Judge: Lon F. Hurwitz, Case: 20-01139875, Date: 2023-08-11 Tentative Ruling
1. Motion for Final Approval
2. Motion for Attorney Fees
Moving Party: Plaintiff Nathan Walter, individually and on behalf of a class of similarly situated individuals
Responding Party: None
SERVICE: July 7, 2023, by electronic service
RELIEF SOUGHT: Plaintiff seeks the entry of an Order and Judgment granting final approval of the Class Action Settlement
UPCOMING EVENTS: Status Conference, September 27, 2023
FACTS/OVERVIEW: This is a putative consumer class action arising from claims of invasion of privacy. On April 1, 2020, Plaintiff Nathan Walter, individually and on behalf of a class of similarly situated individuals (“Plaintiff”), filed a Complaint against Defendant Farfetch.com US, LLC alleging a single cause of action for Unlawful Recording and/or Monitoring of Cellular and Cordless Telephone Communications. (ROA 2). At some point, Plaintiff added Farfetch.com Limited as a named Defendant. Beginning with the Notice of Status Conference dated 6/14/21 (ROA 42), Plaintiff began naming both Farfetch.com US, LLC and Farfetch.com Limited as defendants in the caption. The Register of Actions does not reflect the filing of a Doe Amendment or an Amended Complaint to justify a change in the caption of this case.
Plaintiff alleges that Defendants, an e-commerce company, intentionally and surreptitiously recorded and/or monitored telephone calls placed or routed to their customer service lines. Plaintiff alleges that Defendants’ policy and practice of recording and monitoring customer telephone conversations, without the consent of all parties, violates the California Invasion of Privacy Act (Penal Code §§ 630, et seq.) Specifically, Plaintiff alleges Defendants’ policy and practice violates Penal Code § 632.7, which prohibits the recording or monitoring of a communication made to or from a cellular or cordless telephone without the consent of all parties to the communication. Plaintiff seeks an award of statutory damages, attorney’s fees, and pre- and post-judgment interest.
In the Complaint, the Class is defined as: “All California citizens who, while located within California at any time during the applicable limitations period preceding the filing of the Complaint in this matter and through and including the date of resolution, and while one or both parties to the call were using a cellular or cordless telephone, engaged in a telephone conversation with Defendants’ employee(s) or agent(s) and were recorded and/or monitored by Defendants without any warning or disclosure at the call outset.” [Compl., ¶ 22.]
On December 1, 2020, the Court entered a stay of the litigation pending the outcome of the California Supreme Court’s decision in Smith v. LoanMe, Inc. On April 1, 2021, the Supreme Court issued its decision in Smith v. LoanMe, Inc. (2021) 11 Cal.5th 183.
On January 20, 2023, the Court granted Plaintiff’s Motion for Preliminary Approval of Class Action Settlement. (ROA 122).
In the Order Granting Preliminary Approval filed on February 21, 2023, the Court directed counsel to file the motion for final approval and the motion for award of attorney’s fees, litigation costs, administration costs, and a service award no later than 110 days after entry of the Order. (ROA 128). The Court went on to state that the Final Approval Hearing would be held on August 11, 2023. (ROA 128). Notice of the entry of the Order was filed on February 23, 2023. (ROA 132).
On July 7, 2023, Plaintiff filed the current Motion for Final Approval of Class Action Settlement. (ROA 158). The motion was filed 134 days after the notice of the entry of Order was filed.
TERMS OF PRELIMINARILY APPROVED SETTLEMENT
The Settlement Agreement provided at preliminary approval is found at ROA 72.
Proposed Settlement Class Definition:
“All natural persons who, while residing or located in California, placed a call to Defendant’s customer service telephone number ((646) 791-3768) at any time during the period from and including April 1, 2019 through August 3, 2020 (the ‘Class Period’) and spoke with a representative and were not notified that the call would be recorded.” [Prelim. Settlement Agmt., ¶ 1(h).]
Excluded are “all attorneys and employees of Settlement Class Counsel, any judicial officer to whom this case is assigned, and persons who validly opt out of the settlement by following the procedures set forth [in the Settlement Agreement].” [Ibid.]
Estimated Class size: 34,921 (based on telephone numbers with California area codes). [Decl. of Eric A. Grover ISO Preliminary Approval (ROA 72), ¶ 11.]
