Lin v. Airbnb, Inc.

Lin v. Airbnb, Inc.
Court (s) Database
Federal Court Decisions
Date
2021-11-19
Neutral citation
2021 FC 1260
File numbers
T-1663-17
Notes
A correction was made on February 3, 2022.
Decision Content
Date: 20211119
Docket: T-1663-17
Citation: 2021 FC 1260
Ottawa, Ontario, November 19, 2021
PRESENT: Mr. Justice Gascon
BETWEEN:
ARTHUR LIN
Plaintiff
and
AIRBNB, INC., AIRBNB CANADA INC.,
AIRBNB IRELAND UNLIMITED COMPANY,
AIRBNB PAYMENTS UK LIMITED
Defendants
ORDER AND REASONS
I. Overview
[1] This is a motion brought under Rules 334.29 and 334.4 of the Federal Courts Rules, SOR/98-106 [Rules], for judicial approval of: i) a class action settlement [Settlement Agreement], including the appointment of an administrator of the claims to be filed [Claims Administrator]; ii) the legal fees sought by class counsel Evolink Law Group and Champlain Avocats [Class Counsel Fees]; and iii) the payment of an honorarium to the representative Plaintiff, Mr. Arthur Lin [Honorarium].
[2] The Settlement Agreement, a copy of which is attached as Schedule “A” to this Order, was concluded on August 27, 2021 between Mr. Lin and the defendants Airbnb, Inc., Airbnb Canada Inc., Airbnb Ireland Unlimited Company and Airbnb Payments UK Limited [collectively, Airbnb], in the context of a class action proceeding [Class Action] filed by Mr. Lin in relation to the display of prices on Airbnb’s websites and/or mobile applications [Airbnb Platform]. The Airbnb Platform is a digital marketplace connecting individuals seeking accommodations [Guests] with other individuals offering accommodations [Hosts], and allowing them to transact.
[3] For the reasons that follow, I will approve the Settlement Agreement and the appointment of the Claims Administrator on the terms provided by the parties, but I will only approve in part the proposed Class Counsel Fees and Honorarium.
II. Background
A. Procedural context
[4] This Class Action was commenced on October 31, 2017. In his statement of claim, Mr. Lin alleged that Airbnb breached section 54 of the Competition Act, RSC 1985, c C‑34 [Competition Act], a rarely used criminal offence known as “double ticketing,” by charging Guests, for the booking of an accommodation offered by Hosts on the Airbnb Platform, a final price that was higher than the price displayed at the first stage of browsing on the Airbnb Platform. More specifically, Mr. Lin contested the fact that Airbnb added “service fees” to the final price charged for its accommodation booking services, although these fees were not included in the initial price per night displayed on the Airbnb Platform. The heart of Mr. Lin’s claim was that the inclusion of an additional service fee at a later stage of the sale process resulted in a higher price than the first price expressed to Guests, in contravention of section 54 of the Competition Act.
[5] For the purpose of the Settlement Agreement, the class members are defined as all individuals residing in Canada, other than Quebec, who, from October 31, 2015 to June 25, 2019: i) reserved an accommodation for non-business travel anywhere in the world using Airbnb; ii) whose reserved accommodation matched the parameters of a previous search made by the individual on the search results page of Airbnb; and iii) paid, for the reserved accommodation, a price (excluding applicable sales and/or accommodation taxes) that is higher than the price displayed by Airbnb on the said search results page for this accommodation [Class]. Mr. Lin claimed that the Class members having experienced this situation were entitled to the benefit of the lower price, and sought damages equal to the difference between the first price and the final price displayed on the Airbnb Platform.
[6] Following a contested hearing, I certified the proceeding as a class action in a judgment issued on December 5, 2019 (Lin v Airbnb, Inc, 2019 FC 1563 [Certification Judgment]).
[7] As of June 27, 2019, prior to the issuance of the Certification Judgment, Airbnb adjusted the Airbnb Platform so that Airbnb now displays an all-inclusive price for all accommodation bookings, excluding applicable taxes, at every step of the search and booking process.
