Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_13-cv-03440/USCOURTS-cand-3_13-cv-03440-11/pdf.json

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

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United States District Court

For the Northern District of California

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 Throttling is the slowing of a customer’s data service speed. 

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

IN RE TRACFONE UNLIMITED SERVICE

PLAN LITIGATION

___________________________________/

No. C-13-3440 EMC

ORDER (1) GRANTING MOTION FOR

FINAL APPROVAL OF CLASS ACTION

SETTLEMENT; AND (2) GRANTING

MOTION FOR AWARD OF

ATTORNEYS’ FEES, COSTS, AND

REPRESENTATIVE SERVICE

AWARDS

(Docket Nos. 121, 122)

I. INTRODUCTION

Class Plaintiffs filed four consolidated class actions against Defendant TracFone Wireless,

alleging that TracFone sold “unlimited” data plans that were not, in fact, unlimited. Rather, when

TracFone’s customers exceeded certain data usage caps, TracFone would throttle1

 or suspend those

customers’ data service altogether, or even terminate their phone services entirely. Plaintiffs claim

this behavior violated numerous laws, including California’s Unfair Competition Law (UCL), its

Consumer Legal Remedies Act (CLRA), Florida’s Deceptive and Unfair Trade Practices Act

(FDUTPA), as well as numerous common-law proscriptions. The Federal Trade Commission (FTC)

also alleges that TracFone’s advertising of its “unlimited” data plans was deceptive, and filed a

separate enforcement action that has been related to this case. See Federal Trade Commission v.

TracFone Wireless, Inc., Case No. 15-cv-00392-EMC. TracFone has settled the FTC enforcement

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action as part of a global resolution of these class actions.

The parties to the consumer cases now seek final approval of a nationwide settlement of all

claims stemming from TracFone’s allegedly deceptive marketing practices. Class counsel also

move for an award of attorneys’ fees and costs, and for service awards for the named plaintiffs. 

Pursuant to the terms of the proposed settlement, TracFone has paid $40 million to the FTC that the

FTC will disburse to class members in accordance with an agreed upon payment formula. 

Depending on the precise injury a class member experienced (i.e., whether their service was

throttled, suspended, or terminated) and when that injury occurred, class members who made a claim

will receive between roughly $15 and $65 per affected phone line. TracFone further agreed to the

entry of injunctive relief regarding its advertising and disclosure practices with respect to its

“unlimited” data plans.

1.8 to 1.9 million customers for whom TracFone has up-to-date address information will

automatically receive a payment under the settlement without filing a claim. All other class

members are required to submit a simple claims form to recover under the settlement. The deadline

to file claims passed on June 19, 2015. The deadline for opt-outs and objections passed on May 20,

2015. The settlement administrator reports that 803,671 claim forms were submitted as of June 22. 

Docket No. 139 (Second Supp. Decl. Simmons) at ¶ 8. By contrast, 142 putative class members

opted out, and five objected to the settlement. Docket No. 134-1 (Supp. Decl. Simmons) at ¶¶ 22,

23. Of those five objectors only two, Objectors Birner and Johnson, filed substantive objections. 

And of those, only Birner appeared at the fairness hearing, is represented by counsel, and filed a

formal objection to the settlement complete with legal citations. However, as discussed more fully

below, the Court concludes that Birner lacks standing to object because he is not a class member. In

any event, the Court determines that his objection is without merit. 

For the reasons explained in this Order and stated on the record at the final approval hearing,

the Court determines that the parties’ proposed settlement is fair, reasonable, and adequate. It is

therefore approved. Similarly, the Court determines that class counsels’ fees request is eminently

reasonable in light of the sizeable relief obtained for the class. Accordingly, class counsel will be

awarded the full $5 million sought in fees, plus the full amount of their requested costs ($63,644.75). 

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Finally, the Court approves the payment of $2,500 service awards to the representative plaintiffs. 

II. DISCUSSION

A. Motion for Final Approval of Class Action Settlement

1. Legal Standard for Final Approval

Federal Rule of Civil Procedure 23(e) “requires the district court to determine whether a

proposed settlement is fundamentally fair, adequate and reasonable.” Hanlon v. Chrysler Corp., 150

F.3d 1011, 1026 (9th Cir. 1998). “It is the settlement taken as a whole, rather than the individual

component parts, that must be examined for overall fairness.” Id. (citing Officers for Justice v. Civil

Serv. Comm’n of San Francisco, 688 F.2d 615, 628 (9th Cir. 1982)). 

While the factors this court may consider in making its fairness assessment will naturally

vary from case to case, typically the court should consider:

(1) the strength of the plaintiff’s case; (2) the risk, expense,

complexity, and likely duration of further litigation; (3) the risk of

maintaining class action status throughout the trial; (4) the amount

offered in settlement; (5) the extent of discovery completed and the

stage of the proceedings; (6) the experience and views of counsel; (7)

the presence of a governmental participant; and (8) the reaction of the

class members of the proposed settlement.

In re Bluetooth Headset Prods. Liab. Litig. (In re Bluetooth), 654 F.3d 935, 943 (9th Cir. 2011)

(citing Churchill Village, L.L.C. v. Gen. Elec., 361 F. 3d 566, 575 (9th Cir. 2004)). 

Moreover, “where, as here, a settlement is negotiated prior to formal class certification,

consideration of the[] eight Churchill factors alone is not enough to survive appellate review.” In re

Bluetooth, 654 F.3d at 946 (emphasis in original). Rather, a reviewing court must also be on the

lookout for “subtle signs that class counsel have allowed pursuit of their own self-interests and that

of certain class members to infect the negotiations.” Id. According to the Ninth Circuit in

Bluetooth, such “warning signs” include: (1) where “counsel receive a disproportionate distribution

of the settlement, or when the class receives no monetary distribution;” (2) where the “parties

negotiate a ‘clear sailing’ agreement providing for the payment of attorneys’ fees separate and apart

from class funds;” and (3) where “the parties arrange for fees not awarded to revert to defendants

rather than to be added to the class fund.” Id. (citations omitted).

