Trio Analyzes 9th Circuit Decision on Scrutiny Standard for Class Settlements

September 16, 2021

McGuireWoods partner Diane Flannery and associates Nicholas Hoffman and Drew Gann co-authored an article in Law360 on Sept. 8, 2021, that looks into the recent decision by the 9th U.S. Circuit Court of Appeals on the heightened scrutiny standard required for precertification class settlements.

In Kim v. Allison, the authors explained, the 9th Circuit reversed approval of a precertification class settlement after it found that the district court materially underrated the strength of the plaintiff’s claims, overrated the settlement’s worth and failed to review whether there was collusion related to the attorney fees award.

The case centered on Tinder, the dating app where users swipe left or right to indicate their interest in a potential match. The plaintiff brought the case against the app developer alleging it violated California civil rights and consumer protection laws by charging younger users less for some of its premium services. The district court approved the precertification settlement.

The authors offered key takeaways from the 9th Circuit ruling. “To mitigate this risk, class action parties and their attorneys should no longer assume that a precertification settlement will simply glide through the approval process,” they wrote. “The heightened standard outlined in Kim should be considered well prior to engaging in settlement discussions.”

The authors said other circuits appear to be watching the influential 9th Circuit and may move toward heightened scrutiny for class settlements.