Garcia v. Harborstone Credit Union, No. 3:2021cv05148 - Document 41 (W.D. Wash. 2023)
Court Description: ORDER granting Plaintiff's 33 Motion for Preliminary Approval of Class Action Settlement. Signed by Judge Lauren King. (SS)
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Garcia v. Harborstone Credit Union Doc. 41 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 8 9 10 11 12 13 14 MARIO PAREDES GARCIA, Plaintiff, v. HARBORSTONE CREDIT UNION, CASE NO. 3:21-cv-05148-LK ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Defendant. 15 16 This matter comes before the Court on Plaintiff Mario Paredes Garcia’s Motion for 17 Preliminary Approval of Class Action Settlement. Dkt. No. 33. Defendant Harborstone Credit 18 Union does not oppose the motion. The Court has read and considered the parties’ Amended 19 Settlement Agreement and supporting materials, Dkt. Nos. 40, 40-1–40-4, which the parties 20 submitted following a hearing on the motion on June 2, 2023, Dkt. No. 39. For the reasons 21 discussed below, the Court GRANTS Mr. Paredes Garcia’s motion for preliminary settlement 22 approval and APPROVES the proposed notice plan in accordance with this Order. 23 24 ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 1 Dockets.Justia.com 1 2 I. A. BACKGROUND Factual Background and Procedural History 3 Mr. Paredes Garcia is a noncitizen resident of Gig Harbor who was granted protected status 4 under the Deferred Action for Childhood Arrivals (“DACA”) program. Dkt. No. 1-1 at 1–2. 5 Harborstone is a Washington-based credit union with a majority of its branches located in Pierce 6 County. Id. at 2. On April 22, 2020, after previously being granted an auto loan from Harborstone, 7 Mr. Paredes Garcia submitted a second auto loan application that Harborstone denied because his 8 DACA documentation was “not acceptable for financing.” Id. at 10–14. Prior to the denial, 9 Harborstone conducted a “hard” credit pull of Mr. Paredes Garcia’s consumer credit score, 10 resulting in a six-point drop in his score. Id. at 8, 11 & n.31. Based on this experience, Mr. Paredes 11 Garcia claims that Harborstone engages in a policy and practice of (1) wrongfully denying DACA 12 participants and other noncitizen residents the opportunity to contract for credit in violation of 42 13 U.S.C. § 1981, and (2) wrongfully conducting hard credit pulls in violation of the Fair Credit 14 Reporting Act (“FCRA”), 15 U.S.C. § 1681, et seq. Id. at 15–16, 20–23. On January 26, 2021, Mr. 15 Paredes Garcia initiated this class action lawsuit against Harborstone in Pierce County Superior 16 Court on behalf of two sub-classes: one specifically pertaining to Section 1981 and one specifically 17 pertaining to FCRA. Id. at 16. 18 On March 1, 2021, Harborstone removed the action to federal court. Dkt. No. 1. After the 19 Court denied Harborstone’s motion to dismiss, Dkt. No. 15, the parties moved to stay the case in 20 in order to pursue early settlement, Dkt. No. 22. In October 2022, the parties reached an agreement 21 in principle, Dkt. No. 29, and in December 2022, they finalized a long form settlement agreement, 22 Dkt. No. 30. Thereafter, Mr. Paredes Garcia filed his unopposed motion for preliminary approval 23 of the settlement along with the parties’ initial settlement agreement, proposed notice, and other 24 supporting materials. Dkt. Nos. 33, 34-1–34-5. On June 2, 2023, the Court held a hearing on the ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 2 1 motion to address questions raised by the proposed settlement, see Dkt. Nos. 37–39, and the parties 2 submitted an amended agreement for the Court’s consideration on June 23, 2023, Dkt. No. 40-1. 3 B. Amended Settlement Agreement 4 They key terms of the settlement are as follows. 5 1. Class Definition 6 The class is defined as: 7 9 [a]ll individuals who resided in the United States at the time they applied for a loan from Harborstone Credit Union, and for whom Harborstone obtained a credit report, and whose applications were declined at any time between January 26, 2018, and August 31, 2021 for the reason that they had a tax identification number because they were not permanent residents of the United States. 10 Dkt. No. 40-1 at 2. 1 The parties indicate that this class is comprised of 249 members, assuming no 11 one decides to opt out. Id. at 3, 14; see also Dkt. No. 33 at 9. During the June 2, 2023 hearing, the 12 parties provided additional clarity on how Harborstone identified the class members by pulling 13 data based on loan application denials. 14 2. Class Compensation 15 Harborstone has agreed to pay $186,750 to establish a settlement fund, which will be 16 divided equally among the 249 class members into $750 check payments to be issued within 21 17 days of the settlement fund payment. Dkt. No. 40-1 at 3–4. For class members who submit valid 18 exclusions, the $750 check that class member would have received will be divided evenly among 19 the remaining class members who do not opt out. Id. at 4. Harborstone will separately provide up 20 to $25,000 for settlement administration costs. Id. at 3, 5. 8 21 22 23 24 1 Excluded from the Class are (a) the judge to whom this case is assigned and any member of the judge’s immediate family; (b) any officers, directors, agents, legal representatives, assignees, or successors of Harborstone Credit Union; (c) any entity in which Harborstone Credit Union has a controlling interest or that has a controlling interest in Harborstone Credit Union; and (d) any individual who has an active dispute with Harborstone Credit Union based on the facts asserted in Plaintiff’s Complaint, filed in Pierce County Superior Court on January 26, 2021. Id. ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 3 1 3. Changes to Harborstone’s Policies and Practices 2 Harborstone has agreed to implement the following changes to its policies and procedures: 3 (1) Harborstone Credit Union shall not maintain policies, practices, or guidelines that allow the evaluation of any person who is a non-United States citizen under any different guideline or standard than it would evaluate a person who is a United States citizen when considering whether to admit the person as a member or extend credit to the person; 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (2) Harborstone Credit Union shall not require an applicant to provide documentation showing the applicant can remain in the United States legally through the maturity date of a loan for which the applicant has applied; (3) Harborstone shall not consider an applicant's national origin, race, or immigration status as factors to evaluate creditworthiness, regardless of whether a person is a United States citizen; and (4) Harborstone shall maintain language in its policies confirming that it does not discriminate on account of race, color, or national origin. Dkt. No. 40-1 at 7. 4. Release In exchange for the aforementioned relief and to settle all claims raised in this action, class members will be bound by the following release: As of the Effective Date of this Amended Settlement Agreement, all Members of the Settlement Class, including Plaintiff, fully and finally release all claims that were or could have been brought against Harborstone Credit Union in the Action (as well as its respective predecessors, successors, assigns, employees, officers, directors, insurers, and/or heirs) based on the facts asserted in Plaintiff’s Complaint, filed in Pierce County Superior Court on January 26, 2021 (the “Release”). The scope of this Release shall be from January 26, 2018, to August 31, 2021. This Release specifically includes, but is not limited to, any claims for exemplary damages, statutory damages, compensatory damages, interest, fees, costs, attorneys’ fees, and all other claims made in the Action or that could have been made in the Action based on the allegations in Plaintiff’s Complaint. Dkt. No. 34-1 at 10; see also Dkt. No. 33 at 12–13. 5. Service Award Subject to Court approval, Harborstone has agreed to pay Mr. Paredes Garcia up to $5,000, separate and apart from the settlement fund, as an award for serving as class representative. Dkt. ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 4 1 No. 40-1 at 2, 5; see also Dkt. No. 33 at 10–11. 2 6. Attorneys’ Fees and Costs 3 Subject to Court approval and separate and apart from any other amount going toward 4 settlement, Harborstone has agreed to pay up to $150,000 in attorneys’ fees and costs to Mr. 5 Paredes Garcia’s counsel. Dkt. No. 40-1 at 2, 6; see also Dkt. No. 33 at 11–12. 6 7. Opt-Out and Objection Procedure 7 In order to opt out of the settlement, class members will be required to send written notice 8 to the settlement administrator via mail, email, or a form on the settlement website. See Dkt. No. 9 40-1 at 8–9, 20, 24–25; Dkt. No. 40 at 2. Otherwise, a settlement check will be sent to all class 10 members automatically. Dkt. No. 40-1 at 4, 23. Class members may also object to the settlement 11 via mail or email. Dkt. No. 40-1 at 9–10, 24–25. 12 II. DISCUSSION 13 Settlement of class actions “must be fair, adequate, and reasonable.” Dennis v. Kellogg 14 Co., 697 F.3d 858, 864 (9th Cir. 2012); see Fed. R. Civ. P. 23(e)(1)(B)(2). Under Federal Rule of 15 Civil Procedure 23(e), settling claims brought by a proposed class requires provisional 16 certification, notice to the class, and a fairness hearing before the court. In this case, for the reasons 17 set forth herein, the Court finds that provisional certification and notice are warranted and will 18 proceed to schedule a final fairness hearing. 19 A. Provisional Class Certification 20 To utilize Rule 23’s procedure for aggregating claims, plaintiffs must make two showings. 21 First, they “must establish ‘there are questions of law or fact common to the class,’ as well as 22 demonstrate numerosity, typicality and adequacy of representation.” Olean Wholesale Grocery 23 Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651, 663 (9th Cir. 2022) (en banc) (quoting Fed. 24 R. Civ. P. 23(a)). Second, plaintiffs must show that the class satisfies Rule 23(b) by demonstrating ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 5 1 “that the questions of law or fact common to class members predominate over any questions 2 affecting only individual members, and that a class action is superior to other available methods 3 for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P 23(b). In addition, “[t]he 4 criteria for class certification are applied differently in litigation classes and settlement classes.” 5 In re Hyundai & Kia Fuel Econ. Litig., 926 F.3d 539, 556 (9th Cir. 2019) (en banc). In the latter 6 context, manageability at trial is not a concern, but “a district court must give heightened attention 7 to the definition of the class or subclasses.” Id. at 556–57; accord Amchem Prod., Inc. v. Windsor, 8 521 U.S. 591, 620 (1997). 9 Here, the Court finds that Mr. Paredes Garcia has met his burden of showing that the 10 requirements of Rule 23(a) are met and that the class is maintainable under Rule 23(b) for purposes 11 of preliminary settlement approval. 12 1. Rule 23(a) 13 The class preliminarily satisfies the four prerequisites of Federal Rule of Civil Procedure 14 23(a) because Mr. Paredes Garcia has demonstrated numerosity, commonality, typicality, and 15 adequacy of representation. 