Pokorny et al v. Quixtar Inc et al

Filing 340

ORDER re: Second Submission of Objections to Hardship Awards. Signed by Judge Samuel Conti on June 9, 2014. (sclc2, COURT STAFF) (Filed on 6/9/2014)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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United States District Court

For the Northern District of California

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JEFF POKORNY, LARRY BLENN, and
KENNETH BUSIERE, on behalf of
themselves and those similarly
situated,

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Plaintiffs,

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v.

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QUIXTAR, INC., et al.,

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Defendants.

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) Case No. 07-0201 SC
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) ORDER RE: SECOND SUBMISSION OF
) OBJECTIONS TO HARDSHIP AWARDS
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The settlement agreement in the above-captioned case provided

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for a special hardship fund from which former Quixtar Independent

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Business Owners ("IBOs") who are members of the Settlement Class

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could receive a cash payment of up to 20 percent of their losses,

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for a maximum of $10,000, minus any repayments for Business Support

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Materials ("BSM"), which were awarded under a separate section of

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the agreement.

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Successful hardship claimants were required to show that their

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recruitment into and operation of their Quixtar business (i) caused

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them to file for personal bankruptcy or (ii) caused a loss of at

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least $10,000 from operating their Quixtar business.

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///

ECF No. 162-2 ("Settlement Agreement") § 6.1.2.

Id.

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Per the Settlement Agreement, all hardship claims were to be

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adjudicated by the Special Master.

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"Schedule C or other schedule from a federal tax return, schedules

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filed in connection with a bankruptcy filing, or comparably

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reliable documentation acceptable to the Special Master."

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6.1.2(c).

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review, de novo, any objections to the Special Master's rulings on

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hardship claims.

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Losses had to be proven by a

Id. §

The Settlement Agreement states that the Court will

The Court recently ruled on twenty-eight objections to the

United States District Court

For the Northern District of California

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Special Master's rulings on hardship claims.

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Order").

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additional claimants' objections to the Special Master's rulings.

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ECF Nos. 337-38 ("Pls.' Submission").

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submitted, but the Claims Administrator misplaced them, so neither

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the Court nor the Special Master was able to review them.

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claimants collectively submitted 2,165 pages of documents in

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support of their objections.

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Ex. A ("Supp. Obj'ns").

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claimants who were awarded hardship payments, but who state that

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they should have been awarded more than the amount recommended.

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ECF No. 334 ("Apr. 1

However, on May 6, 2014, Plaintiffs submitted fifteen

These objections were timely

These

ECF No. 338 ("Supp. Stinehart Decl.")

All fifteen of the objections are from

Having reviewed the claimants' new documents, Plaintiffs'

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Submission, and also the Special Master's report and

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recommendations on Plaintiffs' new submissions, ECF No. 339

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("R&R"), the Court rules as follows, analyzing the objections de

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novo and not considering the timeliness of any objection.

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A.

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These claimants were awarded the $10,000 maximum.

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Peterson and Gilman
Claimant

Peterson objects that his award should be $55,499, Supp Obj'ns at

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2-1035, while the Gilman Claimants contend that their award was

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"not a proportionate amount to receive," id. at 1036-68.

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OVERRULES these objections, because the Settlement Agreement does

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not permit awards exceeding $10,000.

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B.

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The Anderson Claimants were awarded $3,501.

The Court

Anderson
Subject to their

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prior $2,000 payment under Section III of the Settlement Agreement,

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which concerned Business Support Materials ("BSM"), the Anderson

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Claimants' award netted $1,501.

They object to their award on the

United States District Court

For the Northern District of California

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grounds that they have over $64,000 of Quixtar products left unsold

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and stored in Mr. Anderson's garage.

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Anderson Claimants' objection because they do not provide any

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acceptable proof of their losses.

The Court OVERRULES the

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C.

Barrera & Castillo

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The Barrera & Castillo Claimants object on the grounds that

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they "lost a lot of money" from Mr. Barrera's Quixtar business, and

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that it is unjust that they were not awarded more money.

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Obj'ns at 1147-74.

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objection because they provide only some ambiguous "invoice

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activity reports," as opposed to tax or bankruptcy documents, and

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they have already received $1,600 after the deduction for the BSM

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payment.

Supp.

The Court OVERRULES the Barrera Claimants'

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D.

Jawny

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The Jawny Claimants submitted acceptable proof of $17,494 in

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losses between 2002-04, and the Special Master awarded them $3,499,

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which was 20 percent of their losses.

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award of $10,000.

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this objection.

They object and ask for an

Supp. Obj'ns at 1175-96.

The Court OVERRULES

The Jawny Claimants did not provide any additional

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documents that would entitle them to the Settlement Agreement's

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$10,000 maximum.

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E.

Cornelius

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The Cornelius Claimants were awarded $3,000.

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$2,600 after the $400 deduction for their BSM payment.

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not submit acceptable documentation of their losses, but they

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object to the Special Master's award and seek an increase to

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$4,000.

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cannot provide additional documents due to amnesia and other

Supp. Obj'ns at 1197-1223.

They did

Mr. Cornelius states that he

United States District Court

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For the Northern District of California

Id.

They received

medical conditions.

The Court cannot rely on that

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representation, so absent additional documentation, the objection

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is OVERRULED.

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F.

