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awarding 25% benchmark in an FCRA case that featured "substantial risks," two motions to dismiss, and more than 65,000 members
Summary of this case from Smith v. A-Check Am. Inc.Opinion
CIV. NO. 1:14-742 WBS BAM
01-26-2016
SARMAD SYED, an individual, on behalf of himself and all others similarly situated, Plaintiffs, v. M-I LLC, a Delaware Limited Liablity Company; PRECHECK, INC., a Texas Corporation; and DOES 1-10, Defendants.
MEMORANDUM AND ORDER RE: MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT
Plaintiff Sarmad Syed brought this putative class action lawsuit against M-I, LLC ("M-I") and PreCheck, Inc. ("PreCheck"), alleging that they violated federal credit reporting laws while conducting pre-employment background checks. On November 4, 2014, the court dismissed plaintiff's action as to M-I. (Docket Nos. 46, 49-50.) Plaintiff subsequently reached a settlement with PreCheck, and the court granted preliminary approval of the class action settlement on September 18, 2015. (Docket Nos. 70-73.) Presently before the court is plaintiff's motion for final approval of the class action settlement. (Docket No. 76.)
I. Factual and Procedural Background
Plaintiff applied for a job with M-I on July 20, 2011. (First Am. Compl. ("FAC") ¶ 14 (Docket No. 36).) As part of the application process, plaintiff received and signed a one-page disclosure form. (Id.) The form stated that M-I might procure a consumer report on plaintiff from PreCheck for employment purposes and included language releasing and discharging M-I and PreCheck from any liability arising out of that report. (Id.)
Plaintiff alleges that PreCheck willfully violated the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681b(b)(1), by furnishing consumer reports about plaintiff and class members for employment purposes without first obtaining from M-I and other employers a certification of compliance pursuant to 15 U.S.C. § 1681b(b)(1). (FAC ¶¶ 42-50.) Plaintiff alleges that as a result, class members could recover statutory damages between $100 and $1,000 and punitive damages under 15 U.S.C. § 1681n(a). (FAC ¶ 47.) The court subsequently stayed the action pending the Supreme Court's decision in Spokeo, Inc. v. Robins, 135 S. Ct. 1892 (2015), which addresses whether a plaintiff who has not demonstrated a concrete harm has Article III standing to seek statutory damages under the FCRA. (Docket No. 69.) Two months later, the parties reached a settlement. (Docket No. 70.)
Under § 1681b(b)(1), before PreCheck can furnish a consumer report for employment purposes, the receiving employer must certify that it had complied with § 1681b(b)(2)'s disclosure requirements and would comply with § 1681b(b)(3) if it decided to take adverse action based on the consumer report. See 15 U.S.C. § 1681b(b)(1)(A)(i). --------
The Settlement Agreement provides for the creation of a settlement fund of $1.6 million. (Dion-Kindem Decl. in Supp. of Prelim. Approval Ex. A ("Settlement Agreement") ¶ 22 (Docket No. 72-2).) From this fund, class counsel may apply for attorney's fees of 25%, or $400,000, and attorney costs of $4,505.81. (Id. ¶ 26; Dion-Kindem Decl. in Supp. of Att'y Fees ("Dion-Kindem Decl.") ¶ 13 (Docket No. 76-2); Blanchard Decl. in Supp. of Atty's Fees ("Blanchard Decl.") ¶ 6 (Docket No. 76-3).) Additionally, plaintiff may apply for a $5,000 incentive award. (Settlement Agreement ¶ 26.) Lastly, administration expenses of $133,427 shall be paid out of the settlement fund to the settlement administrator, Dahl Administration, LLC ("Dahl"). (Id. ¶¶ 17-18.)
The parties' stipulated amount for class counsel's fees and costs and plaintiff's incentive award were negotiated only after the original settlement fund amount of $1.6 million had been agreed upon. (Id. ¶ 26.) After the above deductions, the remaining settlement fund to be distributed pro rata to the class is $1,057,067.19. (See Pl.'s Mem. in Supp. of Prelim. Approval at 6 (Docket No. 72-1).) 65,654 class members have successfully received notice of the class settlement, and the net recovery per class member is approximately $16. (Kratz Decl. ¶ 10 (Docket No. 76-1).)
