Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. 828165-0
Richman, J.
A class action settles in 2003 for $13 million. The class is over 10 years old, and large, with some 650,000 members. Extensive—and expensive—efforts to locate class members, give them notice, and distribute the checks for the allowed claims result in over 404,000 members being sent settlement payments, at a cost of $1.7 million paid by the settling defendants as expressly agreed in the Settlement Agreement. But some 165,000 settlement checks go uncashed, leaving a $3.2 residue in the settlement fund. In 2006, plaintiffs move for a second payment to the some 240,000 class members who cashed their checks, and request that the $495,000 cost for this second payment also be borne by the settling defendants. The trial court ordered the second payment, but with the costs to be paid out of the settlement residue.
Plaintiffs appeal the cost aspect of the trial court’s order. We affirm.
I. BACKGROUND
A. The Lawsuit
This appeal arises out of the settlement of a class action filed against defendants Viacom, Inc., Viacom International Inc., Viacom Cablevision, and Tele-Vue Systems, Inc. (collectively, Viacom). The facts giving rise to the action are not particularly germane to the issue on appeal, and we describe them only generally.
In 1991 officials in various Northern California counties notified Viacom that its real property and business property taxes for the tax years beginning in 1987 were being increased because of a merger Viacom had entered into that year. Viacom objected to the increases, paid them under protest, filed legal challenges to them, and made applications for refunds of the increases. At the same time Viacom elected to pass certain of the increases through to its cable subscribers, and thereafter sent letters to the subscribers advising them that, if Viacom were successful in the tax refund cases, it would “review all the costs . . . and the taxes actually paid and make any appropriate adjustments to your bill.” Following enactment of federal legislation in 1992 and a rate reduction, Viacom discontinued the tax surcharge. Then, following the sale of certain of its cable assets, Viacom settled the tax refund cases, resulting in substantial refunds. Viacom set up a refund mechanism that returned a portion of the tax payments to the subscribers.
Claiming those refunds were inadequate, on June 29, 2000, Suzanne Guyette, A. William Citara, and Dana Conklin (plaintiffs) filed a complaint, “individually and on behalf of all others similarly situated and the general public,” seeking to recover “appropriate adjustments” for Viacom’s former customers in ten Northern California counties: San Francisco, Alameda, Contra Costa, Marin, Napa, Sonoma, Butte, Colusa, Shasta and Tehama. Various attacks on the pleadings led to several amended complaints, and the matter finally came to issue on the third amended complaint, which alleged six causes of action, for: (1) unfair competition (Bus. & Prof. Code § 17200); (2) Consumer Legal Remedies Act (Civil Code § 1750); (3) unjust enrichment/restitution; (4) constructive trust; (5) declaratory relief; and (6) common count (money had and received). Along the way the case was designated complex, (Cal. Rules of Court, rule 3.400) and was assigned to the Honorable Ronald M. Sabraw.
By motion filed October 5, 2001, plaintiffs sought class certification, which was granted in part by Judge Sabraw on February 11, 2002. In early 2003 plaintiffs moved to modify the class certification, which motion was also granted by Judge Sabraw, by order of March 18, 2003. This order certified various classes on a cause of action by cause of action basis—one class under the first cause of action, with two subclasses; one class under the second cause of action; and one class under the third through sixth causes of action, also with two subclasses. As discussed at some length below, these classes would include some 650,000 members.
Meanwhile, the case proceeded through discovery, including extensive document discovery, depositions of numerous percipient witnesses, and retention and depositions of expert witnesses. Significant pretrial motions were also filed, in anticipation of a June 2, 2003 trial date. And then the case settled.
