United States: N.D. Cal. Releases Comprehensive Procedural Guidance For Class Action Settlements

On November 1, 2018, the Northern District of California updated its Procedural Guidance for Class Action Settlements, requiring increased disclosures for settlement preliminary and final approval, and more transparency in post-distribution accounting. Failure to follow the Guidance may result in delay or denial of settlement approval. This article highlights the most significant updated rules affecting class action settlements in the Northern District.

  1. Preliminary Approval

The Procedural Guidance details twelve buckets of information (many with subparts) parties must provide to the Court to obtain preliminary approval for a class action settlement, frontloading and expanding many of the required disclosures regarding the settlement, attorneys' fees and administrative issues. Indeed, the Guidance recommends parties to take these requirements into account "during settlement negotiations" and when drafting class notices.

Parties must disclose the following information about the proposed settlement during the preliminary approval process:

  • Settlement fund and allocation plan to class members;
  • Any differences between the settlement class and the proposed or certified class, as well as differences between the original claims in the complaint and the claims to be released in the settlement;
  • Process used to select the settlement administrator and anticipated administrative costs;
  • Class notice and instructions for opt-outs or objections;
  • Attorneys' fees, including lodestar calculation, and incentive awards;
  • Cy pres recipients and potential conflicts.
  1. Final Approval

The new Guidelines require class counsel to disclose "detailed lodestar information" in all fee requests, "even if the requested amount is based on a percentage of the settlement fund." Loadstar billing calculates attorneys' fees by multiplying the reasonable hours worked by lawyers' hourly rates. Judges in the Norther District of California increasingly have been relying on lodestar information as a check on the reasonableness of attorneys' fees in large class action settlements. The new requirement for detailed lodestar information may signal increased scrutiny and benchmarking of class counsels' fees.

Motions for final approval must also disclose data on submitted claims, undeliverable class notices, opt-outs and objectors.

  1. Post-Distribution Accounting

Parties are now required to file a post-distribution accounting 21 days after settlement funds have been distributed and attorneys' fees paid. The Court may choose to hold a hearing after the materials are submitted. The post-distribution accounting must contain, in an "easy-to-read chart," the following information:

  • Total settlement fund
  • Number of notices sent to class members out of the total number of class members
  • Claims rate (number and percentage of claim forms submitted)
  • Opt-outs and objections
  • Average, median, largest, and smallest recovery per claimant
  • Notice and payment methods
  • Number and value of checks not cashed
  • Amounts distributed to each cy pres recipient
  • Administrative costs
  • Attorneys' fees and costs, including as a percentage of the settlement fund, and the multiplier


The Guidance requires more up-front legwork to obtain preliminary settlement approval, increased scrutiny of attorneys' fees during the final approval phase, and unprecedented transparency of notice efforts and actual recovery via mandatory post-distribution accounting.

The N.D. Cal. Guidance is in line with, but considerably more detailed and comprehensive than the amended Federal Rules of Civil Procedure, to take effect December 1, 2018. For example, amended Fed. R. Civ. Pro. 23(e)(2)(C) will only require courts to determine if a settlement is "fair, reasonable, and adequate" by analyzing, in part, "the costs, risks, and delay of trial and appeal; the effectiveness of any proposed method of distributing relief to the class, including the method of processing class-member claims; [and] the terms of any proposed award of attorney's fees, including timing of payment."

The new N.D. Cal. Guidance requiring class counsel to inform the Court of any changes to claims and class composition was announced by email to ECF registrants just a few minutes after a recent decision regarding approval of one of the largest recent settlements in the Northern District of California, the $576 million indirect purchaser class settlement in In re CRT Antitrust Litig, currently on appeal in the Ninth Circuit. In an order dated November 8, Judge Jon S. Tigar denied the Indirect Purchaser Plaintiffs' Motion for an Indicative Ruling on their Motion to Amend the IPP Fee Order and Plan of Distribution, holding that the Court previously "erred in approving the parties' original settlement" and expressing "concerns about the adequacy of the counsel who negotiated that settlement." In re Cathode Ray Tube Antitrust Litigation, Case No. 07-cv-5944-JST (N.D. Cal. Nov. 8, 2018), ECF No. 5362. The Court took issue with class counsel releasing indirect purchaser claims for three states (dismissed early in the case) without compensation or notice to those class plaintiffs. Although class counsel proposed to add the omitted members back into the class, the Court was concerned that the new class members may identify additional problems with the settlement and potentially need separate counsel.

Practitioners should expect to see increased scrutiny of class action settlements in the busy Northern District, and for the Court's application of its Guidance and the new Federal Rules to set precedent closely watched by federal judges throughout the country.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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