Gregory Berry v. Adam E. Schulman
Filing
PUBLISHED AUTHORED OPINION filed. Originating case number: 3:11-cv-00754-JRS. [999712379]. [14-2006, 14-2050, 14-2101]
Appeal: 14-2006
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Filed: 12/04/2015
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 14-2006
GREGORY THOMAS BERRY; SUMMER DARBONNE, on behalf of herself
and all others similarly situated; RICKEY MILLEN, on behalf
of himself and all others similarly situated; SHAMOON SAEED,
on behalf of himself and all others similarly situated;
ARTHUR B. HERNANDEZ, on behalf of himself and all others
similarly situated; ERIKA A. GODFREY, on behalf of herself
and all others similarly situated; TIMOTHY OTTEN, on behalf
of himself and all others similarly situated,
Plaintiffs − Appellees,
and
LEXISNEXIS RISK AND INFORMATION ANALYTICS
SEISINT, INC.; REED ELSEVIER, INC.,
GROUP,
INC.;
Defendants – Appellees,
v.
ADAM E. SCHULMAN,
Party-in-Interest - Appellant.
-----------------------------JAMES TAYLOR LEWIS GRIMMELMANN,
Amicus Supporting Appellants.
No. 14-2050
GREGORY THOMAS BERRY; SUMMER DARBONNE, on behalf of herself
and all others similarly situated; RICKEY MILLEN, on behalf
of himself and all others similarly situated; SHAMOON SAEED,
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on behalf of himself and all others similarly situated;
ARTHUR B. HERNANDEZ, on behalf of himself and all others
similarly situated; ERIKA A. GODFREY, on behalf of herself
and all others similarly situated; TIMOTHY OTTEN, on behalf
of himself and all others similarly situated,
Plaintiffs − Appellees,
and
LEXISNEXIS
RISK
AND
INCORPORATED;
SEISINT,
INCORPORATED,
INFORMATION
ANALYTICS
GROUP,
INCORPORATED;
REED
ELSEVIER,
Defendants – Appellees,
v.
MEGAN CHRISTINA AARON and the Aaron Objectors,
Party-in-Interest - Appellant.
-----------------------------JAMES TAYLOR LEWIS GRIMMELMANN,
Amicus Supporting Appellants.
No. 14-2101
GREGORY THOMAS BERRY; SUMMER DARBONNE, on behalf of herself
and all others similarly situated; RICKEY MILLEN, on behalf
of himself and all others similarly situated; SHAMOON SAEED,
on behalf of himself and all others similarly situated;
ARTHUR B. HERNANDEZ, on behalf of himself and all others
similarly situated; ERIKA A. GODFREY, on behalf of herself
and all others similarly situated; TIMOTHY OTTEN, on behalf
of himself and all others similarly situated,
Plaintiffs − Appellees,
and
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LEXISNEXIS
RISK
AND
INCORPORATED;
SEISINT,
INCORPORATED,
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INFORMATION
ANALYTICS
GROUP,
INCORPORATED;
REED
ELSEVIER,
Defendants – Appellees,
v.
SCOTT HARDWAY and the Hardway Objectors,
Party-in-Interest - Appellant.
-----------------------------JAMES TAYLOR LEWIS GRIMMELMANN,
Amicus Supporting Appellants.
Appeals from the United States District Court for the Eastern
District of Virginia, at Richmond.
James R. Spencer, Senior
District Judge. (3:11-cv-00754-JRS)
Argued:
September 15, 2015
Decided:
December 4, 2015
Before KING and HARRIS, Circuit Judges, and George J. HAZEL,
United States District Judge for the District of Maryland,
sitting by designation.
Affirmed by published opinion. Judge Harris wrote the opinion,
in which Judge King and Judge Hazel joined.
ARGUED: Richard Monroe Paul, III, PAUL McINNES LLP, Kansas City,
Missouri, for Appellants. William Walter Wilkins, NEXSEN PRUET,
Greenville, South Carolina; Joseph R. Palmore, MORRISON &
FOERSTER LLP, Washington, D.C., for Appellees.
ON BRIEF:
Ashlea G. Schwarz, PAUL McINNES LLP, Kansas City, Missouri;
Samuel Issacharoff, New York, New York; Thomas W. Bevan, Patrick
M. Walsh, BEVAN & ASSOCIATES LPA, INC., Boston Heights, Ohio;
Edwin F. Brooks, EDWIN F. BROOKS, LLC, Richmond, Virginia; Adam
E. Schulman, CENTER FOR CLASS ACTION FAIRNESS, Washington, D.C.,
for Appellants. Michael A. Caddell, Cynthia B. Chapman, CADDELL
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& CHAPMAN, Houston, Texas; Kirsten E. Small, Andrew A. Mathias,
NEXSEN PRUET, Greenville, South Carolina; Leonard A. Bennett,
Matthew J. Erausquin, CONSUMER LITIGATION ASSOCIATES, P.C.,
Newport News, Virginia; James A. Francis, David Searles, John
Soumilas, FRANCIS & MAILMAN P.C., Philadelphia, Pennsylvania;
Dale W. Pittman, THE LAW OFFICE OF DALE W. PITTMAN, P.C.,
Petersburg, Virginia; Ronald I. Raether, Jr., FARUKI, IRELAND &
COX, PLL, Dayton, Ohio; David Neal Anthony, TROUTMAN SANDERS,
LLP, Richmond, Virginia; Marc A. Hearron, Washington, D.C.,
James F. McCabe, San Francisco, California, Michael B. Miller,
MORRISON & FOERSTER LLP, New York, New York, for Appellees.
Daniel F. Goldstein, Matthias L. Niska, BROWN GOLDSTEIN & LEVY,
LLP, Baltimore, Maryland; James Grimmelmann, Professor of Law,
Francis King Carey School of Law, UNIVERSITY OF MARYLAND,
Baltimore, Maryland, for Amicus Curiae.
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PAMELA HARRIS, Circuit Judge:
The class action settlement at issue in this appeal is “the
culmination
class
of
years
of
and
the
counsel
Information
Analytics
litigation
and
defendants,
Group,
Inc.;
Elsevier Inc. (together, “Lexis”).
negotiations”
LexisNexis
Seisint,
between
Risk
Inc.;
and
and
Reed
Berry v. LexisNexis Risk &
Info. Analytics Grp., Inc., No. 3:11-CV-754, 2014 WL 4403524, at
*1
(E.D.
Lexis’s
Va.
sale
Sept.
of
5,
2014).
personal
The
data
dispute
reports
to
centers
debt
around
collectors.
According to the plaintiffs, Lexis has failed to provide the
protections of the Fair Credit Reporting Act (the “FCRA” or the
“Act”),
reports.
15
U.S.C.
§ 1681,
et
seq.,
in
connection
with
its
According to Lexis, its data reports do not qualify as
“consumer reports” within the meaning of the FCRA, and so it is
not required to comply with the Act.
After three separate lawsuits, extensive discovery, and a
long series of mediation conferences, a deal was struck.
Lexis
would make sweeping changes to its product offerings in order to
protect consumer information, and in exchange, the class members
would release any statutory damages claims under the Act.
The
district court certified a settlement class under Rule 23(b)(2)
of
the
Federal
settlement,
Rules
finding
of
that
Civil
it
Procedure
would
make
and
Lexis
approved
“the
the
industry
leader among data aggregation companies in the protection of
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customer information provided to debt collectors.”
Berry, 2014
WL 4403524, at *3.
