Opinion
No. C 02-1240 CW.
May 27, 2005
ORDER DENYING MOTION TO OPT OUT
Misty and Daniel Brannon, Hope and Leonard Dunn, Robert Penny and Susan and Danny Reeves (collectively, Movants) filed a motion to opt out of the class settlement of this case or, in the alternative, for an enlargement of time to opt out. Defendants oppose the motion. Having considered the papers filed by the parties, the Court denies the motion to opt out.
BACKGROUND
In the fall of 2003, Movants retained attorney Breean Beggs to represent them in private suits against Defendants Household International, Inc., Household Finance Corporation II, Household Finance Corporation III, Household Realty Corporation, Beneficial Finance, Beneficial of Washington, Inc. and other related Household Finance corporate entities (collectively, HFC). Beggs Decl. ¶ 1. Movants chose not to participate in an opt-in class action brought by the Attorney General for the State of Washington. See, e.g., Dunn Decl. p. 2.
On December 12, 2003, this Court issued a preliminary order approving a class action settlement of some of Movants' claims and providing for notice to the class. That order required any person who wanted to be excluded from the settlement to mail a request for exclusion to the Settlement Administrator no later than twenty-one days prior to the April 30, 2004 fairness hearing, that is, no later than April 9, 2004. Despite their desire to pursue individual suits against HFC, Movants did not follow the procedure for requesting exclusion from the class. On April 30, 2004, this Court issued a final order approving the class settlement and a judgment.
On February 17, 2004, HFC and Mr. Beggs on behalf of Movants entered into a "tolling agreement" "for the purpose of allowing the parties to negotiate plaintiff's [sic] claims without filing suit." Penny Decl., Ex. A. According to the agreement,
[HFC] and the plaintiff[s] agree to toll any and all statute of limitations for the period of 45 days beginning on January 23, 2004, in relation to any claims that the plaintiff[s] could have brought against [HFC] under federal or state statute, state common law, or contract. In consideration of the tolling, plaintiffs agree not to file suit within that 45-day period.Id. On March 26, 2004, the parties agreed to extend the tolling agreement for another forty-five days. Id. at 2. On May 3, HFC informed Movants that it would no longer engage in settlement negotiations and cited the class action settlement.
Prior to May 3, 2004, Mr. Beggs was not informed of the existence of the class action. Beggs Decl. ¶ 6. On May 17, 2004, at the end of the second forty-five day tolling agreement, Movants filed suit against HFC in Whatcom Superior Court. Id. ¶ 7.
Movants Daniel Brannon and Susan Reeves claim that they never received written notice of the proposed settlement and opt-out opportunity. According to Mr. Brannon, he and his wife had remained at the same mailing address for over six years, and received several other documents from HFC at that address. Brannon Decl. p. 2. According to Susan Reeves, she and her husband also have remained at the same mailing address throughout their dealings with HFC, and have received other mail from Defendants at that address. Reeves Decl. p. 2. Both Mr. Brannon and Ms. Reeves claim that had they received notice of the California class action, they would have immediately opted out of the class.
The Settlement Administrator's records, however, reflect that notice was mailed on December 22, 2003, to all of the Movants. Redell Decl. ¶ 8. None of the notices mailed to Movants were returned as undeliverable. Id. ¶ 10.
Movant Leonard Dunn believes that he did receive the notice. However, Mr. Dunn states that he is severely disabled, due to depression, post-traumatic stress disorder, chronic pain and an organic brain disorder, and therefore was unable to understand or respond to the opt-out provisions. Dunn Decl. p. 2. According to Mr. Dunn, his wife also suffers from major depression and post-traumatic stress disorder, though she provided no affidavit of her own to support that contention.
Movant Robert Penny states that he "may" have received the notice but "relied on Mr. Budisch's [HFC local counsel] agreement that he would engage in direct settlement negotiations with us, so didn't mail anything further in the Acorn case." Penny Decl. p. 2. Based on HFC's conduct, including Mr. Budish's promise to review the files after the Acorn opt-out deadline had passed, Mr. Penny believed that he was not part of the class action in this Court. Id.
