UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Rita Grenier and Edwin Grenier, Individually and on Behalf of All Others Similarly Situated
v. Civil No. 21-cv-534-LM Opinion No. 2023 DNH 090 P Granite State Credit Union, Does 1 through 5
ORDER
Plaintiffs Rita and Edwin Grenier bring this putative class action against
Granite State Credit Union (“Granite”) and “Does 1 through 5,” alleging injuries
arising from Granite’s overdraft fees and policies. Plaintiffs argue that Granite’s
overdraft policies—specifically, Granite’s failure to adequately explain to consumers
how it assesses overdrafts—violate the Electronic Funds Transfer Act’s, 15 U.S.C.
§ 1693 (“EFTA”), implementing regulations, 12 C.F.R. § 1005 et seq. (“Regulation
E”).
Granite filed a motion to dismiss (doc. no. 9) which the court denied (doc. no.
20). The parties now report that they have reached a negotiated settlement of their
dispute. Before the court is plaintiffs’ unopposed motion (doc. no. 40) for
preliminary approval of the parties’ settlement. The court has carefully reviewed
the parties’ proposed Class Action Settlement Agreement (the “Agreement”) and its
supporting exhibits. For the following reasons, the court: (1) preliminarily approves
the Agreement; (2) preliminarily certifies the proposed class for settlement
purposes; (3) appoints KCC LLC to administer the settlement and provisionally appoints plaintiffs’ counsel of record as settlement class counsel and plaintiffs as
settlement class representatives; (4) approves the opt-out and objection procedures
outlined by the parties, subject to one change; and (5) directs the parties to submit
updated proposed notice forms to bring them into conformity with Fed. R. Civ. P.
23(c)(2)(B). The court declines to set a schedule for the fairness hearing and related
deadlines until the notices are approved.
BACKGROUND
Regulation E requires financial institutions to secure “affirmative consent”
from customers before assessing overdraft fees on customers’ ATM and one-time
debit card transactions. 12 C.F.R. § 1005.17(b)(1)(iii). It requires institutions to
obtain such consent utilizing an opt-in notice that “describe[s] the institution’s
overdraft service,” id. § 1005.17(b)(1)(i), in a way that is “clear and readily
understandable,” id. § 1005.4(a)(1).
Plaintiffs allege that Granite violated Regulation E by charging them
overdraft fees without adequately explaining how Granite determines what
constitutes an overdraft. Granite’s opt-in notice (the “Opt-in Disclosure”) states
that an overdraft “occurs when you do not have enough money in your account to
cover a transaction, but we pay it anyway.” It does not disclose how it determines
whether an account has “enough money.”
There are two different methods by which financial institutions can calculate
an account’s balance to determine whether it has “enough money” to cover a
transaction at any given time. One such method, referred to as the “available
2 balance,” is calculated by subtracting from the amount of money in the account any
“holds” on deposits and pending debits that have not yet posted. The other method,
known as the “actual balance,” is the actual amount of money in the account at any
particular time, irrespective of any holds. Calculating overdrafts based on the
available balance tends to result in more frequent overdrafts. Tims v. LGE Cmty.
Credit Union, No. 1:15-CV-4279-TWT, 2017 WL 5133230, at *1 (N.D. Ga. Nov. 6,
2017), rev’d and remanded, 935 F.3d 1228 (11th Cir. 2019).
Granite uses the available balance method. Granite’s failure to inform
accountholders of the difference between the two methods of calculating overdrafts,
and of which method Granite employs, forms the basis of this suit.
After the court denied Granite’s motion to dismiss (doc. no. 20), the parties
engaged in discovery. Plaintiffs served document requests and interrogatories on
Granite, and Granite provided written responses, including transactional data.
Both parties conducted depositions, and plaintiffs’ data expert completed an
extensive analysis of the transactional data provided by Granite.
