Kardonick v. JP Morgan Chase & Co. et al

Filing 71

REPLY to Response to Motion re 30 MOTION to Intervene, 31 MOTION to Intervene Memorandum of Law in Support of filed by George Cleaver, David Lundy, Warren Prince, Harold Smith, Trudy Smith, Ennis White. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E)(Dominguez, Manuel)

EXHIBIT C

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UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION

KENNETH SPINELLI,
Linda R. McCoy, Anthony Mitchell,

Elizabeth Silcato, Patricia Tinder,
Laverne Scruggs, Rose Carr,
Robin Deaver, Michael Blackie,
Trina Blackman, Alice Lewandowski
Harold Smith, Trudy Smith,
David Watlngton, and Jeff Salazar
Individually and for all other persons similarly situated,
Plaintiffs
Case No. 8:08-CV-132-T-33EAJ

v.

CAPITAL ONE BANK (USA), N.A. and
CAPITAL ONE SERVICES, LLC.,

Defendants
/

JOINT DECLARATION OF CURTIS L. BOWMAN, STEVEN A. OWINGS AND
BRENT WALKER IN SUPPORT OF PLAINTIFFS' MOTION FOR FINAL APPROVAL
OF CLASS ACTION SETTLEMENT AND PLAN OF ALLOCATION

I. DECLARATION OF CLASS COUNSEL
We, Curtis L. Bowman, Steven A. Owings and Brent Walker declare as follows:
1. Curtis L. Bowman is a member of

Carney Wiliams Bates Bozeman & Pulliam, PLLC

("Carney Williams"), Steven A. Owings is a partner of the Owings Law Firm, and Brent Walker is
a member of

Carter Walker, PLLC, collectively referred to as "the undersigned" or "Class Counsel".

We have been actively involved in the above-captioned action, from the initial pre-filing
investigation through settlement. We have developed this case from initial interviews of

Capital One

cardholders questioning why their Payment Protection benefits were not honored, to a national

settlement of payment protection claims. We are thus familiar with all relevant facts and the issues

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raised, the work that counsel performed on behalf of the class, and the risks assumed in the
prosecution of the litigation.

2. We submit this declaration pursuant to Rule 23 of the Federal Rules of Civil
Procedure and Rule 408 of

the Federal Rules of

Evidence, in support of

the approval of

Plaintiffs'

Motion for Final Approval of Class Action Settlement and Plan of Allocation.
3. Weare fully familiar with the facts set forth herein and, if called upon, could testify

competently thereto.

II. HISTORY OF THE LITIGATION

A. Initial Investigation
4. This case began with interviews of Capital One cardholders in Florida in 2006.

Pursuant to this investigation it became apparent that many cardholders were being rejected for valid

claims for benefits after paying for the product, and it became apparent that many cardholders with
the product would never have been eligible for benefits; for instance, senior citizens that paid for the

product were ineligible for job loss benefits.
5. The undersigned continued the investigation consisting of extensive interviews with
cardholders, an extensive pre- filing investigation of

business practices relating to the sale of

Payment

Protection, research that included both state and federal regulatory agencies, review and analysis of
publicly available information, review and analysis of similar claims arising in the United Kingdom,

legal research, and other investigation and analysis.

B. Plaintiffs' fied a proposed class action in state court
6. The undersigned filed suit on behalf of Capital One cardholders in Hilsborough

County, Florida Circuit Court on or about September 28, 2007, and amended that complaint on
December 13,2007, initially alleging violations of

the Florida Deceptive and Unfair Trade Practices

Act in connection with Capital One's "up to" marketing of secured credit cards. On January 18,

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2008, Capital One removed this case to federal court. On February 28,2008, the Florida Plaintiffs
filed their second amended complaint in this Court, alleging claims primarily based upon deceptive

marketing and benefit claims under the Florida Deceptive and Unfair Trade Practices Act.

C. Motion practice, discovery and trial preparations

7. A motion to dismiss was filed by Capital One and opposed by Plaintiffs, and that
motion practice in this case, Plaintiffs faced

motion was denied on May 20,2008. At each stage of

formidable opposition by counsel for Capital One, including numerous motions, declarations, and

requests for reconsideration filed with the Court.
8. Following the Court's Order denying Capital One's motion to dismiss, Plaintiffs

engaged in discovery related to class certification. On October 30,2008, Plaintiffs filed a motion
to certify the case as a class action. On March 14, 2009, the Court denied Plaintiffs' motion to

certify the class without prejudice, allowing Plaintiffs to file an amended motion to address issues
related to adequacy. On September 18, 2009, the Court certified this case as a class action. Docket
No. 101.
9. The parties engaged in extensive discovery over a period of approximately

two years.

Discovery included the Plaintiffs submitting multiple sets of interrogatories and requests for
production of documents, the depositions oftwo proposed class representatives, depositions of

key

Capital One employees and product managers, as well as depositions of key Stonebridge Benefit
Services employees, claims managers and business managers. Stonebridge Benefit Services is

Capital One's vendor for Payment Protection marketing, product management and claims
management.
10. Approximately 90,000 documents were produced by Capital One and Stonebridge

Benefit Services and each document was reviewed, analyzed, sorted and categorized. Thousands of
these documents were considered to be key documents and those documents were extensively

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reviewed and analyzed in preparation for depositions and in preparation for triaL.
11. Extensive conversations and negotiations were held with counsel for Capital One

concerning the content and timing of document production, disputed areas of inquiry, defining
relevant areas for discovery and many other matters related to the document production and
scheduling of witnesses for deposition.

12. This case was scheduled for trial during the December, 2010 trial term, and at all

times the undersigned prepared this case for trial as discovery and pretrial matters proceeded.

13. At the time settlement of this case first appeared to be possible, during the first
mediation, Plaintiffs were preparing to take 3 depositions of accounting personnel, and had engaged

in extensive deposition preparation and consultation with their expert witnesses and accountants.
D. Interlocutory Appeal

14. Capital One petitioned for permission to perfect a Rule 23(f) interlocutory appeal to

the United States Court of Appeals for the Eleventh Circuit (the "Eleventh Circuit") challenging

class certification. On May 4, 2010, the Eleventh Circuit issued a ruling declining to hear the
interlocutory appeaL.

