Case 1:16-md-02677-GAO Document 436 Filed 03/03/21 Page 1 of 32
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF MASSACHUSETTS
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`IN RE: DAILY FANTASY SPORTS
`LITIGATION
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`This Document Relates to:
`All Cases
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`MDL No. 1:16-md-02677-GAO
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`BRIEF IN SUPPORT OF PLAINTIFFS’ AND DEFENDANT DRAFTKINGS INC.’S
`JOINT MOTION FOR PRELIMINARY APPROVAL OF PROPOSED SETTLEMENT
`AND APPROVAL OF THE PROPOSED NOTICE OF THE SETTLEMENT
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`17373.001 4847-3782-9083.1
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`TABLE OF CONTENTS
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`INTRODUCTION .......................................................................................................................... 1
`
`STATEMENT OF FACTS ............................................................................................................. 2
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`I.
`
`II.
`
`PROCEDURAL HISTORY OF THE ACTION..................................................... 2
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`SETTLEMENT OF THE ACTION. ....................................................................... 3
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`A.
`
`B.
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`Negotiations Producing Settlement............................................................. 3
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`The Material Terms Of The Proposed Settlement. ..................................... 4
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`1.
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`2.
`
`Settlement Class. ............................................................................. 4
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`Settlement Relief. ............................................................................ 5
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`a.
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`b.
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`c.
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`Financial Benefits To Settlement Class Members. ............. 5
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`Incentive Payment To The Proposed Class
`Representative Plaintiffs. .................................................... 5
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`Injunctive Relief.................................................................. 6
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`3.
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`Released Claims. ............................................................................. 7
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`ARGUMENT .................................................................................................................................. 8
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`I.
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`THE LEGAL STANDARDS FOR PRELIMINARY APPROVAL OF A
`CLASS ACTION SETTLEMENT ARE SATISFIED. .......................................... 8
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`A.
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`B.
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`Legal Standards For Preliminary Approval Of A Class Action
`Settlement. .................................................................................................. 8
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`The Settlement Here Is Fair, Reasonable And Adequate. ........................ 10
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`1.
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`2.
`
`3.
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`Plaintiffs And Class Counsel Have Adequately Represented
`The Class. ...................................................................................... 10
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`The Settlement Proposal Was Negotiated At Arm’s Length. ....... 11
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`The Relief Provided For The Settlement Class Is Adequate,
`Taking Into Account Relevant Factors. ........................................ 11
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`a.
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`The Settlement Relief Is Adequate. .................................. 11
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`i
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`Injunctive Relief.................................................... 11
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`ii
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`Financial Relief. .................................................... 12
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`The Complexity, Expense, And Duration Of the
`Litigation Favor Settlement. ............................................. 12
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`The Risks Of Establishing Liability And Damages
`Favor Settlement. .............................................................. 13
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`The Proposed Attorneys’ Fees Are Fair And
`Reasonable. ....................................................................... 14
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`b.
`
`c.
`
`d.
`
`4.
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`The Proposed Settlement Treats Class Members Equitably
`Relative To Each Other. ................................................................ 14
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`II.
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`THE COURT SHOULD CONDITIONALLY CERTIFY THE CLASS
`FOR PURPOSES OF SETTLEMENT. ................................................................ 15
`
`A.
`
`The Requirements Of Rule 23(a) Are Satisfied. ....................................... 15
`
`1.
`
`2.
`
`3.
`
`4.
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`The Class Is So Numerous That Joinder Of All Members Is
`Impracticable................................................................................. 15
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`There Are Questions Of Law And Fact Common To All
`Class Members. ............................................................................. 16
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`Plaintiffs’ Claims Are Typical Of Those Of The Class. ............... 17
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`The Proposed Class Representative Plaintiffs Have And
`Will Continue To Fairly And Adequately Protect The
`Interests Of The Class. .................................................................. 17
`
`B.
`
`The Requirements of Rule 23(b) Are Satisfied......................................... 18
`
`1.
`
`Common Issues Predominate Because Legal And Factual
`Questions Involve Proof Common To Plaintiffs And Class
`Members. ...................................................................................... 18
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`2.
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`Class Treatment Is Superior To Individual Resolutions. .............. 19
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`III.
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`IV.
