Sinanyan et al v. Luxury Suites International, LLC et al

Filing 121

ORDER. IT IS HEREBY ORDERED that 114 the parties' Motion for an Order is GRANTED. A final fairness hearing shall take place on 1/19/2018, at 9:00 am in Courtroom 7C before Chief Judge Gloria Navarro. See Order for details/deadlines. Signed by Chief Judge Gloria M. Navarro on 7/20/17. (Copies have been distributed pursuant to the NEF - MR)

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1 UNITED STATES DISTRICT COURT 2 DISTRICT OF NEVADA 3 4 5 6 7 8 9 10 11 12 13 ALICE SINANYAN, an individual; JAMES KOURY, an individual and trustee of the Koury Family Trust; and SEHAK TUNA, an individual, on behalf of themselves and others similarly situated, ) ) ) ) ) ) Plaintiffs, ) vs. ) ) LUXURY SUITES INTERNATIONAL, LLC, ) a Nevada limited liability company; RE/MAX ) PROPERTIES, LLC, a Nevada limited liability ) company; JETLIVING HOTELS, LLC, a ) Nevada limited liability company; and DOES 1 ) through 100, inclusive, ) ) Defendants. ) ) Case No.: 2:15-cv-00225-GMN-VCF ORDER 14 This action involves claims brought by Alice Sinanyan (“Sinayan”) and Jim Koury 15 16 (“Koury”) (collectively “Plaintiffs”), individually and on behalf of a putative class of 17 approximately 347 condominium owners, against property rental manager Luxury Suites 18 International, LLC (“LSI”) and its predecessor Re/Max Properties, LLC (“Re/Max”).1 19 Plaintiffs allege that LSI violated its contractual, statutory, and common law duties by failing to 20 disclose its collection of a “resort fee” from rental guests, and the parties have now reached a 21 settlement. Pending before the Court is the Joint Motion for an Order, (ECF No. 114), filed by 22 both parties requesting that the Court grant provisional approval of the proposed settlement 23 agreement and preliminarily certify Plaintiffs’ proposed class action for purposes of settlement. 24 25 Plaintiffs are variously seeking to represent the class against Defendants Jab Affiliates, LLC (“Jab”) and JetLiving Hotels, LLC. Reference to these codefendants is omitted because the instant Motion only concerns allegations with respect to Plaintiffs and LSI. 1 Page 1 of 17 1 For the reasons stated herein, the Motion is GRANTED. 2 I. BACKGROUND 3 On February 9, 2015, Plaintiffs filed the instant action alleging various state law 4 violations on behalf of a putative class comprising all condominium owners at the Signature at 5 MGM Grand (“The Signature”) who contracted with LSI to manage the rental of their 6 condominium units from January 5, 2009, to January 5, 2015 (“Putative Class”). (First Am. 7 Compl. ¶ 75, ECF No. 32). Specifically, Plaintiffs alleges that pursuant to the LSI Rental 8 Agreement, members of the Putative Class were entitled to 65% of a “resort fee” collected by 9 LSI from rental guests. (Id. ¶ 88). According to Plaintiffs, not only did LSI retain all resort 10 fees, LSI also failed to disclose that it was collecting the fee. (Id. ¶ 89). Based on these 11 allegations, the Complaint alleges the following causes of action against LSI: (1) breach of 12 contract; (2) breach of implied covenant of good faith and fair dealing; (3) intentional 13 misrepresentation; (4) fraudulent concealment; (5) negligent misrepresentation; (6) violation of 14 Nevada Revised Statutes § 41.600; (7) breach of fiduciary duty; and (8) unjust enrichment. 15 On August 22, 2016, the parties reached a tentative settlement through mediation and 16 subsequently submitted a proposed settlement (“Proposed Settlement”) now before the Court. 17 (See Joint Mot. for Order 4:15–18, ECF No. 114). The total settlement amount is $525,000.00 18 (“Settlement Amount”), which the parties propose allocating in the following manner: (1) 19 “attorney’s fees in the amount of twenty five percent (25%) of the total settlement amounts”; 20 (2) “costs not to exceed Eighty-Eight Thousand Dollars and Zero Cents ($88,000.00)”; (3) 21 “an incentive payment in the amount of Twenty Thousand Dollars and Zero Cents ($20,000.00) 22 to be paid to Individual Plaintiff Sinanyan and Ten Thousand Dollars and Zero Cents 23 ($10,000.00) to be paid to Individual Plaintiff Koury”; (4) “administrative expenses in the 24 amount of Twelve Thousand Dollars and No Cents ($12,000.00), but not to exceed Fifteen 25 Thousand Dollars and No Cents ($15,000.00)”; and (5) an allocation of the remaining proceeds Page 2 of 17 1 “on a pro rata basis based on the Resort Fees Collected by LSI from the rental of the individual 2 Putative Class member’s unit divided by the total Resorts Fees Collected by LSI from the rental 3 of all non-opt out Putative Class members’ units.” (Id. 6:22–7:9). The Proposed Settlement 4 provides for notice by direct mail to all Putative Class members identified through LSI’s 5 business records. (Id. 7:10–15). 