Patrick Hendricks v. Starkist Co. ( 2018 )

FILED
NOT FOR PUBLICATION
OCT 19 2018
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
PATRICK HENDRICKS, individually and No. 16-16992
on behalf of all others similarly situated,
D.C. No. 3:13-cv-00729-HSG
Plaintiff-Appellee,
v. MEMORANDUM*
BRITTANY FERENCE,
Objector-Appellant,
COLIN MOORE, KATHY DURAND
GORE,
Intervenor,
v.
STARKIST CO.,
Defendant-Appellee.
PATRICK HENDRICKS, individually and No. 16-16993
on behalf of all others similarly situated,
D.C. No. 3:13-cv-00729-HSG
Plaintiff-Appellee,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
v.
KELLY MARIE SPANN,
Objector-Appellant,
COLIN MOORE, KATHY DURAND
GORE,
Intervenor,
v.
STARKIST CO.,
Defendant-Appellee.
PATRICK HENDRICKS, individually and No. 16-16994
on behalf of all others similarly situated,
D.C. No. 3:13-cv-00729-HSG
Plaintiff-Appellee,
v.
JULIUS DUNMORE; et al.,
Objectors-Appellants,
COLIN MOORE, KATHY DURAND
GORE,
Intervenor,
v.
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STARKIST CO.,
Defendant-Appellee.
PATRICK HENDRICKS, individually and No. 16-16995
on behalf of all others similarly situated,
D.C. No. 3:13-cv-00729-HSG
Plaintiff-Appellee,
v.
ERIC MICHAEL LINDBERG,
Objector-Appellant,
COLIN MOORE, KATHY DURAND
GORE,
Intervenor,
v.
STARKIST CO.,
Defendant-Appellee.
PATRICK HENDRICKS, individually and No. 16-17020
on behalf of all others similarly situated,
D.C. No. 3:13-cv-00729-HSG
Plaintiff-Appellee,
v.
KERRY ANN SWEENEY,
3
Objector-Appellant,
COLIN MOORE, KATHY DURAND
GORE,
Intervenor,
v.
STARKIST CO.,
Defendant-Appellee.
PATRICK HENDRICKS, individually and No. 16-17056
on behalf of all others similarly situated,
D.C. No. 3:13-cv-00729-HSG
Plaintiff-Appellant,
v.
BRITTANY FERENCE; et al.,
Objectors-Appellees,
COLIN MOORE, KATHY DURAND
GORE,
Intervenor,
v.
STARKIST CO.,
Defendant.
4
Appeal from the United States District Court
for the Northern District of California
Haywood S. Gilliam, Jr., District Judge, Presiding
Argued and Submitted May 17, 2018**
San Francisco, California
Before: N.R. SMITH and FRIEDLAND, Circuit Judges, and LYNN,*** Chief
District Judge.
Objectors appeal the approval of a class action settlement resolving a dispute
over the alleged under-filling of Starkist tuna cans. Distinguishing this case from
our recent decision in Romero v. Provide Commerce (In re Easysaver Rewards
Litigation), No. 16-56307, 2018 WL 4763174 (9th Cir. Oct. 3, 2018), we affirm.
Objectors raise four issues on appeal. We reject each issue in turn.
1. The settlement notice satisfied due process and Federal Rule of Civil
Procedure 23. Here, the notice included the total amount of the settlement and the
formula that would be used to determine individual recoveries. This information
was sufficient to satisfy Rule 23 and due process. See Mendoza v. Tucson Sch.
Dist. No. 1, 623 F.2d 1338, 1350-51 (9th Cir. 1980) (identifying the district court’s
broad discretion under Rule 23(e) but also acknowledging that due process sets the
**
The panel unanimously concludes that case number 16-17056 is
suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).
*** The Honorable Barbara M. G. Lynn, Chief United States District
Judge for the Northern District of Texas, sitting by designation.
5
outer limits of this discretion); Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370,
1374 (9th Cir. 1993). The fact that the notice also indicated that individuals could
claim a certain value in coupons or cash does not impact the adequacy of the
notice. The notice adequately identified the total value of the settlement fund and
the fact that individual claims were subject to “dilution” in the event that
individuals filed a higher than expected number of claims.