B. The Settlement.
On May 16, 2003, following a lengthy mediation, the parties reached a settlement, which would come to be memorialized in a stipulation of settlement ultimately executed in early August (Settlement Agreement). The Settlement Agreement was 26 pages long, including the two signature pages, and necessarily comprehensive. Both sides rely on language in the Settlement Agreement in support of their positions here, which language will be discussed in detail in connection with the issue to which such language pertains. Suffice to note here that Section III of the Settlement Agreement, labeled “TERMS OF AGREEMENT AND SETTLEMENT,” set forth the essence of the agreement in Part IIIA: in consideration for a general release, “Viacom agrees to pay $13,000,000.00 (Thirteen Million Dollars and no cents) in cash (the “Settlement Payment”), and, in addition, shall pay all reasonable costs and expenses of: (i) providing notice, in the manner approved and ordered by the Court, to the Plaintiff Class; (ii) administering the Settlement, and (iii) of administering and distributing the Settlement Payment and any interest earned on the Settlement Payment (the “Settlement Fund”) in accordance with the Preliminary Approval Order and the Plan of Allocation (as hereinafter defined) and such other orders as the Court may enter (the “Notice and Administration Expenses”) . . . . Viacom shall have no separate or additional liability for Plaintiffs’ Attorneys’ Fees and Expenses beyond the specific provisions of this Paragraph. . . .”
Gilardi & Co. LLC (Gilardi), an experienced settlement administrator, was selected under the Settlement Agreement to administer the settlement. That administration was to be in accordance with the “Plan of Allocation of Settlement Proceeds” (plan of allocation) which was executed at the same time as the Settlement Agreement and, as quoted above, expressly referred to in it.
On August 8, 2003, acting on the joint application of both sides, Judge Sabraw issued an order preliminarily approving settlement and providing for notice, and set the matter for final settlement hearing on October 21, 2003.
Following the plan of allocation, claimants were separated into two groups: Group 1 consisted of Viacom subscribers during the period from October 1, 1991, through August 31, 1993; Group 2, Viacom subscribers after September 1, 1993 (but not subscribers from October 1, 1991, through August 31, 1993). Identifying the claimants who belonged in the two groups posed different challenges, and thus each set of claimants was determined by a separate methodology. Specifically:
As to Group I, Viacom provided Gilardi with records showing the names, addresses, and surcharges paid by all of the members in this Group. In light of the availability of this information, the plan of allocation provided that Group 1 class members would not have to file proofs of claim to establish their entitlement to share in the settlement fund. Rather, Gilardi mailed notices of settlement of class action to these class members, 649,308 in all. Of these original notices, 274,311 were returned as undeliverable. The United States Postal Service provided forwarding addresses for some 700 of the undeliverable notices, and notices were immediately remailed. Gilardi also performed a second address search which yielded updated addresses for 96,581 class members, and notices were mailed to these addresses as well, of which 10,919 were returned as undeliverable. Under the plan of allocation, all class members whose notices were returned and for whom no updated addresses were found were assigned an allowed loss of zero.
As to Group 2, Viacom had no records whatsoever for these people, not even the names and addresses of the subscribers. Group 2 members were thus notified of the settlement by publication, and any member who wanted to make a claim was required to file a claim form. One thousand four hundred forty-two potential Group 2 class members requested claim forms in response to the published notice, and Gilardi mailed notices and claim forms to them.
The matter came on for final approval on October 21, 2003. The record before Judge Sabraw revealed the extensive efforts that had been undertaken by Gilardi to that point, resulting in the initial mailing of almost 650,000 notices to class members at their last known addresses, over one third of which—some 230,000—had been received back as undeliverable. Gilardi recommended that further searches be done as to a portion of these 230,000 class members, those whose allowed loss was $10 or more. Gilardi further determined that it was not economically justifiable to spend money on address searches and remailings to those class members whose allowed loss was under $10.
Following the hearing, Judge Sabraw entered a final approval and judgment. He also entered two orders: (1) order approving the plan of allocation, and (2) order clarifying obligation to locate class members. The latter ordered Gilardi to proceed with the recommended procedure for conducting further searches of class members, and concluded with the following paragraph; “It Is Further Ordered that once the Settlement Administrator completes its further class member searches as referenced above, there shall be no obligation on the part of Viacom to pay the costs of any additional attempts to locate class members either before the distribution of the Settlement Funds to class members or thereafter.”
On December 1, 2004, plaintiffs filed a motion for order approving claims and authorizing distribution of settlement fund. The motion was accompanied by a declaration of Gilardi employee Ann Salazar, which summarized the results of Gilardi’s efforts, and based on which plaintiffs’ class counsel submitted that 404,042 class members were eligible for payment under Group 1 and 715 members under Group 2. Class counsel also recommended approval of the claimant lists so that each authorized claimant would receive payment in accordance with the plan of allocation, that is “pro rata, in the proportion that the Allowed Loss of such Authorized Class Member bears to the total of the aggregate Allowed Losses of all Authorized Class Members, as computed by the Claims Administrator pursuant to this plan of allocation.” As to Group 1, the allowed loss was computed using the formula in paragraph 8 of the plan of allocation. As to Group 2, the plan of allocation provided that each subscriber with a signed proof of claim form was assigned an allowed loss of $15.00.