Based on the data, plaintiffs’ data expert concluded that between June 22,
2020, and April 30, 2022,1 Granite assessed 35,053 overdraft fees on 1,229
customers for transactions that constituted overdrafts under the available balance
calculation, but not under the actual balance calculation. Those fees totaled
$1,051,410. The expert extrapolated those results to estimate the fees assessed
1 The court understands this to be the period covered in the transactional data
provided by Granite during discovery. 3 through March 28, 20232. In total, the expert estimated that Granite assessed
$1,587,963 in fees between June 22, 2020, and March 28, 2023.
DISCUSSION
“The claims, issues, or defenses of a certified class—or a class proposed to be
certified for purposes of settlement—may be settled, voluntarily dismissed, or
compromised only with the court’s approval.” Fed. R. Civ. P. 23(e). Courts approve
class action settlements in stages. See Rapuano v. Trs. of Dartmouth Coll., 334
F.R.D. 637, 642 (D.N.H. Jan. 29, 2020); see also 4 William B. Rubenstein, Newberg
on Class Actions § 13.10 (6th ed. 2022).
First, the court must preliminarily approve the proposed settlement. To do
so, it must find that it “will likely be able to” (1) certify the class for settlement
purposes and (2) approve the settlement proposal under Rule 23(e)(2). Fed. R. Civ.
P. 23(e)(1)(B). Rule 23(e)(1)(B) requires courts to conduct a “searching,” “careful,”
and “rigorous” inquiry before preliminarily approving a settlement.3 Id.; see also
Wright v. S. New Hampshire Univ., 565 F. Supp. 3d 193, 200 (D.N.H. 2021). If the
2 The court presumes, though the plaintiffs did not so specify, that March 28,
2023, marks the end of the “Class Period,” which the Agreement defines as “the period from June 21, 2020, to the date on which the Class List is completed.”
3 Congress amended Rule 23(e) in 2018 to include a specific standard and
process for granting preliminary approval of a settlement. See Rapuano, 334 F.R.D. at 643. Prior to the amendment, in the absence of formal guidance, courts took a more “lax” approach when determining whether to grant preliminary approval of a settlement. Id. This court previously considered the impact of the 2018 amendment in Rapuano and concluded that Rule 23(e) requires the court to conduct a “searching,” “careful,” and “rigorous” inquiry. Id.; see also Wright, 565 F. Supp. 3d at 200. 4 court grants preliminary approval, it then must “direct notice in a reasonable
manner to all class members who would be bound” by the proposed settlement. Fed.
R. Civ. P. 23(e)(1)(B). After notice to the class, the court must hold a fairness
hearing at which class members may appear to support or object to the proposed
settlement. See Rubenstein, supra, § 13.10. Finally, the court must determine
whether to grant final approval of the proposed settlement. See id. Under Rule
23(e)(2), the court may grant final approval of a class action settlement if it can
certify the proposed class, see Amchem Products, Inc. v. Windsor, 521 U.S. 591, 621
(1997), and finds that the proposed agreement is “fair, reasonable, and adequate.”
Fed. R. Civ. P. 23(e)(2).
This case is at the preliminary approval stage. The First Circuit has
recognized the importance of encouraging and facilitating class action settlements
where appropriate under Rule 23(e). Howe v. Townsend, 588 F.3d 24, 36 (1st Cir.
2009) (citing Durrett v. Hous. Auth., 896 F.2d 600, 604 (1st Cir. 1990)).
Nonetheless, the court’s determination at this stage is “preliminary in the sense
that it is subject to modification based on additional information—including further
factual development or objections by class members—that may come to light prior
to or during the fairness hearing.” Rapuano, 334 F.R.D. at 643 (citations omitted).
I. Preliminary Certification of the Proposed Class for Settlement Purposes
To certify a class, the court must find that the class meets the four
requirements of Rule 23(a) and that the action falls into one of the categories
outlined in Rule 23(b). See Amchem, 521 U.S. at 613-14.
