Zwicky v. Diamond Resorts Incorporated

• Court: District Court, D. Arizona
• Decided: September 6, 2023
• Docket: 2:20-cv-02322
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Norman Zwicky, et al., No. CV-20-02322-PHX-DJH

10 Plaintiffs, ORDER

11 v.

12 Diamond Resorts Incorporated, et al.,

13 Defendants. 14 15 Plaintiffs Norman Zwicky (“Zwicky”), George Abarca (“Abarca”), Vikki Osborn 16 (“Osborn”), and Elizabeth Stryks-Shaw (“Stryks-Shaw”) (collectively “Plaintiffs” or 17 “Class Representatives”) previously filed an “Unopposed Motion for Preliminary 18 Certification of Class for Settlement Purposes Only, Preliminary Approval of Settlement, 19 and Approval of Notice” (Doc. 129) (the “Initial Motion”), which the Court granted in 20 part and denied in part. (Doc. 136). Although the Court granted conditional certification 21 of the Class, it denied without prejudice the proposed Settlement Agreement and Release 22 (Doc. 129-1) (the “Proposed Settlement Agreement” or “Agreement”). (Doc. 136 at 17– 23 28). Plaintiffs have since filed an “Unopposed Renewed Motion for Preliminary 24 Approval of Settlement, Approval of Notice” (Doc. 144) (the “Renewed Motion”). 25 Plaintiffs have sufficiently supplemented the record with appropriate documentation 26 regarding the Proposed Settlement Agreement. So, the Court grants Plaintiffs’ Renewed 27 Motion. 28 / / / 1 I. Background1 2 Plaintiffs are all current or former owners of timeshare interests that were acquired 3 or sold by Defendants Diamond Resorts International, Inc. (“DRI”) and Diamond Resorts 4 Management, Inc. (“DRMI”).2 (Doc. 109 at ¶ 12). Defendants Troy Magdos and Kathy 5 Wheeler (collectively the “Defendant Individuals”) are employees of DRI. 6 (Id. at ¶¶ 4, 97, 99). This suit stems from a 2015 state action Zwicky filed in the 7 Maricopa County Superior Court seeking to enforce his statutory and common law 8 inspection rights as a timeshare owner. See Zwicky v. Premiere Vacation Collection 9 Owners Ass’n, No. CV2015-051911 (Ariz. Super. 2015) (the “State Inspection Action”). 10 Zwicky questioned why he was charged annual assessments and fees that were materially 11 higher than previous years. See generally id. 12 In August 2021, Plaintiffs filed their Third Amended Class Action Complaint 13 (“TAC”) (Doc. 109) and brought three causes of action: Count I against all Defendants 14 for violation of the Federal Racketeering Influenced and Corrupt Organization Act 15 (“Federal RICO”), 28 U.S.C. §§ 1961 et seq.; Count II against all Defendants for 16 violation of the Arizona Civil Racketeering Statute (“Arizona RICO”), A.R.S. § 13- 17 2312(B); and Count III against Defendant Individuals only for breach of fiduciary duty. 18 (Id. at ¶ ¶ 130–85). In short, the TAC alleged Defendants failed to disclose certain 19 charges and overcharged timeshare owners annual assessments by imposing those hidden 20 costs as ordinary common expenses. (See Doc. 144 at 4). 21 In its November 15, 2022, Order (Doc. 136) (the “2022 Order”), the Court 22 preliminary certified this matter as a class action on behalf of the following class: 23 / / / 24 / / / 25 / / /

26 1 The Court has discussed the background of this case at length in its prior Orders (Docs. 102 at 1–5; 136 at 1–4) and so the Court will not repeat it here. 27 2 DRMI is a property management company and wholly owned subsidiary of DRI. 28 (Doc. 109 at ¶ 77). 1 All current and former members of the Premiere Vacation Collection Owners Association who were assessed Assessments for any Calendar 2 year(s) from 2011 through and including 2022, excluding ILX Acquisition 3 and any entity that received any bulk transfer/assignment of ILX Acquisition’s Bulk Membership in the Premiere Vacation Collection 4 Owners Association. Excluded from the Class are Diamond Resorts 5 International, Inc., Diamond Resorts Management, Inc., their parents, subsidiaries, successors, affiliates, current officers and directors and all 6 judges assigned to this litigation and their immediate family members. 7 (Id. at 29–30) (the “Class” or “Class Members”). The Court denied the Proposed 8 Settlement without prejudice because it was unsupported by appropriate documentation. 9 (Id. at 17–28). 10 II. Legal Standard 11 Rule 233 governs the requirements and procedures for class action settlements. 