THE KICK LAW FIRM, APC Taras Kick (State Bar No. 143379)s... · THE KICK LAW FIRM, APC ... 643 F.3d...
Transcript of THE KICK LAW FIRM, APC Taras Kick (State Bar No. 143379)s... · THE KICK LAW FIRM, APC ... 643 F.3d...
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PLAINTIFF’S UNOPPOSED MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND APPROVAL OF CLASS COUNSEL ATTORNEYS’ FEES AND COSTS
THE KICK LAW FIRM, APC Taras Kick (State Bar No. 143379) ([email protected]) G. James Strenio (State Bar No. 177624) ([email protected]) 201 Wilshire Boulevard Santa Monica, California 90401 Telephone: (310) 395-2988 Facsimile: (310) 395-2088
Attorneys for Plaintiff Wineesa Cole and the Certified Class
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
Wineesa Cole, individually and on behalf of all others similarly situated,
Plaintiff,
vs.
Asurion Corporation, a Delaware Corporation, Asurion Insurance Services, Inc., a Tennessee Corporation, T-Mobile USA, Inc., a Delaware Corporation, Liberty Mutual Insurance Company, a Massachusetts Corporation, and DOES 1 through 500,
Defendants.
Case No. CV-06-6649-R (JCx)
Before The Honorable Manuel L. Real
Plaintiff’s Unopposed Memorandum and Points of Authorities in Support of Motion for Final Approval of Class Action Settlement, Attorneys’ Fees and Costs, and Class Representative Service Award (Concurrently Filed Are Supporting Declarations of The Hon. Dickran Tevrizian (Ret.); J. Michael Hennigan; Richard Pearl; Taras Kick; Phil Cooper; Wineesa Cole; Dean Kevin Johnson; and, Elliott Leschen) Date: February 16, 2016 Time: 10:00am Courtroom: 8
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TABLE OF CONTENTS TABLE OF AUTHORITIES ................................. Error! Bookmark not defined.
I. SUMMARY 1 II. THE SETTLEMENT IS FAIR, ADEQUATE, AND REASONABLE 2 A. The Terms of the Settlement and Background 2 B. This Court should grant final approval of the Settlement because it is fair, adequate, and reasonable 4 1. The Settlement is entitled to a presumption of fairness 5 2. Class Counsel’s recommendation is entitled to Substantial weight 6 3. The amount offered in settlement is fair, adequate, And reasonable 7 4. The settlement structure is fair, adequate and reasonable 13 5. The positive response from the absent class members 13 C. The requested attorneys’ fees should be approved 14 1. State law governs the award of attorneys’ fees 15 2. Under state law, the lodestar approach governs the award of attorneys’ fees, and the award is to be fully compensatory 15 3. Plaintiff is entitled to attorneys’ fees under §1021.5 19 4. Class Counsel’s lodestar is reasonable 20 5. Even though the $1.9 million requested fee award represents a negative multiplier, a positive multiplier is supported 23 6. The requested fees are reasonable even under the Inapplicable percentage approach 23 D. The requested litigation costs should be approved 24 E. The service award to the class representative should be approved24 F. The requested fees and costs for notice and claims Administration should be approved 25 G. The proposed cy pres recipient should be approved 25 III. CONCLUSION 25
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TABLE OF AUTHORITIES
CASES Allen v. Bedolla,
787 F.3d 1218 (9th Cir. 2015) .............................................................................. 5 Antoninetti v. Chipotle Mexican Grill, Inc.,
643 F.3d 1165 (9th Cir. 2010) ............................................................................ 17 AT&T Mobility LLC v. Concepcion,
563 U.S. 333 (2011) ......................................................................................... 3, 8 Beasley v. Wells Fargo Bank,
235 Cal. App. 3d 1407 (1991) ............................................................................ 19 Building a Better Redondo v. City of Redondo Beach,
203 Cal. App. 4th 852 (2012) ............................................................................. 17 Chavez v. City of Los Angeles,
47 Cal. 4th 970 (2010) ........................................................................................ 15 Chavez v. Netflix, Inc.,
162 Cal.App.4th 43 (2008) ................................................................................. 20 Chavez v. PVH Corp.,
2015 U.S.Dist.LEXIS 170422 (N.D. Cal. 2015) ................................................ 24 Colgan v. Leatherman Tool Grp. Inc.,
135 Cal. App. 4th 663 (2006) ............................................................................. 19 Comcast v. Behrend,
133 S. Ct. 1246 (2013) ....................................................................................... 12 Davis v. City of San Diego,
106 Cal. App. 4th 893 (2003) ............................................................................. 22 DIRECTV, Inc. v. Imburgia,
136 S. Ct. 463 (Dec. 14, 2015) ........................................................................... 12 Dow Corning v. Safety Nat’l Cas.,
335 F.3d 742 (8th Cir. 2003) .............................................................................. 12 Dunk v. Ford Motor Co.,
48 Cal. App. 4th 1794 (1996) ............................................................................. 16 Estrada v. FedEx Ground Package Systems, Inc.,
154 Cal. App. 4th 1 (2006) ................................................................................. 19 Evon v. Law Offices of Sidney Mickell,
688 F.3d 1015 (9th Cir. 2012) ............................................................................ 18 Gaudin v. Saxon Mortg. Servs.,
2015 U.S.Dist.LEXIS 159020 (N.D. Cal. 2015) ................................................ 24 Graham v. DaimlerChrysler Corp.,
34 Cal. 4th 553 (2004) .................................................................................. 15, 19 Hanlon v. Chrysler Corp.,
150 F.3d 1011 (9th Cir. 1997) ........................................................................ 5, 18 Harris v. Marhoefer,
24 F.3d 16 (9th Cir. 1994) .................................................................................. 24
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Hesse v. Sprint Corp., 598 F.3d 581 (9th Cir. 2010) ................................................................................ 4
In re LDK Solar Secs. Litig., 2010 U.S.Dist.LEXIS 87168 (N.D. Cal. 2010) ................................................... 12
In re Sutter Health Uninsured Pricing Cases, 171 Cal.App.4th 495 (2009) ............................................................................... 20
In re TJX Companies Retail Sec. Breach Litig., 584 F. Supp. 2d 395 (D. Mass. 2008) ................................................................. 13
In re Tobacco Cases II, 240 Cal. App. 4th 779 (2015) ............................................................................. 10
In re Toys R Us-Del., Inc.—Fair & Accurate Credit Transactions Act (FACTA) Litig., 295 F.R.D. 438 (C.D. Cal. 2014) ....................................................................... 12
In re Vioxx Class Cases, 180 Cal. App. 4th 116 (2010) ............................................................................. 11
Johnson v. Riverside Healthcare Sys., L.P., 534 F.3d 1116 (9th Cir. 2008) ............................................................................ 15
Ketchum v. Moses, 24 Cal. 4th 1122 (2001) ...................................................................................... 15
Kritzer v. Safelite Solutions, LLC, 2012 U.S. Dist. LEXIS 74994 (S.D. Ohio 2012) ............................................... 24
Linney v. Cellular Alaska P’ship, 151 F.3d 1234 (9th Cir. 1998) .............................................................................. 7
Mangold v. Cal. Pub. Utils. Comm’n, 67 F.3d 1470 (9th Cir.1995) ............................................................................... 15
Maria P. v. Riles, 43 Cal. 3d 1281 (1987) ....................................................................................... 16
Marmet Health Care Ctr., Inc. v. Brown, 132 S. Ct. 1201 (2012) ....................................................................................... 12
McKenzie v. Fed. Exp. Corp., 2012 WL 2930201 (C.D. Cal. 2012) .................................................................. 10
Mexican Workers v. Arizon Citrus Growers, 904 F.2d 1301 (9th Cir. 1990) ............................................................................ 19
Miller v. CEVA Logistics USA, Inc., 2015 U.S.Dist.LEXIS 104704 (E.D. Cal. 2015) ................................................ 23
Moreno v. City of Sacramento, 534 F.3d 1106 (9th Cir. 2007) ............................................................................ 21
Moreno v. City of Sacramento, 534 F.3d 1106 (9th Cir. 2008) ............................................................................ 21
Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523 (C.D. Cal. 2004) ................................................................... 7, 12
Norton v. Maximus Inc., 2015 U.S.Dist.LEXIS 157934 (E.D. Cal. 2015) ................................................... 6
Notrica v. State Comp. Ins. Fund,
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70 Cal. App. 4th 911 (1999) ............................................................................... 17 Officers for Justice v. Civil Serv. Comm’n,
688 F.2d 615 (9th Cir. 1982) .......................................................................... 7, 15 Orkin v. Taylor,
487 F.3d 734 (9th Cir. 2007) .............................................................................. 15 Oxford Health Plans LLC v. Sutter,
133 S. Ct. 2064 (2013) ....................................................................................... 12 Press v. Lucky Stores, Inc.,
34 Cal. 3d 311 (1983) ......................................................................................... 16 Resnick, Resnick v. Frank (In re Online DVD-Rental Antitrust Litig.),
779 F.3d 934 (9th Cir. 2015) ....................................................................... 5, 6, 23 Rodriguez v. Disner,
688 F.3d 645 (9th Cir. 2012) .............................................................................. 15 San Diegans for Open Govt. v. Har Constr., Inc.,
240 Cal. App. 4th 611 (2015) ............................................................................. 19 Schwarz v. Sec’y of Health & Human Servs.,
73 F.3d 895 (9th Cir. 1995) ................................................................................ 21 Serrano v. Priest (Serrano III),
20 Cal. 3d 25 (1977) ............................................................................................ 16 Serrano v. Unruh (Serrano IV),
32 Cal. 3d 621, 639 (1982) .................................................................................. 16 State Compensation Ins. Fund v. Sup. Ct.,
24 Cal. 4th 930 (2001) ........................................................................................ 20 Staton v. Boeing Co.,
327 F. 3d 938 (9th Cir. 2003) ................................................................. 15, 17, 20 Stoetzner v. U.S. Steel Corp.,
897 F.2d 115 (Cir. 1990) .................................................................................... 14 Stovall-Gusman v. W.W. Granger, Inc.,
2015 U.S.Dist.LEXIS 78671 (N.D. Cal. 2015) ................................................... 11 United States v. Bankers Ins.,
245 F.3d 315 (4th Cir. 2001) .............................................................................. 12 Wells v. Allstate Ins. Co.,
557 F. Supp. 2d 1 (D. D.C. 2008) ...................................................................... 23 Wolsey, Ltd. v. Foodmaker, Inc.,
144 F.3d 1205 (9th Cir. 1998) .............................................................................. 8
STATUTORY AUTHORITIES (§1021.5 .................................................................................................................... 16 § 1021.5 .................................................................................................................... 19 28 U.S.C. §1292(b) ................................................................................................. 1, 4 Cal. Bus. & Prof. Code §17200 .................................................................................. 3 Cal. Civ. Code § 3343 ............................................................................................... 10
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False Advertising Act, Cal. Bus. & Prof. Code §17500 ............................................. 3
RULES AND REGULATIONS Fed. R. Civ. P. 23(e) ................................................................................................... 2 Fed. R. Civ. P. Rule 23(e) ......................................................................................... 26
TREATISES William Rubenstein, Alba Conte, & Herbert B. Newberg, Newberg on Class
Actions , §17:25 (4th ed. 2008) ........................................................................... 24
ADDITIONAL AUTHORITIES 2012 U.S.Dist.LEXIS (N.D. Cal. 2012) .................................................................... 17 2015 U.S.Dist.LEXIS (C.D. Cal. 2015) .................................................................. 5, 6
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MEMORANDUM OF POINTS AND AUTHORITIES
I. SUMMARY.
After more than nine years of very thoroughly contested litigation, including
the use of four different neutral mediators, review of over 100,000 documents, and
argument to the Ninth Circuit, the parties finally reached a settlement of this class
action through the acceptance of a mediator’s proposal. (Declaration of Taras Kick
in Support of Unopposed Motion for Final Approval [hereafter “Kick Decl.”],
¶¶41- 48.) At the time of this proposed settlement, this case was pending before the
Ninth Circuit on an interlocutory appeal pursuant to 28 U.S.C. §1292(b), and
actually already had been argued to the Ninth Circuit on July 10, 2015. On October
26, 2015, one of the members of the panel which heard the oral argument called for
an en banc hearing of the argued matter. (Declaration of Taras Kick in Support of
Preliminary Approval [hereafter “Kick Prelim. Decl.”], ¶ 4, Ex. 1.)
At the joint request of all the parties, the Ninth Circuit has granted a remand
of the appeal back to this district court for the limited purpose of enabling the
district court to consider whether it is willing to approve the parties’ proposed
settlement, without prejudice to reinstatement in the event the settlement is not
approved. (Kick Decl. ¶¶30-31.) The Ninth Circuit stated in that limited remand
Order that, “If the parties inform this Court that the settlement will be approved, the
appeal will be dismissed.” (Kick Prelim Decl. ¶5, Ex. 1.)
This Honorable Court preliminarily approved this proposed settlement on
November 23, 2015, stating “The Court has reviewed the relief granted by the
Settlement Agreement and recognizes the significant value to the Class of that
relief.” (Preliminary Approval Order (“Order”) ¶3.) In its Order, this Honorable
Court further found, preliminarily, that “settlement at this time will avoid
substantial additional costs to all parties, as well as the uncertainty and risks that
would be presented to the parties by further litigation of the claims resolved by the
Settlement Agreement,” and that “the Settlement Agreement has been reached as a
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result of intensive, serious, and non-collusive arms-length negotiations.”
This Honorable Court further directed that this motion be filed by January
11, 2016, and that it also be posted on the settlement administrator’s website for
this case, with class members having until January 26 to opt out or object should
they so want. (Order, ¶9.) This, too, has been done. Class Counsel’s fee request is
supported by the concurrently filed declarations of the Honorable Dickran
Tevrizian (Ret.), attorney J. Michael Hennigan, and attorney Richard Pearl, whose
supporting declarations also all have been posted on the settlement website.
This Honorable Court also approved the notice plan proposed in the Motion
for Preliminary Approval, finding that that it meets the requirements of due process
and Federal Rule of Civil Procedure 23(e) (Order ¶6), and appointed Kurtzman
Carson Consultants (KCC) as the settlement administrator to implement the plan.
(Order ¶7.) As described in the accompanying declaration of Phil Cooper of KCC,
this Court’s Order regarding notice and claims handling has been successfully
implemented in every respect. 1 (Cooper Decl. ¶¶3-8.) To date there are 20,211
claims, only five requests for opt out, and no objections. (Cooper Decl. ¶¶11-13.)
In sum, all which had been ordered by this Honorable Court for final
approval has been accomplished, and Plaintiff respectfully requests that final
approval of the class action settlement, attorneys’ fees and costs, and class
representative service award be granted at this time.
II. THE SETTLEMENT IS FAIR, ADEQUATE, AND REASONABLE.
A. The Terms of the Settlement and Background.
This litigation commenced over nine years ago, on October 18, 2006. (Dkt
1 KCC caused the class members to be given direct individual notice by first class postage U.S. mail and caused a longer version of the notice to be posted on KCC’s website. The class members were informed of their choice of making a claim through the U.S. mail or making a claim online through a website which was built for this settlement. (Cooper Decl. ¶¶3-8.)
