Category: Settlement Issues

By Gerald L. Maatman, Jr., Anna Sheridan, and Olga Romadin

Duane Morris Takeaways: On September 16, 2026, in Jimenez, Jr., et al. v. OE Federal Credit Union, Case No. 24-CV-02746 (N.D. Cal. Sept. 16, 2026), U.S. District Judge Jon S. Tigar of the U.S. District Court for the Northern District of California denied plaintiffs’ motion for preliminary approval of a class action settlement in a data breach case involving over 220,000 individuals. The decision is a significant reminder that courts will scrutinize class action settlements for obvious deficiencies, and that plaintiffs seeking preliminary approval must “show their work” by providing detailed information about the relative value of their claims and the strengths and weaknesses of their case.

Case Background

Plaintiffs Daniel Jimenez Jr., Mark Hendren, and Erica Jaramillo are current or former customers of OE Federal Credit Union (“OEFCU”), which is described as “the country’s largest labor-based credit union.” Order at 1. OEFCU possessed its customers’ personally identifiable information (“PII”) and protected health information (“PHI”), including full names, Social Security numbers, dates of birth, bank and financial account information, driver’s license numbers, medical procedure information, and health insurance information. Id. Sometime between August 19, 2023 and October 29, 2023, OEFCU suffered a ransomware attack and data breach resulting in unauthorized access to the PII/PHI of the named plaintiffs and the putative class.

Plaintiffs filed suit alleging claims for negligence, breach of implied contract, invasion of privacy, unjust enrichment, violation of the California Unfair Competition Law, violation of the California Consumer Privacy Act, violation of the California Customer Records Act, and declaratory relief. They brought claims on behalf of themselves and a class of all persons identified as being impacted by the data breach. After OEFCU moved to dismiss, the Court granted the motion in part and denied it in part, dismissing several claims with leave to amend and the declaratory relief claim with prejudice.

The parties subsequently engaged in mediation and reached a proposed class settlement. Under the proposed settlement, OEFCU agreed to establish a non-reversionary settlement fund of $2,300,000. Id. at 3.  Each class member could submit a claim of up to $5,000 for reimbursement of out-of-pocket losses traceable to the data incident. Settlement class members were also entitled to submit a claim for a pro rata cash payment from the net settlement fund, estimated at approximately $50 per claimant. California class members could claim an additional $75, subject to reduction based on the total number of claimants. The settlement agreement proposed to deduct $766,666.66 in attorney’s fees (one-third of the common fund), $5,000 each to the three class representatives as service awards, and undetermined amounts for litigation costs and settlement administration costs.  Id.

The Court’s Decision

Judge Tigar denied the motion for preliminary approval, identifying seven deficiencies that collectively prevented a finding that the settlement fell “within the range of possible approval” under Rule 23(e)(2). See In Re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007).

Adequacy of Relief — Rule 23(e)(2)

The first four deficiencies all bore on whether the proposed settlement provided adequate relief to the class. The Court began by questioning the use of a claims-made distribution process, noting that because OEFCU could readily identify class members from its own records, requiring them to submit claims was unnecessary and would predictably depress the actual payout — “[t]he effect of not simply distributing relief to the known class members is that the defendant will likely pay out much less than it would if there were no claiming process.” Order at 6. The Court noted that claims-made settlements are appropriate when it is the best or only option available, as is often the case with consumer class actions. Id. The Court faulted Plaintiffs for providing no information about the maximum potential recovery at trial, offering instead only boilerplate that the settlement “provides significant relief” and “is well within the range of other data breach settlements.” Relatedly, Plaintiffs supplied only generic statements about the “high level of risk, expense, and complexity” of continued litigation rather than a careful analysis of the claims and defenses — falling short of the Court’s requirement that movants “show their work by explaining the relative value of their claims in significant detail.” Order at 7–8 (quoting Haralson, 383 F. Supp. 3d at 970). Finally, the Court observed that the estimated $50 per-member pro rata payment was unsupported by evidence. Order at 8. After subtracting attorney’s fees alone, the actual per-member recovery was closer to $6, and would decline further once administration costs, incentive awards, and out-of-pocket reimbursement claims were accounted for — the Court noted that if just over 300 claimants sought the full $5,000 reimbursement, the pro rata share could dwindle to nothing for remaining class members. Order at 8.

Equitable Treatment — Rule 23(e)(2)(D)

The fifth deficiency concerned the settlement’s differential treatment of class members. The settlement provided California class members a higher recovery than non-California members, yet Plaintiffs identified no California subclass with distinct claims that might justify the disparity. Order at 8–9. The Court emphasized that unexplained disparate treatment “increases the likelihood that the settlement agreement does not meet the Rule 23(e) standard.” Id. at 9 (quoting Ferrington v. McAfee, Inc., No. 10-CV-01455, 2012 WL 1156399, at *8 (N.D. Cal. Apr. 6, 2012)).

Accuracy and Procedural Compliance

The final two deficiencies concerned the quality of the submission itself. The Court identified a material discrepancy between the motion’s description of the timing of payments to class members and the actual terms of the settlement agreement. Order at 9–10. The Court also found that the motion failed to comply with the Northern District of California’s Procedural Guidelines for Class Action Settlements — including the requirements to explain anticipated versus maximum class recovery, to identify the settlement administration process and its costs, and to provide information about comparable settlements. Id. at 10; see also Bakhtiar v. Info. Res., Inc., No. 17-CV-04559, 2020 WL 11421997, at *8 (N.D. Cal. Jan. 30, 2020) (“A movant’s failure to address the issues discussed in the Guidelines is a proper ground for denying a motion for preliminary or final approval of a class action settlement.”).

The Court denied the motion without prejudice to Plaintiffs’ filing a revised motion, which it ordered due by November 4, 2026. The Court also reminded the parties that the Ninth Circuit benchmark for attorney’s fees in a successful class action is 25% of the common fund, and that Plaintiffs should justify any deviation from that benchmark. Id.

Implications For Companies

The Jimenez decision is a reminder that courts will closely scrutinize class action settlements at the preliminary approval stage, particularly in data breach litigation impacting consumers. The decision underscores several key points for corporate counsel. Most importantly, parties should closely follow the Court’s Procedural Guidelines for Class Action Settlements as failure to heed those Guidelines can serve as an independent basis for denying preliminary approval.

On a more granular level, the Jimenez decision offers other relevant practice pointers for class action settlements. First, claims-made settlement structures may be disfavored where the class members are readily identifiable from the defendant’s records. Second, plaintiffs seeking preliminary approval must do more than offer boilerplate language about the risks of litigation — they must provide concrete information about the maximum potential recovery and a detailed analysis of the strengths and weaknesses of their claims. Third, settlements that provide differential treatment to subsets of class members without explanation may face heightened scrutiny under Rule 23(e)(2)(D).  Companies facing data breach class actions should work closely with counsel to ensure that any settlement submissions provide the level of detail and analysis that courts increasingly require before granting preliminary approval.

By Gerald L. Maatman, Jr. and Anna Sheridan

Duane Morris Takeaways: On September 4, 2026, in Calderon, et al. v. Public Partnerships, LLC, No. 25-CV-02320 (E.D.N.Y. Sept. 4, 2026), U.S. Magistrate Judge Lara K. Eshkenazi of the U.S. District Court for the Eastern District of New York barred a defendant from distributing a proposed dispute resolution agreement (“DRA”) containing a class action waiver to settlement class members during the period between preliminary and final approval of a class settlement. The decision is a reminder that employers seeking to implement arbitration agreements during the pendency of class litigation must carefully consider timing, and that courts will exercise their authority under Rule 23(d) to protect class members from communications that could cause confusion during critical phases of a settlement.

Case Background

Plaintiffs, personal assistants (“PAs”) who received payment through Public Partnerships, LLC (“PPL”) as part of the New York State Medicaid Consumer Directed Personal Assistance Program (“CDPAP”), brought a class action alleging that PPL violated state and federal law by failing to pay them accurately and on time. After extensive mediation, the parties reached a class settlement and submitted a motion for preliminary approval of class certification, appointment of class counsel, and class settlement on June 23, 2026.

At the preliminary approval hearing on July 1, 2026, PPL raised the topic of a proposed DRA that it intended to distribute to PAs, including settlement class members. PPL explained that it wanted to institute the DRA, including a class action waiver, to create a mechanism to address issues raised by PAs without becoming subject to lawsuits related to its role as the statewide fiscal intermediary. Plaintiffs opposed the implementation of the DRA to the extent it would impact settlement class members, arguing it could confuse class members and cause them to mistakenly opt out of the settlement agreement. Plaintiffs also noted that a prior attempt by PPL to implement a DRA had led to significant class confusion, resulting in PPL withdrawing the DRA.

After the parties were unable to resolve the dispute, PPL filed a motion for approval of its proposed DRA and Plaintiffs filed a cross-motion for a Rule 23(d) order barring distribution of the DRA to settlement class members before final approval of the settlement.

The Court’s Decision

The Court denied PPL’s motion and granted Plaintiffs’ motion for a Rule 23(d) order.

