IAN DOUGLAS vs. DHI GROUP, INC., and DICE INC.,

SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA

IAN DOUGLAS, individually, as a representative of the class, and on behalf of the general public,

Plaintiff,

vs.

DHI GROUP, INC., and DICE INC.,

Defendants.
Case No. 18CV331732

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

This is a putative class action brought under the Fair Credit Reporting Act (“FCRA”). According to the allegations of the Class Action Complaint (“Complaint”), filed on July 26, 2017, defendants DHI Group, Inc. and Dice Inc. (collectively, “Defendants”) operate a web service called “Dice Open Web” that searches the internet and creates profiles on people based on information scraped from various sources, including social media sites. (Complaint, ¶ 10.) Defendants then assemble that information into a profile without making any effort to verify the accuracy of the information. (Ibid.) The profiles are sold to recruiters and employers to use for evaluating job applicants. (Id. at ¶ 11.)

The Complaint sets forth the following counts: (1) Disseminating Consumer Reports Without a Permissible Purpose; (2) Failure to Obtain Certification of a Permissible Purpose; (3) Failure to Obtain Certification of Disclosure, Authorization, Adverse Action Procedures and Equal Employment Opportunity Laws; (4) Failure to Provide Summary of Consumer Rights; (5) Failure to Provide Notice to Users of FCRA Responsibilities; and (6) Failure to Provide Consumers’ Full Files Upon Request.

The parties have reached a settlement. Plaintiff has filed a motion for preliminary approval of the settlement.

II. LEGAL STANDARD

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.)

III. DISCUSSION

A. Provisions of the Settlement

The case has been settled on behalf of the following class:

All individuals about whom Defendants created an Open Web profile and (a) for whom a third party used a feature on the Open Web profile to communicate with the individual, or (b) the individual requested deletion of their Open Web profile. The Class Period is from July 26, 2012 to the date the Class List is prepared.

(Declaration of E. Michelle Drake in Support of Unopposed Motion for Preliminary Approval of Class Action Settlement (“Drake Decl.”), Ex. A (“Settlement Agreement”), ¶ 3.1.)

Pursuant to the settlement, Defendant will pay a non-reversionary amount of $1,000,000. (See Settlement Agreement, ¶ 1.27.) This amount includes an incentive award of $5,000 for Plaintiff, up to $333,333 in attorneys’ fees, costs of $32,000, and administration expenses of $75,000. The settlement payments will be distributed evenly to class members, with a maximum individual recovery of $500. (Settlement Agreement, ¶¶ 7.2.1-7.2.2.) However, if enforcing the $500 cap results in more than 25% of the settlement payment ($250,000) being donated to the cy pres recipient (Public Justice), the maximum individual benefit payment will be increased until the cy pres donation is equal to 25% of the total settlement payment. (Settlement Agreement, ¶ 7.2.2.) The settlement also includes several non-monetary benefits in the form of revised business practices. (Settlement Agreement, ¶ 8.)

To receive payment, a class member must file a claim form. The claim form has space to write in the class member’s name and mailing address. The form also has a box to check if the class member believes his or her statutory rights were violated. (See Settlement Agreement, Ex. 4.) It is not apparent why class members should be required to file a claim form. Whether an individual qualifies to be a class member under the class definition can be determined without any additional information from class members. Moreover, a non-attorney class member is unlikely to know if his or her “statutory rights” were violated. The parties shall appear at the hearing on this motion to explain the claim form requirement. The Court may request supplemental briefing at that time.

B. Fairness of the Settlement

Plaintiff states the settlement was only reached after the parties obtained discovery that shed light on Defendants’ defenses to liability and class certification. The parties also engaged in a full-day mediation session with an experienced mediator. As stated above, however, the Court has questions regarding the necessity of the claims process. Therefore, it is not clear at this time how much each class member will recover and the Court cannot make a determination regarding fairness.

C. Incentive Award, Fees, and Costs

Plaintiff seeks a class representative incentive award of $5,000 for class representative Ian Douglas.

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 his 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 in an amount not to exceed $333,333 in addition to reasonable costs. 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. Plaintiff’s counsel must also provide information supporting any request for actual incurred costs.

D. Conditional Certification of Class

Plaintiff requests 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 Defendants’ records. There are common issues regarding whether Defendants’ Open Web Profiles are consumer reports under the FCRA, whether Defendants’ acted willfully, and the amount of damages. 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.

E. Class Notice

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 parties intend to provide both an email notice and a long form notice. The notices generally comply with the requirements for class notice. (See Settlement Agreement, Exs. 2 and 5.) They provide basic information about the settlement, including the settlement terms, and procedures to object or request exclusion. However, the notices discuss the claims process and may need to be modified in that regard. Further, the long form notice states class members who wish to object must mail a written objection to the Court, class counsel, and defense counsel by a certain date. The notice must be changed to state class members can appear and object at the final fairness hearing whether or not any written objection has been submitted and without any prior notice.

F. Conclusion

The parties are ordered to appear at the hearing on this motion to discuss the necessity of the claims process. This order is deemed contested; there is no need for the parties to notify the court that they will appear.

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