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1.) It is already certified as a class action for: “[a]ll persons who while residing in
the State of California purchased cellular telephone insurance from Asurion through
T-Mobile USA from August 1, 2003 through April 2, 2008.” (Dkt. 644.) This class
action alleges that the class members who purchased insurance against loss, theft,
or damage of their cell phone were deceived because Defendants did not adequately
disclose that the phones might be replaced with refurbished ones, even though this
fact is disclosed on the third page of the brochure given to consumers. The theory
of damages is that the class members paid too much in monthly premiums for the
insurance because insurance that sometimes replaces phones with refurnished ones
is worth less than insurance that replaces phones with news ones. (Kick Decl. ¶15.)
Plaintiff lost in the individual, nonbinding arbitration (Dkt. 90, 92), but she
persevered with this lawsuit. She carried two common law claims (for negligent
misrepresentation and fraud) and two statutory claims (for violation of the Unfair
Competition Law's “fraudulent” prong, Cal. Bus. & Prof. Code §17200, and
violation of the False Advertising Act, Cal. Bus. & Prof. Code §17500) to the eve
of trial after full discovery (review of over 100,000 documents, 11 percipient and
expert witness depositions, numerous motions to compel discovery) and complete
trial preparation (including 19 motions in limine, trial briefs, witness lists and
exhibit lists, and jury instructions). (Kick Decl. ¶¶8-14.) To come so far, Plaintiff
had to overcome three motions to dismiss (despite a similar lawsuit against Asurion
being thrown out on a demurrer), an opposition to class certification (despite orders
denying class certification in two similar lawsuits), and three motions for summary
judgment (because the question is one of fact to be resolved at trial). (Id.)
On the eve of trial, the United States Supreme Court handed down AT&T
Mobility LLC v. Concepcion, 563 U.S. 333 (2011), holding that the Discover Bank
rule is preempted by the FAA. On June 10, 2011, this Honorable Court entered an
order granting Defendants’ motion to compel arbitration and stayed this action until
one million class members participate in individual, nonbinding arbitration. (Dkt.
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811.) On October 25, 2012, this Court denied Plaintiff’s motion for reconsideration.
(Dkt. 827, 829.) Although this Court also denied a second reconsideration motion,
on April 25, 2013, this Court, over Defendants’ opposition, granted Plaintiff’s
motion to certify its order for interlocutory appeal under 28 U.S.C. §1292(b). (Dkt.
837, 841.) The Ninth Circuit granted Plaintiff’s petition to appeal (Dkt. 1 in 9th
Cir. Case No. 13-80105), also over Defendants’ opposition, and the appeal was
fully briefed and oral argument occurred on July 10, 2015.
Pursuant to the Settlement,2 Defendants shall pay $4.2 million into a
Settlement Fund, which will first be used to pay Class Counsel's fees ($1.9 million)
and costs ($223,061.41), a service award to the Class Representative ($5,000), and
the Settlement Administrator’s costs . (Settlement ¶9; Kick Decl. ¶47.) The
remaining funds (i.e., the Net Settlement Fund) will then be used to pay Class
Members who submit valid claims. They each will receive an equal share of the
Net Settlement Fund, up to a cap of $124, (Settlement ¶9(e)), which is about 150%
of the average of the estimated average of the premiums paid. (Kick Decl. ¶34-35.)
The release by the class members given in consideration of the Settlement is
narrowly tailored, limited to all claims they made, could have made, or in any way
arise out of any allegations by any class member concerning alleged wrongdoing in
the action between August 1, 2003 and April 2, 2008. (Settlement ¶15; see Hesse
v. Sprint Corp., 598 F.3d 581, 590 (9th Cir. 2010) (scope of release is proper where
it only releases claims based on the factual predicate of the complaint). No money
will revert to Defendants. (Settlement ¶9(g).) B. This Court should grant final approval of the Settlement because it is fair, adequate, and reasonable. The Ninth Circuit has “repeatedly noted that `there is a strong judicial policy
2 The Settlement Agreement is attached as Exhibit 1 to the Declaration of Taras Kick in Support of Unopposed Motion for Preliminary Approval (“Kick Prelim. Decl.,” Dkt. 852-3) filed and dated November 2, 2015. Any terms used here that are defined by the Settlement shall have the same meaning as defined therein.
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that favors settlements, particularly where complex class action litigation is
concerned.'” Allen v. Bedolla, 787 F.3d 1218, 1223 (9th Cir. 2015). “[T]he court’s
intrusion upon what is otherwise a private consensual agreement negotiated
between the parties to a lawsuit must be limited 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.” Hanlon v. Chrysler
Corp., 150 F.3d 1011, 1027 (9th Cir. 1997)
Whether a settlement is fair, adequate, and reasonable is determined by the
following factors: “`(1) the strength of the plaintiff's case; (2) the risk, expense,
complexity, and likely duration of further litigation; (3) the risk of maintaining
class action status throughout the trial; (4) the amount offered in settlement; (5)
the extent of discovery completed and the stage of the proceedings; (6) the
experience and view of counsel; (7) the presence of a governmental participant;
and (8) the reaction of the class members of the proposed settlement.'” Resnick v.
Frank (In re Online DVD-Rental Antitrust Litig.), 779 F.3d 934, 944 (9th Cir.
2015). As discussed below, these factors demonstrate that the Settlement is fair,
adequate, and reasonable. 1. The Settlement is entitled to a presumption of fairness. “The involvement of experienced class action counsel and the fact that the
settlement agreement was reached in arm's length negotiations, after relevant
discovery had taken place create a presumption that the agreement is fair.” Roberti
v. OSI Sys., 2015 U.S.Dist.LEXIS 164312 (C.D. Cal. 2015). Such a presumption
applies in this case: “[a]t all times, the settlement negotiations were at arms’ length
and adversarial” (Kick Decl. ¶42, 44), conducted by capable and experienced
counsel (id. ¶2), and occurred after nine years of litigation generating 857 docket
entries to date, and after both sides performed complete and formal discovery,
inclusive of 11 percipient and expert witness depositions and review of over
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103,725 pages of documents produced by Defendants; the only thing that did not
occur was the trial itself .3 The parties thus were intimately familiar with the
strengths and weaknesses of their respective cases and negotiating positions. See
Norton v. Maximus Inc., 2015 U.S.Dist.LEXIS 157934, *18-19 (E.D. Cal. 2015)
(“[a] settlement that occurs in an advanced stage of the proceeding indicates the
parties carefully investigated the claims before reaching resolution”).4
Further, the settlement was the product of a mediator’s proposal by an
experienced mediator, the Honorable Peter Lichtman, the former head of settlement
of complex litigation and class actions in the complex courthouse in Los Angeles
County. (Kick Decl. ¶44.) Prior to the parties’ acceptance of the mediator's
proposal on August 14, 2015, all negotiations at all times were arm’s length and
adversarial. (Id. ¶¶42, 44.) The negotiations with Judge Lichtman lasted for a year,
beginning in June 2014 (id.), and, there were prior negotiations involving three
other private mediators, all with JAMS, including a retired California Supreme
Court Justice. (Id. ¶43.) “The assistance of an experience mediator in the
settlement process confirms that the settlement is non-collusive.” Roberti, 2015
U.S.Dist.LEXIS 164312, *10.
2. Class Counsel’s recommendation is entitled to great weight.
‘Great weight’ is accorded to the recommendation of counsel, who are most
closely acquainted with the facts of the underlying litigation.” Nat’l Rural
3 The matter was set for trial, and then continued several times. The case was set to start trial on March 2, 2010. (Dkt. 122.) The trial was continued to September 2010 (Dkt. 672), and then continued to November 15, 2010 (Dkt. 676). The case was next scheduled to go to trial on January 25, 2011 (Dkt. 708), and then continued to February 22, 2011 (Dkt. 747, 770). 4 Because the settlement occurs after class certification (almost six years ago, on April 19, 2010 (Dkt. 644)), whereby this Court already found that Plaintiff and Class Counsel satisfy the adequacy requirement, the settlement is not subject to “heightened scrutiny” for collusion among the parties. Resnick, 779 F.3d at 944 n. 6; see Jones, 654 F.3d at 46-947; Rodriguez, 563 F.3d at 963-64.
