Randall Burkholder
Managing Director and Head of Settlement Administration
New York
Tue, Mar 14, 2023
The Kroll Lens: Monitoring Class Action Settlements – 2023, Volume I
As an added benefit for our clients, Kroll’s Settlement Administration practice provides periodic updates on recent developments in class action litigation.
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Disclaimer: 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.
Beltran v. Olam Spices & Vegetables, Inc.
No. 1:18-CV-01676-JLT-SAB, 2023 WL 1467118 (E.D. Cal.)
A class of current and former employees in four separate cases settled the Fair Labor Standards Act (FLSA) and state wage and hour claims with the defendant. Upon the Plaintiffs seeking final approval, the Court recommended granting the motion as well as motions for fees and costs and incentive awards, with reductions.
The Court applied the standard of Rule 23(e) for fairness, reviewing the settlement agreement’s provision of a $4,500,000 settlement fund without reversion. The Court noted that it had previously found deficiencies with respect to notice methodology (and had required the parties to add a reminder, an email blast and a text campaign) that the parties had rectified, but that other issues remained outstanding with respect to fees, costs, incentive awards and class notice.
The Court first looked at the notice defect, highlighting that the administrator’s declaration did not include any information concerning the reminder notice, undeliverable notice processing or the text campaign. The Court directed the parties to address these items. Finally, the Court discussed whether the incorrect hearing date that had been included in the class notice had any impact.
Reviewing relevant authority, the Court found this was not material, reasoning that this information is not among the enumerated items required to be included in a class notice as well as that other factors mitigated this concern. The Court therefore concluded that another round of notice was not necessary.
Looking at class certification, the Court noted that prior certification of class and FLSA claims had not been opposed by any objection and found no reason to now hold otherwise.
For the fairness review, the Court first noted that the strength of the Plaintiff’s claims was uncertain enough to weigh in favor of settlement. In terms of risk and expense, the Court found seven years of litigation to be sufficient to conclude the matter in settlement. The Court then looked at the risk of maintaining certification during a trial and noted potential typicality and commonality concerns involving differing agreements and circumstances between class members’ employment terms. The Court found this weighed in favor of settlement. For the claim amounts to be paid, the Court found these suitable, including certain Private Attorneys General Act claim amounts. The Court also determined sufficient discovery had been conducted thus far, with fair representation by counsel and no objections from class members, and a lack of indicia of collusion.
Nonetheless, the Court found issues with the attorney’s fees and costs requested. The Court reduced the proposed fee of 35% to 20%, citing several factors. Likewise, the Court found it was unable to perform a lodestar check for firms who had submitted no billing records at all. The Court took similar issue with requested expense reimbursements and took similar action. Finally, the Court approved the administrator’s costs without reduction.
Looking at class certification, the Court noted that prior certification of class and FLSA claims had not been opposed by any objection and found no reason to now hold otherwise.
For the fairness review, the Court first noted that the strength of the Plaintiff’s claims was uncertain enough to weigh in favor of settlement. In terms of risk and expense, the Court found seven years of litigation to be sufficient to conclude the matter in settlement. The Court then looked at the risk of maintaining certification during a trial and noted potential typicality and commonality concerns involving differing agreements and circumstances between class members’ employment terms. The Court found this weighed in favor of settlement. For the claim amounts to be paid, the Court found these suitable, including certain Private Attorneys General Act claim amounts. The Court also determined sufficient discovery had been conducted thus far, with fair representation by counsel and no objections from class members, and a lack of indicia of collusion.
Nonetheless, the Court found issues with the attorney’s fees and costs requested. The Court reduced the proposed fee of 35% to 20%, citing several factors. Likewise, the Court found it was unable to perform a lodestar check for firms who had submitted no billing records at all. The Court took similar issue with requested expense reimbursements and took similar action. Finally, the Court approved the administrator’s costs without reduction.
Cotte v. CVI SGP Acquisition Trust
No. 2:21-CV-00299-HNP-DAO, 2023 WL 1472428 (D. Utah) (Oberg, Mag. J.)
A class of borrowers settled Fair Debt Collection Practices Act (FDCPA) and Utah consumer law claims against collection agencies who were unregistered but sought to collect debts from the borrowers. Upon seeking preliminary approval, the Court certified two classes and allowed the class action to proceed.
