SUPERIOR COURT OF CALIFORNIA

COUNTY OF SANTA CLARA

DONNA LOUISE HORNER, individually and on behalf of all others similarly situated,

Plaintiff,

vs.

CROWN ASSET MANAGEMENT, LLC, a Georgia limited liability company; and DOES 1 through 10, inclusive,

Defendant.

Case No. 2017-1-CV-315221

TENTATIVE RULING RE: MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on March 8, 2019, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION
II.
This is a putative consumer class action brought pursuant to the California Fair Debt Buying Practices Act, Civil Code sections 1788.50-1788.64 (“CFDBPA”). According to the Class Action Complaint for Statutory Damages (“Complaint”), filed on August 29, 2017, plaintiff Donna Louise Horner (“Plaintiff”) seeks statutory damages against defendant Crown Asset Management, LLC (“Defendant”) arising from its routine practice of sending initial written communications that do not contain the notice required by the CFDBPA. (Complaint, ¶ 1.) The Complaint sets forth a single cause of action under the CFDBPA.

The parties have reached a settlement. They have filed a joint motion for preliminary approval of the settlement.

The motion for preliminary approval of the settlement was originally set for January 18, 2019. The settlement, however, did not set forth an amount of fees to be paid by Defendant. The Court concluded it could not be determined whether the settlement is fair absent information regarding the fees and costs to be requested. The Court therefore ordered the parties to file a supplemental declaration providing details regarding the amount of fees and costs to be requested. The parties have done so and the Court now rules on the motion.

III. LEGAL STANDARD
IV.
Generally, “questions whether a settlement was fair and reasonable, whether notice to the class was adequate, whether certification of the class was proper, and whether the attorney fee award was proper are matters addressed to the trial court’s broad discretion.” (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 234-235, citing Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794.)

In determining whether a class settlement is fair, adequate and reasonable, the trial court should consider relevant factors, such as “the strength of plaintiffs’ case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and the stage of the proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement.”

(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at pp. 244-245, citing Dunk, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com’n, etc. (9th Cir. 1982) 688 F.2d 615, 624.)

“The list of factors is not exclusive and the court is free to engage in a balancing and weighing of factors depending on the circumstances of each case.” (Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245.) The court must examine the “proposed settlement agreement to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.” (Ibid., quoting Dunk, supra, 48 Cal.App.4th at p. 1801 and Officers for Justice v. Civil Service Com’n, etc., supra, 688 F.2d at p. 625, internal quotation marks omitted.)

The burden is on the proponent of the settlement to show that it is fair and reasonable. However “a presumption of fairness exists where: (1) the settlement is reached through arm’s-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small.”

(Wershba v. Apple Computer, Inc., supra, 91 Cal.App.4th at p. 245, citing Dunk, supra, 48 Cal.App.4th at p. 1802.)

V. DISCUSSION
VI.
A. Provisions of the Settlement
B.
The case has been settled on behalf of the following class:

(i) all persons with addresses in California (ii) to whom SUPERLATIVE RM sent, or caused to be sent, an initial written communication in the form of Exhibit “1” to Plaintiff’s Class Action Complaint filed herein (iii) in an attempt to collect a charged-off consumer debt originally owed to CITIBANK, N.A., and alleged to be currently owed to Defendant (iv) which was sold or resold to Defendant on or after January 1, 2014, (v) which was not returned as undeliverable by the U.S. Post Office (vi) during the period one year prior to the date of filing this action through the date of class certification.

(Class Action Settlement Agreement (“Settlement Agreement”), ¶ 2.3.)

Pursuant to the settlement, Defendant will pay $6,230 to the class (no less than $35 to each class member). (Settlement Agreement, ¶ 4.1.) If there are opt-outs, the amount paid per class member will be recalculated on a pro rata basis. (Ibid.) Defendant will also pay an incentive award of $1,000 to Plaintiff, in addition to $1,000 pursuant to Civil Code section 1788.62, and up to $31,000 in attorneys’ fees and costs. (Id. at ¶¶ 4.2 and 4.5; Joint Statement of the Parties and Supplemental Declaration of Raeon R. Roulston in Support of Joint Motion and Motion for Preliminary Approval of Class Action Settlement and Provisional Class Certification, ¶¶ 8-9.) No information has been provided to the Court regarding settlement administration costs. Settlement checks remaining uncashed after 90 days from the mailing date will be paid to Pro Bono Project Silicon Valley as a cy pres recipient. (Settlement Agreement, ¶ 4.4.)