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`THE PROPOSED CLASS NOTICE IS CONSISTENT WITH FIRST
`CIRCUIT STANDARDS AND PROVIDES ADEQUATE NOTICE TO
`CLASS MEMBERS FOR CLAIMS, OBJECTIONS AND OPT OUTS. ............ 20
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`THE PROPOSED CLASS REPRESENTATIVE PLAINTIFFS SHOULD
`BE PRELIMINARILY APPOINTED AS CLASS REPRESENTATIVES
`AND PLAINTIFFS’ COUNSEL SHOULD BE PRELIMINARILY
`APPOINTED AS CLASS COUNSEL. ................................................................ 22
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`V.
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`A FINAL APPROVAL HEARING SHOULD BE SCHEDULED. ..................... 22
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`CONCLUSION ............................................................................................................................. 22
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`Cases
`
`TABLE OF AUTHORITIES
`
`Amchem Prods. Inc. v. Woodward,
`521 U.S. 591 (1997) ............................................................................................................................. 19
`
`Amgen Inc. v. Conn. Ret. Plans & Trust Funds,
`133 S. Ct. 1184 (2013) ......................................................................................................................... 18
`
`Andrews v. Bechtel Power Corp.,
`780 F.2d 124 (1st Cir.1985) ................................................................................................................. 17
`
`Bezdek v. Vibram USA Inc.,
`79 F. Supp. 3d 324 (D. Mass.), aff’d, 809 F.3d 78 (1st Cir. 2015) .................................................... 8, 9
`
`Brown v. Am. Honda (In re New Motor Vehicles Canadian Exp. Antitrust Litig.),
`522 F.3d 6 (1st Cir. Me. 2008) ....................................................................................................... 15, 18
`
`Bussie v. Allmerica Fin. Corp.,
`50 F.Supp.2d 59 (D. Mass. 1999) ........................................................................................................... 8
`
`City P’ship Co. v. Atl. Acquisition Ltd. P’ship,
`100 F.3d 1041 (1st Cir.1996) ................................................................................................................. 9
`
`Detroit v. Grinnell Corp.,
`495 F.2d 448 (2d Cir.1974) .................................................................................................................... 9
`
`Elkins v. Equitable Life Ins. of Iowa,
`No. Civ A96-296-Civ-T-17B, 1998 WL 1333741 (M.D. Fla. Jan 27, 1998) ....................................... 19
`
`In re Evergreen Ultra Short Opportunities Sec. Litig.,
`275 F.R.D. 382 (D. Mass. 2011) .......................................................................................................... 17
`
`Gintis v. Bouchard Transp. Co.,
`596 F.3d 64 (1st Cir. 2010) .................................................................................................................. 19
`
`Gulbankian v. MW Mfrs., Inc.,
`2014 WL 7384075 (D. Mass. 2014) ....................................................................................................... 9
`
`Hochstadt v. Bos. Sci. Corp.,
`708 F. Supp. 2d 95 (D. Mass. 2010) ..................................................................................................... 18
`
`In re Initial Pub. Offering Sec. Litig. (“In re IPO”),
`471 F.3d 24 (2d Cir. 2006) ................................................................................................................... 17
`
`Lannan v. Levy & White,
`186 F. Supp. 3d 77 (D. Mass. 2016) ......................................................................................... 15, 16, 19
`
`In re Lupron Mktg. and Sales Practices Litig.,
`228 F.R.D. 75 (D. Mass. 2005) ............................................................................................................ 18
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`Moore v. Painewebber, Inc.,
`306 F.3d 1247 (2d Cir. 2002) ............................................................................................................... 18
`
`Mullane v. Central Hanover Bank & Trust Co.,
`339 U.S. 306 (1950) ............................................................................................................................. 20
`
`Nat’l Ass’n of Chain Drug Stores v. New Engl. Carpenters Health Benefits Fund,
`582 F.3d 30 (1st Cir. 2009) .................................................................................................................... 8
`
`New England Carpenters Health Benefits Fund v. First Databank, Inc.,
`602 F.Supp.2d 277 (D. Mass. 2009) ....................................................................................................... 8
`
`Payne v. Goodyear Tire & Rubber Co.,
`216 F.R.D. 21 (D. Mass. 2003) ............................................................................................................ 15
`
`In re Pharm. Indus. Average Wholesale Price Litig.,
`588 F.3d 24 (1st Cir. 2009) .................................................................................................................... 8
`
`In re Relafen Antitrust Litig.,
`231 F.R.D. 52 (D. Mass. 2005) ............................................................................................................ 18
`
`Reppert v. Marvin Lumber & Cedar Co.,
`359 F.3d 53 (1st Cir. 2004) ............................................................................................................ 20, 21
`
`Rolland v. Cellucci,
`191 F.R.D. 3 (D. Mass. 2000) .................................................................................................. 10, 11, 14
`
