1 2 3 4 5 6 7 8 9 10 11 UNITED STATES DISTRICT COURT 12 SOUTHERN DISTRICT OF CALIFORNIA 13 14 Patricia Connor, Individually and on Case No.: 3:10-cv-1284-GPC-BGS behalf of all those similarly situated, 15 ORDER GRANTING PLAINTIFF’S Plaintiff, 16 MOTION FOR A SECOND v. DISTRIBUTION TO CLASS 17 MEMBERS AND CY PRES JPMorgan Chase Bank, N.A., et al., 18 DISTRIBUTION FROM THE Defendants. RESIDUAL SETTLEMENT FUND 19
20 [ECF No. 166.] 21 22 Before the Court is Plaintiff Patricia Connor’s Motion for a Second Distribution to 23 Class Members and Cy Pres Distribution from the Residual Settlement Fund. ECF No. 24 166. Defendant JPMorgan Chase Bank, N.A. has filed a response noting that it does not 25 object to the relief requested in Plaintiff’s Motion, and specifically does not oppose 26 Plaintiff’s selection of cy pres recipients. ECF No. 169. For the reasons that follow, the 27 Court GRANTS Plaintiff’s Motion. The hearing on this matter is hereby VACATED. 28 \ \ \ 1 I. Background 2 On June 16, 2010, Plaintiff filed a putative class action complaint seeking damages 3 and injunctive relief pursuant to the Telephone Consumer Protection Act (“TCPA”), 47 4 U.S.C. § 227 et seq. ECF No. 1. On February 15, 2015, the Court issued a Final 5 Judgment and Order of Dismissal approving of the Settlement Agreement between the 6 parties. ECF No. 160. The Settlement Agreement provided that each approved claimant 7 would be issued a settlement check, the amount of which would depend on the number of 8 claimants. ECF No. 160-1 (“Settlement Agreement”) ¶ 5.01. Plaintiff states that 9 although checks were issued to all claimants,1 approximately 12% were not cashed, 10 leaving a balance of $924,515.17 in the Settlement Fund from the uncashed checks. ECF 11 No. 168 (“Perry Decl.”) ¶¶ 2, 3. 12 Plaintiff now moves for the Court’s authorization of a second distribution to the 13 94,811 claimants who cashed their initial checks. ECF No. 166-1 at 4. Plaintiff 14 simultaneously moves for authorization of distribution of any unclaimed funds remaining 15 after the second distribution to two proposed cy pres recipients, the Consumer Federation 16 of America and New Media Rights. Id. at 5. 17 II. Second Distribution 18 “Most class actions result in some unclaimed funds,” and the Court has “broad 19 discretionary powers in shaping equitable decrees for distributing unclaimed class action 20 funds.” Six (6) Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1307 (9th 21 Cir. 1990). The exercise of this discretion should be guided by the statutory scheme and 22 the interests of the class members. See id.; see also Lane v. Facebook, Inc., 696 F.3d 23 811, 821 (9th Cir. 2012). Although the terms of a settlement agreement may dictate how 24 unclaimed settlement funds should be allocated, a district court may otherwise exercise 25 its equitable powers in managing the distribution of the settlement proceeds. See Beecher 26
27 1 Several thousand settlement checks were returned as undeliverable, and the majority of those checks 28 1 v. Able, 575 F.2d 1010, 1016 (2d Cir. 1978) (noting equitable powers retained by a court 2 overseeing distribution of settlement proceeds); see generally 4 Newberg on Class 3 Actions § 12:28 (5th ed.). 4 Here, although the Settlement Agreement indicates that remaining settlement 5 proceeds be distributed to a cy pres recipient,2 Plaintiff argues that the parties did not 6 contemplate a cy pres distribution of this size—almost $1 million—and thus a second 7 distribution to claimants should be made before a cy pres distribution. In the Malta case, 8 the court confronted a similar situation in which the plaintiff filed an unopposed motion 9 for a second distribution of settlement proceeds. See Malta v. Fed. Home Loan Mortg. 