Plaintiff now seeks final approval of the parties' stipulated class-wide settlement pursuant to Federal Rule of Civil Procedure 23(e). PreCheck does not oppose plaintiff's motion for final approval. (Docket No. 77.)
II. Discussion
Rule 23(e) provides that "[t]he claims, issues, or defenses of a certified class may be settled . . . only with the court's approval." Fed. R. Civ. P. 23(e). "Approval under 23(e) involves a two-step process in which the Court first determines whether a proposed class action settlement deserves preliminary approval and then, after notice is given to class members, whether final approval is warranted." Nat'l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 525 (C.D. Cal. 2004) (citing Manual for Complex Litig., Third, § 30.41 (1995)).
The Ninth Circuit has declared a strong judicial policy favoring settlement of class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). Nevertheless, where, as here, "the parties reach a settlement agreement prior to class certification, courts must peruse the proposed compromise to ratify both the propriety of the certification and the fairness of the settlement." Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003).
A. Class Certification
A class action will be certified only if it meets the four prerequisites identified in Rule 23(a) and additionally fits within one of the three subdivisions of Rule 23(b). See Fed. R. Civ. P. 23(a)-(b); Ontiveros v. Zamora, Civ. No. 2:08-567 WBS DAD, 2014 WL 3057506, at *4 (E.D. Cal. July 7, 2014). Although the court has discretion in determining whether the moving party has satisfied each Rule 23 requirement, see Califano v. Yamasaki, 442 U.S. 682, 701 (1979); Montgomery v. Rumsfeld, 572 F.2d 250, 255 (9th Cir. 1978), the court must conduct a rigorous inquiry before certifying a class, see Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 161 (1982); E. Tex. Motor Freight Sys. v. Rodriguez, 431 U.S. 395, 403-05 (1977).
1. Rule 23(a) Requirements
Rule 23(a) restricts class actions to cases where:
(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.Fed. R. Civ. P. 23(a). These requirements are more commonly referred to as numerosity, commonality, typicality, and adequacy of representation.
a. Numerosity
"A proposed class of at least forty members presumptively satisfies the numerosity requirement." Avilez v. Pinkerton Gov't Servs., 286 F.R.D. 450, 456 (C.D. Cal. 2012); see also, e.g., Collins v. Cargill Meat Solutions Corp., 274 F.R.D. 294, 300 (E.D. Cal. 2011) (Wanger, J.) ("Courts have routinely found the numerosity requirement satisfied when the class comprises 40 or more members."). The settlement class here contains more than 65,000 members, which easily satisfies the numerosity requirement. (Kratz Decl. ¶ 10.)
b. Commonality
Commonality requires that the class members' claims "depend upon a common contention" that is "capable of classwide resolution--which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke." Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2550 (2011). "[A]ll questions of fact and law need not be common to satisfy the rule," and the "existence of shared legal issues with divergent factual predicates is sufficient, as is a common core of salient facts coupled with disparate legal remedies within the class." Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998).
The proposed class includes all "individual[s] on whom, during the period from May 20, 2009 through September 18, 2015, a consumer report for employment purposes was furnished by PreCheck, Inc., and where the address provided . . . listed California as the state of [] residence at the time the report was furnished." (Kratz Decl. Ex. A.) The class would be comprised of individuals alleging facts similar to the named plaintiff: that PreCheck furnished consumer reports regarding the class members to prospective employers without first obtaining the requisite § 1681b(b)(1) certification from those employers. The statutory damages could also be resolved on a class-wide basis. See 15 U.S.C. § 1681n(a). The proposed class thus meets the commonality requirement.
c. Typicality
Typicality requires that the named plaintiff have claims "reasonably coextensive with those of absent class members," but those claims do not have to be "substantially identical." Hanlon, 150 F.3d at 1020. The test for typicality "is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiff[], and whether other class members have been injured by the same course of conduct." Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (citation omitted).
