Named Plaintiffs & Settlement Class Members v. Feldman (In re Apple Inc. Device Performance Litig.)
| Decision Date | 28 September 2022 |
| Docket Number | 21-15758,21-15761,21-15762,21-15763, No. 21-15761, No. 21-15762, No. 21-15763 |
| Citation | 50 F.4th 769 |
| Court | U.S. Court of Appeals — Ninth Circuit |
| Parties | In re Apple Inc. Device Performance Litigation, v. Sarah Feldman; Hondo Jan, Objectors-Appellants, Named Plaintiffs and Settlement Class Members, Plaintiff-Appellee, v. Apple Inc., Defendant-Appellee. In re Apple Inc. Device Performance Litigation, Named Plaintiffs And Settlement Class Members, Plaintiff-Appellee, v. Best Companies, Inc., Objector-Appellant, v. Apple Inc., Defendant-Appellee. In re Apple Inc. Device Performance Litigation, Named Plaintiffs and Settlement Class Members, Plaintiff-Appellee, v. Deborah Pantoni, Objector-Appellant, v. Apple Inc., Defendant-Appellee. In re Apple Inc. Device Performance Litigation, Named Plaintiffs and Settlement Class Members, Plaintiff-Appellee, v. Anna St. John, Objector-Appellant, v. Apple Inc., Defendant-Appellee. |
Argued and Submitted May 11, 2022 Pasadena, California
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Appeal from the United States District Court for the Northern District of California D.C. No. 5:18-md-02827-EJD Edward J Davila, District Judge, Presiding
Kendrick Jan (argued), Kendrick Jan APC, San Diego California, for Objector-Appellants Sarah Feldman and Hondo Jan.
Scott A. Kamber (argued), Kamber Law LLC, Denver, Colorado, for Objector-Appellant Best Companies, Inc. John J. Pentz (argued), Law Offices of John J. Pentz, Sudbury Massachusetts; Jane L. Westfall, Menifee, California; for Objector-Appellant Deborah Pantoni.
Theodore H. Frank (argued) and Anna St. John, Hamilton Lincoln Law Institute, Center for Class Action Fairness, Washington, D.C., for Objector-Appellant Anna St. John.
Mark C. Molumphy (argued), Joseph W. Cotchett, and Elle D. Lewis, Cotchett Pitre &McCarthy LLP, Burlingame, California; Laurence D. King, Kathleen A. Herkenhoff, and Matthew B. George, Kaplan Fox &Kilsheimer LLP, Oakland, California; Frederic S. Fox, Donald R. Hall, and Melinda C. Campbell, Kaplan Fox &Kilsheimer LLP, New York, New York; for Plaintiff-Appellee.
Christopher Chorba (argued), Theodore J. Boutrous Jr., and Wesley Sze, Gibson Dunn &Crutcher LLP, Los Angeles, California; Kory Hines and Catherine McCaffrey, Gibson Dunn &Crutcher LLP, New York, New York; for Defendant-Appellee.
Brett R. Nolan, Office of the Attorney General, Frankfort, Kentucky; Steve Marshall, Attorney General, Office of the Attorney General, Montgomery, Alabama; Mark Brnovich, Attorney General; Office of the Attorney General, Phoenix, Arizona; Leslie Rutledge, Attorney General, Office of the Attorney General, Little Rock, Arkansas; Ashley Moody, Attorney General, Office of the Attorney General, Tallahassee, Florida; Jeff Landry, Attorney General, Office of the Attorney General, Baton Rouge, Louisiana; Keith Ellison, Attorney General Office of the Attorney General, St. Paul, Minnesota; Douglas J. Peterson, Attorney General, Office of the Attorney General, Lincoln, Nebraska; Aaron D. Ford, Attorney General, Office of the Attorney General, Carson City, Nevada; Wayne Stenehjem, Attorney General, Office of the Attorney General, Bismarck, North Dakota; Dave Yost, Attorney General, Office of the Attorney General, Columbus, Ohio; Ken Paxton, Attorney General, Office of the Attorney General, Austin, Texas; Sean D. Reyes, Attorney General, Office of the Attorney General, Salt Lake City, Utah; for Amici Curiae Kentucky, Alabama, Arizona, Arkansas, Florida, Louisiana, Minnesota, Nebraska, Nevada, North Dakota, Ohio, Texas, and Utah.
Shiyang Huang, Topeka, Kansas, as pro se Amicus Curiae.
Before: Jacqueline H. Nguyen, John B. Owens, and Ryan D. Nelson, Circuit Judges.