10 Corp., No. 3:10-cv-01290-BEN-NLS, 2017 U.S. Dist. LEXIS 121844 (S.D. Cal. July 31, 11 2017). The court found that “although the Agreement provides for cy pres distribution of 12 unclaimed funds from the first distribution of the Settlement Fund, it is not clear from the 13 Agreement that a cy pres distribution of this size was contemplated.” Id. at *7. The 14 court, noting that a second distribution would be small but not de minimis, authorized a 15 second distribution to those class members who had cashed the initial settlement checks 16 despite there being no provision for a second distribution in the settlement agreement. Id. 17 at *7–8. 18 The Court concurs with the reasoning in Malta. Like in Malta, the Settlement 19 Agreement’s brief reference to a cy pres distribution of remaining funds does not 20 necessarily suggest that the parties contemplated such a large sum—over 10% of the total 21 amount intended to be distributed to claimants—be directed towards a cy pres recipient 22 when distribution to claimants remains viable. Defendant’s lack of objection to the 23 Motion supports this conclusion regarding the parties’ intent. ECF No. 169; cf. Malta, 24 2017 U.S. Dist. LEXIS 121844 at *7 n.3. A second distribution here would also be 25 26 27 2 The Settlement Agreement provides: “Any returned checks and un-cashed settlement checks shall be paid as a cy pres award as determined by the Parties and approved by the Court.” Settlement Agreement 28 1 feasible given that the amount remaining in the settlement fund, $924,515.17, would 2 cover administrative costs associated with the distribution and result in a non-de minimis 3 distribution of $8.19 to each claimant who had cashed the initial settlement check.3 See 4 Perry Decl. ¶ 4; cf. Maxin v. RHG & Co., Inc., No. 16-CV-2625 JLS (BLM), 2019 WL 5 4295325, at *2 (S.D. Cal. June 24, 2019) (finding potential distribution of $1.89, prior to 6 deduction of administration costs, de minimis); Malta, 2017 U.S. Dist. LEXIS 121844 at 7 *4, 7 (finding payment amount of $3.07 not de minimis). 8 Further, although little case law addresses this precise issue, Ninth Circuit 9 precedent regarding cy pres distributions affirms the Court’s view that a second 10 distribution to class members, where possible and not contrary to the aims of the 11 settlement agreement,4 is often preferable to a cy pres distribution. The cy pres (often 12 translated as “next best”) distribution approach is typically employed when distribution to 13 individual class members is infeasible, but compensation directed towards to a related 14 institution or non-profit organization would best approximate such benefits to the class. 15 See Nachshin v. AOL, LLC, 663 F.3d 1034, 1038 (9th Cir. 2011); see also Principles of 16 the Law of Aggregate Litigation § 3.07(b) (Am. L. Inst. 2010) (“[When funds remain,] 17 the settlement should presumptively provide for further distributions to participating class 18 members unless the amounts involved are too small to make individual distributions 19 economically viable or other specific reasons exist that would make such further 20 distributions impossible or unfair.”). Accordingly, although the Settlement Agreement 21 does not expressly contemplate a second distribution to claimants, directing the 22
23 3 Plaintiff does not provide a specific explanation for why the Motion proposes to distribute the second 24 round of checks only to claimants who cashed the initial settlement checks. See ECF No. 166-1 at 4; 25 Perry Decl. ¶ 4. However, like in Malta, the Court notes it is not likely that claimants who did not cash the initial check for approximately $70 would cash a second check for roughly $8. See Malta, 2017 U.S. 26 Dist. LEXIS 121844 at *7–8.