Plaintiff's and the class members' claims are based on substantially similar factual allegations regarding PreCheck's course of conduct: PreCheck's furnishing of a consumer report for employment purposes without having first obtained a § 1681b(b)(1) certification. Their claims are based on the legal theory that PreCheck failed to comply with its obligations under § 1681b(b)(1) of the FCRA. Plaintiff and class members thus allege similar injuries and class members would presumably seek the same remedy that plaintiff does here: statutory and punitive damages under § 1681n(a). Accordingly, plaintiff's claims appear to be reasonably coextensive with those of the proposed class, and the proposed class thus meets the typicality requirement.
d. Adequacy of Representation
To resolve the question of adequacy, the court must make two inquiries: "(1) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (2) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?" Hanlon, 150 F.3d at 1020. These questions involve the consideration of a number of factors, including "a sharing of interests between representatives and absentees." Brown v. Ticor Title Ins., 982 F.2d 386, 390 (9th Cir. 1992).
The Settlement Agreement provides for an incentive payment of $5,000 to plaintiff to be paid out of the settlement fund. Although the Ninth Circuit has approved "reasonable incentive payments" to named plaintiffs, such payments nonetheless raise the possibility that a plaintiff's interest in receiving his payment will cause his interests to diverge from the class's interest in a fair settlement. Staton, 327 F.3d at 977-78 (declining to approve a settlement agreement where the size of the incentive payment suggested that the named plaintiffs were "more concerned with maximizing [their own] incentives than with judging the adequacy of the settlement as it applies to class members at large"). The court must thus "scrutinize carefully [such] awards so that they do not undermine the adequacy of the class representatives." Radcliffe v. Experian Info. Sys., Inc., 715 F.3d 1157, 1163 (9th Cir. 2013).
A $5,000 incentive award to plaintiff does not on its face appear to create a conflict of interest. Courts have generally found that a $5,000 incentive payment is reasonable. See In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 463 (9th Cir. 2000); Alberto v. GMRI, Inc., 252 F.R.D. 652, 669 (E.D. Cal. 2008). The proposed award, however, is disproportionate to the recovery of other class members, who will each receive approximately $16. Relevant factors for evaluating a named plaintiff's incentive award include "the actions the plaintiff has taken to protect the interests of the class, the degree to which the class has benefitted from those actions, . . . and reasonabl[e] fear[s of] workplace retaliation." Staton, 327 F.3d at 977 (citation omitted).
The incentive payment here is not particularly unfair to other class members, given that it will not significantly reduce the amount of settlement funds available to the rest of the class. In addition, none of the class members have objected to the amount of additional compensation sought by the named plaintiff. Plaintiff also explains that he dedicated over seventy-five hours assisting class counsel, including traveling to the mediation, participating in extensive telephone conversations with counsel, responding to emails, looking for and reviewing documents, and explaining the contents of documents to counsel. (Syed Decl. ¶ 3 (Docket No. 76-4.)
Plaintiff also says he bore the risk that his future employers might learn about this lawsuit and be hesitant to hire him, but nonetheless pursued this action for the benefit of the proposed class members. (Id. ¶ 2.) He further states that he risked being personally liable for PreCheck's costs if this action was unsuccessful, and that those costs could have been substantial. (Id. ¶ 4.) Given this information, the court finds that the $5,000 incentive payment to the named plaintiff is reasonable and does not create a conflict of interest.
The second prong of the adequacy inquiry examines the vigor with which the named plaintiff and his counsel have pursued the common claims. "Although there are no fixed standards by which 'vigor' can be assayed, considerations include competency of counsel and, in the context of a settlement-only class, an assessment of the rationale for not pursuing further litigation." Hanlon, 150 F.3d at 1021.
