Opinion
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
San Francisco Super. Ct. No. CGC04428953
Four objectors to a class action settlement appeal contending the trial court abused its discretion when it approved the settlement and awarded fees. We will reject these arguments and affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
Jones, P.J.
Plaintiff Willem Vroegh and others filed a class action suit against five defendants who manufacture, market, or sell flash memory devices. Such devices are designed to store digital files such as documents, music, and pictures. In marketing and advertising the devices, the defendants represented that each had a storage capacity measured in megabytes or gigabytes. Plaintiffs alleged that defendants overstated the devices’ total storage capacity in their marketing and advertising. The complaint was based on a definitional difference. The defendants used a decimal definition of the words megabyte and gigabyte under which a megabyte equals 1 million bytes and a gigabyte equals 1 billion bytes. The plaintiffs used a binary definition under which a megabyte equals 1,048,576 bytes, and a gigabyte equals 1,073,741,824 bytes. This difference resulted in a dispute over whether defendants overstated the capacity of their flash memory devices by 4 percent. Focusing on this purported misrepresentation, plaintiffs alleged class causes of action for breach of contract, fraud, and violations of the Consumer Legal Remedies Act (CRLA), (Civ. Code, § 1750 et seq.) the unfair competition law, (Bus. & Prof. Code, § 17200 et seq.) and the false advertising law (Bus. & Prof. Code, § 17500 et seq.).
The five defendants were Eastman Kodak Company, Fujifilm U.S.A., Inc., Lexar Media, Inc., PNY Technologies, Inc., and SanDisk Corporation.
For more than two years, the case was vigorously litigated. The parties produced and reviewed approximately 500,000 documents in discovery including marketing materials, consumer complaints, customer service policies, and training manuals. The parties also conducted 15 days of depositions and engaged in extensive motion practice.
Beginning in the summer of 2005, the parties pursued formal and informal settlement discussions. Several of the parties participated in two full-day mediation sessions before retired Judge Alex Saldamando. When that effort was unsuccessful, the parties participated in another session with mediator Anthony Piazza. After two more full days of negotiation, the parties reached an agreement in principle.
The parties agreed to certify a settlement class defined as “all persons who purchased within the United States a Flash Memory Device manufactured, branded, and/or sold by one of the Defendants between February 1, 2000 and February 7, 2006 . . . . Such persons must be the original purchaser for his/her own personal use and not for business use.”
As part of the settlement, the defendants agreed to include language on their packaging and Web sites that was designed to alleviate any possible misunderstanding over the storage capacity of their flash memory devices. The defendants also agreed to provide class members with one of two remedies. First, class members who purchased a flash memory device on or before January 1, 2005 could obtain either a cash refund equal to 5 percent of the purchase price, or a 10 percent discount off the price of a future purchase of a flash memory device from one of the defendants’ on-line stores. To obtain the refund, a class member was required to mail a claim form with proof that the purchase had been made on or before January 1, 2005. To obtain the discount, the class member was simply required to submit a claim form online; no proof of purchase was required. Second, class members who purchased a flash memory device after January 1, 2005, could obtain a discount of 10 percent off a future purchase of a flash memory device from one of the defendants’ on-line stores. The parties estimated that 80 million qualifying flash memory devices had been purchased during the class period with an average price of $40.
The settlement states the disclosure language must be similar to the following:
In addition, the parties agreed that plaintiffs could apply for an award of attorney fees and costs of up to $2.4 million. Any such award was to be paid by defendants and would not reduce the benefit provided to class members.
On February 3, 2006, plaintiffs filed a motion asking for preliminary approval of the settlement. After several court-ordered amendments to the plan, the court preliminarily approved the settlement on April 19, 2006, and ordered the parties to notify the class of the settlement. Defendants notified the class by placing notice in two national publications: Parade Magazine on June 28, 2006, and USA Today, on May 30 and June 1, 2006. Defendants also retained an independent claims administrator and maintained a Web site in order to administer the claims submitted by class members.
A total of 4 persons objected to the settlement. Three of them, David Klausner, Robert Stillerman, and Kenneth Chalmers, filed their objections together. They argued the settlement terms were unfair, and that the settlement unreasonably excluded the claims of business purchasers. Another objector, Diedre Gordon filed objections on her own behalf. She argued that notice to the class was inadequate and that the fee proposal was unreasonable.
The trial court rejected these objections and gave final approval to the settlement. The court also awarded plaintiffs’ counsel $2,377,998.61 in fees and costs.
Objectors Klausner, Stillerman and Chalmers filed their appeal on November 22, 2006. Objector Gordon filed her appeal on January 12, 2007.
For ease of reference, we will refer to Klausner, Stillerman, and Chalmers collectively as the Klausner appellants.