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1 2 3 4 5 6 7 8 9 10 11 UNITED STATES DISTRICT COURT 12 SOUTHERN DISTRICT OF CALIFORNIA 13 14 Patricia Connor, Individually and on Case No.: 3:10-cv-1284-GPC-BGS behalf of all those similarly situated, 15 ORDER GRANTING PLAINTIFF’S Plaintiff, 16 MOTION FOR A SECOND v. DISTRIBUTION TO CLASS 17 MEMBERS AND CY PRES JPMorgan Chase Bank, N.A., et al., 18 DISTRIBUTION FROM THE Defendants. RESIDUAL SETTLEMENT FUND 19
20 [ECF No. 166.] 21 22 Before the Court is Plaintiff Patricia Connor’s Motion for a Second Distribution to 23 Class Members and Cy Pres Distribution from the Residual Settlement Fund. ECF No. 24 166. Defendant JPMorgan Chase Bank, N.A. has filed a response noting that it does not 25 object to the relief requested in Plaintiff’s Motion, and specifically does not oppose 26 Plaintiff’s selection of cy pres recipients. ECF No. 169. For the reasons that follow, the 27 Court GRANTS Plaintiff’s Motion. The hearing on this matter is hereby VACATED. 28 \ \ \ 1 I. Background 2 On June 16, 2010, Plaintiff filed a putative class action complaint seeking damages 3 and injunctive relief pursuant to the Telephone Consumer Protection Act (“TCPA”), 47 4 U.S.C. § 227 et seq. ECF No. 1. On February 15, 2015, the Court issued a Final 5 Judgment and Order of Dismissal approving of the Settlement Agreement between the 6 parties. ECF No. 160. The Settlement Agreement provided that each approved claimant 7 would be issued a settlement check, the amount of which would depend on the number of 8 claimants. ECF No. 160-1 (“Settlement Agreement”) ¶ 5.01. Plaintiff states that 9 although checks were issued to all claimants,1 approximately 12% were not cashed, 10 leaving a balance of $924,515.17 in the Settlement Fund from the uncashed checks. ECF 11 No. 168 (“Perry Decl.”) ¶¶ 2, 3. 12 Plaintiff now moves for the Court’s authorization of a second distribution to the 13 94,811 claimants who cashed their initial checks. ECF No. 166-1 at 4. Plaintiff 14 simultaneously moves for authorization of distribution of any unclaimed funds remaining 15 after the second distribution to two proposed cy pres recipients, the Consumer Federation 16 of America and New Media Rights. Id. at 5. 17 II. Second Distribution 18 “Most class actions result in some unclaimed funds,” and the Court has “broad 19 discretionary powers in shaping equitable decrees for distributing unclaimed class action 20 funds.” Six (6) Mexican Workers v. Arizona Citrus Growers, 904 F.2d 1301, 1307 (9th 21 Cir. 1990). The exercise of this discretion should be guided by the statutory scheme and 22 the interests of the class members. See id.; see also Lane v. Facebook, Inc., 696 F.3d 23 811, 821 (9th Cir. 2012). Although the terms of a settlement agreement may dictate how 24 unclaimed settlement funds should be allocated, a district court may otherwise exercise 25 its equitable powers in managing the distribution of the settlement proceeds. See Beecher 26
27 1 Several thousand settlement checks were returned as undeliverable, and the majority of those checks 28 1 v. Able, 575 F.2d 1010, 1016 (2d Cir. 1978) (noting equitable powers retained by a court 2 overseeing distribution of settlement proceeds); see generally 4 Newberg on Class 3 Actions § 12:28 (5th ed.). 4 Here, although the Settlement Agreement indicates that remaining settlement 5 proceeds be distributed to a cy pres recipient,2 Plaintiff argues that the parties did not 6 contemplate a cy pres distribution of this size—almost $1 million—and thus a second 7 distribution to claimants should be made before a cy pres distribution. In the Malta case, 8 the court confronted a similar situation in which the plaintiff filed an unopposed motion 9 for a second distribution of settlement proceeds. See Malta v. Fed. Home Loan Mortg. 10 Corp., No. 3:10-cv-01290-BEN-NLS, 2017 U.S. Dist. LEXIS 121844 (S.D. Cal. July 31, 11 2017). The court found that “although the Agreement provides for cy pres distribution of 12 unclaimed funds from the first distribution of the Settlement Fund, it is not clear from the 13 Agreement that a cy pres distribution of this size was contemplated.” Id. at *7. The 14 court, noting that a second distribution would be small but not de minimis, authorized a 15 second distribution to those class members who had cashed the initial settlement checks 16 despite there being no provision for a second distribution in the settlement agreement. Id. 17 at *7–8. 