Category: Settlement Issues

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!

By Gerald L. Maatman, Jr. and Sean P. McConnell

Duane Morris Takeaways: On October 25, 2023, in the litigation of In Re Blue Cross Blue Shield Antitrust Litigation, MDL No. 2406 (11th Cir. Oct. 25, 2023), a three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit affirmed a district court’s order giving approval to the Blue Cross Blue Shield insurers’ $2.67 billion class action settlement resolving allegations of antitrust violations and other anti-competitive practices. The settlement, which was reached nearly three years ago, involved Blue Cross Blue Shield agreeing to a multi-billion dollar settlement fund and incorporating various reforms to resolve alleged anti-competitive business practices to harm competition. The Eleventh Circuit rejected various objections from corporate and individual objectors, including arguments that the settlement release would frustrate national employers from participating in the settlement and/or from making similar claims in the future, that the district court failed to scrutinize the allocation of the settlement proceeds among plaintiffs, and issues with the attorneys’ fees awarded. Instead, the Eleventh Circuit found that the district court did not abuse its discretion in approving the settlement.

The affirmation of the district court’s settlement approval in Blue Cross Blue Shield Antitrust Litigation is required reading for any corporate counsel considering settlement of antitrust class action litigation.

Case Background

The underlying multidistrict litigation began in 2012 when subscribers alleged that Blue Cross Blue Shield and member plans engaged in an anti-competitive market allocation and exclusive-dealing scheme to harm competition. The Blue Cross Blue Shield Association is a national insurance company. It owns and licenses its federal trademarks to local member plans and affiliated entities. According to the underlying complaint, subscribers who bought health insurance from Blue Cross Blue Shield alleged that Blue Cross Blue Shield allocated geographic territories, limited member plans’ competition by mandating a minimum percentage of business under the Blue Cross brand for each member doing business inside and outside their territories, restricted the right of member plans to be sold to companies outside the Association, and agreed to other ancillary restraints on competition. There was a separate track of litigation for claims brought by providers, but the case at bar does not involve that track. After the district court granted partial summary judgment for the subscribers in 2018, the parties reached a class action settlement that divided the subscriber-track plaintiffs into two groups: (i) a monetary damages class and (ii) an injunctive relief class.

Settlement Affirmed

Several parties appealed the district court’s approval of the class action settlement.  Home Depot argued that the settlement release would, among other things, frustrate enforcement of the federal antitrust laws. The Eleventh Circuit rejected this argument because “[p]rivate enforcement is only one mechanism by which federal antitrust laws may be vindicated.” Id. at 13. The Eleventh Circuit noted that the “government may also enforce the antitrust laws against companies like Blue Cross” and intimated that DOJ or state attorneys general could investigate and bring claims against Blue Cross for anticompetitive conduct. Id. at 13-15. With respect to argument about the apportionment of settlement funds, the Eleventh Circuit opined that federal laws requires “equity, not equality.” Id. at 25. It therefore concluded that the approval of the class-wide settlement, though facially unequal, was not unfair and not an abuse of discretion.

Implications for Defendants in Class Actions

In Re Blue Cross Blue Shield Antitrust Litigation is one of the most significant antitrust class actions in recent years, and is arguably a historic resolution in terms of industry practices. From the early stages of the action, a court-appointed settlement master helped the parties in settlement negotiations, and the Eleventh Circuit referred to the settlement master’s view that the settlement at issue was reasonable.

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

Duane Morris Takeaways:  Pursuant to Cheeks v. Freeport Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015), the practice of settling lawsuits filed in district courts in the Second Circuit alleging unpaid wages under the Fair Labor Standards Act (“FLSA”) requires approval from either the Court or the U.S. Department of Labor to take effect.  On September 14, 2023, Magistrate Judge James M. Wicks of the U.S. District Court for the Eastern District of New York approved a rather unique settlement request by the parties in such an unpaid wage case.  Although nearly all wage & hour lawsuit settlements in the Second Circuit ultimately conclude with the business-employer defendant agreeing to pay a monetary amount in exchange for dismissal of the case and a release of the employees’ wage claims against the employer, in Gallagher v. Mountain Mortgage Corp. et al., Case No. 22-CV-0715 (E.D.N.Y. Sept. 14, 2023), the Court evaluated and signed-off on the parties’ proposed settlement structure whereby the plaintiff-employee, who worked as a loan processor and mortgage loan originator for a mortgage lender, agreed to resolve the matter in exchange for her receipt of a heavily-discounted purchase price and her agreement to buy the business itself.  The Court’s decision serves as an interesting thought exercise for resolving unpaid wage lawsuits through unorthodox strategies, though potentially applicable only in particular circumstances under which the Court may find such resolution fair and reasonable.