II. DISCUSSION
A. General Principles
“A trial court must approve a class action settlement agreement and may do so only after determining it is fair, adequate, and reasonable. [Citation.] It is vested with a broad discretion in making this determination. [Citation.] In exercising its discretion, that court should consider relevant factors, which may include, but are not limited to the strength of the plaintiffs’ case, the risk, expense, complexity and duration of further litigation as a class action, 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 class members to the proposed settlement. At the same time, the trial court should give ‘[d]ue regard . . . to what is otherwise a private consensual agreement between the parties.’ [Citation.] Such regard limits its inquiry ‘“to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.”’ [Citations.] The trial court operates under a presumption of fairness when the settlement is the result of arm’s-length negotiation, investigation and discovery that are sufficient to permit counsel and the court to act intelligently, counsel are experienced in similar litigation, and the percentage of objectors is small. [Citation.] Ultimately, the court’s determination is simply ‘“‘an amalgam of delicate balancing, gross approximations and rough justice. [Citations.]’”’” (In re Microsoft I-V Cases (2006) 135 Cal.App.4th 706, 723; fn. omitted.)
Our task on appeal is “limited to a review of the record to determine whether it discloses a clear abuse of discretion when the trial court’s determination of fairness is challenged on appeal. We do not substitute our notions of fairness for those of the trial court or the parties to the agreement. [Citation] ‘To merit reversal, both an abuse of discretion by the trial court must be “clear” and the demonstration of it on appeal “strong.”’” (In re Microsoft I-V Cases, supra, 135 Cal.App.4th at p. 723.)
“[P]re-certification settlements are routinely approved if found to be fair and reasonable.” (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 240.) Furthermore, voluntary conciliation and settlement are the preferred means of dispute resolution especially in complex class action litigation. (7-Eleven Owners For Fair Franchising v. Southland Corp. (2000) 85 Cal.App.4th 1135, 1151.)
With these principles in mind, we turn to the arguments that have been advanced.
B. Klausner Appeal
1. Evaluation of the Discount Remedy
As we have noted, the settlement agreement provided two remedies to members of the settlement class. Class members who purchased a flash memory device on or before January 1, 2005 could obtain either a cash refund equal to 5 percent of the purchase price, or a discount of 10 percent off the future purchase of a flash memory device from one of the defendants’ on-line stores. Class members who purchased a flash memory device after January 1, 2005 were limited to the discount remedy.
The Klausner appellants now challenge the discount aspect of the settlement arguing the trial court did not evaluate it correctly. First, they contend the discount had no real value because it could only be used to purchase goods on defendants’ on-line stores. Noting they presented evidence to the court that defendants products could be purchased at other on-line stores for an amount that was less than defendants’ prices even when the 10 percent discount was taken into account, appellants argue the trial court should have presumed that no class member would use the discount remedy. We are unpersuaded. To counter this argument, defendants submitted declarations that indicated appellants’ comparison prices were not necessarily reliable. For example, Scott Zeitler, the Director of Pricing and Market Analysis for SanDisk Corporation, stated “the snapshot of online prices for flash memory products listed on Web sites such as ‘pricegrabber.com’ does not necessarily represent a true comparison of the prices for flash memory products available through the Internet. Customers are often unable to purchase products at the prices quoted on these comparison websites because many of the products listed turn out to be ‘unavailable’ when the customer goes to purchase them, or the listed seller’s website no longer exists when a customer clicks on the link to that site.” Representatives from the other defendants submitted similar declarations.
Furthermore, appellants’ argument is premised on the assumption that cost is the only factor that is used when making an on-line purchase. Again, the declarations defendants submitted suggest that reduced cost is not the only factor to be considered in assessing the benefit of the discount remedy. As an example, the Zeitler declaration further stated: “. . . SanDisk’s online store offers unique benefits, thereby providing increased value to customers who purchase directly at SanDisk’s online store. For example, customers have increased confidence in the product being purchased at SanDisk’s online store because they know they are buying directly from a store affiliated with the manufacturer. In my experience, some products purported to be SanDisk products that are offered online for very low prices turn out to be counterfeit or grey market goods. Customers of SanDisk’s online store also receive added value because they can choose from the widest selection of SanDisk products, including those products with the most recent innovations. [¶] 4. Customers recognize the added value provided by SanDisk’s online store, as shown by the fact that many customers do purchase products at SanDisk’s online store, despite the alleged lower prices available at other online stores.”
The trial court found the defendants’ evidence to be persuasive, “the ten percent, is that a reasonable discount? I think it is. It’s a discount off of what a buyer who will buy from one of the defendants would pay. Whether they could go on another [w]eb site or to a regular establishment and get a better discount I’m not sure matters that much. It is a tangible discount off of something that’s offered in the market place. For whatever reason these defendants are offering for sale their products at their prices and now they’re discounting them ten percent to these people. That is a value. If somebody chooses to go to – I can’t remember the one we were talking about, but Cheap Biz, or something like that, so be it. They could go there and then they would pick the pluses and minuses of shopping there. The fact remains we have given them the opportunity to buy something at ten percent less than the published price. That’s what they’re getting. And I think that is fair, adequate and reasonable.”