[8] On December 16, 2019, Airbnb filed a Notice of Appeal of the Certification Judgment at the Federal Court of Appeal [FCA]. The appeal was heard on March 4, 2021 by way of Zoom. After the hearing, the FCA reserved its judgment, and the decision on the appeal was under deliberation when the Settlement Agreement was reached by the parties. The FCA is holding the appeal in abeyance pending the completion of the settlement process.
[9] A few weeks before Mr. Lin launched his class action proceeding before this Court in late October 2017, Mr. Preisler-Banoon had filed a similar class action before the Superior Court of Quebec in the matter Preisler-Banoon c Airbnb Ireland, 500-06-000884-177 [Quebec Action]. On September 13, 2019, prior to the hearing of the “authorization” (as the certification process is known in Quebec) of the Quebec Action, Airbnb and the Quebec plaintiff executed a settlement agreement. On February 3, 2020, the Superior Court of Quebec rendered a judgment approving the settlement of the Quebec Action (Preisler-Banoon c Airbnb Ireland, 2020 QCCS 270 [Quebec Settlement]). The Quebec Settlement has a gross value of $3,000,000 and provides to the Quebec class members (as they are defined in the Quebec Settlement) a credit of up to $45 on their next booking with Airbnb after confirming their eligibility.
B. Overview of Settlement Agreement
[10] The parties have entered into the Settlement Agreement on August 27, 2021, subject to this Court’s approval. Mr. Lin’s legal counsel, Evolink Law Group and Champlain Avocats [Class Counsel], have concluded that the Settlement Agreement is fair, reasonable, and in the best interests of Mr. Lin and the Class.
[11] The material terms of the proposed Settlement Agreement include:
· the settlement is valued at $6,000,000 [Settlement Amount], which includes any claims administration expenses [Administration Expenses], Class Counsel Fees, any Honorarium, and the applicable sales taxes;
· Airbnb will receive a full and final release in respect of the subject matter of this Class Action, namely, the display of prices on the Airbnb Platform [Release];
· the notification to eligible Class members and the claims procedure will be fully electronic, and managed by the Claims Administrator, Deloitte LLP [Deloitte];
· after the Court approves the Settlement Agreement, and before the claims deadline, eligible Class members can make a claim for a pro-rata share of up to $45 from the settlement funds that will remain after deduction of the Administration Expenses, Class Counsel Fees, Honorarium and applicable sales taxes from the Settlement Amount [Net Settlement Funds];
· distribution of the Net Settlement Funds to the eligible Class members that make a claim will be by way of a non-cash-convertible credit on the Airbnb Platform [Credit], to be redeemed on the next accommodation booking within 24 months of issuance; and
· the individuals covered by the Quebec Settlement are excluded from the Settlement Agreement, and claims relating to those individuals will be dismissed from this Class Action.
[12] Once the Settlement Agreement is approved, a hyperlink will be sent to Class members to make a claim. The Credit to be issued by Airbnb will be a one-time-use only, non-transferable, non-refundable, non-cash-convertible credit of up to $45 in value to each eligible Class member who submits a claim. The Credit’s ultimate value will depend on the total number of approved claims and on the amount the Court approves for Administration Expenses, Class Counsel Fees, Honorarium and applicable sales taxes – which will all be deducted from the Settlement Amount. The Credit cannot be combined with any other offer discount, or coupon, and must be redeemed within 24 months after issuance, on the next Airbnb accommodation booking in any location worldwide. The Credit will be in the same amount for each Class member. In order to be able to redeem a Credit, the eligible Class members must accept the most recent version of Airbnb’s Terms of Service and not be prohibited from using the Airbnb Platform (in accordance with the Terms of Service).
[13] In exchange, Class members will acknowledge that the Credit is in full and complete settlement of their claims and agree to give up any and all claims they may have against Airbnb relating in any way to the display of prices on the Airbnb Platform, including in respect of conduct alleged (or which could have been alleged) in the Class Action.