Case Background

According to the Complaint, plaintiff-employee Nicole Gallagher (“Gallagher”) has over 25 years of experience in the mortgage banking industry and is licensed to originate mortgage loans in New York, New Jersey, Connecticut, and Florida.  Gallagher alleged that she worked for a mortgage lender, Mountain Mortgage Corp. (“MMC”), for a little over a year and claimed that despite working around 85 hours per week, MMC did not pay her at all during certain months, never paid her overtime despite consistently working over 40 hours per week, and failed to provide her with accurate paystubs and weekly earnings statements or with a notice and acknowledgment of her pay rate as required by law.  Specifically, Gallagher asserted that MMC paid her a set weekly salary and no overtime during the entire year of 2021, and that MMC did not compensate her at all during November and December 2020 or at any time in 2022.  MMC claimed that at all relevant times, it understood that Gallagher was not an hourly employee, but instead “was an owner and officer” of MMC who was to be paid by commission no differently than other previously employed salespersons of MMC.

Magistrate Judge Wicks’ opinion noted that, prior to the filing of the lawsuit, Gallagher and MMC had entered into a purchase agreement whereby Gallagher was to purchase MMC for $500,000.  The parties informed the Judge that Gallagher was employed at MMC in advance of her anticipated purchase of MMC, but that when no successful application for a change in ownership of MMC was submitted to the New York State Department of Financial Services by the deadline contemplated in the purchase agreement, the parties’ relationship soured, resulting in Gallagher filing the lawsuit.

As part of the lawsuit, the parties previously submitted a request for the Judge’s approval of a settlement on May 6, 2022, whereby Gallagher would purchase MMC for $100,000 rather than the $500,000 contemplated in the original purchase agreement.  Judge Wicks ultimately denied the parties’ first request for settlement approval due to what he deemed to be a lack of essential information required for the Court to evaluate whether the proposed agreement was fair and reasonable as required by Cheeks.  Such information included the bona fide details of the parties’ FLSA dispute, calculations of Gallagher’s potential recovery, and an explanation of what portion of the reduced purchase price of MMC constituted consideration for Gallagher’s FLSA claims.  The decision of September 14 addressed the parties’ submission of a renewed settlement approval request.

The Decision

As noted by Magistrate Judge Wicks, in support of the parties’ renewed settlement agreement approval request, the parties aimed to kill two bird with one stone – resuscitate the parties’ failed transaction and settle Gallagher’s wage & hour claims against MMC.  Id. at 6.  This time around, Gallagher submitted detailed information to the Court concerning her purported unpaid wage damages, which she alleged to be approximately $295,000.  This figure included alleged “underpayments, liquidated damages, pre-judgment interest, and penalties” owed to her by MMC.  Id. at 4.  Gallagher also provided the Court with the specific details of her alleged employment, including time periods, weekly hours worked, regular rate of pay, and periods during which she claims that she did not receive proper compensation.

Magistrate Judge Wicks noted that under the original settlement approval request, he had been unable to determine which portion of the $400,000 reduction in MMC’s purchase price, if any, was consideration for the release of Gallagher’s FLSA claims, and which portion was attributable to other factors.  As part of the renewed approval request, Gallagher informed the Court that no formal valuation was conducted to reach the original $500,000 purchase price, and that her reduced purchase price of $100,000 was similarly not calculated based on a formal valuation.  Instead, both figures were the product of advice from her attorneys, her experience in the industry, and her “sense of the value” of the mortgage banking licenses (whereby MMC’s New York Mortgage Banker’s license was in the process of being surrendered).  Id. at 5.  Gallagher submitted that she was unable to “break down exactly” what portions of the reduced purchase price were attributable to what specific single factor; however, in her view, the value of her FLSA claims and the loss of MMC’s New York license were both factors that were “in the mix” along with her desire to own MMC outright, avoid costly arbitration, avoid the stress and expense of the lawsuit, and generally “just move on” with her life.  Id. at 5-6.

