F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

M I C H A E L P. K O B Y , an individual; M I C H A E L S I M M O N S , an individual; and J O N A T H A N S U P L E R , an individual, on behalf of themselves and all others similarly situated,

Plaintiffs-Appellees

,

B E R N A D E T T E M. H E L M

U T H , Objector-Appellant

,

U N I T E D S T A T E S O F A M E R I C A , Intervenor
,

v.

ARS N A T I O N

A L S E R V I C E S , I N C ., a California corporation; J O H N
A N D J A N E D O E S , 1 throug h 25, inclusive, D efendants-Appellees. No. 13-56964

D.C. No. 3:09-cv-00780-KSC

OPI NI ON

Appeal from the United States District Court for the Southern District of California Karen S. Crawford, Mag istrate J udg e, Presiding

Arg ued and Submitted J anuary 7, 2016 Pasadena, CaliforniaK O B Y V

. H E L M U T H 2

F iled J anuary 25, 2017

B efore: Paul J . W atford and Michelle T. F r iedland, Circuit J udg es, and J . F rederick Motz

, * District J udg e.

Opinion by

J u dg e W atford

SUMMARY * *

Class Action Settlem ent / Magistrate Judges

The panel reversed a mag istrate judg e’s order approving

a class action settlement in a suit broug ht ag ainst a debt

c o llection ag ency under the F air D ebt Collection Practice s Act.

The panel held that the mag istrate judg e had the authority
to enter final judg ment under 28 U .S.C. § 636(c) because she obtained the consent o f the named plaintiffs and t he defendant. J oining other circuits, the panel he l d that the
mag istrate judg e was not required to obtain the consent of the four million additional class members who were not present before the district court. T he panel also held that § 636(c) does not violate Article I I I of the Constitution by permitting
mag istrate judg es to ex ercise jurisdiction over class actions without obtaining the consent of each absent class member.

* T h e Ho n orab le J

. Fred erick Mo tz, District J u d g e f o r th e U.S. District Co urt f o r th e District o f

Mary lan d, sittin g b y

d esig n atio n

.

* * T h is su m m ary co n s titu tes n o p art o f th e o p in io n o f th e co urt. It h as b een p rep ared b y

co urt staf

f f o r th e co n v en i en ce o f

th e read er.K O B Y V

. H E L M U T H 3

The panel held that the mag istrate judg e abu s ed her discretion by approving the settlement as fair, reasonable, a nd adequate under F e d e ral Rule of Civil Procedure 23(e)(2) because there was no evidence that the injunctive r e lief afforded by the settlement h ad any v a l u e to the class members, y et to obtain it they had to relinquish their rig ht to

s e e k damag es in any other c lass action. There was a l s o n o evidence that the absent class members wou l d d e rive any benefit from the settlement’s c y pres award. Th e panel remanded the case to the district court.

COUNSEL

J onathan Tay lor (arg

ued) and D eepak Gupta, Gupta B eck PL L C, Washing ton, D.C.; D onald A. Yarbroug h, F o rt L auderdale, F lorida; Steven M. B r onson, The B ronson F irm APC, San Dieg o, California; for Objector-Appellant.

Philip D

. Stern (arg

ued), Union, New J ersey ; Robert E. Schroth, Sr. and Robert E. Schroth, J r., Sc h r o th & Schroth, San Dieg o, California, for Plaintiffs-Appellees.

Sean P. F ly

nn (arg u ed), Gordon & Rees Scully Mansukhani, I rvine, California; David L

. Hartsell, McGuire W o o d s L L P, Chicag o, I llinois; for Defendant-App ellee.

B rian W olfman, I nstitute for Public Represent a t i on, Georg etown U niversity L a w Center, Washing ton , D

. C.; I ra Rheing old, National A ss o c iation of Consumer Advocates, W a shing ton, D.C.; for Amic u s Curiae N ational Association of Consumer Advocates.K O B Y V

. H E L M U T H 4

OP INION

W A TF ORD, Circuit J udg e:

The mag istrate judg e in this case approved a class action settlement in which the named p laintiffs and class counsel g ot

w h a t they wanted but the remaining four million c las s members g o t worthless injun c t i ve relief. I n ex chang e for receiving not h i n g of value, the class members g ave up their rig ht to a s s ert damag es claims ag a inst the defendant in any other class action. W e are asked to decide two issues: whether the mag istrate judg e had the authority t o ex ercise jurisdiction without obtaining the consent of all four million class members; and, assuming we g et past that issue, whether the mag istrate judg e abused her discretion b y approvin g t h e settlement as fair, reasonable, and adequate.

