Court Denies Preliminary Approval of Fashion Nova Website Accessibility Class Settlement

On December 20, 2024, the United States District Court for the Northern District of California denied without prejudice a motion for preliminary approval of a class action settlement in a lawsuit against clothing retailer Fashion Nova, Inc. The action involves claims that the retailer violated Title III of the Americans with Disabilities Act (ADA) and California's Unruh Civil Rights Act because its website is not accessible to screen-reader users seeking to visit physical store locations.

Case Background and Prior Proceedings

The plaintiff, a visually impaired customer, filed the lawsuit alleging that the retailer’s website could not be accessed using screen-reader software, impeding access to the goods and services of physical stores. The court previously certified two classes on September 6, 2022:

• A nationwide injunctive relief class under Federal Rule of Civil Procedure 23(b)(2).
• A California damages class under Rule 23(b)(3).

Following multiple settlement conferences in 2023 and an all-day mediation on January 18, 2024, the parties accepted a mediator's proposal on January 25, 2024. A motion for preliminary approval of the agreement was submitted on May 16, 2024.

Terms of the Proposed Agreement

The settlement structure included both injunctive measures and financial relief:

• Website Remediation: Fashion Nova agreed to bring its website into compliance with relevant accessibility standards, adopt an internal Website Accessibility Policy, engage external consultants, and permit class counsel to conduct compliance audits. Implementation was estimated at $60,000 initially, plus up to $42,000 annually for maintenance.
• Monetary Fund: The retailer agreed to create a $5,150,000 funding pool. Court-approved notice, administration costs, attorneys' fees, and service awards would be deducted from this sum to create a net settlement amount.
• Class Member Payments: Eligible California class members submitting timely claims under penalty of perjury could receive a maximum payment of $4,000 (subject to pro rata reduction). Eligible claimants had to confirm legal blindness, an attempt to find physical store locations on the website with reasonable diligence, the approximate dates of visit, and their intention to visit a physical store. Claims were restricted to one per household.
• Unclaimed Funds: If any funds remained after distribution, 50% would go to the American Foundation for the Blind as a cy pres recipient, while 50% would revert to Fashion Nova to finance the injunctive relief.

The Court's Ruling on Reversion

The court determined that the proposed settlement could not be approved due to the reversion clause returning 50% of unclaimed funds to the defendant. Under Ninth Circuit legal precedent, reversion clauses are generally disfavored because they can create incentives for defendants to minimize claim rates in opt-out settlements, while potentially inflating class counsel fee calculations.

The court rejected class counsel’s arguments that reversion was improbable due to high expected participation or that using reverted funds for injunctive remediation justified the clause. The judge observed that Fashion Nova is independently required to implement injunctive relief under the settlement, meaning that applying class funds to satisfy that obligation merely reduces the company's financial responsibility. The denial was issued without prejudice, allowing the parties an opportunity to submit a revised settlement addressing this deficiency.

Source: U.S. Courts (govinfo.gov)