[14] With respect to Class Counsel Fees, Section 11.3 of the Settlement Agreement provides that Class Counsel will seek approval of the Court for the payment, by Airbnb, of Class Counsel Fees in the amount of $2,000,000, plus applicable taxes. The Settlement Agreement further states that Class Counsel will not seek additional payments for disbursements. In October 2017, prior to the filing of the Class Action, Class Counsel had entered into a fee agreement with Mr. Lin [Retainer Agreement], which provides for a contingency fee not exceeding 33% of the total amounts recovered by the Class. I pause to observe that, surprisingly, the Class Counsel Fees mentioned in the Settlement Agreement are slightly above what is provided for in the Retainer Agreement concluded with Mr. Lin: they amount to one third of the Settlement Amount (i.e., 33.33%) as opposed to a maximum of 33% set out in the Retainer Agreement, representing a difference of $20,000.
[15] As far as the Honorarium is concerned, the Settlement Agreement provides that Class Counsel may ask the Court for the approval of an Honorarium of $5,000 to Mr. Lin.
[16] Airbnb does not oppose the terms of the Settlement Agreement relating to Class Counsel Fees and to the request made for an Honorarium to Mr. Lin, and has agreed to pay the Class Counsel Fees, Mr. Lin’s Honorarium and applicable taxes that are approved by the Court. As indicated above, all of these amounts will be deducted from the Settlement Amount.
C. Notices to Class members
[17] On September 16, 2021, the Court issued an order for the distribution of short-form and long-form notices of settlement approval [together, Notices] to the affected Class members, in accordance with Rule 334.34 [Notice Order]. The Notice Order also fixed the settlement approval hearing before this Court on November 1, 2021.
[18] The Notices have been broadly distributed to all persons residing in Canada who were Airbnb customers between October 31, 2015 and June 25, 2019. Through these Notices, Class Counsel advised the Airbnb customers of the settlement of the Class Action and of the settlement approval hearing, and summarized certain elements of the Settlement Agreement. This summary notably referred to the maximum value of $45 for the Credit and explained the redemption process to be followed, as well as the procedure to opt out or object to the proposed settlement. The Notices further informed the potential Class members that the Notices were just a summary, indicated that the Settlement Agreement itself and other court documents were available through a link to the Class Counsel’s website (i.e., https://evolinklaw.com/airbnb-service-fees-national-class-action), and mentioned that the Settlement Agreement shall prevail in case of any discrepancy between the Notices and the Settlement Agreement.
[19] The Notices were sent to the Airbnb customers at the end of September 2021. The Claims Administrator has provided its report on the results of the e-mail distribution of the Notices. They are as follows: i) 2,539,475 e-mails were sent; ii) 494,002 e-mails bounced or were undeliverable; iii) 765,736 e-mails were opened, with 412,934 unique opens to the e-mails. In total, 14 individuals contacted Class Counsel indicating a desire to opt out of the Class Action, and 4 individuals submitted a written objection to the proposed Settlement Agreement.
III. Analysis
[20] This motion is seeking the Court’s approval for the Settlement Agreement, Class Counsel Fees and Mr. Lin’s Honorarium. Each of these three requests will be dealt with in turn.
A. Settlement Agreement
(1) The law relating to approval of class action settlements
[21] Rule 334.29 provides that a class proceeding settlement must be approved by the Court. The legal test to be applied is whether the proposed settlement is “fair, reasonable and in the best interests of the class as a whole” (Bernlohr v Former Employees of Aveos Fleet Performance Inc, 2021 FC 113 [Bernlohr] at para 12; Wenham v Canada (Attorney General), 2020 FC 588 [Wenham 1] at para 48; McLean v Canada, 2019 FC 1075 [McLean 1] at paras 64-65).
[22] The factors to be considered in the analysis have been reiterated by the Court on several occasions (Bernlohr at para 13; Wenham 1 at para 50; McLean 1 at paras 64-66; Condon v Canada, 2018 FC 522 [Condon] at para 19). They are similar to the factors retained by the courts across Canada. These factors are non‑exhaustive, and their weight will vary according to the circumstances and to the factual matrix of each proceeding. I summarize them as follows, in what I view as their order of relative importance:
1) The terms and conditions of the settlement;
2) The likelihood of recovery or success;
3) The expressions of support, and the number and nature of objections;
4) The degree and nature of communications between class counsel and class members;
5) The amount and nature of pre-trial activities including investigation, assessment of evidence and discovery;
6) The future expense and likely duration of litigation;
7) The presence of arm’s length bargaining between the parties and the absence of collusion during negotiations;
8) The recommendation and experience of class counsel; and
9) Any other relevant factor or circumstance.