6 The instant Motion requests that the Court adopt the parties’ proposed order by: (1) 7 granting preliminary approval of the proposed class action Proposed Settlement; (2) 8 provisionally certifying the Putative Class; (3) approving the proposed method and form of 9 notice; and (4) scheduling a final approval hearing. (Id. 4:20–22). 10 II. LEGAL STANDARD 11 The Ninth Circuit has declared that a strong judicial policy favors settlement of class 12 actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). However, a 13 class action may not be settled without court approval. Fed. R. Civ. P. 23(e). When the parties 14 to a putative class action reach a settlement agreement prior to class certification, “courts must 15 peruse the proposed compromise to ratify both the propriety of the certification and the fairness 16 of the settlement.” Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). At the preliminary 17 stage, the court must first assess whether a class exists. Id. (citing Amchem Prods. Inc. v. 18 Windsor, 521 U.S. 591, 620 (1997)). 19 Second, the court must determine whether the proposed settlement “is fundamentally 20 fair, adequate, and reasonable.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). 21 Pre-class certification settlements “must withstand an even higher level of scrutiny for evidence 22 of collusion or other conflicts of interest than is ordinarily required under Rule 23(e) before 23 securing the court’s approval as fair.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 24 935, 946 (9th Cir. 2011). This heightened scrutiny “ensure[s] that class representatives and 25 their counsel do not secure a disproportionate benefit ‘at the expense of the unnamed plaintiffs Page 3 of 17 1 who class counsel had a duty to represent.’” Lane v. Facebook, Inc., 696 F.3d 811, 819 (9th 2 Cir. 2012) (quoting Hanlon, 150 F.3d at 1027). As such, courts must evaluate the settlement 3 for evidence of collusion. Id. 4 If the court preliminarily certifies the class and finds the proposed settlement fair to its 5 members, the court schedules a fairness hearing where it will make a final determination as to 6 the fairness of the class settlement. Finally, the court must “direct notice in a reasonable 7 manner to all class members who would be bound by the proposal.” Fed. R. Civ. P. 23(e)(1). 8 III. 9 10 DISCUSSION The Motion contends, inter alia, that the Court should (1) certify the proposed Putative Class and (2) grant preliminary approval of the Proposed Settlement. 11 A. 12 Plaintiff seeks conditional certification of a settlement class under Rule 23(a) and (b)(3) 13 and satisfies all of Rule 23’s certification requirements. (See Joint Mot. for Order 6:3–20, ECF 14 No. 69). To obtain class certification, a plaintiff must satisfy the four prerequisites identified in 15 Rule 23(a) as well as one of the three subdivisions of Rule 23(b). Amchem Prods., 521 U.S. at 16 614. “The four requirements of Rule 23(a) are commonly referred to as ‘numerosity,’ 17 ‘commonality,’ ‘typicality,’ and ‘adequacy of representation’ (or just ‘adequacy’), 18 respectively.” United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. 19 Workers Int’l Union, AFL–CIO v. ConocoPhillips Co., 593 F.3d 802, 806 (9th Cir. 2010). 20 Certification under Rule 23(b)(3) is appropriate where common questions of law or fact 21 predominate and class resolution is superior to other available methods. Fed. R. Civ. P. 22 23(b)(3). The party seeking class certification bears the burden of affirmatively demonstrating 23 that the class meets Rule 23’s requirements. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 24 2553 (2011). 25 Conditional Class Certification In general, “[b]efore certifying a class, the trial court must conduct a ‘rigorous analysis’ Page 4 of 17 1 to determine whether the party seeking certification has met the prerequisites of Rule 23.” 