Opinion
22-15694
10-12-2022
JAMES C. KANG; et al., Plaintiffs-Appellees, v. KIRK E. FYSON, Objector-Appellant, v. WELLS FARGO BANK, N.A., Defendant-Appellee.
NOT FOR PUBLICATION
Submitted October 12, 2022 [**] San Francisco, California
Appeal from the United States District Court for the Northern District of California D.C. Nos. 5:17-cv-06220-BLF 5:21-cv-00071-BLF Beth Labson Freeman, District Judge, Presiding
Before: SCHROEDER, FRIEDLAND, and R. NELSON, Circuit Judges.
MEMORANDUM [*]
Kirk Fyson challenges the district court's approval of a class action settlement of a labor dispute between Wells Fargo and the Ibarra and Kang classes, two certified classes of which Fyson is a member. He also challenges the district court's denial of his motion to intervene. We have jurisdiction pursuant to 28 U.S.C. § 1291. We affirm.
The Kang class also included the Moses class, which was consolidated with Kang prior to the settlement. See Kang v. Wells Fargo Bank, N.A., No. 17-cv-06220, 2019 WL 944523, at *1(N.D. Cal. Feb. 27, 2019) ("Consolidate the claims pleaded in the separate class action, Michael Moses v. Wells Fargo Bank, N.A., Case No. 3:18 cv 6679 ("Moses"), into this action, James C. Kang v. Wells Fargo Bank, N.A., Case No. 5:17-cv-06220 ("Kang").").
We previously affirmed in part a district court judgment in favor of the Ibarra class. Ibarra v. Wells Fargo Bank, N.A., 809 Fed.Appx. 361, 365-66 (9th Cir. 2020). We ordered payment of some damages (about $24 million) but stayed the determination of any remaining damages pending the decision of the California Supreme Court in Ferra v. Loews Hollywood Hotel, LLC, No. S259172, which would impact whether further damages were owed. Ibarra, 809 Fed.Appx. at 36566. Our order also stated: "We leave it to the district court to decide the amount of any additional payment owed due to post-judgment interest, any implications of the pending attorney's fees appeal for payment of the damages to Plaintiffs, and any other questions of allocation to Plaintiffs." Id. at 365. Following that order and the issuance of the related mandate, we administratively closed the separate appeal Plaintiffs had filed challenging the district court's attorney's fee award.
The parties entered the settlement now at issue, and the district court tentatively approved it, after our prior orders but before the California Supreme Court's decision in Ferra. Ferra v. Loews Hollywood Hotel, LLC, 489 P.3d 1166 (Cal. 2021) (adopting a method for calculating damages consistent with the one Plaintiffs had argued for in Ibarra). The district court subsequently gave final approval to the parties' settlement, awarding plaintiffs $70 million in additional damages. The district court also approved a $21 million award of attorney's fees, or about 22% of the plaintiff classes' total recovery of $95 million. Fyson filed an objection to the settlement and a motion to intervene, both of which were denied by the district court. He now appeals the district court's approval of the settlement, grant of attorney's fees, and denial of his motion to intervene.
Fyson argues that, in approving the settlement, the district court: (1) failed to comply with our prior mandate, (2) invaded our court's jurisdiction by determining attorney's fees while the attorney fee appeal was still "pending," (3) violated the Class Action Fairness Act ("CAFA") by allowing a "net loss" for 89 class members, and (4) abused its discretion in disregarding the allegedly collusive and unfair nature of the settlement. Fyson also argues that the district court (5) erred in denying Fyson's motion to intervene.
1. The district court's approval of the settlement did not violate our mandate. The "rule of mandate" doctrine allows the district court to "decide anything not foreclosed by the mandate." See, e.g., Herrington v. County of Sonoma, 12 F.3d 901, 904 (9th Cir. 1993). Nothing in our order precluded the parties from reaching a settlement or the district court from approving a settlement. Nor did anything in our prior order prevent a global settlement for a broader class than the Ibarra class. Consolidation of the additional classes for settlement did not change the definition of the Ibarra class subject to the $24 million portion of the judgment we had already affirmed.
2. The district court also did not exceed its jurisdiction in granting attorney's fees in conjunction with the settlement. As an initial matter, the "divestiture rule" Fyson invokes is a claims-processing rule, not a jurisdictional rule. See Rodriguez v. County of Los Angeles, 891 F.3d 776, 790-91 (9th Cir. 2018). In addition, in our 2020 order partially affirming the Ibarra judgment, we instructed the district court to consider on remand "any implications of the pending attorney's fees appeal for payment of the damages to Plaintiffs." Ibarra, 809 Fed.Appx. at 365. Then, pursuant to an unopposed motion from Plaintiffs, we administratively closed the pending attorney's fees appeal (No. 18-56425). The administratively closed appeal posed no hurdle to the district court's consideration, once the parties reached a global settlement, of the amount of attorney's fees to be awarded in conjunction with that settlement.
