PUBLISH
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

________________ _________________ In re: SAMSUNG TOP-LOAD WASHING MACHINE MARKETING, SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION.

------------------------------ JERRY WELLS, et al., Plaintiffs - Appellees,

v. BEST BUY CO., INC.; THE HOME DEPOT, INC.; LOWE'S HOME CENTER, LLC; SAMSUNG ELECTRONICS AMERICA, INC.; SAMSUNG ELECTRONICS CO., LTD.; LOWE'S COMPANIES, INC.; SAMSUNG ELECTRONICS COMPANY, LTD, Defendants - Appellees, and SEARS HOLDING CORPORATION, Defendant.

------------------------------ JOHN DOUGLAS MORGAN, Objector - Appellant.

-------------------------------- No. 20-6097 FILED United States Court of Appeals Tenth Circuit 

### May 7, 2021 Christopher M. Wolpert Clerk of Court2 ATTORNEY GENERAL OF THE STATE OF ALASKA; ATTO RNEY GENERAL OF THE STATE OF ARKANSAS; ATTORNEY GENERAL OF THE STATE OF ALABAMA; AT TORNEY GENERAL OF THE STATE OF IDAHO; ATTORNEY GENERAL OF THE STATE OF INDIANA; AT TORNEY GENERAL OF THE STATE OF MISSOURI; ATTORNEY GENERAL OF THE STATE OF NORTH DAKOTA; ATTORNEY GENERAL OF THE STATE OF OKLAHOMA; ATTORNEY GENERAL OF THE STATE OF ARIZONA, Amici Curiae.

________________ _________________ Appeal from the United States District Court for the Western District of Oklahoma (D.C. No. 5:17-ML-02792-D)

________________ _________________ Theodore H. Frank, Hamilton Lincoln Law Institute, Center for Class Action Fairness, Washington, DC, for Objector – Ap pellant John Douglas Morgan. John P. Elwood, Arnold & Po rter Kaye Scholer LLP, Washington, DC (R. Stanton Jones and Anthony J. Franze, Arno ld & Porter Kaye Scholer LLP, Washington, DC, and Arthur E. Brown and Elie Salamon, Arnold & Porter Kaye Scholer LLP, New York, New York, with him on the brief), for Defenda nts – Appellees. Samuel Issacharoff, New York, New Yo rk (William B. Federman, Federman & Sherwood, Oklahoma City, Okla homa, with him on the brief), for Plaintiffs – Appellees. Kate B. Sawyer, Assistant Solicitor General (M ark Brnovich, Attorney General, with her on the brief), Office of the Ar izona Attorney General, Ph oenix, Arizona, for Amici Curiae.

________________ _________________ Before PHILLIPS , MURPHY , and McHUGH , Circuit Judges.

________________ _________________ McHUGH , Circuit Judge.3 ________________ _________________ In 2015, consumers owning Samsung to p-load washing machines experienced issues with the top-load door detaching mid- cycle. Litigation ensued across the country, with the cases consolidated in to the multidistrict litigation underlying this appeal. Over the course of several months, and with the a ssistance of a mediator, class counsel and the defendants negotiated a Settlement Agreement that provided class members five forms of relief. Valuing the Settlement Agreement at between $6.55 a nd $11.42 million and finding that certain aspects of the Agreem ent provided the average claimant greater compensation than damages provable at tria l, the district court, over John Douglas Morgan’s objection, granted final class certific ation and final approval to the settlement. Essential to Mr. Morgan’s objections is the Settlement Agreement’s inclusion of a “kicker” agreement and a “clear-sailing” agre ement relative to the award of attorneys’ fees and costs. Under the “kicker” agreemen t, Samsung retained the difference between the maximum permissible attorneys’ fees and costs award of $6.55 million and the amount actually awarded by the district court. Mr. Morgan further argues that under the “clear-sailing” agreement, Sams ung agreed not to contest a ny request by class counsel for attorneys’ fees and costs of up to $6.55 million. Attempting to resolve his objections, Mr. Morgan and Samsung sought to negotiate a side agreement providing for the possible distribution to the class of a portion of the difference between the $6.55 million maximum permissible attorneys’ fees and co sts, and the actual amount awarded by the district court. Ratification of this side agreement, however, never occurred, with4 Mr. Morgan walking away based on his purpor ted fear that class counsel might sue him and his counsel if he and Samsung finalized the side agreement. Instead of seeking the maximum award of $6.55 million, class counsel sought an attorneys’ fees and costs award of just under $6.25 million. Sc rutinizing the billing records submitted by class counsel and acknowl edging the existence of the “kicker” and “clear-sailing” agreements in the Settlement Ag reement, the district court awarded class counsel a reduced amount of just over $3.8 m illion. As a result of this reward falling well below the maximum permissible amount of $6.55 million, Sa msung was able to retain money that likely would have been distributed to the class had Mr. Morgan and Samsung finalized the side agreement. On appeal, Mr. Morgan advan ces three arguments: (1) the district court made clear errors of fact regarding settlement negotiatio ns and the side agreement; (2) the district court abused its discretion by granting final approval to the Settlement Agreement where it included both a “kicker” and a “clear-saili ng” agreement; and (3) the district court abused its discretion by granting final class certification and allowing class counsel to continue in its role after clas s counsel placed its interests ahea d of the class’s interests. We hold that a district court must appl y heightened scrutiny before approving a settlement that includes both a “kicker” agre ement and a “clear-sailing” agreement. But our review of the record gives us confidence the district court did ju st that. And although the district court made one clear error in its fact-finding process, we conclude the error was harmless to its ultimate d ecisions regarding final class cer tification, final approval of5 the Settlement Agreement, and its award of at torneys’ fees and costs. Accordingly, we affirm the district court’s orders on these matters.
I. BACKGROUND
A. Initiation of Litigation In 2015, thirty-four models of Samsung top-load washing mach ines, individually priced between $450 and $1500 , experienced weakness issues with the top-load door mechanism. As a result of the weakness, th e top-load door on some machines would detach during certain spin cycles , allowing water to spew out of the machine. In an effort to remedy this defect, the Consumer Product Safety Commission and Samsung announced a voluntary recall program unde r which Samsung would (1) provide a free repair to strengthen the top-load door a nd a one-year warranty extension; (2) give consumers a rebate toward the purchase of a new washing machine of any brand if a consumer was no longer using the washing machine; or (3) provide consumers who purchased a washing machine w ithin the thirty da ys preceding the recall a full refund of the purchase price. Unsatisfied by the compensation offered by the recall program, consumers around the country file d class actions against Samsung. 1 The Judicial Panel on Multidistrict Litiga tion (“JPML”) ordered the various class actions filed, based on the top-load door de fect, be combined into a single action and