Now, a group of class members claiming the right to opt out
of
the
settlement
class
and
pursue
statutory
damages
individually (the “Objectors”) seeks to undo that settlement. 1
We find no error in the release of the statutory damages claims
as
part
of
a
Rule
23(b)(2)
settlement,
and
no
abuse
of
discretion in the district court’s approval of the settlement
agreement.
Accordingly, we affirm the district court’s decision
in full.
I.
A.
The
certain
FCRA
regulates
consumer
protections
are
data
focused
the
collection
bearing
on
on
the
and
credit
sale
of
dissemination
eligibility.
“consumer
of
Its
reports”
–
communications (1) containing information related to any one of
seven
specific
consumer
characteristics
(including
credit
standing and worthiness and other personal information), which
are (2) prepared to assist buyers in making certain eligibility
1
The Objectors consist of three separate groups of class
members objecting to the settlement: the “Aaron Objectors,”
20,206 members of the 23(b)(2) class; the “Hardway Objectors,”
another 7,289 class members; and Adam Schulman, a class member
representing himself.
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determinations,
including
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credit
eligibility.
15
U.S.C.
§ 1681a(d).
The Act imposes various obligations on “consumer reporting
agencies” – companies that regularly prepare “consumer reports,”
15
U.S.C.
§
1681a(f)
–
protections for consumers.
and
provides
a
wide
panoply
of
For example, consumer reports may be
furnished only for certain uses, such as credit transactions.
Id. at § 1681b(a)(3)(A).
Consumers are given the right to view
the information in their files, id. at § 1681g(a)(1), and if
they dispute the information they find, the consumer reporting
agency
must
conduct
a
reasonable
investigation
information’s accuracy, id. at § 1681i(a)(1)(A).
protections
applies,
however,
unless
and
until
into
the
None of those
a
“consumer
report” has been issued.
Lexis is a data broker that sells an identity report called
Accurint® for Collections (“Accurint”), used to locate people
and
assets,
authenticate
identities,
and
verify
credentials.
The Accurint database contains information on over 200 million
people, and millions of Accurint reports are sold each year.
For years, Lexis sold Accurint without complying with the FCRA,
on the theory that Accurint is not a “consumer report” that
triggers the Act’s protections.
Whether Accurint reports in
fact constitute “consumer reports” under the FCRA is the crux of
the parties’ dispute.
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B.
Class counsel and Lexis have a long history.
This is the
third national putative class action brought by counsel against
Lexis, each alleging essentially the same thing:
that Lexis
violated the FCRA by selling Accurint reports without affording
FCRA protections.
any
class
Neither of the two prior suits resulted in
settlement
or
court-ordered
relief.
In
Graham
v.
LexisNexis Risk & Information Analytics Management Group, Inc.,
No. 3:09-cv-00655-JRS (E.D. Va. Jan. 21, 2011), the plaintiffs
dismissed the claims after Lexis moved to dismiss for lack of
standing.
And
in
Adams
v.
LexisNexis
Risk
&
Information
Analytics Group, Inc., No. 08-4708 (D.N.J. October 28, 2010),
the
parties
settled
after
the
district
motion for judgment on the pleadings.
lawsuits,
class
counsel
and
Lexis
court
denied
Lexis’s
Over the course of these
negotiated
numerous
times,
including at least nine in-person mediation conferences and many
more telephone conferences.
Throughout
this
litigation,
class
counsel
endeavored
to
prove not only that Lexis violated the FCRA, but also that it
did so “willfully.”
That is because in addition to creating
liability for actual damages sustained by an individual as a
result of a violation, 15 U.S.C. § 1681o(a), the FCRA provides
for statutory damages of between $100 and $1,000 for willful
violations, id. at § 1681n(a), which would be available to all
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class members.
knowing
or
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But willfulness is a high standard, requiring
reckless
disregard
of
the
FCRA’s
requirements.
Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 57, 69 (2007).
Unless
Lexis
was
“objectively
unreasonable,”
id.
at
69,
in
concluding that its Accurint reports were not “consumer reports”
subject
to
the
FCRA,
then
there
would
be
no
liability
for
statutory damages.
The Adams court’s treatment of the willfulness issue, in
particular, is relevant to the case we review today.
Class
counsel focused on the district court’s refusal to dismiss the
case on the pleadings because it would be “premature . . . to
say that [the p]laintiff can produce no evidence to support [a
willfulness]
finding,”
(D.N.J. May 12, 2010).
No.
08-4708,
2010
WL
1931135,
at
*10
But Lexis pointed to an Opinion Letter
issued by the Federal Trade Commission in 2008 declaring that
Accurint reports are not “credit reports” under the FCRA, see
FTC Opinion Letter to Marc Rotenberg at 1 n.1 (July 29, 2008)
(“FTC Opinion Letter” or “Opinion Letter”), and argued that it
cannot be “objectively unreasonable” to adopt the view of the
federal agency responsible for enforcing the FCRA.
as
Lexis
noted,
the
Adams
court
subsequently
And indeed,
clarified
that
unless discovery showed that the FTC had reversed the view taken
in
its
2008
Opinion
Letter,
the
difficulty showing willfulness.
9
Adams
plaintiffs
would
have
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C.
This case began in 2011, when the named plaintiffs (the
“Plaintiffs”
or
the
“Class
Representatives”),
individuals
who
were the subject of Accurint reports, filed a putative class
action against Lexis.
the
FCRA
in
three
The complaint alleged that Lexis violated
ways:
by
selling
Accurint
reports
without
first ensuring that buyers were purchasing the reports for uses
permitted by the FCRA, refusing to allow consumers to view their
Accurint
reports,
and
disputed
information
refusing
in
to
investigate
reports.
Accurint
when
The
consumers
Plaintiffs
proposed three classes to match: an “Impermissible Use” class,
including all persons listed in Accurint reports sold by Lexis;
and “File Request” and “Dispute” classes, limited to consumers
who interacted more directly with Lexis and were refused access
to their Accurint reports or denied investigations when they
filed disputes.
damages.
But
The Plaintiffs sought both actual and statutory
–
as
has
become
important
to
the
Objectors’
argument – because the FCRA does not provide expressly for an
injunctive
remedy
in
private
actions,
they
did
not
seek
injunctive relief.
Over a year later, after months of discovery and a series
of
negotiations
mediators,”
with
including
the
two
aid
of
federal
“three
judges,
highly
Berry,
skilled
2014
WL
4403524, at *14, the Plaintiffs and Lexis at last reached a
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settlement agreement (the “Agreement”).
Instead of the three
classes contemplated by the Plaintiffs’ complaint, the Agreement
calls for just two.
The first, not directly at issue here,
consists of approximately 31,000 individuals who actively sought
to treat Accurint reports as consumer reports under the FCRA by
requesting copies or attempting to dispute information.
Under
the Agreement, those class members will release all potential
FCRA claims against Lexis in exchange for financial compensation
of
approximately
$300
per
person.
The
district
court’s
certification of that class (the “(b)(3) Class”) under Federal
Rule of Civil Procedure 23(b)(3) and approval of its settlement
are not challenged on appeal.
The
focus
of
this
controversy
is
the
second
class,
certified under Federal Rule of Civil Procedure 23(b)(2) (the
“(b)(2) Class”).
Much larger than the first class, the (b)(2)
Class includes all individuals in the United States about whom
the Accurint database contained information from November 2006
to April 2013 – roughly 200 million people. 2
2
And the settlement
Given what is effectively a nationwide class, we must
contend with the possibility that we ourselves are among the
members of the (b)(2) Class.