Under the Settlement Agreement, class counsel’s attorneys fees were deducted from the $13 million, leaving the settlement fund with $8,326,054, including accrued interest. It was anticipated that additional interest of approximately $7,000 would accrue on the fund prior to distribution and that a reserve of $20,280 would be deducted. Thus, the total amount available for distribution was $8,319,774. The total allowed loss for both groups slightly exceeded that amount. Accordingly, under the formula in the plan of allocation, each authorized claimant was to receive 96.432667% of his or her allowed loss. Class counsel requested that Judge Sabraw authorize that pro rata distribution, and on December 3, 2004, he did, issuing an order accepting the recommendations in plaintiffs’ motion.
The result of this was that Gilardi mailed settlement checks to over 404,000 class members. A few class members had questions or concerns, and the parties agreed that Gilardi should reissue checks to these class members, at Viacom’s expense. Gilardi did that. When all was said and done, Gilardi had mailed 404,796 checks to class members, at a total cost to Viacom of some $1.7 million.—But, 164,971 of these checks were never cashed.
The direct result of these uncashed checks was that $3,127,456 remained in the settlement fund. The ultimate result was the motion leading to this appeal.
C. The Motion
On March 7, 2006, plaintiffs filed a motion for an order (1) approving claims; (2) authorizing a second distribution of the settlement fund; and (3) requiring Viacom to defray the cost of the distribution. The motion was straightforward, supported by a four and one-half-page memorandum of points and authorities, and accompanied by two declarations, those of Gilardi employee Salazar and Aram Durphy, one of plaintiffs’ attorneys, whose declaration did little more than identify five exhibits. Of particular interest to the issue here, the entirety of plaintiffs’ argument as to the third request sought by the motion—“requiring Viacom to defray the cost of the distribution”—was in eight lines. They read as follows: “III. The Court Should Order Defendant Viacom To Pay For The Costs Of The Distribution. [¶] The Stipulation of Settlement requires Viacom to pay all costs of distributing settlement funds to class members. Section XIII.B of the Stipulation of Settlement states this expressly: [¶] By agreement of the Parties, the Court shall retain jurisdiction for the purpose of entering orders in furtherance of the administration and consummation of the Settlement. The Court shall retain jurisdiction over the settlement and the settlement process and shall have the authority to interpret the terms of and enforce this Stipulation of Settlement. (Emphasis added.) [¶] It is therefore appropriate for the Court to include in its Order a provision requiring Viacom to pay the costs of the distribution.”
On April 25, 2006, Viacom filed its memorandum in opposition to plaintiffs’ motion and in support of its own cross-motion for distribution to designated charities. It was accompanied by a one-page declaration of Brian Ferrall, one of Viacom’s attorneys, which attached seven exhibits, one of which was a declaration of Dennis Gilardi regarding efforts to locate class members. In its nine-page memorandum, Viacom spent one page arguing that the “additional distribution that plaintiffs propose is neither warranted by principles of due process nor the settlement.” Viacom then spent some five pages arguing that the “proper means for disposing of the residue” is to distribute it to charities, this latter argument being a request for a form of cy près remedy, or fluid recovery, as discussed by us, for example, in In Re Vitamin Cases (2003) 107 Cal.App.4th 820, 826.
We note that neither of the attorney’s declarations submitted in connection with the motion—neither that of Durphy nor that of Ferrell—said anything whatsoever about any of the negotiations for, or the drafting of, the Settlement Agreement. There was nothing about the claimed meaning of any of the terms. Nothing about anyone’s intent. Nothing about any give and take. Nothing.