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 TracFone customers receive TracFone’s services pursuant to monthly contracts that a

customer can choose to let lapse without paying a penalty.

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2. Analysis of the Churchill Village and In re Bluetooth Factors

a. Strength of the Plaintiffs’ Case

TracFone admits it throttled or suspended its customers’ data service, and occasionally even

terminated its customers’ TracFone service altogether where those customers exceeded certain

monthly data caps. The gravamen of Plaintiffs’ complaint is that these data caps were not

adequately disclosed to consumers when they signed up for the service. Rather, TracFone

advertised that the relevant phone plans offered “unlimited” data.

The strength of the Plaintiffs’ case appears to hinge largely on the viability of three separate

defenses, two substantive and one procedural. TracFone’s first substantive defense is that it

adequately disclosed the existence of the data cap in its Terms & Conditions, and thus no reasonable

consumer could have been materially misled by its “unlimited” advertisements. Indeed, this is the

same (and only) substantive point raised by Objector Johnson: According to Johnson, TracFone

should not have to pay any damages because consumers should have known they would be throttled,

suspended, or terminated if they exceeded the data caps. See Docket No. 134-1, Ex. D (Johnson

Objection). Ultimately, the Court believes this putative defense (and associated objection) is not

particularly strong – the typical consumer would likely rely on the veracity of the widely publicized

“unlimited” advertising claims, and thus have little motivation to root around in TracFone’s lengthy

form contract to learn that TracFone’s definition of “unlimited” data ran counter to the plain and

ordinary meaning of that term.

TracFone’s other substantive defense, however, appears much stronger. TracFone first

argues that a substantial number of class members who were throttled likely did not know that their

data speed had been slowed, and thus suffered little, if any, cognizable injury even if they reasonably

relied on TracFone’s allegedly misleading advertisements. Moreover, TracFone argues that those

consumers who did notice the throttling sustained only limited damages, particularly given the

month-to-month duration of TracFone’s service plans.2

 Put simply, TracFone argues that if a

consumer became aware of the throttling, and nevertheless chose to sign additional monthly

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contracts with TracFone, that consumer was no longer misled by the “unlimited” advertisements. 

Rather, such a class member knew that the “unlimited” advertisements were false, and chose to

purchase TracFone’s product anyway.

Finally, TracFone argues that Plaintiffs’ claims were unlikely to succeed as a procedural

matter because they were likely to be compelled to individual arbitration pursuant to an arbitration

clause contained in the Plaintiffs’ service agreement with TracFone. This possibility is discussed in

the following section regarding the risks of this litigation. 

As to the first Churchill Village factor, the Court concludes that while the Plaintiffs’ case

appears strong, TracFone is not without plausible defenses that could have ultimately left class

members with a reduced or non-existent recovery. Thus, the first factor favors approval of this

settlement.

b. The Risk, Expense, Complexity, and Likely Duration of Further Litigation

The second Churchill Village factor also favors settlement. Specifically, the proposed

settlement offers class members prompt relief without the expense and hassle of what would be

protracted litigation if this case cannot be resolved amicably. 

First, it cannot be denied that this litigation is complex. There are four separate consumer

lawsuits pending against TracFone, along with an FTC enforcement action, alleging violations of

various laws of at least three different jurisdictions. Moreover, the alleged wrongful conduct at

issue took place over a considerable period of years, during which time TracFone’s advertisements

and disclosures apparently materially changed at least once, thereby admitting further legal and

factual variation that could quickly ratchet up the complexity of this case.

As noted above, there are also some notable litigation risks that could threaten, reduce, or

even eliminate Plaintiffs’ recovery entirely. Most notably, TracFone filed motions to compel

arbitration in each of the consumer cases pursuant to a contractual arbitration clause in its Terms &

Conditions that contains a class action waiver. TracFone notes that various federal courts have

previously concluded that TracFone’s terms of service are binding on consumers, and those terms of

service include the arbitration provision asserted in these actions. See, e.g., TracFone Wireless, Inc.

v. Anadisk LLC, 685 F. Supp. 2d 1304, 1315 (S.D. Fla. 2010) (holding that TracFone shrinkwrap

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agreement, with similar language to agreement at issue here, was enforceable contract against phone

purchasers); TracFone Wireless, Inc. v. Bequator Corp, Ltd., No. 10-cv-21462 (WMH), 2011 WL

1427635, at *8 (S.D. Fla. Apr. 13, 2011) (same). Thus, TracFone contends that Plaintiffs would be

unlikely to recover damages at all if litigation continues and the motions to compel individual

arbitration are litigated to completion.

Plaintiffs concede that TracFone’s successful invocation of the arbitration clauses is a

significant risk they face if they go forward in this litigation absent settlement, although they

contend that they have strong defenses to the enforceability of the arbitration clause. Objector

Birner, however, argues that even Plaintiffs have exaggerated the risks of arbitration; in his view the

arbitration clause is plainly unenforceable as a matter of California law because it is both

procedurally and substantively unconscionable. Objection at 17-21. Even if Birner had standing to

object, and he does not, this objection is without merit. First, it is not immediately apparent that

California law would govern the enforceability of the arbitration provision. While the relevant

contract’s choice-of-law provision provides that the contract shall be construed under the laws of

Florida, the contract specifically exempts the arbitration provision from the choice-of-law clause,

and does not specify what law should apply to the arbitration clause. Docket No. 51-1, Ex. 1 to

Decl. Levine at ¶ 16. Thus, the Court would likely need to apply choice of law rules to determine

the relevant law to apply to the arbitration clause. And under California’s choice of law rules, it is

likely that the arbitration clause would be governed by either the law of the place where the contract

was made, or the law of the place where the contract was performed. See, e.g., Cal. Civ. Code §

1646 (West 2015). It is quite possible then, that determining arbitrability could require the separate

application of the laws of every state where a TracFone class member signed up for, or received,

TracFone service. At a minimum, this extra complexity further counsels in favor of settlement. 

