Maxin v. RHG & Company, Inc., No. 3:2016cv02625 - Document 11 (S.D. Cal. 2017)

Court Description: ORDER Granting 6 Motion Prelimanary Approval of Class Action Settlement. Final Approval Hearing set for 9/28/2017 at 01:30 p.m. in Courtroom 4D before Judge Janis L. Sammartino. Signed by Judge Janis L. Sammartino on 2/27/2017. (dxj)
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 HEATHER MAXIN, individually and on behalf of all others similarly situated, v. ORDER GRANTING MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT RHG & COMPANY, INC., (ECF No. 6) Plaintiff, 13 14 15 Case No.: 16CV2625 JLS (BLM) Defendant. 16 17 18 Presently before the Court is Plaintiff’s Motion for Preliminary Approval of Class 19 Action Settlement (“Prelim. Settlement Mot.”). (ECF No. 6.) Because the Preliminary 20 Settlement Motion is unopposed, the Court vacated oral argument on the matter and took 21 it under submission without oral argument pursuant to Civil Local Rule 7.1(d). (ECF No. 22 10.) After reviewing Plaintiff’s arguments and the law, the Court concludes that the 23 settlement is fundamentally fair, reasonable, and adequate, and therefore GRANTS the 24 Preliminary Settlement Motion. 25 GENERAL BACKGROUND 26 Plaintiff has filed a Class Action Complaint (“CAC”) for damages and injunctive 27 relief. (ECF No. 1.) Plaintiff alleges that Defendant—“an American ‘pharmaceutical grade 28 and professional strength supplements’ manufacturer that conducts business through 1 16CV2625 JLS (BLM) 1 Internet sales and mail orders, and a numerous pharmaceutical and supplement stores 2 within the United States,” (Compl. ¶ 11)—“made, and continues to make, affirmative 3 misrepresentations regarding its Products, including the Vitamin D3 product purchased by 4 Plaintiff, it manufactures, markets and sells[,]” (id. ¶ 12). Specifically, Plaintiff alleges that 5 “Defendant packaged, advertised, marketed, promoted, and sold its Products as ‘Made in 6 the USA,’ ” (id.), in violation of California Civil Code section 1750, et seq., (id. ¶¶ 50– 7 62); California Business & Professions Code section 17533.7, (id. ¶¶ 63–68); California 8 Business and Professions Code section 17200, et seq., (id. ¶¶ 69–84). 9 In June 2015, Plaintiff sent Defendant a notice letter pursuant to California Civil 10 Code § 1782. (Kazerounian Decl. Ex. 1 (“Settlement Agreement”), § II.C, ECF No. 6-3.) 11 The following month, “Plaintiff sent Defendant a draft of the proposed complaint, alleging 12 claims” under the CLRA, the UCL, and the FAL. (Prelim. Settlement Mot. 3). In October, 13 the Parties “participated in a full day of mediation” before the Honorable Leo S. Papas, a 14 retired Federal Magistrate Judge, and Defendant later produced information “in response 15 to informal discovery requests by Plaintiff’s counsel, including a confirmatory discovery 16 request in the form of special interrogatories.” (Id.) Specifically, “Defendant produced 17 figures regarding the total sales of the Products, the approximate class size, Defendant’s 18 finances and other information that help determine the appropriate notice for the Class.” 19 (Id.) “Based upon the investigation, analysis, and discovery conducted by Class Counsel, 20 as well as information obtained through arm’s-lengths negotiations at the time of 21 mediation, the Parties have agreed to settle the claims in the Action on a nationwide basis 22 under the terms and conditions memorialized in th[e] [Settlement] Agreement.” (Id.) 23 SETTLEMENT TERMS 24 The Parties have submitted a comprehensive settlement document with 25 approximately twenty-two pages of substantive terms, (see generally Settlement 26 Agreement), and several methods of class notice, (ECF Nos. 6-4 (long-form notice), 6-5 27 (claim form), 6-9 (postcard notice), 6-10 (short-form notice), 6-11 (pharmacy notice)). The 28 Settlement Class is defined as: 2 16CV2625 JLS (BLM) All Persons who purchased one or more of the Products [i.e., those “that contained an unqualified ‘Made in the USA’ label or were otherwise represented as being ‘Made in the USA,’ including on Defendant’s website, brochures, and/or any other marketing materials[,]” (Settlement Agreement § III.A.27),] in the United States within the Class Period (i.e., August 1, 2012 through the date the Court issues the Preliminary Approval Order). Excluded from the Class are Defendant, its officers, directors, or employees, and the immediate family members. Also excluded is any judge who may preside over this case and their immediate family members and employees, as well as all persons who are validly excluded from the Settlement. 