SUMMARY[*]
In consolidated appeals by five class objectors, the panel vacated the district court's rulings arising from its approval of a $310 million class action settlement resolving allegations that Apple Inc. secretly throttled the system performance of certain model iPhones to mask battery defects.
Best Companies, Inc. ("BCI") contended that the district court provided inadequate notice of the settlement to nonnatural persons. The panel held that notice here satisfied both Fed.R.Civ.P. 23 and due process. The settlement administrator contacted 99% of the persons associated with potentially eligible devices via the email and postal addresses in Apple's records. Additional class members received notice through the settlement's substantial coverage in the press and on social media. Rule 23 and due process require only a "reasonable effort" to notify individual class members. The panel rejected BCI's assertion that the parties could have given nonnatural persons constructive notice of the settlement through publication because the free media coverage and individual notice to device users was more than adequate to reach nonnatural persons. The district court did not abuse its discretion by authorizing the reasonable notice to nonnatural persons.
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Three of the objectors (the "Feldman objectors") complained that the settlement extinguished the claims of "all former or current U.S. owners" of certain devices who downloaded iOS software before Apple disclosed potential defects, but the settlement limited recovery to the subset of owners who can attest that "they experienced" the alleged defects. The panel held that the fundamental problem with the Feldman objectors' argument was their assumption that all class members suffered the same impairment of iPhone performance and uniform damages. The parties agreed to the attestation requirement as a compromise, and the panel held that this compromise was reasonable. The settlement allowed Apple to limit its exposure while ensuring that compensation was available to every class member who suffered a compensable injury.
The Feldman objectors also argued that the district court cited the wrong legal standard in examining the settlement's fairness by improperly applying a presumption of reasonableness to the settlement rather than applying a heightened scrutiny. The panel held that the district court applied the wrong legal standard and ignored precedent requiring a heightened fairness inquiry prior to class certification. Here, while the district court's probing analysis suggested that it may have applied heightened scrutiny, its written order relied on a flawed legal standard. The district court abused its discretion by stating that it applied a presumption of reasonableness and fairness to the settlement. The panel vacated the order granting final settlement approval so that on remand the district court could evaluate the settlement under the correct standard. In light of this vacatur, the panel also vacated the district court's order awarding attorney's fees, expenses, and incentive payments.
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The Judicial Council of California coordinated four state court proceedings into a single action in the San Francisco Superior Court (the "JCCP action"), which proceeded parallel to the federal litigation. The panel agreed with the Feldman objectors that the district court's explanation for considering JCCP-related work conflicted with the court's overall rationale for its fee award. The lodestar amount claimed by class counsel and accepted by the district court included nearly $4 million in attorney's fees generated by JCCP counsel in the state proceedings. The panel held that the impact of the JCCP fees on the multiplier was not at all insignificant, and the district court's failure to consider whether the JCCP fees should be included in the lodestar was an abuse of discretion.
The panel held that Supreme Court precedent did not foreclose incentive payments to class representatives. The Feldman objectors contended that twenty-first century precedent allowing such awards conflicted with Supreme Court precedent from the nineteenth century. The panel held that, to the contrary, the court has previously considered the nineteenth century caselaw in the context of incentive awards and found nothing discordant. Incentive awards cannot categorically be rejected or approved. So long as they are reasonable, they can be awarded.
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In this multidistrict litigation against Apple Inc., the district court approved a $310 million class action settlement resolving allegations that Apple secretly throttled the system performance of certain model iPhones to mask battery defects. The court approved $80.6 million, representing 26% of the recovery, in fees to class counsel and also approved service awards to the named plaintiffs. Several class members who objected to these decisions now appeal.
The district court actively managed this difficult litigation, which involved the consolidation of dozens of federal lawsuits. Once the settlement was achieved following motions practice, discovery, and months of negotiations with the assistance of a mediator, the settlement administrator sent over 90 million class notices via email and over 5 million notices by postcard. About 99% of persons associated with potentially eligible devices received notice of the settlement. The settlement also received substantial
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press and social media coverage. We find that class members-including nonnatural persons-received adequate notice of the settlement. Any suggestion to the contrary is unsupported by the record.
The district court properly resolved most of the objections at issue on appeal. However, in finding the settlement fair reasonable, and adequate, the district court committed legal error. As we have repeatedly admonished, settlement prior to class certification requires extra scrutiny. While we commend the district court's thoughtful and thorough analysis, which suggests that the court took great care in considering the terms of the settlement, its written order explicitly states that the...
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