Posts belonging to Category Settlements

The Ninth Circuit has declined to revisit the 2012 decision of a three-judge panel affirming the $9.5 million class action settlement involving Facebook’s controversial “Beacon” advertising system. See Lane v. Facebook, __ F.3d __, 2013 WL 765140 (9th Cir. 2013). In an order issued on February 26, 2013, the court denied defendants’ petitions for rehearing and rehearing en banc. Barring review by the U.S. Supreme Court, this brings to a close a multi-year saga for the Beacon settlement, which the parties first agreed to in 2009.

In the complaint, class members alleged that the now-discontinued Beacon program illegally monitored and shared Facebook users’ online shopping and search activity, compiling purchasing patterns and entertainment preferences and selling that information. The parties negotiated a settlement that would devote the entire net proceeds to the creation of the “Digital Trust Foundation,” with the objective of educating Internet users and merchants alike on issues related to privacy, prevention of identity theft, and the improper use of personal information. The settlement, approved in 2010 by U.S. District Judge Richard Seeborg, also required Facebook to discontinue the much-criticized Beacon program, and has successfully withstood criticism that the all-injunctive-relief settlement provisions were inadequate.

The ruling comes amid somewhat greater scrutiny being applied to similar cy pres settlements, where settlement proceeds only indirectly address the at-issue conduct in the underlying lawsuits. Last year, Judge Seeborg rejected a settlement in which Facebook proposed to resolve claims that it had misappropriated users’ names and likenesses with a $10 million charitable contribution. And the battle around the Beacon settlement might not yet be over, as the U.S. Supreme Court’s recent receptiveness to hearing cases where class action jurisprudence is at issue suggests that this relatively aggressive use of the cy pres doctrine might be vulnerable to Supreme Court review.

Tata Consultancy Services — an India-based software company that bills itself as providing clients with technology-based solutions — has agreed to pay $30 million to resolve classwide claims growing out of allegations that the company required employees to sign tax refund checks over to Tata. See Motion for Preliminary Approval, Vedachalam v. Tata Consultancy Servs., Ltd., No. 06-0963 (N.D. Cal. Feb. 21, 2013). The settlement must be approved by the Northern District of California federal district court in which the action has been pending.

The plaintiffs allege that, in addition to reneging on salaries promised as inducements to workers to relocate to the US, Tata (one of India’s largest software concerns) required non-US-citizen employees to both delegate the calculation of their taxes to an outside agency chosen by Tata and to send their refund checks to Tata.

The settlement comprises 12,800 class members who will receive an average payment of $1,600 each, while a standard one-third of the settlement was negotiated to be for attorneys’ fees.

United Airlines has opted to settle rather than risk litigating flight attendants’ allegations of unlawful payroll procedures. See Takagi v. United Airlines, Inc., No. 11-09191 (C.D. Cal. filed Nov. 4, 2011). Under the terms of the settlement, which must receive judicial approval, over 4,000 flight attendants will be eligible for payments from a $925,000 settlement fund. The preliminary approval papers are available here.

The plaintiffs alleged that United violated two distinct California Labor Code statutes, the first concerning the timeliness of payments (Cal. Lab. Code § 204) and the second governing the information that must appear on employees’ pay stubs (Cal. Lab. Code § 226). The parties’ settlement, which resulted from an August 2012 mediation, provides for attorneys’ fees amounting to a standard one-third of the total common fund negotiated by plaintiffs’ counsel.

Though modest, the Takagi settlement gives the plaintiffs’ bar reason to be optimistic. The California wage statement statute, Cal. Lab. Code § 226, was amended effective January 1, 2013, so as to resolve an ambiguity that had precluded the certification of some wage statement cases. As such, United’s willingness to settle is an early indication that the amended statute is functioning as intended, as United would have faced exposure considerably greater than the settlement amount had the plaintiffs successfully moved for class certification. Additionally, despite having been removed to federal court under the Class Action Fairness Act (CAFA), the case nonetheless endured and yielded a settlement, despite the widespread view that both certification and settlement are more difficult in federal court.

Ritz-Carlton Hotels has agreed to pay $2 million to settle a class action lawsuit alleging unpaid overtime as well as meal break and vacation pay violations. See Mot. for Prelim. Approval, Lambson v. The Ritz-Carlton Hotel Co., LLC, No. 11-06669 (N.D. Cal. Feb. 1, 2013). Approximately 1,500 current and former employees of three California Ritz Carlton locations — the Ritz-Carlton Residences in San Francisco, Ritz-Carlton Half Moon Bay and Lake Tahoe Ritz-Carlton — will directly benefit from the settlement, which must be approved by U.S. District Judge Charles Breyer.

The settlement was reached after the parties worked (both formally and informally) with noted wage and hour mediator David Rotman, whose proposal was ultimately accepted by the parties. See Mot. for Prelim. Approval at 2. The preliminary approval papers describe the settlement as a “tremendous recovery” for the class members, and note that none of the $2 million settlement fund will revert to the defendant. Id. at 3. Further, the approval papers contend that the defendant’s total exposure is $6.8 million, and thus the $2 million settlement “represents an approximately 29.4% recovery for the class members.” Id. at 6.

Plaintiffs’ counsel are seeking $635,000 in fees and costs. See id. at 22-23. The settlement also proposes a $15,000 incentive payment to each named plaintiff, as compensation for the distinct risks and demands they undertook relative to other class members.