Caligiuri v. Symantec Corp.

• Decision Date: 28 April 2017
• Docket Number: No. 16-2015, No. 16-2113,16-2015
• Citation: 855 F.3d 860
• Parties: Erin C. CALIGIURI, Objector-Appellant Devi Khoday; Danise Townsend, individually and on behalf of the class they represent, Plaintiffs-Appellees v. SYMANTEC CORP.; Digital River, Inc., Defendants-Appellees Michelle Van De Voorde, Objector-Appellant Devi Khoday; Danise Townsend, individually and on behalf of the class they represent, Plaintiffs-Appellees v. Symantec Corp.; Digital River, Inc., Defendants-Appellees
• Court: U.S. Court of Appeals — Eighth Circuit

855 F.3d 860

Erin C. CALIGIURI, Objector-Appellant

Devi Khoday; Danise Townsend, individually and on behalf of the class they represent, Plaintiffs-Appellees

v.SYMANTEC CORP.; Digital River, Inc., Defendants-Appellees

Michelle Van De Voorde, Objector-Appellant

Devi Khoday; Danise Townsend, individually and on behalf of the class they represent, Plaintiffs-Appellees

v.Symantec Corp.; Digital River, Inc., Defendants-Appellees

No. 16-2015

No. 16-2113

United States Court of Appeals, Eighth Circuit.

Submitted: April 3, 2017

Filed: April 28, 2017

Counsel who represented the appellant Caligiuri was Brent Vullings of Collegeville, PA.

Counsel who represented appellant Van de Voorde was Robert C. Black III of Edina, MN.

Counsel who represented the appellee was Karen Riebel, of Minneapolis, MN, Douglas James McNamara, of Washington, DC, Andrew N. Friedman, of Washington, DC, Kate M. Baxter-Kauf, of Minneapolis, MN, Jessica A. Frogge, of Chicago, IL, and Sally Handmaker of Washington, DC.

Before GRUENDER, MURPHY, and KELLY, Circuit Judges.

GRUENDER, Circuit Judge.

Erin Caligiuri and Michelle Van de Voorde appeal the district court's¹ order approving a class action settlement and granting attorneys' fees and service awards. Caligiuri argues that the district court abused its discretion by (1) approving the settlement without knowing the final administrative costs or the final amount received by the class, (2) calculating attorneys' fees as a percentage of the total settlement fund without deducting administrative costs, (3) failing to ensure that unclaimed settlement funds would be used to benefit the class, and (4) granting service awards of $10,000 to each named plaintiff. Van de Voorde joins in Caligiuri's first two arguments. We affirm.

I. BACKGROUND

In January 2011, plaintiffs filed a class action against Symantec Corp. and Digital River, Inc. (collectively "Symantec"). Symantec sold download insurance services costing between $4.99 and $16.99. These services allowed purchasers of Norton software to re-download the software beyond sixty days from the date of their purchase. Plaintiffs alleged that Symantec failed to disclose that consumers could use various free alternatives to re-download their Norton software. After the close of discovery, the district court certified a national class comprised of all persons in the United States who purchased the download insurance services between January 24, 2005 and March 10, 2011.

In April 2015, the parties agreed to settle. The settlement agreement provided that Symantec would pay $60,000,000 into a total settlement fund. In addition to this amount, Symantec agreed to pay each named plaintiff up to $7,500 of any service award approved by the court. Any amount over $7,500 would be paid from the total settlement fund. To receive reimbursement, class members were required to submit an electronic claim form within thirty days after entry of the final approval order. Class members who submitted an approved claim form would receive reimbursement from the net settlement fund, which consists of the total settlement fund after subtracting attorneys' fees and expenses, administrative costs, and any amount of service awards exceeding $7,500 per named plaintiff. Approved claimants would receive $50 for each purchase of download insurance services, subject to a pro rata reduction if the total claims exceeded the net settlement fund. If, after distribution of the approved claims, sufficient funds remained to pay at least $2 to each approved claimant, then such funds would be distributed to approved claimants in a second distribution on a pro rata basis. If any funds remained after distribution to approved claimants, the remaining funds would be distributed cy pres to the Electronic Frontier Foundation, a nonprofit digital rights group.

In October 2015, the district court preliminarily approved the settlement and appointed a settlement administrator. The settlement administrator's direct notice program provided notice of the settlement via e-mail to class members with a known e-mail address and via postcard to class members with an unknown or invalid e-mail address. The e-mail and postcard notices directed the class members to a settlement website containing the electronic claim form.