Additionally, Birner appears overly optimistic that the arbitration provision would be held

unenforceable under California law, at least in the most relevant respect. Birner has not argued, and

indeed may be foreclosed from arguing that the class action waiver is not enforceable in light of the

Supreme Court’s decision in AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1750 (2011). In

order to avoid the class action waiver, Plaintiffs would need to show that the entire arbitration

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agreement was “permeated” with substantive unconscionability on grounds not preempted by the

FAA. See Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 122 (2000); see also

Mohamed v. Uber Techs., Inc., -- F. Supp. 3d --, 2015 WL 3749716, at *31 (N.D. Cal. 2015). The

only two putatively substantively unconscionable terms Birner identifies in the contract, however, a

unilateral modification clause and punitive damages waiver, could arguably be severed from the

agreement, leaving the class action waiver intact. See Armendariz, 24 Cal. 4th at 121-23 (holding

that California law favors “severing or restricting illegal terms rather than voiding the entire

contract”); see also Mohamed, 2015 WL 3749716, at *25 (summarizing relevant principles of

California law with respect to the severance of substantively unconscionable terms in arbitration

provisions). Put simply, there is substantial risk of lengthy and complicated litigation if this case is

not settled, and a sizeable risk that such litigation could not be maintained as a class action and

would instead be compelled to individual arbitrations. Thus, the second Churchill Village factor

strongly favors settlement.

c. The Risk of Maintaining Class Action Status Throughout the Trial

Plaintiffs would have the burden to show that a class action could be certified, and that

certification could be maintained through trial. The parties correctly argue that there are real risks

that Plaintiffs could not meet that burden here. Thus, the third Churchill Village factor weights in

favor of settlement approval.

TracFone does not concede that a nationwide class could be certified here. Indeed, TracFone

argues that the laws of all fifty states necessarily would apply to Plaintiffs’ claims, thus eviscerating

predominance and manageability. This is not a frivolous argument. See Zinser v. Accufix Research

Inst. Inc., 253 F.3d 1180, 1190, amended by and rehearing denied, 273 F.3d 1266 (9th Cir. 2001)

(recognizing that legal variation among the laws of the fifty states may provide a basis for denying

class certification); Andrews v. Am. Tel. & Tel. Co., 95 F.3d 1014, 1024 (11th Cir. 1996) (same);

Castano v. Am. Tobacco Co., 84 F.3d 734, 741–43 and n. 15 (5th Cir.1996) (same); In re

Rhone–Poulenc Rorer, Inc., 51 F.3d 1293, 1300–01 (7th Cir.1995) (same).

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Moreover, and even assuming that the law of only a few states might apply to Plaintiffs’

claims, TracFone pointedly notes another significant obstacle to class certification – quantification

of class members’ damages. As TracFone notes, the Supreme Court has recently held that a plaintiff

seeking class certification must typically present an adequate model for determining damages on a

classwide basis in order to satisfy Rule 23’s predominance requirement. See Comcast Corp. v.

Behrend, 133 S.Ct. 1426, 1432 (2013); see also Newton v. Am. Debt Servs., No. C-11-3228 EMC,

2015 WL 3614197, at *8 (N.D. Cal. Jun. 9, 2015) (discussing Comcast and class certification

requirements). Here, however, TracFone argues that no common damages model could be fashioned

because a class member’s damages, if any, will depend on a number of individualized assessments. 

For example, TracFone argues that the injury suffered by any class member could differ based on

individualized variables such as: (1) the period over which the customer was throttled (i.e., did

throttling begin early in the month, mid-way through the month, or on the last day of the month?);

(2) the customer’s desired amount of data use (i.e., did the user want to stream movies or music, or

simply check emails or stock quotes?); and (3) throttling’s ultimate impact on the user’s

functionality (i.e., was the user’s functionality only slightly impaired because their email use did not

require particularly high data speeds, or was the class member’s streaming video capability rendered

essentially useless because the throttling speed limit was too low to permit streaming?). Put simply,

TracFone argues that an individual who only infrequently used data intensive features and was

throttled towards the end of the month probably suffered substantially less damage from its

throttling than did a data-hungry individual who wanted to stream movies or music via his TracFone

device, but was prevented from doing so for a substantial portion of the month. While these

arguments might not ultimately foreclose class certification, they present real challenges that

Plaintiffs would have to overcome were this Court to deny final approval. Accordingly, this factor

favors final approval.

d. The Amount Offered in Settlement

As this Court recently explained in its opinion in Bayat v. Bank of the West, the most

important variable in assessing a class settlement is the amount of relief obtained for the class. 

Bayat v. Bank of the W., No. C-13-2376 EMC, 2015 WL 1744342, at *4 (N.D. Cal. Apr. 15, 2015). 

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Here, the settlement provides both monetary and injunctive relief to class members. As described

below, both forms of relief are valuable and substantial. Thus, the most important Churchill Village

factor weighs strongly in favor of final approval. 

i. Monetary Relief

TracFone largely sold its “unlimited” service plans for $45 a month during the class period. 

See Docket No. 121 at 16. As the parties explained at the final approval hearing, TracFone’s

unlimited plan included not just “unlimited” data, but also unlimited voice calls and text messages. 

