Alice Lee v. Global Tel Link Corporation, No. 2:2015cv02495 - Document 206 (C.D. Cal. 2018)
Court Description: ORDER GRANTING FINAL APPROVAL 196 ; GRANTING, IN PART, ATTORNEYS FEES, COSTS,AND SERVICE AWARD 188 ; AND DENYING PETITION FOR DISBURSEMENT 197 by Judge Otis D. Wright, II: Defendant Global Tel*Link Corporation ( will pay $8,800,000 into a n on-reversionary, common settlement fund. The Court reduces the lodestar multiplier to 3.0, and approves a fee award of $2,127,085.00 in attorney fees. The Court finds litigation expenses in the amount of $75,980.30 reasonable. The settlement administrators fee of approximately $850,000.00 is reasonable. The Court REDUCES the incentive award for lead plaintiff David Martin to $6,250.00. (lc)
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Alice Lee v. Global Tel Link Corporation Doc. 206 O 1 2 3 4 5 6 United States District Court Central District of California 7 8 9 10 13 14 ORDER GRANTING FINAL Plaintiffs 11 12 Case 2:15-cv-02495-ODW (PLA) ALICE LEE, et al., APPROVAL [196]; GRANTING, IN v. GLOBAL TEL*LINK CORPORATION, Defendants. PART, ATTORNEYS’ FEES, COSTS, AND SERVICE AWARD [188]; AND 15 DENYING PETITION FOR 16 DISBURSEMENT [197] 17 I. 18 INTRODUCTION 19 This case is about automated collect call messages that occur when inmates at 20 jails and prisons attempt to call a number and have the recipient of the call pay the 21 charges. Such calls trigger an automated “voice” notice directing the called party to 22 provide billing information. Plaintiff alleges that the automated nature of the calls to 23 cell phone numbers violates the Telephone Consumer Protection Act (“TCPA”). 24 While Defendant Global Tel*Link Corporation (“GTL”) maintains that it would 25 prevail on the merits if the case were to be tried, the parties have reached a settlement 26 to avoid risk for both sides. 27 On April 7, 2017, the Court granted Plaintiffs’ Motion for Class Certification 28 and Preliminary Approval of the Class Settlement. (Prelim. Order, ECF No. 141.) Dockets.Justia.com 1 The Court found that the proposed settlement was in the best interests of the class, and 2 that the proposed plan for notifying absent class members was the best notice 3 practicable. (Id. at 3–6.) It also held that the class met Rule 23’s requirements and 4 certified the class for settlement purposes. (Id. at 7–9.) 5 Since then, the parties have been diligently notifying absent class members of 6 the settlement. There was one hiccup in this process. As part of the settlement 7 agreement, the parties agreed that they would obtain contact information for absent 8 class members by subpoenaing subscriber information from cellular telephone 9 providers. However, many of the cell providers objected to the subpoenas pursuant to 10 various state privacy laws. Plaintiffs raised the issue to the Magistrate Judge, who 11 denied Plaintiffs’ motion to compel, in part, based on his interpretation of the state 12 laws. (ECF Nos. 168–71, 173.) Plaintiffs moved for review of the Magistrate Judge’s 13 ruling. (ECF No. 175.) On December 6, 2017, the Court granted, in part, Plaintiffs’ 14 Motion for Review, and ordered the cellular telephone providers to produce subscriber 15 information for class members, subject to certain procedural protections. 16 No. 184.) (ECF 17 Plaintiffs now move for final approval of the settlement, fee and incentive 18 awards, and final class certification. (ECF Nos. 188, 196.) There are two objectors, 19 both of whom Plaintiffs claim are not members of the class. Irene Beck objects and 20 petitions the Court for a different cy pres disbursement. 21 Stephen Kron claims to be a class member, and objects to the fee award provided to 22 counsel. (ECF No. 191.) These objections are meritless for the reasons discussed 23 below. (ECF Nos. 194, 197.) 24 As discussed below, the Court OVERRULES the objections (ECF Nos. 191, 25 194); GRANTS the Motion for Final Approval of Class Settlement (ECF No. 196); 26 GRANTS, IN PART, the Motion for Attorneys’ Fees and Costs (ECF No. 188); and 27 DENIES the Petition for Disbursement of Funds pursuant to Cy Pres (ECF No. 197). 28 2 II. 1 FACTUAL BACKGROUND 2 GTL provides collect-call services to inmates at jails and prisons throughout the 3 United States. The service requires the called party to establish a billing relationship 4 with GTL to pay for and receive calls from an inmate. When an inmate attempts to 5 place a collect call to a telephone number for which there is no pre-established billing 6 relationship with GTL, the call attempt will trigger a separate prerecorded 7 “Notification Call” that tells the called party that they need to set up an account to pay 8 for and receive the call. 9 Plaintiff purports to represent a class of persons who have received such calls 10 on their cellular telephone, with each call allegedly representing a violation of the 11 TCPA’s prohibition against automated calls to cell phones without prior express 12 permission from the called party. See 47 U.S.C. § 227(b)(1)(iii). Defendant contends 13 that its Notification Calls are exempt from the TCPA due to an order from the Federal 14 Communications Commission (“FCC”). In response, Plaintiff argues that the calls are 15 not exempt because GTL does not provide an opt-out mechanism in compliance with 16 the FCC’s order. The parties agree settlement is warranted as the litigation is highly 17 contentious and risk exists for both sides. 18 Plaintiffs filed the putative class action Complaint on December 5, 2014, and it 19 was assigned to this Court on April 3, 2015. Plaintiffs assert only one claim— 20 violations of the TCPA. (Compl., ECF No. 38.) III. 21 The parties proposed no sub-classes; the class will be uniform. 