Malta v. The Federal Home Loan Mortgage Corporation et al

Filing 140

ORDER Granting 132 Motion for Second Distribution of Settlement Fund. Signed by Judge Roger T. Benitez on 7/31/2017. (All non-registered users served via U.S. Mail Service)(knb)

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1 i:-1 1 1-·o I 2 L_ :. 17AUG~I PH 3:z[ 3 CLrnK. U.S. DISTRICT ~CURT SfVTiltRN OIGTRIGT OF CMlFORNll 4 1JS 5 6 7 UNITED STATES DISTRICT COURT 8 SOUTHERN DISTRICT OF CALIFORNIA 9 10 11 12 ALBERTO MALTA, individually and on behalf of all other similarly situated, et al., Plaintiffs, 13 14 15 16 17 v. Case No.: 3:10-cv-01290-BEN-NLS ORDER GRANTING SECOND DISTRIBUTION OF SETTLEMENT FUND THE FEDERAL HOME LOAN MORTGAGE CORPORATION, also known as Freddie Mac, et al., Defendants. 18 19 Before this Court is Lead Plaintiff Alberto Malta's Motion for Second Distribution 20 or, Alternatively, Cy Pres Distribution from the Residual Settlement Fund. (Docket No. 21 132.) The motion is unopposed. (Docket No. 134.) The Court finds the motion suitable 22 for determination on the papers without oral argument, pursuant to Civil Local Rule 23 7.1.d.l. For the reasons set forth below, Lead Plaintiffs Motion is GRANTED in part. 24 25 BACKGROUND This action was filed on June 16, 2010 for violations of the Telephone Consumer 26 Protection Act ("TCPA"). (Docket No. 1.) On May 21, 2013, Co-Lead Plaintiffs Alberto 27 Malta and Danny Allen, Jr. filed a First Amended Complaint on behalf of themselves and 28 a putative class alleging Defendants sent automated text messages to non-customer's 3: 10-cv-01290-BEN-NLS 1 cellular telephones using an automated dialing system without first obtaining the non- 2 customer's express consent in violation of the TCPA. (Docket No. 59.) 3 On February 5, 2013, the Court granted preliminary approval of the Class Action 4 Settlement Agreement ("Agreement"). 1 (Docket No. 48.) On June 21, 2013, the Court 5 entered an Order and Final Judgment of Dismissal with Prejudice ("Final Judgment 6 Order"), which, inter alia, approved the Agreement, directed the parties to consummate 7 the Settlement in accordance with the terms of the Agreement, and retained jurisdiction 8 over the litigation for all matters relating to the consummation of the Agreement. 9 (Docket No. 91.) On June 28, 2013, the Court granted Class Counsel's Ex Parte Request 10 to Modify the Final Judgment Order ("Modification Order"). (Docket No. 96.) The 11 Modification Order modified the numbers of approved late claims, requests for exclusion, 12 and amount paid per claim. 13 On January 4, 2017, Lead Plaintiff Alberto Malta filed an unopposed Motion for 14 Second Distribution or, Alternatively, Cy Pres Distribution from the Residual Settlement 15 Fund ("Pl.'s Redistrib. Mot."). (Docket Nos. 132, 134.) Plaintiffs motion indicates that, 16 pursuant to the Court's Final Judgment and Modification Orders, the Claims 17 Administrator has issued each of the 120,700 claimants a settlement check. However, 18 5,556 claimants did not cash their checks, leaving a balance of$438,832.55 including 19 accrued interest in the Settlement Fund as of March 7, 2016. Plaintiffs motion requests a second distribution of the remaining balance in the 20 21 Settlement Fund. ILYM Group, Inc., the Claims Administrator, estimates that it will cost 22 approximately $85,000 to complete a second distribution of the Settlement Fund, which 23 leaves approximately $353,823.55 for redistribution to claiming Class Members. (Pl.'s 24 Redistrib. Mot at 2; Declaration of Lisa Mullins ("Mulins Deel.")~~ 5-6.) If the Claims 25 26 27 28 1 Capitalized terms not otherwise defined herein have the meanings assigned to them in the Agreement (Docket No. 38-3) or the Court's Final Judgment Order dated June 21, 2013. (Docket No. 91.) 2 3:10-cv-01290-BEN-NLS 1 Administrator issues redistribution checks to only those Class Members who cashed the 2 initial settlement checks, each individual will receive a check for approximately $3.07. 3 (Pl.'s Redistrib. Mot at 2.) If the Claims Administrator issues redistribution checks to all 4 Class Members who submitted a valid claim regardless of whether they cashed the initial 5 settlement check, each individual will receive a check for approximately $2.93. (Id.; 6 Mulins Deel.~ 6.) 7 Although Defendants filed a Statement of Non-Opposition, they noted that "the 8 parties' settlement agreement does not provide for a second distribution to settlement 9 class members." (Docket No. 134 at 2.) Section 11.02 of the Agreement provides: 10 Mailing of Settlement Check: Settlement checks shall be sent to Qualified Class Members by the Claims Administrator via U.S. mail no later than thirty (30) days after the Effective Date. If any settlement checks are returned, the Claims Administrator shall attempt to obtain a new mailing address for that Settlement Class Member by taking the steps described in Sections 9.01. If, after a second mailing, the settlement check is again returned, no further efforts need be taken by the Claims Administrator to resend the check. The Claims Administrator shall advise Class Counsel and counsel for Defendants of the names of the claimants whose checks are returned by the postal service as soon as practicable. Each settlement check will be negotiable for one hundred eighty (180) days after it is issued. Any funds not paid out as the result of uncashed settlement checks shall be paid out as a cy pres award, to a recipient agreed to by the Parties and approved by the Court, as set forth in Section 8.05(f). 