Trombley v. Bank of America Corporation
Filing
97
ORDER granting 90 Motion for Preliminary Approval of Class Action SettlementAgreement. The hearing for final approval of the Settlement Agreement is scheduled for Thursday, December 8, 2011, at 10:00 a.m. in USDC-RI, Courtroom 4. So Ordered by Judge Joseph DiClerico (New Hampshire) on 7/28/2011. (Duhamel, John)
UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF RHODE ISLAND
Bruce J. Trombley, et al.
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, alleging, inter alia, breach of the
implied covenant of good faith and fair dealing.1
The parties
have reached a settlement, and the plaintiffs have filed an
unopposed motion for preliminary approval of their settlement
agreement, which includes a request for certification of a
settlement class.
The plaintiffs also filed a copy of their
proposed settlement agreement, with a proposed claim form,
proposed notice of the settlement, a proposed preliminary
approval order, and a proposed final order and judgment.
1
Trombley and Sukaskas also alleged breach of contract,
violation of the Truth in Lending Act, and that their credit card
agreements were unconscionable. The parties stipulated to the
dismissal of the unconscionability claim without prejudice. The
court previously granted motions in favor of BAC on the breach of
contract and Truth in Lending Act claims.
Background
Trombley and Sukaskas each had a BAC credit card.
They
allege that Trombley made a payment in person at a BAC branch on
the date the payment was due, but BAC did not credit the payment
on that date, imposed a late fee, and cancelled his promotional
interest rate.
Sukaskas attempted to make an online payment for
his credit card balance but was informed that BAC would not
credit the payment on that day because it was the due date.
To
avoid paying late, he paid by telephone, and BAC imposed a
telephone payment fee of $15.00.
They further allege that BAC
has imposed similar fees and charges on the putative class
members for timely-tendered payments.
Trombley and Sukaskas filed this case as a putative class
action on November 24, 2008.
The parties initially litigated
whether the claims were subject to arbitration, until BAC
withdrew its motion for arbitration.
Following the court’s
decisions on BAC’s motion to dismiss and motion for judgment on
the pleadings, the remaining claim in this case is that BAC
violated the duty of good faith and fair dealing by failing to
post the plaintiffs’ and the putative class members’ payments on
the day they were received, without imposing additional fees or
charges.
The plaintiffs argue that BAC abused the discretion
provided in their credit card agreements to delay crediting
2
certain payments made on the due date in violation of the implied
covenant of good faith and fair dealing.
The parties entered a Settlement Agreement that is dated
June 27, 2011.
For purposes of settlement, the parties have
agreed to the following definition of the settlement class:
all Persons who, at any time between August 1, 2006 and
February 22, 2010: (x) had a credit card account with
FIA2 and (y) made a Qualifying Payment in connection
with that account (I) in person at a Bank of America
banking center; (ii) by phone using Bank of America’s
pay-by-phone service; or (iii) electronically using
Bank of America’s online banking services; and (z) who
incurred a late payment fee, finance charge, or other
fees, penalties or charges, in connection with the
timing of such payment that was not waived or refunded.
Settlement Agreement § 2(bb).
“Qualifying Payment” for purposes
of the settlement class means:
payment by a FIA cardholder on a FIA credit account
where the payment is (x) equal to or in excess of the
minimum payment due for the monthly billing cycle in
which it is made (y) not determined by Defendant to be
deficient for non-sufficient funds; and (z) made, or
alleged by the cardholder to be made, on or before the
same day as the “Payment Due Date” or other deadline
stated in the operative cardholder agreement,
cardholder statement or other disclosure to the
cardholder.
Settlement Agreement § 2(u).
2
FIA Card Services, N.A. is the successor-in-interest to
Bank of America, N.A. and is a wholly-owned subsidiary of BAC.
Settlement Agreement, § 1, Recitals.
3
Under the terms of the Agreement, the amount of the
settlement is $5,000,000.
BAC will pay up to $28 from the net
settlement amount to each settlement class member who the
settlement administrator determines has satisfied the
requirements for payment or account credit and will pay the class
representatives $5,000 each as a service award.
Court approved
attorneys’ fees and costs and the costs of the settlement will
also be paid out of the settlement amount.
The net settlement
amount is the amount remaining after payment of court approved
fees, costs, service awards, and any other court-approved
deductions.
If money remains in the settlement amount after the
required payments have been made, up to $450,000 of the money
remaining will constitute a Cy Pres Fund for distribution to
designated organizations.