See Docket No. 151. During the class period, TracFone also sold a more limited service plan for

roughly $30 a month. See Docket No. 134 at 4. As explained at the hearing, this cheaper plan did

not include unlimited voice calls, text messages, or data service. Thus, it is reasonable to assume

that the monetary value of the “unlimited” data service sold to consumers is equal to some portion

(but not all) of the $15 monthly premium that class members paid to obtain unlimited talk, text, and

data service.

The settlement provides that class members who were throttled before TracFone made

certain disclosure changes will receive a minimum payment of $6.50, while customers who were

throttled after TracFone allegedly made more fulsome disclosures will receive a minimum payment

between $2.15-$2.50. Docket No. 121 at 7. For class members whose data service was suspended,

the minimum payment is $10. Id. Plaintiffs whose service was terminated entirely will receive a

guaranteed $65 payment. Id. Critically, these minimum payment amounts assume a 100% claims

rate. If, as has turned out to be the case, the actual claims rate is below 100%, the per claimant

payout rises according to a pro rata formula in the settlement agreement. The parties contend that

based on the estimated final claims rate of nearly 30%, individuals who were throttled will receive

roughly $16 per claim, while claimants whose service was suspended will receive roughly $25. See

Docket No. 134 at 1. 

Contrary to Objector Birner’s arguments that the monetary relief obtained in this settlement

is too low, the $40 million settlement represents a good monetary result for class members. As

noted above, the most reasonable approximate measure of the damages class members sustained is

the additional amount of money customers paid for TracFone’s “unlimited” data plan – an amount

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 The Court assumes without deciding that class members would likely only recover

damages for the first month they were throttled. If a consumer continued to sign up for TracFone’s

service in subsequent months after learning of TracFone’s throttling, such a consumer likely was not

affirmatively misled by TracFone’s allegedly deceptive advertisements. 

10

roughly equal to some unspecified portion of the $15 monthly premium class members were charged

for unlimited data, voice and text services. Assuming for a moment that this entire $15 premium

could be attributed solely to TracFone’s unlimited data service, the Court finds that a realistic

theoretical verdict value in this case would be roughly $120 million, which represents a $15 refund

for each of the approximately eight million class members for the first month their service was

throttled without forewarning or adequate disclosure.3 The $40 million settlement fund recovers

one-third of the theoretical verdict amount for class members – a very reasonable compromise in this

Court’s experience. More realistically, only a portion of the $15 premium is attributable to

unlimited data, and even then because the throttling occurred only when the ceiling on data usage

was reached, many users would not encounter throttling until the last days of the month. This fact

suggests that assuming a full month’s damage at the full $15 premium rate may well be a generous

assumption.

Birner’s specific arguments regarding the alleged inadequacy of the monetary relief in this

settlement are all predicated on untenable assumptions, and must be rejected. For instance, Birner

suggests that customers who were throttled should be refunded the full $45 monthly service fee they

paid TracFone for every month they subscribed to the unlimited data plan and were throttled, not just

for one (or at most two) months of service. However, TracFone correctly points out that class

members who learned they had been throttled could have discontinued their service plans with no

penalty – TracFone users subscribe to the company’s service on a month-to-month basis with no

obligation to renew. Those individuals, like Birner himself, who kept renewing their TracFone

service month after month likely either (1) were not throttled or did not know they were throttled,

and thus likely suffered little or no legally cognizable injury, or (2) knew they were throttled and

continued to sign up for TracFone’s service anyway. TracFone makes a strong argument that when

such members willingly renewed their plans knowing that they were subject to throttling, they could

no longer claim that TracFone’s marketing was materially misleading, deceptive, or injurious.

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Objector Birner’s next argument, that payments between $2.15 and $6.50 to throttled class

claimants are “minimal, arbitrary, or de minimus,” is equally off-point. Birner fails to recognize that

these figures represent the minimum payments due under the settlement, assuming a 100% claims

rate. Because the claims rate does not approach 100%, Birner’s objection is largely irrelevant. In

any event, and in light of the nearly 30% claims rate reported by the parties in their final approval

papers, the actual payments to throttled class members are expected to be approximately $16 each –

at least $1 more than a reasonable estimate of their actual damages (i.e., the full $15 paid for

unlimited talk, text, and data). See Docket Nos. 134 at 1, 139 at 1. Clearly, this is a very good result

for class claimants.

Birner also wrongly argues that the $40 million settlement amount is too low because class

members would be entitled to a substantial restitution remedy if this case is not settled. Essentially,

Birner argues that TracFone would be obligated to disgorge the entirety of the revenues it

wrongfully earned by allegedly misrepresenting the central feature of its unlimited data plan. Birner

alleges that “simple math establishes that TracFone would be unjustly enriched or enjoy revenue,

based upon the $15.00 difference [in price between] the plans, between $14.6 billion to $18.3

billion.” Objection at 4. There are a number of serious flaws in this calculation, including the fact

that Birner’s “simple math” presumes that the entire class (and millions of non-class members, as

well) would be entitled to a full refund of $15 for every month during the years-long class period. 

But even more fundamentally, Birner’s unjust enrichment theory wrongly assumes that the entire

$15 payment TracFone received from class members would be subject to disgorgement to injured

class members, even though the actual benefit TracFone arguably received as a result of its

misrepresentations is likely only a portion of the $15 charge. See Day v. AT&T Corp., 63 Cal. App.

4th 325, 340 (1998) (explaining that a restitution award under the UCL has two predicates; “the

offending party must have obtained something to which it was not entitled and the victim must have

given up something which he or she was entitled to keep”) (emphasis in original); see also Dan B.