16 (a) Numerosity 17 The proposed Class is comprised of 249 people identified through Harborstone’s records 18 and is therefore sufficiently numerous because “joinder of all members is impracticable.” Fed. R. 19 Civ. P. 23(a)(1); see Johnson v. City of Grants Pass, 50 F.4th 787, 803 (9th Cir. 2022) (numerosity 20 is generally satisfied when the class comprises 60 members or more). 21 (b) Commonality 22 Commonality is satisfied under Rule 23(a)(2) because there are numerous questions of law 23 and fact common to the class based on Harborstone’s alleged denial of loans to class members due 24 to citizenship status and pulling of their consumer credit reports without a permissible purpose. ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 6 1 Dkt. No. 1-1 at 18–19; see Abdullah v. U.S. Sec. Assocs., Inc., 731 F.3d 952, 957 (9th Cir. 2013) 2 (commonality can be satisfied by even a “single significant question of law or fact” (cleaned up)). 3 (c) Typicality 4 Typicality is satisfied under Rule 23(a)(3) because Mr. Paredes Garcia’s claims, like the 5 claims of the class, arise out of the same alleged common course of conduct by Harborstone: 6 wrongfully obtaining consumer credit reports for noncitizens residing in the United States even 7 though Harborstone would not extend credit to these individuals, and denying loan applications 8 because the applicants are noncitizens. Dkt. No. 1-1 at 15, 19; see also Wolin v. Jaguar Land Rover 9 N. Am., LLC, 617 F.3d 1168, 1175 (9th Cir. 2010) (“The purpose of the typicality requirement is 10 to assure that the interest of the named representative aligns with the interests of the class.” 11 (quoting Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992))). 12 (d) Adequacy 13 Adequacy is satisfied under Rule 23(a)(4) because Mr. Paredes Garcia will “fairly and 14 adequately protect the interests of the class.” His interests are coextensive with, and not 15 antagonistic to, those of the class members. Class counsel have extensive experience litigating 16 class actions and civil rights claims and have devoted a substantial amount of time investigating 17 the applicable law and underlying facts. See Dkt. No. 34 at 1–6. To date, Mr. Paredes Garcia and 18 his counsel have been prosecuting the action vigorously on behalf of the class. The Court is 19 satisfied that class counsel will continue to devote the necessary time and resources to obtain final 20 approval and ensure proper administration of the settlement. See Ellis v. Costco Wholesale Corp., 21 657 F.3d 970, 985 (9th Cir. 2011). 22 2. Rule 23(b)(3) 23 The Court also finds that the predominance and superiority requirements of Rule 23(b)(3) 24 are met for purposes of preliminary approval. ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 7 1 (a) Predominance 2 Predominance is satisfied because common questions present a significant aspect of the 3 case and can be resolved for all class members in a single adjudication. See Dkt. No. 1-1 at 18–19; 4 Hanlon v. Chrysler Corp., 150 F.3d 1011, 1022 (9th Cir. 1998). Moreover, approving the class- 5 wide settlement negotiated by the parties has important and desirable advantages of judicial 6 economy over numerous individual settlements. (b) Superiority 7 8 Superiority is satisfied because a class action in this context is superior to other available 9 methods for fair and efficient adjudication of the controversy. Provisionally certifying the class 10 and allowing the settlement to move through the approval process is superior to individual 11 lawsuits, conserves judicial resources, and promotes consistent and efficient adjudication. See 12 Hanlon, 150 F.3d at 1023 (a determination of superiority “involves a comparative evaluation of 13 alternative methods of dispute resolution”). 14 3. Class Representative and Class Counsel 15 In light of the above, the Court appoints Mr. Paredes Garcia as class representative and 16 Toby J. Marshall and Eric R. Nusser of Terrell Marshall Law Group PLLC as class counsel. See 17 Dkt No. 40-1 at 2; Dkt. No. 40-2 at 3; see also Fed. R. Civ. P. 23(c)(1)(B) (“An order that certifies 18 a class action must . . . appoint class counsel under Rule 23(g).”). The Court finds that counsel will 19 fairly and adequately represent the interests of the class, have worked to identify and investigate 20 potential claims, have the requisite experience and legal knowledge, and will commit the necessary 21 resources to representing the class. Fed. R. Civ. P. 23(g)(1), (4). 22 B. 23 24 Preliminary Settlement Approval Having found that provisional class certification is appropriate, the Court turns now to the substance of the parties’ proposed settlement. ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 8 1 1. Legal Standard 2 “The purpose of Rule 23(e) is to protect the unnamed members of the class from unjust or 3 unfair settlements affecting their rights.” In re Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th Cir. 4 2008). Before a district court approves a class action settlement, it must determine that the 5 settlement is “fundamentally fair, adequate and reasonable.” In re Heritage Bond Litig., 546 F.3d 6 667, 674–75 (9th Cir. 2008). And where the parties reach a class action settlement prior to class 7 certification, district courts apply “a higher standard of fairness and a more probing inquiry than 8 may normally be required under Rule 23(e).” Dennis, 697 F.3d at 864 (cleaned up). Pre- 9 certification settlement agreements “must withstand an even higher level of scrutiny for evidence 10 of collusion or other conflicts of interest than is ordinarily required under Rule 23(e),” because at 11 this stage, “there is an even greater potential for a breach of fiduciary duty owed the class during 12 settlement.” In re Bluetooth Headset Prod. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011). “This 13 more exacting review” helps “to ensure that class representatives and their counsel do not secure 14 a disproportionate benefit at the expense of the unnamed plaintiffs who class counsel had a duty 15 to represent.” Roes, 1-2 v. SFBSC Mgmt., LLC, 944 F.3d 1035, 1049 (9th Cir. 2019) (cleaned up). 16 At the preliminary approval phase, courts evaluate whether “the proposed settlement 17 appears to be the product of serious, informed, non-collusive negotiations, has no obvious 18 deficiencies, does not improperly grant preferential treatment to class representatives or segments 19 of the class, and falls within the range of possible approval.” Rollins v. Dignity Health, 336 F.R.D. 20 456, 461 (N.D. Cal. 2020); accord Zwicky v. Diamond Resorts Mgmt. Inc., 343 F.R.D. 101, 119 21 (D. Ariz. 2022); K.W. v. Armstrong, 180 F. Supp. 3d 703, 723 (D. Idaho 2016). “The proposed 22 settlement need not be ideal, but it must be fair and free of collusion, consistent with counsel’s 23 fiduciary obligations to the class.” Rollins, 336 F.R.D. at 461. In addition, courts may not “delete, 24 modify or substitute certain provisions. The settlement must stand or fall in its entirety.” Hanlon, ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 9 1 150 F.3d at 1026. 2 2. Analysis 3 The Court preliminarily approves the Amended Settlement Agreement and the terms set 4 5 6 forth therein, for the reasons discussed below. (a) Signs of Conflict or Collusion (i) Arm’s Length Negotiations 7 As an initial matter, the Court notes that the Amended Settlement Agreement appears to be 8 the result of serious, informed, and arm’s-length negotiations between attorneys versed in the legal 9 and factual issues of the case. See In re Apple Inc. Device Performance Litig., 50 F.4th 769, 782 10 (9th Cir. 2022) (“[W]hen a settlement precedes class certification, the district court must apply an 11 even higher level of scrutiny,” which “requires the court to look for and scrutinize any subtle signs 12 that class counsel have allowed pursuit of their own self-interests to infect the negotiations” 13 (cleaned up)). The record reflects that following the Court’s denial of Harborstone’s motion to 14 dismiss in August 2021, the parties exchanged substantial discovery and began engaging in good 15 faith settlement negotiations which lasted approximately one year. See Dkt. No. 33 at 16–17. The 16 parties also expounded upon their year-long negotiations during the June 2 motion hearing. Based 17 on the record before the Court, there are no indications that settlement negotiations were driven by 18 self-interest rather than the class’s interests. 19 However, the proposed agreement must also be examined for more “subtle signs” of 20 collusion, such as (1) counsel receiving a disproportionate distribution of the settlement; (2) the 21 parties negotiating a “clear sailing” arrangement; and (3) the parties creating a reverter that returns 22 unclaimed funds to the defendant. Roes, 1-2, 944 F.3d at 1049. 23 24 (ii) No Reversion; Cy Pres Beneficiaries With respect to the third factor, the Amended Settlement Agreement expressly provides ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 10 1 that “[t]here shall be no reversion to Harborstone Credit Union of any portion of the Settlement 2 Fund.” Dkt. No. 40-1 at 7. Moreover, the agreement mandates that if a class member’s $750 check 3 is not cashed within 180 days of mailing, the associated funds shall become “residual funds” and 4 re-disbursed evenly among two nonprofit organizations: the Mexican American Legal Defense 5 and Educational Fund (“MALDEF”) and the Northwest Justice Project (“NJP”). Id. at 6. 6 In this context, a cy pres award must qualify as “the next best distribution” to giving the 7 funds to class members. Dennis, 697 F.3d at 865. “Not just any worthy recipient can qualify as an 8 appropriate cy pres beneficiary”; there must be a “driving nexus between the plaintiff class and the 9 cy pres beneficiaries.” Id. (cleaned up). Such award must be “guided by (1) the objectives of the 10 underlying statute(s) and (2) the interests of the silent class members, and must not benefit a group 11 too remote from the plaintiff class.” Id. (cleaned up). 12 Counsel represents in their briefing and also affirmed during the motion hearing that 13 MALDEF has advocated for consumer rights on behalf of DACA recipients and other noncitizens 14 (including noncitizens who are not Latino) for many years, and that NJP litigates consumer and 15 immigration rights cases. Dkt. No. 33 at 19; Dkt. No. 34 at 9. Furthermore, the Amended 16 Settlement Agreement specifically directs MALDEF and NJP to use any residual funds received 17 “to advocate for consumer rights issues related to or affecting participants in the Deferred Action 18 for Childhood Arrivals program or other undocumented people living in the United States of 19 America.” Dkt. No. 40-1 at 6. Accordingly, the Court preliminarily finds that there is a sufficient 20 nexus between the cy pres beneficiaries and the settlement class. 