`Smilow v. Southwestern Bell Mobile Sys., Inc.,
`323 F.3d 32 (1st Cir. 2003) ............................................................................................................ 17, 18
`
`Stewart v. Abraham,
`275 F.3d 220 (3d Cir.2001) .................................................................................................................. 15
`
`Tardiff v. Knox Cty.,
`365 F.3d 1 (1st Cir. 2004) .................................................................................................................... 19
`
`In re TelexFree Sec. Litig., __ F.Supp.3d __, No. 4:14-MD-2566-TSH, 2020 WL
`4340966
`(D. Mass. July 28, 2020) ............................................................................................................ 9, 20, 21
`
`In re Volkswagen & Audi Warranty Extension Litig.,
`273 F.R.D. 349 (D. Mass. 2011) .......................................................................................................... 16
`
`Wal-Mart Stores, Inc. v. Dukes,
`131 S. Ct. 2541 (2011) ......................................................................................................................... 15
`
`In re Wireless Facilities,
`253 F.R.D. 607 (S.D. Cal. 2008) .......................................................................................................... 14
`
`Statutes & Rules
`
`Class Action Fairness Act of 2005 ........................................................................................................ 21, 22
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`Fed. R. Civ. P. 23 ................................................................................................................................. passim
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`L.R. 5.4(C) .................................................................................................................................................. 24
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`Other Authorities
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`4 Herbert B. Newberg, Newberg on Class Actions
`§ 11.25, and § 13.64 (4th ed. 2002 and Supp. 2004) ........................................................................ 9, 10
`
`Manual for Complex Litigation (Fourth)
`(Fed. Judicial Center 2004) § 21.632 ................................................................................................... 10
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`INTRODUCTION
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`Defendant DraftKings Inc. (“DraftKings”) and the plaintiffs listed on Exhibit A to the
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`Settlement Agreement, acting individually and in their capacity as proposed class representatives
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`for the proposed Settlement Class (“Class Representative Plaintiffs”) submit this memorandum
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`in support of the Joint Motion for Preliminary Approval of Proposed Settlement and Approval of
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`the Proposed Notice of Settlement. The settlement is a result of a two-day mediation with
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`Thomas Maffei, Esq. of Sherin and Lodgen LLP in June and July of 2020, which followed
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`previously unsuccessful mediation efforts with the Honorable Layn R. Phillips in 2018 and 2019,
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`and numerous other settlement discussions between the parties during the years that this case has
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`been litigated.
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`The settlement provides significant injunctive relief by effectuating changes to
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`DraftKings’ online platform and also provides valuable monetary relief, in the form of
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`“DK Dollars” or U.S. Dollars, to Settlement Class Members1 who made a first-time deposit into
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`their DraftKings Daily Fantasy Sports account prior to January 1, 2018, and who are not net
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`lifetime winners on DraftKings. The settlement requires that DraftKings send the Class Notice
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`to Settlement Class Members via email using the email address in DraftKings’ records, and that
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`the Class Notice also be published on the Settlement Website.
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`While the Class Representative Plaintiffs are confident of a favorable determination on
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`the merits, they have determined that the settlement provides significant benefits to the
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`Settlement Class Members and is in the best interests of the Settlement Class. The Class
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`Representative Plaintiffs also believe that the settlement is appropriate given the expense and
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`1 Unless otherwise defined herein, capitalized terms used in this memorandum shall have the same meaning ascribed
`to them in the Settlement Agreement.
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`amount of time required to continue to pursue the litigation, as well as the uncertainty, risk, and
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`difficulties of proof inherent in such claims.
