In re Bluetooth Headset Products Liability Litigation

When parties in a class action agree to settle, the district court has an independent duty to review the settlement agreement to ensure the reasonableness of the settlement and to guard against collusion amongst parties from seeking their own benefit at the expense of the class.

Plaintiffs filed a class-action suit against defendants Motorola, Plantronics, and GN Netcom, claiming defendants knowingly did not disclose the risk of hearing loss that could result from extended use of Bluetooth headsets at elevated volumes. In the settlement agreement approved by the district court, defendants promised, amongst other terms, to pay the class $100,000, $800,000 in attorneys’ fees, and $12,000 for class representatives. Objectors William Brennan and others appealed both the fee award and the approval order, contending that the district court abused its discretion in approving an award that “disproportionately advances the interests of class counsel” over those of class members. In its review of the of the fee award, the Court was troubled by the district court’s lack of explanation as to its approved award calculation decision, and held that the lower court’s duty to review the reasonableness of a settlement is not abrogated by a defendant’s prior agreement not to object to the fee order. Staton v. Boeing Co., 327 F.3d 938, 963-64 (9th Cir. 2003).With regard to the approval order, the Court found the district court did not adequately provide assurances as to the reasonableness of the settlement in the order, despite the presence of various indicators within the agreement of potential implicit collusion between the parties. VACATED and REMANDED with instructions.