12 The Ninth Circuit has declared a strong judicial policy that favors settlement of class 13 actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992); Hyundai 14 and Kia Fuel Economy Litig., 926 F.3d 539, 556 (9th Cir. 2019). When the “parties 15 reach a settlement agreement prior to class certification, courts must peruse the proposed 16 compromise to ratify both [1] the propriety of the certification and [2] the fairness of the 17 settlement.” Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003); see also In re 18 Bluetooth Headset Products Liab. Litig., 654 F.3d 935, 949 (9th Cir. 2011) (holding 19 when parties seek approval of a settlement negotiated prior to formal class certification, 20 “there is an even greater potential for a breach of fiduciary duty owed the class during 21 settlement”). The second inquiry is at issue as the Court already preliminary certified this 22 class action for settlement purposes. 23 The “court must carefully consider ‘whether a proposed settlement is 24 fundamentally fair, adequate, and reasonable,’ recognizing that ‘[i]t is the settlement 25 taken as a whole, rather than the individual component parts, that must be examined for 26 overall fairness . . . .’” Staton, 327 F.3d at 952 (quoting Hanlon, 150 F.3d at 1026); see 27

28 3 Unless where otherwise noted, all Rule references are to the Federal Rules of Civil Procedure. 1 also Fed. R. Civ. P. 23(e) (outlining class action settlement procedures). Procedurally, 2 the approval of a class action settlement takes place in two stages. In the first stage of the 3 approval process, “the court preliminarily approve[s] the Settlement pending a fairness 4 hearing, temporarily certifie[s] the Class . . . , and authorize[s] notice to be given to the 5 Class.” West v. Circle K Stores, Inc., 2006 WL 1652598, at *2 (E.D. Cal. June 13, 2006) 6 (quoting In re Phenylpropanolamine (PPA) Prods. Liab. Litig., 227 F.R.D. 553, 556 7 (W.D. Wash. 2004)). Therefore, in this Order the Court will only “determine [ ] whether 8 a proposed class action settlement deserves preliminary approval” and lay the 9 groundwork for a future fairness hearing. Nat’l Rural Telecomms. Coop. v. DIRECTV, 10 Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004). 11 At the fairness hearing and after notice to the Class, the Court will entertain any of 12 the Class’s objections to (1) the treatment of this litigation as a class action and/or (2) the 13 terms of the Proposed Settlement Agreement. See Diaz v. Trust Territory of Pac. Islands, 14 876 F.2d 1401, 1408 (9th Cir. 1989) (prior to approving the dismissal or compromise of 15 claims containing class allegations, district courts must, pursuant to Rule 23(e), hold a 16 hearing to “inquire into the terms and circumstances of any dismissal or compromise to 17 ensure that it is not collusive or prejudicial”). Following the fairness hearing, the Court 18 will make a final determination as to whether the parties should be allowed to settle the 19 class action under the terms agreed upon. DIRECTV, 221 F.R.D. at 525. 20 III. Discussion 21 In the 2022 Order, the Court identified three deficiencies with respect to Plaintiff’s 22 Initial Motion and the Proposed Settlement Agreement: (1) there was insufficient 23 documentation to adequately assess the parties’ rationale behind arriving at the 24 Agreement; (2) there appeared to be a facial inequity when comparing the relief provided 25 to the Class and the amount of attorneys’ fees requested; and (3) the parties did not 26 provide any documents to support their calculations behind the proposed Settlement 27 Fund. (See Doc. 136 at 29). In their Renewed Motion, Plaintiffs supplement the record 28 and argue the Court should approve the Proposed Settlement Agreement that was 1 attached to their Initial Motion. (Compare Doc. 129-1 with Doc. 145-5). Plaintiffs also 2 request the Court to approve their proposed methods and forms of notice to the Class and 3 set a date for a fairness hearing.4 The Court will address each request in turn. 4 A. Preliminary Evaluation of Fairness of Proposed Class Action Settlement 5 6 The Court first considers whether to the preliminarily approve the Proposed 7 Settlement Agreement. Rule 23(e) requires courts to evaluate a proposed settlement for 8 fundamental fairness, adequacy, and reasonableness before approving it. Fed. R. Civ. P. 9 23(e)(2). Ultimately, a determination of the fairness, adequacy, and reasonableness of a 10 class action settlement involves consideration of the following eight factors: 11 (1) the strength of the plaintiffs’ case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action 12 status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the 13 experience and views of counsel; (7) the presence of a governmental 14 participant; and (8) the reaction of the class members to the proposed settlement. 