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`Similarly, DraftKings believes that it has substantial and meritorious defenses to the
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`claims in this Action, but has determined that it is desirable to settle the litigation on the terms
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`set forth in the Settlement Agreement.
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`The parties believe that the settlement satisfies all criteria for preliminary
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`approval and therefore jointly move this Court for an order preliminarily approving the
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`settlement, provisionally certifying the Settlement Class pursuant to Federal Rules of Civil
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`Procedure 23(b)(2) and 23(b)(3) for settlement purposes, directing dissemination of the Class
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`Notice, appointing Class Representatives and Class Counsel, and scheduling a Final Approval
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`Hearing.
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`STATEMENT OF FACTS
`PROCEDURAL HISTORY OF THE ACTION.
`
`I.
`
`On February 4, 2016, the Judicial Panel on Multidistrict Litigation (“JPML”) created
`
`In re Daily Fantasy Sports Litigation, MDL 2677 (the “Action”), which consolidated a number
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`of related cases separately filed against, among other Defendants, the nation’s two largest
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`operators of online daily fantasy sports (“DFS”) contests—DraftKings Inc. (“DraftKings”) and
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`FanDuel, Inc (“FanDuel”). ECF No. 1. The JPML transferred the related DFS cases to the
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`District of Massachusetts and appointed the Honorable George A. O’Toole to oversee the
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`Action. Id.
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`On June 30, 2016, Plaintiffs filed a consolidated class action complaint (the “Complaint”
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`or “Compl.”) alleging that Defendants engaged in advertising campaigns that misrepresented the
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`difficulty of DFS contests and the terms of certain promotional offers. Compl. ¶ 1, ECF
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`No. 227. Plaintiffs filed an amended master class action complaint on September 2, 2016 (the
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`“Amended Complaint” or “FAC”). ECF No. 269.
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`Plaintiffs generally fall into three categories: (1) the “Player Plaintiffs,” who assert claims
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`against one or both Defendants with which they have accounts; (2) the “Crossover Plaintiffs,”
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`who have accounts with only one Defendant but assert a civil conspiracy claim against both
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`Defendants, and (3) the “Family Member Plaintiffs,” who assert claims against the Defendants
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`under the loss recovery acts (“LRAs”) of Georgia, Kentucky, Tennessee, New Mexico, and
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`South Carolina. In addition, Plaintiff Nelson C. Steiner (“Steiner”) asserts claims against
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`Defendants as a representative of the State of Florida. Compl. ¶ 50.
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`Defendants moved to compel individual arbitration of all the above claims, other than
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`those brought by Plaintiff Steiner, based on arbitration clauses in Defendants’ respective Terms
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`of Use.2 ECF Nos. 317, 318. On November 27, 2019, this Court granted Defendants’ motion to
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`compel arbitration as to the Player Plaintiffs and the Crossover Plaintiffs but denied the motion
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`as to the Family Member Plaintiffs. ECF No. 406. On March 9, 2020, Defendants moved to
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`dismiss the Family Member Plaintiffs’ LRA claims and Steiner’s clams as a representative of the
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`State of Florida. ECF No. 417. That motion remains pending.
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`II.
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`SETTLEMENT OF THE ACTION.
`A.
`Negotiations Producing Settlement.
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`Since Plaintiffs filed the Complaint, the parties have engaged in formal and informal
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`settlement discussions in an effort to resolve the Action and avoid unnecessary expense, see, e.g.,
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`ECF Nos. 365, 367. Initial discussions, which began in early 2017, involved both DraftKings
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`and FanDuel. In June 2018, the parties participated in a mediation before the Honorable Layn R.
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`2 FanDuel did not move to compel arbitration against three named plaintiffs who opted out of FanDuel’s arbitration
`clause. ECF No. 312. The Court stayed briefing on those claims pending the result of arbitration filings on behalf
`of other Player Plaintiffs.
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`Phillips in which they made substantial progress toward a potential settlement agreement. After
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`continuing to engage in discussions over the course of several months, the parties exchanged
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`settlement proposals in a formal process facilitated by Judge Phillips from September through
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`November of 2019.
