The Ninth Circuit Court of Appeals has affirmed a district judge’s approval of a settlement in a consolidated class action against Nvidia Corp. The company was accused by Plaintiffs of making defective graphic processing units that caused their computers to malfunction. The appeals court found that the settlement was fair and should not be distracted. The court said customers who object can still opt out of the settlement in order to preserve their individual claims. The settlement agreement actually allows objectors to pursue relief through other litigation.

Under the terms of the settlement, Nvidia customers can get replacement computers and motherboards, or be reimbursed for the costs of repairing their computers. Objectors claimed the settlement doesn’t provide any remedy for customers who threw away their defective computers or bought replacements. The three-judge panel ruled that only five objectors, a small number of class members, claimed they threw away their computers. Individual notice was given to about 5 million consumers, according to the court’s order. “In the absence of any evidence that there is a substantial group affected, the settlement remains reasonable.”

The lead Plaintiffs claimed the Nvidia chips at issue overheated, causing the computers they purchased from manufacturers such as Apple Inc., Hewlett-Packard Co. and Dell Inc. to stop working. They also charged that Nvidia’s proposed solution — a software update the company purportedly asked equipment manufacturers to recommend to their customers — was merely a quick fix that in some cases actually exacerbated the problem. After a California federal judge approved the settlement, in September 2010 nine objectors appealed, but the Ninth Circuit ruled against them.

One objector argued that the settlement was unfair because consumers have to prove they bought an affected computer in order to obtain relief. But the appellate court ruled that the requirement is reasonable and would prevent fraud. As for objectors’ assertion that the Plaintiffs and Nvidia colluded in the lead-up to the settlement, the Ninth Circuit noted that both sides battled over class certification, that extensive discovery preceded the settlement and that mediation was required in order to reach it. An objector argued that the class definition was too indefinite and would require mini-trials to determine whether claimants fell within it. But the Ninth Circuit said the class definition was clear and detailed, and that class members only have to send in a simple claim form with documentation proving they are eligible for relief.

Similarly, the Ninth Circuit denied a complaint that the class didn’t meet predominance and adequate representation requirements due to variations in state consumer class action laws and the complaints themselves. The court found that almost all the claims pertained to California and that they didn’t need to be identical. The appellate court also said the class notice was sufficient because the settlement’s website summary linked to the entire court-approved notice, individual notices were sent to millions of consumers and full notice was published in USA Today. The appeals court approved the $13 million fee awarded by the trial judge to Plaintiffs’ lawyers. The court found that the lawyers worked more than 20,000 hours on the case, valued at $10 million. The court said that “although the award is large, it is proportional to the time spent by counsel under the lodestar method that the district court used.”

The lead Plaintiff, Steven Nakash, is represented by Nicole M. Duckett, a lawyer with the Milberg law firm, based in Los Angeles. She did a very good job in the case.

Sources: Kurt Orzec and Law360.com

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