1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 JEFFREY CHEN, Case No. 19-cv-01082-JSC
8 Plaintiff, ORDER RE: PLAINTIFF’S MOTION 9 v. FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT 10 CHASE BANK USA, N.A., Re: Dkt. Nos. 43, 51 Defendant. 11
12 13 Plaintiff Jeffrey Chen brings a class action against Chase Bank USA, N.A. (now J.P. 14 Morgan Chase) (“Chase”) alleging violations of the Equal Credit Opportunity Act (“ECOA”) 15 under 15 U.S.C. § 1691 et seq. (Dkt. No. 43 at 6.)1 Now before the Court is Plaintiff’s unopposed 16 motion for preliminary approval of the parties’ Class Action Settlement Agreement.2 Having 17 considered the papers, having had the benefit of oral argument on December 12, 2019, and having 18 considered the parties’ supplemental submission, the Court GRANTS the motion for preliminary 19 approval. 20 BACKGROUND 21 Plaintiff filed a class action against Chase in the Superior Court of State of California, 22 County of Alameda on January 28, 2019 alleging violations of the ECOA under 12 C.F.R. § 23 1002.2, and seeking punitive damages under the ECOA, injunctive relief, and attorney’s fees and 24 costs. (Dkt. No. 1-1 (“Complaint”) at 1, 9, Prayer for Relief ¶¶ 1-3.) Chase removed the action to 25 this Court because the action arises under ECOA, a federal law. (Dkt. No. 1 at ¶ 7.) Chase then 26 1 Record citations are to material in the Electronic Case File (“ECF”); pinpoint citations are to the 27 ECF-generated page numbers at the top of the documents. 1 moved to dismiss the complaint for lack of statutory standing and failure to state a claim. (Dkt. 2 No. 8.) The Court denied the motion to dismiss, and two months later, the parties participated in a 3 mediation with retired magistrate judge Wayne D. Brazil. (Dkt. No. 22; Dkt. No. 43-1 at ¶ 6.) 4 While the parties did not settle, they made “substantial progress and continued to negotiate over 5 the following weeks.” (Id. at ¶ 7.) On August 9, 2019, the parties reached a settlement in 6 principle. (Id.) After two months of “extensive negotiations concerning the final terms of the 7 Settlement,” Plaintiff filed the instant unopposed motion for preliminary approval of the class 8 action settlement on November 22, 2019. (Id. at ¶ 8.) 9 I. Complaint Allegations 10 Plaintiff applied for a credit card issued by Chase. (Complaint at ¶ 5.) On or about 11 September 19, 2018, Chase sent Plaintiff a letter denying his credit application stating that Chase 12 “can’t approve your request at this time because: Previous unsatisfactory relationship with this 13 bank.” (Id. at ¶¶ 18-19.) Plaintiff alleges that Chase’s denial of his credit application constitutes 14 an “adverse action” for which a “statement of specific reasons for the action taken” or a 15 “disclosure of the applicant’s right to a statement of specific reasons” is required within 30 days of 16 receiving Plaintiff’s credit application. (Id. at ¶¶ 16-17.) Plaintiff insists that the letter he received 17 fails to meet the “specific reason” requirement under the ECOA and does not disclose the specific 18 reasons for which Plaintiff’s application was denied. (Id. at ¶¶ 19, 22.) 19 II. Settlement Agreement 20 A. Proposed Class 21 The proposed settlement class consists of “all natural persons to whom Chase sent a letter 22 giving either ‘previous unsatisfactory relationship with this bank’ or ‘previous unsatisfactory 23 relationship with us or one of our affiliates’ as the only reason for taking adverse action in 24 connection with a credit card account during the period beginning January 28, 2014 and ending on 25 November 22, 2019.” (Dkt. No. 43-1, Ex. A (“Agreement”) § 1.29.) The class is comprised of 26 approximately 18,183 persons. The class excludes “officers and directors of Chase and its parents, 27 subsidiaries, affiliates, and any entity in which Defendant has a controlling interest; and all judges 1 B. Payment Terms 2 Chase agrees to pay $244,659 for: “(1) payments to the Settlement Class, (2) a Class 3 Representative Incentive Award of up to $5,000, and (3) Notice and Settlement Administration 4 Costs.” (Id. §§ 2.3, 3.2, 3.3, 4.8.) The Settlement Class Consideration is “non-reversionary.” (Id. 5 § 4.10(f).) The settlement administration costs are estimated at $50,102. (Dkt. No. 43-1 at ¶ 10.) 6 Assuming the $5,000 class representative incentive award and the $50,102 administration costs, 7 the net settlement class consideration will be $189,557, or, $10.42 per settlement class member if 8 all settlement class members were to submit a valid claim form. (Dkt. No. 43 at 9.) 