1 2 3 4 5 6 7 10 11 JACOB FIGUEROA and MARY Case No.: 18cv692 JM(BGS) JACKSON, on behalf of themselves and 12 all others similarly situated, ORDER ON JOINT MOTION TO Plaintiffs, ADMINISTRATION FEES FOR 14 v. SECONDARY DISTRIBUTION OF 15 SETTLEMENT FUNDS AND CAPITAL ONE, N. A., DESIGNATION OF CY PRES 16 Defendant. RECIPIENT 17 18 On September 9, 21, 2023, the Parties filed Joint Motion to Approve Settlement 19 Administration Fees for Secondary Distribution of Settlement Funds and Designation of 20 Cy Pres Recipient, (“Joint Motion”) (Doc. No. 95). Upon review of the Joint Motion, the 21 court determined that supplemental briefing would be beneficial. Subsequently, the Parties 22 submitted their supplemental briefing, and the court now finds the Joint Motion suitable 23 for submission on the papers and without oral argument in accordance with Civil Local 24 Rule 7.1(d)(1). For the reasons set forth below, the Joint Motion is granted. 25 Discussion 26 1. Settlement Administrator Fees 27 On January 21, 2021, this court entered a Final Approval Order regarding the 28 proposed settlement agreement in this class action suit. (Doc. No. 93.) The Final Order 1 approved class settlement administrator fees not to exceed $900,000, “absent further order 2 of the court.” Id. at 25. The high settlement administrator fees sought by BrownGreer, 3 PLC, were approved based on a declaration it provided estimating costs of $997,933 and 4 Class Counsel relaying a revised estimate of $850,000 to the court at the final approval 5 hearing. Id. at 22. Indeed, when the court questioned Class Counsel on BrownGreer’s 6 final bill at the hearing, Mr. Kaliel anticipated it would be “in the $850,000 range” and he 7 was certain it would be “south of $1 million.” Id. at 3 fn. 2. 8 The Joint Motion states that the settlement administrator has now completed both 9 the initial and second round of disbursements as contemplated by the settlement agreement, 10 and that the secondary distribution “which includes class member checks, postage, data 11 storage, coordinating and processing of mail and checks, amounted to $112,245.49.” Doc. 12 No. 95 at 2. No further information was provided. Because BrownGreer’s fees now exceed 13 over one-million dollars, the court’s request for additional briefing ordered the Parties to 14 provide the court “by way of declarations from BrownGreer and Counsel, a full accounting 15 regarding the costs incurred by BrownGreer, along with any other pertinent information 16 that would explain” these costs. Doc. No. 96 at 2. 17 The additional briefing provides that BrownGreer’s expenses have not exceeded the 18 $900,000 cap imposed by the court. (Doc. No. 97 at 2.) Indeed, the Parties represent that 19 Brown Green discounted its invoices by approximately $19,000 “in order to come in at the 20 cap set by the Court.” Id. at 2. They contend that the settlement administrator fees of 21 $112,245.40 were not contemplated in the settlement agreement and were for the optional 22 services related to the secondary distribution not contemplated by the settlement 23 agreement, stating “the Parties did not understand the court’s cap to apply to these 24 additional services.” Id. at 2-3. 25 While it is true that the settlement agreement is silent regarding administrator fees 26 for a secondary distribution, section 3:4 of the agreement provides: 27 Residual. In the event that there is any residual in the Settlement Fund Account after the distributions required by this Agreement are completed, said 28 1 funds shall in no circumstance revert to Capital One. At the election of Class Counsel and counsel for Capital One, and subject to the approval of the Court, 2 the funds may be distributed to Settlement Class Members via a secondary 3 distribution if economically feasible or through a residual cy pres organization, which will be an entity jointly agreed by the Parties and 4 approved by the Court. Any residual secondary distribution or cy pres 5 distribution shall be paid as soon as reasonably possible following the completion of distribution of funds to the Settlement Class Members. 