Madison - St. Clair Record

Tuesday, March 31, 2020

Welspun, class members seek approval of $36M settlement in suit alleging mislabeled cotton products


By John Breslin | Jun 28, 2019

David Nelson and Matthew Armstrong

A home textile conglomerate has agreed to a proposed settlement of a class action over claims it mislabeled bed linen and other products.

The agreement, between members of the class and Indian-headquartered Welspun, along with its United States subsidiary, must be signed off by a St. Clair County Circuit Court judge.

Welspun was sued in St. Clair County over its alleged mislabeling of products, including pillow cases and towels, which the company described as being made from "Egyptian" and "Pima" cotton.

If the agreement is approved, Welspun will pay out an amount not exceeding $36 million to a potential seven to eight million class members, who will receive either a certain amount of money up to a maximum of $8, a discount, or a credit. The lead plaintiffs in the class will receive $750 each if the agreement is signed off by the judge. Attorney fees, the agreement notes, will be worked out at a later stage.

Under the agreement, class members will be sorted under three tiers.

Tier one will be made up of those with proof of purchase. They will receive a maximum of $2 for the purchase of towels and pillowcases and up to $8 for bedding and comforters.

Tier two includes buyers with no proof of purchase, and they will receive a maximum $1 and $4.

The final tier members are ones that already received a refund for items. They will get a 10 percent discount or $5 credit for future purchases.

When reached for comment, Welspun USA, based in New York, was unable to give the Record a contact for its media department either here or in India, but promised to find out. No-one from the company returned the message by the time of publication.

Plaintiff attorneys David C. Nelson of Belleville and Matthew H. Armstrong of St. Louis did not return messages asking for comment on the proposed settlement.

However, the agreement includes Welspun's position on its activities and the complaint.

The defendants, the agreement document states, maintain its actions, at all times, were "entirely proper, legal, and fair."

Welspun further argues that no-one was harmed or damaged, and it is settling because it wants "to avoid further expense, inconvenience, and interference with ongoing business operations." It admits no liability.

However, part of the settlement does include hiring of a third party expert to make sure the Egyptian cotton is sourced from Egypt, and the Pima cotton comes from south west USA, Australia, Peru, Israel, or another licensed grower.

After plaintiffs' experts examined costs relating to the mark-up for the prices of the premium products, the plaintiffs estimated the total damage done to the class was $44 million.  However, they believed $36 million was "fair, adequate, and reasonable" given that Welspun estimated the monetary damage was zero, the proposed settlement states.

A similar class action is still pending against Welspun in federal court in the Southern District of New York. One of the law firms from the St. Clair County case was involved in that action but withdrew after it was not named class or lead counsel. The New York case relates only to Egyptian cotton.

Another suit against Welspun over its labeling of Pima cotton was also filed in St. Clair County. This was folded into others in May last year with the filing of the present action.

Attorneys for the plaintiffs managed to amass close to 150,000 documents handed over by Welspun, with voluminous detail on the company's data relating to the items linked to the class action.

Welspun and the plaintiffs were involved in mediation process - overseen by a former federal judge - for many months as the two sides attempted to reach an agreement.

In urging the judge to agree to the settlement, the document notes that courts usually decide using a number of criteria, including the strength of the action, the defendant's ability to pay, the complexity, length, and expense of litigation, whether there is any opposition, and the reaction of the class.

In an attempt to argue Welspun is entirely capable of paying the settlement amount, the proposed settlement describes Welspun India as a "highly diversified international conglomerate and a leading manufacturer of home textile products across the globe." It is further described as "the supplier of choice for top retail stores in 50 countries, ranking first among top 15 home line suppliers to the US." 

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Organizations in this Story

St. Clair County Circuit CourtArmstrong Law Firm LLCNelson And Nelson