In  Allen v. Bedolla787 F.3d 1218(9th Cir. 2015) (No. 13-55106), plaintiffs brought a class action against an employment agency.  After several mediations, the parties reached a settlement that created a $4.5 million cash fund.  Up to 25% of the fund could be paid to class counsel, and the remainder to be claimed by class members, with unclaimed funds reverting to defendant.  The Ninth Circuit reversed the approval of the settlement.  Applying its Bluetooth decision, the court stated that settlements that present “subtle signs” that class counsel allowed their self-interest to “infect the negotiations” should receive more probing review.  Warning signs that should provoke heightened scrutiny include:  when counsel receives a disproportionate amount of the settlement; the parties negotiate an arrangement whereby defendant will not object to a certain fee request; and the settlement contains a reverter.  This settlement had all three warning signs, and the district court did not explain the fairness of the settlement.  Further, on the issue of attorneys’ fees, the court cautioned that the Ninth Circuit’s “benchmark,” that it is ordinarily appropriate to pay 25% of settlement value to class counsel, should not lead to a formulaic approach that would result in an unreasonable award.  In this case, less than $400,000 was to be distributed to class members.  Apparently, the parties anticipated this low amount when they settled.  The district court failed to inquire as to why counsel had negotiated such disproportionate benefit for themselves.