15 Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir.2004) (citation omitted). 16 Some of the Churchill factors, however, cannot be fully assessed until the court conducts 17 its fairness hearing. Alberto v. GMRI, Inc., 252 F.R.D. 652, 665 (E.D. Cal. 2008). At the 18 preliminary approval stage, courts need only evaluate “whether the proposed settlement 19 [1] appears to be the product of serious, informed, non-collusive negotiations, [2] has no 20 obvious-deficiency, [3] does not improperly grant preferential treatment to class 21 representatives or segments of the class and [4] falls within the range of possible 22 approval.” Horton v. USAA Cas. Ins. Co., 266 F.R.D. 360, 363 (D. Ariz. 2009) (internal 23 quotation and citation omitted). In its 2022 Order, the Court conducted a cursory review 24 of the Proposed Settlement Agreement in accordance with these four factors. 25 The Court initially rejected the Agreement because it was deficient under the first, 26 27 4 Plaintiffs also request the Court to set a deadline for filing a separate motion for 28 attorneys’ fees and costs. The Court finds it premature to consider this request and will not do so here. 1 second, and fourth factors.5 As to the first factor, Plaintiffs did not provide sufficient 2 information from which the Court could adequately assess the content of the parties’ 3 settlement negotiations or the sufficiency of evidence used therein. (Doc. 136 at 19–20). 4 As to the second factor, the Court was concerned with the facial inequities and conflicts 5 of interest regarding the parties’ clear-sailing agreement for what appeared to be a 6 disproportionate and unsubstantiated award of attorneys’ fees. (Id. at 21–24). As to the 7 fourth factor, Plaintiffs did not provide sufficient documentation demonstrating how the 8 proposed Settlement Fund amount was adequately justified. (Id. at 27–28). In short, 9 Plaintiffs failed to show their work. The Court now considers whether Plaintiffs’ 10 Renewed Motion rectifies these deficiencies. 11 1. Factor One: Settlement Process 12 The parties’ arrived at the Agreement after an all-day, in-person mediation 13 session with Retired Magistrate Judge Edward Infante (“The Hon. Infante”), who is an 14 experienced private mediator and former Chief Magistrate Judge (Doc. 129-7 at 3). The 15 Court found “[t]he parties’ attestations regarding the process of mediation evince[d] good 16 faith negotiations and a thorough process for arriving at settlement” but was unpersuaded 17 because “Plaintiffs d[id] not provide any supplemental documents that concretely show 18 what their ‘numerous offers and counter offers’ and initial term sheet entailed.” 19 (Doc. 136 at 20). There was not enough information for the Court to assess “the 20 strengths and weaknesses of the parties’ claims and defenses . . . and consider how class 21 members will benefit from settlement” to determine if it was fair and adequate. Acosta v. 22 Trans Union, LLC, 243 F.R.D. 377, 397 (C.D. Cal. 2007). 23 In their Renewed Motion, Plaintiffs outline in detail the substance of the parties’ 24 mediation sessions with the Hon. Infante. For example, Plaintiffs explain the progression 25 in which the parties revised their proposal settlement structures and the contents of the 26 offers and counteroffers. (Doc. 144 at 27–33). Plaintiffs also attach the initial Terms 27 5 The Court approved the Agreement with respect to the third factor, finding the proposed 28 incentive awards to Plaintiffs did not improperly grant preferential treatment to class representatives or segments of the class. (Doc. 136 at 25–27). 1 Sheet (Doc. 145-4) the parties generated at the close of mediation, identify the material 2 changes between the Term Sheet and Proposed Settlement Agreement, and explain why 3 the Agreement is a better deal for the Class. (Doc. 144 at 31–43). These clarifications 4 show the parties engaged in back-and-forth negotiations, meaningfully evaluated the 5 claims and defenses at issue in the case, and settled on an Agreement that benefitted the 6 class through a lump sum payment rather than a multi-year payment plan. The settlement 7 process appears to be fair and adequate. 