Haidee Estrella v. Freedom Financial Network LLC et al, No. 3:2009cv03156 - Document 288 (N.D. Cal. 2012)
Court Description: ORDER GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND PLAINTIFFS' MOTION FOR ATTORNEYS' FEES, EXPENSES AND INCENTIVE AWARDS 274 278 285 286 (Illston, Susan) (Filed on 10/1/2012)
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Haidee Estrella v. Freedom Financial Network LLC et al Doc. 288 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 8 9 HAIDEE ESTRELLA, an individual, and ANGELICA ARITA, an individual, on behalf of themselves and others similarly situated United States District Court For the Northern District of California 10 11 12 13 14 15 16 Plaintiffs, v. No. CV 09-03156 SI ORDER GRANTING FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND PLAINTIFFS’ MOTION FOR ATTORNEYS’ FEES, EXPENSES AND INCENTIVE AWARDS FREEDOM FINANCIAL NETWORK, LLC; FREEDOM DEBT RELIEF, INC.; FREEDOM DEBT RELIEF, LLC; GLOBAL CLIENT SOLUTIONS, LLC; ROCKY MOUNTAIN BANK AND TRUST; ANDREW HOUSSER; and BRADFORD STROH Defendants. / 17 On September 28, 2012, the Court held a hearing on plaintiffs’ motion for final approval of the 18 class action settlement, as well as plaintiffs’ motion for award of attorneys’ fees and expenses and 19 incentive awards. For the following reasons, the Court GRANTS final approval to the settlement and 20 GRANTS plaintiffs’ motion for attorneys’ fees and expenses and incentive awards. 21 22 BACKGROUND 23 Plaintiffs initiated this case in Orange County, California Superior Court on December 29, 2008. 24 Thereafter, the defending parties removed this case to the Central District of California based on federal 25 question and supplemental jurisdiction, 28 U.S.C. §§ 1331 & 1367(a). On July 9, 2009 the case was 26 transferred to the Northern District pursuant to 28 U.S.C. § 1404(a). Plaintiffs’ complaint sought redress 27 from all defendants on behalf of themselves and all consumers nationwide who paid defendants 28 Dockets.Justia.com 1 Freedom Financial Network, LLC, Freedom Debt Relief, Inc., and Freedom Debt Relief, LLC 2 (“Freedom Defendants”) for debt settlement services during the four years preceding the filing of the 3 initial complaint. Plaintiffs asserted four separate claims against defendants based upon alleged 4 violations of federal and California state law: Count One, California Unfair Competition Law, Cal. Bus 5 & Prof. Code §§ 17200 et seq.; Count Two, Credit Repair Organization Act, 15 U.S.C. § 1679 et seq.; 6 Count Three, California Consumers Legal Remedies Act, Cal. Civ. Code §§ 1750 et seq.; and Count 7 Four, common law negligence purportedly based on a statutory duty owed to plaintiffs to “contact 8 creditors” under Cal. Fin. Code § 12315.1. On June 2, 2010 the Court certified a class defined as follows: “All consumers nationwide who 10 United States District Court For the Northern District of California 9 paid [the Freedom Defendants] for debt reduction services during the four years proceeding filing of the 11 complaint, who opened a [special purpose account] with [Rocky Mountain Bank & Trust] and [Global 12 Client Solutions, LLC], and did not receive a full refund of fees from [the Freedom Defendants].” On 13 October 25, 2010, this class definition was amended to exclude residents of the state of Washington. 14 After class certification, both parties filed motions for summary judgment, which the Court denied on 15 March 14, 2011. 16 After the United States Supreme Court issued its decision in AT&T Mobility LLC v. Concepcion, 17 131 S.Ct. 1740 (2011) in April 2011, the Freedom Defendants filed a motion to compel arbitration of 18 named plaintiffs, which the Court granted on July 5, 2012. On October 3, 2011, the Court granted 19 plaintiffs’ motion to amend the complaint in order to add two new class representatives. Thereafter the 20 Freedom Defendants moved to compel arbitration with respect to the new plaintiffs and to decertify the 21 class. 22 After several settlement conferences, on December 6, 2011, plaintiffs filed a motion for 23 preliminary approval of a class action settlement between plaintiffs and two of the defendants in this 24 case: Global Client Solution, LLC (“GCS”) and Rocky Mountain Bank & Trust (“RMBT”). Dkt. 239. 25 According to the agreement (“RMBT Settlement”), GCS and RMBT would pay the class $500,000 as 26 a full and final settlement between the parties, to be deposited into a settlement fund, and pursuant to 27 Court approval, fees, costs, and administrative expense to be paid from that fund. What remained in the 28 fund would then be added to any amounts received from the remaining defendants (“Freedom 2 1 Defendants”) by settlement or judgment and then distributed to the class pursuant to a process approved 2 by the Court. Alternatively, if no settlement or judgment could be obtained from the Freedom 3 Defendants, any amounts remaining in the settlement fund would be distributed to Cy Pres. 4 On January 24, 2012, the Court granted Freedom Defendants’ motion to compel arbitration and 5 decertify the class. The Court also granted preliminary approval of the RMBT Settlement with respect 6 to the amount being paid by RMBT and GCS. However, the Court requested additional briefing on how 7 the settlement funds would be distributed. Before the parties could address those issues, the Freedom 8 Defendants and plaintiffs agreed to a class action settlement on February 14, 2012, and plaintiffs filed 9 a motion for preliminary approval of class action settlement on May 9, 2012. Dk. 269. Under the United States District Court