Almada v. Krieger Law Firm, A.P.C.

Opinion

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 SOUTHERN DISTRICT OF CALIFORNIA 8 9 JEFFREY A. ALMADA, on behalf of Case No.: 19-cv-2109-MMP himself an all others similarly situated 10 class members, ORDER: 11 Plaintiff, 1. GRANTING IN PART AND 12 v. DENYING IN PART 13 PLAINTIFF’S UNOPPOSED KRIGER LAW FIRM, A.P.C., MOTION FOR SECOND 14 Defendant. DISTRIBUTION FROM 15 RESIDUAL COMMON FUND AND FINAL APPROVAL OF 16 CY PRES BENEFICIARIES; 17 AND

18 2. VACATING HEARING 19 [ECF No. 85] 20

21 Pending before the Court is Plaintiff Jeffrey A. Almada’s Unopposed Motion for a 22 Second Distribution from the Residual Common Fund and Final Approval of Cy Pres 23 Beneficiaries. [ECF No. 85.] Defendant did not file an opposition.1 For the reasons stated 24 25 1 Civil Local Rule 7.1(f)(3)(c) provides “Waiver: If an opposing party fails to file the papers 26 in the manner required by Civil Local Rule 7.1.e.2, that failure may constitute a consent to 27 the granting of a motion or other request for ruling by the Court.” Because Defendant did not file an opposition, the Court may conclude by virtue of this rule Defendant consents to 28 1 herein, the Court GRANTS IN PART and DENIES IN PART Plaintiff’s motion and 2 VACATES the hearing on this matter. 3 I. RELEVANT BACKGROUND 4 On November 4, 2019, Plaintiff Jeffrey A. Almada (“Plaintiff”) filed a putative class 5 action against Defendant Kriger Law Firm, A.P.C. (“Defendant”) for violations of the Fair 6 Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq., and the Rosenthal 7 Fair Debt Collection Practices Act (“RFDCPA”), Cal. Civ. Code sections 1788 to1788.32. 8 [ECF Nos. 1, 15.] On January 30, 2023, the Court issued an Order Granting Final Approval 9 of Class Action Settlement and Judgment, approving the Settlement2 between the parties. 10 [ECF No. 83 (“Final Approval Order”).] The Court found the Settlement provided each of 11 the 260 participating Settlement Class Members3 would be issued a check in the amount 12 of $507.11. [Id. ¶ 9.] In approving the Settlement, the Court also ordered “[s]hould any 13 funds remain in the Common Fund after the Cash Settlement payments” are distributed, 14 “Class Counsel shall file a formal motion with the Court indicating the amount to be 15 distributed and discussing, in more depth, the proposed cy pres recipients’ respective 16 qualifications to receive such distribution.” [Id. ¶ 14.] The Court also “preliminarily 17 approve[d] The National Consumer Law Center and Public Justice as the proposed cy pres 18 recipients to share any remaining funds in equal parts.” [Id.] 19 20 21 22

23 2 The Agreement has been filed with the Court at ECF No. 75-3. Unless otherwise specified, defined terms or capitalized terms in this Order have the same meaning as in the 24 Settlement Agreement. [See ECF No. 83 ¶ 7, n. 1.] 25 3 This number is made up of the following: 272 Settlement Class Members were identified 26 in the “Class List” to receive Notice; Notice Packets for only 11 Settlement Class Members 27 were ultimately returned as undeliverable because an alternate or better address was unattainable after conducting a skip trace, and there was 1 valid exclusion. [ECF No. 83 ¶ 28 1 In support of the current motion, Plaintiff filed a declaration from Simpluris, Inc. 2 (“Simpluris”), the Settlement Administrator in the above-entitled action, regarding the final 3 accounting of the Settlement thus far. [See ECF No. 85-4, Declaration of Meagan Brunner 4 of Simpluris, Inc. (“Brunner Decl.”) ¶ 1.] Pursuant to the terms of the Settlement 5 Agreement and the Court’s Final Approval Order, Settlement checks in the amount of 6 $507.11 were mailed to the 260 participating Settlement Class Members. [Id. ¶ 4.] The 7 check cashing period expired on September 13, 2023, and sixty-five (65) checks remained 8 uncashed, totaling $32,962.154 in uncashed funds in the Common Fund. [Id. ¶¶ 6–7.] 9 Plaintiff now moves for the Court’s authorization of a second distribution from the 10 Common Fund to the 195 Settlement Class Members who cashed their initial Settlement 11 checks, which would result in an additional check in the amount of approximately $154.90 12 after deducting $2,756 in administrative costs. [Id. ¶¶ 8–9.] Plaintiff also seeks 13 authorization for distribution of any unclaimed funds remaining after the second 14 distribution in equal parts to two preliminarily approved cy pres recipients, The National 15 Consumer Law Center (“NCLC”) and Public Justice (“PJ”). The Court addresses Plaintiff’s 16 two requests in turn. 17 II. SECOND DISTRIBUTION 18 Where class actions are resolved via settlement, “money often remains in the 19 settlement fund even after initial distributions to class members have been made because 20 some class members either cannot be located or decline to file a claim.” In re Google Inc. 21 St. View Elec. Commc’ns Litig., 21 F.4th 1102, 1110 (9th Cir. 2021) (quoting Klier v. Elf 22 Atochem N. Am., Inc., 658 F.3d 468, 473 (5th Cir. 2011)). The Ninth Circuit has recognized 23 numerous potential alternatives for distributing unclaimed settlement funds, including cy 24 pres distribution, escheat to the government, reversion to defendants, and “additional pro 25 26 27 4 Of the sixty-five (65) uncashed checks, twelve (12) checks were undeliverable. [Brunner 28 1 rata distributions to those class members who did claim funds.” Id. at 1110–11; see also 2 Six (6) Mexican Workers, 904 F.2d 1301, 1307, n.4 (9th Cir. 1990). 