9 In addition to the Settlement Class Consideration, “Plaintiff’s counsel will move for 10 attorneys’ fees and costs of up to $185,000, to be paid by Chase.” (Dkt. No. 43-1, Ex. A, 11 Agreement § 3.4(a).) The Court will also enjoin Chase, for five years from the date of final 12 approval, from using the phrases “‘previous unsatisfactory relationship with this bank’ and 13 ‘previous unsatisfactory relationship with us or one of our affiliates’ in adverse action notices as 14 the sole reason for denying credit card applications or otherwise taking an adverse action in 15 connection with a Chase credit card account.” (Id. § 3.5) 16 1. Individual Class Member Shares 17 To receive a payment, settlement class members “must submit a valid Claim Form 18 electronically through the Settlement Website or by mail to the Settlement Administrator” within 19 60 days after the Notice Date. (Agreement §§ 1.5, 4.3(a), 4.10(b).) The claim form will be made 20 available on the Settlement Website and will be mailed upon request. (Id. § 4.3(a).) The claim 21 form requires class members to provide: 22 (a) the Settlement Class Member’s name and mailing address,
23 (b) a certification that, to the best of the Settlement Class 24 Member’s knowledge, Chase sent him or her a notice containing either “previous unsatisfactory relationship with this 25 bank” or “previous unsatisfactory relationship with us or one of our affiliates” as the only reason why Chase took an adverse 26 credit action against the Settlement Class Member.
27 1 after the Notice Date (the “Claims Submission Deadline”). (Id. § 4.3(b).) 2 The Settlement Class Consideration will be divided in equal shares among the claiming 3 class members. Plaintiff estimates that only 7% of class members will submit a valid claim form 4 which would yield a cash payment of approximately $149 per claiming class member. (Dkt. Nos. 5 43 at 13; 43-1 at ¶ 11.) 6 Within 15 days of an order and finalized judgment from this Court, Chase will deposit the 7 Settlement Class Consideration into an account which will be maintained as the “Court-approved 8 Qualified Settlement Fund.” (Dkt. No. 43-1, Ex. A, Agreement §§ 3.2, 4.8.) Within 27 days of the 9 final order and judgment, each class Mmmber eligible for payment will be mailed their payment 10 drawn from the Settlement Class Consideration account. (Id. § 4.10(c).) 11 2. Unclaimed Funds 12 The class members’ checks are valid for 180 days after issuance. (Id. § 4.10(d).) If any 13 check is returned as undeliverable, the Settlement Administrator will make “reasonable efforts to 14 locate the proper address for any intended recipient” and “will re-mail it once to the updated 15 address.” (Id.) For checks left uncashed after the 180 days, a second distribution will be made to 16 the settlement class members who cashed their initial checks, if “economically feasible.” (Id. § 17 4.10(e).) If second round distribution is not feasible, or if there are funds remaining in the 18 Settlement Class Consideration account after the “stale check date for the second distribution,” the 19 remaining funds will then be distributed in a “mutually agreeable manner, subject to the approval 20 of the Court.” (Id.) 21 D. Release 22 Plaintiff and class members who do not opt out agree to release Chase, together with the 23 other “Released Parties,” from the “Released Claims.” (Agreement § 3.6(a).) Namely, claims 24 arising out of or related to: (a) Chase’s use of the language “previous unsatisfactory 25 relationship with this bank” or “previous unsatisfactory 26 relationship with us or one of our affiliates” in an adverse action notice sent pursuant to the ECOA in connection with a 27 credit card account on or before November 22, 2019; or (b) the acts and omissions alleged in the Complaint occurring on 1 (Id. § 1.24.) In addition, Plaintiff and class members waive “any and all rights” under California 2 Civil Code § 1542 which excludes from release those claims which are unknown at the time of the 3 release. (Id. § 3.6(d).) The claims to be released are broader than the claims in the Complaint. 4 (Dkt. No. 43 at 11.) 5 E. Notice 6 Within 10 days of preliminary approval, Chase will “provide the Settlement Class Member 7 List to the Settlement Administrator and Settlement Class Counsel.” (Agreement § 4.2.) “Within 8 45 days of Preliminary Approval, the Settlement Administrator will provide the Settlement Class 9 with notice of the proposed Settlement by: 10 (a) Establishing a Settlement Website, which shall contain the Notice and enable Settlement Class Members to submit a 11 Claim Form electronically. The Settlement Website shall 12 remain active until at least 45 days after the Post- Distribution Accounting; 13 (b) Emailing the Notice to all Settlement Class Members who 14 have an email address on file with Chase; and,