[23] A proposed settlement must be considered as a whole and in context. Settlements require trade‑offs on both sides and are rarely perfect, but they must nevertheless fall within a “zone or range of reasonableness” (Bernlohr at para 14; McLean 1 at para 76; Condon at para 18). Reasonableness allows for a spectrum of possible resolutions and is an objective standard that can vary depending upon the subject matter of the litigation and the nature of the damages for which the settlement is to provide compensation to class members. However, not every disposition of a proposed settlement agreement must be reasonable, and it is not open to the Court to rewrite the substantive terms of a proposed agreement (Wenham 1 at para 51). The function of the Court in reviewing a proposed class action settlement is not to reopen and enter into negotiations with litigants in the hope of improving the terms of the agreement (Condon at para 44). In the end, the proposed settlement is a “take it or leave it” proposition.
[24] I make one other observation, which relates to the interaction between the approval of proposed class action settlements and the approval of class counsel fees. In mandating that both the class action settlements and the payment of class counsel fees be subject to the Court’s approval (i.e., Rules 334.29 and 334.4), the Rules place an onerous responsibility on the Court to ensure that the class members’ interests are not being sacrificed to the interests of class counsel, who have typically taken on a substantial risk and who have a great deal to gain not only in removing that risk but in recovering a significant reward from their contingency fee arrangement (Shah v LG Chem, Ltd, 2021 ONSC 396 [LG Chem] at para 40). [1] The incentives and the interests of class counsel may not always align with the best interests of the class members. It thus falls on the Court to scrutinize both the proposed settlement agreement and the proposed class counsel fees, as they will typically be interrelated. This is the case here since the Net Settlement Funds available to Class members are equal to the Settlement Amount after deduction of the Class Counsel Fees and other expenses.
(2) Application to this case
(a) Terms and conditions of the settlement
[25] Under the terms and conditions of the settlement, the question to be determined is whether the proposed Settlement Agreement, when considered in its overall context, provides significant advantages to the Class members, compared to what would have been an expected result of litigation on the merits.
[26] The key terms of the Settlement Agreement, as seen by the parties, include: a Settlement Amount valued at $6,000,000; distribution of the Settlement Amount by way of a non-cash-convertible Credit issued on the Airbnb Platform; a maximum Credit of $45 per Class member, redeemable within 24 months on the next accommodation booking; and the dismissal of the claims for the Quebec-based members due to potential overlaps with the Quebec Settlement. In his submissions, Mr. Lin also refers to the fact that Airbnb has modified its behaviour and changed its pricing display, though this is not, as such, a term and condition of the Settlement Agreement.
[27] In his written and oral submissions to the Court, Mr. Lin focused on five particular aspects of the Settlement Agreement, namely, the non-cash nature of the Credit, the Release granted to Airbnb, the exclusion of Quebec members, the identity of the Claims Administrator, and the scope of eligible Class members. I will briefly look at each element.
(i) Non-cash nature of the Credit
[28] In the current case, the monetary benefit of the Settlement Agreement for the Class members will take the form of a non-cash distribution to the eligible Class members, namely, the Credit. I acknowledge that courts in Canada and in the United States have often expressed concerns about class action settlements – generally referred to as “coupon settlements” – in which class counsel are awarded large fees while leaving class members with coupons or other non-cash awards of little or no value. However, I agree with Mr. Lin that, while the Credit available to Class members in this case is a non-cash settlement, it does not bear the problematic attributes generally associated with “coupon settlements.”