E. Third-party discovery

targets was Stonebridge Benefits

15. Chief amongClass Counsels' third-party discovery

Services ("Stonebridge"), a vendor for the Payment Protection product that provided Capital One
with Payment Protection related services and recommendations for marketing, product management,

product analysis, business analysis, and claims management. Thousands of documents were
provided by Stonebridge and reviewed by Class Counsel, and four employees and product managers

from Stonebridge were deposed.

III. EXPERT WITNESSES
Forensic Accounting Consultants,

16. Class Counsel retained Vince Milano, c.P.A., of

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P .C. Mr. Milano is a recognized expert in accounting and auditing issues in banking practices and
in accounting by publicly held companies. While Class Counsel were preparing for depositions, Mr.

Milano provided analysis and litigation support.
17. Class Counsel retained Scott Hakala, a Ph.D. economist, a Director in CBIZ

Valuation Group, LLC, a national business valuation and consulting firm. Mr. Hakala has prior
experience in litigation with Capital One and provided valuable advice and analysis of business
practices and accounting. Mr. Hakala conducted damages studies.
18. Class Counsel retained attorney Benjamin Hawkins who specializes in legal issues

related to electronic discovery. Plaintiffs additionally engaged "Messaging Architects" to help
develop deposition strategy for depositions of

Capital One's technical experts in electronic matters.
Peter Olsen, data analyst

Messaging Architect's employee, Greg Smith, attended the deposition of

for Capital One. Capital One's business records are all contained in databases and Plaintiffs sought

methods for determining the content of the database and how to efficiently extract information
relevant to the class claims.
19. Class Counsel retained Dr. Jeffrey Thomas, an expert in insurance for matters related

to insurance products, and the state and federal regulatory structure governing insurance and

insurance-like products such as debt cancellation or debt suspension products.

iv. SETTLEMENT NEGOTIATIONS AND THE SETTLEMENT AGREEMENT
20. In the midst of scheduling and taking depositions, the parties attended Court-ordered

mediation before a professional mediator, Peter Grilli. The first mediation took place in Tampa,
Florida on March 31,2010. At this initial mediation session, the possibility of settling the Plaintiffs'

claims on a national basis was first raised. A second mediation was held on April 20, 2010, and a

third mediation was held on May 20,2010. Each mediation was arms-length and hard fought, and
significant progress was made in each mediation. Following the third in-person mediation, Mr. Grilli

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continued to work on settlement byuse oftelephone calls, again making significant progress towards
settlement. Subsequently, the undersigned traveled to San Francisco to meet with Capital One's

counsel on May 26, 2010 and continue settlement negotiations. The parties reached a preliminary
settlement agreement that was the subject of continuing discussion, drafting, re-drafting, and further

negotiation that spanned approximately two months. On August 13, 2010, Plaintiffs filed a Motion

for Leave to File a 4th Amended Complaint, and the parties jointly filed a Motion for Preliminary
Approval of Class Action Settlement and a Memorandum of Law in support.

V. CLASS COUNSEL FORMED A COALITION OF ATTORNEYS TO FACILITATE
NATIONWIDE SETTLEMENT
21. The parties endeavored to settle all pending litigation in the U.S. relating to the
Payment Protection product, and sought inclusion of all attorneys and all pending lawsuits

throughout the country in the settlement agreement. The undersigned reached out to all counsel of

record in cases against Capital One in which violations of state and federal law related to the
Payment Protection product were alleged. As a result of weeks of negotiations, all counsel agreed
to work together to achieve a national settlement of all claims. Those cases (non Florida cases) and

their respective counsel are as follows:
(1) Bailey, Perrin and Bailey, Craft Hughes Law, P.C.; and Harrson, White, Smith &

Coggins P.C., Salazar, et al. v. Capital One Bank, et al., U.S. Dist. Ct. South
Carolina, Spartanburg Division Case c.A. No.: 7:10-cv-00021-HFF;
(2) Glancy, Binkow & Goldberg, LLP; Murray, Frank & Sailor, LLP; Taus, Cebulash
and

Bank, eta!., U.S. District

Landau, LLP, McCoy, etal. v. Capital One

Court, S.D.

California, Case Number 3:10-cv-00185-L-CAB;
(3) Golomb and Honik, P.c., Carney Williams, PLLC, Owings Law Firm, Carter
Walker, PLLC, Carr, et al., v. Capital One Bank, et al., U.S. Dist. Ct., Dist. of

Jersey, Case Number 1:10-cv-Ol014-JS;
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New

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(4) Golomb and Honik, P.C., Carney Wiliams, PLLC, Owings Law Firm, Carter

Walker, PLLC, Blackie, et aL. v. Capital One Bank, et al., U.S. Dist. Ct. E.D.
Pennsylvania, Case No. 2:

1

0-cv-00823-BMS;

(5) Jackson and McGee, LLP, Carney Williams, PLLC, Owings Law Firm, Carter

Walker, PLLC, Watlington, et aL. v. Capital One Bank, et al., U.S. Dist. Ct. Middle
District of

North Carolina, Case No. 1:10-CV-00171-AU-WWD;

(6) Carney Wiliams, PLLC, Owings Law Firm, Carter Walker, PLLC, Smith, et aL. v.
Capital One Bank, et al., E.D. Ark, Case No. 4-10-CV-0160SWW;
(7) Lozeau Drury, LLP, Carney Wiliams, PLLC, Owings Law Firm, Carter Walker,

PLLC, Mitchell, et aL., v. Capital One Bank, et aL., U.S. District Court, Central
District of

California, Case Number CVI0-2672-SVW;

(8) Shepherd, Finkleman, Miler & Shah, LLP, Taus, Cebulash and Landau, Murray,

Frank & Sailer, LLP, Sullvan v. Capital One Bank, et al. USDC for District of
Connecticut; Case No: 3:10-cv-00092.