1 The class actions also named several reta ilers as defendants, specifically Best Buy Co., Inc.; The Home Depot, Inc.; Home Depot U.S.A., Inc.; Lowe’s Companies, Inc.; Lowe’s Home Centers, LLC; and S ears Holding Corporation. For ease of reference, we collectively refe r to defendants as “Samsung.”6 assigned that action to the Honorable Timoth y D. DeGiusti of the Western District of Oklahoma. The JPML also in corporated into th e multidistrict litigation a New Jersey class action against Samsung ba sed on design defects in th e drain pump mechanism of the same washing machines ex periencing top-load door defect s. William B. Federman of Federman & Sherwood a ssumed the role of lead class counsel.
B. Settlement Negotiations & Agreement Following consolidation in to the multidistrict litigati on, the parties commenced settlement negotiations, with Michael Ungar serving as mediator. Over the span of several months, the parties sp ent nine days negotiating a se ttlement, focusing the first eight days of mediation on the issue of co mpensation and not turning to the issue of attorneys’ fees and costs un til the final day of mediation. 2 In a declaration, Mr. Ungar described the negotiations as “hard-foug ht,” “lengthy,” “exhausting,” “at times frustrating,” and “quite advers arial.” Samsung App., Vol. I at 229, 231. Mr. Ungar further

2 Describing the structure of settleme nt negotiations, Mr. Ungar advised the district court: The relief for class member s was the focus of the vast majority of the mediation sessions and discussions. The provisions of the settlement providing for the payment of attorney s’ fees, costs, and service awards for the named plaintiffs were negotia ted only after the substantive relief to class members was agreed upo n. There was no discussion of attorneys’ fees, costs, or service awards to the named plaintiffs until all substantive terms of the settlement were negotiated. The substantive terms of the settlement were never reopened or altered once the parties’ discussion of attorneys’ fees, co sts, and service awards began. Samsung App., Vol. I at 231–32.7 declared the settlement terms reached by the parties were “t he product of arm’s length negotiations by highly skilled, well-informed lawyers.” Id. at 232. Class counsel and Samsung signed the Se ttlement Agreement in May 2018. The Settlement Agreement provided class member s owning machines w ith top-load door issues four options for relie f: (1) enhanced minimum reca ll rebates, whic h would allow class members to receive a rebate worth up to 15.5% of the estimated purchase price of the washing machine; 3 (2) enhanced recall repair, wherein Samsung would send a technician to a class member’s home to stre ngthen the top-load door mechanism and also provide the member a rebate to ward the purchase of a future Samsung appliance; (3) top separation relief, which would allow a member experiencing a top-load door separation within seven years of purchasing a washin g machine to receive a full refund on the purchase price of the machine as well as up to $400 in expenses resulting from the topload door separation; or (4) recall repair w ith warranty extension, under which a class member could request a repair to their t op-load door mechanism and receive a one-year extension of the warranty on the washing machine. 4 The settlement also provided relief to class members experiencing drain-pump failure s, allowing (1) $150 to cover the cost of already-completed repairs or installation of a new drain pump, if failure occurred within

3 Given the retail price of the washi ng machines, the maximum rebate of 15.5% of the purchase price permitted each consumer to recover between $69.75 and $232.50, depending on the specific model purchased.

4 This option for relief al so obligated Samsung to co mplete the repair within fourteen days of the class member’s request or else give the member a $50 cashequivalent card or replace the member’s washing machine.8 three years of the notice date of the settlem ent; and (2) up to $400 for expenses stemming from the failure of a drain pump. In addition, the Settlement Agreement esta blished parameters regarding an award of attorneys’ fees and costs to class counsel . Central to this appeal, the parties agreed Samsung would “pay attorneys’ costs and fees in the total, all- inclusive amount of $6,550,000.00, subject to approval of the Court. ” Morgan App. at 68. In accord with this language, Samsung agreed not to contest a ny requested award of fees and costs up to $6.55 million. And because th e Settlement Agreement did not require Samsung to place any money to cover the attorneys’ fees and co sts in an escrow-type account prior to the district court’s determination of the approp riate amount of the award, the Settlement Agreement permitted Samsung to retain the difference between the maximum permissible award of $6.55 million and the amount ultim ately awarded by the district court.
C. Side Agreement Negotiations Be tween Mr. Morgan & Samsung Mr. Morgan, represented by the Ham ilton Lincoln Law In stitute (“HLLI”), 5 expressed an intent to object to the Se ttlement Agreement. Mr. Morgan contended settlement negotiations between class counsel and Samsung culminated in a Settlement Agreement allowing class counsel to self-deal at the expense of class compensation. In particular, Mr. Morgan cha llenged the agreement that Samsung would retain the difference between the maximum permissible a ttorneys’ fees and costs and the amount actually awarded by the district court in exchange for Samsung’s agreement not to

