Court Opinion

ID: 4463909
Source: CourtListenerOpinion
Date Created: 2019-12-12 22:00:22.507887+00
Date Added: 2024-06-11T14:53:33.657740
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                         DEC 12 2019
                    UNITED STATES COURT OF APPEALS                    MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

ROBERT RADCLIFFE; CHESTER                        No.   18-55606
CARTER; MARIA FALCON; CLIFTON
C. SEALE III; ARNOLD LOVELL, Jr.,                D.C. No.
                                                 8:05-cv-01070-DOC-MLG
             Plaintiffs-Appellants,

 v.                                              MEMORANDUM*

JOSE HERNANDEZ; ROBERT
RANDALL; BERTRAM ROBINSON;
KATHRYN PIKE; LEWIS MANN,

             Plaintiffs-Appellees,

      v.

EXPERIAN INFORMATION
SOLUTIONS, INC.; EQUIFAX
INFORMATION SERVICES, LLC;
TRANS UNION LLC,

             Defendants-Appellees.

                   Appeal from the United States District Court
                      for the Central District of California
                    David O. Carter, District Judge, Presiding

             *
                   This disposition is not appropriate for publication and is not
precedent except as provided by Ninth Circuit Rule 36-3.
                     Argued and Submitted November 7, 2019
                              Pasadena, California

Before: FARRIS and McKEOWN, Circuit Judges, and KENDALL,** District
Judge.

      Objecting Plaintiffs (Radcliffe, et al.) appeal the district court=s approval of a

pre-certification class action settlement between Settling Plaintiffs (Hernandez, et

al.) and Defendants (Experian, et al.). We review the approval of a class-action

settlement for abuse of discretion. Rodriguez v. West Publ=g Corp., 563 F.3d 948,

963 (9th Cir. 2009). We will affirm unless the district court applied an incorrect

legal standard or based its decision on unreasonable findings of fact. Nachshin v.

AOL, LLC, 663 F.3d 1034, 1038 (9th Cir. 2011). We hold that the district court

did not abuse its discretion in finding that the settlement as a whole was Afair,

reasonable, and adequate.@ Fed. R. Civ. P. 23(e)(2). While we affirm the

settlement, we remand to the district court for recalculation of the attorneys= fee

award to Settling Counsel.

      The parties are familiar with the facts and claims so we do not repeat them

here. In Radcliffe v. Experian Info. Solutions [Radcliffe I], 715 F.3d 1157 (9th

Cir. 2013), a panel of this court held that class representatives and class counsel

        **
            The Honorable Virginia M. Kendall, United States District Judge for
the Northern District of Illinois, sitting by designation.
had conflicts of interest that prevented them from adequately representing the

class. Id. at 1163. This court reversed and remanded.

      On remand after Radcliffe I, the district court re-appointed Settling Counsel

as class counsel and this court affirmed. Radcliffe v. Hernandez [Radcliffe II],

818 F.3d 537 (9th Cir. 2016). On remand after Radcliffe II, the Settling Parties

negotiated a revised settlement. In its order appointing them as class counsel, the

district court specifically noted that Settling Counsel would Aaccept the costs of re-

notice.@ We quoted this language in Radcliffe II when we affirmed the district

court=s order. Our decision in Radcliffe II was thus explicitly predicated on the

fact that Settling Counsel would Aaccept the costs of re-notice.@ Id.

      The district court devoted much attention to a comparison between the two

settlements and approved the settlement in part because it found that the second

settlement brought greater net benefits to the class than the first. But, the second

settlement did not need to be as good as the first, nor must it necessarily have been

approved if it was better. Rule 23(e)(2)=s flexible standard is satisfied so long as

the settlement is Afair, reasonable, and adequate@ on its own merits. Further, we

review the adequacy of a settlement based on the Asettlement as a whole, rather

than the individual component parts.@ Staton v. Boeing Co., 327 F.3d 938, 960

(9th Cir. 2003) (quotation omitted); see also Rodriguez, 563 F.3d at 960B61

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(concluding that conditional incentive agreements created a conflict of interest, but

affirming approval of the settlement).