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`Following the Court’s ruling on Defendants’ motion to compel arbitration, Plaintiffs and
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`DraftKings agreed to continue separate settlement discussions without FanDuel. Following
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`further discussions and exchange of information between counsel in early 2020, Plaintiffs and
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`DraftKings participated in two subsequent mediation sessions lasting more than two full days
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`with Thomas Maffei, Esq. of Sherin and Lodgen LLP in June and July 2020, during which the
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`two sides reached an agreement to settle Plaintiffs’ claims against DraftKings (the “Settlement
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`Agreement”). (See Declaration of Thomas F. Maffei at ¶ 9, Affidavit of Christopher Weld, Jr. at
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`¶ 10, Affidavit of Hunter Shkolnik at ¶ 11, Affidavit of Jasper Ward at ¶ 9, and Affidavit of
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`Melissa R. Emert at ¶ 9.) The Settlement Agreement is the product of arm’s-length negotiations
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`between experienced and informed attorneys and is a strong result for the Settlement Class,
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`assuring meaningful reimbursement and injunctive relief and avoiding significant uncertainties,
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`risks (e.g., appellate risks), and extended delays of continuing to litigate this Action.
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`B.
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`The Material Terms Of The Proposed Settlement.
`1.
`Settlement Class.
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`The Settlement Class is defined as “all Persons in the United States who made a first-time
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`deposit into their DraftKings Daily Fantasy Sports account prior to January 1, 2018, and who are
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`not net lifetime winners on DraftKings as determined by DraftKings’ business records not later
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`than 48 hours prior to the Agreement Execution Date.” Settlement Agreement, § 17.
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`2.
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`Settlement Relief.
`a.
`Financial Benefits To Settlement Class Members.
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`As part of the Settlement Agreement, DraftKings will create two (2) settlement funds.
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`The first will consist of 7,280,000.00 “DK Dollars”3 and will be subject to claims by Settlement
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`Class Members who have an open account with DraftKings and who submit a complete, timely
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`and duly executed Claim Form and Declaration. The second fund will consist of $720,000.00
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`U.S. Dollars and will be subject to claims by Settlement Class Members whose account at
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`DraftKings has been closed and who submit a complete, timely and duly executed Claim Form
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`and Declaration. Settlement Agreement, § IV.A. & B. The settlement funds will be allocated to
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`the Settlement Class Members according to eight levels which are based upon the amount of the
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`first deposit made by the Settlement Class Member into their DraftKings DFS account. Id. In
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`general, the maximum amount of settlement funds available to each Settlement Class Member
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`will be equal to the highest amount of the first deposit in their applicable level multiplied by
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`1.75. Id. at § IV.C. For example, the maximum amount of settlement funds available to any
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`Settlement Class Member in the highest level of initial deposits will be $1,050.00 or 1,050.00
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`DK Dollars, respectively. Id.
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`b.
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`Incentive Payment To The Proposed Class Representative
`Plaintiffs.4
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`Subject to Court approval, DraftKings has agreed to pay the 35 proposed Class
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`Representative Plaintiffs up to $1,250.00 each as incentive compensation for their efforts as
`
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`3 DK Dollars are cash-equivalent site credits that authorized players can use for entry into any real money contest on
`DraftKings’ DFS platform. DK Dollars cannot be withdrawn, and can only be used to enter contests. Payouts in
`contests are paid out in U.S. Dollars which may be used as cash.
`
`4 The proposed Class Representative Plaintiffs are Thomas Berg, Tony Cantamaglia, Eric Champagne, Lamart
`Clay, Alan Cordover, Matt Deady, Michael Desabato, Jamie Facenda, Richard Famiglietti, Alicia Ferdula, Ryan
`Franco, James Gardner, Tom Guarino, Paul Guercio, Jimmy Grundy, Nate Jackson, Jeff Kaufman, Aissa Khirani,
`Ryan Leonard, Scott Levin, Roderick Lizardo, Jared Lokeitz, Samuel Lozada, Brian Martinelli, John McDaid, Karl
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`named plaintiffs and proposed Class Representative Plaintiffs in the Action. Settlement
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`Agreement, § VI.B.
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`c.
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`Injunctive Relief.
