After being hit with a class action, one question consumer products companies often face is:  should we modify our business practices in response to the suit?  Sometimes it makes sense.  Changing the challenged practice can, in some cases, help defeat class certification and may help limit liability.  Others would argue that changing business practices in response to a lawsuit is an admission of culpability that could negatively impact how the judge and jury will view the case.

A recent decision provides an additional reason consumer products companies will want to carefully evaluate whether to change business practices after being sued in a class action.  

In Henderson v. J.M. Smucker Co., CV 10-4524-GHK VBKX, 2013 WL 3146774 (C.D. Cal. June 19, 2013), the plaintiff sued claiming that the defendant’s labels included misleading “health and wellness” claims on products that actually contained unhealthy amounts of high fructose corn syrup and trans fat.  The court dismissed the case because the plaintiff had filed for bankruptcy and the trustee had settled her individual claim.  But the plaintiff’s lawyers still moved for attorney’s fees under a “catalyst theory,” seeking more than $3 million on the ground that the defendant had changed its business practices in response to the suit (by removing the high fructose corn syrup and changing certain labels).
Continue Reading Cautionary Tale – Modify Business Practices and on the Hook for Catalyst Fees