Martin v. Medicredit, Inc. et al

Filing 105

MEMORANDUM AND ORDER APPROVING FINAL CLASS ACTION SETTLEMENT. SO ORDERED. Signed by District Judge E. Richard Webber on 5/15/2018. (CBL)

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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
MARILYNN MARTINEZ, et al.,
Plaintiffs,
Consolidated Case
v.
No. 4:16CV01138 ERW

MEDICREDIT, INC., et al.,
Defendants.
TODD HORNBERGER, et al.,
Plaintiffs,
v.
MEDICREDIT, INC.,
Defendant.
Rajesh Verma,
Plaintiff,
v.
MEMORIAL HEALTHCARE GROUP,
INC., et al.,
Defendants.

MEMORANDUM AND ORDER
This matter comes before the Court on Plaintiff’s Motion for Final Approval of Class
Action Settlement [99] and Plaintiff’s Motion for Attorney Fees and Reimbursement of Expenses
and Incentive Awards [98]. Defendants wrote a letter to the Court stating they agree with all the
1

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terms of the underlying proposed final order, except with respect to the cy pres recipient.
Plaintiff proposed the National Consumer Law Center (“NCLC”), which Plaintiff argues is
“closely aligned to the class’ interests to be protected by” the Telephone Consumer Protection
Act (the “TCPA”). Defendants state the NCLC’s primary activity regarding the TCPA has been
to lobby for expanded TCPA enforcement against organizations like Defendants. They state
settlement funds should not be improperly used to support one party’s counsel’s agenda, citing
S.E.C. v. Bear, Stears & Co., 626 F. supp. 2d 402, 415 (S.D.N.Y. 2009). Defendants propose this
Court designate Legal Services Corporation (“LSC”) as the recipient. LSC is a nonprofit legal
aid organization, and Defendants propose this Court direct funding to telephone services.
I.

BACKGROUND
This case originated as a class action under the TCPA, 47 U.S.C. § 227. Plaintiffs alleged

Defendants made prerecorded calls to cell phones without the prior express consent of the class
plaintiffs or the putative class members. The case was resolved with a settlement agreement,
which was preliminarily approved by this Court on December 15, 2017. The Court also set a
series of deadlines for notice to be sent to class members. Notice was sent to 498,418 class
members and 463,757 class members received a copy. Only eight opted out. The total settlement
amount is $5,000,000 to be divided pro rata among class members after expenses are deducted.
After attorneys’ fees and litigation expenses, each of the 28,406 class members who submitted a
valid claim will receive approximately $91.25. On May 15, 2018, the Court held a final approval
hearing, and the Court largely adopted parties’ proposed final settlement order. However, the
Court withheld resolving the issue as to identifying a cy pres recipient, should any funds remain
for distribution.

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II.

DISCUSSION
Under Federal Rule of Civil Procedure 23(e), the Court may only approve a proposed

settlement agreement if it finds that it is fair, reasonable, and adequate. In making that finding,
the Court must consider four non-exclusive factors: (i) the merits of the plaintiff’s case, weighed
against the terms of the settlement; (ii) the defendant’s financial condition; (iii) the complexity
and expense of further litigation; and (iv) the amount of opposition to the settlement. Prof’l
Firefighters Ass’n of Omaha, Local 385 v. Zalewski, 678 F.3d 640, 648 (8th Cir. 2012). “A
strong public policy favors [settlement] agreements, and courts should approach them with a
presumption in their favor.” Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1148-49 (8th Cir. 1999).
As part of evaluating whether to approve the settlement agreement, the Court must also assess
the reasonableness of the attorneys’ fees in the proposed settlement agreement. Jones v. Casey’s
General Stores, Inc., 266 F.R.D. 222, 230 (S.D. Iowa 2009).
The Court has considered these four factors and finds the factors weigh in favor of
approving the parties’ proposed agreement. The Court accordingly concludes the settlement is
fair, reasonable, and adequate. The Court likewise concludes Plaintiff’s request for attorneys’
fees and costs is also fair and reasonable. Accordingly, the parties’ proposed settlement
agreement will be adopted as set forth below.
With respect to identifying an appropriate cy pres recipient should there be any remaining
funds, the Eighth Circuit has held such a distribution “must be ‘for the next best use for indirect
class benefit,’ and ‘for uses consistent with the nature of the underlying action and with the
judicial function.’” In re BankAmerica Corp. Sec. Litig., 775 F.3d 1060, 1067 (8th Cir. 2015).
This purpose should be “as near as possible to the legitimate objectives underlying the lawsuit,
the interests of class members, and the interests of those similarly situated.” Id. To determine

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whether a recipient is “next-best,” the district court must conduct a thorough investigation,
whereby it “thouroughly explores alternatives” and looks for a recipient that “relates directly to
the injury alleged in this lawsuit and settled by the parties.” Id. (quoting In re Airline Ticket
Comm’n Antitrust Litig., 268 F.3d 619, 626 (8th Cir. 2001) and In re Airline Ticket Comm’n
Antitrust Litig., 307 F.3d 679, 682–84 (8th Cir.2002) (“Airline Tickets II ”) (alterations
omitted)). After thouroughly conducting an independent investigation, this Court finds Plaintiff’s
proposed recipient, the NCLC, closely approximates the interests of the class and is an
appropriate cy pres recipient.
Accordingly,
IT IS HEREBY ORDERED, ADJUDGED and DECREED as follows:
1.

