Madison - St. Clair Record

Friday, October 18, 2019

Kolker approves $36M preliminary settlement in Welspun class action; Welspun prepared to oppose attorney's fees in excess of $9M

Lawsuits

By Heather Isringhausen Gvillo | Jul 30, 2019


Nelson and Armstrong

St. Clair County Circuit Judge Chris Kolker approved a preliminary class settlement for $36 million in a suit alleging Welspun used inferior cotton blends in products marketed as “Egyptian Cotton” and “Pima Cotton.”

On July 2, Kolker granted the plaintiffs’ uncontested motion for preliminary approval of class settlement with defendants Welspun USA, Welspun Global Brands Limited, and Welspun India.

Kolker’s order states that the plaintiffs’ attorneys intend to request fees, costs and expenses, but Welspun reserves the right to oppose any fee in excess of $9 million. 

For purposes of the settlement only, Kolker certified the settlement class, “which consists of all persons who, between January 1, 2012 and the effective date of this order, purchased any subject product in the United States or any of its territories through any in-store or online distributor or retailer, such purchases not made for the purpose of resale or commercial use.”

Kolker designated David Nelson of Nelson & Nelson PC, Matthew Armstrong of Armstrong Law Firm LLC and the Steckler Gresham Cochran PLLC firm as class counsel. The firms are known for filing “unnatural” and false advertisement class actions. 

David Nelson previously settled a suit on behalf of a putative class where he and associates in Missouri and Texas collected $245,000. The putative class received nothing.  

The complaint at issue was filed May 23 alleging false advertising. 

The complaint alleges Welspun home textile products were labeled, marketed, advertised, distributed and sold as being made of “Egyptian Cotton” and “Pima Cotton.” However, the plaintiffs allege the labels were false, and the products were not as advertised. The plaintiffs claim they would not have paid a premium price for the products had they known they were lower quality products. 

Welspun denies that there is any factual or legal basis for the allegations. The defendant argues that the labeling and marketing of its home textile products was truthful and not misleading. It further argues that the plaintiffs did not pay a premium as a result of any misrepresentations and have not suffered any injury entitling them to monetary relief. 

However, in the interest of settling, the defendants do not oppose the plaintiffs’ request to certify the settlement class. 

In the motion for approval of the proposed settlement, Welspun argues that it is settling because it wants “to avoid further expense, inconvenience, and interference with ongoing business operations.”

According to Kolker’s order, another putative class action was filed against Welspun on May 29, 2018 by repeat class plaintiff Shannah Burton in St. Clair County. Burton has filed at least six similar class actions against manufacturers for allegedly falsely advertising their products. The prior Welspun class action raised claims under common law and the Illinois consumer protection law alleging the defendant’s home textile products were incorrectly labeled and misleading. 

The parties agreed on Nov. 16, 2018 to enter into early mediation. They engaged in mediation on Jan. 4 before retired U.S. District Judge Layn R. Phillips. The parties entered into a non-binding term sheet concerning a potential settlement. Burton’s claims were folded into others with the filing of the present action. 

The class representatives moved for preliminary approval of a proposed class action settlement on May 23, which was negotiated with the assistance and oversight of Phillips.

However, on June 6, counsel for the named plaintiffs in a similar suit in the Southern District of New York, Bursor & Fisher PA, filed a motion to intervene. The firm contested the nature of the settlement process and sought to stay the St. Clair County suit. The parties in St. Clair County opposed the move.

Then on June 21, the St. Clair County parties and Bursor & Fisher were able to reach a global resolution of all pending and future disputes. They entered into a supplemental agreement, which incorporates and supplements the settlement agreement, Kolker wrote. 

According to the settlement agreement, the defendant has agreed to marketing reforms to ensure Welspun products are accurately marketed and labeled. 

The settlement also includes three tiers of recovery.

Tier one class members may recover up to a maximum of $2.30 per subject towel and pillowcase with proof of purchase and up to $9.20 per product for all other subject products during the class period. 

Tier two class members may recover up to a maximum of $1.15 per subject towel and pillowcase without proof of purchase and up to $4.60 per product for all other subject products during the class period. 

Tier three class members are those who have already received a refund. They may receive a voucher for a one-time 10 percent discount or a $5credit on a future online purchase. 

However, if the claims exceed the $36 million settlement amount, then the recoveries will be reduced proportionately.

Kolker wrote that the plaintiffs seek a nationwide class, and the defendants do not oppose the request for the purpose of the settlement. Therefore, if final approval of the settlement agreement and supplemental agreement is denied or reversed, the certification of the settlement class will be void. 

St. Clair County Circuit Court case number 19-L-391

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Armstrong Law Firm LLC Nelson And Nelson St. Clair County Circuit Court

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