The trial court’s analysis of this issue was reasonable and did not constitute an abuse of discretion. (In re Microsoft I-V Cases, supra, 135 Cal.App.4th at p. 723.)
The Klausner appellants argue the court’s reasoning was flawed because the declarations submitted by Zeitler and the others defendants were too vague and conclusory to support the court’s conclusion. We find no place in the record where appellants raised this objection in the court below so they cannot validly raise it on appeal. (See 9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 394, p. 444.) The argument also is unpersuasive. Appellants base their argument on language in Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1110, where the court stated “‘[a]n expert’s opinion which rests upon guess, surmise or conjecture, rather than relevant, probative facts, cannot constitute substantial evidence’” (Ibid., quoting Garza v. Workmen’s Comp. App. Bd. (1970) 3 Cal.3d 312, 318, fn. 3.) The record here does not indicate that the declarations defendants submitted were based on guess, surmise or conjecture. Rather, in each case, the declaration was submitted by a high-ranking official of one of the defendants who stated he was familiar with his company’s on-line pricing and with the sales and pricing of his company’s products on other Web sites. The trial court did not abuse its discretion when it relied on those declarations when evaluating the settlement.
Next, the Klausner appellants argue the discount aspect of the settlement lacked any real value because it would benefit the defendants. Appellants base this argument “on the fact that the defendants sell their products at wholesale to retail outlets and distributors, together with the extensive availability of prices more than 10 % lower than the website prices . . . .” Appellants argue that under these circumstances, “it appears likely that a class member using [the 10% discount] would be providing a greater profit margin to the defendant on that sale than the defendant receives on the vast majority of its sales.” We reject this argument because it lacks support in the record. There is no evidence that shows how much profit the defendants made on each of their on-line sales, nor is there any evidence that shows the defendants’ profit margin on their retail sales. A fundamental rule of appellate review is that a judgment is presumed to be correct. An appellate court never makes assumptions to reverse a judgment. (Walling v. Kimball (1941) 17 Cal.2d 364, 373.) We decline appellants request to make unsupported assumptions in this case.
Appellants’ final argument on this point is based on two comments the court made when discussing the discount aspect of the settlement. First, as we have noted the court stated: “the ten percent, is that a reasonable discount? I think it is. It’s a discount off of what a buyer who will buy from one of the defendants would pay. Whether they could go on another [w]eb site or to a regular establishment and get a better discount I’m not sure matters that much.” (Italics added.) Later, in its formal order, the court stated, “With respect to the objection that the discount is illusory because it can be used only on Defendants’ websites, there are no facts to support that objection.” (Italics added.) Appellants now contend the comments we have italicized “show that the trial court believed that the existence of lower prices from other sources was irrelevant and it declined to even consider objectors’ evidence.” However, the court did not say that the evidence the appellants had submitted was irrelevant, nor does the record indicate the court declined to consider that evidence. Rather, the court’s comments taken as a whole, show the court believed appellants’ evidence was insufficient to support the legal argument that they had advanced. We conclude the court did not err on this ground.
2. Refund Remedy
The Klausner appellants suggest the trial court should not have approved the refund remedy because it is “of little practical value.” They note that the average purchase price of the flash devices in question is $40, making the average refund $2. Since to obtain a refund, a class member must fill out a claim form and mail it in, appellants argue that few members of the settlement class will go through that process in order to obtain such a small refund.
While the average refund was small, it must be viewed in context. The complaint alleged that defendants overstated the capacity of their flash memory devices by 4 percent. A 5 percent refund exceeds the damages that were alleged. Furthermore, persons who purchased flash memory devices on or before January 1, 2005, were not limited to the 5 percent cash refund. If they believed that amount was too small, they could elect the discount remedy and purchase a product from one of the defendants’ on-line stores at a discount of 10 percent. We conclude the court did not abuse its discretion by approving the refund aspect of the settlement. (In re Microsoft I-V Cases, supra, 135 Cal.App.4th at p. 723.)
3. Business Purchasers
The class action complaint sought damages on behalf of all those who purchased flash memory devices during the relevant time period. However, the settlement that was approved by the court narrowed the class in one respect. It excluded those who purchased flash memory devices for business use.