The Settlement Agreement and Release dated November 28, 2017, including its

Exhibits (the “Agreement”), and the definition of words and terms contained therein, are
incorporated by reference and are used hereafter. The terms and definitions of this Court’s
Preliminary Approval Order (Dkt. No. 95) are also incorporated by reference into this Final
Approval Order.
2.

This Court has jurisdiction over the subject matter of the Action and over the

Parties, including all Settlement Class Members with respect to the Settlement Class certified for
settlement purposes in this Court’s Preliminary Approval Order, as follows:
The approximately 627,642 persons whose unique cellular
telephone number has been identified in the call data produced in
this litigation where the call records reflect Medicredit Inc. codes
“WN” or “DNK” or NPAS Inc. Smart Codes 11, 13, 15, 42, 584,
and 770.
A list of the telephone numbers that comprise the Settlement Class
is attached as Exhibit 6 to the Agreement and was filed under seal.
Excluded from the Settlement Class are the Judge to whom the
Action is assigned and any member of the Court’s staff and

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immediate family, and all persons who are validly excluded from
the Settlement Class.
3.

The Court hereby finds that the Agreement is the product of arm’s length

settlement negotiations between Plaintiffs Marilynn Martinez, Todd Hornberg, Eric Johnson, and
Rajesh Varma (“Plaintiffs”) and Defendants Medicredit, Inc. and NPAS, Inc. (“Defendants”).
4.

The Court hereby finds and concludes that Class Notice was disseminated to

persons in the Settlement Class in accordance with the terms of the Agreement and that the Class
Notice and its dissemination were in compliance with this Court’s Preliminary Approval Order.
5.

The Court further finds and concludes that the Class Notice and claims

submission procedures set forth in the Agreement fully satisfy Rule 23 of the Federal Rules of
Civil Procedure and the requirements of due process, were the best notice practicable under the
circumstances, provided due and sufficient individual notice to all persons in the Settlement
Class who could be identified through reasonable effort and support the Court’s exercise of
jurisdiction over the Settlement Class as contemplated in the Agreement and this Final Approval
Order.
6.

There were no objections to the Agreement.

7.

The Court hereby finally approves the Agreement and finds that the terms

constitute, in all respects, a fair, reasonable and adequate settlement as to all Settlement Class
Members in accordance with Rule 23 of the Federal Rules of Civil Procedure.
8.

The Court hereby finally certifies the Settlement Class for settlement purposes.

The Court finds for settlement purposes that the Action satisfies all the requirements of Rule 23
of the Federal Rules of Civil Procedure.
9.

The Court hereby approves the plan of distribution for the Settlement Fund as set

forth in the Agreement. The Claims Administrator is hereby ordered to comply with the terms of

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the Agreement with respect to distribution of Settlement Awards, the Second Distribution and
disposition of any Remaining Funds thereafter. Should any Remaining Funds be distributed, the
Court hereby approves the National Consumer Law Center (“NCLC”) as the cy pres recipients
who shall receive an equal distribution. The Court finds this organization is closely aligned with
the class’ interests.
10.

This Court hereby dismisses this Action, with prejudice, without costs to any

party, except as expressly provided for in the Agreement.
11.

As of the Effective Date, the Plaintiffs and each and every one of the Settlement

Class Members unconditionally, fully and finally release and forever discharge the Released
Parties from the Released Claims as fully set forth in the Agreement. In addition, any rights of
Plaintiffs and each and every one of the Settlement Class Members to the protections afforded
under Section 1542 of the California Civil Code and/or any other similar, comparable or
equivalent laws will be terminated.
12.

The Agreement (including any and all exhibits attached thereto) and any and all

negotiations, documents, and discussions associated with it will not be deemed or construed to be
an admission or evidence of any violation of any statute, law, rule, regulation or principle of
common law or equity, or of any liability or wrongdoing by Defendants, or the truth of any of the
claims. Evidence relating to the Agreement will not be discoverable or used, directly or
indirectly, in any way, whether in the Action or in any other action or proceeding, except for
purposes of demonstrating, describing, implementing or enforcing the terms and conditions of
the Agreement, the Preliminary Approval Order and/or this Final Approval Order.
13.

If for any reason whatsoever this Settlement fails to become effective for any

reason, the certification of the Settlement Class shall be void and the Parties and the Action will

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return to the status quo as it existed prior to the Agreement, and no doctrine of waiver, estoppel
or preclusion will be asserted in any proceedings, in response to any motion seeking class
certification, any motion seeking to compel arbitration or otherwise asserted at any other stage of
the Action or in any other proceeding. No agreements, documents or statements made by or
entered into by any Party in connection with the Settlement may be used by Plaintiffs, any
person in the Settlement Class, Defendants or any other person to establish liability, any defense
and/or any of the elements of class certification, whether in the Action or in any other
proceeding.
14.

