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Ninth Circuit Swipes Left on Tinder Class Action Settlement—Again
The United States Court of Appeals for the Ninth Circuit recently vacated a district court order approving a $5.2 million class action settlement between a plaintiff and Tinder, Inc., the mobile dating app. The Ninth Circuit reasoned that because the plaintiff was subject to binding arbitration, while thousands of other class members were not, she was not an adequate representative of the putative settlement class.
Tinder Twice Settles Claims That It Charged Users Over Age 29 More for Premium Features, but the Ninth Circuit Reverses Both Times
In Kim v. Allison, 87 F.4th 994 (9th Cir. 2023), plaintiff Lisa Kim sued alleging Tinder’s pricing scheme for its premium features—Tinder Plus and Tinder Gold—charged users over the age of 29 a higher price and thus violated California’s Unruh Act and Unfair Competition Law. Tinder moved to compel arbitration of Kim’s claims, and the district court granted the motion and stayed the case pending the outcome of arbitration.
Kim appealed the arbitration order, but while her appeal was pending, she and Tinder reached a settlement. The district court approved the settlement over the objections of two objectors, but the Ninth Circuit reversed the district court’s order. On remand, Kim and Tinder settled again, and the same two objectors objected to the amended settlement, arguing that Kim was an inadequate class representative. The district court certified the class for settlement and approved the amended settlement.
On appeal, the Ninth Circuit again reversed, concluding that Kim was an inadequate class representative for two reasons.
First, Kim had a conflict of interest with other class members. Because Kim was subject to arbitration but over 7,000 class members (of a 240,000-member class) were not, the Court concluded Kim had a “strong ‘interest in settling’ her claim, ‘even at the cost of a broad release of other claims’ that are not subject to arbitration” because she had “no chance of going to trial.” The Court rejected Kim’s argument that any conflict was insignificant because the approximately 7,000 class members who were not subject to arbitration accounted for only 5% of the total class: “[W]e have never determined adequacy by deferring to a percentage-of-the-class formula. And even assuming that could be a proper approach in some cases, it does not make sense to adopt that approach for the first time here, where five percent of a class represents a sizeable number of potential class members.”
Second, Kim’s approach to the litigation did not suggest the “vigorous advocacy” required of a class representative. The Court noted that Kim engaged in almost no discovery and failed to make “obvious arguments” when opposing Tinder’s motion to compel arbitration. As a result of these two shortcomings, the Ninth Circuit vacated the district court’s order approving the amended settlement.
Key Takeaways
The Ninth Circuit’s Kim decision is a reminder of the importance of arbitration agreements in class actions. While the fact that Kim had been compelled to arbitration was not dispositive of her inadequacy as a class representative, it permeated the Ninth Circuit’s reasoning on both the “conflict of interest” and “vigorous advocacy” inquiries. Parties on both sides of the “v.” would thus do well to consider early in litigation whether proposed class representatives are subject to any arbitration agreements and to assess the possible impact of those agreements on a class representative’s adequacy.