Pearson v. Nbty, Inc.

772 F.3d 778 (7th Cir. 2014)

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Nature of the Case

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Facts

NBTY (D) and its subsidiary Rexall manufacture vitamins and nutritional supplements designed to help people with joint disorders, such as osteoarthritis. Several class action suits were filed in federal district courts across the country against Ds. Pearson (Ps) charge Ds with violating several states' consumer protection laws by making false claims for efficacy. Class counsel in all six cases negotiated a nationwide settlement with D and submitted it to that court for approval. The district judge approved the settlement with significant modifications. The district judge valued the settlement at the maximum potential payment that class members could receive, which came to $20.2 million of which $4.5 million was to counsel. D also got up to $2 million in rebates of the $4.5 million if attorney fees did not equal $4.5 million. In reality, only 30,245 claims were filed, yielding total compensation for the class members of less than $1 million. Six appeals resulted.