5 Here, plaintiffs seek preliminary certification of the settlement class for
purposes of settlement. The settlement class is defined as “all current and former
members of Defendant with consumer accounts, who were charged [an overdraft
fee] during the Class Period.” The class excludes “Granite State Credit Union, its
parents, subsidiaries, affiliates, officers, and directors; DOES 1 through 5; all
Settlement Class members who make a timely election to be excluded; and all
judges assigned to this litigation and their immediate family members.” All eligible
impacted individuals will be included in the settlement unless they opt out.
A. Fed. R. Civ. P. 23(a)
Rule 23(a) has four requirements: numerosity, commonality, typicality, and
adequacy. Fed. R. Civ. P. 23(a).
1. Numerosity
Rule 23(a)(1) requires that the putative class be “so numerous that joinder of
all members is impracticable.” Fed. R. Civ. P. 23(a)(1). “No minimum number of
plaintiffs is required to maintain a suit as a class action, but generally if the named
plaintiff demonstrates that the potential number of plaintiffs exceeds 40, the first
prong of Rule 23(a) has been met.” Clough v. Revenue Frontier, LLC, No. 17-CV-
411-PB, 2019 WL 2527300, at *3 (D.N.H. June 19, 2019) (quoting Garcia-Rubiera v.
Calderon, 570 F.3d 443, 460 (1st Cir. 2009)). Here, the record establishes that the
settlement class includes at least 1,229 members. Because joinder of 1,229
members is impracticable, numerosity is likely satisfied.
6 2. Commonality
Rule 23(a)(2) requires the existence of “questions of law or fact common to the
class.” Fed. R. Civ. P. 23(a)(2). To establish commonality, a plaintiff must show
that all putative class members “have suffered the same injury.” Wal-Mart Stores,
Inc. v. Dukes, 564 U.S. 338, 350 (2011) (citation, internal quotation marks omitted).
This means that the putative class members’ “claims must depend upon a common
contention . . . of such a nature that it is capable of classwide resolution—which
means that determination of its truth or falsity will resolve an issue that is central
to the validity of each one of the claims in one stroke.” Id. Commonality is a “low
bar.” In re New Motor Vehicles Canadian Exp. Antitrust Litig., 522 F.3d 6, 19 (1st
Cir. 2008).
In this case, all class members allege the same injury, which is that they
were charged overdraft fees in violation of Regulation E. Resolution of each class
member’s allegation depends on whether Granite’s Opt-in Disclosure provides a
“clear and readily understandable” explanation of “the institution’s overdraft
service.” See 12 C.F.R. § 1005.4(1)(1); 1005.17(b)(1)(i). Plaintiffs likely clear the
“low bar” of commonality.
3. Typicality
Rule 23(a)(3) requires that “the claims or defenses of the representative
parties [be] typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3).
The rationale behind this requirement is that “a class representative will
adequately pursue her own claims, and if those claims are ‘typical’ of those of the
rest of the class, then her pursuit of her own interest will necessarily benefit the
7 class as well.” Rubenstein, supra, § 3.28. To be typical, the representative
plaintiffs’ claims must “arise from the same event or practice or course of conduct
that gives rise to the claims of other class members, and [be] based on the same
legal theory.” Garcia-Rubiera, 570 F.3d at 460. The claims need not be identical,
they need only “share the same essential characteristics.” Rapuano, 334 F.R.D. at
648 (quoting Ouadani v. Dynamex Operations E., LLC, 405 F. Supp. 3d 149, 162 (D.
Mass. 2019)).
Here, the representative plaintiffs’ claims share the same essential
characteristics as the claims of the putative class. All plaintiffs allege that they
were charged overdraft fees without fair disclosure of how overdrafts are assessed.
All plaintiffs were also all subject to the exact same Opt-in Disclosure. The
representative plaintiffs would prevail by showing that the language of the Opt-in
Disclosure violated Regulation E. Because the same is true for the putative class,
the parties’ interests align, and thus, typicality is likely satisfied.
