1. society
2. crime
3. property crime
4. fraud

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Amir J. Goldstein (Cal. Bar No. 255620)
[email protected]
LAW OFFICES OF AMIR J. GOLDSTEIN
5455 Wilshire Blvd., Suite 1812
Los Angeles, CA 90036
Telephone: (323) 937-0400
Facsimile: (866) 288-9194
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Lance A. Raphael (pro hac vice)
[email protected]
Stacy M. Bardo (pro hac vice)
[email protected]
CONSUMER ADVOCACY CENTER, P.C.
180 W. Washington St., Suite 700
Chicago, IL 60602
Telephone: (312) 782-5808
Facsimile: (312) 377-9930
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Counsel for Plaintiff
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Daniel J. Marovitch (pro hac vice)
[email protected]
MAROVITCH LAW FIRM, LLC
233 S. Wacker Dr., 84th Floor
Chicago, IL 60606
Telephone: (312) 533-1605
Facsimile: (312) 488-4206
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
BRENDA JONSSON, individually and Case No. CV13-8166 FMO (SHx)
on behalf of all others similarly
situated,
PLAINTIFF’S MEMORANDUM IN
SUPPORT OF HER MOTION FOR
Plaintiff,
PRELIMINARY APPROVAL OF
CLASS ACTION SETTLEMENT
v.
Hearing Date: October 16, 2014
USCB, INC. a California corporation
Hearing Time: 10:00 a.m. PT
d/b/a USCB AMERICA,
Courtroom: 22
Judge: Hon. Fernando M. Olguin
Defendant.
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Action Settlement – Case No. CV13-8166 FMO (SHx)
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TABLE OF CONTENTS
2
Page
3 I.
INTRODUCTION ......................................................................................... 1
4 II.
FACTUAL BACKGROUND AND LITIGATION HISTORY ................ 1
5 III.
TERMS OF THE SETTLEMENT .............................................................. 5
6
A.
Class Definition .................................................................................... 5
7
B.
Monetary Relief ................................................................................... 5
8
C.
Prospective Relief ................................................................................ 6
9
D.
Release .................................................................................................. 7
10
E.
Incentive Award .................................................................................. 7
11
F.
Attorneys’ Fees and Costs/Expenses ................................................. 7
THE PROPOSED SETTLEMENT CLASS SHOULD BE
CERTIFIED ................................................................................................... 8
12 IV.
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A.
The Numerosity Requirement Is Satisfied. ....................................... 8
B.
The Commonality Requirement Is Satisfied. ................................... 8
C.
The Typicality Requirement Is Satisfied........................................... 9
D.
The Adequacy of Representation Requirement Is Satisfied. ........ 10
E.
The Settlement Class Meets Rule 23(b)(3)’s Requirements. ......... 11
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22 V.
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1.
Common questions of law and fact predominate. .................. 12
2.
A class action is the superior method for adjudicating
this controversy......................................................................... 13
F.
Plaintiff’s Counsel Should Be Appointed Class Counsel............... 14
THE PROPOSED SETTLEMENT IS FAIR, ADEQUATE,
AND SHOULD BE PRELIMINARILY APPROVED. ........................... 15
A.
Strength of Plaintiff’s Case, and the Risk, Expense, Complexity,
and Likely Duration of Continued Litigation................................. 16
25
B.
Amount Offered in Settlement ......................................................... 19
26
C.
Extent of Discovery and the Stage of the Proceedings................... 20
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28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
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D.
Experience and Views of Counsel, and Absence of Collusion ...... 20
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E.
The Attorneys’ Fees and Incentive Award Allocations Are
Reasonable. ........................................................................................ 21
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VI.
THE PROPOSED NOTICE PLAN PROVIDES FOR THE BEST
NOTICE PRACTICABLE AND SHOULD BE APPROVED. ............... 23
VII. CONCLUSION ............................................................................................ 25
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TABLE OF AUTHORITIES
Page(s)
3 Cases
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Abdullah v. U.S. Sec. Assocs., Inc.,
731 F.3d 952 (9th Cir. 2013) ......................................................................... 12
Alea London Ltd. v. Am. Home Servs., Inc.,
638 F.3d 768 (11th Cir. 2011) ....................................................................... 17
Amchem Products, Inc. v. Windsor,
521 U.S. 591 (1997)......................................................................................... 8
Ansari v. New York Univ.,
179 F.R.D. 112 (S.D.N.Y. 1998) ..................................................................... 8
Ballard v. Equifax Check Servs., Inc.,
186 F.R.D. 589 (E.D. Cal. 1999) ................................................................... 14
Barani v. Wells Fargo Bank, N.A.,
No. 12-2999, 2014 WL 1389329 (S.D. Cal. Apr. 9, 2014) ........................... 25
Berry v. Baca,
226 F.R.D. 398 (C.D. Cal. 2005)..................................................................... 8
Cellphone Termination Fee Cases,
186 Cal. App. 4th 1380 (Cal. Ct. App. 1st Dist. 2010) ...........................22, 23
Churchill Vill., LLC v. Gen. Elec.,
361 F.3d 566 (9th Cir. 2004) ......................................................................... 24
Crawford v. Honig,
976 F.2d 485 (9th Cir. 1994) ......................................................................... 10
Evon v. Law Offices of Sidney Mickell,
688 F.3d 1015 (9th Cir. 2012) ..................................................................... 8, 9
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Action Settlement – Case No. CV13-8166 FMO (SHx)
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1
Grant v. Capital Mgmt. Servs., L.P.,
449 F. Appx. 598 (9th Cir. 2011) .................................................................. 17
2
3
Hanlon v. Chrysler Corp.,
150 F.3d 1011 (9th Cir. 1998) ...........................................................10, 12, 15
4
5
Hanon v. Dataproducts Corp.,
976 F.2d 497 (9th Cir. 1992) ........................................................................... 9
6
7
Harris v. World Fin. Network Nat’l Bank,
867 F. Supp. 2d 888 (E.D. Mich. 2012) ........................................................ 17
8
9
In re Activision Sec. Litig.,
723 F. Supp. 1373 (N.D. Cal. 1989) ........................................................21, 22
10
11
In re Mego Fin. Corp. Sec. Litig.,
213 F.3d 454 (9th Cir. 2000) ...................................................................15, 18
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Ira Holtzman, C.P.A. v. Turza,
728 F.3d 682 (7th Cir. 2013), cert denied, 134 S. Ct. 1318 (2014) .............. 14
Knutson v. Schwan’s Home Serv., Inc.,
No. 12-0964, 2013 WL 3746118 (S.D. Cal. July 15, 2013) ...................17, 19
Local Joint Executive Bd. of Culinary/Bartender Trust Fund
v. Las Vegas Sands, Inc.,
244 F.3d 1152 (9th Cir. 2001) ....................................................................... 10
Ma v. Covidien Holding, Inc.,
No. 12-02161, 2014 WL 360196 (C.D. Cal. Jan. 31, 2004) ......................... 16
Mais v. Gulf Coast Collection Bureau, Inc.,
944 F. Supp. 2d 1226 (S.D. Fla. 2013) .......................................................... 17
23
24
Manno v. Healthcare Revenue Recovery Grp, LLC,
289 F.R.D. 674 (S.D. Fla. 2013).................................................................... 18
25
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Mendoza v. US,
623 F.2d 1338 (9th Cir. 1980) ....................................................................... 24
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Action Settlement – Case No. CV13-8166 FMO (SHx)
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Moeller v. Taco Bell Corp.,
No. 02-5849, 2004 WL 5669683 (N.D. Cal. Dec. 7, 2004) .......................... 18
Mullane v. Cent. Hanover Bank & Trust Co.,
339 U.S. 306 (1950)....................................................................................... 24
Multi-Ethnic Immigrant Workers Org. Network v. City of Los Angeles,
No. 07-3072, 2009 WL 9100391 (C.D. Cal. June 24, 2009) ........................ 22
Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc.,
221 F.R.D. 523 (C.D. Cal. 2004).............................................................15, 16
Officers for Justice v. Civil Service Comm’n,
688 F.2d 615 (9th Cir. 1982) ......................................................................... 18
Parkinson v. Hyundai Motor Am.,
258 F.R.D. 580 (C.D. Cal. 2008)..................................................................... 9
Parra v. Bashas,
536 F.3d 975 (9th Cir. 2008) ........................................................................... 9
Parsons v. Ryan,
754 F.3d 657 (9th Cir. 2014) ........................................................................... 9
Paul, Johnson, Alston & Hunt v. Graulty,
886 F.2d 268 (9th Cir. 1989) ......................................................................... 21
Pereira v. Ralph’s Grocery Co.,
