Bezdek v. Vibram USA Inc.

• Citation: 79 F.Supp.3d 324
• Decision Date: 16 January 2015
• Docket Number: 13–10764–DPW.,Civil Action Nos. 12–10513–DPW
• Parties: Valerie BEZDEK, individually and on behalf of all others similarly situated, Plaintiff, v. VIBRAM USA INC. and Vibram FiveFingers LLC, Defendants. Brian Defalco, individually and on behalf of all others similarly situated, Plaintiff, v. Vibram USA Inc. and Vibram FiveFingers LLC, Defendants.
• Court: U.S. District Court — District of Massachusetts

79 F.Supp.3d 324

Valerie BEZDEK, individually and on behalf of all others similarly situated, Plaintiff

v.VIBRAM USA INC. and Vibram FiveFingers LLC, Defendants.

Brian Defalco, individually and on behalf of all others similarly situated, Plaintiff

v.Vibram USA Inc. and Vibram FiveFingers LLC, Defendants.

Civil Action Nos. 12–10513–DPW

13–10764–DPW.

United States District Court, D. Massachusetts.

Signed Jan. 16, 2015.

Janine L. Pollack, Wolf Haldenstein Adler Freeman & Herz, Joshua E. Keller, Milberg LLP, New York, NY, Jayne A. Goldstein, Pomerantz LLP, Weston, FL, Michael K. Beck, Gary Roberts & Associates, P.A., West Palm Beach, FL, Nathaniel L. Orenstein, Bryan A. Wood, Daryl Devalerio Andrews, Glen Devalerio, Berman Devalerio Pease Tabacco Burt & Pucillo, Boston, MA, for Plaintiff.

Andrew C. Ryan, Michael J. Rye, Cantor Colburn LLP, Hartford, CT, Christopher M. Morrison, Dana Baiocco, Jonathon H. Roth, Joseph B. Sconyers, Jones Day (Bos), Boston, MA, for Defendants.

MEMORANDUM AND ORDER

DOUGLAS P. WOODLOCK, District Judge.

Before me, following a fairness hearing and the submission of various post-hearing materials as I directed, is a proposed settlement agreement between the defendants, Vibram USA Inc. and Vibram FiveFingers LLC (collectively, “Vibram”), both Massachusetts residents, and a nationwide class of consumers who purchased FiveFingers “barefoot” footwear directly from the defendants or through authorized retailers between March 21, 2008, and May 27, 2014. The plaintiffs in these consolidated actions allege that the defendants misrepresented in their advertising and marketing that this footwear provides certain health benefits to wearers.

The plaintiffs have moved for approval of the proposed settlement agreement, which would establish a $3,750,000 non-reversionary settlement fund to provide refunds to eligible class members and cover the costs associated with this litigation, including administrative costs, attorneys' fees and expenses, and incentive awards for the named plaintiffs. The agreement also provides that Vibram will refrain from making representations of health benefits associated with FiveFingers unless it has reliable evidence to support those representations.

In connection with settlement approval, class counsel for the plaintiffs seek $937,500 in attorneys' fees, $61,674.44 in expenses,¹ and $6,500 in plaintiffs' incentive awards, allocating $2,500 each to Valerie Bezdek and Brian DeFalco, the named plaintiffs here, and $1,500 to Ali Safavi, the plaintiff in a parallel proceeding in the Central District of California, who has agreed to file a joint stipulation to dismissal of that action with prejudice if this settlement is approved. All of these fees and awards would be paid out of the settlement fund. Three objectors raised a variety of concerns about the proposal, contending among other things that the notice to the class and the monetary and injunctive relief provided by the agreement are inadequate, that the requested attorneys' fees are excessive, and that incentive awards and a cy pres provision² are inappropriate.

This memorandum sets forth in detail my reasons for finding that the proposed settlement agreement is fair, reasonable and adequate as required by Fed.R.Civ.P. 23(e). Accordingly, I will approve the class with finality and also approve the settlement agreement involving the class, Dkt. No. 80. I further award the attorneys' fees, expenses, and incentive awards requested.

I. BACKGROUND

A. Procedural History

1. Underlying Actions

In mid–2012, plaintiffs in three states filed putative class action complaints alleging that the defendants engaged in deceptive marketing of FiveFingers footwear by advertising through in-store and online mechanisms, as well as through product packaging, that wearing FiveFingers provides certain “health benefits,” including muscle strengthening and more natural movement and alignment, and representing that these health benefits are supported by scientific research.³ The underlying complaints in these actions contended that the assertions of health benefits and scientific support for such benefits are false and misleading.

On March 21, 2012, Bezdek filed the first of the complaints in this court on behalf of a proposed nationwide class, alleging violations of Mass. Gen. Laws ch. 266, § 91 (untrue and misleading advertising), Mass. Gen. Laws ch. 93A, §§ 2, 9 (unfair and deceptive practices), and Florida Statutes § 501.201 et seq. (on behalf of an alternative Florida-based class), as well as unjust enrichment. Bezdek purchased a pair of FiveFingers footwear in April 2011 for $104.90 through the defendants' website, purportedly relying on the representations of health benefits associated with the footwear. She claims that if she, and other reasonable consumers, had known there was no scientific evidence supporting those benefits, she would not have purchased the footwear, and that she has suffered an economic loss attributable to the defendants' conduct.

