Unreported / Non-Citable
Background
Glazing Employers and Glaziers Union Local #27 Pension and Retirement Fund brought this Private Securities Litigation Reform Act putative class action against iRhythm Technologies and its CEO, Quentin Blackford. The complaint alleged false or misleading statements concerning the Zio AT, a device that transmits heart-event data for physician monitoring. After briefing and a hearing on class certification, the parties reported a settlement, and the court preliminarily approved it. The settlement class generally covers persons and entities that purchased or acquired iRhythm common stock from July 25, 2022 through August 9, 2024, subject to specified exclusions.
Defendants agreed to pay $45 million into a settlement fund. Notice and administration costs, litigation expenses, attorneys' fees, taxes, and a lead-plaintiff compensatory award are deducted before the net amount is distributed pro rata under the plan of allocation. Strategic Claims Services disseminated 84,409 notice packets and maintained the settlement website and toll-free number. The court received no objections and only three exclusion requests. The motions for final approval and for fees, costs, and a representative award were argued on November 5, 2026.
The Court’s Holding
Judge Jacqueline Scott Corley incorporated the preliminary approval order's Rule 23(a) and 23(b) analysis because no material facts had changed. She found that the implemented email and mail notice program supplied the best practicable notice under Rule 23, even though some packets remained undeliverable. Applying the Churchill fairness factors, the court credited the litigation risks, including Defendants' argument that they could rebut the fraud-on-the-market presumption and Plaintiff's recognition of risks to establishing liability, loss causation, and damages. It also relied on the substantial investigation and discovery, counsel's experience, the settlement amount, and the class's reaction. The court found no Bluetooth warning signs of collusion: the requested fee was within the range of reasonableness, there was no clear-sailing agreement, and the fund was non-reversionary.
The court again approved the recognized-loss allocation plan and agreed that Northwestern Pritzker School of Law's Investor Protection Center is an appropriate cy pres beneficiary if residual funds remain after two distributions. It awarded the requested $11,250,000 fee, representing 25 percent of the fund, supported by a lodestar cross-check of $6,243,750 for 8,700 hours and a reasonable 1.8 multiplier. Litigation costs of $672,934.95 and a $9,600 lead-plaintiff award for Oklahoma Firefighters Pension and Retirement System were approved. Although the administrator estimated $395,000 in administration costs, the court awarded $225,000 because Plaintiff did not seek approval before incurring the additional costs and the notice advised class members these costs would not exceed $225,000. Class Counsel must file a Post-Distribution Accounting within 21 days after distribution of the settlement funds, and the parties shall file a proposed judgment on or before November 19, 2026.
Key Takeaways
- The court granted final approval of the $45 million settlement and granted in part the motion for attorneys' fees, costs, and a compensatory award.
- The absence of objections, only three exclusion requests, and damaged shares representing an estimated 97 percent of the total supported the court's assessment of the class's reaction.
- The $11.25 million fee was within the range of reasonableness under the Ninth Circuit's 25 percent benchmark and was supported by a 1.8 lodestar multiplier.
- Settlement administration costs were awarded at $225,000 rather than the administrator's $395,000 estimate because the excess was neither preapproved nor consistent with the class notice.
- The order requires a Post-Distribution Accounting within 21 days after distribution and directs the parties to file a proposed judgment on or before November 19, 2026.
Why It Matters
The order resolves the settlement-approval and fee motions without adjudicating whether iRhythm or Blackford violated the securities laws. Its analysis explains why the risks and expense of continued litigation made the negotiated recovery fair, adequate, and reasonable under Rule 23(e). The administration-cost ruling illustrates that final approval does not automatically authorize expenses exceeding the amount disclosed to the class.