Opinion
B225622
09-15-2011
SUSAN WILLIAMS et al., Plaintiffs and Respondents, v. L.A. FITNESS INTERNATIONAL, LLC, Defendant and Respondent; ANAND L. DANIELL, Objector and Appellant.
Kerr & Wagstaffe, Michael von Loewenfeldt; Law Offices of Kevin T. Barnes, Kevin T. Barnes and Gregg Lander for Plaintiffs and Respondents. Eagan Avenatti and Jason M. Frank for Defendant and Respondent. Anand L. Daniell, in pro. per., for Objector and Appellant.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC385623)
APPEAL from the judgment of the Superior Court of Los Angeles County. Susan Bryant-Deason, Judge. Affirmed.
Kerr & Wagstaffe, Michael von Loewenfeldt; Law Offices of Kevin T. Barnes, Kevin T. Barnes and Gregg Lander for Plaintiffs and Respondents.
Eagan Avenatti and Jason M. Frank for Defendant and Respondent.
Anand L. Daniell, in pro. per., for Objector and Appellant.
SUMMARY
Susan Williams, Nicholle Mortensen, and Julie Done filed this class action against L.A. Fitness International, LLC (L.A. Fitness), on behalf of former and current members of its fitness clubs, claiming L.A. Fitness wrongfully required 20 or 30 days' notice (depending on the contract) to cancel automatic payments for its monthly memberships. The parties reached a class settlement after mediation. The trial court conditionally certified the settlement class and preliminarily approved the settlement, and notice was given to over a million class members. Class member Anand L. Daniell objected to the settlement. The trial court approved the class settlement.
Daniell appeals from the order approving the settlement and the resulting judgment, contending the trial court abused its discretion when it found that class representatives Susan Williams and Julie Done adequately represented the class. Daniell contends the litigation was "attorney manufactured," and the trial court had insufficient evidence that the named plaintiffs were adequate class representatives. He also appears to contend the claims of plaintiff Nicholle Mortensen were never adjudicated, rendering the judgment subject to reversal.
We find the trial court did not abuse its discretion in approving the settlement, and therefore affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs filed this action on behalf of a putative class of current and former members of L.A. Fitness's "monthly membership" program. Plaintiffs claimed L.A. Fitness's monthly membership contracts violate Civil Code section 1812.84, subdivisions (a) & (b) (Health Studio Services Contract statute, prohibiting health clubs from requiring payments that "exceed the term of the contract"), Business and Professions Code section 17200 et seq., and Civil Code section 1750 et seq. (the Consumer Legal Remedies Act). Specifically, plaintiffs challenged the termination provisions of L.A. Fitness's monthly membership contracts that required payment of the last month of dues in advance and required 20 or 30 days' notice of cancellation in advance of the member's electronic fund transfer billing date. Plaintiffs sought damages for former gym members as well as injunctive relief for present members to prevent enforcement of the illegal terms of the membership contracts and to require future contracts to comply with the law.
L.A. Fitness demurred to plaintiffs' First Amended Complaint, contending its contracts did not violate the law, and that plaintiff Mortensen could not state a violation of the Consumer Legal Remedies Act because she was a current gym member who had not suffered an actual injury associated with the termination of her membership. The demurrer was overruled almost in its entirety, but was sustained without leave to amend as to Nicholle Mortensen's claim under the Consumer Legal Remedies Act. The parties, however, erroneously assumed that Mortensen had been dismissed from the entire action by this ruling.
The parties stipulated to have the trial court determine certain "threshold legal issues" to streamline resolution of the case. They provided the court with a set of stipulated facts and asked the court to determine whether L.A. Fitness's contracts violate Civil Code section 1812.84, subdivisions (a) & (b), Business and Professions Code section 17200 et seq., and Civil Code section 1750 et seq.
The stipulated facts are these: L.A. Fitness offers a monthly dues membership, where the member pays up-front charges when they begin their membership, including a one-time initiation fee, the first month of dues, and a prepaid last month of dues. The membership dues are then paid on a monthly basis beginning the month after the enrollment date. Membership dues are collected automatically, either by electronic fund transfer or credit card, at the member's election. The monthly membership, and monthly payment, may be cancelled with either 20 or 30 days' notice before the member's next automatic billing date. If less than the required notice is provided, another month of dues will be collected, and the prepaid last month of dues will be applied to the following month. If proper notice is given, the prepaid last month of dues will be applied to the month following the notice of cancellation, and then the membership will terminate.
Plaintiff Susan Williams began her monthly dues membership on November 12, 2005, as a "family add-on" to the membership of her daughter, plaintiff Nicholle Mortensen. Williams paid her monthly dues on the first of the month by credit card, beginning on December 1, 2005. She requested cancellation of her monthly membership on April 24, 2007. She was charged monthly dues on May 1, 2007, and her prepaid last month of dues was applied on June 1, 2007. Her membership then expired on June 30, 2007.
