Kelsea Baggett v. Hewlett-Packard Company et al
Filing
259
ORDER by Judge Andrew J. Guilford Granting Final Approval of Class Settlement 231 and Granting Application for Attorney Fees and Costs and Incentive Awards 221 . The Court GRANTS final approval and GRANTS the injunction as set forth in the Stipulation of Settlement. After fully reviewing the proposed order on the Motion and the Application, the Court has signed it with modifications consistent with this Order. (db)
1
2
3
4
5
6
7
8
UNITED STATES DISTRICT COURT
9
FOR THE CENTRAL DISTRICT OF CALIFORNIA
10
11
12
13
14
15
16
17
18
In re: HP LASER PRINTER
LITIGATION
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
________________________________ )
CASE NO. SACV 07-0667 AG (RNBx)
ORDER GRANTING FINAL
APPROVAL OF CLASS
SETTLEMENT AND GRANTING
APPLICATION FOR ATTORNEY
FEES AND COSTS AND INCENTIVE
AWARDS
19
20
21
Plaintiff Kelsea Baggett (“Plaintiff Baggett”) filed a Motion for Final Approval of
22
Settlement (“Motion”). Plaintiff James Young (“Plaintiff Young”) and Plaintiff Baggett also
23
filed a Motion for Attorneys’ Fees and Reimbursement of Litigation Expenses (“Application”).
24
After oral argument and after reviewing all papers and arguments submitted, including some
25
very recent submissions and cases, the Court GRANTS the Motion and GRANTS the
26
Application.
27
28
1
BACKGROUND
2
3
This case challenges Hewlett-Packard’s practice of including a “hardstop” on its color
4
laser jet printers that shuts down all printing operations when a toner cartridge reaches “empty,”
5
even though some toner remains in the cartridge. Plaintiff Baggett and Plaintiff Young each
6
filed a class action case against Defendant based on cartridge issues with some Hewlett Packard
7
color LaserJet printers. Plaintiffs alleged that the toner cartridges would shut down even though
8
some toner was left. Plaintiff Baggett alleged that the shutdown could not be overriden.
9
Plaintiff Young alleged that later models would also shut down with toner remaining but the
10
11
process could be overridden by the user.
Plaintiff Baggett asserted claims for violation of the California Unfair Competition Law,
12
unjust enrichment, conversion, trespass to chattels, and fraudulent concealment. The Court
13
dismissed the claim for unjust enrichment but denied Defendant’s motion to dismiss the other
14
claims. The Court later granted summary judgment against Plaintiff Baggett and denied as moot
15
the motion for class certification. Plaintiff Baggett appealed to the Ninth Circuit.
16
Plaintiff Young asserted claims for violation of the California Unfair Competition Law,
17
the California Consumers Legal Remedies Act, unjust enrichment, conversion, trespass to
18
chattels, and fraudulent concealment. Defendant moved to dismiss, which this Court granted.
19
Plaintiff Young appealed to the Ninth Circuit.
20
Both Plaintiffs are dismissing their appeals based on this settlement. Class counsel
21
contends that settlement was reached largely because Defendant admitted it changed its practices
22
in response to this litigation, and has agreed to related injunctive relief. The parties have now
23
reached a settlement and ask the Court to grant final approval.
24
The Court held a final fairness hearing on the Motion and Application. The Court then
25
took the matter under submission for further review, and has now reviewed recent cases that
26
might affect its ruling, including cases submitted along the way by the parties and objectors. In
27
particular, the Court has considered the very recent ruling in In re Bluetooth Headset Liability
28
2
1
Litigation, — F.3d —, 2011 WL 3632604 (9th Cir. Aug. 19, 2011). The Court has now
2
completed its review and thus issues this Order.
3
4
ANALYSIS
5
6
1.
CLASS CERTIFICATION FOR PURPOSES OF SETTLEMENT
7
8
Plaintiffs seek class certification for purposes of settlement. As set forth previously,
9
Plaintiffs move for final certification of “a class (the ‘Settlement Class’) of all individual or
10
entity end-users who purchased, leased, received as a gift or otherwise acquired in the United
11
States an Affected Model (as defined in the Stipulation of Settlement). Excluded from the
12
Settlement Class are all persons who are employees, directors, officers, and/or agents of HP or
13
its subsidiaries and affiliated companies, as well as the Court and its immediate family and
14
staff.”