In the event that the Settlement fails to become effective for any reason, the

money remaining in the Settlement Fund (including accrued interest), less expenses and taxes
incurred or due and owing and payable from the Settlement Fund in accordance with the
Agreement, shall be returned to Defendants within 15 days of the event that causes the
Agreement to not become effective.
15.

In the event that any provision of the Agreement or this Final Approval Order is

asserted by any Defendant as a defense in whole or in part to any claim, or otherwise asserted
(including, without limitation, as a basis for a stay) in any other suit, action or proceeding
brought by a Settlement Class Member or any person actually or purportedly acting on behalf of
any Settlement Class Member(s), that suit, action or other proceeding shall be immediately
stayed and enjoined until this Court or the court or tribunal in which the claim is pending has
determined any issues related to such defense or assertion. Solely for purposes of such suit,
action or other proceeding, to the fullest extent they may effectively do so under applicable law,
the Parties irrevocably waive and agree not to assert, by way of motion, as a defense or
otherwise, any claim or objection that they are not subject to the jurisdiction of the Court, or that

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the Court is, in any way, an improper venue or an inconvenient forum. These provisions are
necessary to protect the Agreement, this Final Approval Order and this Court’s authority to
effectuate the Agreement, and are ordered in aid of this Court’s jurisdiction and to protect its
judgment.
16.

By incorporating the Agreement and its terms herein, the Court determines that

this Final Approval Order complies in all respects with Federal Rule of Civil Procedure 65(d)(1).
17.

Class Counsel have moved pursuant to FED. R. CIV. P. 23(h) and 52(a) for an

award of attorneys’ fees and reimbursement of expenses. Pursuant to Rules 23(h)(3) and 52(a)
this Court makes the following findings of fact and conclusions of law:
(a)

that the Class Settlement confers substantial benefits on the Settlement Class

Members;
(b)

that the value conferred on the Settlement Class is immediate and readily

quantifiable (upon this Judgment becoming Final (as defined in the Agreement), Settlement
Class Members who have submitted valid Settlement Claim Certification Forms will receive
cash payments that represent a significant portion of the damages that would be available to them
were they to prevail in an individual action under the Telephone Consumer Protections Act
(“TCPA”);
(c)

that Class Counsel vigorously and effectively pursued the Settlement Class

Members’ claims before this Court in this complex case;
(d)
advocacy;

that the Class Settlement was obtained as a direct result of Class Counsel’s

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(e)

that the Class Settlement was reached following extensive negotiation between

Class Counsel and Counsel for Defendants, and was negotiated in good-faith and in the absence
of collusion;
(f)

that Settlement Class Members were advised in the Class Notice approved by the

Court that Class Counsel intended to apply for an award of attorneys’ fees in the amount up to
one third of the common fund, which is $1,666,650 and expenses in the amount of up to
$30,967.55 incurred in the prosecution of the Litigation, to be paid from the Settlement Fund;
(g) that no member(s) of the Settlement Class has (have) submitted written objection(s) to
the award of attorneys’ fees and expenses;
(h)

that counsel who recover a common benefit for persons other than himself or his

client is entitled to a reasonable attorneys’ fee from the Settlement Fund as a whole. See, e.g.,
Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980); Allen v. Tobacco Superstore, Inc., 475
F.3d 931 (8th Cir. 2007) discussing factors in fee awards relying on Johnson v. Georgia
Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974) and the requested fee award is consistent
with other fee awards in this Circuit; See Koenig v. United States Bank N.A. (in Re United
States Bancorp Litig.), 291 F.3d 1035, 1038 (8th Cir. 2002) (affirming class attorneys’ award of
one-third); and accordingly, Class Counsel are hereby awarded $ 1,666,666.00 for attorney fees
and $30,323.94 for reimbursed expenses from the balance of the Settlement Fund, which the
Court finds to be fair and reasonable, and which amount shall be paid to Class Counsel from the
Settlement Fund in accordance with the terms of the Agreement.
18.

The Class Representatives, as identified in the Preliminary Approval Order, are

hereby compensated in the amount of $7,500.00 each for their efforts in this case. See e.g. Lees

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v. Anthem Ins. Cos., 2015 U.S. Dist. LEXIS 74902, *10-11 (E.D. Mo. 2015) (citing cases and
approving service award of $10,000 for named Plaintiff).
19.

Pursuant Federal Rule of Civil Procedure 42(a)(2) and Local Rule 42-4.03, the

actions styled Martinez v. Medicredit, Inc., No. 4:16-cv-1138-ERW (E.D. Mo.), which was
previously consolidated with Hornberger v. Medicredit, Inc., No. 4:17-cv-0409-SNLJ (E.D.
Mo.), and Verma v. Memorial Healthcare Group, Inc., et al., No. 4:17-cv-2809-ERW (E.D.
Mo.), are hereby formally consolidated nunc pro tunc as of December 4, 2017.

So Ordered this 15th day of May, 2018.

E. RICHARD WEBBER
SENIOR UNITED STATES DISTRICT JUDGE