Randall Burkholder
Managing Director and Head of Settlement Administration
New York
Fri, Jul 19, 2024
The Kroll Lens: Monitoring Class Action Settlements–2024, Volume X
In Volume 10 of Kroll’s Class Action Lens, we explore recent court cases dealing with proof of purchase, claimant payout, and securities notice.
Subscribe TodayDisclaimer: Please note that the content below is intended to report on class action decisions and Kroll’s Settlement Administration practice may not have been involved with these cases.
Notice
In Re: Ring LLC Privacy Litigation,
No. 19-cv-10899, 2023 WL 9687346 (C.D. Cal. Dec. 20, 2023) (Fitzgerald, J.)
A class of security device purchasers brought a data privacy suit against the manufacturer Ring LLC, resulting in a negotiated settlement. Plaintiffs sought preliminary approval, which the Court granted in part on certification and fairness but slightly modified the parties’ plan for notice.
The Court arrived at its decision by first looking at procedural fairness and found the settlement had been the result of vigorous litigation by experienced counsel and arms-length negotiation involving a mediator. The Court also reasoned that collusion analysis was inapplicable here, as the settlement was for injunctive, non-monetary relief only. Turning next to the substantive component, the Court found the terms to be reasonable in providing a future opt-out to sharing information and considering the risks of continuing litigation. The Court then looked at fees, costs, and service awards, which at this stage were found to be reasonable requests.
As to certification under Rule 23(a), the Court found a class of over 1 million members to be sufficiently numerous, and that commonality was met by the class sharing the same factual and legal issues. Likewise, typicality was found to exist from Plaintiffs’ claims being premised on the same practice as the whole class. For adequacy, the Court found no conflicts and echoed the fairness analysis as proof of counsel’s diligence. The Court also found Rule 23(b)(2) satisfied, in that the proposed injunctive relief applied to the whole class.
Turning to notice, the Court considered the argument that notice is not required for classes under Rule 23(b)(2), citing 9th Circuit precedent. While the Court agreed that no individual notice would be required since the relief was to provide cessation of the offending practice, the Court also noted that other circuits had found notice not required for settlements seeking only injunctive relief and with only non-monetary claims at issue. However, the Court concluded that Plaintiff was still required to serve notices under CAFA to government officials and required settlement information to be posted on counsel’s website prior to final approval, citing a 9th Circuit case approving the same approach for informational value.
Proof of Purchase
Shay v. Apple Inc.,
No. 3:20-cv-1629, 2024 WL 1184693 (S.D. Cal. Mar. 19, 2024) (Ohta, J.)
A class of gift card purchasers brought a consumer lawsuit against a software content provider after unknown third parties fraudulently redeemed the value of the gift cards and the Defendants did not provide the gift card purchasers with a refund or replacement cards. After reaching a settlement, the parties moved for final approval, which the Court granted.
In support of its decision, the Court first looked at notice and found that due process requirements were met and that the notice provided was reasonably calculated to apprise interested parties and give an opportunity to object. Turning next to certification, the Court found its previous certification analysis under Rule 23(c) in connection with preliminary approval unchanged.
The Court then looked at fairness and found the risk of proceeding with litigation warranted settlement, especially with significant obstacles that would arise in trial or in maintaining certification later in the process.
The Court found the settlement amount to be sufficient, and that the settlement had been reached through arms-length negotiation after sufficient discovery had been advanced by experienced counsel. The Court also found only a single objection and zero opt-outs had been entered, and no sign of collusion appeared to be present.
Looking specifically at the objection filed, one argument brought was that the settlement unfairly released claims against non-party retailers.
However, the Court found the argument did not show a conflict of interest, especially with the relief consisting of individual refunds tailored to each member’s harm. The Court also found such a release to be consistent with other cases and not overly broad given the nature of the injury the class as a whole suffered. The Court then looked at the objector’s challenge to the use of publication notice, finding that this was sufficiently reasonable given the lack of contact information for unknown class members.
The Court then looked at the objection as to adequacy of the claims process in requiring unknown class members to provide proof of purchase. The Court noted that all class members were required to provide proof of purchase, and that this weeded out fraudulent claims, which was important in a case “premised on fraudulent activity.” The Court found this was not unduly burdensome.
Claimant Payout
DeSouza v. Aerocare Holdings,
LLC, No. 6:22-cv-1047, 2024 WL 1252384 (M.D. Fla. Mar. 25, 2024)
A class of plaintiffs brought suit under the Telephone Consumer Protection Act (TCPA) and related privacy laws against a CPAP machine manufacturer after attempting unsuccessfully to unsubscribe from text message marketing. After reaching settlement, the parties moved for final approval, and the Court then granted the motion.
In terms of the fairness of the settlement, the Court first looked at Rule 23(e)(2) factors. It found no question as to adequate representation by counsel, arms-length negotiation through a mediator, and lack of collusion, and found the $160 per claimant payout to be relief above the typical recovery in TCPA cases.
The Court also looked at the 11th Circuit’s Bennett factors and briefly noted all such favored approval, with the parties having had opportunity to sufficiently weigh the merits and litigation risks in the case.
The Court also found the motion for attorney’s fees unopposed and granted the motion.
Securities Notice
Hacker v. Electric Last Mile Solutions Inc.,
No. 22-545, 2024 WL 1231257 (D.N.J. Mar. 21, 2024) (Farbiarz, J.)
A class of investors brought a 10b-5 securities suit against an accounting firm and senior employees after a company merger involving significant accounting errors was followed by a drop in stock prices. The parties reached a proposed settlement and moved for preliminary approval. The Court entered an opinion that the motion was “likely to be granted” if some notice issues were addressed.
The Court approved the Plaintiffs’ notice plan, which would target beneficial purchasers known only to the nominees of banks, brokerage firms, and other similar entities, a list of which would be continually updated.
Notice would be sent to these entities and otherwise effectuated by two issuances of a national newswire release, by direct-to-consumer notice. For direct notice purposes, there would be two attempts to send notice via email followed by postal notice to any class members for whom email addresses were unavailable.
The Court had concerns over requiring opt-outs to be sent via postal mail, deeming the use of stamps and envelopes to be burdensome, costly and time-consuming. To address these concerns, the Court instructed that opt-outs be permitted to be submitted by email.
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Robert DeWitte
Managing Director
Settlement Administration
Chicago
Mark P. Rapazzini
Senior Director
Settlement Administration
Silicon Valley
James R. Prutsman
Senior Director
Settlement Administration
Philadelphia
Lynn Gatto
Director
Settlement Administration
Chicago
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