Many people were upset to learn that high-end Godiva Chocolate products come from Pennsylvania, which is the same place of origin as decidedly low-end Hershey bars. In court, they argued that the prominent “Belgium 1926” label was deceptive, even though the true point of origin was stated in the fine print. Ultimately, the company agreed to pay customers a maximum of $15 million ($25 each if they had a proof of purchase and $15 if they didn’t have such documentation).
Many people criticize such legal actions as an abuse of the system. If hundreds of thousands of Godiva customers filed suit alleging misrepresentation, these critics might have a point. But, thanks to the class action system, a single legal matter resolved all these claims once and for all. As outlined below, the attorneys got some money and the victims got some money. Additionally, a company that earns over $500 million a year wrote a sizable check and agreed to change its ways. Everybody won.
Attorney Class Action Payments
Lawyers collect large fees in class action matters. Like the rest of us, they also work very hard to earn that money.
This hard work begins in law school. Believe me, law school isn’t easy or cheap. If you invest a lot of money and time into a project, you expect a significant return.
Moreover, when attorneys file large lawsuits, there’s no guarantee of success. Indeed, a few months earlier, two California residents filed a similar case against Godiva Chocolates. They voluntarily dismissed that case a few months later, since the likelihood of a favorable settlement was bleak.
These lawyers spent hundreds of hours on this case and, in all probability, got nothing. But, they still had to make payroll and cover all other overhead expenses.
Finally, attorneys often agree to limit their fees in these situations. Legally, they’re usually entitled to a third of the settlement amount, as well as all their expenses. Many class action lawyers voluntarily take much less, so victims get a little more.
Victim Class Action Payments
One recent study concluded that class action plaintiffs only get a few cents on the dollar. That might be true. Those two California plaintiffs demanded an outrageous amount of money and wound up receiving $25 each, if they kept their receipts.
Math was not my strongest subject, but I’m pretty sure that 5 percent of something is greater than 100 percent of nothing. In court, it’s almost impossible for an individual plaintiff to beat a company that earns $500 million a year and has a brand image to protect.
Additionally, in misrepresentation class actions, the money is secondary. Companies like Godiva must learn that they cannot lie to customers and bilk them out of a few extra dollars. It may sound corny, but especially to the named plaintiffs in this class action lawsuit, a revised label was most likely priceless.