In evaluating and approving the renewed settlement request, Magistrate Judge Wicks noted his satisfaction with the fairness of the proposed settlement, giving due weight to Gallagher’s more than 25 years of experience in the mortgage banking industry and the fact that Gallagher herself worked at MMC with the intention of inevitably owning it (as opposed to a disinterested third-party purchase of a business).  As such, although there was no formal valuation of MMC’s value conducted, Judge Wicks acknowledged that Gallagher’s experience and familiarity with the business was relevant to her comfort level with the reduced purchase price.  The Court also gave weight to Gallagher’s desire to move on with her life and put these issues behind her.

Magistrate Judge Wicks further cited the fact that Gallagher now owns 100% of MMC, and that a trial loss should he not approve the settlement could potentially turn her status as 100% owner into a 0% owner with no remaining claims against MMC.  The Court noted that no settlement amount was earmarked for payment of attorneys’ fees, as all of Gallagher’s attorneys except for one were paid on an hourly basis (rather than a contingency), that the one exception only represented Gallagher briefly and was replaced within 3 months of filing the case, and the attorney had not expressed any intention of asserting a lien over the reduced purchase price of MMC.

Based on all of these factors, the Court finally confirmed that the renewed settlement agreement properly revised and limited two troublesome provisions concerning non-disparagement and confidentiality – both of which are regularly found by courts to be inconsistent with the public policy intent underlying the FLSA.

Implications for Employers

The decision is an interesting thought experiment for small employers who are subject to unpaid wage lawsuits brought on behalf of a small number of plaintiffs.  In this instance, the parties agreed that rather than separate Gallagher’s desire to purchase MMC and her alleged unpaid overtime wages and related penalties, a more logical solution was to combine the two and provide for one global resolution.  Creative, innovative thinking along these lines likely saved MMC from incurring additional litigation expenses and the unknown of a jury trial verdict.  Moreover, the parties ultimately were able to provide the Court with evidence from which the settlement could be deemed fair and reasonable.

Although potentially limited to specific factual situations along the lines of an experienced employee initially employed by a small business with the goal of owning the business, this decision illustrates that in evaluating the reasonableness of proposed unpaid wage case settlements, judges may be open to approving agreements when the parties think outside the box (as long as the parties are able to defend and support their actions).

Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partners Jerry Maatman and Jennifer Riley with their analysis of significant class action settlements throughout 2022 and a preview settlement trends in 2023.

Episode Transcript

Jerry Maatman: Hello loyal blog readers and thank you for joining our weekly installment of the Class Action Weekly Wire. Today I’m joined by my partner Jen Riley, the co-chair of the Duane Morris Class Action Practice Group. Thanks for being on our podcast today, Jen.

Jennifer Riley: Great to be here, thanks for having me Jerry.

Jerry:  Today we’re discussing I think the most interesting development in the class action space over the last 24 months, and that would be settlement activity. I’m a big believer that one can tell a lot about what’s going on in the class action world based on settlements in terms of what the going rate is to settle these cases – and the Duane Morris Class Action Review has a full chapter on the top 10 settlements measured by monetary values across a wide area of cases. I know, Jen, that the last year was an exceptional year of settlements – what was the major takeaway for employers?

Jen: Absolutely, Jerry. So in 2022 there were more billion dollar settlements than ever before. The opioid litigation settlements in particular fueled record highs as distributors and manufacturers inked settlements with numerous states to pay out for allegations that they contributed to the opioid epidemic in the United States. So all 10 of the largest settlements of the year 2022 were opioid related. Those numbers were astronomical – they included settlements for $7.4 billion involving distributor McKesson and $6.1 billion involving distributor AmerisourceBergen to resolve the vast majority of the opioid lawsuits brought by state and local governmental against those entities.