2 Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012). However, when 3 evaluating class certification in the context of a proposed settlement, courts “must pay 4 undiluted, even heightened, attention to class certification requirements” because the court will 5 lack the opportunity, present when a case is litigated, to adjust the class, informed by the 6 proceedings. Hanlon, 150 F.3d at 1019; see also Amchem Prods., 521 U.S. at 620. The Court 7 finds that Plaintiffs have has met the numerosity, commonality, typicality, and adequacy 8 requirements under Rule 23(a) as well as the certification requirements under Rule 23(b). 9 10 11 i. Rule 23(a) 1. Numerosity Rule 23(a)(1) requires that a class be so numerous that joinder of all members is 12 impracticable. Generally, courts have held that numerosity is satisfied when the class size 13 exceeds forty members. See, e.g., Slaven v. BP Am., Inc., 190 F.R.D. 649, 654–56 (C.D. Cal. 14 2000); In re Cooper Cos. Inc. Secs. Litig., 254 F.R.D. 628, 634 (C.D. Cal. 2009). 15 In this case, the Putative Class consists of approximately 347 unit owners who 16 contracted with LSI for rental management of their units during the relevant period. (Joint Mot. 17 for Order 7:3–4). Therefore, the Court can safely conclude that the Putative Class is 18 sufficiently numerous such that the joinder of each member would be impracticable. 19 20 2. Commonality To demonstrate commonality, a plaintiff must show that there are “questions of law or 21 fact common to the class.” Fed. R. Civ. P. 23(a)(2). “A class has sufficient commonality ‘if 22 there are questions of fact and law which are common to the class.’” Hanlon, 150 F.3d at 1019. 23 As clarified in Dukes, a plaintiff must demonstrate that the class members “have suffered the 24 same injury” and that their claims “depend upon a common contention . . . of such a nature that 25 it is capable of classwide resolution—which means that determination of its truth or falsity will Page 5 of 17 1 resolve an issue that is central to the validity of each one of the claims in one stroke.” Dukes, 2 131 S. Ct. at 2551. 3 Here, the Amended Complaint raises several common questions of law and fact, 4 including (1) whether LSI failed to disclose the resort fee to the Putative Class and (2) whether 5 LSI failed to treat the resort fee as gross rental revenue. (First Am. Compl. ¶ 79, ECF No. 32). 6 If Plaintiffs continued to press this action, the answers to these questions would result in 7 classwide resolution of the claims asserted. Therefore, the Court finds that Plaintiffs have 8 satisfied the commonality requirement. 9 10 3. Typicality To demonstrate typicality, Plaintiffs must show that their claims are typical of the class. 11 Fed. R. Civ. P. 23(a)(3). “The test of typicality ‘is whether other members have the same or 12 similar injury, whether the action is based on conduct which is not unique to the named 13 plaintiffs, and whether other class members have been injured by the same course of conduct.’” 14 Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992). “Typicality refers to the 15 nature of the claim or defense of the class representative, and not to the specific facts from 16 which it arose or the relief sought.” Id. 17 In this case, like the Putative Class, Plaintiffs contracted with LSI for rental management 18 of their condominium units at The Signature and allegedly failed to receive their portion of 19 resort fees collected by LSI from rental guests. (First Am. Compl. ¶ 80). Thus, the named 20 Plaintiffs’ claims and the nature of their alleged losses are sufficiently similar to the Putative 21 Class’s claims and alleged losses to be considered typical. 