4. Adequacy
Rule 23(a)(4) requires a showing that “the representative parties will fairly
and adequately protect the interests of the class.” To make such a showing, the
petitioner must demonstrate that (1) “the interests of the representative party will
not conflict with the interests of any of the class members,” and (2) “counsel chosen
by the representative party is qualified, experienced, and able to vigorously conduct
the proposed litigation.” Andrews v. Bechtel Power Corp., 780 F.2d 124, 130 (1st
Cir. 1985).
8 Regarding the first prong, the court has not identified any way in which the
class representatives’ interests conflict with the interests of any class members. To
the contrary, the parties’ interests appear aligned. With respect to the second
prong, the court is persuaded that McCune Law Group, McCune Wright Arevalo
Vercoski Kusel Weck Brandt, APC (“McCune”) and Shaheen & Gordon, P.A., are
qualified to conduct this litigation. The record indicates that McCune has been
class counsel or co-lead counsel in 25 other overdraft fee class actions. Doc. no. 40-
2. Thus, counsel is qualified and experienced. Further, counsel has demonstrated
its ability to “vigorously conduct the proposed litigation” through its performance in
this litigation thus far. See Andrews, 780 F.2d at 130. The adequacy requirements
of Rule 23(a)(4) are therefore likely satisfied.
B. Fed. Rule Civ. P. 23(b)
Plaintiffs seek certification under Rule 23(b)(3). Rule 23(b)(3) requires the
party seeking certification to show that common questions of law or fact
“predominate over any questions affecting only individual members” and that class
resolution is “superior to other available methods for fairly and efficiently
adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3); see also Amchem, 521 U.S.
at 615. Certification under Rule 23(b)(3) is often appropriate in cases involving
money damages where individual plaintiffs’ recoveries would be too small to justify
the cost of litigating the claims individually. Rubenstein, supra, § 4:47 (citing
Amchem, 521 U.S. at 617). Class actions provide an avenue for recovery under such
9 circumstances by “aggregating the relatively paltry potential recoveries into
something worth someone's (usually an attorney's) labor.” Id.
Rule 23(b)(3) sets forth a non-exhaustive list of factors the court should
consider in making its “predominance” and “superiority” assessments:
• the class members’ interests in individually controlling the prosecution or defense of separate actions;
• the extent and nature of any litigation concerning the controversy already begun by or against class members;
• the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and
• the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3). Because the court is considering certification for the
purposes of settlement only, it need not consider the fourth factor: whether a class
action would be manageable. Amchem, 521 U.S. at 620. However, “other
specifications of the Rule – those designed to protect absentees by blocking
unwarranted or overbroad class definitions – demand undiluted, even heightened,
attention in the settlement context.” Id.
1. Predominance
The predominance inquiry requires the court to examine “the relation
between common and individual questions in a case.” Tyson Foods, Inc. v.
Bouaphakeo, 577 U.S. 442, 453 (2016). A question is common if “the same evidence
will suffice for each member to make a prima facie showing or [if] the issue is
susceptible to generalized, class-wide proof.” Id. (citation, internal quotation marks,
and brackets omitted). A question is individual if it requires “members of a
proposed class . . . to present evidence that varies from member to member.” Id.
10 (citation and internal quotation marks omitted). “Common questions do not
predominate if ‘a great deal of individualized proof’ would need to be introduced or
‘a number of individualized legal points’ would need to be established after common
questions were resolved.” Rubenstein, supra, § 4:50 (citations omitted).
While this requirement is similar to Rule 23(a)’s commonality requirement, it
is “far more demanding,” because it requires courts to find not only that common
questions exist, but also that they predominate over individual ones. See Amchem,
521 U.S. at 624. “When one or more of the central issues in the action are common
to the class and can be said to predominate,” the action may be certified under Rule
23(b)(3), even though other important matters, such as damages, may require
individual determination. Tyson Foods, 577 U.S. at 453 (citation and internal
quotation marks omitted).
