Walter et al v. Hughes Communications, Inc. et al

Filing 77

ORDER DENYING (60 in 3:09-cv-02136-SC) MOTION for Settlement Notice of Motion and Motion for Preliminary Approval of Settlement and Conditional Class Certification and Related Relief; Memorandum of Points and Authorities in Support of Motion filed by Tina Walter, Eric Schumacher, Christopher Bayless (sclc1, COURT STAFF) (Filed on 7/6/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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TINA WALTER, CHRISTOPHER BAYLESS,
and ERIC SCHUMACHER, individually
and on behalf of all others
similarly situated,
Plaintiffs,

For the Northern District of California

United States District Court

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v.

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HUGHES COMMUNICATIONS, INC., and
HUGHES NETWORK SYSTEMS, LLC,

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Defendants.

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I.

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Case No. 09-2136 SC
ORDER DENYING PLAINTIFFS'
MOTION FOR CLASS
CERTIFICATION AND
PRELIMINARY APPROVAL OF
SETTLEMENT

INTRODUCTION
On February 3, 2011, the Court denied the Motion for

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Preliminary Approval of Settlement and Conditional Class

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Certification that was filed by Plaintiffs Tina Walter ("Walter"),

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Christopher Bayless ("Bayless"), and Eric Schumacher ("Schumacher")

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(collectively, "Named Plaintiffs" or "Plaintiffs") and joined by

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Defendants Hughes Communications, Inc. and Hughes Network Systems,

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LLC (collectively, "Hughes").

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2011 Order").

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Plaintiffs and Hughes have filed additional briefs in support of

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it.

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Court has reviewed the documents submitted, and for the following

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reasons, it DENIES the Motion.

ECF Nos. 60 ("Motion"), 69 ("Feb. 3,

Plaintiffs have since renoticed their motion and

ECF Nos. 72 ("Pls.' Supp. Br."), 73 ("Defs.' Joinder").

The

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II.

BACKGROUND

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A.

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Hughes is a satellite broadband Internet technology and

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service provider ("ISP") that sells Internet access via satellite

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to consumers in rural areas where Internet service is not available

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through digital subscriber lines ("DSL") or cable.

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("SAC") ¶ 2.

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offer different download and upload speeds at different prices:

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United States District Court

ECF No. 44

Hughes advertises a variety of service plans which

For example, HughesNet offers the following
"Home" plans: The Home Plan, for a monthly fee
of $59.99, is advertised with download speeds
at 1.0 Mbps; the Pro Plan, for a monthly fee of
$69.99, is advertised with download speeds at
1.2 Mbps; the ProPlus Plan, for a monthly fee
of $79.99, is advertised with download speeds
at 1.6 Mbps; the Elite Plan, for a monthly fee
of $119.99, is advertised with download speeds
at 2.0 Mbps; the ElitePlus Plan, for a monthly
fee of $189.99, is advertised with download
speeds at 3.0 Mbps; and the ElitePlus Plan, for
a monthly fee of $349.99, is advertised with
download speeds at 5.0 Mbps.

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For the Northern District of California

Factual Background

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Id. ¶ 27.

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year commitment from its subscribers; those who cancel their

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service are obligated to pay an early termination fee ("ETF").

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¶ 52.

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subscriptions activated after September 1, 2008 were subject to a

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$400 ETF.

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Regardless of the plan selected, Hughes requires a two-

Id.

Until September 1, 2008, Hughes charged a $300 ETF;

Id. ¶ 28.

Hughes also maintains what it calls a "Fair Access Policy"

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("FAP").

Under the FAP, Hughes caps the amount of data its

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subscribers may download in a day.

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that "[a] small percentage of subscribers who exceed this limit

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will experience a temporary reduction of speed."

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reduction in download speed continues for approximately twenty-four

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Id. ¶ 46.

Hughes advertises

Id.

This

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hours, and serves to discourage subscribers from bandwidth-

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intensive Internet activity.

Id. ¶ 47.

In this action, Plantiffs claim to be current and former

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subscribers and allege that Hughes falsely advertised Internet

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service speeds; oversold and/or capped the speed of its Internet

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service; failed to properly disclose its policy of limiting the

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amount of data users can upload or download; and imposed a $400

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early cancellation fee that was "unconscionable and unenforceable

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under California law."

Plaintiff Bayless claims that as a Hughes subscriber, he

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United States District Court

For the Northern District of California

See id. ¶¶ 2, 26-55.

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frequently experienced slow Internet service and had difficulty

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connecting to the Internet numerous times.

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alleges that even after upgrading to Hughes's ElitePlus Internet

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service, his Internet speed was "approximately half" of the

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advertised speed.

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his subscription in November 2008, he paid a $300 early termination

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fee.

Id. ¶ 61.

Id. ¶ 60.

Bayless

Bayless claims that when he cancelled

Id. ¶ 62.

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Plaintiff Schumacher claims that he upgraded his Hughes

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Internet subscription to the Pro plan due to Hughes's advertising

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of a maximum speed of "up to 1.2 Mbps" and "typical speeds about

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700 Kbps to 800 Kbps during peak times."

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alleges that the average speed of his Internet service during both

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peak and non-peak times was "651 Kbps, approximately half of the

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advertised speed."

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Small Office plan, which he claims also did not perform at

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advertised speeds.

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subscription in or around January 2009.

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Id. ¶ 68.

Id. ¶ 66.

Schumacher

Schumacher then upgraded to Hughes's

Id. ¶¶ 69-71.

Schumacher terminated his
Id. ¶ 71.

Walter subscribed to Hughes's Home plan.

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Walter alleges that

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she experienced "significantly slow, and at times non-existent,

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upload and download speeds," which she attributes to both "the

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speed of the service" and "because the FAP was implemented more

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stringently than the disclosures to her had represented."

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73.

Id. ¶

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Plaintiffs initially sought to represent a class of "all

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citizens of the State of California who are or were subscribers to

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HughesNet's satellite broadband and Internet equipment services

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during the four years preceding the filing of the complaint" and a

United States District Court

For the Northern District of California

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subclass of "all citizens of the State of California who are

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consumers under Civil Code section 1761(d) and are or were

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subscribers of HughesNet's satellite broadband and internet

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equipment services during the three years preceding the filing of

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the complaint."

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filed with the Motion, Plaintiffs seek to expand this class to all

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Hughes subscribers throughout the United States.

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("TAC").

Id. ¶¶ 13-14.

In the Third Amended Complaint

ECF No. 63

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B.

Procedural Background

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Walter and Bayless filed their initial complaint on May 15,

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2009.

ECF No. 1 ("Initial Compl.").

Schumacher filed a complaint

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against Hughes with similar claims in California state court on

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June 9, 2009; this action was subsequently removed to federal court

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and consolidated with the earlier-filed action.

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parties stipulated to multiple extensions of Hughes's deadline to

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respond to the complaint.