18 The Court concurs with the reasoning in Malta. Like in Malta, the Settlement 19 Agreement’s brief reference to a cy pres distribution of remaining funds does not 20 necessarily suggest that the parties contemplated such a large sum—over 10% of the total 21 amount intended to be distributed to claimants—be directed towards a cy pres recipient 22 when distribution to claimants remains viable. Defendant’s lack of objection to the 23 Motion supports this conclusion regarding the parties’ intent. ECF No. 169; cf. Malta, 24 2017 U.S. Dist. LEXIS 121844 at *7 n.3. A second distribution here would also be 25 26 27 2 The Settlement Agreement provides: “Any returned checks and un-cashed settlement checks shall be paid as a cy pres award as determined by the Parties and approved by the Court.” Settlement Agreement 28 1 feasible given that the amount remaining in the settlement fund, $924,515.17, would 2 cover administrative costs associated with the distribution and result in a non-de minimis 3 distribution of $8.19 to each claimant who had cashed the initial settlement check.3 See 4 Perry Decl. ¶ 4; cf. Maxin v. RHG & Co., Inc., No. 16-CV-2625 JLS (BLM), 2019 WL 5 4295325, at *2 (S.D. Cal. June 24, 2019) (finding potential distribution of $1.89, prior to 6 deduction of administration costs, de minimis); Malta, 2017 U.S. Dist. LEXIS 121844 at 7 *4, 7 (finding payment amount of $3.07 not de minimis). 8 Further, although little case law addresses this precise issue, Ninth Circuit 9 precedent regarding cy pres distributions affirms the Court’s view that a second 10 distribution to class members, where possible and not contrary to the aims of the 11 settlement agreement,4 is often preferable to a cy pres distribution. The cy pres (often 12 translated as “next best”) distribution approach is typically employed when distribution to 13 individual class members is infeasible, but compensation directed towards to a related 14 institution or non-profit organization would best approximate such benefits to the class. 15 See Nachshin v. AOL, LLC, 663 F.3d 1034, 1038 (9th Cir. 2011); see also Principles of 16 the Law of Aggregate Litigation § 3.07(b) (Am. L. Inst. 2010) (“[When funds remain,] 17 the settlement should presumptively provide for further distributions to participating class 18 members unless the amounts involved are too small to make individual distributions 19 economically viable or other specific reasons exist that would make such further 20 distributions impossible or unfair.”). Accordingly, although the Settlement Agreement 21 does not expressly contemplate a second distribution to claimants, directing the 22
23 3 Plaintiff does not provide a specific explanation for why the Motion proposes to distribute the second 24 round of checks only to claimants who cashed the initial settlement checks. See ECF No. 166-1 at 4; 25 Perry Decl. ¶ 4. However, like in Malta, the Court notes it is not likely that claimants who did not cash the initial check for approximately $70 would cash a second check for roughly $8. See Malta, 2017 U.S. 26 Dist. LEXIS 121844 at *7–8. 4 A second distribution might not be appropriate where such a payment would result in a significant 27 “windfall” to a limited number of claimants to the detriment of class members who did not submit claims, but that does not appear to be the case here, where the second distribution is only about $8. See 28 1 remaining funds towards the claimants would further the settlement’s purpose of 2 compensating claimants for potential violations of the TCPA. Cf. Hester v. Vision 3 Airlines, Inc., No. 2:09-CV-00117-RLH, 2017 WL 4227928, at *2 (D. Nev. Sept. 22, 4 2017) (finding that a second distribution would “bring the class members closer to [the 5 full] value of their claims”) (internal quotation marks and citations omitted). 6 Thus, the Court GRANTS Plaintiff’s Motion for a Second Distribution to Class 7 Members. 8 III. Cy Pres Distribution 9 “Cy pres provides a mechanism for distributing unclaimed funds to the next best 10 class of beneficiaries.” In re Easysaver Rewards Litig., 906 F.3d 747, 760 (9th Cir. 11 2018). Courts have approved cy pres where “proof of individual claims would be 12 burdensome or distribution of damages costly.” Six Mexican Workers, 904 F.2d at 1305. 