Plaintiff Julie Done entered into a monthly dues contract on December 15, 2001, as a family member add-on to her husband's membership. She paid her dues by credit card on the second of each month following her enrollment. She mailed a notice of cancellation on either March 3, 2004, or March 10, 2004. She was not charged monthly dues on April 1, 2004, and her prepaid last month of dues was applied in April, with her membership terminating on May 15, 2004.
After submitting motions based on these stipulated facts, the parties conducted further discovery and then submitted their dispute to mediation, resulting in a settlement. Plaintiffs Williams and Done then submitted an unopposed motion for preliminary approval of their settlement, which the trial court granted.
The motion was supported by declarations of Williams and Done and their counsel. Both plaintiffs declared they sought the assistance of counsel because L.A. Fitness improperly charged postcancellation dues. They summarized their participation in discovery and settlement, including submitting to a deposition and participating in mediation. Both plaintiffs declared they did not put their own interests above those of the class and they believed the settlement was valuable. Class counsel Michael von Loewenfeldt summarized his extensive class action experience, the discovery and investigation of the claims against L.A. Fitness, and the terms of the settlement agreement. Class counsel Kevin T. Barnes summarized his extensive experience prosecuting class actions.
The material terms of the settlement agreement are as follows: L.A. Fitness gave former members an election between receiving damages of $45 or a 45-day free fitness club membership. The default was the free membership; a claim form was required to get the money. Current members received injunctive relief, barring L.A. Fitness from enforcing the contract terms requiring 20 or 30 days' notice of cancellation to stop automatic payments, instead permitting cancellation with only five days' notice. Also, L.A. Fitness agreed to offer a new contract to its members. Notice to the class was to be given by both electronic mail and U.S. mail, on January 19, 2010, and February 2, 2010, respectively. Notice and claims were to be administered by a third-party claims administrator. The order created a March 19, 2010 cutoff date for opt-out notices and objections by class members and set the final approval hearing for April 16, 2010.
Of the 1.2 million class members who were sent notice of the settlement, only three objections were received, and only 19 opted out of the class.
Appellant Daniell filed his objection with the court on March 22, 2010, and he appeared at the final approval hearing. He complained that: (1) the settlement was inadequate for current members of L.A. Fitness because they would receive nothing in exchange for their release; (2) there was insufficient evidence that Susan Williams and Julie Done were adequate representatives; and (3) they were inadequate representatives because there is a close association between them and counsel and because plaintiff Done is an attorney. His objection also attached email correspondence he sent to class counsel which mentioned, among other things, that he possessed "documents and information" concerning a sexual harassment claim he had against his former employer, 24 Hour Fitness. In his appellate brief, he also accused class counsel Kevin T. Barnes of "manufacturing" claims targeting private gyms in a number of other class actions, including some against his former employer, 24 Hour Fitness.
In response to Daniell's objection and in support of the final approval of the settlement, plaintiffs Done and Williams submitted additional declarations. Done acknowledged that she is a licensed attorney, but confirmed that she has no interest in attorney fees or costs in this action, and she has never worked professionally with class counsel. Class counsel Loewenfeldt stated plaintiff Done was a class member in an action against 24 Hour Fitness that was prosecuted by Loewenfeldt's firm, and that she contacted counsel in this instance regarding her potential claims against L.A. Fitness. Loewenfeldt confirmed that this action, and others which he has prosecuted, were client initiated and not "manufactured" by attorneys. He also testified that plaintiff Done has no professional association with his firm. Class counsel Barnes declared that plaintiff Williams was a class representative for an employment class action that his firm prosecuted against Walmart, but that his firm has never had anything more than an attorney-client relationship with her. He also stated this class action was client initiated.
The trial court entered judgment certifying the class and approving the settlement. The judgment, which incorporated the settlement agreement, established a settlement fund of $9,700,000 from which former members could elect to submit a claim for $45 or receive a 45-day free membership at L.A. Fitness. The judgment also provided for attorney fees of $1,400,000 to class counsel, payment of $831,000 to the third-party claims administrator, and an incentive payment of $5,000 to each class representative. Injunctive relief preventing L.A. Fitness from enforcing the contract provision requiring 20 or 30 days' notice of cancellation, permitting cancellation with only 5 days' notice, and requiring a revised contract was also entered. This timely appeal followed.
DISCUSSION
Code of Civil Procedure section 382 authorizes class actions "when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court . . . ." (See also Cal. Rules of Court, rule 3.760 et seq.) Class certification requires the party seeking certification to prove "(1) . . . a sufficiently numerous, ascertainable class, (2) . . . a well-defined community of interest, and (3) that certification will provide substantial benefits to litigants and the courts, i.e., that proceeding as a class is superior to other methods. [Citations.] In turn, the 'community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.' [Citation.]"(Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1089, citing among others, Code Civ. Proc., § 382 & Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.)
A class action settlement must be approved by the court following a hearing. (Cal. Rules of Court, rule 3.769(a).) Factors relevant to the reasonableness of a class action settlement agreement include "'the strength of plaintiffs' case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through 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.' [Citations.] This list 'is not exhaustive and should be tailored to each case.' [Citation.] . . . '[A] presumption of fairness exists where: (1) the settlement is reached through arm's-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small.' [Citation.]" (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128 (Kullar).)
