Dickey v. Advanced Micro Devices, Inc.

Background

Tony Dickey and Paul Parmer brought a consumer class action against Advanced Micro Devices, Inc. (AMD). They alleged that AMD misrepresented the number of central processing units, or cores, in its Bulldozer Processors. According to the allegations, AMD advertised the processors as having eight cores, but the processors allegedly used sub-processors that could not operate and multitask simultaneously like eight actual cores.

The operative complaint asserted claims under California’s Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law, as well as claims for fraud in the inducement, breach of express warranties, and negligent misrepresentation. The court had previously certified a class consisting of people who purchased one or more specified AMD chips—FX-8120, FX-8150, FX-8320, FX-8350, FX-8370, FX-9370, or FX-9590—either while residing in California or after visiting the AMD.com website.

Settlement Terms

After formal discovery and mediation, the parties entered into a settlement agreement on August 9, 2019. AMD agreed to make a $12,100,000 non-reversionary payment. The payment would cover settlement payments to class members, estimated administrative expenses of $350,000 to $700,000, incentive awards, and attorneys’ fees and costs. The plaintiffs estimated that individual payments would average approximately $37.50 per purchased processor, assuming a 20% claims rate.

The settlement would require class members to release claims arising from marketing, advertising, descriptions, statements, representations, or omissions concerning the number of cores in the specified processors, including claims that were brought or could have been brought in the action. The named plaintiffs could seek incentive awards of no more than $7,500 each. Class Counsel could seek attorneys’ fees of up to one-third of the settlement fund, or $3,630,000, plus costs. The court stated that it would decide the reasonableness of any incentive awards and fee request later, based on evidence presented at the final fairness hearing.

Preliminary Approval Analysis

Federal Rule of Civil Procedure 23(e) requires court approval of a settlement involving a certified class. At the preliminary-approval stage, the court considered whether the settlement appeared to result from serious and informed negotiations without collusion, whether it improperly favored some class members, whether it fell within the range of possible approval, and whether it had obvious deficiencies.

The court found that the settlement followed significant discovery, class certification, and mediation, and concluded that the settlement process favored approval. It also found that the possible incentive awards did not prevent preliminary approval because such awards are not automatically improper. Considering the estimated recovery and the litigation risks identified by the plaintiffs—including the risks of summary judgment, maintaining class treatment, and prevailing at trial—the court found the settlement amount within the possible range of approval. The court found no obvious deficiencies.

Order

The court preliminarily found the settlement fair, reasonable, and adequate and granted the plaintiffs’ motion for preliminary approval of the class-action settlement. It found the proposed mail, email, and digital-media notice plan to be the best practicable notice under the circumstances and directed the parties to implement it. The court also directed the parties to meet and confer and submit deadlines for notice, exclusion and objection requests, fee and incentive applications, the final-approval motion, and the final fairness hearing. This order granted preliminary approval; it did not make the final approval ruling or decide the amount of attorneys’ fees or incentive awards.