At oral argument, counsel for
Lexis and for the Plaintiffs took the position that we are not
class members under a fair and practical reading of the
Agreement, which excludes from the class “the presiding judge in
the action and his staff, and all members of their immediate
family.” J.A. 108. Counsel for the Objectors did not disagree
and also volunteered to waive any potential conflict.
While
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provided
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the
significantly
(b)(2)
from
Class
that
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under
provided
the
the
Agreement
(b)(3)
differs
Class.
First,
unlike members of the (b)(3) Class, (b)(2) Class members retain
the right to seek actual damages individually under the FCRA,
though they waive any claim for statutory damages, as well as
punitive damages.
And second, what (b)(2) Class members receive
in exchange is not monetary but purely injunctive relief – a
fundamental change in the product suite that Lexis offers the
debt-collection
industry
that
“will
result
in
a
significant
shift from the currently accepted industry practices.”
Berry,
2014 WL 4403524, at *3.
Specifically, under the Agreement, Lexis is to divide its
Accurint report into two new products.
Decisioning,”
will
be
treated
“consumer report” definition.
that
Collections
Decisioning
as
The first, “Collections
falling
within
the
FCRA’s
This means, among other things,
reports
can
be
used
only
for
those representations may be sufficient to resolve any problem
that otherwise would arise, we need not rely on them here.
We
agree with the view expressed in the Compendium of Selected
Opinions for the Committee on Codes of Conduct that “[a] judge’s
inclusion as a class member in a Rule 23(b)(2) class action
seeking only injunctive and declaratory relief, in which a
substantial segment of the general public are also members, does
not require recusal, unless the judge has an interest in the
action unique from that of members of the general public
included in the class.” See Compendium § 3.1-6[4](d). Because
any interest we may have in this litigation is common to the
general public, recusal is not required.
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permissible purposes under the FCRA, and so will be available
only
to
buyers
have
completed
Consumers
process.
that
also
will
have
the
reports,
free
of
information
in
their
a
detailed
credentialing
right
to
charge
in
view
the
certain
circumstances, and to dispute information they believe to be
inaccurate, all as provided by the FCRA.
The second suite of products, called “Contact & Locate,” is
intended only for the “limited purpose of finding and locating
debtors or locating assets,” J.A. 121, and will not include any
of
the
“seven
characteristic”
information
communication a “consumer report.”
Id.
that
makes
a
Accordingly, “Contact &
Locate” is not treated as subject to the FCRA, and the Agreement
stipulates
that
“the
Contact
&
Locate
suite
of
products
and
services do not constitute ‘consumer reports’ as that term is
defined under the FCRA.”
J.A. 123.
Nevertheless, consumers
will be given certain FCRA-like protections in connection with
Contact & Locate.
For example, consumers will be able to obtain
free copies of their Contact & Locate reports once each year,
and
they
will
be
able
to
submit
statements
disputing
the
information they find.
In
April
2013,
the
district
court
granted
the
parties’
joint motion for preliminary certification of two classes for
settlement purposes.
certification
of
the
The Objectors filed motions challenging
(b)(2)
Class
13
and
the
terms
of
the
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settlement itself.
which
the
district
After a day-long final approval hearing at
parties
court
Pg: 14 of 43
and
the
certified
Objectors
the
presented
(b)(2)
Class
argument,
the
approved
the
and
settlement.
Certification of a settlement class under Rule 23(b)(2) was
appropriate, the court ruled, because the relief sought by the
class is injunctive, rather than monetary, and “indivisible” in
that it “will accrue to all members of the Rule 23(b)(2) class.”
Berry,
2014
Objectors’
WL
4403524,
claim
that
at
a
*11.
lack
The
of
court
opt-out
dismissed
rights
from
the
the
mandatory (b)(2) Class precluded certification, emphasizing that
class
relief
members
in
the
individualized
members.
retained
form
of
statutory
the
right
actual
to
damages
damages,
sue
for
and
uniform
individualized
waived
as
to
only
all
nonclass
Id. at *11-12.
The district court also approved the terms of the Agreement
as “fair, reasonable, and adequate” under Federal Rule of Civil
Procedure 23(e)(2).
According to the court, no concerns as to
fairness were raised by the process leading up to the Agreement,
involving
“arm’s-length
negotiations
by
counsel after full discovery was completed.”
highly
experienced
Id. at *14.
But
most important, the court held, was the “relative strength” of
the parties’ claims and defenses.
Id. at *15.
Given the 2008
FTC Opinion Letter deeming Accurint reports outside the scope of
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the FCRA, the district court found that the Objectors’ prospects
of recovering statutory damages for a willful violation were
“speculative
at
best,”
making
release
of
those
claims
in
exchange for substantial injunctive relief demonstrably fair and
adequate.
Id.
Finally, the district court approved incentive awards of
$5,000
each
for
the
Class
Representatives
and
granted
class
counsel’s motion for attorneys’ fees, awarding $5,333,188.21 in
connection with the (b)(2) Class settlement.
Id. at *15-16.
The Objectors timely appealed, challenging certification of the
(b)(2)
Class,
approval
of
the
Agreement,
and
the
award
of
attorneys’ fees.
II.
The
Objectors
first
challenge
the
district
court’s
certification of the (b)(2) Class for settlement purposes.
We
review a district court’s decision to certify a class only for
“clear abuse of discretion.”
1169, 1172 (4th Cir. 1975).
Flinn v. FMC
Corp., 528 F.2d
An error of law or clear error in
finding of fact is an abuse of discretion.
Thorn v. Jefferson-
Pilot Life Ins. Co., 445 F.3d 311, 317 (4th Cir. 2006).
short
of
district
such
error,
court’s
we
give
certification
“substantial
decision,
deference”
recognizing
But
to
a
that
a
“district court possesses greater familiarity and expertise than
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a court of appeals in managing the practical problems of a class
action.”
Ward v. Dixie Nat’l Life Ins. Co., 595 F.3d 164, 179
(4th Cir. 2010).
A.
Under Rule 23(a) of the Federal Rules of Civil Procedure, a
party
seeking
class
certification,
whether
for
settlement
or
litigation purposes, first must demonstrate that: “(1) the class
is so numerous that joinder of all members is impracticable; (2)
there are questions of law or fact common to the class; (3) the
claims or defenses of the representative parties are typical of
the claims or defenses of the class; and (4) the representative
parties will fairly and adequately protect the interests of the
class.”
Fed. R. Civ. P. 23(a).
Second, if the requirements of Rule 23(a) are met, then the
proposed class must fit within one of the three types of classes
listed in Rule 23(b).
At issue here is Rule 23(b)(2), which
permits certification where “the party opposing the class has
acted or refused to act on grounds that apply generally to the
class,
so
declaratory
whole.”
that
relief
final
is
injunctive
appropriate
relief
respecting
Fed. R. Civ. P. 23(b)(2).
or
the
corresponding
class
as
a
“[B]ecause of the group
nature of the harm alleged and the broad character of the relief
sought, the (b)(2) class is, by its very nature, assumed to be a
homogenous
and
cohesive
group
with
16
few
conflicting
interests
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among its members.”
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Allison v. Citgo Petroleum Corp., 151 F.3d
402, 413 (5th Cir. 1998).
Accordingly, Rule 23(b)(2) classes
are “mandatory,” in that “opt-out rights” for class members are
deemed unnecessary and are not provided under the Rule.
