Trombley v. Bank of America Corporation
Filing
100
ORDER granting in part and denying in part 98 Joint Motion to Amend/Correct and Incorporate Additional Proposed Rulings Into Order Granting Preliminary Approval of Settlement Agreement. So Ordered by Judge Joseph DiClerico (New Hampshire) on 8/23/2011. (Duhamel, John)
UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF RHODE ISLAND
Bruce Trombley and Ryan Sukaskas
v.
Civil No. 08-cv-456-JD
Bank of America Corporation
O R D E R
The plaintiffs, Bruce J. Trombley and Ryan Sukaskas, sued
Bank of America Corporation (“BAC”), on their own behalf and on
behalf of a putative class, challenging BAC’s practices of
imposing fees and penalties on credit card accounts.
The parties
reached a settlement, and the court granted, in part, the
plaintiffs’ unopposed motion for preliminary approval of the
settlement agreement, limited to the long-form notice.
The court
directed the parties to file a motion with a supporting
memorandum if they sought additional findings that were included
in the proposed order but not in the motion.
The parties have
now filed a joint motion with a supporting memorandum for
additional findings pertaining to preliminary approval of the
settlement agreement.
A.
Short-Form Notice
In the previous order, the court approved the long-form
notice proposed by the plaintiffs.
The parties now ask for
approval of the proposed short-form notice as the best
practicable notice.
Potential class members must receive notice of class
certification.
Fed. R. Civ. P. 23(c).
In addition, the court
must direct notice to all class members who would be bound by a
settlement of the class action.
Fed. R. Civ. P. 23(e).
When a
class is certified and the action is also settled at the same
time, a single notice may be used to satisfy both Rule 23(c) and
Rule 23(e)(1).
See Menkes v. Stolt-Nielsen S.A., (D. Conn. Sept.
20, 2010) (citing Manual for Complex Litigation, Fourth, § 21.311
(2004)).
Rule 23(c)(2)(B) provides the requirements for notice to a
class that is certified under Rule 23(b)(3).
The notice must be
“the best notice that is practicable under the circumstances,
including individual notice to all members who can be identified
through reasonable effort.”
Fed. R. Civ. P. 23(c)(2)(B).
Notice
must “clearly and concisely state in plain, easily understood
language:
(I)
(ii)
(iii)
(iv)
the nature of the action;
the definition of the class certified;
the class claims, issues, or defenses;
that a class member may enter an appearance through an
attorney if the member so desires;
(v)
that the court will exclude from the class any member
who requests exclusion;
(vi) the time and manner for requesting exclusion; and
(vii) the binding effect of a class judgment on members.
2
Id.
In addition, Rule 23(e)(1) requires the court to direct
notice about the settlement to all class members who would be
bound by it.
Section 5 of the Settlement Agreement provides for class
notice by FIA Card Services, N.A. as the successor-in-interest to
BAC.
As provided, FIA will mail notice to members of the class
who at the time of this order are holders or past holders of FIA
credit cards for whom FIA has a mailing address or,
alternatively, FIA may provide notice by email or other
electronic means.
Section 5 also provides that FIA may send the
short-form notice instead of the long-form notice.
The short-form notice begins with a statement of eligibility
for the settlement class that incorporates the class definition,
briefly explains the settlement, and includes deadlines and dates
for filing a claim, exclusion, objections, and the final hearing.
At the end, the short-form notice states that recipients can
obtain more information by going to a website or by calling a
toll-free number.
As such, the short-form notice does not
include all of the information required by Rule 23(c)(2)(B) but
provides ways for recipients to obtain that information.
In their motion, the parties argue that short-form notice
satisfies Rule 23(c)(2)(B) when the required additional
information is available through a website or by telephone.
3
The
parties contend that the proposed short-form notice provides a
more concise and easily understood notice than the long form and
that using the short form will reduce administrative costs.
They
cite several cases where courts have approved short-form notices,
including another class action against Bank of America.
In re
Checking Account Overdraft Litig., --- F.R.D. —, 2011 WL 2258458,
*6 (S.D. Fla. May 24, 2011); see also In re AT&T Mobility
Wireless Data Servs. Sales Tax Litig., --- F. Supp. 2d ---, 2011
WL 2204584, at * 35-*36 (N.D. Ill. June 2, 2011); Casey v.