Here, predominance is likely satisfied. To prevail on the claim that Granite
violated Regulation E, plaintiffs need to show that Granite’s Opt-in Disclosure was
insufficient to explain when Granite assesses overdraft fees. There is no dispute
that all of the plaintiffs were subject to the same Opt-in Disclosure. There is
similarly no dispute that Granite calculated overdrafts using customers’ available
balance rather than their actual balance. Any differences between the class
members’ claims are either immaterial to the resolution of the matter or outweighed
by questions common to all members.
2. Superiority
Under Rule 23(b)(3), the court must next consider whether class action is a
“superior” method of resolving class members’ dispute with the defendant, taking 11 into account the several factors outlined above. Fed. R. Civ. P. 23(b)(3). The
superiority requirement “ensures that litigation by class action will achieve
economies of time, effort, and expense, and promote uniformity of decision as to
persons similarly situated, without sacrificing procedural fairness or bringing about
other undesirable results.” In re Solodyn (Minocycline Hydrochloride) Antitrust
Litig., Case No. CV 14-MD-02503, 2017 WL 4621777, at *21 (D. Mass. Oct. 16,
2017) (citation, internal quotation marks, and ellipsis omitted).
The superiority requirement is likely satisfied. This is a case where “paltry”
potential individual recoveries could make separate actions impractical if not
impossible. See Amchem, 521 U.S. at 617. Class members are thus likely to benefit
by aggregating their claims. See id. Additionally, in light of the issues common to
all class members discussed above, the proposed classwide settlement would
achieve an efficient resolution of the class members’ claims while avoiding
unnecessary and duplicative litigation for all parties and the judicial system. See
Rapuano, 334 F.R.D. at 653.
In sum, the court finds that it will likely be able to certify the proposed class
for the purposes of settlement. See Fed. R. Civ. P. 23(e)(1)(B)(ii).
C. Appointment of Class Counsel Under Rule 23(g)
When a court certifies a class, it must appoint class counsel. Fed. R. Civ. P.
23(g). The court considers the work plaintiff’s chosen counsel has done so far in
identifying and investigating class claims, counsel’s class action and complex
litigation experience, counsel’s knowledge of the applicable law, and counsel’s
12 available resources for pursuing the litigation. See Fed. R. Civ. P. 23(g)(1)(A). In
addition, counsel “must fairly and adequately represent the interests of the class.”
Fed. R. Civ. P. 23(g)(4).
Here, counsel has shown it is fit to represent the class. It identified the
Regulation E claim, took steps to investigate it, and successfully negotiated a
resolution of the parties’ dispute. Counsel also has ample experience litigating class
actions in general, and particular expertise in overdraft fee class actions. See doc.
no. 40-2. Further, based on the record, the court expects that counsel will continue
to devote appropriate resources to notifying absent class members of the proposed
settlement and to fulfilling the class’s obligations under the Agreement, and that
counsel will continue to represent the class fairly and adequately. Accordingly, the
court finds that plaintiffs’ counsel of record may properly serve as class counsel in
this matter under Rule 23(g).
D. Preliminary Certification of the Proposed Class and Appointment of Class Representatives and Class Counsel
For the reasons discussed above, the court preliminarily certifies the
proposed class for settlement purposes. The court provisionally appoints plaintiffs
Rita and Edwin Grenier as the settlement class representatives, and their chosen
counsel, McCune and Shaheen & Gordon, P.A., as settlement class counsel in this
matter. In the event the court ultimately denies final approval of the parties’
proposed settlement agreement, the court’s preliminary certification of the class and
provisional appointments of class counsel and class representatives shall be
vacated. See Rapuano, 334 F.R.D. at 643.
13 II. Approval of Settlement Proposal: Rule 23(e)(2)
In addition to finding that it will likely be able to certify the proposed class,
the court must also determine that it will likely be able to find that the class action
settlement is "fair, adequate, and reasonable.” Fed. R. Civ. P. 23(e)(2); see also
Rapuano, 334 F.R.D. at 654; City P’ship Co. v. Atl. Acquisition Ltd. P’ship, 100 F.3d
1041, 1043 (1st Cir. 1996). To make this assessment, the court should consider the
adequacy of representation and of the relief offered under the proposal, whether
“the proposal was negotiated at arm’s length,” and whether “the proposal treats
class members equitably relative to each other.” Fed. R. Civ. P. 23(e)(2).
