Tobias v. NVIDIA Corporation
4:20-cv-06081
N.D. Cal.Jan 16, 2025Background
- Plaintiffs in a putative class action sued NVIDIA Corporation, alleging issues concerning management of a benefit plan, including excessive fees and poor fund choices.
- Plaintiffs moved unopposed for preliminary approval of a class action settlement, seeking court approval of a $2.5 million settlement against a claimed $14.8 million in potential damages.
- The proposed settlement included a provision where unclaimed funds would revert to the Plan rather than the defendant, but the Court questioned whether this was functionally still a reversionary clause.
- Plaintiffs proposed attorney fees up to one-third of the settlement fund and $10,000 incentive awards for named plaintiffs.
- The Court's analysis focused on the fairness, reasonableness, and adequacy of the settlement under Rule 23(e)(2), and on whether proposed fee and incentive awards were justified.
- The Court denied the motion for preliminary approval without prejudice, citing unresolved issues about the settlement structure and insufficient evidence of reasonableness.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether settlement is reversionary | No reversion to defendants; unclaimed funds go to Plan | (Unopposed) | Not clear it’s not reversionary; clarification needed |
| Sufficiency of information on damages | $2.5M is 16.86% of $14.8M max damages (plaintiffs’ calculation) | (Unopposed) | Insufficient evidence to evaluate reasonableness |
| Attorney fee award amount | Will seek up to 1/3 of common fund | (Unopposed) | Any deviation from 25% benchmark must be justified |
| Incentive award amount | Will seek $10,000 per named plaintiff | (Unopposed) | Any award above $5,000 must be specifically justified |
Key Cases Cited
- Roes, 1–2 v. SFBSC Mgmt., LLC, 944 F.3d 1035 (9th Cir. 2019) (expressing disfavor of reversionary clauses in class settlements)
- In re Volkswagen "Clean Diesel" Mktg., Sales Pracs., & Prods. Liab. Litig., 895 F.3d 597 (9th Cir. 2018) (reversionary settlements generally disfavored due to incentives)
- Cotter v. Lyft, Inc., 176 F. Supp. 3d 930 (N.D. Cal. 2016) (standards for evaluating settlement reasonableness)
- Williams v. MGM-Pathe Commc’ns Co., 129 F.3d 1026 (9th Cir. 1997) (setting 25% benchmark for attorneys’ fees in class actions)
- In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539 (9th Cir. 2019) (benchmark for fee awards can be adjusted based on circumstances)