The court explained the basis for this difference in its order approving the settlement: “The Court is further aware that the definition of the class varies from the class definition originally involved in this case but finds there is nothing wrong with or uncommon about settling upon a class definition that is different from . . . the one that starts out in the litigation. A plaintiff has no obligation to define a class to include all persons who are arguably harmed by challenged conduct but may (and in some cases must) limit the class to ensure typicality and manageability of proof. The fact that the class is defined differently in the settlement than in the original complaint also is appropriate in this context. In particular, the Court finds that the exclusion of ‘business purchasers’ was ‘rationally based on legitimate considerations’ including the fact that there are different legal claims, defenses and factual issues for this group as compared to consumers. Among other differences, there are questions of whether business purchasers may bring claims under the Consumer Legal Remedies Act, and whether they may have had more information available to them at the time of purchase, in that they may have been repeat purchasers or had other experience with Flash Memory Devices. Accordingly, the exclusion of business purchasers is fair and reasonable. In any event, the exclusion of business purchasers will not prejudice any such purchasers, as those purchasers are not bound by any release.”
The Klausner appellants now challenge this aspect of the settlement. They do not argue that the members of an alleged class have the right to be members of the final certified class. Rather, they argue that “under the specific facts of this case it was error to permit the dismissal because there was an insufficient showing that it was fair to the putative class members whose claims [were] dismissed.”
At the time these proceedings were conducted, class action dismissals were governed by former California Rules of Court, rule 1860. As is relevant, it stated, “A dismissal of an entire class action, or of any party or cause of action in a class action, requires court approval. Requests for dismissal must be accompanied by an affidavit or a declaration setting forth the facts on which the party relies. The affidavit or declaration must clearly state whether consideration, direct or indirect, is being given for the dismissal and must describe the consideration in detail.” Case law indicates that a court’s decision to approve a dismissal under rule 1860 is reviewed under an abuse of discretion standard. (Shapell Industries, Inc. v. Superior Court (2005) 132 Cal.App.4th 1101, 1110.)
All further rule references will be to the California Rules of Court.
With minor revisions, the provisions of former rule 1860 are now set forth in rule 3.770.
We find no abuse here. As the trial court stated, there are legitimate differences between those who purchased flash memory devices for personal and business use. Business purchasers are more likely to be repeat customers and thus be aware of any limitations in the devices they purchase. Therefore, it is reasonable to conclude that it was less likely they would have been misled. Furthermore, at least one of the causes of action alleged, that seeking damages under the CRLA, could not be maintained by a business purchaser. We conclude the court did not abuse its discretion when it dismissed the claims of business class members.
Under the CRLA, an action may be maintained by “[a]ny consumer” which is defined as “an individual who seeks or acquires, by purchase or lease any goods or services for personal, family, or household purposes.” (Civ. Code, §§ 1761, subd. (d) & 1780, subd. (a).)
In arguing the trial court erred, appellants rely primarily on La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864 (La Sala). There, the plaintiffs commenced a class action suit on behalf of themselves and others. Then, during the course of the suit, the plaintiffs obtained, on an individual basis, all the relief they were seeking. The trial court ruled there was no longer an individual plaintiff who could represent the class and it dismissed the suit. Our Supreme Court reversed stating as follows: “When a plaintiff sues on behalf of a class, he assumes a fiduciary obligation to the members of the class, surrendering any right to compromise the group action in return for an individual gain. Even if the named plaintiff receives all the benefits that he seeks in the complaint, such success does not divest him of the duty to continue the action for the benefit of others similarly situated.” (Id. at p. 871.)
The facts in this case are significantly different from La Sala. The class action plaintiffs did not dismiss the suit because they and they alone had obtained the benefit they were seeking in the complaint. Rather, the plaintiffs negotiated a settlement under which they and as many as 80 million others who purchased flash memory devices could benefit from the multi-tiered settlement we have described. La Sala does not assist appellants in this very different factual and procedural context.
Appellants contend the trial court’s ruling on this point was unsupported. They note that they submitted declarations from two business purchasers who stated they were misled by the defendants alleged misrepresentations. Appellants also point out that even if the CRLA cause of action could not be maintained on behalf of business purchasers, there was no impediment to business purchasers maintaining the other causes of action that had been alleged. While these factors are relevant, they are not controlling. The issue is whether the trial court abused its discretion when it dismissed the claims of business class members and we find no such abuse here. The fact that the record also contains evidence that might have supported a different conclusion is of no moment. When two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court. (In re Marriage of Rosevear (1998) 65 Cal.App.4th 673, 682.)
4. Whether the Settlement was Collusive
The trial court approved the settlement after concluding that it was fair, adequate and reasonable. The court noted that a presumption of fairness exists when the settlement is the result of arm’s-length bargaining, investigation and discovery that are sufficient to allow the court and counsel to act intelligently, counsel is experienced in similar litigation, and the percentage of objectors is small. The court found that each of those factors was present in this case.