21 (iii) Clear Sailing Arrangement and Proportionality 22 The Amended Settlement Agreement does include a clear sailing arrangement because 23 Harborstone has agreed not to object to a $150,000 fee request by class counsel. Id.; see Roes, 1- 24 2, 944 F.3d at 1049. “Although clear sailing provisions are not prohibited, they by their nature ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 11 1 deprive the court of the advantages of the adversary process in resolving fee determinations and 2 are therefore disfavored.” In re Bluetooth, 654 F.3d at 949. “Therefore, when confronted with a 3 clear sailing provision, the district court has a heightened duty to peer into the provision and 4 scrutinize closely the relationship between attorneys’ fees and benefit to the class, being careful to 5 avoid awarding unreasonably high fees simply because they are uncontested.” Id. at 948 (quotation 6 marks omitted). The Court notes that Harborstone has agreed to fund up to $150,000 for costs and 7 fees separately and such payment will not be deducted from the settlement fund. Dkt. No. 34-1 at 8 3. Even still, “agreement on attorneys’ fees should be viewed as a package deal” in so far as it 9 reflects “the defendant’s overall willingness to pay.” In re Bluetooth, 654 F.3d at 948–49 (cleaned 10 up); accord Roes, 1-2, 944 F.3d at 1051. Here, of the $366,750 total cash going toward settlement, 11 approximately 41% would go toward attorneys’ fees. 12 As the Court cautioned during the June 2 hearing, it will carefully scrutinize the 13 reasonableness of the requested attorneys’ fee award at the final approval stage to determine if it 14 is appropriate in this case. In re Bluetooth, 654 F.3d at 942. At this stage, however, the fee award 15 appears appropriate. Class counsel explained during the hearing that as of June 2, 2023, they had 16 incurred roughly $150,950 in fees and costs, and that they anticipate incurring a total of about 17 $175,000 in fees by the end of the case—meaning the award equates to a “slight haircut.” 18 Accordingly, the Court does not find that the clear sailing provision weighs against preliminary 19 approval. See Juarez v. Soc. Fin., Inc., No. 20-CV-03386-HSG, 2022 WL 17722382, at *5 (N.D. 20 Cal. Dec. 15, 2022). 21 (b) Settlement Range 22 “To determine whether a settlement falls within the range of possible approval, courts focus 23 on substantive fairness and adequacy and consider plaintiffs’ expected recovery balanced against 24 the value of the settlement offer.” Zwicky, 343 F.R.D. at 124 (cleaned up). Here, Harborstone will ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 12 1 pay $186,750 to be divided equally among the 249 class members. Dkt. No. 40-1 at 4. Counsel 2 states that “[w]hile it is difficult to ascertain the actual damages each Class Member may have 3 suffered by being denied for a loan by Harborstone, recent settlements in similar cases demonstrate 4 that the $750 awarded to Settlement Class Members is a substantial recovery.” Dkt. No. 33 at 17. 5 Upon further questioning at the motion hearing regarding how the parties estimated damages in 6 this case, counsel for Harborstone explained that the loan application amount does not necessarily 7 correlate to the damage amount because there are various factors, such as an applicant’s prior credit 8 history, that can influence the net damages associated with being denied a loan. Counsel notes that 9 in two similar cases brought in the Northern District of California, the district court approved 10 settlement awards of up to $300 and $100, respectively, for verified claims by nationwide class 11 members. Dkt. No. 33 at 18 (citing Peña v. Wells Fargo Bank, N.A., No. 19-CV-4065-MMC (N.D. 12 Cal. Jan. 8, 2021); Perez v. Wells Fargo & Co., Case No. 17-CV-00454-MMC, (N.D. Cal. Jan. 8, 13 2021)). When asked to discuss the difference between the proposed per-class-member award here 14 and the proposed award in Juarez v. Social Finance, Inc., Case No. 20-cv-03386-HSG (N.D. Cal.), 15 Harborstone’s counsel explained that the $750 settlement amount here accounts for the strengths 16 of its legal defenses to the FCRA and Section 1981 claims. Counsel for Mr. Paredes Garcia agreed 17 that the strength of claims and defenses led to the $750 proposed award, and added that the facts 18 of this case were more similar to the Wells Fargo cases than the Social Finance case. 19 In addition, Harborstone has agreed to change its lending policies such that noncitizens 20 will be evaluated for loan eligibility on the same terms as U.S. citizen applicants, and will not be 21 required to provide documentation showing they can legally remain in the United States through 22 the maturity date of the loan. Dkt. No. 40-1 at 7. With respect to the monetary value of this 23 prospective relief, Harborstone notes that in 2020, 84 class members applied for loans totaling 24 $2,399,123 with an average loan application amount of $28,560.99, and in 2021, 99 class members ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 13 1 applied for loans totaling $3,606,072 with an average loan application amount of $36,424.97. Dkt. 2 No. 40 at 2. 2 Accordingly, at this juncture, the Court finds that the minimum $750 settlement payment 3 4 per class member is within the range of possible approval. 5 (c) Preferential Treatment 6 At the preliminary approval stage, district courts must also evaluate whether the proposed 7 settlement “improperly grant[s] preferential treatment to class representatives or segments of the 8 class[.]” In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007). In this 9 case, all settlement class members “will receive the same settlement award of $750 and will have 10 the same opportunity to benefit from the prospective relief obtained.” Dkt. No. 33 at 27. And 11 though the Amended Settlement Agreement authorizes Mr. Paredes Garcia to seek a service award 12 of $5,000, such awards are commonplace and “intended to compensate class representatives for 13 work done on behalf of the class, to make up for financial or reputational risk undertaken in 14 bringing the action.” Rodriguez v. West Publ’g Corp., 563 F.3d 948, 958–59 (9th Cir. 2009). 