5 Mr. Morgan’s niece is the president of HLLI.9 challenge any request for fees and costs by class counsel of up to $6.55 million. Mr. Morgan also asserted the Settlement Ag reement provided cla ss members little relief above what was already provided by the voluntary recall program. In an effort to resolve the objections, Mr. Morgan and Samsung entered into negotiations toward a side agreement. Mr. Mo rgan and Samsung reached an agreement in principle and drafted a term sh eet. The district court ordered Mr. Morgan and Samsung to “disclose all details of any agreements that th ey have reached during the pendency of this litigation” and place the side agreement on the record by Decemb er 31, 2019, some nineteen months after cla ss counsel and Samsung signed the Settlement Agreement. Neither Mr. Morgan nor Samsu ng fully complied with the order. Samsung did, however, file a response outlining the general underpinni ngs of the side agreement. In pertinent part, Samsung represented the side agreement provided: A. If the Court does not award the maximum amount of attorneys’ fees under the Settlement Agreement, some of the unawarded fees may be distributed to Settle ment Class Members if certain conditions are met. Samsung and [Mr.] Morgan have agreed that 70% of the following amount is subject to potential distribution to Settlement Class Members: $6.65 million (the maximum fee award permitted under the Settlement Agreement) minus th e total amount of attorneys’ fees, costs, expenses, interest, and serv ice awards awarded by the Court in any forthcoming fee award, minus 70% of any amount paid by Samsung to New Jersey Counsel in addition to the Court’s fee award (which would be in settlement of New Jers ey Counsels’ claim related to the New Jersey litigation). B. The distribution to Settleme nt Class Members pursuant to paragraph A, above, will be made after the final outcome of any appeals, including appeals as to atto rneys’ fees, only if the total amount calculated in accordance with paragr aph A, above, minus the estimated costs of settlement administration for this distribution and any fees awarded by the Court to Morgan’s c ounsel[,] is greater than $600,000.10 If this amount is less than $600,0 00, no distribution shall be made and any unawarded attorneys’ fees shall remain with Samsung. Morgan App. at 194. As sugge sted by paragraph B, the side agreement allowed HLLI to seek attorneys’ fees. And, a ssuming approval of the side ag reement, Mr. Morgan agreed to drop all objections to the Settlement Agreement. Class counsel submitted a brief in respon se to Samsung’s filing regarding the side agreement. Class counsel argued “the side deal [was] unlikely to create any benefit for the class.” Id. at 199 (emphasis in original). Class counsel also repeatedly questioned the propriety of both the side agreement and the negotiations leading to the side agreement:

 “The side agreement is part of a pattern of misconduct by HLLI and Samsung.” Id. at 200.

 “[T]his side agreement appears to be another example of misbehavior by both HLLI and Samsung. The form er executed an about-face on its view of the merits of the Settleme nt once it found a mechanism to get paid, even though class members may not receive even one dollar more than they would have many months ago. This is standard fare for HLLI.” Id. (footnote omitted (which poin ted out that negotiation and dispute over the side agreement was delaying final approval of the Settlement Agreement)).

 “Samsung, for its part, has a pattern of disregarding its representations and settlement commitments in this very litigation.” Id.

 “Rather than meet its obligation, Sams ung worked with HLLI to craft an [agreement] to transfer fees from cl ass counsel to HLLI. Under the side agreement, HLLI can now claim for its elf any attorneys’ fees that are not paid to class counsel.” Id. at 201 (citation omitted).

 “Samsung’s collaboration with HLLI —in direct violation of the Settlement—is not meaningfully distinguishable from conduct condemned previously by the District of New Jersey.” Id

.11 After class counsel’s res ponse, the district court granted Mr. Morgan and Samsung an extension of time to place the si de agreement on the record. Mr. Morgan walked away from negotiations . Mr. Morgan cited the thr eat of suit by class counsel against both himself and HLLI as his basis for walking aw ay from the side agreement. With no side ag reement in place, Mr. Mo rgan proceeded with his objections to the Set tlement Agreement.
D. Mr. Morgan’s Objections, the District Court’s Rulings, and this Appeal In April 2020, three months after the initial d eadline set by the di strict court to place the side agreement with Samsung on th e record and close to two years after class counsel and Samsung signed the Settle ment Agreement, Mr. Morgan filed his objection to final approval of the Settleme nt Agreement. As to his argument for disqualifying class counsel, Mr . Morgan contended class c ounsel breached its duty to the class members by opposing the side agreement, an agr eement Mr. Morgan asserted was certain to benefit the class without posing any risk to class member recovery. Mr. Morgan critic ized class counsel for accu sing HLLI and Samsung of misconduct by negotiating the side agreemen t. Mr. Morgan also claimed class counsel’s course of conduct relative to the side agreement amounted to a breach of its fiduciary duty to the class such that Fe deral Rule of Civil Procedure 23(g)(4) precluded class counsel from con tinuing in its role as lead counsel. And, Mr. Morgan asserted that because disqualif ication of class counsel was required, the district court must decertify the class.12 The district court denied Mr. Morgan’s objections and granted final class certification and final approval to the Settlem ent Agreement. The district court found the following facts: (1) Mr. Morgan and Sa msung never finalized the side agreement or presented the side agr eement to the court; (2) clas s counsel did not threaten Mr. Morgan with litigation; and (3) clas s counsel took no position on the side agreement. The district court concluded nothing in class counsel’s briefing on the side agreement undermined the adequacy of representation, and class counsel acted within reason when questioning whether a ny potential, but indefinite, monetary benefit from the side agreement was outwe ighed by the delay to the proceedings. Accordingly, the district c ourt rejected Mr. Morgan’s c ontention that class counsel had not adequately represented class interests and should be disqualified. Thereafter, the district court concl uded compensation under the Settlement Agreement was fair and adequate to the class. In so holding, the district court made several findings of fact about the Settleme nt Agreement. First, the district court found the Settlement Agreement was nego tiated at arm’s length and the parties “vigorously litigated” the case prio r to reaching settlement terms. Id. at 243. Second, the district court turned to the actu al compensation provided by the Settlement Agreement. Relying on the evidence of an e xpert offered by class counsel, the district court estimated the value of the future wa rranty protection offered by the Settlement Agreement at between $6.44 and $11.31 million. 6 And, importantly, the district court

6 In a footnote, Mr. Morgan suggests th e district court, pursuant to Federal Rule of Evidence 702 and Daubert v. Merrell Do w Pharmaceuticals, Inc. , 509 U.S.13 found the enhanced minimum recall reba te option in the Se ttlement Agreement provided the average class cl aimant more than double the damages that could be established at trial, allowing for a rebate of 15.5% of th e purchase price rather than an estimated 7%. Id. at 246 (“Class Members may also select an Enhanced Minimum Recall Rebate bringing their rebate paymen t to at least fifteen-and-a-half percent (15.5%) of their Washer’s estimated purchase price (exceeding the estimated seven percent (7%) Plaintiffs would receive given a favorable jury verdict).”). Third, while the district court expressed skepticism a bout the value of rebates offered in the Settlement Agreement, it concluded the rebates were not the primary form of compensation. Based on these findings, the district cour t granted final class certification and final approval to the Settleme nt Agreement. Two and a half weeks after granting final approval of the Settlement Agreement, the district court issued its ruling on the requested attorneys’ fees and costs. Cl ass counsel sought $5,996,079.46 in fees and $242,764.47 in costs, totaling an amount about $250,000 less than the maximum award permitted by the Settlement Agreemen t. After critically analyzing the hours billed and the hourly rate charged for varying services, the district court held that a

