Multi-Level Marketing

Published on May 14th, 2015

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Herbalife Class-Action Settlement By the Numbers

In a 60-page opinion less riveting than watching paint dry, a California federal court judge Thursday approved a class-action settlement in Bostick v. Herbalife, a case affecting more than one million people nationwide who signed up to become distributors for the multi-level dietary supplement company. While much of what the U.S. District Court wrote can only be described as legal gobbledygook, the story is in the numbers. Here are some facts and figures worth noting:

  • $4.9 million – That’s the amount of fees plaintiffs’ attorneys will be pocketing. Plaintiffs’ attorneys had asked for $5.25 million but the court reduced the award by $350,000 because “the class has not clearly and significantly responded in favor of the settlement…” Members of the disgruntled class included 18 Herbalife distributors who objected.
  • $1.9 million – When it’s all said and done — after the lawyers and administrative fees are paid, and the class gets its money ($7.4 million) — that’s what we estimate that the Consumer Federation of America will get by way of a cy pres award.
  • $1.56 million – With a bit of contractual magic, Herbalife gets to retain a cool $1.56 million (reducing the overall settlement fund from $17.5 million to approximately $16 million) because class members only claimed about $1 million in product returns out of a possible $2.5 million fund, with the remainder reverting back to Herbalife.
  • $36,662.04 – The amount plaintiffs’ lawyers tried to get for “travel/meals” until the court said no way: “This Court does not find meal expenses to be a necessary cost of litigation that should be borne by the class.” (UPDATE: The court in June amended its award for expenses, allowing a total of $211,662.63 — $35,053 more than it originally allowed. So in the end, the plaintiff’s lawyers received a few dinners shy of the amount they had requested.)
  • Over 3,800 – The number of class members receiving a flat reimbursement of $20 for individual losses that could amount to as much as $3,745.
  • $1,101.48 – The average payout for about 3,500 class members receiving more than $20.
  • 687 – The number of class members who won’t be bound by this settlement because they formally requested exclusion from the court. The number of class members that will be bound? Well over one million.
  • 18 – Lucky 18, that’s the number of Herbalife distributors that objected to this settlement and will likely be appealing the court’s approval.
  • 3 – As in Herbalife is only bound to this settlement agreement for a period of three years. What about the class of 1.5 million distributors, you ask? Oh, they’re bound from here to eternity to the terms of this agreement.
  • 0.5 percent  Meaning that out of a class of over 1.5 million Herbalife distributors, only 7,457 class members filed a claim for relief.
  • 0 – As in, there are no state or federal governmental agencies (such as the FTC, SEC, and Department of Justice, who are all already investigating the company) bound by any word, phrase, or sentence of this settlement. In fact, prompted by several state attorneys general, the parties modified the settlement agreement to ensure that released claims “shall not be deemed to include any claims asserted against any of the Released Parties by any federal, state, or local governmental agency or similar authority . . . ”

Click here for more on TINA.org’s objection to the Herbalife settlement and continuing coverage.

This story was updated on 6/5/15. 

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(French for “as near as possible”): a legal doctrine that requires a judge to consider the manner in which unclaimed settlement funds in class action lawsuits are distributed. Under this doctrine, the remaining funds must be distributed for the indirect benefit of the class instead of benefiting the defendant.

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