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Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 528 (C.D. Cal. 2004). Class
Counsel — experienced in litigating and settling consumer class actions and other
complex matters, and having acted as lead counsel in numerous successful
consumer class actions (Kick Decl. ¶¶ 2, 3) — recommends approval of the
settlement. (Kick Decl. ¶45.) 3. The amount offered in settlement ($4.2 million) is fair, adequate, and reasonable. Class Counsel believes the settlement not only is fair, reasonable, and
adequate, but is an excellent result for the class. (Kick Prelim. Decl. ¶45.) This
exceeds the standard in the Ninth Circuit, “Naturally, the agreement reached
normally embodies a compromise; in exchange for the saving of cost and
elimination of risk, the parties each give up something they might have won had
they proceeded with litigation.” Officers for Justice v. Civil Serv. Comm’n, 688
F.2d 615, 624 (9th Cir. 1982). Further, “it is well-settled law that a proposed
settlement may be acceptable even though it amounts to only a fraction of the
potential recovery that might be available to the class members at trial.” Nat'l
Rural, 221 F.R.D. at 27 (citing Linney v. Cellular Alaska P’ship, 151 F.3d 1234,
1242 (9th Cir. 1998). Here, “the strength of [the] case relative to the risks of
continued litigation,” more than shows the settlement to be fair, adequate, and
reasonable. Lane, 696 F.3d at 823. a. The Class faced sizable obstacles to recovery, each bearing significant risk: Judge Dickran Tevrizian (Ret.), in his concurrently filed declaration in
support of fees in this case, summarizes some of the risks in this case. (Decl.
Tevrizian ¶12.) They include: i. Risk at the Ninth Circuit The trial in this action was derailed by the Supreme Court’s decision of
Concepcion. (Kick Prelim. Decl. ¶¶12-14.) Following Concepcion, on June 10,
2011, this Court granted Defendants’ motion to compel individual arbitration of
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virtually all of the class members' claims and ordered this action stayed until those
absent class members each participate in individual, non-binding arbitration. (DE
811.) While Class Counsel was able to convince this Court to certify its order for
interlocutory appeal after this Court denied Plaintiff's motion for reconsideration,
and was able to convince the Ninth Circuit to grant permission for an interlocutory
appeal (Kick Decl. ¶¶28-30), the strongest argument against the enforceability of
the arbitration agreement — that the FAA does not apply to arbitration agreements
for non-binding argument — faces the seemingly insurmountable obstacle of ,
Wolsey, Ltd. v. Foodmaker, Inc., 144 F.3d 1205 (9th Cir. 1998), a Ninth Circuit
decision expressly holding that the FAA applies to such arbitration agreements.
The appeal would be reinstated if the settlement is not approved. It is
uncertain as to what the ultimate Ninth Circuit ruling would be. If the Ninth Circuit
affirms this Court order compelling arbitration, likely class members would receive
no recovery at all. As Mr. Hennigan explains, “No rational class member would
pursue an $80 restitution claim in non-binding arbitration.” (Hennigan Decl. ¶15.)
As this Court itself recognized early in this case, if class members were all
first forced to go through a non-binding arbitration before being allowed to be part
of the class action, there would not be any class action, and there likely would not
be any recovery of any sort for the class members: “However, if every class member in a class action suit were forced to individually arbitrate its claims before participating in a class action suit, this would effectively prevent class action suits entirely. Class members with potentially small damage amounts would be strongly discouraged from participating in a class action lawsuit if they were first required to arbitrate their claims before participating in the class action suit. Thus, the arbitration clause would act as an effective barrier to class action lawsuits, rather than being merely an additional procedural step in bringing a class action lawsuit. (Dkt. 83, pp. 3-4.)
ii. the highly subjective nature of the claim:
This case is not a clean case of fraudulent omissions or misrepresentations. It
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is one of alleged inadequate disclosure, alleging that Defendants engaged in
deceptive advertising by selling handset insurance representing that the replacement
phones will be of “like kind, quality and value” to the lost phone without disclosing
that the replacement phones were sometimes refurbished rather than new, and also
might differ in other ways. It cannot be said that this fact is not disclosed at all. It
is disclosed on the third page of the program brochure. (Kick Decl. ¶32). The
question is one of whether the overall marketing of the insurance is nonetheless
misleading. The issue is inherently subjective. As Judge Tevrizian states, this is a
substantial risk. (Tevrizian Decl. ¶12.) Indeed, in an earlier class action involving
Asurion’s cell-phone insurance program for Verizon customers and involving
similar allegations of inadequate disclosures regarding refurbished phones was
dismissed at the demurrer stage by the Superior Court for the State of California,
County of Orange, before Plaintiff commenced the lawsuit in this case. (Kick Decl.
¶32, (Webster v. Verizon Wireless, LLC, Case No. 02CC00284, October 5, 2004.)
iii. Plaintiff’s loss in the nonbinding arbitration:
Class representative Ms. Cole actually went through the non-binding
arbitration, paid $3,250 in fees for the non-binding mediation process, was
represented by two attorneys, put on expert testimony, and lost. (Kick Decl. ¶32).
This was a very telling fact about the risk of the case. (Hennigan Decl. ¶14.)
iv. existing risk of maintaining class certification:
Defendants have stated that, in the event that the Class prevails in the Ninth
Circuit appeal, they will move to decertify the action. (Kick Decl. ¶32.) In fact, in
an earlier action involving a different cell-phone insurer, but also involving alleged
inadequate disclosure regarding refurbished phones, the United States District
Court for the Southern District of Florida denied the motion for class certification.
(Kick Decl. ¶32, (Sanchez v. The Signal and Signal Holdings, USDC Case No.
1:05-cv-22259, April 3, 2007 Class Certification Order).) And more recently, in
another case involving cell phone insurance, this one related to Apple’s iPhone,
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class certification was also denied. (English v. Apple, USDC Case No. 14-cv-
01619-WHO, January 5, 2016 Order Denying Class Certification.) The risk of
maintaining class certification must be accounted for and also favors settlement.
See, e.g., McKenzie v. Fed. Exp. Corp., 2012 WL 2930201, *4 (C.D. Cal. 2012).
v. risk of no restitution award:
Even if the Class were to prevail at trial, there is a risk that no restitution
would be awarded. In a much-watched California consumer case regarding
misrepresentation the California Court of Appeal recently affirmed a denial of
restitutionary relief. In re Tobacco Cases II, 240 Cal.App.4th 779 (2015). Further,
as pointed out by Judge Tevrizian, the damages model presented complicated issues
of proof, measuring the difference in value between a replacement phone program,
which always provides new phones, and one which sometimes provides refurbished
phones. (Tevrizian Decl. ¶12.) b. The most that the Class could reasonably expect to recover was $7.8 million. In a fraud case such as this one, the most likely result, if the Class had
prevailed at trial and received a restitution award at all, would have been an
aggregate class award of $7.8 million. (Declaration of Economist Daniel Linde in
Support of Motion for Preliminary Approval [“Linde Decl.”], ¶15.) Although
total premiums paid for the insurance during the class period are approximately
$90.1 million (Linde Decl. ¶14) and Class Counsel may have argued for this, the
normal measure of damages in cases based on fraud, such as this, is the difference
in value between what was represented and what was received. Civil Code section
3343, subdivision (a), provides: "One defrauded in the purchase, sale or exchange
of property is entitled to recover the difference between the actual value of that with
which the defrauded person parted and the actual value of that which he received..."