2. We likewise affirm the district court’s determination that the award of
tuna vouchers was not a form of coupon relief under the Class Action Fairness Act
(CAFA), 28 U.S.C. § 1712(a). Examining the factors identified in In re Online
DVD-Rental Antitrust Litigation, 779 F.3d 934 (9th Cir. 2015), and re-emphasized
in Romero v. Provide Commerce, No. 16-56307, we affirm the district court’s
conclusion that the vouchers at issue do not qualify as coupons. Virtually all of the
factors identified in Online DVD-Rental weigh in favor of the district court’s
conclusion that the vouchers were not coupons under CAFA. The vouchers did not
expire, they were freely transferrable, they could be used at a wide variety of stores
(any retailer selling Starkist products), and the vouchers had sufficient value that
class members could use them to purchase tuna without additional out-of-pocket
expense.
6
The dispute in this case (unlike Romero) does not center on a failure to
provide a promised coupon. Here, the claims center on Starkist’s alleged under-
filling of tuna cans, and the settlement supplies the missing tuna. The fact that the
tuna is delivered by means of a voucher rather than by physically mailing cans of
tuna to class members does not transform the settlement from a tuna settlement
into a coupon settlement. CAFA’s coupon provision does not apply to all non-cash
settlements—it is limited to coupon settlements.
Where the underlying harm stems from something other than a failure to
provide a promised coupon, as was the case in Romero, a voucher that is
sufficiently usable and related to the harm suffered can be acceptable under Online
DVD-Rental. Supplying missing tuna or providing a replacement for a defective
product may be accomplished most efficiently by way of a voucher, and the use of
a voucher to deliver an in-kind settlement to class members will not by itself
transform a non-coupon settlement into a coupon settlement subject to CAFA.
Accordingly, we affirm the district court’s determination that the settlement was
not subject to CAFA’s coupon-settlement requirements. Because this was the only
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basis raised for faulting the district court’s award of attorney fees, we likewise
affirm the award of attorney fees to Plaintiff’s counsel.1
3. Lastly, we affirm the district court’s determination that Plaintiff’s counsel
had not engaged in any improper conduct under our standard in In re Bluetooth
Headset Products Liability Litigation, 654 F.3d 935, 947 (9th Cir. 2011). The
district court correctly determined that none of the three factors identified in
Bluetooth Headset were present and that there was no other evidence of collusion.
Accordingly, the district court correctly denied Objectors’ motion to remove class
counsel.
AFFIRMED.
1
Plaintiff appealed the limited issue of the district court’s payment of fees to
Intervenor’s counsel by way of a deduction from the overall fee award to
Plaintiff’s counsel. We reject this challenge. The district court appropriately
explained the basis for its reduction and award of fees to Intervenor’s counsel. The
cases on which Plaintiff relies to challenge the district court involved
circumstances where the district court’s reduction of fees lacked an adequate
explanation. See, e.g., Stetson v. Grissom, 821 F.3d 1157, 1166-67 (9th Cir. 2016)
(finding an abuse of discretion based on the district court’s failure to explain a
reduction in fees from the lodestar); Stanger v. China Elec. Motor, Inc., 812 F.3d
734, 739 (9th Cir. 2016) (same). Accordingly, we affirm the district court’s award
of attorney fees to Intervenor’s counsel and its corresponding reduction in fees to
Plaintiff’s counsel.
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FILED
Nos. 16-16992, 16-16993, 16-16994, 16-16995, 16-17020, 16-17056
OCT 19 2018
Hendricks v. Starkist Co. MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FRIEDLAND, Circuit Judge, concurring in part and dissenting in part:
I agree with the majority other than as to whether this was a coupon
settlement within the meaning of the Class Action Fairness Act (CAFA), 28 U.S.C.
§ 1712. I write separately to explain why, in my view, applying the framework set
forth in In re Online DVD-Rental Antitrust Litigation, 779 F.3d 934 (9th Cir.
2015), the vouchers to purchase StarKist canned tuna must be considered coupons
under § 1712. I also explain why I disagree with that framework and would adopt
a different rule for determining whether a settlement is a coupon settlement within
the meaning of CAFA were we not bound by In re Online DVD.
