Source: https://www.uclpractitioner.com/class_actions_settlements/
Timestamp: 2019-04-23 06:24:10+00:00

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Posts categorized "Class actions - settlements"
Ninth Circuit approves "cy pres-only" settlement: In re Google Referrer Header Privacy Litig.
In In re Google Referrer Header Privacy Litigation, ___ F.3d ___ (9th Cir. Aug. 22, 2017), the Ninth Circuit affirmed an order granting final approval of an $8.5 million nationwide settlement of certain privacy claims against Google.
Under the settlement, approximately $3.2 million would be "set aside for attorneys' fees, administration costs, and incentive payments to the named plaintiffs," with the rest "allocated to six cy pres recipients" who would use the money "to promote public awareness and education, and/or to support research, development, and initiatives, related to protecting privacy on the Internet." Slip op. at 6.
The Ninth Circuit held that the district court properly found the settlement to be "non-distributable," and therefore appropriate for a cy pres distribution. Id. at 8-9 (citing Lane v. Facebook, Inc., 696 F.3d 811 (9th Cir. 2012)).
The two concepts [i.e., cy pres and "superiority"] are not mutually exclusive, since “[w]here recovery on an individual basis would be dwarfed by the cost of litigating on an individual basis, this factor weighs in favor of class certification.” .... The district court did not abuse its discretion in finding the superiority requirement was met because the litigation would otherwise be economically infeasible. This finding dovetails with the rationale for the cy pres-only settlement.
Id. at 11 (footnote omitted) (quoting Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1175 (9th Cir. 2010)).
The final sections of the opinion address the propriety of the selected cy pres recipients and of the attorneys' fees awarded to class counsel Id. at 11-21. One judge dissented from the cy pres recipients portion of the opinion, reasoning that the district court should have more closely vetted the three recipients affiliated with class counsel's alma maters. Id. at 21-27. The majority, however, found no abuse of discretion. Id. at 19.
We conclude that the statute requires the consent of the named plaintiffs alone and join three other circuits that have reached the same conclusion. See Day v. Persels & Associates, LLC, 729 F.3d 1309, 1316 (11th Cir. 2013); Dewey v. Volkswagen Aktiengesellschaft, 681 F.3d 170, 181 (3d Cir. 2012); Williams v. General Electric Capital Auto Lease, Inc., 159 F.3d 266, 269 (7th Cir. 1998).
As a purely linguistic matter, § 636(c)(1)’s reference to the consent of “the parties” could be read to encompass both the named plaintiffs and the absent class members, for the term does not have a single fixed meaning. In some contexts absent class members are treated as parties, see In re Cement Antitrust Litigation, 688 F.2d 1297, 1307–10 (9th Cir. 1982) (judicial recusal statute), while in other contexts they are not, see Snyder v. Harris, 394 U.S. 332, 340 (1969) (diversity jurisdiction statute). As the Supreme Court has observed, absent class members may be treated as parties “for some purposes and not for others.” Devlin, 536 U.S. at 10.
Slip op. at 9. The Court also rejected the argument of an amicus curiae that "§ 636(c) violates Article III of the Constitution by permitting magistrate judges to exercise jurisdiction over class actions without obtaining the consent of each absent class member." Id. at 12-14.
The magistrate judge abused her discretion by approving the settlement in this case. The settlement should not have been approved for one primary reason: There is no evidence that the relief afforded by the settlement has any value to the class members, yet to obtain it they had to relinquish their right to seek damages in any other class action.
First of all, I want to encourage everyone to get to the polls today and vote! I certainly will be voting today (Go Hillary!).
When I was reading the Walker opinion for my post yesterday, I realized the Ninth Circuit had handed down an opinion on a similar subject earlier this year (March) that I hadn't covered yet.