Coventry HealthCare of Kan., Inc., 2011 U.S.Dist. LEXIS 47663, at
*6-*7 (W.D. Mo. May 4, 2011); Larson v. Sprint Nextel Corp., 2010
WL 234934, at *10 (D.N.J. Jan. 15, 2010).
In Larson, the court initially denied the motion for final
approval because the proposed short-form notice did not include
all of the information required by Rule 23(c)(2).
Larson v.
Sprint Nextel Corp., 2009 WL 1228443, at *9-*10 (D.N.J. Apr. 30,
2009).
After the parties prepared and filed an amended notice
plan, the court approved the notice based on a finding that the
short-form notice, as amended, complied with the requirements of
Rule 23(c)(2).
Larson, 2010 WL 234934, at *10.
In Walter v. Hughes Commc’ns, Inc., 2011 WL 2650711, at *14
(N.D. Cal. July 6, 2011), the court denied a motion for
preliminary approval of a class action settlement in part because
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the proposed postcard notice was insufficient due to a lack of
information about a potential award and other settlement
information and the lack of a means to command recipients’
attention.
In AT&T Mobility, the court held that a very
abbreviated notice message which provided a website address and a
toll-free telephone number where complete information was
available was “more than sufficient.”
2011 WL 2204584 at *35.
In this case, the proposed short-form notice gives more
information than the proposal in Walter and appears likely to get
the attention of potential class members.
The parties have
agreed that FIA may provide the short-form notice which gives the
website address and toll-free telephone number for more
information.
The website will allow recipients to download the
Settlement Agreement, the long-form class notice, and the claim
form.
Section 5 of the Settlement Agreement, however, also
requires that the short-form notice explain to recipients how
they can obtain more information by mail.
The proposed short-
form notice does not describe how recipients can obtain
information by mail, as is required under the Settlement
Agreement.
In the absence of mail instructions, the short-form
notice does not conform to the parties’ agreement.
5
The short-form notice would be sufficient if its recipients
could then easily obtain the long-form notice, claim form, and
other information.
While that information will be readily
available through the website, notice to those without access to
the website is not sufficient.
To fill that gap, the short-form
should include instructions of how to obtain that information by
mail, as is provided in Section 5(b) of the Settlement Agreement.
Because the proposed short form lacks the mailing information, it
is not sufficient as proposed.
The court previously granted preliminary approval based on
the long-form notice.
If the parties include instructions of how
recipients can obtain the full notice and the claim form by mail
as part of the short-form notice, the short-form notice would
also be granted preliminary approval.
B.
Claim Form
The parties ask the court to approve the proposed claim
form.
As proposed, the claim form provides a statement of the
claim that conforms to the class definition and the notice,
clearly asks for certain information, and provides a relatively
simple means for proving a claim.
See, e.g., Trombley v. Nat’l
City Bank, 759 F. Supp. 2d 20, 28 (D.D.C. 2011) (giving
preliminary approval to a claim form that was short, clear,
6
straightforward and required only basic information for an
award); cf. Walter, 2011 WL 2650711, at *14 (denying approval of
claim form with limitation not included in class notice and so
vague and complex as to invite user error).
The proposed claim
form is preliminarily approved, subject to any objections or
other challenges in the context of considering final approval.
C.
Settlement Administrator
The parties agreed to have FIA retain Rust Consulting, Inc.
as the Settlement Administrator.
See Settlement Agreement, § 11.
The parties ask the court to appoint Rust Consulting, Inc. as the
Settlement Administrator as part of the preliminary approval
process and to order FIA, through Rust Consulting, Inc., to
provide an affidavit that notice was disseminated as provided in
the Settlement Agreement or as required by the court.
At the preliminary approval stage, class counsel may need
assistance from a data processing service to administer class
notice and the settlement procedures.
In re AT&T Mobility
Wireless Data Servs. Sales Litig., 270 F.R.D. at 353.
In all
matters, preliminary approval is subject to change in the final
order.
The court grants preliminary approval to those parts of
the Settlement Agreement that appoint Rust Consulting, Inc. to
serve as Settlement Administrator and require FIA through Rust to
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provide an affidavit that explains how notice was disseminated.