      We are satisfied that the district court did not abuse its discretion in

approving the settlement. The district court duly analyzed each of the factors

considered in Staton and deemed the settlement substantively adequate. See

Staton, 327 F.3d 959 (listing factors relevant to adequacy of class action

settlement). Objecting Plaintiffs= optimistic valuation of Defendants= potential

liabilities was undercut by substantial litigation risks, which drastically reduced the

expected value of the class=s claims. The parties sharpened their valuations of the

case over 14 years of contested litigation, not to mention four trips to this court on

appeal. They settled on terms mutually agreeable to the parties involved (except,

of course, Objecting Plaintiffs).

      The district judgeCwho knew more about the parties= litigating positions

than anybody and, notably, had insight into future rulings on class certification and

other issues that would be reviewable only on a deferential standard of

reviewCdeemed the settlement adequate. See Hanlon v. Chrysler Corp., 150 F.3d
1011, 1026 (9th Cir. 1998) (noting that approval of a settlement is Acommitted to

the sound discretion of the trial judge because he is >exposed to the litigants, and

their strategies, positions and proof=@) (quoting Officers for Justice v. Civil Serv.

                                           4
Comm=n, 688 F.2d 615, 626 (9th Cir. 1982)). Even if the district court overvalued

the worth of the non-monetary benefits, the settlement was adequate.

      Likewise, we reject Objecting Plaintiffs= assertion that the settlement fails to

Atreat[] class members equitably relative to each other.@ Fed. R. Civ. P.

23(e)(2)(D). Rule 23=s flexible standard allows for the unequal distribution of

settlement funds so long as the distribution formula takes account of legitimate

considerations and the settlement remains Afair, reasonable, and adequate.@ Fed.

R. Civ. P. 23(e)(2). Settling Plaintiffs sought to provide additional relief to

plaintiffs who alleged more concrete material harms than other class members.

Nothing in Rule 23Cand no precedent cited by Objecting PlaintiffsCprohibits

parties from tying distribution of settlement funds to actual harm.

      Objecting Plaintiffs= final contention is that Settling Counsel created a

conflict of interest by opting to Arepay@ its debt to the class in new benefits rather

than deducting the costs of re-notice from the fee award. As is, this contention is

less easily dismissed. At the very least, the structure of the attorneys= fee award in

this case created the possibility of a conflict of interest with the class.

      That said, multiple factors counsel restraint. Most importantly, given that

Rule 23=s flexible standard governs this dispute, we conclude that the settlement is

fair and that Settling Counsel ably represented the class. In Rodriguez, we

                                            5
approved a class action settlement even though we held that class counsel and five

of the seven class representatives had a conflict of interest. 563 F.3d at 961

(holding that settlement was substantively fair and reasonable to the class). The

Rodriguez factors are present here.

      There is a further factor here that weighs in favor of approving the

settlement. This long-standing dispute has cost the parties a great deal already.

Further time spent litigating will serve only to devour more and more of the

settlement fund, which would be better spent providing relief to injured parties.

Settling Plaintiffs and Defendants have achieved a mutually agreeable solution,

though not without each side feeling the predictable pains of negotiation. We are

satisfied that the settlement provides adequate relief to the class.

      In light of our decision in Radcliffe II, however, we remand for

reconsideration of the attorneys= fee award. Settling Counsel were duty-bound to

reimburse the class for the waste of settlement funds caused by the ethical conflict

in Radcliffe I. We recognize that the district court=s fee calculation appears to

have taken into account Settling Counsel=s Adebt@ to the class in other ways, such

that it may be unwarranted for the district court to simply subtract the $6 million

estimated cost of re-notice from the $8,262,848 fee award currently in place. We

                                           6
leave specific calculations up to the discretion of the district court, but specifically

note Radcliffe II=s insistence that Settling Counsel pay the full cost of re-notice.

      We affirm the district court=s approval of the settlement. We reverse and

remand the award of attorneys= fees to class counsel for recalculation of the fee

award in line with this court=s opinion in Radcliffe II.

AFFIRMED IN PART; REVERSED AND REMANDED IN PART.

Each party shall bear its own costs on appeal.

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