Gross Settlement Amount (“GSA”): $4,000,000.00 [Prelim. Settlement Agmt., ¶ 3.1.]
$ 1,333,333.00 Attorneys’ fees (not to exceed 1/3 of GSA)
$ 20,000.00 Litigation costs (not to exceed)
$ 80,000.00 Notice and Administration costs (not to exceed)
$ 10,000.00 Enhancement (not to exceed)
__________________
$ 2,556,667.00 Net Settlement Amount (“NSA”) [Id., ¶¶ 3.2-3.4]
Injunctive Relief: None. The preliminary Settlement Agreement did not contain any injunctive relief or requirement that Defendants make a change in their policies and practices regarding the recording and/or monitoring of customer telephone calls to Defendants’ customer service numbers.
Payments to Class:
How Calculated? Divide NSA among Authorized Claimants in proportion to number of unlawfully-recorded calls made by each individual. First divide NSA by aggregate number of unlawfully-recorded calls made by all Authorized Claimants. Resulting quotient is the “Per-Call NSA.” Sum paid to each Authorized Claimant is equal to the Per-Call NSA multiplied by number of calls made by or attributed to that Authorized Claimant. [Prelim. Settlement Agmt., ¶ 3.5.]
Reversion? No. Entire NSA will be distributed to Authorized Claimants. [Id., ¶ 3.4.]
Claims Made? Yes. Claim forms must be postmarked or received electronically no later than 100 days after entry of Order of Preliminary Approval. [Id., ¶ 8.5.] The Notice deadline is 40 days after entry of Order of Preliminary Approval. Notice sent by email and postcard. [Id., ¶ 6.3.]
Taxation? Authorized Claimants who receive distribution from NSA are solely responsible for taxes owed or incurred. [Id., ¶ 16.1.]
Payments? No later than 50 days after Settlement Effective date. [Id. ¶ 10.1]
Uncashed Settlement checks must be cashed Checks? within 90 days after issuance. Funds from uncashed checks will be distributed to cy pres recipient, Consumer Federation of California. [Id., ¶ 3.6.]
Average Pymt.? $4,340.66 ($849.95 per call). [Grover Decl., ¶ 28.]
ANALYSIS OF SETTLEMENT AND FINAL APPROVAL MOTION
1. Release Language
“Upon the Settlement Effective Date, the Settlement Class Representative and each Settlement Class Member, and their respective heirs, assigns, successors, agents, attorneys, executors, and representatives, shall be deemed to have, and by operation of this Agreement and the Final Approval Order and Judgment shall have, fully, finally, irrevocably, and forever, released Farfetch.com US, LLC and its present and former officers, directors, members, managers, shareholders, agents, parents, subsidiaries, affiliates, insurers, operators, partners, joint ventures, franchisees, franchisors, consultants, attorneys, successors or assigns (collectively, the ‘Released Parties’) from any and all liabilities, claims, causes of action, damages (whether actual, compensatory, statutory, punitive or of any other type), penalties, costs, attorneys’ fees, losses, or demands, whether known or unknown, in law or equity, existing or suspected or unsuspected, that relate to or arise out of the alleged recording, monitoring, or eavesdropping on telephone calls made to Defendant’s customer service number ((646) 791-3768) at any time during the period from and including April 1, 2019 through August 3, 2020 (collectively, the ‘Released Claims’). The Released Claims include, but are not limited to, all potential claims reasonably related to or arising out of the same set of facts plead [sic] in the complaint concerning the Released Parties’ violations of any law prohibiting or regulating the monitoring, recording or eavesdropping on telephone calls without the consent of all parties, including but not limited [to] California Penal Code §§ 632, 632.7 and 637.2, during the Class Period. The Released Claims also include but are not limited to all claims under any other California or federal statute, code, rule or regulation that regulates or restricts the monitoring or recording of or eavesdropping on telephone calls that are reasonably related to or arise from the same set of facts pled in the Complaint.” [Settlement Agmt., ¶ 11.1.]