3. Nor did the district court violate CAFA. See 28 U.S.C. § 1713 ("The court may approve a proposed settlement under which any class member is obligated to pay sums to class counsel that would result in a net loss to the class member only if the court makes a written finding that nonmonetary benefits to the class member substantially outweigh the monetary loss."). Contrary to Fyson's contention, the settlement did not result in a "net loss" for any class members. The only way to find a "net loss" in this case is by assuming that class members were entitled to recoup the 25% of the Ibarra judgment that was withheld in trust for possible future payment of attorney's fees. But the class members had no right to this money, which, regardless of the settlement, might all have been used to cover attorney's fees. The fact that it was later pooled with the rest of the settlement fund and that some class members did not receive an amount of additional damages (beyond what they had already received in the Ibarra judgment) that was larger than a pro rata amount of the attorney's fee fund does not constitute a "net loss."
4. The district court did not abuse its discretion in concluding that the settlement was "fair, reasonable, and adequate" under Rule 23(e)(2) and that there was sufficient opportunity to opt-out under Rule 23(c)(2). Fed.R.Civ.P. 23(c)(2), (e)(2).
Rule 23(e)(2)(C) requires the district court to inquire into the adequacy of a class settlement, including the reasonableness of attorney's fees. Fed.R.Civ.P. 23(e)(2)(C). Our decision in In re Bluetooth Headset Products Liability Litigation identifies three signs of collusion that district courts must consider as part of this inquiry: (1) a disproportionate distribution of the settlement to attorneys, (2) a clear sailing agreement between the parties "providing for the payment of attorneys' fees separate and apart from class funds, which carries the potential of enabling a defendant to pay class counsel excessive fees and costs in exchange for counsel accepting an unfair settlement on behalf of the class," and (3) a reversion provision where any fees not awarded revert to the defendants rather than the class fund. 654 F.3d 935, 947 (9th Cir. 2011) (quotation marks omitted). The presence of any- and even all three-of these factors is not a "death knell," so long as the district court sufficiently examines them and "assure[s] itself that the fees awarded . . . were not unreasonably high." Kim v. Allison, 8 F.4th 1170, 1180 (9th Cir. 2021) (quotation marks omitted).
Here, even assuming that the district court overlooked what Fyson argues was a "clear sailing" provision in the settlement agreement, any error was harmless because the district court carefully scrutinized the fee amount. The court did not grant the full amount requested; it conducted a careful lodestar cross-check to arrive at a lower rate it found more appropriate. The district court then appropriately determined that the fee amount it had calculated was not unreasonably high, noting that the settlement was overall fair and favorable to class members.
The district court did not violate Rule 23(e)(2)(D)'s requirement that proposed settlement agreements treat the claims of class members "equitably relative to each other." Fed.R.Civ.P. 23(e)(2)(D). The parties agreed to allocate damages based on the number of shifts worked during the period rather than on each member's commission payments. That form of pro rata calculation is a simple, efficient, and reasonable way of allocating damages. The district court therefore did not abuse its discretion in approving it.
Nor did the district court violate Rule 23(c)(2), which requires that class members of a class certified under Rule 23(b)(3) have a reasonable opportunity to opt out of a class settlement. Fed.R.Civ.P. 23(c)(2)(B). All class members were provided an opportunity to opt out and none did so. Fyson instead made only an untimely objection to the settlement.
Fyson argues that the opportunity to opt out was not meaningful because, by opting out of the Ibarra class, class members would have to forfeit money in the attorney fee trust. But they had no entitlement to that money, so this argument fails.
5. Lastly, the district court did not err in denying Fyson's motion to intervene on grounds of untimeliness and adequate representation. See Fed.R.Civ.P. 24. Despite Fyson's awareness of the litigation-the settlement reached in October 2020, consolidation of the classes in March 2021, preliminary approval of the settlement in April 2021, and his own filing of an objection in June 2021-he did not move to intervene until July 2021. And Fyson offers no evidence of inadequacy of representation beyond the failed arguments he makes in his objection to the settlement. In any event, the better course for class members who oppose a settlement is to object to the settlement rather than seeking to intervene. See Allen v. Bedolla, 787 F.3d 1218, 1222 (9th Cir. 2015) (affirming denial of motion to intervene in part because objectors' concerns could be addressed through the normal objection process).
AFFIRMED.
[*] This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.
[**] The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2).