22 23 4. Adequacy of Representation “To satisfy constitutional due process concerns, absent class members must be afforded 24 adequate representation before entry of a judgment which binds them.” Hanlon, 150 F.3d at 25 1020 (citing Hansberry v. Lee, 311 U.S. 32, 42–43 (1940)). In Hanlon, the Ninth Circuit Page 6 of 17 1 identified two issues for determining the adequacy of representation: (1) whether the named 2 plaintiffs and their counsel have any conflicts of interest with other class members; and (2) 3 whether the named plaintiffs and their counsel will “prosecute the action vigorously on behalf 4 of the class.” Id. 5 In the instant case, Plaintiffs seek appointment of Wolf, Rifkin, Shapiro, Schulman & 6 Rabkin, LLP, (“Counsel”) as class counsel. (Mot. 6:27–28). There is nothing in the record 7 suggesting that Plaintiffs or Counsel have any conflict of interest with other absent class 8 members. Plaintiffs’ claims thus appear “completely aligned with [that] of the class,” and there 9 is no conflict apparent at this stage. Collins v. Cargill Meat Sols. Corp., 274 F.R.D. 294, 301 10 (E.D. Cal. 2011). Plaintiffs’ attorneys are experienced class action litigators, as reflected in 11 declarations submitted with Plaintiffs’ Motion for preliminary class certification. (See 12 Springmeyer Decl., ECF No. 115). The Court is therefore satisfied at this stage that the named 13 Plaintiffs will adequately represent the Putative Class. However, as discussed below, Plaintiffs 14 must provide sufficient justification for their disproportionally large incentive awards or reduce 15 the awards. See Radcliffe v. Experian Info. Solutions, Inc., 715 F.3d 1157, 1165 (9th Cir. 2013) 16 (noting that unreasonably high incentive awards can destroy adequacy of class representatives). 17 18 ii. Rule 23(b) Rule 23(b)(3) permits certification where “the court finds that questions of law or fact 19 common to the members of the class predominate over any questions affecting only individual 20 members, and that a class action is superior to other available methods for the fair and efficient 21 adjudication of the controversy” in light of, among other things, “the difficulties likely to be 22 encountered in the management of a class action.” Fed. R. Civ. P. 23(b)(3). 23 This case satisfies Rule 23(b)(3)’s requirements. The common questions of whether 24 Plaintiffs and the Putative Class were entitled to a share of the resort fee and whether LSI had a 25 duty to disclose that it was collecting resort fees predominate over any individual questions. Page 7 of 17 1 Moreover, adjudicating this matter as a class action is a superior approach to resolving the 2 instant controversy because it avoids the dangers of duplicative litigation and the unfairness of 3 inconsistent judgments. 4 B. 5 The Court next considers whether the terms of the Proposed Settlement are fair, Preliminary Approval of the Proposed Settlement 6 reasonable, and adequate towards the absent Putative Class members. See Fed. R. Civ. P. 7 23(e)(2). Courts have long recognized that “settlement class actions present unique due process 8 concerns for absent class members.” Hanlon, 150 F.3d at 1026. One inherent risk is that class 9 counsel may collude with the defendants, “tacitly reducing the overall settlement in return for a 10 higher attorney’s fee.” Knisley v. Network Assocs., Inc., 312 F.3d 1123, 1125 (9th Cir. 2002); 11 see also Evans v. Jeff D., 475 U.S. 717, 733 (1986) (recognizing that “the possibility of a 12 tradeoff between merits relief and attorneys’ fees” is often implicit in class action settlement 13 negotiations). 14 To guard against this potential for class action abuse, Rule 23(e) requires court approval 15 of all class action settlements, which may be granted only after a fairness hearing and a 16 determination that the settlement taken as a whole is fair, reasonable, and adequate. Fed. R. 17 Civ. P. 23(e)(2); see Staton, 327 F.3d at 972 n. 22 (noting that the court’s role is to police the 18 “inherent tensions among class representation, defendant’s interests in minimizing the cost of 19 the total settlement package, and class counsel’s interest in fees”); Hanlon, 150 F.3d at 1026 20 (“It is the settlement taken as a whole, rather than the individual component parts, that must be 21 examined for overall fairness.”). 22 23 24 25 The factors in a court’s fairness assessment will naturally vary from case to case, but courts in the Ninth Circuit generally must weigh the Churchill factors: (1) the strength of the plaintiff’s case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the Page 8 of 17 stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members of the proposed settlement. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 In re Bluetooth, 654 F.3d at 946 (quoting Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004)). However, where, as here, “a settlement agreement is negotiated prior to formal class certification, consideration of these eight Churchill factors alone is not enough.” Id. Prior to formal class certification, there is an even greater potential for a breach of fiduciary duty owed the class during settlement. Accordingly, “such agreements must withstand an even higher level of scrutiny for evidence of collusion or other conflicts of interest than is ordinarily required under Rule 23(e) before securing the court’s approval as fair.” Id. (citing Hanlon, 150 F.3d at 1026); accord In re Gen. Motors Corp. Pick–Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 805 (3d Cir. 1995) (cautioning that courts must be “even more scrupulous than usual in approving settlements where no class has yet been formally certified”); Mars Steel Corp. v. Cont’l Ill. Nat’l Bank & Trust Co. of Chicago, 834 F.2d 677, 681 (7th Cir. 1987) (“[W]hen class certification is deferred, a more careful scrutiny of the fairness of the settlement is required.”); Weinberger v. Kendrick, 698 F.2d 61, 73 (2d Cir. 1982) (noting that reviewing courts must employ “even more than the usual care”); see also Manual for Complex Litig. § 21.612 (4th ed. 2004). Therefore, before approving a precertification settlement, the Court must not only show that it “has explored [the Churchill] factors comprehensively, but also that the settlement is not the product of collusion among the negotiating parties.” In re Bluetooth, 654 F.3d at 947. Because collusion is unlikely to be evident from the face of the settlement itself, courts “must be particularly vigilant not only for explicit collusion, but also for more subtle signs that class counsel have allowed pursuit of their own self-interests and that of certain class members to infect the negotiations.” Id. A few such signs include: (1) “when counsel receive a Page 9 of 17 1 disproportionate distribution of the settlement”; (2) “when the parties negotiate a ‘clear sailing’ 2 arrangement providing for the payment of attorneys’ fees separate and apart from class funds”; 3 and (3) “when the parties arrange for fees not awarded to revert to defendants rather than be 4 added to the class fund.” Id. 5 i. 6 Proposed Class Members’ Share of the Settlement Under the Proposed Settlement, the amount to be paid to the entire Putative Class will 7 not exceed 50% of the total Settlement Amount, which itself represents roughly 10% of the 8 Putative Class’s maximum estimated damages.2 (See Joint Mot. for Order 17:24–25). This 9 proposed distribution of funds gives the Court some pause. However, “[i]t is well-settled law 10 that a cash settlement amounting to only a fraction of the potential recovery does not per se 11 render the settlement inadequate or unfair.” In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 12 459 (9th Cir. 2000), as amended (June 19, 2000). Indeed, Plaintiffs contend that “putative class 13 members could potentially owe LSI for amounts undercharged by LSI.” (Joint Mot. for Order 14 17:27–28). 15 The Court finds, based on the information provided by Plaintiffs, that the settlement 16 award in this case appears to be fair and reasonable. However, Counsel is advised that more 17 information will be required at the final approval stage in order for the Court to ascertain 18 whether the settlement amount is in fact reasonable in light of the risks implicated by further 19 litigation. Pointer v. Bank of Am. Nat’l Ass’n, No. 2:14-cv-00525-KJM-CKD, 2016 WL 20 696582, at *12 (E.D. Cal. Feb. 22, 2016) (“It has been remarked that the district court takes on 21 the role of fiduciary for absent class members, or that of a skeptical client, who critically 22 examines the settlement’s terms and implementation.”). 23 24 25 Plaintiffs contend that assuming their allegations are true, “then putative class members would be entitled to sixty-five percent (65%) of $4.1 million, or $2,665,000.00.” (Joint Mot. for Order 17:24–25). 