Allison v. Tinder, Inc., No. 19-55807 (9th Cir. 2021)Annotate this Case
The dating app Tinder offered reduced pricing for those under 29. Kim, in her thirties, paid more for her monthly subscription than those in their twenties. Kim filed suit, citing California’s Unruh Civil Rights Act and its unfair competition statute. The parties reached a settlement, before class certification, that applied to a putative class, including all California-based Tinder users who were at least 29 years old when they subscribed. Tinder agreed to eliminate age-based pricing in California for new subscribers. Class members with Tinder accounts would automatically receive 50 “Super Likes” for which Tinder would ordinarily have charged $50. Class members who submitted a valid claim form would also receive their choice of $25 in cash, 25 Super Likes, or a one-month free subscription.
Class members, whose attorneys represent the lead plaintiff in a competing age discrimination class action against Tinder in California state court, objected to the proposed settlement. The district court certified the class, granted final approval of the proposed settlement, and awarded Kim a $5,000 incentive payment and awarded $1.2 million in attorneys’ fees. The Ninth Circuit reversed. While the district court correctly recited the fairness factors under Fed. R. Civ. P. 23(e)(2), it materially underrated the strength of the plaintiff’s claims, substantially overstated the settlement’s worth, and failed to take the required hard look at indicia of collusion, including a request for attorneys’ fees that dwarfed the anticipated monetary payout to the class.
Court Description: Class Settlement. The panel reversed the district court’s approval of a pre- certification class settlement, vacated the district court’s judgment and attorneys’ fees award, and remanded for the district court to conduct the more probing inquiry required for a pre-certification class settlement. Plaintiff Lisa Kim brought suit against Tinder, Inc. in federal court pursuant to the Class Action Fairness Act of 2005 (“CAFA”) for violations of California’s Unruh Civil Rights Act and its unfair competition statute. Tinder successfully compelled arbitration, and Kim and Tinder reached a settlement, before class certification, that applied to a putative class. Class members Rich Allison and Steve Frye objected. The district court rejected the objections, certified the class for settlement purposes, granted final approval of the proposed settlement, and awarded Kim a * The Honorable Jed S. Rakoff, United States District Judge for the Southern District of New York, sitting by designation. ALLISON V. TINDER 3 $5,000 incentive payment and her counsel $1.2 million in attorneys’ fees. Addressing the district court’s approval of the settlement overall, the panel held that the district court correctly recited the fairness factors under Fed. R. Civ. P. 23(e)(2), but that the district court abused its discretion by underrating the strength of the plaintiff’s case, overstating the settlement value, and overlooking the suggestions of collusion present. The panel held that independent of the district court’s abuse of discretion in its overall evaluation of the settlement, the approval of the attorneys’ fees was itself an abuse of discretion. By adopting without any scrutiny the purported value of the injunctive relief and failing to consider the likely claims rate, the district court shirked its independent duty to assess the value of the settlement Judge Callahan dissented. She agreed with the majority that the district court’s $24 million valuation of the settlement agreement was to some degree overinflated, but she dissented because the district court nevertheless reasonably evaluated the settlement class’s relatively weak claims. Because the settlement provided for fair, reasonable, and adequate value for the release of the class’s claims, she would affirm on the ground that the district court did not abuse its discretion in approving the settlement. Judge Callahan also disagreed with the majority’s opinion discussion of whether the award of attorneys’ fees was an abuse of discretion because the discussion was superfluous, given the majority’s holding that the district court’s approval of the settlement should vacated, and because the objectors waived any challenge to the district court’s lodestar calculations. 4 ALLISON V. TINDER