2 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 Section 8.05(f) provides: [F]inally, on the Final Distribution Date, which is the earlier of (i) the date as of which all the checks for Settlement Awards have been cashed or (ii) 210 days after the date on which the last check for a Settlement Award was issued, the Claims Administrator shall pay any amount remaining in the Settlement Fund Account from uncashed settlement checks to one or more cy pres recipients which are agreed upon by the Parties and approved by the Court. (Docket No. 38.3 at 14.) 3 3: 10-cv-01290-BEN-NLS 1 (Docket No. 38-3 at 18.) Nevertheless, as will be explained below, the Court concludes 2 granting Plaintiffs request for a second distribution of the Settlement Fund is the most 3 appropriate disposition of the remaining funds at this time. 4 DISCUSSION 5 "It is not uncommon in consumer class actions to have funds remaining after 6 payment of all identifiable claims." Diamond Chem. Co. v. Akzo Nobel Chemicals B. V, 7 517 F. Supp. 2d 212, 217 (D.D.C. 2007) (quoting In re Motorsports Merch. Antitrust 8 Litig., 160 F. Supp. 2d 1392, 1393 (N.D. Ga. 2001); see also Six (6) Mexican Workers v. 9 Arizona Citrus Growers, 904 F.2d 1301, 1307 (9th Cir. 1990). Various courts who have 10 considered the question of how to appropriately distribute such funds have determined 11 that "neither the class members nor the settling defendants have any legal right to 12 unclaimed or excess funds." Id. (quoting Powell v. Georgia-Pacific Corp., 843 F. Supp. 13 491, 495 (W.D. Ark. 1994), aff'd, 119 F.3d 703 (8th Cir. 1997)); see also Motorsports 14 Merch., 160 F. Supp. 2d at 1393; Wilson v. Southwest Airlines, Inc., 880 F.2d 807, 811- 15 12 (5th Cir. 1989); In re Folding Carton Antitrust Litig., 744 F.2d 1252, 1254 (7th Cir. 16 1984), cert. dismissed, 471U.S.1113, 106 S.Ct. 11 (1985). 17 Neither Lead Plaintiff nor Defendants contend they retain any legal claim to the 18 remaining Settlement Fund. Nor are they entitled to it pursuant to the terms of the 19 Agreement. Therefore, the Court "must apply equitable principles in considering the 20 appropriate distribution of the [r]emaining Settlement Fund." Id. (citing Motorsports 21 Merch., 160 F. Supp.2 d at 1393); see also Powell, 843 F. Supp. at 495 (until settlement 22 funds are completely distributed, the court retains its traditional equity powers) (citing 23 Beecher v. Able, 575 F.2d 1010, 1016 (2d Cir. 1978)). 24 The Court has reviewed Plaintiffs Motion and corresponding memorandum of 25 points and authorities, the Declarations of Lisa Mullins and Jennifer M. Urban in support 26 of Plaintiffs Motion, all other exhibits and papers submitted in support thereof, and 27 Defendant's Statement of Non-Opposition, and determines that good cause exists for a 28 second distribution of the Settlement Fund to the Class Members who cashed the initial 4 3:10-cv-01290-BEN-NLS 1 settlement checks. First, although the Agreement provides for cy pres distribution of 2 unclaimed funds from the first distribution of the Settlement Fund, it is not clear from the 3 Agreement that a cy pres distribution of this size was contemplated. 3 In contrast, it is 4 clear to the Court that the Settlement Fund was intended to compensate Class Members 5 whose claims were timely filed and approved by this Court. Second, although each 6 payment to individual Class Members in a second distribution will be small, it is not non- 7 distributable, insignificant, or de minimis. See In re Google Referrer Header Privacy 8 Litig., 87 F. Supp. 3d 1122, 1132 (N.D. Cal. 2015) (quoting Nachshin v. AOL, LLC, 663 9 F.3d 1034, 1038 (9th Cir. 2011) (Cy pres payments may be approved when actual funds 10 are "non-distributable," or "where the proof of individual claims would be burdensome or 11 distribution of damages costly.") (internal citation and quotation marks omitted). Third, 12 the Court agrees with Plaintiffs assertion that it is unlikely that Class Members who did 13 not cash the initial check for $84.78 will cash a check for less than $4.00. 14 Therefore, the Court directs the Claims Administrator to pay each of the Class 15 Members who cashed the initial settlement checks an equal share of the remaining 16 Settlement Fund, after its own fees of no more than $85,000.00 are paid. If unclaimed 17 funds remain in the Settlement Fund after the second distribution, either party may move 18 the Court for a cy pres distribution in accordance with the Agreement. 19 This Court retains jurisdiction to consider any further applications concerning the 20 administration of the Agreement, and such other and further relief as this Court deems 21 appropriate. 22 IT IS SO ORDERED. 23 24 DATED: July-?L_, 2017 EZ nited States District Court Judge 25 26 27 28 3 Indeed, Lead Plaintiffs request for a second distribution of the remaining funds and Defendants non-opposition to a second distribution supports the Court's determination. 5 3: I 0-cv-O 1290-BEN-NLS

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