22 23 SETTLEMENT TERMS A. Relevant Definitions 24 The Court preliminarily approved a class of: “All persons using and/or 25 subscribing to a mobile telephone number to which a Notification Call was placed 26 during the Class Period.” (Prelim. Order 3.) Excluded from this definition are the 27 Judge and court staff on this case, as well as their immediate family members. The 28 parties do not propose any changes. 3 1 The definition of the Class Period is December 5, 2010, through the date of 2 entry of a Preliminary Approval Order, which the Court entered on April 7, 2017. 3 (Id.) 4 A Notification Call is “a call (i) placed by or on behalf of GTL, (ii) to a number 5 attempted in a Failed Inmate Call Attempt, (iii) using a prerecorded voice message, 6 (iv) to explain in sum and substance that inmate calls could not be completed and/or 7 billed, and [v] that the called party could take certain steps to arrange for billing 8 and/or set up a prepaid account.” (Settlement Agreement (“SA”) 6, ECF No. 135-2.) 9 A Failed Inmate Call Attempt is a telephone call attempted by an inmate or 10 prisoner through GTL’s service to a phone number for which GTL had no billing 11 relationship and therefore no means to bill the call to the called party. (SA 5.) 12 B. Settlement Fund and GTL’s Changing Practices 13 GTL will pay $8,800,000 into a non-reversionary, common settlement fund. 14 (SA 11.) Class members who submit a claim will receive a pro-rata share of the 15 balance of that amount—after payment of notice and administration costs, any Court- 16 ordered award of attorneys’ fees and expenses, and any Court-ordered incentive award 17 for the class representative. The parties estimated at the preliminary approval stage that each class member 18 19 who submitted a successful claim would receive approximately $60. 20 Order 3–4.) They calculated this amount by assuming a 5% claim rate. After notice 21 and the claim submission process, there were a total of 32,449 valid claims (and 1,850 22 deficient claims that may eventually be corrected). 23 (“Geraci Decl.”) ¶ 19, ECF No. 196-2.) If no deficient claims are corrected, each 24 class member will receive $174.52, provided that the Court awards the requested fees, 25 costs, incentive award, and administrative expenses. 26 distribution is more than double what the parties expected.1 (Declaration of Jay Geraci This per-class-member 27 28 1 This reflects a relatively low claim rate (1.8%), which the Court addresses below. 4 (Prelim. 1 In addition to the payment to class members who submit claims, GTL agreed to 2 change its practices to include in all Notification Calls an interactive-voice and/or key- 3 activated opt-out mechanism that the called-party may use to opt-out of all future 4 Notification Calls. The called party will also be provided with a toll-free number that 5 can be used to opt-out. Finally, opting-out is effective to block all future calls, 6 regardless of the number of times an inmate attempts to call that number. (SA 15.) 7 The settlement amount shall be reserved and paid out as follows: 8 (1) Calculation of Payment: Once the claims period ended, the settlement 9 administrator will calculate the amount each class member is to receive (the amount 10 will be uniform among all class members, aside from the named-plaintiff’s incentive 11 award). All that remains is to resolve the deficient claim submissions. The settlement 12 administrator identified 1,850 claims as deficient. (Geraci Decl. ¶ 19.) The settlement 13 administrator will send these claimants a deficiency notice, and the claimants will 14 have 30 days to return a valid phone number, claim ID, or provide records establishing 15 receipt of a Notification Call from Defendant. (Id.) If none of the deficient claims are 16 remedied, then each claimant is entitled to $174.52, provided the Court awards the 17 fees and costs requested. 18 (2) Opting In and Opting Out: After Notice was sent (see infra Part C. 19 Notice), class members had 60 days to submit timely and valid requests for exclusion. 20 Requests for exclusion were mailed to the settlement administrator. Nineteen class 21 members requested exclusion from the class. 22 objections were to be made within 60 days, and filed with the Court. The parties also 23 agreed that, to ensure that only valid class members object to the settlement, objectors 24 must provide a valid claim ID, demonstrate ownership of a telephone number that 25 appears on the class list based on GTL’s records, or produce telephone records 26 establishing receipt of a Notification Call. Two individuals objected, as discussed 27 further below. (See Geraci Decl. ¶¶ 21–23.) 28 5 (Geraci Decl. ¶ 20.) Similarly, 1 (3) Release of Claims: Any class member who did not opt out within the 60- 2 day period described above will release all claims against GTL arising out of 3 Notification Calls, calls made by automatic telephone dialing systems, and/or artificial 4 or prerecorded voice calls to mobile telephones. 5 (4) Method of Payment: The settlement administrator will send checks to the 6 class members who submitted valid claims. The recipients will then have 120 days to 7 cash the check (from the date on the check). Any amounts that remain uncashed after 8 120 days will be used as part of a second distribution, whereby the settlement 9 administrator will distribute the remaining funds to class members who did cash their 10 checks, provided that each member would receive at least $10 in the second 11 distribution. After 120 days of the date of the checks in the second distribution, any 12 remaining funds will be paid to the National Consumer Law Center, which works with 13 the FCC to enforce the protections of the TCPA. (SA 19–20.) Objector Irene Beck 14 opposes the cy pres distribution to the National Consumer Law Center. (See ECF 15 Nos. 194, 197.) The Court addresses Ms. Beck’s objection below. 