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`For a period of two years, DraftKings will implement the following measures with
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`respect to the offering of DFS contests on DraftKings’ platform: (i) limit each authorized player
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`to one active and continuously used account; and prevent prohibited DraftKings Employees from
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`entering public daily fantasy sports contests for which an entry fee is required on DraftKings’
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`platform; (ii) enable authorized players to exclude themselves from contests and prevent such
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`players from entering a contest from which they have excluded themselves; (iii) enable
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`authorized players to: (1) set limits on the amount of funds an authorized player can deposit;
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`(2) set limits on the number of entries an authorized player can enter each week and/or (3) set
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`limits on an authorized player’s maximum entry fee per contest; (iv) provide a hyperlink on
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`DraftKings’ daily fantasy sports platform to make information available to customers about
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`responsible play; (v) provide a hyperlink on DraftKings’ daily fantasy sports platform to make
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`statistics available to consumers about the percentage of all authorized players who are net
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`winners, breakeven, and net losers over the previous 30 days (to be calculated as of the last
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`updated date); (vi) permit any authorized player to permanently close an account registered to
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`such player on DraftKings’ platform at any time and for any reason; (vii) identify all highly
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`experienced players in any contest by a symbol attached to such players’ usernames, or by other
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`easily visible means, on DraftKings’ platform; (viii) disclose the number of entries a single
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`authorized player may submit to each contest; (ix) use a hyperlink on DraftKings’ platform
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`directing users to information concerning assistance for compulsive players, including a toll-free
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`
`Medina, Michael Moton, Scott Murphy, Cooper Ogburn, Christine Parks, Jodi Siegel, Steven Siler, Peter
`Triantafylidis, Scott Walters, David White. See Settlement Agreement. Ex. A.
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`number directing callers to reputable resources containing further information; (x) ensure the
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`value of any prizes and awards offered to authorized players are established and determinable
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`prior to the start of the contest; (xi) ensure no winning outcome shall be based solely on the
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`score, point spread, or performance of a single sports team; and (xii) ensure no winning outcome
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`shall be based solely on any single performance of an individual athlete. Settlement Agreement,
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`§ III.A.4. In addition, DraftKings will use commercially reasonable efforts to: (i) not permit the
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`use of unauthorized scripts that give an authorized player an unfair advantage over another
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`authorized player in a paid daily fantasy sports contest and shall use commercially reasonable
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`efforts to monitor for and prevent the use of such scripts; and (ii) ensure that commercially
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`reasonable measures are in place to deter, detect and, to the extent reasonably possible, prevent
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`cheating, including collusion, and the use of automated means that: (1) are not available to all
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`players, and (2) provide a competitive advantage. Id.
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`3.
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`Released Claims.
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`Class Representative Plaintiffs and each Settlement Class Member5 will release
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`DraftKings6 from, among other things described in the Settlement Agreement, all claims (i) that
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`were or could have been asserted in the Action or (ii) in connection with, arising out of, or
`
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`5 In addition, the Settlement Agreement defines “Releasing Person” to mean, “the Class Representative Plaintiffs,
`each Settlement Class Member and his, her or their attorneys, agents, administrators, devisees, assignees, executors,
`successors, predecessors, or other representatives Settlement Agreement, § 16.
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`6 The Settlement Agreement will also release the following persons and entities only as to claims involving
`DraftKings: the Payment Processor Defendants as defined in the Complaint: Paysafecard.com USA Inc. and
`Vantiv, Inc.; the Non-Defendant Banks as defined in the Complaint: JP Morgan Chases & Co. and Capital One
`Financial Corporation; the Non-Defendant Facilitators as defined in the Complaint: Visa Inc., Mastercard
`Incorporated and American Express Credit Corporation; the Non-Defendant Enterprise DraftKings Investors as
`defined in the Complaint: 21st Century Fox; Atlas Ventures Associates III, Inc.; BDS Capital Management LLC;
`Mail.ru Group, formerly known as DST Global, also known as Digital Sky Technologies; Fox Sports Interactive
`Media LLC; GGV Capital; Jason Robins; Hub Angels Management LLC; Jordan Mendell; Kraft Group; Legends
`Hospitality LLC; MSG Sports & Entertainment, LLC; Major League Baseball Ventures; Major League Soccer LLC;
`M7 Tech Partners LLC; NHL Enterprises, Inc.; NHL Enterprises, L.P.; Redpoint Ventures LLC; The Raine Group
`LLC; and Wellington Management Company LLP. See Settlement Agreement, § 15(b)-(e).