15
As mentioned, the Court previously granted Plaintiffs’ request to certify a class for
16
purposes of settlement on a preliminary basis. (Dkt. # 219.) The Court previously considered
17
the four prerequisites set forth in Federal Rule of Civil Procedure 23(a) and determined that this
18
class preliminarily met those requirements. At that stage, the Court carefully reviewed the
19
proposed terms and gave substantial guidance to the parties on issues such as the proposed
20
release of claims by class members.
21
Nothing has changed since the Court granted preliminary approval that would warrant a
22
deviation from the Court’s previous ruling. Accordingly, the Court certifies the class for
23
purposes of class settlement for the reasons specified in more detail in the preliminary approval
24
order.
25
26
27
28
3
1
2.
APPROVAL OF CLASS SETTLEMENT
2
3
2.1
Settlement Terms
4
5
The primary relief here is injunctive relief, with Defendant disclosing the existence and
6
effect of the mechanism in the printer cartridges that stops printing after a certain number of
7
pages. Defendant will also cease using that mechanism in future printers.
8
9
There is also a nominal monetary benefit to class members, for a total potential pay-out of
$5 million. Each member of the Baggett class (covering printer models with cartridges whose
10
shutdown cannot be overridden) will receive a $13 e-credit per qualifying printer if the class
11
member shows proof of ownership of a class printer. Members of the Young class (covering
12
printer models with cartridges whose shutdown can be overridden) will receive $7 e-credit per
13
qualifying printer if they provide proof of ownership of a class printer and submit a declaration
14
that they received a message the cartridge was empty, believed they were out of toner due to the
15
message, and removed the cartridge without using the available override function. (Motion
16
1:22-27, Motion 11:21-12:10.)
17
The e-credits “will be redeemable for printers and printer supplies offered at
18
www.shopping.hp.com.” (Stipulation of Settlement ¶ 43.) There are some products available
19
for less than the amount of the $13 e-credit. Therefore, since some class members can get
20
something for free, “coupon settlement” concerns are alleviated.
21
In exchange for the relief provided, class members “shall be deemed to have, and by
22
operation of the Final Order and Judgment shall have, fully, finally and forever released,
23
relinquished, and discharged all Released Claims against the Released Parties.” (Stipulation of
24
Settlement ¶ 45.)
25
The parties appeared before the Honorable James L. Warren (Retired) to mediate
26
settlement. As set forth in In re Bluetooth, “the mere presence of a neutral mediator, though a
27
factor weighing in favor of a finding of non-collusiveness, is not on its own dispositive of
28
whether the end product is a fair, adequate, and reasonable settlement agreement.” In re
4
1
Bluetooth, 2011 WL 3632604, at *10. With this limitation in mind, the Court notes this factor
2
when concluding that the Court should approve the settlement and award fees.
3
4
2.2
Injunction
5
6
7
The Stipulation of Settlement (Dkt. # 213, Ex. A) sets forth the injunction at paragraphs
31-33. The Court now GRANTS an injunction consistent with those terms.
8
9
2.3
Objectors and Opt-Outs
10
11
There are several objectors in this case. Plaintiff Young is now one of the objectors.
12
The objectors who filed their objections properly before the deadline of January 4, 2011, raise
13
unconvincing arguments that the compensation to the class should be greater. Several additional
14
objectors filed untimely objections. Even though those objectors missed the deadline, the Court
15
nonetheless considered their objections. Besides the formal objectors, approximately 40 other
16
class members sent letters to the class administrator expressing some dissatisfaction with the
17
settlement.
18
The objections are not sufficiently meritorious to justify changing the terms of the
19
proposed settlement. Further, the credibility of at least one objector was called into question
20
based on misstatements or mischaracterizations of evidence in his submissions to this Court.
