Wickham v. Schenker, Inc.
- Pitts
- 5:23-cv-00946
- U.S. District Court · Northern District of California
- 4
In Wickham v. Schenker, Judge Pitts denied without prejudice preliminary approval of a class settlement because its unclaimed-funds recipient lacked a required connection to the class.
The ruling affected Eric Wickham, Schenker, Inc., and the proposed settlement class of approximately 29,628 applicants. The proposed settlement was not preliminarily approved.
What happened
In Wickham v. Schenker, Inc., Eric Wickham sued Schenker under the Fair Credit Reporting Act over employment background-check disclosures. The proposed settlement covered about 29,628 applicants and provided a gross payment of $1,275,000, with an estimated net payment of $25.16 per class member.
The court focused on the proposal’s plan for distributing money that class members did not collect. That plan would have sent the remaining funds to the Alliance for Children’s Rights. The court said such a recipient must have a strong connection to the class and the law involved, and Wickham acknowledged that no such connection existed here.
Judge P. Casey Pitts ruled that the proposed recipient made the settlement unfair, inadequate, and unreasonable. Because the court could not remove or replace that provision while approving the rest of the agreement, it denied the motion for preliminary approval without prejudice.
The detailed version
- Wickham v. Schenker, Inc. · No. 5:23-cv-00946
- Pitts
- Apr. 11, 2025
Background
Eric Wickham moved for preliminary approval of a proposed class-action settlement in a Fair Credit Reporting Act case against Schenker, Inc. The operative complaint asserted one claim under 15 U.S.C. § 1681b(b)(2)(A), which requires an employer seeking an applicant’s consumer report to provide a clear and conspicuous disclosure in a document containing only that disclosure. The complaint alleged that Schenker’s disclosure included extra information, including references to state-law counterparts and a hyperlink to at least one website unrelated to the Fair Credit Reporting Act.
The proposed settlement class included approximately 29,628 people who applied for positions with Schenker between November 20, 2014, and February 28, 2022, and about whom Schenker obtained a consumer report. The proposed gross settlement amount was $1,275,000, and the estimated net payment was $25.16 per class member.
Legal standard
Federal Rule of Civil Procedure 23(e) requires a court to determine whether a proposed class settlement is fair, reasonable, and adequate. Preliminary approval is the first of a two-step process; final approval would come after notice to class members. Because this settlement was proposed before class certification, the court said it had to scrutinize the proposal carefully, including the risk that the parties might settle without substantial litigation effort.
The proposed agreement included a cy pres provision. Cy pres is a method of distributing unclaimed settlement funds to the next-best group of beneficiaries when those funds are not paid to class members. The court explained that there must be a driving connection between the plaintiff class and the proposed cy pres recipients. The recipient must also be guided by the objectives of the underlying statute and the interests of class members who did not claim their payments.
Analysis
The parties proposed the Alliance for Children’s Rights as the cy pres recipient. At the preliminary-approval hearing, Wickham conceded that there was no driving connection between that organization and either the class or the objectives of the Fair Credit Reporting Act. The court therefore found the cy pres provision impermissible and concluded that it made the proposed settlement not fair, adequate, or reasonable.
The court further held that it could not approve the settlement by deleting, changing, or substituting the cy pres provision. Under the authorities cited in the opinion, the settlement had to stand or fall as a whole. The defective cy pres provision therefore prevented the court from approving any other part of the proposed settlement.
Disposition
The court denied the motion for preliminary approval of the class-action settlement without prejudice. The opinion also states that the court identified several other concerns at the preliminary-approval hearing, but the provided text does not describe those concerns. The order’s stated basis for denial was the impermissible cy pres provision.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.