Lyons et al v. Bank of America, NA et al

Filing 72

ORDER GRANTING 70 MOTION FOR SETTLEMENT APPROVAL. Signed by Judge Claudia Wilken on 11/27/2012. (ndr, COURT STAFF) (Filed on 11/27/2012)

1

IN THE UNITED STATES DISTRICT COURT

2

FOR THE NORTHERN DISTRICT OF CALIFORNIA

3
4
5

GINA LYONS and JERRY LYONS, on
behalf of themselves and all
others similarly situated,

6

Plaintiffs,

7
8
9

United States District Court
For the Northern District of California

10

No. C 11-1232 CW
ORDER GRANTING
MOTION FOR
SETTLEMENT
APPROVAL (Docket
No. 70)

v.
BANK OF AMERICA, NA, and BAC HOME
LOANS SERVICING, LP,
Defendants.
________________________________/

11
12
13
14
15
16
17
18

Plaintiffs, Gina and Jerry Lyons, brought this putative class
action in March 2011 for breach of contract and various other
claims against Defendants, Bank of America, NA and BAC Home Loans
Servicing, LP.

The parties reached a settlement agreement in

September 2012 and now move for preliminary approval.

took the matter under submission on the papers and now grants the
motion.
BACKGROUND

19
20
21
22
23
24
25
26
27
28

The Court

On September 18, 2012, the parties met with mediator Gilda R.
Turitz and reached an initial settlement agreement.

They informed

the Court two days later but declined to provide any details about
the proposed agreement.

Docket No. 65.

The parties also failed

to notify the Court whether they would be seeking preliminary
approval of the settlement under Rule 23.

Accordingly, on

September 26, 2012, the Court ordered the parties to submit a
joint status report addressing that question.

Docket No. 66.

1

One week later, the parties submitted a status report stating

2

that they did “not believe Court approval is required in order to

3

dismiss these post-2003, uncertified, putative class member claims

4

without prejudice.”

5

that they were “prepared to file a motion for approval . . . if

6

this Court requires it.”

7

the joint status report, the Court ordered the parties to file a

8

motion for preliminary approval.

9

filed the motion on November 16, 2012.

United States District Court
For the Northern District of California

10
11

Docket No. 67, at 2.

Id.

They noted, however,

On October 9, 2012, after reviewing

Docket No. 68.

The parties

LEGAL STANDARD
Federal Rule of Civil Procedure 23(e) states that the

12

“claims, issues, or defenses of a certified class may be settled,

13

voluntarily dismissed, or compromised only with the court’s

14

approval.”

15

requirement to settlements made before a class has been certified.

16

Diaz v. Trust Territory of Pac. Islands, 876 F.2d 1401, 1408 (9th

17

Cir. 1989).1

18

inquire into a settlement or dismissal differs before and after

The Ninth Circuit has extended this court approval

It has stressed, however, that a “court’s duty to

19
20
21
22
23
24
25
26
27
28

1

Courts in this district have expressed some uncertainty
about whether Rule 23(e) still applies to pre-certification
settlement proposals in the wake of the 2003 amendments to the
rule but have generally assumed that it does. See, e.g., Mahan v.
Trex Co., Inc., 2010 WL 4916417, at *3 (N.D. Cal.) (noting that
“even where the procedures of Rule 23(e) do not apply
automatically,” court approval of class settlements and dismissals
is still required (citations omitted)); Houston v. Cintas Corp.,
2009 WL 921627, at *1-*2 (N.D. Cal.) (discussing the 2003
amendments to Rule 23(e) and “[a]ssuming without deciding that
Rule 23 [still] applies” to pre-certification settlements); Castro
v. Zenith Acquisition Corp., 2007 WL 81905, at *1 (N.D. Cal.)
(assuming that Rule 23(e) applies to pre-certification dismissals
without discussing the 2003 amendments).
2

1

certification” because, before certification, the risk of

2

prejudice to absent class members is significantly lower.