1 2 3 4 5 6 7 8 9 (Prelim. Settlement Mot. 3; see also Settlement Agreement § III.A.9.) This includes 10 approximately 4,665 putative Class Members Defendant has been able to identify as well 11 as “numerous others who purchased Vital Nutrients’ products through third party 12 distributors, healthcare practitioners, and other retailers . . . .” (Prelim. Settlement Mot. 3– 13 4.) Defendant estimates that “91% of its sales [are] to healthcare practitioners or 14 distributors” rather than direct-to-consumer sales, (Petrarca Decl. ¶ 2, ECF No. 6-15), and 15 that it “shipped approximately 2,426,024 units of Vital Nutrients products” during the class 16 period, “not all of which contained a ‘Made in USA’ label, and some of which third parties 17 have confirmed with Certificates of Analysis that they were made in the USA[,]” (id. ¶ 3). 18 The Settlement Agreement provides for a common fund of $900,000 to be used to 19 pay: 20 21 22 23 (i) the Cash Awards, (ii) the incentive award to Plaintiff . . . , (iii) the Attorneys’ Fees Award, which includes litigation costs of Class Counsel, (iv) costs of administering the notice, the Claims, and the Settlement, and (v) taxes due in connection with the Gross Settlement Fund and Net Settlement Fund prior to distribution to the Class. 24 25 (Settlement Agreement § III.B.1.) Class Members will be entitled to anywhere from $6.00 26 to $150.00. (See id. § III.B.2.) “Specifically, Class Members who submit a Valid Claim 27 without Adequate Proof of Purchase shall receive $6.00 per Product, up to a maximum of 28 5 Products per Person; Class Members who have proof of having purchased more than 5 3 16CV2625 JLS (BLM) 1 Products and submit a Valid Claim accompanied by Adequate Proof of Purchase shall 2 receive $6.00 per Product, up to a maximum of 25 Products per Person.” (Id. § III.B.2.(a)– 3 (b).) 4 If the combined monetary value of class member claims are in excess of the fund 5 amount then “the amount to each Class Member shall be reduced on a pro rata basis.” (Id. 6 § III.B.1.(d).) If the common fund exceeds the combined monetary value of class member 7 claims, or if there are any unclaimed funds, then the excess “shall be delivered to a cy pres 8 recipient selected by the parties and approved by the Court.” (Id. § III.B.1.(e)–(f).) 9 Additionally, Defendant has “already commenced shipping its Products with revised 10 labeling that conforms to the terms of the Settlement” and has “deleted any ‘Made in USA’ 11 representation from its website.” (Id. § III.B.3(a).) Defendant will continue this course of 12 conduct. (Prelim. Settlement Mot. 4–5.) 13 RULE 23 SETTLEMENT CLASS CERTIFICATION 14 Before granting preliminary approval of a class action settlement agreement, the 15 Court must first determine whether the proposed class can be certified. Amchem Prods. v. 16 Windsor, 521 U.S. 591, 620 (1997) (indicating that a district court must apply “undiluted, 17 even heightened, attention [to class certification] in the settlement context” in order to 18 protect absentees). 19 Class actions are governed by Federal Rule of Civil Procedure 23. In order to certify 20 a class, each of the four requirements of Rule 23(a) must first be met. Zinser v. Accufix 21 Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir. 2001). Rule 23(a) allows a class to be 22 certified only if: 23 24 25 26 27 (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. 28 4 16CV2625 JLS (BLM) 1 Next, in addition to Rule 23(a)’s requirements, the proposed class must satisfy the 2 requirements of one of the subdivisions of Rule 23(b). Zinser, 253 F.3d at 1186. Here, 3 Plaintiff seeks to certify the Settlement Class under subdivision Rule 23(b)(3), which 4 permits certification if “questions of law or fact common to class members predominate 5 over any questions affecting only individual class members,” and “a class action is superior 6 to other available methods for fairly and efficiently adjudicating the controversy.” The 7 Court addresses each of these requirements in turn. 8 I. Rule 23(a)(1): Numerosity 9 Federal Rule of Civil Procedure 23(a)(1) requires that a class must be “so numerous 10 that joinder of all members is impracticable.” “[C]ourts generally find that the numerosity 11 factor is satisfied if the class comprises 40 or more members and will find that it has not 12 been satisfied when the class comprises 21 or fewer.” Celano v. Marriott Int’l, Inc., 242 13 F.R.D. 544, 549 (N.D. Cal. 2007). 14 Here, the proposed Settlement Class consists of at least 4,665 individuals, and there 15 are many other potential class members scattered across the nation. (Petrarca Decl. ¶¶ 2– 16 3.) Accordingly, joinder of all members would be impracticable for purposes of Rule 17 23(a)(1), and the numerosity requirement is therefore satisfied. 