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

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on January 18, 2019, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION

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.

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

The parties have provided all of the details of the settlement for preliminary approval. They state, however, that Plaintiff’s counsel is not seeking approval of fees and costs at this time and will seek approval of fees and costs as part of the final approval of the settlement. In fact, the settlement agreement itself does not set forth an amount of fees to be paid by Defendant. (Class Action Settlement Agreement, ¶¶ 9.1-9.5.)

The parties state the amount of fees and costs requested and ultimately awarded will not impact the amount paid to the class because the payments to the class were negotiated first and separately from the other settlement terms. The parties contend the deferral of fees in this manner is a practice routinely approved by courts, citing to a case in which the request for fees was deferred until after settlement approval. (In re National Football League Players Concussion Injury Litigation (3d Cir. 2016) 821 F.3d 410, 444-447.) While it is true such a practice was approved in that case, the court stated it was “sympathetic to concerns that others have raised over the practice of delaying consideration of a fee motion.” (Id. at p. 446.) The court acknowledged
[d]elaying the fee petition denies class members information about what their counsel did in negotiating the settlement. And, all else being equal, the more information available the better. Moreover, class members may have less incentive to object to the fee award at a later time because approval of the settlement will have already occurred.

(In re National Football League Players Concussion Injury Litigation, supra, 821 F.3d at pp. 446-447.)

While the court found the procedure did not violate due process under the circumstances of the particular case before it, it did not foreclose the possibility the procedure could violate due process in other cases. (See In re National Football League Players Concussion Injury Litigation, supra, 821 F.3d at p. 447.)

In the case now at issue, the Court finds it cannot be determined whether the settlement is fair absent information regarding the fees and costs to be requested. The Court acknowledges the steps taken by Plaintiff’s counsel to negotiate the best settlement possible for the class separate from fees and costs. The Court is also cognizant, however, that it is likely Defendant took the potential fees and costs into consideration when negotiating the amount to pay class members. To fulfill its fiduciary duty to putative class members, the Court must see the entire settlement amount, fees and costs included, to determine whether the settlement is fair. Further, class members should be able to see the fees and costs in the notice because it could affect their decision whether to object or opt-out.

Accordingly, the hearing on this motion is CONTINUED to March 8, 2019. The parties must file a supplemental declaration at any time before 4:00 p.m. on February 27, 2019, providing details regarding the amount of fees and costs to be requested. Additionally, the parties must attach a revised notice to the supplemental declaration that includes the amount of fees and costs.

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

NOTICE: The Court does not provide court reporters for proceedings in the complex civil litigation departments. Parties may arrange for a private court reporter to provide services, but those arrangements must be consistent with the local rules and policies posted on the Court’s website.