Dobbs, Law of Remedies: Damages-Equity-Restitution, at § 4.1(4) (West 1993) (explaining how

restitution is typically calculated, and noting that restitution in an amount exceeding a plaintiff’s

actual monetary losses is rarely awarded); Douglas Laycock, The Scope and Significance of

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Restitution, 67 Tex. L. Rev. 1277, 1289 (1989) (noting that courts typically only award restitution in

an amount exceeding plaintiff’s losses in cases where the defendant’s conduct was particularly

egregious, and further noting that even an award disgorging a defendant’s profits is relatively rare). 

Allowing class members to recover the full $15 paid for each month they subscribed to TracFone’s

service would represent a significant windfall for class members; not a just measure of damages. 

Birner has simply not established that class members would obtain a significantly larger recovery

under a restitution or unjust enrichment theory than they are receiving under the proposed

settlement.

Birner’s argument that class members could obtain punitive damages if they pursued this

case through trial is similarly off-base. As Plaintiffs point out, punitive damages are only available

under one of the various statutes they sued under. See Clark v. Superior Court, 50 Cal. 4th 605, 610

(2010) (holding that punitive damages are not available under California’s Unfair Competition

Law); Rollins, Inc. v. Heller, 454 So. 2d 580, 585 (Fla. Ct. App. 1984) (holding that punitive

damages are not available under Florida’s Deceptive and Unfair Trade Practices Act); Crogan v.

Metz, 47 Cal. 2d 398, 405 (1956) (holding punitive damages are not available for breach of contract

under California law); G.M. Brod & Co. v. U.S. Home Corp., 759 F.2d 1526, 1536 (11th Cir. 1985)

(explaining that punitive damages are not available for breach of contract under Florida law). And

while punitive damages can theoretically be awarded under the CLRA, Birner has not cited any

CLRA case where such damages were actually awarded, nor has Birner sufficiently demonstrated

that TracFone’s conduct here would warrant a punitive damages award under the CLRA.

Equally without merit is Birner’s argument that the settlement does not adequately

compensate those few class members whose service was entirely terminated. Objection at 15. As

Birner explains, until late 2013 TracFone subscribers were required to purchase either locked

handsets that worked only on TracFone’s network, or locked SIM cards that would not work on

other networks. Id. Consequently, the phones or SIM cards purchased by later-terminated class

members could not be used with other wireless carriers, rendering those products useless. Birner

alleges that the settlement does not adequately account for these class members’ sunk costs. 

TracFone notes that first-time customers could purchase a new TracFone-branded handset

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for as little as $5, or could purchase a locked SIM card for less than $16. Docket No. 135 at 5. 

Birner has not contradicted this point. Importantly, claimants whose service was terminated receive

a guaranteed $65 payment under the settlement. This payment is intended to provide compensation

both for the value of any data service that was lost, and for at least some portion of the cost of any

handset or SIM card that was purchased and then rendered worthless by TracFone’s decision to

terminate service. Birner’s objection that claimants whose service was terminated do not receive

adequate compensation for their sunk equipment costs is not well taken. 

Finally, Birner argues that the $40 million settlement amount is too low because TracFone

has the financial wherewithal to withstand a greater verdict. However, “the fact that [the defendant]

could afford to pay more does not mean that it is obligated to pay any more than what the [plaintiffs]

are entitled to under the theories of liability that existed at the time the settlement was reached.” In

re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 538 (3d Cir. 2004). More generally, it is not this

Court’s role in reviewing a settlement to ensure the settlement is perfect, extracting every cent

possible from the defendant under the circumstances. See Lane v. Facebook, Inc., 696 F.3d 811, 819

(9th Cir. 2012). Rather, this Court’s job is simply to ensure the settlement is “fundamentally fair

within the meaning of Rule 23(e).” Id. For the reasons described above, the monetary portion of

this settlement is very fair to class members by any measure and thus Birner’s objection to the

monetary relief is without merit.

ii. Injunctive Relief

In addition to the significant monetary relief available under the settlement, TracFone has

also agreed to make numerous conduct changes, including:

! TracFone will not advertise its mobile service plans as providing “unlimited” data

unless it also makes clear in adjacent disclosures any applicable throttle limits or

caps, as well as the actual speeds to which customer data will be slowed.

! TracFone’s terms and conditions will be updated to describe the impact throttling can

have on the functionality of services.

! TracFone will ensure that customers contacting TracFone customer service receive

accurate information about TracFone’s throttling, suspension, and service termination

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policies, and about the impact throttling can have on the functionality of services.

! TracFone will implement a system to advise customers by SMS text message when

their data speed has been throttled upon reaching specified data usage caps.

See Settlement Agreement at § IV.C.

The Court finds that the injunctive relief will have significant value for both class members

and the general public. Most importantly, the injunctive relief is designed to make it clear to

customers exactly what TracFone is selling when it advertises its “unlimited” data plans by forcing

TracFone to better inform customers of its throttling, suspension, and service termination policies. 

Further, TracFone customers will receive a text message when they are actually throttled. 

Customers who receive such a text message and dislike TracFone’s throttling policy can choose not

to renew their TracFone service the following month. 

Birner argues that the conduct changes in the Settlement Agreement are “unenforceable

window dressing” because the settlement does not provide for liquidated damages or the automatic

imposition of specified monetary sanctions in the event that TracFone does not comply with the

terms of the settlement. Objection at 24. Like many of Birner’s other arguments, this objection is

predicated on a fundamental misunderstanding of the facts or law. As TracFone correctly point out,

this Court retains jurisdiction over the Settlement Agreement and FTC Stipulated Order—if 

TracFone does not comply with the terms of the settlement, the Court can take appropriate remedial

action. There is absolutely no reason to suspect that the injunctive relief agreed to is merely

“unenforceable window dressing.” 

