settlement agreement and general release settlement agreement and general release ... or of any...
Post on 23-Mar-2018
Embed Size (px)
SETTLEMENT AGREEMENT AND GENERAL RELEASE
This Settlement Agreement and General Release (Settlement Agreement or
Agreement or Settlement) is entered into on March 1, 2017, between Plaintiff Vince Mullins
(Plaintiff) and Defendant Direct Digital, LLC (Direct Digital or Defendant) (collectively,
A. Direct Digital manufactures, markets, sells and distributes a dietary supplement
containing glucosamine sulfate, sold under the name Instaflex Joint Support
(Instaflex or the Product).
B. In 2013, Plaintiff filed this putative class action involving Instaflex (the
C. Plaintiff alleges in the Litigation that certain claims made on the labeling and
packaging of Instaflex are false, deceptive, and misleading. Based on those
allegations, Plaintiff alleges in the Litigation that Direct Digital violated various
state consumer protection acts. No allegations related to safety or physical injury
have been made.
D. Direct Digital denies the allegations raised in the Litigation, and denies any
wrongdoing and any liability in connection with the claims asserted in the
E. Plaintiff and his counsel have conducted an extensive examination of the facts and
documents relating to the Litigation, including documents produced by Direct
Digital, responses to written discovery requests, third party discovery, and the
Case: 1:13-cv-01829 Document #: 128-1 Filed: 03/03/17 Page 1 of 23 PageID #:1653
deposition of Direct Digitals 30(b)(6) witness regarding, among other things, the
science regarding Instaflex.
F. The Parties also engaged in motion practice with regard to Plaintiffs class
certification motion which also included expert disclosures, written reports, and
G. On September 30, 2014, the District Court granted Plaintiffs motion for class
H. Defendant sought and was granted a F.R.A.P. Rule 23(a) hearing. On July 28,
2015, the Seventh Circuit affirmed the District Courts class certification order.
Defendant sought certiorari before the United States Supreme Court and on
February 29, 2016, the Court denied certiorari.
I. This Settlement Agreement was reached after protracted, arms-length negotiations
over more than a years time, including first a full-day mediation before the Hon.
Wayne Andersen and then over the ensuing year, and numerous telephonic and
email communications between counsel for the Parties and Judge Andersen.
J. Plaintiff and his counsel have concluded that this Settlement Agreement provides
substantial benefits to Plaintiff and to members of the Settlement Class (as defined
below), and resolves all issues that were or could have been raised in the Litigation
without prolonged litigation and the risks and uncertainties inherent in litigation.
Plaintiffs counsel have also considered the collectability of any judgment that
might ultimately be entered against Defendant.
Case: 1:13-cv-01829 Document #: 128-1 Filed: 03/03/17 Page 2 of 23 PageID #:1654
K. Plaintiff and his counsel have concluded that this Settlement Agreement is fair,
reasonable, adequate, and in the best interest of the Settlement Class and the
L. Direct Digital consents to the Settlement Agreement solely to avoid the expense,
inconvenience, and inherent risk of litigation, as well as the concomitant disruption
of its business operations.
M. Nothing in this Settlement Agreement shall be construed as an admission or
concession by Direct Digital of the truth of any allegations raised in the Litigation,
or of any fault, wrongdoing, or liability of any kind.
N. This Settlement Agreement, its terms, documents related to it, and the negotiations
or proceedings connected with it, shall not be offered or received into evidence in
the Litigation, or any other action or proceeding, to establish any liability or
admission by Direct Digital.
NOW, THEREFORE, in consideration of the foregoing, and the mutual covenants,
promises, and general releases set forth below, the Parties hereby agree as follows:
Proposed Class for Settlement Purposes
1. Settlement Class Definition. Pursuant to Fed. R. Civ. P. 23, the Parties agree to
certification, for settlement purposes only, of the Settlement Class which consists of all persons
who paid money to obtain Instaflex for personal use and not for resale or distribution, including
all persons who paid only shipping and handling for an Instaflex trial or sample. Excluded from
the Settlement Class are: (i) Defendant; (ii) retailers of Instaflex; (iii) the parents, subsidiaries,
affiliates, officers, and directors of (i) and (ii); (iv) those persons who submit valid requests for
Case: 1:13-cv-01829 Document #: 128-1 Filed: 03/03/17 Page 3 of 23 PageID #:1655
exclusion from the Settlement Class; and (v) any persons who purchased Instaflex and have
already received a full refund.