Jerry: It’s interesting, Jen – having studied this space for going on 20 years now, most years’ average settlements across all areas were three to five billion dollars and all of a sudden have a year where the settlements top $60 billion. It brought to mind for me the only analogous situation was two decades ago when state attorney generals and private plaintiffs settled big tobacco cases – about 20 to 25 billion dollars, a lot of money at that time two decades ago was spent, so 2022 was an exceptionally unique year by any measure. I think one of the largest consumer fraud settlements, the $6 billion student loan settlement in Sweet, et al. v. Cardona Student Debt Cancellation Settlement kind of rounded out the story in terms of big blockbuster numbers across the board.

Jen: I will also note that there were some very large antitrust settlements in 2022. The top one came in at about $2.67 billion in In Re Blue Cross Blue Shield Antitrust Litigation. That was an antitrust class action involving claims that health insurance companies violated the Sherman Antitrust Act by entering into unlawful agreements to restrain competition among them in the health and insurance sales market.

Jerry: Well not only antitrust, but also securities fraud – we had the $1 billion In Re Dell Technologies Inc. Class V Stockholders Litigation settled in Delaware as well as the $800 million In Re Twitter Inc. Securities Litigation. Those were robust settlement numbers that also pushed the settlements even higher. What were some of the other areas that you think worth watching in the current calendar year in terms of the potential for large class action settlements?

Jen: Well, definitely the largest settlement so far this year happens to be in the products liability and mass torts space. There the top story is the resolution of claims relating to contamination from so-called forever chemicals in firefighting foam. As of August of this year, all of the claims by local water authorities and municipalities have been resolved in a global settlement agreement. 3M, DuPont, and other defendants will reportedly pay about $10.3 billion to resolve those claims as part of that settlement deal.

Jerry: That is one heck of a blockbuster settlement. The other area where I think we’re going to see significant settlement activity at very high levels would be in the antitrust bucket, and will continue to see large numbers there although it would take a lot of settlements to break the record that was compiled in calendar year 2022 by our calculations checking this on a daily basis from January 1 to the present, we’re at about $38 billion dollars so uh year even if there wasn’t another settlement in 2023 after 2022, 2023 would be the biggest settlement year in the history of American jurisprudence, so still a very, very impressive record being shown by the plaintiffs’ bar in monetizing these class actions.

Jen: Agreed. Those are some impressive sums thus far this year, it will be very interesting to see how the rest of the year unfolds on that front.

Jerry: We’ll be sure to share these results in our analysis with our readers and listeners in terms of our 2024 Duane Morris Class Action Review. Thanks Jen for joining me today and for your great insights and analysis as always, and thank you to our listeners for tuning in to our Friday weekly podcast. Thank you.

By Gerald L. Maatman, Jr. and Katelynn Gray

Duane Morris Takeaways – In Moses v. N.Y. Times Co., No. 21-2556, 2023 WL 5281138 (2d Cir. Aug. 17, 2023), Objector-Appellant Eric Isaacson (“Isaacson”) was successful in appealing an order of the U.S. District Court for the Southern District of New York approving a class action settlement, and attorneys’ fee award, and an incentive award in a class action against the New York Times (the “NYT”) alleging violations of California’s Automatic Renewal Law. The Second Circuit’s opinion is a case study for corporate counsel on the attributes of class action settlements that courts are apt to reject during the approval process.

Background Of The Case

Plaintiff Maribel Moses (“Moses”) brought a class action on behalf of similarly-situated subscribers in California against the NYT alleging it violated the California Automatic Renewal Law (“ARL”) by enrolling consumers who sign up for a NYT subscription, either through its website or the App, in a renewing subscription without providing the requisite disclosures and authorizations.

The parties engaged in informal discovery and mediation right off the bat and reached an agreement which settled the claims of 876,606 persons.  Under the terms of the settlement agreement, NYT agreed to implement business reforms to comply with the ARL, and to provide class members with Access Codes valid for a one-month free subscription to a NYT product, or a pro rata cash payment. A $1.65 million non-reversionary settlement fund was established to pay all approved claims, attorneys’ fees of up to $1.25 million, and a court-approved incentive award to Moses of up to $5,000.

