FILED NOT FOR PUBLICATION DEC 12 2019 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ROBERT RADCLIFFE; CHESTER No. 18-55606 CARTER; MARIA FALCON; CLIFTON C. SEALE III; ARNOLD LOVELL, Jr., D.C. No. 8:05-cv-01070-DOC-MLG Plaintiffs-Appellants,
v. MEMORANDUM*
JOSE HERNANDEZ; ROBERT RANDALL; BERTRAM ROBINSON; KATHRYN PIKE; LEWIS MANN,
Plaintiffs-Appellees,
v.
EXPERIAN INFORMATION SOLUTIONS, INC.; EQUIFAX INFORMATION SERVICES, LLC; TRANS UNION LLC,
Defendants-Appellees.
Appeal from the United States District Court for the Central District of California David O. Carter, District Judge, Presiding
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Argued and Submitted November 7, 2019 Pasadena, California
Before: FARRIS and McKEOWN, Circuit Judges, and KENDALL,** District Judge.
Objecting Plaintiffs (Radcliffe, et al.) appeal the district court=s approval of a
pre-certification class action settlement between Settling Plaintiffs (Hernandez, et
al.) and Defendants (Experian, et al.). We review the approval of a class-action
settlement for abuse of discretion. Rodriguez v. West Publ=g Corp., 563 F.3d 948,
963 (9th Cir. 2009). We will affirm unless the district court applied an incorrect
legal standard or based its decision on unreasonable findings of fact. Nachshin v.
AOL, LLC, 663 F.3d 1034, 1038 (9th Cir. 2011). We hold that the district court
did not abuse its discretion in finding that the settlement as a whole was Afair,
reasonable, and adequate.@ Fed. R. Civ. P. 23(e)(2). While we affirm the
settlement, we remand to the district court for recalculation of the attorneys= fee
award to Settling Counsel.
The parties are familiar with the facts and claims so we do not repeat them
here. In Radcliffe v. Experian Info. Solutions [Radcliffe I], 715 F.3d 1157 (9th
Cir. 2013), a panel of this court held that class representatives and class counsel
** The Honorable Virginia M. Kendall, United States District Judge for the Northern District of Illinois, sitting by designation. had conflicts of interest that prevented them from adequately representing the
class. Id. at 1163. This court reversed and remanded.
On remand after Radcliffe I, the district court re-appointed Settling Counsel
as class counsel and this court affirmed. Radcliffe v. Hernandez [Radcliffe II],
818 F.3d 537 (9th Cir. 2016). On remand after Radcliffe II, the Settling Parties
negotiated a revised settlement. In its order appointing them as class counsel, the
district court specifically noted that Settling Counsel would Aaccept the costs of re-
notice.@ We quoted this language in Radcliffe II when we affirmed the district
court=s order. Our decision in Radcliffe II was thus explicitly predicated on the
fact that Settling Counsel would Aaccept the costs of re-notice.@ Id.
The district court devoted much attention to a comparison between the two
settlements and approved the settlement in part because it found that the second
settlement brought greater net benefits to the class than the first. But, the second
settlement did not need to be as good as the first, nor must it necessarily have been
approved if it was better. Rule 23(e)(2)=s flexible standard is satisfied so long as
the settlement is Afair, reasonable, and adequate@ on its own merits. Further, we
review the adequacy of a settlement based on the Asettlement as a whole, rather
than the individual component parts.@ Staton v. Boeing Co., 327 F.3d 938, 960
(9th Cir. 2003) (quotation omitted); see also Rodriguez, 563 F.3d at 960B61
3 (concluding that conditional incentive agreements created a conflict of interest, but
affirming approval of the settlement).
We are satisfied that the district court did not abuse its discretion in
approving the settlement. The district court duly analyzed each of the factors
considered in Staton and deemed the settlement substantively adequate. See
Staton, 327 F.3d 959 (listing factors relevant to adequacy of class action
settlement). Objecting Plaintiffs= optimistic valuation of Defendants= potential
liabilities was undercut by substantial litigation risks, which drastically reduced the
expected value of the class=s claims. The parties sharpened their valuations of the
case over 14 years of contested litigation, not to mention four trips to this court on
appeal. They settled on terms mutually agreeable to the parties involved (except,
of course, Objecting Plaintiffs).
The district judgeCwho knew more about the parties= litigating positions
than anybody and, notably, had insight into future rulings on class certification and
other issues that would be reviewable only on a deferential standard of
reviewCdeemed the settlement adequate. See Hanlon v. Chrysler Corp., 150 F.3d
1011, 1026 (9th Cir. 1998) (noting that approval of a settlement is Acommitted to
the sound discretion of the trial judge because he is >exposed to the litigants, and
their strategies, positions and proof=@) (quoting Officers for Justice v. Civil Serv.