15 (c) For all Settlement Class Members who do not have a 16 current and valid email address on file with Chase (including as evidenced by any undeliverable messages or 17 bounce-backs resulting from (b) immediately above), by sending the Notice and Claim Form to Settlement Class 18 Members via U.S. Mail using the postal mailing address on file with Chase as updated by the Settlement Class 19 Administrator using reasonable and customary procedures 20 for address updating using public records. 21 (Id.) All email notices will be sent with a tracking pixel and, if the email notice has not opened as 22 of the seventh day following the email notice, the class member will be sent a notice by mail. (Id. 23 § 4.2.) 24 F. Opt-Out and Objections to the Settlement 25 Settlement class members may opt out by submitting a request for exclusion to the 26 settlement administrator no later than 60 days after the notice date. (Id. § 4.4.) If more than 25 27 settlement class members validly and timely opt out, Chase may terminate the settlement within 1 settlement by filing or sending the Court a written objection, which meets the effectiveness 2 requirements, no later than 60 days after the notice date. (Id. § 4.7.) An objector, or his attorney, 3 may call witnesses or present evidence at the final approval hearing if he chooses to and complies 4 with the requirements. (Id.) 5 DISCUSSION 6 A class action settlement agreement must be fair, adequate, and reasonable. Fed. R. Civ. 7 P. 23(e)(2). Where, as here, parties reach an agreement before class certification, “courts must 8 peruse the proposed compromise to ratify both the propriety of the certification and the fairness of 9 the settlement.” Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). If the court 10 preliminarily certifies the class and finds the settlement appropriate after “a preliminary fairness 11 evaluation,” then the class will be notified, and a final fairness hearing scheduled to determine if 12 the settlement is fair, adequate, and reasonable pursuant to Rule 23. Villegas v. J.P. Morgan 13 Chase & Co., No. CV 09-00261 SBA (EMC), 2012 WL 5878390, at *5 (N.D. Cal. Nov. 21, 14 2012). 15 I. Conditional Certification of the Settlement Class 16 Class actions must meet the following requirements for certification: 17 (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to 18 the class; (3) the claims or defenses of the representative parties 19 are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the 20 interests of the class. 21 Fed. R. Civ. P. 23(a). In addition to meeting the requirements of Rule 23(a), a putative class 22 action must also meet one of the conditions outlined in Rule 23(b)—as relevant here, the condition 23 that “questions of law or fact common to class members predominate over any questions affecting 24 only individual members, and that a class action is superior to other available methods for fairly 25 and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). Prior to certifying the 26 class, the Court must determine that Plaintiff has satisfied his burden of demonstrating that the 27 proposed class satisfies each element of Rule 23. 1 A. Rule 23(a) 2 The Rule 23(a) factors are satisfied. First, there are approximately 18,183 persons in the 3 class. (Dkt. No. 43 at 8.) The putative class thus satisfies the numerosity requirement. See Ries v. 4 Ariz. Beverages USA LLC, 287 F.R.D. 523, 536 (N.D. Cal. 2012) (“While there is no fixed 5 number that satisfies the numerosity requirement, as a general matter, a class greater than forty 6 often satisfies the requirement, while one less than twenty-one does not.”). 7 Second, the commonality requirement is satisfied because there are common questions of 8 law and fact arising out of Chase’s allegedly unlawful practice that affected all class members who 9 applied for a credit card through Chase during the specified time period and were denied because 10 of their unspecified “previous unsatisfactory relationship” with Chase or one of its affiliates. See 11 Bellinghausen v. Tractor Supply Co., 303 F.R.D. 611, 617 (N.D. Cal. 2013) (finding commonality 12 requirement satisfied where class members were subject to the same challenged policies and 13 procedures). In particular, Plaintiff identifies the following common issues: “whether Chase’s 14 explanation for its adverse actions constitutes a ‘specific’ reason under ECOA’s notice provision,” 15 and “whether Chase’s credit denials and terminations constitute ‘adverse actions’ under ECOA.” 16 (Dkt. No. 43 at 17.) Third, the typicality requirement is similarly satisfied because Plaintiff’s 17 