8 The Court was also concerned that the parties arrived at a settlement before they 9 completed extensive discovery. See Acosta, 243 F.R.D. at 397 (“Federal courts are 10 inherently skeptical of pre-certification settlements, precisely because such settlements 11 tend to be reached quickly before the plaintiffs’ counsel has had the benefit of the 12 discovery necessary to make an informed evaluation of the case and, accordingly, to 13 strike a fair and adequate settlement.”). While Plaintiffs vaguely mentioned the 14 negotiations were aided by disclosures mandated by the Arizona Superior Court in the 15 State Inspection Action and Defendants’ summaries of their indirect corporate costs, 16 Plaintiffs did not provide or cite to any of those documents in their Initial Motion. 17 (Doc. 136 at 20). These gaps prevented the Court from evaluating the content of the 18 parties’ negotiations or the sufficiency of evidence used by the parties. 19 Plaintiffs now supply those documents in their Renewed Motion. (See Docs. 144- 20 4; 144-5; 144-7; 144-8) (State Inspection Action disclosure orders); (see also Docs. 144- 21 6; 144-9) (Defendants’ summaries of indirect corporate costs). Plaintiffs also aver they 22 engaged in informal investigation of DRI’s public filings to better understand DRI’s 23 business operations, “and to determine (among other things) whether [DRI’s alleged] 24 overhead-shifting practice was sanctioned or disclosed.” (Doc. 144 at 5). Of these 25 documents include DRI’s filings at the United States Securities and Exchange 26 Commission, Arizona Department of Real Estate, and during various bankruptcy 27 proceedings. (Doc. 144 at 5–6); (see e.g., Doc. 145-1) (Arizona Department of Real 28 Estate Electronic Filing). Moreover, Plaintiffs’ Renewed Motion includes the discovery 1 documents facilitated in the present action. (See Doc. 144-10). The Court agrees that the 2 discovery obtained in the State Inspection Action and this matter demonstrates the 3 parties’ efforts to investigate before settlement are satisfactory. 4 In sum, Plaintiffs have sufficiently supplemented the record to demonstrate the 5 parties engaged in a good-faith mediation session. There is no evidence to suggest that 6 the Proposed Settlement Agreement was negotiated in haste or collusion. See Hanlon, 7 150 F.3d at 1027. Thus, the Court is preliminarily satisfied that the Agreement was the 8 product of serious, informed negotiations. 9 2. Factor Two: Obvious Deficiencies 10 Next, the Court will reevaluate the terms of the Agreement for obvious 11 deficiencies. The Ninth Circuit has identified three “subtle signs” of deficiencies, which 12 it refers to as the Bluetooth factors: “(1) when counsel receives a disproportionate 13 distribution of the settlement; (2) when the parties negotiate a clearsailing arrangement, 14 under which the defendant agrees not to challenge a request for an agreed-upon attorney's 15 fee; and (3) when the agreement contains a kicker or reverter clause that returns 16 unawarded fees to the defendant, rather than the class.” McKinney-Drobnis, 16 F.4th at 17 607–08 (citation omitted); In re Bluetooth, 654 F.3d at 947 (internal quotation and 18 citation omitted). In the 2022 Order, the Court rejected the Agreement due to concerns 19 arising under the first and second Bluetooth factor.6 20 a. Disproportionate Distribution of the Settlement to Counsel 21 22 The Court first took issue with the proportionality between the agreed upon award 23 of attorney’s fees and the results obtained for the Class. In their Initial Motion, Plaintiffs 24 requested approval of “25% of the settlement fund ($3,250,000) as an award of attorneys’ 25 fees and expenses (currently estimated at $25,000).” (Doc. 129 at 4). The Court 26 6 The Court found the third Bluetooth factor weighed against collusion because there was 27 no reverter clause and the Proposed Settlement Agreement required any undistributed funds to be distributed to Habitat for Humanity as a cy pres recipient. (Doc. 136 at 24– 28 25). The Court need not address this factor again. 