The Court applied the framework set forth in Chen-Oster v. Goldman, Sachs & Co., 449 F. Supp. 3d 216, 255 (S.D.N.Y. 2020), considering factors including class members’ relative vulnerability, evidence of actual or contextual risk of coercion, whether the provision was imposed unilaterally, and evidence of misleading conduct, language, or omissions. The Court emphasized that it need not find actual or willful misconduct “so long as the effect is to interfere with class members’ rights.” (Op. at 4).

While the Court acknowledged that the DRA itself was not coercive or misleading, and credited the steps PPL had taken to reduce confusion, the Court concluded that the risk of confusion for settlement class members was high for several reasons.

First, the timing of the DRA rollout would directly overlap with notifications to settlement class members of the settlement, which could confuse class members about the relationship between the DRA and the settlement.

Second, the DRA contained an opt-out process that, despite best efforts at clarity, could still cause settlement class members to inadvertently opt out of the settlement — a risk the Court found was particularly high due to the number of settlement class members for whom English is not their first language. Third, the timing of the DRA rollout could cause settlement class members to believe that accepting the arbitration agreement was a condition of accepting the settlement.

The Court distinguished the case PPL primarily relied on – Carusillo v. FanSided, Inc., No. 20 Civ. 4766, 2021 WL 4311167 (S.D.N.Y. Sept. 21, 2021) – where the court had permitted distribution of an arbitration agreement during a collective action opt-in period. The Court explained that Carusillo involved a relatively early stage of the litigation, whereas Calderon was in its final stages, with a final approval hearing scheduled for November 10, 2026. The Court noted that PPL offered no explanation for the urgency of its request to communicate with settlement class members about the DRA rather than waiting just a few months until the risk of confusion would no longer exist.

The Court further rejected PPL’s argument that Plaintiffs’ concerns about class confusion ended on September 19, 2026 — the deadline for opt-outs and objections — finding that the risk of confusion would persist even after the opt-out deadline because class members would continue to learn about their settlement rights and could potentially submit late opt-outs.

Implications For Employers

The Calderon decision underscores the importance of timing when implementing arbitration agreements during pending class litigation. While courts have permitted employers to introduce arbitration agreements during the pendency of class or collective actions, the Calderon ruling makes clear that courts will scrutinize the timing of such communications, particularly during the sensitive period between preliminary and final approval of a class settlement. The Court’s decision did not prevent PPL from distributing the DRA to non-class members, and it did not find the DRA itself to be coercive or misleading. Employers should take note, however, that even a well-drafted arbitration agreement with meaningful opt-out protections can be blocked if the timing of its distribution could cause confusion or interfere with class members’ rights during a settlement process. Employers considering rolling out arbitration agreements or dispute resolution programs during the pendency of class litigation should work closely with counsel to carefully evaluate the litigation timeline and consider whether it is prudent to delay the rollout until after settlement proceedings conclude.

By Gerald L. Maatman, Jr. and Justin R. Donoho

Duane Morris Takeaways:  On December 23, 2025, Judge William Alsup of the U.S. District Court for the Northern District of California entered an order in Bartz, et al. v. Anthropic PBC, Case No. 24-CV-5417 (N.D. Cal. Dec. 23, 2025), requiring five law firms seeking a fee award in connection with a class action settlement to file a declaration setting forth the full extent of any of the firms’ actual or proposed fee-sharing agreements and the extent to which any arrangement may result in some class members receiving a sweeter recovery than other class members.  Judge Alsup also ordered preservation of all communications and other documents relating to such side deals. 

The ruling is significant because it shows that only appointed class counsel may be eligible to receive a fee award in connection with a class action settlement, and may not outsource its responsibilities to non-appointed counsel or seek any other arrangements that may favor some class members to the detriment of other class members.  Furthermore, the ruling shows that any such side deals must be disclosed publicly prior to any final approval of a class action settlement.

Background

This case is one of several class actions that plaintiffs have filed alleging that developers of generative artificial intelligence  (“gen AI”) violated copyright laws by generating infringing outputs and/or by using unauthorized copies of copyrighted works as inputs to train the developer’s models. 

Many of these gen AI class actions are “bet-the-company” lawsuits, even for the world’s largest companies. Plaintiffs in gen AI class actions typically invoke the Copyright Act in order to seek millions — and sometimes even billions — of dollars on the theory that thousands or millions of unauthorized copies of copyrighted works, times up to $150,000 per copyrighted work for willful infringement, equals a crushing, settlement-inspiring number. 

In Bartz, the parties reached a $1.5 billion settlement, which the Court preliminary approved, and which we blogged about previously here and here.

Following preliminary approval, two law firms appointed as class counsel and three additional non-appointed firms filed a petition for fees to be awarded in connection with the class action settlement.  The fee petition sought $225 million for class counsel and $75 million for the non-appointed law firms.  Id. at 3, 7.  These three non-appointed firms had agreed to gather contact information for the class list and to provide input on the claim form and claims process, two for the publisher class members (“Publishers’ Coordination Counsel”), and one for the author class members (“Authors’ Coordination Counsel”).  Id. at 3.

The Court’s Decision

The Court declined to rule on the fee petition, ordering that a number of disclosures and preservation efforts be made first in order “to set the record straight” concerning aspects of the fee petition.  Id. at 1.  Such was necessary, according to the Court, because it appeared that counsel may have entered into one or more “side deals.”  Id. at 3.

As the Court explained, “[t]wo and only two law firms were ever appointed class counsel.”  Id. at 1.  Moreover, “preliminary approval and the class notices confirmed that only two firms were approved to serve the class … Those firms never proposed a fee splitting scheme, and none was ever even preliminarily approved.”  Id. at 7. 

As to the three non-appointed law firms, the Court found that they “cannot appoint [themselves] class counsel by showing up.  Nor can class counsel appoint someone else to do its work.”  Id. at 2.  As the Court further explained, it had not had a chance to vet the non-appointed counsel for conflicts, or to prevent duplication of effort by overlapping law firms.  Id. at 8.  In addition, the Court found it concerning that “we do not yet know whether ‘Publishers’ Coordination Counsel’ will share any part of their bonanza with one or more publishers so as to give those publishers a premium to not opt out … and thereby avoid triggering [the defendant]’s right to about the settlement.”  Id.  Furthermore, the class notice “never alerted class members that still other lawyers would come out of the woodwork to seek a third again whatever their class counsel would seek for its work.”  Id. (emphasis added).

For these reasons, the Court ordered that, within one week, all law firms who filed fee petitions or on whose behalf fee petitions were filed, must publicly file a declaration (not under seal) setting forth the “full extent” to which such firm agreed or made a proposal “to share any portion(s) of any fee award in this class action or in any other class action (putative or certified) involving any party (or class member) herein,” and stating as to each such agreement or proposal its date, terms, the extent to which it is verbal and the extent to which it is in writing (or in an email or text or other message), and the parties and the names of all persons who made the agreement.  Id. at 10.  The Court also ordered public disclosure in a declaration of the “full extent to which any arrangement has been made or proposed by which any class member would receive a sweeter recovery than other class members.”  Id. at 10-11.  Finally, the Court further ordered that “[a]ll emails, messages, and written materials relating to any of the above shall be preserved for future potential discovery.”  Id. at 11.

Implications For Companies

The Bartz fee petition order is as extraordinary as it is unique. It offers strong precedent for any company defending a large class action and preparing to enter into a class action settlement.  Specifically, Bartz shows that plaintiffs’ firms seeking any portion of a fee award in connection with such a settlement will need to publicly disclose any side deals prior to any final settlement approval.  Therefore, settling defendants should consider seeking to discover any side-deal information before entering into such settlement.  That way, any obstacles to final settlement approval such as that presented by the Bartz fee petition order might be considered before the parties reach any settlement.

By Gerald L. Maatman, Jr., Eden E. Anderson, and Eisha Perry

Duane Morris Takeaways: Judge William Alsup of the U.S. District Court for the Northern District of California issued a decision in Nehmer, et al. v. U.S. Department of Foreign Affairs, Case No. 3:86-CV-06160 (N.D. Cal. May 20, 2025), rejecting class counsel’s proposed cy pres distribution of over $63,000,000 in funds appropriated by Congress to settle the claims of deceased Vietnam veterans injured by Agent Orange.  Judge Alsup explained that a cy pres distribution was not authorized by the 1991 consent decree in the case, nor by any statute and that class counsel needed to redouble efforts to locate veterans’ survivors or to pay veterans’ estates.  The decision makes clear that, absent an express cy pres provision in a class action settlement or statutory authority supporting it, a cy pres distribution is not authorized.  

The ruling is an important primer for corporate counsel in the consideration and use of settlement tools – such a cy pres distribution – in resolving class actions.

Case Background

The Nehmer case settled in 1991 and involved the claims of veterans who suffered from illnesses because of the use of Agent Orange during the Vietnam War.  Because the extent of harm caused by Agent Orange was not then fully known, the consent decree that was entered after the settlement required claims to be automatically reopened if they turned on diseases the Department of Veterans Affairs had earlier rejected but later recognized as service related.  The consent decree did not contain a time limit sunsetting the opportunity to file claims, nor for the VA’s obligation to re-adjudicate claims.  Over the last nearly 35 years, more than $4.5 billion in retroactive payments have been made to veterans under the settlement. 