The Release also includes a Section 1542 waiver by each Settlement Class Member and the Named Plaintiff, and their respective heirs, assigns, successors, agents, attorneys, executors, and representatives. [Id., ¶ 11.2.] In addition, this provision states: “Although the releases granted under this Agreement are not general releases, the Settlement Class Representative, for himself and each Settlement Class Member, nonetheless expressly acknowledges that, to the extent permitted by law, he is waiving, in connection with and relating to the Released Claims only, the protections of Section 1542.” [Ibid.]
2. Results of Class Notification
Actual Class Size: 25,570. 34,921 records sent to administrator. After performing reverse look-up using the telephone numbers to obtain complete physical mailing addresses, the administrator did not identify any duplicate records and removed 9,351 records for which no contact information (i.e., no physical or e-mail address) was obtained. Administrator identified 25,570 unique records, all of which contained a single email address, and 10,259 of which also contained a physical mailing address. [Admin. Decl. (ROA 160), ¶ 4.]
Mailing Success: As of June 30, 2023, of the 25,570 emails attempted for delivery, 3,827 emails were rejected/bounced back as undeliverable.
As of June 30, 2023, of the 10,259 postcards mailed, 100 were returned by USPS with a forwarding address. They were automatically re-mailed to the updated addresses provided. 927 postcards were returned as undeliverable without a forwarding address. 909 undeliverable records were run through an advanced address search. 655 updated addresses were provided, and re-mailed Notices were sent to those address.
After all Notice emails and mailings, mailed Notices likely reached 9,987 of the 10,259 persons to whom postcards were sent – a success rate of approximately 97.3%. Of the 254 persons who did not receive the postcard, 197 were successfully sent the email Notice. Therefore, of the 10,259 persons who were sent postcards, only 57 did not receive either the postcard or the email Notice – a 99.4% success rate.
The email Notice likely reached 21,743 of the 25,570 persons to whom an email was sent – an 85% success rate. Of the 3,827 persons who did not receive the email Notice, 1,210 were successfully sent the postcard Notice. Therefore, of the 25,570 persons sent the email Notice, only 2,617 did not receive either the email or the postcard Notice – an 89.76% success rate. [Admin. Decl., ¶¶ 9-14.]
Claims Made: Last day to submit claim forms/opt outs/objections was June 11, 2023. As of June 30, 2023, administrator had received 124 Claim Forms by mail and 592 Claim Forms electronically for a total of 716 Claim Forms. [Admin. Decl., ¶¶ 16-17.] Administrator completed validation process for the 716 Claim Forms and determined that 128 Class Members have submitted deficient Claim Forms. Administrator has sent email or mail Notice to those 128 Class Members giving them 20 days to cure. [Id., ¶ 19.] Administrator has received 5 late claims. [Id., ¶ 20.] Including the Named Plaintiff, there are 589 claims that are not deficient and represent a total of 3,008 unique telephone calls.
Opt-Outs: One (1) timely opt out request. [Admin. Decl., ¶ 23.] The Class Member requesting to opt out is Record Identification Number 671251TF53N7S. [Id., Exh. G.] (Class Members were provided a unique “Class Member ID” on their notices. [Id., ¶ 18].)
Objections: None [Admin. Decl., ¶ 23.]
Net Settlement Amount: $2,556,667.00 ($4,000,000.00 GSA minus $1,333,333.00 attorneys’ fees, $$20,000.00 litigation costs, $10,000.00 enhancement, and $80,000.00 administration costs). [Grover Decl., ¶ 33; Prelim. Settlement Agmt., ¶ 3.4.]
Average Payment Based on Actual Disbursements Requested: Average settlement payment will be $4,340.66. Lowest projected payment is $849.95, highest is $157,240.75. [Admin. Decl., ¶ 21.]
ISSUE: The results of the Class Notification are excellent. This supports a finding that the Settlement is reasonable, fair, and adequate. However, the administrator still needs to provide an update on the status of cure notices and how many of the 128 Class Members cured. The administrator also must provide update on average settlement payment to include additional Class Members who cured.
3. Representative Enhancement
Named Plaintiff seeking a $10,000 enhancement. Class counsel attests enhancement is fair and reasonable because Named Plaintiff “actively and aggressively” represented the putative class. Counsel also attests Named Plaintiff was “essential element” in the prosecution and settlement of the litigation, and was available to gather evidence and provide information critical to the prosecution. [Grover Decl., ¶ 50.] Counsel attests enhancement amount is fair given the amount of time and effort Named Plaintiff spent on the litigation, and the personal hardship he faced as a result of filing this lawsuit. [Id., ¶ 51.]