Upon learning on May 3 that HFC considered Movants' claims to be covered by the class action settlement, Mr. Beggs sought an attorney who was a member of the California Bar for the purpose of filing a motion to opt out for his clients, but was unable to do so until January, 2005. Beggs Decl. ¶ 9. On February 14, 2005, Movants filed this motion. Movants made no other attempt to opt out of the class settlement.
LEGAL STANDARD
In requesting exclusion from the class after the April 9, 2004 opt-out deadline, Movants are effectively seeking relief from final judgment under Federal Rule of Civil Procedure 60(b). The standard for determining whether Movants should be allowed to opt out of the class after the applicable deadline is whether their failure to comply with the deadline is the result of "excusable neglect." Fed.R.Civ.P. 60(b). This standard allows courts, "where appropriate, to accept late filings caused by inadvertence, mistake, or carelessness, as well as by intervening circumstances beyond the party's control." Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. P'ship, 507 U.S. 380, 388 (1993). It is appropriate for courts to accept such late filings when the party's neglect can be considered "excusable," a determination that is "at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission." Id. at 395. The relevant circumstances include "the danger of prejudice to the [opposing party], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was in reasonable control of the movant, and whether the movant acted in good faith." Id.
Because final judgment has been entered, Federal Rule of Civil Procedure 60(b) governs this motion, rather than Federal Rule of Civil Procedure 6(b)(2) which provides for the enlargement of time. See In re New England Mut. Life Ins. Co. Sales Practice Litig., 204 F.R.D. 6, 11 (D. Mass. 2001). Therefore, Movants' motion for enlargement of time to opt out is DENIED.
DISCUSSION
I. Effect of Tolling Agreement on Class Membership and Opt-Out DeadlineMovants argue that their February 17, 2004 tolling agreement with HFC constitutes a binding contract that exempts them from the class action's opt-out procedures and settlement agreement. Movants' argument is not supported by the plain terms of the agreement. HFC agreed only to toll the statute of limitations, while Movants agreed only not to file suit for forty-five days. Movants did not express an intention to opt out of the class action, and HFC did not agree to exempt Movants from the opt-out deadline. Nothing in the agreement would have invalidated a subsequent decision by Movants to participate in the class settlement. Because the agreement on its face clearly does not include the provision asserted by Movants, the Court does not need to consider the additional evidence offered by them in support of their interpretation of the agreement. See Berg v. Hudesman 115 Wash.2d 657, 669 (1990) (noting with approval the general rule that parole evidence is not admissible for the purpose of adding to the terms of a written contract).
The Court therefore overrules Defendants' objections, and denies Movants' motion to strike those objections, as moot.
The Court also denies as moot Movants' motion to strike Defendants' Appendix of Authorities. The Court does not rely on those authorities.
Movants also argue that the tolling agreement constitutes an effective expression of their desire to opt out. As explained above, the tolling agreement does not preclude Movants' participation in the class settlement and therefore is not clear evidence of an intent to opt out. This finding is consistent withMcCubbrey v. Boise Cascade Home Land Corp., 71 F.R.D. 62 (N.D. Cal. 1976), the case relied upon by Movants. There, the court found that certain potential class members who filed individual lawsuits after receipt of the class notice but prior to termination of the opt-out period had effected substantial compliance with the opt-out requirement, but that potential class members who filed suit after termination of the opt-out period were bound by the judgment entered in the class action. Id. at 67. The court reasoned that "institution of litigation . . . constitutes an effective — indeed, strident — expression of a desire not to acquiesce in an impending class settlement." Id. at 71. Here, the tolling agreement preserved Movants' option to join the class settlement, and thus cannot be considered a clear and effective expression of a desire to opt out.
II. Failure to Provide Adequate Notice
A. Notice to Counsel
Movants argue that HFC failed to provide them with the "best notice practicable" as required by due process, i.e., notice to their counsel of record.