18 II. Rule 23(a)(2): Commonality 19 Federal Rule of Civil Procedure 23(a)(2) requires that there be “questions of law or 20 fact common to the class.” Commonality requires that “the class members ‘have suffered 21 the same injury.’ ” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349–50 (2011) (quoting 22 Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 (1982)). “The existence of shared legal 23 issues with divergent factual predicates is sufficient, as is a common core of salient facts 24 coupled with disparate legal remedies within the class.” Hanlon v. Chrysler Corp., 150 25 F.3d 1011, 1019 (9th Cir. 1998). 26 Here, all common questions revolve around whether Defendant’s labeling of its 27 products as “Made in USA” were in violation of California law and negatively impacted 28 /// 5 16CV2625 JLS (BLM) 1 the class members. Accordingly, it is appropriate for these issues to be adjudicated on a 2 class-wide basis, and Rule 23(a)(2) is satisfied. 3 III. Rule 23(a)(3): Typicality 4 To satisfy Federal Rule of Civil Procedure 23(a)(3), Plaintiff’s claims must be 5 typical of the claims of the Class. The typicality requirement is “permissive” and requires 6 only that Plaintiff’s claims “are reasonably coextensive with those of absent class 7 members.” Hanlon, 150 F.3d at 1020. “The test of typicality ‘is whether other members 8 have the same or similar injury, whether the action is based on conduct which is not unique 9 to the named plaintiffs, and whether other class members have been injured by the same 10 course of conduct.’ ” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) 11 (quoting Schwartz v. Harp, 108 F.R.D. 279, 282 (C.D. Cal. 1985)). “[C]lass certification 12 should not be granted if ‘there is a danger that absent class members will suffer if their 13 representative is preoccupied with defenses unique to it.’ ” Id. (citation omitted). 14 Here, Plaintiff is an individual whose claims allegedly arise out of Defendant’s same 15 underlying “Made in USA” product labeling as those claims pertaining to the proposed 16 Settlement Class. (Compl. ¶¶ 14–17.) Accordingly, Plaintiff’s claims are typical of the 17 claims of the members of the proposed Settlement Class, thus satisfying Rule 23(a)(3). 18 IV. Rule 23(a)(4): Adequacy 19 Federal Rule of Civil Procedure 23(a)(4) requires that the named representatives 20 fairly and adequately protect the interests of the class. “To satisfy constitutional due 21 process concerns, absent class members must be afforded adequate representation before 22 entry of judgment which binds them.” Hanlon, 150 F.3d at 1020 (citing Hansberry v. Lee, 23 311 U.S. 32, 42–43 (1940)). To determine legal adequacy, the Court must resolve two 24 questions: “(1) do the named plaintiffs and their counsel have any conflicts of interest with 25 other class members, and (2) will the named plaintiffs and their counsel prosecute the 26 action vigorously on behalf of the class?” Id. 27 Here, there is no reason to believe that the named representative and Class Counsel 28 have any conflict of interest with the proposed Settlement Class members. (See Maxin 6 16CV2625 JLS (BLM) 1 Decl. ¶ 10, ECF No. 6-13; Kazerouninan Decl. ¶¶ 36–38, ECF No. 6–2.) There is also no 2 reason to believe that the named representative and Class Counsel have thus far failed to 3 vigorously investigate and litigate this case. Plaintiff has retained competent counsel, who 4 has conducted pre-suit investigation, research, and informal discovery in this case. (Prelim. 5 Settlement Mot. 3.) Furthermore, Class Counsel have significant class action litigation 6 experience, are knowledgeable about the applicable law, and will continue to commit their 7 resources to further the interests of the Class. (Kazerounian Decl. ¶¶ 46–61.) Accordingly, 8 the named representative and Class Counsel adequately represent the proposed Settlement 9 Class members, and Rule 23(a)(4)’s adequacy requirement is met. 10 V. Rule 23(b)(3) 11 Federal Rule of Civil Procedure 23(b)(3) permits certification if “questions of law 12 or fact common to class members predominate over any questions affecting only individual 13 class members,” and “a class action is superior to other available methods for fairly and 14 efficiently adjudicating the controversy.” 15 A. 16 “The Rule 23(b)(3) predominance inquiry tests whether the proposed classes are 17 sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., 521 U.S. 18 at 623. “Rule 23(b)(3) focuses on the relationship between the common and individual 19 issues.” Hanlon, 150 F.3d at 1022. Predominance 20 Here, the common issue of whether Defendant’s product labeling was in violation 21 of California law predominates over any individual issues such as the extent to which 22 individual class members relied on the labeling in deciding to purchase the products and 23 which of Defendant’s specific products Class Members purchased. (See Prelim. Settlement 24 Mot. 13.) Further, for purposes of settlement, Class Members are not required to prove any 25 evidentiary or factual issues that could arise in litigation. Accordingly, the predominance 26 requirement of Rule 23(b)(3) is satisfied. 