At issue before the Court was the re-adjudicated claims of 1,137 veterans who are now deceased and whether the $63,000,000 in settlement payments owed to those deceased veterans could instead, as proposed by class counsel, be paid to a cy pres organization.  A large portion of the deceased veterans owed these funds had no eligible survivors nor any open estate and, for those that did have eligible survivors, efforts to locate the survivors through the use of private investigators proved unsuccessful.  The VA took the position that, because the consent decree did not provide for a cy pres distribution, the funds should remain in the VA’s possession, available for payment should any survivor ever emerge to claim their share. 

The Decision

The Court rejected class counsel’s proposed cy pres distribution, noting it was not authorized by the consent decree nor by any statute, and that the Court therefore lacked power to order such a distribution.  As to the deceased veterans with survivors, the Court held that more effort needs to be undertaken to find them, including repeating the private investigator’s efforts and through the placement of advertisements.  As to the deceased veterans who seemingly had no survivors and closed estates, the Court determined that more effort needs to be expended to pay the estates, even if costly.  The Court explained that payment to the estates might be possible without having to re-open the estates and class counsel needed to expend more efforts in this regard, efforts that might even reveal beneficiaries. 

Implications of the Decision:

The Nehmer decision makes clear that, absent an express cy pres provision in a class action settlement or statutory authority supporting it, a cy pres distribution is not authorized.  Even when there is a cy pres provision in a class action settlement, courts are increasingly scrutinizing such clauses. Parties need to think carefully about utilizing the doctrine and the designation of unclaimed settlement funds. 

By Gerald L. Maatman, Jr., Shannon Noelle, and Anna Sheridan

Duane Morris Takeaways:  On June 25, 2025, in In Re Wawa Data Security Litigation, No. 24-1874, 2025 WL 175035 (3d Cir. June 25, 2025), the Third Circuit approved a $3.2 million class fee award for class counsel contained in a settlement agreement finding that fees can be based on relief made available to the class and does not have to be capped by a percentage of the relief actually claimed in low-harm data breach security class action where the claim rate is notoriously low.  The Third Circuit also held that clear sailing agreements (agreements not to challenge class counsel fee petitions) and fee reversions (where amount of agreed-upon fee not awarded reverts to defendant) are not per se impermissible and, rather, there must be evidence of collusion or harm to class members to invalidate a fee award on this basis.

Case Background Leading to Wawa I

On December 19, 2019, Wawa — a convenience store chain with 850 locations throughout the mid-Atlantic and Florida that sells fuel as well as convenience store items — released a public statement through its CEO detailing a data security breach Wawa had experienced in which hacker stole payment information including credit and debit card numbers used at all Wawa stores and fuel dispensers.  As the Third Circuit noted “a race to the courthouse promptly ensued” with plaintiffs filing 15 different state statutory and common law class action claims that were ultimately consolidated by Chief Judge Juan Sanchez of the U.S. District Court for the Eastern District of Pennsylvania on January 8, 2020.  In Re Wawa Inc. Data Security Litigation, Civ No. 24-1874, at *6 (3d Cir. June 25, 2025) (hereafter “Wawa II”). Three litigation tracks emanated out of this consolidation, including: (1) a financial institution track; (2) an employee track; and (3) a consumer track.  The consumer track is the subject of the Wawa II decision at issue and involved numerous common law, state consumer protection, and data privacy claims.  The consumer plaintiffs sought compensatory relief and an injunction requiring Wawa to: (1) strengthen its data security systems and monitoring procedures to prevent further breaches; (2) submit to future annual audits of those systems; and (3) provide several layers of free credit monitoring and identify theft insurance to all class members. 

Several months after the consolidated class complaint was filed, settlement talks began in which the parties retained a mediator to supervise a mediation session that lasted almost 12 hours.  As a result of this mediation session, the parties agreed Wawa would provide either compensation for out-of-pocket losses or a Wawa gift card.  Plaintiffs were divided into three tiers:  (1) customers who affirmed they spent at least some time monitoring their credit card statements were eligible for a $5 Wawa gift card (this tier was subject to a $6 million cap and a $1 million floor); (2) customers who saw a fraudulent charge that required some effort to sort out were eligible for a $15 Wawa gift card (this tier was subject to a $2 million cap with no floor); and (3) customers who could show certain out-of-pocket losses caused by the breach could receive up to $500 in cash (this tier was subject to a $1 million cap without a floor).  Wawa also agreed to a range of injunctive relief to improve its security systems through a continuation of a $25 million investment in security that the Wawa board authorized pre-settlement in February 2020.  This security system improvement commitment included retaining a security firm to evaluate compliance, conducting an annual penetration test for potential vulnerabilities to data breaches, operating a system to encrypt payment information at sale terminals, implementing security procedures at sale terminals, and maintaining written security programs and policies.  Wawa further committed to provide class members notice of the settlement via updates posted in stores, a settlement website, and a press release.  After the terms for compensatory and injunctive relief were settled, the parties then agreed that Wawa would pay class counsel $3.2 million in attorneys’ fees and related costs “paid by Wawa as directed by the Court” and further providing that Wawa would “cooperate with Class Counsel, if and as necessary, in providing information Class Counsel may reasonable request from Wawa in connection with preparing the petition” for fees. Id. at *9. The settlement agreement was silent about what would happen if the district court awarded less than the full $3.2 million in fees.  

On July 30, 2021, Judge Gene Pratter of the Eastern District of Pennsylvania issued an opinion preliminarily approving the settlement finding it “fair, reasonable, and adequate” as the settlement negotiations took place at arm’s length,” the relief offered provided both monetary and injunctive components, and there was “no reason to doubt that settlement [would] provide a tangible benefit to plaintiffs and proposed class members while avoiding the costs and risks associated with continued litigation.” In re Wawa, Inc. Data Sec. Litig., No. CV 19-6019, 2021 WL 3276148, at *9, 11 (E.D. Pa. July 30, 2021).

On November 10, 2021, class member Theodore Frank filed objections arguing: (1) Wawa’s notice procedures were improper; (2) the gift card claims rate was too low; (3) the attorneys’ fees contemplated by the settlement agreement were too high given that most of the relief made available to the class was not cash-based; and (4) the fee provision of the agreement contained an improper clear sailing (i.e., an agreement not to challenge class counsel’s fee petition) and fee reversion (i.e., agreement that any amount of the $3.2 million not awarded to class counsel reverts to Wawa) that restricted the district court’s ability to fix any potential imbalance between attorneys’ fees and the final relief awarded to the class.  Frank raised no objection to the certification process or the certification decision.

In response to this objection, a Second Amended Settlement Agreement was submitted on November 12, 2021 making tier 1 gift cards automatically available to mobile application users and eliminating the gift cards’ expiration date.  An Objector, Frank, submitted further objections that the settlement would permit any amount of attorneys’ fees short of the $3.2 million agreed-upon to revert back to Wawa.  As a result, on February 4, 2022, counsel submitted a Third Amended Settlement Agreement clarifying that Wawa would not benefit from approval of less than $3.2 million in attorneys’ fees and committing that any shortfall would be distributed to tier 1 and tier 2 gift card holders.  On April 20, 2022, Judge Pratter issued an opinion giving final approval of the settlement agreement and deeming it fair, reasonable, and adequate, as required by Rule 23(e)(2).

Regarding the attorneys’ fee award, Judge Pratter awarded the agreed-upon amount of $3.2 million, allocating $3,040,060 to attorneys’ fees, $45,940 to litigation expenses, and $100,000 for settlement administration expenses.  Judge Pratter found that the Gunter factors supported an award of this amount which requires consideration of:  (1) the size of the fund created and the number of persons benefitted; (2) the presence or absence of substantial objections by members of the class to the settlement terms and/or fees requested by counsel; (3) the skill and efficiency of the attorneys involved; (4) the complexity and duration of the litigation; (5) the risk of nonpayment; (6) the amount of time devoted to the case by plaintiffs’ counsel; and (7) the awards in similar cases.  See Gunter v. Ridgewood Energy Corp., 223 F.3d 190 (3d Cir. 2000).   For Gunter factor 1, Judge Pratter relied on the value of the funds made available to the class; for factor 2 the only substantive objections before the Court were raised by Frank and were addressed in the third iteration of the settlement agreement; for factor 3 the Judge was satisfied that the skill of the attorneys involved weighed in favor of approval; for factor 4 the Judge noted that data breach litigation is “inherently complex;” for factor 5 the fact that counsel took the case on a contingency basis weighed in favor of approval; for factor 6 the attorneys spent 6,000 hours on the litigation; and, as to factor 7 the Judge noted that other data breach class actions have resulted in fee awards significantly higher. In re Wawa, Inc. Data Sec. Litig., No. CV 19-6019, 2022 WL 1173179, at *11 (E.D. Pa. Apr. 20, 2022). A lodestar cross-check also supported the fee award. 

