A Nutty Settlement

In a February 2011 post, "This Is Getting Nutty," I wrote about a class action lawsuit that had been filed against Ferrero USA Inc., the United States subsidiary of the company that produces Ferrero Chocolates and Tic-Tac breath mints, over the ingredients in its hazelnut spread, Nutella. The complaint alleged that Ferrero USA violated California consumer protection laws by representing that Nutella is a healthy, nutritious, and balanced breakfast for children. The lawsuit alleged that the name plaintiff, Athena Hohenberg, the mother of a four-year-old child, bought Nutella after she saw advertisements showing mothers serving their children the product and declaring that the spread was a healthy and nutritious breakfast. According to the complaint: "Nutella, however, contains 70% saturated fat and processed sugar by weight. Both of these ingredients significantly contribute to America's alarming increases in childhood obesity, which can lead to life-long health problems." The complaint alleges that Ms. Hohenberg was "shocked" when she learned that Nutella was not healthy and "was the next best thing to a candy bar."

At the time I commented that although numerous bloggers had ridiculed the lawsuit, I noted that because California has some of the strictest consumer protection laws, the case could prove troublesome for Ferrero,  and it would be interesting to see whether Ferrero would vigorously defend the advertising and ingredients in Nutella in a manner similar to the way Taco Bell defended the ingredients in its beef tacos.

Ferrero has decided to settle the case. According to the settlement documents, Ferrero will pay up to $4 for every jar of Nutella bought in California since August 2009, or bought anywhere else in the United States since January 2008. The settlement amount may reach $6,000,000; a total of $3,050,000 for the consumer "buyback," and fees "not to exceed Three Million Dollars ($3,000,000)" for the lawyers. In addition, plaintiffs' counsel can petition the court for a further fee award of up to 30% of the $3,050,000 in the consumer "buyback" fund.

Finally, Ferrero has also agreed to modify the Nutella label to give more prominence to nutritional information, to replace and no longer air three Nutella commercials, and to modify the content of the website for Nutella.

Documents related to the lawsuit and the settlement can be viewed at nutellaclassactionsettlement.com.