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Plaintiffs amended their complaint.

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October 5, 2009, Hughes moved to dismiss the FAC.

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January 26, 2010, the Court granted in part and denied in part

ECF Nos. 5, 13.

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ECF No. 17.

The

On September 3, 2009,

See ECF No. 18 ("FAC").
ECF No. 20.

On
On

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Hughes's motion to dismiss, dismissing two claims with prejudice

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and two claims without prejudice, and granting Plaintiffs leave to

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amend their complaint.

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Plaintiffs filed their Second Amended Complaint.

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March 18, 2010, Hughes filed a second motion to dismiss.

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45.

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withdrew its motion to dismiss.

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after several additional continuances, Plaintiffs filed an

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unopposed motion for preliminary approval of a class action

United States District Court

For the Northern District of California

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ECF No. 40.

On February 26, 2010,
See SAC.

On

ECF No.

Shortly thereafter, the parties began mediation and Hughes

settlement.

ECF No. 55.

On January 7, 2011,

ECF No 60.

Plaintiffs concurrently filed their Third Amended Complaint.

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In it, Plaintiffs bring four causes of action: (1) violation of

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California's Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code

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§§ 1750, et seq., as well as "similar applicable consumer

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protection law of other states", TAC ¶¶ 73-84; (2) violation of

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California's Unfair Competition Law ("UCL"), Cal. Civ. Code §

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17200, as well as "similar applicable unfair competition law of

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other states"; TAC ¶¶ 85-98; (3) negligent misrepresentation, id.

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¶¶ 99-109; and (4) intentional misrepresentation and omission, id.

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¶¶ 110-119.

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sought to represent a class of Hughes's California customers,

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Plaintiffs now seek to represent "[a]ll residents of the United

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States of America who are or were subscribers to Hughes' satellite

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broadband and internet equipment services during the four years

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preceding the filing of the original complaint" and a subclass of

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"[a]ll residents of the United States of America who are consumers

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under Civil Code section 1761(d) and are or were subscribers of

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Hughes' satellite broadband and internet equipment services during

Whereas in the first three complaints, Plaintiffs

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the three years preceding the original filing of the complaint."

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Id. ¶¶ 13-14.
The Court denied the Motion, finding that the papers submitted

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Feb. 3, 2011 Order.

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their motion and advised the parties include to information such as

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estimates of the size of the class, the total gross amount to be

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recovered, and the cost of administration and notice.

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Court also ordered briefing and evidence supporting "Plaintiffs'

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United States District Court

failed to provide basic information about the proposed class.

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For the Northern District of California

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See

threadbare assertion that the requirements of Federal Rules 23(a)

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and (b)(3) are satisfied," and ordered additional briefing on the

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proposed form of notice to the class.

The Court granted the parties leave to renew

Id.

The

Id.

The parties have since renewed their motion for preliminary

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approval of the settlement.

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changed, but the parties have revised the notice documents in

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response to the Court's February 3, 2011 Order.

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Supp. Decl. Ex. 1 ("Settlement"), id. Ex. A ("Claim Form"); Ezrin

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Decl. Exs. D ("Long Form"), E ("Postcard"), F ("Summary Notice").1

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Plaintiffs also submit firm resumes of Plaintiffs' three counsel,

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Bramson, Plutzik, Mahler & Birkhaeuser LLP ("Bramson Plutzik"),

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Audet & Partners LLP ("Audet"), and Pogust, Braslow & Millrood, LLC

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("Pogust") as evidence that they are adequate class counsel.

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Decl. Exs. A, B, C.

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///

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1

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The terms of the settlement have not

See Rosenberg

Ezrin

Jennifer Rosenberg ("Rosenberg"), counsel for Plaintiffs filed a
declaration in support of the Motion, ECF No. 61, which she later
corrected in a supplemental declaration, ECF No. 66. Joshua C.
Ezrin ("Ezrin"), counsel for Plaintiffs, filed a declaration in
support of the Settlement, which Plaintiffs attached to their
Supplemental Brief.

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C.

1.

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subject to the settlement's release of liability is defined as:
All persons and entities residing in the United
States of America who, during any time between
May 15, 2005 and the Preliminary Approval Date,
were subscribers to any of the Hughes' Consumer
Service Plans.

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Excluded from this definition are Hughes
Communications,
Inc.
and
Hughes
Network
Systems,
LLC,
and
their
respective
subsidiaries, affiliates, dealers, employees,
directors,
and
the
legal
representatives,
heirs,
successors
and
assigns
of
the
individuals and entities previously referenced
in this sentence, and any government entities.

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United States District Court

For the Northern District of California

Class Structure

Under the settlement, the class that would be certified and

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The Proposed Settlement

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Settlement § 1.27.
2.

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Injunctive Relief

Under the proposed settlement, Hughes would alter its practice

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of charging a $400 flat ETF and instead pro-rate its ETF such that

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it would vary between $85 and $400 depending on the number of

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months left on the subscriber's 24-month contract.

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at 6.

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at least "18 months after the effectiveness of the new schedule,"

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and not return to a flat ETF for a period of three years.

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Plaintiffs provide a chart which they claim shows that the

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"estimated minimum value of the changes to the ETF policy is

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approximately $4,472,662."

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Pls.' Supp. Br.

Hughes would be required to maintain this rate schedule for

Id.

Id. at 7.

Hughes would alter its FAP to provide subscribers with what it

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calls "FAP Tokens."

Id.

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reset their download allowances once per month if they reached

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their maximum download allowance under the FAP for that month.

These "tokens" would allow subscribers to

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Id.

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Plaintiffs estimate the value of this portion of the injunctive

2

relief at $10,099,388.

Id. at 8.

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Hughes would also alter its advertising such that "[w]hen

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advertising upload or download speeds measured in MBPS or KBPS for

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its consumer plans, Hughes will include a disclosure in reasonable

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proximity to the advertised speeds that states that advertised

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upload and download speeds are not guaranteed and may be slower

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than the maximum advertised speeds, particularly during peak

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times."

United States District Court

For the Northern District of California

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11

Id. at 7.

The parties do not attempt to estimate the

value of this relief to the class.
Plaintiffs estimate that the injunctive relief contemplated

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under the settlement will confer a total benefit of roughly $14

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million on the class.

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3.

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Economic Relief

Under the proposed settlement, former subscribers who paid an

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ETF prior to December 6, 2010 would receive a $40 cash payment, and

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former subscribers who did not pay an ETF would receive a $5 cash

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payment.

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preliminary approval would receive no cash compensation.

Settlement § 2.6.

Current subscribers as of the date of

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Receipt of the cash payment would be conditioned on each class

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member's submission of a valid and timely claim form in which he or

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she affirm the above facts, as well as the fact that he or she

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returned "all equipment leased from or provided by Hughes" within

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ninety days of cancelling his or her Hughes service.