Named Plaintiff attests that he initially spent one hour discussing possible litigation with counsel, including his responsibilities as class representative. Named Plaintiff also attests he “spent hours” obtaining and reviewing his telephone records for the litigation. He also spent 2 hours reviewing the Complaint before it was filed, discussed the stay of litigation with counsel, discussed the mediation with counsel, discussed the MOU that was a precursor to the Settlement Agreement, and spent 2 hours talking to counsel about the formal Settlement Agreement. [Decl. of Nathan Walter (ROA 152), ¶¶ 3-9.]
ISSUE: Amount of requested enhancement exceeds usual amount of $5,000. Named Plaintiff and counsel have not provided sufficiently detailed account of time he spent on the litigation.
4. Administration Costs
Administrator attests that as of May 31, 2023, it will have billed $39,134.27 for services and fees incurred in administration of this matter. Administrator estimates an additional $44,736.14 will be needed to complete administration of the Settlement. Remaining work to be completed includes (a) review of claim deficiencies, (b) tasks related to distribution and post-distribution, and (c) other tasks related to case completion. Current estimate subject to change depending on factors such as number of claims remaining to be examined, number of claims filed, and/or unanticipated change in scope of administration. [Admin. Decl., ¶ 24, Exh. H.]
ISSUE: The total of $83,870.41 exceeds the $80,000.00 amount in the Order Granting Preliminary Approval. Settlement Administrator must provide updated invoice of total costs for services and fees before final approval of Settlement.
5. Litigation Costs
Class Counsel attests that as of July 7, 2023, Keller Grover LLP’s costs to date are $9,418.17. Costs include filing fees, CourtCall charges, service of process, postage, copying, legal research, conference calls, mediation, mileage, and meals. Class Counsel also attests that as of July 7, 2023, co-counsel Scot Bernstein’s costs are $6,580.00. Additional expected costs of $300. [Grover Decl., ¶¶ 73-74, Exh. 8.] Class Counsel seeking a total of $16,568.17 in costs.
6. Order and Judgment
Notice of Judgment: Not provided.
ISSUE: Method of informing Class of final judgment must be provided. (CRC Rule 3.771(b).)
Final Accounting: Proposed Order suggests February 2, 9, or 16, 2024 as date for Final Accounting. (ROA 142, ¶ 6.) Compliance report will be submitted at least 10 calendar days prior to hearing. (Ibid.)
Opt-outs/Exclusions: Not identified in Proposed Order.
ISSUE: Proposed Order must specifically identify Class Members who opted out or requested exclusion.
RE PROPOSED ORDER: (ROA 142)
1. The proposed Order is to be revised consistent with the issues addressed above.
2. Settlement Agreement and Release should be identified with ROA number.
3. Counsel and settlement administrator declarations should be identified by ROA number.
4. Paragraph 2 – “final fairness” hearing should read “Final Accounting” hearing.
5. The proposed Order should include a provision specifying how notice of the judgment will be
provided to the Class. (CRC, Rule 3.771(b).)
6. The proposed Order should identify the cy pres recipient.
MOTION FOR ATTORNEYS’ FEES
1. Attorneys’ Fees (ROA 144, 159)
Lead Class Counsel, Eric A. Grover of Keller Grover LLP, is an experienced consumer protection and class action attorney. (ROA 150, Grover Decl., ¶¶ 2-4). Co-counsel, Scot Bernstein of the Law Offices of Scot D. Bernstein, is also an experienced consumer protection and class action attorney. (ROA 146, Bernstein Decl., Exh. 1.) Class Counsel seeks combined attorneys’ fees of $1,333,333.00, which is 1/3 of the GSA. This is within market range and reasonable. (Grover Decl., ¶¶ 52-53.)
Counsel seeks attorneys’ fees under the “common fund” doctrine—i.e., amount of reasonable attorneys’ fees determined by percentage of the common fund created for the class. (Laffitte v. Robert Half Int’l., Inc. (2016) 1 Cal.5th 480, 503.)