Third Circuit’s Decision in Wawa I

Objector Frank challenged the fee award portion of the settlement agreement on appeal to the Third Circuit arguing that the provision on fees constituted a “clear sailing” agreement because, according to Frank’s interpretation of the provision, Wawa agreed not to contest a fee request from class counsel and Frank also claimed that a “fee reversion” was still contained in the agreement despite the fact that the amended iteration of the settlement agreement clarified that any amount not awarded to counsel would be distributed amongst the class and would not revert back to Wawa.  In Re: Wawa, Inc. Data Security Litigation, 85 F.4th 712, 717-18 (3d Cir. 2023) (hereinafter “Wawa I”).  Frank argued that attorneys’ fees should be capped at 25% of the amount actually awarded to the class, not the amount offered to the class.  The Third Circuit issued a decision in Wawa I, on November 2, 2023, vacating the fee award and remanding the action back to the district court to determine the reasonableness of the attorneys’ fee in light of the benefit rendered to the class and to evaluate the presence of side agreements indicating “collusion,” i.e. a commitment from Wawa not to dispute a fee request from class counsel or an agreement amongst the parties that any portion of the attorneys’ fee not awarded to class counsel would revert back to Wawa.  Id. at 727.  The Court also remanded for additional consideration about the reasonableness of the award finding that the district court “saw itself as bound to consider only the funds made available to the class” when it could evaluate reasonableness by reference to “either amounts paid or amounts made available.”  Id. at 725-26. 

On remand, Judge Pratter requested the parties provide submissions containing any information they believed she should consider based on the panel’s decision in Wawa I.  See Wawa II, at *7 (3d Cir. June 25, 2025).  Objector Frank expressly declined to argue that collusion occurred between counsel for the class and Wawa and suggested the panel used the word “collusion” as “semantic shorthand” to consider potential conflicts with broad brushstrokes.  Class counsel and Wawa submitted declarations that there was no collusion.  Id.  Objector Frank pointed out that counsel admitted there was a clear sailing agreement in a joint declaration class counsel filed in October 2021 and again proposed that an attorney fee award should be based on actual rather than proposed recovery.   Id.  Class counsel countered that Objector Frank had conceded there was no collusion.  Id.  On April 9, 2024, Judge Pratter issued an opinion and judgment that the fee awarded was reasonable and that there were no side agreements or anything problematic in settlement negotiations which were conducted at arms’ length under the supervision of a mediator.  See 2024 WL 1557366, at *7-13. She specifically found that Wawa’s agreement to “cooperate” in the preparation of a fee petition meant no more than the common meaning of that term which did not waive Wawa’s right to object to fees.  Id. at *7.  On the issue of fee reversion, Judge Pratter found that there was “never any discussion of any tradeoff” and any insinuation of an unintentional fee reversion was “diligently corrected” prior to her final approval of the settlement.  Id. at *10.  On the issue of reasonableness of the fee award, Judge Pratter again evaluated the funds offered finding the gift cards to be a “meaningful benefit” because they “closely approximate cash” and that the injunctive relief was also “central” to the award and “weigh[ed] strongly in favor” of granting the fee figure.   Id. at *14-17.  Judge Pratter further acknowledged that the appeal and remand proceedings already reduced the value of counsel’s fee by an estimated $408,492.  Id. at n.13. 

Third Circuit’s Decision in Wawa II

On appeal for the second time to the Third Circuit in Wawa II, Objector Frank mounted three arguments, including:  (1) Judge Pratter did not follow the panel’s mandate in Wawa I which he claimed found that a clear sailing agreement and intentional fee reversion existed between counsel; (2) Judge Pratter’s findings as to the clear sailing and fee reversion were clearly erroneous; and (3) Judge Pratter erred by relying on the amount “made available” to the class as the basis of the fee award rather than the amount actually paid to class members.  Wawa II, 2025 WL 1750352, at *9-12.  The Third Circuit rejected all three arguments and affirmed the fee award. 

First, the Third Circuit found the Wawa I panel did not hold that a clear sailing agreement existed or that the fee reversion was intentional.  Rather, the parties and Judge Pratter “assumed” the existence of a clear sailing agreement and the panel followed suit but the issue was never squarely decided.  Id. at *9-10.  Likewise, the Wawa II panel did not agree that Wawa I found that any fee reversion was intentional.  Id.  In any event, the Wawa II Court clarified that clear sailing agreements and fee reversions are not “per se impermissible” but are rather “red flags” requiring further scrutiny which they felt satisfied Judge Pratter performed during the remand proceedings.  Id.  The Third Circuit held, as a result, that Judge Pratter did comply with the Wawa I mandate.  Id. at 10.

Second, applying the clearly erroneous standard to Judge Pratter’s factual findings, the Third Circuit agreed with Judge Pratter’s finding that there was no clear sailing agreement or intentional fee reversion indicating collusion.  Id. at 10-12.  The Wawa II Court assessed and agreed with Judge Pratter’s findings that the language in the settlement agreement on fees did not constitute a clear sailing agreement and, regardless, Judge Pratter “thoroughly examined the parties’ negotiation process” and found it to be devoid of any evidence of collusion or negative implications for the class.  Id. at *11.  The panel afforded “great deference” to the Judge’s decision to credit testimony from Wawa’s counsel on this issue.  The panel also did not find any credible evidence that the class was harmed at all by the provision on attorneys’ fees.  Id.  Further, the Court also agreed that any fee reversion in the initial draft of the settlement agreement was unintentional and due to counsel’s impression that the fee award was low and therefore it was unlikely the court would award anything less.  Id.

Third, on the issue of the reasonableness of the fee award, the Court agreed with the district court that the fee award was reasonable.  Id. at 12-14.  In support of this conclusion, the Court found that the gift cards were designed to be spendable cash at any Wawa store, three-fourths of Wawa’s inventory is under $5, and the gift cards did not have an expiration date.  The Court further acknowledged the injunctive relief that the class received as justifying the amount of attorneys’ fees which “they themselves requested in the Consolidated Complaint” and, though “difficult to value,” nevertheless “has real value.”  Id. at *13. The Third Circuit disagreed with Objector Frank that the injunctive relief should not be considered in evaluating the reasonableness of the award because Wawa was already in the process of implementing the improved security measures pre-settlement, finding that “Wawa’s post-settlement security updates and formal commitment to the relief are attributable to the settlement.”   Id. (emphasis added).  Finally, and of significant note, the Court took into account the fact that the low claim rate present—the class consisted of 22 million members and 563,955 claims which meant a claim rate of 2.56%—is typical in low-harm data breach class action settlements, such as this one.  Id. at *13-14.  Though the claim rate is axiomatically low given the low overall harm, this does not negate the attorney time dedicated to finalizing meaningful relief to address the alleged harms at issue.  Id.  The Court also affirmed the district court’s use of the Gunter factors and lodestar cross check to support its analysis.  Id. at *14. 

Implications of Wawa II Decision

The Wawa II decision evidences the Third Circuit’s endorsement of basing fee awards in class settlements on the recovery offered to class members, setting aside the claim rate, in the context of low-harm data breach class actions where low claim rates are well-documented.  So long as the recovery secured is meaningful (be it through injunctive, monetary, or other means) and the hours class counsel spent on securing that relief justify the award sought, the fee petition is colorable.  This provides good guidance for defense counsel and objectors that in objecting to fee awards in such cases more is needed than the mere suggestion of a clear sailing agreement or fee reversion, and rather evidence of harm to the class or collusion amongst counsel must be shown to demonstrate that the fee is unreasonable or exorbitant. 

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Emilee N. Crowther

Duane Morris Takeaways: In a data breach class action entitled In Re T-Mobile Customer Data Security Breach Litigation, Nos. 23-2944 & 23-2798, 2024 WL 3561874 (8th Cir. July 29, 2024), the U.S. Court of Appeals for the Eighth Circuit  overturned a district court’s order granting $78.75 million in attorneys’ fees for class counsel as part of the underlying approval of the class action settlement. The Eighth Circuit held that the district court abused its discretion by awarding class counsel an unreasonable attorneys’ fee award, and improperly striking a class member objection to that award.

This decision serves as an important reminder that, in class actions, unnamed class members who cannot opt out of a class can object to and appeal a district court’s approval of a settlement — which can inure to the benefit of both the class and the defendant.

Case Background

At some point before August 16, 2021, a cybercriminal breached T-Mobile’s systems, capturing personally identifiable information for an estimated 76.6 million people. Id. Various plaintiffs filed suits nationwide, and in December 2021, the suits were combined into a multidistrict litigation proceeding in the U.S. District Court for the Western District of Missouri. Id.

In January 2022, the Court appointed twelve attorneys to represent the class in various roles (“class counsel”), who then filed a joint complaint, and entered settlement discussions with T-Mobile. Id. at 7. A month after class counsel filed the complaint, the parties agreed to a settlement where T-Mobile would, among other items, create a $350 million fund from which individual class members could recover up to $25,000 for out-of-pocket losses they could prove resulted from the data breach, and $25 (or $100 if a member of the California sub-class) for all other class members who did not submit proof of loss. Id.