No. 07-841, 2010 WL 6510338 (C.D. Cal. Mar. 24, 2010) .......................... 16
Pinto v. Princess Cruise Lines, Ltd.,
513 F. Supp. 2d 1334 (S.D. Fla. 2007) .......................................................... 22
23
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Ritchie v. Van Ru Credit Corp.,
No. 12-01717, 2014 WL 3955268 (D. Ariz. Aug. 13, 2014) ..................22, 25
25
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Rose v. Bank of Am. Corp.,
No. 11-02930, 2014 WL 4273358 (N.D. Cal. Aug. 29, 2014)...................... 19
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Schwarm v. Craighead,
233 F.R.D. 655 (E.D. Cal. 2006) ................................................................... 14
Scovil v. FedEx Ground Package Sys., Inc.,
No. 10-515, 2014 WL 1057079 (D. Me. Mar. 14, 2014) .............................. 23
Silber v. Mabon,
18 F.3d 1449 (9th Cir. 1994) ......................................................................... 25
Staton v. Boeing Co.,
327 F.3d 938 (9th Cir. 2003) ..................................................................... 8, 10
Vandervort v. Balboa Capital Corp.,
No. 11-1578, 2014 WL 1274049 (C.D. Cal. Mar. 27, 2014) ..................22, 23
Wal-Mart Stores, Inc. v. Dukes,
131 S. Ct. 2541 (2011)..................................................................................... 8
Wolin v. Jaguar Land Rover N. Am., LLC,
617 F.3d 1168 (9th Cir. 2010) .................................................................13, 14
Wright v. Linkus Enters., Inc.,
259 F.R.D. 468 (E.D. Cal. 2009) ................................................................... 16
17 Statutes, Rules & Regulations
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15 U.S.C. § 1692.............................................................................................. 2
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15 U.S.C. § 1692d..................................................................................3, 9, 13
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15 U.S.C. § 1692e ..................................................................................3, 9, 13
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15 U.S.C. § 1692f ..................................................................................3, 9, 13
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15 U.S.C. § 1692k.......................................................................................... 18
23
47 U.S.C. § 227.......................................................................................passim
24
Cal. Civ. Code § 1788.................................................................................. 2, 4
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Cal. Civ. Code § 1788.17 ................................................................................ 9
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Fed. R. Civ. P. 23(a) ..............................................................................8, 9, 15
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Fed. R. Civ. P. 23(b) ...............................................................................passim
2
Fed. R. Civ. P. 23(c) ................................................................................14, 24
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Fed. R. Civ. P. 23(e) ................................................................................15, 23
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Fed. R. Civ. P. 23(g) ................................................................................14, 15
5 FCC Rulings
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In Re Rules & Regulations Implementing the TCPA,
17 FCC Rcd 17459 (2002)............................................................................... 2
In Re Rules & Regulations Implementing the TCPA,
18 FCC Rcd 14014 (2003)............................................................................... 2
Publications
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12
Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,
Federal Practice & Procedure (2d ed. 1986) ............................................... 12
13
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Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,
Federal Practice & Procedure (3d ed. 2005) ............................................... 13
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Theodore Eisenberg & Geoffrey P. Miller,
Incentive Awards to Class Action Plaintiffs: An Empirical Study,
53 UCLA L. Rev. 1303 (2006) (3d ed. 2005) ............................................... 23
Manual for Complex Litigation, Third (1995) .............................................. 15
Manual for Complex Litigation, Fourth (2004) ......................................23, 24
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1 I.
INTRODUCTION
2
Following months of extensive first and third-party discovery, numerous
3 arms-length negotiations between counsel, and two formal, all-day mediations with
4 experienced third-party neutrals, Plaintiff Brenda Jonsson and Defendant USCB,
5 Inc. have reached a Class Action Settlement Agreement that, in addition to including
6 prospective relief to stop the wrongful conduct alleged in this Action,1 provides
7 substantial monetary compensation to the Class. Plaintiff respectfully requests that
8 the Court grant this motion and enter an Order preliminarily approving the Parties’
9 Settlement, as further set forth herein.
10 II.
FACTUAL BACKGROUND AND LITIGATION HISTORY
11
Defendant USCB is a California-based collection agency. (Dkt. No. 54, 1st
12 Am. Compl. (hereinafter referred to as (“FAC”) ¶¶ 5-6.) USCB employs the use of
13 automatic dialing and artificial/prerecorded voice technology through third parties
14 Five9, Inc. (“Five9”) and Global Connect, LLC (“Global Connect”), which allows
15 it to reach debtors in a more cost-effective way than through traditional, manual
16 dialing. (FAC ¶ 23). Unfortunately, some consumers whose cell phone Defendant
17 called using an automatic telephone dialing system (“autodialer”) or prerecorded
18 voice never consented to such calls and, in some cases, continued to receive them
19 despite requesting that such calls cease. (FAC ¶¶ 15, 29.)
20
Plaintiff received repeated, artificial/prerecorded voice message calls to her
21 cell phone from Defendant. (Id. ¶ 23.) USCB’s prerecorded message calls were
22 made through its autodialer services, Five9 and Global Connect. (Id.) These were
23 what Plaintiff’s complaint refers to as “wrong number” calls—in other words, the
24 artificial voice technology USCB used within its prerecorded messages to Plaintiff’s
25 cell phone identified someone other than Plaintiff as the party Defendant had
26
1
Unless otherwise stated herein, capitalized terms shall have the same meaning as set forth in the
27 Settlement Agreement, Ex. 1 to the Notice of Motion for Prelim Approval (“Agreement”).
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
1
1 intended to call. (Id. ¶ 28.) While USCB’s prerecorded messages provided a phone
2 number that recipients could notify it had called a wrong number, Plaintiff alleged
3 that USCB’s calls continued even after Plaintiff called this number and asked USCB
4 to stop calling. (Id. ¶ 24.) Plaintiff alleges these calls violated the Telephone
5 Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, the Fair Debt Collection
6 Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the Rosenthal Fair Debt
7 Collection Practices Act (“Rosenthal Act”), Cal. Civ. Code §§ 1788 et seq.
Congress passed the TCPA in response to “outrage[] over the proliferation of
8
9 intrusive, nuisance calls[.]” Pub. L. No. 102-243, § 2(6) (1991), codified at 47 U.S.C.
10 § 227. Although the law targets a variety of practices, its history suggests Congress
11 was particularly concerned with the use of “automatic telephone dialing system[s],”
12 or “autodialers.”2 47 U.S.C. § 227(a)(1). Autodialers can store and automatically
13 call long lists of phone numbers, often repeatedly, and are “frequently used to send
14 artificial or prerecorded messages.” In re Rules & Regulations Implementing the
15 TCPA, 17 FCC Rcd 17459, 17474 ¶ 24 (2002). The TCPA broadly restricts
16 autodialed and prerecorded calls to cell phones. 47 U.S.C. § 227(b)(1)(A). The
17 statute provides for injunctive relief and the greater of actual damages or statutory
18 damages of $500 per violation, which can be trebled at the court’s discretion if the
19 violations were “willfully or knowingly” committed. 47 U.S.C. § 227(b)(3).
20
Plaintiff filed her original Complaint against USCB on November 5, 2013,
21 alleging that Defendant made autodialed and prerecorded calls to the cell phones of
22
23
2
The FCC has clarified that any equipment with the capacity to dial numbers without human
24 intervention, such as the predictive dialers in this case, constitutes an “automatic telephone
25 dialing system” under Section 227(a)(1) of the TCPA. See, e.g., In re Rules & Regulations
Implementing the TCPA, 18 FCC Rcd 14014, 14092 ¶ 132 (2003) (“The basic function of such
26 equipment ... has not changed–the capacity to dial numbers without human intervention.”)
(emphasis in original).
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28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
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1 herself and others in violation of the TCPA and FDCPA.3 (Dkt. No. 1, Compl. at
2 2:1-7.) Defendant answered the Complaint on December 5, 2013, and subsequently
3 amended its Answer on December 26, 2013. (Dkt. Nos. 11, 27.)