As the California Supreme Court explained in Cortez: “[i]n a fraud action,” the
award of damages is based on “the difference between the actual value of that
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which the defrauded person parted and the actual value of that which he received.”
The same is true for violation of the UCL’s fraudulent prong. In re Vioxx Class
Cases, 180 Cal.App.4th 116, 131 (2010).
Class Counsel believes that the most likely restitutionary number the class
would have received in aggregate, had it prevailed at trial, is $7.8 million. (Kick
Decl. ¶¶34-35.) The probability of receiving a refurbished phone under the
program which is the subject of this class action was 57.7%. (Linde Decl. ¶13.) As
economist Daniel Linde explains, therefore the diminution in value as a result of
Defendants’ use of refurbished phones to fulfill claims can be calculated by
determining the probability of receiving a refurbished phone (57.7%), then
factoring in the value of a refurbished phone versus a new phone (85%). (Linde
Decl. ¶14.) As Mr. Linde further explains, by then dividing the aggregate
premiums by the possibility of receiving a refurbished phone, then deducting 85%
of that number, one arrives at a figure of $7.8 million in diminution in value as a
result of Defendants’ use of refurbished phones. (Linde Decl. ¶15.) In other words,
in Class Counsel’s opinion, and as illustrated by economist Linde, the most likely
class award in a fraud-based case such as this one, were the class to prevail, would
be the difference in value between an insurance program which provides new
phones in all cases, and one which provides refurbished phones in 57.7% of cases
as the Defendants did. (Linde Decl. ¶13.)
The $4.2 million settlement amount therefore represents about 54% of the
actual likely recovery at trial were the class to prevail. (Kick Prelim. Decl. ¶36.)
This is an excellent result, well above the amount of settlements granted final
approval by courts within the Ninth Circuit. E.g., Stovall-Gusman v. W.W.
Granger, Inc., 2015 U.S.Dist.LEXIS 78671, *12-13 (N.D. Cal. 2015) (7.3% of the
“estimated trial award”); In re Toys R Us-Del., Inc.—Fair & Accurate Credit
Transactions Act (FACTA) Litig., 295 F.R.D. 438, 453-54 (C.D. Cal. 2014) (3%);
In re LDK Solar Secs. Litig., 2010 U.S.Dist.LEXIS 87168, *6 (N.D. Cal. 2010) (5%
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of “plaintiff's expert estimated damages”); Omnivision, 559 F.Supp.2d at 1042
(9% of “Plaintiffs’ damages expert estimated damages”).
c. Continued litigation would take years.
This Court also should consider that the Settlement provides for payment to
the Class now, rather than a speculative payment sometime in the distant future.
Churchill, 361 F.3d at 575 (holding that courts should consider the “likely duration
of further litigation” in deciding whether to approve class settlements). “In most
situations, unless the settlement is clearly inadequate, its acceptance and approval
are preferable to lengthy and expensive litigation with uncertain results.” Nat’l
Rural, Inc., 221 F.R.D. at 526. A trial in this action cannot even occur unless the
Class prevails in the currently pending appeal, which may necessitate significant
additional time if it is heard by an en banc panel. Even if an en banc panel would
rule in favor of the Class, there is a risk that the issue would go up to the Supreme
Court given that there is a split in the circuits as to whether the FAA covers
nonbinding arbitration, with two circuit decisions holding that the FAA covers
nonbinding arbitration. Dow Corning v. Safety Nat’l Cas., 335 F.3d 742 (8th Cir.
2003); United States v. Bankers Ins., 245 F.3d 315 (4th Cir. 2001).
This risk is heightened given that the Supreme Court has had a particular
interest in arbitration and class action cases in the last several years, exemplified by
Concepcion; Am. Expr. Co. v. Italian Colors Res.,133 S.Ct. 2304 (2013); Comcast
v. Behrend, 133 S. Ct. 1246 (2013); Oxford Health Plans LLC v. Sutter, 133 S.Ct.
2064 (2013); Marmet Health Care Ctr., Inc. v. Brown, 132 S.Ct. 1201 (2012);
and, most recently, DIRECTV, Inc. v. Imburgia, 136 S.Ct. 463 (Dec. 14, 2015).
Even if the Class eventually prevails on the appeal, and then also prevails at
trial, the Class would still have to wait years more for the end of a “likely”
subsequent appeal. (Kick Decl. ¶40.). See LinkedIn, 309 F.R.D. at 587 (“the losing
party is likely to appeal [any judgment following the trial], further raising the costs
in terms of both time and money. Because continued litigation would be risky,
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costly, complex, and long, this factor favors settlement”) (citations omitted).
4. The settlement structure is fair, adequate, and reasonable.
Under the settlement, the net settlement fund will be distributed to all class
members who submit valid claims. The amount each will receive depends on the
participation rate, but all who submit valid timely claims will receive a pro rata
share capped at about 150% the average of the premiums paid. (Settlement
Agreement ¶9(e)(2).) To date, according to the claims administrator, there have
been 20,211 claims filed. (Cooper Decl. ¶13.) This means if fees and costs are
awarded in the full amount as requested, each class member would receive
approximately $81, which on average is equal to approximately a 100% refund of
total premiums paid by that class member, and more than ten times the average
class member’s restitution as calculated by economist Linde. (Kick Decl. ¶35.)
This is arrived at by taking the aggregate restitution of $7.8 million and dividing by
the more than 1 million class members, for an average restitution per class member,
had this case gone to trial, of less than $8 per class member. (Kick Decl. ¶35.)
One additional outstanding feature of this settlement is that the $4.2 million
settlement fund is real, not illusory. Unlike some claims-made settlements where
unclaimed funds revert to the defendant (see, e.g., In re TJX Companies Retail Sec.
Breach Litig., 584 F.Supp. 2d 395, 405 (D. Mass. 2008) (“in ... a claims-made
settlement, the defendant is likely to bear only a fraction of the liability to which it
agrees”)), not a single penny of the $4.2 million settlement fund will revert to
Defendants. Instead, if any of the $4.2 million settlement fund remains after
payment to class members who submit claims, this remainder will be distributed to
cy pres recipients. (Settlement ¶9(g).) 5. The positive response from the absent class members. As of the date of the filing of this motion, although 20,211 already have
made claims, only five class members requested exclusion from the settlement, and
to date no class member has objected. (Cooper Decl. ¶¶11, 12). This positive
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response of the class members to the Settlement further supports final approval.5
C. The requested attorneys’ fees should be approved.
Class Counsel’s timesheets and work have been reviewed by three highly
respected experts, The Honorable Dickran Tevrizian, former judge of the Central
District; fee expert Richard Pearl, the State’s leading experts on attorney fee issues
and the author of state and federal manuals on attorney fee awards, including
California Attorney Fee Awards, 2d Ed., published by CEB in 1994 and updated
annually; and, J. Michael Hennigan, one of California’s most prominent complex
litigation attorneys. All three are in agreement that the full $1.9 million requested
should be awarded, and that in fact the full $3.5 million lodestar was fully earned
and justified. “It is my opinion that the $3.5 million lodestar is reasonable,
appropriate and fully justified, and, in fact, is modest for the complexity of this
case.” (Tevrizian Decl. ¶6.) “Based on my review of counsel’s time records and
miscellaneous work product, the total attorneys’ fees requested by Plaintiff’s
attorneys here are eminently reasonable (Pearl Decl. ¶20.) “It is my opinion that the
attorneys’ fees sought by The Kick Law Firm, APC, are justified and should be
awarded in full.” (Hennigan Decl. ¶6.) These experts also have commented on
Class Counsel’s caliber of work. “I was impressed by the work that TKLF
performed, and the way it approached this case, including its thoroughness and
determination which I believe were necessary to obtain this proposed settlement.”
(Tevrizian Decl. ¶11.) “It is my opinion that the class recovery in this case is due to
the high caliber and tenacious work of The Kick Law Firm.” (Hennigan Decl. ¶11.)