Plaintiff's counsel state that they have expertise in prosecuting employment claims throughout their careers. (Dion-Kindem Decl. ¶ 2; Blanchard Decl. ¶ 2.) Peter R. Dion-Kindem states that he has been counsel of record for at least forty class actions in federal and state court. (Dion-Kindem Decl. ¶ 3.) Lonnie C. Blanchard, III states that he has been counsel of record for at least thirty employment class actions. (Blanchard Decl. ¶ 2.) The court thus has some assurance that plaintiff's counsel has the experience necessary to maximize the return on this matter and vindicate the injuries of the class.
Plaintiff's counsel also indicate that the decision to settle plaintiff's claim was made after taking into account the uncertainty and risk of further litigation, the potential outcome of pursuing the case, and the difficulties and delays inherent in class action litigation. (Dion-Kindem Decl. in Supp. of Prelim. Approval ¶ 7.) Plaintiff's counsel point to the pending decision in Spokeo, which will determine whether a plaintiff seeking only statutory damages for a violation of the FCRA has Article III standing. (Id.) The court agrees that these considerations weigh in favor of settlement. Accordingly, the court holds that the named plaintiff is an adequate class representative.
2. Rule 23(b)
An action that meets all the prerequisites of Rule 23(a) may be certified as a class action only if it also satisfies the requirements of one of the three subdivisions of Rule 23(b). Leyva v. Medline Indus. Inc., 716 F.3d 510, 512 (9th Cir. 2013). Plaintiffs seek certification under Rule 23(b)(3), which provides that a class action may be maintained only if (1) "the court finds that questions of law or fact common to class members predominate over questions affecting only individual members" and (2) "that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3). a. Predominance
"Because Rule 23(a)(3) already considers commonality, the focus of the Rule 23(b)(3) predominance inquiry is on the balance between individual and common issues." Murillo v. Pac. Gas & Elec. Co., 266 F.R.D. 468, 476 (E.D. Cal. 2010) (citing Hanlon, 150 F.3d at 1022); see also Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 623 (1997) ("The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.").
Plaintiff's and the class members' claims turn on the legality of a common method used by PreCheck to furnish consumer reports for employment purposes and whether that method constituted a willful violation of the FCRA. The class claim thus demonstrates a "common nucleus of facts and potential legal remedies" for the class members that can be resolved in a single adjudication. See Hanlon, 150 F.3d at 1022.
To the extent that any variations may exist, there is no indication that any variations in class members' claims are "sufficiently substantive to predominate over the shared claims." See id. at 1023. Accordingly, the court finds that common questions of law and fact predominate over questions affecting only individual class members.
b. Superiority
Rule 23(b)(3) also requires a showing that "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3). In considering whether a class action is superior, the court considers four non-exhaustive factors:
(A) the class members' interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action.Id. The parties settled this action prior to certification, making factors (C) and (D) inapplicable. See Murillo, 266 F.R.D. at 477 (citing Windsor, 521 U.S. at 620).
Given that they will recover approximately $16 under the settlement, class members might have an interest in individually prosecuting their own separate actions. If class members pursued individual litigation, they could possibly recover statutory damages between $100 and $1,000 and punitive damages under the FCRA. See 15 U.S.C. § 1681n(a). As discussed in greater detail below, however, the substantial risks associated with litigating this case make class members' interests in pursuing individual actions likely low.
Additionally, notice of the settlement had been successfully mailed to 65,654 class members, out of which only five members opted out and none had filed objections. (Kratz Decl. ¶¶ 10, 12-13.) The court is also unaware of any concurrent litigation already begun by class members regarding the FCRA issues presented here against PreCheck. The class action device thus appears to be the superior method for adjudicating this controversy.
Accordingly, because the settlement class has satisfied both Rule 23(a) and Rule 23(b)(3), the court will grant final certification of the settlement class.
3. Rule 23(c)(2) Notice Requirements
If the court certifies a class under Rule 23(b)(3), it "must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort." Fed. R. Civ. P. 23(c)(2)(B). Rule 23(c)(2) governs both the form and content of a proposed notice. See Ravens v. Iftikar, 174 F.R.D. 651, 658 (N.D. Cal. 1997) (citing Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 172-77 (1974)). Although that notice must be "reasonably certain to inform the absent members of the plaintiff class," actual notice is not required. Silber v. Mabon, 18 F.3d 1449, 1454 (9th Cir. 1994) (citation omitted).
