Although we were wary that caps on the Red Bull settlement could ultimately be rejected by the court based on dilution concerns, on May 12, 2015, Judge Katherine Polk Failla out of the Southern District of New York approved the settlement and entered an order of dismissal with prejudice in both Red Bull class actions.
The settlement originally intended to provide $10 checks or $15 vouchers to claimants, with the amount of Red Bull’s payout capped at $13 million. However, as soon as the proposed settlement was announced to the public, the claims website was flooded with traffic and quickly crashed – indicating that the proposed class was well in excess of the 1.3 million claimant-limit necessary to ensure each consumer received at least a $10 recovery.
Judge Failla noted this dilution problem and that it ultimately left individual claimants with 42 percent less of a benefit than the terms of the settlement provided, yet still approved the settlement.
Plaintiffs’ counsel in both cases walked away with a cool $3.4 million in attorneys’ fees, not an insignificant recovery for what Judge Failla said was slightly more than a nuisance value settlement.
After all is said and done, one still has to wonder – does this approval reflect what is supposed to be the primary concern of plaintiffs’ and their counsel in bringing these false advertising cases – that is, to benefit and protect consumers? The decision certainly makes settlement caps on recoveries a good option for the defense bar and one that should be encouraged in the future. But, it also sheds light on the motivations of plaintiffs’ attorneys (not that they were in the shadows all that much) – that the real motivation is not ensuring the class gets their full refunds, but making sure plaintiffs’ attorneys secure some type of victory to justify fee awards.