27 /// 28 /// 7 16CV2625 JLS (BLM) 1 B. 2 The final requirement for certification pursuant to Federal Rule of Civil Procedure 3 23(b)(3) is “that a class action [be] superior to other available methods for fairly and 4 efficiently adjudicating the controversy.” The superiority inquiry requires the Court to 5 consider the four factors listed in Rule 23(b)(3): 6 7 8 9 10 Superiority (A) the class members’ interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action. 11 12 See also Zinser, 253 F.3d at 1190. A court need not consider the fourth factor, however, 13 when certification is solely for the purpose of settlement. See True v. Am. Honda Motor 14 Co., 749 F. Supp. 2d 1052, 1066 n.12 (C.D. Cal. 2010); see also Amchem, 521 U.S. at 620 15 (“Confronted with a request for settlement-only class certification, a district court need not 16 inquire whether the case, if tried, would present intractable management problems, for the 17 proposal is that there be no trial.”). The superiority inquiry focuses “ ‘on the efficiency and 18 economy elements of the class action so that cases allowed under [Rule 23(b)(3)] are those 19 that can be adjudicated most profitably on a representative basis.’ ” Zinser, 253 F.3d at 20 1190 (quoting 7A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal 21 Practice and Procedure § 1780, at 562 (2d ed. 1986)). A district court has “broad discretion” 22 in determining whether class treatment is superior. Kamm v. Cal. City Dev. Co., 509 F.2d 23 205, 210 (9th Cir. 1975). 24 Here, Class Members’ claims involve the same issues arising from the same factual 25 bases. If Class Members’ claims were considered on an individual basis, potentially 26 thousands of cases would follow a similar trajectory, and each would come to a similar 27 result. Furthermore, individual cases would consume a significant amount of the Court’s 28 and the Class Members’ resources. It is also likely that Class Members would not pursue 8 16CV2625 JLS (BLM) 1 litigation on an individual basis due to the high costs of pursuing individual claims. The 2 interests of the Settlement Class Members in individually controlling the litigation are 3 minimal, especially given that Defendant’s same product labeling would be at issue. Given 4 all of the above, class treatment is the superior method of adjudicating this controversy, 5 and the superiority requirement of Rule 23(b)(3) is met. 6 VI. Conclusion 7 For the reasons stated above, the Court finds certification of the Settlement Class 8 proper under Rule 23(b)(3). Accordingly, the Settlement Class is CERTIFIED for 9 settlement purposes only. 10 RULE 23 PRELIMINARY FAIRNESS DETERMINATION 11 Having certified the Settlement Class, the Court must next make a preliminary 12 determination as to whether the proposed settlement is “fair, reasonable, and adequate” 13 pursuant to Federal Rule of Civil Procedure 23(e)(1)(C). Relevant factors to this 14 determination include: 15 The strength of the plaintiffs’ case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offered in settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence of a governmental participant; and the reaction of the class members to the proposed settlement. 16 17 18 19 20 Hanlon, 150 F.3d at 1026. Furthermore, due to the “dangers of collusion between class 21 counsel and the defendant, as well as the need for additional protections when the 22 settlement is not negotiated by a court designated class representative,” any “settlement 23 approval that takes place prior to formal class certification requires a higher standard of 24 fairness.” Id. Additionally, although in the present case the Court has not been presented 25 with formal applications for class counsel’s attorney fees or class service awards, the Court 26 nonetheless considers these potential fees because they form part of the settlement 27 agreement. 