The proposed settlement agreement also provides that all
members of the settlement class who do not opt out of the class
will be bound by the terms of the settlement agreement.
After
final settlement approval, the class representatives and each
settlement class member will release BAC as is provided in the
Settlement Agreement.
The Settlement Agreement also provides for
obtaining class certification, notice to class members, and other
procedures necessary to resolve the case.
4
Discussion
In their present motion, the plaintiffs ask the court to
certify a settlement class and to give preliminary approval to
the Settlement Agreement.
I.
Settlement Class Certification
To certify a class, the parties must show that the proposed
class meets all of the requirements of Federal Rule of Civil
Procedure 23(a) and one of the three categories provided in Rule
23(b).
Garcia-Rubiera v. Calderon, 570 F.3d 443, 460 (1st Cir.
2009); Smilow v. Southwestern Bell Mobile Sys., Inc., 323 F.3d
32, 38 (1st Cir. 2003).
When certification is sought for
purposes of settlement, the certification requirements designed
to protect absentees require heightened scrutiny because the
court will not have the opportunity to modify the class, if
necessary, over the course of the litigation.
Amchem Prods.,
Inc. v. Windsor, 521 U.S. 591, 620 (1997); Hochstadt v. Boston
Sci. Corp., 708 F. Supp. 2d 95, 102 (D. Mass. 2010)(“[W]hen a
settlement class is proposed, it is incumbent on the district
court to give heightened scrutiny to the requirements of Rule 23
in order to protect absent class members.”).
5
A.
Requirements of Rule 23(a)
“Rule 23(a) requires that (1) there be numerosity, (2) there
be common questions of law or fact, (3) the class
representative’s claims be typical of the class, and (4) the
representative’s representation of the class be adequate.”
In re
New Motor Vehicles Can. Exp. Antitrust Litig., 522 F.3d 6, 18
(1st Cir. 2008).
1.
Numerosity
The numerosity requirement is satisfied if the class is so
large that joinder of all the class members would be
impracticable.
Fed. R. Civ. P. 23(a)(1).
The plaintiffs
estimate, and BAC does not dispute, that there are 391,108
potential class members.
Based on the estimated number, the
numerosity requirement is met.3
2.
Commonality
A class must share common questions of law or fact.
Civ. P. 23(a)(2).
Fed. R.
To satisfy the commonality requirement, the
claims of the class “must depend upon a common contention . . .
3
If the settlement amount, less estimated amounts for
expenses, is divided by the proposed payments to class members,
the calculation suggests the likely number of approved class
members is about half of the potential class members.
6
[which] must be of such a nature that it is capable of classwide
resolution--which means that determination of its truth or
falsity will resolve an issue that is central to the validity of
each one of the claims in one stroke.”
Wal-Mart Stores, Inc. v.
Duke, 131 S. Ct. 2541, 2551 (2011).
Trombley and Sukaskas assert that the class shares the
contention that BOA’s practices and policies for credit card
balance payments violate the implied covenant of good faith and
fair dealing.
More specifically, the class shares the contention
that BAC’s practices and policies violated the implied covenant
of good faith and fair dealing by causing Trombley, Sukaskas, and
class members to incur penalties, fees, or charges when they made
payments on their BAC credit card accounts in person at a branch
bank, by telephone, or electronically.
For Trombley, Sukaskas,
and the class, the claim that BAC violated the implied covenant
of good faith and fair dealing is based on Delaware law.
See
Order, dkt. no. 47, Dec. 23, 2009, at 5 n.3 & 9.
The proposed class shares the same factual and legal
contentions and therefore meets the commonality requirement.
3.
Typicality and Adequacy
The requirements of typicality and adequacy focus on the
class representatives.
Fed. R. Civ. P. 23(a)(3) & 23(a)(4).
7
The claims of the class representatives must be typical of the
class members’ claims, meaning that the representatives’
“injuries arise from the same events or course of conduct as do
the injuries of the class and . . . [the representatives’] claims
and those of the class are based on the same legal theory.”
Otte
ex rel. Estate of Reynolds v. Life Ins. Co. of N. Am., --- F.
Supp. 2d ---, 2011 2307404, at *4 (D. Mass. June 10, 2011)
(internal quotation marks omitted).
The class representatives
must also be able to fairly and adequately protect the interests
of the class, which requires a showing that “the interests of the
representative part[ies] will not conflict with the interests of
any of the class members, and . . . that counsel chosen by the
representative part[ies] is qualified, experienced and able to
vigorously conduct the proposed litigation.”