I

T h e named plaintiffs are Michael Koby

, Micha el Simmons, and J onathan Supler. I n April 2009 they sued A RS National Services, I n c., a debt collection ag ency , under the F air Debt Collection Practices Act ( FD C P A )

, 15 U .S.C. § 1692 e t seq. They alleg ed that ARS violated §§ 1692d(6) and 1692e(11) of the F DCPA by leaving voicemail messag e s in w h ich the callers failed to disclose (1) that they w orked for ARS, (2) that ARS is a debt collector, or (3) that the purpose of the call was to collect a debt. T he named plaintiffs broug ht the action on behalf of every one in the United S t a t e s w ho received a voicemail messag e from ARS which fai l ed t o disclo s e t h a t information. T he class consists of some four million people nationwide.K O B Y V

. H E L M U T H 5

The named plaintiffs requested “max imum s t a tutory damag es ,” which vary under the F DCPA depending on the
nature of the a ction b e ing b roug ht. I n an individual a ction, a p l aintiff may recover any actual damag es suffered p l u s statutory damag es up to $ 1,000. § 1692k(a)(1), (a)(2)(A). I n

a c lass action, the named p laint i f f s m ay recover actual damag es plus statutory damag es up t o $ 1
, 000, but the damag es award for the rest of the class is capped at $500,000

or 1% of the defendant’s net worth, whichever is less. § 1692k(a)(2)(B ).

I n Aug ust 2011, after the district c ourt denied ARS’s motion to dismiss the case o n the pleading s, the parties b eg an discussing settlement. Around the same time, A RS voluntarily adopted a new, standar d i z ed voicemail messag e which requires its employ ees to disclose that they w o r k for ARS, that ARS is a debt c o llector, and that they are c alling to collect a debt. The parties ag ree that t h is new voicemail
messag e complies with the F DCPA.

Over the course of more than a y ear, the parties eng ag ed in settlement discussions with th e a s s istance of a mag istrate judg e. The n amed plaintiffs and A RS event u a l l y consented
to having th e same mag istrate judg e conduct a ll f urther proceeding s in the case, including the entry of final judg ment. The district court entered an o rder authoriz ing the mag istrate judg e to e x ercise jurisdiction over the case, and she presided over all further proceeding s.

I n J anuary 2013, following a full-day ma n d a t ory settlement conference before the mag istrate judg e, the parties finally hammered out a deal. Under the terms o f the settlement, the parties ag reed to seek certification of a nationwide, settlement-only class under F ederal Rule of CivilK O B Y V

. H E L M U T H 6

Procedure 23(b)(2). The p roposed class consisted o f
every one in the United States who b etween Ap r i l 2 0 08 a nd Aug ust 2 011 received a voicemail messag e fr o m A RS that failed to identify ARS a s the caller, disclose that the call was from a debt collector, or state that the p urpose of the call was to c o llect a debt. (The p arties chose those dates because April 2008 is the beg inning of the applicable statute of limitations period and A RS ended the alleg ed F DCPA violati o n s in Aug ust 20 1 1
, w hen it adopted the new voicemail messag e.) B ecause the class would b e certified under Rule 23(b)(2), the parties ag reed that no notice of any kind would be sent to the four million class members and tha t n o o ne would be permitted to opt out of the class.

I n terms of monetary

pay ments, ARS ag reed to pay each of the three named plaintiffs $ 1,000, the max imum they could h o pe to recover under the F D CPA as none o f them h a d suffered any actual damag es. ARS repres e nted to the court (althoug h it is unclear whether the mag istrate judg e took any steps to verify this fact) that its net w o rth was only $3.5 million, which meant the other four mill i o n c lass members could collectively

recover no more than $35,000. Given the impossi b i l ity of distributing less than a penny to e ach member of the class, ARS ag reed to make a $35,000 cy pres award to a local San Dieg o charity instead. ARS also ag reed
to pay clas s c o u nsel the neg o tiated sum of $ 6 7,500 in attorney ’s fees.