The affidavit will be provided on or before Wednesday, November
23, 2011.
As in all preliminary rulings, the appointment of Rust
Consulting, Inc. as Settlement Administrator is subject to review
for purposes of final approval.
D.
Id.
Settlement Costs
In the joint motion, the parties ask the court for
permission to deduct “Settlement Costs” from the amount of the
settlement and to file reports with the court to document the
amounts deducted.1
As the parties have agreed to the proposed
method for deducting and reporting “Settlement Costs,” the
proposed method is preliminarily approved as follows:
All
Settlement Costs may be deducted from the Settlement Amount,
provided that not less frequently than once each quarter, the
Settlement Administrator in coordination with FIA shall file with
the court a written report stating the nature, amount, and
recipients of the Settlement Costs that have been expended, paid,
or incurred, and also provided that preliminary approval is
subject to challenge in the context of a motion for final
approval.
1
The parties do not define Settlement Costs.
8
E.
Other Requested Rulings
The parties ask the court to give preliminary approval to
certain specific matters, based on particular sections of the
Settlement Agreement, and ask the court to adopt the language
they used in their proposed order.
The parties do not explain
why separate preliminary approval is necessary for these matters.
At this stage, the court can only determine whether the
proposed settlement appears to fall within the range of possible
final approval.
See, e.g., Am. Int’l Group, Inc. v. ACE INA
Holdings, Inc., 2011 WL 3290302, at *6 (N.D. Ill. July 26, 2011).
For that reason, the parties’ request for a ruling that the
claims administration and distribution plan in the Settlement
Agreement are fair and adequate is premature.
All findings and
rulings for purposes of preliminary approval are contingent on
the parties achieving successful final approval of the Settlement
Agreement.
1.
Schedule for Exclusions, Claims, Documents, and Fee
Request
The parties ask the court to direct that exclusions, claims,
documents, and fee requests be submitted by certain dates.
Subject to subsequent modification as may be necessary, those
potential class members who do not submit claim forms or file
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objections have the right to be excluded from the Settlement
Class by sending a written request for exclusion to the address
listed in the Class Notice that is postmarked on or before
Friday, October 28, 2011.
Claim forms for payment under the
settlement are to be submitted via the website or postmarked on
or before Friday, December 23, 2011.
Documents and materials in
support of the request for final approval of the Settlement
Agreement shall be filed on or before Wednesday, November 23,
2011.
Any motion by Class Counsel for fees, costs, expenses, and
incentive awards to the named plaintiffs shall be filed on or
before Friday, October 7, 2011.
2.
Settlement Termination
The parties have agreed that BAC may terminate the
Settlement Agreement if a certain percentage of the class chooses
to be excluded from the settlement.
confidential.
The agreed percentage is
Although the parties offer, in a footnote, to
submit the confidential information to the court, under seal,
they have not done so.
Nevertheless, the parties ask the court
to approve that part of their agreement.
10
The court cannot determine whether the confidential terms
meet the standard for preliminary approval because they were not
submitted to the court for review.
3.
Stay of Proceedings and Injunction Against Other Suits
The parties ask the court to stay further proceedings in
this action, except as is necessary to address the settlement,
and to enjoin all “Class Members” who have not been excluded from
the class from initiating or pursuing claims until a final
approval order or termination of the Settlement Agreement.2
Based on the parties’ Settlement Agreement, proceedings in this
case are stayed, except for those necessary to address the
settlement, until a final order issues or the Settlement
Agreement is terminated.
With respect to an injunction against “Class Members” to
preclude them from initiating or pursuing claims against BAC in
other cases, the parties provide no basis for such an order.
In
support, the parties state that if “any Defendant Releasee” were
to assert a defense in another action based on the court’s order
granting preliminary approval of the Settlement Agreement, that
2
Under the definitions in the Settlement Agreement,
“Settlement Class Members” are all of those who meet the class
definition and who were not excluded from the Settlement Class.
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suit should be stayed immediately.
The parties also appear to
intend to block a separate class action based on the same claims.