16 (5) Attorneys’ Fees: Plaintiffs’ counsel moved for an award of $2,200,000 in 17 attorneys’ fees, and $76,825.97 in out-of-pocket expenses to be deducted from the 18 gross settlement amount. (Fee Mot., ECF No. 188.) 19 (6) Costs to be Deducted from the Settlement Amount: Deducted from the 20 settlement amount will be: costs of notice and administration of settlement; any Court- 21 ordered award of attorneys’ fees and expenses; and any Court-ordered incentive award 22 for Plaintiff. The settlement administrator estimates administrative costs of $850,000. 23 (Geraci Decl. ¶ 24.) 24 25 26 27 (7) Blow-Up Clause: The parties have not identified any particular number of claims or opt-outs that would void the settlement. (8) Incentive Award: David Martin, named plaintiff, requests a $10,000 incentive award for his service to the class. (Fee Mot. 22–23.) 28 6 1 C. Notice to Settlement Class and Claim Submissions 2 GTL produced records of its Notification Calls during the discovery process, 3 and it further refined those records to compile a settlement class list containing the 4 unique telephone numbers of each person that appears to be in the class, based on the 5 records. 6 Defendant’s records. (Geraci Decl. ¶ 5.) The settlement administrator processed the 7 available names and addresses through the National Change of Address Database to 8 update any inaccurate addresses. (Id.) Approximately 1.8 million class members were identified through 9 Plaintiffs then subpoenaed various wireless providers (including Verizon, 10 AT&T, T-Mobile, Cricket Wireless, US Cellular, and others) to obtain contact 11 information for the members of the class who were identified only by cellular phone 12 number. As explained above, several of the providers objected, and Plaintiffs moved 13 to compel the documents. 14 providers to produce the subscriber information.2 (ECF No. 184.) (ECF No. 155.) Ultimately, the Court ordered the The settlement administrator engaged in a multifaceted notice campaign: 15 16 it delivered a copy of all relevant pleadings to the United States Attorney 17 General, and the Attorneys General of the 50 states where class members 18 reside (Geraci Decl. ¶¶ 2–4); it delivered the notice to approximately 207,000 email addresses and 19 1,105,000 physical mailing addresses (Id. ¶¶ 6–14); 20 it sent approximately 207,000 reminder emails (Id. ¶ 15); 21 22 it established a case website providing both a long form notice and 23 numerous other documents regarding the case (Id. ¶ 17), which received 24 118,794 visits; 25 26 27 28 2 Pursuant to Pennsylvania privacy law, AT&T directly mailed notice of the settlement to class members, as opposed to providing the address to the settlement administrator for mailing. (See ECF Nos. 188; 196-3.) 7 it established a toll-free telephone number, which received 22,104 calls (Id. 1 ¶ 18); and 2 it published notice via Facebook newsfeed, delivering over 115,000,000 3 impressions to Facebook users (Id. ¶ 16). 4 Class members could submit claims via the settlement website, a toll-free 5 6 telephone number, or by mail. 7 regardless of the number of times they were called by Defendant. 8 members submitted 32,449 claims to the administrator that were supported by a valid 9 claim ID, telephone number, or telephone records. (Geraci ¶ 19.) An additional 1,850 10 claims were found deficient. (Id.) The settlement administrator will send notices to 11 the class members with deficient claims, who will then have 30 days to submit proper 12 verification. (Id.) IV. 13 (SA 18–19.) They were limited to one claim (Id.) Class ANALYSIS The Court previously found that the class merited certification, and nothing has 14 15 changed since the Court conditionally certified the class. Accordingly, the Court 16 maintains its approval. 17 A. Class Certification 18 Class certification is a prerequisite to preliminary approval of the settlement 19 agreement. Class certification is appropriate only if each of the four requirements of 20 Rule 23(a) and at least one of the requirements of Rule 23(b) are met. Under Rule 21 23(a), the plaintiff must show that: “(1) the class is so numerous that joinder of all 22 members is impracticable; (2) there are questions of law and fact common to the class; 23 (3) the claims or defenses of the representative parties are typical of the claims or 24 defenses of the class; and (4) the representative parties will fairly and adequately 25 protect the interests of the class.” Fed. R. Civ. P. 23(a). 26 Next, the proposed class must meet at least one of the requirements of Rule 27 23(b)(3): (1) “questions of law or fact common to class members predominate over 28 any questions affecting only individual members,” and/or (2) a class action is 8 1 “superior to other available methods for fairly and efficiently adjudicating the 2 controversy.” Fed. R. Civ. P. 23(b)(3). 3 1. 4 The proposed class meets all four 23(a) factors. Rule 23(a) Requirements First, it is sufficiently 5 numerous. While no “exact numerical cut-off is required” for the numerosity 6 requirement, “numerosity is presumed where the plaintiff class contains forty or more 7 members.” In re Cooper Cos. Inc. Sec. Litig., 254 F.R.D. 628, 634 (C.D. Cal. 2009). 8 The class size in this case is approximately 1.8 million members. Thus, this class 9 easily meets the requirement. 10 Next, the claims of the potential class members demonstrate common questions 11 of fact and law. See Mazza v. Am. Honda Motor Co., 666 F.3d 581, 589 (9th Cir. 12 2012). The issues are essentially the same for all members: they all received a 13 Notification Call on their cellular telephones and were unable to opt-out, allegedly in 14 violation of the TCPA. Common questions among the class include whether: (1) the 15 calls used a “prerecorded voice,” and (2) the calls complied with the FCC’s opt-out 16 requirements. At this juncture, no discernable individualized issues appear to exist 17 which might detract from the common questions of fact and law. As such, the class 18 meets this requirement. 