The four million unnamed cl a s s members receive no monetary compens a tion u nder the settlement. They are, howeve r , the beneficiaries of a stipulated injunction to be entered ag ainst ARS as part of the settlement. The injunction requires ARS to c ontinue using

, f or a period of two y ears, the

new voicemail messag e it had already adopted voluntarilyK O B Y V

. H E L M U T H 7

back in Aug ust 2011. I n return for that supposed benefit, the four million class members forfeit the rig ht to seek damag e s from ARS as part of a class action. The class members retain th e ri gh t to pursue d amag es c laims a g ainst ARS on an individual basis.

A s required by the Class Action F airness Act, s e e 28 U.S.C. § 1715(b), A RS sent notice of the proposed settlement to the appropriate state and federal officials, none of whom objected to the settlement.

The four million class members d id not receive individual notice of the proposed settlement, but one class member—the appellant in this case, B ernadette Helmuth—filed an objection. She is the named plaintiff in a s e parate class action a g ainst ARS p e n ding in t h e district court for the Southern District o f F lorida. H er lawsuit alleg es essentially the same F DCPA v iolations alleg ed in this cas e , e x cept that she seeks certification of a much small er class limited to F lorida residents who owed money to a particular creditor on whose b e h alf ARS was attempting to collect. After the parties ag reed to the settlement i n t his case, ARS asked the district c ourt in F lorida t o s t a y a ll further proceeding s in Helmuth’s case on the g round that, if a p p roved, the

s e t t l e ment would bar her case from proceeding as a class action. The district court in F lorida ag r eed to stay Helmuth’s action pending final approval of the settlement.

I n her objection to the settlement, Helmuth arg u e d, a mong other thing s, that the settlement w as unfair and unreasonable because class members woul d b e barred from pursuing damag es claims as part of a class action but w ould receive

n o t h i n g of value in return. (Helmuth did not object to the
mag istrate judg e’s autho r i t y to approve the settlement a ndK O B Y V

. H E L M U T H 8

enter judg ment, so w e e x press no view on the propriety o f having the same judg e who assisted the parties in n eg otiating

a settlement decide whether the settlement should be approved as fair and r easonable.) After conducting a fairness hea ri n g a t which Helmuth’s counsel, ARS’s counsel, a nd class counsel presented arg ument, the mag istrate judg e certified the proposed c lass under Rule 23(b)(2 ) ; a pproved the settlement as fair, r easonable, and adequate under Rule 23(e)(2); and e ntered judg ment according ly

. Having objected
to the settlement in the district c ourt, H elmut h i s entitled to ch al l e n ge the court’s ruling s on appeal. See Devlin v

. Scardelletti , 536 U.S. 1, 14 (2002).

I I

B e fore reaching the merits, we must b e s ure we have jurisdiction to decide this appeal. That inquiry requires more work here than in most c a ses. Our jurisdiction is t r i gge r e d only if the mag istrate judg e had the a uthority to ente r final judg ment under 28 U.S.C. § 636(c). S e e Anderson v

. W oodCreek Venture Ltd.

, 351 F .3d 9 11, 913–14 (9th Cir. 2003). Section 636(c) authoriz es mag istrate judg es, “ [ u] pon the consent of the parties,” to “conduct any or all proceeding s i n a jury or nonjury civil matter and order the entry o f judg ment in the case, wh e n specially desig nated to ex ercise such j u r i sdiction by the district court or courts he serves.” 28 U.S.C. § 636(c)(1). W hen a mag istrate judg e is authoriz ed
to enter final judg ment, “an ag gr ieved party may appeal directly to the appropriate United States c ourt of appeals from the judg ment of the mag istra t e judg e in the same manner a s

an appeal f

rom any o ther judg ment o f a district court.” § 636(c)(3).K O B Y V

. H E L M U T H 9

No one disputes that the d istrict court properly desig nated the mag istrate judg e to ex ercise jurisdiction in this case. Nor is there any dispute that the named plainti f f s a n d A RS consented to the mag istrate judg e’s e x e r c i se of jurisdiction. The only question is whether the statute required not just the
consent of the named plaintiffs, but also the consen t o f t he four million class members who were not present before the
court (we will refer to them as the absent class m e m b e r s ). W e conclu de that the statute requires the consent of the named plaintiffs alone and join three other circuits that have reached the same c o n c l u sion. See Day v. Persels & Associates, LLC
, 729 F .3d 1 3 09, 1316 (11th Cir. 2013 ); Dewey v. Volkswagen Aktiengesellschaft