Id. at *6 (internal
quotation marks omitted); see also Ortiz v. Fibreboard Corp., 527
U.S. 815, 856 (1999).
The claims alleged in this case are based on three payment
methods that incurred fees, charges, or penalties imposed by BAC.
Trombley made his payment in person at a branch bank, and
Sukaskas paid by telephone after trying to pay electronically.
Both incurred fees, charges, or other penalties as a result.
As
defined, each member of the class will also have made a payment
in one or more of the three stated payment methods and will have
8
incurred fees, charges, or penalties.
Variations in the payment
methods do not appear to be significant for purposes of the case.
Nothing has been presented that shows or suggests that Trombley’s
and Sukaskas’s claims are not typical of the claims of the class
members.
This case presents a relatively simple class action that
does not implicate the potential for conflicts of interest and
other problems which have arisen in more complex cases.
e.g., Ortiz, 527 U.S. at 856-57.
See,
The proposed settlement
obligates BAC to pay up to $5,000,000 to provide distributions of
$28 to each approved class member, distributions of $5,000 each
to Trombley and Sukaskas as class representatives, attorneys’
fees and costs, settlement costs, and a Cy Pres Fund.
Agreement, § 9(a).
Settlement
Although the Settlement Agreement provides
for payments to Trombley and Sukaskas in an amount that is much
higher than the payments to other class members, that arrangement
does not appear to jeopardize the payments that will be made to
the remainder of the class.
With respect to the adequacy of counsel to represent the
class, the plaintiffs’ counsel, Peter N. Wasylyk, Michael D.
Donovan, Michael J. Quirk, and Andrew S. Kierstead, represent
that they are “active practitioners whose experience in consumer
law and class action litigation is demonstrated by the
9
Declarations attached to this memorandum.”
90, at 17.
Memorandum, dkt. no.
Unfortunately, the declarations were not filed with
the memorandum.
Counsel shall promptly file the declarations.
The court has independently confirmed that each attorney,
representing Trombley and Sukaskas, has represented plaintiffs in
other class action litigation in federal court.
The court has
not found any indication that the plaintiffs’ counsel would not
meet the adequacy requirements.
B.
Requirements of Rule 23(b)
The class seeks certification under Rule 23(b)(3), which
requires that the common questions of law or fact predominate
over any individual questions and that a class action is the
better means for adjudicating the case.
To determine whether
common questions of law or fact predominate, the court generally
examines the elements of the claim.
See Erica P. John Fund, Inc.
v. Halliburton Co., 131 S. Ct. 2179, 2184 (2011).
For purposes
of a settlement class, however, any issues pertaining to
management of the class during litigation need not be considered.
Amchem, 521 U.S. at 620.
Because the parties have agreed to a settlement, the
plaintiffs will not be required to prove the elements of the
claim.
BAC has agreed to make certain payments to approved class
10
members, without admitting liability.
The parties have also
agreed to the terms for administering the class for purposes of
the settlement.
In these circumstances, the common questions
predominate over any individual questions that might arise.
Each individual class member’s claim in this case is for the
fees, charges, or penalties that BAC assessed when that
individual paid a credit card bill in person, by telephone, or
electronically.
The plaintiffs represent that individually the
amounts claimed on average would be $35, which is too small to
litigate in separate cases.
Therefore, a class action appears to
be superior to individual suits to resolve the claim raised here.
See Smilow, 323 F.3d at 40.
C.
Certification
Solely for the purpose of settlement as provided in the
parties’ Settlement Agreement and without prejudice to BAC’s
reserved rights to pursue arbitration and to contest class
certification should the settlement fail, the following
settlement class is conditionally certified:
All Persons who, at any time between August 1, 2006,
and February 22, 2010: (a) had a credit card account
with FIA; (b) made a Qualifying Payment in connection
with that account (I) in person at a Bank of America
banking center; (ii) by phone using Bank of America’s
pay-by-phone service; or (iii) electronically using
Bank of America’s online banking services; and (c) who
11
incurred a late payment fee, finance charge, or other
fees, penalties or charges, in connection with the
timing of such payment that was not waived or refunded.
Proposed Order at 2-3.
For purposes of the class definition, a
“Qualifying Payment” is
a payment by a FIA cardholder on a FIA credit account
where the payment is (x) equal to or in excess of the
minimum payment due for the monthly billing cycle in
which it is made (y) not determined by Defendant to be
deficient for non-sufficient funds; and (z) made, or
alleged by the cardholder to be made, on or before the
same day as the “Payment Due Date” or other deadline
stated in the operative cardholder agreement,
cardholder statement or other disclosure to the
cardholder.
