SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA

LESLEY ANNE LOCK, individually and on behalf of all others similarly situated,

Plaintiff,

vs.

GLOBAL CREDIT & COLLECTION CORPORATION, A/K/A AFFINITY GLOBAL, a Delaware corporation; and DOES 1 through 10, inclusive,

Defendants.
Case No. 2015-1-CV-283297

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 November 9, 2018, 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 by plaintiff Lesley Anne Lock (“Plaintiff”) pursuant to the California Rosenthal Fair Debt Collection Practices Act (“RFDCPA”). According to the Class Action Complaint for Statutory Damages (“Complaint”), filed on July 20, 2015, Plaintiff is alleged to have incurred a financial obligation in the form of a consumer credit account issued by Citibank, N.A. (Complaint, ¶ 14.) Plaintiff was unable to pay the debt and defaulted on her payments. (Id. at ¶ 15.) The debt was later sold or otherwise transferred to defendants Global Credit & Collection Corporation aka Affinity Global (“Defendant”) for collection from Plaintiff. (Id. at ¶ 16.)

Defendant sent a collection letter to plaintiff in an attempt to collect the debt. (Complaint, ¶ 17.) The collection letter notified Plaintiff of her specific debt in 7-point type. (Id. at ¶ 24.) The collection letter sent to Plaintiff provides the notice required by Civil Code section 1812.700, subdivision (a) in 5-point type. (Id. at ¶ 25.) Plaintiff alleges Defendant therefore failed to comply with Civil Code section 1812.701, subdivision (b). (Id. at ¶ 30.)

The Complaint sets forth the following causes of action: (1) California Consumer Collection Notice; and (2) Rosenthal Fair Debt Collection Practices Act (“RFDCPA”). The parties have reached a settlement. The parties now move 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:

(i) all persons with addresses in California (ii) to whom Defendants sent, or caused to be sent, an initial written communication in the form of Exhibit “1” attached to Plaintiff’s Class Action Complaint filed herein (iii) in an attempt to collect a defaulted consumer debt originally owed to CITIBANK, N.A. (iv) which was not returned as undeliverable by the U.S. Post Office (v) during the period one year prior to the date of filing this action through the date of class certification.

(Joint Motion for Preliminary Approval of Class Action Settlement and Provisional Class Certification, p. 3:23-27.)

Pursuant to the settlement, Defendant will pay $27,780 (no less than $30 to each of approximately 926 class members). (Class Action Settlement Agreement, ¶ 4.2.) Defendant will also pay an incentive award of $1,500 to Plaintiff, in addition to an individual statutory payment of $1,000. Defendant states the individual payment is pursuant to Civil Code sections 1788.30, subdivision (b) and 1788.17. Neither of these code sections, however, concerns class actions. Section 1788.30 specifically refers to individual actions. It is therefore unclear what authority would permit Plaintiff to receive an individual payment separate from the class. Plaintiff’s counsel shall appear at the hearing on this motion to provide clarification regarding the additional $1,000 payment. Defendant will pay for settlement administration costs. (Id. at ¶ 3.5) Settlement checks remaining uncashed after 90 days from the mailing date will be paid to Alexander Community Law Center as a cy pres recipient. (Id. at ¶ 4.4.)

B. Fairness of the Settlement

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 states significant litigation risk 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.

C. Incentive Award, Fees, and Costs

In addition to the $1,000 individual settlement payment to the class representative, Plaintiff will seek a class representative incentive award of $1,500 for class representative Lesley Anne Lock.
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 will make a determination regarding the incentive award at that time.

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.) Plaintiff’s counsel has not submitted a request for fees and costs at this time, but asserts fees and costs will be requested in connection with the motion for final approval of the settlement. 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.

D. Conditional Certification of Class

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 RFDCPA. 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 notice generally complies with the requirements for class notice. (See Settlement Agreement, Ex. B.) It provides basic information about the settlement, including the settlement terms, and procedures to object or request exclusion. However, the notice states further court proceedings will be in Department 6 before Judge Zayner. The notice must be modified so class members will know that further proceedings will be in Department 5. Further, the notice states any class member who wants to intervene or file an appearance must do so no later than the opt out date. The notice must be changed to state that class members may appear at the final approval hearing to object even without filing or serving any papers and without providing any advance notice.

The amended notice must be provided to the Court for review before it is sent to class members.

F. Conclusion

The motion for preliminary approval of class settlement is GRANTED, subject to the Court’s instructions above. The final approval hearing is set for March 29, 2019, at 9:00 a.m. in Department 5.

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