claim challenges the letter that was sent to all class members upon denial of their credit 18 application, and thus, all members suffered the same or similar injury. See Hanon v. Dataproducts 19 Corp., 976 F.2d 497, 508 (9th Cir. 1992) (“The test of typicality is whether other members have 20 the same or similar injury, whether the action is based on conduct which is not unique to the 21 named plaintiffs, and whether other class members have been injured by the same course of 22 conduct.”); see also Bellinghausen, 303 F.R.D. at 617 (finding the typicality requirement satisfied 23 because the named plaintiff “allege[d] that he, like the other class members, worked for 24 [d]efendant in California during the class period and was subject to the same wage-and-hour 25 policies and procedures at issue in [the] litigation”). 26 Finally, Plaintiff and class counsel appear to adequately represent the class. Plaintiff 27 received the denial letter from Chase during the class period and was allegedly injured by this 1 with that of the class. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 594-95 (1997) 2 (“Representatives must be part of the class and possess the same interest and suffer the same 3 injury as the class they seek to represent.”). Plaintiff’s counsel consists of three attorneys, Ray 4 Gallo, Dominic Valerian, and Alexander Darr. (Dkt. No. 43-1 at ¶¶ 14-18.) Mr. Gallo graduated 5 from UCLA Law School in 1991, has been litigating in consumer class actions since 2004, and 6 has been appointed as class counsel multiple times. (Id. at ¶¶ 14-15.) Mr. Valerian graduated 7 from USC Law School in 2005, spent five years defending complex cases, including consumer 8 class actions, and since 2009, has focused primarily on prosecuting consumer and employment 9 class and mass actions, including two cases where he was appointed co-counsel with Mr. Gallo. 10 (Id. at ¶ 16.) Lastly, Mr. Darr graduated from Ohio State University Law School in 2010 and after 11 clerking and working briefly at a law firm, he founded Darr Law LLC where he prosecutes 12 consumer protection actions. (Id. at ¶ 18.) Mr. Darr “has pursued more than 100 consumer 13 arbitrations, many alleging claims under the Equal Credit Opportunity Act.” (Id.) Thus, it appears 14 that Plaintiff’s counsel is “qualified, experienced, and generally able to conduct the class action 15 litigation.” See Bellinghausen, 303 F.R.D. at 617. 16 B. Rule 23(b)(3) 17 Rule 23(b)(3) requires establishing the predominance of common questions of law or fact 18 and the superiority of a class action relative to other available methods for the fair and efficient 19 adjudication of the controversy. Rule 23(b)(3) includes the following non-exhaustive list of 20 factors pertinent to the predominance and superiority analysis: 21 (A) the class members’ interests in individually controlling the prosecution or defense of separate actions; (B) the extent and 22 nature of any litigation concerning the controversy already 23 begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the 24 particular forum; and (D) the likely difficulties in managing a class action. 25 Fed. R. Civ. P. 23(b). Here, the Court concludes that there are not any predominance or 26 superiority concerns because the challenged practice is common to all class members. 27 1. Predominance 1 Rule 23(b)(3) first requires “predominance of common questions over individual ones” 2 such that “the adjudication of common issues will help achieve judicial economy.” Valentino v. 3 Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996). This “inquiry focuses on the 4 relationship between the common and individual issues.” Vinole v. Countrywide Home Loans, 5 Inc., 571 F.3d 935, 944 (9th Cir. 2009) (internal quotation marks and citation omitted). In 6 particular, the predominance requirement “tests whether proposed classes are sufficiently cohesive 7 to warrant adjudication by representation.” Amchem, 521 U.S. at 594. When common questions 8 “present a significant aspect of the case [that] can be resolved for all members of the class with a 9 single adjudication,” there is justification for “handling the dispute on representative rather than on 10 an individual basis.” Delagarza v. Tesoro Ref. & Mktg. Co., No. C-09-5803 EMC, 2011 WL 11 4017967, at *10 (N.D. Cal. Sept. 8, 2011) (internal quotation marks and citation omitted). The 12 Court is satisfied that the core common question in this case—whether Chase’s practice of sending 13 out letters denying credit applications on the basis of a “previous unsatisfactory relationship” with 14 Chase or one of its affiliates constitutes a “specific reason” under the ECOA—predominates over 15 any differences with respect to the practice. This presents a discrete legal question that does not 16 depend on facts relevant to any particular individual because all settlement class members 17 received the same, non-individualized reason for the adverse action with respect to their credit 18 card account. Accordingly, the Court concludes that common questions of law and fact 19 predominate. 