March 6, 2025

Too Big a Slice? What’s Next for Attorneys’ Fees in Claims-Made Settlements?

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Ross Weiner

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March 6, 2025

The Ninth Circuit’s recent decision in In re: California Pizza Kitchen Data Breach Litigation sheds new light on the viability of a claims-made settlement in that Circuit.  While the 2-1 decision affirmed the lower court’s decision that the class action settlement was fair, reasonable, and adequate, the court took issue with the attorneys’ fee award and remanded for additional scrutiny and likely “downward adjustment.”  Below is a brief overview of the case and its key takeaways. 

The case stemmed from a 2021 data breach in which over 100,000 CPK employees’ personal information was compromised.  One group of plaintiffs quickly negotiated a claims-made settlement with CPK, which would provide valid claimants with: up to $1,000 for ordinary expenses; up to $5,000 for identity theft losses; 24 months’ worth of credit monitoring services; and $100 (as part of the $1,000) in statutory damages for California residents.  The settlement was uncapped, meaning there was no overall limit as to how much CPK ultimately would have to pay.  Finally, CPK promised not to object to class counsel’s fee award so long as it did not exceed $800k. 

Counsel for another set of plaintiffs objected to the settlement as collusive and to the attorneys’ fees requested as excessive, arguing they could “negotiate a better settlement for the class.” 

The Central District of California overruled the objection and approved the settlement, even though only 1.8% of the class filed a claim.  And despite expressing “tremendous concern” over the scope of attorneys’ fees, in a “sparse written order,” the district court awarded the full $800k in attorneys’ fees and costs.  The other set of plaintiffs timely appealed. 

The Ninth Circuit quickly homed in on a critical risk in any class action settlement: that “class counsel may collude with the defendants, tacitly reducing the overall settlement in return for a higher attorneys’ fee.”  Under In re Bluetooth Headset Prods. Liab. Litig. , the court identified three “subtle signs” of collusion: 

  1. Counsel receiving a disproportionate distribution of the settlement; 

  1. The parties negotiating a “clear sailing arrangement” under which the defendant agrees not to object to an agreed-upon attorneys’ fee; and 

  1. A “reverter” clause that returns unawarded fees to the defendant rather than the class.   

If these three indicia are present, then a settlement “must withstand an even higher level of scrutiny….” 

Here, the Ninth Circuit found that all three indicia were present.  Nevertheless, the court held that their existence does not render a settlement “per se collusive,” noting that it was satisfied that the district court “fulfilled its heightened obligation to ferret out any evidence of collusion or other conflicts of interest.” 

As for whether the settlement satisfied Rule 23’s requirement that it must be fair, reasonable, and adequate, the court found that it did, in part because there was adequate compensation to the class and real risk and uncertainty of prolonged litigation.  In closing, the court underscored that lower courts “do not have a duty to maximize settlement value for class members.”  Rather, a court’s task is “much more modest,” namely, “ensuring that the class settlement is fair, reasonable, and adequate.” 

Because the settlement was not conditioned on the approval of an attorneys’ fee request, the court was able to vacate the fee award without undoing the settlement approval.  So, it did. 

The court explained that under both the “lodestar” and “percentage-of-recovery” methods, the $800k in fees did not pass muster, and the district court’s barebones approval explanation was ultimately its death knell.  Specifically, the court pointed out that the district court had both questioned the $687k lodestar and “appeared disinclined” to approve fees of more than 25% of the recovery.  Yet, at the end of the day, the district court did just that, “even though the attorneys’ fees constitute around 45% of the settlement value to the class.”  Because the trial court failed to provide an adequate explanation for the fees, the Ninth Circuit reversed and remanded, with strict instructions for the district court to scrutinize the reasonableness of plaintiffs’ lodestar, with the expectation that the results “will likely favor downward adjustment.” 

First , the Ninth Circuit reiterated that it has “never held that claims-made settlements are per se inadequate under Rule 23(e).”  So claims-made settlements remain a viable option in the Ninth Circuit.   

Second , clear-sailing provisions, in which the defendant agrees not to object to an application for attorneys’ fees up to a certain amount, remain disfavored and should be avoided.   

Third , to avoid heightened Bluetooth scrutiny in claims-made settlements, parties should consider building into the settlement that any reduction in attorneys’ fees should inure to the benefit of the class through a pro rata adjustment of the benefit.   

Fourth , while competing sets of plaintiffs’ counsel can often complicate settlement and yield accusations of “reverse auctions,” the Ninth Circuit is once again on record that courts do “not have a duty to maximize settlement value for class members.”   

The Ninth Circuit’s decision strikes a balanced approach that preserves claims-made settlements as a viable option while ensuring appropriate scrutiny. By following the court’s guidance—particularly by avoiding clear-sailing provisions and structuring settlements so fee reductions benefit the class—litigants can create claims-made settlements that provide meaningful benefits to participating class members while offering defendants the certainty of resolving claims. 