Despite this, Class Counsel seeks only the agreed $1.9 million in fees, a
reduction Class Counsel’s $3.5 million lodestar of about 46%.6 5 Stoetzner v. U.S. Steel Corp., 897 F.2d 115, 118-19 (Cir. 1990) (the response of class members “strongly favors” settlement even when 10 percent object). 6 “In 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.” F.R.C.P. Rule 23(h). “Attorneys’ fees provisions included in proposed class action
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In terms of legal basis for fees, in this class action attorney fees are
authorized, inter alia, by the fee-shifting statute of California Civil Procedure Code
§1021.5, California’s codification of the private attorney general doctrine. As
discussed below, the “statutory fee principles” include the principles that the award
of fees is to be determined by the lodestar approach and that the award is to be fully
compensatory in light of the public policy underlying §1021.5.
1. State law governs the award of attorney fees.
In the Ninth Circuit, in a diversity case, state law governs not only
entitlement to fees, but calculation of reasonableness of fees. See Mangold v. Cal.
Pub. Utils. Comm'n, 67 F.3d 1470, 1478–79 (9th Cir.1995); Rodriguez v. Disner,
688 F.3d 645, 653 n.6 (9th Cir. 2012). Therefore, “[t]he task ... is to approximate
state law as closely as possible ....” Orkin v. Taylor, 487 F.3d 734, 714 (9th Cir.
2007). “In interpreting state law, we are bound to follow the decisions of the state’s
highest court. When the state’s highest court has not spoken on an issue, we must
determine what result the court would reach if we were standing in its shoes ....”
Johnson v. Riverside Healthcare Sys., L.P., 534 F.3d 1116, 1125 (9th Cir. 2008). 2. Under state law, the lodestar approach governs the award of attorney fees, and the award is to be “fully compensatory.” The California Supreme Court has repeatedly instructed that the lodestar
approach govern the award of attorney fees, especially in an action involving the
fee-shifting statute of §1021.5. E.g., Chavez v. City of Los Angeles, 47 Cal.4th 970,
985 (2010); Graham v. DaimlerChrysler Corp., 34 Cal.4th 553, 578-79 (2004)
(§1021.5 case); Ketchum v. Moses, 24 Cal.4th 1122, 1131-32 (2001); Maria P. v.
Riles, 43 Cal.3d 1281, 1294-95 (1987); Press v. Lucky Stores, Inc., 34 Cal. 3d 311,
321-22 (1983) (§1021.5 case); Serrano v. Unruh (Serrano IV), 32 Cal. 3d 621,
624-25, 639 (1982) (§1021.5 case); Serrano v. Priest (Serrano III), 20 Cal.3d 25, agreements are, like every other aspect of such agreements, subject to the determination whether the settlement is ‘fundamentally fair, adequate and reasonable.’” Staton v. Boeing Co., 327 F. 3d 938, 963-64 (9th Cir. 2003).
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49 n. 23 (1977) (§1021.5 case). Over the last 40 years, these pronouncements have
been consistent and emphatic. As it instructed in Press: “Serrano III requires the
trial court to first determine a `touchstone' or `lodestar' figure ....” 34 Cal.3d at 321-
22. As summarized in Chavez: “[u]nder §1021.5, if a court determines that
attorney fees should be awarded, computation of those fees is based on the lodestar
adjustment method ....” 47 Cal.4th at 985.
Because the California Supreme Court has not previously squarely addressed
the issue of fees awarded in a class action involving a common fund, there had been
some question as to whether the percentage approach, not uncommon in federal
cases involving such class action cases, could also be used under state law. E.g.,
Dunk v. Ford Motor Co., 48 Cal.App.4th 1794, 1809 (1996) (“[t]he award of
attorney fees based on a percentage of a 'common fund' recovery is of questionable
validity in California”). That issue is now under review by the California Supreme
Court in Laffitte v. Robert Half Int’l, S222996, review granted Feb. 25. 2015, a case
involving a class action where attorney fees were awarded based on the percentage
approach. As such, the only accepted method for calculating appropriate fees in a
California action such as this while Laffitte is reviewed is the lodestar.7 The
California Supreme Court has repeatedly approved its use and the California Court
of Appeal has applied it in class action cases resulting in a common fund. E.g.,
Lealao, 82 Cal.App.4th at 26 (“[i]n a class action governed by California law where
the responsibility to pay attorneys’ fees is statutorily or otherwise transferred from
the prevailing plaintiff or class to the defendant, the primary method for
establishing the amount of reasonable attorneys’ fees is the lodestar method”); Kim
v. Space Pencil, Inc., 2012 U.S.Dist.LEXIS 169922 (N.D. Cal. 2012) (because 7 The California Supreme Court also stated in Serrano III, its seminal decision on this issue: 'The starting point of every fee award ... must be a calculation of the attorney’s services in terms of the time he has expended on the case. [This] is the only way of approaching the problem that can claim objectivity, a claim which is obviously vital to the prestige of the bar and the courts.' 20 Cal.3d at 48 n. 23.
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California state law governs, “[t]he lodestar analysis is the appropriate method to
determine fees in this case”) (citing Lealao). As Judge Tevrizian declares, “I
believe using a lodestar methodology is the appropriate manner of determining fees
in this particular case.” (Tevrizian Decl. ¶14.) This is especially true in this action
involving the fee-shifting statute of §1021.5. In such a case, it is proper to measure
the fees “against statutory fee principles.” Staton, 965 F.2d at 969. Under state
law, the statutory fee principle governing fees under §1021.5 is that the lodestar
approach governs. E.g., Chavez, 47 Cal.4th at 985.
Consistently, the federal courts have repeatedly held that awards under
federal fee-shifting statutes are governed by the lodestar method: “[u]nder a fee-
shifting statute, the court `must calculate awards for attorneys’ fees using the
`lodestar method' ....” Staton, 965 F.3d ; see Jones, 654 F.3d at 941 (“[t]he
‘lodestar method’ is appropriate in class actions brought under fee-shifting
statutes”); Antoninetti v. Chipotle Mexican Grill, Inc., 643 F.3d 1165, 1176 (9th
Cir. 2010) (“under federal fee-shifting statutes ‘the lodestar approach’ is the
guiding light’ in determining a ‘reasonable’ fee”).
Under state law, the statutory fee principle governing fees under §1021.5 also
includes the principle that the fees should be fully compensatory. The California
“Supreme Court has explained that an attorney fee award, including an award under
[§1021.5], `should be fully compensatory' and, absent `circumstances rendering the
award unjust, an … award should ordinarily include compensation for all the hours
reasonably spent, including those relating solely to the fee.'” Building a Better
Redondo v. City of Redondo Beach, 203 Cal.App.4th 852, 870 (2012). This is true
even if, unlike here, the fees are more than the amount of the monetary recovery.
E.g., Notrica v. State Comp. Ins. Fund, 70 Cal.App.4th 911, 955 (1999) (approving
attorney fee award of triple (3x) the compensatory damages as consistent with the
purposes underlying §1021.5 “to encourage litigation in the public interest by
covering such fees”). The Ninth Circuit itself recognizes that the public policy
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underlying consumer protection statutes compels using an approach that does not
decrease the loadstar based on the monetary amount recovered: “We have specifically instructed that `courts should not reduce lodestars based on relief obtained simply because the amount of damages recovered on a claim was less than the amount requested.' Moreover, in City of Riverside, the Supreme Court ... expressly rejected the proposition that fee awards must be in proportion to the amount of damages recovered. See City of Riverside, 477 U.S. at 574 (affirming fee award of $245,456.25 when damages recovered were $13,300). The same is true in consumer protection cases: where the monetary recovery is generally small, requiring direct proportionality for attorney’s fees would discourage vigorous enforcement of the consumer protection statutes.”
