Case 1:14-cv-23100-JAL Document 35 Entered on FLSD Docket 05/04/2015 Page 1 of 26 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION CASE NO.: 1:14-cv-23100-LENARD/GOODMAN AMBER GRACE TEUFEL, as an individual and on behalf of all others similarly situated, Plaintiff, vs. KARLIN FOODS CORPORATION, an Illinois Corporation, Defendant. UNOPPOSED MOTION FOR PRELIMINARY CLASS CERTIFICATION FOR SETTLEMENT PURPOSES AND APPROVAL OF NOTICE TO THE CLASS, AND INCORPORATED MEMORANDUM OF LAW Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiff Amber Teufel (“Plaintiff”), with the consent of Karlin Foods Corporation (“Defendant”), hereby moves for an Order: 1. Conditionally certifying the following proposed Class for settlement purposes only: All Persons who, for personal or household use, purchased in the United States from August 22, 2010 to the present, Wal Mart’s Great Value™ All Natural Cornstarch, which was distributed by Karlin Foods Corporation and sold exclusively at Wal-Mart Stores1 . Excluded from the Settlement Class are: (a) all Persons who purchased or acquired the Product for resale; (b) Karlin Foods Corporation and its employees, principals, affiliated entities, legal representatives, successors and assigns, and Wal-Mart Stores, Inc. and its parents and/or subsidiaries; (c) any 1. Product means Wal Mart’s Great Value™ All Natural Cornstarch, distributed by Karlin Foods Corporation and sold exclusively at Wal-Mart Stores, Inc. Case 1:14-cv-23100-JAL Document 35 Entered on FLSD Docket 05/04/2015 Page 2 of 26 Person who files a valid, timely Request for Exclusion; (d) federal, state, and local governments (including all agencies and subdivisions thereof, but excluding employees thereof) and (e) the judges to whom this Action is assigned and any members of their immediate families. 2. Conditionally designating Plaintiff Teufel as the representative of the Class. 3. Appointing Joshua H. Eggnatz, Esq. and Michael J. Pascucci, Esq. of Eggnatz, Lopatin & Pascucci, LLP, 5400 S. University Drive, Suite 413, Davie, FL 33328, as Lead Counsel for the Class; 4. Preliminarily approving the terms of the Settlement as set forth in the Stipulation of Settlement; 5. Approving the forms of notice and the methods of providing notice of the Settlement to the Class as set forth in the Stipulation of Settlement and the exhibits thereto and directing that said forms of notice be provided to Class Members in that manner; 6. Scheduling a Final Approval Hearing at which the request for final approval of the proposed Settlement, Plaintiff Counsel’s application for an award of attorneys’ fees, Class Representative Service Award, and expenses, and the entry of the Final Judgment and Order will be considered. As set forth in the Stipulation of Settlement and Exhibits in support thereof, the parties suggest the following event schedule leading to the claims submission deadline, predicated on preliminary approval by the Court on May 25, 2015: Proposed Date2 Event June 15, 2015 Publication notice begins (21 days after preliminary approval) 2. Pursuant to the Parties’ stipulation, the actual deadlines for the events listed in this schedule will vary depending upon the date on which preliminary approval is granted (if it is granted) and the date that the Court sets for the Final Approval Hearing. 2 Case 1:14-cv-23100-JAL Document 35 Entered on FLSD Docket 05/04/2015 Page 3 of 26 July 30, 2015 Deadline for opt-outs and objections (45 days after Notice) September 14, 2015 Final Approval Hearing (112 days after preliminary approval) September 28, 2015 Deadline for submitting claims (14 days after Final Approval Hearing) This motion is based on the Stipulation of Settlement and Exhibits in support thereof and upon such other matters as may be presented at the hearing. Plaintiff is also filing concurrently herewith Plaintiff’s Unopposed Memorandum in Support of Request for Preliminary Approval of Class Action Settlement, the Declarations of Joshua H. Eggnatz, and a proposed Notice Plan, all in support of this Motion. 3 Case 1:14-cv-23100-JAL Document 35 Entered on FLSD Docket 05/04/2015 Page 4 of 26 MEMORANDUM IN SUPPORT OF MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Plaintiff, Amber Teufel (“Plaintiff”), submits this Memorandum in support of her Unopposed Motion for Preliminary Approval of Class Action Settlement, for entry of the [Proposed] Order Granting Preliminary Approval of Class Action Settlement. The terms of the proposed settlement (“Settlement”) are fully set forth in the Stipulation of Class Action Settlement attached as Exhibit A. (“Stipulation”). I. INTRODUCTION Without objection by Karlin Foods Corporation (“Defendant”), Plaintiff respectfully requests that the Court grant preliminary approval of the proposed Settlement of this action in which Plaintiff alleges that the Product labeling was false and misleading.3 Karlin is a food company engaged in the business of marketing and distributing to retailers various food products, among them cornstarch. Karlin at all relevant times sold cornstarch to Wal Mart Stores, Inc., which sold it at retail under the brand name: “Great Value™ All Natural Cornstarch.” On August 22, 2014, Plaintiff filed a putative class action, alleging that the “All Natural” statement on the Product is false, deceptive, misleading, and sold pursuant to an unfair business practice. Karlin vigorously disputes the claims and specifically avers that no state or federal regulation or agency prohibits the Product from being labeled as “all natural,” despite the presence of genetically modified organisms in the Product. 