[29] First, the Credit granted to Class members will have a wide range of applications. The Class members will be able to use it towards accommodation bookings anywhere in the world, including local staycations or short road-trips, for both the service fees (paid to Airbnb) and the listing fees (paid to the Hosts) that are part of a booking on the Airbnb Platform. Second, the ultimate value of the Settlement Amount (i.e., $6,000,000) is known at the outset, and will not be dependent on the number of individual Class members who actually redeem the Credit. Third, the claims procedure will be simplified, as eligible Class members will not be required to submit proof of their claims and will be entitled to share in the settlement upon acknowledging that they meet the requirements for a claim. Fourth, the redemption period is long enough, extending to a maximum of 24 months. Fifth, based on inquiries received from potential Class members after the Notices were distributed, Airbnb appears to have a number of repeat customers for its Airbnb Platform. There is therefore a good likelihood that Class members will do business with Airbnb again, and will effectively use the Credit.
[30] In sum, after scrutiny, I am satisfied that the Credit does not fit among those “coupon settlements” that the Court should be reluctant to approve. Rather, the Credit will be distributed in a way that is more akin to a gift card or a bill credit. In addition, based on the evidence before me, it is expected that the take-up rate will be significant among the Class members. Finally, in the circumstances, the distribution of the Net Settlement Funds in the form of Credits through the Claims Administrator is more practical and economical, compared to what a cash distribution would have entailed.
(ii) Release to Airbnb
[31] Turning to the Release clause, the Court has to review the scope of releases granted in class action settlement agreements to ensure that defendants do not unfairly obtain a broad release (or even a release for future claims), beyond the claims that are or could have been raised in the action. Here, I agree with Mr. Lin that there are no concerns relating to the scope of the Release granted to Airbnb in the Settlement Agreement. The Release is qualified by the words “relating in any way to the display of prices on the Airbnb Platform, including conduct alleged (or which could have been alleged) in the Proceeding,” which was the subject matter of Mr. Lin’s Class Action. The Release is thus circumscribed to those price-related practices at the source of the Class Action. While the Release extends to all forms of price “display,” including arguably false or misleading pricing representations, I am satisfied that it is not overbroad in the context of what was alleged by Mr. Lin in his Class Action.
(iii) Dismissal of the claims for Quebec members
[32] As stated above, the Quebec Settlement provides for the settlement of similar claims made by the class members in the Quebec Action, based on Airbnb’s display of prices on the Airbnb Platform. I agree with Mr. Lin that it is fair and reasonable to exclude those claims from the Settlement Agreement as amounts received by the Quebec members under the Quebec Settlement would overlap with the Settlement Agreement and would create a potential of double indemnity for the class members residing in Quebec.
(iv) Use of Deloitte as Claims Administrator
[33] The estimated Administration Expenses primarily consist of the fees for the Claims Administrator, Deloitte, and amount to an all-inclusive total of $320,500. I agree with Mr. Lin that this amount is justified in the circumstances and I am satisfied that Deloitte is well qualified to act as Claims Administrator.
(v) Eligible Class members
[34] The Settlement Agreement provides for an additional requirement to be eligible to claim a Credit, which results in a slight reduction of the number of eligible Class members entitled to receive compensation. Eligible Class members will be limited to those individuals that used the Airbnb Platform for the first time between October 31, 2015 and June 25, 2019. Therefore, Class members that already had an account and had used the Airbnb Platform prior to October 31, 2015 will not be eligible for a Credit. Airbnb estimates that the difference between Class members who will be eligible for a Credit and the total of Class members who used the Airbnb Platform during the relevant period represents approximately 194,000 individuals.
[35] I am satisfied that this reduced distribution of the Settlement Amount to a more limited number of Class members is a reasonable compromise in light of Airbnb’s position that those Guests who had experienced the impugned pricing practice more than once are on a different legal footing.
(vi) Other elements
[36] In assessing the terms and conditions of a proposed class action settlement and determining whether they are fair, reasonable and in the best interests of the class members, the Court should also consider the expected take-up rate by the class members, particularly where there is a fixed settlement fund as is the case here (Condon at para 48), or where the quantum of the compensation to be received by each claimant depends on the number of eligible claimants who submit a claim. The Court may therefore take into account evidence on the expected participation in the settlement by class members when it assesses the sufficiency of available settlement funds or the effective monetary compensation of class members (Bodnar v The Cash Store Inc, 2010 BCSC 145 at para 21).