20 2. Superiority 21 A class action is a superior means of adjudicating a dispute “[w]here classwide litigation of 22 common issues will reduce litigation costs and promote greater efficiency.” Valentino, 97 F.3d at 23 1234. In evaluating superiority, “courts consider the interests of the individual members in 24 controlling their own litigation, the desirability of concentrating the litigation in the particular 25 forum, and the manageability of the class action.” Hunt v. Check Recovery Sys., Inc., 241 F.R.D. 26 505, 514 (N.D. Cal. 2007), modified, 2007 WL 2220972 (N.D. Cal. Aug. 1, 2007), aff’d sub nom., 27 Hunt v. Imperial Merch. Servs., Inc., 560 F.3d 1137 (9th Cir. 2009). A class action is superior to 1 First, given the relatively low value of the individual claims, there is no indication that 2 members of the proposed class would have a strong interest or incentive in litigating their claims 3 individually. See Chavez v. Blue Sky Nat. Beverage Co., 268 F.R.D. 365, 379 (N.D. Cal. 2010) 4 (evaluating superiority under Rule 23(b)(3) and noting that “the class action is superior to 5 maintaining individual claims for a small amount of damages”). Actual damages would be 6 difficult to prove here and punitive damages are capped at $10,000 per person, see 15 U.S.C. § 7 1691e(b), and require a showing of recklessness, see Anderson v. United Fin. Co., 666 F.2d 1274, 8 1278 (9th Cir. 1982). Second, because of the uniformity of the claims and lack of individualized, 9 factual issues, it is more efficient to resolve claims on a class basis than through individual 10 actions. See, e.g., In re Wells Fargo Home Mortg. Overtime Pay Litigation, 527 F.Supp.2d 1053, 11 1069 (N.D. Cal. 2007). 12 Accordingly, the Court concludes that conditional certification of the class under Rule 13 23(b)(3) for settlement purposes is proper. 14 II. Preliminary Approval of the Settlement Agreement 15 In determining whether a class action settlement agreement is fair, adequate, and 16 reasonable to all concerned, courts generally consider the following factors: 17 (1) the strength of the plaintiff’s case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the 18 risk of maintaining class action status throughout the trial; (4) 19 the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the 20 experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class 21 members of the proposed settlement. 22 In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011) (quoting Churchill 23 Vill., LLC v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004)). However, when “a settlement 24 agreement is negotiated prior to formal class certification, consideration of these eight . . . factors 25 alone is” insufficient. Id. In such cases, courts must not only consider the above factors, but also 26 ensure that the settlement did not result from collusion among the parties. Id. at 947. Because 27 collusion “may not always be evident on the face of a settlement, . . . [courts] must be particularly 1 allowed pursuit of their own self-interests and that of certain class members to infect the 2 negotiations.” Id. The Bluetooth court identified three such signs: 3 (1) when counsel receives a disproportionate distribution of the settlement, or when the class receives no monetary 4 distribution but class counsel are amply rewarded; 5 (2) when the parties negotiate a “clear sailing” arrangement 6 providing for the payment of attorneys’ fees separate and apart from class funds, which carries the potential of 7 enabling a defendant to pay class counsel excessive fees and costs in exchange for counsel accepting an unfair settlement 8 on behalf of the class; and 9 (3) when the parties arrange for fees not awarded to revert 10 to defendants rather than be added to the class fund. 11 Id. (internal quotation marks and citations omitted). 