The court scheduled a final fairness hearing for January 19, 2016. Before the hearing, the settlement administrator informed the court that, as of January 10, 2016, it had incurred $1,955,681.56 in costs and estimated that the total cost of the entire settlement administration would be approximately $2,420,681.56. It further stated that it already had received claims for 307,240 unique purchases.

In addition, class counsel filed a motion for attorneys' fees, expenses, and service awards. Class counsel requested an award of attorneys' fees of one-third of the total settlement fund, which amounts to $20,000,000, as well as reimbursement for $738,605.19 in litigation expenses. The motion also requested that the court grant service awards of $10,000 to each of the two named plaintiffs.

Class members Erin Caligiuri and Michelle Van de Voorde timely objected to the settlement and to class counsel's motion for attorneys' fees and service awards. After the fairness hearing, the district court granted final approval of the settlement, granted class counsel's motion for attorneys' fees, expenses, and service awards, and denied all objections. Caligiuri and Van de Voorde now appeal.

II. DISCUSSION

A. Settlement Approval

A district court may approve a class action settlement only after finding that it is "fair, reasonable, and adequate." Fed. R. Civ. P. 23(e)(2). We review a district court's order approving a class action settlement for abuse of discretion. Marshall v. Nat'l Football League , 787 F.3d 502, 508 (8th Cir. 2015). When reviewing for abuse of discretion, "we ask whether the District Court considered all relevant factors, whether it was significantly influenced by an irrelevant factor, and whether in weighing the factors it committed a clear error of judgment." Id. (citation and alternations omitted).

Caligiuri and Van de Voorde do not challenge the fairness of the settlement terms. Rather, they argue that the district court abused its discretion by approving the settlement without knowing the final administrative costs or the final amount received by the class. They contend that the district court could not have determined the fairness, reasonableness, and adequacy of the settlement without knowing these amounts. On this basis alone, they request that we vacate the district court's settlement approval. We decline to do so.

First, although the district court did not know the final administrative costs, it was provided with an estimate. Before the fairness hearing, the settlement administrator informed the court that it estimated that the total cost of the entire settlement administration would be approximately $2,420,681.56. This estimate was subject to change because administrative costs would continue to accrue throughout the process of distributing the settlement, which would not begin until the court granted final approval. For this reason, it is common for courts to approve settlements after receiving only estimates of administrative costs. See, e.g. , Huyer v. Buckley , 849 F.3d 395, 397 (8th Cir. 2017) (noting that district court approved settlement where administrative costs were estimated at $3,250,000 and funds would be deducted from net settlement fund if actual costs exceeded that amount). As such, the district court was entitled to rely on the estimates provided by the settlement administrator when deciding whether to approve the settlement, and there is no indication that the court failed to consider that information.

Second, there likewise is no requirement for a court to know the final amount received by the class before approving a settlement. See Hamilton v. SunTrust Mortg., Inc. , No. 13-60749-civ, 2014 WL 5419507, at *4 (S.D. Fla. Oct. 24, 2014) (collecting cases and concluding that "[d]istrict courts often grant final approval of class actions settlements before the final claims deadline"). Indeed, at the time the district court approved the settlement, it could have estimated that the net settlement fund would be approximately $36,835,713.25.² And the court knew that, under the terms of the settlement agreement, the vast majority of the net settlement fund would be distributed to class members, because if enough funds remain to distribute at least $2 to each approved claimant, then all remaining funds will be distributed to approved claimants on a pro rata basis. Thus, as the district court observed, "any cy pres distribution would likely be minimal, consisting only of uncashed checks and any funds remaining if a second distribution to the class would pay less than $2 to each approved claimant."

Furthermore, to the extent that Caligiuri and Van de Voorde suggest that there was a possibility that "the size of the individual awards compared to claimants' estimated damages" would be inadequate, see In re Baby Prods. Antitrust Litig. , 708 F.3d 163, 174 (3d Cir. 2013), their objection is baseless. As the district court noted, "it is anticipated that class members submitting valid claims will receive an amount in excess of their out-of-pocket loss—around $50 per claim, compared to the $4.99 to $16.99 purchase price." Indeed, the district court was reasonable to anticipate that each approved claimant would receive around $50 per purchase. Before the fairness hearing, the settlement administrator represented that it had received 307,240 claimed purchases, which would not be enough to trigger the pro rata reduction from $50. In addition, class counsel represented that it was "likely that most valid claimants will receive more than their out-of-pocket losses here." As it turns out, this prediction was correct. The settlement administrator has received claims for 732,049 purchases. According to class counsel, even if...