579 (1993), should have dis qualified the expert. Howeve r, Mr. Morgan does not adequately develop his argument on this point . Accordingly, the is sue of the expert’s qualifications and exclusion of the expert is not pr operly before us. See Bronson v. Swensen , 500 F.3d 1099, 1104 (10t h Cir. 2007) (“[W]e routinely have declined to consider arguments that are . . . inadequately presented [] in an appellant’s opening brief.”).14 base fee amount of $2,951, 067.50 was reasonable and s upported by the record. The district court next selected a lodestar multiplier of 1.3. 7 This resulted in a total attorneys’ fees and cost s award of $3,836,387.75. 8 After calculating this amount, the district court crosschecked its award against the value of the Settlement Agreement to assess what percent of Sams ung’s total liability was attri butable to attorneys’ fees and costs to class counsel. On appeal, Mr. Morgan argues the distri ct court should have disqualified class counsel because class counsel opposed, rather than welc omed, the side agreement— an agreement that Mr. Morgan argues was certain to give the class more money. Pointing to the “kicker” and “clear-sailing” agreements, Mr. Morg an also criticizes class counsel for agreeing to a structure where Samsun g could retain unallocated attorneys’ fees rather than distributing them to the class in exchange for Samsung’s agreement not to challenge cl ass counsel’s fees and cost s request. In Mr. Morgan’s view, Samsung was willing to pay a certa in amount of money—compensation and attorneys’ fees and costs co mbined—to settle the litigati on, but the structure of the fee arrangement allowed Sams ung to retain some of that money. Mr. Morgan

7 On appeal, Mr. Morgan does not challe nge the reasonableness of the billing hours or hourly rates for any of the serv ices performed by class counsel. Nor does Mr. Morgan directly challenge the distri ct court’s selection of a 1.3 lodestar multiplier.

8 This amount is approximately $2.7 million below the maximum permissible award established by the Settlement Agreem ent. As such, all indications suggest some additional money would have been disbursed to the class members had Mr. Morgan and Samsung finalized the side agreement and had the district court approved that side agreement.15 contends this court should reverse the di strict court’s orders granting final class certification, granting final approval to th e Settlement Agreement, and awarding class counsel attorneys’ fees and costs, and s hould further hold the district court erred by not disqualifying class counsel.
II. DISCUSSION
A. Standard of Review We review de novo whether the district court applied the co rrect Federal Rule of Civil Procedure 23 standa rd when certifying the class. 9 CGC Holding Co., LLC v. Broad & Cassel , 773 F.3d 1076, 1086 (10th Cir. 2014) . If the district court applied the correct standard, “we may reverse that decision only for abuse of discretion.” Id. at 1085 (quotation marks omitted). “The dist rict court abuses its discretion when it misapplies the Rule 23 factors—either thr ough a clearly erroneous finding of fact or an erroneous conclusion of law.” Id. at 1085–86. “Because class certification decisions are necessarily case specific, district courts posse ss significant latitude in deciding whether or not to certify a class.” Vallario v. Vandehey , 554 F.3d 1259, 1264 (10th Cir. 2009) (citation omitted). “As long as the district court applies the proper Rule 23 standard, we will defer to its class certification ruling provided that decision falls within the bounds of rationa lly available choices given the facts and law involved in the matter at hand.” Id.

