Smith et al v. Leichtman et al

Filing 305

ORDER as to 300 MOTION for Settlement Preliminary Settlement Approval. Motion Hearing set for 8/30/2013 09:00 AM in Courtroom 11, 19th Floor, San Francisco before Hon. Jeffrey S. White.. Signed by Judge Jeffrey S. White on 6/27/13. (jjoS, COURT STAFF) (Filed on 6/27/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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CHRISTINA SMITH, et al.,

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For the Northern District of California

United States District Court

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Plaintiffs,

No. C 10-00010 JSW

v.
LEVINE LEICHTMAN CAPITAL
PARTNERS, INC., et al.,

ORDER REGARDING MOTION
FOR PRELIMINARY APPROVAL
OF CLASS ACTION
SETTLEMENT

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Defendants.
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Now before the Court is the motion for final approval of class action settlement filed by

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Plaintiffs. Although the parties have made some substantial changes to their settlement

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agreement, the Court still has some concerns. First, although some of the imbalances in the

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release provisions have been cured, the release provisions are still problematic. While the class

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members would release claims against all Defendants, only National Corrective Group, Inc.

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(“NCG”) would release claims against class members. Moreover, it is not clear why the

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settlement agreement should require class members to release claims relating to the

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administration of the settlement, which involves events that have not occurred yet, in addition to

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that arise out of or relate to the Diversion Programs.

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Second, the Court had concerns with the proposed injunctive relief when it denied final

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approval of the prior settlement agreement. The Court noted that the proposed injunctive relief

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did not appear to provide much relief or benefit for the class. Pursuant to the proposed

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settlement, NCG was only required to alter the letters sent for a period of two years. After that

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time, NCG was not prohibited from mailing out letters with the same language challenged by

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this lawsuit. Moreover, the Court noted that proposed altered letters could still mislead

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recipients that the letters were sent by, or with individual authorization from, the district

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attorney and that the district attorney is accusing the recipients of violating the law. Instead of

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strengthening the scope of the injunctive relief, the parties have omitted any injunctive relief

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from the revised settlement agreement. In the absence of any injunctive relief, and in

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consideration that each class member will likely receive approximately two or eight dollars, the

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Court finds that the benefit to class members is quite minimal. Although the Court will not

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require the parties to provide injunctive relief as a condition of approval, the parties are
admonished that the absence of effective injunctive relief may result in the Court limiting the

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For the Northern District of California

United States District Court

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attorneys’ fees awarded to reflect the lack of substantial benefits to the class.

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The parties shall submit a supplemental brief to address the Court’s concerns by no later

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than July 11, 2013. The Court HEREBY CONTINUES the hearing on the motion for

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preliminary approval of the class action settlement to August 30, 2013 at 9:00 a.m. If the

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parties need more time to negotiate and amend the terms of the settlement agreement, they shall

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inform the Court by July 11, 2013

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IT IS SO ORDERED.

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Dated: June 27, 2013
JEFFREY S. WHITE
UNITED STATES DISTRICT JUDGE

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