Each of these law firms has performed valuable work in advancing the interests of the Class, in
attending mediation sessions or supporting the attorneys attending mediation sessions, and each has

been instrumental in achieving resolution of the claims against Capital One.

VI. THE SETTLEMENT AGREEMENT
22. The Settlement Agreement allows Capital One cardholders to submit claims for

reimbursement for fees paid for Payment Protection. Beginning in June, 2010, in response to the

litigation and other factors, Capital One began a remediation program that refunded fees and
supplied benefits to certain Capital One cardholders who paid for payment protection but were
denied Payment Protection benefits due to status at the time of purchase of the product, among other

reasons. The value of the remediation program is estimated to be $45 million dollars.

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23. The settlement achieved by Class Counsel is a claims-made settlement with an
estimated value of $205 million. Capital One also agreed to pay attorney fees and costs not to

exceed $12.8 million in addition to the settlement for Class members. Under this agreement,
attorney fees and costs wil not reduce the amounts available to Class members.
24. Moreover, the settlement has additional virtues. Because the settlement allows claims
back to January 1, 2005, (in

28, 2003), the statutes oflimitations defenses

Florida back to September

available to Capital One are waived for that time period.
VII. PLAINTIFFS' RISK AND BENEFIT ANALYSIS

25. By the time the parties agreed to settle this litigation, Class Counsel had a detailed
understanding of the merits of the Class's claims, the litigation risks present in the case, and the

viability of Defendants' defenses. Although the case was mostly prepared for trial at the time of
settlement, key depositions in the areas of accounting and damages remained to be taken and expert
witnesses remained to be deposed. Ifthe case had proceeded to trial, substantial additional expenses

would have been incurred, primarily with regard to expert witnesses. This does not, of course,
motion practice and discovery, and the respective trials ifthis case had

include the additional costs of

proceeded separately in each jurisdiction in which the other Payment Protection cases were filed.
the substantial benefits the Settlement provides, the risks Plaintiffs faced in establishing

In light of

the elements of

Defendants' liability, the risks inherent in proving damages, and the risk that this

Court (or another trial court) or an appellate court would dismiss the claim, reverse a verdict or
judgment, Class Counsel believe that the proposed Settlement is fair and adequate and in the best
interest of the Class.
26. The benefit to the Class is significant. Class members in every state in the United

States can receive recovery attributable to fees paid for Payment Protection from January 1, 2005
forward, statutes of

limitations are waived, defenses to claims are waived, and litigation risks are

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avoided. In Florida, the claims period begins on September 28,2003 because these claims were filed
years earlier than other pending claims.

27. Based on the factors set forth above, the Settlement amply satisfies the requirements
of

Fed. R. Civ. P. 23(a) and 23(b)(3), warranting final certification by the Court.

VIII. THE SETTLEMENT IS FAIR, REASONABLE, ADEQUATE AND WARRNTS
FINAL APPROVAL
28. On the one hand, Plaintiffs believe they would have prevailed on their claims against

the Defendants at trial; on the other hand, Defendants contend that Plaintiffs would faiL. Considering

the parties' divergent positions, the evidence in the case, the defenses available to Capital One, and

other problems that might have arisen and created significant complications for Plaintiffs, it is the
informed judgment of the undersigned, based upon their knowledge of all proceedings to date and
their extensive experience in litigating class actions, that the proposed Settlement before this Court
is fair, reasonable and adequate, in the best interests of the Class, and deserves approvaL.
29. Equally important, by the time the parties agreed to the Settlement, Representative

Plaintiffs had a comprehensive understanding of

the merits of

the Class's claims, the defenses to

those claims and the risks the Representative Plaintiffs and the Class faced. Indeed, prior to
Settlement Class Counsel reviewed and analyzed more than 90,000 pages of documents produced
by Defendants; met with experts in the fields of accounting, damages, and electronic discovery; and
participated in numerous mediation sessions with an experienced mediator. Although the risks were

substantial, Class Counsel were prepared to continue prosecuting the case.
30. Moreover, the magnitude and complexity of this case is remarkable. In short, the

Litigation focused on the marketing and management practices of a particular product of the largest

issuer of credit cards in the United States. The Litigation involved the interplay of state and federal

regulatory systems, complex business practices, and novel legal issues. In this regard, proof of
causation and damages at trial would have been a complex and difficult undertaking, making success
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at trial far from assured. Thus, it is evident that continued litigation against Defendants would be
of substantial duration and cost.
31. Further, despite the extensive amount of

investigation and discovery

undertaken thus

far, if the Litigation were to proceed, Plaintiffs would also have to conduct further document
discovery, take depositions, and designate experts. In addition, anticipated motions for summary

judgment would have to be briefed and argued, a pretrial order would have to be prepared, and
proposed jury instructions would have to be submitted. Finally, motions in limine would have to be
filed and argued, followed by a triaL.
32. Moreover, any

trial against the Defendants would have involved dozens ofwitnesses

and hundreds (if not thousands) of exhibits. Resolution of the expert issues alone could have
required substantial Daubert hearings as well as lengthy pre-trial hearings. The cost of experts over

the course of the litigation would have risen well into the milions of dollars. Should the case have
proceeded to trial, plaintiffs expected the entire trial to take several weeks. Moreover, whatever the

outcome of trial, appeal certainly would have been taken to the Eleventh Circuit and perhaps even

to the United States Supreme Court. All of the foregoing would have extended the case, thus
delaying the ability of the Class to recover for years, if at all, while being extremely expensive for
the parties. Settlement at this juncture results in a substantial and tangible present recovery, without

the attendant risk and delay of trial and appeals, as well as the associated expense.
33. In contrast, the Settlement at this juncture provides a substantial, immediate benefit

to a vast number of present and former credit card holders without the attendant risk and delay of
trial and appeals.
34. In short, continuing to litigate against the Defendants would mean a sharp and certain

rise in litigation costs without any corresponding certainty for a sharp (or any) rise in recovery.
Thus, the benefits of

the Settlement clearly outweigh the risks of continued litigation and is infinitely