See
id.; see also Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541,
2558 (2011).
Federal circuits, including ours, have held that mandatory
Rule 23(b)(2) classes may be certified in some cases even when
monetary
relief
is
Allison,
151
F.3d
predominates,
Thorn,
445
at
Rule
F.3d
issue.
at
Thorn,
413-14.
23(b)(2)
at
See
445
Where
But
where
at
monetary
certification
331-32.
F.3d
is
331;
relief
inappropriate.
monetary
relief
is
“incidental” to injunctive or declaratory relief, Rule 23(b)(2)
certification may be permissible.
Allison, 151 F.3d at 415; see
also Dukes, 131 S. Ct. at 2560 (discussing Allison).
This rule
follows from the premise underlying the mandatory nature of Rule
23(b)(2) classes:
monetary
awards
declaratory
breaks
down
If a class action is more about individual
than
remedies,
and
becomes necessary.
the
it
then
is
about
the
“presumption
procedural
uniform
safeguard
injunctive
of
of
or
cohesiveness”
opt-out
rights
Allison, 151 F.3d at 413; see Eubanks v.
Billington, 110 F.3d 87, 95 (D.C. Cir. 1997).
And indeed, the
Supreme Court clarified in Dukes that claims for individualized
monetary relief – in that case, back-pay awards under Title VII
17
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– are not “incidental” for purposes of Rule 23(b)(2) and may not
be certified under that Rule.
131 S. Ct. at 2557.
B.
The Objectors’ principal argument is that certification of
the (b)(2) Class runs afoul of these limits.
Objectors,
the
statutory
damages
waived
According to the
under
the
Agreement
predominate over the injunctive relief awarded and are not of
the “incidental” and non-individualized sort, see Dukes, 131 S.
Ct.
at
2557,
2560;
Allison,
151
F.3d
at
415,
that
may
be
certified under Rule 23(b)(2). 3
We disagree.
paradigmatic
Rule
As the district court explained, this is a
23(b)(2)
case:
The
“meaningful,
valuable
injunctive relief” afforded by the Agreement is “indivisible,”
“benefitting
all
Berry,
2014
WL
claims
released
individualized
[]
members”
4403524,
under
claims
prohibited by Dukes.
at
the
that
of
*11.
the
(b)(2)
And
Agreement
threaten
the
are
class
Class
at
statutory
not
the
cohesion
once.
damages
kind
and
of
are
When it comes to statutory damages under
the FCRA, what matters is the conduct of the defendant, Lexis –
which,
as
the
district
court
emphasized,
3
“was
uniform
with
We can assume for purposes of this opinion that a class
settlement that releases damages claims is on precisely the same
footing under Rule 23(b)(2) and the Due Process Clause as one
that provides for damages.
We note, however, that Lexis
contests that premise, and we do not decide its validity today.
18
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respect
to
Filed: 12/04/2015
each
of
the
class
Pg: 19 of 43
members.”
Id.
at
*12.
The
availability of statutory damages in this case, in other words,
is a simple function of Lexis’s policies with respect to its
Accurint reports, applicable to the entire (b)(2) Class. 4
If
Lexis unreasonably failed to treat Accurint reports as “consumer
reports” subject to the FCRA, then every class member would be
entitled uniformly to the same amount of statutory damages, set
by rote calculation.
Id.
Indeed, this settlement appears to be structured precisely
to comply with Dukes and with Rule 23(b)(2).
There are, to be
sure, individualized monetary damages claims at issue here –
those for actual damages under the FCRA – but those claims, as
the district court emphasized, are retained by the (b)(2) Class
members.
Id.
In contrast, the monetary claims released – those
for statutory damages – “flow directly from liability to the
class as a whole” on the same set of claims underlying the
4
Like the district court, we find unpersuasive the
Objectors’ contention that the Adams decision, see supra at
Section I.B., effectively divides the (b)(2) Class into two
groups differently positioned with respect to willfulness:
(1) class members whose claims arose after the Adams decision
put Lexis on notice that its Accurint reports were subject to
the FCRA, making those members eligible for statutory damages;
and (2) class members whose claims arose before Adams put Lexis
on notice. In fact, the Adams court did not rule that Accurint
reports qualified as “consumer reports” under the FCRA, as it
subsequently explained to the parties: “I think there has been
some misinterpretation of what my [motion for judgment on the
pleadings] ruling was.” J.A. 2367.
19
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injunctive
Filed: 12/04/2015
relief,
making
Pg: 20 of 43
them
non-individualized
and “incidental” for purposes of Rule 23(b)(2).
under
Dukes
Dukes, 131 S.
Ct. at 2560 (quoting Allison, 151 F.3d at 415) (emphasis in
original).
The Objectors also argue that the statutory damages claims
released
by
the
Agreement
cannot
be
deemed
“incidental”
to
injunctive relief because the Plaintiffs’ original complaint did
not
seek
any
injunctive
relief
under
the
FCRA.
Again,
we
disagree.
We may assume, as did the district court, that the FCRA,
which does not provide expressly for a private right of action
for
injunctive
relief,
injunctive remedies.
authority
agreement
to
not
permit
consumers
to
seek
But like the district court, we think that
is beside the point:
parties’
does
“[I]n the settlement context, ‘it is the
that
enter
any
serves
as
judgment
the
at
source
all.’”
of
the
Berry,
court’s
2014
WL
4403524, at *12 (quoting Local Number 93 v. City of Cleveland,
478 U.S. 501, 522 (1986)); see Sullivan v. DB Invs., Inc., 667
F.3d 273, 317 (3d Cir. 2011) (court may “approve a mutually
agreed-upon stipulation enjoining conduct . . . regardless of
whether the plaintiffs could have received identical relief in a
contested suit”).
And Lexis is free to agree to a settlement
enforcing a contractual obligation that could not be imposed
without its consent.
Indeed, many FCRA class action disputes
20
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are
Doc: 88
resolved
Filed: 12/04/2015
in
part
Pg: 21 of 43
through
consent
decrees.
See,
e.g.,
Serrano v. Sterling Testing Sys., Inc., 711 F. Supp. 2d 402, 409
(E.D. Pa. 2010).
Failing to acknowledge the critical role of the settlement
agreement,
the
Objectors
rely
on
authority
settlement context that is unavailing here.
Objectors
point
Circuits,
each
to
decisions
noting
that
from
the
the
from
outside
the
Specifically, the
Fifth
unavailability
and
of
Eleventh
injunctive
relief under a statute would preclude certification of a Rule
23(b)(2) class.
See Christ v. Beneficial Corp., 547 F.3d 1292,
1298 (11th Cir. 2008); Bolin v. Sears, Roebuck & Co., 231 F.3d
970, 977 n.39 (5th Cir. 2000).
did
the
defendants
agree
to
But in neither of those cases
a
settlement;
instead,
defendants in both cases opposed certification.
F.3d at 1295-96; Bolin, 231 F.3d at 973.
the
Christ, 547
We can agree that in
those circumstances, where the defendant is unwilling to settle
and the relevant statute does not allow for injunctive relief,
Rule 23(b)(2) certification would be inappropriate because the
plaintiffs
relief.
would
But
have
simply
no
to
prospect
describe
of
those
achieving
injunctive
circumstances
is
to
differentiate them from those before us now, where the (b)(2)
Class members indeed will achieve substantial injunctive relief,
by
virtue
of
the
parties’
settlement,
Agreement.