19 The named plaintiff in this action also meets the typicality requirement.3 20 Typicality in this context means that the representative claims are “reasonably co- 21 extensive with those of absent class members; they need not be substantially 22 identical.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). Here, 23 Plaintiff Martin (like all class members) contends that he received a robocall, that it 24 was made without prior express consent, and that it was not exempt per the FCC’s 25 order. Thus, the lead plaintiff shares material common factual and legal issues with 26 27 28 3 Despite the case name being Alice Lee v. Global Tel*Link, the “Consol” (lead) plaintiff in the action is David W. Martin. 9 1 the other settlement class members. Nothing has changed since preliminary approval 2 to disturb this analysis. 3 Finally, the named plaintiff and his counsel satisfy the adequacy requirement 4 for representing absent class members. This requirement is met where the named 5 plaintiffs and their counsel do not have conflicts of interest with other class members 6 and will vigorously prosecute the interests of the class. Id. Here, there is no evidence 7 of any potential conflicts. Class counsel appear well-qualified because they have 8 successfully litigated TCPA actions in the past. (See Declaration of Timothy J. 9 Sostrin (“Sostrin Decl.”) ¶¶ 17–24, ECF No. 188-3.) Furthermore, when presented 10 with discovery issues after agreeing to the settlement, counsel continued to litigate by 11 moving to compel production of the class members’ phone records, and subsequently 12 seeking review of the Magistrate Judge’s ruling. (See ECF No. 184.) This supports 13 class counsel’s adequacy, and vigorous representation of the class. 14 As such, the proposed class and its representative satisfy the Rule 23(a) 15 requirements. 16 2. 17 Simply put, Rule 23(b)(3) requires that the class be “sufficiently cohesive to 18 warrant adjudication by representation.” Hanlon, 150 F.3d at 1022. Questions of law 19 or fact common to class members must predominate over any questions affecting only 20 individual class members, and class resolution must be superior to any other available 21 methods of adjudication. Here, questions of law or fact common to class members 22 predominate over individualized questions because the only issues that appear to be at 23 stake—whether the calls were prerecorded and whether the FCC exempts them from 24 the TCPA—are common to the class. Further, the sheer number of claimants (let 25 alone class members) demonstrates that individual actions would not be efficient, and 26 requiring each potential class member to litigate it themselves would mean the costs 27 of litigation for each plaintiff would dwarf any recovery. 28 requirements of Rule 23(b)(3). Rule 23(b)(3) Requirements 10 The class meets the Therefore, the Court confirms its certification for settlement purposes. 1 2 3 4 B. Fairness of Settlement Terms The Court previously found that the settlement was fair, adequate, and reasonable in its preliminary approval order. (Prelim. Order 10–13.) 5 In determining whether a proposed class action settlement is “fair, reasonable, 6 and adequate,” this Court may consider some or all of the following factors: “(1) the 7 strength of the plaintiffs’ case; (2) the risk, expense, complexity, and likely duration of 8 further litigation; (3) the risk of maintaining class action status throughout trial; (4) the 9 amount offered in settlement; (5) the extent of discovery completed, and the stage of 10 the proceedings; (6) the experience and views of counsel; (7) the presence of a 11 governmental participant; and (8) the reaction of the class members to the proposed 12 settlement.” Rodriguez v. West Publ’g Corp., 563 F.3d 948, 963 (9th Cir. 2009). The 13 settlement is appropriate under these factors, as discussed below. 14 1. 15 Defendant presented a cognizable defense by arguing that the FCC’s rules Strength of Plaintiffs’ case and complexity of further litigation 16 regarding opt-outs prevented liability. Thus, Defendant disputes its liability, but 17 concedes to settlement because of the inherent uncertainty in the result of continued 18 litigation. Officers for Justice v. Civil Serv. Comm’n of City & Cnty. of S.F., 688 F.2d 19 615, 625 (9th Cir. 1982) (“[I]t is the very uncertainty of outcome in litigation and 20 avoidance of wasteful and expensive litigation that induce consensual settlements.”). 21 While the details of this case may not be terribly complex, the large number of class 22 members, and case management issues, support a resolution through the class-wide 23 settlement process. “In most situations, unless the settlement is clearly inadequate, its 24 acceptance and approval are preferable to lengthy and expensive litigation with 25 uncertain results.” Nat’l Rural Telecomm. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 26 526 (C.D. Cal. 2004). Accordingly, these elements support approving the settlement. 27 28 11 1 2. 2 Individual issues unearthed during discovery can derail a class action in TCPA 3 suits. See Vigus v. S. Ill. Riverboat/Casino Cruises, Inc., 274 F.R.D. 229, 235 (S.D. 4 Ill. 2011) (refusing to certify TCPA class where the “proposed class includes a 5 substantial number of people who voluntarily gave their telephone numbers to the 6 [defendant]”). On the other hand, some courts find that issues of consent are worthy 7 of class resolution. See Green v. Serv. Master on Location Servs. Corp., No. 07 C 8 4705, 2009 WL 1810769, at *2 (N.D. Ill. June 22, 2009) (quoting Hinman v. M and M 9 Rental Ctr., Inc., 545 F. Supp. 2d 802, 806–07 (N.D. Ill. 2008)) (“‘the question of 10 consent may rightly be understood as a common question’ and the possibility that 11 some class members may have consented is not sufficient to defeat class 12 certification.”). 