Figueroa v. Capital One, N.A. et al
Filing
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Order on Joint Motion to Approve Settlement Administration Fees for Secondary Distribution of Settlement Funds and Designation of Cy Pres Recipient re: ECF 95 . Signed by Judge Jeffrey T. Miller on 12/1/2023. (All non-registered users served via U.S. Mail Service)(dim)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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JACOB FIGUEROA and MARY
JACKSON, on behalf of themselves and
all others similarly situated,
Case No.: 18cv692 JM(BGS)
ORDER ON JOINT MOTION TO
APPROVE SETTLEMENT
ADMINISTRATION FEES FOR
SECONDARY DISTRIBUTION OF
SETTLEMENT FUNDS AND
DESIGNATION OF CY PRES
RECIPIENT
Plaintiffs,
v.
CAPITAL ONE, N. A.,
Defendant.
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On September 9, 21, 2023, the Parties filed Joint Motion to Approve Settlement
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Administration Fees for Secondary Distribution of Settlement Funds and Designation of
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Cy Pres Recipient, (“Joint Motion”) (Doc. No. 95). Upon review of the Joint Motion, the
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court determined that supplemental briefing would be beneficial. Subsequently, the Parties
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submitted their supplemental briefing, and the court now finds the Joint Motion suitable
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for submission on the papers and without oral argument in accordance with Civil Local
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Rule 7.1(d)(1). For the reasons set forth below, the Joint Motion is granted.
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Discussion
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1. Settlement Administrator Fees
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On January 21, 2021, this court entered a Final Approval Order regarding the
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proposed settlement agreement in this class action suit. (Doc. No. 93.) The Final Order
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approved class settlement administrator fees not to exceed $900,000, “absent further order
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of the court.” Id. at 25. The high settlement administrator fees sought by BrownGreer,
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PLC, were approved based on a declaration it provided estimating costs of $997,933 and
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Class Counsel relaying a revised estimate of $850,000 to the court at the final approval
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hearing. Id. at 22. Indeed, when the court questioned Class Counsel on BrownGreer’s
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final bill at the hearing, Mr. Kaliel anticipated it would be “in the $850,000 range” and he
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was certain it would be “south of $1 million.” Id. at 3 fn. 2.
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The Joint Motion states that the settlement administrator has now completed both
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the initial and second round of disbursements as contemplated by the settlement agreement,
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and that the secondary distribution “which includes class member checks, postage, data
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storage, coordinating and processing of mail and checks, amounted to $112,245.49.” Doc.
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No. 95 at 2. No further information was provided. Because BrownGreer’s fees now exceed
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over one-million dollars, the court’s request for additional briefing ordered the Parties to
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provide the court “by way of declarations from BrownGreer and Counsel, a full accounting
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regarding the costs incurred by BrownGreer, along with any other pertinent information
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that would explain” these costs. Doc. No. 96 at 2.
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The additional briefing provides that BrownGreer’s expenses have not exceeded the
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$900,000 cap imposed by the court. (Doc. No. 97 at 2.) Indeed, the Parties represent that
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Brown Green discounted its invoices by approximately $19,000 “in order to come in at the
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cap set by the Court.” Id. at 2. They contend that the settlement administrator fees of
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$112,245.40 were not contemplated in the settlement agreement and were for the optional
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services related to the secondary distribution not contemplated by the settlement
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agreement, stating “the Parties did not understand the court’s cap to apply to these
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additional services.” Id. at 2-3.
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While it is true that the settlement agreement is silent regarding administrator fees
for a secondary distribution, section 3:4 of the agreement provides:
Residual. In the event that there is any residual in the Settlement Fund
Account after the distributions required by this Agreement are completed, said
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funds shall in no circumstance revert to Capital One. At the election of Class
Counsel and counsel for Capital One, and subject to the approval of the Court,
the funds may be distributed to Settlement Class Members via a secondary
distribution if economically feasible or through a residual cy pres
organization, which will be an entity jointly agreed by the Parties and
approved by the Court. Any residual secondary distribution or cy pres
distribution shall be paid as soon as reasonably possible following the
completion of distribution of funds to the Settlement Class Members.
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Doc. No. 75 at 15. The Parties did not however ask for court approval before making the
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secondary distribution, which the supplemental briefing provides was in excess of
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$2 million. Rather, after receiving a cost estimate for the secondary distribution, the Parties
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determined that a secondary distribution made the most sense. Since the secondary
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distribution involved Class Members receiving a share of unused funds in excess of
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$2 million (see Doc. 97 at 3), the court takes no issue with this decision. Accordingly, the
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court APPROVES the additional settlement fees in the amount of $112,245.49.
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2. Cy Pres Funds
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Additionally, the Parties request the court approve the distribution of the residual
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$440,998.02 left in the settlement fund to a cy pres recipient they have chosen, Jump$tart
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Coalition for Personal Financial Literacy (“Jump$tart Coalition’).
