CALIFORNIA CLASS ACTION LAW

Experian in Ruddington Fields (Photo credit: Ruddington Photos)

Today, the Ninth Circuit reversed a district court’s approval of a class action settlement against credit reporting agencies under the Fair Credit Report Act, citing a failure by the class representatives and class counsel to adequately represent the class.  Radcliffe, et al v. Experian Information Solutions, Inc., et al., Case No. 11-56376, __ F.3d __ (Apr. 22, 2013).  The court took issue with the incentive awards to the class representatives that were conditioned on the class representatives’ support for the settlement.  The agreement provided for incentive awards:

On or before October 19, 2009, Proposed 23(b)(3) Settlement Class Counsel shall file an application or applications to the Court for an incentive award, to each of the Named Plaintiffs serving as class representatives in support of the Settlement, and each such award not to exceed $5,000.00.

The court concluded that these conditional awards caused a divergence of interests between the representatives and the class:

These conditional incentive awards caused the interests of the class representatives to diverge from the interests of the class because the settlement agreement told class representatives that they would not receive incentive awards unless they supported the settlement. Moreover, the conditional incentive awards significantly exceeded in amount what absent class members could expect to get upon settlement approval. Because these circumstances created a patent divergence of interests between the named representatives and the class, we conclude that the class representatives and class counsel did not adequately represent the absent class members, and for this reason the district court should not have approved the class-action settlement.

Judges & Attorneys

Circuit Judge Ronald M. Gould delivered the opinion for the court.  District Judge Sam E. Haddon, sitting by designation, issued a concurrence.

George F. Carpinello (argued) and Adam R. Shaw, Boies, Schiller & Flexner LLP, Albany, New York; Daniel Wolf, Daniel Wolf Law Offices, Washington, D.C.; Charles Juntikka, Charles Juntikka & Associates LLP, New York, New York, for Plaintiffs-Appellants Robert Radcliffe, Chester Carter, Maria Falcon, Clifton C. Seale, III, and Arnold E. Lovell and Objectors-Appellants Christy Driver, Ivonne Martinez, Kelly J. Porter, Lisa Brisbane, Brenda Melendez, and Ralph Michael Porter.

Steven A. Miller, Steven A. Miller, PC, Denver, Colorado, for Objector-Appellant Steven C. Singer.

Joseph Darrell Palmer, Darrell Palmer Law Offices, Solana Beach, California, for Objector-Appellant Maria L. Borbon.

Charles M. Thompson, Charles M. Thompson, PC, Birmingham, Alabama; R. Stephen Griffis, R. Stephen Griffis Law Offices, Hoover, Alabama, for Objectors-Appellants Thomas A. Carder and Glenda Schilleci.

John William Davis, John W. Davis Law Offices, San Diego, California; Steven F. Helfand, Helfand Law Offices, San Francisco, California, for Objector-Appellant Walter Ellingwood.

C. Benjamin Nutley and James Garrett Kendrick, Kendrick & Nutley, Pasadena, California, for Objectors-Appellants Marcia Green and Jimmy Green.

Gregory A. Beck and Scott L. Nelson, Public Citizen Litigation Group, Washington, D.C., for Appellant Charles Juntikka.

Michael A. Caddell (argued) and Cynthia Chapman, Caddell & Chapman, Houston, Texas; Michael W. Sobol, Lieff Cabraser Heimann & Bernstein LLP, San Francisco, California; Stuart T. Rossman and Charles M. Delbaum, National Consumer Law Center, Boston, Massachusetts; Leonard A. Bennett and Matthew Erausquin, Consumer Litigation Associates, P.C., Newport News, Virginia; Lee A. Sherman, Callahan, Thompson, Sherman & Caudill, LLP, Irvine, California; Mitchell A. Toups, Weller, Green, Toups & Terrell, L.L.P., Beaumont, Texas, for Plaintiffs-Appellees.

Daniel J. McLoon (argued) and Michael G. Morgan, Jones Day, Los Angeles, California, for Defendant-Appellee Experian Information Solutions, Inc.

Cindy D. Hanson, Kilpatrick Townsend & Stockton LLP, Atlanta, Georgia, for Defendant-Appellee Equifax Information Services LLC.

Julia B. Strickland, Stephen J. Newman, Brian C. Frontino, and Catherine Huang, Stroock & Stroock & Lavan LLP, Los Angeles, California, for Defendant-Appellee TransUnion LLC.

By CHARLES H. JUNG