PreCheck provided records for 72,261 individuals about whom it furnished consumer reports for employment purposes. (Kratz Decl. ¶ 4.) Dahl then removed duplicate and incomplete records, processed the records through the U.S. Postal Service National Change of Address database to update the addresses for class members who had moved within the last four years, and successfully mailed summary notice of the class settlement to 65,654 class members. (Id. ¶¶ 4-13.)
The mailed notice contained a summary of the settlement terms, explained that class members do not have to do anything to receive their settlement payments, described the binding effect of the class action and the procedure for opting out and objecting to the settlement, and provided the time and place of the final fairness hearing. (Id. Ex. A.) The notice also directed class members to the settlement website, which provided further information on the proceedings, class members' rights, and answers to frequently asked questions; allowed class members to view and download the Settlement Agreement and other settlement documents filed with the court; and listed the contact information for the claims administrator. (Id. ¶ 11, Exs. A-B.)
The court finds that the notice provided was reasonably certain to inform class members of the settlement and that it was the best notice practicable under the circumstances. The notice provided to class members therefore satisfies Rule 23(c)(2)(B). See also Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) ("Notice is satisfactory if it 'generally describes the terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come forward and be heard.'" (citation omitted)).
B. Rule 23 (e): Fairness, Adequacy, and Reasonableness of Proposed Settlement
Having determined class treatment to be warranted, the court must now determine whether the terms of the parties' settlement appear fair, adequate, and reasonable. See Fed. R. Civ. P. 23(e)(2); Hanlon, 150 F.3d at 1026. This process requires the court to "balance a number of factors," including:
the strength of the plaintiff's case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offered in settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence of a governmental participant; and the reaction of the class members to the proposed settlement.Hanlon, 150 F.3d at 1026.
1. Strength of Plaintiff's Case
An important consideration is the strength of the plaintiff's case on the merits balanced against the amount offered in the settlement. DIRECTV, 221 F.R.D. at 526. The district court, however, is not required to reach any ultimate conclusions on the merits of the dispute, "for it is the very uncertainty of outcome in litigation and avoidance of wastefulness and expensive litigation that induce consensual settlements." Officers for Justice v. Civil Serv. Comm'n of the City & Cty. of S.F., 688 F.2d 615, 625 (9th Cir. 2004).
Plaintiff alleges that PreCheck willfully violated § 1681b(b)(1) of the FCRA by improperly furnishing consumer reports about class members for employment purposes without first obtaining the required certification that the employers had complied with their obligations under the FCRA. Plaintiff here faced substantial risks associated with litigating this case. PreCheck has vigorously denied that it violated § 1681b(b)(1) because it had obtained prospective, blanket certifications from M-I and other employers before furnishing consumer reports to them. PreCheck further contends that even if those blanket certifications were not proper, it nonetheless did not willfully violate the FCRA. PreCheck's denial of liability is evidenced by the two motions to dismiss it had previously filed in this litigation. (Docket Nos. 10, 38.)
There was a risk that PreCheck's prospective certifications indeed complied with the FCRA or that even if they did not comply, that PreCheck's actions did not amount to willful noncompliance. Furthermore, this action was stayed pending the Supreme Court's resolution of Spokeo two months before the parties settled. Absent a settlement, the Supreme Court's decision in Spokeo could have undermined plaintiff's action entirely if the Supreme Court ruled that a plaintiff does not have standing under the FCRA without first proving a concrete injury.
The settlement terms, which provide some payment to over 65,000 members of the class, compare favorably to these uncertainties regarding PreCheck's liability. "In most situations, unless the settlement is clearly inadequate, its acceptance and approval are preferable to lengthy and expensive litigation with uncertain results." DIRECTV, 221 F.R.D. at 529 (citation omitted). In comparing the strength of plaintiff's case with the settlement, the court thus finds that the proposed settlement is a fair resolution of the issues in this case.