3 A district court has “broad discretionary powers in shaping equitable decrees for 4 distributing unclaimed class action funds” and its “choice among distribution options 5 should be guided by the objectives of the underlying statute and the interests of the silent 6 class members.” Six (6) Mexican Workers, 904 F.2d at 1307. “Although the terms of a 7 settlement agreement may dictate how unclaimed settlement funds should be allocated, a 8 district court may otherwise exercise its equitable powers in managing the distribution of 9 the settlement proceeds.” Connor v. JPMorgan Chase Bank, N.A., No. 10-cv-1284, 2021 10 WL 1238862, at *1 (S.D. Cal. Apr. 2, 2021). 11 Here, the Settlement Agreement provides in relevant part: 12 If any portion of the Common Fund remains unclaimed, or any check sent to any Settlement Class Members remains uncashed after it is no longer 13 administratively feasible to provide for an additional distribution [to] 14 Settlement Class Members, then such unclaimed or uncashed funds will, subject to approval by the Court, become part of the Common Fund for cy 15 pres distribution in equal parts to any cy pres recipients. 16 17 [Settlement Agreement § III.U.]5 Thus, the Settlement Agreement specifically 18 contemplates a cy pres distribution only after it is no longer administratively feasible to 19 provide an additional distribution to Settlement Class Members. Id. Plaintiff contends 20 though the Settlement Agreement does not expressly provide for a second distribution, the 21 parties also did not anticipate sixty-five (65) Settlement Class Members would not cash 22 their checks, resulting in $32,962.15 in unclaimed funds, which is a substantial amount 23 compared with the size of the Settlement Class. [ECF No. 85-1 at 9.] Further, Plaintiff 24 asserts as “it is economically feasible to conduct a second distribution to the 195 Settlement 25 Class Members who cashed their initial settlement check, a distribution to the proposed cy 26 27 5 The Settlement also provides Defendant has no reversionary interest in any portion of the 28 1 pres beneficiaries is not appropriate under the Settlement Agreement until after a second 2 distribution occurs.” [Id.] Thus, Plaintiff asserts a second distribution is proper and does 3 not run afoul of the Settlement’s intent. 4 The Court finds a second distribution is administratively feasible given the amount 5 of uncashed funds, $32,962.15, remaining in the Common Fund, which would cover the 6 administrative costs associated with the second distribution in the amount of $2,756 and 7 thus result in a non-de minimis payment of approximately $154.90. The Court also agrees 8 the second distribution should be limited to the 195 Settlement Class Members who cashed 9 their initial Settlement checks, as it is unlikely those who did not cash their check in the 10 amount of $507.11 would cash a check for a smaller sum in the amount of $154.90. See In 11 re Google Inc. St. View Elec. Commc’ns Litig., 21 F.4th at 1110–11; Malta v. Fed. Home 12 Loan Mortg. Corp., No. 10-cv-1290, 2017 WL 11837070, at *3 (S.D. Cal. Aug. 1, 2017); 13 Connor, 2021 WL 1238862, at *2 n.3. 14 Finally, the Court finds a second distribution not only is consistent with the terms of 15 the Settlement Agreement but also directly benefits class members and is thus preferable 16 to a cy pres distribution under these circumstances. In Klier v. Elf Atochem North America 17 Incorporated, 658 F.3d 468, 475 (5th Cir. 2011), a case cited by the Ninth Circuit as an 18 example of permitting additional pro rata distributions to class members who previously 19 claimed funds, the Fifth Circuit explained: 20 Because the settlement funds are the property of the class, a cy pres distribution to a third party of unclaimed settlement funds is permissible “only 21 when it is not feasible to make further distributions to class members.” Where 22 it is still logistically feasible and economically viable to make additional pro rata distributions to class members, the district court should do so, except 23 where an additional distribution would provide a windfall to class members . 24 . . A cy pres distribution puts settlement funds to their next-best use by providing an indirect benefit to the class. That option arises only if it is not 25 possible to put those funds to their very best use: benefitting the class 26 members directly.