The materials before Judge Sabraw did provide various historical and expense data, including what had been expended in connection with the settlement to date, as well as what would be anticipated if plaintiffs’ motion were successful. This evidence showed that Viacom had incurred expenses of almost $1.7 million to the point at which the 404,796 checks had been cut and mailed—almost 165,000 of which had been returned. As Viacom distilled it, “At a cost of about $1.7 million to Viacom, some $5.1 million (61% of the available funds for distribution) has been paid to about 240,000 (or 36%) class members.” Then, Viacom went on in argumentative fashion, “Plaintiffs’ current proposal for a second distribution to class members is estimated to cost almost another $500,000. This would increase the total administrative costs of this Settlement to $2.2 million, or 27% of the funds for the distribution to class members. Furthermore, by its terms, the proposed second distribution would not provide settlement funds to even one additional class member. Rather it would only provide additional compensation to those who already cashed settlement checks. Lastly, the address information of those who cashed checks is now two or more years old, and in that time, particularly in the Bay Area, a significant portion of those persons undoubtedly have moved. Based upon past experience, no more than 75% of the addresses may still be correct, and of those, only half may actually cash the checks they receive.”
On May 2, 2006, plaintiffs filed their reply, consisting solely of a six-page memorandum of points and authorities, to which was appended portions of a commentary on class actions and a law review article. After briefly contending that Viacom had no standing (other than to contest the reasonableness of the expenses), plaintiffs’ reply argued that “the settlement agreement requires Viacom to pay all administration costs, including those for a second, or subsequent distribution.” This argument, too, was brief, only 10 lines, and the only provisions cited in claimed support were in VI G of the Settlement Agreement and in the plan of allocation.
Moreover, and despite its “requires” argument, plaintiffs’ reply brief ended with the following candid observation: “In sum, the Court would be well within its discretion to direct another round of payments with Viacom paying the “reasonable” costs estimated at $500,000 . . . . At the same time we acknowledge that cy près distributions to appropriate consumer or public interest organizations that protect consumer rights would also be an appropriate use of leftover funds in consumer class actions like this. Plaintiffs’ counsel believes, however, that at this stage such a cy près distribution is premature. Given that there is still over $3 million that could be distributed at reasonable costs to class members—not to produce a windfall for them but to help make them whole—a second distribution is the best way to benefit the class and achieve the purposes of this litigation. Ultimately, however, the decision is one for the Court to make in its discretion, consistent with the Settlement Agreement and the best interests of the class.”
Plaintiffs’ motion came on for hearing before Judge Sabraw on May 9, 2006, prior to which he had entered a tentative decision, the terms of which are not in the record. Judge Sabraw heard spirited argument from knowledgeable counsel who, among other things, made various observations about the claimed purport or intent of various provisions, asserting, for example, that certain things were “bargained for” and that certain language was “deliberate.” All of this, of course, was despite the fact that there was no evidence supporting any such assertion.
At the hearing Judge Sabraw indicated early-on that he agreed with plaintiffs’ counsel that the settlement residue should be distributed to class members, and not under any cy près principle. There followed various comments applicable to the issue here, such as the sensitive recognition by Judge Sabraw that he was “not interested in treading on the [settlement] agreement.” As he observed at another point, “If the agreement is specific, we’ll first have a first mailing. And if that’s not successful, then we’ll have a second. And [if] all those mailings are the responsibility of Viacom, then the discussion is over.” Judge Sabraw’s awareness of the issue before him was crystallized later when, jousting with plaintiffs’ counsel, Judge Sabraw noted that, while he agreed that the funds should be distributed to class members, the “rub . . . comes with whether or not the settlement negotiated between the [parties] contemplated multiple mailings.” Or, Judge Sabraw put it a few pages later, “That’s the heart of the issue though, whether or not it was reasonable to expect that there would be one distribution to a class of this size and that there would not be a substantial residue left in the sum of some $3 million.” And finally, in responding to class counsel’s argument, the analysis “is governed by a standard of reasonableness and the reasonable expectations of the parties, and what is missing is some explicit discussion of multiple efforts and distributions on a mass basis . . . .”
