U.S. District Judge James Ware (Ret.) (Jason Doiy)
SAN FRANCISCO — A class action settlement over faulty Apple laptop power adapters sounded dead on arrival Tuesday at the U.S. Court of Appeals for the Ninth Circuit.
Neither U.S. District Judge James Ware’s approval nor a declaration from mediator Fern Smith attesting to the arm’s-length nature of the negotiations sounded likely to spare In re Apple MagSafe Power Adapter Litigation from remand for further hearings on the $3.1 million attorney fee award.
Ninth Circuit Judge William Fletcher pointed out that Ware’s order signing off on the settlement appeared to have been prepared by counsel. “Did the district judge make any changes to the proposed order other than striking out the word ‘proposed’?” he asked Morrison & Foerster partner Deanne Maynard, representing Apple.
Maynard and class counsel Helen Zeldes said Ware actively participated in both a settlement hearing and a fairness hearing, where objectors had a full opportunity to air their concerns.
“My question is not whether you argued them,” Fletcher said. “My question is what the district judge did in response to the arguments.”
Objector counsel Theodore Frank of the Center for Class Action Fairness said the answer is not much. “The only thing the judge said is the objections are overruled,” Frank told the Ninth Circuit.
Apple acknowledged in 2008 that the magnetic power adapters it developed for MacBooks had a tendency to fray, and offered to replace them for free. San Diego-based Zeldes & Haeggquist and Washington, D.C.’s Mehri & Skalet brought a class action the next year. Following mediation before Smith of JAMS, Apple agreed to refund between $35 and $79 for anyone who had paid for a replacement adapter within three years of a laptop purchase. The company also promised to replace existing adapters for up to three years if they failed.
Class counsel received $3.1 million in fees. Smith, a former district court judge, filed a declaration stating the negotiations were in good faith and at arm’s length, with no discussion of attorney fees until after settlement was reached, at least to her knowledge.
Ware signed off in April 2012, a few months before he retired from the Northern District and started his own mediation practice.
“We got cash refunds for them,” class counsel Zeldes told the Ninth Circuit on Tuesday, plus two additional years of warranty coverage. “This is not some kind of cy pres [award].”
Furthermore, Zeldes said, “we had a declaration from a mediator, which is a factor that goes against the argument of collusion.”
Frank argued that class counsel achieved little beyond what Apple was already providing, and that owners of adapters more than 3 years old were shut out. The “token cash relief” is “dwarfed by what the attorneys collected for themselves,” he said.
Fletcher and Judge Barry Silverman seemed to agree that, at a minimum, Ware had not made necessary findings about settlement value as required by In re Bluetooth Headset Product Liability Litigation, a leading Ninth Circuit case on self-dealing in class actions.
Bluetooth is “the one I can’t get around,” Fletcher told Zeldes. “I think the district judge just didn’t properly go through and analyze under Bluetooth, and I’m inclined to remand.”
But Fletcher sounded exasperated with Frank at times, too. “Let’s say the $3 million is excessive,” he said. Given that Apple has already promised to make class members whole, what would Frank do with those funds? “Are you just going to give them free money?”
Fletcher did not appear to assign much weight to mediator Smith’s declaration. “What, if any, importance should we attach to the fact that the settlement was achieved with … the assistance of a very experienced former district judge?” Fletcher asked Frank.
None, Frank said. “The mediator has no duty to the parties that aren’t at the table,” he said, “and that’s the absent class members.”
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