After the class was notified of the settlement, class counsel moved for a fee award of 22.5% of the $350 million settlement fund, or a total award of $78.75 million. Id. at 8. Thirteen class members filed objections to the settlement. Two of the objecting class members, Cassie Hampe (“Hampe”) and Connie Pentz (“Pentz”), contended that the amount of attorneys’ fees sought was too high. Id. The district court struck Hampe’s objection under Rule 12(f), finding that Hampe and her law firm were serial objectors, and that her objection was vexatious, brought in bad faith, and brought for the sole purpose of extracting a fee from the settlement fund. Id. at 9. The district court also struck Pentz’s objection under Rule 12(f) because Pentz’ son had previously filed frivolous objections to class action settlements and Pentz herself would not attend a deposition. Id.

Hampe and Pentz appealed. They argued that the district court erred in relying on Rule 12(f) to strike their objections, and that the class counsel’s fee award was unreasonable. Id.

The Eighth Circuit’s Decision

The Eighth Circuit found that the district court abused its discretion in striking Hampe’s objections to class counsel’s attorney’s fees request, and also by awarding class counsel unreasonable attorneys’ fees. Id. at 19. The Eighth Circuit also held that the district court did not abuse its discretion by striking Pentz’ objections. Id.

First, the Eighth Circuit found that the district court abused its discretion by relying on Rule 12(f) to strike the objections of both Hampe and Pentz. Id. at 10. While Rule 12(f) permits courts to “strike from a pleading . . . any redundant, immaterial, impertinent, or scandalous matter,” the Eighth Circuit reasoned that it did not permit the district court to strike a class member’s objection to a settlement, since it is not a pleading under Rule 7(a). Id. at 9-10.

Second, the Eighth Circuit acknowledged that while the district court had inherent authority to strike objections as a sanction for misconduct, the alleged misconduct asserted here only supported the district court striking Pentz’ objection — not Hampe’s objection. Id. at 10. For Hampe, the Eighth Circuit found that the district court abused its discretion in striking her objection because there was no evidence that either Hampe or her attorneys were attempting to extort a payout, acted vexatiously, broke any rules, or acted unethically. Id. As for Pentz, however, the Eighth Circuit held that it could not fault the district court for striking her objection, since Pentz had been covertly working with an attorney (despite initially stating that she was acting pro se), evaded service of a subpoena compelling her to sit for a deposition, and generally refused to cooperate with the district court’s discovery orders. Id. at 11.

Finally, the Eighth Circuit analyzed Hampe’s objection that the fee award was unreasonable. Id. at 12-19. In class actions, courts use two methods to calculate attorneys’ fees, including: (i) the “lodestar” method (where the court multiplies the number of hours the attorneys worked by their hourly rates); or (2) the percentage method (where the court awards a percentage of the fund that the attorneys helped recover). Id. at 12. While district courts have discretion to choose which method should apply, the Eighth Circuit underscored that district courts should focus on whether or not the fee is reasonable under Rule 23(h), and consider “the time and labor required,” “the amount involved and the results obtained,” and “awards in similar cases.” Id. at 12.

The Eighth Circuit ultimately held that the district court’s attorneys’ fee award was unreasonable and constituted a “windfall” for class counsel. Id. at 16. The district court, in an attempt to demonstrate that the attorneys’ fee award was reasonable, conducted a lodestar crosscheck and found that the lodestar “multiplier” was 9.6, meaning that class counsel would get paid about 9.6 times their customary hourly rates. Id. While district court found this multiplier was reasonable, the Eighth Circuit did not, citing its previous holding in Rawa v. Monsanto Co., 934 F.3d 862, 870 (8th Cir. 2019) (holding that a 5.3 multiplier was too high and amounted to a windfall for class counsel). Id.

Implications For Class Action Defendants

The Eighth Circuit’s ruling in In Re T-Mobile Customer Data Security Breach Litigation serves as an important reminder that class members have power to object to attorney fee awards. While only awarding reasonable attorneys’ fees to class counsel certainly inures to the benefit of the class, it also benefits the defendants in claims-made data breach settlements. When calculating the total “payout” for a defendant in a claims-made data breach settlement, an attorneys’ fee award is a hard cost that drives up a defendant’s total likely payout. However, reducing the attorneys’ fee, it leaves more in the settlement fund for class members to claim. As stated in the 2024 Duane Morris Class Action Review, claim rates in data breach class actions are between 1% and 10%. Accordingly, by raising the amount left in the settlement fund for the class members to claim, the total payout for a defendant will likely substantially decrease.

By Gerald L. Maatman, Jr. and Jennifer A. Riley

Duane Morris Takeaways: Corporate defendants saw unprecedented settlement numbers across all areas of class action litigation in 2022 and 2023. The cumulative value of the top ten settlements across all substantive areas of class action litigation hit near record highs in 2023, second only to the settlement numbers observed in 2022. When the numbers for 2022 and 2023 are combined, the totals signal that corporate defendants have entered a new era of heightened risks and higher stakes in the valuation of class actions. On an aggregate basis, across all areas of litigation, class actions and government enforcement lawsuits garnered more than $51.4 billion in settlements in 2023, almost as high as the record-setting $66 billion in 2022. Combined, the two-year settlement total eclipses any other two-year period in the history of American jurisprudence.

So far, 2024 is on pace with the numbers of the previous two years. As of the end of the first quarter of 2024, the aggregate settlement total across all areas of class action litigation and government enforcement lawsuits is $19.8 billion (in accounting for the top 5 settlements in the various substantive areas of law). It is anticipated that these numbers will increase across the board by the end of the year.

More Billion Dollar Class Action Settlements

So far this year, there are three settlements over the billion-dollar mark. Last year, parties resolved 14 class actions for $1 billion or more in settlements, making 24 billion-dollar settlements in the last two years. Reminiscent of the Big Tobacco settlements nearly two decades ago, 2022 and 2023 marked the most extensive set of billion-dollar class action settlements and transfer of wealth in the history of the American court system.

The Scorecard On Leading Class Actions Settlements Thus Far in 2024

The plaintiffs’ class action bar has scored rich settlements thus far in 2024 in virtually every area of class action litigation. The following list shows the totals of the top 5 settlements in 2024 so far in key areas of class action litigation:

$13.73 Billion – Products liability/mass tort class actions
$1.65 Billion – Antitrust class actions
$1.21 Billion – Securities fraud class actions
$558 Million – Consumer fraud class actions
$388.95 Million – Data breach class actions
$288 Million – ERISA class actions
$265.5 Million – Privacy class actions
$141 Million – Discrimination class actions
$139.3 Million – Wage & hour class and collective actions
$47.45 Million – Labor class actions
$47.3 Million – Government enforcement actions
$47.25 Million – Civil rights class actions
$28.93 Million – TCPA class actions
$23.71 Million – Fair Credit Reporting Act class actions

The high dollar settlements of the past two years suggested that the plaintiffs’ bar would continue to be equally, if not more aggressive, with their case filings and settlement positions. From the 2024 data, it certainly looks to be the case as we end the first part of the year.

Top Class & Collective Action Litigation Settlements In 2024

Top Antitrust Class Action Settlements In 2024

1. $418 million – Burnett, et al. v. The National Association Of Realtors, Case No. 19-CV-332 (N.D. Ill. Mar. 15, 2024) (settlement agreement reached in a class action to resolve claims that broker commission rules caused home sellers across the country to pay inflated fees).
2. $385 million – In Re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litigation, Case No. 13-MD-2445 (E.D. Penn. Feb. 27, 2024) (final settlement approval granted in a class action to resolve claims brought by states, insurers, and buyers of a new dissolvable strip version of Suboxone to the market, encouraging the move from tablets to strips by allegedly misrepresenting to the U.S. Food and Drug Administration that the tablets posed a risk to children of accidental consumption).
3. $335 million – Le, et al. v. Zuffa LLC, Case No. 15-CV-1045 (D. Nev. Mar. May 6, 2024) (preliminary settlement approval sought in a class action to resolve claims that fighters’ wages were suppressed by up to $1.6 billion).
4. $265 million – In Re Generic Pharmaceuticals Pricing Antitrust Litigation, Case No. 16-MD-2724 (E.D. Penn. May 9, 2024) (preliminary settlement approval sought for a class action to resolve claims by direct purchasers, end-payors and states alleging that multiple makers of generic drugs conspired to keep the prices on their products high, in violation of state laws and the federal Sherman Act).
5. $250 million – Burnett, et al. v. The National Association Of Realtors, Case No. 19-CV-332 (N.D. Ill. Apr. 26, 2024) (settlement agreement reached with defendant Berkshire Hathaway in a class action to resolve claims that broker commission rules caused home sellers across the country to pay inflated fees).