12 The court cannot, however, fully assess such factors until the final approval hearing; thus, 13 “a full fairness analysis is unnecessary at this stage.” See Alberto v. GMRI, Inc., 252 F.R.D. 652, 14 665 (E.D. Cal. 2008) (internal quotation marks and citation omitted). At the preliminary approval 15 stage, “the settlement need only be potentially fair.” Acosta v. Trans Union, LLC, 243 F.R.D. 377, 16 386 (C.D. Cal. May 31, 2007). Preliminary approval is thus appropriate where “the proposed 17 settlement appears to be the product of serious, informed, non-collusive negotiations, has no 18 obvious deficiencies, does not improperly grant preferential treatment to class representatives or 19 segments of the class, and falls within the range of possible approval.” In re Tableware Antitrust 20 Litig., 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007) (internal quotation marks and citation 21 omitted). 22 A. Fairness Factors 23 1. Settlement Process 24 The first factor concerns “the means by which the parties arrived at settlement.” Harris v. 25 Vector Mktg. Corp., No. C-08-5198 EMC, 2011 WL 1627973, at *8 (N.D. Cal. Apr. 29, 2011). 26 To approve a proposed settlement, a court must be satisfied that the parties “have engaged in 27 sufficient investigation of the facts to enable the court to intelligently make . . . an appraisal of the 1 effectiveness of the investigation plaintiffs’ counsel conducted prior to reaching an agreement.” Id. 2 The parties attended a full day of mediation on July 17, 2019 with retired magistrate judge 3 Wayne D. Brazil. (Dkt. No. 43-1 at ¶ 6.) While the parties did not reach a settlement at the 4 mediation, they continued to exchange information and reached an agreement in principal on 5 August 9, 2019. (Id. at ¶ 7.) After two months of negotiations, the parties executed a formal 6 agreement on November 22 and Plaintiff filed the motion for preliminary approval the same day. 7 (Id. at ¶ 8.) 8 The Settlement Agreement thus appears to be the product of serious, informed, non- 9 collusive negotiations and this factor weighs in favor of preliminary approval 10 2. Obvious Deficiencies 11 The Court must next consider “whether there are obvious deficiencies in the Settlement 12 Agreement.” See Harris, 2011 WL 1627973, at *8. Here, the Court finds no obvious deficiencies 13 on the face of the Settlement Agreement or the stipulated amendment to same that would preclude 14 preliminary approval. 15 3. Lack of Preferential Treatment 16 The Court must next examine whether the Settlement Agreement “provides preferential 17 treatment to any class member.” See Villegas, 2012 WL 5878390, at *7. Under the agreement, 18 each claiming class member would get a pro rata share of the net settlement class consideration, so 19 all settlement class members receive an equal amount. (Dkt. No. 43-1, Ex. A, Agreement § 20 4.10(b).) The agreement also provides for an incentive of award of up to $5,000, which Chase 21 does not oppose. (Id. § 3.3(a).) Any amount of the $5,000 class representative incentive award 22 not approved “shall remain part of the Settlement Class Consideration.” (Id. § 3.3(e).) 23 “Incentive awards are fairly typical in class action cases.” Rodriguez v. W. Publ’g Corp., 24 563 F.3d 948, 958 (9th Cir. 2009) (distinguishing incentive awards from incentive agreements, the 25 latter of which are “entered into as part of the initial retention of counsel” and “put class counsel 26 and the contracting class representatives into a conflict position from day one”). Incentive awards 27 of $5,000 have been deemed “presumptively reasonable” in this District. See, e.g., Burden v. 1 2013; Hopson v. Hanesbrands Inc., No. CV–08–0844 EDL, 2009 WL 928133, at *10 (N.D. Cal. 2 Apr. 3, 2009). Plaintiff contends that an incentive award of $5,000 is warranted here because he 3 spent “more than 40 hours on this case, including, researching and consulting with prospective 4 counsel, gather documents and information, providing factual information to counsel, monitoring 5 case developments, and participating in settlement discussion.” (Dkt. No. 43-1 at ¶ 12.) In 6 addition, he ran the risk of paying Chase’s costs if he lost. (Id.) 7 At this stage, there is no indication that the proposed incentive award constitutes 8 “preferential treatment” that would defeat preliminary approval. 9 4. Range of Possible Approval 10 In determining whether the Settlement Agreement “falls within the range of possible 11 approval,” the Court must focus on “substantive fairness and adequacy” and consider Plaintiff’s 12 “expected recovery balanced against the value of the settlement offer.” See Tableware, 484 F. 13 Supp. 2d at 1080; see also Harris, 2011 WL 1627973, at *11 (noting that courts “must estimate 14 the maximum amount of damages recoverable in a successful litigation and compare that with the 15 settlement amount” in determining “the value of the settlement against the expected recovery at 16 trial”) (internal quotation marks and citation omitted). “[I]t is well-settled law that a proposed 17 settlement may be acceptable even though it amounts only to a fraction of the potential recovery 18 that might be available to class members at trial.” Nat’l Rural Telecomms. Coop. v. DIRECTV, 19 Inc., 221 F.R.D. 523, 527 (C.D. Cal. 2004). 