13 certification, which supports a settlement. Risk of maintaining class action status Accordingly, both sides had arguments for, and against, class 14 3. 15 The parties agreed to an $8.8 million non-reversionary settlement fund. If the 16 Court awards the requested fees, and the number of claims stays the same, then each 17 class member will receive $174.52. 18 members receive in many TCPA cases in the Ninth Circuit. See, e.g., Franklin v. 19 Wells Fargo Bank, N.A., No. 14-cv-2349-MMA (BGS), 2016 WL 402249, at *5 (S.D. 20 Cal. Jan. 29, 2016) (approving settlement where class members received 21 approximately $71.16); Estrada v. iYogi, Inc., No. 2:13–01989 WBS (CKD), 2015 22 WL 5895942, at *7 (E.D. Cal. Oct. 6, 2015) (granting preliminary approval to TCPA 23 settlement where class members estimated to receive $40). There is also an injunctive 24 component to the settlement, which provides prospective relief. (SA 15–16.) Grant v. 25 Capital Mgmt. Servs., No. 10–cv–2471–WQH (BGS), 2014 WL 888665, *9 (S.D. 26 Cal. Mar. 5, 2014) (approving class settlement under the TCPA providing only 27 injunctive relief). Therefore, this factor also favors approving the settlement. Amount offered in settlement This exceeds the amount individual class 28 12 1 4. 2 The parties litigated this case for two years before reaching a settlement. 3 Plaintiffs defeated a motion to dismiss, and opposed a motion for summary judgment, 4 and motion to exclude expert testimony. (ECF Nos. 40, 98, 111.) They engaged in 5 discovery regarding the substance of Plaintiffs’ claims and Defendant’s defenses. The 6 parties attended mediation in October 2016, which proved unsuccessful. However, 7 they later accepted a mediator’s proposal. 8 approved the settlement, Plaintiffs continued to litigate to obtain the identifying 9 information of class members from cellular providers. (See ECF No. 184.) These 10 facts all support a finding that the parties settled after being fully informed of their 11 respective positions. Stage of proceedings Even after the Court preliminarily 12 5. 13 The parties are represented by worthy counsel, who are experienced in this 14 Experience of counsel field. (Sostrin Decl. ¶¶ 17–24.) 15 6. 16 The settlement administrator notified the United States Attorney General and 17 the attorneys general of each of the 50 states. (Geraci Decl. ¶¶ 2–4.) None of the 18 notified parties have objected to the settlement, or otherwise appeared. (Id. ¶ 4.) This 19 supports a finding that the government entities have no concerns regarding the 20 settlement’s adequacy. See Garner v. State Farm Mut. Auto Ins. Co., No. CV 08 1365 21 CW (EMC), 2010 WL 1687832, at *14 (N.D. Cal. Apr. 22, 2010) (“Although CAFA 22 does not create an affirmative duty for either state or federal officials to take any 23 action in response to a class action settlement, CAFA presumes that, once put on 24 notice, state or federal officials will raise any concerns that they may have during the 25 normal course of the class action settlement procedures.”). Accordingly, this factor 26 also supports approving the settlement. Presence of government participant 27 28 13 1 7. 2 Of approximately 32,000 valid claims, only nineteen class members opted out 3 of the settlement. (Geraci Decl. ¶ 20.) This low opt-out rate indicates a favorable 4 reception by the class. Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 577 (9th 5 Cir. 2004) (affirming the district court’s approval where 45 of 90,000 notified class 6 members objected to the settlement, and 500 class members opted out of the 7 settlement). There are only two objectors, whose objections the Court addresses 8 below. And although only 1.8% of the potential class members submitted claims as 9 opposed to the predicted 5%, this does not preclude final approval. (See Geraci Decl. 10 ¶ 19); see Keil v. Lopez, 862 F.3d 685, 697 (8th Cir. 2017) (noting that in consumer 11 class actions a low claim rate “does not suggest unfairness”); Perez v. Asurion Corp., 12 501 F. Supp. 2d 1360, 1377–78, 1384 (S.D. Fla. 2007) (approving settlement where 13 118,663 out of approximately 10.3 million class members submitted claims, for a 14 claim rate of approximately 1.2%); see also Bayat v. Bank of the West, C–13–2376 15 EMC, 2015 WL 1744342, at *6 (N.D. Cal. Apr. 15, 2015) (finding class settlement in 16 TCPA claim to be fair, adequate, and reasonable where there was only a 1.9% claim 17 rate for damages, and 1.1% for injunctive relief). Accordingly, this factor weighs in 18 favor of settlement. On balance, these factors weigh in favor of approving the settlement. 19 20 21 22 Reaction of class members C. Sufficiency of Notice To find notice to absent class members sufficient, the Court must analyze both the type and content of the notice. 23 1. 24 Under Rule 23(c)(2)(B), “the court must direct to class members the best notice 25 that is practicable under the circumstances, including individual notice to all members 26 who can be identified through reasonable effort.” The Ninth Circuit has approved 27 individual notice to class members via e-mail. See In re Online DVD-Rental Antitrust 28 Litig., 779 F.3d 934, 946 (9th Cir. 2015). Type of Notice 14 It has also approved notice via a 1 combination of short-form and long-form settlement notices. Id.; see also Spann v. 2 J.C. Penney Corp., 314 F.R.D. 312, 331 (C.D. Cal. 2016) (approving e-mail and 3 postcard notice, each of which directed the class member to a long-form notice). 