Following the Parties’ planning conference on December 18, 2013, Plaintiff
4
5 vigorously pursued discovery. (Raphael Decl. ¶¶ 24, 32-39, attached hereto as
6 Exhibit B.)
Plaintiff also requested specific information regarding USCB’s
7 insurance policy. Defendant disclosed that the applicable insurance policy during
8 the four-year class period had a $3,000,000 policy limit and reported that the policy
9 fund limit would be further diminished by defense fees and costs. On April 3, 2014,
10 Plaintiff issued a demand for the policy limit. (Raphael Decl. ¶ 31.)
11
Throughout, Defendant vigorously disputed liability and claimed certification
12 would be difficult or impossible. On the merits, USCB asserted multiple defenses
13 including but not limited to, (a) the dialers it uses do not qualify as “autodialers”
14 under the TCPA, (b) it had prior express consent of the debtor to call the numbers
15 dialed, including Plaintiff’s cellular number, and (c) pending petitions for FCC
16 declaratory rulings could render the TCPA inapplicable to non-telemarketing calling
17 activities altogether and here, the calls were debt-related.4
On April 14, 2014, USCB took Plaintiff’s deposition, and Plaintiff produced
18
19 audio files and 80-plus pages of documents. On April 25, 2014, Plaintiff’s counsel
20 took the Fed. R. Civ. P. 30(b)(6) deposition of Global Connect. (Raphael Decl. ¶
21
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25
26
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The FDCPA claims—as well as the analogous Rosenthal Act claims in the First Amended
Complaint—are based on the fact that Plaintiff alleged USCB’s calls to her and other putative
class members were, as Congress has found, a nuisance and invasion of privacy, and therefore
harassing, unfair, and unconscionable in violation of 15 U.S.C. §§ 1692d and 1692f. (FAC ¶¶
44-49.) Likewise, USCB’s use of prerecorded messages that implicitly threaten continued
calling in violation of the TCPA are alleged to violate 15 U.S.C. § 1692e(5)’s prohibition against
threatening to take any action that cannot legally be taken. (FAC ¶¶ 50-51.)
4
Dkt. No. 45, Memorandum of Points and Authorities in Support of Defendant USCB, Inc.’s
Motion to Stay Litigation Pending FCC Declaratory Rulings.
3
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
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1 34.) Apart from the account notes, procedures, and other documents produced by
2 Defendant, Five9 and Global Connect produced records of millions of phone calls,
3 in addition to manuals, contracts, and communications applicable to their
4 relationships with USCB and the calls at issue in this case. (Raphael Decl. ¶¶ 325 33.) Plaintiff also issued third party subpoenas to the carriers whose numbers
6 appeared in the call records from Defendant’s “wrong-number” notification line to
7 try and identify class members. (Raphael Decl. ¶¶ 36.)
8
On May 19, 2014, with discovery ongoing and the policy demand expired, the
9 Parties attended a Court-ordered mediation with mediator Howard S. Fredman, Esq.
10 (Dkt. No. 35.) The Friday before the Monday mediation, USCB filed a motion to
11 stay the case based on several third-party petitions to the FCC regarding the TCPA,
12 which Defendant argued affected the viability of Plaintiff’s claims. (Dkt. Nos. 45,
13 51-52.) Given the motion and the fairly entrenched position of the Parties at that
14 time, they failed to reach an accord at this initial, all-day mediation. (Dkt. No. 48.)
15
Given the initial unsuccessful mediation and because Plaintiff now had the
16 benefit of additional discovery, Plaintiff filed her FAC on May 29, 2014 adding,
17 inter alia, claims under the Rosenthal Act, Cal. Civ. Code §§ 1788 et seq., and
18 expanding the definition of the class to include all wrong number calls, rather than
19 just those consumers who called USCB’s wrong-number notification line. (FAC ¶¶
20 26-27, 54-60.) USCB filed its Answer on June 10, 2014. (Dkt. No. 56.)
21
After Plaintiff opposed the motion to stay and further discovery and additional
22 arms-length settlement discussions had taken place, USCB withdrew its motion to
23 stay. (Dkt. Nos. 55, 57, 59.) While the initial mediation was unsuccessful, it did
24 help promote further dialogue and set the stage for a second mediation. (Raphael
25 Decl. ¶¶ 39-40.) On July 24, 2014, the Parties attended an all-day mediation at their
26 expense with the Hon. Carl J. West (Ret.) of JAMS and eventually came to an
27 agreement in principle that would become the settlement for which Plaintiff now
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
4
1 seeks preliminary approval. (Raphael Decl. ¶ 44.) On July 25, 2014, Defendant
2 provided a list of 621,278 unique cell phone numbers, called by or on behalf of
3 Defendant from November 5, 2009 to May 15, 2014. This list comprises the group
4 of potential class members eligible to obtain relief under the settlement.
5 III.
TERMS OF THE SETTLEMENT
6 A.
Class Definition. The Settlement Class is defined as:
7
All persons in the United States whose cellular telephone number, at
8 any time between November 5, 2009 and May 15, 2014, Defendant or another
on its behalf called using an artificial or prerecorded voice and/or equipment
9 with the capacity to dial numbers without human intervention, where the
10 person owning the number called was not the person that Defendant intended
to call or not a person who had consented to receiving such calls.
11
(Agreement at C1.) The class is being identified by a list of 621,278 unique cell
12
phone numbers that were called by or on behalf of Defendant from November 5,
13
2009 to May 15, 2014. USCB’s counsel tendered a Declaration describing the
14
process by which these cellular telephone numbers were identified and de15
duplicated. (Christopherson Decl. at ¶¶ 4-22, attached as Exhibit C).
16
B.
Monetary Relief. The Agreement requires USCB to pay $2,750,000 into a
17
Settlement Fund (91.6% of the applicable insurance policy limit). From this Fund,
18
Cash Benefits will be paid to each Settlement Class Member who submits a timely,
19
valid claim form. The Cash Benefits will be distributed on a pro rata basis from a
20
pool containing at least $1,472,000 after subtracting: (1) notice and administration
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costs of no more than between $311,000 and $393,000 (see Passarella Decl. ¶ 12,
22
attached to Agreement as Exhibit E); (2) attorneys’ fees of up to 30% of the
23
Settlement Fund (i.e., not to exceed $825,000) and costs/expenses not to exceed
24
$50,000, subject to Court approval; and (3) an incentive award to Plaintiff of $10,000
25
for her service as class representative, subject to Court approval. Should the Court
26
award less than the requested amount of attorneys’ fees, costs, or class representative
27
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
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1 incentive award,5 and/or should the final Claims Administrator bill be less than the
2 good faith estimate cap provided, that money shall remain in the Settlement Fund
3 for distribution to the Settlement Class Members. Any amount remaining in the
4 Fund from checks left un-cashed for more than 120 days will be distributed to a
5 Court-approved cy pres recipient.(Agreement at D1(f).)6
6
As noted, a minimum of $1,472,000 of the Settlement Fund will be available
7 for distribution to the Settlement Class Members. (Raphael Decl. ¶ 46.) Based upon
8 a review of materials provided to Class Counsel by the Claims Administrator, and
9 based upon other judicially approved class settlements, Plaintiff estimates a 3-10%
10 claim submission rate from the group of persons receiving direct mail notice, and
11 therefore a recovery per claimant between $47.00 and $158.00. (Raphael Decl. ¶
12 51.) Updated benefit amounts will be provided in advance of the Final Fairness
13 Hearing when the Claims Administrator submits its report on claims made.
14 C.
Prospective Relief
15
In addition to this monetary relief, USCB is implementing changes to prevent
16 further alleged violations of the TCPA’s prohibition against autodialed or
17 prerecorded calls to cell phones without consent.
The Agreement requires
18 Defendant to maintain these changes to its business practices for at least a year after
19 the Settlement’s Effective Date, to ensure that phone numbers are scrubbed to
20 identify cell phone numbers for non-autodialed calling, and are correctly associated
21 with the person USCB intends to call. (Agreement at D2.) Specifically, USCB is
22
5
These requests will be filed in anticipation of the Final Fairness Hearing after notice has been
23 issued and the Settlement Class has the opportunity to comment on such awards.
6
In the unlikely event there are less than 1,500 Approved Claims, USCB shall be entitled to a
24 $400,000 reversion of funds, and if there are less than 2,000 Approved Claims, Defendant shall
25 be entitled to a $250,000 reversion. This reversion was agreed to because, assuming a minimum
class member benefit settlement pool of $1,472,000 ($2,750,000 minus the highest possible
26 settlement administration expense, attorneys’ fees and costs, and the class representative
incentive award), if there are 2,000 approved claims, each claimant would receive $736.00; if
27 there are 1,000 approved claims, each claimant would receive $981.00. (Agreement at D1(e).)