The district court preliminarily approved the settlement agreement on May 12, 2021 and conditionally certified the class for settlement purposes.  Of the 876,606 persons, three class members, including Isaacson, objected to the settlement.  Isaacson’s arguments were focused on the fairness of the settlement, the attorneys’ fees calculation, and the lawfulness of the incentive award.  In approving the settlement, the district court applied a presumption of fairness standard and found it was reached in “arm’s-length negotiation between experienced, capable counsel . . . after a nine-hour mediation before a neutral third party.”  Id. at 8.  The district court further found the relief afforded to the class was “commensurate with the harm alleged” and that the incentive award was appropriate under Second Circuit precedent.  Id. at 9. With respect to the proposed attorneys’ fee award, the district court found the Access Codes were not coupons under the Class Action Fairness Act’s (“CAFA”) coupon settlement provisions, which includes various restrictions on the award of attorneys’ fees. Instead, the district court looked to the value of the entire settlement in determining whether the award was appropriate and ruled that given its face value of $5,563,000, $1.25 million in attorneys’ fees (22.5% of the total face value of the settlement) was reasonable.  The attorneys’ fee award constituted 76% of the $1.65 million settlement fund.

Isaacson appealed the judgement to the Second Circuit.

Second Circuit’s Decision To Vacate The District Court’s Judgment

In vacating the district court’s judgement, a three-judge panel of the Second Circuit agreed with Isaacson that the district court applied the wrong legal standard when it approved the proposed settlement and wrongly concluded that the Access Codes were not “coupons” under the CAFA.

Federal Rule of Civil Procedure 23(e) requires court approval when settling claims of a certified class and provides that a district court may only approve a class-wide settlement after a hearing and only on finding that it is “fair, reasonable, and adequate.”  Acknowledging the nine factors historically used to evaluate the fairness, reasonableness and adequacy of a class settlement, and without displacing them, the panel pointed to the 2018 revisions to Rule 23(e)(2), which include a list of four considerations district courts must evaluate, one of which is whether the “proposal was negotiated at arm’s length.”  The inclusion of this factor, the panel held, “prohibit courts from applying a presumption of fairness to proposed settlements arising from an arms-length agreement.”  Id. at 13.  Instead, the panel explained, courts must consider all four factors outlined in Rule 23(e)(2) “holistically,” which includes, among other considerations, taking into account the terms of any proposed award of attorney’s fees.  Id.

Isaacson argued, and the panel agreed, that the district court erred when it presumed the proposed settlement was fair because it was reached in an arm’s-length negotiation, and further abused its discretion when it failed to evaluate such fairness in light of the attorneys’ fee and incentive awards. Notably, the panel opined “the error does not automatically require the reversal of the settlement’s approval”, and that it is “possible” the district court’s errors could be “harmless.”  Id. at 22.  In this case however, the panel found the error could not be “written off as harmless” given the fee awards were “intimately intertwined with the settlement.” Id. at 22-23. In fact, the panel pointed out that the amount of attorneys’ fees and incentive payment awarded directly impacted the amount of funds available for pro rata distribution to class members. As such, the district court was required to consider these fees, not just separately, but together with the other requisite considerations.

With respect to the attorneys’ fee award, the panel agreed with Isaacson that the Access Codes were coupons “under the plain meaning of the word,” i.e., digital vouchers provided to class members valid only for “select products or services.” Id. at 29, 32.  The fact that the class members had the option to take cash relief was not of import, the panel found.  As such, since the Access Codes were coupons, the district court was required to apply the CAFA’s coupon settlement provisions when calculating the attorneys’ fee awards, which looks to the redemption value of the coupons, as opposed to the face value of the settlement.  On remand, the panel said the district court must evaluate the settlement both in light of the fee award and comply with the CAFA’s coupon settlement requirements when determining the amount of such an award.

The one argument of Isaacson’s shot down by the panel was his challenge to the approval of the $5,000 incentive award. It refused to reverse established precedent in the Second Circuit or depart from Rule 23, which allows incentive awards that are fair and appropriate.

The panel ultimately vacated and remanded the district court’s order approving the settlement and the attorneys’ fees award. At that same time, it did not opine on the fairness of the settlement or suggest that it must be overturned.

Implications For Corporate Defendants

The Second Circuit’s ruling is a perfect example of how an attorneys’ fee award that is not thought through can serve to delay, and potentially derail, the class action settlement process. It is not enough to simply consider it on its own, but the proposed attorneys’ fee award must be considered holistically with all the Rule 23(e)(2) factors in determining whether the ultimate proposal is fair, reasonable, and adequate.