4 As detailed above, the settlement administrator emailed, snail-mailed, and 5 advertised the settlement via Facebook and the settlement website. (Geraci Decl. 6 ¶¶ 6–18.) It also received thousands of calls on the toll-free number created for this 7 settlement, which confirms the notice effectively reached class members. (Id.) 8 2. 9 The Court previously analyzed and approved the notice. (Prelim. Order 13.) Content of Notice 10 Overall, the notice procedure and content are adequate. 11 D. Objectors & Petition for Alternate Cy Pres Distribution 12 Irene Beck and Stephen Kron object to the settlement. 13 1. 14 Beck objects to section 12.3 of the Class Settlement Agreement. (Beck Obj. 2, 15 ECF No. 194.) Section 12.3 provides that any funds not distributed to class members 16 after the first and second distributions shall be distributed cy pres to the National 17 Consumer Law Center, and “earmarked for working with the FCC and Congress to 18 safeguard the protections of the TCPA.” (SA 20.) “The cy pres doctrine allows a 19 court to distribute unclaimed or non-distributable portions of a class action settlement 20 fund to the ‘next best’ class of beneficiaries.” Nachshin v. AOL, LLC, 663 F.3d 1034, 21 1036 (9th Cir. 2011) (citing Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 22 F.2d 1301, 1307–08 (9th Cir. 1990)). Irene Beck 23 Beck contends that, while the National Consumer Law Center advocates worthy 24 causes, it does not “focus upon litigation specifically aimed at ameliorating the 25 barriers to communication between inmates and their loved ones.” (Beck Obj. 2.) 26 She contends she spent large amounts of money speaking to her incarcerated loved 27 one, and she requests that the cy pres award be distributed to an organization that 28 would fight to lower the cost of communication with prisoners. (See id.) Defendant 15 1 and other providers, she argues, charge exorbitant rates to communicate with 2 prisoners. 3 organization that would work to lower the rates, and further allow communication 4 with inmates. (Id.) She suggests the Human Rights Defense Center (“HRDC”) as an 5 In addition to objecting, Beck filed a “Petition for an Order Approving 6 Distribution of Cy Pres Funds.” (Pet., ECF No. 197.) Her Petition argues the same 7 points as her Objection and provides several letters from various respected legal minds 8 lauding the work of the HRDC. (See id.; Supp. Declaration of Brian Vogel (“Vogel 9 Decl.”), Ex. 11, ECF No. 199.) The Court does not dispute the admirable work of 10 HRDC. However, Beck misses the point. She claims that “[t]he core identifiable goal 11 of the Plaintiff Class is to be charged no more than affordable, reasonable rates for 12 their telephone calls from prisoners after they receive automated billing calls to which 13 they previously did not consent.” (Pet. 7.) This is plain wrong. 14 The purpose of this class action was to vindicate the rights of class members 15 vis-a-vis the TCPA; it had nothing to do with the rates—exorbitant or not—charged 16 by Defendant. (See Compl.; see also SA 26 (§ 17.2 releasing only claims relating to 17 automated calls made by Defendant without class members’ consent, and making no 18 mention of the rates).) 19 automated calls and will further the goals of the absent class members. (See NCLC, 20 Robocalls 21 telemarketing.html (last visited Sept. 21, 2018).) Furthermore, the funds distributed to 22 the National Consumer Law Center will be earmarked for use in conjunction with 23 enforcing the TCPA. (SA 20.) The cy pres doctrine requires the Court to provide the 24 funds to the “next best class of beneficiaries.” See Nachshin, 663 F.3d at 1036 25 (quotation marks omitted). The National Consumer Law Center fits that bill. & The National Consumer Law Center advocates against Telemarketing, https://www.nclc.org/issues/robocalls-and- 26 Plaintiffs also contend that Beck lacks standing because she submitted a 27 deficient claim form. (Mot. Final Approval 18.) The form was deficient because it 28 did not provide “a mobile number contained in the Class List, a valid claim ID, [or] 16 1 any telephone records establishing receipt of a Notification Call.” (Geraci Decl. ¶ 23.) 2 Beck responded to this argument in a late-filed declaration attaching 2018 telephone 3 records, bank records spanning 2015–17, and a deficient claim notice. 4 Declaration of Irene Beck (“Beck Decl.”), Exs. 1-3, ECF No. 202.) However, the 5 court need not address Beck’s standing. Even assuming Beck has standing to object, 6 the grounds for her Objection and Petition are insufficient to warrant denial of the 7 Motion for Final Approval. Accordingly, the Court OVERRULES Beck’s Objection, and DENIES her 8 9 (See Petition. (ECF Nos. 194, 197.) 10 2. 11 Kron objects to the settlement because he claims class counsel seeks too high a 12 fee award. (Kron Obj., ECF No. 191.) Kron contends he is a class member and 13 submitted claim number 10268118101. (Kron Obj. 1.) Plaintiffs counter that Kron is 14 not a class member, and therefore lacks standing to object. (Mot. Final Approval 18); 15 see Fed. R. Civ. P. 23(e)(5) (“Any class member may object….”) (emphasis added). 16 Plaintiffs argue that Kron is not on the class list, and that, while the claim ID he 17 provided corresponds to a company on the class list, Westcoast Commercial, Kron 18 does not claim to be associated with Westcoast Commercial. (Geraci Decl ¶ 21.) In 19 any event, Westcoast Commercial already submitted a claim, and did not object. (Id.) Stephen Kron 20 The Court addresses the validity of the fee award below, and therefore the 21 merits of Kron’s objections to the extent he could have standing. As discussed below, 22 the Court OVERRULES Kron’s Objection. (ECF No. 191.) 23 24 25 26 V. ATTORNEYS’ FEES, COSTS, INCENTIVE AWARDS, AND SETTLEMENT ADMINISTRATOR FEES Plaintiffs seek attorneys’ fees and costs, an incentive award for the named- plaintiff, and settlement administrator fees. (ECF Nos. 188, 196.) 