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better than another possibility - no recovery at all.
35. In light of

as of

the substantial benefits that the Settlement provides to the Class, as well

the substantial risks Plaintiffs faced in establishing liability and damages, discussed below, as

well as the further inherent risks presented by prosecuting a complex class action before a jury, Class

Counsel believes that the proposed Settlement is clearly fair, adequate in the best interests of the
Class, and deserve this Court's approval.

ix THE FAVORABLE REACTION TO THE SETTLEMENT
36. Upon preliminary approval ofthe Settlement, the court-approved notice was mailed

to approximately 9 milion members of the Class. It advised the members of the Class of the
Settlement and of their rights in connection therewith, including their rights to exclude themselves
or to object to any aspect of the Settlement or Class Counsels' request for attorneys' fees and

reimbursement of litigation expenses. As of the date of this declaration, 43 objections have been
received by Class Counsel, each of

which is addressed below. i These numbers represent a fraction

of one percent ofthe Settlement Class. As such, Class Counsel respectfully submit that the favorable
reaction ofthe Class validates both the extraordinary

nature of

the Settlement and the reasonableness

of Class Counsels' fee and expense request.

37. Of the objections received, twenty-three (23) cardholders object to the individual
amounts to be received by cardholders because they feel they are inadequate. See Appendix, Tab
Nos. 1-22, and 73.
38. In a similar vein, another two (2) objections state the cardholders object on the

lIn addition to those letters classified as objections and requests for exclusions in connection
with this Settlement, Class Counsel received thirteen (13) responses that address additional concerns
discussed herein, but which are included in the objection total. See ii 47 below.

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grounds that they were sued by Capital One, had judgments entered against them in an amount
greater than they would receive in the Settlement, and, thus, feel they are entitled to a greater pro rata
share. See Appendix, Tab Nos. 23 and 24.

39. Thus, essentially, the above referenced twenty-five (25) objections challenge the

Settlement for not achieving the ceiling in damages. However, such a position does not embody the

essence of compromise, which is that the "best possible" recovery must be tempered by the risks of

further litigation. See Canupp v. Sheldon, Case No. 2:04-cv-260-FTM-99DNF, 2009 U.S. Dist.
LEXIS 113488, at *11 (M.D. Fla. Nov. 23, 2009) (noting "inherent in compromise is a yielding of
absolutes and an abandoning of

highest hopes"). As such, while these objections raise a legitimate

interest in achieving the best possible recovery, they do not state a ground for finding the Settlement,

which embodies a compromise negotiated at arms' length, deficient. See also ii 45 below.
40. Additionally, four (4) objections assert that they object on the ground that they never

had to use Payment Protection services. See Appendix, Tab Nos. 25-28. However, this ground does

not address any inadequacies in the Settlement.
41. One letter gives the reason for his objection as being that he was forced to file
bankrptcy. See Appendix, Tab No. 29. Another gives no grounds at all (see Appendix Tab No. 30),

while still another simply objects for not liking "any part" ofthe Settlement (see Appendix Tab No.
31). As such, these letters are conclusory at best and do not address any specific inadequacies in the

Settlement.
42. Another cardholder objects to the Settlement on the ground that the amount of

time

to "seek legal orientation and do research for this case was not appropriate and extremely short," and

the notice instructed her not to call or write the court or court clerk's offce for more information.
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See Appendix, Tab No. 32. While the notice did advise cardholders not to contact the court or court

clerk office's for more information on the Settlement, it plainly provided, in a section entitled
"Where Can I Get More Information About the Lawsuit," that additional information could be
obtained through Class Counsel and set forth contact information for Class CounseL. See Notice at
p. 6. Thus, class members were adequately notified of how to obtain information regarding the

Settement.
43. Lastly, one cardholder - Mr. Griffis - objects to the Settlement because it does not

provide "automatic" relief to Settlement Class members. See Appendix, Tab No. 33. First, Mr.
Griffis's assertion is somewhat misleading, calling for clarification. The recovery obtained as a
result of this Action comes in two forms: (1) direct payment through the remediation program, and

(2) claims-made payments or credits. With regard to the former, Capital One has already paid
approximately $45 million through the remediation program. See ii 21 above. With regard to the
latter, which has an estimated value of $205 milion, class members must return a one-page claim
form, signed under penalty of perjury.2 Thus, there are no umeasonable obstacles to participating
in the Settlement. 3

2Notably, this is a common and accepted practice in common fund cases.
3In support of

his contention that the Settlement structure minimizes the number of claims,

Mr. Griffis makes the blanket assertion that "given the historical claims rates ofless than 10%, the
failure of
the Settlement Agreement to require automatic payment benefits may make as much as a
90% difference in the total value of the settlement." See Appendix, Tab 31 at p. 2. However, Mr.
Griffis cites no authority for this position. Moreover, this argument ignores the facts that Capital
One has already paid out approximately $45 milion through the remediation program and that

reputable mediator Peter Grilli certified that "( t Jhe conduct of counsel and party representatives was
professional and adversarial throughout the mediation discussions. Significant disagreements

surfaced requiring the scheduling of additional mediation sessions, telephone meetings and caucuses.

The negotiations were complex and difficult, and conducted at arms' length and in good faith on
(continued...)
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44. Equally important, the Settlement ensures the best notice practicable by providing for

direct mailing to approximately 9 million potential Class members. As such, all Class members wil

have a fair opportunity to participate in the Settlement. Structuring the Settlement in this regard
allowed Class Counsel to maximize the relief available to individual class members who take the

minimal steps necessary to participate. For example, in common fund cases, attorneys' fees and
administrative fees are paid out of the fund, thereby reducing the relief available to class members.
In comparison, here the fees and costs are being paid separately, and were negotiated only after the
recovery for the Class was agreed upon.4
45. In short, the majority of the objection letters question the Settlement on the

sufficiency of the amount being paid to each Settlement Class member. First, it is important to note
that the above-referenced objections to the Settlement were received out of a total mailing of

approximately 9 milion, representing a fraction of one percent. See Lipuma v. Am. Express Co.,

Case No. 04-203l4-CIV-ALTONAGA, slip op. at p. 45 (S.D. Fla. Dec. 20, 2005) (noting forth-one

(41) objections out of a mailing of approximately 8.8 milion "militates in favor of approval").
Second, and as noted above, while Class Counsel is mindful that each member of the Settement

3(oo.continued)

both sides." Grilli Decl. ii 4 (attached as Exhibit F to the Joint Declaration previously filed with the
Court); see also Lipuma v. Am. Express Co., Case No. 04-20314-CIV -ALTONAGA, slip op. (S.D.

