130 Litigating CA Wage & Hour Class and PAGA Actions (23rd Edition) Seyfarth Shaw LLP | www.seyfarth.com coupons that are actually redeemed.669 Alternatively, the fee award may be based on the lodestar method, which considers the amount of time the class counsel reasonably expended working on the action.670 The court may approve a coupon settlement only after a hearing and “a written finding” that the settlement is “fair, reasonable, and adequate for class members.”671 In True v. American Honda Motor Co., the district court reiterated that heightened scrutiny is necessary in reviewing coupon settlements.672 The court gave three reasons why such settlements are generally disfavored: “they often do not provide meaningful compensation to class members; they often fail to disgorge ill-gotten gains from defendant; and they often require class members to do future business with the defendant in order to receive compensation.”673 Nonetheless, coupon settlements can be approved if the value of the specific coupon settlement is “reasonable in relation to the value of the claim surrendered.”674 Settling parties must also be careful to avoid conditioning incentive awards to class representatives on their acceptance of the settlement. In Radcliffe v. Experian Info Solutions, the Ninth Circuit determined that class counsel and class representatives were inadequate where a settlement conditioned the provision of incentive awards to class representatives on the representatives’ approval of the settlement.675 The Ninth Circuit reasoned that this condition “corrupted” the settlement by motivating the class representatives to support a possibly unfair settlement in exchange for the award, as opposed to seeking a fair settlement for the entire class.676 Settlements may also not be approved if any class member is forced to pay an amount to class counsel that would result in a net loss to the class member, unless the court makes a written finding that the benefits substantially outweigh the loss.677 Finally, the court will not approve a settlement that provides for a payment to some class members that is more than the payment to others solely due to their geographic proximity to the court.678 CAFA also contains specific requirements regarding the issuance of class settlement notifications.679 CAFA requires defendants to serve a notice of the proposed settlement agreement on (1) the “appropriate federal official” and (2) the “appropriate state official.”680 The notice must include the complaint, notices of scheduled 669 See id. § 1712(a). 670 See id. § 1712(b) (1). 671 See id. § 1712(e). 672 True v. Amer. Honda Motor Co., 749 F. Supp. 2d 1052, 1069 (C.D. Cal. 2010). 673 Id. (citing Figueroa v. Sharper Image Corp., 517 F. Supp. 2d 1292, 1302 (S.D. Fla. 2007)). 674 Id. 675 Radcliffe v. Experian Info. Solutions, 715 F.3d 1157 (9th Cir. 2013). 676 Id. at 1164. The Ninth Circuit went on to explain that a large disparity between the incentive award and the payments to the rest of the class members “exacerbated the conflict.” Id. at 1165. 677 See 28 U.S.C. § 1713. 678 See 28 U.S.C. § 1714. 679 See 28 U.S.C. § 1715. 680 See id. § 1715(a).
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