15 Because the Court will ultimately consider the evidence presented at the final fairness 16 hearing and evaluate the reasonableness of any award request at that time, and in light of the 17 preliminary indicia that such award is warranted, see Dkt. No. 33 at 10–11, the Court finds no 18 basis to preclude preliminary approval on account of preferential treatment of class members. (d) Obvious Deficiencies 19 20 The Court also considers whether there are any obvious deficiencies in the settlement 21 agreement. “Obvious deficiencies in a settlement agreement include ‘any subtle signs that class 22 counsel have allowed pursuit of their own self-interests to infect the negotiations.’” Zwicky, 343 23 2 24 Harborstone calculates the average loan application amount in 2020 as $28,560.59, id., but that appears to be a typo; the correct amount is $28,560.99. ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 14 1 F.R.D. at 121 (quoting McKinney-Drobnis v. Oreshack, 16 F.4th 594 (9th Cir. 2021)). For the 2 reasons discussed herein, the Court finds no such deficiencies, and therefore finds that this factor 3 weighs in favor of preliminary approval. 4 C. Class Notice Plan 5 For class actions pursuant to Rule 23(b)(3), “the court must direct to class members the 6 best notice that is practicable under the circumstances, including individual notice to all members 7 who can be identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B). With respect to the 8 content of the notice itself, the notice must clearly and concisely state in plain, easily understood language: (i) the nature of the action; (ii) the definition of the class certified; (iii) the class claims, issues, or defenses; (iv) that a class member may enter an appearance through an attorney if the member so desires; (v) that the court will exclude from the class any member who requests exclusion; (vi) the time and manner for requesting exclusion; and (vii) the binding effect of a class judgment on members under Rule 23(c)(3). 9 10 11 12 13 Id. 14 The parties have agreed that a third-party settlement administrator, Simpluris, will issue 15 settlement notices via U.S. Mail and email (where class members’ email addresses are available) 16 in English and Spanish and maintain a website with the settlement notices. See Dkt. No. 40-1 at 3, 17 7–9; see also Dkt. No. 40 at 2. 3 Prior to mailing, Simpluris will verify class members’ addresses 18 using the National Change of Address database or a similar service. Dkt. No. 40-1 at 8. And to 19 ensure that Simpluris’ email messages do not get caught in spam filters, it will “run class members’ 20 email addresses through a database to ensure that the email address is valid.” Dkt. No. 40 at 2. 21 “This step helps prevent a large number of bounce backs, which can raise red flags for email 22 servers and increase the chances that notice emails will be errantly caught by a spam filter.” Id.; 23 3 24 Based on its colloquy with counsel during the June 2 hearing, the Court is satisfied that translation into additional languages is not necessary. ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 15 1 see also id. at 3 (“[Simpluris] has assured Class Counsel that, based on its experience, the notice 2 in this case has a very low chance of getting caught in class members’ spam filters.”). If mailed 3 notices are returned as undeliverable, Simpluris will utilize “skip-tracing resources to search for 4 updated mailing addresses, and if any are found, re-mail such notices[.]” Dkt. No. 40-1 at 8. 5 Simpluris will also send reminder notices via email to all class members with email addresses no 6 later than two business days after the motion for final approval is filed and notify class members 7 that said motion is available on the settlement website. Dkt. No. 40 at 2; see Dkt. No. 40-1 at 9. 8 As for the contents of the notice itself, counsel has attached an amended English-language 9 version to the Amended Settlement Agreement which addresses the Court’s concerns discussed 10 during the motion hearing. See Dkt. No. 40-1 at 19–26; Dkt. No. 40-3 at 17–24 (redlined version 11 of initial proposed notice). The revised notice explains (1) the nature of the action; (2) the class 12 definition; (3) Plaintiff’s claims and allegations and Harborstone’s denial of those allegations; 13 (4) the basic terms of the settlement; (5) how to opt out or object; (6) that class members may 14 retain their own counsel and appear through that counsel; and (7) the binding effect of a class 15 judgment. Dkt. No. 40-1 at 19–26. Notably, counsel has added a clause on the second page of the 16 notice indicating that regardless of whether a class member chooses to be excluded or object, they 17 may still attend the final approval hearing, as well as more express guidance that class members 18 may retain their own counsel. Dkt. No. 40-1 at 20, 24. The notice also now includes a description 19 of Harborstone’s policy changes resulting from the proposed settlement, and importantly, an 20 option to opt out via mail, email, or a form on the settlement website, or to object via mail or email. 21 Id. at 22–23, 24–25. Simpluris’s forthcoming website will also have copies of the relevant case 22 documents and instructions. See id. at 8–9. The notice further informs class members that class 23 counsel will file a motion with the Court for attorneys’ fees and costs, and that Mr. Paredes Garcia 24 will seek a service award of up to $5,000. Id. at 22. The Court thus finds the content of the notice ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 16 1 to be satisfactory. See Hyundai, 926 F.3d at 567 (“Notice is satisfactory if it generally describes 2 the terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate 3 and to come forward and be heard.” (cleaned up)). 