This is a putative class action arising out of a breach of defendant Vendini, Inc.’s (“Defendant”) servers and the resulting disclosure of data of Defendant’s customers, including their names, mailing addresses, e-mail addresses, phone numbers, and credit card numbers and expiration dates.  The action is brought by plaintiffs Lanie Lim and John Lewert (“Plaintiffs”) on behalf of themselves and others similarly situated.  Defendant is a ticketing service that handles sales for entertainment venues.[1]  Plaintiffs allege that Defendants’ customers purchase tickets through Defendant and entrust Defendant with safeguarding their personal information (including names, addresses, credit card numbers and expiration dates), but Defendant failed to implement and maintain policies and procedures to adequately protect the information of customers from unauthorized access, destruction, use, modification and/or disclosure, and failed to implement and maintain polices and procedures to detect and prevent such unauthorized acts.[2]

 

Plaintiffs allege that on or about May 25, 2013, they received notice from Defendant stating that a third-party hacker accessed Defendant’s databases and may have accessed customers’ personal information.[3]  The announcement stated that Defendant detected the breach of April 25, 2013, and it was believed to have occurred in late March.[4]  Plaintiffs allege that Defendant inexplicably delayed in providing notice to consumers of the security breach, which prevented Plaintiffs and the putative class from taking immediate steps to monitor and attempt to safeguard their personal information.[5]  Plaintiffs allege they and the putative class have suffered damages including lost time and expenses for debit and credit card monitoring and identity theft insurance, out of pocket expenses, anxiety, emotional distress, fear and apprehension of identity theft and fraud, loss of privacy and other economic and non-economic harm.[6]

 

The putative class is defined as: “All persons who are domiciled or reside in the United States whose [personal identification information] resided on Defendant’s computer network servers on or before April 25, 2013.”[7]

 

The Complaint, filed January 31, 2014, asserts twelve causes of action for: (1) violation of California Civil Code section 1798.80 et seq.;[8] (2) violation of California Business and Professions Code section 17200 et seq.; (3) false advertising under California Business and Professions Code section 17500 et seq.; (4) violations of the Consumer Legal Remedies Act, California Civil Code section 1750 et seq.; (5) breach of contract; (6) breach of implied contract; (7) unjust enrichment; (8) negligence; (9) invasion of privacy; (10) violation of the Song-Beverly Credit-Card Act, California Civil Code section 1747.08; (11) violation of the Stored Communications Act, 18 U.S.C. § 2711; and (12) violation of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030.

 

Settlement Terms

 

According to Plaintiffs, Lim’s counsel sent Defendant a letter in June 2013 outlining the claims on behalf of Lim and the proposed class, and over the next several months, the parties exchanged substantial information about the claims and Defendant’s defenses.[9]  The parties eventually participated in two full-day mediation sessions with the Honorable John Leo Wagner (Ret.), as well as representatives for Defendant’s general liability carrier, St. Paul Fire & Marine Insurance Company (“St. Paul”), who had filed a declaratory relief/coverage action against Defendant in federal court.[10]  The parties accepted Judge Wagner’s proposal to resolve the claims, and the parties thereafter engaged in negotiations to draft the Class Action Settlement Agreement (the “Settlement Agreement”).[11]

 

Under the Settlement Agreement, all class members who do not opt out of the settlement will release claims from the “Data Security Incident” in exchange for Defendant’s creation of a non-reversionary common fund in the amount of $3,000,000.00, which includes up to 30 percent in attorney’s fees and up to $25,000 in costs, costs of claims administration and notice, and service awards of $2,500 for each of the Plaintiffs.[12]  Class members can submit claims for “Unreimbursed Identity Theft Losses” of up to $3,000.00 and/or “Unreimbursed Expenses” of up to $1,000.00 which are attributable to the Data Security Incident and occurred on or after April 25, 2013 through the end of the Claims Period.[13]

 

Regarding notice to the putative class, to the extent Defendant possesses the name and contact information for any person it believes to be a class member, Defendant will provide this to the Claims Administrator within 7 calendar days after preliminary approval.  Within 14 days after preliminary approval, the Claims Administrator will create and maintain a website that includes the Settlement Agreement, the Claim Form, and the preliminary approval Order (to be activated within 10 business days of preliminary approval).  The website shall be designed and constructed to accept electronic Claim Form submissions.  Also within 14 days after preliminary approval, the Claims Administrator will disseminate the Notice and Claim Form via e-mail to all class members for whom Defendant has provided e-mail addresses.[14]  The Claims Administrator will also disseminate the Summary Notice via e-mail and by postcard (U.S. Mail) to class members for whom Defendant has not provided an e-mail address, or whose e-mail notices are returned or otherwise known to be undeliverable.[15]  Finally, the Claims Administrator will disseminate the Summary Notice in one daily and one weekend issue of USA Today.