In Radcliffe v. Hernandez, 818 F.3d 537 (9th Cir. 2016), the court considered whether the attorneys who had included improper promises concerning incentive awards in a class action settlement agreement, thereby creating a conflict of interest for class counsel between the class representatives and the unnamed class members, should be disqualified from continuing to represent the class. In 2013, the Ninth Circuit had reversed final approval of the settlement because of the incentive award provisions. See Radcliffe v. Experian Information Solutions, Inc., 715 F.3d 1157 (9th Cir. 2013) (briefly discussed in this blog post).
On remand, the objectors who had obtained that reversal moved to disqualify the firms previously appointed as lead counsel, who had negotiated the settlement with the problematic provisions. The district court denied the motion, but certified the questions to the Ninth Circuit, which granted permission to appeal. 818 F.3d at 540-41. The Ninth Circuit affirmed, holding that "California law does not require automatic disqualification in class action cases." Id. at 541.
fits the circumstances of the lawyer who represents a class of plaintiffs whose interests may in some ways be adverse to each other, but all of whose interests are adverse to the defendant. In a class action, conflicts often arise not because an attorney simultaneously represents litigation adversaries but because they simultaneously represent different members of the same class who develop divergent interests regarding how to prevail on their shared claims. Thus, in Radcliffe I, we explained that the conditional incentive award was improper because it “undermined [the named plaintiffs'] ability to ‘fairly and adequately protect the interests of the class.’ ” Radcliffe I, 715 F.3d at 1165 (quoting Fed. R. Civ. Pro. 23(a)(4)). “This requirement is rooted in due-process concerns—‘absent class members must be afforded adequate representation before entry of a judgment which binds them.’ ” Id. (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998)). These concerns with adequate representation and due process for absent party members are simply not present in individual plaintiff suits. And because the California Supreme Court has never discussed the automatic disqualification rule in the context of class actions, it also has never been required to confront the ethical issues and conflicts of interest that are unique to class action cases. Given this vacuum, we are not willing to assume that California courts would apply the same disqualification rules to a class action case as they do in individual plaintiff cases.
[I]n this case the district court could reasonably conclude that the conflict of interest was appropriately cured when we rejected the settlement agreement that contained the improper conditional incentive award. This conflict was not inherent to the relationship between Hernandez Counsel [i.e., class counsel] and the rest of the class but rather, as in Rodriguez, resulted from a particular provision in an agreement that was later held invalid.
Id. at 546. The opinion goes on to hold that class counsel remained adequate to represent the class and should not be replaced by objectors' counsel. Id. at 547-49.
We previously found that Hernandez Counsel created a significant conflict of interest between themselves, their clients, and the rest of the class, and nothing in the present order diminishes or qualifies that holding. We are not convinced, however, that the conflict we found requires automatic disqualification of class counsel. We believe that, given the unique ethical and due process concerns involved in class actions, district courts must have the discretion to address attorney representation and disqualification issues based on the details of each case, and we further believe the California Supreme Court would agree. Accordingly, we hold that the district court did not abuse its discretion in denying White Counsel's motion to disqualify Hernandez Counsel and to be appointed as class counsel, and granting Hernandez Counsel's cross-motion to be appointed as class counsel.
In Duran v. Obesity Research Institute, LLC, ___ Cal.App.4th ___ (Jun. 23, 2016; pub. ord. Jul. 15, 2016), the Court of Appeal (Fourth Appellate District, Division One) reversed an order granting final approval of a nationwide, claims-made class action settlement. The case alleged CLRA and UCL violations against the maker of certain dietary supplements that were allegedly not "clinically proven" to help users lose weight, contrary to assertions made on the package.
Among other problems, the court noted that certain statements in the claim form (which the court treated as part of the class notice) were inconsistent with the terms of the parties' revised settlement agreement. See slip op. at 13-15. One of the problems was that the claim form referred to products that were excluded from the scope of the settlement! Id. at 13. It sounds like the parties amended the original settlement agreement in response to the trial court's comments at an initial approval hearing, but forgot to make corresponding changes to the claim form. See id. at 14. The Court of Appeal considered this problem so significant (and no wonder) that it reversed on that ground, even though the objectors had not raised the issue, either below or in their appellate briefing. Id. at 15-17.
