Hawkins v. S2Verify et al

Filing 101


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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 REGMON L. HAWKINS, individually and on behalf of all others similarly situated, Plaintiff, 12 13 14 15 No. C 15-03502 WHA ORDER DENYING JOINT MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT v. S2VERIFY, a foreign LLC, Defendant. / 16 17 INTRODUCTION 18 In this FCRA class action for statutory damages, the parties move for preliminary 19 approval of a proposed settlement agreement (Dkt. No. 97). Because the scope of the proposed 20 release is overbroad, the joint motion for preliminary approval of the proposed settlement 21 agreement is DENIED. 22 23 STATEMENT The detailed background of this case has already been set forth in prior orders (Dkt. Nos. 24 22, 60, 82) and does not need to be repeated here. In brief, lead plaintiff Regmon L. Hawkins 25 applied for employment with IPC Corp., a security services firm. IPC then requested and 26 obtained a consumer report regarding plaintiff from defendant S2Verify, LLC, a consumer 27 reporting agency. The report listed plaintiff’s prior convictions, as well as three charges that 28 did not result in criminal convictions and were older than seven years. IPC allegedly denied plaintiff’s employment application based on the report. 1 Plaintiff then brought this action on behalf of a putative class, asserting various claims 2 against defendant for willful violations of the FCRA. Previous orders denied defendant’s 3 motions to strike the complaint’s class allegations (Dkt. No. 22), and to dismiss certain claims 4 (Dkt. No. 60). Another order certified a class of claimants for statutory damages pursuant to the 5 FCRA (Dkt. No. 82). Defendant also moved for summary judgment (Dkt. No. 76), but 6 withdrew its motion after the parties stipulated to withdraw one of three counts in the complaint 7 (Dkt. Nos. 83, 84). 8 9 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). 11 For the Northern District of California United States District Court 10 Preliminary approval is appropriate if “the proposed settlement appears to be the product of 12 serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly 13 grant preferential treatment to class representatives or segments of the class, and falls within the 14 range of possible approval.” In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078, 1079 (N.D. 15 Cal. 2007) (Chief Judge Vaughn Walker). 16 Here, the overbroad proposed release is an obvious deficiency and sufficient reason to 17 deny preliminary approval. The proposed settlement agreement provides, “Class Members . . . 18 completely, finally and forever release and discharge S2Verify of, and from, any and all claims 19 under the FCRA, 15 U.S.C. § 1681, et seq., arising out of their consumer reports prepared by 20 S2Verify” (Dkt. No. 97-1 § 10.2). In their joint motion, the parties briefly allude to this 21 provision, acknowledging “the release does not precisely parallel the claims asserted in the First 22 Amended Complaint (Dkt. 35) in that it purports to release all FCRA claims by all Class 23 Members arising out of their S2Verify reports” (Dkt. No. 97 at 4). They suggest this is not 24 problematic because the release “only applies to the consumer reports actually prepared by 25 S2Verify as to the Class Members, and is therefore tailored to the specific issues litigated in the 26 case on which Class Counsel took full and extensive discovery (See Dkt. 82 at 4-5.)” (ibid). 27 The parties cite to the prior order certifying the class, but nothing on the pages cited — or in the 28 rest of that order — suggests the class’s two surviving claims under the FCRA should be 2 1 expanded to include “any and all claims under the FCRA . . . arising out of [the class members’] 2 consumer reports prepared by S2Verify” (see Dkt. No. 97-1 § 10.2). 3 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 6 settlement seeking to “expand the class . . . claim-wise (including claims not even in the 7 complaint) . . . will be viewed with suspicion. If an expansion is to occur it must come with an 8 adequate plaintiff and one with standing to represent the add-on scope and with an amended 9 complaint to include the new claims, not to mention due diligence as to the expanded scope” 10 (ibid). The parties’ joint motion does not satisfy these requirements. The motion is therefore 11 For the Northern District of California Settlement, “The release should be limited only to the claims certified for class treatment” and 5 United States District Court 4 DENIED without prejudice to the parties submitting a new proposed settlement agreement with a 12 more appropriate release of claims. CONCLUSION 13 14 For the foregoing reasons, the joint motion for preliminary approval of the class action 15 settlement is DENIED. Possibly, there will be other shortfalls in the proposed settlement 16 agreement, but they can be addressed at the hearing on November 3. 17 IT IS SO ORDERED. 18 19 Dated: October 17, 2016. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 27 28 3

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