4 Comm=n, 688 F.2d 615, 626 (9th Cir. 1982)). Even if the district court overvalued
the worth of the non-monetary benefits, the settlement was adequate.
Likewise, we reject Objecting Plaintiffs= assertion that the settlement fails to
Atreat[] class members equitably relative to each other.@ Fed. R. Civ. P.
23(e)(2)(D). Rule 23=s flexible standard allows for the unequal distribution of
settlement funds so long as the distribution formula takes account of legitimate
considerations and the settlement remains Afair, reasonable, and adequate.@ Fed.
R. Civ. P. 23(e)(2). Settling Plaintiffs sought to provide additional relief to
plaintiffs who alleged more concrete material harms than other class members.
Nothing in Rule 23Cand no precedent cited by Objecting PlaintiffsCprohibits
parties from tying distribution of settlement funds to actual harm.
Objecting Plaintiffs= final contention is that Settling Counsel created a
conflict of interest by opting to Arepay@ its debt to the class in new benefits rather
than deducting the costs of re-notice from the fee award. As is, this contention is
less easily dismissed. At the very least, the structure of the attorneys= fee award in
this case created the possibility of a conflict of interest with the class.
That said, multiple factors counsel restraint. Most importantly, given that
Rule 23=s flexible standard governs this dispute, we conclude that the settlement is
fair and that Settling Counsel ably represented the class. In Rodriguez, we
5 approved a class action settlement even though we held that class counsel and five
of the seven class representatives had a conflict of interest. 563 F.3d at 961
(holding that settlement was substantively fair and reasonable to the class). The
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FILED NOT FOR PUBLICATION DEC 12 2019 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ROBERT RADCLIFFE; CHESTER No. 18-55606 CARTER; MARIA FALCON; CLIFTON C. SEALE III; ARNOLD LOVELL, Jr., D.C. No. 8:05-cv-01070-DOC-MLG Plaintiffs-Appellants,
v. MEMORANDUM*
JOSE HERNANDEZ; ROBERT RANDALL; BERTRAM ROBINSON; KATHRYN PIKE; LEWIS MANN,
Plaintiffs-Appellees,
v.
EXPERIAN INFORMATION SOLUTIONS, INC.; EQUIFAX INFORMATION SERVICES, LLC; TRANS UNION LLC,
Defendants-Appellees.
Appeal from the United States District Court for the Central District of California David O. Carter, District Judge, Presiding
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Argued and Submitted November 7, 2019 Pasadena, California
Before: FARRIS and McKEOWN, Circuit Judges, and KENDALL,** District Judge.
Objecting Plaintiffs (Radcliffe, et al.) appeal the district court=s approval of a
pre-certification class action settlement between Settling Plaintiffs (Hernandez, et
al.) and Defendants (Experian, et al.). We review the approval of a class-action
settlement for abuse of discretion. Rodriguez v. West Publ=g Corp., 563 F.3d 948,
963 (9th Cir. 2009). We will affirm unless the district court applied an incorrect
legal standard or based its decision on unreasonable findings of fact. Nachshin v.
AOL, LLC, 663 F.3d 1034, 1038 (9th Cir. 2011). We hold that the district court
did not abuse its discretion in finding that the settlement as a whole was Afair,
reasonable, and adequate.@ Fed. R. Civ. P. 23(e)(2). While we affirm the
settlement, we remand to the district court for recalculation of the attorneys= fee
award to Settling Counsel.
The parties are familiar with the facts and claims so we do not repeat them
here. In Radcliffe v. Experian Info. Solutions [Radcliffe I], 715 F.3d 1157 (9th
Cir. 2013), a panel of this court held that class representatives and class counsel
** The Honorable Virginia M. Kendall, United States District Judge for the Northern District of Illinois, sitting by designation. had conflicts of interest that prevented them from adequately representing the
class. Id. at 1163. This court reversed and remanded.
On remand after Radcliffe I, the district court re-appointed Settling Counsel
as class counsel and this court affirmed. Radcliffe v. Hernandez [Radcliffe II],
818 F.3d 537 (9th Cir. 2016). On remand after Radcliffe II, the Settling Parties
negotiated a revised settlement. In its order appointing them as class counsel, the
district court specifically noted that Settling Counsel would Aaccept the costs of re-
notice.@ We quoted this language in Radcliffe II when we affirmed the district
court=s order. Our decision in Radcliffe II was thus explicitly predicated on the
fact that Settling Counsel would Aaccept the costs of re-notice.@ Id.