1 construed this statement to mean that the parties presumptively agreed to a fee award that 2 was 134 times the amount of actual fees estimated at $25,000. (Doc. 136 at 23 citing 3 Docs. 129-1 at 44; 129 at 4). In their Renewed Motion, Plaintiffs now clarify their 4 “counsels’ statement was ambiguous and perhaps poorly worded” and that “their estimate 5 of $25,000 was intended to refer to expenses only. Not fees.” (Doc. 144 at 25). 6 Plaintiffs also attach declarations by their Counsel as preliminary examples of actual 7 hours billed to justify their request for a 25% fee award. (Docs. 145-6; 145-7). 8 In light of Plaintiffs’ clarification and the Ninth Circuit recognition that “25% of 9 the fund as the benchmark for a reasonable fee award,” the Court is preliminarily assured 10 there is no danger of disproportionate distribution of the settlement to Counsel. In re 11 Bluetooth, 654 F.3d at 942. 12 b. Clear-sailing Arrangement for Attorneys’ Fees 13 The Court also took issue with the parties’ clear-sailing agreement for fees 14 because Defendants promised not to oppose Plaintiffs’ request for attorneys’ fees of 25% 15 of the Settlement Fund. (Doc. 129-1 at 44). This concern was compounded due to the 16 Court’s initial understanding that the Agreement promoted a fee award grossly greater 17 than the actual fees estimated. However, the parties have since clarified their request for 18 fees and sufficiently dispelled any reservations regarding disproportionality. See supra 19 Section III.A(2)(a). 20 Although there is a clear-sailing agreement for fees, Plaintiffs’ petition for fees 21 nonetheless remains subject to Court approval. (Doc. 144 at 27). And to be sure, the 22 Proposed Settlement Agreement protects the interest of the Class by providing that “the 23 Court’s failure to approve, in whole or in part, any award for attorneys’ fees shall not 24 prevent the Settlement Agreement from becoming effective, nor shall it be grounds for 25 termination.” (Doc. 129-1 at 44). 26 In sum, Plaintiffs have alleviated the concerns identified in the 2022 Order with 27 respect to the first and second Bluetooth factors. There are no obvious deficiencies in the 28 Proposed Settlement Agreement. 1 3. Factor Four: Settlement Fund Within Range of Possible Approval 2 3 Last, the Court will reconsider the proposed Settlement Fund amount in light of 4 the parties’ supplemental documents. In their Initial Motion, Plaintiffs represented the 5 “maximum, reasonable, nontrebled” recovery award for this lawsuit is $35,000,000. 6 (Doc. 129 at 21–22). They concluded the $13,000,000 Settlement Fund, which is roughly 7 37% of estimated damages, was well within reason because even a fractional recovery 8 may be fair in light of the uncertainties, delay, and expense of trial. Id. (citing Millan v. 9 Cascade Water Servs., Inc., 310 F.R.D. 593, 611 (E.D. Cal. 2015)). The Court found this 10 explanation hollow because Plaintiffs did not provide any concrete information to justify 11 their calculations. (Doc. 136 at 28). 12 In their Renewed Motion, Plaintiffs attach the parties’ quantitative analysis that 13 supports the maximum value estimate at $35,000,000. (Doc. 145-2) (Indirect Corporate 14 Cost Analytical Work-Up). The analysis references Defendants’ indirect corporate cost 15 summaries from 2011–2021 (Docs. 144-6; 144-9) and “presents a year-by-year recap of 16 the total net adjusted Indirect Corporate Costs passed on to [] Class members” that totals 17 $35,275,633. (Docs. 144 at 16–17; 145-2). Plaintiffs represent this figure constitutes the 18 maximum because it would be “achieve[d] [] only if the Court or jury were to 19 categorically reject all of the Defendants’ challenges to the merits and damages claims[.]” 20 (Doc. 144 at 12). 21 Plaintiffs’ additional documents competently supports their calculations for the 22 Settlement Fund. And the Court agrees that the $13,000,000 Settlement Fund falls within 23 the “range of reasonableness” as 37% of the estimated maximum of non-trebled 24 compensatory damages. (Doc. 144 at 13–14); see Nat’l Rural Telecommunications Coop. 25 v. DIRECTV, Inc., 221 F.R.D. 523, 527 (C.D. Cal. 2004) (citing Linney v. Cellular 26 Alaska P’ship, 151 F.3d 1234 (9th Cir. 1998)) (“[I]t is well-settled law that a proposed 27 settlement may be acceptable even though it amounts to only a fraction of the potential 28 recovery that might be available to the class members at trial.”); see e.g., In re 1 Volkswagen “Clean Diesel” Mktg., Sales Pracs., & Prod. Liab. Litig., 2018 WL 2 6198311, at *6 (N.D. Cal. Nov. 28, 2018) (approving a settlement fund that constituted 3 “33 percent of th[e] projected maximum recovery”). And if Class Counsel obtains an 4 attorneys’ fees award equivalent to 25% of the Settlement Fund ($3,250,000), the amount 5 of the Settlement Fund available for distribution to class members would be equivalent to 6 27% of their maximum recovery. See e.g., In re Volkswagen, 2018 WL 6198311, at *6 7 (approving a settlement fund that ultimately allowed for 24% of the class members’ 8 maximum recovery after 25% of funds were allocated for attorneys’ fees). Thus, the 9 amount of the $13,000,000 Settlement Fund is preliminarily approved. 