Tinder’s settlement to end a class action over its practice of charging people over age 30 almost twice as much for premium subscriptions has come undone, after the Ninth Circuit said Tuesday that the $24 million deal undervalued the strength of class members’ claims.
The U.S. Court of Appeals for the Ninth Circuit also said the district court didn’t adequately consider signs of collusion, and more specifically the agreement’s inclusion of a “clear sailing provision,” which specified that Tinder wouldn’t challenge plaintiffs’ demand for $1.2 million in attorneys’ fees—a figure the appeals court called “excessive.”
The pre-certification class settlement provided about 240,000 members with $50 worth of “Super Likes” automatically. Super Likes allow users of the dating app to indicate “heightened interest” in one another and can be purchased for $1 each.
Members who submitted claims—less than 0.745% of the settlement class—also stood to receive their choice of $25 in cash; 25 Super Likes, for members with an active account; or a free one-month subscription, for members who no longer subscribe.
Tinder also agreed to stop charging people different prices based on age, but with respect to California subscribers only and while reserving the right to offer a discount to subscribers 21 and younger.
Because the claims rate was low, Tinder stood to pay less than $45,000 of the estimated $6 million cash portion of the settlement, the court said.
And although the agreement provided 50 free Super Likes to class members regardless of whether they submitted claims, the ostensibly “universal” relief was limited to class members with active accounts, the court said.
Further, the injunctive relief would apply only to new California-based subscribers, “a group that, by definition, does not include the class members,” the court said in a decision by Judge Jed S. Rakoff, who sat by designation from the U.S. District Court for the Southern District of New York.
Rakoff’s majority opinion also said the U.S. District Court for the Central District of California improperly disregarded the ruling against Tinder in Candelore v. Tinder Inc. Even if the lower court judge found Candelore unpersuasive, it was “the law of the case,” Rakoff said.
In Candelore, a state court found that Tinder’s two-tiered pricing system violated California’s Unruh Civil Rights Act. Some of the settlement class members in this case are also putative members of the Candelore class, so the agreement releases claims governed by that decision, Rakoff said.
The settlement class included “all California-based Tinder users who were at least 29 years old when they subscribed to Tinder’s premium services and were charged a higher price than younger subscribers.”
Judge Paul J. Watford joined in the decision. Judge Consuelo M. Callahan dissented.
Although the settlement was “to some degree overinflated,” the lower court “nevertheless reasonably evaluated the settlement class’s relatively weak claims,” Callahan said.
Altshuler Berzon LLP represents the objectors who challenged the settlement on appeal.
Plaintiffs are represented by Law Offices of Todd M. Friedman PC. Tinder is represented by Manatt Phelps & Phillips LLP.
The case is Allison v. Tinder Inc., 9th Cir., No. 19-55807, 8/17/21.