Settlement Agreement, § 2(u).
Bruce J. Trombley and Ryan
Sukaskas will serve as the class representatives.
Pursuant to
Federal Rule of Civil Procedure 23(g), the following attorneys
are appointed to serve as class counsel:
Michael D. Donovan
Donovan Searles & Axler, LLC
1845 Walnut Street, Suite 1100
Philadelphia, Pennsylvania 19120
Michael J. Quirk
Williams Cuker Berezofsky, LLC
1515 Market Street, Suite 1300
Philadelphia, Pennsylvania 19102
Andrew S. Kierstead
The Law Office of Andrew S. Kierstead
1001 SW 5th Avenue, Suite 1100
Portland, Oregon 97204
12
Peter N. Wasylyk
The Law Offices of
Peter N. Wasylyk
1307 Chalkstone Avenue
Providence, Rhode Island 02903
II.
Preliminary Approval of Proposed Settlement
After a class has been certified in a case, a settlement
that would be binding on class members requires the court’s
approval, following a hearing and based on a finding that the
settlement is fair, reasonable, and adequate.
12(e).
Fed. R. Civ. P.
A proposed settlement of a class action may be given
preliminary approval “where it is the result of serious,
informed, and non-collusive negotiations, where there are no
grounds to doubt its fairness and no other obvious deficiencies
(such as unduly preferential treatment of class representatives
or of segments of the class, or excessive compensation for
attorneys), and where the settlement appears to fall within the
range of possible approval.”
Passafiume v. NRA Group, LLC, ---
F.R.D. —, 2010 WL 6641072, at *5 (E.D.N.Y. Nov. 30, 2010)
(internal quotation marks omitted); see also In re Puerto Rican
Cabotage Antitrust Litig., 269 F.R.D. 125, 140 (D.P.R. 2010).
The parties have thoroughly litigated this case since its
inception in 2008.
The plaintiffs represent that the settlement
provides $5,000,000 of economic relief to BOA customers.
13
The
plaintiffs also state that each class member on average paid $35
in improper late fees and that the settlement provides for
payment of up to $28 to each approved class member.
The
plaintiffs contend that settlement will benefit the public
interest, by avoiding delays and uncertainties in litigation.
The plaintiffs overstate the actual amount that will be
available for awards to class members, which is the net
settlement amount not $5,000,000.
The proposed amount of the
awards to Trombley and Sukaskas, $5,000 each, is greatly in
excess of the awards to individual class members, which at most
will be $28.
For purposes of preliminary approval and in the
absence of evidence of collusion, the awards alone do not
undermine the fairness of the proposed settlement.4
See, e.g.,
Staton v. Boeing Co., 327 F.3d 938, 976-77 (9th Cir. 2003).
If
the circumstances change or additional information suggests that
the terms of the settlement are not fair, however, the court will
not grant final approval.
Therefore, the Settlement Agreement is granted preliminary
approval.
4
For purposes of final approval, the parties will have to
justify the amount of the awards and demonstrate that the awards
are not unfair in light of the awards to the class members.
14
III.
Administration and Procedures
Once a settlement class is conditionally certified and the
proposed settlement receives preliminary approval, “[t]he court
must direct notice in a reasonable manner to all class members
who would be bound by the proposal.”
Fed. R. Civ. P. 23(e)(1).
The procedure then moves forward with submission of claim forms,
review of claim forms, exclusion from the class, a hearing on the
settlement proposal, a motion for final approval, and a final
decision and judgment.
Fed. R. Civ. P. 23(c) & 23(e); see also,
e.g., Andrews Farms v. Calcot, Ltd., 2011 WL 2923886, at *14
(E.D. Cal. July 18, 2011).
A.
Notice
Notice to potential Rule 23(b)(3) class members 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. (c)(2)(B).
The
notice must include the following information, stated clearly and
concisely in plain and easily understood language:
(I)
(ii)
(iii)
(iv)
(v)
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;
that the court will exclude from the class any member
who requests exclusion;
15
(vi) the time and manner for requesting exclusion; and
(vii) the binding effect of a class judgment on members
under Rule 23(c)(3).
Fed. R. Civ. P. 23(c)(2)(B).
In this case, the proposed notice is provided in a long form
and a short form.