21
22
2.4
Notice to Class
23
24
“Adequate notice is critical to court approval of a class settlement.” Hanlon v. Chrysler
25
Corp., 150 F.3d 1011, 1025 (9th Cir. 1998). Since Plaintiffs seek certification under Rule
26
23(b)(3), notice must comply with the requirements of Rule 23(c)(2)(B):
27
28
5
1
For any class certified under Rule 23(b)(3), the court must direct to
class members the best notice that is practicable under the
circumstances, including individual notice to all members who can
be identified through reasonable effort. The notice must clearly and
concisely state in plain, easily understood language: (i) the nature of
the action; (ii) the definition of the class certified; (iii) the class
claims, issues, or defenses; (iv) that a class member may enter an
appearance through an attorney if the member so desires; (v) that the
court will exclude from the class any member who requests
exclusion; (vi) the time and manner for requesting exclusion; and
(vii) the binding effect of a class judgment on members under Rule
23(c)(3).
2
3
4
5
6
7
8
The parties have provided proper notice consistent with the preliminary settlement
9
approval. The Court directed that notice be provided by: (1) emailing the “long form” notice to
10
the last known email address of those members of the Settlement Class who have a valid email
11
address in Defendant’s registration database and have not withheld their consent to be contacted
12
via email; (2) publishing the “summary notice” in USA Weekend, Parade, People, and CIO
13
Magazine as well as placing banner advertisements on Yahoo.com and other websites; and (3)
14
providing a link on both notice forms to a settlement website.
15
The number of claim forms submitted, the number of opt-outs, and the number of
16
objectors all indicate that notice was sufficient. The Court finds that class notice was
17
appropriate in form and substance.
18
19
2.5
Settlement Factors
20
21
“Although Rule 23(e) is silent respecting the standard by which a proposed settlement is
22
to be evaluated, the universally applied standard is whether the settlement is fundamentally fair,
23
adequate and reasonable.” Officers for Justice v. Civil Serv. Comm’n, 688 F.2d 615, 625 (9th
24
Cir. 1982). The settlement as a whole, rather than the component parts, is the proper subject of
25
inquiry. Hanlon, 150 F.3d at 1026. “Settlement is the offspring of compromise; the question we
26
address is not whether the final product could be prettier, smarter or snazzier, but whether it is
27
fair, adequate and free from collusion.” Id. at 1027.
28
6
1
In assessing a settlement proposal, the Court must consider various factors, including (1)
2
the strength of plaintiffs’ case; (2) the risk, expense, complexity, and likely duration of further
3
litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount
4
offered in settlement; (5) the extent of discovery completed, and the stage of the proceedings; (6)
5
the experience and views of counsel; (7) the presence of a governmental participant; and (8) the
6
reaction of the class members to the proposed settlement. Staton v. Boeing Co., 327 F.3d 938,
7
959 (9th Cir. 2003); Churchill Vill. LLC v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004). But
8
“[t]his is by no means an exhaustive list of relevant considerations.” Officers for Justice, 688
9
F.2d at 625.
Considering all the factors set forth in Staton and Churchill, the Court concludes that the
10
11
proposed settlement is fundamentally fair, adequate, and reasonable. Particularly significant
12
under Factor (1) is that this Court previously ruled against Plaintiffs’ theory of recovery, which
13
highlights the risk involved under Factors (2) and (3). Factor (5) also supports the settlement, as
14
the Baggett case had proceeded all the way through summary judgment. Further, under
15
Factor (6), the Court gives some weight to the fact that Plaintiffs’ counsel is experienced in class
16
action litigation and views this settlement as providing “virtually all of the injunctive relief
17
sought . . . that directly address[es] the gravamen of the complaints.” (Motion at 14:27-28, 15:3-
18
4.)
19
But as noted in In re Bluetooth, where a settlement is negotiated before formal class
20
certification, it’s important to consider whether there is evidence of collusion or other conflicts
21
of interest. In re Bluetooth, 2011 WL 3632604, at *9. Courts must be “particularly vigilant not
22
only for explicit collusion, but also for more subtle signs that class counsel have allowed pursuit
23
of their own self interests and that of certain class members to infect the negotiations.” Id. The
24
In re Bluetooth court set forth several such signs. One sign is when class counsel receive a
25
disproportionate share of the monetary settlement. Id. Another sign is when the parties
26
negotiate a “clear sailing” provision for attorney fees, in that defendant will not object to fees up
27
to a certain level. Id. And a final sign identified by In re Bluetooth is when the parties arrange
28
for fees to revert to the defendant instead of to the class fund or a cy pres fund. Id. These signs
7
1
are all present here, as they were in In re Bluetooth, so the Court must “examine the negotiation
2
process with even greater scrutiny than is ordinarily demanded.” Id. at *12. The Court has
3
closely examined the evidence and argument presented regarding the negotiation of the
4
settlement agreement. As noted previously, the parties appeared before a neutral third party
5
mediator. While not dispositive, this fact supports a finding of non-collusion. Id. at *10.