Other comments and observations from the argument are enlightening, especially those from plaintiffs’ attorneys. Illustrative is the concession where, apparently acknowledging the candid conclusion in their reply brief and the possible need to balance and evaluate various factors, the attorney observed that he did not “think there’s any hard and fast rule here. . . .” Or, he later acknowledged, “[t]his is why I said in the beginning, your Honor, I don’t think this as is a crystal clear solution. We’re trying to give the court guidance on how we see it. [¶] As an advocate for the class, we’d like to see the money go to the class members. We think it’s really important that the court considers this and take into account that Viacom signed this deal . . . . [¶] . . . [¶] I think the more critical inquiry here, your Honor, is whether or not as you’re pointing out is a matter perhaps is a matter of policy or if not is a matter of practicality. Whether it is worth the expense to spend that extra whatever it is 3, 4, $500,000 to get that money to them, I really think that’s the inquiry. We think it’s worth it, but that’s something for the court to examine.”
On May 10, 2006, Judge Sabraw issued his order approving claims and authorizing second distribution of settlement funds. It began with a description of the issue and distillation of the respective positions: “The principal issue separating the parties at this point concerns the interpretation of the Settlement Agreement as it applies to the current motion. Specifically, plaintiffs contend that the consideration for the settlement of this case requires Viacom to pay all costs of ‘administering and distributing’ the $13 million in settlement funds. Plaintiffs point to the language of the Settlement Agreement that refers to ‘distributions,’ meaning that the parties contemplated the possibility of multiple distributions, each to paid for by Viacom. The Settlement Agreement also provides in ¶VI D ‘Under no circumstances shall Plaintiff Class or the Settlement Fund be required to pay any portion of the Notice and Administration Expenses.’ On this basis, plaintiffs argue that Viacom must pay any costs associated with a further distribution to the class.
“Defendant also refers to the Settlement Agreement and notes that Viacom’s obligation to pay all costs of ‘administering and distributing’ the settlement funds is limited to ‘reasonable costs and expenses.’ Viacom points out that it has thus far expended approximately $1.7 million dollars in notice and administration costs for the distribution of approximately $5.1 million dollars in settlement proceeds to 240,000 class members. The cost of administering a further distribution is estimated to be around $495,000.00.”
And then came Judge Sabraw’s finding and conclusion:
“The Court finds the issue of whether multiple distributions were contemplated by the parties as part of the original settlement to be unclear. Reasonable minds may differ. It is clear, however, that the parties did not expect that the Settlement Fund or Class members should pay for the reasonable administration and distribution costs of the initial distribution. Further, the contemplation of ‘reasonable’ costs and expenses suggests that there must be some proportionality to effecting the overall settlement. The Court believes that whenever possible, settlement funds should be distributed to those persons from whom the money was taken, rather than to a cy près fund. The Court is mindful that significant efforts have thus far been undertaken to get the money to the class members. Despite these efforts, only 35% of the original class received a benefit. The Court nonetheless will require distributions to those class members who have previously cashed checks, rather than distribute the balance to charity. However, the Court determines that burdening Viacom with the further costs of a subsequent distribution would impose an unreasonable burden on Viacom under the circumstances. [¶] The Court authorizes the Claims Administrator to distribute the balance of remaining settlement funds to the members of the class who received and cashed their initial checks, less the estimated additional costs and expenses of $495,000.00.”
On July 5, 2006, plaintiffs filed a timely notice of appeal.
II. DISCUSSION
A. The Standard Of Review
Plaintiffs assert that the issue before us presents a question of law, and thus an issue for de novo review. Specifically, plaintiffs’ position is that the appeal presents only the question of the interpretation of the Settlement Agreement, and based only on the terms of that agreement because, as noted above, no extrinsic evidence was introduced.
The principle on which plaintiffs rely is, of course, an accurate statement of the general rule, and has been at least since the opinion in Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 866, that absent extinsic evidence, the reviewing court must make an independent determination of the meaning. As the Supreme Court has since expressed it, if there is no extrinsic evidence, “a reviewing court will independently construe the terms used in” the agreement. (See Newman v. Wells Fargo Bank (1996) 14 Cal.4th 126, 134 [will]; Estate of Powell (2000) 83 Cal.App.4th 1434, 1439 [trust]. As particularly apposite here, this rule has been applied to the interpretation of settlement agreements. (See, e.g., Citizens for Goleta Valley and Goleta Valley v. HT Santa Barbara (2004) 117 Cal.App.4th 1073, 1076.)
Based on this principle, plaintiffs argue that the Settlement Agreement (1) “requires” Viacom to pay all administrative costs, and (2) “expressly forbids using settlement funds to pay administrative costs.”
