Ninth Circuit Seems To Be Looking At Class Action Settlement Valuations Most Closely, Although Dissenting Circuit Judge Thought District Judge’s Decision Was Adequate.
We are starting to discern a trend by the Ninth Circuit to scrutinize class action settlements and fee requests with more rigor, as Kim v. Allison (Tinder, Inc.), Case No. 19-55807 (9th Cir. Aug. 17, 2021) (published) demonstrates, albeit a 2-1 decision.
In this matter, the district judge approved a cash/redemption pre-class certification settlement which he valued at $24 million, $6 million for injunctive relief and the rest for the cash/redemption component. He also approved $1.2 million in attorney’s fees to class counsel pursuant to a “clear sailing provision” agreed to by the defense. The Ninth Circuit, in a 2-1 majority decision penned by Judge Rakoff of the S.D.N.Y. (sitting by designation), sent this back for a restudy based on objectors’ challenges. The majority found that the injunctive relief valuation had no support, and there was reason to believe that the claims rate valued the monetary component at closer to $45,000 rather than a possible $6 million dependent on a dubious 100% claims rate (with the $12 million in Super Likes incentives also not resonating as being achievable, according to the majority). The clear sailing provision also was disturbing; in tandem with the overvaluation of the class action settlement, the entire thing—including attorney’s fees—needed a more intensive reexamination.
In dissent, Circuit Judge Callahan found that the $6 million valuation of the cash/redemption component supported the $1.2 million fee award, although she did indicate that the overall settlement might have been overvalued.
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