Hydroxatone To Pay $3M To Iron Out Wrinkles Over Skin Cream


, New Jersey Law Journal


As of Aug. 15, the end of the claims period, 41,813 had been submitted.

Margolis challenged the settlement, sought Sabol discovery materials and ended up filing the lone substantial objection—claiming that the litigation was worth upward of $300 million.

But McNulty certified the Sabol class and gave final approval to the settlement.

He dispensed with Margolis’ attempt to distinguish a separate class of customers who bought Hydroxatone through the automated-call system rather than speaking with a representative, noting that about half of the 2.6 million Sabol class members used the automated system.

Margolis, therefore, is a member of the Sabol class, he noted.

And Margolis’ $300 million calculation is “manufactured from thin air,” McNulty said.

Sales via the automated system through 2011, the end of the class period, were closer to $80 million, and neither figure reflects damages incurred by the plaintiffs, he said.

There’s no evidence that the defendants have assets that would allow for a greater judgment, the judge added. He noted combined losses of $9.85 million in 2011 and 2012, a 58 percent drop in net worth, a slashing of the work force by nearly two-thirds and $14 million owed to creditors.

“More fundamentally, ‘insolvency’ is not a requirement” and “a settlement is not to be deemed inadequate because it failed to drive the defendant out of business,” McNulty wrote.

He also struck Margolis’ argument that additional insurance benefits were left on the table, noting that just one of Hydroxatone’s three carriers approved coverage for the settlement.

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