FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ROBERT BRISEÑO; CHRISTI TOOMER;

KELLY MCFADDEN; JANETH RUIZ;

BRENDA KREIN; ALEXIS JUSTAK;

LEONORA ULITSKY; ANNE COWAN;

JULIE PALMER; PATTY BOYER;

NECLA MUSAT; PAULINE MICHAEL;

RONA JOHNSTON; CHERI SHAFSTALL;

JILL CROUCH; ERIKA HEINS;

MAUREEN TOWEY; MICHELE 

ANDRADE; ANITA WILLMAN; DEE 

HOPPER-KERCHEVAL; LIL MARIEBIRR, individually and on behalf of 

all others similarly situated,

Plaintiffs-Appellees,

v.

M. TODD HENDERSON,

Objector-Appellant,

v.

CONAGRA FOODS, INC.,

Defendant-Appellee.

No. 19-56297

D.C. No.

2:11-cv-05379-

CJC-AGR

OPINION

Appeal from the United States District Court

for the Central District of California

Cormac J. Carney, District Judge, Presiding
2 BRISEÑO V. HENDERSON

Argued and Submitted December 7, 2020

Pasadena, California

Filed June 1, 2021

Before: John B. Owens and Kenneth K. Lee, Circuit 

Judges, and David A. Ezra,* Senior District Judge.

Opinion by Judge Lee

SUMMARY**

Class Action Settlements

The panel reversed the district court’s approval of a class 

action settlement in an appeal brought by a class member 

Objector in a diversity action where the class alleged that 

ConAgra Foods, Inc. used a misleading “100% Natural” 

label on Wesson Oil.

The panel held that the class settlement agreement raised 

a squadron of red flags that required further review. The 

panel held further that under the newly revised Fed. R. Civ. 

P. 23(e)(2) standard, courts must scrutinize settlement 

agreements – including post-class certification settlements –

for potentially unfair collusion in the distribution of funds 

between the class and their counsel.

* The Honorable David A. Ezra, Senior United States District Judge 

for the Western District of Texas, sitting by designation.

** This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.
BRISEÑO V. HENDERSON 3

The panel held that the district court erred by failing to 

apply the newly revised Fed. R. Civ. P. 23(e)(2). 

Specifically, the panel held that under the newly revised 

Rule 23(e)(2), courts must apply the heightened scrutiny in 

In re Bluetooth Headset Products Liability Litigation, 654 

F.3d 935 (9th Cir. 2011), to post-class certification 

settlements in assessing whether the division of funds 

between the class members and their counsel was fair and 

adequate. The panel held further that district courts must 

apply the Bluetooth factors to scrutinize fee arrangements to 

determine if collusion may have led to class members being 

shortchanged. The panel concluded that the class settlement 

here featured all three red flags of potential collusion that 

was noted in Bluetooth: plaintiffs’ counsel received a 

disproportionate distribution of the settlement; the parties 

agreed to a “clear sailing arrangement” in which ConAgra 

agreed not to challenge the agreed-upon fees for class 

counsel; and the agreement contained a “kicker” or 

“reverter” clause in which ConAgra, not the class members, 

received the remaining funds if the court reduced the agreedupon attorneys’ fees.

The panel held that the district court erred by failing to 

approximate the value of the settlement’s injunction. 

Specifically, the panel held that it was reversible error when 

the district court, rather than attempting to quantify the value 

of the injunctive relief, instead concluded that it had “some” 

value. The panel held further that the district court erred by 

placing even “some value” on the injunction because it was, 

and is, virtually worthless.

The panel next addressed – and rejected – appellees’ 

argument that the Erie doctrine precluded the application of 

Rule 23(e)(2) to a class settlement where state substantive 

law governed attorney’s fees in fee shifting cases. In any 
4 BRISEÑO V. HENDERSON

event, the Objector challenged settlement fairness under 

Rule 23(e), rather than an award of attorney’s fees under 

Rule 23(h). Thus, Erie’s effect on fee-shifting law, if it even 

had one, was not implicated in this appeal.

The panel held that the district court did not err by 

determining that the Objector failed to rebut its own 

conclusion that the settlement satisfied Rule 23(e)(2). The 

record demonstrated that the district court conducted its own 

independent analysis, and then considered, and dismissed, 

the Objector’s objections. The district court never 

improperly shifted to the Objector the burden of rebutting 

the settlement’s fairness, reasonableness, and adequacy at 

the fairness hearing.

The panel remanded for further proceedings.

COUNSEL

Theodore H. Frank (argued) and Melissa A. Holyoak, Center 

for Class Action Fairness, Hamilton Lincoln Law Institute, 

Washington, D.C., for Objector-Appellant.

Samuel Issacharoff (argued), New York, New York; Robert 

Klonoff, Portland, Oregon; Ariana J. Tadler, A.J. de 

Bartolomeo, and Brian R. Morrison, Tadler Law LLP, New 

York, New York; Adam J. Levitt and Amy E. Keller, 

DiCello Levitt Gutzler LLC, Chicago, Illinois; David Azar, 

Milberg Phillips Grossman LLP, Irvine, California; for 

Plaintiffs-Appellees.

Angela M. Spivey (argued), Alston & Bird LLP, Atlanta, 

Georgia, for Defendant-Appellee.
BRISEÑO V. HENDERSON 5

Mark Brnovich, Attorney General; Oramel H. Skinner, 

Solicitor General; Kate B. Sawyer, Assistant Solicitor 

General; Keena Patel, Assistant Attorney General; Office of 

the Attorney General, Phoenix, Arizona; Steve Marshall, 

Kevin G. Clarkson, Leslie Rutledge, Lawrence G. Wasden, 

Curtis T. Hill Jr., Daniel Cameron, Jeff Landry, Eric 

Schmitt, Dave Yost, Mike Hunter, Alan Wilson, and Ken 

Paxton, Attorneys General; as and for Amici Curiae 

Attorneys General of Arizona, Alabama, Alaska, Arkansas, 

Idaho, Indiana, Kentucky, Louisiana, Missouri, Ohio, 

Oklahoma, South Carolina, and Texas.