28 /// 9 16CV2625 JLS (BLM) 1 I. Strength of Plaintiff’s Case 2 In order to succeed on the merits, Plaintiff would have to prove that Defendant’s 3 product labeling violated California law. (See generally CAC.) Defendant denies all 4 Plaintiff’s allegations, believes it has meritorious defenses to all of Plaintiff’s claims, and 5 maintains that its products and all of its representations and labeling were in compliance 6 with all applicable laws. (Settlement Agreement § II.C.) Plaintiff’s Counsel, however, 7 believes Plaintiff has a strong case and that the $900,000 proposed settlement is “in part 8 due to the strength of Plaintiff’s claims.” (Prelim. Settlement Mot. 19; see also 9 Kazerounian Decl. ¶¶ 42–43.) Additionally, the Settlement Agreement is the result of 10 arm’s-length negotiations conducted over several months, including each Party’s 11 individual discovery and valuation of the case and one full-day mediation session before 12 an experienced mediator. (Prelim. Settlement Mot. 1–3.) Given this disagreement and 13 neutral third-party evaluation of the same, the Court thus finds that this factor weighs in 14 favor of the $900,000 settlement being fair, reasonable, and adequate. 15 II. Risk, Expense, Complexity, and Likely Duration of Further Litigation 16 Were the case to proceed to further litigation rather than settlement, the Parties 17 would each bear substantial risk and a strong likelihood of protracted and contentious 18 litigation. Even though the Parties have agreed to settle this action, they fundamentally 19 disagree regarding the validity of Plaintiff’s claims. (Settlement Agreement § II.) 20 Additionally, the Parties document a number of risks in litigating Plaintiff’s claims— 21 including an expert survey assessment “that the ‘Made in USA’ language was not material 22 to [the majority of] class members[,]” (id. § II.D)—and thus argue that the present 23 Settlement affords class members at least some compensation where there might be none. 24 Indeed, the fact that Defendant disputes all aspects of Plaintiff’s claims, and might contend 25 that the California statutes have recently been amended “in a way that [could] diminish[] 26 the value of the claims asserted in this Action[,]” (Prelim. Settlement Mot. 20), suggests 27 that these issues would be vigorously (and therefore costly) litigated were there to be 28 /// 10 16CV2625 JLS (BLM) 1 further litigation. Given the foregoing, this factor weighs in favor the settlement being fair, 2 reasonable, and adequate. 3 III. Risk of Maintaining Class Action Status Throughout Trial 4 The Parties dispute whether the classes can be validly certified in the absence of the 5 Settlement Agreement. (See id. at 19–20.) Implicit in this disagreement is the likelihood of 6 initial challenges to class certification and the potential for decertification motions even if 7 class status is granted. Weighed against the fact that Defendant does not object to a finding 8 that the class elements are met for purposes of this settlement, this factor also weighs in 9 favor of the settlement being fair, reasonable, and adequate. 10 IV. Amount Offered in Settlement 11 Defendant has agreed to pay $900,000 to settle this lawsuit. This amounts to 12 potential value to each class member (i.e., $6–$150 per member) that “is arguably more 13 than the value representing a reduction in Defendant’s product’s value due to the alleged 14 false advertising, which would otherwise be highly contested and require expert testimony 15 to determine.” (Id. at 20.) Further, the value offered compares favorably to many other 16 “similarly approved settlements, some of which only offer vouchers or discounts.” (Id.; see 17 id. n.4 (collecting similar, lower-award-value cases that were approved).) Although there 18 are a great many potential class members—and thus great potential recovery—given the 19 foregoing and the slim chance of Class Members otherwise individually seeking recovery, 20 this factor nonetheless weighs in favor of settlement. 21 V. Extent of Discovery Completed and Stage of Proceedings 22 Prior to the agreed-upon settlement, the Parties engaged in informal discovery, 23 including analysis of Defendant’s allegedly non-compliant products and locating putative 24 Class Members from Defendant’s sales records. (Id. at 1–4; 21–22.) And as discussed, the 25 Parties engaged a neutral third-party mediator who fully examined and discussed with each 26 party the strengths and weakness of each party’s case. (Id. at 3.) Both Class Counsel and 27 Defense Counsel gained significant knowledge of the relevant facts and law throughout the 28 discovery process and through independent investigation and evaluation. Accordingly, it 11 16CV2625 JLS (BLM) 1 appears the Parties have entered into the Settlement Agreement with a strong working 2 knowledge of the relevant facts, law, and strengths and weaknesses of their claims and 3 defenses. Given all of the above, this factor weighs in favor of the proposed settlement 4 being fair, reasonable, and adequate. 