6 7 Doc. No. 75 at 15. The Parties did not however ask for court approval before making the 8 secondary distribution, which the supplemental briefing provides was in excess of 9 $2 million. Rather, after receiving a cost estimate for the secondary distribution, the Parties 10 determined that a secondary distribution made the most sense. Since the secondary 11 distribution involved Class Members receiving a share of unused funds in excess of 12 $2 million (see Doc. 97 at 3), the court takes no issue with this decision. Accordingly, the 13 court APPROVES the additional settlement fees in the amount of $112,245.49. 14 2. Cy Pres Funds 15 Additionally, the Parties request the court approve the distribution of the residual 16 $440,998.02 left in the settlement fund to a cy pres recipient they have chosen, Jump$tart 17 Coalition for Personal Financial Literacy (“Jump$tart Coalition’). 18 “A cy pres remedy, sometimes called ‘fluid recovery,’ Mirfasihi v. Fleet Mortg. 19 Corp., 356 F.3d 781, 784 (7th Cir. 2004), is a settlement structure wherein class members 20 receive an indirect benefit (usually through defendant donations to a third party rather than 21 a direct monetary payment.” Lane v. Facebook, Inc. 696 F.3d 811, 819 (9th Cir. 2012). 22 The “cy pres doctrine allows a court to distribute unclaimed or non-distributable portions 23 of a class action settlement fund to the ‘next best’ class of beneficiaries.” In re Google Inc. 24 Street View Elec. Commc’ns. Litig. 21 4th 1102, 1111 (9th Cir. 2021) (quoting Nachshin 25 v. AOL, LLC, 663 F.3d 1034, 1036 (9th Cir. 2011)). The requirement “that a cy pres 26 remedy must be the ‘next best distribution’ of settlement funds means only that a district 27 court should not approve a cy pres distribution unless it bears a substantial nexus to the 28 interests of the class members.” Lane v. Facebook, Inc, 696 F.3d 811, 821 (9th Cir. 2012) 1 (quoting Nachshin, 663 F.3d at 1036) (finding a substantial nexus between Facebook 2 privacy claims and charity giving grants promoting online privacy and security). The 3 district court’s review of a class-action settlement that calls for a cy pres remedy is not 4 substantively different from that of any other class-action settlement except that the court 5 should not find the settlement fair, adequate, and reasonable unless the cy pres remedy 6 ‘account[s] for the nature of the plaintiffs’ lawsuit, the objectives of the underlying statutes, 7 and the interests of the silent class members . . . .” Lane, 696 F.3d at 819-20 (quoting 8 Nachshin 663 F.3d at 1036). 9 Here, Plaintiffs alleged violations of numerous consumer protection laws designed 10 to protect a consumer’s rights, along with associated breach of contract claims. All of 11 Plaintiffs’ claims centered around the fees Defendant, Capital One, N.A., charges its 12 customers for using Out-of-Network (“OON”) automatic teller machines. Plaintiffs 13 alleged that the fees for OON balance inquiries, or “third” fees, were wrongly charged and 14 were in violation of Defendant’s standardized account agreement, Fee Schedule, and 15 Electronic Funds Transfers Agreement and Disclosure. The settlement agreement provides 16 that any residual left in the settlement fund will be distributed to a “cy pres organization, 17 which will be jointly agreed by the Parties and approved by the Court.” Doc. No. 75 at 15.
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1 2 3 4 5 6 7 10 11 JACOB FIGUEROA and MARY Case No.: 18cv692 JM(BGS) JACKSON, on behalf of themselves and 12 all others similarly situated, ORDER ON JOINT MOTION TO Plaintiffs, ADMINISTRATION FEES FOR 14 v. SECONDARY DISTRIBUTION OF 15 SETTLEMENT FUNDS AND CAPITAL ONE, N. A., DESIGNATION OF CY PRES 16 Defendant. RECIPIENT 17 18 On September 9, 21, 2023, the Parties filed Joint Motion to Approve Settlement 19 Administration Fees for Secondary Distribution of Settlement Funds and Designation of 20 Cy Pres Recipient, (“Joint Motion”) (Doc. No. 95). Upon review of the Joint Motion, the 21 court determined that supplemental briefing would be beneficial. Subsequently, the Parties 22 submitted their supplemental briefing, and the court now finds the Joint Motion suitable 23 for submission on the papers and without oral argument in accordance with Civil Local 24 Rule 7.1(d)(1). For the reasons set forth below, the Joint Motion is granted. 