Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_17-cv-00159/USCOURTS-casd-3_17-cv-00159-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity Action

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CASE NO. 3:17-cv-00159-L-JLB

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SHEILA DASHNAW, et al.,

Plaintiffs,

v.

NEW BALANCE ATHLETICS, INC., 

 Defendant.

Case No. 3:17-cv-00159-L-JLB

ORDER DENYING WITHOUT 

PREJUDICE PLAINTIFF'S 

MOTION FOR PRELIMINARY 

APPROVAL OF SETTLEMENT

Pending before the Court in this putative class action alleging consumer fraud

relating to "made in USA" representations on certain New Balance athletic shoes, is 

Plaintiffs' motion for preliminarily approval of class action settlement. The motion 

is denied without prejudice for the following reasons:

1. The representation in the motion and the proposed class notice that 

class members will receive "up to $10" in damages is problematic. "Up to $10" is 

the maximum class member payment provided under the settlement agreement. The 

actual amount depends on the number of claims. However, based on the 

representations in Plaintiff's motion, the class members will not receive $10 unless 

the class participation rate is extremely low or the factual representations in support 

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of the proposed settlement are inaccurate by a wide margin. Pursuant to the 

settlement agreement, Defendant is to pay $750,000 as "total Relief Amount." From 

that amount, an estimated $200,000 is deducted for settlement administration costs 

and $15,000 for requested class representative service compensation. After 

deductions, approximately $535,000 is available to pay the class members. 

Defendant estimates that one million qualifying pairs of New Balance shoes were 

sold to the putative class. Assuming that the estimate is accurate, and that every 

putative class member submits a claim for one pair of shoes, each will receive 

$0.54. It is very uncommon in consumer class actions for every class member to 

submit a claim. "[I]t is not unusual for only 10 or 15% of the class members to 

bother filing claims." Briseno v. ConAgra Foods, Inc., 844 F.3d 1121, 1131 (9th 

Cir. 2017) (internal quotation marks and citation omitted). Ten or 15% are "low 

participation rates." Id. If only 10% of the putative class submit claims, their 

estimated recovery will be $5.35. To receive $10, the participation rate would have 

to be abysmally low -- just over 5%. A realistic estimate of individual class member 

recovery is relevant to the settlement fairness determination under Federal Rule of 

Civil Procedure 23(e), see In re Bluetooth Headset Prod. Liability Litig., 654 F.3d 

935, 946 (9th Cir. 2011), and to the adequacy of the proposed notice to the class, see 

In re Online DVD Rental Antitrust Litig., 779 F.3d 934, 946 (9th Cir. 2015). The 

estimate of class member recovery provided in the motion and proposed notice 

appears inaccurate on its face, and lacks a plausible explanation. 

2. The proposed cy pres award does not comply with Dennis v. Kellogg 

Co., 697 F.3d 858, 865 (9th Cir. 2012) (" [W]e require that there be a driving nexus 

between the plaintiff class and the cy pres beneficiaries.”).

3. The parties have provided no evidence of compliance with 28 U.S.C. § 

1715.

/ / / / /

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4. The proposed class notice must be amended to make clear that making 

an objection does not preclude a class member from submitting a claim.

5. Federal Rule of Civil Procedure 23(e)(5) provides that "[a]ny class 

member may object" to the proposed settlement. Although the parties may 

encourage class members to provide written objections by a date certain, the Court 

is not inclined to prohibit a class member from objecting, if he or she did not file 

written objections or did not do so in a timely manner. Accordingly, the proposed 

notice must be amended consistent with this order.

For the foregoing reasons, Plaintiff's motion for preliminary approval of class 

action settlement is denied without prejudice to re-filing after curing the foregoing 

defects.

IT IS SO ORDERED.

Dated: October 5, 2018

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