2. Settlement Class Counsel. Pursuant to the Courts September 30, 2014, Class
Certification Order, Settlement Class Counsel are:
Elaine A. Ryan BONNETT, FAIRBOURN, FRIEDMAN & BALINT, P.C. 2325 E. Camelback Road, Suite 300 Phoenix, Arizona 85016 Max A. Stein BOODELL & DOMANSKIS, LLC One North Franklin, Suite 1200 Chicago, Illinois 60606 Stewart M. Weltman1 Joseph Siprut SIPRUT, PC 17 North State Street, Suite 1600 Chicago, Illinois 60602
3. Settlement Purposes Only. Defendant does not agree to certification of the
Settlement Class for any purpose other than to effectuate the Settlement Agreement.
4. Vacating Settlement Class Certification. The certification of the Settlement
Class shall be binding only with respect to the settlement of the Litigation. In the event that the
Settlement Agreement is terminated pursuant to its terms or is not approved in all material respects
by the District Court, or such approval is reversed, vacated, or modified in any material respect by
this or any other court, the certification of the Settlement Class shall be deemed vacated, the
Litigation shall proceed as if the Settlement Class had never been certified, and no reference to the
Settlement Class, this Settlement Agreement, or any documents, communications, or negotiations
1 At the time of the class certification order, Mr. Weltman was the owner of Stewart M. Weltman LLC and subsequently joined Boodell & Domanskis, LLC as Of Counsel on February 1, 2015. Thereafter, as of February 1, 2017, Mr. Weltman joined Siprut, P.C.
Case: 1:13-cv-01829 Document #: 128-1 Filed: 03/03/17 Page 4 of 23 PageID #:1656
related in any way thereto shall be made for any purpose in this Litigation or any other action or
Benefits to the Class
5. Settlement Fund and Net Settlement Fund. Direct Digital agrees to contribute
$4,500,000 to a Settlement Fund (the Settlement Fund), which will be used to pay any and all
Cash Awards (as defined in paragraph 6), Attorneys Fee Awards (as defined in paragraph 8),
Incentive Awards (as defined in paragraph 9), and Notice and Administration Costs up to $400,000
(as defined in paragraph 10). Direct Digital shall fund the Settlement Fund as follows: (a)
$400,000 shall be deposited within 30 days of the Courts order preliminarily approving this
Settlement Agreement for purposes of covering Notice and Administration Costs; (b) $1,100,000
by no later than April 5, 2017, or 30 days after the Effective Final Judgment Date2, whichever is
later; (c) $1,500,000 by no later than one year after the $1,100,000 installment was due to be paid;
(d) $1,500,000 by no later than two years after the first $1,100,000 installment was due to be paid.
All payments shall be made to the Settlement Administrator, as defined in paragraph 14, and shall
be held by the Settlement Administrator in an interest-bearing account until such time as the funds
should be distributed pursuant to the terms of this Agreement or order of the Court. Other than
distributions to cover Notice and Administration Costs, no distributions shall be made until the
Settlement Fund is fully funded absent order of the Court. In the event that the Settlement Fund
is not fully funded, then Plaintiff may elect to terminate the Settlement Agreement or seek to
enforce it. Should Plaintiff elect to terminate the Settlement Agreement, Direct Digital shall not
2 The Effective Final Judgment Date shall be the later of: (a) the expiration of the time to appeal the Final Judgment and Order with no appeal having been filed; or (b) if any such appeal is filed, the termination of such appeal on terms that affirm the Final Judgment and Order or dismiss the appeal with no material modification of the Final Judgment and Order; or (c) the expiration of the time to obtain any further appellate review of the Final Judgment and Order.
Case: 1:13-cv-01829 Document #: 128-1 Filed: 03/03/17 Page 5 of 23 PageID #:1657
be entitled to a refund of any monies already distributed by the Settlement Administrator, including
Notice and Administration Costs. Should Plaintiff choose to enforce the Settlement Agreement,
Plaintiff shall be entitled to recover from Defendant all attorneys fees and any expenses incurred
in enforcing the Settlement Agree