Kagan et al v. Wachovia Securities, LLC et al

Filing 100

Order by Hon. Samuel Conti in case 3:11-cv-00412-SC; denying without prejudice (96) Motion for Settlement in case 3:09-cv-05337-SC.Associated Cases: 3:09-cv-05337-SC, 3:11-cv-00412-SC(sclc2, COURT STAFF) (Filed on 8/1/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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THEODORE KAGAN, et al,

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Plaintiffs,

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v.

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For the Northern District of California

United States District Court

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WACHOVIA SECURITIES, L.L.C., et
al,

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Defendants.

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Case Nos. 09-5337 SC
11-0412 SC
ORDER DENYING PLAINTIFFS'
AMENDED MOTION FOR
PRELIMINARY APPROVAL OF
PROPOSED CLASS SETTLEMENT

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This Order addresses the second effort by Plaintiffs to secure

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preliminary approval of a class-wide settlement.

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Mot.").1

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the case, so the Court will not recite it here.

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Plaintiffs' second effort comes much closer than the first to

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meeting the standards for preliminary settlement class

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certification, and the Court recognizes that the parties have

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addressed many of the concerns articulated in the Court's April 2,

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ECF No. 96 ("Am.

The Court and parties are familiar with the background of
In short,

Counsel for Plaintiffs, Richard L. Kellner, submitted a
declaration in support of the amended motion. ECF No. 96-1. Mr.
Kellner later submitted an amended declaration. ECF No. 97
("Kellner Am. Decl."). The Court considers only the amended
declaration. Attached to the amended declaration as Exhibit A is
the parties' settlement agreement and various supporting documents.
With less than ideal clarity, Plaintiffs' counsel uses the letter
"A" a second time to label the agreement itself; they then label
the agreement's supporting documents as Exhibits B, C, and so on,
up to G. Then there is a second exhibit labeled Exhibit B, which
is the resume of Plaintiffs' counsel's firm. For purposes of this
Order, the Court refers only to the first set of exhibits, i.e.,
the settlement agreement and supporting documents.

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2012 Order.

ECF No. 93 ("Apr. 2 Order").

Nevertheless, the Court

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is still concerned about the notice that the parties propose to

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send to potential class members.

Kellner Am. Decl. Ex. B ("Not.").

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Previously, the Court stated that the proposed notice was

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simply too long. The Court is concerned that few class
members will read a fifteen-page, single-spaced Class
Notice without having been given some initial hint as to
why they should bother.
The parties should provide an
industry-standard short-form notice that directs them to
the long-form notice for details.

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Apr. 2 Order at 19.

The parties have responded to this guidance by

United States District Court

For the Northern District of California

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averring that they "will provide a short industry standard form

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notice that provides all the necessary information, while

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simultaneously providing class members with a means to access more

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detailed information if the class members desire that information."

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Am. Mot. at 15.

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contains all the information required by Federal Rule of Civil

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Procedure 23(e)(1).2

They then explain that the proposed notice

This is true, but it does not adequately address the problem

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that the Court previously identified.

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proposed notice is not that it provides too little information, but

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too much.

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best notice that is practicable under the circumstances . . . ."

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

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Indeed, as the treatise cited in Plaintiffs' moving papers

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explains: "The notice should be brief and reasonably clear to the

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minimally sophisticated layperson."

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8:32 (4th ed.).

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The problem with the

The district court "must direct to class members the

The notice must be concise.

Id.

3 Newberg on Class Actions §

Rule 23(e)(1) provides, in full, that "[t]he court must direct
notice in a reasonable manner to all class members who would be
bound by the proposal."

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The notice proposed here is not brief, and Plaintiffs'

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description of the eight-page, single-spaced, small-type notice as

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"short" misses the mark.

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sophisticated layperson," the parties' proposed notice would seem

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lengthy and daunting; it would be unlikely to result in further

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inquiry.

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that will provide interested potential class members with further

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detail about the settlement.

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referring to planned website).

On the contrary, for a "minimally

The parties are to be commended for setting up a website

See Not. at 2, 4, 7, 8 (placeholders
But the Court is puzzled why the

United States District Court

For the Northern District of California

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parties do not simply send potential class members a brief, bare-

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bones letter or postcard directing them to the website.

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the mailing's main objective should be to entice potential class

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members to view the website.

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Indeed,

Because the Court determines that, under the circumstances of

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this case, the notice proposed by the parties is not the best

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notice practicable under the circumstances nor reasonably concise,

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as required by Rule 23, the Court DENIES WITHOUT PREJUDICE

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Plaintiffs' amended motion for preliminary approval of the proposed

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class settlement.

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and supporting materials within thirty (30) days of this Order.

Plaintiffs may submit a second amended motion

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IT IS SO ORDERED.

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Dated: August 1, 2012
UNITED STATES DISTRICT JUDGE

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