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self-study / Class Actions

Jul. 30, 2020

Trends emerge under Northern District’s class settlement guidelines

Darren K. Cottriel

Partner, Jones Day

Phone: (949) 851-3939


McGeorge SOL Univ of the Pacific; CA

Darren works in Jones Day's Business & Tort Litigation practice.

Ann T. Rossum

Associate, Jones Day


Ann works in Jones Day's Business & Tort Litigation practice.

Brianne J. Kendall

Associate, Jones Day


Brianne works in Jones Day's Business & Tort Litigation practice.

In November 2018, the United States District Court for the Northern District of California adopted the Procedural Guidance for Class Action Settlements, listing factors parties should address when seeking approval of class action settlements in that court. These factors are intended to protect unnamed class members and increase transparency about the proposed settlement’s terms, particularly where a class settlement occurs at an early stage of the case when the court knows little about the case other than what is alleged in the pleadings. The Northern District adopted the guidelines, in part, because it has become a gateway for consumer class action litigation, seeing a multitude of consumer class action complaints filed annually. A year and a half later, the Northern District remains the only federal court with district-specific guidelines on class settlement approval. A review of the Northern District’s decisions on preliminary approval of consumer class settlements since November 2018 reveals trends as to the court’s key focus areas and provides guidance on what parties and their counsel should do to address the guidelines and increase their chances of settlement approval.

Primary Areas of Focus in Decisions over the Last 18 Months

Since the guidelines’ promulgation, judges in the Northern District have primarily focused on three areas: (1) whether the parties have adequately explained any changes made to the settlement class or claims released in the settlement as compared to what is alleged in the complaint, (2) whether the proposed settlement’s notice procedures are adequate, and (3) whether the proposed settlement calls for a third-party settlement administrator and, if so, how it was selected and what its estimated costs are.

(1) Changes Made to the Class Definition or Claims Released as Compared to the Complaint

The guidelines require parties to explain “any differences between the settlement class and the class certified” or “proposed in the operative complaint,” and to include “an explanation as to why the differences are appropriate.” The guidelines also require parties to explain any differences between the claims proposed to be released and those “in the operative complaint” or “certified for class treatment.” The court has denied preliminary approval when parties redefine the settlement class or change the claims released in a way that the court believes undermines principles of fairness required in consumer class settlements.

For example, in Bronson v. Samsung Electronics America, Inc., a case regarding allegedly defective televisions, the proposed settlement class was narrower than the class alleged in the complaint. No. C 18-02300 WHA, 2019 WL 4738232, at *1, *3 (N.D. Cal. Sept. 29, 2019). The parties revised the class definition by limiting the class period, narrowing the television models covered, and requiring class members to have sought product testing before submitting a claim. Id. at *3. The court denied preliminary approval until the parties modified the proposed settlement to eliminate the limited timespan and testing requirement. Bronson, 2019 WL 5684526, at *3 (N.D. Cal. Nov. 1, 2019). The court required these changes on fairness grounds because it viewed testing as burdensome and saw the proposed smaller settlement class coupled with limited notice procedures as effectively preventing a subset of original class members from knowing the settlement did not apply to them. See Bronson, 2019 WL 4738232, at *4-5.

Similarly, in Livingston v. MiTAC Digital Corp., a case alleging deceptive marketing of GPS devices, the court denied preliminary approval of the parties’ proposed class settlement in part because the parties failed to explain and justify changes to the settlement class as compared to the class proposed in the complaint. No. 4:18-CV-05993-JST, 2019 WL 8504695, at *8 (N.D. Cal. Dec. 4, 2019). The court required the parties to address this issue in their subsequent motion for preliminary approval. Id.

The foregoing cases contrast with cases in which parties made minimal and practical changes to the class definition, which the court generally approves. For example, in Carlotti v. ASUS Computer Int’l., an alleged consumer class action concerning computer performance and related advertising, the parties sought approval of a class settlement that provided monetary and injunctive relief. No. 18-cv-03369-DMR, 2019 WL 6134910, at *1-2 (N.D. Cal. Nov. 19, 2019). In granting preliminary approval, the court approved the parties’ changes to the class definition because the revisions were supported by practical reasons, such as excluding members who “already received relief,” as opposed to changes that the court has viewed as unfairly excluding potential class members. See id. at *13-14.

As to the scope of release, Shin v. Plantronics reflects the court applying the guidelines to deny preliminary approval where the release in the proposed class settlement is broader than the claims alleged in the complaint. No. 18-cv-05626-NC, 2019 WL 2515827 (N.D. Cal. June 17, 2019). In Shin, a putative consumer class action concerning marketing of wireless headphones, the court initially denied preliminary approval, in part, because the proposed release covered claims regarding all aspects of headphone performance, whereas the claims alleged in the complaint focused only on battery life and water/sweat resistance. Id. at *1, *3. After the parties amended the settlement to narrow the scope of release, the court granted preliminary approval of the class settlement. Shin, 2019 WL 8638832 at *1-2 (N.D. Cal. Aug. 13, 2019).

Parties seeking preliminary approval should be cautious of substantially revising the class definition or the claims to be released for purpose of class settlement without good reasons. And, if any changes are made, the parties should adequately explain those differences and provide adequate justification for them in the motion for preliminary approval.

(2) Scrutiny of Notice Procedures

The guidelines also discuss the court’s expectations with regard to notice procedures — even going so far as to provide sample language. The Northern District has scrutinized notice procedures that appear to minimize class member outreach or discourage class members’ claims.