21
upon
approval
of
the
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Nor does the failure of the Plaintiffs to seek injunctive
relief
in
their
original
complaint
certification under Rule 23(b)(2).
independently
preclude
By its terms, Rule 23(b)(2)
applies so long as “final injunctive relief . . . is appropriate
respecting
the
(emphasis
class
added),
and
as
a
whole,”
the
Fed.
corresponding
R.
Civ.
P.
Advisory
23(b)(2)
Committee’s
Note likewise focuses on the “final relief” afforded in a Rule
23(b)(2) case, 39 F.R.D. 69, 102 (1966).
We therefore look to
the Agreement itself, and to the “final relief” it contemplates,
to
assess
the
propriety
of
any
monetary
remedy.
Any
other
result would not only contravene the terms of Rule 23(b)(2), it
would discourage settlement by binding plaintiffs to the choices
they make at the earliest stages of litigation and foreclosing
the
kinds
of
remedial
compromises
necessary
to
achieve
agreement.
That is not to say that the relief requested in a complaint
may never inform the inquiry into whether monetary relief is
truly
“incidental”
intended
in
part
under
to
Rule
guard
23(b)(2).
against
That
inquiry
certification
when
is
an
“injunction request is illusory,” made only to justify a damages
award that otherwise would be improper under Rule 23(b)(2).
See
Thorn, 445 F.3d at 329; Richards v. Delta Air Lines, Inc., 453
F.3d
525,
530
(D.C.
Cir.
2006).
So
if,
for
instance,
substantial monetary damages actually are awarded under a Rule
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23(b)(2) class settlement, then the absence of a request for
injunctive relief in the original complaint may give rise to
concerns that it is the money and not the injunction that is
driving the case.
Cf. Hecht v. United Collection Bureau, Inc.,
691 F.3d 218, 224 (2d Cir. 2012) (Rule 23(b)(2) certification
invalid where complaint did not mention injunctive relief and
“damages
.
.
.
[were]
the
only
remedy
awarded
that
clearly
applied to every class member”); Fry v. Hayt, Hayt & Landau, 198
F.R.D. 461, 469 n.8 (E.D. Pa. 2000) (Rule 23(b)(2) certification
inappropriate
where
plaintiff
seeks
substantial
monetary
judgment as part of settlement and did not seek injunction in
original complaint).
But here, where the only relief actually
awarded to the (b)(2) Class is injunctive, those concerns are
not present.
C.
In the alternative, the Objectors argue that even if the
statutory
damages
incidental
and
claims
not
released
predominant,
by
the
due
(b)(2)
Class
are
process
precludes
certification of the class without opt-out rights.
Here, the
Objectors rely on dicta from the Supreme Court’s decision in
Dukes,
requires
noting
the
opt-out
“serious
rights
(and
possibility”
that
concomitant
notice)
due
process
under
Rule
23(b)(2) even “where the monetary claims do not predominate.”
Dukes, 131 S. Ct. at 2559.
But as the district court explained,
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the Supreme Court did not go that far in Dukes, holding instead
only that claims for individualized monetary relief may not be
certified under Rule 23(b)(2).
Berry, 2014 WL 4403524, at *12.
Like the district court, we decline to go where the Supreme
Court has not.
As
discussed
certification
monetary
above,
of
relief
federal
mandatory
so
long
courts
Rule
as
long
permitted
classes
involving
23(b)(2)
have
that
relief
is
“incidental”
to
injunctive or declaratory relief – meaning that damages must be
in
the
nature
of
a
“group
remedy,”
flowing
“directly
from
liability to the class as a whole.”
Allison, 151 F.3d at 415;
see id. at 411 (collecting cases).
In such circumstances, our
court
has
held,
opt-out
rights
are
not
required
individualized adjudications are unnecessary.
because
See Thorn, 445
F.3d at 330 & n.25 (“By requiring that injunctive or declaratory
relief predominate . . . Rule 23(b)(2) ensures that the benefits
of
the
class
running
the
members
to
action
risk
of
recover
inure
to
cutting
money
the
class
as
off
the
rights
damages
and
class
a
of
whole
without
absent
members
who
class
want
individualized evaluation of their claim for money damages.”).
We do not believe that the Court’s dictum in Dukes warrants
or even authorizes overturning this established precedent.
See
United States v. Ruhe, 191 F.3d 376, 388 (4th Cir. 1999) (Fourth
Circuit panels are “bound by prior precedent from other panels
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in this circuit absent contrary law from an en banc or Supreme
Court decision”).
And we note that our unwillingness to jump
ahead of the Supreme Court in this regard is shared by our
sister
circuits.
considered
whether,
certification
involved.
Two
other
in
remains
federal
light
courts
of
permissible
of
Dukes,
when
appeals
Rule
monetary
have
23(b)(2)
damages
are
And both have affirmed the continued validity of Rule
23(b)(2)
certification
monetary
relief
is
of
monetary
claims
non-individualized
injunctive or declaratory remedies.
so
and
long
as
“incidental”
the
to
See Amara v. CIGNA Corp.,
775 F.3d 510, 519-20 (2d Cir. 2014); Johnson v. Meriter Health
Servs. Emp. Ret. Plan, 702 F.3d 364, 369-71 (7th Cir. 2012); see
also Douglin v. GreatBanc Trust Co., No. 1:14-cv-00620-RA, 2015
WL 3526248, at *5-7 (S.D.N.Y. June 30, 2015).
To be sure, and as the district court recognized, when a
“proposed settlement is intended to preclude further litigation
by absent persons, due process requires that their interests be
adequately represented.”
Berry, 2014 WL 4403524, at *11 (citing
In re Jiffy Lube, 927 F.2d 155, 158 (4th Cir. 1991)).
premise
behind
certification
of
mandatory
classes
But the
under
Rule
23(b)(2) is that because the relief sought is uniform, so are
the interests of class members, making class-wide representation
possible and opt-out rights unnecessary.
See Dukes, 131 S. Ct.
at 2558; Thorn, 445 F.3d at 330 & n.25; Allison, 151 F.3d at
25
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413-14.
And
Filed: 12/04/2015
before
a
Pg: 26 of 43
class
may
be
certified
under
Rule
23(b)(2), of course, a court must find under Rule 23(a)(4) – as
the district court did here – that the interests of all of the
class members will be fairly and adequately represented by the
named plaintiffs and class counsel.
Rule 23(e)’s settlement
approval process provides additional protection, ensuring that
Rule
23(b)(2)
class
members
receive
notice
of
a
proposed
settlement and an opportunity to object, and that a “settlement
will not take effect unless the trial judge – after analyzing
the facts and law of the case and considering all objections to
the proposed settlement – determines it to be fair, adequate,
and reasonable.”
Kincade v. Gen. Tire and Rubber Co., 635 F.2d
501, 507-08 (5th Cir. 1981).
We see no reason to depart here
from the general understanding that these procedural safeguards
are sufficient to protect the due process rights of objecting
Rule 23(b)(2) class members.
Indeed, the particular terms of this Agreement make opt-out
rights
especially
concerned
about
unnecessary
the
“need
here.
for
The
Dukes
plaintiffs
with
Court
was
individual
monetary claims to decide for themselves whether to tie their
fates to the class representatives’ or go it alone – a choice
Rule 23(b)(2) does not ensure that they have.”
Ct. at 2559 (emphasis in original).
Dukes, 131 S.