25 Discussion 26 1. Settlement Administrator Fees 27 On January 21, 2021, this court entered a Final Approval Order regarding the 28 proposed settlement agreement in this class action suit. (Doc. No. 93.) The Final Order 1 approved class settlement administrator fees not to exceed $900,000, “absent further order 2 of the court.” Id. at 25. The high settlement administrator fees sought by BrownGreer, 3 PLC, were approved based on a declaration it provided estimating costs of $997,933 and 4 Class Counsel relaying a revised estimate of $850,000 to the court at the final approval 5 hearing. Id. at 22. Indeed, when the court questioned Class Counsel on BrownGreer’s 6 final bill at the hearing, Mr. Kaliel anticipated it would be “in the $850,000 range” and he 7 was certain it would be “south of $1 million.” Id. at 3 fn. 2. 8 The Joint Motion states that the settlement administrator has now completed both 9 the initial and second round of disbursements as contemplated by the settlement agreement, 10 and that the secondary distribution “which includes class member checks, postage, data 11 storage, coordinating and processing of mail and checks, amounted to $112,245.49.” Doc. 12 No. 95 at 2. No further information was provided. Because BrownGreer’s fees now exceed 13 over one-million dollars, the court’s request for additional briefing ordered the Parties to 14 provide the court “by way of declarations from BrownGreer and Counsel, a full accounting 15 regarding the costs incurred by BrownGreer, along with any other pertinent information 16 that would explain” these costs. Doc. No. 96 at 2. 17 The additional briefing provides that BrownGreer’s expenses have not exceeded the 18 $900,000 cap imposed by the court. (Doc. No. 97 at 2.) Indeed, the Parties represent that 19 Brown Green discounted its invoices by approximately $19,000 “in order to come in at the 20 cap set by the Court.” Id. at 2. They contend that the settlement administrator fees of 21 $112,245.40 were not contemplated in the settlement agreement and were for the optional 22 services related to the secondary distribution not contemplated by the settlement 23 agreement, stating “the Parties did not understand the court’s cap to apply to these 24 additional services.” Id. at 2-3. 25 While it is true that the settlement agreement is silent regarding administrator fees 26 for a secondary distribution, section 3:4 of the agreement provides: 27 Residual. In the event that there is any residual in the Settlement Fund Account after the distributions required by this Agreement are completed, said 28 1 funds shall in no circumstance revert to Capital One. At the election of Class Counsel and counsel for Capital One, and subject to the approval of the Court, 2 the funds may be distributed to Settlement Class Members via a secondary 3 distribution if economically feasible or through a residual cy pres organization, which will be an entity jointly agreed by the Parties and 4 approved by the Court. Any residual secondary distribution or cy pres 5 distribution shall be paid as soon as reasonably possible following the completion of distribution of funds to the Settlement Class Members. 6 7 Doc. No. 75 at 15. The Parties did not however ask for court approval before making the 8 secondary distribution, which the supplemental briefing provides was in excess of 9 $2 million. Rather, after receiving a cost estimate for the secondary distribution, the Parties 10 determined that a secondary distribution made the most sense. Since the secondary 11 distribution involved Class Members receiving a share of unused funds in excess of 12 $2 million (see Doc. 97 at 3), the court takes no issue with this decision. Accordingly, the 13 court APPROVES the additional settlement fees in the amount of $112,245.49. 14 2. Cy Pres Funds 15 Additionally, the Parties request the court approve the distribution of the residual 16 $440,998.02 left in the settlement fund to a cy pres recipient they have chosen, Jump$tart 17 Coalition for Personal Financial Literacy (“Jump$tart Coalition’). 18 “A cy pres remedy, sometimes called ‘fluid recovery,’ Mirfasihi v. Fleet Mortg. 19 Corp., 356 F.3d 781, 784 (7th Cir. 2004), is a settlement structure wherein class members 20 receive an indirect benefit (usually through defendant donations to a third party rather than 21 a direct monetary payment.” Lane v. Facebook, Inc. 696 F.3d 811, 819 (9th Cir. 2012). 22 The “cy pres doctrine allows a court to distribute unclaimed or non-distributable portions 23 of a class action settlement fund to the ‘next best’ class of beneficiaries.” In re Google Inc. 24 Street View Elec. Commc’ns. Litig. 