Harbour v. California Health & Wellness Plan

Background

This data-privacy class action was brought by John Harbour, Tami Wisnesky, Joweli Vunisa, and J. Doe against California Health & Wellness Plan, Health Net of California, Inc., Health Net Life Insurance Company, Health Net Community Solutions, Inc., Health Net, LLC, Centene Corporation, and Accellion, Inc. The settlement resolves the action only as to the Health Net Defendants. The opinion does not state that the settlement resolves the claims against Accellion.

The court had previously conditionally certified the settlement class and provisionally appointed the class representatives, class counsel, and Epiq Class Action and Claims Solutions, Inc. as settlement administrator. Epiq sent email or postcard notice to 1,387,210 of 1,400,125 identified potential class members, approximately 90 percent of the potential class, and conducted a digital notice campaign. As of December 19, 2023, Epiq had received 31,551 claim forms. The court received no objections and 29 requests for exclusion.

Settlement Terms

Health Net agreed to pay $10 million into a non-reversionary common settlement fund without admitting liability. The fund includes attorneys’ fees and costs, notice and settlement-administration expenses, and service awards for the class representatives.

Participating class members may claim one of three forms of relief: three years of credit-monitoring and insurance services, a cash-fund payment, or a documented-loss payment of up to $10,000. Based on claims received as of December 21, 2023, class counsel estimated cash payments of approximately $243 for California claimants and $121 for other claimants who submit valid claims. California claimants were to receive twice the payment made to non-California claimants because of the heightened protections associated with the California statutory claims asserted in the lawsuit.

The agreement also requires Health Net to implement and maintain specified data-security measures for five years. If funds remain after distribution, the agreement provides for an additional distribution if the average payment would be at least $3; otherwise, remaining funds are to be used to extend the credit-monitoring services, with any further remainder distributed to the Electronic Frontier Foundation.

Court’s Analysis of Final Approval

Under Federal Rule of Civil Procedure 23(e), a court may approve a class settlement after a hearing if it finds the settlement fair, reasonable, and adequate and finds that the class-certification requirements are met. Because this settlement was reached before formal class certification, the court applied a heightened review for possible conflicts of interest or collusion.

The court found that the requirements for maintaining the class for settlement purposes were satisfied. It concluded that the class members shared common questions about whether Health Net had reasonable data-security measures and whether Health Net could have prevented or mitigated the unauthorized exposure or compromise of personal and protected health information. The court also found that common questions predominated and that a class action was superior to millions of separate proceedings or abandonment of most claims.

The court found the notice adequate. It determined that the email, postcard, digital, website, and telephone-notice procedures were the best notice practicable and reasonably informed class members of the settlement and their rights to object or exclude themselves.

The court found the settlement fair, reasonable, and adequate. It considered the asserted claims’ legal uncertainty, Health Net’s denial of wrongdoing, the risks and costs of continued litigation, the risk of losing class status, the $10 million fund, the lack of formal discovery, class counsel’s experience, the absence of government objections, and the class members’ reaction. The court stated that all applicable factors except formal discovery favored approval or strongly favored approval. The court also found no evidence of conflicts of interest or collusion, noting the arm’s-length negotiations, two in-person mediations, additional negotiations facilitated by a retired judge and mediator, and the absence of an agreement requiring Health Net to pay a specified fee amount separately from the settlement fund.

Attorneys’ Fees, Costs, and Service Awards

Class counsel requested $2.5 million in attorneys’ fees, equal to 25 percent of the $10 million settlement fund. The court evaluated the request using the percentage-of-the-fund method and cross-checked it using the lodestar method, which multiplies reasonable hours by reasonable hourly rates.

Class counsel reported a lodestar of $1,413,855.50 for 1,794.8 hours and applied a 1.77 multiplier to reach $2.5 million. The court found the hours, costs, hourly rates ranging from $425 to $1,200, and multiplier reasonable. It awarded $2,500,000 in attorneys’ fees.

The court also approved reimbursement of $37,333.06 in litigation costs. It approved service awards of $1,500 for each class representative, finding those awards reasonable in light of the representatives’ efforts and below the amount the court described as presumptively reasonable.

Disposition

The court GRANTED the motion for final approval of the class-action settlement. It also GRANTED plaintiffs’ motion for attorneys’ fees and costs. The court confirmed the class representatives’ and class counsel’s provisional appointments, awarded class counsel $2.5 million in attorneys’ fees and $37,333.06 in costs, and granted each class representative a $1,500 incentive award. The order constitutes a final judgment for purposes of Rule 58, while the court retained jurisdiction over matters concerning interpretation, administration, implementation, effectuation, and enforcement of the order and settlement agreement. The parties were ordered to file a post-distribution accounting by September 26, 2024, and the court set October 10, 2024, as a compliance date.