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`Case 1:16-md-02677-GAO Document 436 Filed 03/03/21 Page 15 of 32
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`relating in any way to the facts and circumstances alleged in the Action. See Settlement
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`Agreement, §§ 14, X.A-E.
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`I.
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`ARGUMENT
`THE LEGAL STANDARDS FOR PRELIMINARY APPROVAL OF A CLASS
`ACTION SETTLEMENT ARE SATISFIED.
`A.
`Legal Standards For Preliminary Approval Of A Class Action Settlement.
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`Court approval is required for settlement and dismissal of a class action. Fed. R. Civ.
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`P. 23(e). Prior to final approval, the Court must find that a settlement that will bind all class
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`members is “fair, reasonable, and adequate.” Id. The First Circuit has not established a fixed
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`test for evaluating the fairness of a settlement. New England Carpenters Health Benefits Fund v.
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`First Databank, Inc., 602 F.Supp.2d 277, 280 (D. Mass. 2009). “There is no single litmus test
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`for a settlement’s approval; it is instead examined as a gestalt to determine its reasonableness in
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`light of the uncertainty of litigation.” See Bussie v. Allmerica Fin. Corp., 50 F.Supp.2d 59, 72
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`(D. Mass. 1999).
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`There are numerous specific factors that courts may look to when evaluating whether a
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`settlement satisfies Rule 23(e). Most of these factors are “intuitively obvious and dependent
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`largely on variables that are hard to quantify.” Nat’l Ass’n of Chain Drug Stores v. New Engl.
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`Carpenters Health Benefits Fund, 582 F.3d 30, 44 (1st Cir. 2009). In the end, they all concern
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`the “question of the reasonableness of the settlement in light of the uncertainties of litigation.”
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`Bezdek v. Vibram USA Inc., 79 F. Supp. 3d 324, 343 (D. Mass.), aff’d, 809 F.3d 78 (1st Cir.
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`2015). The court “enjoys considerable range in approving or disapproving a class settlement,
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`given the generality of the standard and the need to balance [a settlement’s] benefits and costs.”
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`In re Pharm. Indus. Average Wholesale Price Litig., 588 F.3d 24, 33 (1st Cir. 2009) (quoting
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`Nat’l Ass’n of Chain Drug Stores, 582 F.3d at 45.)
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`17373.001 4847-3782-9083.1
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`Case 1:16-md-02677-GAO Document 436 Filed 03/03/21 Page 16 of 32
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`Consistent with Rule 23(e)(2), in determining the fairness of a settlement, the Court
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`considers factors such as: (1) the Class Representative Plaintiffs and Class Counsel have
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`adequately represented the Settlement Class; (2) the settlement was negotiated at arm’s-length;
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`(3) the relief provided for the Settlement Class is adequate, taking into account the costs, risks,
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`and delay of trial and appeal; and (4) the settlement treats all Settlement Class Members
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`equitably. See In re TelexFree Sec. Litig., __ F.Supp.3d __, No. 4:14-MD-2566-TSH, 2020 WL
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`4340966, at *2 (D. Mass. July 28, 2020).
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`Courts in the First Circuit, including this district, have also relied on factors such as:
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`(1) the complexity, expense, and likely duration of the litigation;
`(2) the reaction of the class to the settlement; (3) the stage of the
`proceedings and the amount of discovery completed; (4) the risks of
`establishing liability; (5) the risks of establishing damages; (6) the
`risks of maintaining the class action through the trial; (7) the ability
`of the defendants to withstand a greater judgment; (8) the range of
`reasonableness of the settlement fund in light of the best possible
`recovery; (9) the range of reasonableness of the settlement fund to a
`possible recovery in light of all the attendant risks of litigation.
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`Bezdek, 79 F. Supp. 3d at 343-344 (quoting Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d
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`Cir.1974); see also Gulbankian v. MW Mfrs., Inc., 2014 WL 7384075, at *2 (D. Mass. 2014).
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`At the preliminary approval stage, there is a “presumption in favor of settlement”
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`“[w]hen sufficient discovery has been provided and the parties have bargained at arms-length.”
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`City P’ship Co. v. Atl. Acquisition Ltd. P’ship, 100 F.3d