"A class member who appears at a fairness hearing and objects to a settlement affecting that class member has standing to appeal." (Consumer Cause, Inc. v. Mrs. Gooch's Natural Food Markets, Inc. (2005) 127 Cal.App.4th 387, 395.) Our review of the fairness or reasonableness of a class action settlement is "limited to a determination whether the record shows 'a clear abuse of discretion.' [ Citation.] Our task is not to determine in the first instance whether the settlement was reasonable or whether certification was appropriate. We determine only whether the trial court acted within its discretion in making the rulings that it did. [Citations.]" (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 234-235.) In reviewing the trial court's certification of the class for settlement purposes, our task is not to determine whether the class is appropriate, but whether the trial court abused its discretion in granting certification. "'"[T]rial courts have been given great discretion with regard to class certification. . . . [I]n the absence of other error, [an appellate] court will not disturb a trial court ruling on class certification which is supported by substantial evidence unless (1) improper criteria were used . . . or (2) erroneous legal assumptions were made . . . ." [Citations.]'" (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1807.)
Daniell complains there was insufficient evidence that the named plaintiffs are adequate class representatives, because Done is an attorney, and there was a past attorney-client relationship between Williams and class counsel Barnes. It appears that Daniell is concerned about collusion between the representative plaintiffs and class counsel, or that there was insufficient evidence before the court to determine the "closeness" of the relationship between the named plaintiffs and class counsel.
Daniell's cited authority does not support his concerns about some sort of unfair collusion in this case. In Apple Computer, Inc. v. Superior Court (2005) 126 Cal.App.4th 1253, the trial court abused its discretion when it denied an attorney disqualification motion where "an insurmountable conflict of interest exist[ed] between the attorneys for the putative class . . . and the putative class itself" due to the named plaintiff's employment as an attorney for class counsel. (Id. at p. 1278, italics omitted.) The court adopted the holdings of federal decisions refusing to permit class action attorneys, their relatives, or business associates from acting as the class representative. (Id. at pp. 1264-1266.) The court concluded that the named plaintiff's interest in attorney fees created a conflict. "Because the financial recovery for reasonable attorney's fees would dwarf the individual's recovery as a member of the class . . . , the financial interests of the named plaintiffs and of the class are not coextensive." (Id. at p. 1265.) Here, in contrast, Done is not affiliated with class counsel, the former attorney-client relationship between Williams and Barnes by itself does not suggest an inappropriately close relationship in this case, and class counsel and plaintiffs have disavowed any common financial or other relationship besides that of attorney-client.
Daniell also contends "the record [must] contain information sufficient for the court to intelligently evaluate the adequacy of the settlement," citing Kullar, supra, 168 Cal.App.4th at page 129, and that insufficient evidence demonstrates Done and Williams are adequate representative plaintiffs. However, Kullar concerned the fairness of the terms of a class action settlement, not the adequacy of the class representatives. In Kullar, the parties submitted no declarations describing the investigation undertaken, no records were produced in discovery, and none of the factors considered to arrive at the settlement amount were explained to the court. (Id. at pp. 128-129.) In that case, it was impossible to determine if the settlement was fair without "basic information about the nature and magnitude of the claims in question and the basis for concluding that the consideration being paid for the release of those claims represents a reasonable compromise." (Id. at p. 133.)
Here, in contrast, plaintiffs provided the court with declarations describing the extent of discovery and the exchange of information, explaining the relationship between plaintiffs and class counsel, and establishing the class action was initiated by the named plaintiffs and not their attorneys. Unlike Kullar, the adequacy of the settlement achieved for the benefit of the class is not at issue here. Only the much simpler issue of the adequacy of the class representatives is at issue, which clearly does not require the volume of evidence called for in Kullar. (See Kullar, supra, 168 Cal.App.4th at pp. 124-125.)
The named plaintiffs must adequately represent the interests of the class, acting as fiduciaries on behalf of the class, without any conflicts with class interests. (La Sala v. American Sav. & Loan Assn. (1971) 5 Cal.3d 864, 871.) But Daniell has provided no evidence or legal authority to support his claims about plaintiffs' adequacy to represent this class, and we conclude the information provided to the court was clearly sufficient. Daniell also has not provided any authority or argument explaining how the parties' incorrect belief that plaintiff Mortensen was dismissed from the action supports reversal of the judgment. He mentions this "defect" only in passing in his statement of appealability. Therefore, we will not address this issue. (McComber v. Wells (1999) 72 Cal.App.4th 512, 522; Altman v. Poole (1957) 151 Cal.App.2d 589, 593.) In fact, it appears that Mortensen participated in the class settlement, did not opt out, and is therefore bound by the judgment.
Because Daniell has not otherwise attacked the fairness or reasonableness of the settlement, we have no cause to review its terms, and therefore affirm.
DISPOSITION
The judgment is affirmed. Respondents are awarded their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
GRIMES, J. WE CONCUR:
BIGELOW, P. J.
RUBIN, J.