27 28 1 Klier, 658 F.3d at 475 (internal citations and footnotes omitted); see also Connor, 2021 2 WL 1238862, at *2 (“Ninth Circuit precedent regarding cy pres distributions affirms the 3 Court’s view that a second distribution to class members, where possible and not contrary 4 to the aims of the settlement agreement, is often preferable to a cy pres distribution”) 5 (footnote omitted). For the reasons explained above, the Court finds given the substantial 6 uncashed funds remaining the Common Fund, it is still administratively and economically 7 feasible to make a second distribution to the 195 participating Settlement Class Members, 8 and such an additional distribution is both consistent with and indeed specifically 9 contemplated by the Settlement Agreement. Further, the second distribution would not 10 result in a windfall to the 195 participating Settlement Class Members who cashed their 11 initial checks.6 Thus, the Court finds a second distribution would further the intent of the 12 Settlement Agreement, as well as put the funds to their best use by benefitting class 13 members directly. Accordingly, the Court GRANTS Plaintiff’s motion for a second 14 distribution to participating Settlement Class Members. 15 III. CY PRES DISTRIBUTION 16 Plaintiff concurrently moves for an order approving a cy pres distribution of any 17 funds remaining in the Common Fund after the second distribution to the preliminary 18 approved cy pres beneficiaries, NCLC and PJ. Plaintiff contends a cy pres distribution is 19 proper because the terms of the Settlement Agreement provide for a cy pres distribution 20 for any unclaimed funds or uncashed settlement checks in equal parts to NCLC and PJ, a 21 third distribution is not economically feasible, and the Court already preliminarily 22 approved NCLC and PJ as cy pres beneficiaries. [ECF No. 85-1 at 11.] 23 24 25 26 6 Plaintiff previously represented “[t]he maximum statutory damages under the FDCPA 27 and RFDCPA is up to $1,000 per statute (depending on whether the violation is proven to be willful.).” [ECF No. 75-1 at 31 (citing 15 U.S.C. § 1692k(a)(1)-(2)(A) (FDCPA); see 28 1 “[F]ederal courts have widely recognized the cy pres doctrine as a tool for 2 ‘distribut[ing] unclaimed or non-distributable portions of a class action settlement fund to 3 the ‘next best’ class of beneficiaries.’” In re Google Inc. St. View Elec. Commc’ns Litig., 4 21 F.4th at 1111 (quoting Nachshin v. AOL, LLC, 663 F.3d 1034, 1036 (9th Cir. 2011)). 5 Under the cy pres doctrine, class members “benefit—albeit indirectly—from a defendant’s 6 payment of funds to an appropriate third party.” Id. at 1116. In determining whether a 7 proposed cy pres beneficiary is appropriate, the court must consider whether the 8 distributions account for (1) the nature of the plaintiff’s lawsuit, (2) the objectives of the 9 underlying statutes, and (3) the interests of the silent class members. Id. These factors 10 “guide judicial oversight of cy pres settlement provisions” and “are designed to ensure that 11 cy pres payments particularly ‘benefit the plaintiff class.’” Id. (quoting Nachshin, 663 F.3d 12 at 1036, 1040). Overall, the cy pres award must have a “direct and substantial nexus to the 13 interests of absent class members.” Id. (quoting Lane v. Facebook, Inc., 696 F.3d 811, 821 14 (9th Cir. 2012)). 15 Here, the Settlement Agreement provides “[a]ny unclaimed portion of the Common 16 Fund, as well as any sums allocated to settlement checks that have not been cashed, shall 17 be paid to cy pres recipients” as described in Section III, which in turn provides “after it is 18 no longer administratively feasible to provide for an additional distribution [to] Settlement 19 Class Members, then such unclaimed or uncashed funds will, subject to approval by the 20 Court, become part of the Common Fund for cy pres distribution in equal parts to any cy 21 pres recipients.” [Settlement Agreement §§ III.G, III.U.] Thus, as detailed above, the 22 Settlement Agreement provides for a cy pres distribution only after “it is no longer 23 administratively feasible to provide for an additional distribution” to participating 24 Settlement Class Members. [See id. § III.U.] 25 