[37] In this case, based on the evidence provided by Mr. Lin (through the affidavit sworn by Class Counsel Simon Lin [Counsel Affidavit]), it is reasonable to estimate that approximately 30% of the Class members will apply for a Credit and participate in the claims process. The evidence reveals that, in the Quebec Settlement, the take-up rate ended up being effectively about 30%, translating into a credit of approximately $9.50 per individual Quebec class member. According to the Counsel Affidavit (at paragraphs 108-110), Class Counsel expects that, in the current case, the take-up rate will be “reasonably high” and “similar” to the Quebec Settlement, although it could be affected by some other factors, in particular the pandemic. Based on the evidence before me, I therefore agree that 30% is a reasonable rough estimation of the proportion of eligible Class members who are expected to file a claim to the Net Settlement Funds.
(vii) Conclusion
[38] In summary, when considered in their overall context, I am satisfied that the terms and conditions of the Settlement Agreement provide significant advantages to the Class members which might not have been achieved with the continued litigation, and are a positive factor supporting the approval of the Settlement Agreement.
(b) Likelihood of recovery or success
[39] The next factor to consider is the likelihood of recovery or success. This factor refers to the likelihood of success of Mr. Lin’s Class Action if it were to proceed on the merits. This factor of likelihood of recovery or success must be assessed at the time when the parties choose between proceeding with the litigation or settling the matter. Under this factor, the Court must determine whether the proposed Settlement Agreement is an attractive viable alternative to continued litigation.
[40] Here, I am satisfied that the Settlement Agreement is a reasonable and attractive viable alternative to litigation for Mr. Lin and the Class, because litigating the Class Action could have led to unforeseen conclusions. The ultimate success of Mr. Lin in his Class Action was uncertain for three main reasons, namely, the pending appeal before the FCA, the risk involved at the merits trial, and the difficulties linked to enforcing a judgment from this Court in foreign jurisdictions.
[41] First, the pending appeal before the FCA focused on three important issues, for which the outcome is fairly difficult to predict: i) whether a section 36 claim based on section 54 of the Competition Act requires pleading and proving “reliance”; ii) whether it was sufficient for Mr. Lin to plead the simple difference between the two prices posted by Airbnb as damages under section 36 of the Competition Act; and iii) whether the Class description met the appropriate standard for certification. Since many of these issues are novel, the risk of an adverse decision from the FCA is a real possibility for the Class members.
[42] Second, the success of Mr. Lin at a merits trial faces several hurdles. In my reasons delivered in the Certification Judgment, I commented on the challenges in litigating this Class Action to a successful conclusion on the merits. I notably indicated that the application of the “double ticketing” provision to this case was not free from doubt (Certification Judgment at para 7), and that Airbnb had raised numerous valid points regarding the legal interpretation of sections 36 and 54 of the Competition Act and their application to this case (Certification Judgment at para 34). I further recognized that, in light of the paucity of “double ticketing” cases, Mr. Lin certainly appeared to be stretching the potential interpretation and application of section 54 of the Competition Act, and that he was extending it into unchartered territory (Certification Judgment at para 56). I noted that, in its submissions, Airbnb had raised valid and relevant points regarding the nature and identity of the product or products effectively supplied by Airbnb through the Airbnb Platform, and that it was certainly open to Airbnb to submit and argue that section 54 of the Competition Act could not apply to its situation because what is effectively supplied through the Airbnb Platform are two different products by two different persons at two different prices (Certification Judgment at para 53). In other words, there were solid factual and legal arguments advanced by Airbnb on the presence of two products, on whether what is supplied by Airbnb could be characterized as a bundle of different articles and services, and on whether the product at issue is the bundle or its components, as opposed to the accommodation booking services put forward by Mr. Lin (Certification Judgment at para 54). I also pointed out that it may look like a strange proposition to plead and argue that loss or damage could be established by a customer, based simply on a price differential between the lower and the higher price of a product, when the customer knew about both prices and nevertheless decided to accept the higher price and to proceed with the transaction (Certification Judgment at para 83). I finally acknowledged that demonstrating and proving the existence of an actual loss or damage in these circumstances may present additional challenges for Mr. Lin and the Class members (Certification Judgment at para 83).
