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Ninth Circuit Tosses Class Settlement in ‘Batterygate’ Suit
Panel Says Judge Erred in Applying Presumption of Fairness and Reasonableness
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals yesterday capsized a $310 million settlement of a class action against Apple, Inc. that was based on it providing an update that slowed the performance of certain older models of iPhones in order to prolong battery life and thus mask a battery defect, holding that the judge who approved the resolution erred in applying a presumption that a settlement is fair and reasonable.
The controversy has been dubbed “Batterygate” in news accounts. Approximately 2.3 million purchasers whose claims were approved by an administrator had been expecting to receive payments of about $25, but payment will be delayed pending the outcome of further proceedings in the District Court for the Northern District of California.
Writing for a three-judge panel, Circuit Judge Jacqueline H. Nguyen said that District Court Judge Edward J. Davila provided “probing analysis” that “suggests” that he “may have applied heightened scrutiny,” which was the correct standard, but his “written order relied on a flawed legal standard.” Davila said in that order that the “recommendations of plaintiffs’ counsel should be given a presumption of reasonableness” and that there is “a presumption that the agreement is fair.”
Nguyen wrote that “settlement prior to class certification requires extra scrutiny,” and declared:
“[T]he district court abused its discretion by stating that it applied a presumption of reasonableness and fairness to the settlement. We vacate the order granting final settlement approval so that on remand the district court can evaluate the settlement under the correct standard.”
Attorney-Fee Award
In ordering that the settlement be vacated, the Ninth Circuit also blotted out a $80.6 million award of attorney fees. Nguyen provided guidance in calculating the attorney fees, on remand.
The plaintiffs’ counsel claimed entitlement to $4 million for work done on litigation in the San Francisco Superior Court which, Nguyen said, “proceeded parallel to the federal litigation.” Yet, it was not clear from the order whether Davila took that work into account or not, she observed, declaring that the “impact” of fees for such services “was not at all ‘insignificant,’ ”and that the failure to consider whether such fees “should be included in the lodestar was an abuse of discretion.”
Davila awarded incentive payments to the named plaintiffs. The objectors argued that such awards, approved in recent decisions, conflict with 19th Century pronouncements by the U.S. Superior Court.
“To the contrary,” the circuit judge said, “we have previously considered this nineteenth century caselaw in the context of incentive awards and found nothing discordant.”
Notice Was Sufficient
Nguyen found no merit in the contention that there was an insufficient effort to provide corporate purchasers of iPhones with notice of the proposed settlement and that publication should have been made. The judge pointed out:
“The media covered the settlement in 2,670 pieces with a combined readership of approximately 7.31 million people….Indeed, the large share of corporate claimants belies a lack of notice. More than one million nonnatural persons submitted claims, comprising nearly a third of the total.”
The case is In re Apple Inc Device Performance Litigation, 21-15758.
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