The panel then turned to the method of class notice to be provided on remand (assuming preliminary approval is again granted). Id. at 18-24. Direct notice was sent by email to those who purchased the products on the defendant's website (but not those who purchased the products on Wal-Mart's website); published notice was made in USA Today; and a settlement website was established. Id. at 19. The court held that evidence should have been presented on the feasibility and cost of obtaining contact information for, and providing direct notice to, class members who purchased online from Wal-Mart, Amazon, CVS, Walgreens, and other retailers. Id. at 19-21.
The court also directed the lower court to reconsider whether published notice in USA Today was sufficient, observing that the products were never advertised in that paper, and noting the lack of evidence that the parties made any effort to target the relevant demographic (i.e., people interested in weight loss). Id. at 21-24. "For example, in Wershba, supra, 91 Cal.App.4th at page 251, a class action involving support for Apple computers, notice was published not only in USA Today, but also in MacWorld." Id. at 23.
Finally, the court held that the injunctive relief portion of the settlement, which required the defendant to make certain changes to its advertising, was "illusory" and duplicated relief already obtained by the FTC in a related proceeding. Id. at 24-26. "As such, it is difficult to conceive how this injunctive relief adds value." Id. at 26.
Supreme Court takes up attorneys' fees case: Laffitte v. Robert Half International Inc.
On Wednesday, February 25, 2014, the Supreme Court granted review in Laffitte v. Robert Half International, No. S222996. The docket does not yet provide a summary of the issues to be considered.
In Laffitte, the Court of Appeal (Second Appellate District, Division Seven), affirmed the trial court's order granting final approval of a class action settlement and attorneys' fees award in a wage and hour case. Laffitte v. Robert Half Int'l Inc., 231 Cal.App.4th 860 (2014), review granted. My original blog post on the opinion is here.
It is not clear which issue or issues the Court will be focusing on. If and when I obtain copies of the petition for review and other briefing, I will post them here.
New settlement approval and attorneys' fees opinion: Laffitte v. Robert Half International Inc.
In Laffitte v. Robert Half International Inc., ___ Cal.App.4th ___ (Oct. 29, 2014; pub. ord. Nov. 21, 2014), the Court of Appeal (Second Appellate District, Division Seven) confirmed the continuing vitality of the percentage-of-the-fund method of fixing attorneys' fee awards in common fund cases.
The Court also addressed settlement approval, and construed the Ninth Circuit's opinions in In re Mercury Interactive Corp. Securities Litigation, 618 F.3d 988 (9th Cir. 2010) and In re Bluetooth Headset Products Liability Litigation, 654 F.3d 935 (9th Cir. 2011). This is the first time either opinion has been cited in a published Court of Appeal opinion.
My publication request for CAOC is here.
In Luckey v. Superior Court (Cotton On USA, Inc.), ___ Cal.App.4th ___ (July 22, 2014), the parties stipulated to appointment of a temporary judge to rule on the motions for preliminary and final approval of a class action settlement. (The proposed temporary judge was the mediator retained to assist in negotiating the settlement.) The trial court refused to approve the stipulation. The plaintiff challenged this ruling by filing a writ petition. Slip op. at 2, 8.
[W]hile Luckey and [defendant] Cotton On were the only “parties litigant” at the time of the stipulation to the temporary judge, they were also the only parties who could be bound by such a stipulation. As the conceded purpose of the stipulation was to bind all putative class members to the stipulation, and they could not be bound until they had been given notice and an opportunity to appear, the stipulation was ineffective. The state Constitution provides that, for a stipulation to a temporary judge to be effective, that stipulation must be made by the parties litigant. In a pre-certification class action, the parties litigant have not yet been identified; thus, no such stipulation can be effectively made.
Slip op. at 22-23 (footnotes omitted).
I am sharing office space with Schneider Wallace Cottrell Konecky LLP, which has been great so far.
In the published portion of Litwin v. iRenew Bio Energy Solutions LLC, ___ Cal.App.4th ___ (May 28, 2014), the Court of Appeal (Second Appellate District, Division One) reversed final approval of a class action settlement because the notice informed the class members that if they wished to object, they (or their counsel) must appear in person at the final approval hearing.
