A San Francisco federal judge has pulled the plug on a potential $5.1 million settlement to end a nearly five-year-old lawsuit accusing online women's clothing seller Fashion Nova of discrimination by selling their products through a website that is allegedly not accessible enough to the blind and visually impaired.
In the ruling, U.S. District Judge Jon S. Tigar said he couldn't approve the settlement because it would allow Fashion Nova to keep up to half of whatever money isn't claimed from the settlement by California residents supposedly harmed by the allegedly deficient website.
Under the settlement, attorneys for the plaintiffs would have claimed 25% of the settlement fund, or about $1.24 million.
In his ruling, Judge Tigar offered no comments on the appropriateness of the attorneys' fees.
The lawsuit was filed in 2020 in San Francisco federal court by attorneys with the Wilshire Law Firm, of Los Angeles.
The action was filed on behalf of named plaintiff Juan Alcazar, identified as a legally-blind resident of San Mateo County.
In the lawsuit, Alcazar and his attorneys from the Wilshire firm accuse Fashion Nova of allegedly violating the federal Americans with Disabilities Act and the California Unruh Act, a a state law which similarly forbids disability discrimination.
The lawsuit specifically claims Fashion Nova's website is too inaccessible to those with visual impairments, because it is largely not compatible with so-called screen reading software. This allegedly denies the blind and visually impaired people equal opportunity to shop online.
The lawsuit sought damages of $4,000 per offense per person, as allowed under the California law, plus attorney fees.
The lawsuit estimated as many as 10,000 California residents could be included in the plaintiffs' class.
According to court records, Alcazar and the Wilshire Law Firm attorneys have partnered for a host of similar lawsuits against online retailers and restaurants in California courts, all accusing them of similarly violating the ADA and Unruh Act for hosting retail websites that are allegedly incompatible with screen readers.
In the Northern District of California alone, for instance, their lawsuits have taken aim at retailers including A.P.C., Rite Aid, Miele, Hickory Farms and Icebreaker; and restaurants including Shake Shake, Rooster & Rice, Bubba Gump Shrimp Co. and the Halal Guys, among many others.
Some of those cases have landed settlements, most ending within two years. Others have been dismissed without a notice of any settlement within months.
In the case against Fashion Nova, court documents indicated the parties had reached a deal to end the lawsuit after more than four years in court.
Under that settlement, Fashion Nova agreed to pay more than $5.1 million.
Eligible California class members would receive up to $4,000 each. The Wilshire firm attorneys would receive more than $1.2 million.
Should any money remain in the fund after all eligible class members, attorneys and settlement administrators have been paid, the settlement would have split the remainder, with 50% going to the American Foundation for the Blind and the other half of the remainder going back to Fashion Nova.
In a brief explaining the settlement, the plaintiffs noted they could find virtually no other settlements of this kind in the courts on which to pattern their deal with Fashion Nova. They noted they were aware of only one other case in the entire country "which obtained similar settlement relief." That was a case docketed as National Federation of the Blind v. Target, a lawsuit, also filed in the Northern District of California.
In that 2012 settlement, retail giant Target agreed to pay $6 million. However, the attorneys in the Fashion Nova case said they did not have information concerning how many people received money from the settlement or how much they received.
While Judge Tigar had agreed to allow the Fashion Nova case to move forward as a class action, he rejected the bid to approve the settlement, saying he was uncomfortable with the so-called "reversionary" provision, under which Fashion Nova could get some of the $5.1 million back at the end.
Tigar noted plaintiffs' lawyers sought to assure him that the potential $4,000 per person payouts would be enough to ensure very little chance that Fashion Nova could invoke the provision.
But he said those assurances were insufficient to win him over, saying that "reason makes little sense."
"If the parties do not believe that a reversion will materialize, then there is no need for the provision," Tigar said. "Nor is the Court persuaded by the second justification. Defendant is required to fund the injunctive relief required by the settlement, so reducing its financial obligation by the receipt of class settlement funds simply boosts its bottom line."
He denied the motion for preliminary approval of the settlement without prejudice, meaning the parties can file a new motion for settlement in a bid to "correct this deficiency."
Plaintiffs have been represented by attorneys Thiago M. Coelho, Shahin Rezvani, Jennifer M. Leinbach, Jesenia A. Martinez and Jesse S. Chen, of the Wilshire firm.
Fashion Nova has been represented by attorneys Chad S. Hummel, Amy P. Lally, Eric B. Schwartz, Anna Tutundjian and Marissa X. Hernandez, of the firm of Sidley Austin LLP, of Los Angeles; and Paul J. Watford and David H. Kramer, of the firm of Wilson Sonsini Goodrich & Rosati P.C., of Los Angeles and Palo Alto.