, 681 F .3d 170, 181 (3d Cir. 2012); W

illiams v. Gener al Electric Capital Auto Lease, Inc. , 159 F

. 3d 266, 269 (7th Cir. 1998).

As a purely ling u istic matter, § 636 (c ) ( 1 )’s reference to the consent of “the parties” c ould be read to encompass both the named plaintiffs and the absent cla ss members, for the
term does not have a sing le fix ed meaning

. I n some contex ts absent class members are treated as parties, see In re Cement Antitrust Litigation
, 688 F .2d 1297, 1307–10 (9th Cir. 1 982) (judicial recusal statute), while in other contex ts they a re not,

see Snyder v. Harris
, 394 U.S. 3 3 2, 340 (19 6 9 ) (diversity jurisdiction statute). As the Su p reme Court has observed, abse n t c l a ss members may be treated as parties “ for some purposes and not for others.” Devlin , 536 U.S. at 10.

Viewing § 636(c) as a whole, it seems clear that Cong ress did not intend a

bsent class members to be treated as parties in this contex t. I n § 636(c)(2), w h i c h s p ecifies the procedures for obtaining party c o nsent u nder (c)(1), the phras e “ t h e parties” is used m u ltiple times in a way that cannot sensiblyK O B Y V

. H E L M U T H 10

be read to include absent class membe r s

. 1 Fo r ex ample, the provision states that when a mag istr ate judg e has been desig nated to ex ercise jurisdiction under (c)(1), “ the clerk o f
court shall, at the time the action is filed, notify the parties o f the availability of a mag istrate judg e to ex ercise such jurisdiction.” I n vir t u a l l y all class actions, it would be impossible for the clerk of court to issue this notice to absent class members at the time the action i s f i l e d

. The identities of all absent class members w i ll often not be known until later in the case, after at least p r eliminary discovery has been conducted. Even if the identities of all absent class members

are known at the outset of the case, the clerk would n eed to compile their names and contact information in order to send the required notice, since that information will not appear in the c omplaint. And in larg e class actions, the c ost of sending

ea c h c l a ss member notice of the availability of a mag istrate judg e w ould be prohibitive even f o r t h e most w ell-funded district c ourts. W e doubt Cong ress woul d h ave imposed

1 Sectio n 6 3 6 (c)(2 ) p ro v i d es:

If a m ag istrate j u d g e is d e s i g n ated to ex ercise civ i l j urisd ictio n

u n d er p arag rap h (1 ) o f th is su b sectio n , th e clerk of co u

rt sh all, at th e tim e th e actio n is f i led

, n o tif y th e p arties o f th e av ailab ility o f a m ag istrate j u d g e to

ex ercise su ch j urisd i ctio n

. T h e d ecisio n o f th e p arties

s h all b e co m

m un icated to th e clerk o f co urt

. T h ereaf ter, ei t he r t

h e district co urt j u d g e o r th e

m ag i strate j u d g e m ay ag ain a d vi s e th e p arties o f th e

av ailab ility o f th e m ag istrate j u d g e, b u t in s o d o in g , sh all also ad v i se t

h e p arties th at th ey are f ree to

w i t hh o l d c o n se n t w i t h o u t a d v e r se su b s t a n t i v e

co n s eq u en ces. Ru les o f co u rt f or th e ref eren ce o f civ i l

m atters to m ag istrate j u d g es sh all in clu d e p ro ced ures to p ro tect th e v o l un tarin ess o f th e p arties’ co n sen t.K O B Y V

. H E L M U T H 11

these substantial budg etary and manpower burdens on c lerks’ offices across the country without making that intent ex plicit.