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
6
1 going to partner with Neustar, a company that employs real time scrubbing services
2 on all telephone numbers placed into a call database, to determine whether a number
3 is a cellular phone number. If the telephone number is determined to be a cellular
4 phone number, Neustar will analyze whether the name of the debtor on the debtor
5 account assigned for collection is the same name associated with its scrub results. If
6 the names do not match, USCB will not make the call.
7 D.
Release
8
In consideration of the prospective relief and $2,750,000 Settlement Fund,
9 upon the Effective Date, Plaintiff and the Settlement Class will grant USCB a
10 Release. However, the Release is limited to claims arising from a Settlement Class
11 Member’s receipt of automated and/or prerecorded or artificial voice calls to their
12 cellular phones. They retain any and all rights they would otherwise have to dispute
13 the alleged debt being collected. (Agreement at D3.)
14 E.
Incentive Award
15
In recognition of Plaintiff’s time and effort, the Parties agreed that Class
16 Counsel will petition for, and USCB will not oppose, an incentive award of $10,000
17 for Plaintiff. (Agreement at D1(b).) If approved by the Court, such amount shall be
18 paid from the Settlement Fund. As detailed in Plaintiff’s Declaration (Jonsson Decl.
19 ¶¶ 3, 10, attached as Exhibit A), Plaintiff consulted counsel, gathered evidence,
20 obtained phone records, compiled recordings, took screenshots, clarified facts,
21 reviewed the complaint, answered discovery, appeared for deposition, produced
22 documents, appeared for the mediation, and reviewed settlement documents.
23 F.
Attorneys’ Fees and Costs/Expenses
24
The Parties agreed that USCB will pay from the Settlement Fund reasonable
25 attorneys’ fees and costs/expenses to Class Counsel in an amount to be determined
26 by the Court. (Agreement at D1(c).) Class Counsel will not seek more than 30% of
27
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
7
1 the Settlement Fund (i.e., $825,000) in fees and $50,000 expenses/costs, and USCB
2 will not object to any fee petition seeking up to that amount.
3 IV.
4
THE PROPOSED SETTLEMENT CLASS SHOULD BE CERTIFIED.
Rule 23(a) establishes four prerequisites for class action litigation, (1)
5 numerosity, (2) commonality, (3) typicality, and (4) adequacy of representation.
6 Staton v. Boeing Co., 327 F.3d 938, 953 (9th Cir. 2003). “In addition to satisfying
7 Rule 23(a)’s prerequisites, parties seeking class certification must show that the
8 action is maintainable under Rule 23(b)(1), (2), or (3).” Amchem Products, Inc. v.
9 Windsor, 521 U.S. 591, 614 (1997). Because Plaintiff satisfies all prerequisites of a
10 class action, the Settlement Class should be certified for settlement purposes.
11 A.
12
The Numerosity Requirement Is Satisfied.
A plaintiff must establish “the class is so numerous that joinder of all members
13 is impracticable[.]” Fed. R. Civ. P. 23(a)(1). “While there is no precise threshold,
14 courts have found that the numerosity requirement ‘has been satisfied when the class
15 comprises 40 or more members and will find that it has not been satisfied when the
16 class comprises 21 or fewer.’” Berry v. Baca, 226 F.R.D. 398, 403 (C.D. Cal. 2005)
17 (quoting Ansari v. New York Univ., 179 F.R.D. 112, 114 (S.D.N.Y. 1998)). Here,
18 USCB’s records indicate it used its Five9 and Global Connect dialers to make calls
19 playing prerecorded voice messages to 621,278 unique cellular telephone numbers.
20 (Christopherson Decl. ¶ 21.) The Class is thus sufficiently numerous such that
21 joinder is impracticable, satisfying Rule 23(a)(1).
22 B.
The Commonality Requirement Is Satisfied.
23
Rule 23 requires “questions of law or fact common to the class[.]” Fed. R.
24 Civ. P. 23(a)(2). “Commonality requires a plaintiff to demonstrate that the class
25 members have suffered the same injury[.]” Wal-Mart Stores, Inc. v. Dukes, 131 S.
26 Ct. 2541, 2551 (2011) (quotations and citation omitted). “‘Where the circumstances
27
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
8
1 of each particular class member vary but retain a common core of factual or legal
2 issues with the rest of the class, commonality exists.’” Evon v. Mickell, 688 F.3d
3 1015, 1029 (9th Cir. 2012) (quoting Parra v. Bashas, 536 F.3d 975, 978–79 (9th Cir.
4 2008)); see also Parkinson v. Hyundai., 258 F.R.D. 580, 594 (C.D. Cal. 2008).
5
Commonality is satisfied: Plaintiff alleges USCB, without permission
6 (whether because of a wrong number or otherwise), called Class Members’ cell
7 phone numbers using an artificial or prerecorded voice or equipment capable of
8 dialing numbers without human intervention. All of USCB’s calls were made by
9 only two unique dialing platforms, Five9 and Global Connect. (Agreement at A6;
10 FAC ¶ 23.) Thus, common questions can be answered on a class-wide basis,
11 including: (1) whether the dialers constitute “automatic telephone dialing systems”
12 as defined by § 227(a)(1) of the TCPA; (2) whether USCB lacked “prior express
13 consent” for its calls, where it called cell phones intending to call someone else, or
14 where none of its records reflect that consent had been obtained; and (3) whether
15 USCB’s calls constitute unfair, unconscionable, or harassing conduct in connection
16 with debt collection, in violation of §§ 1692d and f of the FDCPA, and whether the
17 threat of continued calling violated § 1692e(5) of the FDCPA and thus, also permit
18 remedies under the Rosenthal Act (Cal. Civ. Code § 1788.17).
19 C.
The Typicality Requirement Is Satisfied.
20
Typicality requires that “the claims or defenses of the representative parties
21 are typical of the claims or defenses of the class[.]” Fed. R. Civ. P. 23(a)(3). “The
22 test of typicality is ‘whether other members have the same or similar injury, whether
23 the action is based on conduct which is not unique to the named plaintiffs, and
24 whether other class members have been injured by the same course of conduct.’”
25 Parsons v. Ryan, 754 F.3d 657, 685 (9th Cir. 2014) (quoting Hanon v. Dataproducts
26 Corp., 976 F.2d 497, 508 (9th Cir. 1992)). Injuries of the plaintiff and other class
27 members need not be identical. See Parsons, 754 F.3d at 685.
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
9
1
Here, Plaintiff’s claims are typical of the Settlement Class. Just as it did to
2 the Settlement Class Members, USCB made calls to Plaintiff’s cell phone using
3 equipment with the capacity to dial numbers without human intervention, without
4 her permission. (FAC ¶¶ 16-23; see also Dkt. No. 55, Pl.’s Resp. to Def.’s Mot. Stay
5 at 10:1-22, 18:9-19:11.) USCB used the same dialers to call Plaintiff’s cell phone
6 number it used to call the Settlement Class Members’ cell phone numbers.
7 (Agreement at A6; FAC ¶¶ 23, 26.) These calls also utilized prerecorded voice
8 technology, often using the same call script. (FAC ¶ 21.) Likewise, Plaintiff alleges
9 neither she nor any of the Settlement Class Members had previously given USCB
10 permission to call their phones; USCB called Plaintiff intending to call someone
11 else. (FAC ¶ 28.) They thus share the same injury—robocalls to their cell phones
12 to which they had not consented—based on Defendant’s conduct and technology.
13 D.
The Adequacy of Representation Requirement Is Satisfied.
14
“Adequate representation ‘depends on the qualifications of counsel for the
15 representatives, an absence of antagonism, a sharing of interests between
16 representatives and absentees, and the unlikelihood that the suit is collusive.’” Local
17 Joint Executive Bd. of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244
18 F.3d 1152, 1162 (9th Cir. 2001) (quoting Crawford v. Honig, 37 F.3d 485, 487 (9th
19 Cir. 1994)). Adequacy is determined by two questions: “‘(1) Do the representative
20 plaintiffs and their counsel have any conflicts of interest with other class members,
21 and (2) will the representative plaintiffs and their counsel prosecute the action
22 vigorously on behalf of the class?’” Staton v. Boeing Co., 327 F.3d 938, 957 (9th
23 Cir. 2003)(quoting Hanlon v. Chrysler, 150 F.3d 1011, 1020 (9th Cir. 1998).
24
Here, neither Plaintiff nor her counsel have any conflicts of interest with the
25 Settlement Class. Plaintiff is a member of the Settlement Class, and initiated this
26 lawsuit on behalf of herself and others after receiving autodialed calls from USCB
27 that left prerecorded messages in her cell phone’s voicemail box made through
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
10
1 Defendant’s dialers Five9 and Global Connect. (Jonsson Decl. ¶ 2.) Plaintiff shares
2 the same claims as the other Settlement Class Members, and she seeks to ensure that
3 their rights and interests are adequately protected. (Jonsson Decl. ¶ 2.) In fact,
4 Plaintiff even rejected an early “pick-off” attempt by USCB that would have
5 prevented a class-wide resolution of this Action. (Jonsson Decl. ¶ 4.)