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Claim Form.

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class members paid an ETF during the class period and would

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therefore be potentially eligible for the $40 cash payment.

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Supp. Br. at 9.

Id.; see

Plaintiffs estimate that approximately 73,837 of the

Plaintiffs estimate that

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Pls.'

approximately 465,706

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former subscribers did not pay an ETF and would therefore be

2

eligible for the $5 cash payment.

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size of the cash payments by the number of class members eligible

4

to receive them to calculate "the total amount of cash compensation

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available to the Class under the Settlement" at approximately

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$5,282,010.

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4.

Id.

Plaintiffs multiply the

Id.
Fee Awards

Hughes agrees to pay Plaintiffs' counsel up to $980,000 in
attorney fees and expenses once the settlement becomes final,

United States District Court

For the Northern District of California

10

subject to Court approval.

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in addition to the relief Hughes will provide to the settlement

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class -- it would not be paid out of a common fund.

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parties also intend to seek a cash payment of $5,000 to compensate

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each of the three Named Plaintiffs.

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5.

Settlement § 2.9.

This fee amount is

Id.

The

Id. § 2.11.

Notice

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The parties propose providing notice of the settlement to the

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class via a Postcard sent via direct mail, a Long Form sent via e-

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mail, and a Summary Notice published in USA Today.

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parties agree that a "professional claims administrator" will

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administer the claims resolution process, issuing class notice and

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claim forms, determining and issuing settlement payments, and

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responding to class member inquiries.

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would pay all costs of notice.

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Id. § 3.2.

Id. §§ 2.7, 3.2.

The

Hughes

Id. § 2.9.

The Postcard would be sent via First Class U.S. Mail to each

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class member for whom Hughes has a valid mailing address.

Pls.'

26

Supp. Br. at 10.

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Hughes equipment requires a physical address, Hughes customer

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account records necessarily include a mailing address for 100% of

Plaintiffs allege that "because installation of

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1

the approximately 1.1 million class members," id. at 10, and that

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Hughes has already determined that two percent of these addresses

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are no longer valid "e.g., based on a returned mailing."

4

Decl. ¶ 3.2

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certain percentage" of class members "will have moved their

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residences since providing an address to Hughes."

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not attempt to estimate this "certain percentage," but they propose

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updating their address list using the National Change of Address

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System ("NCOA").

Mathur

Hughes admits that in addition to this two percent, "a

Pls.' Supp. Br. at 10.

Id.

Hughes does

The parties do not

United States District Court

For the Northern District of California

10

attempt to determine a "reach calculation" -- that is, an estimate

11

of the number of class members to receive notice -- for notice via

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the Postcard.
The Postcard states: "you may be entitled to cash or non-cash

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benefits."

See Postcard.

It provides no information on the size

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of the cash awards available under the settlement.

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that "any legal claim you may have against Hughes related to this

17

lawsuit will be settled" if the class member does not exclude him

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or herself and if the Court approves the settlement.

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directs the recipient to a yet-unidentified Web site to read the

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Long Form and access the Claim Form.

It also states

Id.

It

Id.

The Long Form would be sent via e-mail and would also be

21
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available on the settlement Web site.

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addresses for approximately 79 percent of the class members, but

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concedes that only approximately 40 percent of these addresses are

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still valid.

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Hughes only has valid and current e-mail addresses for 31 percent

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2

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Marthur Decl. ¶ 4.

Hughes claims to have e-mail

As such, by Hughes's estimates,

Alok Mathur ("Mathur"), director of business processes for
Hughes, filed a declaration in support of the settlement, which
Plaintiffs attached to their Supplemental Brief.
10

1
2

of the class.
The Summary Notice would be published as a one-eighth-page

3

advertisement in USA Today on two consecutive days.

4

Br. at 11.

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basic information about the proposed settlement.

6

Pls.' Supp.

It is a simple text-only advertisement, and it provides

The parties estimate that the cost of the above-mentioned

7

forms of notice will be $365,300; the parties estimate the

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administration costs for administering the settlement to "range

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from approximately $69,000 to $84,000," depending on how many

United States District Court

For the Northern District of California

10

claims are submitted.

11

6.

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Id.

Releases of Liability

Under the settlement, all of the class members who do not

13

affirmatively opt out of the class by providing the claims

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administrator with timely notice of intention to opt out would be

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subject to the following release of liability:

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[The class members] [s]hall release and forever
discharge, and shall be forever barred from
instituting, maintaining or prosecuting against
any or all of the Released Persons, any and all
claims, liens, demands, actions, causes of
action, obligations, damages or liabilities of
any nature whatsoever, whether legal, equitable
or otherwise, arising from or relating to the
subject matter of this Litigation, including,
without limitation, the charging of ETFs, the
HughesNet Fair Access Policy, the actual or
advertised download, upload or other internet
speeds,
any
advertising
or
other
public
statement relating to the foregoing and/or any
other
matter
alleged
in
the
Complaint
(collectively, the "Claims"), insofar as such
Claims were asserted or could have been
asserted in this Litigation or in any other
lawsuit or arbitration proceeding in any venue
or forum on or before the date of the Final
Order Date, or based on Hughes implementation
of this Settlement Agreement in accordance with
its terms.

28

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1

Settlement § 4.1.

The class would also waive any claims not known

2

at the time of the release under California Civil Code § 1542.

Id.

3
4

III. LEGAL STANDARD
No class action may be settled without court approval.

5

Fed.

6

R. Civ. P. 23(e).

When the parties to a putative class action

7

reach a settlement agreement prior to class certification, "courts

8

must peruse the proposed compromise to ratify both the propriety of

9

the certification and the fairness of the settlement."

Staton v.

United States District Court

For the Northern District of California

10

Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003).

First, the Court

11

must assess whether a class exists.

12

v. Windsor, 521 U.S. 591, 620 (1997)).

13

determine whether the proposed settlement "is fundamentally fair,

14

adequate, and reasonable."

15

1011, 1026 (9th Cir. 1998).

Id. (citing Amchem Prods. Inc.
Second, the court must

Hanlon v. Chrysler Corp., 150 F.3d

16
17

IV.

DISCUSSION

18

A.

19

Federal Rule of Civil Procedure 23(a) provides four

Class Certification

20

requirements for class certification: (1) numerosity ("the class is

21

so numerous that joinder of all members is impracticable"); (2)

22

commonality ("there are questions of law or fact common to the

23

class"); (3) typicality ("the claims or defenses of the

24

representative parties are typical of the claims or defenses of the

25

class"); and (4) adequacy of representation ("the representative

26

parties will fairly and adequately protect the interests of the

27

class").

28

must also find that the requirements of Rule 23(b)(1), (b)(2), or

Fed. R. Civ. P. 23(a)(1)-(4).

12

In addition, the court

1

(b)(3) are satisfied.