10 In sum, Plaintiffs have adequately showed their work behind the Proposed 11 Settlement Agreement and allayed all concerns identified in the 2022 Order. The Court 12 will preliminarily approve the Agreement because it “appears to be the product of 13 serious, informed, non-collusive negotiations, has no obvious-deficiency, does not 14 improperly grant preferential treatment to class representatives or segments of the class 15 and falls within the range of possible approval.” Horton, 266 F.R.D. at 363 (internal 16 quotation and citation omitted). 17 C. Proposed Class Notice and Administration 18 The Court next turns to the parties’ proposed methods and forms of notice to the 19 Class. Rule 23(c)(2)(B) governs the requirements for notices in Rule 23(b)(3) class 20 actions: 21 [T]he court must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who 22 can be identified through reasonable effort. . . . The notice must clearly and 23 concisely state in plain, easily understood language[] 24 (i) the nature of the action; (ii) the definition of the class certified; 25 (iii) the class claims, issues, or defenses; 26 (iv) that a class member may enter an appearance through an attorney if 27 the member so desires; 28 (v) that the court will exclude from the class any member who requests 1 exclusion; 2 (vi) the time and manner for requesting exclusion; and 3 (vii) the binding effect of a class judgment on members under Rule 23(c)(3). 4 Fed. R. Civ. P. 23(c)(2)(B). The notice may be distributed by United States mail, 5 electronic means, or other appropriate means. Id. In addition, due process requires the 6 notice must be “reasonably calculated, under all the circumstances, to apprise interested 7 parties of the pendency of the action and afford them an opportunity to present their 8 objections.” Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950). 9 The Proposed Settlement Agreement details a Notice Program (Doc. 129-1 at 29– 10 34) and includes three notice forms: (1) a Proposed Postcard Notice (Doc. 129-2); 11 (2) a Proposed Email Notice (Doc. 129-3); and (3) a Proposed Long Form Notice 12 (Doc. 129-4). The Notice Program also provides for “the creation of a Settlement 13 Website that will provide additional information and documents, including the operative 14 pleadings and the Long Form Notice.” (Doc. 144 at 40). 15 1. Notice Methods 16 The Notice Program names JND Legal Administration as Settlement 17 Administrator7 and directs notice be distributed in one of three ways: “(1) Email Notice 18 shall be the primary form and notice and sent to all Class Members for whom DRM has 19 provided email addresses; (2) Postcard Notice sent by U.S. mail only to Class Members 20 for whom DRM does not have valid email addresses or for whom Email Notice bounces 21 back as undeliverable; (3) and Long Form Notice, which shall be written in both English 22 and Spanish, and shall be available on the Settlement Website and via mail upon a Class 23 Member’s request to the Settlement Administrator.” (Doc. 129-1 at 32–33). DRMI 24 agrees to provide the Settlement Administrator with a Class Membership List containing, 25 among other things, each Class Member’s name, last known address, email address 26 27 7 The Settlement administrator is tasked with, among other things, determining and 28 allocating each Class Member’s pro rata interest in the Settlement Fund, managing the Settlement Website, and carrying out the Notice Program. (Doc. 129-1 at 27–29). 1 (if available), and assessment fees incurred between 2011–2022. (Id. at 26). 