T h e re is an a dditional reason to believe that Congr e s s intended to require the consent o f only the named plainti ffs under § 6 36(c)(1). As a g eneral matter, the named plaintiffs in a properly certified class action are charg ed with conducting the litig ation on behalf of the class they represent; by definition class a ctions involve too many plai n t i f fs to allow each to participate personally

. See F ed. R

. Civ. P. 23(a)(1). The n amed plaintiffs serve as r epresentatives of the class and in that capacity

are authoriz ed to decide matters of litig ation strate gy , such as w hich claims to assert or drop,

w h a t discovery to take, what motions to file, and so fort h

. Deciding whether to consent to a mag istrate judg e is a matter of litig ation strateg y of the same order. I n fact, it is probably less consequential to the o utcome than ot h e r d ecisions the named p laintiffs are o rdinarily called upon to make, s u ch a s deciding whether to consent to a bench t rial or choosing which issues to raise on appeal from an ad v e r s e v erdict. I t would therefore have b een sensible for C o ng ress to a ssume that the named plaintiffs in a class action will decide, on behalf of the absent class members, whether to consent to the jurisdiction of a mag istrate judg e. 2

2 It is tru e th at th e co n sen t req u ired un d er § 6 3 6 (c)(1 ) is u su ally g iv en at th e o u tset o f t

h e case b ef

o re a class h as b e e n c e r t i fied

, at w h i ch p o i n t th e n am ed

p lain t if f s lack th e au t

h o rity to b in d th e ab sen t class m em b ers. S ee S ta n da rd Fire In su r

a n c e C o

. v. Kn o wles

, 1 3 3 S. Ct. 1 3 4 5
, 1 3 4 9 (2 0 1 3). T h at s im

p ly m ean s if th e class is n ev er certif ied

, th e ab sen t class

m em b ers w i l l n o t b e b o u

n d b y th e n am ed p l ain tif f s’ d ecisio n to g ran t

co n sen t. If th e class is certif ied a n d t he c ase p ro ceed s to j u d g m en t, h o w ev er, t

h e n am ed plain t if

f s’ litig atio n

- related d ecisio n s are n o l e ss b in d in g m erely b ecau se th ey o ccu rred bef o re t h e class certif

icatio n o rd er

w as en tered

.K O B Y V

. H E L M U T H 12

W ith that issue of s tatutory interpretation r esolved, the jurisdictional analy s is is straig htforward. Cong r e ss has authoriz ed mag istrate j u d g es to e nter judg ment in a class action so long as the named parties to the action have consented, and here the named plaintiffs and ARS have done

so. Thus, a

n appeal from the judg ment ente r ed by the
mag istrate judg e ma y be taken d irectly to our court “in the

same man n er as a

n appeal from any other judg ment of a district court.” 28 U.S.C. § 636(c)(3).

The o nly remainin g i s s u e is whether § 636(c) is constitutionally valid. The National A sso c i a t i o n o f C o n s u

mer Advocates, appearing a s a friend of the court, arg ues that the
statute is unconstitutional, at least as applied to class a ctions. I n its view, § 6 36(c) v iolates A rticle I I I of the Constitution b y permitting mag istrate judg es to ex ercise j urisdiction over class actions without obtaining the conse n t o f each absent class member.

Article I I I g rants judg es who wield the judicial power o f the United States life tenure during g ood beh a vior and a g uaranteed salary that may not be diminished. These protections are d e sig ned to ensure the independence a nd impartiality of th e j u dicial officers a uthoriz e d to decide the merits of a litig ant’s case. The Supreme Court has held that l i t i gants in federal c o urt have a personal rig ht, conferred by A rticle I I I
, to insist u

pon adjudication o f their claims by a judg e who e njoy s the salary and tenure protections afforded by Article I I I

—protections that mag is trate judg e s lack. Commodity Futures Trading Commission v. Schor

, 478 U.S. 833, 848 (1986); see Pacem a k er Diagnostic Clinic of America, Inc. v. Instromedix, Inc.
, 7 25 F .2d 537, 542 (9th Cir. 1984) (en b anc). B ut the p e r s o n a l rig ht to an A rticle I I I adjudicator may

be waived, and a party ’s ex press or impliedK O B Y V

. H E L M U T H 13

consent to adjudication by a mag istra t e judg e constitutes a valid waiver of the rig ht. Roell v

. W i t h row , 538 U.S. 580, 590 (2003).