Top Civil Rights Class Action Settlements In 2024

1.    $17.5 million – Clark, et al. v. City Of New York, Case No. 18 Civ. 2334 (S.D.N.Y. Apr. 5, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the city policy department’s policy requiring all arrested individuals to have their photograph taken without a head covering violated the Religious Land Use and Institutionalized Persons Act).
2. $13.7 million – Sow, et al. v. New York, Case No. 21 Civ. 533, (S.D.N.Y. Feb. 22, 2024) (final settlement approval granted for a class action resolving claims by individuals who were arrested or arrested and subjected to force by the New York City Police Department during protests in 2020 following the murder of George Floyd).
3. $10 million – Adberg, et al. v City Of Seattle, Case No. 20-2-14351-1 (Wash. Super. Ct. Jan. 30, 2024) (settlement reached to end a lawsuit brought by more than 50 protesters who say they were brutalized by its police force during Black Lives Matter demonstrations in the summer of 2020).
4. $4.8 million – Students For Fair Admissions, Inc., et al. v. University Of North Carolina, Case No. 14-CV-954 (M.D.N.C. Jan. 29, 2024) (the University of North Carolina agreed to cover the fees and expenses of a group founded by affirmative action advocates that won a U.S. Supreme Court challenge to the school’s consideration of race in student admissions).
5. $1.25 million – National Coalition On Black Civic Participation, et al. v. Wohl, Case No. 20 Civ. 8668 (S.D.N.Y. Apr. 8, 2024) (consent decree entered resolving a lawsuit brought by Black voters claiming that a pair of conservative conspiracy theorists engaged in a robocall campaign that spread lies about voting by mail to Black voters ahead of the 2020 election).

Top Consumer Fraud Class Action Settlements In 2024

1. $145 million – In Re Kia Hyundai Vehicle Theft Marketing, Sales Practices, And Products Liability Litigation, Case No. 22-ML-3052 (N.D. Cal. July 15, 2024) (final settlement approval sought in a class action resolving claims that that consumers were left vulnerable to theft and damage due to vehicles being improperly manufactured with design flaws).
2. $125 million – National Veterans Legal Services Program, et al. v. United States Of America, Case No. 16-CV-745 (D.D.C. Mar. 20, 2024) (final settlement approval granted in a class action resolving claims challenging the legality of “excessive” PACER fees).
3. $108 million – Elder, et al. v. Reliance Worldwide Corp., Case No. 20-CV-1596 (N.D. Ga. Jan. 9, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the defendants made and sold water heater connector hoses with defective rubber linings).
4. $100 million – Esposito, et al. v. Cellco Partnership d/b/a Verizon Wireless, Case No. MID-L-6360-23 (N.J. Super. Mar. 22, 2024) (final settlement approval granted in a class action to resolve claims that the company misled its customers by not disclosing certain fees in its postpaid wireless service plans).
5. $80 million – Sorace, et al. v. Wells Fargo Bank NA, Case No. 20-CV-4318 (E.D. Penn. Feb. 15, 2024) (final settlement approval granted in a class action to resolve claims that the bank failed to send reasonable and authenticated notices to customers whose vehicles were repossessed).

Top Data Breach Class Action Settlements In 2024

1. $350 million – In Re Alphabet Inc. Securities Litigation, Case No. 18-CV-6245 (N.D. Cal Apr. 9, 2024) (preliminary settlement approval granted in a class action alleging that a software glitch led to a data breach in which Google+ users’ personal data was exposed for three years).
2. $15 million – Salinas, et al. v. Block Inc., Case No. 22-CV-4823 (N.D. Cal. June 3, 2024) (preliminary settlement approval sought in a class action to resolve claims that a December 2021 data breach at the companies exposed personally identifiable information, account numbers and trading activity of 8.2 million people).
3. $8.7 million – Sherwood, et al. v. Horizon Actuarial Services LLC, Case No. 22-CV-1495 (N.D. Ga. Apr. 2, 2024) (final settlement approval granted for a class action to resolve claims that employer benefit plan members’ sensitive data was exposed in a massive breach at a consulting company).
4. $8 million – In Re Orrick, Herrington & Sutcliffe LLP Data Breach Litigation, Case No. 23-CV-4089 (N.D. Cal. Apr. 11, 2024) (preliminary settlement approval sought in a class action to resolve claims brought by clients of a law firm alleging their personal information was compromised in a March 2023 data breach of some of the firm’s client data).
5. $7.25 million – In Re Lincare Holdings Inc. Data Breach Litigation, Case No. 22-CV-1472 (M.D. Fla. June 12, 2024) (final settlement approval sought/scheduled for a class action to resolve claims that the company failed to protect consumers from a 2021 data breach).

Top Discrimination Class Action Settlements In 2024

1. $54 million – California Civil Rights Department v. Activision Blizzard Inc., Case No. 21STCV26571 (Cal. Super. Jan. 17, 2024) (consent decree entered for an action to resolve claims that the company engaged in gender discrimination, pay inequities, and fostered a culture of sexual harassment in the workplace).
2. $30 million – Employees’ Retirement System Of Rhode Island v. Paul Marciano, et al., Case No. 2022-0839 (Del. Chan. Jan. 4, 2024) (final settlement approval granted for a class action to resolve claims of decades of alleged sexual misconduct by one of the company’s co-founders).
3. $25 million – Jewett, et al. v. Oracle America Inc., Case No. 17-CIV-02669 (Cal. Super. Ct. Feb. 11, 2024) (preliminary settlement agreement sought in a class action to resolve claims that female employees were paid less than male employees).
4. $18 million – Forsyth, et al. v. HP Inc., Case No. 16-CV-4775 (N.D. Cal. Mar. 29, 2024) (final settlement approval granted in a class action to resolve claims alleging that the company unlawfully pushed out hundreds of older workers as part of a workforce reduction plan in violation of the ADEA).
5. $14 million – Randle, et al. v. SunTrust Bank Inc., Case No. 18-CV-1525 (D.D.C. Feb. 21, 2024) (final settlement approval granted in a class action to resolve claims brought by Black financial advisors alleging the bank blocked them from working with lucrative clients because of their race).

Top Government Enforcement Class Action Settlements In 2024

1. $16.5 million – In The Matter Of Avast Ltd., Case No. 202-3033 (FTC Jan. 19, 2024) (consent decree entered following a Federal Trade Commission lawsuit alleging that the company sold personal information to more than 100 third parties despite promising to protect consumers from online tracking).
2. $16 million – U.S. Department Of Labor v.  Disaster Management Group LLC (DOL Jan. 24, 2024) (consent order entered following investigations into 62 government subcontractors hired to construct temporary housing and provide services to Afghan refugees at Joint Base McGuire-Dix-Lakehurst in New Jersey).
3. $8.7 million – EEOC v. DHL Express (USA) Inc., Case No. 10-CV-6139 (N.D. Ill. Apr. 24, 2024) (consent decree entered resolving a lawsuit filed alleging that the company gave Black workers more difficult and dangerous work assignments than white employees).
4. $3.2 million – U.S. Department Of Labor v. Geronimo Wall Systems LLC, Case No. 24-CV-607 (D. Ariz. Apr. 2, 2024), U.S. Department Of Labor v. BCK Coatings Inc., Case No. 24-CV-2049 (D. Ariz. Apr. 2, 2024), U.S. Department Of Labor vs. 4-E Painting LLC, Case No. CV-24-CV-605 (D. Ariz. Apr. 11, 2024) & U.S. Department Of Labor v. Liberty Constructors LLC, Case No. 24-CV-606 (D. Ariz. Mar. 24, 2024) (consent decrees entered following investigations into four companies by the Wage & Hour Division which the companies willfully and recklessly shortchanged the affected workers and violated the overtime and minimum wage provisions of the FLSA).
5. $2.9 million – In Re Chipotle Mexican Grill Inc. d/b/a Chipotle Mexican Grill 1083, et al., Case Nos. CAS-2020-00215, CAS-2020-00216-R & CAS-2022-00297-R (Seattle Office of Labor Standards Mar. 8, 2024) (consent decree entered following a city agency investigation into eight Chipotle restaurants in Seattle to resolve the city’s investigation into employees’ allegations that the employer violated local ordinances governing sick pay and scheduling).

Top ERISA Class Action Settlements In 2024

1. $169 million – Electrical Welfare Trust Fund, et al. v. United States, Case No. 19-CV-353, (Fed. Claims Ct. Feb. 21, 2024) (preliminary settlement approval granted in a class action alleging that the government illegally exacted certain contributions from SISAs under it for benefit year 2014).
2. $61 million – In Re GE ERISA Litigation, Case No. 17-CV-12123 (D. Mass. Mar. 7, 2024) (final settlement approval granted in consolidated class actions alleging that the company violated the ERISA by directing employee retirement savings into underperforming GE Asset Management funds to generate fees for the subsidiary before it was sold).
3. $20 million – Durance, et al. v. Retirement Plan Committee Of Talen Energy Corp., Case No. 20-CV-5975 (E.D. Penn. Feb. 22, 2024) (preliminary settlement approval granted for a class action resolving claims from employees alleging that that they were owed early retirement pension benefits and pension supplements due to a change in control).
4. $19 million – Krohnengold, et al. v. New York Life Insurance Co., Case No. 21-CV-1778 (S.D.N.Y. Feb. 26, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the company unlawfully kept underperforming proprietary investment options in two employee retirement plans).
5. $19 million – Colon, et al. v. Johnson, Case No. 22-CV-888 (M.D. Fla. Mar. 27, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the company and executives enacted a scheme that diverted workers’ retirement benefits to shell companies and private equity firm Palm Beach Capital).