20 Under 15 U.S.C. § 1691e(b), Chase’s potential liability on class members’ punitive 21 damages claims is capped at $500,000. The projected net settlement class consideration of 22 $189,557 amounts to approximately 38% of class members potential punitive damages recovery. 23 Any actual damages would be fact specific and difficult to prove. The settlement amount of 24 $189,557 appears to be fair, reasonable, and adequate in light of the maximum damages exposure 25 and the risks attendant with further litigation. In particular, any punitive damages recovery likely 26 requires a finding that Chase acted recklessly. In addition, Plaintiff contends that there could be 27 challenges certifying the action because determining whether any particular applicant is aggrieved 1 would entail significant discovery and motion practice such that both sides fees and costs could 2 exceed the $500,000 cap on punitive damages. 3 *** 4 Accordingly, consideration of the fairness factors warrants preliminary approval of the 5 Settlement Agreement. 6 B. Class Notice Plan 7 For any class certified under Rule 23(b)(3), class members must be afforded “the best 8 notice that is practicable under the circumstances, including individual notice to all members who 9 can be identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). Such notice must clearly 10 state the following: 11 (i) the nature of the action; (ii) the definition of the class certified; (iii) the class claims, issues, or defenses; (iv) that a 12 class member may enter an appearance through an attorney 13 if the member so desires; (v) that the court will exclude from the class any member who requests exclusion; (vi) the time 14 and manner for requesting exclusion; and (vii) the binding effect of a class judgment on members under Rule 23(c)(3). 15 Fed. R. Civ. P. 23(c)(2)(B). “Notice is satisfactory if it generally describes the terms of the 16 settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come 17 forward and be heard.” Churchill, 361 F.3d at 575 (internal quotation marks and citation omitted). 18 The notice requirements under Rule 23(c) are met. The Notice, as revised, describes the 19 allegations and claims in plain language, defines a class member, includes contact information for 20 Plaintiff’s counsel and the Claims Administrator, and summarizes the settlement amount and its 21 distribution. (Dkt. No. 51 at 49.) The Notice further describes the options available to class 22 members, including instructions for opting out of the settlement and filing an objection, and the 23 deadline for each of course of action available, if there is one. The Notice also informs class 24 members that receiving a share of the class settlement will release claims against Chase and 25 released parties and defines both released claims and released parties. It also informs class 26 members that they may appear at the final approval hearing in person or through an attorney and 27 directs class members to a website with more information, including the settlement agreement and 1 other important documents in the case. Finally, the Notice advises how class counsel will be paid, 2 how the class can review class counsel’s motion for attorneys’ fees and costs prior to the final 3 approval hearing, and how class members can object to the attorney’s fee. See In re Mercury 4 Interactive Corp. Sec. Litig., 618 F.3d 988, 995 (9th Cir. 2010) (holding that class members must 5 “have an opportunity to oppose class counsel’s fee motion”). 6 The Notice Plan also appears adequate. As explained in the settlement agreement, the 7 Notice Plan provides that the settlement administrator, within 45 days of preliminary approval, 8 will: (1) establish and maintain a settlement website that will contain the notice and claim form, 9 (2) email a notice to all class members who have an email on file with Chase, and (3) send the 10 notice via U.S. mail using the mailing address on file with Chase to all settlement class members 11 who do not have a current or valid email address, and to those who have not opened their email 12 notice within seven days. (Dkt. No. 43-1 at 22, Agreement § 4.2.) The claim form will remain 13 available on the settlement website and will be mailed along with the notice. (Id. § 4.3.) Class 14 members have 60 days from the day the notice is mailed to submit a claim form, request to be 15 excluded, or file an objection. 16 Accordingly, the notice and notice plan support preliminary approval. 