Corona v. Transcendent One, Inc. et al

Filing 194

FINDINGS AND RECOMMENDATION - IT IS HEREBY RECOMMENDED to Chief United States District Judge Laurie Smith Camp that: Plaintiff's Motion for Preliminary Approval of Class Action Settlement and for Conditional Certification of Settlement Class ( filing 190 ) be granted. The Proposed Order Granting Preliminary Approval of Proposed Settlement, Directing Notice to Class, and Setting Fairness Hearing (filing [192-3]) be approved, and that Joel Ewusiak, Gary Pearson, Christopher Roberts, and Sc ott Schutzman be appointed as class counsel. The Court schedule a final hearing to determine whether the proposed settlement is fair, reasonable, and adequate. A party may object to a magistrate judge's order by filing an objection within fourteen (14) days after being served with a copy of the findings and recommendation. Failure to timely object may constitute a waiver of any objection. Ordered by Magistrate Judge F.A. Gossett. (TCL )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
AMADOR L. CORONA, Attorney at )
Law, individually and on behalf of all )
other similarly situated persons,
)
)
Plaintiff,
)
)
V.
)
)
UNITED BANK CARD, INC., a )
corporation,
)
)
Defendant.
)
)

8:12CV89

FINDINGS AND
RECOMMENDATION

This matter is before the Court on Plaintiff’s Unopposed Motion for Preliminary
Approval of Class Action Settlement and for Conditional Certification of Settlement Class
(filing 190). For the reasons set forth below, the undersigned will recommend that the
Motion be granted.
BACKGROUND
This case was removed from state court on March 5, 2012. (Filing 1.) Plaintiff filed
an Amended Class-Action Complaint on March 21, 2013. (Filing 63.) Plaintiff’s Amended
Complaint generally alleges that merchants, such as Plaintiff, were unlawfully assessed “IRS
Processing Validation Charges.” (Id.) The Complaint asserts that Defendant Harbortouch
Payments, LLC (formerly United Bank Card, Inc.) breached its contracts with merchants and
was unjustly enriched by assessing and collecting these charges. (Id.)
The parties have reached a settlement. The National Class Action Settlement
Agreement and Release (“Agreement”) defines the proposed class as follows:
[A]ll Persons within the United States that are or were Harbortouch Merchants,
and that paid Harbortouch an IRS Processing Validation Fee and did not
receive a full refund, provided that the Person submitted a Merchant

Application to Harbortouch prior to February 1, 2009.1
(Filing 192-1.) The Agreement establishes a total settlement benefit amount valued at
$688,000, which, according to Plaintiff, is approximately half of the net total of the IRS fees
collected by Harbortouch from class members. The Agreement entitles Harbortouch’s
existing merchants to receive a credit for equipment needed by the merchants to use
Harbortouch’s credit card transaction services. The Agreement also entitles former
merchants to receive the same equipment credit or, alternatively, a cash payment. Under the
Agreement, Plaintiff will request a service award of $5,000 and class counsel will request
attorneys’ fees and expenses of $215,000. The payment of the service award, and attorney
fees and costs, will not reduce the value of the total benefits available to class members.
Harbortouch has agreed to pay the costs of class action administration.
Plaintiff now seeks an order (1) certifying the class for purposes of settlement; (2)
preliminarily approving the terms of the settlement agreement; (3) approving the parties’
proposed form and method for giving notice of settlement to the proposed class; (4) directing
that the notice be given to proposed class members; and (5) scheduling a final settlement
hearing. Harbortouch does not oppose the Motion.

1

Excluded from the class are:

(a) Persons that received a full refund of IRS Processing Validation Fees paid;
(b) Persons that believed, before signing the Merchant Application, that First
National Bank of Omaha or Harbortouch had a right under the contract to
unilaterally amend or modify contractual terms that would permit the
assessment of the IRS fees, after providing 30 days’ written notice;
(c) Harbortouch and its employees, officers, directors, and all persons with a
controlling interest, and Harbortouch’s legal representatives, predecessors,
successors and assigns; and
(d) Persons that submitted a valid and timely request for exclusion from the
Settlement Class.
(Filing 192-1.)
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DISCUSSION
Plaintiff seeks class-certification for purposes of settlement. Under the Federal Rules
of Civil Procedure, one or more members of a class may sue or be sued as representative
parties on behalf of all members if (1) the class is so numerous that joinder of all members
is impracticable (“numerosity”); (2) there are questions of law or fact common to the class
(“commonality”); (3) the claims or defenses of the representative parties are typical of the
claims or defenses of the class (“typicality”); and (4) the representative parties will fairly and
adequately protect the interests of the class (“adequacy of representation”). Fed. R. Civ. P.
23.
In assessing whether the numerosity component is satisfied, a number of factors are
relevant, including the number of persons in the proposed class, the nature of the action, the
size of the individual claims, and the inconvenience of trying individual suits. Paxton v.
Union Nat. Bank, 688 F.2d 552, 559 (8th Cir. 1982). “The commonality requirement is
satisfied if the claims of the class depend upon a common contention whose truth or falsity
will resolve an issue that is central to the validity of each class member’s claims.” Henggeler
v. Brumbaugh & Quandahl P.C., LLO, No. 8:11CV334, 2013 WL 5881422, *2 (D. Neb. Oct.
25, 2013) (internal quotations omitted). The typicality requirement is met if there are “other
members of the class who have the same or similar grievances as the plaintiff.” Alpern v.
UtiliCorp United, Inc., 84 F.3d 1525, 1540 (8th Cir. 1996) (quotation omitted). The
adequacy of representation element concerns “whether the class representatives have
common interests with the members of the class and whether they and their counsel will
competently and vigorously pursue the lawsuit.” Henggeler, 2013 WL 5881422 at *3.
If the requirements of numerosity, commonality, typicality, and adequacy are satisfied,
a plaintiff must satisfy one of the three subsections of Fed. R. Civ. P. 23(b). Rule 23(b)(3)
provides that a class action may be maintained if “the court finds that the questions of law
or fact common to class members predominate over any questions affecting only individual
members, and that a class action is superior to other available methods for fairly and
efficiently adjudicating the controversy.” Fed. R. Civ. P. 23.
The undersigned preliminarily finds, for purposes of settlement only, that the
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requirements of Rule 23 have been met and that the proposed class should be certified. The
proposed class consists of approximately 21,658 separate merchant accounts. Given this
number, it would be impracticable to try each case separately. Also, the primary legal and
factual issues surrounding Defendant’s alleged course of conduct is common for all class
members. Class members would have similar grievances as the named Plaintiff and class
members’ claims would likely be based on the same legal theories. Finally, the adequacy of
representation requirement has been met because there is no conflict of interest between
Plaintiff and the class members. Plaintiff’s common interests with the members of the class
ensure that the class will be fairly and adequately protected and counsel has considerable
experience in class-action litigation.
The Rule 23(b)(3) requirements are likewise satisfied. Common questions
predominate over any questions affecting only individual members. Also, certifying the class
for settlement purposes will “achieve economies of time, effort, and expense, and promote
. . . uniformity of decision as to persons similarly situated, without sacrificing procedural
fairness or bringing about other undesirable results.” Amchem Products, Inc. v. Windsor, 521
U.S. 591, 615 (1997) (internal quotation omitted). A class action is superior to other methods
of fairly adjudicating the controversy.
Further, the undersigned finds that the proposed form and manner of notice should be
approved as it satisfies Fed. R. Civ. P. 23 and provides the best notice that is practicable
under the circumstances. Fed. R. Civ. P. 23.
Plaintiff also seeks an order preliminarily approving the terms of the parties’
settlement agreement. “In considering preliminary approval of a proposed settlement in a
class action case, the court makes a preliminary evaluation of the fairness of the settlement,
prior to notice.” Smith v. Gurstel Chargo, PA, No. 8:14CV183, 2014 WL 6453772, *3 (D.
Neb. Nov. 17, 2014). The undersigned has reviewed the Proposed Settlement Agreement and
preliminarily finds that the terms of the Agreement are within the range of possible approval.
It appears that the Agreement’s terms are fundamentally fair, reasonable, adequate and in the
best interest of the class members. In light of the complexity of this litigation, as well as the
expense and likely duration of further litigation, the settlement provides significant benefits
to class members. Plaintiff has shown that the settlement is the result of arms-length
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negotiations and that counsel for all parties have considerable experience in class action
litigation.
Accordingly,
IT IS HEREBY RECOMMENDED to Chief United States District Judge Laurie
Smith Camp that:
1.

Plaintiff’s Motion for Preliminary Approval of Class Action Settlement and for
Conditional Certification of Settlement Class (filing 190) be granted;

2.

The Proposed Order Granting Preliminary Approval of Proposed Settlement,
Directing Notice to Class, and Setting Fairness Hearing (filing 192-3) be
approved, and that Joel Ewusiak, Gary Pearson, Christopher Roberts, and Scott
Schutzman be appointed as class counsel; and

3.

The Court schedule a final hearing to determine whether the proposed
settlement is fair, reasonable, and adequate.2

A party may object to a magistrate judge’s order by filing an objection within fourteen
(14) days after being served with a copy of the findings and recommendation. Failure to
timely object may constitute a waiver of any objection.
DATED August 24, 2015.
BY THE COURT:
S/ F.A. Gossett
United States Magistrate Judge

2

Plaintiff requests that the final settlement hearing be held 135 days or more from
entry of the Preliminary Approval Order.
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