While plaintiffs’ position is grounded on an accurate view of the state of the evidentiary record, we are troubled by the argument in light of other aspects of plaintiffs’ position below, beginning with plaintiffs’ own argument concerning the payment issue. Plaintiffs’ entire argument on this point was in the eight lines quoted above, which in bold face contended that the court “should” order Viacom to pay the costs of the distribution, and that it was “appropriate” for Judge Sabraw to include such a provision. “Should,” plaintiffs said, not “must”; “appropriate,” not “mandatory.” These are hardly hallmarks of any so-called “requirement,” the first prong of plaintiffs’ argument here.
As to the second prong—that the Settlement Agreement “expressly forbids” expense payment from the settlement fund—such argument was never urged below.
Likewise noteworthy on this point is the candid conclusion in plaintiffs’ reply brief below, about Judge Sabraw’s “discretion,” Also, class counsel’s candid comment at the hearing, that there is no “hard and fast rule.” In light of plaintiffs’ positions below, it may be that their “question of law” position here runs afoul of the “theory of trial” doctrine. (See generally 9 Witkin, Cal. Procedure (4th ed. 1997) §§ 399-405, pp. 451-457; see Jones v. Dutra Construction Co. (1997) 57 Cal.App.4th 871, 876 [applying doctrine to motion for summary judgment]; In re Marriage of Eben-King & King (2000) 80 Cal.App.4th 92, 110-111 [set aside motion]; but see, Ward v. Taggart (1959) 51 Cal.2d 736, 742 [doctrine does not apply to question of law on undisputed facts]; Seeley v. Seymour (1987) 190 Cal.App.3d 844, 856 [same: application of interpretation of document on undisputed facts].)
But assuming plaintiffs’ claimed principle of de novo review applies, our review leads us to the same conclusion as Judge Sabraw.
B. Analysis Of The Settlement Agreement
1. The Principles of Contract Interpretation
Division Four of this court set forth the principles governing here, in City of Atascadero v. Merrill, Lynch, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 473-474. There, citing numerous cases, some statutes, and the leading California commentator, the court noted as follows: “Any contract must be construed as a whole, with the various individual provisions interpreted together so as to give effect to all, if reasonably possible or practicable. (Civ. Code, § 1641; Civ. Code, § 1858; 1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, § 686, pp. 619-620.) Courts must interpret contractual language in a manner which gives force and effect to every provision, and not in a way which renders some clauses nugatory, inoperative or meaningless. [Citations.] The fundamental goal of contractual interpretation is to give effect to the mutual intention of the parties (Civ. Code, § 1636; [citations].) The mutual intention to which the courts give effect is determined by objective manifestations of the parties’ intent, including the words used in the agreement, as well as extrinsic evidence of such objective matters as the surrounding circumstances under which the parties negotiated or entered into the contract; the object, nature and subject matter of the contract; and the subsequent acts and conduct of the parties. [Citations.]”
This recitation echoed some of the principles we ourselves set forth years earlier, in County of Marin v. Assessment Appeals Bd. (1976) 64 Cal.App.3d 319, 325, where we distilled the “well-settled” rules, including that “the contract must be construed as a whole and the intention of the parties must be ascertained from the consideration of the entire contract, not some isolated portion [citations.] . . . . And last, but not least, the court shall avoid an interpretation which will make a contract extraordinary, harsh, unjust, inequitable or which would result in absurdity. [Citations.]”
With these principles in mind, we turn to an analysis of the Settlement Agreement here, and conclude that the agreement supports the conclusion Judge Sabraw reached.
2. The Settlement Agreement
It is true that Section IIIA of the Settlement Agreement provides that Viacom shall pay $13 million and in addition certain specified costs and expenses. At the same time, Section III A says that Viacom shall pay “reasonable” costs and expenses, and then only in connection with three specified events: “(i) providing notice, in the manner approved and ordered by the Court, to the Plaintiff Class; (ii) administering the Settlement, and (iii) of administering and distributing the Settlement Payment.” In sum, Viacom is liable only for “reasonable costs and expenses.” And for what? Three things: “(i) providing notice . . . (ii) administering the Settlement, and (iii) of administering and distributing the settlement payment . . . .” (Italics added.)