27 28 17 1 A. Attorneys’ Fees 2 Class Counsel seeks 25% of the common settlement fund ($8.8 million), which 3 totals $2,200,000. (Fee Mot. 8.) “While attorneys’ fees and costs may be awarded in 4 a certified class action where so authorized by law or the parties’ agreement, courts 5 have an independent obligation to ensure that the award, like the settlement itself, is 6 reasonable, even if the parties have already agreed to an amount.” In re Bluetooth 7 Headset Prod. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011) (citation omitted). 8 “Where a settlement produces a common fund for the benefit of the entire class, courts 9 have discretion to employ either the lodestar method or the percentage-of-recovery 10 method.” Id. at 942. “[T]he lodestar method produces an award that roughly 11 approximates the fee that the prevailing attorney would have received if he or she had 12 been representing a paying client who was billed by the hour in a comparable case.” 13 Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551 (2010). 14 In the Ninth Circuit, contingency fee recovery is typically in the range of 20% 15 to 33.33% of the total settlement value, with 25% considered a benchmark. See In re 16 Bluetooth, 654 F.3d at 941–42. “Because the benefit to the class is easily quantified 17 in common-fund settlements, we have allowed courts to award attorneys a percentage 18 of the common fund in lieu of the often more time-consuming task of calculating the 19 lodestar. Applying this calculation method, courts typically calculate 25% of the fund 20 as the ‘benchmark’ for a reasonable fee award, providing adequate explanation in the 21 record of any ‘special circumstances’ justifying a departure.” Id. at 942. Courts may 22 also “cross-check” the percentage-of-the-fund approach under circumstances where 23 the fees seem suspect. See id. at 944. 24 Under the percentage method, class counsel’s fee request meets the benchmark. 25 It is further justified by the discussion above regarding the strength of Plaintiffs’ case, 26 the challenges counsel faced in negotiating this settlement, and the favorable outcome 27 for the class. 28 However, the lodestar cross-check indicates a slight reduction is warranted. 18 1 The lodestar method calculates a fee award by multiplying hours worked, by hourly 2 rate, and typically provides a multiplier that considers risk endured by class counsel. 3 Fischer v. SJB-P.D. Inc., 214 F.3d 1115, 1119 (9th Cir. 2000). Here, class counsel 4 submits declarations that establish: 5 6 7 8 9 10 11 12 13 Name Patric A. Lester (Solo Practitioner) Belford Smith (Paralegal) Keith Keogh (Partner) Tim Sostrin (Associate) Matt Seckel (Paralegal) 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Rate Hours Lodestar $500.00 400.1 $200,050.00 $195.00 114.3 $22,288.50 $600.00 169.3 $101,580.00 $500.00 764.2 $382,100.00 $175.00 17.2 $3,010.00 Totals 1465.1 $709,028.50 (Declaration of Patric Lester (“Lester Decl.”) ¶¶ 24–26, ECF No. 188-1; Sostrin Decl. ¶ 15.) 1. Hours The approximately 1,465 hours spent by class counsel reaching this settlement included: researching and drafting motions for preliminary and final approval and motion for fees, opposing Defendant’s motion to dismiss, summary judgment, and motion to exclude expert, negotiating the settlement and participating in, and preparing for, mediation, and discussing case strategy with co-counsel. (See Lester Decl. ¶ 10; Sostrin Decl. ¶¶ 11–15.) “[I]t is well established that ‘[t]he lodestar cross-check calculation need entail neither mathematical precision nor bean counting. . . [courts] may rely on summaries submitted by the attorneys and need not review actual billing records.’” Bellinghausen v. Tractor Supply Co., 306 F.R.D. 245, 264 (N.D. Cal. 2015) (quoting 19 1 Covillo v. Specialtys Cafe, No. C–11–00594 DMR, 2014 WL 954516, at *6 (N.D. Cal. 2 Mar. 6, 2014)). Here, class counsel’s declarations reasonably set forth the details of 3 how they spent their time, and the tasks all seem necessary. While counsel surely 4 could have included a bit more detail in their declarations, the docket in this action 5 demonstrates that class counsel engaged in significant motion practice, substantiating 6 the hours expended over a two-year period. Accordingly, the Court cannot find that 7 the number of hours expended are unreasonable, especially when being used as a 8 cross-check for the percentage method of fee calculation. 9 2. Rate & Lodestar Multiplier 10 In evaluating rates, courts consider the reasonable rates for the specific 11 geographic area and type of practice. See Chalmers v. City of Los Angeles, 796 F.2d 12 1205, 1210–11 (9th Cir. 1986). Here, class counsel details their extensive experience 13 in litigating consumer class actions in support of their hourly rates. (Lester Decl. 14 ¶¶ 21–23; Sostrin Decl. ¶¶ 17–23.) Lester also provides citations to other cases where 15 courts have approved his hourly rates. See, e.g., In re Portfolio Recovery Assoc., LLC, 16 Tel. Consumer Prot. Act Litig., No. 11-MD-2295 JAH (BGS) (S.D. Cal. Mar. 29, 17 2018) ECF Nos. 655–56 (approving $500 hourly rate for Lester and $195 hourly rate 18 for Belford); see also Chan v. Sutter Health Sacramento Sierra Region, LA CV 15- 19 2004 JAK (AGRx), 2017 WL 819903, at *6 (Feb. 14, 2017) (approving rates ranging 20 between $425 and $595 per hour in TCPA class action). Thus, these rates appear 21 reasonable. 