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Claimant Titus does not object to his award, but he asks that

Titus

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it be explained.

Pls.' Submission at 5.

The Special Master

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recommends that Mr. Titus's request be interpreted as an objection,

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and suggests that the award be recalculated.

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agrees.

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substantial (but less than 100 percent) credit for submitting tax

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returns outside the Class Period in this case, but some of that

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credit was not included in Mr. Titus's award.

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Submission at 5; Supp. Obj'ns at 1224-53.

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Titus's total loss was $43,929, 20 percent of which is $8,786, as

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opposed to the previously calculated $7,544.

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Titus an additional allocation of $1,242.

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///

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///

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///

R&R at 3.

The Court

The Special Master had originally given Mr. Titus

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Id.; Pls.'

The Court finds that Mr.

The Court GRANTS Mr.

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G.

Gillespie & Ducham

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The Gillespie and Ducham Claimants were awarded $2,000 on the

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basis of their bankruptcy filings, which presumed a $10,000 loss

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per the Special Master's standard practices regarding claimants who

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at least provided proof of bankruptcy.

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$560 after a $1,440 deduction for her BSM payment, and Claimant

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Ducham obtained $2,000 because she had not received any BSM

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payments.

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to her embarrassment and humiliation of going through bankruptcy,

Claimant Gillespie obtained

Claimant Gillespie asks for a "much higher amount," due

United States District Court

For the Northern District of California

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Supp. Obj'ns at 1254-82, while Claimant Ducham contends that he

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lost all of his documentation but "ended up filing bankruptcy for

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$75,969.49," id. at 1283-1338.

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objections because neither claimant provided additional

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documentation.

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sufficiently explain that his losses were due to his involvement in

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Quixtar, and without proof, the Court declines to adjust his claim

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upward.

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H.

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The Skrdla Claimants proved a net loss of $5,992 between 2007-

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09, but the Special Master awarded them $2,000 (as opposed to a 20-

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percent payment of $1,198) based on their bankruptcy filings.

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object to that award, claiming that they lost more than $50,000,

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but they provide no new documentation.

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The Court therefore OVERRULES their objection.

The Court OVERRULES these

Mr. Ducham filed bankruptcy schedules, but did not

Skrdla

They

Supp. Obj'ns at 1339-1413.

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I.

Howerter

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The Howerter Claimants were awarded $6,902, with a net of

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$5,125 after a $1,776 deduction for their BSM payment.

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Master notes that the Howerter Claimants submitted additional 2003

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The Special

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tax information after their claim was initially reviewed.

The

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Howerter Claimants ask for the $10,000 maximum, but 20 percent of

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their total loss of $48,154, after the 2003 tax information's

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addition, would be $9,631.

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Submission at 6 n.1.

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Claimants an additional allocation of $2,729.

Supp. Obj'ns at 1414-8; Pls.'

The Court accordingly GRANTS the Howerter

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J.

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The Hamid Claimants were awarded $4,625, with a net of $2,625

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Hamid

after a $2,000 BSM deduction.

They object and ask for $10,000.

United States District Court

For the Northern District of California

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They submit additional tax forms, not previously considered, that

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bring their 2003-2009 losses to $46,978.

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1576; Pls.' Submission at 6.

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Finding consideration of the Hamid Claimants' new evidence

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appropriate, the Court GRANTS them an additional allocation of

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$4,771.

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K.

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Claimant Guzman was awarded $2,624 based on his 2006-07 tax

Supp. Obj'ns at 1482-

Twenty percent of that is $9,395.

Guzman

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returns' stated loss of $13,450.

He later filed additional tax

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information, including a 2005 return, which would have shown a

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total loss of $18,610, for an award of $3,722.

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award should have been based on the $18,610 loss.

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1577-1780.

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allocation of $1,098, based on his additional documentation.

He objects that his
Supp. Obj'ns at

The Court GRANTS Claimant Guzman an additional

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L.

Johnson

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Claimant Johnson had originally submitted a combined objection

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to the settlement and hardship claim.

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reimbursement for losses from 1993-2008, but the Class Period for

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this case started on January 1, 2003, excluding Ms. Johnson's

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The hardship claim requested

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claims before that date.

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Ms. Johnson had originally submitted her husband's Schedule C forms

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for 2001-04 and 2006-08, showing a total loss of $28,851, though

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Plaintiffs note that Ms. Johnson's husband opted out of this class

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action, and she is not named on his tax returns.

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at 7 & n.2.

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$5,770, which netted $3,770 after Ms. Johnson's $2,000 BSM payment

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was deducted, on the grounds that it was an insult.

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at 1781-1896.

United States District Court

For the Northern District of California

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In support of her Class Period losses,

Pls.' Submission

Ms. Johnson objects to the Special Master's award of

Supp. Obj'ns

The Court OVERRULES the objection, because Ms.

Johnson did not submit additional documentation.

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M.

Davis

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Claimant Davis requests an explanation of her $4,213 award,

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which was based on her documented loss of $21,067.

Ms. Davis's

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award is 20 percent of the $21,067 loss, per the Settlement

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Agreement's maximum.

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the extent that it asks for further consideration of the award,

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since she submitted no additional documentation.

The Court OVERRULES Ms. Davis's objection to

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IT IS SO ORDERED.

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Dated: June 9, 2014
UNITED STATES DISTRICT JUDGE

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