OPINION

LEE, Circuit Judge:

We can perhaps sum up this case as “How to Lose a 

Class Action Settlement in 10 Ways.” The parties crammed 

into their settlement agreement a bevy of questionable 

provisions that reeks of collusion at the expense of the class 

members: Class counsel will receive seven times more 

money than the class members; an injunction touted by an 

expert as worth tens of millions of dollars appears worthless; 

the defendant agrees not to challenge the plaintiffs’ 

attorneys’ fees amount; any reduction in those fees by the 

court reverts to the defendant; and on and on.

While courts should not casually second-guess class 

settlements brokered by the parties, they should not 

greenlight them, either, just because the parties profess that 

their dubious deal is “all right, all right, all right.” We 

reverse the district court’s approval of the class settlement 

because the agreement raises a squadron of red flags 

billowing in the wind and begging for further review. We 
6 BRISEÑO V. HENDERSON

hold that under the newly revised Rule 23(e)(2) standard, 

courts must scrutinize settlement agreements — including 

post-class certification settlements — for potentially unfair 

collusion in the distribution of funds between the class and 

their counsel.

BACKGROUND

For many years, ConAgra, then-owner of Wesson Oil, 

labeled that product as “100% Natural.” In 2011, Robert 

Briseño and others sued ConAgra, alleging that “100% 

Natural” was misleading because Wesson Oil contains 

ingredients made from genetically modified organisms 

(“GMOs”).

Three years later, plaintiffs sought class certification. 

Relying on the expert report of Colin B. Weir, they argued 

that they overpaid for Wesson Oil based on the “100% 

Natural” label. ConAgra responded that its market research 

showed that less than 3 percent of consumers bought the 

product because of that label. Although Weir testified that 

hedonic regression could quantify the supposed price 

premium charged for that label, he did not try to calculate it 

at first.

Unsurprisingly, ConAgra then challenged the 

admissibility of Weir’s report. Enlisting its own expert, 

ConAgra asserted that historical price data showed that the 

label did not affect the price of Wesson Oil. According to 

ConAgra, if the public had cared about the “100% Natural” 

claim, then the price of Wesson Oil should have declined 

after ConAgra removed that claim from the product’s label. 

The district court agreed, denying plaintiffs’ first 

certification request.
BRISEÑO V. HENDERSON 7

Still hoping to strike oil, plaintiffs filed an amended 

motion for class certification. This time, however, they 

supplemented Weir’s expert material with a supporting 

opinion by Dr. Elizabeth Howlett. Together, plaintiffs’ 

experts asserted that consumers paid a 2.28% price premium 

for the allegedly mislabeled products. Furthermore, Dr. 

Howlett suggested that a conjoint analysis could help 

determine how consumers value “GMO content.” Plaintiffs, 

however, never submitted that conjoint analysis. ConAgra, 

again, sought to strike plaintiffs’ experts and opposed class 

certification.

This time, the court denied ConAgra’s motions and 

certified a Rule 23(b)(3) damage class, though it refused to 

certify a 23(b)(2) injunctive class for lack of standing. 

ConAgra twice pursued Rule 23(f) interlocutory review of 

class certification. It lost both appeals and an attempt to seek 

certiorari. The parties began settlement negotiations shortly 

after that.

Meanwhile, ConAgra agreed to sell Wesson Oil to The 

J.M. Smucker Company in May 2017. About two months 

later, ConAgra voluntarily removed the disputed label, and 

stopped marketing Wesson products as “natural.” ConAgra 

maintains that this litigation played no role in either decision. 

In early 2018, the Smucker deal hit an insurmountable 

regulatory jam. Undeterred, ConAgra sought a new suitor 

for Wesson. At the same time, it engaged in mediation with 

the certified class. The district court assigned Magistrate 

Judge McCormick to help the parties grease the wheels of 

justice, and they emerged with an agreement-in-principle in 

November 2018. A month later, ConAgra agreed to sell 

Wesson to Richardson International. The deal closed in 

February 2019. The next month, the parties proposed a 

settlement agreement.
8 BRISEÑO V. HENDERSON

ConAgra agreed to provide, in relevant part:

(a) $0.15 for each unit of Wesson Oils 

purchased to households submitting valid 

claim forms (to a maximum of thirty units 

without proof of purchase, and unlimited 

units with proof of purchase) (b) an 

additional fund of $575,000 to be 

allocated to New York and Oregon class 

members submitting valid claim forms, 

as compensation for statutory damages 

under those states’ consumer protection 

laws, and (c) an additional fund of 

$10,000 to compensate those in all 

classes submitting valid proof of 

purchase receipts more than thirty 

purchases, at $0.15 for each such 

purchase above thirty, with Class 

Counsel paying any non-funded claims 

(i.e., claims above the $10,000 provided 

by ConAgra) from any attorneys’ fees 

awarded in this case.

With a class of nearly 15 million consumers, ConAgra 

claimed that it theoretically exposed itself to nearly 

$67.5 million in claims if every consumer submitted a claim. 

(Spoiler alert: that never happens — not even close). The 

settlement agreement established a fund on a claims-made 

basis — i.e., ConAgra would pay out for only those claims 

submitted by consumers. The settlement, however, did not 

require ConAgra to identify or provide direct notice to class 

members.

The settlement agreement also provided injunctive 

relief: Should ConAgra have seller’s remorse and decide to 

reacquire the Wesson brand in the future, it agreed not to 
BRISEÑO V. HENDERSON 9

advertise or market Wesson Oil as “natural,” unless the FDA 

permits the use of the term to describe oil derived from GMO 

seeds. Relying on Mr. Weir’s analysis, the parties asserted 

that the “the value of the injunctive relief to the Classes” is 

$27 million.

Finally, the settlement stated that plaintiffs would 

request — and ConAgra would not contest — $6.85 million 

in attorneys’ fees and expenses. That amount would come 

directly from ConAgra and be separate from the class 

settlement fund. If the court, however, sliced the agreedupon attorneys’ fees, that reduction would revert to ConAgra 

rather than the class.

The parties thus represented that their settlement could 

theoretically be worth over $100 million — around 

$95 million in value to the class ($67.5 million in potential 

payout and $27 million in injunctive relief value), along with 

another $6.85 million for the attorneys. Yet, when the dust 

settled, ConAgra shelled out less than $8 million, with a 

mere $1 million of that going to the class. Class counsel’s 

fees swallowed $5.85 million, and expenses devoured 

another $978,671. Of the 15 million class members, barely 

more than one-half of one percent of them submitted a claim.

