Hashw v. Dep't Stores Nat'l Bank

• Decision Date: 26 April 2016
• Docket Number: Civ. No. 13–727 (RHK/BRT)
• Citation: 182 F.Supp.3d 935
• Parties: Ameer A. Hashw, on behalf of himself and others similarly situated, Plaintiff, v. Department Stores National Bank and FDS Bank, Defendants.
• Court: U.S. District Court — District of Minnesota

182 F.Supp.3d 935

Ameer A. Hashw, on behalf of himself and others similarly situated, Plaintiff,

v.Department Stores National Bank and FDS Bank, Defendants.

Civ. No. 13–727 (RHK/BRT)

United States District Court, D. Minnesota.

Signed April 26, 2016

Mark L. Heaney, Heaney Law Firm, LLC, Minnetonka, Minnesota, Alexander H. Burke, Burke Law Offices, LLC, Chicago, Illinois, for Plaintiff.

Amy L. Schwartz, Lapp, Libra, Thomson, Stoebner & Pusch, Minneapolis, Minnesota, Julia B. Strickland, Marcos D. Sasso, Shannon E. Dudic, Stroock & Stroock & Lavan LLP, Los Angeles, California, Martin C. Bryce, Jr., Mark J. Furletti, Ballard Spahr LLP, Philadelphia, Pennsylvania, for Defendants.

MEMORANDUM OPINION AND ORDER

RICHARD H. KYLE, United States District Judge

INTRODUCTION

This action arises out of automated debt-collection telephone calls made by Defendants Department Stores National Bank ("DSNB") and FDS Bank ("FDS") in connection with Macy's and Bloomingdale's credit-card accounts. Plaintiff Ameer Hashw, acting on behalf of himself and a nationwide class of persons who received such calls, commenced this action in 2013, alleging the calls violated the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227(b). Following discovery and after two days of private mediation, the parties reached a settlement in mid–2015; the Court preliminarily approved that settlement, certified a settlement class, and directed notice be provided to class members. With notice now having been provided, Hashw moves for final approval of the settlement, as well as attorneys' fees and an "incentive award" for litigating this case on behalf of the class. For the reasons that follow, the Motion for settlement approval will be granted, and the Motion for fees and an incentive award will be granted in part and denied in part.

BACKGROUND

In 2006, Hashw opened a Macy's branded credit card, which was issued by DSNB. He fell behind on his payments and, between December 2010 and February 2011, DSNB called his cellular phone 112 times using an automated telephone dialing system ("ATDS"). He did not consent to DSNB contacting his cellular phone; in fact, he claimed he had never provided his number to DSNB and that it had obtained the number through a credit bureau or "skip trace" service. Because the TCPA prohibits calls to a person's cellular phone using an ATDS without prior consent, see 47 U.S.C. § 227(b), Hashw commenced this action, individually, seeking compensatory damages and an injunction prohibiting DSNB from using automated dialers to call cellular phones.

Shortly after bringing the action, Hashw amended his Complaint to add FDS as a Defendant¹ and to allege class claims, asserting that numerous others had been subjected to the same illegal automated calls on their cell phones. Defendants responded by moving to dismiss, which Motion was fully briefed and denied by the Court in November 2013. The parties then undertook discovery, including the production of documents from Defendants and third parties via subpoena, and engaged in motion practice before the Magistrate Judge.

In May 2014, the parties agreed to mediation before retired United States Magistrate Judge Morton Denlow in Chicago; this action was stayed in the interim, although the parties continued to exchange information, in particular regarding the size and scope of the putative class, in order to facilitate settlement discussions. The parties mediated for two days and eventually reached an agreement in principle to settle this case on a class-wide basis. It then took several months to finalize the settlement documents, with the parties participating in telephone conferences with the Magistrate Judge on no fewer than eight occasions before finally seeking preliminary settlement approval in July 2015. The settlement's material terms were:

1. A "settlement class" would be certified, consisting of all persons nationwide whose cell phones were called, without consent, by Defendants or their agents using an ATDS between September 3, 2009, and July 22, 2015,² in connection with collecting on Macy's or Bloomingdale's³ credit-card accounts. The parties estimated the class comprised approximately 1.1 million individuals (a number they later revised to 1.2 million after conducting "confirmatory" discovery);⁴

2. Each class member would release DSNB, FDS, Macy's, Bloomingdale's, and Citibank from all claims "aris[ing] out of or ... related in any way to the actual or alleged use [by the released entities] of an artificial or prerecorded voice and/or of any automatic telephone dialing system ... to make ... calls to collect on Macy's and/or Bloomingdale's credit card accounts" during the class period;