6
Retired Judge Warren, the mediator in this settlement, states in his Declaration that the
7
settlement process was “long and arduous” over a period of several years, which suggests that
8
neither side was willing to collude for a quick resolution. (Warren Declaration, ¶ 3.) Further, he
9
states that “[a]ll counsel vigorously asserted their positions and negotiated in good-faith and at
10
arms-length to reach an appropriate compromise for the class.” (Id. ¶ 5.) According to Retired
11
Judge Warren, class counsel “insist[ed] that the settlement terms for the benefit of the class be
12
finally resolved before compensation of counsel was addressed.” (Id.) The Court finds that this
13
and other evidence supports a finding that there was no collusion between the parties in reaching
14
this settlement, despite the presence of the warning signs identified by In re Bluetooth.
15
16
2.6
Incentive Award
17
18
The parties agreed to a $2,500 stipend to Plaintiff Baggett and a $1,000 stipend to
19
Plaintiff Young. “Incentive awards are fairly typical in class action cases.” Rodriguez v. West
20
Publishing Corp., 563 F.3d 948, 958 (9th Cir. 2009) (emphasis omitted). Incentive awards “are
21
intended to compensate class representatives for work done on behalf of the class, to make up
22
for financial or reputational risk undertaken in bringing the action, and, sometimes, to recognize
23
their willingness to act as a private attorney general.” Id. at 958-59. Incentive awards are within
24
the Court’s discretion. In re Mego Financial Corp. Securities Litigation, 213 F.3d 454, 463 (9th
25
Cir. 2000).
26
27
Plaintiff Young has objected to this settlement and the Court finds that such objectors to a
settlement are helpful in reviewing settlements and should not be discouraged. Thus, the Court
28
8
1
finds it appropriate to award him an incentive fee. The Court finds that the incentive awards are
2
reasonable as to Plaintiff Baggett and Plaintiff Young.
3
2.7
4
Attorney Fees and Costs
5
Class counsel spent over 11,000 hours on this litigation, for a lodestar of $4,776,464.25 in
6
7
fees plus nearly $200,000 in costs. Hourly rates range from $800 for a partner to $75 for a
8
paralegal, with a range of rates for dozens of other associates and partners. (Plaintiffs’
9
Supplement in Support of Plaintiffs’ Motion for Preliminary Approval of Class Action
10
Settlement, Dkt. # 217.) Counsel acknowledges that the monetary benefit to the class is minimal
11
but contends that the injunctive relief is substantial. (Application at 2:24-3:2.) Plaintiffs request
12
attorney fees and costs of $2.75 million. Thus, the requested fees are a little over 50% of the
13
lodestar.
14
The Court has a duty to determine whether the attorney fees sought are fair and
15
reasonable. In re Bluetooth, 2011 WL 3632604, at *3; see also Staton, 327 F.3d at 963 (the
16
“district court must carefully assess the reasonableness of a fee amount spelled out in a class
17
action settlement agreement.”). “In employment, civil rights and other injunctive relief class
18
actions, courts often use a lodestar calculation because there is no way to gauge the net value of
19
the settlement or any percentage thereof.” In re Bluetooth, 2011 WL 3632604, at *4, citing
20
Hanlon, 150 F.3d at 1029. The resulting lodestar may then be adjusted upwards or downwards.
21
Id. Here, because the primary benefit to the class is injunctive relief, the Court finds it
22
appropriate to base the attorney fees on a lodestar calculation rather than any sort of common
23
fund calculation. The Court finds it unnecessary to attempt to quantify the value of the
24
injunctive relief where a lodestar calculation provides a reasonable way to determine attorney
25
fees.