So the question becomes whether Article I I I categ orically prohibits the n amed plaintiffs from w aiving

, on behalf of the class members they r e p resent, the rig ht to proceed before an Article I I I judg e. A categ orical prohibition o f that sort mig ht be w a rranted if the interests of the named plaintiffs a nd the absent class m e m bers frequently diverg ed with respect to

ex e r cise of the rig ht a t issue. B ut the opposite is true of the rig ht to have a case heard by an A rticle I I I judg e. T o serve a s class representat ives, the named plaintiffs must have c laims that are ty

p ical of the claims held by the class, and in conducting the litig ation the named p laintiffs must fairly a nd adequately protect the interests o f the clas s. F ed. R. Civ. P. 23(a)(3)–(4). When those requirements are met, the interests of the named plaintiffs a

n d absent class members w ill almost alway s be a lig ned w hen it comes to deciding whe t h e r to consent to a mag istrate judg e’s jurisdiction. B arring unusual circumstances, the named plaintiffs w i l l have as strong an interest a s the absent c lass memb e r s in having their c laims adjudicated by

an independent and impartial decisionmaker. The n amed plaintiffs can therefore be ex pected to p rotect the absent class memb e rs’ interests in the ex ercise of the rig ht conferred by

Article I I I

.

There are constitutional limits, of course, on the named plaintiffs’ authority to wa i v e t h e rig hts of their fellow class members, but tho s e limits a re imposed by the Due Process Clause, n ot by Article I I I

. Most fundamentally

, a s mandated by due p rocess (and enforc e d throug h F ederal Rule o f Civil Procedure 23), the n amed plaintiffs’ interests must in fact be alig ned with those of the class, and the named plaintiffs mustK O B Y V

. H E L M U T H 14

adequately represent the interests of the class throug hout the litig ation. Taylor v. S

turgell

, 5 53 U.S. 880, 900– 0 1 (2008); Hansberry v. Lee
, 3 1 1 U

. S. 32, 41–43 (1940). I n some instances, absent class members must also r eceive notice o f the action and an opportunity to opt out. Taylor

, 553 U.S. at 900; Phillips Petroleum Co. v

. Shutts

, 472 U.S. 797, 811–12 (1985).

The absent class members in this c a se were not afforded notice and an opportunity to opt out. B ut we need not decide whether the Due Process Clause r equired those p rotections before the n amed plaintiffs cou l d w a i v e, on b e half of the class, the rig h t to an Article I I I adjudicator. Any violation o f the absent c lass members’ due pro c e s s rig hts would affect only th e p r eclusive r each of the resulting class judg ment in subsequent lit i g ation. See, e.g. , Hecht v. United Collection Bureau, Inc.
, 691 F .3d 218, 224–26 (2d Ci r

. 2 0 1 2 ) (lack o f notice); Crawford v. H

onig
, 37 F .3d 485, 488 (9th Cir. 1 994) (inadequate representation). L imits impos e d b y the Due Process Clause on the e nforcement of class judg ments do not curtail a mag istrate judg e’s authority under § 636(c) to enter judg ment in the first instance—a jud gm e n t t hat at the very least will bind the n a m e d p a r ties who consented to the
mag istrate judg e’s jurisdiction. So any due process violation th a t mig ht have occurred here would not deprive u s o f jurisdiction to decide this appeal, g iven that our jurisdiction is key ed to the ma gi strate judg e’s authority to enter final judg ment. Moreover, due process issues involving the ex tent to which the j u d gment mig ht bind absent class members in future litig ation would arise only if w e were to u phold the
mag istrate judg e’s order approving the settlement. B ecause

we conclude below that the mag istrate judg e abused her discretion in ent e r i n g that order, we are not faced with such due process issues here.K O B Y V

. H E L M U T H 15

I I I

Under F ederal Rule of Civil Procedure 23(e)(2), a district
court may approve a class a ction settlement o n ly after finding that the settlement is “ f

air, r easonable, a

n d adequate.” W hen, as here, a class settlement is neg otiated prior to formal class

cer t i f i cation, there is a

n increased risk that the named plaintiffs and class cou n s e l w ill breach the fiduciary oblig ations they owe to the a bsent class member s