5 VI. Experience and Views of Counsel 6 “The recommendations of plaintiffs’ counsel should be given a presumption of 7 reasonableness.” Boyd v. Bechtel Corp., 485 F. Supp. 610, 622 (N.D. Cal. 1979). And 8 here, Class Counsel believes the Settlement Agreement is fair, reasonable, adequate, and 9 in the best interest of the Settlement Class. (Id. at 22.) Furthermore, in the present case the 10 presumption of reasonableness is warranted based on Class Counsel’s expertise in complex 11 litigation, familiarity with the relevant facts and law, and significant experience negotiating 12 other class and collective action settlements. (Kazerounian Decl. ¶¶ 46–61.) Given the 13 foregoing, and according the appropriate weight to the judgment of these experienced 14 counsel, this factor weighs in favor the proposed settlement being fair, reasonable, and 15 adequate. 16 VII. Settlement Attorney Fees Provision 17 In the Ninth Circuit, a district court has discretion to apply either a lodestar method 18 or a percentage-of-the-fund method in calculating a class fee award in a common fund case. 19 Fischel v. Equitable Life Assur. Soc’y of U.S., 307 F.3d 997, 1006 (9th Cir. 2002). When 20 applying the percentage-of-the-fund method, an attorneys’ fees award of “twenty-five 21 percent is the ‘benchmark’ that district courts should award . . . .” In re Pac. Enters. Sec. 22 Litig., 47 F.3d 373, 379 (9th Cir. 1995) (citing Six (6) Mexican Workers v. Ariz. Citrus 23 Growers, 904 F.2d 1301, 1311 (9th Cir. 1990)); Fischel, 307 F.3d at 1006. However, a 24 district court “may adjust the benchmark when special circumstances indicate a higher or 25 lower percentage would be appropriate.” In re Pac. Enters. Sec. Litig., 47 F.3d at 379 26 (citing Six (6) Mexican Workers, 904 F.2d at 1311). “Reasonableness is the goal, and 27 mechanical or formulaic application of either method, where it yields an unreasonable 28 result, can be an abuse of discretion.” Fischel, 307 F.3d at 1007. 12 16CV2625 JLS (BLM) 1 In the present case, the Settlement Agreement specifies that Defendant will not 2 oppose Class Counsel’s request to the Court for approval of attorney fees in the amount of 3 $270,000. (Settlement Agreement § III.I.) This would be approximately thirty percent of 4 the $900,000 common fund— five percent more than the Ninth Circuit benchmark. 5 Although the Court does not conclude that the attorney fee provision is fatal to preliminary 6 approval of the settlement, the Court notes that counsel will need to address in their formal 7 attorney fee application any arguments supporting the heightened award. Additionally, the 8 Court will carefully scrutinize any class member objections to the proposed thirty-percent 9 award. 10 VIII. Class Representative Service Award Provision 11 The Ninth Circuit recognizes that named plaintiffs in class action litigation are 12 eligible for reasonable incentive payments. Staton v. Boeing Co., 327 F.3d 938, 977 (9th 13 Cir. 2003). The district court must evaluate each incentive award individually, using “ 14 ‘relevant factors includ[ing] the actions the plaintiff has taken to protect the interests of the 15 class, the degree to which the class has benefitted from those actions, . . .[and] the amount 16 of time and effort the plaintiff expended in pursuing the litigation . . . .’ ” Id. (citing Cook 17 v. Niedert, 142 F.3d 1004, 1016 (7th Cir. 1998)). 18 In the present case, the Settlement Agreement provides an incentive award of up to 19 $5,000 to the Class Representative. (Settlement Agreement § III.I.) Plaintiff Heather Maxin 20 declares “that she “understand[s] the obligations of serving as a Class Representative” and 21 has “and will adequately . . . represent the interest of the putative class.” (Maxin Decl. ¶ 7, 22 ECF No. 6-13.) Ms. Maxin has thus far “met with [her] attorneys for the initial consultation, 23 participated in calls regarding fact-finding efforts with [her] attorneys, [and] made [her]self 24 available telephonically for a full day of mediation in case [she] was needed . . . .” (Id.) 25 Given the foregoing, the Court concludes that the current Settlement Agreement Class 26 Representative Payment provision should not bar preliminary approval of the Settlement 27 Agreement. 28 /// 13 16CV2625 JLS (BLM) 1 2 3 4 IX. Conclusion For the reasons stated above, Plaintiff’s Preliminary Settlement Motion is GRANTED. NOTICE OF CLASS CERTIFICATION AND SETTLEMENT 5 Pursuant to Federal Rule of Civil Procedure 23(c)(2)(B), “[f]or any class certified 6 under Rule 23(b)(3) the court must direct to class members the best notice that is 7 practicable under the circumstances, including individual notice to all members who can 8 be identified through reasonable effort.” Because the Court has determined that 9 certification is appropriate under Rule 23(b)(3), the mandatory notice procedures required 10 by Rule 23(c)(2)(B) must be followed. 