2. Risk, Expense, Complexity, and Likely Duration of Further Litigation
Further litigation could greatly delay the resolution of this case and increase expenses. The parties would have had to wait until the Supreme Court's decision in Spokeo and, if that decision allowed plaintiff's action to proceed, they would have had to litigate class certification and a jury trial. This factor weighs in favor of settling this action.
3. Risk of Maintaining Class Action Status Throughout Trial
Plaintiff states that if the case proceeded to trial, there would be a risk that PreCheck would succeed in decertifying the class. (Pls.' Mot. at 3-4.) Thus, this factor also favors approval of the settlement
4. Amount Offered in Settlement
In assessing the amount offered in settlement, "[i]t is the complete package taken as a whole, rather than the individual component parts, that must be examined for overall fairness." Officers for Justice, 688 F.2d at 628. "It is well-settled law that a cash settlement amounting to only a fraction of the potential recovery will not per se render the settlement inadequate or unfair." Id. The value of the settlement fund in this case is $1.6 million with each class member receiving approximately $16. As discussed above, the class recovery here is a fair resolution of the issues given the litigation risks involved regarding the merits and the costs and delays of further litigation. This factor thus weighs in favor of settlement.
5. Extent of Discovery and the State of Proceedings
The parties represent that they have conducted an extensive exchange of information in this matter. (Dion-Kindem Decl. in Supp. of Prelim. Approval ¶ 5.) Among other information, PreCheck has provided plaintiff with information regarding its agreements with the employers, its certification process, and information on the class members on whom it furnished consumer reports. (Pl.'s Mot. at 4; Kratz Decl. ¶ 4, Ex. B at 2.)
The parties also engaged in a full day of mediation before Joan Jessler, a well-known mediator, and the matter was settled based on the mediator's proposal. (Pl.'s Mem. in Supp. of Prelim. Approval at 19.) The parties' investigation of the claims through informal discovery and mediation, and their consideration and acceptance of the views of a third-party mediator weigh in favor of settlement.
6. Experience and Views of Counsel
As discussed above, plaintiff's counsel indicate that they have extensive expertise in prosecuting employment claims and class actions throughout their careers. (Dion-Kindem Decl. ¶¶ 2-3; Blanchard Decl. ¶ 2.) Based on their experience, counsel believe that the settlement is fair, reasonable, and in the best interests of the class members given the uncertainty and risk of further litigation, the potential outcome of pursuing the case, the difficulties and delays inherent in class action litigation, and the Supreme Court's pending decision in Spokeo. (Dion-Kindem Decl. in Supp. of Prelim. Approval ¶ 7.) The court gives considerable weight to class counsel's opinions regarding the settlement due to counsel's experience and familiarity with the litigation. Alberto v. GMRI, Inc., Civ. No. 07-1895 WBS DAD, 2008 WL 4891201, at *10 (E.D. Cal. Nov. 12, 2008). Counsel's assertion that the settlement is fair, adequate, and reasonable is a factor supporting the court's final approval of the agreement. See Hanlon, 150 F.3d at 1026.
7. Presence of Government Participant
No governmental entity participated in this matter; this factor, therefore, is irrelevant to the court's analysis.
8. Reaction of the Class Members to the Proposed Settlement
Notice of the settlement was successfully mailed to 65,654 class members and no objections were filed prior to the December 28, 2015 deadline. (Kratz Decl. ¶¶ 10, 12.) "It is established that the absence of a large number of objections to a proposed class action settlement raises a strong presumption that the terms of a proposed class settlement action are favorable to the class members." DIRECTV, 221 F.R.D. at 529. Accordingly, this factor weighs in favor of the court's approval of the settlement.
Having considered the above factors, the court finds that the settlement is fair, adequate, and reasonable pursuant to Rule 23(e). See Hanlon, 150 F.3d at 1026.