2

2011 WL 2437013, at *5 (2011).

3

the court "that questions of law or fact common to class members

4

predominate over any questions affecting only individual members,

5

and that a class action is superior to other available methods for

6

fairly and efficiently adjudicating the controversy."

7

P. 23(b)(3).

8

its "predominance" and "superiority" requirements.

9

Inc. v. Windsor, 521 U.S. 591, 615 (1997).

United States District Court

For the Northern District of California

10

Wal-Mart Stores, Inc. v. Dukes, __ U.S. __,
Rule 23(b)(3) requires a finding by

Fed. R. Civ.

Courts refer to the requirements of Rule 23(b)(3) as
Amchem Prods.,

More than a pleading standard, Rule 23 requires the party

11

seeking class certification to "affirmatively demonstrate . . .

12

compliance with the rule -- that is, he must be prepared to prove

13

that there are in fact sufficiently numerous parties, common

14

questions of law or fact, etc."

15

(emphasis in original).

16

frequently "will entail some overlap with the merits of the

17

plaintiff's underlying claim."

18

Wal-Mart, 2011 WL 2437013, at *10

This requires a "rigorous analysis" which

Id.

Plaintiffs no longer seek certification of a class and a

19

subclass -- they seek certification of a single class of "[a]ll

20

persons and entities residing in the United States of America who,

21

during any time between May 15, 2005 and the Preliminary Approval

22

Date, were subscribers to any of the Hughes' Consumer Service

23

Plans."

24
25

Settlement § 1.27.
1.

Numerosity

Rule 23(a)(1) provides that a class action may be maintained

26

only if "the class is so numerous that joinder of all parties is

27

impracticable."

28

"impracticable" does not mean impossible; it refers only to the

Fed. R. Civ. P. 23(a)(1).

13

However,

1

difficulty or inconvenience of joining all members of the class.

2

Harris v. Palm Springs Alpine Estates, Inc., 329 F.2d 909, 913-14

3

(9th Cir. 1964).
Plaintiffs allege that the class consists of approximately 1.1

4
5

million individuals.

Pls.' Supp. Br. at 12.

In support of this

6

estimate, they attach the declaration of Michael J. Bass ("Bass"),

7

a senior systems analyst for Hughes.3

8

reviewed Hughes's subscription data and alleges that it shows that

9

there were 200,875 Hughes subscribers in May 2005, and that 885,719

Bass declares that he

Id. ¶ 3.

United States District Court

For the Northern District of California

10

new subscribers have joined in the intervening period.

11

Bass declares that because approximately 539,543 of this total

12

class are no longer Hughes customers, Hughes has roughly 549,051

13

current subscribers.

14

2010, a total of 73,837 former subscribers were charged ETFs, and

15

he estimates that the "vast majority" of these subscribers were

16

charged prior to December 6, 2010.

Bass also states that as of December 31,

Id. ¶ 6.

In light of the above, the Court finds the numerosity

17
18

Id.

requirement to be satisfied.
2.

19

Commonality

Rule 23(a)(2) requires that there be "questions of law or fact

20

Fed. R. Civ. P. 23(a)(2).

Wal-Mart, decided

21

common to the class."

22

after the parties filed their papers in support of settlement,

23

represents a significant restatement of the commonality

24

requirement.

25

that the class members 'have suffered the same injury.'"

26

2011 WL 2437013, at *9 (quoting Gen. Tel. Co. of the Southwest v.

27

Falcon, 457 U.S. 147, 157 (1982)).

28

3

"Commonality requires the plaintiff to demonstrate

ECF No. 72-1.
14

Wal-Mart,

The class members' "claims must

1

depend on a common contention," and that common contention must be

2

"of such a nature that it is capable of classwide resolution --

3

which means that determination of its truth or falsity will resolve

4

an issue that is central to the validity of each one of the claims

5

in one stroke."

6
7
8
9

United States District Court

For the Northern District of California

10
11
12

Id.

Plaintiffs offer a list of nine "common questions" as proof
that the commonality requirement is satisfied:
(a) Whether Hughes was unjustly enriched by
unfairly charging flat rate early termination
fees without taking into consideration its
actual damages. (See Third Amended Complaint
(TAC at ¶ 17(h));
(b) Whether Hughes was unjustly enriched in
selling Plaintiffs and the Settlement Class
defective broadband and satellite service (TAC
at ¶ 17(i));

13
14
15

(c) Whether Hughes falsely advertised to
Settlement Class members by marketing and
advertising
its
services
as
reliable,
consistent
high
speed
broadband
satellite
service (TAC at ¶ 17(a));

16
17
18

(d) Whether Hughes, through false advertising
and otherwise, misrepresented to Settlement
Class members the maximum upload and download
speeds of its various Hughes service plans (TAC
at ¶ 17(b));

19
20
21

(e) Whether Hughes, through false advertising
and otherwise, misrepresented to Settlement
Class members the volume of data that can be
downloaded continuously through its Hughes
service plans (TAC at ¶ 17(c));

22
23
24
25
26
27

(f) Whether Hughes, through false advertising
and otherwise, misrepresented to Settlement
Class members the maximum upload and download
capability
of
its
Hughes
satellite
and
broadband service subscriber equipment and
hardware (TAC at ¶ 17(d));
(g) Whether Hughes oversold its bandwidth,
thereby adversely affecting Settlement Class
members' satellite broadband service;

28

15

(h)
Whether
Hughes
fraudulently
induced
Settlement Class members to upgrade their
service
and
incur
additional
fees
by
misrepresenting the benefits of upgrading in
terms of speed, accessibility, functionality
and connectivity of its Hughes broadband
satellite services (TAC at ¶ 17(g)); and

1
2
3
4

(i) Whether Hughes unfairly imposed
termination fees upon Settlement
Class members (TAC at ¶ 17(h)).

5
6
7
8
9

early

Pls.' Supp. Br. at 13.
Plaintiffs do not attempt to explain how these questions are
common to any of the four claims pleaded in their TAC.

This

United States District Court

For the Northern District of California

10

failure is troubling, given Plaintiffs' eleventh-hour attempt to

11

certify a nationwide class.

12

of action and no federal causes of action.

13

that California law would apply to the claims of class members

14

outside of California; nor do they attempt to argue that a cause of

15

action would be supported by the law of other states.

16

Plaintiffs' first cause of action was formerly violation of

17

California's Consumer Legal Remedies Act, now Plaintiffs claim

18

violation of "[t]he Consumer Legal Remedies Act and similar

19

applicable consumer protection law of other states."

20

(emphasis added).

21

law to be applied in this action, the Court cannot find that there

22

are questions of law or fact common to the class.

23

Court finds the commonality requirement to be unsatisfied.
3.