9 Mr. Morgan does not contend the district court ignored Federal Rule of Civil Procedure 23 or applied the incorrect standa rd when granting fina l class certification.16 “The district court’s approval of a cl ass action settlement is reviewed for an abuse of discretion.” New England Health Care Emps . Pension Fund v. Woodruff , 512 F.3d 1283, 1290 (10th Ci r. 2008). “In reviewing a court’s determination for abuse of discretion, we will not disturb th e determination absent a distinct showing it was based on a clearly erroneou s finding of fact or an err oneous conclusion of law or manifests a clear error of judgment.” Rutter & Wilbanks Corp. v. Shell Oil Co. , 314 F.3d 1180, 1187 (10th Cir. 2002) (quotati on marks omitted). However, even where a district court makes a clearly erroneous factual finding, we may affirm if the error is harmless. 28 U.S.C. § 2111; see also Fed. R. Civ. P. 61.
B. Federal Rule of Civil Procedur e 23 Standard in Class Actions Federal Rule of Civil Procedure 23( e) governs the approval of settlement agreements in class actions. Under the Rule , a district court, before approving a settlement agreement, must find that the settlement is “fair, reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2). In making this determinati on, a district court must consider whether: (A) the class representatives and class counsel have adequately represented the class ; (B) the proposal was negotiated at arm’s length ; (C) the relief provided for th e class is adequate , taking into account: (i) the costs, risks, and delay of trial and appeal; (ii) the effectiveness of any prop osed method of distributing relief to the class, including the method of processing classmember claims; (iii) the terms of any proposed award of attorney’s fees , including timing of payment; and (iv) any agreement required to be id entified under Rule 23(e)(3); and (D) the proposal treats class members equitably relative to each other.17 Fed. R. Civ. P. 23(e)(2)(A)–(D) (emphasis added). This court ha s further noted four factors for evaluation by a district court: (1) whether the proposed settlement wa s fairly and honestly negotiated; (2) whether serious questions of law and fact exist, placing the ultimate outcome of the litigation in doubt; (3) whether the value of an immediat e recovery outweighs the mere possibility of future re lief after protracted and expensive litigation ; and (4) the judgment of the pa rties that the settlement is fair and reasonable. In re Motor Fuel Temperature Sales Pracs. Litig. , 872 F.3d 1094, 1116 –17 (10th Cir. 2017) (emphasis added) (quotation marks omitted). Meanwhile, Rule 23(g) governs the a ppointment and maintenance of class counsel. Under the Rule, “a court that cer tifies a class must a ppoint class counsel.” Fed. R. Civ. P. 23(g)(1). Based on the Ru le’s plain language, “a district court’s decision to certify a class must precede the appointment of class counsel.” Sheinberg
v. Sorensen , 606 F.3d 130, 132 (3d Cir. 2010). A district court may only appoint an attorney to represent the cl ass if the attorney “is adequate under Rule 23(g)(1) and (4).” Fed. R. Civ. P. 23(g )(2). And under Rule 23(g)(4), class counsel has a duty to “fairly and adequately represent the interests of the class.” Fed. R. Civ. P. 23(g)(4). The duty placed on class counsel by Rule 23(g)(4) continues through entry of final judgment. Jin v. Shanghai Original, Inc. , 990 F.3d 251, 261–62 (2d Cir. 2021). “A district court is required to monitor class proceedings and ‘reassess its class rulings as the case develops.’” Id. at 261 (quoting Boucher v. Syracuse Univ. , 164 F.3d 113, 118 (2d Cir. 1999)). Where class counsel does not persist in satisfying its duty under Rule 23(g)(4), a di strict court may decertify the class if doing so would18 protect the class; but, the court may also consider other measures, such as disciplinary action against cl ass counsel, to address clas s counsel’s breach of the Rule 23(g)(4) duty. Id. at 262–63; Sheinberg , 606 F.3d 134.
C. Review of Settlements with “Kicke r” and “Clear-Sa iling” Agreements 1. Legal Standard This case presents an issu e of first impression regard ing the degree of scrutiny a district court must apply to a settlement agreement in a class action where the terms governing the award of attorneys’ fees and costs contain a “kicker” anda “clearsailing” agreement. From out -of-circuit authority and th e arguments presented by the parties, we identify four possible standa rds for reviewing se ttlement agreements containing both a “kicker” and a “clear-sailing” agreement: (1) a per se prohibition against such settlement ag reements; (2) a presumption against the fairness and reasonableness of such settlement agreemen ts; (3) a requirement that the district court apply increased or heightened scruti ny before granting fina l approval to such settlement agreements; and (4) the nor mal standard governing the approval of settlement agreements in cl ass action litigation. We c onclude the third approach— heightened scrutiny—is appr opriate because while “kic ker” and “clear-sailing” agreements may serve a purpose in the ne gotiation process, th e presence of both agreements in a settlement agreement also suggests th e class members may not be receiving all reasonable benefits. A true “kicker” agreement allows “all fees not awarded [t o class counsel to] revert to defendants rather than be added to the cy pres fund or otherwise benefit the19 class.” 10 In re Bluetooth Heads et Prods. Liab. Litig. , 654 F.3d 935, 947 (9th Cir. 2011). A “clear sailing” agreement is one wh ere the defendant “agree[s] not to object to an award of attorney s’ fees” specified in a settlement agreement. Id. To our knowledge, no court has adopted a per se rule against inclusion of “kicker” and “clear-sailing” agreements in settlements. See In re Sw. Airlines Voucher Litig. , 799 F.3d 701, 712 (7th Cir. 2015) (declining to adopt a per se rule and noting the Ninth Circuit has also declin ed to do so). This court has affirmed a district court’s final approval of a se ttlement agreement containing a “kicker” provision. 11 Fager v. CenturyLink Comm’s, LLC , 854 F.3d 1167, 117 6–77 (10th Cir. 2016). And there is good reason for not au tomatically rejecti ng settlements with

10 Technically speaking, the Settlement Agreement did not contain a true “kicker” provision because Samsung never re linquished the $6.55 million in potential attorneys’ fees and costs. Ho wever, the effect of the stru cture of the attorneys’ fees and costs provisions in the Settlement Agreem ent is the same because, after entry of final judgment, Samsung will permanently retain the diffe rence between the permissible maximum award of $6.55 million and the actual award of just over $3.8 million.

11 The “kicker” provision in Fager v. CenturyLink Communications, LLC differs from the “kicker” agreement in th e Settlement Agreement as the provision in Fager allowed the defendant to receive a re version of unclaimed monies from the class compensation fund. 854 F.3d 1167, 11 76 (10th Cir. 2016). However, where the settlement in Fager also permitted class counsel to receive a “fixed fee independent of the amount recovered by the class,” see id ., the general concept of a defendant receiving a reversion in exchange for class counsel receiving favorable terms regarding attorneys’ fees was also at issue in Fager . Thus, although the “kicker” provisions in Fager and the Settlement Agreement here are not identical, we believe Fager is instructive with re gard to addressing the “kicker” provision in the Settlement Agreement and what impact the inclusion of a “kicker” agreement and an agreement on attorneys’ fees favorable to class counsel has on the district court’s duty to scrutinize a settlement agreement and the award of attorneys’ fees and costs.20 “kicker” agreements. “Kicker” agreemen ts can valuably further negotiations by allowing defendants to establish their maxi mum liability with the expectation that their actual liability will ultim ately be less once the distri ct court scrutinizes class counsel’s fees and costs request. In settlements pr oviding fair and reasonable compensation to the class members, “k icker” agreements, as opposed to the automatic distribution of unawa rded attorneys’ fees and co sts to class members, can avoid situations where participating clas s members receive a wi ndfall, well above their actual damages, at th e expense of the defendant. Further, reversions to defendants are not inherently improper. Had class counsel and Samsung not reached an agreement regarding who would recei ve the difference between the maximum permissible attorneys’ fees and costs and the actual award, the district court could have nonetheless permitted Sams ung to retain the difference. See Van Gemert v. Boeing Co. , 739 F.2d 730, 736–37 (2d Cir. 19 84) (affirming decision by special master to return unclaimed judgment funds to a defendant). Thus, if a district court can order a reversion to a defendant, we see no reason why we should adopt a rule strictly precluding parties fr om providing for the same re sult as part of a settlement. As for “clear-sailing” agreements, “not every ‘clear[-]sailing’ provision demonstrates collusion.” Gooch v. Life Invs. Ins. Co. of Am. , 672 F.3d 402, 426 (6th Cir. 2012). This court has affirmed a district court’s approval of a settlement agreement containing a “clea r-sailing” agreement without advancing any commentary critical of the provision. See In re Motor Fuel , 872 F.3d at 1119–20. And we are not alone. Other circuits have not only affirm ed final approval of settlements containing21 “clear-sailing” provisions but have affirmed final appr oval of settlements containing both a “kicker” provision and a “clear-sailing” provision. Campbell v. Facebook,
Inc. , 951 F.3d 1106, 1125–28 (9th Cir. 2020); Gascho v. Global Fitness Holdings,
LLC , 822 F.3d 269, 29 0–91 (6th Cir. 2016). Further, it has long been recognized that “kicker” and “clear-sailing” ag reements can play an impor tant role in class action settlement negotiations “bec ause the defendants want to know their total maximum exposure and the plaintiffs do not want to be sandbagged.” Malchman v. Davis , 761 F.2d 893, 905 n.5 (2d Cir. 1985), abrogated on other grounds by Amchem Prods., Inc. v. Windsor , 521 U.S. 591, 619, 629 (1 997). With these considerations in mind, we reject Mr. Morgan’s suggest ion that this court adopt a per se rule prohibiting parties from including “kicker” and “clea r-sailing” agreements in class action settlement agreements. 12 However, the inclusion of both a “kic ker” agreement and a “clear-sailing” agreement can be an “indic[ation] of possible implicit collusion.” In re Bluetooth Headset , 654 F.3d at 947. We have previously expressed c oncerns about attorneys’ fees and costs awards in cas es where the settlement agr eement contained a “kicker” provision. In Fager we suggested that where a sett lement agreement contains a

