Tobias v. NVIDIA Corporation

• Court: District Court, N.D. California
• Decided: January 16, 2025
• Docket: 4:20-cv-06081
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 CRISTINA TOBIAS, et al., Case No. 20-cv-06081-JST

8 Plaintiffs, ORDER DENYING WITHOUT 9 v. PREJUDICE MOTION FOR PRELIMINARY APPROVAL OF 10 NVIDIA CORPORATION, et al., CLASS ACTION SETTLEMENT 11 Defendants. Re: ECF No. 127

12 13 Before the Court is Plaintiffs’ unopposed motion for preliminary approval of class action 14 settlement. ECF No. 127. The Court will deny the motion without prejudice for the reasons 15 discussed below. 16 First, it is not clear that the settlement is not reversionary. The Ninth Circuit has “not 17 disallowed reversionary clauses outright,” but it “generally disfavor[s] them because they create 18 perverse incentives.” Roes, 1–2 v. SFBSC Mgmt., LLC, 944 F.3d 1035, 1058 (9th Cir. 2019) 19 (citing In re Volkswagen “Clean Diesel” Mktg., Sales Pracs., & Prods. Liab. Litig., 895 F.3d 597, 20 611–12 (9th Cir. 2018)). This Court “frequently rejects class settlements containing reversion 21 clauses.” Alcazar v. Fashion Nova, Inc., No. 20-cv-01434-JST, 2024 WL 5191979, at *3 n.1 22 (N.D. Cal. Dec. 20, 2024) (citations omitted). Plaintiffs argue that “[t]here shall be no reversion to 23 Defendants” and state that uncashed checks “shall revert to the Settlement Fund and then 24 transferred to the Plan to defray administrative fees and expenses that would otherwise be charged 25 to Plan participants.” ECF No. 127 at 6. It is not clear why the Court should not consider 26 transferring funds to the Plan to be reversionary, particularly in the absence of any explanation of 27 how Plan participants would benefit. For example, will funds that revert to the Plan be tracked in 1 fees than they otherwise would? 2 Second, Plaintiffs have provided insufficient information for the Court to evaluate the 3 amount of the settlement. “In determining whether the proposed settlement falls within the range 4 of reasonableness, perhaps the most important factor to consider is ‘plaintiffs’ expected recovery 5 balanced against the value of the settlement offer.’” Cotter v. Lyft, Inc., 176 F. Supp. 3d 930, 935 6 (N.D. Cal. 2016) (quoting In re High-Tech Emp. Antitrust Litig., No. 11-cv-02509-LHK, 2014 WL 7 3917126, at *3 (N.D. Cal. Aug. 8, 2014)).1 Plaintiffs assert that “[t]he class recovery under the 8 settlement will be $2,500,000, which represents roughly 16.86% of Plaintiffs’ potential maximum 9 recoverable losses, of $14,832,044.44 as calculated by Plaintiffs.” Id. at 4–5. But the only 10 evidence submitted regarding Plaintiffs’ potential recovery is a single paragraph in counsel’s 11 declaration: “Based on analysis and information exchanged during mediation, Plaintiffs assigned 12 best-case scenario damages to the recordkeeping claim of $1,689,456.00; failure to select lower 13 cost share classes at between $1,228,554.00 and $1,854,837.00; and fund underperformance 14 damages of around $11,287,751.44. This totaled potential damages of about $14,205,762.00 - 15 $14,832,044.00.” ECF No. 128 ¶ 37. The Court has no basis by which to evaluate the 16 reasonableness of counsel’s estimated potential recovery, and it therefore cannot determine on the 17 record before it whether the settlement is “fair, reasonable, and adequate.” Fed. R. Civ. P. 18 23(e)(2). 19 For these reasons, Plaintiffs’ motion for preliminary approval of class action settlement is 20 denied, without prejudice to Plaintiffs’ filing a revised motion correcting these deficiencies. 21 In addition, the Court notes that Plaintiffs’ counsel “anticipates seeking an award of 22 attorneys’ fees up to one-third of the common fund established by the Settlement,” and that 23 “Plaintiffs will seek contribution awards of $10,000 each for Plaintiffs Cristina Tobias, Anthony 24 Briggs, Ann MacDonald and David Calder.” ECF No. 127 at 19. The Court will not determine 25 appropriate fee and incentive awards until after a motion has been filed. However, it reminds the 26 1 At some point, the common law will have to reckon with inflation. $5,000 in February 2012, 27 when the Harris decision was issued, had the same buying power as $6,931.41 has today. Bureau 1 parties that, “[flor more than two decades, the Ninth Circuit has set the ‘benchmark for an 2 || attorneys’ fee award in a successful class action [at] twenty-five percent of the entire common 3 fund.’” Jn re Wells Fargo & Co. S’holder Derivative Litig., 445 F. Supp. 3d 508, 519 (N.D. Cal. 4 || 2020) (alteration in original) (quoting Williams v. MGM-Pathe Commc’ns Co., 129 F.3d 1026, 5 1027 (9th Cir. 1997)), aff'd, 845 F. App’x 563 (9th Cir. 2021). Similarly, “[a]n incentive award of 6 || $5,000 is presumptively reasonable, and an award of $25,000 or even $10,000 is considered ‘quite 7 || high.” Rollins v. Dignity Health, No. 13-cv-01450-JST, 2022 WL 20184568, at *9 (N.D. Cal. 8 July 15, 2022) (citing Dyer v. Wells Fargo Bank, N.A., 303 F.R.D. 326, 335 (N.D. Cal. 2014)). 9 Plaintiffs should justify any deviation from the attorney’s fee benchmark and presumptively 10 || reasonable incentive award when they apply for such awards. See, e.g., In re Hyundai & Kia Fuel 11 Econ. Litig., 926 F.3d 539, 570 (9th Cir. 2019) (noting that “[t]he 25% benchmark can be adjusted 12 || upward or downward, depending on the circumstances”); Wren v. RGIS Inventory Specialists, No. 13 C-06-05778 JCS, 2011 WL 1230826, at *32 (N.D. Cal. Apr. 1, 2011) (discussing factors a court 14 || considers when evaluating requests for incentive awards), supplemented, 2011 WL 1838562 (N.D. 3 15 Cal. May 13, 2011). a 16 CONCLUSION 3 17 For the foregoing reasons, Plaintiffs’ motion for preliminary approval is denied without 18 || prejudice. 19 IT IS SO ORDERED. 20 || Dated: January 16, 2025 .

71 JON S. TIGAR 22 ited States District Judge 23 24 25 26 27 28