Tagged: Class Settlement

New Jersey Chancery Division Adopts Watered-Down Trulia Standard and Approves Disclosure-Only Settlement of Merger Litigation

New Jersey Chancery Division Adopts Watered-Down Trulia Standard and Approves Disclosure-Only Settlement of Merger Litigation

Nearly three years ago, the Delaware Court of Chancery issued its landmark opinion in In re Trulia, Inc. Stockholder Litigation, in which Chancellor Bouchard strongly criticized the use of disclosure-only settlements in class-action merger challenges and subjected such settlements to a heightened level of judicial review. In a disclosure-only settlement the merging parties agree to enhance their disclosures about the challenged merger in exchange for a broad release from a settlement class comprised of their shareholders. According to Chancellor Bouchard, all too often the enhanced disclosures in such settlements provide little, if any, value to the shareholders, while class counsel get large fee awards and the corporations get “deal insurance” because their shareholders have released them and their boards from liability arising from the transaction. Because disclosure-only settlements so rarely give meaningful relief to the shareholders, Chancellor Bouchard held that a court should approve them only if “the supplemental disclosures address a plainly material misrepresentation or omission[] and the subject matter of the proposed release is narrowly circumscribed.” In the first published New Jersey state court opinion addressing the Trulia standard, the Chancery Division in Strougo v. Ocean Shore Holding Co. followed Trulia in holding that disclosure-only settlements are to be...

Ninth Circuit Reverses $200 Million Settlement and Class Certification For Lack of Proper Choice of Law Analysis

Ninth Circuit Reverses $200 Million Settlement and Class Certification For Lack of Proper Choice of Law Analysis

In a decision that may make it harder to settle cases on behalf of nationwide classes, the Ninth Circuit recently overturned a $200 million class action settlement and vacated the certification of a nationwide class of consumers, finding the district court failed to examine whether different states’ laws applied to the class members’ claims and whether Rule 23’s predominance requirement was satisfied. The dispute was rooted in a 2012 investigation which found that Hyundai and Kia deviated from U.S. Environmental Protection Agency fuel economy testing protocols and overstated the fuel efficiency estimates in advertisements and car window stickers for certain 2011, 2012, and 2013 vehicles. A California federal court approved the settlement in June 2015. However, in In re Hyundai and Kia Fuel Economy Litigation, a split three-judge panel of the Ninth Circuit vacated the District Court’s approval order and certification of a nationwide class of consumers. Five objectors appealed from the class settlement arguing, among other things, that the settlement violated consumer rights in states other than California. The Ninth Circuit held that the District Court erred by failing to apply California’s choice of law rules to determine whether California law could apply to all plaintiffs in a nationwide class...

Don’t Get Hacked By Your Cyber-Insurer 0

Don’t Get Hacked By Your Cyber-Insurer

The risks inherent in the maintenance and storage of confidential information present an ongoing challenge to daily operations. Cyber insurance may be an appropriate mechanism to mitigate those risks. But – BUYER BEWARE – broad exclusions and other conditions in a cyber policy can hack into coverage and leave your company uninsured and exposed to significant liability for defense costs, liability payments, and regulatory damages.

Seventh Circuit Rejects Unbalanced “Division of Spoils” Between Class Counsel and Class Members in RadioShack Settlement 0

Seventh Circuit Rejects Unbalanced “Division of Spoils” Between Class Counsel and Class Members in RadioShack Settlement

In Redman v. RadioShack Corp., the Court of Appeals for the Seventh Circuit, in an opinion by Judge Richard Posner, reversed and remanded the district court’s judgment approving the settlement terms for a class action filed against RadioShack Corp. alleging violation of the Fair and Accurate Credit Transactions Act. The court expressed concern about “the division of spoils between class counsel and class members” and found it likely that “each class member has a valid claim to a good deal more than one $10 coupon, and it would seem therefore that the equities favor a reallocation of some of what we are calling the spoils from class counsel to class members who have submitted claims for the coupons.”

Lessons to Learn in the Wake of the Sixth Circuit’s Decision Upsetting the Class Settlement in the Dry Max Pampers Litigation 0

Lessons to Learn in the Wake of the Sixth Circuit’s Decision Upsetting the Class Settlement in the Dry Max Pampers Litigation

There have been a flurry of federal appellate court decisions this year and last scrutinizing and overturning class settlements (see In re HP Inkjet Printer Litig. and Radcliffe v. Experian, merely by way of example). That trend continued on August 2, 2013, with In re Dry Max Pampers Litigation, a case involving Pampers marketed with “Dry Max technology,” where the Sixth Circuit upset a settlement awarding class counsel $2.73 million in attorneys’ fees and the named plaintiffs $1,000 “per ‘affected child.’” The Court found it offered the class representatives and class counsel “preferential treatment” at the expense of unnamed class members, who received nothing save what the Sixth Circuit characterized as “worthless injunctive relief.” Though the latest decisions out of the Third and Seventh Circuits addressing the bona fides of attorneys’ fee awards in class settlements — see Kirsch v. Delta Dental and Silverman v. Motorola — held that the deals there passed muster, both sides of the bar would be well served by taking note of what went wrong in In re Dry Max.

Ninth Circuit Rules that Redemption Value of Coupons Cannot be Ignored in Calculating Attorneys’ Fees in Coupon Settlements 0

Ninth Circuit Rules that Redemption Value of Coupons Cannot be Ignored in Calculating Attorneys’ Fees in Coupon Settlements

In In re HP Inkjet Printer Litigation, the Ninth Circuit reversed a District Court’s approval of a class action settlement providing “e-credits,” or coupons, to class members, on the ground that the class counsel fee award violated § 1712 of the Class Action Fairness Act (“CAFA”). The parties’ settlement agreement had provided for $5 million in coupons, as well as injunctive relief in the form of additional product disclosures. The District Court, recognizing that the coupons were worth significantly less than their face value, estimated that the “ultimate value” of the combined coupon and injunctive relief to the class was approximately $1.5 million, and awarded fees of $1.5 million based solely on the lodestar method, without calculating the actual redemption value of the coupons.

Third Circuit Makes Approval of Class Action Settlements Including Cy Pres Distributions More Difficult 0

Third Circuit Makes Approval of Class Action Settlements Including Cy Pres Distributions More Difficult

In In re Baby Products Antitrust Litigation, the Third Circuit vacated a district court’s approval of a $35.5 million class action settlement, finding it unreasonable that only $3 million of the settlement fund was to be distributed to class members. This marked the first time the Third Circuit has addressed the issue of cy pres distributions in class action settlements, and will likely lead district courts to subject class action settlements involving cy pres distributions to greater scrutiny.

Third Circuit, En Banc, Approves Settlement Class Containing Members Who Lack “Viable Claim” 0

Third Circuit, En Banc, Approves Settlement Class Containing Members Who Lack “Viable Claim”

The U.S. Court of Appeals for the Third Circuit has issued an en banc opinion in Sullivan v. DB Investments, Inc. affirming a District Court’s certification of two nationwide settlement classes. In sum, though the multiplicity of states’ laws would affect the predominance inquiry in a litigated nationwide class action, in the settlement context, the Circuit eased the burden somewhat by declining to require a showing that each class member possess “a viable claim” based upon what would have been the applicable state statute or law.