 

Class members may submit one claim before the expiration of the “Claims Period” (one year after the “Notice Date”, or the date by which the Notice Plan is complete)[16] by submitting a “Claim Form”[17] with required documentation to the Claims Administrator.[18]  Class members may object to the Settlement by filing their objections in writing with the Court, with service on class counsel, defense counsel, and the Claims Administrator, no later than the “Opt-Out Date”, which is 45 days after the Notice Date.[19]  Class members may be excluded from the settlement by sending a written Request for Exclusion to the Claims Administrator no later than the Opt-Out Date.[20]

 

On June 16, 2014, this Court issued an Order Granting Preliminary Approval to the Settlement.  In granting preliminary approval, this Court noted that the settlement was entitled to a presumption of fairness and provisionally certified the settlement class and appointed Plaintiffs as settlement class representatives and Plaintiffs’ counsel as class counsel.  With respect to Notice procedures, this Court concluded that the Full Notice attached as Exhibit B to the Settlement Agreement complied with Rule 3.766(d) in all respects and further concluded that the class representative awards of $2500 are facially reasonable, but that plaintiffs should provide more detailed evidence in support of the amount of time and effort spent. With respect to the request for attorney’s fees and expenses, this Court noted that the request for attorney’s fees equal to 30% of the Net Settlement Amount was not an “uncommon” contingency fee allocation, but indicated that counsel should submit evidence to support a lodestar cross-check as a further way of evaluating the reasonableness of the fee award.

 

Plaintiffs now move for Final Approval of the Settlement.

 

“The well-recognized factors that the trial court should consider in evaluating the reasonableness of a class action settlement agreement include ‘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.’ [Citations.]  This list ‘is not exhaustive and should be tailored to each case.’ [Citation.]”  (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.)  “[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.  [Citation.]”  (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1802.)

 

Here, as noted in the Preliminary Approval Order, the settlement is entitled to a presumption of fairness.  It was reached through arm’s-length bargaining after formal mediation with Judge Wagner.  In support of this motion, Plaintiffs submit the declaration of Judge Wagner, who discusses the issues and challenges involved in the settlement negotiations (including the insurance coverage issues), and offers his opinions on the fairness and reasonableness of the settlement terms.[21]  Although it appears there was no formal discovery, Plaintiffs’ counsel submits that prior to the first mediation session, the parties exchanged correspondences and draft pleadings, and Plaintiffs’ counsel communicated with Plaintiffs and other putative class members, investigated Defendant’s business and organizational structure, consulted with experts in the payment card industry (“PCI”), reviewed a substantial amount of PCI compliance documentation provided by Defendant, communicated with government agencies regarding Freedom of Information Act requests, and researched evolving case law.[22]  The experience of Plaintiffs’ counsel in consumer protection and class action litigation is supported by declarations.[23]

 

“Although [t]here is usually an initial presumption of fairness when a proposed class settlement … was negotiated at arm’s length by counsel for the class, … it is clear that the court should not give rubber-stamp approval.  Rather, to protect the interests of absent class members, the court must independently and objectively analyze the evidence and circumstances before it in order to determine whether the settlement is in the best interests of those whose claims will be extinguished.  To make this determination, the factual record before the … court must be sufficiently developed… . The proposed settlement cannot be judged without reference to the strength of plaintiffs’ claims.  The most important factor is the strength of the case for plaintiffs on the merits, balanced against the amount offered in settlement.  The court must stop short of the detailed and thorough investigation that it would undertake if it were actually trying the case, but nonetheless it must eschew any rubber stamp approval in favor of an independent evaluation.”  (Kullar, supra, 168 Cal.App.4th at p. 130, internal citations and quotation marks omitted.)

 

Plaintiffs argue they have a strong case, but that Defendant would mount a vigorous defense regarding: industry-standard data-security protocols that Defendant adopted; the fact that Defendant had not entered into a contract with consumers regarding the use of their information; the fact that the number of putative class members who suffered unreimbursed out-of-pocket expenses is very small, and Defendant is not liable for class members who have not suffered unreimbursed out-of-pocket expenses; Plaintiffs’ and the class members’ lack of standing to assert claims due to lack of actual injury; and individualized issues regarding causation and damages that would defeat class certification.[24]  Plaintiffs submit that the risks and expense of continued litigation would include an examination of Defendant’s procedures and practices, costs of experts on data security, and extensive motion practice.  Plaintiffs further submit that there is a high likelihood that Plaintiffs would be unable to recover a more substantial sum owing to Defendant’s financial condition,[25] as well as the insurance coverage dispute and “burning” policy limits.[26]

 

The record suggests that Plaintiffs faced a number of difficult issues in order to prevail on their claims.  Balanced against this reality is the $3,000,000.00 settlement fund, which is not insubstantial, particularly given Defendant’s financial condition and insurance coverage issues.  The Court finds that the settlement amount, balanced against the strength of Plaintiffs’ claims, is facially reasonable and fair.