2 Courts in this circuit have approved similar notice programs that dispersed short- 3 form notice by email where possible and, alternatively, by mail to class members for 4 whom there are no known email addresses. See e.g., Corcoran v. CVS Health, 2019 WL 5 6250972, at *9–10 (N.D. Cal. Nov. 22, 2019); In re MyFord Touch Consumer Litig., 6 2019 WL 1411510, at *4 (N.D. Cal. Mar. 28, 2019). Rule 23(c)(2)(B) indeed allows 7 electronic notice to class members in certain situations, and the parties have established a 8 procedure for obtaining the necessary information of the Class Members. 9 See Fed. R. Civ. P. 23(c)(2)(B). Thus, the Court finds the Notice Program’s distribution 10 method is proper. 11 2. Notice Forms 12 The Court next reviews the contents of the three notice forms. All forms are made 13 up of easily understandable questions and answers concerning the Proposed Settlement 14 Agreement and the litigation. The Proposed Postcard and Email Notices are identical and 15 summarize the Proposed Long Form Notice. (Compare Doc. 129-2 with Doc. 129-3). 16 These short-form notices meet the requirements of Rule 23(c)(2)(B) because they 17 describe the nature of the action; define the Class; state the issues; outline recovery and 18 release under the Proposed Settlement Agreement; inform Class Members they can 19 appear at the fairness hearing; and refer Class Members to the Proposed Long Form 20 Notice on the Settlement Website for instructions on how to opt out of the settlement or 21 object at the fairness hearing. (Id.) However, the Court notes the Proposed Postcard and 22 Email Notices only state the date and time of the fairness hearing. Both documents 23 should be revised to also include the Court’s address and courtroom number. 24 The Proposed Long Form provides greater details on the components listed in the 25 Proposed Postcard and Email Notices, including the background of the State Inspection 26 Action, the functions of non-monetary benefits provided by the Agreement, and how 27 Class Counsel will be paid. (Doc. 129-4). The Proposed Long Form meets due process 28 requirements because it explains to the Class their rights to opt out of or object to the 1 Proposed Settlement Agreement, and the deadlines by which to exercise those rights. 2 Contingent on the revisions identified above, the parties’ Notice Program, 3 Proposed Postcard Notice, Proposed Email Notice, and Proposed Long Form Notice are 4 approved. The Court believes email and direct mail, with all reasonable efforts made to 5 obtain updated addresses, is the “best notice that is practicable under the circumstances.” 6 Fed. R. Civ. P. 23(c)(2)(B). 7 IV. Conclusion 8 The Court preliminarily approves the Proposed Settlement Agreement as 9 sufficiently fair, reasonable, and adequate to allow the dissemination of notice of the 10 Agreement to the Class. Plaintiffs have amply supplemented the record to rectify all 11 prior deficiencies identified in the 2022 Order. The Notice Program and three notice 12 forms are approved so long as the parties perform the following revisions: the Proposed 13 Postcard and Email Notices should state the Court’s address and courtroom number to 14 direct Class Members to the fairness hearing. 15 Accordingly, IT IS ORDERED as follows: 16 I. The Court preliminarily approves the Settlement Agreement and Release 17 (Doc. 129-1) as sufficiently fair, reasonable, and adequate to allow the dissemination of 18 notice of the Settlement Agreement and Release to the Class. This determination 19 permitting notice to the Class is not a final finding, but a determination that there is 20 sufficient cause to submit the Settlement Agreement and Release to the Class and to hold 21 a Final Approval Hearing to consider the fairness, reasonableness, and adequacy of the 22 Settlement Agreement and Release. 23 II. The Court appoints as third-party Settlement Administrator: JND Legal 24 Administration. 25 III. The Court approves the Postcard Notice, Email Notice, and Long Form 26 Notice, not materially different from those filed at (Docs. 129-2; 129-3; 129-4), provided 27 the Postcard and Email Notices be revised to state the Court’s address and courtroom 28 number to direct Class Members to the fairness hearing. 1 The proposed methods and forms for notifying the Class Members of the 2 settlement and its terms and conditions meet the requirements of Fed. R. Civ. P. 3 23(c)(2)(B) and due process, constitute the best notice practicable under the 4 circumstances, and constitute due and sufficient notice to all persons entitled to the 5 notice. The Court finds that the proposed notice forms are clearly designed to advise the 6 Class Members of their rights. 