3

(noting that pre-certification dismissals do not require “the kind

4

of substantive oversight required when reviewing a settlement

5

binding upon the class”).

6
7
8
9

United States District Court
For the Northern District of California

10
11
12

Id.

To determine whether pre-certification settlement or
dismissal is appropriate, the court must
inquire into possible prejudice from (1) class members’
possible reliance on the filing of the action if they
are likely to know of it either because of publicity or
other circumstances, (2) lack of adequate time for class
members to file other actions, because of a rapidly
approaching statute of limitations, (3) any settlement
or concession of class interests made by the class
representative or counsel in order to further their own
interests.

13

Diaz, 876 F.2d at 1408; see also Houston, 2010 WL 4916417, at *1

14

(applying the Diaz factors).

15

is to “determine whether the proposed settlement and dismissal are

16

tainted by collusion or will prejudice absent putative members.”

17

Mahan, 2010 WL 4916417, at *3.

18
19

The central purpose of this inquiry

DISCUSSION
The parties have not provided the Court with a copy of their

20

proposed settlement agreement.

21

proposed agreement in broad terms and argue that it satisfies the

22

three Diaz factors.

23

agreement, Plaintiffs would voluntarily dismiss all claims against

24

Defendants with prejudice.

25

but without prejudice to allow putative class members to bring

26

these claims against Defendants in the future.

27

not disclosed any of their other obligations under the settlement;

Instead, they describe their

Under the parties’ description of their

Class claims would also be dismissed,

28
3

The parties have

1

nonetheless, they have demonstrated that approval is appropriate

2

here.

3

Under the first Diaz factor, the Court must assess whether

4

dismissal will prejudice absent class members who knew of and

5

relied on Plaintiffs’ lawsuit.

6

class members are not aware of this lawsuit and have not relied on

7

it because the suit has garnered little media attention.

8

Court agrees that this apparent lack of media coverage makes it

9

unlikely that similarly situated homeowners knew of Plaintiffs’

The parties argue that putative

The

United States District Court
For the Northern District of California

10

lawsuit and relied on it for vindication of their own rights.

11

Mahan, 2010 WL 4916417, at *3 (finding that detrimental reliance

12

by absent class members was unlikely because there was “no

13

evidence that the instant case has garnered significant news

14

coverage”).

See

15

Furthermore, even if some putative class members had relied

16

on Plaintiffs’ lawsuit, application of the second and third Diaz

17

factors makes clear that they would not be prejudiced by dismissal

18

here.

19

parties’ settlement jeopardizes absent class members’ opportunity

20

to bring suit against Defendants or otherwise undermines their

21

ability to prosecute class claims.

22

parties intend to dismiss the class claims without prejudice,

23

absent class members would still be able to bring suit against

24

Defendants.

25

because of the class action tolling doctrine.

26

Los Angeles, 754 F.2d 1485, 1488 (9th Cir. 1985); Hanni v. Am.

27

Airlines, Inc., 2010 WL 1576435, at *3 (N.D. Cal.).

Under those factors, the Court must determine whether the

In this case, because the

What’s more, these claims would not be time-barred

28
4

Tosti v. City of

1

Accordingly, the basic terms of the parties’ pre-

2

certification settlement agreement satisfy the Diaz factors and

3

merit approval under Rule 23(e).

4

CONCLUSION

5

For the reasons set forth above, the Court GRANTS the

6

parties’ motion for settlement approval and voluntary dismissal

7

(Docket No. 70).

8

are dismissed with prejudice.

9

without prejudice.

United States District Court
For the Northern District of California

10
11

Plaintiffs’ individual claims against Defendants
All class claims are dismissed

The parties are not required to provide notice

of the settlement to absent class members.
IT IS SO ORDERED.

12
13
14

Dated: 11/27/2012

CLAUDIA WILKEN
United States District Judge

15
16
17
18
19
20
21
22
23
24
25
26
27
28
5