In conclusion, the value of both the monetary and injunctive relief on offer in this settlement

is very good, and well within the reasonable range of approvable outcomes when compared to the

theoretical verdict value of these claims. Thus the fourth Churchill Village factor tips strongly in

favor of settlement approval.

e. The Extent of Discovery Completed and the Stage of the Proceedings

The fifth Churchill Village factor favors approval of this settlement. Declarations from class

counsel reveal that they spent significant time litigating this matter before a settlement was reached. 

For instance, class counsel aver that they spent roughly 778 hours on pre-filing case investigation,

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440 hours preparing for and taking depositions, and roughly 663 hours on other discovery. See

Docket Nos. 143-46. Plaintiffs counsel have represented to the Court that they obtained sufficient

information throughout the litigation process to make an informed decision about the settlement. 

See id. There is no reason to question counsels’ assertion. Thus this factor weighs in favor of

approval.

f. The Experience and Views of Counsel

Class counsel have submitted declarations that indicate that all of the attorneys here have

significant experience litigating and settling consumer class actions. See, e.g., Docket Nos. 122-1

and 122-2. For instance, lead class counsel from the firm of Lieff, Cabraser, Heimann & Bernstein,

LLP, are known to this Court to be skilled and experienced class action litigators. All counsel

involved in this matter support the settlement. This factor weighs in favor of final approval. 

g. The Presence of a Governmental Participants

The FTC participated heavily in reaching this settlement, and supports the settlement. 

Indeed, the FTC will be responsible for the disbursement of the $40M settlement fund to class

claimants. No government entity has raised any objections to the proposed settlement. This factor

weighs in favor of final approval.

Birner argues that the FTC’s presence in the settlement counsels against approval because, in

Birner’s view, the settlement was solely the work of the FTC. Essentially, Birner argues that the

consumer actions added nothing to the settlement, and the $40 million paid to the FTC for the

purpose of consumer redress should be viewed solely as consideration to settle the FTC enforcement

action. According to Birner, consumers received nothing but “past consideration” in exchange for

the release of their claims. Objection at 13. 

Birner’s argument is without merit. The consumer and FTC settlements were reached at the

same time as part of a global settlement. TracFone has stated that it only agreed to pay $40 million

to the FTC because those funds will be used to pay class members in the consumer cases, thereby

resolving all of the pending lawsuits against it. Docket 113 at 2. Counsel for the FTC confirmed

this point at the final approval hearing, as did Plaintiffs’ counsel. The FTC’s endorsement of the

settlement counsels in favor of granting final approval.

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 The first Bluetooth factor is not met. As described below, the $5 million fees request does

not represent a disproportionate portion of the settlement. Rather, the fees awarded represent 11%

($5M/$45M) of total settlement amount. This figure is particularly reasonable in light of the 25%

benchmark for fees awards in the Ninth Circuit. See Hanlon, 150 F.3d at 1029. The requested fee is

even more reasonable in light of the positive value of the injunctive relief obtained on behalf of class

members. 

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h. The Reaction of the Class Members of the Proposed Settlement

As previously indicated, the parties estimate that there are approximately eight million

members in the settlement class. Over 800,000 of these individuals submitted claims, while only

142 opted out, and five objected to the settlement. Docket Nos. 134-1; 139. Additionally, the

settlement provides that an additional 1.8 to 1.9 million customers for whom TracFone has address

information will automatically receive a check, even if they did not affirmatively file a claim. Taken

together, and depending on the extent of the overlap between the those class members who will

automatically receive a payment and those who filed claims, the total claims rate is estimated to be

approximately 25-30%. This is an excellent result that counsels in favor of settlement approval. 

See, e.g., Bayat, 2015 WL 1744342 at *5-6 (approving class action settlement with 2% claims rate);

Evans v. Linden Research, Inc., No. C-11-1078 DMR, 2014 WL 1724891, at *4 (N.D. Cal. Apr. 29,

2014) (approving class action settlement with 4.3% claims rate). 

i. In re Bluetooth Factors

When a settlement agreement is negotiated prior to formal class certification, the district

court must evaluate the settlement for three additional signs of collusion between class counsel and

the defendant:

(1) do counsel receive a disproportionate distribution of the settlement,

or does the class receive no monetary distribution while class counsel

are amply rewarded;

(2) is there a “clear sailing” arrangement providing for the payment of

attorneys’ fees separate and apart from class funds . . . ; and

(3) do any attorneys’ fees not awarded to class counsel revert to

defendants instead of being added to the class fund.

See In re Bluetooth, 654 F.3d at 946-47 (citations omitted).

Here, two of the three Bluetooth signs weigh against settlement approval.4

 Specifically, the

settlement has a “clear sailing” agreement whereby fees will be paid separate and apart from class

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funds, and TracFone has agreed not to challenge class counsels’ fees request up to $5 million. See

Settlement Agreement § IX.A (“Defendants agreed not to oppose . . . (a) $5 million attorneys’ fees;

and (b) $100,000 litigation expense.”). Moreover, any fees not awarded to class counsel will revert

to TracFone rather than being added to the $40 million settlement fund. The presence of these

factors is in no way dispositive, however. As the Bluetooth opinion itself makes clear, the Bluetooth

factors are merely “warning signs” that indicate the potential for collusion. See In re Bluetooth, 654

F.3d at 947. When faced with such “indicia of possible implicit collusion,” the Court need not reject

the settlement outright. Id. Rather, the Court is merely obligated to “assure itself that the fees

awarded in the agreement were not unreasonably high” in light of the results obtained for class

members. Id. 