11 Where there is a class settlement, Federal Rule of Procedure 23(e)(1) requires the 12 court to “direct notice in a reasonable manner to all class members who would be bound 13 by the proposal.” “Notice is satisfactory if it ‘generally describes the terms of the settlement 14 in sufficient detail to alert those with adverse viewpoints to investigate and to come forward 15 and be heard.’ ” Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 962 (9th Cir. 2009) (quoting 16 Churchill Vill., LLC v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004)); see also Grunin v. 17 Int’l House of Pancakes, 513 F.2d 114, 120 (8th Cir. 1975) (“[T]he mechanics of the notice 18 process are left to the discretion of the court subject only to the broad ‘reasonableness’ 19 standards imposed by due process.”). 20 In the present case, the Parties have agreed to notify the Class by four distinct 21 methods: “(1) by mailing or emailing Direct Notice, (2) by establishing a Settlement 22 Website and toll-free number, (3) by providing notice to the Pharmacies that sell 23 Defendant’s Products and requesting that they post a copy of the Short-Form Notice on 24 their websites and in their stores, and (4) by Publication Notice” in USA Today. (Prelim. 25 Settlement Mot. 5–7; see also Settlement Agreement § III.C–D.) In particular, each notice 26 method directs putative Class Members to the website www.RHGsettlement.com, which 27 will contain “the Long-Form Notice, the Agreement, the Complaint, a Claim Form that can 28 be downloaded, the ability to make a claim online, and any additional relevant documents 14 16CV2625 JLS (BLM) 1 as later determined.” (Prelim. Settlement Mot. 6–7.) The proposed Long-Form Notice 2 explains, in part: (i) the nature of the action; (ii) the definition of class certified; (iii) the 3 class claims, issues, and defenses; (iv) the proposed Class Member Settlement amounts; 4 (v) that class members may timely object to the proposed Settlement; (vi) that the court 5 will exclude from the class any member who requests exclusion; (vii) the time and manner 6 for requesting exclusion; and (viii) the binding effect of a class judgment on class members 7 under Rule 23(c)(3). (See generally Long Form Notice, ECF No. 6-4.) 8 Having thoroughly reviewed the jointly drafted Notice, the Court finds that the 9 method and content of the Notice comply with Rule 23. Accordingly, the Court approves 10 the Parties’ proposed notification plan. 11 12 13 14 CONCLUSION For the reasons stated above, the Court GRANTS Plaintiff’s Preliminary Settlement Motion. The Court ORDERS as follows: 1. PRELIMINARY APPROVAL OF PROPOSED SETTLEMENT 15 AGREEMENT: The Settlement Agreement is preliminarily approved as fair, reasonable, 16 and adequate pursuant to Federal Rule of Civil Procedure 23(e). 17 2. PRELIMINARY CLASS CERTIFICATION: Pursuant to Federal Rule of 18 Civil Procedure 23(b)(3), the action is preliminarily certified, for settlement purposes only, 19 as a class action on behalf of the following Settlement Class Members with respect to the 20 claims asserted in this Action: 21 Settlement Class: All Persons who purchased in the United States between August 22 1, 2012 and the date on which this Order is electronically docketed one or more of 23 Defendant’s products that contained an unqualified “Made in USA” label or were 24 otherwise represented as being “Made in USA,” including on Defendant’s website, 25 brochures, and/or any other marketing materials. 26 3. CLASS REPRESENTATIVE, CLASS COUNSEL, AND SETTLEMENT 27 ADMINISTRATOR: Pursuant to Federal Rule of Civil Procedure 23, the Court 28 preliminarily certifies, for settlement purposes only, Plaintiff Heather Maxin as the Class 15 16CV2625 JLS (BLM) 1 Representative, and Abbas Kazerounian of the Kazerouni Law Group, A.P.C. and Joshua 2 B. Swigart of Hyde & Swigart as Class Counsel. Additionally, the Court approves and 3 appoints Kurtzman Carson Consultants as the Claims Administrator. 4 4. NOTICE: The Court preliminarily approves the form and substance of the 5 proposed notice set forth in the Settlement Agreement and the notice forms and 6 corresponding documents attached as Exhibits 1A, 1B, 1F, 1G, and 1H to the Preliminary 7 Settlement Motion. (ECF Nos. 6-3, 6-4, 6-5, 6-9, 6-10, 6-11.) The form and method for 8 notifying the Class Members of the Settlement and its terms and conditions satisfies the 9 requirements of Federal Rules of Civil Procedure 23(c)(2)(B) and 23(e). The Court 10 concludes that the Notice Procedure submitted by the Parties constitutes the best notice 11 practicable under the circumstances. As provided in the Settlement Agreement, the Claims 12 Administrator shall provide notice to the Class Members and respond to Class Member 13 inquiries. 