There can be no question that Viacom paid for “providing notice.” Viacom also paid for “administering the settlement,” especially as “administering” the settlement must be different from “administering and distributing the settlement payment” as each of them is separately numbered. And Viacom initially paid for distributing the settlement payment. In short, Viacom had met its obligations under the Settlement Agreement. Since it did, that should end the inquiry, as Section III A states that Viacom “shall have no . . . additional liability for . . . Expenses beyond the specific provisions of this paragraph.” (Italics added.) In short, it could be said that the Settlement Agreement compels the result reached below. But at the very least, the Settlement Agreement is “unclear.”
That it is, is shown by Section VI D itself, the paragraph on which plaintiffs rely to argue here that “under no circumstances” shall the settlement fund be called on to pay. To begin with, Section VI is entitled “Settlement Administration,” Paragraph D of which provides in its entirety as follows: “D. In the event of disputes over Notice and Administration Expenses, including without limitation, disputes over whether a particular expenditure is necessary for requirements of due process or constitutes a Notice and Administration Expense or whether a Notice and Administration Expense is reasonable in amount, or whether a Notice and Administration Expense has been adequately substantiated by the Settlement Administrator, the matter will be submitted to the Court, whose resolution of the matter shall be binding on all parties and their respective counsel. In this event, the parties agree to cooperate and to take such steps so as to resolve any dispute both expeditiously and economically, including without limitation, where practical, informal resolution with the assistance of the Court. Under no circumstances shall the Plaintiff Class or the Settlement Fund be required to pay any portion of the Notice and Administration Expenses.”
Preliminarily, we note that neither side addresses the language in this paragraph that the trial court’s “resolution of the matter shall be binding on all parties and their respective counsel.” Likewise ignored is that the mandate that the parties “cooperate” to resolve disputes, which cooperation is not in the record here. What does this mean? One conclusion is that class counsel never acted as though the paragraph pertained.
As to substance of paragraph D, the one sentence on which plaintiffs rely—however belatedly—is in a paragraph that by its terms applies only to “disputes over Notice and Administration Expenses,” three non-inclusive examples of which are set forth. It is apparently in such circumstances that the “[u]nder no circumstance” language is to apply, and the motion leading to this appeal was not clearly in such circumstances.
But even if it were, there is clearly a tension between the “under no circumstances” language in Section VI D and the “reasonable costs and expenses” language in Section III A. And if the language plaintiffs rely on were to trump the “reasonable” language, it would render that language nugatory. This, of course, flies in the face of various rules of contract interpretation quoted above, such as that in Civil Code section 1641 [“The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable . . . .”] (See, generally, Transamerica Ins. Co. v. Sayble (1987) 193 Cal.App.3d 1562, 1566 [“contract must be construed as a whole, without giving a distorting emphasis to isolated words or phrases”]. As the newly drafted standard instruction instructs, “In deciding what the words of a contract meant to the parties [we] should consider the whole contract, not just isolated parts. [We] should use each part to help [us] interpret the others, so that all the parts make sense when taken together.” (CACI No. 317 (Spring 2007).
Plaintiffs assert in the factual recitation in their brief that “both the . . . Settlement [Agreement] and the Plan of Allocation use plural language in contemplation of future ‘distributions.’ For example, Section VI requires ‘distributions’ to be made in a manner consistent with the Plan of Allocation (AA 041); to distribute funds consistent with ‘orders’ of the Court (AA 042); for disputes over reasonableness of costs to be submitted to the Court (AA 043); limits liability for ‘distributions’ (AA 043) and calls for a charitable mechanism ‘after all distributions’ (AA 044). Similarly the Plan of Allocation expressly contemplates more than one distribution (‘in the first or any subsequent distribution.’) (AA 162-163.)” Then, in their argument, plaintiffs assert that the “plentiful references to plural ‘distributions’ in the settlement documents show without a doubt that the parties contemplated multiple distributions.” We are not persuaded.
Section VI, G, which contains the first reference to “distributions” to which plaintiffs point, is entitled “Amounts Remaining For Charity After Distributions to Authorized Class Members.” (Italics added.) We fail to see how this could avail plaintiffs, as it is directly contrary to the position they asserted. Furthermore, and as Judge Sabraw pointedly asked, might not any reference to “distributions” refer “to the fact that we are sending out distributions to many, many consumers?”—an interpretation, it bears noting, plaintiffs’ counsel acknowledged he “had a feeling” the court would make. What, we ask, could be more indicative of an “unclear” agreement than such an admission.
