O'Shea v. American Solar Solution, Inc.

Filing 161

ORDER: (1) Denying Without Prejudice Joint Motion for Preliminary Approval of Settlement [Doc. 158 ]; (2) Granting Plaintiff's Motion to Withdraw Attorney [Doc. 59 ]. Signed by Judge M. James Lorenz on 6/12/2019. (Attorney Tania Babaie terminated) (lrf)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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KERRY O’SHEA, on behalf of himself
and all others similarly situated.,

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Plaintiff,

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v.

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AMERICAN SOLAR SOLUTION, INC.
a California corporation,
Defendant.

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Case No. 3:14-cv-00894-L-RBB
ORDER:
(1) DENYING WITHOUT
PREJUDICE JOINT MOTION
FOR PRELIMINARY
APPROVAL OF SETTLEMENT
[Doc. 158]
(2) GRANTING PLAINTIFF’S
MOTION TO WITHDRAW
ATTORNEY [Doc. 159]

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Pending before the Court in this class action alleging violations of the

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Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227 et seq. is the joint

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motion for preliminarily approval of class action settlement. The motion is denied

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without prejudice for the following reasons:

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CASE NO. 3:14-cv-00894-L-RBB

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1.

The representation in the motion and the proposed class notice that class

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members will receive $20 in damages is problematic. Twenty dollars ($20) is the

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maximum class member payment provided under the settlement agreement. The

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actual amount depends on the number of claims.

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representations in Plaintiff's motion, the class members will not receive $20 unless

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the class participation rate is extremely low or the factual representations in support

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of the proposed settlement are inaccurate by a wide margin. Pursuant to the settlement

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agreement, Defendant is to set aside “a Settlement Fund for a total amount of

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$1,250,000 to pay Approved Claims[.]” Doc. 158-3 at 8. From that amount, a

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potential $170,000 is deducted attorney’s fees an estimated $125,000 for notice and

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settlement administration costs, and $15,000 for requested class representative service

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compensation. After deductions, approximately $940,000 is available to pay the class

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members. Defendant estimates that 220,007 members belong to the class called by

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Defendant during the class period. If the estimate is accurate, and that every class

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member submits one Approved Claim for a cellphone call, each will receive $4.27.

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While the Court recognizes that it is very uncommon in consumer class actions for

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every class member to submit a claim, the class members could receive more of a

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benefit from proposed Settlement Fund even if the claim rate was low. "[I]t is not

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unusual for only 10 or 15% of the class members to bother filing claims." Briseno v.

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ConAgra Foods, Inc., 844 F.3d 1121, 1131 (9th Cir. 2017) (internal quotation marks

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and citation omitted). Ten or 15% are "low participation rates." Id. If only 15% of

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the class submit Approved Claims as defined in the Settlement Agreement, their

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estimated recovery could exceed $20 while accounting for other costs. As such, the

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Court questions why class members would only be afforded a maximum benefit of

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$20 per Approved Claim per individual if the claims rate is less than three percent

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(3%). The joint motion does little to answer this question. A realistic estimate of

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individual class member recovery is relevant to the settlement fairness determination

However, based on the

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CASE NO. 3:18-cv-00894-L-RBB

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under Federal Rule of Civil Procedure 23(e), see In re Bluetooth Headset Prod.

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Liability Litig., 654 F.3d 935, 946 (9th Cir. 2011), and to the adequacy of the proposed

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notice to the class, see In re Online DVD Rental Antitrust Litig., 779 F.3d 934, 946

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(9th Cir. 2015). The estimate of class member recovery provided in the motion and

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proposed notice appears inaccurate on its face and lacks a plausible explanation.

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2.

The joint motion wholly fails to identify a cy pres recipient in lieu of

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direct distribution of damages to silent class members. Federal courts frequently

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apply the cy press doctrine to allow for an “aggregate calculation of damages, the use

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of summary claim procedures, and distribution of unclaimed to indirectly benefit the

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entire class.” Dennis v. Kellogg Co., 697 F.3d 858, 865 (9th Cir. 2012) (quoting Six

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Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1305 (9th Cir. 1990)). A

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cy pres award must be “the next best distribution” to compensating the class members

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directly which ensures the settlement retains a logical connection to the plaintiff class

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and the underlying claims. Six Mexican Workers, 904 F.2d at 1308. A cy pres award

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must be “guided by (1) the objectives of the underlying statute(s) and (2) the interests

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of the silent class members, . . . and [(3)] must not benefit a group too remote from

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the plaintiff class.” Id. at 1308-09 (internal citations and quotation marks omitted).

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Accordingly, to determine “whether the class settlement, take as a whole, is fair,

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reasonable, and adequate to all concerned,” a court must determine “whether the

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distribution of the approved class settlement complies with [the Ninth Circuit’s]

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standards governing cy pres awards.” Nachshin v. AOL, LLC, 663 F.3d 1034, 1040

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(9th Cir. 2011). Without designation of a cy pres award recipient and explanation of

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the nexus to the plaintiff class, the Court cannot complete its analysis of the

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settlement. Therefore, the settlement agreement and joint motion must be amended

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consistent with this order.

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3.

The proposed class long-form notice must be amended to indicate, on

Page One, the number of the question that explains the class members rights and

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CASE NO. 3:18-cv-00894-L-RBB

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options in this settlement. For example, to understand the steps necessary to “Attend

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A Hearing[,]” the class must see question 22, so reference to the corresponding

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question should be mentioned in addition to the current explanation on Page One.

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Also, the Court notes that, in the “Am I included?” section on Page Two of the long-

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form notice, the parties should modify the language beginning, “If you any question

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about which class you are a member of,” because the Court only certified one class in

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this case.

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Accordingly, the proposed notices must be amended consistent with this order.

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4.

The parties should also review the notices for typographical errors.
Federal Rule of Civil Procedure 23(e)(5) provides that "[a]ny class

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member may object" to the proposed settlement. Although the parties may encourage

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class members to provide written objections by a date certain, the Court is not inclined

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to prohibit a class member from objecting, if he or she did not file written objections

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or did not do so in a timely manner. Accordingly, the proposed notice must be

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amended consistent with this order.

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For the foregoing reasons, the parties’ motion for preliminary approval of class

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action settlement [Doc. 158] is denied without prejudice to re-filing after curing the

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foregoing defects.

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Plaintiff seeks leave for attorney Tania Babaie’s (“Counsel”) withdrawal from

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this litigation because she is no longer employed by the firm representing Plaintiff.

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Defendants have not opposed Plaintiff’s request. Counsel has filed a proof of service

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declaring Defendant has been served in compliance with Civil Local Rule 83.3. For

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good cause shown, the Court GRANTS Plaintiff’s motion [Doc. 159].

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IT IS SO ORDERED.

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Dated: June 12, 2019

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CASE NO. 3:18-cv-00894-L-RBB