Fla. Dec. 20, 2005) (approving claims-made settlement despite objection that the claims-made
structure should be replaced by a direct-credit format).
4Based on their experience, Class Counsel are mindful that some Class members may choose

not to participate in claiming Settlement benefits for any number of completely legitimate reasons,
including they never had to use Payment Protection and do not feel strongly either way, or they

generally do not like to involve themselves in litigation. Bearing this in mind, it is Class Counsel's
beliefthat the structure utilized in this Settlement made the settlement terms more favorable to those
Class members who care to participate.
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Class desires the "best possible" recovery, Class Counsel is also mindful that "a juiy verdict in
(plaintiffs' J favor against the settling Defendant is by no means a certainty." Biben v. Card, (19911992 Transfer BinderJ Fed. Sec. L. Rep. (CCH) ii96,512 at 92,330 (W.D. Mo. Dec. 10, 1991). Thus,

in harmonizing these two sentiments, Class Counsel tempered the "best possible" recovery by the
risks of further litigation during the negotiation process. See Canupp v. Sheldon, Case No. 2:04-cv-

260-FTM-99DNF, 2009 U.S. Dist. LEXIS 113488, at *11 (M.D. Fla. Nov. 23, 2009) (noting
highest hopes"). In doing

"inherent in compromise is a yielding of absolutes and an abandoning of

so, it is Class Counsels' informed belief

that the immediate and substantial benefits provided in the

Settlement are fair and represent a better option than no recovery at alL. Third, the proposed Plan of

Allocation was formulated (i) only after Class Counsel consulted with experts in the areas of
accounting and damages, and (ii) in a fair and just way to ensure an equitable distribution among

Class members. Fourth, it must also be noted that the objectors had the choice to opt out of the
Settement and preserve their claims but chose not to do so. Consequently, the small number of

objectors have not presented a sufficient basis for this Court to reject the proposed Settlement.
46. Six (6) responses fied with the Court and labeled objections, upon furtherreview by

Class Counsel, appear not to state an objection to the Settlement, but, rather, raise other concerns or
issues. More specifically, one letter indicates the cardholder does not know what to do. See

Appendix Tab No. 34. Similarly, another cardholder simply states she does not want to do anything

to jeopardize her current payment plan with Capital One. See Appendix Tab No. 35. In this same
vein, three cardholders seem to believe the notice was a collection letter, and they write about their

ability, or rather inability, to make payments. See Appendix Tab Nos. 36, 37 and 72. The sixth of
these letters states in general terms that she just wants what belongs to her. See Appendix Tab Nos.
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38. Nevertheless, because these six responses appear as objections on the Court's CM/ECF system,

they have been included in the total number of objections received.
47. In addition to the objections set forth above, Class Counsel received responses that

did not specifically state either that the cardholder was objecting or requesting to be excluded, but
requested (1) additional information (see Appendix, Tab Nos. 39-41); (2) help with another concern

and/or claim (see Appendix, Tab Nos. 42-46); or (3) that their account or record be cleared (see
Appendix, Tab Nos. 47-50). In addition, one letter informed Class Counsel that the cardholder was

her sister. See Appendix, Tab No. 51. Importantly, even assuming these letters could be construed

as objections to the Settlement, the total number of objections stil falls well below one percent of
the Settlement Class.

48. Lastly Class Counsel received three (3) objections that made blanket objections to

any award of attorneys' fees and reimbursement oflitigation expenses (see Appendix, Tab Nos. 15,
52, and 73), three (3) objections to an award of attorneys' fees and reimbursement of litigation

expenses in the amount of$12.8 milion (see Appendix Tab Nos. 33 and 53)5, and one objection to

the award of service fees (see Appendix Tab No. 54). As discussed in more detail below, these
objections do not raise an adequate basis for denying the requested fee award.
49. First, as stated in Plaintiffs' Motion for Award of Attorneys' Fees, Reimbursement

of

Litigation Expenses, and Approval of

Service Payments to Class Representatives, based upon the

relevant factors, Class Counsel are entitled to an award of reasonable fees and expenses. Moreover,

based upon a review of fees awarded in similar cases, the fee requested in this Action is on the low

50bjectors Bradley Estep and Judy Matt filed their objections jointly. See Appendix Tab No.
53.

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end, representing less than 5% of the estimated recovery of $250 milion and a lodestar multiplier
of

just 1.49.6 See In re Warner Comm. Sec. Litig., 618 F. Supp. 735,749 (S.D.N.Y. 1985) ("In view

of the complexity of the case, the risk that litigation would produce no recovery and the quality of

representation provided by plaintiffs' counsel, plaintiffs' counsel seek to apply a multiplier of
approximately 2.26 to the lodestar. Such a multiplier appears to be at the lower end ofthe range of
multipliers used in other large cases."). Equally important, the requested fee and expense award was

negotiated after the reliefto the Class was agreed to, and Capital One has agreed to pay this amount

separately from the benefits achieved for the Class. Thus, the fees and expenses applied for wil not

reduce the value being realized by each Settlement Class member. On this additional basis, the
requested fee award is fair and reasonable.