The majority’s conclusion that the vouchers here are not coupons accords
with neither our existing caselaw nor common understandings of the meaning of
“coupon.” The majority states that “[v]irtually all” of the factors from In re Online
DVD weigh in favor of finding that the vouchers in this case are not coupons under
CAFA. Specifically, the majority notes that the vouchers did not expire, were
freely transferrable, could be used anywhere that StarKist products are sold, and
would not require out-of-pocket expenses to purchase canned fish. The majority
glosses over, however, the dominant feature of these vouchers: that they can be
used only to purchase canned tuna. I believe that the considerations articulated in
In re Online DVD were not intended to be of equal importance, and that the narrow
use of the vouchers here should be given dispositive weight in this case.
The majority emphasizes that the vouchers do not expire and are freely
transferrable. But In re Online DVD used those factors to capture the flexibility of
a particular credit and, by extension, how similar the credit was to cash. See id. at
951. In contrast, the vouchers here are remarkably inflexible—again, they cannot
be used to purchase anything other than canned tuna. That class members could
buy canned tuna now or could buy canned tuna five years from now simply does
not make these vouchers less like coupons, in the common understanding of that
term. The gift cards in In re Online DVD, in contrast, gave consumers “the ability
to purchase one of many different types of products” from Walmart, “a giant, low-
cost retailer.” Id. at 951-52. And the Walmart gift cards were similar to cash not
only because of the range of products they could be used to purchase, but also
because they allowed consumers to avoid purchasing the product that gave rise to
the action in the first place. These StarKist vouchers, in contrast, can only be used
to acquire the product at issue in the underlying suit: canned tuna.
In terms of the options available to class members, the fact that the vouchers
can be used to purchase only canned tuna has a far greater practical effect than the
fact that the credits are transferrable. After all, Congress “targeted [coupon]
settlements for heightened scrutiny out of a concern that the full value of coupons
2
was being used to support large awards of attorney’s fees regardless of whether
class members had any interest in using the coupons.” Romero, slip op. at 8-9.
When considering how likely class members are to use a coupon, what the coupon
can be used to purchase is more significant than whether the coupon can be
transferred or at some point expires—indeed, the value any class member could
obtain by transferring a voucher is limited by the extent to which others would
want it, which is determined by what it can be used for. Cf. Redman v. RadioShack
Corp., 768 F.3d 622, 628 (7th Cir. 2014) (explaining that “the secondary market in
coupons is bound to be thin” where the coupons are not all that flexible). As a
result, under In re Online DVD, I believe the district court erred by concluding that
it need not apply CAFA’s requirements for coupon settlements.
More generally, though, I believe the disagreement among panel members
in this case reflects a larger problem with the framework adopted by In re Online
DVD for determining whether an award is a coupon within the meaning of CAFA.
Were we writing on a blank slate, I would not rely on In re Online DVD’s non-
exclusive multifactor inquiry to divine CAFA’s definition of a “coupon” at all, and
would instead treat any type of discount, credit, gift card, or voucher as a coupon
under CAFA.
CAFA does not define the word “coupon.” See 28 U.S.C. § 1711 (defining
other terms but not defining “coupon”). I believe that the statute provides no
3
definition because Congress intended the definition to be simple—any type of
award that is not cash or a product itself, but that class members can redeem to
obtain products or services or to help make future purchases, is a coupon.1
Treating all non-cash discounts, credits, vouchers, and the like as coupons
under CAFA would mean that class counsel would receive attorney’s fees in
proportion to the value obtained by the class, because the coupons would only
contribute to the settlement value upon which fees are based to the extent the
coupons were redeemed. If coupons had the characteristics that In re Online DVD
held made the gift cards there similar to cash, those characteristics would lead class
1
The Senate Judiciary Committee’s Report on CAFA described several
examples of concerning settlements in which large attorney’s fee awards (in cash)
vastly exceeded the value of non-cash awards to class members. Most of the
settlements described involved coupons that provided discounts off future
purchases from the defendants. See S. Rep. No. 109-14, at 15-20 (2005), as
reprinted in 2005 U.S.C.C.A.N. 3, 15-20. In re Online DVD then drew its criteria
for what constitutes a “coupon” from the concerns in the Senate Report. 779 F.3d
at 950-52. But the Senate Report did not purport to limit the definition of
“coupon” to such settlements or to percentage discounts rather than other sorts of
gift cards or vouchers. See S. Rep. No. 109-14, at 15-20. As the Seventh Circuit
has explained, from “the standpoint of the dominant concerns that animate the
provisions of [CAFA] regarding coupon settlements it’s a matter of indifference
whether the coupon is a discount off the full price of an item or is equal to (or for
that matter more than) the item’s full price.” Redman v. RadioShack Corp., 768
F.3d 622, 636 (7th Cir. 2014). Thus, I believe Congress intended the term
“coupon” in CAFA to include what the majority characterizes as in-kind
settlements—those that supply or replace a complete product—when they are
achieved through vouchers.