***

Certum Group, the industry leader in structuring class action settlements, can help defendants in class action litigation evaluate the litigation options and design an optimal settlement structure that is backed by full risk transfer to an insurer.  Certum Group offers two insurance solutions for defendants in class action litigation. 

Class Action Settlement Insurance (CASI) provides companies with the certainty they need to get back to business.  It is the only product on the market that allows companies to mitigate, cap and transfer the financial risk of settlement in existing class action litigation. Designed by Certum Group in response to businesses’ need for financial certainty in class action lawsuits and resulting settlements, CASI eliminates the unintended consequences of settlement and helps businesses exit litigation for a known, fixed cost. 

Litigation Buyout (LBO) Insurance provides companies with the ability to successfully ring-fence litigation exposure and transfer the full financial risk of class action, antitrust, and non-class litigation. With LBO Insurance, the insurance carrier takes on the financial risks and liabilities for businesses – at any time before settlement and for a known, fixed cost. In the context of an M&A transaction or financing, LBO Insurance negates the requirement for the use of escrows or indemnities, providing certainty and finality to both parties to the transaction. 

Contact us today to learn more about our creative insurance solutions to resolve existing or ring-fence threatened or existing litigation for a known, fixed cost. 

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Apple v. OpenAI: How the World’s Most Valuable Company Is Using Trade Secret Law to Defend Its Competitive Edge

