211 F. Supp. 3d 1244
C.D. Cal.2016Background
- Plaintiff Cynthia Spann sued JCPenney (filed 2012) on behalf of California purchasers alleging false price-comparison advertising for private/exclusive branded apparel and accessories (UCL, FAL, CLRA). Class certification was granted and later modified for settlement purposes.
- The certified Settlement Class covers Californians who purchased qualifying items at ≥30% off stated "original" or "regular" price during Nov 5, 2010–Jan 31, 2012 and Jan 1, 2013–Dec 31, 2014, excluding refunds and certain employees/coupon-only buyers.
- Parties negotiated an arm’s-length settlement: JCPenney agreed to a $50,000,000 common fund (cash component for fees/costs/admin/representative incentive; remainder allocated to claimants as cash or non-expiring store credit via a points system) plus injunctive/non-monetary relief (pricing policy, compliance program, audits/training).
- Court-approved notice program: mailed and emailed notices to millions, published online and in print, created a settlement website and call center; ~159,022 timely claims received, 809 opt-outs, seven objections.
- Court evaluated CAFA notice, Rule 23 notice sufficiency, fairness factors (Bluetooth factors and Ninth Circuit guidance), collusion indicia, cy pres recipient, and attorneys’ fees/costs and incentive award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Final approval — fairness & adequacy of settlement | Settlement provides substantial monetary recovery, meaningful injunctive relief, and avoids litigation risks and delay | Settlement appropriate given uncertainties and company finances; no collusion | Approved: court found settlement fair, reasonable, adequate, and not collusive (final approval granted) |
| Adequacy of notice under Rule 23(c)(2) | Notice plan (email/mail/publication/website) gave best practicable notice and enabled claims/opt-outs/objections | No material challenge to adequacy other than isolated objections | Approved: notice procedures and forms met Rule 23 requirements |
| CAFA compliance | Plaintiffs/administrator served required notices to state/federal officials | No contrary position | CAFA notice satisfied; 90-day waiting requirement observed |
| Collusion concerns (clear-sailing, reversion, fee structure) | Counsel sought up to 27% fee from common fund; settlement gives monetary recovery to class and injunctive relief; no reversion to defendant | Defendant agreed to clear-sailing for fees but will pay from common fund; no reverter | Court found no evidence of collusion: fees paid from common fund, no reverter, full fund distributed |
| Cy pres designation | Residual unclaimed funds should go to consumer-protection organization aligned with class interests | JCPenney agreed to NCLC as cy pres recipient for unclaimed funds | Approved: National Consumer Law Center has adequate nexus to class and claims |
| Attorneys’ fees, costs, and incentive award | Class counsel requested $13,500,000 (27% of fund), $191,080.91 costs, and $10,000 representative service award | Defendant did not oppose fees within negotiated ceiling; objectors challenged amount but provided no persuasive basis | Approved: court applied California law (Laffitte), used percentage-of-fund with lodestar cross-check (lodestar $4,399,095.50, multiplier ~3.07) and awarded requested fees, costs, and $10,000 incentive |
Key Cases Cited
- Officers for Justice v. Civil Serv. Comm’n of City & Cnty. of S.F., 688 F.2d 615 (9th Cir. 1982) (Rule 23(e) protects absent class members in settlement approval)
- Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) (district court must examine overall fairness of class settlements)
- Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003) (standards for fairness, reasonableness, and adequacy in class settlements)
- In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935 (9th Cir. 2011) (heightened scrutiny for collusion, signs include disproportionate counsel recovery, clear-sailing, and reverter clauses)
- In re Online DVD-Rental Antitrust Litig., 779 F.3d 934 (9th Cir. 2015) (upholding gift-card settlements where card and cash alternatives are equivalent; lodestar/percentage cross-check guidance)
- Laffitte v. Robert Half Int’l Inc., 1 Cal.5th 480 (Cal. 2016) (California allows lodestar-multiplier or percentage approaches; trial court discretion in fee method)
- Vizcaino v. Microsoft Corp., 290 F.3d 1043 (9th Cir. 2002) (common-fund fee awards and multiplier survey; lodestar cross-check utility)
- Rodriguez v. West Publ’g Corp., 563 F.3d 948 (9th Cir. 2009) (factors supporting settlement fairness and counsel’s recommendations)