Ninth Circuit Yanks Apple Power Cord Settlement

SAN FRANCISCO — A class action settlement over Apple laptop power adapters has been sent back to federal district court for reconsideration of a $3.1 million fee award.

A U.S. Court of Appeals for the Ninth Circuit panel unanimously vacated the settlement Thursday, saying former U.S. District Judge James Ware had failed to properly evaluate it for possible self-dealing between class counsel and Apple Inc.

“We do not intend to direct the district court toward a particular result,” the court stated in an unpublished per curiam opinion. “We request only that the court demonstrate that it was ‘particularly vigilant’ in monitoring for self-dealing and implicit collusion.”

The court also ruled that Ware had overstepped by ordering five objectors to post a collective $75,000 in bonds as a condition of appealing.

Ware retired from the Northern District bench in 2012. The case will be heard by a different judge on remand.

San Diego-based Zeldes & Haeggquist and Washington, D.C.’s Mehri & Skalet sued Apple in 2009 over magnetic power adapters that Apple acknowledged had a tendency to fray. The settlement called for the company to extend an existing replacement program and to refund between $35 and $79 to consumers who had already paid for a new adapter.

Theodore Frank of the Center for Class Action Fairness argued on appeal that Ware “rubber-stamped” a deal that was structured to obscure actual relief. Class counsel argued it had obtained actual cash refunds for consumers, while Apple stressed that Ware had participated actively in a settlement fairness hearing.

The Ninth Circuit agreed mostly with Frank, ruling in In re Magsafe Apple Power Adapter Litigation that Ware had failed to set out specific reasons for approving the fee award, which had included a 1.5 multiplier. “We emphasize that Apple’s advance agreement to pay class counsel up to $3 million in attorneys’ fees and $100,000 in expenses ‘cannot relieve the district court of its duty to assess fully the reasonableness of the fee request,’” the court stated, quoting from In re Bluetooth Headsets Product Liability Litigation,

Ware had conducted the fairness hearing before the claims period closed, so there was no way for the Ninth Circuit to estimate how many claims had been filed and how much Apple actually paid out. “On remand,” the court stated, “the district court may find it useful to elicit this information so that it can compare the amount recovered by the class with the amount claimed by class counsel,” the court stated.

The court also held the appellate bonds—$15,000 for each of the five objectors—were inappropriately pegged to the parties’ expected attorney fees on appeal, rather than costs. “These costs rarely exceed a few hundred dollars when taxed against an appellant,” the court stated.

The opinion was signed by Judges Barry Silverman, William Fletcher and Jay Bybee.

Contact the reporter at sgraham@alm.com.

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