By Patrick Dempsey • August 18, 2026
On July 10, 2026, the most valuable company in the world accused the most talked-about company in the world of theft. Apple sued OpenAI in the U.S. District Court for the Northern District of California, alleging that OpenAI built its hardware ambitions on a foundation of Apple’s misappropriated trade secrets.¹ Few disputes touch as much of Certum’s Trade Secret Litigation Playbook at once: reasonable measures to guard a secret, identifying with particularity what was taken, and the human-centered points — recruiting and employee departures — where secrets actually walk out the door. Nearly every core theme in Certum Group’s Trade Secret Guide is in this case. And the lesson beneath it is worth sitting with: for the companies with the most to protect, trade secret litigation is not a last resort. It’s a front-line instrument of competitive strategy. Background The dispute sits at the intersection of two of the most closely watched storylines in technology. In 2025, OpenAI acquired io, the hardware venture founded by former Apple design chief Jony Ive and a group of other Apple alumni, for a reported $6.5 billion, and set out to build its first consumer hardware device, widely expected to compete directly with the iPhone.² To staff that effort, OpenAI hired aggressively from Apple. According to the complaint, more than 400 former Apple employees now work at OpenAI.³ Two of those hires anchor Apple’s allegations. Tang Yew Tan spent roughly 24 years at Apple, where he served as a vice president of product design responsible for the iPhone and Apple Watch, before becoming OpenAI’s chief hardware officer. Chang Liu spent about eight years at Apple as a senior systems electrical engineer before departing for OpenAI in 2026.⁴ Apple’s theory is not that a single rogue employee walked out the door with a file. It is that the movement of talent was accompanied by a coordinated effort, one Apple describes as operating “at every level," to extract and exploit the confidential information those employees carried in their heads and on their devices.⁵ The Allegations The complaint reads less like a garden-variety departure dispute and more like a catalog of the exact conduct the Trade Secret Guide warns companies to watch for. Among Apple’s central allegations: Apple claims OpenAI’s hardware leadership directed recruiters to use Apple’s confidential project code names during the hiring process, and instructed job candidates to bring “actual parts” and “CAD/design artifacts” to their interviews.⁶ It alleges that OpenAI circulated internal Apple documents marked “Need to Know” that coached departing employees on how to evade Apple’s exit-security procedures, including the “dreaded walkout,” and to alert OpenAI before signing their exit agreements.⁷ The specifics attributed to individual employees are what give the complaint its texture. Apple alleges that Chang Liu exploited an authentication bug to reach internal network storage after his access should have been cut off, messaging a colleague, “LOL, I found out I can access the [network storage], so funny,” and noting within hours of his departure that he “still ha[d] another computer.”⁸ And Apple alleges that io “exploited and used Apple’s secret, proprietary industrial design techniques,” misleading one of Apple’s own manufacturing partners about whether it was authorized to use a confidential metal-finishing technique.⁹ The trade secrets Apple says are at risk span the full arc of its product-development process: technical specifications for unreleased technologies, engineering presentations and prototype data, component and vendor selection processes, and the proprietary manufacturing techniques that turn a design into a shippable product.¹⁰ Notably, Apple’s opening ask is not a damages windfall. It is protection. Apple seeks to bar OpenAI from using or disclosing the information at issue, to compel the return of its confidential materials, and to preserve the evidence.¹¹ In other words, Apple is using the courthouse to do what its NDAs and exit interviews were supposed to do: keep its edge inside the building. OpenAI’s Response OpenAI has pushed back hard, and its answer is a preview of the fault lines any trade secret plaintiff should expect to fight over. On August 6, 2026, OpenAI moved to dismiss, characterizing the alleged conduct as “benign, lawful conduct” that Apple has mischaracterized, and arguing that its hardware executives simply followed standard industry recruiting practices.¹² As to Chang Liu, OpenAI contends he was “trying to help Apple” by assisting former colleagues who asked him to locate work information, not stealing anything.¹³ More pointed, and more instructive, is OpenAI’s argument that Apple’s own conduct undermines its case. OpenAI asserts that Apple allowed employees to use personal iCloud accounts for work and failed to properly revoke access when they left — noting that an Apple manager remained logged into Chang Liu’s personal iCloud account after his departure in order to transfer files.¹⁴ From that, OpenAI argues that Apple’s offboarding lapses created “confusion and unwanted access issues that Apple now characterizes as theft.” OpenAI also contends that Apple has not identified its trade secrets with adequate specificity, pointing instead to “generic categories of the product-development process.”¹⁵ OpenAI must file its full response by August 17, 2026, with oral argument on the motion set for October 1, 2026.¹⁶ Whatever the merits, OpenAI’s playbook is worth studying precisely because it is so conventional. Reasonable secrecy measures and identification of the trade secret with particularity are two of the elements every misappropriation claim rises or falls on, and they are exactly where a well-resourced defendant will apply pressure first. What This Means It is easy to read a case like this as celebrity litigation between two of the most valuable enterprises on earth. The more useful reading is that trade secret law has become core infrastructure for how modern companies protect competitive advantage. Apple did not respond to a $6.5 billion competitive threat with a press release or a patent portfolio. It responded with a trade secret complaint, because in a business where the crown jewels are unpatented know-how — manufacturing techniques, vendor relationships, unreleased designs — the Defend Trade Secrets Act and its state-law counterparts are the sharpest tools available. The case also throws the Trade Secret Guide’s central lessons into relief. The value of a trade secret program is only as good as the “reasonable measures” behind it; OpenAI’s opening move is to argue that Apple’s own iCloud and offboarding practices were not reasonable at all. The ability to describe what was taken, with specificity, is not a formality. It is frequently the whole ballgame at the pleading stage. And the human element — recruiting, exit procedures, the “dreaded walkout” — is where secrets actually leak, long before anyone reaches a courtroom. Companies that treat these as compliance checkboxes learn the hard way, in a complaint, that they were the strategy all along. For those of us who evaluate disputes for a living, Apple v. OpenAI is also a reminder of why high-stakes trade secret matters are among the most compelling on the plaintiff’s side. The conduct is often concrete and documentable, the competitive stakes are enormous, and, as the Federal Circuit’s recent decision in Versata Software v. Ford underscored, the damages framework can reach the full value of what the misappropriation delivered to the wrongdoer, not merely a discounted license fee. That combination is exactly what makes these cases worth pursuing, and worth backing. Apple’s complaint will be tested, as it should be, and the allegations remain just that — allegations. But the strategic signal is already unmistakable. When the most valuable company in the world wants to defend its future, it reaches for trade secret law. Certum Group’s Trade Secret Guide is built to help plaintiffs and their counsel do the same, whatever their size, and this case is a live illustration of why that playbook matters now more than ever. Certum Group can help. If you are evaluating a trade secret dispute or want to talk through options for funding or de-risking one, get in touch . Footnotes ¹ Complaint, Apple Inc. v. OpenAI, Inc. , No. 5:26-cv-07078 (N.D. Cal. filed July 10, 2026); see Apple sues OpenAI over alleged trade secret theft , TechCrunch (July 10, 2026). ² The wildest allegations in Apple's trade secrets lawsuit against OpenAI , TechCrunch (July 13, 2026). ³ Id. ⁴ Apple sues OpenAI over alleged trade secret theft , TechCrunch (July 10, 2026). ⁵ Apple sues OpenAI alleging trade secret theft, says scheme was "at every level," CNBC (July 10, 2026). ⁶ The wildest allegations in Apple's trade secrets lawsuit against OpenAI , TechCrunch (July 13, 2026). ⁷ Id. ⁸ Id. ⁹ Id. ¹⁰ Apple sues OpenAI over alleged trade secret theft , TechCrunch (July 10, 2026). ¹¹ Id. ¹² OpenAI Asks Judge to Toss Apple's Trade Secrets Lawsuit , Claims Journal (Aug. 7, 2026). ¹³ Id. ¹⁴ OpenAI says Apple's own security practices undermine its trade secrets case , TechCrunch (Aug. 6, 2026). ¹⁵ Id. ¹⁶ OpenAI Asks Judge to Toss Apple's Trade Secrets Lawsuit , Claims Journal (Aug. 7, 2026).

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