24
25

Plaintiffs bring four state-law causes
Plaintiffs do not argue

Whereas

TAC ¶ 74

Because Plaintiffs have not even identified the

Accordingly, the

Typicality

Rule 23(a)(3) requires that the representative parties' claims

26

be "typical of the claims . . . of the class."

Fed. R. Civ. P.

27

23(a)(3).

28

claims are 'typical' if they are reasonably co-extensive with those

"Under the rule's permissive standards, representative

16

1

of absent class members; they need not be substantially identical."

2

Hanlon, 150 F.3d at 1020.

3

plaintiffs to be identically situated with all other class members.

4

It is enough if their situations share a common issue of law or

5

fact and are sufficiently parallel to insure a vigorous and full

6

presentation of all claims for relief."

7

Inc. v. Legal Servs. Corp., 917 F.2d 1171, 1175 (9th Cir. 1990).

8

In practice, "[t]he commonality and typicality requirements of Rule

9

23(a) tend to merge."

United States District Court

Cal. Rural Legal Assist.,

Falcon, 457 U.S. at 157 n.13.

Plaintiffs argue that the named Plaintiffs "have precisely

10
For the Northern District of California

Rule 23 "does not require the named

11

the same claims as the Settlement Class," and allege that each

12

Plaintiff "truly represents a sector of the claims being addressed

13

by the settlement."

14

"experienced numerous service disruptions due to reaching her

15

download threshold;" Bayless "terminated his service due to

16

dissatisfaction with speed and service and paid an ETF;" and

17

Schumacher "terminated his service but did not pay an ETF."

18

14-15.

19

Pls.' Supp. Br. at 14.

Walter claims to have

Id. at

As with the commonality requirement, the Court finds the

20

typicality requirement unsatisfied.

It is true that the injuries

21

claimed by the three named Plaintiffs mirror the injuries alleged

22

to have been experienced by the class as a whole -- they are caused

23

by Hughes's allegedly unfair or illegal FAP and ETF and misleading

24

advertising of Internet speed.

25

between the alleged injuries to named Plaintiffs and the class as a

26

whole, they fail to draw parallels between named Plaintiffs' legal

27

claims and the legal claims of the class as a whole.

28

Plaintiffs are California residents, and it appears that California

But while Plaintiffs draw parallels

17

Named

1

law would apply to their claims.

2

California law would apply to the claims of non-California resident

3

class members.

4

unsatisfied.

5

4.

6

Plaintiffs do not argue that

As such, the Court finds this requirement

Adequacy of Representation

Rule 23(a)(4) requires a showing that "the representative

7

parties will fairly and adequately protect the interests of the

8

class."

9

Plaintiffs are represented by qualified and competent counsel and

Fed. R. Civ. P. 23(a)(4).

This factor requires: (1) that

United States District Court

For the Northern District of California

10

(2) that the proposed representative Plaintiffs do not have

11

conflicts of interest with the proposed class.

12

1020, 603 F.3d at 614.

13

Hanlon, 150 F.3d at

Plaintiffs allege that "Plaintiffs and putative class members

14

are represented by extremely qualified counsel with extensive

15

collective experience prosecuting complex consumer class actions

16

cases of this nature."

17

reviewed the curriculum vitae submitted and sees no issue with the

18

qualification and experience of Plaintiffs' counsel.

19

Court finds that Plaintiffs' counsel's work on this Motion speaks

20

volumes, and the Court is not convinced by this work that

21

Plaintiffs' counsel would adequately represent the class.

22
23
24
25
26
27
28

Pls.' Supp. Br. at 16.

The Court has

However, the

As to the second requirement, Plaintiffs state that their
claims are co-extensive with the settlement because
(1) Plaintiffs and each Settlement Class Member
have been injured in the same manner by Hughes
by being forced to comply with an unlawful ETF
policy and for entering into their respective
service contracts on the basis of false
information regarding the speeds of service
obtainable
under
each
respective
internet
service
plan,
(2)
Plaintiffs
and
each
Settlement Class Member have an identical

18

interest in establishing Hughes' liability for
imposing
an
unlawful
ETF
and
falsely
advertising the speeds of service available
under each respective internet service plan,
(3) Plaintiffs assert the same legal claims and
theories as would all other Settlement Class
Members under the factual and legal theories
enumerated above, and (4) Plaintiffs seek the
identical relief that would be sought by all
members of the Settlement Class.

1
2
3
4
5
6
7
8
9

Pls.' Supp. Br. at 16.
Plaintiffs' argument is flawed.

Plaintiffs' contention that

the named Plaintiffs "assert the same legal claims and theories as

United States District Court

For the Northern District of California

10

would all Settlement Class Members" is not true given that class

11

members outside California would likely bring claims under the laws

12

of their states.

13

the laws of the fifty states are so similar as to render the Named

14

Plaintiffs adequate class representatives, but Plaintiffs have not

15

argued this in their papers.
5.

16
17

It is possible that the remedies provided under

Predominance and Superiority

Rule 23(b)(3) requires the court to find that "the questions

18

of law or fact common to class members predominate over any

19

questions affecting only individual members."

20

23(b)(3).

21

on a settlement motion does not require an analysis of potential

22

trial management problems, "other specifications of the Rule --

23

those designed to protect absentees by blocking unwarranted or

24

overbroad class definitions -- demand undiluted, even heightened,

25

attention in the settlement context."

26

terms of a proposed settlement are "relevant to a class

27

certification."

28

action be "superior to other available methods for fairly and

Fed. R. Civ. P.

While evaluation of Rule 23's predominance requirement

Id.

Amchem, 521 U.S. at 20.

Rule 23(b)(3) also requires that the class

19

The

1

efficiently adjudicating the controversy."

2

23(b)(3).

4
5
6
7

9

The factors relevant to assessing superiority include:
(A)
the
class
members'
interests
in
individually controlling the prosecution or
defense of separate actions; (B) the extent and
nature
of
any
litigation
concerning
the
controversy already begun by or against class
members; (C) the desirability or undesirability
of concentrating the litigation of the claims
in the particular forum; and (D) the likely
difficulties in managing a class action.

3

8

Fed. R. Civ. P.

Fed. R. Civ. P. 23(b)(3).
Plaintiffs identify eight legal questions which they claim

United States District Court

For the Northern District of California

10

predominate, such as "Whether HughesNet's conduct violates the

11

unfair competition law, such as California Business and Professions

12

Code § 17200 et seq. and similar laws of other states."

13

Supp. Br. at 19.

14

satisfied the commonality requirement, and because they have not

15

identified a single common question of law or fact, the Court

16

cannot find that common questions predominate.

17

Pls.'

As the Court noted above, Plaintiffs have not

Plaintiffs state that the superiority requirement is satisfied

18

because "this case involves multiple claims for relatively small

19

sums," making class treatment superior to "alternative methods."

20

Pls.' Supp. Br. at 20.

21

contemplates awards of $5 and $40 to class members who return a

22

claim form, the named Plaintiffs seek $5,000, a considerably higher

23

amount.