Top FCRA, FDPCA, And FACTA Class Action Settlements In 2024

1. $9.75 million – Sullen, et al. v. Vivint, Inc.,Case No. 01-CV-2023-903893 (Ala. Cir. Ct. Apr. 23, 2024) (final settlement approval granted in a class action alleging that the company accessed credit information in violation of the Fair Credit Reporting Act and created Vivint accounts without authorization).
2. $6.76 million – Martinez, et al. v. Avantus LLC, Case No. 20-CV-1772 (D. Conn. Feb. 27, 2024) (final settlement approval granted in a class action alleging that the company violated federal law by including inaccurate information on mortgage borrowers’ credit reports).
3. $5.7 million – Steinberg, et al. v. Corelogic, Case No. 22-CV-498 (S.D. Cal. Apr. 9, 2024) (final settlement approval granted in a class action lawsuit to resolve claims that the company violated the federal Fair Credit Reporting Act by listing consumers as deceased on credit reports when they were actually alive).
4. $877,000 – McKey, et al. v. TenantReports.com LLC, Case No. 22-CV-1908-GJP (E.D. Penn. Feb. 27, 2024) (final settlement approval granted in a class action lawsuit to resolve claims that the company prepared consumer background reports that included outdated criminal non-conviction information).
5. 5.    $630,000 – Forestal, et al. v. SH Group Operations LLC, Case No. 23-CA-013634 (Fla. Cir. Ct. May 22, 2024) (final settlement approval sought in a class action alleging that the company violated the Fair Credit Reporting Act when supplying and using consumer reports).

Top FLSA / Wage & Hour Class And Collective Settlements In 2024

1. $72.5 million – Utne, et al. v. Home Depot USA Inc., Case No. 16-CV-1854 (N.D. Cal. Mar. 8, 2024) (final settlement approval granted for a class action to resolve claims that the company failed to pay hourly wages, pay final wages on time, and provide accurate written wages).
2. $38 million – In The Matter Of The Investigation Of Letitia James, Attorney General Of The State Of New York Of Lyft Inc., AOD No. 23-041 (AG Labor Bureau Nov. 30, 2024) (the New York Attorney General took legal action against Lyft, claiming the ride-booking company withheld wages from drivers by deducting taxes and fees from their pay instead of having passengers pay those expenses and prevented drivers from receiving the benefits they were entitled to under New York law).
3. $15 million – Bolding, et al. v. Banner Bank, Case No. 17-CV-601 (W.D. Wash. Jan. 8, 2024) (final settlement approval sought in a class and collective action to resolve claims that the company misclassified mortgage loan officers as exempt employees and thereby failed to pay overtime compensation in violation of federal and state wage & hour laws.
4. $10.3 million – Ward, et al. v. United Airlines Inc., Case No. 15-CV-2309 (N.D. Cal. Jan. 24, 2024) (final settlement approval granted in a class action to resolve claims that the airline failed to include pilots’ hours and hourly rates on pay stubs in violation of federal and state wage & hour laws).
5. $3.5 million – Vasquez, et al. v. Leprino Foods Co., Case No. No. 1:17-cv-00796 (E.D. Cal. Feb. 12, 2024) (preliminary settlement approval granted in a class action to resolve claims that the company failed to pay employees for on-call meal and rest breaks, second meal breaks, rounding of time punches, donning and doffing off the clock, wages, overtime and premium pay, accurate wage statements and final wages at termination in violation of state wage & hour law).

Top Labor Class Action Settlements In 2024

1. $20 million – In Re International Longshore and Warehouse Union, Case No. 23-BK-30662 (N.D. Cal. Bankr. Feb. 22, 2024) (preliminary settlement approval granted in a class action to resolve claims alleging that the union of engaging in an unlawful boycott of the company during a labor dispute).
2. $20 million – Bauserman, et al. v. State Of Michigan Unemployment Insurance Agency, Case No. 15-000202 (Mich. Ct. Claims Jan. 29, 2024) (final settlement agreement granted in a class action to resolve claims over the Michigan Unemployment Insurance Agency’s use of a computer program to detect fraudulent claims, which resulted in thousands of false fraud determinations).
3. $2.5 million – Arrison, et al. v. Walmart Inc., Case No. 21-CV-481 (D. Ariz. Jan. 30, 2024) (settlement reached in a class action to resolve claims that the company should have paid nearly 80,000 workers for the time they spent undergoing COVID-19 screenings before clocking in for their shifts).
4. $2.5 million – Campa, et al. v. Board Of Trustees Of The Sheet Metal Workers Pension Plan Of Northern California, Case No. 23-CV-1760 (N.D. Cal. Apr. 18, 2024) (preliminary settlement approval sought in a class action to resolve clams that approximately 30 early retirees were not provided with the full retirement benefits they were promised.
5. $2.45 million – Hoeffner, et al. v. D’Amato, Case No. 09-CV-3160 (E.D.N.Y. Mar. 18, 2024) (preliminary settlement approval sought in a class action to resolve claims against two union benefit funds, that the funds illegally refused to transfer money to another set of funds after a merger of union locals).

Top Privacy Class Action Settlements In 2024

1. $90 million – In Re Facebook Internet Tracking Litigation, Case Nos. 22-16903 and 22-16904 (9th Cir. Feb. 21, 2024) (final settlement approval affirmed in a class action to resolve claims alleging that Facebook used cookies to track the internet activity of logged-out social network users who visited third-party websites containing Facebook “Like” button plugins).
2. $75 million – Rogers, et al. v. BNSF Railway Co., Case No. 19-CV-3083 (N.D. Ill. Feb. 27, 2024) (preliminary settlement approval granted in a class action to resolve claims alleging that the company unlawfully scanned drivers’ fingerprints for identity verification purposes without written, informed permission or notice when they visited BNSF rail yards).
3. $52.5 million – Schreiber, et al. v. Mayo Foundation For Medical Education And Research, Case No. 22-CV-188 (W.D. Mich. May 25, 2024) (final settlement approval sought/scheduled in a class action to resolve claims that the company shared subscriber information with third parties without getting consumer consent).
4. $25 million – Peters, et al. v. Apple, Case No. 19STCV21787 (Cal. Super Ct. Apr. 2, 2024) (final settlement approval granted in a class action to resolve claims that the company misrepresented the ability to use its Family Sharing feature to share subscriptions to apps).
5. $23 million – Smith-Washington, et al. v. TaxAct Inc., Case No. 23-CV-830 (N.D. Cal. Feb. 27, 2024) (preliminary settlement approval sought in a class action to resolve claims alleging that the company shared confidential taxpayer information with Meta Platforms Inc. and Google).

Top Products Liability And Mass Tort Class Action Settlements In 2024

1. $10 billion – In Re Aqueous Film-Forming Foams Products Liability Litigation, MDL 2873 (D.S.C. Mar. 29, 2024) (final settlement approval granted in a class action to resolve claims with 3M by utilities that maintain it’s liable for the damage they have and will incur due to its signature PFAS that were used for decades in specialized fire suppressants, called aqueous film-forming foams (AFFF), that were sprayed directly into the environment and reached drinking water).
2. $1.185 billion – Camden, et al. v. E.I. DuPont de Nemours & Co., Case No. 23-CV-3230 (D.S.C. Feb. 8, 2024) (final settlement approval granted in a class action to resolve claims in a multidistrict litigation for the firefighting agent aqueous film forming foam (AFFF), which contains per- and polyfluoroalkyl substances (PFAS).
3. $1.1 billion – Philips Recalled CPAP, Bi-Level PAP, And Mechanical Ventilator Products Liability Litigation, Case No. 21-MC-1230 (W.D. Penn. Apr. 29, 2024) (settlement reached in a multi-district litigation claiming that degraded foam in breathing machines caused plaintiffs personal injuries or will require long-term medical monitoring).
4. $750 million – In Re Aqueous Film-Forming Foams Products Liability Litigation, Case No. 18-MN-2873 (D.S.C. Apr. 25, 2024) (preliminary settlement approval granted to resolve claims that Johnson Controls International PLC subsidiary Tyco Fire Products LP’s public water systems’ federal claims that some “forever chemicals” they detected in their supplies came from firefighting foam it made).
5. $700 million – In Re Johnson & Johnson Talcum Powder Products Marketing, Sales Practices And Products Liability Litigation, Case No. 16-MD-2738 (D.N.J. Jan. 24, 2024) (settlement reached in a multi-district litigation with 42 state attorneys general to resolve claims that Johnson & Johnson wrongfully marketed its talc-based baby powder by not warning about possible health risks).