But here, the right to “go
it alone” is built into the Agreement itself, under which any
26
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Pg: 27 of 43
(b)(2) Class member may pursue actual damages resulting from
individualized harm under the FCRA.
In this sense, (b)(2) Class
members are “opted out” already, by virtue of the settlement in
question.
As
the
district
court
explained,
the
Agreement
“preserves Rule 23(b)(2) class members’ rights to bring claims
for
actual
rights.”
damages,
thereby
preserving
their
due
process
Berry, 2014 WL 4403524, at *12.
Finally,
the
practical
position give us pause.
implications
of
the
Objectors’
What is being sought is a blanket right
to opt out of a Rule 23(b)(2) settlement that provides purely
injunctive
relief
solely
because
non-individualized
statutory
damages claims are released, while individualized actual damages
claims
are
retained.
That
such
a
rule
would
discourage
settlement seems undeniable; defendants like Lexis surely will
not
agree
to
settlements
like
this
something approaching global peace.
507.
And
in
light
of
all
the
one
if
they
cannot
buy
See Kincade, 635 F.2d at
other
procedural
protections
already in place, not to mention the retention of actual damages
claims under this Agreement, any marginal benefit that might
accrue to disenchanted class members is unlikely to be worth
this cost.
As the Supreme Court has recognized, procedural due
process is a “flexible concept,” requiring varying degrees of
protection
interest
“depending
and
the
upon
particular
the
importance
circumstances
27
attached
under
to
the
which
the
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deprivation may occur.”
Survivors,
473
U.S.
Pg: 28 of 43
Walters v. Nat’l Ass’n of Radiation
305,
320
(1985).
We
do
not
think
it
requires the rigid opt-out rule proposed by the Objectors here.
D.
We briefly address the Objectors’ final argument against
certification:
that
inadequate
under
Rule
$5,000
each
the
Class
to
interest
class.
between
(b)(2)
23(a)(4)
Class's
because
Representative
those
Representatives
representation
monetary
created
and
payments
of
conflict
a
the
is
of
rest
of
the
Though we appreciate that such awards can misalign the
interests of class representatives and other class members in
certain circumstances, we hold that the district court did not
abuse its discretion in approving the payments here. 5
Incentive
awards
are
“intended
to
compensate
class
representatives for work done on behalf of the class, to make up
for financial or reputational risk undertaken in bringing the
action, and, sometimes, to recognize their willingness to act as
a private attorney general.”
Rodriguez v. W. Publ’g Corp., 563
F.3d 948, 958-59 (9th Cir. 2009).
class
5
action
cases.”
Nor do we find
court’s judgment that
represented adequately
Objectors
argue
to
unpersuasive.
Id.
at
They are “fairly typical in
958
(quoting
4
William
B.
any abuse of discretion in the district
the (b)(2) Class members otherwise were
under Rule 23(a)(4).
To the extent the
the
contrary,
we
find
their
claims
28
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Pg: 29 of 43
Rubenstein et al., Newberg on Class Actions § 11:38 (4th ed.
2008)).
The district court found that awards of $5,000 were
appropriate here because the Class Representatives acted for the
benefit of the class, and it cited other cases in which district
courts
in
our
circuit
have
ordered
similarly
substantial
payments.
The
Objectors
point
us
to
cases
from
other
circuits
scrutinizing such awards when a “settlement gives preferential
treatment to the named plaintiffs while only perfunctory relief
to unnamed class members,” In re Dry Max Pampers Litig., 724
F.3d
713,
718
incentive
(6th
Cir.
agreements
are
2013).
And
entered
it
into
is
true
that
when
at
the
onset
of
litigation, see Rodriguez, 563 F.3d at 959, and particularly
when they are conditioned on class representative support for a
settlement, Radcliffe v. Experian Info. Sols. Inc., 715 F.3d
1157,
1164
(9th
Cir.
2013),
large
awards
may
raise
concerns
about whether named plaintiffs might “compromise the interest of
the class for personal gain,” Dry Max Pampers, 724 F.3d at 722
(quoting Hadix v. Johnson, 322 F.3d 895, 897 (6th Cir. 2003)).
In this case, however, the incentive awards were not agreed
upon
ex
ante,
and
they
were
not
conditioned
Representatives’ support for the Agreement.
not
negotiated
Agreement
had
until
been
after
the
established,
29
it
the
Class
Indeed, they were
substantive
making
on
terms
of
the
significantly
less
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likely that the Class Representatives would have been influenced
in the performance of their representative duties.
And finally,
this is not a case in which unnamed class members received “only
perfunctory relief,” see Dry Max Pampers, 724 F.3d at 718, –
instead, the district court found that the class members were
afforded substantial relief by significant changes in Lexis’s
consumer-protection practices – and there is no indication that
the highly experienced class counsel pursued this lawsuit any
less vigorously because of the Class Representatives’ fee award.
Under
these
circumstances,
we
defer
to
the
judgment
of
the
district court in approving the Class Representatives’ awards
and finding adequate representation under Rule 23(a)(4).
III.
The Objectors next challenge the district court’s approval
of the (b)(2) Class settlement, arguing principally that it is
unfair
and
statutory
relief
showing
damages
in
decision
inadequate
claims
exchange.
substantial
that
the
because
without
Again,
we
deference,
district
approving the settlement.”
it
releases
providing
afford
court
for
the
reversing
abused
class
any
district
only
its
“upon
members’
monetary
court’s
a
clear
discretion
in
Flinn, 528 F.2d at 1172 (citations
and internal quotation marks omitted).
30
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A.
As discussed above, a key procedural protection afforded
Rule 23(b)(2) class members is that a settlement will not be
approved over their objections unless a district court finds it
to
be
“fair,
reasonable,
and
adequate.”
Fed.
23(e)(2); see In re Jiffy Lube, 927 F.2d at 158.
R.
Civ.
P.
The fairness
analysis is intended primarily to ensure that a “settlement [is]
reached as a result of good-faith bargaining at arm’s length,
without collusion.”
In re Jiffy Lube, 927 F.2d at 159.
The district court properly considered the factors we have
identified as bearing on this inquiry: “(1) the posture of the
case at the time settlement was proposed, (2) the extent of
discovery
that
had
been
conducted,
(3)
the
circumstances
surrounding the negotiations, and (4) the experience of counsel
in the area of [FCRA] class action litigation.”
“extensive
discovery”
conducted
through
the
Id.
course
Noting the
of
three
separate lawsuits, the district court concluded that the parties
here “reached an agreement through arm’s-length negotiations by
highly experienced counsel after full discovery was completed,”
sufficient to demonstrate the fairness of the Agreement.
2014 WL 4403524, at *14.
Berry,
The Objectors do not and could not
take serious issue with this assessment, and we see no reason to
disturb the court’s judgment.
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As to the Objectors’ primary complaint – that the Agreement
is
inadequate
because
it
fails
to
provide
any
monetary
compensation for the release of statutory damages claims – the
district court emphasized the most important factor in weighing
the substantive reasonableness of a settlement agreement: the
“strength of the plaintiffs’ claims on the merits.”
F.2d at 1172.
Flinn, 528
In other words, the fairness of a deal under
which class members give up statutory damages claims in exchange
for injunctive relief depends critically on an assessment of the
Plaintiffs’ case that they are entitled to statutory damages in
the first place.
The district court deemed that case “speculative at best,”
Berry, 2014 WL 4403524, at *15, and we think that is generous.