Requiring class members in a nationwide class or even a statewide class to appear at the final approval hearing or hire an attorney to have their objections heard works a hardship on objectors, as the benefit to the objector from the class action may be so low that it would be cost prohibitive or physically challenging to personally assert one’s rights at a hearing in a potentially distant location. .... Requiring any objector to attend the final approval hearing does not offer a meaningful opportunity to be heard, and therefore violates class members’ due process rights.
.... Although appellant was afforded the opportunity to be heard, there may have been many class members whose objections were chilled. Misstating objectors’ rights such that they are dissuaded from exercising their opportunity to be heard does not fairly apprise class members of their options associated with the settlement. For these reasons, the order granting final approval of the settlement must be reversed.
In Carter v. City of Los Angeles, ___ Cal.App.4th ___ (Feb. 26, 2014; pub. ord. Mar. 13, 2014), the Court of Appeal (First Appellate District, Division One) held, on a 2-1 vote, that the trial court had improperly approved a class action settlement that released statutory damages claims, but did not provide unnamed class members with an opportunity to opt out.
The majority's analysis relies heavily on the discussion of Rule 23(b)(2) class certification in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), although the opinion acknowledges that Dukes is not binding.
I am not persuaded. First, the relevant sentence of Wal-Mart is not only dictum but also expressly acknowledges that the Court has “never held” that lack of notice and opt-out rights in a class action with nonpredominating claims for monetary damages always violates due process. (Wal-Mart, supra, 131 S.Ct. at p. 2559.) Second, that passage in Wal-Mart is inapplicable here in any event, because it refers to “absence of notice and opt-out” (ibid.), but here class members were given notice and the opportunity to object. Wal-Mart says nothing, even in dictum, about whether the absence of opt-out rights in these circumstances would violate due process. Third, the settlement in this case secures highly valuable benefits for all class members, and those benefits overwhelmingly predominate over the objectors’ individual claims for monetary damages, which are probably worthless. Under the circumstances of this case, there is no “serious possibility” (ibid.) that certification of the class and approval of the settlement violates due process.
Rothschild, Acting P.J., dissenting (slip op. at 1).
On July 26, 2013, a petition for a writ of certiorari was filed with the U.S. Supreme Court by the objectors in the Lane v. Facebook case. Marek v. Lane, no. 13-136.
In its original opinion in this case, the Ninth Circuit affirmed a class action settlement with a significant cy pres component. Lane v. Facebook, Inc., 696 F.3d 811 (9th Cir. 2012). En banc rehearing was denied in February, with six judges strenuously dissenting. Lane v. Facebook, Inc., 709 F.3d 791 (9th Cir. 2013).
It will of course be very interesting to see whether this case is taken up. The other pending U.S. Supreme Court petition that I'm currently following is POM Wonderful LLC v. The Coca Cola Co., No. 12-761 (U.S.) (discussed here). This case has already been relisted once.
If you are aware of any other pending cert. petitions of interest, please drop me an email.
The Ninth Circuit has handed down two opinions in recent weeks addressing class action settlements.
In Radcliffe v. Experian Information Solutions Inc., ___ F.3d ___ (9th Cir. Apr. 22, 2013; mod. May 2, 2013), the court reversed final approval because some of the class representatives' incentive awards were made conditional upon their support of the settlement, which undermined their adequacy (and that of their counsel).
In In re: HP Inkjet Printer Litigation, ___ F.3d ___ (9th Cir. May 15, 2013), the court reversed final approval and the attorneys' fees award, finding that the award did not comport with the provisions of CAFA governing attorneys' fees in "coupon" settlement cases. Judge Berzon dissented.
On a related note, on February 26, 2013, the Court denied en banc rehearing of the panel opinion in Lane v. Facebook, Inc., 696 F.3d 811 (9th Cir. 2012). This is the case in which the court approved a class action settlement with a significant cy pres component. The order denying rehearing, and a strenuously-worded dissent by six judges, were both published: Lane v. Facebook, Inc., 709 F.3d 791 (9th Cir. Feb. 26, 2013).