50. Second, as set forth above, there has already been a payout of $45 million, and the
Claims Administrator has received over 100,000 claims with nearly two more months to submit
claims. In this regard, Objector Griffis seems to concede that the requested fee and expense award

6Class Counsel have provided these valuations and calculations to the Court as a percentage

and lodestar cross-check in accord with applicable caselaw. At the same time, Class Counsel have
consistently
represented that the claims-made portion ofthis Settlement was just that, requiring each
Eligible Class Member to submit a valid claim form. Accordingly, Objectors Estep and Matt's
argument that there was no common fund created here is inapposite. In a similar vein, Objectors
Estep and Matt's contention that a multiplier is inappropriate unless the Court makes a fìnding that

the hourly rates are inadequate is without merit. See Appendix Tab No. 53 at p. 7. Rather, a
multiplier may be applied to a lodestar calculation "to compensate for the risk associated with a
contingency fee," among others. Davis v. Locke, 936 F.2d 1208, 1215 (11 th Cir. 1991); Harris v. Ft

Myers, 624 F.2d 1321, 1325 (5th Cir. 1980) ("The factor of contingency is ordinaiily regarded as the
most important single ingredient in augmenting an hourly
rate."). Moreover, while Objectors Estep

and Matt's reliance on claselaw out of Ohio is not controlling, it further demonstrates the
reasonableness of the requested fee under a lodestar analysis. See Shannon Van Horn et al. v.
Nationwide Property & Casualty Ins. Co., et aL., Case NO.1 :08-605 (N.D. Ohio, 2010), Docket No.
308, p. 10 (awarding a lodestar multiplier of approximately 1.2).

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of $12.8 milion is fair and reasonable. See Appendix Tab No. 33 at p. 5 ("To the extent that the
value of valid claims submitted in this case total at least $50 milion, (Objector GriffisJ has no

objection to an award of$12.8 milion in fees. "). This is apparently because a fee and expense award

of $12.8 represents approximately 25% of $50 milion, which many courts recognize as falling
withing the benchmark range for awarding attorneys' fees. Camden 1,946 F.2d at 774-75. ("The

majority of common fund fee awards fall between 20% to 30% of the fund."); see also Managed
Care Litig. Class Plaintif v. Aetna, Inc., MDL No. 1334,2003 U.S. Dist. LEXIS 27228, at *16
(S.D. Fla. Oct. 24, 2003) ("The total amount of

fees requested (the fee and cost payment, less Class

the settlement's value is at

counsel's cost) falls withing the 'benchmark' range of25-30% even if

one objector's suggested low end. . . .");1n re Sunbeam Sec. Litg, 176 F.Supp. 2d 1323, 1334 (S.D.
Fla 2001) (25% fee award); Waters v. Intl Precious Metals Corp., 190 F.3d 1291 (11 th Cir.

1999)(awarding 33 1/3%); Diaz v. Hllsborough County Hosp. Authority, 2000 WL 1682918 (M.D.

Fla. Aug. 7, 2000)(awarding 33%).
51. Third, the requested fees and expenses were necessary to prosecute and settle this

Action, and are fair and reasonable. In this regard, while Objectors Estep and Matt contend that
Class Counsel's hourly rate should be limited to that which is appropriate in the Tampa area, they
Florida. In contrast, Class

fail to present any evidence on approved hourly rates within the State of

Counsel previously supplied this Court with evidence that rates of$550 to $765 are appropriate in
the State of

Law in Support of

Florida. See Plaintiffs' Memorandum of

Plaintiffs ' Motion for Award

of Attorneys' Fees, Reimbursement of Litigation Expenses, and Approval of Service Payments to
Class Representatives atp. 9; SECv.Mut. Benefits Corp., Case No. 04-60573-CIV-MORENO, 2009

rates of$550 to $765 in the State

U.S. Dist. LEXIS 118760, at *15 (S.D. Fla. Dec. 7,2009) (noting

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Florida).7
52. In a similar vein, Class Counsels's out-of-pocket expenses were advanced on behalf

ofthe Class and were necessary and reasonable. Notwithstanding, Objectors Estep and Matt make
blanket challenges that Class Counsel's expenses as being excessive. For example, Objectors Estep

and Matt claim that out-of-expenses for advertising should be rejected because "what advertising

was necessary to prosecute this case?" See Appendix Tab No. 53 at p. 9. To explain, in
representative litigation that potentially involves milions of consumers, it is necessary for plaintiffs'

attorneys to conduct a thorough investigation of the alleged facts, which includes a reasonable
inquiry into the scope of the alleged wrongdoing and the extent of the alleged wrongdoing. Not

being privy to the Defendants' records, Plaintiffs' Counsel in this Action participated in an
advertising campaign to reach the affected class regarding the claims asserted against Capital One.

Furthermore, advertising expenses frequently occur in complex class action litigation. To this end,
the advertising expense in this Action was reasonable, especially given that the Class in this Action

is comprised of approximately 9 million cardholders throughout the United States. Similarly,

70bjectors Estep and Matt provide the cite Carpenters Health & Welfare Fund v. Coca-Cola

Co., 587 F. Supp. 1206 (N.D. Ga. 2008) as rejecting the inclusion of forensic accountants in a
lodestar calculation; however, the citation 587 F. Supp. 1206 is to a 1984 opinion styled United
States v. Alled Chemical Corporation out of the Northern District of California that has absolutely
nothing to do with lodestar calculations. See id at 1206 ("This matter is before on defendant Santa
Fe's motion to dismiss the fifth cause of action for failure to state a claim upon which relief

may be

granted and on defendant Allied Chemical Corporation's motion to dismiss the remaining four
causes of action for failure to state a claim upon which relief may be granted or, in the alternative,
for a more definite statement."). As such, Objectors Estep and Matt have given this Court no reason
to exclude expenses for forensic accountants that performed work in connection with this Litigation.
Moreover, fees for such experts are routinely held compensable in similar actions. Similarly, the
expense for contract labor should also be allowed, as such employees were necessary to assist in
handling the thousands of telephone calls received by Class Counsel in connection with the
Settlement of this Litigation.
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printing and copying charges in the amount of$3l ,000 for multiple law firms over a period spanning

almost four years of intense litigation for the purpose of propounding and responding to discovery,

getting a Class certified, responding to Defendants' motions to dismiss and permission to appeal is

more than reasonable. What is more, the majority of the circuits agree that expenses for online
research in performing such tasks, among others, are compensable. See Trs. Of the Constr. Indus.
&