For the Northern District of California 10 terms of Class Settlement, as defined in the Stipulation of Settlement (Dkt. 269-1), the Freedom 11 Defendants agreed to pay $1,400,000 to resolve claims against them, in addition to the $500,000 RMBT 12 and GCS had previously agreed to in order to settle the claims against them. The Settlement Class 13 encompasses all persons nationwide who: (i) were customers of any of the Freedom Defendants; (ii) 14 opened a special purpose account or similar account with RMBT (or another bank) administered by 15 GCS; (iii) paid fees to any of the Freedom Defendants for debt reduction services at any time from 16 December 28, 2004 through the date of the Judgment; and (iv) did not receive a full refund of fees paid 17 to the Freedom Defendants. Excluded from the Settlement Class are those Persons who timely and 18 validly request exclusion from the Settlement Class and those Persons who were residents of the state 19 of Washington at the time they signed agreements for debt reduction services with any of the Freedom 20 Defendants. 21 would be paid from the Settlement Fund. What remains in the Fund would be disbursed to Class 22 Members who submit a claim and will be apportioned to the Class pro rata, based on the amount of net 23 fees (fees net of refunds) paid by each respective claimant to the Freedom Defendants for debt 24 settlement services. 25 In exchange for the relief described above, the Freedom Defendants and each of their related and 26 affiliated entities would receive a full release of all claims which have been made or could have been 27 made herein based upon or arising from the facts recited herein (“Released Claims” as defined in ¶ 1.24 28 of the Stipulation of Settlement). Also under the Class Settlement, all administration costs, costs of suit, and attorneys fees 3 1 On May 24, 2012, this Court preliminarily approved the Class Settlement. On June 25, 2012, 2 notice of the settlement was disseminated to the Class. As of the filing of the instant motions, 5,102 3 Class members have submitted claims for reimbursement from the Settlement Fund. Under the 4 apportionment plan, it is expected that the average class member will receive approximately $185 from 5 the Settlement Fund after the payment of administration expenses, attorneys fees, and costs. 6 7 DISCUSSION Now before the Court is plaintiffs’ motion for final approval of the class settlement, and 9 plaintiffs’ motion for attorneys’ fees, expenses and incentive payment. The Court finds that defendant 10 United States District Court For the Northern District of California 8 provided notice consistent with the Court’s preliminary approval order, and that notice satisfied due 11 process and Federal Rule of Civil Procedure 23(e). 12 comprehensive and targeted notice to approximately 87,912 class members and also posted the relevant 13 material on the settlement website. See Thompson Decl. (Dkt. 284-2). The notice (1) fully and 14 accurately informed class members about the lawsuit and settlement, (2) provided sufficient information 15 so that class members were able to accept the benefits offered, opt out and pursue their own remedies, 16 or object to the proposed settlement, (3) provided procedures for class members to file written objections 17 to the proposed settlement, to appear at the hearing, and to state objections to the proposed settlement, 18 and (4) provided the time, date and place of the final fairness hearing. The Claims Administrator disseminated 19 The Court also finds that the Class Settlement is fair, reasonable and adequate. The Court, 20 pursuant to In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 947 (9th Cir. 2011), has examined 21 the settlement for collusion and finds that the settlement appears to be the product of serious, informed, 22 non-collusive negotiations. The Stipulation of Settlement was negotiated at arms-length by experienced 23 counsel who did not put their interests ahead of the class, as shown by, inter alia, the declaration of 24 Stuart C. Talley, attorney for the plaintiffs and class, attesting to the non-collusive nature of the 25 negotiations and the fact that the parties continued to prepare for trial as they negotiated the settlement. 26 Talley Decl. ¶ 9 (Dkt. 284-1). 27 The Court also finds that the Class Settlement provides the class a similar, perhaps even better, 28 recovery than that which it could have achieved if plaintiffs were successful on the merits. Because the 4 class has been decertified, each class member would be required to litigate his or her case individually 2 in binding arbitration if this settlement is not approved. See Dkt. 257 (“Order Granting Motion to 3 Compel and Decertify the Class; Granting Preliminary Approval of Settlement.”) The amount each 4 would be seeking will typically be less than $3,000 and there would be filing fees and other 5 administrative expenses associated with AAA arbitration. Talley Decl. ¶ 11. Given this expense 6 relative to the amount at stake, it is doubtful that any class member would be able to retain an attorney 7 to aid them in this process. Id. Thus, if the settlement is not approved, it is unlikely that many – or 8 perhaps any -- class members will ever establish liability against the defendants. By contrast, approval 9 of the settlement will actually guarantee class members’ some financial recovery. On average, class 10 United States District Court For the Northern District of California 1 members will receive $185 (Talley Decl. ¶ 10), which is better than the alternative – recovering nothing 11 in uncertain arbitration. 