The Klausner appellants now contend the trial court should not have relied on the presumption because there was substantial evidence of collusion that the trial court “refused to consider.” This is simply incorrect. The court did not refuse to consider the evidence appellants submitted. Rather, the court considered that evidence and rejected appellants’ argument that the settlement was collusive. As the court explained: “With respect to objectors’ assertion that the settlement appears collusive, there has been no showing from which a conclusion of collusion could be made. The terms of this settlement were negotiated with the assistance of an independent, capable, experienced mediator, and have been shown to reflect the balance between the prudence of settling any large litigation and the strengths and weaknesses of both sides in this case. The Court is mindful that even if the alleged misrepresentation as to capacity were proven it may not have been material. The fact that a settlement may be beneficial to a defendant’s ongoing business is not a reason to conclude that the settlement is improper, but rather may reflect a prudent motive for a defendant to compromise its position. The terms of the settlement, even as described by the objector[s], do not reflect collusion.”
Appellants argue that various aspects of this settlement exhibit the “[s]tructural [s]igns” of a collusive class action settlement. For example, appellants note that the defendants agreed to pay the plaintiffs’ attorney fees, and they argue that the discount remedy had “no value” and had the potential to provide defendants with increased profits. They also note that the terms of the settlement excluded business purchasers, and that it did not provide any fixed sum of money that defendants would be obligated to pay to members of the settlement class. However, even if we were to assume that these and the other facts appellants cite are evidence on which a finding of collusion could be based, that is not how the trial court ruled. The court here ruled the settlement was not collusive and that finding is amply supported by the record. Again, when two or more inferences can reasonably be deduced from the facts, the reviewing court has no authority to substitute its decision for that of the trial court. (In re Marriage of Rosevear, supra, 65 Cal.App.4th at p. 682.)
The Klausner appellants also allege that “the record discloses apparent failures to comply with the rules of court regarding class action settlements. . . .” However appellants concede they cannot validly raise this issue on appeal because they did not raise it in the court below.
C. Gordon Appeal
1. Notice
Gordon contends the settlement must be reversed because the trial court did not provide adequate notice to members of the class. Her first argument is premised on the fact that one of the causes of action alleged sought damages under the CRLA. Civil Code section 1781 of the CRLA sets forth the rules that apply when a plaintiff seeks to maintain a class action under the act. Civil Code section 1781, subdivisions (b), (c), (d), (e), and (f) state as follows:
“(b) The court shall permit the suit to be maintained on behalf of all members of the represented class if all of the following conditions exist:
“(1) It is impractical to bring all members of the class before the court.
“(2) The questions of law or fact common to the class are substantially similar and predominate over the questions affecting the individual members.
“(3) The claims or defenses of the representative plaintiffs are typical of the claims or defenses of the class.
“(4) The representative plaintiffs will fairly and adequately protect the interests of the class.
“(c) If notice of the time and place of the hearing is served upon the other parties at least 10 days prior thereto, the court shall hold a hearing, upon motion of any party to the action which is supported by affidavit of any person or persons having knowledge of the facts, to determine if any of the following apply to the action:
“(1) A class action pursuant to subdivision (b) is proper.
“(2) Published notice pursuant to subdivision (d) is necessary to adjudicate the claims of the class.
“(3) The action is without merit or there is no defense to the action.
“A motion based upon Section 437c of the Code of Civil Procedure shall not be granted in any action commenced as a class action pursuant to subdivision (a).
“(d) If the action is permitted as a class action, the court may direct either party to notify each member of the class of the action. The party required to serve notice may, with the consent of the court, if personal notification is unreasonably expensive or it appears that all members of the class cannot be notified personally, give notice as prescribed herein by publication in accordance with Section 6064 of the Government Code in a newspaper of general circulation in the county in which the transaction occurred.
“(e) The notice required by subdivision (d) shall include the following:
“(1) The court will exclude the member notified from the class if he so requests by a specified date.
“(2) The judgment, whether favorable or not, will include all members who do not request exclusion.
“(3) Any member who does not request exclusion, may, if he desires, enter an appearance through counsel.
“(f) A class action shall not be dismissed, settled, or compromised without the approval of the court, and notice of the proposed dismissal, settlement, or compromise shall be given in such manner as the court directs to each member who was given notice pursuant to subdivision (d) and did not request exclusion.”
Gordon contends the class settlement notice given here was inadequate because it did not satisfy the mandate of Civil Code section 1781, subdivision (d) that notice be given as prescribed in Government Code section 6064, i.e., once a week for four consecutive weeks in a newspaper of general circulation in the county in which the transaction occurred.
Government Code section 6064 states, in part, “Publication of notice pursuant to this section shall be once a week for four successive weeks.”
