Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-02953/USCOURTS-cand-3_16-cv-02953-8/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1681 Fair Credit Reporting Act

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SEAN GILBERT DEVRIES,

Plaintiff,

v.

EXPERIAN INFORMATION 

SOLUTIONS, INC.,

Defendant.

Case No. 16-cv-02953-WHO 

ORDER RE TAX REPORTING ISSUE

Re: Dkt. No. 111

The parties have negotiated a settlement agreement but are now at an impasse regarding 

how Experian Information Solutions, Inc. (“Experian”) will be issuing Form 1099s to report to the 

Internal Revenue Service (“IRS”) the amount to be paid to Sean Gilbert DeVries and Ronald 

Chinitz (collectively “Named Plaintiffs”).1 Under the settlement agreement, Experian agreed to 

make a single lump sum payment to the Named Plaintiffs through its counsel of record. 

Separately, the Named Plaintiffs and Plaintiffs’ Counsel agreed upon the appropriate allocation of 

that lump sum as between the Named Plaintiffs and Plaintiffs’ Counsel for the work it did on 

behalf of the putative class and the general public.

Experian argues that it is obligated to issue Form 1099s to each of the two Named 

Plaintiffs, and Plaintiffs’ Counsel for the full lump sum settlement amount called for in the 

settlement agreement. Plaintiffs contend that the Named Plaintiffs and Plaintiffs’ Counsel should 

be taxed on the amount they actually receive, not the entire lump sum. As an equitable matter, 

1 Parties indicate that the settlement in this matter was negotiated in conjunction with a companion 

matter involving the same claims and same counsel before the Santa Cruz County Superior Court

in an action captioned Ronald Chinitz, on behalf of himself and all others similar situated v. 

Experian Information Solutions, Inc., Case No. 17CV02552. 

Case 3:16-cv-02953-WHO Document 112 Filed 03/27/20 Page 1 of 2
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United States District Court

Northern District of California

what plaintiffs want makes sense. The question is whether the tax law allows Experian to do so 

under the current agreement.

The parties have not provided sufficient analysis for me to decide what tax law requires, 

but there appears to be a simple solution. If the Named Plaintiffs direct Plaintiffs’ Counsel to have 

separate checks sent to them and to their counsel in the aggregate amount of the settlement, then 

Experian should do so and issue separate 1099s. If it is necessary to make a non-substantive 

amendment to the settlement agreement that allocates the proper portions to Named Plaintiffs and 

Plaintiffs’ Counsel in separate checks instead of one lump sum amount to Plaintiffs’ Counsel, then 

do that. In this way, Experian would suffer no harm and the Named Plaintiffs and Plaintiffs’ 

Counsel would be taxed on the amount they will actually receive. 

That is what happened in Johnson v. LPL Fin. Servs., 517 F. Supp. 2d 1231 (S.D. Cal. 

2007), a case that posed a similar question in an employment lawsuit settlement. Disposing of the 

lump sum versus separate checks dispute, the court observed that “if a judgment or settlement is 

entered against Defendant for $300,000, and Attorney and Plaintiff request that Defendant provide 

Attorney with a check payable to only Attorney for $100,000 for Attorney’s fees and provide 

Plaintiff with a check payable to only Plaintiff for $200,000, Defendant must provide Attorney 

with a form 1099 in the amount of $100,000 and provide Plaintiff with a form 1099 in the amount 

of $300,000.” Id. at 1237.

IT IS HEREBY ORDERED that the parties discuss whether to adopt the suggestion above. 

If it is unacceptable, Experian shall file a memorandum of no more than five pages by April 8, 

2020, explaining why it or any other suggestion that fairly allocates the tax burden is unworkable 

or otherwise improper. Plaintiffs may respond by memorandum of similar length by April 20, 

2020. No reply is allowed absent further court order.

IT IS SO ORDERED.

Dated: March 26, 2020

William H. Orrick

United States District Judge

Case 3:16-cv-02953-WHO Document 112 Filed 03/27/20 Page 2 of 2