Maribel Moses v. the New York Times Company
79 F.4th 235
| 2d Cir. | 2023Background
- Moses sued The New York Times on behalf of California subscribers, alleging automatic renewals violated California’s Automatic Renewal Law (ARL).
- Parties reached a settlement for ~876,000 class members: NYT agreed to change practices and class members could get either a pro rata cash share from a $1.65M non-reversionary fund or a one-month Access Code for NYT products (face value $3–$5), valid ≥50 years; no claim form required to receive Access Codes.
- Settlement authorized up to $1.25M in attorneys’ fees (paid from the $1.65M cash fund) and a $5,000 incentive award to the named plaintiff; ~10,541 claimants opted for cash; most class members were to be emailed Access Codes.
- The district court preliminarily approved the settlement, applied a presumption of fairness because the settlement was reached at arm’s length after mediation, and separately awarded fees and the incentive payment.
- Objector Isaacson appealed, arguing (1) the district court misapplied Rule 23(e) by presuming fairness, (2) the Access Codes are “coupons” so CAFA governs fee calculation, and (3) incentive awards are unlawful under nineteenth-century precedent.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a presumption of fairness may be applied when settlement is negotiated at arm’s length under Rule 23(e) | Moses: arms-length negotiation supports approval and a presumption of fairness | NYT: arm’s-length mediation justifies a presumption that settlement is fair | Court: Rule 23(e)(2) forbids a presumption of fairness from arm’s-length negotiations; court must consider Rule 23(e)(2) factors holistically |
| Whether the district court erred by evaluating attorneys’ fees and incentive awards separately from settlement fairness | Moses: fees and incentive awards can be assessed separately; settlement remains fair | Isaacson: fees and incentive awards must be considered as part of the fairness inquiry under Rule 23(e)(2)(C)-(D) | Court: district court abused discretion by treating fees and incentive award apart from the Rule 23(e) fairness analysis; must assess fees/incentive in tandem with settlement fairness |
| Whether Access Codes are “coupons” under CAFA, requiring fee calculation based on redemption value | Isaacson: Access Codes are coupons (digital vouchers limited to select products, require reengaging with NYT) so CAFA §1712 applies | Moses/NYT: Access Codes are whole-product free offers, not coupons; CAFA does not apply | Court: Access Codes are coupons under ordinary meaning, legislative history, and Ninth Circuit factors; CAFA coupon provisions apply and require fee attribution to redeemed value |
| Whether incentive awards to class representatives are per se unlawful under Greenough/Pettus | Isaacson: nineteenth-century Supreme Court cases prohibit such payments as creating conflicts | Moses: incentive awards are permissible and commonplace; Melito permits them | Court: incentive awards are not per se unlawful; Greenough and Pettus do not bar reasonable incentive awards; district court’s incentive award not reversed on categorical grounds |
Key Cases Cited
- Melito v. Experian Marketing Sols., Inc., 923 F.3d 85 (2d Cir. 2019) (approves incentive awards as not per se unlawful)
- City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974) (traditional Grinnell factors for settlement fairness)
- Goldberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000) (factors for assessing attorneys’ fees in common-fund cases)
- In re Easysaver Rewards Litig., 906 F.3d 747 (9th Cir. 2018) (CAFA/coupon factors guide)
- In re Online DVD-Rental Antitrust Litig., 779 F.3d 934 (9th Cir. 2015) (coupon analysis and factors)
- In re Lumber Liquidators Chinese-Manufactured Flooring Prod. Mktg., Sales Pracs. & Prod. Liab. Litig., 952 F.3d 471 (4th Cir. 2020) (coupon-settlement concerns and limits)
- Roes, 1-2 v. SFBSC Mgmt., LLC, 944 F.3d 1035 (9th Cir. 2019) (noting Rule 23(e)(2) limits on presumption of fairness)
- Johnson v. NPAS Sols., LLC, 975 F.3d 1244 (11th Cir. 2020) (contrasting view: held incentive awards unlawful per se)
- Trustees v. Greenough, 105 U.S. 527 (1881) (historical decision on plaintiff compensation in common-fund context)
- R.R. & Banking Co. v. Pettus, 113 U.S. 116 (1885) (historical decision regarding counsel’s claims against a common fund)