The defendants moved to dismiss Bezdek's complaint, and on June 25, 2012, Bezdek responded by filing an amended complaint, which the defendants challenged through a renewed motion to dismiss. On February 20, 2013, I denied the initial motion to dismiss as moot, and denied in part the renewed motion to dismiss, finding that Bezdek adequately alleged falsity or deception, a cognizable “price premium” injury under the applicable consumer protection laws, and scienter. Bezdek v. Vibram USA Inc., Civ. No. 12–10513–DPW, 2013 WL 639145, at *3–4, *8–9 (D.Mass. Feb. 20, 2013). I allowed the renewed motion to dismiss on the unjust enrichment claim, because I concluded that the plaintiff had an adequate available remedy at law. Id. at *9.

The second relevant complaint was filed on July 9, 2012 in the United States District Court for the Central District of California by Safavi, represented by the same counsel as Bezdek. See Safavi v. Vibram USA Inc., No. 12–cv–05900–BRO–JCG (C.D.Cal.) (Compl., July 9, 2012, ECF No. 1). Safavi purchased a pair of FiveFingers footwear in July 2011 from an REI store in California for $92.96, also purportedly relying on the representations of health benefits associated with the footwear.Id. ¶ 11. On behalf of a proposed class of California consumers, Safavi alleges violations of the California Unfair Competition Law, Business and Professions Code § 17200 et seq., the California Consumers Legal Remedies Act, Civil Code § 1750 et seq., and breach of express warranty. Id. ¶¶ 66–92. On September 24, 2012, the Safavi action was stayed pending a ruling on class certification in the Bezdek action. Safavi, No. 12–cv–05900–BRO–JCG (Order, Sept. 24, 2012, ECF No. 24). If the settlement is approved, Safavi and the defendants agree to file a stipulation of dismissal of that action in the Central District of California.

The third relevant complaint was filed on August 13, 2012 in Illinois state court by DeFalco. See De Falco v. Vibram USA, LLC, No. 12–cv–07238, 2013 WL 1122825, at *2 (N.D.Ill. Mar. 18, 2013). DeFalco purchased three pairs of FiveFingers footwear in or about December 2011 and April 2012 from a FiveFingers authorized retailer in Illinois, for prices of approximately $130 and $110. Id. at *1. On behalf of a proposed class of Illinois consumers, DeFalco alleges violations of the Illinois Fraud and Deceptive Business Practices Act, 815 ILCS § 505/1 et seq., breach of express warranty, and unjust enrichment. Id. at *6. The De Falco action was removed to the United States District Court for the Northern District of Illinois on September 11, 2012. Id. at *2. On March 18, 2013, the defendants' motion to dismiss was granted in part and denied in part, and its motion for transfer to this district was granted. Id. at *12.

I stayed the Bezdek matter from March to May 2013 to allow for the transfer of the De Falco matter from the Northern District of Illinois, and for the disposition of the motion to transfer the Safavi matter from the Central District of California. The Safavi matter was ultimately stayed rather than transferred. Following the transfer of the De Falco matter in April 2013, I consolidated it with the Bezdek action.

2. Discovery and Settlement Negotiations

In July 2013, I set deadlines for discovery and motions for certification of the class in the now consolidated Bezdek/De Falco actions, anticipating that fact discovery would be completed by April 21, 2014. Counsel represent that over the course of the summer and fall of 2012, the parties engaged in extensive written discovery efforts, through written requests made by each party of the other, and through third-party document subpoenas.

Although mediation efforts in January 2013 failed, sometime in the fall of 2013 the parties resumed settlement negotiations and reached an agreement in principle on December 12, 2013. On December 20, 2013, the parties jointly requested a stay of the proceedings, which I granted, and anticipated finalizing a settlement agreement in early 2014. At that time, the plaintiffs had not filed a motion for class certification or identified an expert on class issues, nor had either party taken any depositions.

3. Proposed Settlement and Preliminary Review

On April 30, 2014, the parties submitted a proposed settlement agreement which was shortly thereafter replaced by a joint amended settlement agreement. The plaintiffs thereafter moved for preliminary review, authorization of class notice, and scheduling of a final fairness hearing.

Following a hearing, on May 12, 2014,⁴ I granted the plaintiffs' motion and issued an order, Dkt. No. 76 (“order authorizing notice”), certifying pursuant to Fed.R.Civ.P. 23, a class for the purposes of settlement only; appointing Bezdek as the class representative, and her counsel, Wolf Haldenstein Adler Freeman and Herz LLP, as lead class counsel for the class; approving notice as set forth in attachments to the amended settlement agreement; appointing Heffler Claims Group LLC as the...