Through July 6, 2023, Keller Grover LLP spent a total of 207.30 hours litigating this case. This amounts to a total lodestar of $174,687.50. (Grover Decl., ¶¶ 54, 63.) Counsel expects to spend an additional 20 hours finalizing the Motion for Final Approval, attending the Final Approval hearing, and dealing with various settlement administration issues. (Id., at ¶ 55.)
Through June 30, 2023, Mr. Bernstein spent a total of 123.1 hours on this case, and anticipates spending an additional 2 hours on the Final Approval hearing and 5 hours on settlement administration issues. This amounts to a lodestar of $123,595.00. (Bernstein Decl., ¶ 12, Exh. 1.)
A summary of the hours and fees is set forth below:
Keller Grover LLP
Attorney Hours Hourly Rate Total
Eric Grover, Prtnr 126.40 $950 $120,080.00
Elizabeth Acevedo, 42.70 $675 $ 28,822.50
Robert Spencer 6.20 $675 $ 4,185.00
Adrian Barnes 32.00 $675 $ 21,600.00
207.30 $174,687.50
Law Office of Scot Bernstein
Scot Bernstein Prtnr 123.1 $950 $116,945.00
TOTAL 330.50 $291,632.50
Fees for future work are estimated at $20,000.00. Therefore, the final lodestar is $311,632.50.
The hourly rates for Mr. Grover and Mr. Bernstein are high, as is the lodestar multiplier, which is approximately 4.5. However, the requested fees are based on the “common fund” doctrine and are equal to 1/3 of the GSA.
The result in this case was good. The GSA amount of $4,000,000.00 was reached through mediation. Only one Class Member opted out of the Settlement, and none objected. The success rate of the Class Notice was more than 90%, and the average payment is $4,340.66.
Under the fee division agreement between co-counsel, Keller Grover LLP will receive 30% of all fees and Law Offices of Scot D. Bernstein will receive 25% of all fees. The remaining 45% shall be allocated as follows: (1) amount Keller Grover and Bernstein in proportion to their respective lodestars until such as point as each firm has received a sum equal to its own lodestar over and above the percentage already allocated to that firm; and (2) any portion of that remaining 45% shall be equally divided between the two firms. (Grover Decl., ¶ 72.) Final fee-split calculation will occur once the Court awards attorneys’ fees. (Ibid.)
Under this fee-split agreement, Keller Grover will receive $400,000.00 as a base amount, and Bernstein will receive $333,333.00 as a base amount. It is estimated the remaining $600,000.00 will be split as follows:
• Keller Grover $332,221.25
• Scot Bernstein $267,778.75
The total amount of fees sought and the fee-split arrangement are reasonable. Counsel has handled this litigation in a diligent manner.
2. Litigation Costs
Keller Grover LLP’s costs to date are $9,418.17, including filing fees, CourtCall charges, service of process, postage, copying costs, legal research, conference call charges, mediation costs, mileage, and meals. (Grover Decl., ¶ 73, Exh. 8.) Keller Grover LLP expects to incur additional costs of $300.00 through the rest of the litigation for filing fees and service costs. (Id., ¶ 73.) Co-counsel Bernstein’s costs to date are $6,850.00. (Bernstein Decl., ¶ 8, Exh. 1.) Total amount of litigation costs sought is $16,568.17. (Grover Decl., ¶ 75.)
The majority of the litigation costs went for the mediation fee of $13,250.00. (See, Grover Decl., Exh. 8.) More than $2,400.00 went for filing fees, court fees, and CourtCall. (Ibid.) A total of $333.33 went for postage, copying costs, legal research, one conference call, and transportation. (Ibid.) All of these costs are reasonable. However, counsel also seeks costs for meals. Although only $27.40 was spent on meals, this should not be included. Attorneys have to eat wherever they are, and therefore, meals are not necessary to conduct the litigation. (See, Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 774.) Accordingly, $27.40 will be deducted from the total.
The Court approves $16,540.77 in litigation costs.
RULING:
The hearing on the Motion for Final Approval is CONTINUED to 10/20/23, at 1:30 p.m. in Department CX103 so that counsel may address the issues identified above.
Counsel must file supplemental papers addressing the Court’s concerns no later than fourteen (14) calendar days prior to the continued hearing date. Counsel must also provide red-lined versions of all revised papers, and an explanation of how the pending issues were resolved.
Clerk to give Notice.