4
members to redeem them at a high rate, and a higher attorney’s fee award would
result. But counsel generally would receive lower fees if the settlement awarded
coupons of less value to class members, as class members would redeem such
coupons at a lower rate. This approach would directly track the approach Congress
adopted in drafting CAFA—rather than worrying about giving a definition to the
term “coupon,” the value of the award to the class would be determined by the
redemption rate, which is a direct reflection of how much class members actually
value the award, and the benefit they receive. 2
This approach would avoid uncertainty for district courts (and disagreement
on appeal, like we have in this case), because a bright-line rule that any type of
discount or credit counts as a coupon would be simple to implement. In contrast,
2
The way the StarKist vouchers in the present settlement will work further
demonstrates why such credits should be considered coupons under CAFA. Each
voucher will have a face value of between $1 and $2, as determined by StarKist.
Because, in most stores, that face value will not equal the exact price of any round
number of cans of tuna, class members will either need to spend some of their own
money to redeem the whole voucher (a factor in the In re Online DVD analysis, the
nuance of which the majority ignores in this case), or will have to leave some of
the voucher unredeemed. Even though many class members will leave a portion
unredeemed, and even though many class members will not redeem the voucher at
all—whether because they lose it, forget they have it, decide they no longer like
tuna, or for any other reason—the majority’s holding that the vouchers are not
coupons means all the distributed vouchers will be counted at their full face value
for purposes of calculating the settlement value and the resulting attorney’s fees.
This is exactly the sort of result Congress was trying to prevent when it adopted the
coupon provisions in CAFA.
5
any non-exclusive list of multiple considerations, such as that adopted in In re
Online DVD, requires courts to separately evaluate in each case how many of those
considerations must be satisfied, how to balance those that are satisfied and those
that are not, and whether other criteria might also be relevant. For example, should
a defendant’s extensive inventory priced at less than a gift card’s value mean that
the gift card is not a coupon even if it has blackout dates and expires very quickly?
What about a gift card that does not expire but can only be used at certain locations
and for a limited range of products? In this case, several of the In re Online DVD
factors weigh in favor of a finding that the vouchers are coupons while, in my
view, one particularly significant factor does not. Neither CAFA nor our list of
considerations in In re Online DVD provides clear guidance on how to balance
these factors, so endless litigation over such questions is inevitable unless we
change course and adopt a simpler rule.
A rule that any type of discount or credit is a coupon would also provide
predictability in crafting settlements. Counsel would know from the outset if they
were negotiating a “coupon settlement” and could structure the settlement to
account for that. Indeed, they might be able to use an expert to estimate the
coupon redemption rates before the redemption period was over. See Redman, 768
F.3d at 634. Class members would receive notice that counsel’s fee depended on
6
the redemption of the coupons, so they could use that information in deciding
whether to object to the fee request.
In my view, Congress enacted a simple rule for evaluating the value of
coupon awards to class members based on their redemption rate, and we have
created needless complication and confusion by deciding that approach should
only apply some of the time, based on judicially created standards for what counts
as a coupon. I hope that our court acting en banc, or the Supreme Court, will
someday put us back on track. In the meantime, weighing the factors of In re
Online DVD, I respectfully dissent from the conclusion that this settlement was not
a coupon settlement within the meaning of CAFA.
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