The court’s role in the settlement approval process is to serve as a fiduciary
for the absent class members, and to protect them from an unjust or unfair
settlement. See In re Lupron(R) Mktg. & Sales Pracs. Litig., 228 F.R.D. 75, 93 (D.
Mass. 2005); see also Amchem, 521 U.S. at 623. When “the parties negotiated at
arm's length and conducted sufficient discovery,” there is a presumption that a
negotiated settlement is within the range of reasonableness. Cohen v. Brown Univ.,
16 F.4th 935 (1st Cir. 2021), cert. denied sub nom. Walsh v. Cohen, 212 L. Ed. 2d
618, 142 S. Ct. 2667 (2022) (quoting In re Pharm. Indus. Average Wholesale Price
Litig., 588 F.3d 24, 32-33 (1st Cir. 2009)).
As an initial matter, the court notes that the presumption of reasonableness
applies here. Counsel’s sworn affidavit attests that settlement negotiations took
place at arm’s length. Doc. no. 40-2 ¶ 5. Counsel’s position is further supported by
the record, which indicates a months-long negotiation process. The parties first
informed the court that they had reached an agreement to settle the case “in 14 principle” on January 9, 2023. Doc. no. 34. They simultaneously asked the court to
stay the upcoming deadlines in the case for 30 days while they finalized the
agreement. Doc. no. 35. The parties subsequently request a 30-day extension of the
stay so that they could continue negotiations. Doc. no. 36. On March 27, 2023, the
parties informed the court that they had reached a settlement. Doc. no. 37.
The parties also engaged in sufficient discovery. Plaintiffs served document
requests and interrogatories on Granite, and Granite provided written responses,
including transactional data. They each conducted depositions and plaintiffs’ data
expert completed an extensive analysis of the data provided by Granite. Doc. no.
40-2, ¶ 5. As a result, the plaintiffs possessed the facts necessary to understand the
merits of their case. See In re Tyco Int'l, Ltd. Multidistrict Litig., 535 F. Supp. 2d
249, 261 (D.N.H. 2007).
Moreover, review of the parties’ Agreement establishes that the court will
likely be able to find that its terms are fair, adequate, and reasonable. Under the
proposed settlement, Granite will pay $635,000 into a “Settlement Fund.” This
amount represents approximately 40% of the possible damages plaintiffs could
recover. Though “[t]here is no predetermined figure indicating what constituted a
reasonable percentage of probable trial damages,” see Rubenstein, supra, § 13.15,
the recovery here is within the range of other overdraft fee class action settlements.
See Lane v. Campus Fed. Credit Union, No. 16-CV-37-JWD-EWD, 2017 WL
3719976, at *8 (M.D. La. May 16, 2017) (preliminarily approving settlement in
overdraft fee class action that represented 46% of total potential recovery); Behrens
15 v. Landmark Credit Union, No. 17-CV-101-JDP, 2018 WL 3130629, at *5 (W.D. Wis.
June 26, 2018) (preliminarily approving settlement that represented 49.3% of total
potential recovery in same circumstances). This is especially true since the
settlement amount does not reflect the “prospective value of the change in
[Granite’s] overdraft fee assessment practice.” Behrens, 2018 WL 3130629, at *5.
This amount is also reasonable in light of the potential risks and costs of
additional litigation. Continued litigation would involve a motion to certify the
class, a possible motion for summary judgment, and a possible trial. This litigation
would come with risks, because if a jury (or the court at summary judgment) were to
find that Granite’s Opt-in Disclosure satisfied Regulation E, the plaintiffs would not
recover any damages. Additionally, continued litigation would be costly.