C. Attorney's Fees
Federal Rule of Civil Procedure 23(h) provides that "[i]n a certified class action, the court may award reasonable attorney's fees and nontaxable costs that are authorized by law or by the parties' agreement." If a negotiated class action settlement includes an award of attorney's fees, that fee award must be evaluated in the overall context of the settlement. Knisley v. Network Assocs., 312 F.3d 1123, 1126 (9th Cir. 2002); Monterrubio v. Best Buy Stores, L.P., 291 F.R.D. 443, 455 (E.D. Cal. 2013) (England, J.). The court "ha[s] an independent obligation to ensure that the award, like the settlement itself, is reasonable, even if the parties have already agreed to an amount." In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 941 (9th Cir. 2011).
"Under the 'common fund' doctrine, litigant or a lawyer who recovers a common fund for the benefit of persons other than himself or his client is entitled to a reasonable attorney's fee from the fund as a whole.'" Staton, 327 F.3d at 969 (quoting Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980)). In common fund cases, the district court has discretion to determine the amount of attorney's fees to be drawn from the fund by employing either the percentage method or the lodestar method. Id. The percentage method is particularly appropriate in common fund cases where, as here, "the benefit to the class is easily quantified." Bluetooth, 654 F.3d at 942. The Ninth Circuit has permitted courts to award attorney's fees using the percentage method "in lieu of the often more time-consuming task of calculating the lodestar." Id. The court will thus adopt the percentage method here.
Under the percentage method, the court may award class counsel a percentage of the total settlement fund. Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1047 (9th Cir. 2002). The Ninth Circuit "has established 25% of the common fund as a benchmark award for attorney fees." Hanlon, 150 F.3d at 1029. Class counsel request $400,000 in attorney's fees, which constitutes 25% of the total $1.6 million settlement fund. (Dion-Kindem Decl. ¶ 11; Blanchard Decl. ¶ 3.) The parties negotiated the amount for attorney's fees only after the original settlement amount of $1.6 million had been agreed upon. (Settlement Agreement ¶ 26.)
As discussed above, there were substantial risks and delays inherent in this litigation and a possibility that class members would not have recovered anything. No class members have filed any objections to the settlement, nor to the proposed attorneys fees, and PreCheck does not oppose class counsel's application for fees. (Id.; Kratz Decl. ¶ 13.) The court thus finds that class counsel's request for attorney's fees is fair, appropriate, and reasonable under the circumstances. Accordingly, the court will approve class counsel's application for $400,000 in attorney's fees.
D. Costs
"There is no doubt that an attorney who has created a common fund for the benefit of the class is entitled to reimbursement of reasonable litigation expenses from that fund." Alberto, 2008 WL 4891201, at *12. Class counsel have submitted a list of itemized costs relating to scanning, photocopying, mediation, travel expenses, postage, court fees, and other office-related costs. (Dion-Kindem Decl. ¶ 13; Blanchard Decl. ¶ 6.) The court finds these are reasonable litigation expenses. Accordingly, the court will grant class counsel's request for costs in the amount of $2,877.59 to Dion-Kindem and $1,628.22 to Blanchard.
E. Incentive Payment to Named Plaintiff
"Incentive awards are payments to class representatives for their service to the class in bringing the lawsuit." Radcliffe, 715 F.3d at 1163. For the reasons previously discussed, see supra Part II.A.1.d, the court finds that an incentive payment of $5,000 is reasonable and proper in this case.
III. Conclusion
Based on the foregoing, the court grants final certification of the settlement class and approves the settlement set forth in the Settlement Agreement (Docket No. 72-2) as fair, reasonable, and adequate. Consummation of the Settlement Agreement is therefore approved, and the definitions provided in the Settlement Agreement shall apply to the terms used herein. The Settlement Agreement shall be binding upon all members of the class action who did not timely elect to be excluded.