7 In accordance with the Settlement Agreement and Release, Defendant Diamond 8 Resorts Management, Inc. shall provide the Class Membership List to the Settlement 9 Administrator within twenty-one (21) days of the issuance of this Order. The Class 10 Membership List shall include (1) the name, last known address and, to the extent 11 available, email address of each Class Member; and (2) the amount each Class Member 12 was assessed in Assessments for each Calendar Year between 2011 and 2022. 13 In accordance with the Settlement Agreement and Release, the Settlement 14 Administrator will carry out notice to the Class Members as expeditiously as possible, but 15 no later than thirty (30) days after the issuance of this Order. 16 IV. Any Class Member who desires to be excluded from the class must comply 17 with the terms set forth in the Long Form Notice and submit an appropriate and timely 18 request for exclusion that is postmarked no later than forty-five (45) days before the 19 Final Approval Hearing. Any Class Member who submits a valid and timely request 20 for exclusion will not be bound by the terms of the Settlement Agreement and Release. 21 V. Any Class Member who does not timely request exclusion as set forth in 22 the Long Form Notice and who intends to object to the fairness of this settlement must 23 comply with the terms set forth in the Long Form Notice and file a written objection with 24 the Court no later than forty-five (45) days before the Final Approval Hearing. Any 25 such Class Member must also mail a copy of the written objection, within the same 26 period, to (1) Edward Louis Barry; Law Office of Edward L. Barry; 2120 Company St., 27 Third Floor; Christiansted, Virgin Islands 00820; (2) Phelps & Moore, PLLC; 7430 East 28 Butherus Drive, Suite A; Scottsdale, Arizona 85260; and (3) Julie Singer Brady and 1 Brandon Crossland; Baker & Hostetler, LLP; 200 South Orange Avenue; Orlando, 2 Florida 32801. 3 Any Class Member who has timely filed an objection must appear at the Final 4 Approval Hearing, in person or by counsel, and be heard to the extent allowed by the 5 Court, applying applicable law, in opposition to the fairness, reasonableness and 6 adequacy of the Settlement, and on the application for an award of attorneys’ fees and 7 costs. The right to object to the Settlement Agreement and Release must be exercised 8 individually by an individual Class Member, not as a member of a group or subclass and, 9 except in the case of a deceased, minor, or incapacitated Class Member, not by the act of 10 another person acting or purporting to act in a representative capacity. 11 VI. The Court will conduct an in-person Final Approval Hearing on 12 February 8, 2024, at 10:00 AM at the United States District Court for the District of 13 Arizona, Sandra Day O’Connor U.S. Courthouse, Courtroom 605, 401 West Washington 14 Street, Phoenix, AZ 85003-2158, to review and rule upon the following issues: 15 A. Whether this action satisfies the applicable prerequisites for class 16 action treatment for settlement purposes under Fed. R. Civ. P. 23; 17 B. Whether the Settlement Agreement and Release is fundamentally 18 fair, reasonable, adequate, and in the best interest of the Class Members and should be 19 approved by the Court; 20 C. Whether a Final Order and Judgment, as provided under the 21 Settlement Agreement and Release, should be entered, dismissing the Lawsuit with 22 prejudice and releasing the Released Claims against the Released Parties; and 23 E. To discuss and review other issues as the Court deems appropriate. 24 VII. The Court reserves the right to adjourn or to continue the Final Approval 25 Hearing, or any further adjournment or continuance thereof, without further notice other 26 than announcement at the Final Approval Hearing or at any adjournment or continuance 27 thereof; and to approve the settlement with modifications, if any, consented to by Class 28 Counsel and Defendants without further notice. 1 IT IS FURTHER ORDERED that Plaintiffs’ Unopposed Renewed Motion for || Preliminary Approval of Settlement, Approval of Notice (Doc. 144) is GRANTED. 3 Dated this 5th day of September, 2023. 4 5 JL — ———— 6 Kgar Diangé 7 United States District Fudge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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