By Gerald L. Maatman, Jr., Jennifer A. Riley, and George J. Schaller

Duane Morris Takeaways: In Su v. 811 Autoworks LLC et al., No. 3:21-CV-00220 (N.D. Ga. June 5, 2023), a federal district court in Georgia entered a consent judgement requiring an employer to pay approximately $40,000 for back wages and liquidated damages to end an FLSA suit filed by the U.S. Department of Labor (DOL) last year. The circumstances of the award are far from typical, and show how context is everything.

For employers facing DOL-initiated lawsuits involving retaliation, overtime, and recordkeeping prohibitions of the FLSA, this decision is illustrative of the potential for liquidated damages for failures to adhere to the FLSA, particularly in disputes over back wages and final wages where retaliation occurs.

Case Background

The DOL filed an FLSA action on behalf of former workers (“Claimants”) of 811 Autoworks LLC d/b/a/ AOK Walker Luxury Autoworks (“AOK”) and AOK’s owner, Miles Walker.  The Claimants alleged they were denied pay for final wages and did not receive required overtime pay when they worked over 40 hours in a workweek.  In its investigation, the DOL also determined Walker failed to keep adequate and accurate records of employees’ pay rates and work hours in violation of the FLSA’s recordkeeping prohibitions.

Additionally, at least one Claimant, Andreas Flaten, alleged he was retaliated against for requesting his final paycheck where AOK delivered his final $915 paycheck as 91,500 oil covered pennies with an expletive marked pay stub left on the driveway of his residence. Subsequently, the oil covered pennies damaged Flaten’s driveway and took nearly seven hours to remove.

The Court’s Decision

The Court resolved the DOL suit by entering its consent judgment. The consent judgement directed AOK to compensate workers who exceeded 40 hours in a workweek at a rate of “at least one-half times the regular rate at which such employee is employed, unless such employee qualifies for an exemption . . .”  Id. at 2. The consent judgment also ordered that AOK must “not threaten or intimidate (verbally or in writing), terminate or threaten to terminate, coerce or attempt to influence behavior, disparage in person or electronically, or retaliate or discriminate against any current and/or former AOK employees based on AOK’s belief that an employee was engaged in protected activity.” Id. at 2-3.  The Court further included a definition for “protected activity.” Id. at 3.  The consent judgement required AOK “shall not fail to make, keep and preserve adequate and accurate employment records as prescribed by Regulation.” Id.  In response to Flaten’s retaliation allegations, the Court sought immediate removal from AOK’s website all photographs and references to Flaten and permanently enjoined AOK from posting photographs or references to Flaten on any other website or social media site. Id.

As to payments, the Court held AOK was “restrained from withholding back wages in the total amount of $19,967.9 plus liquidated damages in the amount of $19,987.09.” Id. at 4.  The Court provided a schedule for the payments, where the payments must be delivered to, and noted AOK would be in default for failure to make any payments per the schedule. Id. at 4-5.  Finally, the Court required AOK to post this Consent Judgment and immediately post U.S. Department of Labor, Wage and Hour Division Fact Sheet #77A in all conspicuous places in or about its facility. Id. at 6.

Implications For Employers

Employers that are confronted with DOL-initiated litigation involving FLSA prohibitions should, from a practical standpoint, continuously review recordkeeping procedures, overtime policies, and final wage policies to ensure FLSA compliance. Employers should also note that, in response to the alleged retaliation, the Court sought removal of and enjoined the company from referencing the retaliated claimant on its own website and any other website or social media site. And obviously, paying disputed wage by dumping a truckload of oil-covered pennies on the driveway of a worker is ill-advised.

By Gerald L. Maatman, Jr. and Rebecca S. Bjork

Duane Morris Takeaway: Even when class actions span decades prior to settling, the case seems unwinnable, the settlement contains a vast record, and the outcome was largely favorable to plaintiffs, courts nonetheless might be reluctant to add a “superior attorney performance” lodestar multiplier for an award of attorneys’ fees when the evidence provided by plaintiffs’ counsel is insufficient to do so. This issue was present in the U.S. District Court for the District of Columbia’s recent ruling in the extraordinary 45-year long case of Hartman, et al. v. Blinken, Case No. 77-CV-2019 (D.D.C. Mar. 31, 2023).