6
Likewise, putative Class Counsel are devoted to advocating on behalf of
7 consumers, and are experienced in consumer class actions and the claims asserted in
8 this Action. See generally (Raphael Decl.; Marovitch Decl., attached as Exhibit D;
9 Goldstein Decl., attached as Exhibit E.)
Plaintiff’s counsel have vigorously,
10 efficiently, and effectively pursued this case. There was no collusion, as evidenced
11 by the fact that the Settlement Agreement was only reached after months of extensive
12 discovery, numerous arms-length conferences, and two full-day mediations with
13 experienced third-party neutrals. As such, the adequacy prong is satisfied.
14 E.
The Settlement Class Meets Rule 23(b)(3)’s Requirements.
15
A plaintiff seeking to maintain a class action under Fed. R. Civ. P. 23(b)(3)
16 must establish “that the questions of law or fact common to class members
17 predominate over any questions affecting only individual members, and that a class
18 action is superior to other available methods for fairly and efficiently adjudicating
19 the controversy.” Id. Here, because the factual and legal questions of this Action—
20 based on a standard business practice of calling cell phones using an autodialer and
21 prerecorded messages without independently verifying the called party’s consent—
22 overcome any issues affecting individual Class Members, the predominance
23 requirement is met.
Likewise, where the class action vehicle will provide
24 substantive relief to Settlement Class Members who would likely otherwise be either
25 unaware of their statutory rights, or who would find the cost of individual litigation
26 prohibitive given the limited individual damages available, a class action is the
27
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
11
1 superior method of adjudicating these claims. There is no indication that the
2 Settlement Class in this Action will not be manageable.
3 1.
Common questions of law and fact predominate.
4
“[T]he predominance analysis under Rule 23(b)(3) focuses on the relationship
5 between the common and individual issues in the case, and tests whether the
6 proposed class is sufficiently cohesive to warrant adjudication by representation.”
7 Abdullah v. U.S. Sec. Assocs., Inc., 731 F.3d 952, 964 (9th Cir. 2013) (citations
8 omitted). “‘When common questions present a significant aspect of the case and they
9 can be resolved for all members of the class in a single adjudication, there is clear
10 justification for handling the dispute on a representative rather than on an individual
11 basis.’” Hanlon, 150 F.3d at 1022 (quoting 7A Charles Alan Wright, Arthur R.
12 Miller & Mary Kay Kane, Federal Practice & Procedure § 1778 (2d ed. 1986)).
13
Here, common questions of both law and fact predominate. In order to
14 establish USCB’s liability under the TCPA, each Class Member would be required
15 to prove that Defendant, (1) made a call, (2) using an automatic telephone dialing
16 system or an artificial or prerecorded voice, (3) to his or her cellular telephone
17 number. 47 U.S.C. § 227(b)(1)(A)(iii). If required should the Court reject the
18 Settlement Agreement, all of these issues would be subject to common proof, to be
19 determinative of Settlement Class Members’ claims on a class-wide basis.
20
USCB only used two dialing platforms to call Plaintiff and the other
21 Settlement Class Members. (Agreement at A6; Dkt. No. 55, Pl.’s Resp. to Def.’s
22 Mot. Stay at 10:1-3.) Global Connect and Five9 produced records of the calls made,
23 which were scrubbed to isolate only those calls made to numbers assigned to a
24 cellular telephone service. (Christopherson Decl. ¶¶ 4, 22.) A finding by the Court
25 that one, both, or neither of these two dialers constitute “automatic telephone dialing
26 systems” under the TCPA would be determinative of the Settlement Class Members’
27 claims in one fell swoop, without delving into individual issues. Further, where the
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
12
1 Settlement Class includes only persons whom Defendant had not intended (i.e.,
2 wrong numbers) or otherwise lacked permission to call, whether or not a caller
3 necessarily lacks the “prior express consent” of an unintended call recipient is
4 another question subject to common proof. Damages, too, are subject to class-wide
5 determination, i.e., whether USCB’s knowledge that it was calling wrong numbers
6 and other persons for whom it lacked consent to call warrants treble damages for
7 “willful[] or knowing[]” violations under 47 U.S.C. § 227(b)(3).
Likewise, where Plaintiff’s FDCPA and Rosenthal Act claims similarly relate
8
9 to the calls USCB made as part of an repeated business practice, whether such calls
10 are harassing, unfair, or unconscionable in violation of 15 U.S.C. §§ 1692d and
11 1692f—or whether the prerecorded message USCB used in its calls violates 15
12 U.S.C. § 1692e(5)’s prohibition against threatening to take any action that cannot
13 legally be taken—can be determined by the Court at summary judgment or trial at
14 once as to Plaintiff and all other Class Members. Thus, the questions of law and fact
15 common to the Settlement Class predominate.
16 2.
17
18
19
20
21
22
23
24
25
A class action is the superior method for adjudicating this controversy.
“‘[T]he purpose of the superiority requirement is to assure that the class action
is the most efficient and effective means of resolving the controversy.’” Wolin v.
Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1175 (9th Cir. 2010) (quoting 7AA
Charles Wright, Arthur Miller & Mary Kay Kane, Federal Practice and Procedure,
§ 1779 at 174 (3d ed. 2005)). Matters relevant to Rule 23(b)(3) include: “(A) the
class members’ interests in individually controlling the prosecution ... of separate
actions; (B) the extent and nature of ... litigation ...; (C) the desirability ...of
concentrating the litigation of the claims in the ... forum; and (D) the likely
difficulties in managing a class action.” Fed. R. Civ. P. 23(b)(3).
26
27
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
13
1
Class actions under the TCPA and FDCPA are often certified. See, e.g., Ira
2 Holtzman, C.P.A. v. Turza, 728 F.3d 682, 684 (7th Cir. 2013), cert. denied, 134 S.
3 Ct. 1318 (2014). Certification is particularly appropriate because consumers are
4 frequently unaware they even have a cause of action,7 or find the limited amount
5 available in damages insufficient to warrant the time and resources needed to pursue
6 individual litigation. See, e.g., Schwarm v. Craighead, 233 F.R.D. 655, 664 (E.D.
7 Cal. 2006) (“Not only are most individual consumers unaware of their rights under
8 the FDCPA, but also the size of the individual claims is ‘usually so small there is
9 little incentive to sue individually.’”) (quoting Ballard v. Equifax Check Servs., Inc.,
10 186 F.R.D. 589, 600 (E.D. Cal. 1999)). The TCPA does not provide for statutory
11 fee shifting, see 47 U.S.C. § 227(b)(3). Thus, unless the consumer received a
12 particularly large volume of calls, he or she will find it cost-prohibitive to litigate a
13 case on an individual basis—and likely impossible to obtain representation—where,
14 for one call, the consumer may only receive $500. See Wolin, 617 F.3d at 1175
15 (“Where recovery on an individual basis would be dwarfed by the cost of litigating
16 on an individual basis, this factor weighs in favor of class certification.”) Thus, a
17 class action is the superior method for fairly adjudicating this controversy.
18 F.
Plaintiff’s Counsel Should Be Appointed Class Counsel.
19
“An order that certifies a class action must define the class and the class
20 claims, issues, or defenses, and must appoint class counsel under [Fed. R. Civ. P.]
21 23(g).” Fed. R. Civ. P. 23(c)(1)(B). Rule 23(g)(1)(A), in turn, provides that in
22 making the class counsel determination, the court must consider putative class
23 counsel’s “(i) ... work ... in identifying or investigating potential claims in the action;
24 (ii) ... experience in handling class actions, other complex litigation, and the types
25
For example, Plaintiff is aware of only two other consumers who brought a TCPA claim against
USCB. See Mogannam v. USCB, Inc., No. 14-2413 (C.D. Cal. filed Mar. 31, 2014); Richard v.