 

Since the Court issued its Preliminary Approval Order, the parties have worked diligently to issue sufficient Notice to all class members of their rights and obligations pursuant to the Settlement Agreement.  The Declaration of Jacqueline Hitomi (Supervising Case Manager for the claims administrator, CPT Group, Inc.) sets forth the steps taken to obtain contact information from Vendini about potential class members and the steps taken to ensure that proper notice was given to as many class members as possible.  Specifically, CPT Group sent summary notice via email to all class members for whom Vendini had email addresses and via postcard to all class members who had only mailing addresses or whose emails bounced back.  In addition,  notice by publication was issued in the USA Today newspaper between June 27, 2014 and June 30, 2014.  The Notice directed the class members to the settlement website maintained by CPT Group and the actual website contained detailed information about the settlement, important dates and deadlines, and also provided copies of important Court documents including a copy of the Settlement Agreement.  According to the Hitomi Declaration, CPT Group also activated a toll-free line to answer questions about the settlement and in the first 30 days, there was an average of about 280 calls per day.  As of Sept. 18, 2014, Ms. Hitomi indicates that there were 1014 valid claims with 83 valid requests for exclusion.  As of the same date, three class members had submitted two objections to the CPT Group.  Based upon the information referenced above, this Court finds that Plaintiffs have complied with the Notice requirements set forth in the Settlement Agreement and in a manner which is consistent with Calif. Rules of Court, Rule 3.766(d).

 

Regarding the Class Representative Incentive Awards, the Declaration of Anthony J. Orshansky indicates that Plaintiff’s Lim and Lewert devoted a “substantial amount of time” to this case by meeting with counsel and responding to requests for information, took time off work to travel and attend the mediation and have remained actively involved in the case through and after settlement and continue to be engaged.  Mr. Orshansky also indicates that the amount of the award in this case ($2500) is significantly less than awards approved in other similar settlements and that no one has objected to the amount of the incentive award as being “unreasonable.”   While the Court would have preferred declarations from the class representatives themselves, the Court will accept the information contained in the Orshansky Declaration and finds that the incentive awards to the class representatives are fair and reasonable.

 

With respect to the experience of counsel and the amount of fees claimed, the Declaration of Anthony Orshansky details the substantial experience which class counsel has in litigating class actions such as the present one.  The Court finds that class counsel has significant experience and expertise in litigating large class actions.  With respect to the requested fee amount of 30% of the Gross Settlement Fund, this Court concluded that the award was reasonable under the “common fund” doctrine, which allows a party recovering a fund for the benefit of others to recover attorney’s fees from the fund itself.  At the Court’s request,  Plaintiffs’ counsel did provide evidence of a lodestar cross-check in its Final Approval Papers (Declaration of Anthony J. Orshansky in Support of Plaintiffs’ Unopposed Motion for Attorney’s Fees, Expenses and Incentive Awards).  The total lodestar number for time spent is $652,340 which is below the 30% fee of the Net Settlement Amount, but as the Orshansky Declaration properly points out, this lodestar number does not contemplate the time to be spent in the future obtaining Final Approval and continuing to represent class members during the claims process which remains open until July 25, 2015.  Additionally,  the Court finds that given the beneficial settlement to the class, the complexity of the issues involved, the efficiency in which the settlement was reached and the risks involved in taking this case on a contingency fee,  a modest multiplier of 1.38 is appropriate under Serrano v. Priest (1975) 20 Cal. 3^rd 25.  Accordingly, the Court finds that the request for fees and expenses is reasonable and appropriate in the instant case.

 

For the reasons set forth above, Plaintiffs Motion for Final Approval of Class Action Settlement and Motion for Attorney’s Fees, Expenses and Incentive Awards is GRANTED.

 

[1] Compl. ¶ 2.

[2] Compl. ¶ 3.

[3] Compl. ¶ 42.

[4] Compl. ¶ 42.

[5] Compl. ¶ 3.

[6] Compl. ¶ 48.

[7] Compl. ¶ 60.

[8] These statutes are part of the California Civil Code regarding “obligations arising from particular transactions,” pertaining to protections for customer records.

[9] Decl. Anthony J. Orshansky ISO Prelim. Approv. ¶ 6.

[10] Decl. Orshansky ¶¶ 6-11.

[11] Decl. Orshansky ¶¶ 12-13.

[12] Decl. Orshansky ¶ 14.

[13] Class Action Settlement Agreement § 4.2, Exh. 1 to Pltfs’ Memo. Pts. & Auth. ISO Mot. for Prelim. Approv.

[14] Settl. Agmt § 5.4.

[15] Settl. Agmt § 5.4.3.2.

[16] Settl. Agmt. §§ 1.2, 1.21.  The “Notice Plan” means the method of providing the Class with notice of the

settlement, as approved by the Court.  (Settl. Amgt. § 1.23.)

[17] Settl. Agmt. § 1.1, Exh. D to Settl. Agmt.

[18] Settl. Agmt § 5.5.1.

[19] Settl. Agmt. § 1.25.

[20] Settl. Agmt. § 7.4.1.

[21] See Decl. Hon. John Leo Wagner (Ret.) ¶¶ 11-25.

[22] Decl. Orshansky ¶ 7.

[23] See Decl. Orshansky ¶¶ 33-34; Decl. Joseph J. Siprut Exh. A (firm resume).

[24] Decl. Orshansky ¶¶ 18-19.

[25] Decl. Mark Tacchi ¶¶ 7-9.

[26] See Decl. Joy K. Fausey ¶¶ 3-4; Decl. Kevin Kieffer ¶ 8.