In the absence of any such suits and lacking proper support
for an injunction, the parties have not provided a basis to enter
the requested injunction, particularly at the preliminary
approval stage.3
See Fed. R. Civ. P. 65; 28 U.S.C. § 1651; see,
e.g., In re Life Investors Ins. Co. of Am., 589 F.3d 319, 328-32
(6th Cir. 2009); In re Am. Investors Life Ins. Co. Annuity Mktg.
& Sales Practices Litig., 715 F. Supp. 2d 610, 614-16 (E.D. Pa.
2010) enforcing permanent injunction imposed as part of final
approval at 263 F.R.D. 226, 250-51 (E.D. Pa. 2009)); Curtis-Bauer
v. Morgan Stanley & Co., Inc., 2008 WL 4667090, at *11 (N.D. Cal.
Oct. 22, 2008) (imposing permanent injunction as part of final
approval order).
Although other suits were enjoined in In re
Mut. Funds Inv. Litig. as part of a preliminary approval order,
the cursory nature of the order does not provide the background
or reasoning in support of the injunction ruling, which minimizes
any persuasive value the case may have had here.
2010 WL
2044895, at *3 (D. Md. May 19, 2010).
3
In their motion, the parties failed to cite authority to
support their request for an injunction.
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4.
Objections to Settlement
The parties ask the court to approve certain procedures for
submitting objections to the settlement.
The proposed procedures
require objectors to file before a deadline a written notice of
objection which provides proof of membership in the Settlement
Class, specific objections, and grounds including proof for the
objections.
A Class Member who does not provide written notice
of an objection within the time allowed would not be permitted to
appear at the final hearing and would be deemed to have waived
any objection to the settlement.
In addition, the parties
propose that class or defense counsel will be entitled to depose
the objector and to seek discovery related to the objection.
The
parties explain that the proposed objection procedures are
intended to protect the interests of the class in an efficient
and expeditious resolution of the case against nuisance
objections.
Courts have recognized the problems caused by so-called
professional objectors, who assert meritless objections in large
class action settlement proceedings to extort fees or other
payments.
See, e.g., Vollmer v. Selden, 350 F.3d 656, 659-63
(7th Cir. 2003); Duhaime v. John Hancock Mut. Life Ins. Co., 183
F.3d 1, 6-7 (1st Cir. 1999); In re Countrywide Fin. Corp.
Customer Data Sec. Breach Litig., 2010 WL 5147222, at *4 (W.D.
13
Ky. Dec. 13, 2010); Dewey v. Volkswagen of Am., 728 F. Supp. 2d
546, 575 (D.N.J. 2010); In re Initial Public Offering Sec.
Litig., 728 F. Supp. 2d 289, 295 (S.D.N.Y. 2010); In re United
Health Group Inc. PSLRA Litig., 643 F. Supp. 2d 1107, 1109 (D.
Minn. 2009).
The requirement for written objections filed by a
deadline appears to be a common part of the objection procedures
used in other cases.
See, e.g., Macedonia Church v. Lancaster
Hotel, LP, 2011 WL 2360138, at *7 (D. Conn. June 9, 2011); In re
Checking Account, 2011 WL 2258458, at *8-*9; Dalton v. Carworks
Servicing, LLC, 2010 WL 5341939, at *9 (S.D. Ala. Nov. 19, 2010).
The parties cite no case, however, in which a court has adopted
all of the proposed objection procedures advocated here, which
include waiver of a late-filed objection and the opportunity for
discovery conducted by class or defense counsel.4
In this case, Settlement Class Members who choose to submit
objections to notice, the Settlement Agreement, class
certification, the application of Class Counsel for an award of
fees and costs, the claims process, or any other part of the case
that is subject to court approval must do so in writing on or
4
Despite the potential problems caused by professional
objectors, some courts have considered all submitted objections,
even those that were not timely filed and those that were
frivolous. See, e.g., Dewey, 728 F. Supp. 2d at 574-75; In re
Compact Disc Minimum Advertised Price Antitrust Litig., 216
F.R.D. 197, 218 n.52 (D. Me. 2003).
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before Friday, October 28, 2011.
The written notice of
objection, together with any supporting materials, must be filed
in this case either through electronic docketing or
conventionally with the Clerk of Court.
In addition, the written
objection must be served on Class Counsel and Defendant’s Counsel
by first class mail postmarked on or before Friday, October 28,
2011.