24

trial, then the class's claims may be large enough to justify

25

individual actions.

26

While it is true that the settlement

If this $5,000 figure represents a potential recovery at

For these reasons, the Court finds that Plaintiffs have failed

27

to satisfy Rule 23's requirements.

28

flaws it has identified are curable through amended pleadings or

20

The Court notes that all of the

1

alteration of the terms of the settlement, and so it grants parties

2

leave to file an amended motion for settlement.

3

judicial economy, it also evaluates the fairness of the settlement

4

and the adequacy of the proposed notice.

In the interest of

5

B.

6

The Ninth Circuit has warned that "there are real dangers in

Fairness of the Settlement

7

the negotiation of class action settlements of compromising the

8

interests of class members," because "[i]ncentives inherent in

9

class-action settlements" can "result in a decree in which the

United States District Court

For the Northern District of California

10

rights of [class members, including the named plaintiffs] may not

11

[be] given due regard by the negotiating parties."

12

F.3d at 959 (internal quotation marks omitted).

13

stem from the fact that "[t]he class members are not at the table;

14

class counsel and counsel for the defendants are."

15

"influence the result of the negotiations without any explicit

16

expression or secret cabals," and is why "district court review of

17

class action settlements includes not only consideration of whether

18

there was actual fraud, overreaching or collusion but, as well,

19

substantive consideration of whether the terms of the decree are

20

'fair, reasonable and adequate to all concerned.'"

21

(citing Officers for Justice v. Civ. Serv. Comm'n of San Francisco,

22

688 F.2d 615, 625 (9th Cir. 1982)).

23

of "collusion between class counsel and the defendant," the Ninth

24

Circuit has adopted the rule of other circuits that "settlement

25

approval that takes place prior to formal class certification

26

requires a higher standard of fairness," leading to "a more probing

27

inquiry than may normally be required under Rule 23(e)."

28

150 F.3d at 1026.

21

Staton, 327

These incentives

Id.

This can

Id. at 950

Due in part to these dangers

Hanlon,

1

Not all proposed class action settlements require the same

participate in settlement negotiations, the Court need not assume

4

the role of class advocate.

5

structured such that the interests of the class are tied to the

6

interests of the named plaintiffs, their counsel, or the defendant

7

demands less scrutiny.

8

size of the class counsel's attorney fee award to the number of

9

claim forms submitted or the amount disbursed to the class gives

10

United States District Court

level of court scrutiny -- if the class had the opportunity to

3

For the Northern District of California

2

class counsel motivation to ensure that notice to the class is as

11

effective as possible.

12

from the largest possible release of liability, a settlement in

13

which only class members who submit a claim form release their

14

claims against a defendant aligns the interests of the defendant

15

and the class members.

Similarly, a settlement that is

For example, a settlement that ties the

Similarly, because a defendant benefits

16

No such alignments are present here: all parties present

17

during negotiation of the settlement stand to benefit regardless of

18

whether the class members receive a benefit.

19

Plaintiffs would receive up to $5,000 in incentive payments,

20

subject to Court approval, regardless of the size of the award to

21

the class.

22

paid to Plaintiffs' counsel; this proposed award is not tied to the

23

total amount recovered by the class.

24

considerable benefit -- a release of every related claim that could

25

be brought by its 1.1 million subscriber base -- even if no claim

26

forms were submitted and no funds were distributed to the class.

27

As such, the parties have designed a settlement containing no

28

structural protections of the interests of the class as a whole.

The three Named

The settlement contemplates $980,000 in attorneys' fees

22

And Hughes would receive a

1
2
3
4

Hence, the parties force the Court into the role of class
advocate.
1.

Substantive Issues

Under the settlement, around 40 percent of the class -- former

5

subscribers who did not pay an ETF -- would be eligible to receive

6

a $5 cash payment.

7

subscribers who did pay an ETF -- would be eligible to receive the

8

$40 cash payment.

9

subscriber base -- would receive no benefit except the proposed

Around seven percent of the class -- former

The remaining class members -- Hughes's current

United States District Court

For the Northern District of California

10

injunctive relief.

11

derive no benefit from the proposed injunctive relief.

12

Obviously, Hughes's former subscribers would

In exchange for this relief, every class member who does not

13

affirmatively opt out of the settlement would be subject to the

14

settlement's release of liability:

15
16
17
18
19
20
21
22
23
24
25
26

[Class members] [s]hall release and forever
discharge, and shall be forever barred from
instituting, maintaining or prosecuting against
any or all of the Released Persons, any and all
claims, liens, demands, actions, causes of
action, obligations, damages or liabilities of
any nature whatsoever, whether legal, equitable
or otherwise, arising from or relating to the
subject matter of this Litigation, including,
without limitation, the charging of ETFs, the
HughesNet Fair Access Policy, the actual or
advertised download, upload or other internet
speeds,
any
advertising
or
other
public
statement relating to the foregoing and/or any
other
matter
alleged
in
the
Complaint
(collectively, the "Claims"), insofar as such
Claims were asserted or could have been
asserted in this Litigation or in any other
lawsuit or arbitration proceeding in any venue
or forum on or before the date of the Final
Order Date, or based on Hughes implementation
of this Settlement Agreement in accordance with
its terms.

27

Settlement § 4.1.

The Long Form summarizes this release as one

28

freeing Hughes and affiliated persons "from all claims of liability

23

1

that were asserted or that could have been asserted in the lawsuit,

2

or in other legal proceedings or forums, arising from or relating

3

to the subject matter of the lawsuit."

4

Postcard summarizes this release as one of "claims related to the

5

matters alleged in the lawsuit that you may have against Hughes and

6

others."

7

Long Form at 5.

The

See Postcard.

This release is obtusely written.

Notice of the terms of the

8

settlement must be provided to the class "in plain, easily

9

understood language."

Fed. R. Civ. P 23(c)(2)(B).

If one accepts

United States District Court

For the Northern District of California

10

the accuracy of the Long Form's summary of the release, all claims

11

relating to Hughes's charging of ETFs, its FAP, its advertising,

12

and the speed of its service would be released.

13

particularly broad release, and while it does not render the

14

settlement unfair, its breadth should be considered in evaluating

15

the fairness of the settlement.

16

This is a

The amount to be paid to the class is, of course, an important

17

factor in determining the fairness of a settlement.

18

instructed the parties to estimate the "total gross amount to be

19

recovered by the class, supported by appropriate evidence."

20

3, 2011 Order.

21

total amount of cash compensation available to the Class under the

22

Settlement," (emphasis added) which they estimate to be

23

approximately $5,282,010.

24

would pay if every single class member who was eligible to receive

25

a cash benefit received notice of the settlement and submitted a

26

timely and valid claim form.

27
28

The Court

Feb.