Plaintiff contends a third distribution is not economically feasible because, following 26 a second distribution, each participating Settlement Class Member’s individual recovery 27 would be de minimis. [ECF No. 85-1 at 12.] Plaintiff estimates a third distribution would 28 likely have similar administrative costs as estimated for the second ($2,756) and further 1 alleges a check cashing rate following a second distribution “could be closer to 90% given 2 the 195 Settlement Class Members who would be receiving this second distribution already 3 cashed their initial check and are likely to also cash a second check.” [Id.]7 Assuming a 4 90% cash checking rate and excluding anticipated administrative costs for a third 5 distribution, Plaintiff alleges “a third distribution would likely be no more than $1.95 per 6 Settlement Class Member.” [Id.] 7 Plaintiff has not sufficiently established an additional distribution would not be 8 administratively feasible. As a preliminary matter, Plaintiff offers no declaration—from 9 the Settlement Administrator or otherwise—to support his allegations regarding a third 10 distribution including the anticipated check cashing rate. Further, though the Court tends 11 to agree a payment of $1.95 per Settlement Class Member may be de minimis, if the check 12 cashing rate for the second distribution is less than the 90% alleged by Plaintiff, an 13 additional distribution may be administratively feasible and non-de minimis,8 and thus 14 consistent with the terms of the Settlement Agreement prior to a cy pres distribution. Thus, 15 the Court finds Plaintiff’s motion to authorize a cy pres distribution is premature at this 16 juncture, without having the benefit of knowing the amount of unclaimed funds, if any, 17 resulting from the second distribution authorized above. 18 Accordingly, the Court DENIES without prejudice Plaintiff’s motion for approval 19 of the cy pres recipients and a cy pres distribution. Upon completion of the second 20 distribution approved above, Plaintiff shall renew his motion for a cy pres distribution and 21 22 23 7 Plaintiff also represents the check cashing percentage rate for the initial distribution to 24 the 260 Settlement Class Members was 75%. [ECF No. 85-1 at 12.] 25 8 Plaintiff acknowledges several times throughout his motion a payment of $8.19 was held 26 to be not de minimis, ECF No. 85-1 at 10, and also relies on another case in which the 27 Court found an additional distribution of $3.07 was not de minimis. See Connor, 2021 WL 1238862, at *2 (finding second distribution of $8.19 not de minimis); Malta, 2017 WL 28 1 || final approval of cy pres beneficiaries, if appropriate, with an accompanying declaration 2 Simpluris as to the final accounting of the second distribution. 3 CONCLUSION 4 For the reasons set forth above, the Court GRANTS IN PART and DENIES IN 5 ||PART Plaintiff's Unopposed Motion for a Second Distribution from the Residual 6 || Common Fund and Final Approval of Cy Pres Beneficiaries as follows: 7 1. The Court GRANTS Plaintiff's Unopposed Motion for a Second Distribution 8 || from the Residual Common Fund and further ORDERS as follows: 9 a. Payment in the amount of $2,756 shall be distributed from the Common 10 Fund to Simpluris, Inc., the Court appointed third-party Claims 11 Administrator, for the purpose of administering a second distribution 12 within (7) seven days of the date of this Order. 13 b. A second distribution in equal parts shall be made from the remainder of 14 the Common Fund to the 195 Settlement Class Members who cashed their 15 initial Settlement checks within forty-five (45) days of the date of this 16 Order. 17 2. The Court DENIES without prejudice Plaintiff's motion for final approval 18 ||of cy pres beneficiaries and a cy pres distribution. Upon completion of the second 19 || distribution approved above, Plaintiff shall file a renewed motion for a cy pres distribution 20 final approval of cy pres beneficiaries, if appropriate, with an accompanying 21 || declaration from Simpluris as to the final accounting of the second distribution. 22 IT IS SO ORDERED. 23 ||Dated: May 16, 2024 Miho My. ser 4 HON. MICHELLE M. PETTIT United States Magistrate Judge 25 26 27 28