2 Page 10 of 17 1 ii. 2 Proposed Award of Attorneys’ Fees The Court recognizes that it need not directly address a proposed allocation of attorneys’ 3 fees until the Proposed Settlement becomes final. However, the parties must, to some degree, 4 justify the proposed award at this stage because any award of fees will directly reduce the 5 amount payable to the Putative Class, and thus bears on the present fairness inquiry. Martinez 6 v. Realogy Corp., No. 3:10-cv-00755-RCJ-VPC, 2013 WL 5883618, at *6 (D. Nev. Oct. 30, 7 2013). 8 This is a common fund case. (Joint Mot. for Order 3:19). Under regular common fund 9 procedure, the parties settle for the total amount of the common fund and shift the fund to the 10 court’s supervision. The plaintiffs’ lawyers then apply to the court for a fee award from the 11 fund. See Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268, 271 (9th Cir. 1989) (noting 12 that in a common fund case, “a court has control over the fund—even one created pursuant to a 13 settlement, as here[—] . . . and assesses the litigation expenses against the entire fund so that 14 the burden is spread proportionally among those who have benefited.”). In setting the amount 15 of common fund fees, the district court has a special duty to protect the interests of the class. 16 On this issue, the class’s lawyers occupy a position adversarial to the interests of their clients. 17 Staton, 327 F.3d at 970. As the Ninth Circuit has explained, 18 19 20 21 [b]ecause in common fund cases the relationship between plaintiffs and their attorneys turns adversarial at the fee-setting stage, courts have stressed that when awarding attorneys’ fees from a common fund, the district court must assume the role of fiduciary for the class plaintiffs. Accordingly, fee applications must be closely scrutinized. Rubber-stamp approval, even in the absence of objections, is improper. 22 23 Id. (emphasis added); see also In re Coordinated Pre-trial Proceedings in Petroleum Prods. 24 Antitrust Litig., 109 F.3d 602, 608 (9th Cir. 1997) (“In a common fund case, the judge must 25 look out for the interests of the beneficiaries, to make sure that they obtain sufficient financial Page 11 of 17 1 benefit after the lawyers are paid. Their interests are not represented in the fee award 2 proceedings by the lawyers seeking fees from the common fund.”). 3 An award of attorney fees for creating a common fund may be calculated in one of two 4 ways: (1) a percentage of the funds created; or (2) “the lodestar method, which calculates the 5 fee award by multiplying the number of hours reasonably spent by a reasonable hourly rate and 6 then enhancing that figure, if necessary, to account for the risks associated with the 7 representation.” Graulty, 886 F.2d at 272. The Ninth Circuit has approved either method for 8 determining a reasonable award of fees. Id. However, the fee award must always be reasonable 9 under the circumstances. In re Wash. Pub. Power Supply Sys. Sec. Litig., 19 F.3d 1291, 1296 10 11 (9th Cir. 1994). The typical range of acceptable attorney fees in the Ninth Circuit is 20% to 30% of the 12 total settlement value, with 25% considered a benchmark percentage. Vizcaino v. Microsoft 13 Corp., 290 F.3d 1043, 1048 (9th Cir. 2002); Powers v. Eichen, 229 F.3d 1249, 1256 (9th Cir. 14 2000). In assessing whether the percentage requested is fair and reasonable, courts generally 15 consider the following factors: (1) the results achieved; (2) the risk of litigation; (3) the skill 16 required; (4) the quality of work performed; (5) the contingent nature of the fee and the 17 financial burden; and (6) the awards made in similar cases. Vizcaino, 290 F.3d at 1047–50. In 18 circumstances where a percentage recovery would be too small or too large in light of the hours 19 worked or other relevant factors, the “benchmark percentage should be adjusted, or replaced by 20 a lodestar calculation.” Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376 (9th Cir. 1993). 21 Here, “Plaintiffs seek an award of attorney’s fees in the amount of $131,250.00, or 25 22 percent of the common fund.” (Joint Mot. for Order, 21:11–12). Counsel’s proposed award 23 aligns with the Ninth Circuit’s “benchmark” of twenty-five percent, and the Court therefore 24 need not conduct a cross check with the loadstar amount. See Powers, 229 F.3d at 1256–57 25 (“[T]wenty-five percent of the recovery [is] a ‘benchmark’ for attorneys’ fees calculations Page 12 of 17 1 under the percentage-of-recovery approach.”). Finding the percentage requested by Plaintiffs 2 not unreasonable, the Court approves the attorneys’ fee request on a preliminary basis. See 3 Vizcaino, 290 F.3d at 1047 (observing that percentage awards of between twenty and thirty 4 percent are common). 