13 A determination of whether an entity is an appropriate recipient of a cy pres distribution 14 must take into account “the nature of the plaintiffs’ lawsuit, the objectives of the 15 underlying statutes, and the interests of the silent class members, including their 16 geographic diversity.” Nachsin, 663 F.3d at 1036. In Nachsin, the Ninth Circuit held 17 that the objectives of the Electronic Communications Privacy Act, at issue, had nothing 18 to do with the cy pres donations to Legal Aid Foundation of Los Angeles, the Boys and 19 Girls Clubs of Santa Monica and Los Angeles, and the Federal Judicial Center 20 Foundation. Id. While the cy pres recipient need not be ideal, it must bear “a substantial 21 nexus to the interests of the class members.” Lane, 696 F.3d at 821. 22 Here, although Plaintiff cannot calculate precisely the amount of unclaimed funds 23 that will remain after the second distribution, it is likely to be de minimis. The experience 24 of the first distribution suggests that many, but not all, claimants will cash the second 25 settlement checks. See Perry Decl. ¶ 3. Even if far fewer claimants cash the second 26 settlement checks due to their lower value, a third distribution would entail yet another 27 set of administration costs, potentially again exceeding $100,000. See id. (noting that 28 administrative costs for the second distribution are estimated to be $147,877.95). 1 Therefore, it is unlikely that following a second distribution there will be more than de 2 minimis funds available for a third distribution given the administrative costs associated 3 with distribution to claimants. It would therefore be burdensome, and contrary to the 4 language of the Settlement Agreement, to require a third and likely de minimis 5 distribution to claimants before permitting distribution to a cy pres recipient. 6 Additionally, the Court finds that there is a “substantial nexus” between the 7 interests of the class members and the proposed cy pres recipients, the Consumer 8 Federation of America (“CFA”) and New Media Rights (“NMR”), and that a cy pres 9 distribution to these organizations would be consistent with the objectives of the TCPA. 10 In this lawsuit, Plaintiff and the class members alleged violations of the TCPA, arising 11 from Defendants’ alleged use of an automated dialer or artificial or prerecorded voice to 12 contact class members on their cell phones. See Settlement Agreement ¶ 1.01. NMR is a 13 program at Western School of Law that works to advance the privacy rights of consumers 14 and others through pro bono legal services and education. See generally ECF No. 166-3 15 (“Neill Decl.”). Additionally, NMR helps small businesses and non-profits comply with 16 privacy laws like the TCPA to protect consumer privacy before violations occur, which 17 would directly serve the interests of class members. Id. at 1–2. CFA is an association of 18 consumer rights-focused non-profit groups that works to advance the interests of 19 consumers. See generally ECF No. 166-2 (“Weintraub Decl.”). Although CFA’s 20 mission is broader in scope and not specifically targeted towards privacy and technology, 21 the organization advocates for the enforcement of the TCPA and similar laws and will 22 generally further the interests of class members by advancing consumer protection 23 through research, education, and advocacy. Id. ¶¶ 3, 6, 7. CFA operates at the national 24 level, Weintraub Decl. ¶ 4, and NMR engages in both national and local work, Neill 25 Decl. at 2–3. As the Settlement Agreement does not specify the geographic location of 26 the class members, these cy pres recipients reflect an appropriate geographic scope. See 27 Settlement Agreement ¶ 2.16. 28 The Court therefore GRANTS Plaintiff’s Motion for Cy Pres Distribution from the 1 || Residual Settlement Fund. 2 ||IV. Conclusion 3 For the reasons set forth above, the Court hereby: 4 1. GRANTS Plaintiff's Motion for a Second Distribution to Class Members; 5 2. GRANTS Plaintiff's Motion for a Cy Pres Distribution from the Residual 6 Settlement Fund to be completed should there be funds remaining following the 7 second distribution, to recipients CFA and NMR; and 8 2. VACATES the hearing currently set for April 9, 2021. 9 IT IS SO ORDERED. 10 ||Dated: April 2, 2021 72 I] Hon. athe Cae 12 United States District Judge 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28