Only one class member opted out of the settlement. 

M. Todd Henderson, a law professor at the University of 

Chicago, objected to the settlement under Rule 23(e), 

arguing that attorneys hoarded 88% of the class’s actual 

recovery. He asserted that our precedent required the court 

to treat the settlement as a constructive common fund (i.e., 

the settlement effectively establishes one common fund to 

pay out both the class members and their counsel). 

Henderson also contended that the settlement’s “clear 

sailing” provision (i.e., ConAgra’s refusal to challenge the 

agreed-upon attorney’s fees) and “kicker” clause (i.e., any 
10 BRISEÑO V. HENDERSON

reduction in fees reverting to ConAgra, not the class 

members) raised the specter of collusion. He also objected 

to the stipulated value of the injunctive relief, describing it 

as “illusory.” Likewise, Henderson castigated Mr. Weir, 

stating that his failure to conduct a price comparison 

rendered his opinion unreliable.

Plaintiffs sought final approval of the settlement in July 

2019. Based on Mr. Weir’s declaration, they valued 

ConAgra’s label change at $19,080,000. They also 

contended that, if Wesson’s new owner, Richardson, 

continued to refrain from labeling the product as “natural” 

for even a year, the value of the injunction would surge to 

$30.2 million. And for each year that Richardson did not 

label Wesson Oil as “natural,” the class would obtain an 

annual benefit of over $11 million, according to Mr. Weir. 

Plaintiffs argued that the fee request “represent[ed] 

approximately 25.4% of the parties’ estimated value of the 

injunctive relief or 23% of Plaintiffs’ conservative 

estimate[].” They also calculated their own lodestar fee at 

around $11.499 million.

When the claims deadline passed, class members made 

97,880 timely claims for $418,919, a shadow of the 

$67.5 million potential liability that ConAgra touted in 

seeking approval of the settlement. Even with separately 

funded pools for New York and Oregon, ConAgra would 

pay class members a maximum of $993,919. Out of a class 

of 15 million consumers, fewer than 100,000 would receive 

a single cent.

The district court held its final fairness hearing in 

October 2019. Henderson and class counsel remained 

loggerheads on almost every issue. The parties disputed 

whether Henderson as an objector, or plaintiffs as 

proponents, bore the burden of establishing that the 
BRISEÑO V. HENDERSON 11

settlement satisfied Rule 23(e). Henderson argued that the 

“kicker” demonstrated ConAgra’s willingness to settle for 

roughly $8 million, and that class counsel bargained away 

absent class members’ rights in exchange for much of the 

settlement. The district court disagreed.

Rejecting Henderson’s motion to strike Mr. Weir’s 

expert report, the district court explained that “[h]aving one 

expert’s opinion — however purportedly flawed — on the 

value of that injunction helps the Court develop its own 

view.” Despite recognizing the parties’ “vigorous dispute 

over the precise valuation,” it still found that “the injunction 

adds at least some value to the amount offered in 

settlement.” It continued, “even if there were no injunctive 

relief, the [c]ourt would likely find that the amount offered 

in settlement was fair and reasonable given the likely

obstacles to Plaintiffs recovering [at trial].”

The district court went on to evaluate the settlement for 

fairness under our decision in Staton v. Boeing Co., 327 F.3d 

938, 959 (9th Cir. 2003). It explained that the length and 

nature of the suit allowed both sides to evaluate the costs and 

benefits of protracted litigation, supplemented by the 

recommendation of a court-appointed mediator. Again, the 

court’s concerns over the merits of the plaintiffs’ suit heavily 

influenced its analysis. The court, however, stopped short of 

conducting a Rule 23(e) inquiry. Instead, it merely held that 

“[t]here is substantial overlap between [Rule 23(e)(2)] 

factors and the Staton factors.”

The court, “rel[ying] on the lodestar method,” found 

class counsel’s $6.85 million reasonable given the lodestar 

amount of “nearly $11.5 million.” Indeed, the court 

appeared impressed that “Defendant [was] willing to pay 

anything at all given the many liability and damages issues 

this case has had from the beginning.” The court also 
12 BRISEÑO V. HENDERSON

pointed to “the amount of hours reasonably spent on the 

litigation, counsel’s efforts in litigating this years-long 

complex action, the results achieved, and the risks inherent 

in continued litigation.”

It also emphasized the “substantial” nature of “the 

[$0.15] per-unit award,” given that it had restricted relief to 

“only the portion of [the] premium attributable to 

consumers’ belief that ‘100% natural’ meant that the 

products were GMO-free.” It thus concluded that “[t]he 

settlement amount offered provide[d] an immediate and 

tangible benefit to class members and eliminate[d] the risk 

that they could receive less than that amount, or nothing at 

all, if litigation continued.”

And while the court “appreciate[d] Objector’s high-level 

concerns regarding an apparent trend [sic] toward class 

action settlements disproportionately benefitting attorneys,” 

it was “not persuaded” that “the disproportionate attorney 

fee award under the settlement render[ed] the entire 

settlement unfair.” Rather, the court maintained that “the 

record in this case sufficiently ‘dispel[s] the possibility that 

class counsel bargained away a benefit to the class in 

exchange for their own interests.’” Henderson timely 

appealed, and we have jurisdiction under 28 U.S.C. § 1291.

STANDARD OF REVIEW

We review for abuse of discretion a district court’s 

decision to approve a class action settlement. Roes, 1–2 v. 

SFBSC Mgmt., LLC, 944 F.3d 1035, 1043 (9th Cir. 2019). 