5 6 7 8 iii. Treatment of Class Representatives The Proposed Settlement provides for class representative payments of $20,000.00 to Sinanyan and $10,000 to Koury. (Doc. No. 29-1 at 22.) At its discretion, a district court may award incentive payments to named plaintiffs in 9 class action cases. Rodriguez v. West Publ’g Corp., 563 F.3d 948, 958–59 (9th Cir. 2009). The 10 purpose of incentive awards is to “compensate class representatives for work done on behalf of 11 the class, to make up for financial or reputational risk undertaking in bringing the action, and, 12 sometimes, to recognize their willingness to act as a private attorney general.” Rodriguez, 563 13 F.3d at 958–59. To justify an incentive award, a class representative must present “evidence 14 demonstrating the quality of plaintiff’s representative service,” such as “substantial efforts 15 taken as class representative to justify the discrepancy between [his] award and those of the 16 unnamed plaintiffs.” Alberto v. GMRI, Inc., 252 F.R.D. 652, 669 (E.D. Cal. 2008). 17 The Ninth Circuit has emphasized that “district courts must be vigilant in scrutinizing all 18 incentive awards.” Radcliffe, 715 F.3d at 1165. In particular, district courts have declined to 19 approve incentive awards that represent an unreasonably high proportion of the overall 20 settlement amount, or that are disproportionate relative to the recovery of other class members. 21 See Ontiveros v. Zamora, 303 F.R.D. 356, 365 (E.D. Cal. 2014); see also Ko v. Natura Pet 22 Prods., Inc., Civ. No. 09–2619 SBA, 2012 WL 3945541, at *15 (N.D. Cal. Sept. 10, 2012) 23 (holding that an incentive award of $20,000, comprising one percent of the approximately $2 24 million common fund was “excessive under the circumstances” and reducing the incentive 25 award to $5,000); Wolph v. Acer Am. Corp., No. C 09–01314 JSW, 2013 WL 5718440, at *6 Page 13 of 17 1 (N.D. Cal. Oct. 21, 2013) (reducing the incentive award to $2,000 where class representatives 2 did not demonstrate great risk to finances or reputation in bringing the class action). Courts 3 have reasoned that overcompensation of class representatives could encourage collusion at the 4 settlement stage of class actions by causing a divergence between the interests of the named 5 plaintiff and the absent class members, thus jeopardizing adequacy of class representatives. See 6 Staton, 327 F.3d at 977–78; Radcliffe, 715 F.3d at 1165 (noting that unreasonably high 7 incentive awards can destroy adequacy of class representatives). 8 Here, the proposed Settlement Agreement provides an incentive award of $20,000.00 to 9 class representative Sinanyan, an amount that represents approximately 3.8% of the gross 10 settlement fund. (Joint Mot. for Order 7:4–7). The Settlement Agreement also provides an 11 incentive award of $10,000.00 to class representative Koury, or approximately 1.9% of the 12 gross settlement fund. (Id.). The lowest average settlement share per class member is $751, 13 based on a $260,750 settlement amount and the class size of 347 unit owners. Plaintiffs do not 14 explain why their efforts during the litigation process merit awards significantly higher than the 15 average settlement share per class members. Moreover, the proposed incentive awards also 16 greatly exceed a $5,000 award that courts in this circuit have recognized as “presumptively 17 reasonable.” See, e.g., Deatrick v. Securitas Sec. Servs. USA, Inc., No. 13-CV-05016-JST, 2016 18 WL 5394016, at *8 (N.D. Cal. Sept. 27, 2016). 