3 All capitalized terms not defined herein shall have the same meanings set forth in the Stipulation. Although Defendant agrees the Court should approve this Settlement, it continues to deny Plaintiff’s allegations. 4 Case 1:14-cv-23100-JAL Document 35 Entered on FLSD Docket 05/04/2015 Page 5 of 26 The Parties have engaged in formal discovery as well as informal and voluntary exchange of information, including written discovery, document production, and the deposition of Plaintiff. On February 19, 2015, Teufel and Karlin participated in a full-day mediation session with Rodney A. Max, Esq., but were unable to reach an agreement at that time. Since then, the Parties have continued to engage in extensive settlement negotiations, including through consultation with the mediator. At all times, the Parties’ negotiations were adversarial, non-collusive, and at arms’ length. Ultimately, the Parties reached a settlement in principle, which was memorialized in the Stipulated Settlement Agreement signed May 1, 2015, and attached hereto as Exhibit A. Plaintiff’s objective in this Action was to end Defendant’s alleged false labeling and advertising practices regarding the Product’s “All Natural” statement, despite the fact that the same allegedly contain artificial, synthetic, and/or genetically modified ingredients in it. Plaintiff alleged that Defendant improperly labeled the subject Product by virtue of the above-referenced labeling, in violation of state consumer protection statutes and common law. The proposed Settlement compensates Class Members by providing Class Members both with injunctive relief and monetary relief for damages incurred. If approved, the injunctive relief component requires Defendant to ensure that its Product is no longer being falsely represented to the public as being “All Natural,” as alleged by Plaintiff. If approved, the monetary relief Defendant will provide is substantial and reasonable under the circumstances. Specifically, Defendant will provide claimants who do not provide proof of purchase of the Product a cash refund in the amount of up to $2.00, representing a $1.00 full refund compensation for up to two (2) purchases of the Product. Additionally, claimants who provide proof of purchase may seek compensation up to $8.00 for Products purchased, representing a $1.00 full refund compensation for up to eight (8) purchases of the Product. To satisfy these claims, 5 Case 1:14-cv-23100-JAL Document 35 Entered on FLSD Docket 05/04/2015 Page 6 of 26 Defendant has agreed to provide a guaranteed cash benefit payout available exclusively to pay class member claims in an amount up to $515,000.00. Furthermore, Defendant will pay all costs of noticing the Class, the costs of claims administration, Plaintiffs’ Counsel’s attorneys’ fees and expenses, and the Class Representative’s incentive award, in an amount up to $310,000.00. These amounts will be paid in addition to, and separate and apart from the guaranteed cash benefit. Thus, the total amount of settlement funds which Karlin is committed to pay to cover all costs associated with the Settlement is an amount up to $825,000.00 Class Notice advising potential Class Members of their settlement benefits and their rights will be effectuated pursuant to several methods. Specifically, the claims administrator shall cause a website and a toll-free number to be created for Notice purposes. Such resources will provide Class members with critical settlement information, including the opt-out date. Additionally, the claims administrator will provide Notice to the Class via digital publication, not later than twenty- one (21) calendar days after entry of the Preliminary Approval Order, or such other date as the Court may order. All methods of providing Notice to Class shall comport with all requirements of due process. The proposed Class for which the Parties request certification for purposes of the Settlement is: All Persons who, for personal or household use, purchased in the United States from August 22, 2010 to the present, Wal Mart’s Great Value™ All Natural Cornstarch, which was distributed by Karlin Foods Corporation and sold exclusively at Wal-Mart Stores4. Excluded from the Settlement Class are: (a) all Persons who purchased or acquired the Product for resale; (b) Karlin Foods Corporation and Wal-Mart Stores, Inc. and its employees, 4. Product means Wal Mart’s Great Value™ All Natural Cornstarch, distributed by Karlin Foods Corporation and sold exclusively at Wal-Mart Stores, Inc.