Laborers Health & Welfare Trustv. Summit Landscape Cos., 460 F.3d 1253, 1258 (9th Cir. 2006)

(noting that the Eighth Circuit is the only circuit that has endorsed the view the "computer-based
legal research must be factored into the attorneys' hourly rate," and following the majority position
that "computerized research costs can, in appropriate circumstances, be recovered in addition to the
hourly

rates of attorneys."); Arbor Hil Concerned Citizens NeighborhoodAss 'n v. County of Albany,

369 F.3d 91,98 (2d Cir. 2004) ("If(the firmJ normally bils its paying clients for the cost of online
research services, that expense should be included in the fee award."); Inves Sys., Inc. v. McGraw-

Hil Cos., 369 F.3d 16,22 (1 st Cir. 2004) ("(C)omputer-assisted research should be. . . reimbursed
under attorney's fee statutes. . . so long as the research cost is in fact paid by the firm to a third-party

provider and is customarily charged by the firm to its clients as a separate disbursement."); Case by
Case v. Unifed Sch. Dist. No. 233, 157 F.3d 1243,1257-58 (10th Cir. 1998) ("Reasonable expenses
incurred in representing a client in a civil rights case (such as Westlaw charges J should be included

in the attorney's fee award if such expenses are usually biled in addition to the attorney's hourly
their out-of-pocket litigation

rate.").8 Accordingly, Class Counsel are entitled to reimbursement of

80bjectors Estep and Matt's reliance on Friskney v. American Park and Play, Inc., Case No.
inapposite
to the present facts as that case dealt with statutory costs available under section 1920, which allows
04-80457-CIV-RYSKAMP/VITUNAC, 2007U.S. Dist. LEXIS 14619 (S.D. Fla. 2000) is

only specific enumerated costs. Id. at *6.

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expenses.
53. Fourth, the Class Representatives in this Action played important and active roles in

the prosecution ofthis Litigation, and fully discharged their obligations, thereby helping to effectuate
protection laws. Each Class Representative provided all necessar

the policies underlying consumer

assistance to counsel during the prosecution of this case and actively participated in discovery,
including in some instances depositions. Accordingly, they are entitled to compensation for their
the Class.

personal efforts on behalf of

SETTLEMENT PURPOSES

X. THE CLASS SHOULD BE FINALLY CERTIFIED FOR

54. The Court's Order Preliminarily Approving the Settlement and Providing for Notice

preliminarily approved a Class for settlement purposes defined as "( 1) all natural persons who have

or had Capital One credit card accounts in the United States and who emolled in and were charged
for Payment Protection on or after January 1, 2005 through July 31,2010; or (2) all natural persons,

who had a billing address in Florida at the time of emollment in Payment Protection, who have or
had Capital One credit card accounts and who emolled in Payment Protection on or after September
28,2003 through July 3,2010. Any cardholder who filed for bankruptcy after emolling in Payment

Protection is excluded from the class."
55. The Class amply satisfies the requirements of

Federal Rule of

Civil Procedure 23(a)

and 23(b)(3), and warrants final certification by the Court for the purpose of effectuating the
Settlement.

A. The Class Satisfies the Reguirements of Rule 23(a)
56. Under Rule 23(a), class certification is appropriate where:
(1) the class is so numerous that joinder of all members is

impracticable,
(2) there are questions of law or fact common to the class,
(3) the claims or defenses ofthe representative parties are typical

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of the claims or defenses of the class, and
protect the

(4) the representative parties will fairly and adequately

interests of the class.

The Class in this Litigation easily satisfies each foregoing requirement.

1. Numerosity

57. Many courts have determined that the numerosity requirement is satisfied when a
proposed class involves at least 40 members. Plaintiffs need not show that joinder is impossible;

impracticability of joinder will suffice. Here, Capital One identified approximately 9 milion
potential Settlement Class members who were sent the court-approved Notice. Consequently, the
threshold for numerosity is readily met.
58. The number of

Class members in this Litigation, we estimate, well exceeds class sizes

that routinely satisfy Rule 23(a)'s numerosity requirement. Thus, the Class manifestly satisfies the
requirements of

Rule 23(a)(1).

2. Commonality
59. Rule 23(a)(2) requires that there be common questions oflaw or fact, not that every

question be identical or common. This criterion is satisfied where there is even one single issue
common to all members of the Class, and therefore it is easily met in this case.
the

60. Here, Plaintiffs, as the court-appointed Class Representatives, and members of

Defendants. Indeed, Plaintiffs' claims

Settlement Class all challenge the same course of conduct of

and those of other Settlement Class members all arise from the same body of facts as they were all

injured by the same series of misleading and deceptive statements. In addition, the claims of
legal theories. Accordingly,

Plaintiffs and other Settlement Class members arise under identical

there are numerous common issues of law and fact in the present case, including:
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a) Whether the defendants' sales, biling and marketing scheme is fraudulent,
deceptive, unlawful and/or unfair;
b) Whether Capital One's common and uniform sales, billing and marketing

schemes related to the Payment Protection product constitute a deceptive
trade practice;
c) Whether Plaintiffs and the members ofthe Class are entitled to restitution of
all amounts acquired by defendants through their common and uniform
scheme;

d) Whether Plaintiffs and the members of the Class are entitled to injunctive
relief requiring the disgorgement of all wrongfully collected fees by Capital
One;
e) Whether Plaintiffs and the members of
the Class are entitled to prospective

injunctive relief enjoining Capital One from continuing to engage in the
fraudulent, deceitful, unlawful and unfair common scheme as alleged herein;
and

h) Whether Plaintiffs and the members of the Class are entitled to recover
compensatory and punitive damages as a result of

the defendants' wrongful

scheme.
3. Typicality
61. The typicality

requirement set forth in Rule 23(a)(3) requires an inquiry

into whether

the Representative Plaintiffs' claims are based upon a legal theory that differs from that upon which
the claims of other Class members are based. "Typical" does not mean identicaL. Instead, the

questions oflaw and fact merely need to arise out of the same legal or remedial theory.
62. Representative Plaintiffs' claims are typical ofthe claims ofthe members ofthe Class

they seek to represent because Representative Plaintiffs, and the Class members each sustained
Defendants' wrongful conduct. The Representative Plaintiffs' claims arise

damages arising out of

from the same course of conduct and are predicated on the same legal theories as the claims of other