[43] All of these observations reflect the fact that the likelihood of success of Mr. Lin at the common issues trial was difficult to predict at the time of certification, and it remains so today. There is little to no jurisprudence on section 54 of the Competition Act, as well as considerable uncertainty in the law as to whether a trial judge would award damages in the context of this Class Action. It is also clear that the legal questions advanced by Mr. Lin were novel with no appellate jurisprudence, suggesting a strong likelihood of multiple levels of appeals after a decision at the merits trial.
[44] Third, there is also a risk with having to enforce a judgment against non-Canadian defendants, as is the case for some of the Airbnb entities.
[45] In sum, when the parties decided to conclude the Settlement Agreement, it was uncertain and questionable whether Mr. Lin’s Class Action could be litigated successfully on the merits, given the state of the law on “double ticketing.” Most of those factors are still relevant today. This, again, is a positive factor supporting the approval of the Settlement Agreement.
(c) Expressions of support, and number and nature of objections
[46] Turning to the expressions of support or objections to the proposed Settlement Agreement, Class Counsel has received a total of 84 correspondence from potential Class members, further to the Notices sent by the Claims Administrator after the Notice Order. These responses can be categorized as follows: 43 were general inquiries; 23 members voiced their support for the Settlement Agreement; 14 expressed a wish to opt out; and 4 objected to the proposed settlement. I observe that the deadline for opting out or objecting to the Settlement Agreement – as set out in the Notices – has now passed. The opt-outs and objections were included as exhibits to the Counsel Affidavit.
[47] I agree with Mr. Lin that the number of opt-outs is small compared to the size of the Class. Furthermore, some of the opt-outs appear to have been sent due to confusion as to whether these Airbnb customers were included or not in the Class definition. With respect to the four objections, two complaints regarded the type of remedy available (i.e., a non-cash-convertible Credit to be used on the Airbnb Platform) and two objectors found the maximum amount of the Credit (i.e., $45) too low. One of the complainants who initially objected to the non-cash nature of the Credit distribution voiced some support after Class Counsel explained to him the rationale for the non-cash structure of the settlement. I note that none of the objectors attended the settlement approval hearing before this Court.
[48] I also agree with Mr. Lin that the few objections received do not detract from the fact that the proposed Settlement Agreement, for the Class as a whole, is fair and reasonable and in their best interests. Having considered all of the objections received, I am of the view that they are not sufficient to conclude that the Settlement Agreement should not be approved. The fact that a settlement is less than ideal for any particular class member is not a bar to approval for the Class as a whole (Condon at para 69).
(d) Degree and nature of communications between Class Counsel and Class members
[49] The degree and nature of communications between Class Counsel and Class members is another important factor to consider for the approval of the Settlement Agreement. As will be discussed below in section III.B, it is also, in my view, a factor having an impact on the approval of Class Counsel Fees.
[50] In this case, there is no doubt that Class Counsel and Mr. Lin have evidently communicated well. With regard to the communications between Class Counsel and Class members more generally, since the commencement of this Class Action, Class Counsel has maintained and updated a website to publish basic information regarding the case, including a mailing list that allows interested individuals to subscribe for updates. Court documents and other records have been posted on this website for Class members’ review. Prior to the publication of the Notices, there were 70 individuals subscribed to that mailing list, and that number increased to 673 individuals after the Notices announcing the settlement approval hearing were distributed.
[51] After the conclusion of the Settlement Agreement, the Notices were sent by e-mail to all the Class members who registered with Class Counsel and provided valid e-mail addresses. Class Counsel also posted the Notices and the Settlement Agreement on their dedicated website for the Class members. As indicated above, the Claims Administrator provided a report detailing the delivery of the Notices, which showed that the Notices were widely disseminated to Airbnb customers. I agree with Mr. Lin that, in light of the foregoing, sufficient steps were taken to provide notice of the Settlement Agreement to the Class members.
