Doe v. Securtest
- Richard Seeborg
- 3:18-cv-07344
- U.S. District Court · Northern District of California
- 3
In Hawkins v. Securtest, Judge Seeborg denied preliminary approval of a proposed Fair Credit Reporting Act class settlement because Hawkins’s interests appeared misaligned with the class.
The ruling affects Regmon Hawkins, the approximately 1,579 proposed class members, and Securtest Inc. and the other Defendants because the proposed class settlement was not preliminarily approved.
What happened
In Regmon Hawkins v. Securtest Inc., et al., Hawkins asked the court to preliminarily approve a settlement of claims that employment background-check disclosures did not comply with the Fair Credit Reporting Act. He sought approval for himself and a proposed class of about 1,579 people.
Under the proposed settlement, Hawkins would receive $50,000 for his individual claims and a $5,000 incentive award only if the court approved the $100,000 class settlement. The court said this arrangement gave Hawkins a strong financial reason to favor approval, while each class member would receive about $23.
The court found significant reason to doubt that Hawkins could fairly represent the class and denied the motion for preliminary approval. Judge Seeborg also noted concerns about the proposed release of claims under another state law, but the court did not decide whether that release was fair.
The detailed version
- Doe v. Securtest · No. 3:18-cv-07344
- Richard Seeborg
- Nov. 29, 2023
Background
Regmon Hawkins brought a proposed class action under the Fair Credit Reporting Act (FCRA), a federal law governing consumer reports, including employment background checks. He alleged that people who were the subjects of background checks did not receive required written disclosures. Hawkins sought preliminary approval of a proposed class-action settlement on behalf of himself and approximately 1,579 proposed class members.
This was the second version of the proposed settlement. The court had denied preliminary approval of the earlier version because of concerns about a conflict of interest between Hawkins and the other proposed class members.
Proposed settlement
The revised settlement provided for Defendants to pay $150,000 in total. It conditioned a $50,000 payment to Hawkins for resolution of his individual claims on the court’s approval of the $100,000 class settlement. The revised proposal also sought a $5,000 incentive, or service, award for Hawkins. Hawkins would also receive his proportional share of the class settlement.
The court observed that Hawkins would receive slightly more than $55,000 from settlement approval, representing 36% of the total amount Defendants would pay. Each proposed class member would receive about $23, down from about $26 under the earlier proposal. The court also observed that the proposed $5,000 incentive award was about 208 times the average class-member recovery. The court said that amount alone did not make preliminary approval inappropriate, but viewed the payment for Hawkins’s individual claims as the more serious concern.
Court’s reasoning
The court concluded that the revised proposal did not resolve the fundamental conflict between Hawkins and the proposed class. In the court’s view, Hawkins had a strong financial incentive to obtain approval of the settlement regardless of how much each class member received. The court therefore had significant reason to doubt that Hawkins was an adequate class representative—someone able to fairly protect the class’s interests.
The court also identified another potential problem: the settlement appeared to release class members’ claims under both the FCRA and the Investigative Consumer Reporting Agencies Act. The court said it lacked enough information to determine whether approximately $23 per class member was fair and reasonable if class members were giving up potential state-law claims without apparent consideration.
Disposition
The court ruled on the papers, vacated the scheduled hearing, and denied the motion for preliminary approval of the class-action settlement. Judge Seeborg’s order did not approve the proposed settlement.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.