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“A cy pres remedy, sometimes called ‘fluid recovery,’ Mirfasihi v. Fleet Mortg.
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Corp., 356 F.3d 781, 784 (7th Cir. 2004), is a settlement structure wherein class members
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receive an indirect benefit (usually through defendant donations to a third party rather than
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a direct monetary payment.” Lane v. Facebook, Inc. 696 F.3d 811, 819 (9th Cir. 2012).
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The “cy pres doctrine allows a court to distribute unclaimed or non-distributable portions
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of a class action settlement fund to the ‘next best’ class of beneficiaries.” In re Google Inc.
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Street View Elec. Commc’ns. Litig. 21 4th 1102, 1111 (9th Cir. 2021) (quoting Nachshin
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v. AOL, LLC, 663 F.3d 1034, 1036 (9th Cir. 2011)). The requirement “that a cy pres
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remedy must be the ‘next best distribution’ of settlement funds means only that a district
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court should not approve a cy pres distribution unless it bears a substantial nexus to the
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interests of the class members.” Lane v. Facebook, Inc, 696 F.3d 811, 821 (9th Cir. 2012)
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(quoting Nachshin, 663 F.3d at 1036) (finding a substantial nexus between Facebook
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privacy claims and charity giving grants promoting online privacy and security). The
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district court’s review of a class-action settlement that calls for a cy pres remedy is not
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substantively different from that of any other class-action settlement except that the court
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should not find the settlement fair, adequate, and reasonable unless the cy pres remedy
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‘account[s] for the nature of the plaintiffs’ lawsuit, the objectives of the underlying statutes,
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and the interests of the silent class members . . . .” Lane, 696 F.3d at 819-20 (quoting
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Nachshin 663 F.3d at 1036).
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Here, Plaintiffs alleged violations of numerous consumer protection laws designed
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to protect a consumer’s rights, along with associated breach of contract claims. All of
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Plaintiffs’ claims centered around the fees Defendant, Capital One, N.A., charges its
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customers for using Out-of-Network (“OON”) automatic teller machines.
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alleged that the fees for OON balance inquiries, or “third” fees, were wrongly charged and
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were in violation of Defendant’s standardized account agreement, Fee Schedule, and
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Electronic Funds Transfers Agreement and Disclosure. The settlement agreement provides
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that any residual left in the settlement fund will be distributed to a “cy pres organization,
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which will be jointly agreed by the Parties and approved by the Court.” Doc. No. 75 at 15.
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Aside from the name of the proposed recipient of the cy pres award, no further
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information was provided in the original Joint Motion, prompting this court to require the
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Parties to demonstrate how their proposed cy pres remedy considers the nature of Plaintiffs’
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lawsuit, the objectives of the statutes underlying Plaintiffs’ claims, and the interests of the
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silent class members, including their geographic diversity. See, e.g., In re Google Inc.,
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21 F.4th at 1112-13. The court is now informed that Jump$tart Coalition “consists of more
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than 100 national organizations and a network of 51 independent, affiliated state coalitions
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that share a commitment to advancing youth financial literacy and raising public awareness
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about the importance of financial literacy.” Doc. No. 99 at 2. See also Doc. No. 99-1 at
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¶ 2, Declaration of Amina Carter, Director of Operations and Marketing for Jump$tart
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Coalition. Thus, the Parties contend that Jump$tart Coalition’s work can help class
Plaintiffs
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members and the public, writ large, better understand and decipher financial disclosures,
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including the fees and costs associated with the services provided by financial institutions
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in order to make informed decisions when selecting a banking provider. Doc. No 99 at 2.
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Relatedly, the Parties submit that improved financial literacy will better help class members
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(and their family members) develop a greater comprehension when and how fees
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associated with financial transactions are incurred, how such fees accrue over time, and
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what impact those fees may have one one’s finances. Id. at 2-3. Accordingly, the
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substantial nexus requirement is satisfied.
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Thus, in accordance with section 3.4 of the settlement agreement (see Doc. No. 75
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at 15), the court APPOINTS Jump$tart Coalition as the cy pres recipient and AWARDS
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it the $440,998.02 in residual funds.
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Conclusion
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In accordance with the foregoing, the court GRANTS the Parties’ Joint Motion to
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Approve Settlement Administration Fees for Secondary Disbursement of Settlement Funds
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and Designation of Cy Pres Recipient (Doc. No. 95). All residual funds in the settlement
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fund following the payment of $112,245.49 to the settlement administrator for the
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secondary distribution shall be distributed to Jump$tart Coalition for Personal Financial
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Literacy as the cy pres recipient.
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IT IS SO ORDERED.
Dated: December 1, 2023
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