct was likely to deceive a reasonable consumer, which omitting known benzene contamination would arguably do.
  • CLRA: Applies to sale of goods to consumers, prohibiting deceptive representations about product characteristics, standard, quality, etc. Selling adulterated products would likely qualify.
  • FDUPTA: The falsity of an ad and a plaintiff’s reliance are key. Plaintiffs assert benzene rendered IGK products useless and a reasonable consumer would not buy them if properly labeled.
  • Unjust Enrichment: Focuses on whether defendant unfairly retained money from plaintiff. By selling contaminated products at full price, plaintiffs argue LBP unjustly profited.

Key Takeaways:

• • Many states have consumer protection laws that allow individuals to sue over false advertising, deceptive labeling, and harmful products.
  • These laws often focus on whether a reasonable consumer would be misled by a company’s conduct and whether the plaintiff relied on and was harmed by the deception.
  • Omitting known safety issues or product defects can violate these laws just as much as making affirmatively false statements.
  • Selling an “adulterated” product that doesn’t meet labeled quality or safety standards may be actionable under these statutes.
  • Unjust enrichment claims allow plaintiffs to recover money unfairly retained by a defendant, such as profits from mislabeled goods.

Procedural Insights:

• • After a Complaint is filed, defendants often file a Motion to Dismiss arguing the Complaint is legally deficient in hopes of ending the case quickly
  • When only certain claims are dismissed, the case proceeds on the surviving claims, which puts pressure on defendants
  • Courts often mandate that litigants engage in mediation or attempt to negotiate a resolution prior to proceeding to trial.
    
  • If initial mediation is unsuccessful, parties often continue informal settlement negotiations if they think a deal is possible
  • A Notice of Settlement informs the Court the parties have resolved the claims, but the settlement still needs to be documented and approved

Takeaways:

• • Motions to dismiss are a common early defense tactic, but courts often allow at least some claims to proceed
  • Mediation is frequently required in federal cases and can be a catalyst for settlement negotiations even if initially unsuccessful
  • It’s common for class action cases to settle before trial, as defendants often want to avoid further litigation expense, uncertainty, and bad publicity
  • However, the settlement process is heavily scrutinized by the Court to ensure fairness to absent class members
  • Even after a Notice of Settlement, it can still take months to finalize the agreement, approve notice procedures, and get final approval

Important Provisions:

• • Release of Claims: Class Members who don’t opt out will release LBP from liability for the settled claims, even if they don’t submit a claim
  • Non-Reversionary Fund: No amount of the Settlement Fund will return to LBP – all money will be paid out to the Class or cy pres
  • Settlement Administration Costs: The estimated $250,000 costs of administering the settlement come out of the Fund first
  • Incentive Awards: The named Plaintiffs will request up to $2,500 each for their service as Class Representatives
  • Remaining Funds: Any leftover funds 180 days after payments are issued will be redistributed pro rata to claimants or donated to a Court-approved cy pres recipient

Key Insights:

• • Proof of purchase requirements are common to prevent fraudulent claims, but class action settlements still often allow claims without proof to ensure all class members can participate
  • Pro rata reductions are a fairness mechanism to ensure the settlement fund isn’t exhausted, but they can reduce class member compensation if claims volume is high
  • A 25% fee request is on the high end but fairly typical for class actions, and courts heavily scrutinize the reasonableness of any fee awarded
  • Named plaintiffs are often awarded incentive payments for the time and effort of serving as class representatives, but courts are increasingly cautious about large awards
  • Non-reversionary settlement funds ensure defendants can’t recoup any amounts not paid to class members and instead excess funds are redistributed pro rata or donated to charity

Factors to Consider:

• • Opt-outs preserve your right to bring your own lawsuit but you have to pursue your claims individually which can be costly and time-consuming
  • Objectors have the opportunity to voice concerns to the Court about settlement fairness, but objections are often uphill battles and very few ultimately change settlement terms
  • Those who do nothing and don’t opt out still give up their legal rights to sue separately even if they don’t submit a claim, which prevents them from pursuing higher individual damages
  • Typically, only a very small percentage of class members opt out or object – in most cases less than 1% – as many are happy to get some automatic settlement benefits

Tips:

• • Think carefully about your individual circumstances before deciding whether to participate, object, or opt out – there’s no one-size-fits-all approach
  • If objecting, focus on concrete unfairness concerns – vague or boilerplate complaints are given little weight and serial objectors’ motives may be questioned
  • Those opting out should be prepared to find their own attorney and actively pursue individual litigation or settlement since they are exiting the class representation
  • Not submitting a claim or opting out are the lowest effort options but provide the least individual benefit – you get nothing but still give up your rights
  • When in doubt, do your research, consult an attorney if needed, and make an informed decision before the deadlines expire

Key Considerations:

• • Court appointment of Class Counsel is meant to ensure attorneys are qualified, experienced, and adequate representatives for absent Class Members
  • By seeking a percentage-of-fund fee award, Counsel puts its compensation at risk – if the case resolves unfavorably, it may receive no money at all for its work
  • Fees must be approved by the Court, which closely analyzes billing records to assess reasonableness and may award less than requested
  • Though 25% is a frequently requested benchmark, fee percentages can vary from the single digits to one third of the fund depending on case size and complexity
  • Having fees come from the Settlement Fund avoids the need for Class Members to pay out of pocket but some argue it reduces their total recovery

Takeaways:

• • Court-appointed Class Counsel is duty-bound to represent Class Members’ best interests and maximize their relief
  • A 25% fee award, if approved, would be on the higher end but is not unprecedented in class action litigation as compensation for Counsel’s risk and result achieved
  • However, some class action critics argue these fee structures misalign incentives and result in counsel being overpaid compared to individual recoveries
  • Courts are the bulwark against excessive fees, rigorously analyzing fee requests and supporting records to determine appropriate awards
  • Class Members can raise objections to any fee petition they believe is unreasonable for the Court to consider in its assessment

The Court’s Role as Fiduciary:

• • When reviewing a class action settlement, the judge assumes a protective obligation to safeguard the interests of Class Members not directly participating, verifying that the resolution is just, appropriate, and sufficient
  • At preliminary approval, the Court makes a threshold determination that the settlement has no obvious deficiencies, falls within the range of reasonableness, and justifies notice to the Class
  • After hearing from Class Members and considering the settlement as a whole, the Court gives a final thumbs up or down at the Final Approval Hearing
  • As part of its analysis, the Court assesses factors like the strength of Plaintiffs’ case, the settlement amount, the scope of the release, distribution plan fairness, and reaction of the Class
  • If approved, the Court will enter a final judgment adopting the settlement terms and dismissing the claims released by Class Members

Key Considerations on Releases and Admissions:

• • Released claims are the core “give” for Class Members in exchange for the settlement benefits – in return for compensation, they agree to dismiss their legal claims
  • Releases are often broad, covering known and unknown claims to provide Defendants with global peace – Class Members should carefully consider the claims given up
  • By covering all Class Members who do not opt out, settlements achieve comprehensive resolution and avoid leaving lingering liability
  • The “No Admission of Wrongdoing” clause is standard to allow Defendants to settle claims without conceding fault, maintaining defenses if the settlement fails
  • Critics argue these provisions let Defendants off the hook too easily, but courts generally accept them as promoting settlement

Questions:

1. What was the main allegation against IGK in the class action lawsuit?
   1. The shampoo had dangerous amounts of benzene, a known carcinogen.
   2. The products caused hair loss
   3. IGK misrepresented the products’ ingredients
   4. The dry shampoos were contaminated with asbestos
2. What is the total amount of the proposed Settlement Fund?
   1. $500,000
   2. $850,000
   3. $1.2 million
   4. $2.5 million
3. How can Class Members get a full refund under the settlement?
   1. By filing a Claim Form without attaching receipts or other documentation of the purchases
   2. Claim Form submission with Proof of Purchase
   3. By opting out of the settlement
   4. Full refunds are not available under the settlement
4. What is the Class Member opt out or settlement objection deadline?
   1. November 19, 2024
   2. April 23, 2024
   3. September 6, 2024
   4. January 1, 2025
5. What claims are Class Members releasing if the settlement is approved?
   1. Only the claims specifically listed in the Complaint
   2. Every claim related to benzene in IGK products that were or could have been asserted
   3. All claims against IGK, whether related to the lawsuit or not
   4. Class Members are not releasing any claims

Answers:

1. A. The dry shampoos contained harmful levels of benzene. The lawsuit alleged that IGK’s products contained benzene, a known carcinogen, at levels above FDA limits, rendering them adulterated.
2. B. $850,000. Under the proposed settlement, IGK will pay $850,000 into a non-reversionary Settlement Fund to compensate Class Members and pay fees, costs, and settlement expenses.
3. B. Claim Form with Proof of Purchase submission. To get a full refund, Class Members must timely submit a valid Claim Form and supporting receipts or other documentation showing their IGK purchases.
4. C. September 6, 2024. Class Members who wish to exclude themselves from or object to the settlement terms must do so by this date, well in advance of the November 2024 final approval hearing.
5. B. All claims connected to benzene in IGK products that were or could have been asserted. The settlement releases all claims relating to the presence of benzene in the covered products during the Class Period, not just the specific causes of action alleged in the operative Complaint.

Disclaimer

This guide is intended for informational purposes only and is not legal advice. The information provided is based on publicly available settlement documents and should not be construed as an endorsement or opinion on the merits of the lawsuit allegations. Class Members should review the official settlement notices and consult with their own attorney for case-specific advice. Settlement terms are subject to change prior to final approval by the Court.