IT IS THEREFORE ORDERED that plaintiff's motion for final approval of the class action settlement (Docket No. 76) be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED THAT:
(1) solely for the purpose of this settlement, and pursuant to Federal Rule of Civil Procedure 23, the court hereby certifies the following class: All individuals on whom, during the period from May 20, 2009 through the date of this Order, a consumer report for employment purposes was furnished by PreCheck, Inc., and where the address provided listed California as the individual's state of residence at the time the report was furnished, but not any individuals who timely opt-out of the settlement. Specifically, the court finds that:
(a) the settlement class members are so numerous that joinder of all settlement class members would be impracticable;
(b) there are questions of law and fact common to the settlement class which predominate over any individual questions;
(c) claims of the named plaintiff are typical of the claims of the settlement class;
(d) the named plaintiff and plaintiff's counsel have fairly and adequately represented and protected the interests of the settlement class; and
(e) a class action is superior to other available methods for the fair and efficient adjudication of the controversy.
(2) the court appoints the named plaintiff, Sarmad Syed, as representative of the class and finds that he meets the requirements of Rule 23;
(3) the court appoints Peter R. Dion-Kindem, P.C., 21550 Oxnard St., Suite 900, Woodland Hills, CA 91367; and Blanchard Law Group, APC, 3311 East Pico Boulevard Los Angeles, CA 90023, as counsel to the settlement class and finds that counsel meets the requirements of Rule 23;
(4) the Settlement Agreement's plan for class notice is the best notice practicable under the circumstances and satisfies the requirements of due process and Rule 23. The plan is approved and adopted. The notice to the class complies with Rule 23(c)(2) and Rule 23(e) and is approved and adopted;
(5) the parties have executed the notice plan in the court's Preliminary Approval Order and successfully mailed notice to 65,654 class members, in response to which five class members requested to be excluded, and none objected. Having found that the parties and their counsel took extensive efforts to locate and inform all putative class members of the settlement, and given that no class members have filed any objections to the settlement, the court finds and orders that no additional notice to the class is necessary;
(6) as of the date of the entry of this Order, plaintiff and
all class members who have not timely opted out of the settlement, and all those acting or purporting to act on their behalf, fully and forever release, waive, acquit, and discharge PreCheck, Inc., and the Released Persons (as defined by paragraph 10 of the Settlement Agreement) from any and all claims set forth in the complaint or any amended complaint, and any and all claims, known or unknown, that arise out of or that could have arisen out of, the facts, transactions, occurrences, representations, or omissions set forth in the First Amended Complaint, based on claims arising out of or based on the Fair Credit Reporting Act; and all penalties, tax, and interest associated with the foregoing. The claims released by plaintiffs and class members are subject to the conditions stated in paragraph 33 of the Settlement Agreement;
(7) class administrator, Dahl Administration, LLC, is awarded $133,427.00 for its services as settlement administrator and payment shall be made in accordance with paragraph 28 of the Settlement Agreement;
(8) class representative, Sarmad Syed, is awarded $5,000 as an incentive payment and payment shall be made in accordance with paragraphs 26, 30, and 31 of the Settlement Agreement;
(9) class counsel, Peter R. Dion-Kindem, P.C. and Blanchard Law Group, APC, are awarded $400,000 in attorney's fees and payment shall be made in accordance with paragraph 29 of the Settlement Agreement;
(10) class counsel, Peter R. Dion-Kindem, P.C., is awarded $2,877.59 in costs and payment shall be made in accordance with paragraph 29 of the Settlement Agreement;
(11) class counsel, Blanchard Law Group, APC, is awarded $1,628.22 in costs and payment shall be made in accordance with paragraph 29 of the Settlement Agreement;
(12) all class members who did not opt out from the settlement will receive a settlement share from the Net Settlement Fund (as defined in paragraph 12 of the Settlement Agreement) and payment shall be made in accordance with paragraphs 26, 30, and 31 of the Settlement Agreement;
(13) this action is dismissed with prejudice; however, without affecting the finality of this Order, the court shall retain continuing jurisdiction over the interpretation, implementation, and enforcement of the Settlement Agreement with respect to all parties to this action and their counsel of record.
Pursuant to Federal Rule of Civil Procedure 58, the Clerk of the Court is instructed to enter judgment accordingly. Dated: January 26, 2016
/s/_________
WILLIAM B. SHUBB
UNITED STATES DISTRICT JUDGE