We must read the language of a statute as a whole (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735), and when Civil Code section 1781 is read as a whole, it is apparent that section 1781, subdivision (d) describes how notice must be provided when a court decides to certify a class so it can be litigated on an ongoing basis as a class action. This is made clear by section 1781 subdivision (b) which states that the section sets forth the rules a court must apply when deciding whether to “permit the suit to be maintained on behalf of all members of the representative class . . . .” (Italics added.) The common definition of the word “maintain” is to “keep up or carry on” (American Heritage Dict. (4th ed. 2001) p. 1055), and a suit is kept up or carried on only if it is litigated on an ongoing basis. Here, no one wanted to “keep up or carry on” the suit that had been filed as a class action. Rather, they proposed to settle their dispute.
Our conclusion on this point is buttressed by the mandatory requirement in Civil Code section 1781, subdivision (e) that any notice given under section 1781, subdivision (d) inform the class members that any “judgment, whether favorable or not, will include all members who do not request exclusion.” (Civ. Code, § 1781, subd. (e)(2).) A judgment may be characterized as “favorable or not” only after the action is litigated to a judgment. The court here did not anticipate a favorable or unfavorable judgment ever being entered. Rather, the parties proposed to settle their dispute. Indeed, providing notice under Civil Code section 1781, subdivision (d), and therefore suggesting that a “favorable” judgment ultimately might be entered would have been misleading and confusing to members of the settlement class.
Gordon contends that the requirement to provide notice under Civil Code section 1781, subdivision (d) can be inferred from the language of section 1781, subdivision (f). We disagree. Subdivision (f) states that notice of a settlement in a CRLA case must be provided to “each member who was given notice pursuant to subdivision (d) . . . .” As the trial court here noted, “that in this case is nobody.” No class-wide notice was given of the pendency of the matter as a class action. The trial court never made an order regarding notice to the class of class certification. (See rule 3.766(c).) We will not, by judicial fiat, construe section 1781, subdivision (d), to require notice in a circumstance other than that specified by the Legislature, i.e., when deciding whether it is appropriate to “permit the suit to be maintained” as a class action. We conclude the court did not err when it failed to provide notice under Civil Code section 1781, subdivision (d).
However, while the court was not required to provide notice under Civil Code section 1781, subdivision (d), it was required to provide notice. “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 apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. [Citations.] The notice must be of such nature as reasonably to convey the required information, [citation] and it must afford a reasonable time for those interested to make their appearance. [Citations.] But if with due regard for the practicalities and peculiarities of the case these conditions are reasonably met, the constitutional requirements are satisfied.” (Mullane v. Central Hanover, Tr. Co. (1950) 339 U.S. 306, 314-315.)
At the time the proceedings at issue were conducted, settlement of class actions was governed by rule 1859. As is relevant, rule 1859 stated:
With minor modifications, these provisions are now set forth in rule 3.769.
“(c) Any party to a settlement agreement may submit a written notice of motion for preliminary approval of the settlement. The settlement agreement and proposed notice to the class members must be filed with the motion, and the proposed order must be lodged with the motion.
“(d) The court may make an order approving or denying certification of a provisional settlement class after the preliminary settlement hearing.
“(e) If the court grants preliminary approval, its order must include the time, date, and place of the final approval hearing; the notice to be given to the class; and any other matters deemed necessary for the proper conduct of a settlement hearing.
“(f) If the court has certified the action as a class action, notice of the final approval hearing must be given to the class members in the manner specified by the court. The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.”
The parties in this case followed these rules precisely. After they reached a tentative settlement, the plaintiffs filed a motion for preliminary approval. The court preliminarily approved the settlement. It conditionally certified a class for settlement purposes only and ordered the parties to provide notice to the settlement class. Notice was provided in two ways. First, what the parties described as a “summary notice” was published in two national publications: Parade Magazine and USA Today. It described the dispute, the proposed settlement, and told class members that they had the right to opt out of the settlement and bring a separate suit on their own behalf. The notice then provided a web address that class members should visit for “[f]or important additional information and instructions . . . .”
The Web site to which settlement class members were directed contained what the parties described as “long form notice” of the settlement. It set forth, in detail, the background of the suit, the class definition, the terms of the settlement, the claims process and deadlines, the terms of the proposed dismissal, the proposed attorney fee agreement, the rights and options of class members if they wished to remain a member of the class and if they wished to opt out of the settlement, the time and date of the final settlement hearing, and how objections should be raised.