14 Within thirty (30) days of the date on which this Order is electronically docketed, 15 the Parties SHALL disseminate the notices in the forms attached as Exhibits 1A, 1B, 1F, 16 1G, and 1H to the Preliminary Settlement Motion and in the manner and form provided in 17 the Settlement Agreement and Preliminary Settlement Motion. 18 5. FINAL APPROVAL HEARING: Judge Sammartino shall conduct a Final 19 Approval Hearing on September 28, 2017 at 221 W. Broadway, Courtroom 4D, 4th Floor, 20 San Diego, CA 92101, to consider: 21 22 23 24 a. the fairness, reasonableness, and adequacy of the proposed settlement; b. Plaintiff’s request for the award of attorney fees and costs; c. the Class Representative enhancement; d. dismissal with prejudice of the class action with respect to Defendant; and e. the entry of final judgment in this action. 25 26 At the Final Approval Hearing, the Parties shall also be prepared to update the Court on 27 any new developments since the filing of the motion, including any untimely submitted 28 opt-outs, objections, and claims, or any other issues as the Court deems appropriate. 16 16CV2625 JLS (BLM) 1 2 The date and time of the Final Approval Hearing shall be included in the Notice to be mailed to all class members. 3 6. MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT: 4 No later than twenty-one days before the Final Approval Hearing, the Parties shall file a 5 Motion for Final Approval of Class Action Settlement. The Motion shall include and 6 address any objections received as of the filing date. In addition to the class certification 7 and settlement fairness factors, the motion shall address the number of putative Settlement 8 Class members who have opted out and the corresponding number of claims. 9 7. APPLICATION FOR ATTORNEY FEES, COSTS, AND CLASS 10 REPRESENTATIVE SERVICE AWARD: No later than twenty-one days before the 11 Final Approval Hearing, Class Counsel shall file an application for attorney fees, costs, 12 and a class representative service award. Class Counsel shall provide documentation 13 detailing the number of hours incurred by attorneys in litigating this action, supported by 14 detailed time records, as well as hourly compensation to which those attorneys are 15 reasonably entitled. Class Counsel should address the appropriateness of any upward or 16 downward departure in the lodestar calculation, as well as reasons why a percentage-of- 17 the-fund approach to awarding attorney fees may be more preferable in this case. Class 18 Counsel should be prepared to address any questions the Court may have regarding the 19 application for fees at the Final Approval Hearing. 20 8. MISCELLANEOUS PROVISIONS: In the event the proposed settlement is not 21 consummated for any reason, the conditional class certification shall be of no further force 22 or effect. Should the settlement not become final, the fact that the Parties were willing to 23 stipulate to class certification as part of the settlement shall have no bearing on, nor be 24 admissible in connection with, the issue of whether a class should be certified in a non- 25 settlement context. 26 /// 27 /// 28 /// 17 16CV2625 JLS (BLM) 1 9. SCHEDULE: The Court orders the following schedule for further proceedings: 2 Event 3 Defendant to Deliver Class List to Within 5 days of the date on which 4 Claims Administrator. 5 Claims Administrator to (1) Establish Within 28 days of the date on which 6 Website and Toll-Free Number; (2) this Order is electronically docketed. 7 8 9 10 Date this Order is electronically docketed. Publish Notice of Settlement in USA Today; and (3) Send Notice to Class Members and Relevant Pharmacies. Last Day for Class Members to File No later than 90 days from the date on Request for Exclusion from which this Order is electronically 11 Settlement. 12 Last Day for Class Members to File No later than 90 days from the date on 13 Objections to the Settlement. docketed. which this Order is electronically docketed. 14 15 Last Day for Class Members to File No later than 100 days from the date 16 Notice of Intention to Appear at Final on which this Order is electronically 17 18 19 20 Approval Hearing. docketed. Parties to File Motion for Final No later than 21 days before the Final Approval. Approval Hearing. Class Counsel to File Motion for No later than 21 days before the Final Attorney Fees and 21 Final Approval Hearing. and Approval Hearing. Incentive Award. 22 Costs 23 24 25 Thursday, September 28, 2017 at 1:30 p.m. IT IS SO ORDERED. Dated: February 27, 2017 26 27 28 18 16CV2625 JLS (BLM)