In
order
to
recover
statutory
damages
under
the
FCRA,
the
Plaintiffs would have to show a “willful” violation by Lexis, 15
U.S.C. § 1681n, which in turn would require that Lexis have
adopted an “objectively unreasonable” reading of the Act when it
concluded
that
its
“consumer reports.”
Accurint
reports
were
Safeco, 551 U.S. at 69.
not
covered
as
As the district
court noted, the Supreme Court has made clear that where “the
statutory text and relevant court and agency guidance allow for
more than one reasonable interpretation . . . a defendant who
merely adopts one such interpretation” cannot be held liable as
a willful violator.
Id. at 70 n.20.
32
And here, with agency
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guidance
Filed: 12/04/2015
expressly
specifying
Pg: 33 of 43
that
Accurint
reports
are
not
subject to the FCRA, see FTC Opinion Letter, it is hard to see
how Lexis can be said to have acted unreasonably by adopting
that reading. 6
On the other side of the ledger, of course, is the benefit
to the (b)(2) Class of “substantial [injunctive] relief without
the risk of litigation.”
district
court
Berry, 2014 WL 4403524, at *15.
described
the
injunction
in
this
case
The
as
implementing a “substantial, nationwide program that addresses
the issues raised in the Complaint by the [(b)(2) Class] and
will
result
making
in
Lexis
protection.
a
“the
significant
industry
Id. at *3.
shift”
industry
in
leader”
in
practices,
consumer-information
Indeed, the record includes a finding
by an information privacy law expert that the injunctive relief
provided in the Agreement provides consumers with benefits so
substantial
dollars.
that
The
their
monetary
Objectors’
value
exclusive
is
focus
in
on
the
the
billions
of
absence
of
monetary relief is unsupported by law and also imprudent as a
matter of common sense:
There was no realistic prospect that
6
Nothing about the Adams litigation dictates a different
result. Although the district court in that case denied Lexis’s
motion for judgment on the pleadings on the willfulness issue,
it subsequently clarified on reconsideration that it was “very
persuaded by the FTC’s letter,” J.A. 2377, and that if “the
plaintiffs don’t come forward with authority to the contrary
. . . then . . . [they] have a difficult row to hoe,” J.A. 2368.
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Lexis could or would provide meaningful monetary relief to a
class of 200 million people. 7
We
can
assessment
positions
find
of
or
no
reason
to
disturb
the
relative
strength
its
fact-intensive
the
of
district
the
analysis
of
parties’
the
the
district
court
was
well
within
its
legal
benefits
provided the (b)(2) Class by the parties’ settlement.
view,
court’s
In our
discretion
in
approving the settlement as fair, reasonable, and adequate under
Rule 23(e).
B.
The Objectors bring one final challenge to the settlement,
arguing that it impermissibly immunizes Lexis from future FCRA
liability in connection with its new Contact & Locate product.
We disagree.
The Objectors’ claim appears to rest on two sections of the
Agreement.
In
the
first,
the
7
parties
stipulate
that
“the
For that reason and others, the fact that the much smaller
(b)(3) Class received monetary relief under the Agreement does
not by itself render unreasonable the non-monetary relief
provided the (b)(2) Class. The (b)(3) Class, unlike the (b)(2)
Class, consists of individuals who took some affirmative action
against Lexis, seeking to view their Accurint reports or
challenging information included in those reports, putting them
in a fundamentally different position with respect to Lexis.
And in exchange for the monetary relief provided by the
Agreement, the (b)(3) Class releases all of its damages claims
against Lexis, while the (b)(2) Class retains the right to sue
for actual damages.
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Contact & Locate suite of products and services will not involve
the
provision
of
‘consumer
under the FCRA.”
reports’
J.A. 120-21.
as
that
term
is
defined
In the second, the parties
“acknowledge that the specific design and content of the Contact
& Locate . . . suite of products and services may change over
time to respond to the then current requirements of customers
and the market.”
J.A. 122.
According to the Objectors, the
upshot is that Lexis has carte blanche to develop Contact &
Locate into a product that is indeed a “consumer report” under
the FCRA, while class members, bound by their stipulation, will
be unable to respond.
We
think
that
significantly
overstates
Lexis’s
freedom
under the Agreement.
It is true that the Agreement provides
Lexis
it
the
discretion
according to market needs.
needs
to
develop
Contact
&
Locate
But as the district court explained,
it also sets boundaries for the design and implementation of
Contact & Locate, which assure that the product cannot operate
as a “consumer report” for purposes of the FCRA.
Agreement,
information
for
instance,
that
does
Contact
not
&
Locate
contain
any
may
of
Under the
include
the
characteristic” consumer information covered by the FCRA.
121; Berry, 2014 WL 4403524, at *4.
only
“seven
J.A.
And in the section of the
Agreement labeled the “Rule 23(b)(2) Settlement Class Release,”
J.A. 129, the parties clarify that their agreement is only that
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the “Post Settlement Products” (of which Contact & Locate is
one) “shall not be ‘consumer reports’ within the meaning of the
FCRA so long as [they] are not used in whole or in part as a
factor
in
determining
eligibility
for
credit”
or
purpose that could qualify them as consumer reports.
33 (emphasis added).
any
other
J.A. 132-
Under that provision, Lexis has no free
pass from FCRA liability; instead, the Agreement applies only so
long as Contact & Locate remains true to the parties’ intent and
is not used in a manner that would make it a “consumer report.”
Releases, of course, are a standard feature of class action
settlements.
Indeed, the release of claims that form the basis
of litigation is the raison d’être of any settlement, so the
Objectors do not dispute that it would have been appropriate for
the
(b)(2)
Class
to
stipulate
comply with the FCRA.
they
argue,
to
that
Lexis’s
Accurint
reports
But it is different and unreasonable,
release
claims
regarding
Contact
because Contact & Locate does not yet exist.
this overstates the case.
&
Locate,
Again, we think
Contact & Locate is a new name, but
it is a new name for what is essentially a scaled-down version
of the old Accurint reports, without the features that allegedly
made
Accurint
troublesome
under
the
FCRA.
In
class
action
settlements, parties may release not only the very claims raised
in their cases, but also claims arising out of the “identical
factual predicate.”
See, e.g., In re Literary Works in Elec.
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Databases Copyright Litig., 654 F.3d 242, 248 (2d Cir. 2011).
Although the name of the product has changed, now, as before,
Lexis attempts only to sell information that will enable debt
collectors to locate assets, and not information to be used for
credit eligibility determinations.
Because the (b)(2) Class can
release claims against Accurint, it can do so for Contact &
Locate, as well.
IV.
We are left with one final argument: a challenge by one
(and only one) Objector 8 to the district court’s approval of
class
counsel’s
approximately
$5.3
million
injunctive relief for the (b)(2) Class.
Procedure
23(h)
permits
“the
court
fee
for
securing
Federal Rule of Civil
[to]
award
reasonable
attorney’s fees . . . that are authorized by . . . the parties’
agreement.”
awards
for
Fed. R. Civ. P. 23(h).
abuse
of
discretion
only.
We review attorneys’ fee
Carroll
Abramson, 53 F.3d 626, 628 (4th Cir. 1995).
v.
Wolpoff
&
That review is
“sharply circumscribed,” and a fee award “must not be overturned
unless it is clearly wrong.”
Plyler v. Evatt, 902 F.2d 273, 278
(4th Cir. 1990) (internal quotation marks omitted).
8
Objector Schulman is the only Objector and member of the
200 million-member (b)(2) Class to contest the award of fees in
this case.