Instead of doing this, Plaintiffs provide "the

This represents the total amount Hughes

Plaintiffs' offer of the total compensation available in lieu
of total compensation paid is disingenuous.

24

Plaintiffs' counsel

1

claim to be "extremely qualified counsel with extensive experience

2

prosecuting complex consumer class actions cases of this nature."

3

Pls.' Supp. Br. at 16.

4

means to estimate class participation in a settlement such as this

5

one.

6

in similar class actions are typically ten percent or less.

7

e.g., In re Compact Disc Minimum Advertised Price Antitrust Litig.,

8

370 F. Supp. 2d 320, 321 (D. Me. 2005) (two percent submission

9

rate); Buchet v. ITT Consumer Fin. Corp., 845 F. Supp. 684, 695 (D.

As such, they certainly should have the

They are no doubt aware that average claims submission rates
See,

United States District Court

For the Northern District of California

10

Minn. 1994), as amended 858 F. Supp. 944 (rejecting settlement

11

where similar settlement had only a three percent redemption rate);

12

Strong v. Bellsouth Telecomm., Inc., 173 F.R.D. 167, 169 (W.D. La.

13

1997) (4.3 percent claims rate); Burch v. United Cable TV of

14

Baltimore Ltd. P'ship, 732 A.2d 88 7 (Md. 1999) (9.7 percent

15

response rate to claims process); Union Life Fid. Ins. Co. v.

16

McCurdy, 781 So. 2d 1 86, 188 (Ala. 2000) (observing that only 113

17

of 104,000 class members submitted claims, for a rate of 0.1

18

percent).

19

the Court estimates that roughly $500,000 will be paid to the

20

class.

21

motion for $980,000 in attorney's fees.

22

Assuming a rather generous ten percent response rate,

This amount is dwarfed by Plaintiffs' counsel's anticipated

Plaintiffs also provide unrealistic estimates of the value of

23

the injunctive relief available under the settlement.

24

claim that Hughes's revised FAP and its pro-rated early termination

25

fee confer a benefit of $14 million upon the class.

26

reviewed the declarations submitted in support of this figure, the

27

Court is extremely skeptical of the accuracy of this estimate.

28

Setting aside its accuracy, however, Plaintiffs fail to state that

25

Plaintiffs

Having

1

this injunctive relief provides no benefit to the roughly half of

2

the class who are no longer Hughes subscribers.

3

benefit of the injunctive relief would be conferred upon future

4

Hughes subscribers, and these individuals are not part of the

5

settlement class and would not be bound by the release of

6

liability.

Also, part of the

Despite serious concerns with the confusing wording of the

7
8

release and considerable skepticism as to Plaintiffs' estimate of

9

the settlement's value to the class, the Court does not find the

United States District Court

For the Northern District of California

10

substantive terms of the settlement to be inherently unfair at this

11

time.

12

more appropriate for objecting class members to raise if and when

13

this settlement reaches the final approval stage.

The Court finds the question of substantive fairness to be

2.

14

Procedural Issues

15

While Rule 23(e)(5) gives class members the opportunity to

16

object to the substance of the settlement at the final fairness

17

hearing, this often occurs too late in the proceedings to address

18

procedural issues, such as flaws in the claims submission process.

19

As such, the Court reviews the design of the claims process

20

closely.

21

Under the settlement, class members can receive $5 if they

22

returned their Hughes equipment and $40 if they also paid an ETF

23

during the stated period.

24

member and the receipt of such a payment, however, and such

25

additional steps tend to lower class participation.

26

Allen, "Anticipating Claims Filing Rates in Class Action

27

Settlements" (Nov. 2008) ("A settlement that requires claimants

28

simply to sign a form will likely have a higher claims-filing rate

Many hurdles stand between a class

26

See Tiffany

questions and attach documentation, all other things being equal.")

3

First, the class member must receive notice of the settlement.

4

Class members will not be sent claim forms.

5

member receives the Postcard, he or she must comb through the small

6

type on the Postcard to find the Web site he or she must access for

7

more information about the settlement.

8

have to use a computer to access the settlement Web site, follow

9

the links on the settlement Web site to locate the Claim Form,

10

United States District Court

than one requiring claimants to provide narrative responses to

2

For the Northern District of California

1

download the Claim Form, print out the Claim Form, fill out the

11

Claim Form with the required personal information, and mail the

12

Claim Form to the claims administrator during the claims period.

13

The class members would bear the cost of the forty-four cent

14

postage stamp required to submit the Claim Form.

Assuming a class

The class member would then

15

The design of the Claim Form presents problems of its own.

16

states that to receive a cash payment of $40, the claimant must

17

affirm that during the period, the claimant (1) subscribed to a

18

Hughes satellite broadband consumer Internet service plan; (2) was

19

no longer a Hughes subscriber as of the preliminary approval date;

20

(3) paid an ETF between May 15, 2005 and December 5, 2010; and (4)

21

returned "all equipment leased from or provided by Hughes within

22

ninety (90) days" of termination of the subscription.

23

cash payment of $5, the claimant must affirm that the claimant (1)

24

was a Hughes subscriber, (2) was no longer a Hughes subscriber as

25

of the date by which Hughes must complete notice; (3) did not pay

26

an early termination fee, or paid an ETF on or after December 6,

27

2010, and (4) returned all equipment leased from or provided by

28

Hughes within ninety days of termination.

27

It

To receive a

The claimant must

1

provide his or her name, address, "email address(es) used in

2

corresponding with Hughes," and his or her "current email address,"

3

and sign and date the claim form under penalty of perjury.

4

claimant must mail this form to the settlement administrator before

5

the stated deadline.

6

The Claim Form suffers from several problems.

The

First, it

7

includes a limitation that is not provided in the Long Form or the

8

Summary Notice -- namely, the requirement that the claimant

9

returned all equipment "leased from or provided by Hughes" within

United States District Court

For the Northern District of California

10

ninety days of termination.

11

to likely discourage some class members from filing a claim --

12

while it may be clear to class members what constitutes "equipment

13

leased" from Hughes, it is less clear what is required by the

14

provision mandating the return of equipment "provided by" Hughes.

15

Third, the Claim Form is unnecessarily complex.

16

long, it contains unnecessary language, and it is confusingly

17

arranged.

18

error.

19

it reflexively cites to the Class Notice and Settlement Agreement

20

"for eligibility and claims rules," while the Class Notice refers

21

class members to the Claim Form for additional eligibility

22

requirements.

23

Second, this limitation is so vague as

It is two pages

Like a poorly drafted verdict form, it invites user

Finally, the Claim Form creates an infinite feedback loop;

It would be rational for a class member to invest the time and

24

effort to perform the above steps and scrutinize the claim form if

25

the economic incentive for so doing was great enough.

26

majority of class members who would receive any cash payment under

27

the settlement would receive a mere $5.