27 USCB, Inc., No. 13-5672 (N.D. Cal. filed Dec. 9, 2013).
26
7
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
14
1 of claims asserted in the action; (iii) ... knowledge of the applicable law; and (iv) ...
2 resources [to be] commit[ted] to representing the class[.]” “Class counsel must fairly
3 and adequately represent the interests of the class[,]” and the court “may consider
4 any ... matter pertinent to counsel’s ability to fairly and adequately represent the
5 interests of the class[,]” Fed. R. Civ. P. 23(g)(4), 23(g)(1)(B).
6
Plaintiff’s attorneys should be appointed class counsel on account of their
7 substantial time and effort spent prosecuting this case and their familiarity with the
8 facts, claims, and applicable law. See generally (Raphael Decl.; Marovitch Decl.;
9 Goldstein Decl.)
Further, Plaintiff’s attorneys are dedicated consumer rights
10 advocates experienced in both class and individual litigation who have invested—
11 and are prepared to continue investing—all time and resources necessary to
12 zealously advocate in the best interests of the Settlement Class. Because the
13 requirements of Fed. R. Civ. P. 23(a) and 23(b)(3) are satisfied, Plaintiff requests the
14 Court certify the Class for settlement purposes, and appoint Plaintiff Brenda Jonsson
15 as Class Representative and her attorneys as Class Counsel.
16 V.
17
THE PROPOSED SETTLEMENT IS FAIR, ADEQUATE, AND
REASONABLE, AND SHOULD BE PRELIMINARILY APPROVED.
18
Rule 23(e) provides that class settlement approval “involves a two-step
19 process in which the Court first determines whether a proposed class action
20 settlement deserves preliminary approval and then, after notice is given to class
21 members, whether final approval is warranted.” Nat’l Rural Telecomms. Coop. v.
22 DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004) (citing Manual for Complex
23 Litig., Third Ed. at 236–37 (1995)). “Rule 23(e) has been interpreted to require the
24 district court to determine whether a proposed settlement is fundamentally fair,
25 adequate, and reasonable.” In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 458 (9th
26 Cir. 2000) (citing Hanlon, 150 F.3d at 1026).
27
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
15
1
Courts use several factors to assess “fair, adequate, and reasonable,”
2 including: (1) the strength of the plaintiff’s case; (2) the risk, expense, complexity,
3 and likely duration of further litigation; (3) the risk of maintaining class action status
4 throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery
5 completed and the stage of the proceedings; (6) the experience and view of counsel;
6 (7) the presence of a governmental participant; and (8) the reaction of the class
7 members to the proposed settlement. Nat’l Rural Telecomm. Coop., 221 F.R.D. at
8 525 (citations omitted). Because some factors cannot be fully assessed at the
9 preliminary approval stage, “a full fairness analysis is unnecessary[;] ... [r]ather, the
10 court need only review the parties’ proposed settlement to determine whether it is
11 within the permissible ‘range of possible judicial approval’ and thus, whether the
12 notice to the class and the scheduling of the formal fairness hearing is appropriate.”
13 Pereira v. Ralph’s Grocery Co., No. 07-841, 2010 WL 6510338, at *2 (C.D. Cal.
14 Mar. 24, 2010) (quoting Wright v. Linkus Enters., 259 F.R.D. 468, 472 (E.D. Cal.
15 2009)); accord Ma v. Covidien Holding, Inc., No. 12-02161, 2014 WL 360196, at
16 *4 (C.D. Cal. Jan. 31, 2014). Because the Parties’ settlement is fair, adequate, and
17 reasonable, it should be preliminarily approved by this Court.
18 A.
19
Strength of Plaintiff’s Case, and the Risk, Expense, Complexity, and
Likely Duration of Continued Litigation
20
Plaintiff believes her claims have merit, and that she could make a compelling
21 case if this Action were to go to trial. However, it is clear that, absent settlement,
22 the Parties will continue to expend significant time and resources in further
23 discovery and motion practice, all without the assurance of any substantive benefit
24 to the Class beyond that which is already afforded under the Settlement
25 Agreement—and which will continue to deplete given the burning limits provision
26 in USCB’s insurance policy. (Raphael Decl. ¶ 24.)
27
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
16
1
The TCPA is, in essence, a strict liability statute. See Harris v. World Fin.
2 Network Nat. Bank, 867 F. Supp. 2d 888, 892 (E.D. Mich. 2012) (“The TCPA is
3 essentially a strict liability statute which imposes liability for erroneous unsolicited
4 [calls].”) (quoting Alea London Ltd. v. Am. Home Servs., Inc., 638 F.3d 768, 776
5 (11th Cir. 2011)); Knutson v. Schwan’s Home Serv., Inc., No. 12-0964, 2013 WL
6 3746118, at *8 (S.D. Cal. July 15, 2013) (noting that “establishing a common
7 question regarding violations of the TCPA does not require a showing of intent[,]”
8 and that “[a]ll that is required is ... that [defendant] called Plaintiffs (1) using an
9 automated dialer or artificial or prerecorded voice; (2) in non-emergency situations
10 and without prior express consent; (3) on their cellular telephones”). However,
11 whether the defendant had the “prior express consent” of the called party for such
12 calls is an affirmative defense. See, e.g., Grant v. Capital Mgmt. Servs., L.P., 449
13 F. App. 598, 600, n.1 (9th Cir. 2011) (“‘[E]xpress consent’ is not an element of a
14 TCPA plaintiff’s prima facie case, but rather is an affirmative defense for which the
15 defendant bears the burden of proof.”); accord Mais v. Gulf Coast Collection
16 Bureau, Inc., 944 F. Supp. 2d 1226, 1233 (S.D. Fla. 2013) (citation omitted).
17
USCB contends it had “prior express consent.” (Dkt. No. 56, Answer to FAC
18 at 9:24-28.) Defendant asserts the debtors whom it intended to call provided cell
19 numbers to their respective creditors, USCB’s clients. (Id.; Dkt. No. 51-1, Def.’s
20 Mot. Stay Mem. at 11:14-20; Dkt. No. 55, Pl.’s Resp. to Def.’s Mot. Stay at 10:2321 11:2.) Although it would be USCB’s burden to ultimately prove such consent, to
22 the extent this Court rejects the Settlement Agreement, Plaintiff expects USCB to
23 argue that individualized questions of consent prohibit class certification.
24
USCB is likely to argue, especially given its prior motion to stay (Dkt. No.
25 51), that the Global Connect and Five9 dialers it used to call Plaintiff and the other
26 class members do not constitute “automatic telephone dialing systems” under §
27 227(a)(1) of TCPA. (Raphael Decl. ¶ 42.) While Plaintiff denies that such arguments
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
17
1 are valid—see generally (Dkt. No. 55, Pl.’s Resp. to Def.’s Mot. Stay at 10:1-22,
2 18:9-19:14); Manno v. Healthcare Revenue Recovery Grp., LLC, 289 F.R.D. 674,
3 686 (S.D. Fla. 2013) (“Whether the provision of a phone number on [hospital]
4 admissions paperwork equates to express consent is a question common to all class
5 members....On this defense, all class members will prevail or lose together, making
6 this another common issue to the class.”)—they still present risk to the Class of a
7 potential total loss that can be avoided by settlement approval.8
8
Additionally, because statutory damages are requested, Plaintiff would surely
9 face due process arguments from USCB should litigation continue. See Moeller v.
10 Taco Bell Corp., No. 02-5849, 2004 WL 5669683, at *3 (N.D. Cal. Dec. 7, 2004)
11 (“It is possible that statutory damages could violate due process if the penalty
12 prescribed is so severe and oppressive as to be wholly disproportionate to the offense
13 and obviously unreasonable.”) (quotations and citation omitted); but see In re Mego
14 Fin. Corp. Sec. Litig., 213 F.3d at 459 (“It is well-settled law that a cash settlement
15 amounting to only a fraction of the potential recovery does not per se render the
16 settlement inadequate or unfair.”) (citing Officers for Justice v. Civil Serv. Comm’n,
17 688 F.2d 615, 628 (9th Cir. 1982)). Thus, even if Plaintiff and the Class obtained a
18 judgment entitling them to the full amount in damages, it is possible, if not likely,
19 that such award would be reduced—and would not be remotely collectable from
20 Defendant based its actual financial status. (Sterman Decl. attached as Exhibit C.).
21
Plaintiff also expects substantial additional discovery and motion practice
22 should the Court deny approval of the settlement, including continuing the time23 intensive and expensive pursuit of third-party discovery. (Raphael Decl. ¶ 28.)
