Steinfeld v. Discover Financial Services et al

Filing 53

ORDER REGARDING MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT. Motion Hearing set for 8/2/2013 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)

1
2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7
FOR THE NORTHERN DISTRICT OF CALIFORNIA
8
9

11
For the Northern District of California

United States District Court

10

ANDREW STEINFELD and WALTER
BRADLEY, on behalf of themselves and all
others similarly situated,

12
13

No. C 12-01118 JSW

Plaintiffs,
v.

ORDER REGARDING MOTION
FOR PRELIMINARY APPROVAL
OF CLASS ACTION
SETTLEMENT

DISCOVER FINANCIAL SERVICES, et al.,

14

Defendants.
/

15
16
17

Now before the Court is the motion for preliminary approval of class action settlement.

18

The Court has some concerns regarding the proposed settlement. First, the proposed release

19

includes a requirement that class members release claims relating to the administration of the

20

settlement, which involves events that have not occurred yet, in addition to that arise out of or

21

relate to the claims of this lawsuit. It is not clear why class members should be required to

22

release claims relating to the administration of the settlement as a condition of participating in

23

the class.

24

Second, the settlement agreement provides that direct notice be provided within sixty to

25

ninety days from the Court’s preliminary approval and that the deadline to submit a claim form

26

is one hundred and twenty days from the Court’s preliminary approval. Therefore, class

27

members may have as little as thirty days to submit a claim. The Court is concerned that this

28

time period is unnecessarily brief.

1

Third, although the settlement agreement makes clear that any incentive awards and

approval of these amounts as part of the Court’s preliminary approval of the class action

4

settlement. In terms of the requested service awards, Plaintiffs request $2,000 for each of the

5

named Plaintiffs. In support of this request, Plaintiffs submit the declaration by Daniel M.

6

Hutchinson who summarily states that the incentive awards “are intended to recognize and

7

compensate Plaintiffs for their commitment to, and active participation in, this litigation,

8

including by assisting with the initial case investigation, providing Class Counsel with pertinent

9

documents and information, reviewing pertinent pleadings including the operative complaints,

10

and keeping abreast of, reviewing, and signing off on, the proposed Settlement.” (Declaration

11
For the Northern District of California

attorneys’ fees and costs are not conditions of the settlement, Plaintiffs appear to request

3

United States District Court

2

of Daniel M. Hutchinson, ¶ 22.) Mr. Sturdevant does not describe the contributions made by

12

any individual named representative. Nor do Plaintiffs provide any supporting declarations

13

from the individual named representatives describing their efforts and contributions. The Ninth

14

Circuit recently reiterated that “district courts must be vigilant in scrutinizing all incentive

15

awards to determine whether they destroy the adequacy of the class representatives. ...

16

[C]oncerns over potential conflicts may be especially pressing where, as here, the proposed

17

service fees greatly exceed the payments to absent class members.” Radcliffe v. Experian

18

Information Solutions, Inc., --- F.3d ---, 2013 WL 1831760, *5 (9th Cir. May 2, 2013).

19

Whether to reward the named representatives for their efforts is within the Court’s

20

discretion. See, e.g., Van Vranken v. Atlantic Richfield Co., 901 F. Supp. 294, 299 (N.D. Cal.

21

1995) (citations omitted). Courts may consider the following criteria in determining whether to

22

provide incentive awards: “(1) the risk to the class representative in commencing suit, both

23

financial and otherwise; (2) the notoriety and personal difficulties encountered by the class

24

representative; (3) the amount of time and effort spent by the class representative; (4) the

25

duration of the litigation; and (5) the personal benefit (or lack thereof) enjoyed by the class

26

representative as a result of the litigation.” Id. (citations omitted). If the request within the

27

motion for preliminary approval contains all the information Plaintiffs were intending to submit

28
2

1

in support of their proposed incentive awards, the parties fail to provide sufficient evidence

2

demonstrating the proposed incentive awards are justified based on these factors.

3

With respect to the request for an award of attorneys’ fees, “[w]here a settlement

either the lodestar method or the percentage-of-recovery method.” In re Bluetooth Headset

6

Products Liability Litig., 654 F.3d 935, 942 (9th Cir 2011). Here, Plaintiffs only presented an

7

analysis of the percentage-of-recovery method. In the absence of any analysis and evidence

8

regarding the lodestar method, the Court is precluded from exercising its discretion over which

9

method to employ. Accordingly, if the request within the motion for preliminary approval

10

contains all the information Plaintiffs were intending to submit in support of their requested

11
For the Northern District of California

produces a common fund for the benefit of the entire class, courts have discretion to employ

5

United States District Court

4

attorneys’ fees, the Court also finds that Plaintiffs’ request for attorneys’ fees to be insufficient.

12

By no later than July 11, 2013, Plaintiffs shall submit a supplemental brief to address the

13

Court’s concerns. The Court HEREBY CONTINUES the hearing on the motion for

14

preliminary approval of the class action settlement to August 2, 2013 at 9:00 a.m. If Plaintiffs

15

clarify that they intend to file a separately noticed motion for attorneys’ fees and incentive

16

awards, this Order is without prejudice to Plaintiffs doing so.

17

IT IS SO ORDERED.

18
19

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

20
21
22
23
24
25
26
27
28
3