28

likely find that given the size of the cash benefit and the amount

28

But the vast

Many class members will

1

of time required to submit a claim, it simply is not worth the time

2

and effort to submit a claim.

3

There are many ways the parties could improve the claim

4

submission procedure, such as by allowing class members to make

5

claims using an online form or by mailing settlement checks to each

6

class member who, according to Hughes's records, satisfies the

7

requirements for such a claim.

8

have opted for an unnecessarily taxing claims procedure over these

9

alternatives.

For unknown reasons, the parties

The Court finds that in light of the small cash

United States District Court

For the Northern District of California

10

benefits contemplated, the proposed claim procedure is

11

unreasonable.

12

C.

13

Notice to the class must provide:

14
15
16
17
18
19
20
21
22
23

Adequacy of Proposed Notice

the
best
notice
practicable
under
the
circumstances, including individual notice to
all members who can be identified through
reasonable effort. The notice must concisely
and clearly state in plain, easily understood
language: the nature of the action; the
definition of the class certified; the class
claims, issues, or defenses; that a class
member may enter an appearance through counsel
if the member so desires; that the court will
exclude from the class any member who requests
exclusion, stating when and how members may
elect to be excluded; and the binding effect of
a class judgment on class members under Rule
23(c)(3).
Fed. R. Civ. P. 23(c)(2)(B).
The Federal Judicial Center's "Judges' Class Action Notice and

24

Claims Process Checklist and Plain Language Guide" ("FJC Class

25

Action Checklist"), available through the FJC Web site, provides

26

guidance for judges and counsel in determining whether a notice

27

plan is adequate.

28

and reviewing courts to ask, "Will the notices come to the

Among other things, this guide instructs parties

29

1

attention of the class?" and "Are the notices informative and easy

2

to understand?"

Id.

The Postcard, which would be sent via U.S. mail, is postcard-

3
4

sized.

It provides the case name and is titled, "NOTICE OF

5

PROPOSED CLASS ACTION SETTLEMENT."

6

the awards to class members; it merely informs its recipient that

7

the settlement, if approved, "may entitle you to cash or non-cash

8

benefits."

9

online, for a description of "all eligibility requirements to

It does not state the size of

It directs class members to read the Long Form, found

United States District Court

For the Northern District of California

10

receive a cash benefit."

11

claim forms and exclusion from the settlement, it provides no other

12

pertinent information to the class.

13

information about how to object to the settlement, nor does it

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state that Plaintiffs' counsel seeks a $980,000 award of attorneys'

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fees.

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capital letters stating, "YOUR LEGAL RIGHTS MIGHT BE AFFECTED BY

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THIS SETTLEMENT.

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of text treatment or graphic elements to command class members'

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attention.

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innovative techniques to ensure their mailings stand out.

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Postcard uses none of these techniques.

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Other than the deadlines for submitting

It does not include

It is written in small type and aside from a provision in

PLEASE READ THIS NOTICE CAREFULLY," it is devoid

Direct mail companies have developed a number of
The

The Long Form, which would be e-mailed to the class members

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for whom Hughes has a valid e-mail address and posted on the

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settlement Web site, is a seven-page document.

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does not command the attention of the class.

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court document, complete with a case caption.

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reflects most of the terms of the Settlement Agreement, it does not

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state every requirement for receiving a cash payment, but rather

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See Long Form. It

It appears to be a
While it accurately

1

directs class members to the "conditions described on the Claim

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Form."

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Id. § 4(a).

The Summary Notice would be published as a one-eighth-page

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advertisement in USA Today on two consecutive days.

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contains much of the information contained in the Long Form,

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including the size of the cash benefits available, and directs

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readers to visit the settlement Web site for more information.

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However, like the Long Form, it is merely a collection of small-

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print text, and does not appear designed to command the attention

United States District Court

For the Northern District of California

10
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This document

of USA Today's readers.
In sum, the Court is not convinced that the proposed notice

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plan would provide the class with "the best notice practicable

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under the circumstances" as Rule 23 requires.

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very little effort was expended by the parties to ensure the

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largest possible number of class members received notice.

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It appears as though

In light of the above, the Court DENIES Plaintiffs' Motion.

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The Court finds that Plaintiffs have failed to establish that Rule

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23's class certification requirements of commonality, typicality,

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predominance, and adequacy of representation are satisfied for a

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nationwide class of Hughes's current and former subscribers.

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Court finds the claims procedure contemplated in the settlement to

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be unreasonable given the small size of the cash payments available

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to class members.

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failed to establish that the proposed notice plan would provide the

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class with the best notice practicable under the circumstances.

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The

Finally, the Court finds that Plaintiffs have

The Court recognizes that a fair settlement is considerably

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preferable to all parties than protracted litigation.

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proposed settlement is unfair, it is not beyond salvage through

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While the

1

amendment.

Furthermore, the Court is convinced that a fair

2

settlement could be reached without increasing the cost or burden

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on Hughes -- the parties value this settlement at roughly $20

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million, which should be enough to effect a fair settlement.

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such, the Court has labored to provide the parties with guidance

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should they decide to file an amended motion for preliminary

7

approval.

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exists and that the Named Plaintiffs are proper representatives of

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that class.

As

The parties must establish that a nationwide class

The parties must provide a claims procedure that is

United States District Court

For the Northern District of California

10

simple and easy enough to encourage, rather than inhibit,

11

participation by class members despite the small size of the cash

12

awards.

13

scope of the release of liability to the class members.

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parties must design the best notice plan practicable under the

15

circumstances, and provide the Court with a realistic reach

16

calculation for the plan.

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settlement such that the interests of either Plaintiffs' counsel or

18

Hughes is aligned with the interests of the class, the Court will

19

apply considerably less scrutiny in reviewing it.

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the parties on notice that if the Court does ultimately

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preliminarily approve the settlement, it may delay ruling on an

22

attorneys' fees motion until after all settlement proceeds have

23

been disbursed to the class in order to determine the fairness of

24

the amount sought in attorneys' fees in light of the total benefit

25

conferred on the class.

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///

27

///

28

///

The parties must clearly and explicitly communicate the
The

Furthermore, if the parties alter the

32

The Court puts

1

V.

CONCLUSION

2

For the foregoing reasons, the Court DENIES the Motion for

3

Preliminary Approval of Settlement filed by Plaintiffs Tina Walter,

4

Christopher Bayless, and Eric Schumacher.

5

leave to file an amended motion.

6

Friday, August 26, 2011, at 10:00 a.m., in Courtroom 1, 450 Golden

7

Gate Avenue, San Francisco, California.

8

confer and file a joint case management statement no less than

9

seven (7) days before the status conference.

The parties are granted

A status conference is set for

The parties shall meet and

United States District Court

For the Northern District of California

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IT IS SO ORDERED.

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Dated: July 6, 2011
UNITED STATES DISTRICT JUDGE

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