24 Plaintiff also expects an opposed motion for class certification, in addition to
25
Plaintiff’s FDCPA and Rosenthal Act claims would similarly be subject to potential loss should
26 the Court find, (1) USCB’s calls did not violate the FDCPA’s prohibitions against harassing,
unfair, or unconscionable collection activity, or (2) that such violations were nonetheless subject
27 to the FDCPA’s “bona fide error” defense, see 15 U.S.C. § 1692k(c).
8
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
18
1 summary judgment briefing, and a renewal of USCB’s motion to stay. (Dkt. Nos.
2 51, 55, 57.) Thus, a rejection of the Settlement will result in protracted litigation.
3 B.
Amount Offered in Settlement
4
The Agreement establishes a Settlement Fund of $2,750,000, encompassing
5 over 91% of USCB’s $3,000,000 claims-made insurance policy limit. (Agreement
6 at D1.)
Given USCB’s inability to pay substantially beyond the limits of
7 insurance—and the fact that the $3 million policy will continue to deplete with
8 additional defense costs—it is doubtful that the Class would benefit significantly
9 more, if at all, even if Plaintiff were successful at trial.9 (Sterman Decl. ¶ 10.)
Plaintiff’s counsel expects at least $1,472,000 of the Settlement Fund to be
10
11 used for direct Cash Benefits to Settlement Class Members. (Raphael Decl. ¶ 46;)
12 Assuming KCC’s reverse lookup permits at least half of the 621,278 Settlement
13 Class Members to receive Direct Mail Notice—at least 3-10% of which will
14 typically submit Claim Forms—Plaintiff anticipates a pro rata Cash Benefit of
15 between $47 and $158 for each Class Member who submits an Approved Claim.
16 Subject only to the limited reverter where less than 2,000 ($250,000) or 1,500
17 ($400,000) Approved Claims are submitted, (Agreement at D1(e)), there is no cap
18 on per-Settlement Class Member Cash Benefits under the Agreement. Any recovery
19 must necessarily fall within the range of a defendant’s ability to pay, even the lowest
20 estimated $47 amount anticipated for each Settlement Class Member is within
21 reason for a TCPA class action. See, e.g., Rose v. Bank of Am. Corp., No. 11-02390,
22 2014 WL 4273358, at *10 (N.D. Cal. Aug. 29, 2014) (“[T]he $20 to $40 range falls
23 in the lower range of recovery achieved in other TCPA class action settlements.”);
24 Knutson, 2014 WL 3519064, at *4 (citing TCPA cases with $20-$100 in anticipated
25
26
9
The Settlement is subject to confirmatory discovery regarding USCB’s financial condition and
27 ability to pay beyond its insurance policy limits. (Agreement at M3.)
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
19
1 per-class member benefits, and preliminarily approving TCPA class settlement
2 providing for $20 cash payments and $80 merchandise vouchers).
3 C.
Extent of Discovery and the Stage of the Proceedings
4
As discussed above, the Parties conducted extensive discovery, allowing
5 Plaintiff and Class Counsel to engage in settlement negotiations fully capable of
6 making informed decisions in the best interests of the Class. Plaintiff pursued
7 discovery with Defendant and third parties, and obtained records of millions of calls
8 to and from USCB, as well as hundreds of pages of communications, manuals,
9 contracts, and other documents relevant to the calls and USCB. (Raphael Decl. ¶¶
10 32-38.)
By taking Global Connect’s deposition, Plaintiff gained insight into
11 autodialing and prerecorded voice capabilities. In an attempt to identify class
12 members, Plaintiff also issued subpoenas to numerous telephone carriers and
13 retained a third party scrubbing company. (Raphael Decl. ¶ 34.)
14
Although the discovery conducted thus far has been extensive, the Parties will
15 likely continue aggressively pursuing discovery should the Court reject the
16 settlement. Plaintiff also expects substantial summary judgment briefing, including
17 whether Defendant’s Global Connect and Five9 dialers constitute “automatic
18 telephone dialing systems” under the TCPA, as well as an opposed motion for class
19 certification, which can be avoided if the settlement is approved. Thus, the extent
20 of discovery and stage of proceedings support approval.
21 D.
Experience and Views of Counsel, and Absence of Collusion
22
Putative Class Counsel are experienced in the litigation of nationwide class
23 action cases on behalf of consumers, and believe that the proposed Settlement is fair,
24 adequate, and reasonable, and in the best interests of the Settlement Class. See
25 generally (Raphael Decl.; Marovitch Decl.) In negotiating this Settlement, putative
26 Class Counsel had the benefit of years of experience with consumer class actions
27 and an in-depth knowledge of the facts of this case. In counsel’s view, a spectacular
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
20
1 settlement was achieved, providing for effective prospective relief preventing further
2 illegal calling by USCB, as well as significant monetary relief to the Class
3 encompassing over 91% of Defendant’s insurance policy limits. The Settlement
4 Agreement was negotiated after months of extensive discovery, through at times
5 heated negotiations during both informal, arms-length discussions and formal, day6 long mediations with experienced third-party neutrals. There was absolutely no
7 collusion or malfeasance in negotiating the settlement of this Action, as is readily
8 apparent from the exceptional result obtained.
9 E.
10
The Attorneys’ Fees and Incentive Award Allocations Are Reasonable.
The Settlement Agreement requests Court approval of up to 30% of the
11 Settlement Fund (i.e., a cap of $825,000) in attorneys’ fees and a cap of $50,000 in
12 costs/expenses, as well as an incentive award to Plaintiff Jonsson of $10,000.
13 (Agreement at D1.) Both allocations are reasonable.
14
Although the “benchmark” in the Ninth Circuit begins at 25% of the
15 settlement fund, this is only a starting point. See Paul, Johnson, Alston & Hunt v.
16 Graulty, 886 F.2d 268, 272 (9th Cir. 1989) (approving “that the ‘bench mark’
17 percentage for the fee award should be 25 percent[,]” and noting that “[o]rdinarily,
18 ... fee awards range from 20 percent to 30 percent of the fund created”); see also In
19 re Activision Sec. Litig., 723 F. Supp. 1373, 1377, 1378 (N.D. Cal. 1989) (finding
20 that, where “[t]he Ninth Circuit’s [Graulty] opinion does not appear to foreclose,
21 upon appropriate findings, the setting of a different benchmark, since it left ‘to the
22 district court the task of determining what this reasonable percentage should be[,]’”
23 and where, “[a]s documented by the lengthy list of cases below, ... in most recent
24 cases the benchmark is closer to 30%[,]” that a 30% benchmark “will encourage
25 plaintiffs’ attorneys to move for early settlement, provide predictability for the
26 attorneys and the class members, and reduce the time consumed by counsel and court
27
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
21
1 in dealing with voluminous fee petitions”). In fact, “[n]ationally, the average
2 percentage of the fund award in class actions is approximately one-third.” Multi3 Ethnic Immigrant Workers Org. Network v. City of Los Angeles, No. 07-3072, 2009
4 WL 9100391, at *4 (C.D. Cal. June 24, 2009) (citing two empirical studies reviewing
5 hundreds of class actions, one of which found that “[m]edian rates ranged from 27%
6 to 30% [with] ... [m]ost fee awards ... between 20% and 40% of gross monetary
7 settlement[,]” and the other finding that “attorneys’ fees in class actions averaged
8 approximately 32% of the recovery, regardless of the case size, and averaged
9 34.74% when the fees and expenses were added together”).
10
Here, where counsel—assuming the risk of receiving nothing for their
11 substantial expense and effort in an evolving area of the law addressing ever12 changing technology—expended hundreds of hours litigating this case, aggressively
13 pursued discovery, staved off an attempt to stay the action, and negotiated a
14 $2,750,000 settlement encompassing over 91% of the limit of USCB’s insurance and
15 substantive inability to pay, a 30% fee award is well within reason. See, e.g.,
16 Vandervort v. Balboa Capital Corp., No. 11–1578, 2014 WL 1274049, at *6 (C.D.
17 Cal. Mar. 27, 2014) (awarding, in TCPA class action, 33% of $3.3 million settlement
18 fund in attorneys’ fees and costs); Ritchie v. Van Ru Credit Corp., No. 12-01714,
19 2014 WL 3955268, at *10 (D. Ariz. Aug. 13, 2014) (preliminarily approving 30%
20 of $2.3 million settlement fund in attorneys’ fees and costs in TCPA action against
21 debt collector); see also Pinto v. Princess Cruise Lines, Ltd., 513 F. Supp. 2d 1334,
22 1342 (S.D. Fla. 2007) (citing cases, noting that “[t]he 30% fee requested in this case
23 is thus well in line with the bulk of the fee awards in class action litigation”).