21 4th 1102, 1111 (9th Cir. 2021) (quoting Nachshin 25 v. AOL, LLC, 663 F.3d 1034, 1036 (9th Cir. 2011)). The requirement “that a cy pres 26 remedy must be the ‘next best distribution’ of settlement funds means only that a district 27 court should not approve a cy pres distribution unless it bears a substantial nexus to the 28 interests of the class members.” Lane v. Facebook, Inc, 696 F.3d 811, 821 (9th Cir. 2012) 1 (quoting Nachshin, 663 F.3d at 1036) (finding a substantial nexus between Facebook 2 privacy claims and charity giving grants promoting online privacy and security). The 3 district court’s review of a class-action settlement that calls for a cy pres remedy is not 4 substantively different from that of any other class-action settlement except that the court 5 should not find the settlement fair, adequate, and reasonable unless the cy pres remedy 6 ‘account[s] for the nature of the plaintiffs’ lawsuit, the objectives of the underlying statutes, 7 and the interests of the silent class members . . . .” Lane, 696 F.3d at 819-20 (quoting 8 Nachshin 663 F.3d at 1036). 9 Here, Plaintiffs alleged violations of numerous consumer protection laws designed 10 to protect a consumer’s rights, along with associated breach of contract claims. All of 11 Plaintiffs’ claims centered around the fees Defendant, Capital One, N.A., charges its 12 customers for using Out-of-Network (“OON”) automatic teller machines. Plaintiffs 13 alleged that the fees for OON balance inquiries, or “third” fees, were wrongly charged and 14 were in violation of Defendant’s standardized account agreement, Fee Schedule, and 15 Electronic Funds Transfers Agreement and Disclosure. The settlement agreement provides 16 that any residual left in the settlement fund will be distributed to a “cy pres organization, 17 which will be jointly agreed by the Parties and approved by the Court.” Doc. No. 75 at 15. 18 Aside from the name of the proposed recipient of the cy pres award, no further 19 information was provided in the original Joint Motion, prompting this court to require the 20 Parties to demonstrate how their proposed cy pres remedy considers the nature of Plaintiffs’ 21 lawsuit, the objectives of the statutes underlying Plaintiffs’ claims, and the interests of the 22 silent class members, including their geographic diversity. See, e.g., In re Google Inc., 23 21 F.4th at 1112-13. The court is now informed that Jump$tart Coalition “consists of more 24 than 100 national organizations and a network of 51 independent, affiliated state coalitions 25 that share a commitment to advancing youth financial literacy and raising public awareness 26 about the importance of financial literacy.” Doc. No. 99 at 2. See also Doc. No. 99-1 at 27 ¶ 2, Declaration of Amina Carter, Director of Operations and Marketing for Jump$tart 28 Coalition. Thus, the Parties contend that Jump$tart Coalition’s work can help class 1 |}members and the public, writ large, better understand and decipher financial disclosures, 2 including the fees and costs associated with the services provided by financial institutions 3 ||in order to make informed decisions when selecting a banking provider. Doc. No 99 at 2. 4 || Relatedly, the Parties submit that improved financial literacy will better help class members 5 ||(and their family members) develop a greater comprehension when and how fees 6 associated with financial transactions are incurred, how such fees accrue over time, and 7 || what impact those fees may have one one’s finances. Jd. at 2-3. Accordingly, the 8 || substantial nexus requirement is satisfied. 9 Thus, in accordance with section 3.4 of the settlement agreement (see Doc. No. 75 10 |/at 15), the court APPOINTS Jump$tart Coalition as the cy pres recipient and AWARDS 11 |/it the $440,998.02 in residual funds. 12 Conclusion 13 In accordance with the foregoing, the court GRANTS the Parties’ Joint Motion to 14 || Approve Settlement Administration Fees for Secondary Disbursement of Settlement Funds 15 Designation of Cy Pres Recipient (Doc. No. 95). All residual funds in the settlement 16 ||fund following the payment of $112,245.49 to the settlement administrator for the 17 ||secondary distribution shall be distributed to Jump$tart Coalition for Personal Financial 18 || Literacy as the cy pres recipient. 20 || Dated: December 1, 2023 Piel 21 if pray 09 n. Jeffrey. Miller nited States District Judge 23 24 25 26 27 28