26
“The essential goal in shifting fees (to either party) is to do rough justice, not to achieve
27
auditing perfection. So trial courts may take into account their overall sense of a suit, and may
28
use estimates in calculating and allocating an attorney’s time.” Fox v. Vice, 131 S.Ct. 2205,
9
1
2210 (2011). But the Court must be sure that “the amount awarded [is] not unreasonably
2
excessive in light of the results achieved.” In re Bluetooth, 2011 WL 3632604 at *6. The Court
3
looks to the Kerr factors in determining any adjustment to the lodestar. Kerr v. Screen Extras
4
Guild, Inc., 526 F.2d 67 (9th Cir. 1975). Kerr sets forth the following twelve factors: (1) the
5
time and labor required, (2) the novelty and difficulty of the questions involved, (3) the skill
6
requisite to perform the legal service properly, (4) the preclusion of other employment by the
7
attorney due to acceptance of the case, (5) the customary fee, (6) whether the fee is fixed or
8
contingent, (7) time limitations imposed by the client or the circumstances, (8) the amount
9
involved and the results obtained, (9) the experience, reputation, and ability of the attorneys, (10)
10
the “undesirability” of the case, (11) the nature and length of the professional relationship with
11
the client, and (12) awards in similar cases. Id. at 70. The Court has reviewed each of the
12
factors. One of the key factors here is the amount involved and the results obtained. As noted,
13
the primary benefit here is injunctive in nature, and the injunctive relief provided under the
14
Stipulation of Settlement is equivalent to what Plaintiffs were seeking in filing this lawsuit.
15
Another key factor is the time and labor required. Counsel for Plaintiffs devoted an enormous
16
number of hours to this litigation. The supporting documentation provides a break-down of
17
hours into general categories, which is appropriate for a case like this.
18
Considering the years spent on this case, the numerous motions filed, the adverse results
19
followed by appeals, and the successfully negotiated settlement, it is reasonable to award
20
substantial fees to Plaintiffs’ counsel. Further, collusion appears not to be involved here here,
21
particularly considering that Defendant had prevailed both in the Baggett action after summary
22
judgment and in the Young action after dismissal. The Court also finds that the costs identified
23
by Plaintiffs were reasonably incurred.
24
With appropriate reductions to the thousands of hours billed, adjustments to the hourly
25
rates of dozens of attorneys, and reduction of the multiplier, and heeding Justice Kagan’s
26
exhortation not to become “green-eyeshade accountants,” Fox, 131 S.Ct. at 2216, the Court finds
27
that the hours and rates are reasonable with a total award, including costs, of $2 million, which
28
makes the fees a little less than 40% of the lodestar. This Court has discretion to determine
10
1
appropriate fees and the Supreme Court noted that “[w]e can hardly think of a sphere of judicial
2
decisionmaking in which appellate micromanagement has less to recommend it.” Id.
3
The attorney fee award is reasonable compared to the degree of success, particularly
4
regarding the injunctive relief obtained. The “foremost” consideration is “the benefit obtained
5
for the class” and the degree of success. In re Bluetooth, 2011 WL 3632604, at *4. The
6
injunctive relief accepted by Defendant provides substantial benefit. The Court has considered
7
the disproportion between the monetary value for the class in the form of e-credits and the multi-
8
million dollar fee award and concludes that the fees are justified due to the lodestar calculation
9
and the benefit of the injunctive relief. Because this is not a common-fund case, the Court need
10
not compare the lodestar to a 25% benchmark, and the Court finds that this is not an
11
inappropriate approach designed to avoid the 25% benchmark. See In re Bluetooth, 2011 WL
12
3632604, at *6 (requiring the district court to compare the lodestar to a percentage award where
13
it was unclear whether the district court employed a lodestar or percentage award calculation).
14
15
3.
CONCLUSION
16
17
The Court finds that the settlement is fair, reasonable, and adequate, that notice complies
18
with the requirements of due process, that few class members have objected or opted out, and
19
that there have been requisite showings for the incentive awards. The Court further finds that an
20
award of $2 million for attorney fees and costs is appropriate here.
21
22
23
24
25
26
27
28
11
1
DISPOSITION
2
3
The Court GRANTS final approval and GRANTS the injunction as set forth in the
4
Stipulation of Settlement. After fully reviewing the proposed order on the Motion and the
5
Application, the Court has signed it with modifications consistent with this Order.
6
7
8
IT IS SO ORDERED.
9
DATED: August 31, 2011
10
11
_______________________________
Andrew J. Guilford
United States District Judge
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?