Evon v. Law Offices of Sidney Mickell, 688 F.3d 1015, 1033 (9th Cir. 2012).
The use of the lodestar approach also makes the most sense in cases where,
as here, the recovery is not purely pecuniary. Hanlon, 150 F.3d at 1029; see also
Evon, 688 F.3d at 1033 (“that the lawsuit spurred [defendant] to cease unlawful
conduct is an important consideration, see id., that the district court failed to
recognize”). Here, in substantial part as a result of the filing of this action,
Defendants improved disclosures they make to potential customers, specifically
agreeing henceforth to `specifically inform' potential customers, at the time they
make a point-of-sale decision to enroll in an Asurion wireless protection plan
(among other things) the potential use of refurbished or different equipment to
satisfy claims. (Settlement ¶2; Declaration of Asurion VP Elliott Leschen ¶8).
And, in any event, the Ninth Circuit has cautioned courts that “[t]he
benchmark percentage should be adjusted, or replaced by a lodestar calculation,
when special circumstances indicate that the percentage recovery would be either
too small or too large in light of the hours devoted to the case or other relevant
factors.” Six (6) Mexican Workers v. Arizon Citrus Growers, 904 F.2d 1301, 1311
(9th Cir. 1990). So it is here. (Tevrizian Decl. ¶14.)
3. Plaintiff is entitled to attorney fees under §1021.5.
“It is well settled that attorney fees under section 1021.5 may be awarded for
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consumer class action suits benefiting a large number of people.” Graham, 34
Cal.4th at 578. Plaintiff satisfies the requirements for §1021.5 fees. See, e.g.,
Beasley v. Wells Fargo Bank, 235 Cal.App.3d 1407, 1417-18 (1991) (awarding
§1021.5 fees in consumer class action against bank for charging fees that were not
valid as liquidated damages). First, Plaintiff qualifies as a “successful”/“prevailing”
party because she obtained through the Settlement some of the benefit she sought in
this action: “[i]t is undisputed that relief obtained through a settlement may qualify
a plaintiff as the prevailing party, even in the presence of a stipulation disclaiming
liability on the merits.” Lyons, 136 Cal.App.4th at 1345-46. Second, her lawsuit
“concerned the enforcement of the California consumer protection laws—an
important right affecting the public interest.” Colgan v. Leatherman Tool Grp. Inc.,
135 Cal.App.4th 663, 703 (2006). Third, the litigation conferred a “significant
benefit”: the pecuniary benefit to the class members and the nonpecuniary benefit
of causing a change in Defendants’ disclosure practices. See, e.g., Estrada v.
FedEx Ground Package Systems, Inc., 154 Cal.App.4th 1, 16-17 (2006) (“[the
plaintiff] ... pursued this public interest class action not only for himself but on
behalf of a class ... and ultimately obtained awards for 209 [employee] drivers. ...
No more is required to satisfy the ‘significant benefit,’ ‘public interest,’ and ‘large
class of persons’ requirements of [§1021]”). Fourth, the necessity of private
enforcement was such as to make an award appropriate. Public enforcement was
inadequate. Public enforcement was inadequate because the government failed to
take action (e.g., San Diegans for Open Govt. v. Har Constr., Inc., 240 Cal.App.4th
611, 630 (2015)), and, in any event, public enforcement would have been
inadequate due to the Insurance Commissioner’s lack of statutory authority to order
restitution (State Compensation Ins. Fund v. Sup. Ct., 24 Cal.4th 930, 938 (2001).
Fifth, and finally, the financial burden of private enforcement was such as to make
an award appropriate. This is because the “estimated value of the case” (i.e. the
financial benefits obtained of $4.2 million, discounted by the probability of success
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of less than 25% at the time the critical litigation decisions were being made (Kick
Decl. ¶33 ), due to the risks posed by the nature of this case) does not “exceed by a
substantial margin” the actual litigation costs ($3.5 million in attorney fees plus
costs). See Whitley, 50 Cal.4th at 1215-16 (explaining the test for §1021.5’s
financial burden requirement).8 4. Class Counsel’s lodestar is reasonable. The $1.9 million in attorney fees requested is 46% less than the lodestar.
(Kick Decl. ¶¶52-81.)
a. The number of hours were reasonably necessary.
This nine-year old case has generated 857 docket entries to date, manifesting
its vigorously contested nature. Class Counsel’s lodestar is properly documented
by the accompanying declaration of Taras Kick, summarizing and providing a
detailed description and number of hours of work performed. (Kick Decl. ¶¶52-
81.)9 The work also has been reviewed and approved by expert declarants Judge
Tevrizian, Mr. Pearl, and Mr. Hennigan. (See Section II.B., supra.) The work
performed runs the entire gamut of litigation up to the eve of trial and even a fully-
briefed-and-argued interlocutory appeal to the Ninth Circuit concerning the
arbitration clause in the insurance policy. While no reduction in the number of
hours is warranted, the requested amount of attorney fees of $1.9 million constitutes
a $1.6 million reduction from the $3.5 million lodestar. Such a steep 46%
reduction, virtually halving the lodestar, should alleviate any concerns this Court 8 Of course, even if arguendo §1021.5 did not apply, Plaintiff would be entitled to attorney fees under the common fund doctrine: “a 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 967; see generally Jones, 654 F.3d at 941 (“[t]he award of attorneys’ fees in a class action settlement is often justified by the common fund or statutory fee-shifting exceptions to the American Rule, and sometimes by both”). 9 California state law does not require the submission of these time sheets. E.g., In re Sutter Health Uninsured Pricing Cases, 171 Cal.App.4th 495, 512 (2009); Chavez v. Netflix, Inc., 162 Cal.App.4th 43, 65 (2008).
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might have regarding the reasonableness of the number of hours spent. As the
Ninth Circuit explains: “The court is not ‘required to set forth an hour-by-hour analysis of the fee request[,] ... [and] when faced with a massive fee application the district court has the authority to make across-the-board percentage cuts either in the number of hours claimed or in the final lodestar figure as a practical means of trimming the fat from a fee application.’”
Schwarz v. Sec’y of Health & Human Servs., 73 F.3d 895, 906 (9th Cir. 1995).
Even if arguendo there were fat in the lodestar (there is not), the 46% cut already
cut all the fat and then some. See Moreno v. City of Sacramento, 534 F.3d 1106,
1112 (9th Cir. 2007) (allowing trial court to “impose a small reduction, no greater
than 10 percent--a 'haircut'--based on its exercise of discretion and without a more
specific explanation”), 1112-13 (a cut of 25 percent for duplicative work was
unacceptable without a specific explanation, especially given the attorney’s own
reduction of her fees by 9 percent).
Also, the Ninth Circuit teaches that in a risky case, “It must also be kept in
mind that lawyers are not likely to spend unnecessary time on contingency fee
cases in the hope of inflating their fees. The payoff is too uncertain, as to both the
result and the amount of the fee...By and large, the court should defer to the
winning lawyer’s professional judgment as to how much time he was required to
spend on the case.” Moreno v. City of Sacramento, 534 F.3d 1106, 1112 (9th Cir.
2008) (Kozinski, J.). As already detailed, this case was very risky. (Kick Decl.
¶¶32-33.) Indeed, in an earlier class action involving Asurion’s cell-phone
insurance program for Verizon customers and involving similar allegations of
misrepresentations and/or inadequate disclosures regarding refurbished phones was
dismissed at the demurrer stage by the Superior Court for the State of California,
County of Orange, before the plaintiff commenced the lawsuit in this case. (Kick
Decl. ¶32 (Webster v. Verizon Wireless, LLC, Case No. 02CC00284, October 5,
2004 Minute Order)).) And, in an earlier action involving a different cell-phone
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insurer, but also involving alleged inadequate disclosure regarding refurbished
phones, the United States District Court for the Southern District of Florida denied
the motion for class certification. (Kick Decl. ¶32 (Sanchez v. The Signal and
Signal Holdings, USDC Case No. 1:05-cv-22259, April 3, 2007 Class Certification
Order)).) Recently, in yet another case involving cell phone insurance, this one
related to Apple’s iPhone, class certification was also denied. (Kick Decl. ¶32.)
b. The hourly rates are reasonable.