[52] However, in determining the approval of a proposed class action settlement, the Court’s analysis must not look solely at the existence of communications to class members and at the efforts deployed by class counsel to distribute such communications in an adequate way. In the exercise of its role, the Court must also review and consider the actual contents of the communications with class members, in light of the proposed settlement agreement and of the evidence provided at the settlement approval motion, and assess whether sufficient information has effectively been provided to the class members to allow them to make an informed decision about the proposed settlement.
[53] In this case, further to my review of the evidence provided by Mr. Lin on this motion, I must conclude that Class Counsel’s communications with Class members fall short of the mark to meet the requirements of an adequate, full and frank disclosure of the contemplated Settlement Agreement. In other words, there were some important shortcomings in the informative value of the Notices sent to the Class members. I understand that Class members could have access to the Class Counsel’s website and to the Settlement Agreement itself, and that they were invited to do so at the end of the Notices. However, the actual text of both the short-form and long-form Notices were short on details regarding several key features of the proposed Settlement Agreement. More specifically:
· the Notices did not specify that the total Settlement Amount was $6,000,000;
· the Notices did not provide information on the actual amount or on the percentage base of Class Counsel Fees;
· while they mentioned that the Credit of $45 was a maximum amount which could be lowered depending on the number of claimants, the Notices did not provide any additional detail on the likely or expected take-up rate or on the amount of the effective Credit likely or expected to be received by the Class members.
[54] To the extent that the purpose of the Notices was to properly inform the Class members of the Settlement Agreement in order to give them the means to decide to accept it, opt out or voice an objection, I find that, in light of the evidence now before me, the Notices sent to the Class members did not provide a sufficiently transparent, informative and adequate disclosure to the Class members. Of course, I cannot change the Notices retroactively. But, in class actions involving consumer-related issues such as this one, which involve thousands of ordinary consumers affected by pricing or marketing practices or other business conduct, communications of a proposed settlement agreement to the potential class members ought to be much more transparent and forthcoming for the class members than what has been done by Class Counsel in this case.
[55] In my view, in such class action settlement agreements, the notices to the class members should always at least disclose, in clear terms and in both the short-form and long-form versions of the notices, the following basic information about the proposed settlement agreement: i) the quantum of the total settlement amount; ii) the precise list of deductions from the total settlement amount (such as class counsel fees or administration expenses) when these impact the net settlement amount to be received by the class members; iii) the quantum of these various deductions (including the quantum of the class counsel fees); iv) the percentage of the total settlement amount to be received by class counsel as legal fees; v) the maximum compensation amount to be received by each class member, if any; and vi) the likely or expected effective compensation amount, or range of compensation amounts, to be received by the class members, when class counsel has information or is able to estimate the expected take-up rate and/or the likely or expected net compensation amount to be received. Generally speaking, having access to such minimal information is needed by the class members in order for them to be able to make a well-informed decision about what a proposed settlement agreement actually offers, and on whether they shall support it, opt out or object to it. In the current case, most of these basic elements were not included in the Notices to Class members, though some of them could be gleaned from the actual Settlement Agreement made indirectly available to Class Counsel through the Class Counsel’s website. In my opinion, to simply provide a link to a 27-page Settlement Agreement as was done in this case does not amount to a satisfactory disclosure of the above-mentioned information to the Class members, and can hardly be considered fair, reasonable, and in the best interests of the Class.
[56] Though it is impossible to measure what would have been the effect of the disclosure of the above-listed information in the Notices, it is fair to say that it would likely have had a certain impact on the reactions, expressions of support or objections of the Class members to the proposed Settlement Agreement.
[57] For those reasons, I conclude that the degree and nature of communications between Class Counsel and Class members is at best a neutral factor for the approval of the Settlement Agreement.
(e) Amount and nature of pre-trial activities, including investigation, assessment of evidence and discovery
[58] At the time the Settlement Agreement was executed, very limited investigation, discovery, evidence gathering and pre-hearing work had been completed by the parties, meaning that the amount and nature of pre-trial activities necessary to take the case to trial remained high. Moreover, Airbnb’s evidence showed that Airbnb does not have precise records of Class members that reserved an accommodation matching the parameters of a previous search ma