“A [district] court abuses its discretion when it fails to apply 

the correct legal standard or bases its decision on 

unreasonable findings of fact.” Nachshin v. AOL, LLC,

663 F.3d 1034, 1038 (9th Cir. 2011). Even so, “[a]ppellate 

review of a settlement agreement is generally ‘extremely 
BRISEÑO V. HENDERSON 13

limited.’” Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th 

Cir. 2012) (citing Hanlon v. Chrysler Corp., 150 F.3d 1011, 

1026 (9th Cir. 1988)). We, however, “hold district courts to 

a ‘higher procedural standard when making [a] 

determination of substantive fairness.’” Roes, 1–2, 944 F.3d 

at 1043 (quoting Allen v. Bedolla, 787 F.3d 1218, 1223 (9th 

Cir. 2015)). See also Dennis, 697 F.3d at 864 (explaining 

that “‘[t]o survive appellate review, the district court must 

show it has explored comprehensively all factors,’ and must 

give ‘a reasoned response’ to all non-frivolous objections” 

(citing Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 

615, 624 (9th Cir. 1982))). Thus, this court “will rarely 

overturn an approval of a” compromised settlement “unless 

the terms of the agreement contain convincing indications 

that . . . self-interest rather than the class’s interest in fact 

influenced the outcome of the negotiations.” Staton,

327 F.3d at 960; Allen, 787 F.3d at 1223.

“We also review for abuse of discretion a district court’s 

award of fees and costs to class counsel, as well as its method 

of calculation.” Labatz v. U.S. Cellular of Cal., Inc., 22 F.3d 

1142, 1148–49 (9th Cir. 2000).

ANALYSIS

I. The district court erred by failing to apply the new 

Rule 23(e)(2), which requires courts to scrutinize 

attorneys’ fee arrangements.

A. Under the newly revised Rule 23(e)(2), courts should 

apply the Bluetooth factors even for post-class 

certification settlements.

Rule 23(e) imposes on district courts an independent 

obligation to ensure that any class settlement is “fair, 

reasonable, and adequate,” accounting for the interests of 
14 BRISEÑO V. HENDERSON

absent class members. Fed. R. Civ. P. 23(e)(2). Likewise, 

we recognize “an independent obligation to ensure that [any 

attorneys’ fee] award, like the settlement itself, is 

reasonable, even if the parties have already agreed to an 

amount.” In re Bluetooth Headset Products Liability 

Litigation, 654 F.3d 935, 941 (9th Cir. 2020); see also 

Staton, 327 F.3d at 960–64. Indeed, settlement agreements 

“warrant special attention when the record suggests that 

settlement is driven by fees; that is, when counsel receive a 

disproportionate distribution of the settlement.” Hanlon,

150 F.3d at 1021. Regardless of “whether the attorneys’ fees 

come from a common fund or are otherwise paid, 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).1

Before the 2018 amendment, Rule 23 stated that class 

settlements should be “fair, reasonable, and adequate” but 

did not elaborate. Like our sister circuits, we filled in the 

gaps, instructing courts to consider the following factors 

(sometimes called “Hanlon factors” or “Staton factors”) in 

assessing whether a settlement is “fair, reasonable, and 

adequate”:

[T]he strength of the plaintiffs’ case; the risk, 

expense, complexity, and likely duration of 

1 While we do not address whether the settlement agreement 

amounts to a constructive common fund as alleged by Henderson, the 

district court on remand should review the settlement structure to 

determine whether to apply common fund principles to its 23(e) inquiry. 

See Bluetooth, 654 F.3d at 948–49 (explaining that “[e]ven when 

technically funded separately, the class recovery and the agreement on 

attorneys’ fees [are] a package deal . . . for purposes of analyzing . . . the 

settlement’s overall reasonableness”) (internal quotations omitted).
BRISEÑO V. HENDERSON 15

further litigation; the risk of maintaining 

class action status throughout the trial; the 

amount offered in settlement; the extent of 

discovery completed and the stage of the 

proceedings; the experience and views of 

counsel; the presence of a governmental 

participant; and the reaction of the class 

members to the proposed settlement.

Hanlon, 150 F.3d at 1026; Staton, 327 F.3d at 959 (internal 

citations and quotations omitted). Admittedly, we never 

explicitly mandated consideration of the terms of attorneys’ 

fees in the Hanlon/Staton factors.

On the other hand, we have recognized the risks in 

allowing counsel to bargain on behalf of the entire class, 

especially pre-class certification when counsel may try to 

strike a quick settlement on behalf of the class. See Staton, 

327 F.3d at 960. In Bluetooth, we explained that courts 

should scrutinize agreements for “subtle signs that class 

counsel have allowed pursuit of their own self-interests . . .

to infect the negotiations.” 654 F.3d at 947. We identified 

three of those signs: (1) “when counsel receive[s] a 

disproportionate distribution of the settlement”; (2) “when 

the parties negotiate a ‘clear sailing arrangement,’” under 

which the defendant agrees not to challenge a request for an 

agreed-upon attorney’s fee; and (3) when the agreement 

contains a “kicker” or “reverter” clause that returns 

unawarded fees to the defendant, rather than the class. Id. 

In reviewing settlements struck before class certification, 

district courts must apply these so-called Bluetooth factors 

to smoke out potential collusion.

Last year, we noted that “Bluetooth therefore left open a 

question no subsequent case has answered,” whether its 
16 BRISEÑO V. HENDERSON

heightened inquiry applies to post-class certification

settlements. Campbell v. Facebook, Inc., 951 F.3d 1106, 

1125–26 (9th Cir. 2020). We now answer that question: 

indeed, it does.

That answer flows from the revised Rule 23(e). In 

December 2018, Congress and the Supreme Court amended 

Rule 23(e) to set forth specific factors to consider in 

determining whether a settlement is “fair, reasonable, and 

adequate,” including:

23(e)(2)(C): [Considering whether] the 

relief provided for the class is adequate, 

taking into account:

(i) the costs, risks, and delay of trial 

and appeal;

(ii) the effectiveness of any 

proposed method of 

distributing relief to the class, 

including the method of 

processing class-member claims;

(iii) the terms of any proposed 

award of attorney’s fees, 

including timing of payment; and

(iv) any agreement required to be 

identified under Rule 23(e)(3).

23(e)(2)(D): the proposal treats class 

members equitably relative to each other.

Fed. R. Civ. P 23(e)(2)(C)–(D) (emphasis added).
BRISEÑO V. HENDERSON 17

Under this revised text, district courts must now consider 

“the terms of any proposed award of attorney’s fees” when 

determining whether “the relief provided for the class is 

adequate.” Fed. R. Civ. P. 23(e)(2)(C)(iii). While none of 

our sister circuits has yet directly addressed what this 

provision specifically requires,2 the plain language indicates 

that a court must examine whether the attorneys’ fees 

arrangement shortchanges the class. In other words, the new 

Rule 23(e) makes clear that courts must balance the 

“proposed award of attorney’s fees” vis-à-vis the “relief 

provided for the class” in determining whether the settlement 

is “adequate” for class members.