24
The proposed $10,000 incentive award to Plaintiff is also reasonable. While
25 class representative awards are discretionary, they are “intended to compensate class
26 representatives for work done on behalf of the class, to make up for financial or
27 reputational risk undertaken in bringing the actions, and sometimes, to recognize
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
22
1 their willingness to as a private attorney general.” Cellphone Termination Fee
2 Cases, 186 Cal. App. 4th 1380, 1393-94 (Cal. Ct. App. 1st Dist. 2010) (internal
3 citation omitted). Plaintiff spent significant time and energy prosecuting this case.
4 (Jonsson Decl. ¶ 3.) In fact, Plaintiff assumed additional risk by rejecting an early
5 individual settlement offer because had she accepted, she would have benefited
6 financially and not had to expend the significant additional time and resources
7 prosecuting this Action on behalf of a putative class, but the Class would have
8 received nothing. (Jonsson Decl. ¶ 4.) Instead, Plaintiff chose to aggressively
9 litigate this Action, and obtain a sizable settlement of $2,750,000, to provide each
10 Class Member an estimated minimum of $47 in direct Cash Benefits. Because the
11 negotiated settlement places no cap on individual Cash Benefits to Class Members
12 (subject to a limited reverter where less than 2,000 or 1,500 Accepted Claims are
13 submitted), the amount each Class Member receives may be considerably more.
14
The proposed incentive award follows similar awards in the Ninth Circuit and
15 across the country. See, e.g., Vandervort, 2014 WL 1274049, at *6 (awarding
16 $10,000 incentive award in TCPA class action against debt collector); Scovil v.
17 FedEx Ground Package Sys., Inc., No. 10- 515, 2014 WL 1057079, at *6 (D. Me.
18 Mar. 14, 2014) (“A 2006 study of incentive awards during 1993–2002 (374 cases)
19 found that the median incentive payment then was $4,357, and the average
20 $15,992.”) (citing Theodore Eisenberg & Geoffrey P. Miller, Incentive Awards to
21 Class Action Plaintiffs: An Empirical Study, 53 UCLA L. Rev. 1303, 1308 (2006)).
22
23
VI.
THE PROPOSED NOTICE PLAN PROVIDES FOR THE BEST
NOTICE PRACTICABLE AND SHOULD BE APPROVED.
24
The Court shall “direct notice in a reasonable manner to all class members
25 who would be bound by” a proposed settlement. Fed. R. Civ. P. 23(e)(1); accord
26 Manual for Complex Litig., Fourth, § 21.312 (2004). Under Fed. R. Civ. P. 23(b)(3),
27
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
23
1 “the court must direct to class members the best notice that is practicable under the
2 circumstances, including individual notice to all members who can be identified
3 through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). The best practicable notice
4 is that which is “reasonably calculated, under all the circumstances, to apprise
5 interested parties of the pendency of the action and afford them an opportunity to
6 present their objections.” Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S.
7 306, 314 (1950). The notice must identify: (i) the nature of the action; (ii) the class
8 definition; (iii) the claims, issues, or defenses applicable to the class; (iv) that a class
9 member may appear through an attorney; (v) any class member who requests
10 exclusion will be excluded from the class by the court; (vi) the time and manner for
11 requesting exclusion; and (vii) the binding effect of a class judgment.
12
The proposed notice forms satisfy this criteria. The notice is clear,
13 straightforward, and provides persons in the Settlement Class with enough
14 information to evaluate whether to participate in the Settlement. See Churchill Vill.,
15 L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) (“Notice is satisfactory if it
16 ‘generally describes the terms of the settlement in sufficient detail to alert those with
17 adverse viewpoints to investigate and to come forward and be heard.’”) (quoting
18 Mendoza v. Tucson Sch. Dist. No. 1, 623 F.2d 1338, 1352 (9th Cir. 1980)).
19
The Agreement provides for Direct Mail Notice via postcard to all members
20 of the Settlement Class whose contact information can be obtained from a reverse
21 look-up performed by KCC of the 621,278 unique cell phone numbers USCB called
22 during the Class Period. (Agreement at H2.) The Settlement Agreement also calls
23 for a website containing the “long-form notice” and other relevant information
24 pertaining to the settlement, which will permit Settlement Class Members to view
25 applicable case documents and even submit Claim or Opt-Out Forms online.
26 (Agreement at H3.) Direct Mail and Website Notice will be further supplemented
27 by a far-reaching press release and online ads linking to the settlement website.
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
24
1 (Agreement at H4.) KCC estimates that the reverse look-up will result in valid
2 contact information for at least half of the 621,278 phone numbers, and the press
3 release will reach thousands of media outlets. (Passarella Decl. ¶¶ 8-10.)
4
This Notice Program satisfies due process, especially where Rule 23 does not
5 require that each potential class member receive actual notice of the class action.
6 See Silber v. Mabon, 18 F.3d 1449, 1454 (9th Cir. 1994) (finding “best notice
7 practicable,” and not actual notice, to be proper standard for notice of settlement to
8 absent class members). Courts have approved similar notice plans in other TCPA
9 cases, using reverse look-ups to identify absent class members where the
10 identification of such individuals is not readily apparent—as must be the case here,
11 where many Settlement Class Members were “wrong number” call recipients for
12 whom a name and address is unavailable through USCB’s records. See, e.g., Barani
13 v. Wells Fargo Bank, N.A., No. 12-2999, 2014 WL 1389329, at *10 (S.D. Cal. Apr.
14 9, 2014) (preliminarily approving notice plan for proposed TCPA class action
15 settlement contemplating postcard notice to class members identified via reverse
16 directory lookup); Ritchie, 2014 WL 956131, at *5-6 (preliminarily approving notice
17 plan for proposed TCPA class action settlement using skip-tracing to identify class
18 members). Thus, because the proposed notice plan constitutes the best notice
19 practicable, provides due and sufficient notice to the Settlement Class, and fully
20 satisfies the requirements of due process and Federal Rule of Civil Procedure 23, it
21 should be approved.
22 VII. CONCLUSION
23
For the foregoing reasons, Plaintiff Brenda Jonsson respectfully requests that
24 the Court enter an Order (i) granting preliminary approval of the Parties’ proposed
25 class action settlement, (ii) certifying the proposed Class for settlement purposes,
26 (iii) approving the form and content of the notice to the members of the Settlement
27 Class, (iv) appointing Plaintiff as Class Representative, (v) appointing her counsel
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
25
1 as Class Counsel, (vi) scheduling a Fairness Hearing, and (vii) providing such other
2 and further relief as the Court deems reasonable and just.
3 Dated: September 12, 2014
4
5
6
7
8
Respectfully submitted,
BRENDA JONSSON, individually
and on behalf of all others similarly
situated
By: /s/ Lance A. Raphael
One of Plaintiff’s Attorneys
Amir J. Goldstein (Cal. Bar No. 255620)
9 [email protected]
10 LAW OFFICES OF AMIR J. GOLDSTEIN
5455 Wilshire Blvd., Suite 1812
11 Los Angeles, CA 90036
12 Telephone: (323) 937-0400
Facsimile: (866) 288-9194
13
14 Lance A. Raphael (pro hac vice)
[email protected]
15 Stacy M. Bardo (pro hac vice)
16 [email protected]
CONSUMER ADVOCACY CENTER, P.C.
17 180 W. Washington St., Suite 700
18 Chicago, IL 60602
Telephone: (312) 782-5808
19 Facsimile: (312) 377-9930
20
Daniel J. Marovitch (pro hac vice)
21 [email protected]
22 MAROVITCH LAW FIRM, LLC
233 S. Wacker Dr., 84th Floor
23 Chicago, IL 60606
24 Telephone: (312) 533-1605
Facsimile: (312) 488-4206
25
26 Counsel for Plaintiff
27
28 Plaintiff’s Memorandum in Support of Preliminary Approval of the Parties’ Class
Action Settlement – Case No. CV13-8166 FMO (SHx)
26