Further, the Agreement treats class members equitably relative to each
other. After attorneys’ fees, litigation costs, and the service award to the class
representatives are subtracted from the settlement fund, each settlement class
member will receive a portion of the remaining funds based on the amount of
overdraft fees they paid during the class period. Awards will be distributed either
via direct deposit (for current Granite customers) or via check (for former Granite
customers). Because awards will be distributed in proportion to the amount of fees
each class member paid, the Agreement treats class members equitably.
Finally, the court finds that the release of liability in paragraph 67 of the
Agreement that applies only to Granite’s “conduct . . . during the Class Period that
[was] or could have been alleged in the Action, relating to the assessment of
16 [overdraft fees] . . .” is not overly broad and therefore reasonable. See Morgan v.
United States Soccer Fed’n, No. 219CV01717RGKAGR, 2022 WL 16859651, at *3
(C.D. Cal. Aug. 11, 2022) (“A proposed settlement agreement is overly broad when it
fails to limit the claims released to those based on the facts alleged in the
complaint.”). The court notes that paragraph 69 of the Agreement contains another
release which states that “Plaintiffs agree to a general release of the Released
Parties from all claims . . . of every nature and description whatsoever . . . ” Doc.
no. 40-3 at 23. The court construes this release to be part of the release relating to
the subject matter of this lawsuit in paragraph 67. To the extent the parties
intended to include a general release of all claims, that release is overly broad and
not approved by the court. See Morgan, 2022 WL 16859651, at *3.
Although the settlement proposal appears fair, adequate, and reasonable at
this preliminary stage of approval proceedings, the parties should nonetheless be
prepared to further explain and defend the proposed settlement at the fairness
hearing. In particular, the parties should be prepared to discuss how they reached
the agreed settlement amount (i.e., how they weighed the potential recovery at trial
against the plaintiffs’ chances of success at trial to reach a reasonable settlement
amount), details about counsel’s lodestar analysis, and the specifics of the release of
liability.
Still, because the proposed payments to class members constitute provision of
substantial relief to the settlement class without requiring class members to incur
the risks, burdens, costs, or delay associated with continued litigation, trial, and
17 possible appeal, the settlement proposal appears fair, adequate, and reasonable at
this stage. The court therefore preliminarily approves the parties’ proposed
settlement, pending final approval following a fairness hearing.
III. Notice and Settlement Administration
Because the court has concluded that it will likely be able to certify the
proposed class for the purposes of settlement and approve the proposed settlement,
it must direct notice to all class members who would be bound by the Agreement.
See Fed. R. Civ. P. 23(e)(1)(B). Under Rule 23(c), “the court must direct to class
members the best notice that is practicable under the circumstances, including
individual notice to all members who can be identified through reasonable effort.”
Fed. R. Civ. P. 23(c)(2)(B).
The court has reviewed the “Notice Program” outlined in the Agreement. In
accordance with the Notice Program, within 60 days of the execution of the
Agreement, Granite will produce a “Class List” containing the names and contact
information of all settlement class members. The parties’ Agreement provides that
certain administrative duties (including providing notice to class members,
disbursement of payments to class members, and other such matters) will be
performed by a “Settlement Administrator.”4 The Settlement Administrator will
send email notice to all class members who are current Granite customers and who
agreed to receive email correspondence from Granite. It will send postcard notice to
4 The Agreement sometimes uses the term “Claims Administrator” instead of
“Settlement Administrator.” The court will use the term “Settlement Administrator” as that term is explicitly defined in the Agreement. 18 customers who did not agree to email correspondence or who are no longer
customers of Granite. The court appoints KCC LLC, the claims administration
business suggested by plaintiffs, as the Settlement Administrator, which will
provide notice to the class and administer the settlement.5
The court finds that the form and substance of the notices proposed by the
parties (doc. no. 40-3, ex. 1 & 2) will comply with Rule 23(c)(2)(B) after several
corrections are made. With respect to the Email and Postcard Notice (id., ex. 1), the
notice informs class members that Granite unlawfully assessed certain “Relevant
Fees,” but it does not include the definition of that term. The notice should specify
the type of fees at issue in the suit. Additionally, the notice states that Granite “has
agreed to issue a credit to your Account, payment to you if you are no longer a
member, and/or to return certain Relevant Fees.” Stating that Granite may return
“certain Relevant Fees” could confuse class members because class members will
only receive a pro rata portion of the net settlement fund.