Nothing in the Rule’s text suggests that this requirement 

applies only to pre-certification settlements. Congress 

required courts to scrutinize attorney’s fees, even if the 

settlement occurred after class certification. And for good 

reason, too: The specter of collusion still casts a long shadow 

2 The Second Circuit provided some guidance in Fresno Cty. Emps.’ 

Ret. Assoc. v. Isaacson/Weaver Family Trust, 925 F.3d 63, 71–72 (2d 

Cir. 2019) (describing 23(e)(2), in a post-certification class settlement 

context, as a “backstop that prevents unscrupulous counsel from quickly 

settling a class’s claims to cut a check” and involving “judicial review of 

class-action settlements with a ‘searching assessment’ of counsel’s fee 

award”) (internal citations omitted). But several district courts have 

conducted limited Rule 23(e)(2)(C)(iii) analyses, albeit without fulsome

inquiry into its textual requirements. See In re MyFord Touch Consumer 

Litig., No. 13-CV-03072-EMC, 2019 WL 1411510 at *8–9 (N.D. Cal. 

Mar. 28, 2019) (citing Hanlon, 150 F.3d at 1026); In re GSE Bonds 

Antitrust Litig., 414 F. Supp. 3d 686, 693 (S.D.N.Y. Nov. 7, 2019); 

Gumm v. Ford, No. 5:15-CV-41-MTT, 2019 WL 479506, at *3 (M.D. 

Ga. Jan 17, 2019) (quoting Fed. R. Civ. P. 23 Advisory Comm.’s Note, 

2018 amend.); In re J.P. Morgan Stable Value Fund ERISA Litig., 

No. 12-CV-2458 (VSB), 2019 WL 4734396, slip op. at *2–5 (S.D.N.Y. 

Sept. 23, 2019).
18 BRISEÑO V. HENDERSON

over post-class certification settlements when they involve 

divvying up funds between class members and class counsel.

We have observed that courts should scrutinize pre-class 

certification settlements because plaintiffs’ counsel may 

collude with the defendant to strike a quick settlement 

without devoting substantial resources to the case. See, e.g.,

Hanlon, 150 F.3d at 1026 (adopting other circuits’ “more 

probing inquiry” for “settlement approval that takes place

prior to formal class certification”). The potential for 

collusion reaches its apex pre-class certification because, 

among other things, (1) the court has not yet approved class 

counsel, who would owe a fiduciary duty to the class 

members; and (2) plaintiffs’ counsel has not yet devoted 

substantial time and money to the case, and may be willing 

to cut a quick deal at the expense of class members’ interests. 

See generally In re General Motors Corp. Pick-Up Truck 

Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 788–90 (3d Cir. 

1995).

In contrast, by the time a court has certified a class — the 

theory goes — the parties have vigorously litigated the 

dispute, reducing the chance that class counsel will settle on 

the cheap for a quick buck. By devoting substantial time and 

resources to the case, class counsel has skin in the game, 

guaranteeing his or her interest in maximizing the size of the 

settlement fund. Likewise, because a district court has 

appointed class counsel who owes a fiduciary duty to the 

class members, class counsel would be ethically forbidden 

from sacrificing the class members’ interests. See Allen, 

787 F.3d at 1223.

All of this is true — but also beside the point. Simply 

put, class certification does not cleanse all sins, especially 

when it involves potential collusion over divvying up funds 

between class counsel and the class (rather than the size of 
BRISEÑO V. HENDERSON 19

the settlement fund or relief). See Staton, 327 F.3d at 972 

n.22 (recognizing “the inherent tensions among class 

representation, defendant’s interests in minimizing the cost 

of the total settlement package, and class counsel’s interest 

in fees”).

Even after a court has certified a class, class counsel still 

has the incentive to conspire with the defendant to reduce 

compensation for class members in exchange for a larger fee. 

A defendant goes along with this collusion because it cares 

only about the total payout, not the division of funds between 

class and class counsel. After all, a defendant, no matter if a 

class has been certified, has “no reason to care about the 

allocation of its cost of settlement between class counsel and 

class members.” Pearson v. NBTY, Inc., 772 F.3d 778, 783 

(7th Cir. 2014) (Posner, J.). Instead, “all it cares about as a 

rational maximizer of its net worth is the bottom line — how 

much the settlement is likely to cost it.” Id.

Consider this example. What would any rational 

defendant do if faced with these two settlement options: 

(1) establish a $10 million fund for class members and pay 

$3 million in fees to class counsel for a total payout of 

$13 million, or (2) set up a $7 million fund and pay 

$4 million to class counsel for a total payout of $11 million. 

A defendant would choose the second option because it 

would save $2 million, even though it shortchanges class 

members. Nothing about class certification can make a 

defendant care more about its opponents than its own bottom 

line.

Put another way, a post-class certification settlement 

only ensures that the parties litigated aggressively to arrive 

at an adequate total fund size; it does not, however, address 

the inherent incentives that tempt class counsel to elevate his 

or her own interest over those of the class members. As one 
20 BRISEÑO V. HENDERSON

prominent academic who supports class actions put it, “the 

profit motive will give class action lawyers incentives to do 

sneaky things, just like it gives businesses incentives to do 

sneaky things.” Brian T. Fitzpatrick, The Conservative Case 

for Class Actions 72 (2019). The potential for this type of 

collusion is no hoax — it is real, whether a class has been 

certified or not.

Congress sought to end this practice by changing the text 

of Rule 23(e)(2)(C). We thus now hold that courts must 

apply Bluetooth’s heightened scrutiny to post-class 

certification settlements in assessing whether the division of 

funds between the class members and their counsel is fair 

and “adequate.” Fed. R. Civ. P. 23(e)(2)(C).

B. The settlement had all the hallmarks of a potentially 

collusive settlement giving short shrift to the class.

Despite holding its final approval hearing after the new 

version of Rule 23(e)(2) took effect, the district court did not 

apply it and instead relied on this court’s Staton factors. 