Top Securities Fraud Class Action Settlements In 2024

1. $490 million – In Re Apple Inc. Securities Litigation, Case No. 19-CV-2033 (N.D. Cal. Mar. 15, 2024) (preliminary settlement approval granted in a class action to resolve claims that Apple’s CEO Tim Cook defrauded shareholders by concealing falling demand for iPhones in China).
2. $350 million – In Re Alphabet Inc. Securities Litigation, Case No. 18-CV-6245 (N.D. Cal. Apr. 9, 2024) (preliminary settlement approval granted in a class action to resolve claims that the company deceived them about a March 2018 software glitch that allegedly gave third-party app developers the ability to access the private profile data of 500,000 users of the Google Plus social media site).
3. $192.5 million – Chabot, et al. v. Walgreens Boots Alliance Inc., Case No. 18-CV-2118 (M.D. Penn. Feb. 7, 2024) (final settlement approval granted in a class action to resolve claims that the company’s executives lied about the likelihood of an ultimately unsuccessful merger between the two drugstore chains).
4. $97 million – Roofer’s Pension Fund, et al. v. Papa, Case No. 16-CV-2805 (D.N.J. Apr. 23, 2024) (preliminary settlement approval granted in a class action to resolve claims that the company’s executives made misleading statements to defeat a potential $29 billion takeover attempt).
5. $85 million – Industriens Pensionsforsikring A/S, et al. v. Becton Dickinson and Co., Case No. 20-CV-2155 (D.N.J. Jan. 18, 2024) (preliminary settlement approval granted in a class action the investors reached with the medical technology company over securities fraud claims that it hid regulatory problems regarding sales of its Alaris infusion pump).

Top TCPA Class Action Settlements In 2024

1. $9.7 million – Berman, et al. v. Freedom Financial Network LLC, Case No. 18-CV-1060 (N.D. Cal. Feb. 16, 2024) (final settlement approval granted in a class action to resolve claims alleging that the debt consolidation company and its subsidiaries made telemarketing calls which violated the Telephone Consumer Protection Act).
2. $9 million – Moore, et al. v. Robinhood Financial LLC, Case No. 21-CV-1571 (W.D. Wash. July 16, 2024) (final settlement approval sought in a class action to resolve claims that the company’s referral text messages violated Washington telemarketing laws).
3. $7 million – Williams, et al. v. Choice Health Insurance LLC, Case No. 23-CV-292 (M.D. Ala. July 9, 2024) (final settlement approval sought in a class action to resolve claims that the company violated the TCPA with unsolicited marketing calls).
4. $2 million – Burnett, et al v. CallCore Media Inc., Case No. 21-CV-3176 (S.D. Tex. June 25, 2024) (final settlement approval sought in a class action to resolve claims the company placed prerecorded phone calls to consumers in violation of state laws and the federal TCPA).
5. $1.225 million – Lateano, et al. v. Chicago Cubs Baseball Club LLC, Case No. 23-CV-2757 (N.D. Ill. June 17, 2024) (final settlement approval sought in a class action to resolve claims that the Chicago Cubs sent text messages to customers without consent in violation of the TCPA).

By Gerald L. Maatman, Jr., Maria Caceres-Boneau, and Gregory S. Slotnick

Duane Morris Takeaways: On February 29, 2024, Judge Andrew Carter of the U.S. District Court for the Southern District of New York in Lee v. Grove Group Advisors LLC, et al., Case No. 1:20 Civ. 05937 S.D.N.Y. (Feb. 29, 2024), issued an order granting a motion to enforce a settlement agreement reached between the parties nearly three years after it was initially submitted for approval, and more than two years after the Court ultimately approved the agreement as fair and reasonable.  The decision underscores the importance of a Court’s retention of jurisdiction over a case in order to enforce or otherwise apply the settlement of a case, and also serves as a reminder that employers and individual business executives who sign settlement agreements to end litigation should always be prepared to make all agreed-upon payments, or else risk the ire of a Judge, the Court’s enforcement of the agreement, and additional interest on the original settlement amount. 

Case Background

According to the Complaint filed by the Plaintiff on July 30, 2020, Plaintiff began working on August 9, 2019 for the defendants – including an investment advisory company and its Chief Executive Officer/Co-Founder (together, “Defendants”) – as a “Manufacturing and Engineering Director” for which Defendants agreed to pay Plaintiff an annual salary of $160,000.  Complaint (“Compl.”) at ¶¶ 12, 21-22.  Plaintiff claims that Defendants also agreed to provide him with fifteen (15) days of PTO per year.  Id. at ¶ 23.  According to Plaintiff, in January 2020, Defendants ceased paying him his wages, told him that they’d pay him “soon,” and after he continued to work for Defendants, in February 2020, Defendants sent him a letter stating that his last day of employment was February 13, 2020.  Id. at ¶¶ 26-33. The letter also informed Plaintiff that Defendants owed him approximately $24,000 for the period from December 22, 2019 to February 13, 2020, that Defendants did not have the means to pay him at that time, but that they were making “every effort to raise money for the company in order to pay our liabilities, yours included.”  Id. at ¶ 32.

Plaintiff alleges that on May 15, 2020, Defendants paid him only $3,846.15, and that Defendants did not pay him the balance of what they owed him despite Plaintiff trying to reach out to Defendants on numerous occasions in an attempt to get paid, the only reply from Defendants being “we will let you know when we get the funds to pay you.”  Id. at ¶¶ 34-35.  Plaintiff claimed entitlement to $20,153.87 in unpaid earned wages for work performed for Defendants, as well as sixty-four (64) hours of accrued, unused PTO valued at $4,923.07 – totaling $25,076.94.  Id. at ¶¶ 36-38.

According to the Court Order, the parties reached agreement at mediation and submitted an initial proposed settlement agreement for Court approval on May 27, 2021, as required by Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015).  Order at 1.  On December 28, 2021, after the parties filed a revised agreement, the Court approved the agreement as fair and reasonable, and it provided for payment by Defendants of a settlement sum of $14,990 by January 11, 2022.  Id. at 1-2.  Critically, the Court retained jurisdiction over the case to hear any motion to enforce or otherwise apply the settlement.  Id.  The Order stated that Plaintiff now sought to enforce the agreement, and that the Court provided Defendants with multiple opportunities to respond to the motion to enforce, including a December 4, 2023 order to show cause as to why Plaintiff’s motion to enforce should not be deemed unopposed.  Id.

The Court’s Decision

The Court determined that because the parties reached a binding and enforceable agreement, Plaintiff’s motion to enforce the agreement should be granted.  Id.  The order confirmed that to date, Defendants had not paid any of the settlement sum, and that after counsel for Defendants’ request to withdraw was granted by the Court, Plaintiff filed a motion to enforce the settlement on April 12, 2023.  Id. at 2.  Defendants also ignored the Court’s repeated warnings to obtain new counsel.  Id.  On June 5, 2023, the Court issued an order to show cause as to why the Plaintiff’s motion should not be treated as unopposed, and provided another follow-up to Defendants by way of a December 1, 2023 filing.  Id.  Defendants did not respond, and the Court noted that they have not made any filing on the docket since February 9, 2023.  Id. at 2-3.

The Court set out the standard of review for settlement agreements, which it stated are interpreted according to general principles of contract law.  Id. at 3.  The Court found that when a judge determines a settlement agreement was in fact reached, the agreement is binding on the parties, and that the parties must be in agreement on all essential terms.  Id.  The order confirmed that once a settlement agreement is reached, it constitutes a binding and conclusive contract, and that the parties are bound to its terms even if they have a later change of heart.  Id. at 4.

The Court stated that it may only vacate a stipulation of settlement upon a showing of good cause, such as fraud, collusion, mistake, duress, lack of capacity, or where the agreement is unconscionable, contrary to public policy, or so ambiguous that it indicates by its terms that the parties did not reach agreement.  Id. at 5.

In this case, the Court found no such showing of good cause to vacate the agreement, since it was written and signed by the parties and approved by the judge.  Id.  In considering the totality of the circumstances, the Court ruled that Plaintiff established that the signed settlement agreement is enforceable.  Id. at 6.  As a result, the Court granted Plaintiff’s motion to enforce the agreement, as well as Plaintiff’s request for 9% interest per year from the date the funds became due (January 11, 2021) to the date the funds became owed (April 12, 2023 – the filing date of the motion to enforce settlement).  Id.  The Court calculated such interest to be $3,034.55, and ultimately held Plaintiff is entitled to recover from Defendants, individually, jointly and severally, the total amount of $18,024.55.  Id.

Implications For Businesses

The Lee decision illustrates that under appropriate circumstances, such as the settlement of an unpaid wage claim providing for a judge to retain jurisdiction, a court is apt to grant motions to enforce a settlement agreement without hesitation (and also award interest on same).  In this case, the Court provided Defendants with numerous opportunities to defend themselves and appear on the docket.  However, Defendants’ silence spoke volumes, and the Court ultimately approved Plaintiff’s motion to enforce the valid agreement previously reached and submitted on the docket by the parties.

Businesses and their executives should always ensure their intent and unquestioned ability to make agreed-upon payments as part of any litigation settlement agreement (and to their employees), whether an unpaid wage claim filed on the docket for Court approval in the Second Circuit, or a private, confidential breach of contract claim.  This is especially so when a Court retains jurisdiction over a filed matter to enforce any settlement agreement reached.  Of course, employers should also make sure that they follow Court Orders and meet Court deadlines to a tee!