The Long Form Notice is also deficient in several respects. First, it refers to a
single class representative when there are two class representatives. Second,
section one of the notice states that the “Class Representative has asserted a claim
for breach of the Account agreement and violation of consumer protection laws.”
5 Plaintiffs report that they requested bids for claims administration services
from “two very well-regarded claims administrators,” and that KCC was the lower bidder. Doc. no. 40-1 at 11. Plaintiffs further report that “[t]he proposed manner of notice when used in other overdraft fee class action cases prosecuted by these same Class Counsel with KCC has never resulted in a notice reach of less than 90%, and usually has been well in excess of that.” Id. 19 The class representatives did not assert a claim for breach of the account
agreement, only a claim for violating Regulation E. Third, section four makes
reference to “one or both of the Settlement Classes.” There is only one settlement
class in this case. Finally, the notice states that objections need only be sent to the
Settlement Administrator. This section must be updated to require that notice of
objections be sent only to the clerk of the court. The court finds redundant the
Agreement’s requirement that class members serve notice of objections on any party
other than the clerk of the court, since counsel will automatically receive electronic
notice of all objections sent to the clerk of the court once they are placed on the
docket. The court is concerned that the additional unnecessary service
requirements will deter objectors. As such, the court will accept and consider
objections so long as they are sent to the clerk of court. See Lloyd v. Navy Fed.
Credit Union, No. 17-CV-1280-BAS-RBB, 2018 WL 5247367, at *10 (S.D. Cal. Oct.
22, 2018), order approved, No. 17-CV-1280-BAS-RBB, 2019 WL 2269958 (S.D. Cal.
May 28, 2019) (“[T]he parties cannot limit the Court's discretion regarding the type
of notice it finds must be provided to class members to satisfy constitutional due
process concerns, including notice regarding the objection procedure class members
will need to follow for the Court to consider their objections.”).
The parties shall submit the proposed notices reflecting the changes no later
than August 11, 2023. The court will review the amended notices on an expedited
basis. Once the court approves them, the court will schedule the fairness hearing
and other related deadlines.
20 IV. Opting Out and Objecting
The Agreement affords settlement class members the opportunity to opt-out
by sending written notice to the Settlement Administrator. The Court approves and
adopts the procedure and manner governing all requests to be excluded from the
Class as outlined in the Agreement. The Agreement also affords class members the
opportunity to object by sending written notice to the Settlement Administrator,
class counsel, defense counsel, and the clerk of the court. As already noted, the
court shall only require written notice of objections to be sent to the clerk of the
court. The court otherwise approves and adopts the manner for objecting to the
proposed settlement outlined in the Agreement.
CONCLUSION
For the foregoing reasons, the court grants plaintiffs’ motion for preliminary
approval of the proposed class action settlement (doc. no. 40) and finds it likely that
the court will be able to certify the proposed class for the purposes of settlement.
The court appoints KCC LLC to administer the settlement and provisionally
appoints plaintiffs’ counsel of record as settlement class counsel and plaintiffs as
settlement class representatives. Once the court approves the updated notices, the
court will schedule the fairness hearing and other related deadlines. The court
approves the opt-out and objection procedures outlined by the parties, subject to the
change noted above, and directs the parties to submit updated proposed notice
21 forms to bring them into conformity with Fed. R. Civ. P. 23(c)(2)(B) by August 11,
2023.
SO ORDERED.
__________________________ Landya McCafferty United States District Judge
August 2, 2023
cc: Counsel of Record