Class Counsel’s hourly rates are reasonable. The attorneys’ qualifications
and experience well support their respective hourly rates (Kick Decl. ¶¶2-3, 52-81),
as the esteemed Mr. Pearl attests to in detail (Pearl Decl. ¶¶13-19). See Davis v.
City of San Diego, 106 Cal.App.4th 893, 902-03 (2003) (the declaration by the
plaintiff’s counsel is sufficient to attest to the fact that the hourly rates are in line
with those prevailing in the community for similar services by lawyers); United
Steelworkers . v. Phelps Dodge., 896 F.2d 403, 407 (9th Cir. 1990) (“[a]ffidavits of
the plaintiffs’ attorney and other attorneys regarding prevailing fees in the
community, and rate determinations in other cases, particularly those setting a rate
for the plaintiffs’ attorney, are satisfactory evidence of the prevailing market rate”).
Mr. Hennigan (¶19) and Judge Tevrizian (¶15) also attest the rates are reasonable.
In fact, Class Counsel’s same hourly rates have been specifically approved
by courts in other consumer class actions. (Kick Decl. ¶80.) Long, 2014 U.S.Dist.
LEXIS 101670, (“[a] court is justified in relying on a requesting counsel’s recently
awarded fees when setting that counsel’s reasonable hourly rate”). 5. Even though the $1.9 million requested fee award represents a negative multiplier, a positive multiplier is supported. Although the requested fees represent a negative lodestar multiplier
(0.54, i.e., a reduction of 46% of the lodestar), a positive lodestar multiplier would
be justified had Class Counsel not agreed to the reduction. “Multipliers in the 3-4
range are common in lodestar awards for lengthy and complex class action
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litigation.” Miller v. CEVA Logistics USA, Inc., 2015 U.S.Dist.LEXIS 104704, *20
(E.D. Cal. 2015). Several factors justify such a positive lodestar multiplier, and
these are set forth in the declarations of The Hon. Dickran Tevrizian and Mr.
Hennigan. However, Class Counsel does not seek a positive multiplier, only the
agreed not to exceed $1.9 million, which is an approximate 46% reduced lodestar. 6. The requested fees are reasonable even under the inapplicable percentage approach. The requested fees are reasonable even under the inapplicable percentage
approach. The $1.9 million request represents about 45% of the common fund,
which in this case totals $4.2 million. Multiple factors justifying an upward
adjustment of the benchmark are present: “the extent to which class counsel
`achieved exceptional results for the class,' whether the case was risky for class
counsel, whether counsel's performance `generated benefits beyond the cash
settlement fund,' the market rate for the particular field of law (in some
circumstances), the burdens class counsel experienced while litigating the case
(e.g., cost, duration, foregoing other work), and whether the case was handled on a
contingency basis.” Resnick, 779 F.3d at 955 (emphasis added). Other courts have
approved well within this range in a case like this. See, e.g., Wells v. Allstate Ins.
Co., 557 F.Supp.2d 1, 7 (D. D.C. 2008) (fees totaling 45% of fund in consumer
protection action against insurer based on insurance claim mishandling:
approximately 10 years of litigation, 45% of common fund represented 55% of
lodestar, post-certification but no trial or appeal; Kritzer v. Safelite Solutions, LLC,
2012 U.S. Dist. LEXIS 74994, *28-29 (S.D. Ohio 2012) (awarding 52% of
settlement fund as fees: "There is no doubt that the result achieved for the class was
exceptional in this case.)”; See generally William Rubenstein, Alba Conte, &
Herbert B. Newberg, Newberg on Class Actions §17:25 (4th ed. 2008) ("[a]n upper
limit of 50 percent of the fund may be stated as a general rule, although even larger
percentages have been awarded.")
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D. The requested litigation costs should be approved.
This Court should approve payment of $223,061.41 attached as Exhibit “1”
to the Declaration of Taras Kick, as these all were necessary to the prosecution of
the case. (Kick Decl. ¶83(detailing the costs).) These costs are reasonable and
incurred in Class Counsel’s efforts to prosecute the class claims effectively. (Id.)
To the extent any are not recoverable under §1021.5, they are sought and
recoverable under the common fund doctrine. It is well-established that reasonable
costs that would normally be charged to a fee-paying client are recoverable from a
common fund. E.g., Harris v. Marhoefer, 24 F.3d 16, 19 (9th Cir. 1994); see
Omnivision, 559 F.Supp.2d at 1048-49 (“photocopying, printing, postage and
messenger services, court costs, legal research on Lexis and Westlaw, experts and
consultants, and the costs of travel for various attorneys and their staff throughout
the case”). Further, these costs also have been reviewed by expert Michael
Hennigan, and testified to as appropriate. (Hennigan Decl. ¶ 21.) There also were
more than an additional $200,000 in costs incurred on behalf of the class which are
not being sought to be recovered. . (Kick Decl. ¶83; Hennigan Decl. ¶ 21.)
E. The service award to the class representative should be approved.
It is common in class action cases to provide incentive awards to named
plaintiffs. See Newberg § 11:38 (4th ed. 2008). “The Ninth Circuit has established
$5,000 as a reasonable benchmark award for representative plaintiffs.” Chavez v.
PVH Corp., 2015 U.S.Dist.LEXIS 170422, *27 (N.D. Cal. 2015) ; Gaudin v.
Saxon Mortg. Servs., 2015 U.S.Dist.LEXIS 159020, *28 (N.D. Cal. 2015) (“[m]any
courts in the Ninth Circuit have also held that a $5,000 incentive award is
`presumptively reasonable'”). Such an award is all that is sought in this case, and is
appropriate. The class representative in this case was available for nine years, very
helpful to the prosecution of the case, sat for deposition, provided documents, and
was at all times attentive and involved. (Cole Decl. ¶¶3-5; Kick Decl. ¶84.)
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F. The requested fees and costs for notice and claims administration should be approved. The Settlement Administrator has estimated fees and costs for the Court
approved notice and claims process of $432,000, and has agreed to cap them at
$482,000. (Carameros Decl. ¶9.) The Court previously preliminarily approved
these sums, and the claims administrator has since effectuated the plan.
G. The proposed cy pres recipient should be approved.
Because there are already in excess of 20,000 claims, and each class member
is eligible to claim up to $124, it is likely there will not be much money left for a cy
pres recipient. To the extent there is any residue at all, any residue of the Net
Settlement Fund will not revert to Defendants but instead go to a non-profit
organization(s) to be approved by this Court. (Settlement ¶9(g).) Class Counsel
proposes the cy pres recipient be the University of California Davis School of Law
for the specifically earmarked purpose of an endowed faculty fellowship or chair
focusing on consumer rights, including such as those in this case, in the name of
retired California Supreme Court Justice Cruz Reynoso, as described in more detail
in the concurrently filed declaration of Dean Kevin R. Johnson of the law school.
III. CONCLUSION.
Based on the foregoing, Plaintiff respectfully requests that the Court finally
approve the Settlement — including the requested attorney fees and costs, class
representative incentive award, fees and costs of the settlement administrator, and
the proposed cy pres recipient — as fair, adequate, and reasonable, and, therefore,
in compliance with Federal Rules of Civil Procedure Rule 23(e).
Dated: January 11, 2016 Respectfully submitted,
The Kick Law Firm, APC
By: /s/Taras Kick Taras Kick James Strenio
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Attorneys For Plaintiff Wineesa Cole And the Certified Class