This brings us to Gordon’s second argument. She contends the notice was inadequate because the published portion of the notice did not provide enough information. Specifically, Gordon complains the published notice “did not specify a date for the final approval hearing, nor explain that class members could object in writing or by appearing at the hearing,” “did not include the procedures for the member to follow in requesting exclusion from the class,” and “did not state that any member who does not request exclusion, may, if he or she desires, enter an appearance through counsel . . .” While the published portion of the notice did not include the information Gordon describes, all of that information and more was provided on the Web site to which members of the settlement class were directed in the published notice. Rule 1859(f) stated that notice of settlement must be given “in the manner specified by the court.” In the court below, appellant conceded that the trial court had the discretion to determine what type of notice was appropriate. (See also 7-Eleven Owners For Fair Franchising v. Southland Corp., supra, 85 Cal.App.4th at p. 1164.) We conclude the court did not abuse its discretion when it ruled that summary notice in two national publications that provided basic information, together with a long form notice on a linked Web site that included a full explanation of all the relevant facts would provide adequate notice to the members of the settlement class.
While not controlling, we note that former rule 1856(e) specifically contemplated using the Internet to provide notice. The section stated that when providing notice that an action is pending, “the court may order a means of notice reasonably calculated to apprise the class members of the pendency of the action-for example, publication in a newspaper or magazine, broadcasting on television, radio, or the Internet; or posting or distribution through a trade or professional association, union or public interest group.” (Italics added.)
Gordon’s final argument on notice is a combination of her first two. She contends the notice that was provided violated due process because it failed to comply with the requirements set forth in controlling statutes and the rules of court. However, as we have stated, the notice did comply with the controlling statutes and the rules of court. We reject Gordon’s due process argument because it is based on a false premise.
2. Procedural Barriers
The settlement agreement stated that those who wished to opt out of the settlement must do so by mail. According to the terms of the settlement, the request to opt out had to include what brand of device the person purchased and the approximate date of the purchase.
Gordon now challenges this requirement arguing it was unduly onerous. We disagree. As the trial court stated aptly, “all you got to do is open your camera you’ll get the model number and the model name and you’ll have a pretty good idea maybe when you bought it good enough for you to write [on] your claim form. Is that perfect? Of course not. Is it reasonable? Is it fair? Is it adequate? I think so.” We agree with the court’s trenchant observation.
The settlement agreement also required that any member of the class who objected to the settlement must set forth those objections in writing and send them to the clerk of the San Francisco Superior Court with copies to the seven attorneys who represented the parties to this case. Gordon contends the requirement that objectors provide copies to counsel was too onerous under language contained in a concurring opinion authored by former Chief Justice Bird in State of California v. Levi Strauss & Co. (1986) 41 Cal.3d 460, 483. With respect, we note that Justice Bird’s opinion on this point was a concurrence that was not signed by any other member of the court. It is not controlling here. Furthermore, the challenged requirement was not unduly onerous. Objections could be sent by first class mail for only a few dollars. Photocopying and supplies might add a small amount to that cost. We do not view this as a significant burden in the context of a settlement that was designed to benefit many millions of purchasers.
In her concurring opinion, Chief Justice Bird stated as follows: “Next, intervener contends that the trial court erred in failing to provide for effective participation by objectors. She points out that would-be objectors were told to mail copies of their written objections to five different addresses. This requirement imposed a burden out of proportion to the likely size of the average individual recovery. There is no apparent reason why the Attorney General could not have received the objections at a single location and sent them on to counsel, thereby saving each individual additional postage.” (State of California v. Levi Strauss & Co., supra, 41 Cal.3d at p. 483.)
3. Claims Data
Gordon argues that if we “find that the case should be remanded for further proceedings,” we should “require the disclosure of the total number and dollar value of the claims made. . . .” Gordon argues this information would be valuable to academics and organizations that track class actions and measure their social and economic effect. We are not remanding this case for further proceedings, so Gordon’s request is moot. It is also unpersuasive. Gordon has not cited and we are not aware of any case or California statute that would require the disclosure of that type of information. Gordon’s remedy if any, must be through the Legislature.
Indeed, the primary authority upon which Gordon relies is an unpublished decision of a North Carolina trial court addressing North Carolina law. Gordon has not explained how that case is controlling or even citable here.
4. Attorney Fees
Plaintiffs’ attorneys asked the trial court to award them fees using the lodestar method approved by our Supreme Court in Serrano v. Priest (1977) 20 Cal.3d 25. The court agreed and awarded counsel $2,307,976.43 in fees representing an enhancement of their lodestar by approximately 1.49. Gordon now contends the court erred when awarding fees.
The lodestar method of awarding fees “requires the trial court first to determine a touchstone or lodestar figure based on a careful compilation of the time spent and reasonable hourly compensation for each attorney. That touchstone figure may then be augmented or diminished by taking various relevant factors into account, including (1) the novelty and difficulty of the questions involved and the skill displayed in presenting them; (2) the extent to which the nature of the litigation precluded other employment by the attorneys; and (3) the contingent nature of the fee award, based on the uncertainty of prevailing on the merits and of establishing eligibility for the award. [Citation.]” (Flannery v. California Highway Patrol (1998) 61 Cal.App.4th 629, 639, fn. omitted.) On appeal we review the trial court’s decision to award fees under an abuse of discretions standard. (Id. at p. 647.)
