Radcliffe v. Experian: Ninth Circuit Reverses Settlement Approval in Fair Credit Reporting Act Case

In Radcliffe v. Experian Information Solutions Inc., ___ F.3d ___ (9th Cir. 4/23/13) the Ninth Circuit reversed a district court order approving the $45 million settlement of an action under the Fair Credit Reporting Act where: (a) the class representatives' enhancement awards were conditioned on their support of the settlement, creating a conflict of interest between them and the absent class members; and (b) the conditional incentive awards ($5,000) "significantly exceeded in amount what absent class members could expect to get upon settlement approval" (up to $1,400 per class member who demonstrated actual harm, depending on the type of harm suffered, plus $26 for any inconvenience suffered). 

Objecting Plaintiffs contend that the settlement agreement, which provides for incentive awards to named plaintiffs “in support of the [s]ettlement,” created a conflict of interest between the class representatives and the class. Objecting Plaintiffs also assert that, as a result of this conflict, class counsel engaged in conflicted representation by continuing to represent the settling class representatives (“Settling Plaintiffs” or “class representatives”) and the class at large after the two groups developed divergent interests. Objecting Plaintiffs thus contend that the class representatives and class counsel were inadequate to represent the absent class members. See Fed. R. Civ. P. 23(a)(4), 23(g)(1)(B). Upon review of the record and reflection on our precedents, we agree. 

Slip op. at 13.  

The opinion is available here.