22 Courts typically award a multiplier in a lodestar calculation that considers the 23 risk contingency fee attorneys endure. In re Wash. Pub. Power Supply Sys. Sec. Litig., 24 19 F.3d 1291, 1300 (9th Cir. 1994) (“[C]ourts have routinely enhanced the lodestar to 25 reflect the risk of non-payment in common fund cases.”). Here, as is, the lodestar 26 multiplier is approximately 3.1 ($709,028.50 x 3.1 = $2,197,988.35). The Ninth 27 Circuit routinely upholds higher lodestar multipliers. See Vizcaino v. Microsoft Corp., 28 290 F.3d 1043, 1051 (9th Cir. 2002) (upholding multiplier of 3.65 and noting that 20 1 range between 1 and 4 is typically appropriate). Plaintiffs argue this multiplier is 2 appropriate because class counsel are both small firms and litigated this contingency 3 fee case for approximately two years without any guarantee of payment. 4 The court finds this lodestar multiplier a bit high, although not entirely 5 unreasonable given the litigation history and motion practice necessary prior to 6 settlement. 7 approves a fee award of $2,127,085.00. Accordingly, the Court reduces the lodestar multiplier to 3.0, and 8 3. 9 Kron argues that the 25% contingency fee should be calculated from the net 10 recovery of the class, instead of the gross settlement fund, which includes money 11 earmarked for administrative fees and costs. (Kron Obj. 3.) Kron’s Objection 12 The Ninth Circuit has expressly held that calculating the fee as set forth above 13 is permissible: “The district court did not err in calculating the attorneys’ fees award 14 by calculating it as a percentage of the total settlement fund, including notice and 15 administrative costs, and litigation expenses.” In re Online DVD-Rental Antitrust 16 Litig., 779 F.3d 934, 953 (9th Cir. 2015); see also Powers v. Eichen, 229 F.3d 1249, 17 1258 (9th Cir. 2000) (rejecting objector’s argument that a fee award should be based 18 on “net recovery,” which does not include “expert fees, litigation costs, and other 19 expenses”). Furthermore, the percentage award is further confirmed by the lodestar 20 analysis. 21 22 Accordingly, in addition to Kron’s lack of standing, the Court OVERRULES his objection for this reason too. 23 24 25 26 27 28 21 1 B. Litigation Expenses & Settlement Administrator Fees 2 Class counsel seeks $75,980.304 in litigation expenses, and an award of 3 approximately $850,000 to the settlement administrator. (See Lester Decl. ¶ 27; 4 Sostrin Decl. ¶ 16; Fee Mot. 22; Geraci Decl. ¶ 24.) 5 1. 6 Litigation expenses are generally recoverable as part of a class action 7 settlement. See In re Immune Response Sec. Litig., 497 F. Supp. 2d 1166, 1177–78 8 (S.D. Cal. 2007) (finding that costs such as filing fees, photocopy costs, travel 9 expenses, postage, telephone and fax costs, computerized legal research fees, and 10 mediation expenses are relevant and necessary expenses in class action litigation). 11 Class counsel persuasively argued that their litigation expenses were reasonably 12 incurred and necessary to the litigation. The litigation fees appear reasonable in 13 relation to the settlement amount, and included mediation fees, deposition costs, travel 14 expenses, expert fees, and invoices relating to distribution of the class notice by 15 AT&T. (Sostrin Decl. ¶ 16; Supp. Expl..) Class counsel does not seek reimbursement 16 for every expense incurred. (Supp. Expl. 1 n.1; id. at 2.) Most of the litigation fees 17 (approximately $53,765.00) relate to invoices for fees paid to Plaintiffs’ expert, Jeff 18 Hansen. (See Supp. Expl. 2; Supp. Declaration of Timothy J. Sostrin (“Supp. Sostrin 19 Decl.”), Ex. A, ECF Nos. 204-1–204-2.). 20 expenses in the amount of $75,980.30 reasonable. Litigation Expenses Therefore, the Court finds litigation 21 2. 22 The settlement administrator’s fee of approximately $850,000 on a $8.8 million 23 settlement also appears reasonable. It is also less than originally predicted, given the 24 lower claim rate. The settlement administrator was required to oversee notice to more Settlement Administrator’s Fee 25 26 27 28 4 Class Counsel initially sought $76,825.97 in litigation expenses. (Fee Mot. 22.) However, at the Court’s request, Class Counsel reviewed and corrected the submitted expenses, and accordingly adjusted the requested amount downward to $75,980.30. (Supp. Explanation of Litig. Costs (“Supp. Expl.”) 1 n.1, ECF No. 204.) 22 1 than one million class members, maintain a database of responses with personal 2 consumer information, set up a website, purchase Facebook advertising, and field calls 3 from potential class members. Therefore, the amount of the settlement fund set aside 4 for the settlement administrator is reasonable. 5 C. 6 Incentive Award Class Counsel requests an incentive award of $10,000 for the lead plaintiff. 7 (Fee Mot. 22–23.) Martin, as the lead plaintiff, sat for deposition, regularly 8 communicated with his attorneys, submitted a declaration in support of the motion for 9 class certification, and appeared at a hearing on Defendant’s Motion to Change 10 Venue. (Declaration of David Martin (“Martin Decl.”) ¶ 3.) “Generally, in the Ninth 11 Circuit, a $5,000 incentive award is presumed reasonable.” Bravo v. Gale Triangle, 12 Inc., No. CV 16–03347 BRO (GJSx), 2017 WL 708766, at *19 (C.D. Cal. Feb. 16, 13 2017) (citing Harris v. Vector Mktg. Corp., No. C–08–5198 EMC, 2012 WL 381202, 14 at *7 (N.D. Cal. Feb. 6, 2012)). 15 substantiate a claim for twice the presumed award. 16 REDUCES the incentive award to $6,250, which is justified by Martin’s appearance 17 at deposition, declarations, and appearance at a hearing. VI. 18 Martin provides no explanation that would Accordingly, the Court CONCLUSION 19 For the foregoing reasons, the Court OVERRULES the objections of Beck 20 (ECF No. 194) and Kron (ECF No. 191); GRANTS the Motion for Final Approval of 21 Class Settlement (ECF No. 196); GRANTS, IN PART the Motion for Attorneys’ 22 Fees and Costs (ECF No. 188); and DENIES the Petition for Disbursement of Funds 23 (ECF No. 197). 24 25 26 27 28 IT IS SO ORDERED. September 24, 2018 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 23
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