Shuman v. SquareTrade Inc.

Background

The parties reached a class-action settlement concerning SquareTrade Protection Plan claims. The settlement covered two subclasses: the Fast Cash Subclass, consisting of people whose claims were resolved through a Fast Cash payment, and the SKU-cap Subclass, consisting of people who received less than they allegedly should have received because of a product-identification error. The class period ran from April 20, 2016, through June 27, 2022.

The proposed settlement class included 705,575 SquareTrade customers who filed more than 884,000 reimbursement claims. After preliminary approval, notice was mailed or emailed to 703,729 class members, representing more than 99.76% of the class. Three hundred twenty-two class members requested exclusion, and there were nine objections; the court stated that the objections appeared to be accidental and that four were withdrawn.

Class Certification and Settlement Approval

The court found that the requirements for certification under Rule 23 of the Federal Rules of Civil Procedure were satisfied for settlement purposes. It found sufficient numbers of class members, common legal and factual questions, typical claims by the named plaintiffs, adequate representation, and superiority of a class action because individual claims involved relatively small amounts.

The court found the settlement fair, reasonable, and adequate. Under the settlement, the SKU-cap Subclass would receive the full amount of its damages without filing a claim. Fast Cash Subclass members could also receive the full amount of their damages, but they had to submit claims. The settlement also required enhanced disclosures about the Fast Cash program and required SquareTrade to maintain technical corrections intended to prevent the SKU-cap error from recurring.

Because the settlement was negotiated before formal class certification, the court applied heightened scrutiny for possible collusion. The court identified two warning signs: the requested attorneys’ fees exceeded the expected settlement payout, and any reduction in fees would benefit SquareTrade rather than the class. Nevertheless, the court found no collusion because the settlement followed extensive discovery and litigation, had no provision guaranteeing fees, and was negotiated with help from an experienced neutral mediator.

Attorneys’ Fees and Costs

The court concluded that the plaintiffs were successful under California Code of Civil Procedure section 1021.5 because the settlement provided benefits to class members and future SquareTrade policy purchasers. Applying the lodestar method—reasonable hours multiplied by reasonable hourly rates—the court found Class Counsel’s time and rates reasonable. It rejected SquareTrade’s argument that the fees should be reduced for work on allegedly meritless legal theories, finding those theories factually related and closely intertwined with the successful claims.

The court approved $958,681.61 in attorneys’ fees. It also awarded $41,318.39 in litigation costs, including filing and service costs, deposition costs, mediation expenses, and document-hosting and analysis expenses.

Service Awards and Disposition

The court approved service awards of $5,000 each for named plaintiffs Michael Shuman, Kathleen Abbott, and Tommy Gonzales. The court noted that each had sat for a full-day deposition and responded to extensive discovery requests.

Judge Joseph C. Spero granted the request for final approval of the Settlement Agreement and awarded $958,681.61 in attorneys’ fees, $41,318.39 in costs, and $5,000 to each named plaintiff. The clerk was instructed to enter judgment consistent with the order.