. A s a result, “such ag reements must w ithstand an even hig her level of scru t i ny for evidence of collusion or other conflicts o f interest than is ordinarily required u nder Rule 23(e) before securing the c ourt’s a pproval as fair.” In re Bluetooth Headset Products Liability Litigation
, 654 F .3d 935, 946 (9th Cir. 2011). The decision to approve a class action settlement is reviewed for abuse of di s cretion. Allen v. B edolla

, 787 F .3d 1218, 1222 (9th Cir. 2015).

The mag istrate judg e abused her discretion by approving the settlement in this case. T he settleme n t s h o u l d n o t have been approved for one primary reason: There is no evidence that the relief afforded by the settlement has any value to the class members, y et to obtai n i t t h ey h ad to relinquish their rig ht to seek damag es in any other class action.

The settlement’s injun c t i v e relief is worthless to most members of the class becau s e it merely dictates the disclosures ARS must make in future voicemail messag es for

a period of two y ears. That relief could pot e n t i a l l y benefit class members who are likely to be contacted by ARS during the two-y ear window, but there is an obvious mismatch between the injunctive relief p rovided a nd t he definition o f the proposed class. The class w as n ot defined to include those who are likely

to be contacted by ARS in the future; itK O B Y V

. H E L M U T H 16

w as d efined to include those who had suffered a past wron g at ARS’s hands—receiving a voice m a i l messag e b etween 2008 and 2011 that did not disclose certain information about the caller a n d t h e purpose of the c all. The fact that a class member was a targ et of collection efforts sometime b etween 2008 and 2011, however, does not without more establish that he o r she would likely be contacted b y A RS ag ain a fter October 2013, when the settlement was approved.

As the proponents o f the settlement, ARS and the named plaintiffs bore the burden o f demonstrating t h a t class members would benefit f rom the settlement’s injuncti v e relief, w hich r equired them to show that class members were likely to face future collection efforts by ARS. See In re Dry Max Pampers Litigation
, 724 F .3d 713, 719 (6th Cir. 2013). They fell f

ar short of carry

ing tha t burden. ARS and the named plaintiffs made no showing that members o f the class continued to r eceive calls f rom ARS as p a r t o f ong oing efforts to collect debts that were by then two to five y e ars old,

a proposition d oubtful enoug h that empi rical data of some sort would b e n ecessary to substantiate it. Nor did they show that class members were likely to become t a r ge t s of ARS’s collection e fforts in the future. That would h appen o nly if a class member failed to pay another debt, the debt g ot referred
to a collection ag ency , and ARS turned out to be that ag ency

. W h ile some of the four m i l lion class members mig ht find themselves in that predicament d u r ing the two-y e ar span o f the injunction, nothing in the record indicates that most class members would. I n other words, ARS and the named plaintiffs provided no e vidence to sug g est that many , if any , members of the proposed class w ould derive a benef i t from obtaining the injunctive relief afforded by the settlement.K O B Y V

. H E L M U T H 17

Even for class me m bers who mig ht become targ ets o f collection e fforts by ARS in the future, the settlement’s injunctive relief is of no real value. The injunction does not oblig ate ARS to do any

t h ing it was not already d oing

. I t merely requires ARS to continue using the same v oicem a i l
messag e it v oluntarily adopted back in 2011. A RS took that step for its own business reasons (presumably to avoid f urther litig ation risk), not because o f any court- o r set t l e m e n timposed oblig ation. ARS w ould therefore be unl i kely to revert b ack to its o ld way s r e g a r d less o f whether the settlement contained the stipulated injunction. See Crawford

v. Equifax P ayment Services, Inc.
, 2 01 F .3d 877, 882 (7th Cir. 2000). To make matters worse, the settlement contained an escape clause that allowed ARS to seek dissolution of the injunction “at a

ny time if there is a chang e in the law.” Thus, if the litig ation risk were reduced by a new court decision or leg islative enactment—the only scenario i n w h ich ARS mig ht be tempted to resume its prior condu c t

— A R S could seek to wrig g le out of the injunction.