In evaluating the adequacy of a class action notice, the Court uses the standard articulated in Mullane v. Central Hanover Bank Trust Co., 339 U.S. 306, 314 (1950): "An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to appraise interested parties of the pendency of the action and afford them an opportunity to present their objections." Actual notice is not required in order to satisfy due process, so long as notice is reasonably calculated to reach the class. Silber v. Mabon, 18 F.3d 1449, 1453-54 (9th Cir. 1994).
As HFC notes, the Court has already determined that the notice to class members was generally adequate. See November 3, 2004 Order Granting in Part and Denying in Part Movants' Motion to Opt Out (the Barrow Order) at 5; November 23, 2004 Order Denying Movants' Motion to Opt Out (the Jamieson Order) at 4-5; and November 23, 2004 Order Denying Movants' Motion to Opt Out (the Woodward Order) at 4-5. Movants provide no authority for their assertion that mailing notice directly to individuals, rather than to their counsel of record, does not constitute sufficient notice. Therefore, the Court concludes that mailing notice directly to Movants, in conjunction with the other aspects of the notice plan, met the requirements of due process.
B. Brannon and Reeves
Movants Misty and Daniel Brannon and Susan and Danny Reeves claim not to have received notice by mail of the settlement. Because of this, they argue, they should be entitled to opt out of the class after the deadline. HFC provides evidence that the Settlement Administrator mailed notice of the settlement and opt-out requirements to Movants' addresses of record and published notices in the USA Today and Seattle Times newspapers. Movants do not dispute the accuracy of the Settlement Administrator's records. It is possible that these notices were lost in the mail. Because the procedures were reasonably calculated to reach the class, the Court finds that the notice to Mr. and Mrs. Brannon and Mr. and Mrs. Reeves was constitutionally sufficient even if they did not receive actual notice. See Silber at 1453-54.
C. Dunn
Movants argue that HFC should have accommodated the Dunns' disabilities by sending their notice to their attorney. However, Movants do not show any evidence that HFC was or should have been aware of the Dunns' disabilities; indeed, Mr. Dunn acknowledges that he had received other communications by mail from HFC, and does not suggest that he had objected in the past to this method of communication. Nor do Movants provide case law suggesting that HFC should have anticipated such a need for accommodation. Therefore, the Court concludes that the notice provided to the Dunns was adequate.
III. Excusable Neglect
Movants argue that their reasonable reliance on the tolling agreement, even if based on a misinterpretation, constitutes excusable neglect. It is true that Mr. Budish's extension of the tolling agreement until after the close of the opt-out period, without mentioning the existence of the Acorn action, was not forthright. Had Movants promptly filed this motion after learning of the class action on May 3, 2004, their argument might have been persuasive.
Instead, Movants delayed for nine months before filing a motion to opt out. Movants argue that the nine month delay was caused by Mr. Beggs' inability to find California counsel, and a "lengthy argument as to whether to address [the] issue in Whatcom County, Washington or California." Movants' Reply at 6. A search for local counsel does not justify a nine-month delay. Nor is the evidence cited by Movants sufficient to show that a "lengthy argument" caused the nine month delay. Furthermore, the delay could have been averted had either Mr. and Mrs. Dunn or Mr. Penny informed their attorney of their receipt of the class notice, which they acknowledge receiving despite being confused by or misunderstanding its contents.
In Pioneer, the Supreme Court held that when determining whether failure to act before the bar date was excusable, the proper inquiry was whether the neglect of Movants and their counsel was excusable. Pioneer, 507 U.S. at 396. The Court reasoned that "clients must be held accountable for the acts and omissions of their attorneys." Id. The Court here finds that Movants' nine month delay before filing their motion to opt out does not constitute excusable neglect.
CONCLUSION
For the foregoing reasons, Movants' motion to opt out is DENIED (Docket No. 355). Movants' motions to strike Defendants' appendix of authorities and objections are denied as moot (Docket Nos. 359 and 361).
IT IS SO ORDERED.