My original post on the Facebook case is here.
Third Circuit considers cy pres settlements: In re Baby Prods. Antitr. Litig.
In In re Baby Products Antitrust Litigation, ___ F.3d ___ (3d Cir. Feb. 19, 2013), the Third Circuit considered cy pres settlement distributions in class action cases for the first time. It held that cy pres distributions are permissible, but vacated the order approving the particular settlement before it and remanded for further proceedigs.
Although we agree with the ALI that cy pres distributions are most appropriate where further individual distributions are economically infeasible, we decline to hold that cy pres distributions are only appropriate in this context. Settlements are private contracts reflecting negotiated compromises. Sullivan, 667 F.3d at 312. The role of a district court is not to determine whether the settlement is the fairest possible resolution—a task particularly ill-advised given that the likelihood of success at trial (on which all settlements are based) can only be estimated imperfectly. The Court must determine whether the compromises reflected in the settlement—including those terms relating to the allocation of settlement funds—are fair, reasonable, and adequate when considered from the perspective of the class as a whole.
"Shaking the Class Action Settlement Tree: Cy Pres Distributions in the Wake of Dennis v. Kellogg"
The Private Advertising Litigation Committee of the American Bar Association will present a free teleseminar on Wednesday, December 5, 2012 at 9:30 a.m. Pacific (12:30 Eastern) called "Shaking the Class Action Settlement Tree: Cy Pres Distributions in the Wake of Dennis v. Kellogg."
On September 4, 2012, in Dennis v. Kellogg Co., 2012 WL 3800230 (9th Cir. Sept. 4, 2012), the U.S. Court of Appeals for the Ninth Circuit reissued its July 2012 opinion striking down a consumer class action settlement solely on the basis of a faulty cy pres distribution provision. Among other things, the court found that the cy pres distribution of Kellogg product to "unspecified charities involved in feeding the indigent" did not bear a sufficient nexus to the claims in the false advertising action to support a class settlement. The panel of experts will discuss the Dennis decision and others, and offer their insights into the future of class settlements containing cy pres provisions.
Aaron Blynn,Genovese Joblove & Battista P.A.
New Ninth Circuit class settlement opinion: Lane v. Facebook, Inc.
The question presented is whether the district court abused its discretion in approving the parties’ $9.5 million settlement agreement as “fair, reasonable, and adequate,” either because a Facebook employee sits on the board of the organization distributing cy pres funds or because the settlement amount was too low. We hold that it did not.
Slip op. at 11537. Senior Circuit Judge Kleinfeld filed a dissenting opinion.
Ninth Circuit withdraws and issues new opinion in class action settlement case: Dennis v. Kellog Co.
On September 4, 2012, the Ninth Circuit withdrew its earlier opinion and handed down a new opinion in a class action settlement case, Dennis v. Kellog Co., ___ F.3d ___ (9th Cir. Sept. 4, 2012). Here is my blog post on the earlier opinion.
The new opinion still reverses the final approval order because the cy pres recipients who would have received the settlement fund residual were "divorced from the concerns embodied in consumer protection laws such as the UCL and the CLRA." Slip op. at 10540.
The new opinion also vacates the attorneys' fees award, but unlike the earlier opinion, contains no separate section discussing the award. Id. at 10544. Instead, in a footnote, the opinion says that "[o]ur decision on the merits of the settlement renders moot the attorneys’ fees issue." Id. at 10544 n.2 (citing Waggoner v. C&D Pipeline Co., 601 F.2d 456, 459 (9th Cir. 1979)).
[L]et us not forget that the $2 million fee award breaks out to just over $2,100 per hour. Not even the most highly sought after attorneys charge such rates to their clients.