4 Under Rule 23(h), class members must be given a full and fair opportunity to examine and 5 object to attorneys’ fees motion. In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988, 993– 6 94 (9th Cir. 2010). Although class counsel originally planned to grant class members 30 days to 7 opt out or object, Dkt. No. 34-1 at 4, the amended agreement now provides for a 60-day opt out 8 and objection period during which Plaintiff must file the motion for attorneys’ fees at least 30 days 9 before end of the 60-day period, Dkt. No. 40-1 at 4, 11. Moreover, as mentioned above, the parties’ 10 Amended Settlement Agreement and notice procedures now include a reminder notice via email 11 shortly after the filing of the motions for final approval. Id. at 9. Accordingly, as discussed on the 12 record at the hearing and pursuant to the parties’ Amended Settlement Agreement and proposed 13 notice, the Court orders the following notice schedule: 14 15 Deadline Deadline to mail Notices of Settlement July 24, 2023 (“Initial Mailing Date”) 16 Deadline for Plaintiff’s Motion for Final August 23, 2023 Approval and Attorneys’ Fees and Costs 17 18 19 20 21 22 Event Deadline to post Plaintiff’s Motion for Final 1 Business Day after Filing of Motion Approval and Attorney’s Fees and Costs on Settlement Website Deadline to send email reminder to Class 2 Business Days after Filing of Motion Members contacted via email to inform them that Plaintiff’s Motion for Final Approval and Attorney’s Fees and Costs is posted on Settlement Website Deadline for Class Members to postmark September 22, 2023 objections and exclusion requests (“Notice Deadline”) 23 Deadline for parties to file response to Class October 2, 2023 Member objections 24 Final Approval Hearing November 6, 2023 at 10:00 a.m. ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 17 1 The Court finds that with these changes, the proposed notice provides sufficient time for 2 class members to evaluate the proposed settlement and determine if they wish to be excluded or 3 object. 4 5 6 III. CONCLUSION Based on the foregoing, Plaintiff’s Motion for Preliminary Approval of Class Action Settlement, Dkt. No. 33, is GRANTED. 7 NOW, THEREFORE, IT IS HEREBY ORDERED: 8 1. 9 10 Unless otherwise provided herein, all capitalized terms below have the same meaning as set forth in the Amended Settlement Agreement. 2. The Court provisionally certifies the following Class for purpose of settlement: “All 11 individuals who resided in the United States at the time they applied for a loan from Harborstone 12 Credit Union, and for whom Harborstone obtained a credit report, and whose applications were 13 declined at any time between January 26, 2018, and August 31, 2021 for the reason that they had 14 a tax identification number because they were not permanent residents of the United States.” 15 16 17 18 3. For the reasons set forth above, the Class satisfies the four prerequisites of Federal Rule of Civil Procedure 23(a) (numerosity, commonality, typicality, adequacy). 4. For the reasons set forth above, the Class also satisfies the two requirements of Federal Rule of Civil Procedure 23(b)(3) (predominance and superiority). 19 5. The Court appoints Mario Paredes Garcia to serve as Class Representative. 20 6. The Court appoints Terrell Marshall Law Group PLLC as Class Counsel. 21 7. The Court preliminarily approves the Amended Settlement Agreement and the 22 terms set forth therein, including the amount of the Settlement Fund to be used to provide monetary 23 awards to the Settlement Class Members. 24 ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 18 1 2 8. The Court preliminarily approves the Service Award payment of $5,000 to the Class Representative. 3 9. 4 $150,000. 5 10. The Court preliminarily approves the attorneys’ fees and costs payment of The Court appoints Simpluris as Settlement Administrator, which shall fulfill the 6 Settlement Administration functions, duties, and responsibilities of the Settlement Administrator 7 as set forth in the Amended Agreement and this Order. The Court preliminarily approves the 8 payment of costs for Settlement Administration, up to $25,000. 9 11. The Court approves the form and content of the English language Amended 10 Settlement Notice substantially in the form attached as Exhibit A to the Amended Settlement 11 Agreement, Dkt. No. 40-1 at 18–26, and Orders the Settlement Administrator to translate the 12 English language Notice into Spanish and to provide both Notices to Class Members as set forth 13 in Section II.I of the Amended Agreement. 14 12. The Settlement Administrator shall comply with all notice requirements of Section 15 II.I of the Amended Agreement. In compliance with those sections, beginning no later than twenty- 16 one (21) days after entry of this Order (July 24, 2023), the Settlement Administrator shall cause 17 notice to be delivered in the manner set forth in the Agreement to all Class Members who have 18 been identified by the Parties’ counsel. 19 13. The Court finds that the Notices of Settlement and the manner of their 20 dissemination described in Section II.I of the Amended Agreement constitutes the best practicable 21 notice under the circumstances and is reasonably calculated, under all the circumstances, to apprise 22 Class Members of the pendency of this action, the terms of the Amended Agreement, and their 23 right to opt out or object to the settlement and appear at the final approval hearing. The Court finds 24 that the notice plan is reasonable, that it constitutes due, adequate, and sufficient notice to all ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 19 1 persons entitled to receive notice, and that it meets the requirements of due process, Fed. R. Civ. 2 P. 23(c), and any other applicable laws. 3 14. Settlement Class Members who wish to receive a Settlement Award payment from 4 the Settlement Fund need not take any action to receive a payment. Settlement Awards will be 5 distributed in accordance with Section II.B of the Amended Agreement. 