Gittin v. KCI USA, Inc

Filing 47

PRELIMINARY APPROVAL ORDER. Final Approval Hearing set for 7/21/2011 01:30 PM. Signed by Judge Richard Seeborg on 4/12/11. (cl, COURT STAFF) (Filed on 4/12/2011)

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*E-filed 4/12/11 * 1 2 3 4 5 IN THE UNITED STATES DISTRICT COURT 6 FOR THE NORTHERN DISTRICT OF CALIFORNIA 7 SAN FRANCISCO DIVISION 8 9 LANCE GITTIN, on behalf of himslef and others similarly situated, 11 For the Northern District of California United States District Court 10 No. 09-CV-05843 RS PRELIMINARY APPROVAL ORDER Plaintiff, v. 12 13 14 15 KCI USA, Inc., Defendant. ____________________________________/ 16 17 18 19 20 21 22 23 24 25 26 27 I. BACKGROUND KCI USA, Inc. (“KCI”) is a medical supplies company that also engages in the collection of debts from its customers. This case arises out of KCI’s practice of mailing a standardized debt collection letter which allegedly violated the California Rosenthal Fair Debt Collection Practices Act (“RFDCPA”). Compl., Ex. 1; Cal. Civil Code § 1788 et seq. Following a mediation on September 24, 2010, the parties have jointly submitted a class action settlement agreement and request that Court conditionally certify the class pursuant to the Federal Rules of Civil Procedure, Rule 23(a) and 23(b)(3), direct the mailing of the proposed class action notice, approve the parties’ preliminary settlement, and set a schedule for the remainder of this litigation. The Court hereby conditionally certifies the class and grants preliminary approval of the parties’ proposed settlement agreement. 28   NO. 09‐CV‐05843RS   PRELIMINARY APPROVAL ORDER  1 2 3 II. DISCUSSION A. Class Certification & Notice Rule 23 of the Federal Rules of Civil Procedure determines the aptness of class the numerosity, commonality, typicality, and adequacy of representation requirements of 6 Rule 23(a), and the provision of Rule 23(b)(3) are met in this case. See Zinser v. Accufix 7 Research Inst., Inc., 253 F. 3d 1180, 1186 (9th Cir. 2001). The Court conditionally grants 8 the parties’ request for class certification. The class is defined as approximately 1,655 9 perosn: (1) with an address in California, (2) to which KCI caused to be mailed a letter in 10 the form of Exhibit 1 attached to plaintiff’s complaint, (3) regarding an alleged obligation 11 For the Northern District of California actions. See Fed. R. Civ. P. 23. The Court is conditionally and preliminarily satisfied that 5 United States District Court 4 incurred for personal, family, or household purposes, (4) between December 14, 2008 and 12 December 14, 2009, (5) which letter was not returned by U.S. Post Office as 13 undeliverable, and (6) who did not have civil court proceedings initiated against them by 14 KCI. The Court appoints Gittin as class representative. Ronald Wilcox of San Jose, 15 California and O. Randolph Bragg of Chicago, Illinois are appointed as class counsel 16 pursuant to Rule 23(g). The Court finds that Wilcox and Bragg are experienced and 17 knowledgeable in class action litigation and that they will fairly and adequately represent 18 the interests of the class. See Fed. R. Civ. P. 23(g). 19 The Court further directs dispatch of the notice to the class members as submitted 20 by the parties in their proposed settlement agreement provided that a legible copy of 21 Exhibit 1 is attached. The notice shall be sent via first class US mail as agreed to by the 22 parties. The opt-out period shall be sixty days. 23 B. The Settlement Agreement 24 Rule 23(h) governs the award of attorneys’ fees and costs in certified class actions. 25 Because plaintiff’s counsel have not yet submitted a fee motion, on March 17, 2011 the 26 Court requested supplemental briefing regarding the application of In re Mercury 27 Interactive Corp. Securities Litigation, 618 F.3d 988 (9th Cir. 2010) to the instant motion. 28 In Mercury, the Ninth Circuit explained that Rule 23(h) requires that class members be NO. 09‐CV‐05843 RS   PRELIMINARY APPROVAL ORDER  2  members’ opt-out deadline. Id. The Mercury court held that setting the class members’ 3 objection deadline on a date before the deadline for counsel to submit their fee motion 4 amounted to legal error and was nearly a denial of due process in that it deprived class 5 members of a full and fair opportunity to object to the fee motion. Id. at 993-94 6 (“Allowing class members an opportunity thoroughly to examine counsel’s fee 7 motion . . . is essential for the protection of the rights of class members.”). Mercury also 8 clarified that such an opportunity to object “ensures that the district court, acting as a 9 fiduciary for the class, is presented with adequate, and adequately-tested, information to 10 evaluate the reasonableness of a proposed fee.” Id. Mercury involved a common class 11 For the Northern District of California allowed an opportunity to object to a fee motion prior to the expiration of the class 2 United States District Court 1 fund, a percentage of which was allocated to attorney’s fees. Id. at 990. Thus, the amount 12 distributed to the attorneys directly diminished the amount received by the class, 13 necessitating that the class be given an opportunity to examine and object to the attorneys’ 14 fee motion. Id. at 990-91. 15 In contrast, this case is brought under the RFDCPA, which provides for a separate 16 award of costs and reasonable attorney’s fees to a prevailing party.1 This lack of a 17 common fund obviates the due process concerns highlighted by the Mercury court. See, 18 e.g., In re Lifelock, Inc. Marketing & Sales Practices, No. 08-1977-MHM, 2010 WL 19 3715138, at *9 (D.Ariz. 2010) (finding Mercury inapplicable where the class members’ 20 rights were not affected by the attorneys’ fees because there was no common fund, no 21 adversarial relationship between the attorneys and the class members, and notice was 22 discretionary rather than required under Rule 23(c)(2)(a)). In this case, the Court grants 23 preliminary approval of the parties’ proposed settlement agreement. This is not to say that 24 the Mercury rule would necessarily be inapplicable in every class action where separate 25 26 1 27 28 The RFDCPA provides that “[i]n the case of any action to enforce any liability under this title, the prevailing party shall be entitled to costs of the action. Reasonable attorney’s fees, which shall be based on time necessarily expended to enforce the liability, shall be awarded to a prevailing debtor . . . .” Cal. Civ. Code § 1788.30(c). NO. 09‐CV‐05843 RS   PRELIMINARY APPROVAL ORDER  3  1 statutory costs and attorney fees are awarded or where there is no common fund. The 2 Court finds only that Mercury does not apply to the instant case. 3 C. Schedule 4 The Court sets a schedule for the remainder of litigation as follows: 5 1. Notices are to be sent via US mail by Monday, April 25, 2011. 6 2. The class members’ opt-out deadline shall be set sixty days after the email 7 8 9 11 For the Northern District of California United States District Court 10 notices are sent, or Friday, June 24, 2011, whichever is later. 3. The hearing regarding final approval shall be held on Thursday, July 21, 2011 at 1:30 p.m. The parties are directed to update the notice to class members to reflect the above schedule. 12 13 14 III. CONCLUSION The Court grants conditional certification of the class and preliminary approval of the parties’ proposed settlement agreement in accordance with this order. 15 16 IT IS SO ORDERED. 17 18 19 Dated: 4/12/11 RICHARD SEEBORG UNITED STATES DISTRICT JUDGE 20 21 22 23 24 25 26 27 28 NO. 09‐CV‐05843 RS   PRELIMINARY APPROVAL ORDER  4 

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