In Re Bluetooth Headset Products Liability, 654 F.3d 935

Twenty-six putative class actions in various courts alleging misleading Bluetooth headset safety claims; conduct included compensation scheme and cy pres, notice, and fee provisions.
Settlement provided $100,000 cy pres to four hearing-loss prevention nonprofits; notice costs up to $1.2 million; class counsels’ fees capped at $800,000 and up to $12,000 incentive awards; no minimum fees or costs tied to approval.
Approval of the Settlement and a separate Fee Order awarding $850,000 to class counsel and $12,000 to representatives were appealed by objectors who argued fee disparity with class recovery was unfair.
District court approved settlement for injunctive relief and cy pres, certified a settlement class for purposes of the agreement, and later awarded fees based on lodestar; objectors challenged on possible collusion and inadequate fee justification.
This opinion vacates both the Approval Order and Fee Order and remands to allow a more searching inquiry into the fairness of the distribution and reasonableness of attorneys’ fees.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Is the fee award reasonable in relation to the class recovery?	Brennan argues fee dwarfs class relief; disparity suggests unfairness.	Defendants contend fee amount reasonable given benefit and complexity.	Remand required; record insufficient to determine reasonableness.
Should the settlement be treated as a common fund for fee calculation?	Objectors urge common-fund approach to ensure 25% benchmark.	Defendants rely on lodestar; not required to treat as common fund.	Remand to decide treatment and recalculate fees.
Did the pre-certification “clear sailing” and kicker provisions signal collusion refining the fee?	Provisions risk improper bargaining harming class interests.	Provision severable and negotiated separately; not per se collusive.	Court must scrutinize fee provision; vacate approvals for further review.
Did the district court adequately weigh Churchill factors and potential collusion before approving settlement?	Pre-certification agreement requires heightened scrutiny beyond Churchill factors.	Factors supported settlement; mediation and notice were thorough.	Remand to reassess fairness with a more thorough Rule 23(e) analysis.

Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003) (district court must ensure fee awards are reasonable)
Hensley v. Eckerhart, 461 U.S. 424 (1983) (lodestar reasonableness and relation to results obtained)
In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768 (3d Cir. 1995) (common fund and fee-shifting considerations; multiple methods)
Six Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301 (9th Cir. 1990) (25% benchmark; special circumstances)
In re Mercury Interactive Corp., 618 F.3d 988 (9th Cir. 2010) (use of lodestar and/or percentage approaches; cross-checks)
Officers for Justice v. Civil Serv. Comm'n of S.F., 688 F.2d 615 (9th Cir. 1982) (settlement fairness review; overall package)
Hanlon v. Eckerhart, 150 F.3d 1011 (9th Cir. 1998) (factors for evaluating reasonable fee; emphasis on class benefit)
Churchill Village, L.L.C. v. Gen. Elec., 361 F.3d 566 (9th Cir. 2004) (Churchill factors for fairness of settlement)