In the case at bar, the requisite “hard look” at the settlement indicates that the requested fees

award is not “unreasonably high” in light of the significant relief obtained for the class. Indeed, as

noted above, every single Churchill Village factor weighs in favor of final approval, and the most

important factor – the amount received in settlement – is undoubtedly favorable. Moreover, it is

worth noting that the particular settlement structure present here was mandated by the FTC, which

prohibited the use of any settlement funds to pay attorney fees, litigation expenses, court costs, or

incentive payments to class representatives. Stipulated Order § III.A. Thus, the settlement displays

the second Bluetooth “warning sign” because the FTC required the payment of attorneys’ fees

“separate and apart from class funds.” In re Bluetooth, 654 F.3d at 947. Significantly, the $40

million settlement fund is not subject to reversion to the Defendant; all of it will be distributed to

class members. Thus, the Court will grant final approval to this settlement despite the presence of

two of Bluetooth’s three warning signs.

j. Conclusion

All of the Churchill Village factors weigh in favor of final approval and a finding that the

proposed settlement is fair, reasonable, and adequate. And while two of the Bluetooth warning signs

are present, the settlement appears to present a good deal for class members when viewed as a

whole. Consequently, the Court GRANTS the motion for final approval. 

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B. Objector Birner Lacks Standing to Object to the Settlement

The Court has considered and rejected Birner’s various objections to the proposed settlement

on the merits, as indicated above and in the Court’s oral ruling at the final approval hearing. In any

event, the Court finds that Birner has no legal standing to object to the settlement because he has not

demonstrated that he is an aggrieved class member. See In re First Capital Holdings Corp. Fin.

Prods. Sec. Litig. (In re First Capital), 33 F.3d 29, 30 (9th Cir. 1994) (holding that only “an

aggrieved class member” has standing to object to a proposed class settlement); see also San

Francisco NAACP v. San Francisco Unified School Dist., 59 F. Supp. 2d 1021, 1032 (N.D. Cal.

1999) (noting that “nonclass members have no standing to object to the settlement of a class action)

(citation omitted). The burden is on Birner to prove that he has standing to object (i.e., that he is an

aggrieved class member). See In re Apple Inc. Sec. Litig., No. 06-cv-5208-JF, 2011 WL 1877988, at

*3 n.4 (N.D. Cal. May 17, 2011); In re Hydroxycut Mktg. and Sales Practices Litig., No. 09-cv-1088

BTM, 2013 WL 5275618, at *2 (S.D. Cal. Sep. 17, 2013) (“The party seeking to invoke the Court’s

jurisdiction – in this case, the Objectors – has the burden of establishing standing.”) (citing Steel Co.

v. Citizens for a Better Environment, 523 U.S. 83, 103-04 (1998)).

Birner has not met his burden to establish that he is an aggrieved class member. The closest

Birner has come is his unsupported assertion that he believes he was throttled because his data

service was often slow. See Docket No. 136-1 (Birner Depo.) at 34:8-35:12. But as the parties to

this litigation agree, a cell phone user’s data speed can be affected and slowed by numerous factors

unrelated to deliberate throttling, such as poor cell reception or differing network speeds (e.g., 3G

vs. 4G). See Docket No. 137-1 at ¶ 16. 

In contrast to Birner’s weak showing on standing, TracFone has submitted probative

evidence that Birner is not a class member. Specifically, a TracFone employee submitted a

declaration under penalty of perjury that states that (1) “TracFrone keeps record of all accounts that

were throttled, suspended, or terminated at TracFone’s direction”; and (2) those records establish

that Birner’s account was never throttled, suspended, or terminated because he “never consumed

enough data in a single 30-day period to be subject to throttling, suspen[sion], or termination.” 

Docket No. 137-1 at ¶¶ 13-14. Birner has presented no evidence that seriously contradicts

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5

 Birner filed a motion to continue the final approval hearing in this case so that he could

review the discovery provided to him for the purpose of learning whether he is actually a class

member. Docket No. 141. The Court denied Birner’s motion, finding that Birner had made an

insufficient showing that it was likely that he would ever find evidence in the discovery provided to

him that contradicts TracFone’s direct assertion that he was never throttled, even if the Court

permitted Birner extra time to review or conduct such discovery. 

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TracFone’s assertion that he is not a class member. Thus, the Court finds that Birner lacks standing

to object to the proposed settlement because he is not a class member, and certainly is not an

aggrieved class member.5

 See In re First Capital, 33 F.3d at 30 (“Simply being a member of a class

is not enough to establish standing. One must be an aggrieved class member.”). Nonetheless, the

Court has treated Birner as amicus curiae and given full consideration to his arguments. 

C. Motion for Attorneys’ Fees and Class Representative Incentive Awards

1. Legal Standards for an Award of Attorneys’ Fees

The Ninth Circuit has held that in a class action “the district court must exercise its inherent

authority to assure that the amount and mode of payment of attorneys’ fees are fair and proper.” 

Zucker v. Occidental Petroleum Corp., 192 F.3d 1323, 1328 (9th Cir. 1999). The district court’s

duty to “carefully assess the reasonableness of a fee amount spelled out in a class action settlement

agreement,” Staton v. Boeing Co., 327 F.3d 938, 963 (9th Cir. 2003), exists “independently of any

objection” to the fee amount requested. Zucker, 192 F.3d at 1328-29.

In common-fund cases like this one, “the district court has discretion to use either a

percentage or lodestar method” when determining the appropriate amount of attorneys’ fees. 