The Settlement Agreement explains that notice
will be provided by either the long or the short form and that
the short form explains how to download or obtain the full notice
by mail.
The long form notice covers twelve pages, including an
introduction, a table of contents, a section of basic information
about the case and purpose of the notice, and sections explaining
the settlement benefits, the process for exclusion from the
settlement, counsel for the class, objections, the fairness
hearing, and the risk of doing nothing.
The long form notice
describes the nature of the action, provides the class
definition, explains the claim, states that a class member may
hire his own attorney, the availability and process for
exclusion, and the binding effect of a judgment.
The short form notice is a summary of the notice provided in
the long form.
The short form states the nature of the action;
explains the relief available from the settlement; provides the
deadlines for claims, exclusions, objections, and the date of the
hearing; and informs recipients how to obtain more information.
Although the short form notice does not provide all of the
16
required information, it does notify recipients about how to
obtain all of the information about the action, the class, the
settlement, and a potential class member’s rights.
The Settlement Agreement provides that BAC will mail notice
to the members of the settlement class who are reasonably
identifiable or it will provide notice electronically.
The
Settlement Agreement states that BAC can fulfill the notice by
mail requirement by using billing inserts.
The Agreement also
states that BAC can use either the long or the short form notice.
Rule 23(c) requires the court to direct the best notice to
class members that is practicable under the circumstances.
The
long form satisfies the requirements of Rule 23(c)(2)(B), while
the short form does not.
The plaintiffs do not explain why the
short form would be the best notice that is practicable under all
of the circumstances, including through individual mailings.
Therefore, notice by the long form is approved.
BAC must seek
approval before using the short form for notice.
B.
Administration
The plaintiffs’ proposed order granting preliminary approval
addresses many specific issues that were not included in the
plaintiffs’ unopposed motion seeking preliminary approval of the
Settlement Agreement.
The additional issues include
17
authorization for BAC to retain Rust Consulting, Inc. as
Settlement Administrator, approval of the claim form, preliminary
approval of settlement costs to allow quarterly deduction from
the Settlement Amount, and other matters.
Because those issues
were not addressed in the plaintiffs’ motion, the court will not
incorporate the proposed rulings into the order on preliminary
approval of the Settlement Agreement.
If the parties seek
additional rulings from the court, they must seek relief by
filing a motion along with a supporting memorandum.
C.
Preliminary Approval
The court grants preliminary approval of the Settlement
Agreement.
Conclusion
For the foregoing reasons, the plaintiffs’ unopposed motion
for preliminary approval (document no. 90) is granted as follows:
1.
A settlement class, as defined in the Settlement
Agreement, Section 2(bb) and Section 2(u), is conditionally
certified.
2.
Bruce J. Trombley and Ryan Sukaskas will serve as the
class representatives.
Pursuant to Federal Rule of Civil
Procedure 23(g), the following attorneys are appointed to serve
18
as class counsel:
Michael D. Donovan
Donovan Searles & Axler, LLC
1845 Walnut Street, Suite 1100
Philadelphia, Pennsylvania 19120
Michael J. Quirk
Williams Cuker Berezofsky, LLC
1515 Market Street, Suite 1300
Philadelphia, Pennsylvania 19102
Andrew S. Kierstead
The Law Office of Andrew S. Kierstead
1001 SW 5th Avenue, Suite 1100
Portland, Oregon 97204
Peter N. Wasylyk
The Law Offices of
Peter N. Wasylyk
1307 Chalkstone Avenue
Providence, Rhode Island 02903
3.
The Settlement Agreement is granted preliminary
approval.
4.
BAC shall provide notice to class members as set forth
in Section 5 of the Settlement Agreement, except that the long
form notice, not the short form, shall be used.
The parties are
granted the opportunity to file a motion, supported by a
memorandum of law, seeking leave to use the short form notice.
19
5.
The hearing for final approval of the Settlement
Agreement is scheduled for Thursday, December 8, 2011, at 10:00
a.m. at the United States District Court for the District of
Rhode Island in Providence, Rhode Island.
SO ORDERED.
____________________________
Joseph A. DiClerico, Jr.
United States District Judge
(Sitting by designation.)
July 28, 2011
cc:
Peter N. Wasylyk, Esquire
Andrew S. Kierstead, Esquire
Michael D. Donovan, Esquire
Michael J. Quirk, Esquire
Robert G. Flanders, Jr., Esquire
David J. Fioccola, Esquire
Mark P. Ladner, Esquire
Matthew H. Parker, Esquire
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