C. Fairness of the Settlement
D.
The parties assert the settlement is the product of arm’s-length negotiations that took place over several months. The parties state settlement was reached only after an extensive exchange of information. Plaintiff believes the claims in this action present a reasonable probability of a favorable determination on behalf of the class, but concedes there is significant litigation risk that is avoided by settling the case.

Overall, the Court finds the settlement is fair. It provides for some recovery for each class member and eliminates the risk and expense of further litigation.

E. Incentive Award, Fees, and Costs
F.
In addition to the $1,000 settlement payment pursuant to Civil Code section 1788.62, Plaintiff will seek a class representative incentive award of $1,000 for class representative Donna Louise Horner.

The rationale for making enhancement or incentive awards to named plaintiffs is that they should be compensated for the expense or risk they have incurred in conferring a benefit on other members of the class. An incentive award is appropriate if it is necessary to induce an individual to participate in the suit. Criteria courts may consider in determining whether to make an incentive award include: 1) the risk to the class representative in commencing suit, both financial and otherwise; 2) the notoriety and personal difficulties encountered by the class representative; 3) the amount of time and effort spent by the class representative; 4) the duration of the litigation and; 5) the personal benefit (or lack thereof) enjoyed by the class representative as a result of the litigation. These “incentive awards” to class representatives must not be disproportionate to the amount of time and energy expended in pursuit of the lawsuit.

(Cellphone Termination Fee Cases (2010) 186 Cal. App. 4th 1380, 1394-1395, quotation marks, brackets, ellipses, and citations omitted.)

Prior to final approval of the settlement, the class representative must submit a declaration specifically detailing her participation in this action.

The Court also has an independent right and responsibility to review the requested attorneys’ fees and only award so much as it determines reasonable. (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127-128.) In the newly filed supplemental declaration, Plaintiff’s counsel states the parties have reached an agreement that Plaintiff’s counsel will seek attorneys’ fees and costs in an amount not to exceed $31,000. (Joint Statement of the Parties and Supplemental Declaration of Raeon R. Roulston in Support of Joint Motion and Motion for Preliminary Approval of Class Action Settlement and Provisional Class Certification, ¶¶ 8-9.) Plaintiff’s counsel should submit lodestar information (including hourly rates and hours worked) prior to the final approval hearing so the Court can compare the lodestar information with the requested fees.

G. Conditional Certification of Class
H.
The parties request the putative class be conditionally certified for purposes of the settlement. Rule 3.769(d) of the California Rules of Court states that “[t]he court may make an order approving or denying certification of a provisional settlement class after [a] preliminary settlement hearing.” California Code of Civil Procedure Section 382 authorizes certification of a class “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court . . . .” As interpreted by the California Supreme Court, Section 382 requires: (1) an ascertainable class; and (2) a well-defined community of interest among the class members. (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.)

The “community-of-interest” requirement encompasses three factors: (1) predominant questions of law or fact; (2) class representatives with claims or defenses typical of the class; and, (3) class representatives who can adequately represent the class. (Id. at p. 326.) “Other relevant considerations include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing.” (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.) The plaintiff has the burden of establishing that class treatment will yield “substantial benefits” to both “the litigants and to the court.” (Blue Chip Stamps v. Superior Court (1976) 18 Cal.3d 381, 385.)

As explained by the California Supreme Court,

The certification question is essentially a procedural one that does not ask whether an action is legally or factually meritorious. A trial court ruling on a certification motion determines whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be advantageous to the judicial process and to the litigants.

(Sav-On Drug Stores, Inc. v. Superior Court, supra, 34 Cal.4th at p. 326, internal quotation marks, ellipses, and citations omitted.)

Class members can be ascertained from Defendant’s records. There is a common issue in this case regarding the substantially similar debt collection letters Defendant sent to class members and whether those letters violated the CFDBPA. No issue has been raised regarding the typicality or adequacy of Plaintiff as class representative. In sum, the Court finds the proposed class should be conditionally certified.

I. Class Notice
J.
The content of a class notice is subject to court approval. “If the court has certified the action as a class action, notice of the final approval hearing must be given to the class members in the manner specified by the court.” (Cal. Rules of Court, rule 3.769(f).)

The notice generally complies with the requirements for class notice. (See Joint Statement of the Parties and Supplemental Declaration of Raeon R. Roulston in Support of Joint Motion and Motion for Preliminary Approval of Class Action Settlement and Provisional Class Certification.) It provides basic information about the settlement, including the settlement terms, and procedures to object or request exclusion. The notice is approved.

K. Conclusion
L.
The motion for preliminary approval of class settlement is GRANTED. The final approval hearing is set for July 26, 2019, at 9:00 a.m. in Department 5.

The Court will prepare the final order if this tentative ruling is not contested.