12 For similar reasons, we also reject an approach placing a presumption of unreasonableness on settlement agreements containing a “kicker” and a “clearsailing” agreement. Individu al class actions, by nature, are unique and the terms of settlement agreements vary significantly between actions such that we cannot presume the presence of a “kic ker” and a “clear-sailing” agreement in a settlement suggests unfairness to the interest s of the class in all cases.22 “kicker” provision, use of only the traditi onal lodestar method to calculate the fees award may not adequately sc rutinize the requested award, and therefore a district court should crosscheck its award against the amount paid by the defendants to the class members. 13 Fager , 854 F.3d at 1177. Further, we have expressed wariness about the potential for class counsel and defendants to reach an agreemen t that prioritizes the award of attorneys’ fees and costs at the expense of class compensation and the interests of class members: “The defendant cares only about the si ze of the settlement, not how it is divided between the attorneys’ fees and compensation for the class. From the selfish standpoint of class counsel and the defendant, therefore, the optimal settlement is one modest in overall amount but heavily tilted toward a ttorneys’ fees.” Thus, class counsel may be tempted “to sell out the class by agreeing with the defendant to recommend that the judge approve a settlement involving a meager recovery for the class but gener ous compensation for the lawyers.” In re Motor Fuel , 872 F.3d at 1117 (quoting Eubank v. Pella Corp. , 753 F.3d 718, 720 (7th Cir. 2014)). As for “clear-sailing” provisions, they cut against the general adversarial nature of our le gal system, potentially leaving it to the district court to first develop arguments against the requested fees and costs and th en to rule on those very arguments. See In re Bluetooth Headset , 654 F.3d at 949 (collecting authorities raising this concern and stating “[a]lt hough clear sailing provisions are not

13 The objector in Fager did not properly preserve objections to the fees structure of the agreement. 854 F.3d at 11 77. Thus, although we discussed concerns regarding the fees structure in that agr eement, we did not a dopt a position regarding how district court’s should adjust their analysis wher e a settlement agreement contains a “kicker” agreement. See id

.23 prohibited, they ‘by their nature deprive th e court of the advantages of the adversary process’ in resolving fee determinations and are therefore disfavored” (brackets omitted) (quoting Weinberger v. Grea t N. Nekoosa Corp. , 925 F.2d 518, 525 (1st Cir. 1991)). To address these concerns, the Ninth Circuit has recognized that where a settlement agreement contains a “kicker” and a “clear-sailing” agreement, “the district court ha[s] a special ‘obligation to assure itself that the fees awarded in the agreement were not unreasonably high’ for[,] if they were, ‘the likelihood is that the defendant obtained an economica lly beneficial concession w ith regard to the merits provisions, in the form of lower moneta ry payments to cl ass members or less injunctive relief for the class than could otherwis e have been obtained.’” 14 Id. at 947 (quoting Staton v. Boeing Co. , 327 F.3d 938, 964–65 (9th Cir. 2003)). The Seventh Circuit has arguably gone a step further a nd concluded the inclus ion of “kicker” and “clear-sailing” provisions in a settlement “weigh[s] substantially against the fairness of a settlement and call[s] for ‘intense critical scruti ny by the district court.’” In re Sw. Airlines Voucher Litig. , 799 F.3d at 712 (quoting Redman v. RadioShack Corp. , 768 F.3d 622, 637 (7th Cir. 2014)). We hold a heightened scrutiny approach draws the proper balance. Faced with a settlement containing a “kicker” agreement and a “clear-sailing” agreement, a

14 In re Bluetooth Headset also involved a situa tion where class counsel received an award disproportionate to th e amount of class comp ensation. 654 F.3d 935, 947 (9th Cir. 2011).24 district court must carefully consider whether the settlem ent was negotiated at armslength. As part of this evaluation, the dist rict court shall take special care to assure the class members receive fair and reasonable comp ensation based on record evidence of their actual damages and the lik elihood of success at tr ial. A court should also consider the fees and costs award provided for by the settl ement in comparison to the value of the set tlement to the class. In re Bluetooth Headset , 654 F.3d at 947– 48. And a district court ma y consider the structure of the negotiation process, including whether the parties negotiated atto rneys’ fees and costs while negotiating class compensation or whether negotiations on fees and costs were reserved until after the parties reached an agreement on class compensation. In considering the structure of negotiations, a di strict court should seek inde pendent verification of any claims by the parties that atto rneys’ fees and costs were negotiated subsequent to and apart from class compensation. See id. at 948. Additionally, a court may consider whether the parties relied upon a neutral medi ator to aid settlement negotiations, a consideration that “weigh[s] in favor of a finding of n on-collusiveness [but] is not on its own dispositive.” Id. Finally, the district court sh all consider the litigation and settlement agreement as a whole, searchi ng for other indicia of self-dealing by class counsel through negotiati ons with the defendant. 15