12 The Court has considered the documents styled as objections submitted by Mr. Millette and Ms. 13 Carey. Dkts. 282, 283. The parties have stipulated that both objectors will be permitted to opt out 14 (Dkts. 285, 286). Therefore, the Court need not address these objections. 15 16 As such, the Court finds the settlement appropriate for final approval under Federal Rule of Civil Procedure 23(e). 17 Plaintiffs’ counsel seeks an award of $633,333 for attorneys’ fees and expenses (one-third of the 18 $1.9 million settlement fund). The Court has reviewed plaintiff’s motion and supporting declarations, 19 and finds that the requested amounts are reasonable under the circumstances of this case, the risk 20 involved in the litigation, and the exceptional result achieved for the class in the settlement. See 21 generally Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975). Class counsel worked 22 2991.5 hours for a lodestar of $2,105,895. Dkt. 278 at 2. But class counsel seeks a negative multiple 23 of .30, in requesting far less fees than it worked. Moreover, 33% of the settlement fund is reasonable 24 in light of the prevailing fees that have been awarded in similar cases. Markham Decl. ¶ 25(Dkt. 278-1). 25 Plaintiffs’ counsel also seeks an incentive payment of $3,000 each for plaintiffs Estrella and Artia, and 26 $1000 each for plaintiffs Hall and Mays. The Court finds that this amount is fair and reasonable in light 27 of plaintiffs’ risks in commencing this action as the class representatives and the time and effort spent 28 by plaintiffs in litigating this action. See Markham Decl. ¶ 13, 28. 5 1 Based on the foregoing, IT IS HEREBY ORDERED THAT: 2 1. Settlement class members. As was preliminarily approved by this Court, it is affirmed that the class members are defined as all persons nationwide who: (i) were customers of any of the 4 Freedom Defendants; (ii) opened a special purpose account or similar account with RMBT (or another 5 bank) administered by GCS; (iii) paid fees to any of the Freedom Defendants for debt reduction services 6 at any time from December 28, 2004 through the date of the Judgment; and (iv) did not receive a full 7 refund of fees paid to the Freedom Defendants. Excluded from the Settlement Class are those Persons 8 who timely and validly request exclusion from the Settlement Class and those Persons who were 9 residents of the state of Washington at the time they signed agreements for debt reduction services with 10 United States District Court For the Northern District of California 3 any of the Freedom Defendants. Additionally, the Settlement Class includes individuals who signed 11 up with the Freedom Defendants and GCS after June 2, 2010 (the date of the prior class certification 12 order). 13 2. Binding effect of order. This Order applies to all claims or causes of action settled under 14 the Class Settlement, and binds all Class Members including those who did not properly request 15 exclusion under the Preliminary Approval of Class Settlement and Class Certification Order. This order 16 does not bind persons who filed timely and valid requests for exclusion. 17 3. Release. Plaintiffs and all Settlement Class members who did not properly request 18 exclusion are: (1) deemed to have released and discharged defendants from all liability as defined in the 19 Class Settlement; and (2) barred and permanently enjoined from asserting, instituting, or prosecuting, 20 either directly or indirectly, the settled claims. 21 4. 22 Settlement Fund. 23 5. Attorneys’ fees and costs. Class counsel are awarded $633,333 to be paid from the Incentive award. Plaintiffs Estrella and Artia are awarded $3,000 each as an incentive 24 award, and plaintiffs Hall and May are awarded $1000 each as an incentive award. Incentive awards 25 are to be paid from the Settlement Fund. 26 6. Court’s jurisdiction. Pursuant to the Class Settlement, “final” means when the last of the 27 following with respect to the Final Order and Judgment Approving Class Settlement shall occur: (1) the 28 expiration of time to file a motion to alter or amend the Judgment under Federal Rule of Civil Procedure 6 59(e) has passed without any such motion having been filed; (2) the expiration of the time in which to 2 appeal the Judgment has passed without any appeal having been taken, which date shall be deemed to 3 be thirty (30) days following entry of the Judgment, unless the date to take such an appeal has been 4 extended by Court order or otherwise; and (3) if such motion to alter or amend is filed or if an appeal 5 is taken, immediately after the determination of that motion or appeal so that it is no longer subject to 6 any further judicial review or appeal whatsoever, whether by reason of affirmance by a court of last 7 resort, lapse of time, voluntary dismissal of the appeal, or otherwise, and in such a manner as to permit 8 the consummation of the Class Settlement substantially in accordance with the terms and conditions of 9 the Stipulation of Settlement. An “appeal” shall include any petition for a writ of certiorari or other writ 10 United States District Court For the Northern District of California 1 that may be filed in connection with approval or disapproval of the Class Settlement but shall not 11 include any appeal that concerns the issues of attorneys’ fees, reimbursement of costs or stipends to the 12 Class Plaintiffs. 13 14 IT IS SO ORDERED. 15 16 Dated: October 1, 2011 SUSAN ILLSTON United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28 7
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