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Here, class counsel’s fee was negotiated by the parties,
and the Agreement allowed for a total attorneys’ fee award of up
to $5.5 million to be paid entirely by Lexis.
The district
court awarded the requested fee after analyzing it through the
lodestar
method.
settlement,
the
With
regard
district
to
court
the
found
Rule
that
23(b)(2)
“a
Class
lodestar
of
$3,349,379.95 and a multiplier of 1.99 are applicable and, in
light of the fact that counsel allocated approximately 80% of
their time to crafting injunctive relief for the Rule 23(b)(2)
class, an award of $5,333,188.21 is appropriate.” 9
WL 4403524, at *15.
the
district
Objector
court’s
insufficiently
detailed
Schulman argues primarily that
explanation
and,
Berry, 2014
in
for
its
particular,
fee
award
that
the
was
court
failed to respond to his protests that class counsel’s hourly
rate and number of hours worked were unreasonable.
And indeed,
despite our very deferential review in this area, we do require
district courts to set forth clearly findings of fact for fee
awards so that we have an adequate basis to review for abuse of
discretion.
See Barber v. Kimbrell’s, Inc., 577 F.2d 216, 226
9
Under the lodestar method, the district court multiplies
the number of hours worked by a reasonable hourly rate. And it
can then “adjust the lodestar figure using a ‘multiplier’
derived from a number of factors, such as the benefit achieved
for the class and the complexity of the case.” Kay Co. v.
Equitable Prod. Co., 749 F. Supp. 2d 455, 462 (S.D.W. Va. 2010).
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(4th Cir. 1978) (adopting the twelve fee-shifting factors of
Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.
1974),
whenever
the
district
court
is
required
to
determine
reasonable attorneys’ fees).
We acknowledge that the district court’s explanation of its
fee award was brief, compressed into a single paragraph.
stress
the
importance
of
addressing
fee
requests
And we
fully
and
carefully, so that we may engage in meaningful review.
Blankenship
v.
Schweiker,
(vacating
fee
award
thorough
review).
where
On
676
F.2d
district
balance,
116,
118
court
(4th
did
however,
not
and
Cir.
See
1982)
engage
under
in
the
circumstances of this case, we think that the district court’s
explanation was sufficient and that the court did not otherwise
abuse its discretion in approving the fee award.
The district court provided the specific basis on which it
awarded fees: that class counsel “expended large amounts of time
and labor,” and “achieved an excellent result in this large and
complex action.”
Berry, 2014 WL 4403524, at *15.
It went on to
detail why the result was indeed “excellent,” finding that the
Agreement “provides substantial benefits for over 200 million
consumers” and “forces [Lexis] to comply with the FCRA.”
Id.
And the court compared the lodestar multiplier to those applied
in similar cases.
the
more
That explanation is in accord with several of
prominent
Barber
factors,
39
which
“include
such
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considerations as the time and labor required, the novelty or
difficulty of the issues litigated, customary fees in similar
situations, and the quality of the results involved.”
In re
MRRM, P.A., 404 F.3d 863, 867-68 (4th Cir. 2005).
As to the reasonableness of class counsel’s hourly rate, it
is not the case, as Objector Schulman would have it, that the
court erred by relying solely on counsel’s affidavit as evidence
of
prevailing
contains
market
multiple
rates.
expert
On
opinions,
the
contrary,
all
backed
the
by
record
voluminous
evidence, that both counsel’s hourly rate and the time spent on
the case were reasonable.
The district court’s findings rest
not on unsupported and self-serving assertions from counsel, but
on
the
testimony
of
experts
like
Professor
Geoffrey
Miller,
comparing class counsel’s rates to those charged in bankruptcy
litigation as well as to rates awarded in similar class action
cases,
and
opining
that
counsel’s
attestations
to
the
time
incurred were consistent with the complexity and the duration of
the litigation.
The court’s reference to “large amounts of time
and labor” may have been brief, but it was backed by substantial
evidence on which the court was entitled to rely.
Moreover, this case does not raise the kind of concerns
that might call for an especially robust or detailed explanation
of a fee award by a district court.
There is no reason to worry
here that “the lawyers might [have] urge[d] a class settlement
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at a low figure or on a less-than-optimal basis in exchange for
red-carpet
treatment
on
fees.”
See
Weinberger
Nekoosa Corp., 925 F.2d 518, 524 (1st Cir. 1991).
v.
Great
N.
As discussed
above, given the size of the (b)(2) Class and the fragility of
its legal position, there was never any realistic possibility of
class-wide monetary relief; put bluntly, there is no reason to
think that class counsel left money on the table in negotiating
this Agreement.
And it is not as if the injunctive relief
ultimately achieved for the (b)(2) Class was below expectations.
Again, the district court’s assessment of the injunction as an
“excellent result in [a] large and complex action” may have been
on the terse side, but it is amply supported by the experts who
opined
on
the
fee
award,
characterizing
the
injunction
as
bringing about a “sea change” in business practices, J.A. 201516,
and
as
a
“serious
advancement
of
consumer
rights
by
dominant member of the data broker industry,” J.A. 583.
a
See
McDonnell v. Miller Oil Co., 134 F.3d 638, 641 (4th Cir. 1998)
(finding
reasonable
that
fee
the
“most
award
is
critical
the
factor
degree
of
in
calculating
success
a
obtained”
(internal quotation marks omitted)). 10
10
Other features of this case further diminish any concern
about the fee award and, accordingly, any need for heightened
scrutiny by the district court. Because class counsel’s fee is
to be paid entirely by Lexis, it does not reduce the (b)(2)
Class’s recovery. Cf. Cook v. Niedert, 142 F.3d 1004, 1011 (7th
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Finally, the fact that only one of the approximately 200
million members of the (b)(2) Class objects to the award of
attorneys’ fees is relevant to our decision.
Notice of the
proposed settlement in this case reached 75.1 percent of the
(b)(2)
Class
members,
but
only
Objector
Schulman
raised
any
concerns; indeed, the other Objectors specifically declined to
join this portion of the challenge.
That almost complete lack
of objection to the fee request provides additional support for
the district court’s decision to approve it.
See In re Rite Aid
Corp. Sec. Litig., 396 F.3d 294, 305 (3d Cir. 2005) (noting that
only two of 300,000 class members objecting to fee request is a
“rare phenomenon” and evidence that the district court did not
abuse its discretion in awarding fees); see also Flinn, 528 F.2d
at
1174
(finding
class
action
settlement
reasonable
where
“[o]nly five members of the class filed any dissent from the
settlement”).
Cir. 1998) (when attorneys’ fee reduces amount of common fund,
court must carefully scrutinize fee application).
Nor, of
course, will it require the expenditure of taxpayer funds, which
might warrant additional scrutiny. Cf. Perdue v. Kenny A., 559
U.S. 542, 559 (2010) (limiting the use of multipliers in
lodestar-based fee awards against the government under feeshifting statutes). Finally, the parties did not even begin to
negotiate class counsel’s fee until after the substantive terms
of the Agreement were finalized, making it far less likely that
counsel could have traded off the interests of class members to
advance their own ends.
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Again, we should not be understood to minimize the need for
district courts to explain their attorneys’ fee awards and to
take account of relevant objections.
But on the facts of this
case, we find that the district court satisfied that standard,
and committed no abuse of discretion in awarding attorneys’ fees
to class counsel in connection with the (b)(2) Class settlement.
V.
For the reasons set forth above, we affirm the decision of
the district court.
AFFIRMED
43
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