True, as the district court recognized, many of the Staton

factors fall within the ambit of the revised Rule 23(e). But 

Congress provided district courts with new instructions —

such as analyzing the “terms of the settlement” and “terms 

of any proposed award of attorney’s fees” — that require 

them to go beyond our precedent. Although we need not 

decide whether a district court always abuses its discretion 

by applying the judicially manufactured factors in Staton and 

Hanlon, we must follow the law that Congress enacted. And 

that means scrutinizing the fee arrangement for potential 

collusion or unfairness to the class. Fed. R. Civ. P. 

23(e)(2)(C)(iii).

Perhaps because our court had not clarified whether the 

Bluetooth factors apply to post-class certification 
BRISEÑO V. HENDERSON 21

settlements, the district court did not adequately scrutinize 

the fee arrangement for collusion. It instead noted that the 

fee request amounted to less than half of the lodestar amount. 

But the lodestar amount alone cannot tell us if the requested 

fees are reasonable. Counsel may have frittered away hours 

on pointless motions or unnecessary discovery, padding the 

lodestar. See Chambers v. Whirlpool Corp., 980 F.3d 645, 

665 (9th Cir. 2020) (“asymmetrical nature of discovery in 

class actions . . . can lead to excessive billing”). Or maybe 

counsel devoted tremendous hours but achieved very little 

for the class. See id. at 667. And in any event, even 

attorneys’ fees based on a reasonable percentage of an 

unreasonable number of hours are still unreasonable.

We hold that district courts must apply the Bluetooth 

factors to scrutinize fee arrangements — even in post-class 

certification settlements — to determine if collusion may 

have led to class members being shortchanged. The class 

settlement here features all three red flags of potential 

collusion that we warned about in Bluetooth.

First, plaintiffs’ counsel “receive[d] a disproportionate 

distribution of the settlement.” Bluetooth, 654 F.3d at 947. 

The lion’s share of the money — almost $7 million — will 

end up in the pockets of attorneys, while the class receives 

relative scraps, less than a million dollars. So little goes to 

the class members in a claims-made settlement, such as this 

one, because the redemption rate is notoriously low, 

especially when it involves small-ticket items. The 

redemption rate shrinks even further if the settlement, as 

here, provides for no direct notice to class members.3 

3 Although Henderson did not object to the lack of direct notice, we 

have an independent duty to examine the “effectiveness of any proposed 

method of distributing relief to the class.” Fed. R. Civ. P. 23(e)(2)(C)(ii). 
22 BRISEÑO V. HENDERSON

Despite ConAgra’s claim that it could potentially provide 

over $95 million in payments and value to the class 

members, they ended up receiving only about 1% of that 

touted amount. And that was no surprise, given how the 

parties knowingly structured the settlement. This gross 

disparity in distribution of funds between class members and 

their class counsel raises an urgent red flag demanding more 

attention and scrutiny.

Second, the parties agreed to a “clear sailing 

arrangement” in which ConAgra agreed not to challenge the 

agreed-upon fees for class counsel. This flashes yet another 

red flag under Bluetooth. Id. A clear sailing provision 

signals the potential that a defendant agreed to pay class 

counsel excessive fees in exchange for counsel accepting a 

lower amount for the class members. Id. at 949. Indeed, the 

“very existence of a clear sailing provision increases the 

likelihood that class counsel will have bargained away 

something of value to the class.” Id. at 948 (quoting 

Weinberger v. Great N. Nekoosa Corp., 925 F.2d 518, 525 

(1st Cir. 1991)). When faced with a clear sailing provision, 

courts thus have a “heightened duty to peer into the provision 

and scrutinize closely the relationship between attorney’s 

fees and benefit to the class, being careful to avoid awarding 

‘unreasonably high’ fees simply because they are 

uncontested.” Id.

We, however, do not hold that parties must provide direct notice, 

especially for low-cost items bought by millions of consumers. A 

contrary ruling would likely not be cost-effective, with administrative 

and notice costs devouring most of the settlement fund. But we mention 

the lack of direct notice to underscore that the parties here knew that the 

redemption rate would be extremely low and that the agreed-upon 

attorneys’ fees would swamp the actual recovery for class members.
BRISEÑO V. HENDERSON 23

Finally, the agreement contains a “kicker” or “reverter” 

clause in which ConAgra, not the class members, receives 

the remaining funds if the court reduces the agreed-upon 

attorneys’ fees. Id. We identified this, too, in Bluetooth, as 

a warning sign. The reason is obvious: If ConAgra is 

content to pay nearly $7 million to class counsel but the court 

finds the full amount unreasonable, there is no plausible 

reason why the class should not benefit from the spillover of 

excessive fees. As we warned in Bluetooth, “[u]nless the 

district court is able to conclude that in this particular case, 

a kicker provision is in the class’ best interest as part of the 

settlement package, the kicker makes it less likely that the 

settlement can be approved if the district court determines 

the clear sailing provision authorizes unreasonably high 

attorneys’ fees.” Id. at 949.

Here, the parties managed to run afoul of all three 

Bluetooth factors. That also raises the question of whether

the parties colluded to prevent any direct challenge to 

excessive fees. Typically, class members can challenge an 

excessive fee award under Rule 23(h). But when parties 

agree to a “kicker,” a 23(h) challenge cannot increase class 

recovery because the excessive fees wind up back in the 

defendant’s pockets. That means that a class member may 

not have standing to object to the excessive fees because any 

action taken by the court would not redress the class 

member’s purported injury.4 Meanwhile, by agreeing to the 

“clear sailing” clause, the defendant has also waived its right 

to challenge the attorneys’ fees, foreclosing any action under 

Rule 23(h). See Pearson, 772 F.3d at 786 (describing this 

combination as “a gimmick for defeating objectors”).

4 Henderson thus could only reach this court by challenging the 

totality of the settlement, rather than just attorneys’ fees.
24 BRISEÑO V. HENDERSON

We stress that nothing in this opinion suggests that courts 

should unnecessarily meddle in class settlements negotiated 

by the parties or that courts have a duty to maximize the 

settlement fund for class members. Far from it. We instead 

follow the rules of our involvement in the class action 

process as set by Congress. Under those rules, the parties 

can agree on any “fair, reasonable, and adequate” settlement 

amount. Fed. R. Civ. P. 23(e). Nor do we seek to make any 

of the identified signs of collusion an independent basis for 

withholding settlement approval. Disproportionate fee 

awards, clear sailing agreements, and kicker clauses all may 

be elements of a good deal. But, as we explained in 

Bluetooth, they may also signal a collusive settlement, and 

district courts must scrutinize them where they appear. And 

here, the parties did more than just check every Bluetooth 

box; their settlement presented a Murderers’ Row of 

provisions out of left field that seemingly favor class counsel 

and the defendant at the expense of the class members. The 

district court thus should give a hard look at the settlement 

agreement to ensure that the parties have not colluded at 

class members’ expense.

