Hydroxycut Class Action Settlement Denied Over Cy Pres Award

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A California federal judge on Tuesday decided not to give final approval to a $25.3 million class action settlement over recalled Hydroxycut products, finding that the cy pres distribution did not satisfy the standards for cy pres relief set forth by the Ninth Circuit Court of Appeals.

The plaintiffs filed the Hydroxycut class action lawsuit over allegations that Kerr Investment Holding Corp., the parent organization for Hydroxycut supplement maker Iovate Health Sciences Inc., and certain retailers falsely advertised the Hydroxycut supplements as safe and effective treatments for weight loss. In reality, the plaintiffs claimed, the company failed to disclose that there was no scientific support for these claims.

The parties initially agreed to the $25.3 million Hydroxycut class action settlement in November 2012. Under the terms of the class action settlement, Class Members would receive a cash payment for up to the full retail price of Hydroxycut products. Class Members without proof of purchase could receive a cash payment of $25 for one Hydroxycut product, while those with proof of purchase could receive payment for all of the Hydroxycut products they purchased. If preferred, a Class Member can choose to receive a bundle of Hydroxycut products valued at no less than $50 instead of a cash payment.

The terms of the Hydroxycut class action settlement also mandated that any amount of the settlement fund that is not claimed can be used to pay damages to plaintiffs who have filed personal injury lawsuits alleging injuries from ingesting Hydroxycut products.

On Nov. 19, U.S. District Judge Barry T. Moskowitz declined to grant final approval to the Hydroxycut class action settlement, finding that it did not satisfy the cy pres distribution guidelines set forth by the Ninth Circuit. Cy pres, French for “as near as possible,” is a legal doctrine that requires a judge to consider the manner in which unclaimed settlement funds are distributed.

Under the cy pres doctrine, the remaining funds must be distributed for the indirect benefit of the class. Courts generally rely on cy pres distributions in an effort to avoid either returning the funds to a defendant who has been found liable or to increase the pro-rata share of the class members who filed claims in the class action settlement.

“The biggest problem with the proposed cy pres distribution in this settlement is that it simply does not benefit the class,” Judge Moskowitz wrote. “Cy pres distributions to personal injury claimants in this action reduce the amount that Iovate must pay into the personal injury fund while providing no additional benefit to the personal injury claimants and no benefit at all to the Class Members who suffered no personal injury.”

Class Members in the Hydroxycut settlement include individuals in the U.S. who purchased certain Hydroxycut products between May 9, 2006 and May 1, 2009. These products include:

• Hydroxycut Regular Rapid Release Caplets
• Hydroxycut Hardcore Liquid Caplets
• Hydroxycut Regular Drink Packets
• Hydroxycut Hardcore Drink Packets (Ignition Stix)
• Hydroxycut Liquid Shots
• Hydroxycut Max Aqua Shed
• Hydroxycut Carb Control
• Hydroxycut Caffeine-Free Rapid Release Caplets
• Hydroxycut Max Liquid Caplets
• Hydroxycut Caffeine-Free Drink Packets
• Hydroxycut Max Drink Packets
• Hydroxycut Hardcore RTDs (Ready-to-Drink)
• Hydroxycut 24
• Hydroxycut Natural

Anyone who has filed a personal injury lawsuit related to injuries allegedly caused from consuming the Hydroxycut products is ineligible to participate in the class action settlement.

Judge Moskowitz took issue with the fact that funds from the class action settlement could be used to benefit people who are not included in the class. “It appears that the cy pres relief is being used as a vehicle to settle the personal injury cases, not to provide an indirect prospective benefit to the entire class. Because the cy pres distribution violates the Ninth Circuit’s standards governing cy pres awards, the Court cannot find that the settlement is fair, reasonable, and adequate.”

The plaintiffs are represented by Timothy G. Blood, Leslie E. Hurst and Thomas J. O’Reardon II of Blood Hurst & O’Reardon LLP and Andrew S. Friedman, Elaine A. Ryan and Patricia N. Syverson of Bonnett Fairbourn Friedman & Balint PC.

The Hydroxycut Class Action Lawsuits are In re: Hydroxycut Marketing and Sales Practices Litigation, Case No. 3:09-md-02087, and Andrew Dremak v. Iovate Health Sciences Group Inc., et al., Case No. 3:09-cv-01088, in the U.S. District Court for the Southern District of California.

UPDATE: The Hydroxycut class action lawsuit is not dead yet. A federal judge denied defendants’ motion to dismiss the case on Jan. 27, 2014, but told plaintiffs they needed to provide more details on how the retailer defendants engaged in false advertising in order for them to be included.

UPDATE 2: A revised Hydroxycut class action settlement has been reached, according to court documents filed on April 21, 2014.

UPDATE 3: Instructions on how to file a claim for the Hydroxycut weight loss supplement class action settlement are now available! Click here or visit www.DietSupplementSettlement.com for details.