In Livingston, the court disapproved of the parties’ proposed objection and opt-out procedures because class members would have only 45 days (rather than the typical 60 days), and the court believed the proposed procedures were overly burdensome and exceeded the guidelines’ limited scope of information to request from consumers. 2019 WL 8504695, at *6-7. Similarly, in Hadley v. Kellogg Sales Co., an alleged food mislabeling class action, the court denied preliminary approval partially because it believed the opt-out form and objection requirements would, among other things, overly burden and misguide class members. No. 16-CV-04955-LHK, 2020 WL 836673, at *1, *6-8 (N.D. Cal. Feb. 20, 2020).

The court also has rejected proposed settlements when the parties did not take sufficient steps to ensure that notice of the proposed settlement would reach class members. For instance, in Carlotti, the court granted preliminary approval where notice was provided via print media, websites, and social media that was “expected to reach 76.75% of the target audience.” 2019 WL 6134910, at *3. In contrast, the Bronson court denied preliminary approval due, in part, to what it saw as glaring unfairness where the parties’ proposal deprived absent class members of notice that their damages claims were not released by the settlement and imposed onerous objection procedures. 2019 WL 4738232, at *4-5; see also Bronson, 2019 WL 5684526, at *2. After sending the parties back to the drawing board, the court granted preliminary approval and endorsed the parties’ proposal to publish notices in magazines and newspapers and maintain a settlement website that posted class settlement information. Bronson, 2019 WL 5684526, at *3. Likewise, in Shin, the court denied preliminary approval where the parties had not yet “secure[d] third-party cooperation” from major retailers in identifying class members. 2019 WL 2515827, *6-7. And in Ang v. Bimbo Bakeries USA, Inc., an alleged food mislabeling class action, the court twice rejected the parties’ proposed notice plans — one of which offered no notice to absent class members and another that only published notice of settlement to class counsel’s website. No. 4:13-cv-01196-HSG, 2020 WL 2091801, at 3 (N.D. Cal. Mar. 31, 2020). Once the parties agreed to modify the proposed notice plan to also include issuing a joint press release and publishing notice on the defendant’s website, the parties secured preliminary approval. See Ang, 2020 WL 2041934, at *6-7 (N.D. Cal. Apr. 28, 2020).

In seeking preliminary approval of a class settlement, the parties should detail how the notice plan follows the guidelines and demonstrate that the proposed settlement provides sufficient means of notifying class members, including unnamed class members. Absent doing so, the parties risk the court denying preliminary approval and requiring the parties to refile their motion to address perceived deficiencies in the notice plan.

(3) Selection and Compensation of Third-Party Settlement Administrators

The Northern District also wants to know if the parties intend to use a third-party settlement administrator and, if so, how the parties selected it and its anticipated cost. The guidelines seek to ensure parties are transparent as to why they chose a particular administrator and how their selection promotes fairness to class members.

For instance, in Livingston, the court relied on principles of fairness in rejecting the defendant’s proposal to serve as its own settlement administrator and encouraging the parties to find a third-party administrator. 2019 WL 8504695, at *7. The court also asked for information specified in the guidelines about any settlement administrator chosen. Id. By comparison, in both Carlotti and Broomfield v. Craft Brew Alliance, Inc., the parties proposed third-party settlement administrators and provided the information called for in the guidelines (including how they chose the administrator and the administrator’s fees and costs), and both secured preliminary approval. Carlotti, 2019 WL 6134910, at *15; Broomfield, No 5:17-CV-01027-BLF, 2019 WL 6112324, at *3 (N.D. Cal. June 14, 2019).

In determining whether to grant preliminary approval, the Northern District tries to ensure that parties are notifying the most class members possible and processing claims fairly. This has likely increased courts’ interest in the parties’ selection and use of outside settlement administrators, as well as how much the administrator will be paid in proportion to any monetary relief to the class.

Key Takeaways

Based on trends evident in the Northern District’s decisions on preliminary approval of consumer class settlements in the 18 months since implementation of the guidelines, parties should take at least two practical steps to increase their chances of obtaining approval:

• Prepare to Comply with the Guidelines: The three trends above are not exhaustive, and the court has taken issue with other aspects of proposed settlements that did not address and comply with the guidelines. What is evident is that Northern District judges utilize the guidelines as a checklist for review of proposed class settlements at the preliminary approval stage. For this reason, parties should prepare preliminary approval requests with an eye toward addressing each criteria set out in the guidelines. Failure to fully address the guidelines increases the odds of the court denying preliminary approval and sending the parties back to the drawing board.

• Remember that the Guidelines Protect Unnamed Class Members and Foster Transparency: The court’s concerns over changing the settlement class or the scope of claims subject to a release, or over deficiencies in notice procedures, all arise from the court’s gatekeeper role to protect unnamed class members. If the proposed settlement includes changes in the class definition or expands the scope of claims in a release beyond what was alleged in the complaint, the parties should be forthright in explaining and justifying the reasons for the changes in their preliminary approval papers. Further, the parties should provide full disclosure regarding use, selection and compensation of any third-party settlement administrator to inform the court’s review of the settlement and proposed notice plan. This increased transparency with the court will increase the parties’ likelihood of securing preliminary approval.

Adhering to the guidelines when preparing a proposed settlement and preliminary approval papers necessarily addresses the equitable treatment of unnamed class members and ensures that the court receives the information it needs to consider and grant preliminary approval. Approaching consumer class settlements with these goals in mind in turn will increase parties’ chances of obtaining preliminary approval on the first pass. 

The views and opinions set forth herein are the personal views or opinions of the authors; they do not necessarily reflect views or opinions of the law firm with which they are associated.


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