The ruling is a must read for any corporate counsel involved in class action litigation.

Case Background

Hartman was originally filed on Nov. 25, 1977 by over 1,000 female plaintiffs alleging that they were discriminated against by the United States Information Agency on the basis of their sex in violation of Title VII of the Civil Rights Act when they were allegedly passed over for hiring or promotions at the agency. The resulting litigation continued for decades, until the last several years, which involved negotiations between the plaintiffs’ counsel and the United States Department of State, the resulting defendant following the dissolution of the U.S. Information Agency. In 2000, the parties entered into a consent decree that provided for a $508 million settlement fund for the class and for “reasonable attorneys’ fees, expenses, and costs.” Id. at 2. The parties also settled more than 20 interim attorneys’ fee requests. Id.

The class action settlement constitutes the largest employment discrimination class action settlement ever.

In 2018, after all settlement funds were issued, plaintiffs filed a motion for a final determination of attorneys’ fees, seeking an additional award of $34 million as an enhancement to the lodestar amount.

Following an extensive evaluation and analysis of the previously awarded attorneys’ fees, the court denied plaintiffs’ request. It ruled that although the lodestar fee that had been awarded up to that point was “likely not an adequate measure of class counsel’s true market value,” plaintiffs had failed to properly identify information necessary for the court to approve a modification to the award. Id. at 3. Specifically, the court noted that plaintiffs had not submitted information regarding the “Laffey Matrix rates” used to calculate interim fees over the past several years, and failed to provide interest rate differences between the 1-year Treasury bill rate and the prime rate. Id. at 3-4.

The parties thereafter stipulated that defendants: (i) would pay plaintiffs $9,033,600 to resolve any issues concerning the use of the below-market Laffey Matrix rates and the Treasury bill interest rate; (ii) that the value of the base lodestar for the enhancement was $19 million; and (iii) that all other claims based on delay of fees, true market lodestar value, or interest paid on the interim fee awards were fully resolved. Id. at 4. The only remaining issue, identified by the parties as a potential dispute, was the possibility of a lodestar enhancement for “superior attorney performance” or “exceptional results.” Id.

Plaintiffs thereafter filed a motion for a lodestar enhancement based on “superior attorney performance.” The court denied the motion.

The Court’s Ruling

The court reviewed plaintiffs’ request under the D.C. Circuit’s “three-part analysis to assess appropriate fee awards under fee-shifting statutes in cases involving complex federal litigation.” Id. at 5. Under that framework, the third part of the analysis, or whether the use multiplies as warranted, was applicable here. Id.

Plaintiffs asserted that exceptional results and superior lawyering justified enhancement of the lodestar because it did not account for: (i) the results obtained; (ii) “the preclusion of other employment by committing both human and capital resources to the case;” (iii) “the duration of the case;” (4) “the ‘undesirability’ of the case;” and (iv) “awards in similar cases.” Id. at 10.

The court essentially found that none of the factors warranted a lodestar enhancement, as all factors were already accounted for in other areas of the lodestar determination. The court explained that any special results obtained should be already reflected in the reasonableness or the hourly rates. The court also noted that the complexity and voluminous nature of the record materials would be reflected in the overall number of hours billed. The court also stated that plaintiffs failed to show how any special commitment of human or capital resources was not already reflected in the lodestar.

As to plaintiffs’ argument that the case was “undesirable” and thus an enhancement was warranted, the court ruled that plaintiffs failed to identify specific evidence demonstrating that the case was undesirable, which was required under pertinent case law. Further, any societal implications from plaintiffs’ victory could not be measured in an objective way by the court in order to provide a lodestar enhancement.

The court concluded by emphasizing that the decision not to multiply the lodestar should not be taken to diminish the “resounding success plaintiffs’ counsel achieved.” Id. at 13-14. However, the court ruled that this case was not the “rare” or “exceptional” case in which “specific evidence” supports an “objective and reviewable basis” for enhancement of the lodestar. Id. at 14. The court thereby denied plaintiffs’ request for an enhancement of the lodestar amount.

Implications For Employers

Fee awards are discretionary, but the ruling in Hartman demonstrates the high standard of evidence required for an enhancement award. This decision is an excellent reference for defense efforts to fight attorneys’ fees awards in large-scale class actions.