The Court analyzed the settlement under Rule 23 for purposes of both class certification and settlement approval. In terms of class certification, the Court found numerosity satisfied, that the debt collection law claims in question were common to the class without variance, and that the injury asserted was typical for the whole class. The Court further found the class representatives to be adequate, lacking any conflict of interest and represented by substantial experienced counsel. The Court then looked at Rule 23(b)(3) factors. For predominance, the Court found common questions to be predominant now and likely to remain so. For superiority, the Court found efficiency of recovery, lack of outside litigation, the centrality of the forum, and management ease to weigh in favor of a class proceeding.
In terms of the proposed settlement, the Court first reviewed Tenth Circuit fairness factors concerning fair negotiation, likelihood of recovery and the value in settling instead, and the parties’ belief in reasonableness of the settlement. The Court found the negotiation was conducted vigorously and at arms’ length, the disputed questions of law were significant, and the immediate relief of the settlement was favorable, with parties agreeing that the process had been conducted well over several months.
Turning to Rule 23(e) factors, the Court found that counsel had provided adequate representation for the class, with fair and honest negotiation and adequate relief as found under the previous factors. They also found there was simplicity in administration, notice, and check expiration dates –notice was provided by first class mail, no claims were required to be submitted to be paid, and checks would be valid for 120 days. Further, the Court found class members were being treated equitably relative to one another, depending on the harm suffered by each, with awards to be fairly determined by the Court later.
In terms of the proposed settlement, the Court first reviewed Tenth Circuit fairness factors concerning fair negotiation, likelihood of recovery and the value in settling instead, and the parties’ belief in reasonableness of the settlement. The Court found the negotiation was conducted vigorously and at arms’ length, the disputed questions of law were significant, and the immediate relief of the settlement was favorable, with parties agreeing that the process had been conducted well over several months.
Turning to Rule 23(e) factors, the Court found that counsel had provided adequate representation for the class, with fair and honest negotiation and adequate relief as found under the previous factors. They also found there was simplicity in administration, notice, and check expiration dates –notice was provided by first class mail, no claims were required to be submitted to be paid, and checks would be valid for 120 days. Further, the Court found class members were being treated equitably relative to one another, depending on the harm suffered by each, with awards to be fairly determined by the Court later.
Davis v. Centurylink, Inc.
No. 3:22-CV-00038, 2023 WL 1111830 (S.D. Tex.) (Edison, Mag. J.)
Defendant telephone and internet providers brought a motion to dismiss various claims that faulty internet service had caused technical problems in filing litigation documents, leading to fatal delays in court proceedings. Defendants argued that these claims were already barred by a 2017 class action settlement and res judicata.
The Court converted the motion sua sponte into a motion for summary judgment, and then granted the motion, thereby dismissing the Plaintiff’s claims. The Court applied the standard of Rule 56(a) to determine if summary judgment was warranted. The Court found the motion was unclear in relation to certain plaintiffs but that it did apply to others.
Analyzing the substance of the motion, the Court first looked to a 2017 settlement in a multidistrict litigation, which Defendants argued barred relief in this matter. The Court found that the Plaintiff had received notice in that case and failed to present any objections. The Plaintiff argued she was required in that case to opt in to participate, but the Court found the notice explicitly required members to opt out or be bound by the settlement. The Court also found that the Plaintiff had submitted a form seeking payment, but that it had been filed late. This form also contained language binding claimants to the settlement. Additionally, the Plaintiff had attempted to opt out from the settlement eight months after the deadline had passed. As such, the Court found the Plaintiff bound by the broad release of liability in that settlement.
Analyzing the substance of the motion, the Court first looked to a 2017 settlement in a multidistrict litigation, which Defendants argued barred relief in this matter. The Court found that the Plaintiff had received notice in that case and failed to present any objections. The Plaintiff argued she was required in that case to opt in to participate, but the Court found the notice explicitly required members to opt out or be bound by the settlement. The Court also found that the Plaintiff had submitted a form seeking payment, but that it had been filed late. This form also contained language binding claimants to the settlement. Additionally, the Plaintiff had attempted to opt out from the settlement eight months after the deadline had passed. As such, the Court found the Plaintiff bound by the broad release of liability in that settlement.
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Settlement Administration
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