Withdrawn opinion, slip op. at 8128. That, of course, is not the standard by which the propriety of a fee award is measured in the Ninth Circuit in a contingency-fee action. Under well-established Ninth Circuit decisional law, multipliers may be approved in a proper case, so it misses the mark to consider the total rate that a fee award "breaks out" to, without considering whether a multiplier is appropriate under relevant Ninth Circuit standards. The language was appropriately omitted from the new opinion.
You may remember that in 2009, the Ninth Circuit handed down an opinion approving the settlement in the BAR/BRI antitrust class action, but disapproving certain "ex ante incentive agreements" formed between some of the representative plaintiffs and their counsel. Rodriguez v. West Publishing Corp., 563 F.3d 948 (9th Cir. 2009) (mentioned in this blog post).
Last week, the Ninth Circuit considered the case again. In Rodriquez v. Disner, ___ F.3d ___ (9th Cir. Aug. 10, 2012), the panel affirmed the district court's ruling that the attorneys who formed those incentive agreements had forfeited almost all of their fees, and reversed the district court's order denying fees to the objectors who were the first to bring the conflict of interest to the court's attention.
Ninth Circuit addresses cy pres doctrine in new class settlement decision: Dennis v. Kellogg Co.
In Dennis v. Kellogg Co., ___ F.3d ___ (9th Cir. Jul. 13, 2012), the Ninth Circuit reversed final approval of a class action settlement because the cy pres recipients who would receive the settlement fund residual were "divorced from the concerns embodied in consumer protection laws such as the UCL and the CLRA." Slip op. at 8120-21. The court also found the attorneys' fees award excessive. Id. at 8125-29.
The case involved UCL and CLRA claims against Kellogg Co. for representing that Frosted Mini-Wheats cereal "was scientifically proven to improve children’s cognitive functions for several hours after breakfast." Id. at 8114.
First Circuit addresses cy pres settlement distributions: In re: Lupron Marketing and Sales Practices Litig.
Last week, the First Circuit handed down an interesting decision addressing "the evolving law of cy pres distributions in class action settlement agreements." In re: Lupron Marketing and Sales Practices Litig., ___ F.3d ___ (1st Cir. Apr. 24, 2012) (slip op. at 21).
Retired U.S. Supreme Court Justice David Souter sat on the panel.
Third Circuit hands down long-awaited "diamonds" antitrust class settlement decision: Sullivan v. DB Investments, Inc.
Yesterday, the Third Circuit, sitting en banc, handed down its long-awaited decision in the "diamonds" antitrust class action, Sullivan v. DB Investments, Inc., ___ F.3d ___ (Dec. 20, 2011).
I have not yet had an opportunity to review the opinion, but evidently the court affirmed in full the district court's order granting final approval of the classwide settlement and certifying settlement classes, and in so doing, discussed Dukes v. Wal-Mart in depth. There is a lengthy dissent. Howard Bashman, author of How Appealing and counsel for one of the objectors, took pains to point out that the 90-day period to file a cert. petition with the U.S. Supreme Court begins to run today.
In other another Sullivan case, the Ninth Circuit has handed down its opinion following the California Supreme Court's decision this past June in Sullivan v. Oracle Corp. (discussed here and here). See Sullivan v. Oracle Corp., ___ F.3d ___ (Dec. 13, 2011).
I am unlikely to be able to report further on these cases, or on any other new developments, until after the 1st of the year. Please keep sending me new opinions, orders, briefs, news, etc., nonetheless. Happy holidays, all.
The cy pres doctrine allows a court to distribute unclaimed or non-distributable portions of a class action settlement fund to the “next best” class of beneficiaries. See Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1307-08 (9th Cir. 1990). Cy pres distributions must account for the nature of the plaintiffs’ lawsuit, the objectives of the underlying statutes, and the interests of the silent class members, including their geographic diversity. See id. The cy pres distributions here do not comport with our cy pres standards. While the donations were made on behalf of a nationwide plaintiff class, they were distributed to geographically isolated and substantively unrelated charities.
Slip op. at 20288-89. The Ninth Circuit remanded for the parties to propose and the district court to approve cy pres distributions to different charities. See id. at 20295-97.

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