Hanlon, 150 F.3d at 1029; see also In re Bluetooth, 654 F.3d at 942. If the court selects the

percentage method, “[t]his circuit has established 25% of the common fund as a benchmark award

for attorney fees.” Hanlon, 150 F.3d at 1029 (citation omitted). If the court selects the lodestar

method, the court “begins with the multiplication of the number of hours reasonably expended by a

reasonable hourly rate.” Id. (citation omitted). The lodestar figure may then be “adjusted upward or

downward to account for several factors including the quality of the representation, the benefit

obtained for the class, the complexity and novelty of the issues presented, and the risk of

nonpayment.” Id. (citation omitted). Regardless of which method the court chooses, the Ninth

Circuit has “encouraged courts to guard against an unreasonable result by cross-checking their

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calculations against a second method.” In re Bluetooth, 654 F.3d at 944. Ultimately, “courts aim to

tether the value of an attorneys’ fees award to the value of the class recovery.” In re HP Inkjet

Printer Litig., 716 F.3d at 1178 (citing Hensley v. Eckerhart, 461 U.S. 424, 436 (1983)). “The more

valuable the class recovery, the greater the fees award. And vice versa.” Id. at 1178-79 (citation

omitted); see also Hensley, 461 U.S. at 436 (instructing district courts to “award only that amount of

fees that is reasonable in relation to the results obtained”). 

2. Merits of the Request for Attorneys’ Fees

Class counsel requests an attorneys’ fees award of $5 million, which represents 11% ($5

million/$45 million) of the total settlement value. This is well below the 25% benchmark typically

awarded in common fund cases in the Ninth Circuit. See Hanlon, 150 F.3d at 1029. As discussed

above, class counsel obtained excellent relief for the class. They are therefore entitled to a

reasonable fee to compensate them for their successful efforts. See Hensley, 461 U.S. at 436. The

Court readily concludes that a contingency award is appropriate in this case, and further concludes

that an award of roughly 11% of the common fund amount is reasonable in light of the superb results

obtained by class counsel here. 

Moreover, the $5 million fees request is easily justified under the lodestar cross-check. Here,

class counsel spent more than 5,000 hours litigating this case, running up approximately $3 million

in legal fees. The Court requested supplemental briefing from class counsel regarding their lodestar

billings, and the Court has reviewed class counsels’ supplemental filings. The Court is satisfied that

class counsels’ lodestar figure is justified in light of the complexity and duration of this litigation. 

The $5 million fees award sought represents a positive lodestar multiplier of about 1.7. As

noted, courts have discretion to apply a positive multiplier after considering factors such as: the

quality of representation, the benefit obtained for the class, the complexity and novelty of the issues

presented, and the risk of nonpayment. See Van Vranken v. Atl. Richfield Co., 901 F. Supp. 294, 298

(N.D. Cal. 1995) (providing that the district court may “enhance the lodestar with a ‘multiplier,’ if

necessary to arrive at a reasonable fee in light of all of the circumstances of the case”); In re

Washington Public Power Supply Sys. Securities Litig., 19 F.3d 1291, 1299-1300 (9th Cir. 1994)

(explaining that a positive lodestar multiplier is appropriate to compensate counsel for the risk of

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non-payment in a contingency fee case). All of these factors warrant a positive multiplier here, and

the precise multiplier (1.7) is well within the range approved in the Ninth Circuit in other successful

class actions. See, e.g. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1051 (9th Cir. 2002) (approving

a 3.65 multiplier on lodestar); Van Vranken, 901 F. Supp. at 298-99 (N.D. Cal. 1995) (multiplier of

3.6). Thus the Court GRANTS the motion for attorneys’ fees, and awards class counsel the full

amount of fees sought, as well as the full amount of litigation costs requested. 

3. Class Representative Service Awards

The $2,500 incentive awards sought for the named plaintiffs are reasonable and approved. In

the Ninth Circuit, “named plaintiffs . . . are eligible for reasonable incentive payments.” Staton, 327

F.3d at 977. Such awards are intended to “compensate class representatives for work done on behalf

of the class, to make up for financial or reputational risk undertaken in bringing the action, and,

sometimes, to recognize their willingness to act as a private attorney general.” Rodriguez v. West

Publ’g Corp., 563 F.3d 948, 958-959 (9th Cir. Cal. 2009).

According to the Plaintiffs’ attorneys, in addition to lending their names to these cases, and

thus subjecting themselves to public attention, the named Plaintiffs here were actively engaged in

the prosecution and settlement of these actions. See Docket No. 122 at 20. Among other things,

they “provided information to Class Counsel, gathered documents, reviewed pleadings, stayed

updated about the litigation, reviewed and approved the proposed Settlement, and, in the case of one

plaintiff, had their deposition taken.” Id. The $2,500 awards requested are reasonable, especially in

light of other cases where similar or larger incentive awards have been awarded to named class

plaintiffs. See, e.g., Nwabueze v. AT & T Inc., No. C 09–1529 SI, 2013 WL 6199596, at *12 (N.D.

Cal. Nov. 27, 2013) (awarding $5,000 incentive payment for each of two named plaintiffs); Hopson

v. Hanesbrands, Inc., No. CV–08–844 EDL, 2009 U.S. Dist. LEXIS 33900, at *27–28, 2009 WL

928133 (N.D. Cal. Apr. 3, 2009) (noting that “courts have found that $5,000 incentive payments are

reasonable”) (citations omitted). 

III. CONCLUSION

For the reasons explained above and on the record at the final approval hearing, the Court

grants final approval to the proposed class action settlement. The Court also grants class counsel $5

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million in attorneys’ fees, and $63,644.75 in costs. Finally, the Court grants the request for $2,500

incentive awards for the named plaintiffs. The Court overrules all objections on the merits, and

further concludes that Objector Birner lacked standing to object in the first instance. 

This order disposes of Docket Nos. 121 and 122. The Clerk is directed to close the file in

this case, along with the file in the following cases: Browning v. TracFone Wireless, No. 14-cv1347-EMC; Blaqmoor v. TracFone Wireless, No. 13-cv-5295-EMC; Gandhi v. TracFone Wireless,

No. 13-cv-5296-EMC; and Federal Trade Commission v. TracFone Wireless, No. 15-cv-392-EMC.

IT IS SO ORDERED.

Dated: July 2, 2015

_________________________

EDWARD M. CHEN

United States District Judge

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