Here, Gordon challenges the attorney fee award on three grounds. First, she contends the award must be reversed because the trial court did not explain adequately why it awarded enhanced fees. We disagree. The transcript of the fee hearing demonstrates the trial court fully understood the Serrano case and the standards it was obligated to apply. The transcript also indicates the court carefully weighed counsels’ request for an enhanced fee, “The multiplier is right on the edge of what I approve for this kind of case, but it’s acceptable, certainly not out of line, it is I think reasonable given the risk involved in this litigation, given the duration of time spent on it and given the standards that this Court has applied in the past for multipliers and is aware of in terms of similar cases in similar courts to this one.” The court’s formal order further explained why the court believed a multiplier was warranted: “The requested fee of $2,307.976.43 represents an enhancement of the lodestar in this matter by a multiplier of approximately 1.49. The court finds that this multiplier is fair and reasonable in light of the contingent nature of Class Counsel’s representation of the Class (both from the point of view of eventual victory on the merits and the point of view of establishing eligibility for an award), the novelty and complexity of the questions involved in this case, the value of class benefits obtained, and the importance of other injunctive relief obtained by Class Counsel. The Court also finds that Class Counsel bore a substantial amount of risk that they would receive no compensation for its work or reimbursement for its expenses, while litigating this case over several years, and that the enhancement is consistent with those awarded in similar cases, settlements and circumstances in similar courts to this one.”
We conclude the court adequately explained why it was granting an enhancement to the lodestar.
Gordon contends the court’s explanation was inadequate under Ramos v. Countrywide Home Loans, Inc. (2000) 82 Cal.App.4th 615 (Ramos). However, there, the trial court granted what the Ramos court characterized as a “relatively large multiplier” of 2.5 after providing only a brief summary of the factors upon which it was relying to make the award. (Id. at pp. 620, 625.) The Ramos court ruled the trial court’s explanation was inadequate given the size of the multiplier and the lack of support for some of the factors that were cited by the trial court. (Id. at pp. 625-629.) Here, by contrast, the court’s explanation was more detailed, the multiplier was lower, and as we will now explain, the factors the court cited were supported.
Gordon contends the factors the court cited when awarding a multiplier are not supported. The first factor the court cited was the contingent nature of the case. The factor is clearly supported. The record indicates plaintiffs’ counsel pursued this case without any assurance that they would be paid or that their costs would be reimbursed. The possibility that counsel would not be paid was very real. Defendants defended the suit aggressively and to the end, they denied any liability. Their position was founded on several significant defenses including the fact that the definitions of gigabyte and megabyte they used arguably were consistent with both state and federal law. Defendants also argued forcefully that it would have been difficult for any purchaser to maintain they had relied on the alleged misrepresentation or that they had been harmed by it. As the trial court observed, it was by no means certain that the plaintiffs would be able to establish that class members were eligible for an award or that they would prevail ultimately.
The second factor cited by the court, the cases novelty and complexity, was also supported. The case itself dealt with high technology issues that are themselves, novel and complex. For example, while the complaint alleged primarily that defendants had overstated the capacity of their flash memory devices because they used a specific definition of terms megabyte and gigabyte, the complaint alleged alternatively that the disparity may have been due to undisclosed partitioning and/or formatting, bad sectors, internal operational data storage requirements, environmental operating conditions and/or idiosyncratic interoperability with particular computer operating systems. The trial court could reasonably conclude that the subject matter of this dispute was both novel and complex.
The final factor the court cited was the skill that counsel displayed when presenting the case, and here there was ample evidence to support the conclusion that counsel acted skillfully. As we have noted, there were significant impediments to the class recovering anything. The fact that counsel was able to negotiate a settlement that provided significant benefit to class members on what arguably was a weak case was evidence of the skill they displayed.
In sum, we conclude substantial evidence supports each of the factors upon which the trial court relied.
Gordon’s final argument is that the trial court could not validly “enhance the lodestar by reference to the monetary ‘value’ of the settlement under the circumstances.” We reject this argument because the court did not enhance the lodestar based on the value of the settlement. The court simply measured the fees requested against the benefit obtained as a way of “cross-checking” the amount it awarded under the Serrano standard. The court was quite clear that the analysis was “not necessary” to its award of fees. We reject appellant’s argument because it is based on a false premise.
III. DISPOSITION
The orders approving the class action settlement and awarding fees and costs are affirmed.
We concur: Gemello, J., Needham, J.
“1 megabyte (MB) = 1 million bytes. Total accessible capacity varies.”
“1 gigabyte (GB) = 1 billion bytes. Total accessible capacity varies.” (Fn. omitted.)