To be considered, an objection must include documentary
proof that the objector is a member of the Settlement Class, a
statement of the specific objection or objections, and the
grounds for the objection or objections.
5.
Settlement Agreement Not an Admission
The parties have agreed that their Settlement Agreement and
all negotiations, documents, and discussions associated with it
are not an admission or evidence of liability or wrongdoing by
BAC.
Therefore, the Settlement Agreement and its related
negotiations, documents, and discussions cannot be used against
BAC except for purposes of construing, implementing, or enforcing
the Settlement Agreement and the court’s orders.
Conclusion
For the foregoing reasons, the parties’ joint motion to
incorporate additional rulings into the preliminary approval
15
order (document no. 98) is granted in part and denied in part.
The court makes the following additional findings in support of
preliminary approval of the Settlement Agreement and preliminary
class certification:
1.
All parts of the preliminary approval of the Settlement
Agreement and preliminary settlement class certification in the
order issued on July 27, 2011, and in this order are subject to
review for purposes of a final order after notice to the
settlement class, consideration of comments and objections if
any, and a hearing to be held on Thursday, December 8, 2011.
2.
The short-form notice is not preliminarily approved
because it lacks mailing instructions.
3.
The proposed claim form is preliminarily approved.
4.
The parties’ agreement that FIA will retain Rust
Consulting, Inc. as Settlement Administrator is preliminarily
approved.
FIA through Rust will provide an affidavit on or
before Wednesday, November 23, 2011, to class counsel and the
court that explains how notice was disseminated.
5.
All Settlement Costs may be deducted from the Settlement
Amount, provided that not less frequently than once each quarter,
the Settlement Administrator in coordination with FIA shall file
with the court a written report stating the nature, amount, and
recipients of the Settlement Costs that have been expended, paid,
16
or incurred, and also provided that preliminary approval is
subject to challenge in the context of a motion for final
approval.
5.
Subject to subsequent modification as may be necessary,
those potential class members who do not submit claim forms or
file objections have the right to be excluded from the Settlement
Class by sending a written request for exclusion to the address
listed in the Class Notice that is postmarked on or before
Friday, October 28, 2011.
6.
Claim forms for payment under the settlement are to be
submitted via the website or postmarked on or before Friday,
December 23, 2011.
7.
Documents and materials in support of the request for
final approval of the Settlement Agreement shall be filed on or
before Wednesday, November 23, 2011.
8.
Any motion by Class Counsel for fees, costs, expenses,
and incentive awards to the named plaintiffs shall be filed on or
before Friday, October 7, 2011.
9.
Based on the parties’ Settlement Agreement, proceedings
in this case are stayed, except for those necessary to address
the settlement, until a final order issues or the Settlement
Agreement is terminated.
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10.
Settlement Class Members who choose to submit
objections to approval of the Settlement Agreement or any part of
the Settlement Agreement or to the application of Class Counsel
for an award of fees and costs must do so in writing on or before
Friday, October 28, 2011.
The written notice of objection,
together with any supporting materials, must be filed in this
case either through electronic docketing or conventionally with
the Clerk of Court.
In addition, the written objection must be
served on Class Counsel and Defendant’s Counsel by first class
mail postmarked on or before Friday, October 28, 2011.
To be
considered, an objection must include documentary proof that the
objector is a member of the Settlement Class, a statement of the
specific objection or objections, and the grounds for the
objection or objections.
10.
The parties have agreed that their Settlement Agreement
and all negotiations, documents, and discussions associated with
it are not an admission or evidence of liability or wrongdoing by
BAC.
Therefore, the Settlement Agreement and its related
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negotiations, documents, and discussions cannot be used against
BAC except for purposes of construing, implementing, or enforcing
the Settlement Agreement and the court’s orders.
SO ORDERED.
____________________________
Joseph A. DiClerico, Jr.
United States District Judge
(Sitting by designation.)
August 23, 2011
cc:
Michael D. Donovan, Esquire
David J. Fioccola, Esquire
Robert G. Flanders, Jr., Esquire
Andrew S. Kierstead, Esquire
Mark P. Ladner, Esquire
Matthew H. Parker, Esquire
Michael J. Quirk, Esquire
Peter N. Wasylyk, Esquire
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