The district court devoted much attention to a comparison between the two
settlements and approved the settlement in part because it found that the second
settlement brought greater net benefits to the class than the first. But, the second
settlement did not need to be as good as the first, nor must it necessarily have been
approved if it was better. Rule 23(e)(2)=s flexible standard is satisfied so long as
the settlement is Afair, reasonable, and adequate@ on its own merits. Further, we
review the adequacy of a settlement based on the Asettlement as a whole, rather
than the individual component parts.@ Staton v. Boeing Co., 327 F.3d 938, 960
(9th Cir. 2003) (quotation omitted); see also Rodriguez, 563 F.3d at 960B61
3 (concluding that conditional incentive agreements created a conflict of interest, but
affirming approval of the settlement).
We are satisfied that the district court did not abuse its discretion in
approving the settlement. The district court duly analyzed each of the factors
considered in Staton and deemed the settlement substantively adequate. See
Staton, 327 F.3d 959 (listing factors relevant to adequacy of class action
settlement). Objecting Plaintiffs= optimistic valuation of Defendants= potential
liabilities was undercut by substantial litigation risks, which drastically reduced the
expected value of the class=s claims. The parties sharpened their valuations of the
case over 14 years of contested litigation, not to mention four trips to this court on
appeal. They settled on terms mutually agreeable to the parties involved (except,
of course, Objecting Plaintiffs).
The district judgeCwho knew more about the parties= litigating positions
than anybody and, notably, had insight into future rulings on class certification and
other issues that would be reviewable only on a deferential standard of
reviewCdeemed the settlement adequate. See Hanlon v. Chrysler Corp., 150 F.3d
1011, 1026 (9th Cir. 1998) (noting that approval of a settlement is Acommitted to
the sound discretion of the trial judge because he is >exposed to the litigants, and
their strategies, positions and proof=@) (quoting Officers for Justice v. Civil Serv.
4 Comm=n, 688 F.2d 615, 626 (9th Cir. 1982)). Even if the district court overvalued
the worth of the non-monetary benefits, the settlement was adequate.
Likewise, we reject Objecting Plaintiffs= assertion that the settlement fails to
Atreat[] class members equitably relative to each other.@ Fed. R. Civ. P.
23(e)(2)(D). Rule 23=s flexible standard allows for the unequal distribution of
settlement funds so long as the distribution formula takes account of legitimate
considerations and the settlement remains Afair, reasonable, and adequate.@ Fed.
R. Civ. P. 23(e)(2). Settling Plaintiffs sought to provide additional relief to
plaintiffs who alleged more concrete material harms than other class members.
Nothing in Rule 23Cand no precedent cited by Objecting PlaintiffsCprohibits
parties from tying distribution of settlement funds to actual harm.
Objecting Plaintiffs= final contention is that Settling Counsel created a
conflict of interest by opting to Arepay@ its debt to the class in new benefits rather
than deducting the costs of re-notice from the fee award. As is, this contention is
less easily dismissed. At the very least, the structure of the attorneys= fee award in
this case created the possibility of a conflict of interest with the class.
That said, multiple factors counsel restraint. Most importantly, given that
Rule 23=s flexible standard governs this dispute, we conclude that the settlement is
fair and that Settling Counsel ably represented the class. In Rodriguez, we
5 approved a class action settlement even though we held that class counsel and five
of the seven class representatives had a conflict of interest. 563 F.3d at 961
(holding that settlement was substantively fair and reasonable to the class). The
Rodriguez factors are present here.
There is a further factor here that weighs in favor of approving the
settlement. This long-standing dispute has cost the parties a great deal already.
Further time spent litigating will serve only to devour more and more of the
settlement fund, which would be better spent providing relief to injured parties.
Settling Plaintiffs and Defendants have achieved a mutually agreeable solution,
though not without each side feeling the predictable pains of negotiation. We are
satisfied that the settlement provides adequate relief to the class.
In light of our decision in Radcliffe II, however, we remand for
reconsideration of the attorneys= fee award. Settling Counsel were duty-bound to
reimburse the class for the waste of settlement funds caused by the ethical conflict
in Radcliffe I. We recognize that the district court=s fee calculation appears to
have taken into account Settling Counsel=s Adebt@ to the class in other ways, such
that it may be unwarranted for the district court to simply subtract the $6 million
estimated cost of re-notice from the $8,262,848 fee award currently in place. We
6 leave specific calculations up to the discretion of the district court, but specifically
note Radcliffe II=s insistence that Settling Counsel pay the full cost of re-notice.
We affirm the district court=s approval of the settlement. We reverse and
remand the award of attorneys= fees to class counsel for recalculation of the fee
award in line with this court=s opinion in Radcliffe II.
AFFIRMED IN PART; REVERSED AND REMANDED IN PART.
Each party shall bear its own costs on appeal.