18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 709 load washing machines manufactured and sold by Defendants, brought multiple class actions alleging that the products were defective. The parties to all the cases negotiated a settlement agreement that provided class members five forms of relief. Valuing the settlement at between $6.55 million and $11.42 million and finding that certain aspects of the agreement provided the average claimant greater compensation than damages provable at trial, the District Court, over John Douglas Morgan’s objection, granted final class certification and final approval to the settlement. Essential to Morgan’s objections was that the settlement agreement included a “kicker” provision and a “clearsailing” provision relative to the award of attorneys’ fees and costs. Under the “kicker” provision, Defendants retained the difference between the maximum permissible attorneys’ fees and costs award of $6.55 million and the amount actually awarded by the District Court. Morgan argued that under the “clearsailing” provision, Defendants agreed not to contest any request by class counsel for attorneys’ fees and costs of up to $6.55 million. Attempting to resolve his objections, Morgan and Defendants sought to negotiate a side agreement providing for the possible distribution to the class of a portion of the difference between the $6.55 million maximum permissible attorneys’ fees and costs, and the actual amount awarded by the District Court. Ratification of this side agreement, however, never occurred, with Morgan walking away based on his fear that class counsel might sue him if he finalized the side agreement. Instead of seeking the maximum award of $6.55 million, class counsel sought an attorneys’ fees and costs award of just under $6.25 million. Scrutinizing the billing records submitted by class counsel and acknowledging the existence of the “kicker” and “clear-sailing” provisions in the settlement agreement, the District Court awarded class counsel a reduced amount of just over $3.8 million. As a result of this award falling well below the maximum permissible amount of $6.55 million, Defendants were able to retain money that likely would have been distributed to the class had the side agreement been finalized. On appeal, Morgan advanced three arguments, including that: (i) the District Court made clear errors of fact regarding settlement negotiations and the side agreement; (ii) the District Court abused its discretion by granting final approval to the settlement agreement where it included both a “kicker” and a “clear-sailing” provision; and (iii) the District Court abused its discretion by granting final class certification and allowing class counsel to continue in its role after class counsel placed its interests ahead of the interests of the class. The Tenth Circuit held that the District Court was required to apply heightened scrutiny before it approved a settlement that included both a “kicker” provision and a “clear-sailing” provision. However, after a review of the record, the Tenth Circuit concluded that the District Court did apply such scrutiny. The Tenth Circuit found that the District Court made one clear error in its fact-finding process in that it determined that class counsel took no position as to the side agreement, when in fact class counsel opposed the side agreement. The Tenth Circuit held that this error was harmless to the ultimate decisions regarding final class certification, final approval of the settlement agreement, and the award of attorneys’ fees and costs. Accordingly, the Tenth Circuit affirmed the District Court’s orders granting final class certification and granting final approval to the settlement agreement under Rule 23(e). In Re Zoom Video Communications Inc. Privacy Litigation, Case No. 20-CV-2155 (N.D. Cal. Oct. 21, 2021). Plaintiffs, a group of users of Defendant’s videoconferencing provider, filed a class action alleging various claims of privacy and data security issues. The parties ultimately settled the matter and filed a motion for preliminary settlement approval. The Court granted the motion. For settlement purposes, the Court granted certification of a class consisting of all individuals in the U.S. who registered, used, opened, or downloaded the Zoom Meetings application. The Court held that based on its review of the proposed agreement and supporting briefs, the settlement agreement appeared to be the result of serious, informed, non-collusive negotiations. The Court also opined that the terms of the settlement did not improperly grant preferential treatment to any individual or segment of the settlement class. The Court held that the settlement terms fell within the range of possible approval and were fair, reasonable, and adequate. For these reasons, the Court granted preliminary settlement approval. Kassman, et al. v. KPMG LLP, 2021 U.S. Dist. LEXIS 71243 (S.D.N.Y. April 12, 2021). Plaintiffs, a group of female employees in Defendant’s tax and advisory departments, filed a class and collective action alleging violations of the Equal Pay Act and Title VII of the Civil Rights Act in connection with Defendant’s pay and promotions policies. After a decade of litigation, the parties agreed to settle the matter and requested preliminary settlement approval, which the Court granted. The proposed settlement provide $10 million with the average claimant pay-out of approximately $16,000. The Court noted that $10 million was approximately 20% of Plaintiffs’ alleged potential damages, and such a recovery was within the range of settlements approved by