19 During the final fairness review, the Court will determine whether the requested 20 incentive award is appropriate in light of “the proportion of the payments relative to the 21 settlement amount,” “the size of the payment,” “the actions the plaintiff has taken to protect the 22 interests of the class, the degree to which the class has benefitted from those actions,” and “the 23 amount of time and effort the plaintiff expended in pursuing the litigation.” Staton, 327 F.3d at 24 952; see also Deatrick, 2016 WL 5394016, at *8 (finding that while $5,000 was a 25 presumptively reasonable incentive award in the Ninth Circuit, such an award in that case was Page 14 of 17 1 not warranted because plaintiff did not offer details regarding the actions the plaintiff had taken 2 to protect the interests of the class). Without satisfactory elaboration on these points, the Court 3 will reduce Plaintiffs’ incentive awards following the final fairness hearing to a reasonable 4 amount. See, e.g., Wolph v. Acer Am. Corp., No. C 09-01314 JSW, 2013 WL 5718440, at *6 5 (N.D. Cal. Oct. 21, 2013). 6 iv. Proposed Class Notice and Administration For proposed settlements under Rule 23, “the court must direct notice in a reasonable 7 8 manner to all class members who would be bound by the proposal. Fed. R. Civ. P. 23(e)(1); see 9 also Hanlon, 150 F.3d at 1025 (“Adequate notice is critical to court approval of a class 10 settlement under Rule 23(e).”). A class action settlement notice “is satisfactory if it generally 11 describes the terms of the settlement in sufficient detail to alert those with adverse viewpoints 12 to investigate and to come forward and be heard.” Churchill Vill., LLC v. Gen. Elec., 561 F.3d 13 566, 575 (9th Cir. 2004). 14 The Court finds that the notice and exclusion form proposed by Plaintiffs meets the 15 requirements of Federal Civil Procedure Rule 23(c)(2)(B) and that the proposed mail delivery is 16 also appropriate in these circumstances. (See Joint Mot. for Order 7:10–15). Specifically, 17 Plaintiffs’ proposed notice adequately describes the terms of the settlement, informs the class of 18 the proposed award, provides information concerning the time, place, and date of the final 19 approval hearing, and informs absent class members that they may enter an appearance through 20 counsel. (See Exs. B, C to Springmeyer Decl., ECF Nos. 115-2, 115-3); Churchill, 561 F.3d at 21 575 (noting that a class action settlement notice “is satisfactory if it generally describes the 22 terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate 23 and to come forward and be heard”). 24 /// 25 /// Page 15 of 17 1 2 3 IV. CONCLUSION IT IS HEREBY ORDERED that the parties’ Motion for an Order, (ECF No. 114), is GRANTED as follows: 4 1. Preliminary class certification is approved; 5 2. Plaintiffs’ Counsel are appointed as Class Counsel; 6 3. Sinanyan and Koury are appointed as Class Representatives; 7 4. CPT Group, Inc., is approved as Claims Administrator; 8 5. The Settlement Agreement is approved on a preliminary basis as fair and 9 10 adequate; 6. Within thirty days from the date this Order is filed, Defendant shall provide the 11 Claims Administrator with the name, last known home address, home telephone 12 number, and email address pertaining to each class member; 13 7. Within thirty days after receipt by the Claims Administrator of the putative class 14 members’ identifying information, the Claims Administrator shall mail the Class 15 Notice, (Ex. B to Springmeyer Decl., ECF No. 115-2), and Exclusion Form, (ECF 16 No. C to Springmeyer Decl., ECF No. 115-3), (collectively, the “Class Notice 17 Package”) by United States First Class Mail; 18 8. The deadline for class members to mail an Exclusion Form and/or mail any 19 objection(s) to the Settlement Agreement is sixty days from the date the Claims 20 Administrator mails the Class Notice Package; 21 9. 22 23 The deadline for Class Counsel to file a motion for attorneys’ fees, costs, and incentive awards to the Class Representatives is November 20, 2017; 10. The deadline for Plaintiffs to file a motion for final approval of class action 24 settlement, as well as the Claims Administrator to file a declaration of due 25 diligence and proof of mailing, is December 18, 2017; Page 16 of 17 1 11. A final fairness hearing shall take place on January 19, 2018, at 9:00 am in 2 Courtroom 7C before Chief Judge Gloria Navarro. The matter of Class Counsel’s 3 motion for attorneys’ fees, costs, and incentive awards to the Class 4 Representatives will be considered at the final fairness hearing. 5 20 DATED this _____ day of July, 2017. 6 7 8 ___________________________________ Gloria M. Navarro, Chief Judge United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 17 of 17

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