Class members, thus satisfying Rule 23(a)(3).
4. Adequacy of Representation
63. The adequacy

requirement under Rule 23(a)( 4) is designed to ensure that absent class

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members' interests are fully protected, while serving to uncover conflicts of interest between named
represent the class requires

plaintiffs and a class. Demonstrating that the named plaintiffs adequately

a showing that: (1) the named plaintiffs have interests in common with, and not antagonistic to, the
class' interest; and (2) plaintiffs' attorneys are qualified, experienced, and generally able to conduct

the litigation.
64. Here, there are no conflicts between the Representative Plaintiffs and the other Class

members. More particularly, the Class Representatives' interests are directly aligned with, and not

in conflict with, the interests ofthe Settlement Class members.

65. There also can be no dispute that Class Counsel are capable of prosecuting this
litigation. Indeed, Class Counsel have extensive experience in prosecuting securities and consumer
fraud class actions. See Firm Resumes previously filed with the Court on October 1, 2010.
66. Furthermore, the Settlement is the product of lengthy negotiations with eminently

qualified defense counseL. The aggregate size of the Settlement validates the excellent quality of
Class Counsel's representation of the Class.

B. Predominance of Common Questions and Superiority of the Class Action to
Other Methods of Adjudication
67. Rule 23(b)(3) authorizes class certification where: (1) the court finds that the

questions of law or fact common to the members of the class predominate over any questions
affecting only individual members, and (2) a class action is superior to other available methods for
the fair and efficient adjudication of

the controversy. Both ofthese circumstances are present in this

Litigation.

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1. Common Legal And Factual Questions Predominate Over Individual
Issues
68. Here, the issue of

Capital One's liability

is centered on whetherrepresentations made

by Capital One in connection with its Payment Protection program were misleading, deceptive
and/or unconscionable, and these issues predominate over any individual issues that theoretically
might exist. See, e.g., Bank One, 2002 U.S. Dist. LEXIS 8709, at *22 ("The issues oflaw and fact
that flow from Defendants' alleged misstatements and omissions predominate over any individual
issue. "). Thus, the evidence needed to prove the claims of all Class members would be substantially
the same. Accordingly, central issues therefore predominate over any individual issues that

theoretically might exist in the Litigation.
2. Superiority of the Class Action to Other Methods of Adjudicating

Plaintiffs' Claims
69. When confronted with a request for settlement-only class certification, it is largely

unnecessary for a district court to inquire whether the case, if tried, would present intractable
management problems. Nevertheless, absent class action treatment, the expense of individual

litigation of the claims presented in this Litigation would likely prevent Class members from
obtaining any recovery of their losses. Where, as here, each Class member suffered harm, but the

possibility and amount of individual recovery may not be sufficient to make individual litigation
worthwhile, a class action is the superior method for addressing these claims.

70. Based on the factors set forth above, the Class amply satisfies the requirements of
Fed. R. Civ. P. 23(a) and 23(b)(3), warranting final certification by the Court.
C. Notice To the Class
71. In its Preliminary Approval Order, the Court not only granted preliminary approval

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the Settlement and conditionally certified the Class for purposes of effectuating the Settlement,

but it also approved, inter alia, the Notice of Pendency and Settlement of Class Action (the
"Notice") to be sent to all potential Class members in connection with the proposed Settement.
72. Pursuant to the Preliminary Approval Order, the court-approved Notice was sent to

approximately 9 milion Capital One cardholders.
73. The Notice informed the Class of

the terms of

the settement, including the proposed

Plan of Allocation; an explanation regarding the attorneys' fees and costs sought; the name,

telephone number, and address of Class Counsel who wil be reasonably available to answer
questions from class members concerning any matter contained in the Notice; a brief statement
explaining the reasons why the parties propose the settlement; and the rights and options of the

Settlement Class Members in relation to the Settlement. As such, the Notice fairly apprized the
potential class members of the settlement and their individual rights thereto. the existence of the
Settlement.
74. Moreover, copies of the Notice and Claim Forms, the Settlement Agreement, the

operative Complaint, Plaintiffs' Memorandum of

of Attorneys' Fees, Reimbursement of

Law in Support of

Plaintiffs' Motion for Award

Litigation Expenses, and Approval of

Service Payments to

Class Representatives, and relevant Orders relating to the Settlement were posted on a website at

www.spinellsettlement.com.

75. The Notice informed Settlement Class members that the deadline for persons to
exclude themselves from or object to the Settlement was November 3, 2010.
76. Thus, the deadline for exclusions and objections has now passed. To date, out of

the

entire mailing of approximately 9 million individual notices to Class members, 2036 Class members
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have requested exclusion from the Settlement (see Declaration of Settlement Administrator filed
November 4,2010 and Appendix, Tab Nos. 55-71). Another 393,007 notices have been determined

to be undeliverable by the Claims Administrator, rendering these additional opt-outs by default.
Lastly, forty-three (43) class members have objected to the terms ofthe Settlement and/or the award
of attorneys' fees, reimbursement of expenses, and service payments. See Appendix, Tab Nos. 1-38,
52-54, and 72-73.

77. Additionally, Class Counsel fielded thousands of telephone inquiries from Class

members. In this regard, Class Counsel retained bilingual call representatives to ensure that Spanish-

speaking callers would be provided an adequate explanation to any questions or concerns.

XI. CONCLUSION
78. Taken together, the relevant criteria for finding a class action settlement fair and

reasonable are plainly satisfied in this case and the objectors have given this Court no reason to
discount these findings. The Court should accordingly give its final approval to the Settlement.

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We declare under penalty of perjury that the foregoing is true and correct on this 5th day of
November,

2010.

4L~

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