ARS and the n amed p l aintiffs likewise presented no

ev i d e n c e that the absent c lass members would derive any benefit from the settlement’s c y p r e s award. I ndeed, it is doubtful that the award c ould be appr o v ed under our precedents, which r e q

uire that cy pres awards be tethered to the o bjectives of the u nderlying statutes or the interests of the class members. See Nachshin v. AOL, LLC
, 6 6 3 F .3d 1034, 1039 (9th Cir. 2011). Here, the award consists of a $35,000 donation to a S a n D i eg o v eterans’ org aniz ation. The San Dieg o location of the chosen charity has no g eog raphic nex us to the class, which includes four million individuals scattered throug hout the United States. Nor was there any ev i d e nce that the settlement class is d isproportionately composed o f
veterans. And there was no showing that the work performedK O B Y V

. H E L M U T H 18

by the desig n ated charity w ou l d protect consumers from unfair debt c ollection practices, the objective of the F DCPA. Thus, e v e n p u tting a side the relatively small siz e o f the cy pr e s a w a rd, we cannot say that this aspect of the settlement provided any

material benefit to the class members.

B e cause the settlement g ave the a b s e n t class members nothin g of value, they could not fairly or r easonably be required to gi v e up a

ny thing in return. Yet the settlement requires absent class members to relinquish thei r r ig ht to pursue damag es claims ag a inst ARS as part of a class action. The parties dispute wh e t h e r that rig ht h as any real value to the absent class memb e r s , gi ven the F DCPA’s cap on class action damag es. ARS asserts that, with total damag e s capped
at $35,000, n one of the absent class members h ave a ny hope of obtaining meaning ful monetary r elief as p a rt of another class action because it would be impossible to define a class small enoug h to afford individual recoveries o f m o r e than a trivial amount. Helmuth asserts, however, that the proposed class in h er p ending F lorida action migh t c o ntain as few a s several hundred members, each o f whom could recov er meaning ful relief of roug hly $100. 3

W e need n ot resolve the p arties’ dispute on this point. I t is enoug h to conclude that the wa i v er of the rig h t to seek

3 T h e p arties o v erlo o k th e f act t h a t th e settlem en t also w aiv es th e ab sen t class m em

b ers’ rig h t to p ursu e class actio n d am ag es f o r clai m s

un d er state law

, so th ey h av e n o t ex p l o red w h eth er state- law an alo g u es of th e FDCP A co n tain sim i lar class actio n d am ag es cap s. In States w ith o u t

su ch a cap , t

h e rig h t to p ursu e class actio n d am ag es un d er state law co u ld b e co n sid erab ly m o re v alu ab l e th an th e rig h t t o p ursu e su ch d am ag es

u n d e r th e FDCP A
, as n o co urt o f w h ich w e are aw are h as h eld th at t h e FDCP A ’ s d a m a g e s cap p reem p ts state s t atu tes p erm ittin g a larg er

reco v ery

.K O B Y V

. H E L M U T H 19

damag es in future class actions has some value, and it plainly does. Very few class members would bother to file their o wn individual actions to recover minimal ( or non-ex istent) actual damag es a

nd statutory d amag es capped a t $1,000. F or smalldollar claims like these, e v e n under a statute with a feeshifting provision, a class a ction is often the only rea listic

means o f obtaining any monetary recovery

. S e e S h utts , 472 U. S

. a t 809; Crawford

, 201 F .3d at 882. Cutting off

ac c e s s t o a p rocedural tool that may o ffer the only realistic

means of obtaining monetary relief deprived the absent class

me m b e rs o f something of value here, even if it mig ht be worth relatively little. The fact that c lass m e m b e rs were required to g ive up any

thing at all in ex chang e for worthless injunctive relief precluded approval of the settlement as fair, reasonable, and adequate under Rule 23(e)(2).

Helmuth challeng es the r easonableness of the settlement

on other g rounds, such as the dispar i t y b etween what the named plaintiffs g ot and what the rest of t h e c l ass members received, and she contends in addition that the class c ould not be certified u nder Rule 23(b)(2). I n lig ht o f our disposition above, we need not address these remaining contentions.

REVERSED and REMANDED

.