6 15. Class Members who wish to exclude themselves from the settlement must do one 7 of the following: 8 a. Mail an exclusion request letter to the Settlement Administrator, postmarked 9 no later than September 22, 2023 (sixty (60) days after the Settlement 10 Administrator’s initial distribution of the Notices of Settlement (the “Initial 11 Mailing Date”)). To be valid, an exclusion request letter sent by mail must 12 include (1) the person’s name, address, and telephone number; (2) a statement 13 from the person clearly asking to be excluded (for example: “I want to be 14 excluded from the settlement in Paredes Garcia v. Harborstone Credit 15 Union”); and (3) the person’s signature; 16 b. Email an exclusion request to the Settlement Administrator, sent no later than 17 September 22, 2023 (sixty (60) days after the Initial Mailing Date). To be valid, 18 an exclusion request sent by email must include (1) the person’s name, address, 19 and telephone number; (2) a statement from the person clearly asking to be 20 excluded (for example: “I want to be excluded from the settlement in Paredes 21 Garcia v. Harborstone Credit Union”) (3) the person’s electronic signature (for 22 example: “Sincerely, John Doe”); or 23 c. Submit an exclusion request using the form on the settlement website no later 24 than September 22, 2023 (sixty (60) days after the Initial Mailing Date). To be ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 20 1 valid, an exclusion request submitted through the form on the settlement 2 website must include (1) the person’s name, address, and telephone number; 3 (2) an affirmation from the person clearly asking to be excluded (for example: 4 “I want to be excluded from the settlement in Paredes Garcia v. Harborstone 5 Credit Union”); and (3) an affirmation that the person submitting the form is 6 the Class Member whose name appears in the form or is otherwise authorized 7 to submit the form on the person’s behalf. 8 16. 9 following: Settlement Class Members who wish to object to the Settlement must do one of the 10 a. Mail an objection letter to the Settlement Administrator, postmarked no later 11 than September 22, 2023 (sixty (60) days after the Initial Mailing Date). 12 Objection letters submitted by mail must include (1) the person’s name, address, 13 and telephone number; (2) the name of the case, Paredes Garcia v. Harborstone 14 Credit Union, Civil Case No. 3:21 cv 5148 LK; (3) the reasons why the person 15 thinks the Court should not approve the settlement; (4) any supporting 16 documentation the person wishes the Court to consider; and (5) the person’s 17 signature; or 18 b. Email a written objection letter as an attachment to the Settlement 19 Administrator no later than September 22, 2023 (sixty (60) days after the Initial 20 Mailing Date). Objection letters submitted as attachments to an email must 21 include (1) the person’s name, address, and telephone number; (2) the name of 22 the case, Paredes Garcia v. Harborstone Credit Union, Civil Case No. 3:21 23 cv 5148 LK; (3) the reasons why the person thinks the Court should not 24 ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 21 1 approve the settlement; (4) any supporting documentation the person wishes the 2 Court to consider; and (5) the person’s signature. 3 4 Any objection not timely made in one of these two manners shall be waived and forever barred. 17. Class Counsel shall file their motion for final approval, including their request for 5 an award of attorneys’ fees and costs, no later than August 23, 2023 (thirty (30) days before the 6 “Notice Deadline”), sufficiently in advance of the expiration of the opt out and objection period 7 so that Class Members will have sufficient information to decide whether to opt out or object and, 8 if objecting, to make an informed objection. Class Counsel’s motion for final approval, including 9 their request for an award of attorneys’ fees and costs, shall be posted on the settlement website 10 no later than one (1) business day after filing. The Settlement Administrator shall send a reminder 11 notice via email to all Class Members who previously received notice via email and inform them 12 that Plaintiff’s motion for final approval has been posted on the settlement website no later than 13 two (2) business days after filing. 14 15 16 18. Class Counsel shall file their responses to any Class Member objections no later than October 2, 2023 (ten (10) days after the Notice Deadline). 19. A Final Approval Hearing shall be held before this Court on November 6, 2023 at 17 10:00 a.m., to determine whether the Amended Settlement Agreement is fair, reasonable, and 18 adequate and should be given final approval. The Court may postpone, adjourn, or continue the 19 Final Approval Hearing without further notice to the Settlement Class. After the Final Approval 20 Hearing, the Court may enter a Final Approval Order and final judgment in accordance with the 21 Amended Settlement Agreement, which will adjudicate the rights of the Class with respect to the 22 claims being settled. 23 24 ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 22 1 20. All proceedings before the Court are stayed pending final approval of the 2 settlement, except as may be necessary to implement the settlement or comply with the terms of 3 the Amended Agreement. 4 5 Dated this 3rd day of July, 2023. 6 A 7 Lauren King United States District Judge 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 ORDER GRANTING PLAINTIFF’S MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT - 23
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