Shuman v. SquareTrade Inc.

Background

Plaintiffs Michael Shuman, Kathleen Abbott, and Tommy Gonzales moved for preliminary approval of a proposed class-action settlement with SquareTrade, Inc. The opinion states that the dispute concerned SquareTrade customers who submitted claims under Protection Plans, including claims resolved through the Fast Cash program and claims for which payments were allegedly reduced by an SKU-cap error. The court noted that the parties had litigated for more than two years, including briefing on arbitration, three motions to dismiss, a summary-judgment motion, discovery disputes, document production, and depositions.

Preliminary Settlement Approval

The court found that it would likely be able to approve the settlement as fair, reasonable, and adequate under Federal Rule of Civil Procedure 23(e)(2). It found that the settlement resulted from arm’s-length negotiations, with assistance from retired Judge James L. Warren; that the plaintiffs and class counsel adequately represented the proposed class; that the settlement considered the costs, risks, and delay of trial and appeal; and that class members would be treated equitably. The court therefore preliminarily approved the settlement and preliminarily approved the release of the claims covered by the agreement, subject to a final approval hearing.

Settlement Class

For settlement purposes, the court preliminarily certified a class under Rule 23(b)(3), consisting of two subclasses:

- The Fast Cash Subclass: people who submitted a Protection Plan claim during the class period and whose claim was resolved through a Fast Cash payment from SquareTrade. - The SKU-cap Subclass: people who submitted a Protection Plan claim during the class period, received a monetary payment from SquareTrade, and received less than they allegedly should have received because of the SKU-cap error.

The court found that the requirements for class certification appeared satisfied for settlement purposes. It cited approximately 815,000 claims filed by SquareTrade customers during the class period, common legal and factual questions, typicality of the plaintiffs’ claims, adequate representation, and the superiority of a class action because individual claims involved relatively small amounts of money. The court appointed David Stein, Amanda M. Karl, William H. Anderson, and Rebecca P. Chang as class counsel.

Notice and Administration

The court appointed JND Legal Administration as the settlement administrator. It approved notice by email, mail when an email address was unavailable but a physical address was available, and publication through a settlement website. The court found that the notice procedure satisfied due-process requirements and Rule 23 and explained the litigation, settlement class, settlement terms, rights to object or opt out, the final approval hearing, and the binding effect of a final class judgment.

The settlement administrator was ordered to distribute notice no later than November 16, 2022. Class members who wished to opt out or object generally had to do so by January 30, 2023. Class members who did not opt out would be bound by the settlement after entry of a final approval order and judgment. The order also directed class counsel to submit information about notice, claims, payments, and opt-outs before the final approval hearing.

Final Approval Hearing and Disposition

The court scheduled a February 24, 2023 hearing to consider final approval of the settlement, permanent certification of the settlement class, entry of judgment, attorneys’ fees and expenses, and service awards for the class representatives. The order expressly granted the plaintiffs’ motion for preliminary approval of the class-action settlement; it did not itself grant final approval of the settlement.

Effect of the Order

The order permitted the settlement process to proceed and gave settlement-class members procedures for receiving notice, submitting claims, opting out, objecting, and appearing at the final approval hearing. It did not decide the ultimate merits of the customers’ underlying claims against SquareTrade.