Hawkins v. S2Verify et al

Filing 101

ORDER DENYING 97 JOINT MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT by Hon. William Alsup. (whalc2, COURT STAFF) (Filed on 10/17/2016)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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For the Northern District of California

United States District Court

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REGMON L. HAWKINS, individually and
on behalf of all others similarly situated,
Plaintiff,

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No. C 15-03502 WHA

ORDER DENYING JOINT
MOTION FOR PRELIMINARY
APPROVAL OF CLASS
ACTION SETTLEMENT

v.
S2VERIFY, a foreign LLC,
Defendant.
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INTRODUCTION

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In this FCRA class action for statutory damages, the parties move for preliminary

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approval of a proposed settlement agreement (Dkt. No. 97). Because the scope of the proposed

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release is overbroad, the joint motion for preliminary approval of the proposed settlement

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agreement is DENIED.

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STATEMENT
The detailed background of this case has already been set forth in prior orders (Dkt. Nos.

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22, 60, 82) and does not need to be repeated here. In brief, lead plaintiff Regmon L. Hawkins

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applied for employment with IPC Corp., a security services firm. IPC then requested and

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obtained a consumer report regarding plaintiff from defendant S2Verify, LLC, a consumer

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reporting agency. The report listed plaintiff’s prior convictions, as well as three charges that

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did not result in criminal convictions and were older than seven years. IPC allegedly denied
plaintiff’s employment application based on the report.

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Plaintiff then brought this action on behalf of a putative class, asserting various claims

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against defendant for willful violations of the FCRA. Previous orders denied defendant’s

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motions to strike the complaint’s class allegations (Dkt. No. 22), and to dismiss certain claims

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(Dkt. No. 60). Another order certified a class of claimants for statutory damages pursuant to the

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FCRA (Dkt. No. 82). Defendant also moved for summary judgment (Dkt. No. 76), but

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withdrew its motion after the parties stipulated to withdraw one of three counts in the complaint

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(Dkt. Nos. 83, 84).

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ANALYSIS
“A settlement should be approved if ‘it is fundamentally fair, adequate and reasonable.’”
Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir. 1993) (citation omitted).

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For the Northern District of California

United States District Court

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Preliminary approval is appropriate if “the proposed settlement appears to be the product of

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serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly

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grant preferential treatment to class representatives or segments of the class, and falls within the

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range of possible approval.” In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1079 (N.D.

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Cal. 2007) (Chief Judge Vaughn Walker).

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Here, the overbroad proposed release is an obvious deficiency and sufficient reason to

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deny preliminary approval. The proposed settlement agreement provides, “Class Members . . .

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completely, finally and forever release and discharge S2Verify of, and from, any and all claims

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under the FCRA, 15 U.S.C. § 1681, et seq., arising out of their consumer reports prepared by

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S2Verify” (Dkt. No. 97-1 § 10.2). In their joint motion, the parties briefly allude to this

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provision, acknowledging “the release does not precisely parallel the claims asserted in the First

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Amended Complaint (Dkt. 35) in that it purports to release all FCRA claims by all Class

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Members arising out of their S2Verify reports” (Dkt. No. 97 at 4). They suggest this is not

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problematic because the release “only applies to the consumer reports actually prepared by

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S2Verify as to the Class Members, and is therefore tailored to the specific issues litigated in the

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case on which Class Counsel took full and extensive discovery (See Dkt. 82 at 4-5.)” (ibid).

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The parties cite to the prior order certifying the class, but nothing on the pages cited — or in the

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rest of that order — suggests the class’s two surviving claims under the FCRA should be
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expanded to include “any and all claims under the FCRA . . . arising out of [the class members’]

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consumer reports prepared by S2Verify” (see Dkt. No. 97-1 § 10.2).

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As stated in the Notice Regarding Factors to be Evaluated for Any Proposed Class

the specific “claims to be released should be spelled out” (Dkt. No. 11 at 3). A proposed

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settlement seeking to “expand the class . . . claim-wise (including claims not even in the

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complaint) . . . will be viewed with suspicion. If an expansion is to occur it must come with an

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adequate plaintiff and one with standing to represent the add-on scope and with an amended

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complaint to include the new claims, not to mention due diligence as to the expanded scope”

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(ibid). The parties’ joint motion does not satisfy these requirements. The motion is therefore

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For the Northern District of California

Settlement, “The release should be limited only to the claims certified for class treatment” and

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United States District Court

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DENIED without prejudice to the parties submitting a new proposed settlement agreement with a

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more appropriate release of claims.
CONCLUSION

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For the foregoing reasons, the joint motion for preliminary approval of the class action

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settlement is DENIED. Possibly, there will be other shortfalls in the proposed settlement

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agreement, but they can be addressed at the hearing on November 3.

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IT IS SO ORDERED.

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Dated: October 17, 2016.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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