15 The considerations identified in this paragraph are by no means an exhaustive list of factors for a district court to evaluate before approving a settlement agreement containing both a “kicker” and a “clear-sailing” agreement. Each class action is unique and the distri ct court, being keenly fa miliar with the case, must exercise its discretion to id entify and consider relevant factors when determining25 2. Application Having set forth the standard for evalua ting settlement agreements containing both a “kicker” and a “clear-sailing” agreem ent, we now review the scrutiny actually applied by the district court in this case. We hold the district c ourt applied sufficient scrutiny and did not abuse its discretion by granting final approval of the Settlement Agreement. The district court acknowledged the attorn eys’ fees and costs structure created by the Settlement Agreement. The district court took care to rely on expert evidence to determine the value of cert ain aspects of the settlement. 16 And the district court found that the average class claimant re ceived compensation in excess of damages provable at trial, receiving rebates worth 15. 5% of the estimated price of a washing machine rather than approx imately 7%. This conclusion, which Mr. Morgan has not disputed with any evidence, is critical to affirming the dist rict court’s grant of final approval of the Settlement Agreement. Si mply put, where class members were receiving compensation equivalent to or in excess of actual da mages, it cannot be said that class counsel and defendants negotiated terms that favored attorneys’ fees and costs at the expense of adequate a nd reasonable compensation for the class.

whether a given settlement agreement was negotiated at arms-length with class counsel ardently representing the interests of the class members.

16 Although Mr. Morgan disagrees with the valuation reached by the expert advanced by class counsel, he does not point us to any evidence he presented to counter the expert’s opinion and establis h a competing, lesser valuation for the Settlement Agreement.26 Rather, additional compensation to the class members would have provided a windfall. Thus, while the inclusion of a “kicker” and a “clear-saili ng” agreement in the fees and costs structure might serve as an indication of improper self-dealing, the structure of the negotiations and the actual compensatory terms of this Settlement Agreement counteract the proposition that the Agreement was the product of selfdealing by class counsel thr ough negotiations with Samsung. And this conclusion is confirmed by Mr. Ungar’s decl aration discussing the nature , tenor, and structure of the settlement negotiations. In summation, the record supports th e conclusion that cl ass counsel fought hard for the interests of the class members and obtained more than equitable compensation for the cl ass. Accordingly, the distri ct court, in this complex multidistrict litigation, applie d sufficient scrutiny and acted well within its discretion to grant final approval of the Settlement Agreement.
D. Mr. Morgan’s Request to Disqualify Class Counsel & Decertify the Class

We next hold the district court did not abuse its discretion by rejecting Mr. Morgan’s request to disqua lify class counsel and decerti fy the class. Our analysis of this issue revolves around two provisions of Federal Ru le of Civil Procedure 23. Rule 23(g)(4) imposes a duty on class counsel to “fairly a nd adequately represent the interests of the class.” Relatedly, before granting final approval to a settlement, a district court must assure it self that “class counsel ha[s ] adequately represented the class.” Fed. R. Civ. P. 23(e)(2)(A). Our prev ious analysis of the benefits provided to the class members by the Settle ment Agreement favors the c onclusion that the district27 court did not abuse its discretion in denying Mr. Morgan’s request to disqualify class counsel and decertify the class. Mr. Morgan, however, argues class counsel also breached its fiduciary duty to the class by opposing the side agreemen t that would have permitted the class members to receive additional compensation. We start our analysis of this argument by considering three factual findings by the di strict court that Mr. Morgan contends are clearly erroneous. Concludi ng one of the three findings was clearly erroneous, we then consider whether this factual error requires vacatu r and remand or if it was harmless to the district court’s ultimate rejection of Mr. Morgan’s request to disqualify class counsel a nd decertify the class. First, Mr. Morgan disputes the district court’s findi ng that he and Samsung had not finalized the side agreement and that the agreement “may (or may not) have come to fruition.” Morgan App. at 229. Mr. Morgan contends he and Samsung reached final terms on the side agreement and the d eal was essentially done. The record does not support Mr. Morgan’s position. Althou gh the district court provided Mr. Morgan two opportunities to place the side agreement on the record, Mr. Morgan never complied with the district court’s orders. In fact, Mr. Morgan left it to Samsung to disclose the general terms of the side agreement by the first deadline, of December 31, 2019. 17 Accordingly, the district cour t was well within its right to

17 Samsung’s filing does note that it “c onferred” with Mr. Morgan before submitting its response to the district court’s order. Morgan App. at 192.28 express skepticism about whet her the side agreement woul d come to fruition, and it did not clearly err by finding that Mr. Morg an and Samsung had not finalized a side agreement. Second, Mr. Morgan contests the distri ct court’s finding that “Class Counsel never threatened to su e Objector Morgan.” See id. Once again, we fi nd no clear error in this factual finding. Wh ile class counsel alleged Mr . Morgan had engaged in “misconduct,” id. at 200, such an allegation is far from a threat to su e. And an e-mail from class counsel to Mr. Morg an indicated that class c ounsel had never threatened to sue Mr. Morgan or HLLI. While Mr. Mo rgan believes he was entitled to a more definitive and affirmative promise not to su e from class counsel, he points to nothing in the record contradicting cl ass counsel’s statement that it had never threatened to sue Mr. Morgan or HLLI. Simply put, cla ss counsel expressing concerns about the side agreement does not equate to thr eatening to sue Mr. Morgan and HLLI. This takes us to Mr. Morg an’s third challenge to th e district court’s factual findings: that “Class Coun sel took no position as to the side agreement.” Id. at 230. Here, we find clear error. As outlined supra at 10, class counsel rather obviously opposed the side agreement, describing the negotiations betw een HLLI and Samsung as “misconduct” and “misbeha vior” and arguing the side agreement was unlikely to provide class members any benefit. Id . at 200. We hold, however, that this error was harmless. By virtue of Mr. Morgan not complying with the district court’s orders to place the side ag reement on the record, class counsel had reason to be skeptical of whether the si de agreement would actually29 come to fruition or if it would otherwise dela y, or further delay, final approval of the Settlement Agreement and distribution of se ttlement proceeds to the class members. Furthermore, where the side agreement allo wed HLLI to seek at torneys’ fees and costs and Mr. Morgan’s niece served as president of HLLI, it was not unreasonable for class counsel to question Mr. Morgan ’s motivations both in objecting and in offering to drop his objections if the side agreement came to fruition. Thus, although the district court erred by finding that class counsel did not oppose the side agreement, there were reas onable bases, in line with the interests of the class members, for class counsel to oppose furt her negotiations on the side agreement. 18 And the district court recognized that cla ss counsel had reason fo r concern regarding the side agreement dela ying the proceedings. Ultimately, we disagree with Mr. Morg an’s contention th at class counsel breached its fiduciary duty to the class by wa y of its briefing in opposition to the side agreement. And where the Settlement Agreement provid ed class members fair, reasonable, and adequate co mpensation, we see no indica tion class counsel otherwise breached its fiduciary duty to th e class. Therefore, we conc lude the district court did

