SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA

THOMAS LAGOS, on behalf of himself and all others similarly situated,

Plaintiff,

vs.

THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY, a California corporation, and DOES 1 through 10,

Defendants.
Case No. 2015-1-CV-284497

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 June 1, 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 arising out of an alleged violation of 15 U.S.C. section 1681b(b), which concerns the use of “consumer reports” for employment purposes. (Complaint, ¶¶ 10-14.) The Complaint, filed on August 18, 2015, sets forth a single cause of action for violation of 15 U.S.C. section 1681b(b)(2).
The parties have reached a settlement. Plaintiff Thomas Lagos (“Plaintiff”) and defendant The Board of Trustees of the Leland Stanford Junior University (collectively, the “Parties”) 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:

All individuals on whom, during the [period from August 18, 2010 through August 22, 2015] a consumer report for employment purposes was procured by Stanford. Excluded from the Settlement Class are all persons who are validly excluded from the Settlement Class and persons who received constructive or actual notice that [a] consumer report had been obtained on them more than two years before August 18, 2015.

(Declaration of Peter R. Dion-Kindem in Support of Stipulation re Order for Preliminary Approval of Class Action Settlement (“Dion-Kindem Decl.”), Ex. 1 (“Settlement Stipulation”), ¶¶ II(9), (22).)
Pursuant to the settlement, Defendant will pay a total of $600,000. (Settlement Stipulation, ¶ II(25).) This amount includes attorneys’ fees of up to $200,000, costs of up to $25,000, an enhancement payment of $7,500 for the class representative, and class administration costs of up to $70,000.

Out of the net settlement fund, 90% will be distributed to class members for whom a consumer report was generated by Defendant during the period August 18, 2013 through August 22, 2015 (“two-year settlement class members”), and 10% will be distributed to class members for whom a consumer report was generated by Defendant during the period August 18, 2010 through August 18, 2013 and who did not have constructive or actual notice that a consumer report had been obtained on them (“three-five year settlement class members”). (Settlement Stipulation, ¶¶ II(29)-(30), III(1).)

B. Fairness of the Settlement

Plaintiff states the settlement was reached through arm’s-length negotiations, including a formal settlement conference with a federal court magistrate judge. Plaintiff contends this is a good settlement. Plaintiff asserts that whether Defendant violated the Fair Credit Reporting Act (“FCRA”) is highly contested and Plaintiff would also have to show any violation was willful. Plaintiff states two-year settlement class members will receive a net distribution of $29.60 and three-five year settlement class members will receive a net distribution of $5.51. In light of the good faith negotiations in this matter and the risk that the class will not prevail if this case continues to trial, the Court finds the settlement is fair.
Plaintiff will seek a class representative incentive award of $7,500.

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.)

Plaintiff has submitted a declaration in support of the request for the incentive award. Plaintiff lists various activities he has performed and states he has spent approximately 95 hours in connection with the case. (Declaration of Thomas Lagos in Support of Stipulation re Entry of Order for Preliminary Approval of Class Action Settlement, ¶ 11.) The Court finds Plaintiff has sufficiently justified the requested incentive award and it is approved.

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 will seek attorneys’ fees of $200,000 (one-third of the total settlement fund), plus up to $25,000 for costs. In support of the request, Plaintiff’s counsel provides a declaration stating the lodestar for the case so far is $433,562.50. (Dion-Kindem Decl., ¶ 24.) While the rates used in calculating this lodestar are somewhat high ($875/hour), the lodestar results in a negative multiplier. Consequently, the Court finds the fees are fair and they are preliminarily approved.

C. 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. The parties state there are approximately 13,000 class members. There are common issues regarding whether Defendant failed to provide lawful, timely notice when obtaining consumer reports for employment purposes and whether any violation was willful. No issue has been raised regarding the typicality or adequacy of Plaintiff as class representative. The Court finds the proposed class should be conditionally certified.

D. 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).)

There are two notices – an email and website notice, and a postcard notice. (Dion-Kindem Decl., Ex. 1, Exs. B1 and B2.) Both notices generally comply with the requirements for class notice. They provide basic information about the settlement, including the settlement terms, and procedures to object or request exclusion. However, the notices states that class members who want to object must mail a written objection to the class administrator and that failure to do so in a specified manner will result in a class member being unable to object. The notices must be changed to make clear that class members may appear at the final approval hearing to make an oral objection even without mailing any written objection and without providing advance notice.

E. Conclusion

Subject to the modification to the notices, the motion for preliminary approval of class action settlement is GRANTED. The final approval hearing is set for October 5, 2018, at 9:00 a.m. in Department 5.

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