II. The district court erred by failing to approximate the 

value of the injunction.

Next, we address Henderson’s argument that the district 

court erred by failing to recognize the settlement’s injunctive 

relief as worthless. Rather than attempt to quantify the value 

of the injunctive relief, it instead concluded that it had 

“some” value. We agree with Henderson that this constitutes 

reversible error. See Roes, 1–2, 944 F.3d at 1055 (explaining 

that a district court must either quantify and explain the value 

of injunctive relief or exclude it from calculations).

We go further and also hold that the district court erred 

by placing even “some value” on the injunction because it 
BRISEÑO V. HENDERSON 25

was, and is, virtually worthless. A district court abuses its 

discretion when it approves a settlement despite “no 

evidence that the relief afforded by [a] settlement has any 

value to the class members, yet to obtain it they had to 

relinquish their right to seek damages in any other class 

action.” Koby v. ARS Nat. Servs., Inc., 846 F.3d 1071, 1079 

(9th Cir. 2017).

Certainly, “the relief provided to the class cannot be 

assessed in a vacuum.” Campbell, 951 F.3d at 1123. After 

all, a “class [does] not need to receive much for [a] 

settlement to be fair [when] the class [gives] up very little.” 

Id. at 1124. And “[i]n evaluating what class members 

relinquished in [a] settlement, [courts] must also consider 

whether class members were required to release claims that 

were more meritorious than the theories Plaintiffs pursued in 

[the present] litigation.” Id. at 1124.

But, critically, we also find illusory any injunction that 

“does not obligate [the bound party] to do anything it was 

not already doing . . . voluntarily . . . for its own business 

reasons . . . not because of any court-or settlement-imposed 

obligation. . . [when a defendant] would therefore be 

unlikely to revert back to its old ways regardless of whether 

the settlement contained the stipulated injunction.” Koby, 

846 F.3d at 1080. ConAgra would like us to believe that, by 

agreeing to the settlement’s injunctive relief, it bound its 

own hands and threw away the key. In reality, it did that 

years before reaching an agreement with the class.

Under the settlement, ConAgra agreed to refrain from 

marketing Wesson Oil as “100% Natural.” That sounds 

great, except that ConAgra already abandoned that strategy 

in 2017 — two years before the parties hammered out their 

agreement — for reasons it claims were unrelated to this or 

any other litigation. Even worse, ConAgra’s promise not to 
26 BRISEÑO V. HENDERSON

use the phrase “100% Natural” on Wesson Oil appears 

meaningless because ConAgra no longer owns Wesson Oil. 

In reality, this promise is about as meaningful and enduring 

as a proposal in the Final Rose ceremony on the Bachelor. 

Simply put, Richardson — the new owner of Wesson Oil —

can resume using the “100% Natural” label at any time it

wishes, thereby depriving the class of any value theoretically 

afforded by the injunction. ConAgra thus essentially agreed 

not to do something over which it lacks the power to do. 

That is like George Lucas promising no more mediocre and 

schlocky Star Wars sequels shortly after selling the franchise 

to Disney. Such a promise would be illusory.5

Granted, ConAgra also promised to abide by the 

injunction if it reacquires Wesson. Yet at the fairness 

hearing, ConAgra’s counsel emphasized the company’s lack 

of interest in buying back the brand. Indeed, ConAgra’s 

attempts to sell Wesson predated the parties’ first mediation. 

Thus, for the injunction to have any value, ConAgra would 

not only need to abandon its long-term corporate strategy, 

purchase the brand, possibly at a premium, but then also 

redesign and execute a brand-new labeling and marketing 

campaign. We find this unlikely and speculative at best.

We do not question the district court’s view of the 

plaintiffs’ likelihood of success in future litigation. But even 

if the class gave up very little, it has a right to receive 

something in exchange. Here, they did not because the 

injunctive relief is practically worthless.

Nothing in the testimony of the plaintiffs’ expert, Mr. 

Weir, convinces us otherwise. As Professor Fitzpatrick of 

5 As evident by Disney’s production of The Last Jedi and The Rise 

of Skywalker.
BRISEÑO V. HENDERSON 27

Vanderbilt Law School explained, “[n]onmonetary relief is 

much more difficult to put a number on than a pot of cash is, 

and lawyers may give the court rosy numbers to justify fee 

awards.” Fitzpatrick, The Conservative Case for Class 

Actions 71. Here, the lawyers relied on an expert to provide 

a rosy number untethered to reality. Courts must “stamp [] 

out” such attempts. Id. at 72.

Mr. Weir concluded that the annual value of the 

injunctive relief is a staggering $11.54 million. In other 

words, ConAgra had been charging a price premium — to 

the aggregate tune of $11.54 million a year — for the “100% 

Natural” label, and, because of the injunction, that full 

amount accrues to the class each year. So, according to Mr. 

Weir, this settlement is essentially minting money to the tune 

of eight figures each year for the class members. Despite 

ample opportunity, he never tested his theory. That failure 

is more telling because he had a real-life example he could 

have examined: ConAgra dropped the “100% Natural” label 

years ago, so he could have studied whether that led to the 

removal of the price premium. Mr. Weir claims other reallife market factors made performing a post-labelling pricecheck futile. But that admission appears to doom his own 

expert conclusion that the label led to a price premium — if 

he cannot separate other market factors to figure out a price 

premium in real-life, how can he do so in a hypothetical 

study that he did not conduct? In short, Mr. Weir effectively 

admits that his expert testimony turns on “unverifiable 

evidence.” See Domingo ex rel. Domingo v. T.K., 289 F.3d 

600, 607 (9th Cir. 2002). Because Mr. Weir’s testimony is 

unverifiable, it is ultimately worth as little as the settlement’s 

injunctive relief.
28 BRISEÑO V. HENDERSON

III. Erie does not preclude the application of Rule 

23(e)(2).