18 Given that nineteen months elap sed between class counsel and Samsung signing the Settlement Agreement and the in itial December 31, 2019, deadline set by the district court for Mr. Morgan and Samsung to place any side agreement on the record, Mr. Morgan and Samsung had more than adequate time to negotiate and finalize any side agreement.30 not abuse its discretion by denying Mr. Mo rgan’s request to disqualify class counsel. 19
E. District Court’s Award of Fees and Costs Mr. Morgan contests the district court’ s award of attorney s’ fees and costs based, once again, on the presence of the “k icker” and “clear-sailing” agreements in the Settlement Agreement. We hold the pr esence of “kicker” and “clear-sailing” agreements in a settlement do place a heightened duty on the district court relative to any award of attorneys’ fees and co sts. And we adopt the suggestion from Fager that before awarding fees and co sts, a district court must make findings as to the defendant’s total liability to the class under the settleme nt—i.e., the value of the settlement—and the estimated financial impact on the de fendant based on the terms of the settlement and in light of then-pre vailing information on the class participation

rate. See Fager , 854 F.3d at 1176–77 (reco gnizing merit to measuring attorneys’ fees against “the amount actually paid to the class”). A district court, after carefully reviewing billing records and performing th e traditional lodestar analysis, should crosscheck the fees and cost s award against both the value of the settlement and the estimated actual cost to the defendant. Finally, where a sett lement agreement contains a “clear-sailing” agreement, a ny doubts regarding hourly rates and billed

19 Because Mr. Morgan’s ar guments for not granting fi nal class certification and decertifying the class hinged on di squalifying class counsel, we likewise conclude the district court did not abuse its discretion in rejecting Mr. Morgan’s positions on these two related issues.31 hours shall be resolved against class couns el. In this sense, where class counsel bargains for a defendant’s agreement not to challenge a request for fees and costs, class counsel assumes a heightened burde n for establishing the propriety of the records supporting its fe es and costs award. Although the Tenth Circuit had not yet adopted this framework, the district court complied with it. The district cour t was well aware of the value of the settlement, the class participation rate, and the resulting actual financial impact on Samsung. 20 The district court also scrutinize d the billing records offered by class counsel, carefully explaining its rationale for accepting the submissions. And, after performing its lodestar analys is, the district court crossc hecked its awar d against the value of the Settlement Agreement and the actual cost of the Settlement Agreement to Samsung—i.e., relief to class claimants and the valu e of the warranties provided under the Agreement. Notably, this process employed by the di strict court resulted in an award to class counsel well below both the maximu m permissible award of $6.55 million and the award of about $6.25 million sought by class counsel. The final award amounted

20 In determining the actual financial im pact of the Settlement Agreement on Samsung, we consider both th e payments Samsung made to class claimants and the value of the warranties provided to clas s members by the Settlement Agreement. Although the warranties may not have ulti mately required paym ents from Samsung, warranties, like insura nce, carry with them actuary value and provide consumers peace of mind. Had Samsung sold the wash ing machines with the now extended warranty provided as a result of the Settle ment Agreement, th e list price for the machines likely would have been higher. Thus, while the warran ties do not presently require Samsung to pay any monies, th ey are akin to a lost profit.32 to slightly more than half of the minimum value of th e Settlement Agreement and approximately one-third of Samsung’s to tal minimum liability for compensation, service awards, costs, and attorneys’ fees under the Ag reement. Working off the maximum estimated valuati on of the settlement of $11.42 million, the awarded attorneys’ fees and costs amount to a bout one-third of the maximum settlement valuation and about one-quarter of Samsung’s total maximum liability for compensation, service awards, costs, and attorneys’ fees. For purposes of crosschecking a lodestar figure against the value of a settlement, these percentages are well within the range of reasonable and permissible fees and costs awards in class action litigation. See Camden I Cond ominium Ass’n, Inc. v. Dunkle , 946 F.2d 768, 774–75 (11th Cir. 1991) (“The majority of common fund fee awards fall between 20% and 30% of the fund. . . . To avoid de pleting the funds ava ilable for distribution to the class, an upper limit of 50% of th e fund may be stated as a general rule, although even larger percenta ges have been awarded.”); see also In re Motor Fuel , 872 F.3d at 1119–20 (fi nding no abuse of discretion wh ere district court approved settlement agreement permitting for attorneys’ fees and co sts in excess of half the money paid by defendant). Ac cordingly, Mr. Morgan has provided us no grounds for disturbing the district court’s calculated j udgment in awarding class counsel just over $3.8 million in fees and costs.
III. CONCLUSION We hold that where a settlement agr eement in a class action contains a “kicker” agreement and a “clear-sailing” agreement, the district court must apply33 heightened scrutiny before granting final approval of the settl ement agreement and when determining the attorneys’ fees and costs award. Here, the district court did just that. And while the district court did make one clear error in it s factual findings, the error was harmless. Therefore, we AFFIRM the district c ourt’s orders granting final class certification, granting final approval to the Settlement Agr eement, and awarding class counsel attorney s’ fees and costs.