Finally, we question how plaintiffs can rely on any language in the plan of allocation, as Section VI, H of the Settlement Agreement precludes it: “H. It is understood and agreed by the Settling Parties that any proposed Plan of Allocation is not a part of the [Settlement Agreement] and is to be considered by the Court separately from the Court’s consideration of the fairness, reasonableness and adequacy of the settlement set forth in the Stipulation, and any order or proceeding relating to the Plan of Allocation shall not operate to terminate or cancel the [Settlement Agreement] or affect the finality of the Court’s Judgment approving the Stipulation and the settlement set forth herein, or any other orders entered pursuant to the Stipulation.”
Plaintiffs argue here, repeating an argument below, that “[m]ost assuredly, had Viacom intended to document that there would be only a single distribution or that it would pay for only one distribution of checks, it would have, or should have, expressly and repeatedly documented as much in the Settlement Agreement. In the absence of any cap or any provision stating that there would be only one distribution, any claim made now that a second distribution was not foreseen is simply disingenuous.”
But the converse is equally true, and the parties could easily have expressly provided for multiple payments; or that Viacom would pay all costs; or that Viacom would pay all costs for all distributions—not “reasonable” costs. A leading treatise on class actions—not incidentally, the treatise appended to plaintiffs’ reply below—contains an entire chapter on “Drafting the Settlement Agreement.” There, in discussing the possible obligation of a defendant to pay class plaintiffs’ counsel fees, the authors admonish that “the language of a fee provision in the settlement agreement should be clear and precise.” (Conte & Newberg, Newberg on Class Actions (4th ed. 2002) §12.3, p. 282.) Such advice is equally apt to the costs involved here.
Plaintiffs last argument is that the Settlement Agreement “should be enforced on public policy grounds.” This argument is difficult to comprehend, as it appears to urge only that the Settlement Agreement be enforced—which it was, only in a way with which plaintiffs disagree.
To the extent that the argument does inject policy into the analysis, it is appropriate to mention various principles and observations about class actions, one of which is that recognized by plaintiffs in their reply, that “a second distribution of unclaimed funds to class members may be denied where the claiming class members had already been fully compensated and the second distribution would produce a windfall for them. See [State of California v.] Levi Strauss & Co. [(1986)]41 Cal.3d [460,] 479 (possible “windfall” one factor to be considered.)” While plaintiffs assert that second distribution will not produce a windfall, “but rather will simply help to make [the class members] whole,” there is no evidence to support this claim. In any event, the second distribution, to the relatively small percentage of class members, will certainly mean that those members will receive more than 100% of their “allowed claim.”
Another observation, and one particularly apt here, is that by our Supreme Court, that the “disposition of the residue” of a class fund “is a matter within the discretion of the trial court,” which “should have the full range of alternatives at [its] disposal.” (State of California v. Levi Strauss & Co., supra, at pp. 479-480; accord, Six (6) Mexican Workers v. Arizona Citrus Growers (9th Cir. 1990) 904 F.2d 1301, 1307 [trial courts have “broad discretionary powers in shaping equitable decrees for distributing unclaimed class action funds”].) All this is summed up in Newberg that however “the court disposes of the . . . unclaimed portion of [the common fund] . . . it has been recognized that this determination falls within the general equity powers of the court . . . .” (Conte & Newberg, Newberg on Class Actions, supra, § 10.16, p. 513.)
III.
CONCLUSION AND DISPOSITION
Almost 30 years ago we confirmed that the management of a class action is “ ‘a difficult legal and administrative task.’ ” (Dean Witter Reynolds, Inc. v. Superior Court (1989) 211 Cal.App.3d 758, 773). From beginning to end, Judge Sabraw managed this class action in exemplary fashion and, we conclude, he reasonably and properly applied the principles of contract interpretation to the situation here, and arrived at a considered—and most equitable—disposition of the residue of the settlement fund. The order appealed from is affirmed.
We concur: Haerle, Acting P.J., Lambden, J.