We next address — and reject — appellees’ argument 

that the Erie doctrine precludes the application of Rule 23(e) 

to a class settlement where state substantive law governs 

attorney’s fees in fee-shifting cases.

Every year, tens of thousands of first year law students 

learn about Erie R. Co. v. Tompkins, and, soon after that, 

they become second-and-third-year law students with poor 

understanding of the doctrine. 304 U.S. 64, 58 S. Ct. 817, 

82 L.Ed. 1188 (1938). Some of these students take the bar 

exam, fail, and try again or do other things. Others pass and 

become attorneys who still do not understand Erie. Granted, 

the difference between substantive and procedural law is 

sometimes fuzzy. While we seek to provide clarity when an 

Erie question presents itself to this court, we leave most of 

the work to professors like M. Todd Henderson and Samuel 

Issacharoff. That said, a “Federal Rule of Procedure is not 

valid in some jurisdictions and invalid in others — and valid 

in some cases and invalid in others — depending [solely] 

upon whether its effect is to frustrate [state law].” Shady 

Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 

393, 409 (2010).

In any event, Henderson challenges settlement fairness 

under Rule 23(e), rather than an award of attorney’s fees 

under Rule 23(h). Thus, Erie’s effect on fee-shifting law, if 

it even has one, is simply not implicated in this appeal. 

Instead, this case concerns Congress’s simple command that 

all federal district courts must withhold approval of any class 

settlement, absent a finding that it is “fair, reasonable, and 

adequate.” Fed. R. Civ. P. 23(e)(2).
BRISEÑO V. HENDERSON 29

IV. The district court did not err by determining that 

Henderson failed to rebut its own conclusion that 

the settlement satisfied Rule 23(e)(2).

Finally, we address Henderson’s argument that the 

district court improperly shifted to him the burden of 

rebutting the settlement’s fairness, reasonableness, and 

adequacy at the fairness hearing. Contrary to his 

contentions, however, the district court never required 

Henderson to show that the settlement was “clearly 

inadequate.”

Rule 23(e)(2) assumes that a class action settlement is 

invalid. See Roes, 1–2, 944 F.3d at 1049 n.12 (explaining 

that “[a] presumption of fairness . . . is very likely 

inappropriate under the standards now codified in Rule 

23(e)(2)”). It also instructs that “[i]f the proposal would bind 

class members, the court may approve it only after a hearing 

and only on finding that it is fair, reasonable, and adequate.” 

Fed. R. Civ. P. 23(e)(2). As class counsel points out, this is 

exactly what the district court tried to do. The record 

demonstrates that the district court conducted its own 

independent analysis, and then considered, and dismissed, 

Henderson’s objections.

In Roes, 1–2, we reversed a district court that applied a 

“‘presumption that [a] settlement is fair and reasonable’” to 

a pre-certification class that “is the product of arms-length 

negotiations.” 944 F.3d at 1049. Noting that this court has 

“never endorsed applying a broad presumption of fairness, 

but ha[s] actually required that courts do the opposite . . .

when it comes to settlements negotiated prior to class 

certification,” we held that “the district court failed to apply 

the correct legal standard and to conduct the searching 

inquiry required, thereby abusing its discretion.” Id. 

Critically, we explained that our decision turned on the 
30 BRISEÑO V. HENDERSON

amended text of Rule 23(e)(2). Id. at 1049 n.12 (“Rule 

23(e)(2) now identifies ‘whether . . . the proposal was 

negotiated at arm’s length’ as one of four factors that courts 

must consider and does not suggest that an affirmative 

answer to that one question creates a favorable presumption 

on review of the other three”) (citing Fed. R. Civ.

P. 23(e)(2)(B)). In contrast, though the district court did 

allude to a presumption of fairness, it confined it to its 

analysis of one of the Staton factors. It did not shift the 

burden to Henderson. Henderson’s objection stems from the 

following textual juxtaposition:

In most situations, unless the settlement is 

clearly inadequate, its acceptance and 

approval are preferable to lengthy and 

expensive litigation with uncertain results.’ 

Nat’l Rural Telecommunications, 221 F.R.D. 

at 526 (quoting 4 A Conte & H. Newberg, 

Newberg on Class Actions, § 11:50 at 155 

(4th ed. 2002)). The Objection fails to 

persuade the Court that this Settlement 

Agreement is clearly inadequate.

Were that the crux of the district court’s ruling, Henderson 

would have a point. But the district court already concluded, 

albeit improperly, that the settlement satisfied Rule 23(e)(2). 

Moreover, an assumption of invalidity does not demand 

disfavoring settlement. Quite the opposite, “we have 

repeatedly noted that ‘there is a strong judicial policy that 

favors settlements, particularly where complex class action 

litigation is concerned.’” Allen, 787 F.3d at 1223 (quoting 

In re Syncor ERISA Litig., 516 F.3d 1095, 1101 (9th Cir. 

2008) (citing Class Plaintiffs v. City of Seattle, 955 F.2d 
BRISEÑO V. HENDERSON 31

1268, 1276 (9th Cir. 1992))). We do not intend to revisit that 

policy.6

CONCLUSION

“Two Virginians and an immigrant walk into 

a room/ diametrically opposed/ foes/ They 

emerge with a compromise/ Having opened 

doors that were previously closed/ Bros/ . . .

No one else was in the room where it 

happened . . . No one really knows how the 

game is played/ The art of the trade/ How the 

sausage gets made/ We just assume that it 

happens/ But no one else is in the room where 

it happens.”

Hamilton: An America Musical (2016).

Though that process suffices for political compromise 

and even most settlements, it does not for class action 

settlements. Because they impose binding judgments on 

absent class members, federal courts must approve class 

action settlements and ensure that they are fair, reasonable, 

and adequate. And under the newly enacted Rule 23(e), 

federal courts must scrutinize attorneys’ fees for potential 

collusion that shortchanges the class, even in post-class 

certification settlements. We REVERSE the district court’s 

approval of the settlement, and REMAND this case for 

further proceedings consistent with this opinion.

6 Nor do we intend to grant Henderson’s motion for sanctions. (Dkt. 

No. 31). That motion is DENIED.