Shuman v. SquareTrade Inc., 3:20-cv-02725

Background

Plaintiffs brought a nationwide class action against SquareTrade alleging underpayments arising from two practices: (1) the Fast Cash program (payments made without full documentation) and (2) an SKU-cap error that understated some reimbursements; the Settlement Class covers April 20, 2016–June 27, 2022 and has two subclasses (Fast Cash and SKU‑cap).
Parties reached a negotiated settlement providing full reimbursement for the SKU‑cap subclass and claim-based reimbursement for the Fast Cash subclass; enhanced disclosures and technical fixes for future policyholders are included.
Notice (postcard, email, website) reached >99.7% of class; about 49,542 Fast Cash claims were submitted (≈6% claims rate); 322 class members timely opted out; nine objections (four withdrawn).
Plaintiffs moved for final approval, seeking certification under Rule 23(b)(3), attorneys’ fees of $958,681.61, litigation costs of $41,318.39, and $5,000 service awards for each of three named plaintiffs; SquareTrade supports the settlement and costs/service awards but opposes the fee amount.
The court found the settlement fair, reasonable, and adequate under Rule 23(e)(2) and the Ninth Circuit’s Churchill/Bluetooth framework, certified the class, and—despite two “red flags” regarding fees—not finding collusion—approved the settlement and awarded the requested fees, costs, and service awards.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Final approval & class certification under Rule 23	Settlement is fair, notice adequate, benefits class and future purchasers	Supports settlement generally; disputes only fee amount	Court granted final approval and certified the settlement class under Rule 23(a) and (b)(3); notice satisfied due process
Collusion / settlement negotiation integrity	Negotiation was arm’s‑length, mediated, after extensive discovery; fee request is reasonable	Two red flags: (1) requested fees exceed class payout; (2) any court reduction benefits defendant rather than class	Court acknowledged red flags but found no collusion (mediator, discovery, reduced lodestar, no clear‑sailing) and approved the settlement
Attorneys’ fees under Cal. Civ. Proc. Code §1021.5 and lodestar reasonableness	Request $958,681.61; lodestar ≈ $1.85M reduced by billing judgment and a negative multiplier (~.52); fee award appropriate under §1021.5	Fees excessive; some legal theories lacked merit and warrant reduction	Court awarded $958,681.61, finding Plaintiffs "successful" under §1021.5, lodestar and rates reasonable, negative multiplier supports reasonableness, and defendant’s reduction argument rejected as claims were factually intertwined
Litigation costs & service awards (CLRA/CCP §1033.5)	Seek $41,318.39 in litigation costs and $5,000 each to three named plaintiffs for time/deposition participation	SquareTrade did not object to costs or service awards	Court awarded $41,318.39 in costs and $5,000 to each named plaintiff

Key Cases Cited

Churchill Vill. v. Gen. Elec., 361 F.3d 566 (9th Cir. 2004) (heightened scrutiny and factors for class‑action settlement approval)
In re Bluetooth Headset Prods. Liab., 654 F.3d 935 (9th Cir. 2011) (identifies collusion "red flags" and standards for pre‑certification settlements)
Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003) (standards for attorneys’ fees and fairness review in class settlements)
Class Plaintiffs v. City of Seattle, 955 F.2d 1268 (9th Cir. 1992) (judicial policy favoring settlement of complex class actions)
Amchem Prods. v. Windsor, 521 U.S. 591 (1997) (class action superiority/manageability principles)
Laffitte v. Robert Half Int’l Inc., 1 Cal.5th 480 (2016) (lodestar and multiplier guidance under California law)
Graham v. DaimlerChrysler Corp., 34 Cal.4th 553 (2004) (definition of a "successful party" under Cal. Civ. Proc. Code §1021.5)
Rodriguez v. West Publ’g Corp., 563 F.3d 948 (9th Cir. 2009) (factors supporting incentive/service awards)
Chavez v. City of Los Angeles, 47 Cal.4th 970 (2009) (fees not reduced when prevailing on factually related claims)