17 C. Attorneys’ Fees 18 Rule 23(h) provides for an award of attorneys’ fees and costs in a certified class action 19 where it is “authorized by law or by the parties’ agreement.” Fed. R. Civ. P. 23(h). ECOA 20 authorizes an award of attorneys’ fees and costs in a successful action and the settlement 21 agreement provides for Chase to pay an award of attorneys’ fees and costs of up to $185,000. See 22 15 U.S.C. § 1691e(d). (Dkt. No. 43-1, Ex. 1, Agreement at § 3.4(a).) “While attorneys’ fees and 23 costs may be awarded in a certified class action where so authorized by law or the parties’ 24 agreement, Fed. R. Civ. Pro. 23(h), courts have an independent obligation to ensure that the 25 award, like the settlement itself, is reasonable, even if the parties have already agreed to an 26 amount.” Bluetooth, 654 F.3d at 941. 27 Where, as here, Plaintiff is entitled to attorneys’ fees under the statute and the fees are to 1 method for calculating attorneys’ fees. See Tahara v. Matson Terminals, Inc., 511 F.3d 950, 955 2 (9th Cir. 2007). “The lodestar figure is calculated by multiplying the number of hours the 3 prevailing party reasonably expended on the litigation (as supported by adequate documentation) 4 by a reasonable hourly rate for the region and for the experience of the lawyer.” Bluetooth, 654 5 F.3d at 941. Accordingly, along with the parties’ final approval filings, Plaintiff shall submit a 6 thorough fee award petition that details the hours reasonably spent representing the class in this 7 action so that the Court can conduct a lodestar crosscheck. See Bluetooth, 654 F.3d at 944–45. 8 D. Costs 9 “There is no doubt that an attorney who has created a common fund for the benefit of the 10 class is entitled to reimbursement of reasonable litigation expenses from that fund.” Ontiveros v. 11 Zamora, 303 F.R.D. 356, 375 (E.D. Cal. 2014) (internal quotation marks and citation omitted). 12 Here, the Settlement Agreement provides that Plaintiff’s counsel may obtain up to $185,000 in 13 attorneys’ fees and costs, and, specifically, requests $7,685 in costs. (Dkt. No. 43-1 at ¶ 21.) 14 Plaintiff’s counsel is instructed to submit an itemized summary of costs with its motion for 15 attorneys’ fees so that the Court can determine whether such costs are reasonable litigation 16 expenses incurred for the benefit of the class. 17 CONCLUSION 18 For the reasons stated above, the Court GRANTS preliminary approval of the class action 19 settlement as follows: 20 1. The Court provisionally certifies the following Settlement Class, for settlement 21 purposes only: All natural persons to whom Chase sent a letter giving either 22 “previous unsatisfactory relationship with this bank” or “previous unsatisfactory relationship with us or one of our 23 affiliates” as the only reason for taking an adverse action in connection with a credit card account during the period 24 beginning January 28, 2014 and ending on November 22, 2019. 25 The following individuals are excluded from the Settlement Class: officers and 26 directors of Chase and its parents, subsidiaries, affiliates, and any entity in which 27 Chase has a controlling interest; and all judges assigned to hear any aspect of this 1 litigation, as well as their immediate family members. 2 2. Ray E. Gallo and Gallo LLP and Alexander Darr and Darr Law LLC are appointed 3 as Class Counsel. 4 3. Within 45-days of the date of this Order, the Settlement Administrator shall provide 5 notice to the class in accordance with the Notice Plan. 6 4. The deadline for class members to submit a Request for Exclusion shall be 60-days 7 after the initial mailing of the Notice, and not later than April 30, 2020. 8 5. The deadline for class members to object to the Settlement Agreement shall be 60- 9 days after the initial mailing of the Notice, and not later than April 30, 2020. 10 6. Class Counsel shall file a motion for attorneys’ fees and costs by March 26, 2020. 11 7. Plaintiff shall file his Motion for Final Approval by May 21, 2020. The motion 12 shall include a copy of the Notice ultimately sent to the class along with the other 5 13 information, as available, suggested by the Northern District of California 14 Procedural Guidance for Class Action Settlements. 3 15 8. The deadline for class members to object to Class Counsel’s motion for attorneys’ a 16 fees and costs shall be June 4, 2020. 3 17 9. The parties shall appear before this Court for a final approval hearing on June 25, 18 2020 at 9:00 a.m. in Courtroom E, 450 Golden Gate Ave., San Francisco, 19 California. 20 21 IT IS SO ORDERED. 22 || Dated: January 16, 2020
24 Me 25 ACQUELINE SCOTT CORLE United States Magistrate Judge 26 27 28