United States District Court, N.D. California
ADRIAN MORRIS, on behalf of herself and all others similarly situated Plaintiff,
FIDELITY INVESTMENTS, FMR LLC, and FIDELITY BROKERAGE SERVICES LLC, Defendants.
NOTICE AND ORDER RE FACTORS TO BE EVALUATED FOR ANY
PROPOSED CLASS SETTLEMENT
WILLIAM ALSUP UNITED STATES DISTRICT JUDGE
guidance of counsel, please review the Procedural
Guidance for Class Action Settlements, which is
available on the website for the United States District Court
for the Northern District of California at
addition, counsel should review the following substantive and
timing factors that the undersigned judge will consider in
determining whether to grant preliminary and/or final
approval to a proposed class settlement. Many of these
factors have already been set forth in In re Bluetooth
Headset Products Liability Litigation, 654 F.3d 935,
946-47 (9th Cir. 2011), but the following discussion further
illustrates the undersigned judge's consideration of such
Adequacy of Representation.
seeking to represent a class, including a settlement class,
must affirmatively meet the Rule 23 standards, including
adequacy. It will not be enough for a defendant to stipulate
to adequacy of the class representation (because a defendant
cannot speak for absent class members). An affirmative
showing of adequacy must be made in a sworn record. Any
possible shortcomings in a plaintiff's resume, such as a
conflict of interest, a criminal conviction, a prior history
of litigiousness, and/or a prior history with counsel, must
be disclosed. Adequacy of counsel is not a substitute for
adequacy of the representative.
remember that when one undertakes to act as a fiduciary on
behalf of others (here, the absent class members), one must
perform adequate due diligence before acting. This requires
the representative and his or her counsel to investigate the
strengths and weaknesses of the case, including the best-case
dollar amount of claim relief. A quick deal up front may not
be fair to absent class members.
Cost-Benefit for Absent Class Members.
proposed class settlement, how do the costs of what absent
class members will give up compare to the benefits of what
they will receive in exchange? If the recovery will be a full
recovery, then much less will be required to justify the
settlement than for a partial recovery, in which case the
discount will have to be justified. The greater the discount,
the greater must be the justification. This will require an
analysis of the specific proof, such as a synopsis of any
conflicting evidence on key fact points. It will also require
a final class-wide damage study or a very good substitute, in
sworn form. If little discovery has been done to see how
strong the claim is, it will be hard to justify a substantial
discount on the mere generalized theory of “risks of
litigation.” A coupon settlement will rarely be
approved. Where there are various subgroups within the class,
counsel must justify the plan of allocation of the settlement
proposed release should be limited only to the claims
certified for class treatment. Language releasing claims that
“could have been brought” is too vague and
overbroad. The specific statutory or common law claims to be
released should be spelled out. Class counsel must justify
the release as to each claim released, the probability of
winning, and its estimated value if fully successful.
the proposed class settlement contemplate that claims of
absent class members will be released even for those whose
class notice is returned as undeliverable? Usually, the Court
will not extinguish claims of individuals known to
have received no notice or who received no benefit (and/or
for whom there is no way to send them a settlement check).
Put differently, usually the release must extend only to
those who receive money for the release.
Expansion of the Class.
defendants vigorously oppose class certification and/or argue
for a narrow class. In settling, however, defendants often
seek to expand the class, either geographically
(i.e., nationwide) or claim-wise (including claims
not even in the complaint) or person-wise (e.g.,
multiple new categories). Such expansions will be viewed with
suspicion. If an expansion is to occur it must come with an
adequate plaintiff and one with standing to represent the
add-on scope and with an amended complaint to include the new
claims, not to mention due diligence as to the expanded
scope. The settlement dollars must be ...