3. Defendants would pay $12.5 million into a fund from which each class member timely submitting a claim would receive a check representing his or her pro rata share of the fund (minus attorneys' fees and administrative costs);4. A claims administrator (Heffler Claims Group) would be appointed to provide notice to class members by e-mail and regular mail, by advertising in nationwide publications, and by a settlement website regarding (a) the proposed settlement, (b) the manner in which to submit a claim form, and (c) the means to opt out of the settlement. All settlement administration expenses would be paid from the settlement fund;

5. Class counsels' fees and costs would be paid from the settlement fund, and Defendants would not oppose such fees and costs as long as they did not exceed 1/3 of the fund;

6. Hashw would be paid a $27,500 "incentive award" from the settlement fund, to which Defendants would not object;⁵

7. After the initial distribution to the class and the payment of administrative costs, attorneys' fees, and the incentive award, any money remaining in the fund—for example, from uncashed checks sent to class members—would be redistributed to all class members having cashed their settlement checks, unless the amount of each redistribution was so small as to be economically impractical ($3 or less); and

8. Any funds remaining after the second distribution to class members would be allocated to cy pres recipients, so that no portion of the fund would revert to Defendants.

The Court reviewed the proposed settlement and held a hearing on August 28, 2015. A short time later, it granted preliminary approval, conditionally certified the settlement class contemplated by the parties' agreement, and directed that notice be provided to the class in accordance with the settlement. Heffler then undertook a broad notice campaign, including (i) creating a settlement website, (ii) directly contacting all potential class members for whom it had either an email or mailing address, informing them of the settlement and directing them to the settlement website for more information, (iii) establishing a toll-free number class members could call with questions about the settlement, and (iv) running nationwide ads regarding the settlement in People magazine and USA Today . According to Heffler, more than 4.5 million potential class members were reached through email and mail alone.⁶ As of February 26, 2016, Heffler had received claim forms from 252,078 individuals. An additional 30 persons opted out of the settlement, and 5 others submitted written objections, which are discussed in more detail below.

Hashw now seeks final approval of the settlement, and Defendants join that Motion. Hashw also moves for an incentive award of $27,500 for litigating this case on behalf of the class, and his counsel seek a fee award of 1/3 of the settlement fund, approximately $4.166 million; Defendants have not objected to these requests. The Court held a hearing on February 26, 2016, at which all parties (and no objectors) appeared, and then requested additional briefing on the fee issue. Additional briefing having now been submitted, both Motions are ripe for disposition.

I. Settlement approval

A. General principles

Under Federal Rule of Civil Procedure 23(e), the settlement of a class action requires court approval where, as here, it binds class members. Such approval may issue "only after a hearing and on finding that [the settlement] is fair, reasonable, and adequate." Fed. R. Civ. P. 23(e)(2). Review of a proposed class-action settlement, therefore, proceeds in two stages. At the first stage, the parties submit the proposed settlement to the Court, which must then make "a preliminary fairness evaluation." Manual for Complex Litigation (Fourth) (hereafter, "Manual") § 21.632 (2004); accord, e.g., Valencia v. Greater Omaha Packing, Nos. 8:08CV88, 8:08CV161, 2013 WL 5347442, at *1 (D.Neb. Sept. 23, 2013). If the proposed settlement is preliminarily acceptable, the Court directs that notice be provided to absent class members, in order to afford them an opportunity to be heard on, object to, and opt out of the settlement. Fed. R. Civ. P. 23(c)(3), (e)(1), (e)(5) ; see also Grunin v. Int'l House of Pancakes, 513 F.2d 114, 120 (8th Cir.1975) ("[D]ue process requires that notice of a proposed settlement be given to the class.").

Rule 23(e)"imposes on the trial judge the duty of protecting absentees, which is executed by the court's assuring the settlement represents adequate compensation for the release of the class claims." In re Gen. Motors Corp. Pick–Up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 805 (3d Cir.1995). Hence, the Court must "act[ ] as a fiduciary, serving as a guardian of the rights of class members." In re Wireless Tel. Fed. Cost Recovery Fees Litig., 396 F.3d 922, 932 (8th Cir.2005). Only careful review of a settlement can discharge this obligation. Manual § 21.61 ("Judicial review must be exacting and thorough. The task is demanding because the adversariness of litigation is often lost after the agreement to settle.").

B. The settlement merits approval

Having carefully reviewed (and already preliminarily approved) the parties' settlement, the Court concludes that it is fair, reasonable, and adequate. It reaches...