Huyer v. Njema

• Decision Date: 03 February 2017
• Docket Number: No. 16-1484,16-1484
• Citation: 847 F.3d 934
• Parties: Edward HUYER; Connie Huyer; Carlos Castro; Hazel P. Navas, Plaintiffs–Appellees, Wells Fargo & Company; Wells Fargo Bank, N.A., Defendants–Appellees, v. Kenneth M. NJEMA, Movant–Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

847 F.3d 934

Edward HUYER; Connie Huyer; Carlos Castro; Hazel P. Navas, Plaintiffs–Appellees,Wells Fargo & Company; Wells Fargo Bank, N.A., Defendants–Appellees,

v.Kenneth M. NJEMA, Movant–Appellant.

No. 16-1484

United States Court of Appeals, Eighth Circuit.

Submitted: January 10, 2017

Filed: February 3, 2017

Counsel who represented the appellees, Wells Fargo & Company and Wells Fargo Bank, N.A. was Jesse Linebaugh, of Des Moines, IA., Jan T. Chilton, of San Francisco, CA., Mark D. Lonergan, of San Francisco, CA.

Counsel who represented the appellees, Edward Huyer, Connie Huyer, Carlos Castro, and Hazel P. Navas was Roxanne Barton Conlin, of Des Moines, IA., Michael Reese, of New York, NY., Deborah Clark Weintraub, of New York, NY., Kim E. Richman, of Brooklyn, NY., Mario A. Pacella, of Columbia, SC., Todd Garber of White Plains, NY.

Before SMITH, GRUENDER, and SHEPHERD, Circuit Judges.

GRUENDER, Circuit Judge.

Kenneth Njema appeals the district court's¹ orders denying Njema's motion to join a trespass claim to this class action and approving the class action settlement. Because the district court did not abuse its discretion in denying joinder or in approving the settlement, we affirm.

I. BACKGROUND

In 2008, plaintiffs filed this class action against Wells Fargo & Co. and Wells Fargo Bank, N.A. ("Wells Fargo"), alleging eight counts, including two violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The plaintiffs' claims related to Wells Fargo's practice of automatically ordering and charging fees for drive-by property inspections when customers fell behind on their mortgage payments. In 2015, the parties participated in mediation and reached a settlement agreement, which provides that Wells Fargo will pay $25,750,000 in exchange for dismissal of the lawsuit and a release of all related claims. The release provision of the settlement agreement requires an injunction against prosecution by class members of any "Released Claims," which the provision defines as any claims "based upon, arising out of, or relating to, in any way, property inspection fees assessed on a mortgage serviced by Wells Fargo, or Wells Fargo's practices in ordering or charging borrowers for property inspections."

On September 2, 2015, the district court preliminarily approved the settlement agreement, scheduled a fairness hearing for January 21, 2016, and entered an injunction prohibiting class members from maintaining any action asserting Released Claims against Wells Fargo in any other court. Afterward, more than 2.7 million notices were sent to class members.

Separately, in 2013, Kenneth Njema brought an individual action against Wells Fargo in the United States District Court for the District of Minnesota ("Minnesota district court").² In his individual action, Njema raised a claim for trespass, arguing that Wells Fargo's agents entered his property and changed the locks even though Wells Fargo knew that he still resided there. The Minnesota district court denied Wells Fargo's motion for summary judgment as to Njema's trespass claim, and it scheduled a trial on December 14, 2015.

In October 2015, Njema received notice that he was a member of this class action. Njema then attempted to join his individual action with the class action by filing a series of motions. On November 14, 2015, Njema filed a motion with the Judicial Panel on Multidistrict Litigation ("JPML"), seeking to transfer his individual action under 28 U.S.C. § 1407 to the district court for consolidation with the class action. The same day, Njema filed a motion with the Minnesota district court to stay his individual action pending resolution of the JPML transfer motion. Njema later filed a transfer motion with the district court. The following events then occurred.

First, the Minnesota district court denied Njema's motion to stay his individual action, noting that there was "no basis for transferring this action for consolidation." After Njema requested reconsideration of this denial, the Minnesota district court asked Wells Fargo whether the injunction entered in the class action against prosecuting any "Released Claim" would bar Njema from proceeding on his trespass claim. Wells Fargo responded that Njema's trespass claim was not within the scope of the "Released Claims" described in the class action settlement agreement and that, even if it were, Wells Fargo "should be able to waive that protection" so that Njema's trespass claim could proceed to trial in the Minnesota district court. In light of this response, the Minnesota district court denied Njema's request for reconsideration.

Second, the district court denied Njema's transfer motion. The district court held that "[b]ecause Plaintiff's trespass claim in the District of Minnesota does not in any way relate to property inspection fees charged by Wells Fargo, he is not precluded from pursuing that claim while also remaining a class member in the class action suit in this Court." Third, before the JPML could consider Njema's transfer motion, the Minnesota district court dismissed Njema's individual action for failure to prosecute.

Lastly, Njema filed an objection to the settlement agreement in the district court, arguing that the settlement terms were unfair. On the morning of the fairness hearing, Njema also filed a motion to certify trespass as a related claim under Federal Rule of Civil Procedure 23 and to add himself as a named class representative of this new subclass under Rule 19. Six days later, the district court denied Njema's motion to certify trespass as a related claim, explaining that "the questions of law and fact related to trespass are not common to those raised in the property inspection fee claims." The following month, the court determined that the settlement agreement was fair, overruled all objections,and granted final approval of the settlement. The court also awarded attorneys' fees to class counsel and granted each named plaintiff an incentive award of $10,000. Njema now appeals the court's denial of his motion to certify trespass as a related claim and its approval of the settlement.

II. DISCUSSION

A. Motion to Certify Trespass as a Related Claim

Njema first argues that the district court erred in denying his motion to certify trespass as a related claim and create a new subclass under Rule 23. We review this denial for abuse of discretion. Avritt v. Reliastar Life Ins. Co. , 615 F.3d 1023, 1029 (8th Cir. 2010).

Rule 23(a) lists four prerequisites that a plaintiff must satisfy to bring a claim as a class action. Here, the district court properly denied Njema's motion because Njema's trespass claim does not satisfy the requirement that "there are questions of law or fact common to the class." Fed. R. Civ. P. 23(a)(2). "Commonality requires the plaintiff to demonstrate that the class members have suffered the same injury." Ebert v. Gen. Mills, Inc. , 823 F.3d 472, 478 (8th Cir. 2016) (quotation omitted). Njema's trespass claim involved a different injury than the injury alleged by the class action plaintiffs. Njema alleged that agents of Wells Fargo unlawfully entered his property, whereas the class action plaintiffs alleged that Wells Fargo unlawfully charged fees for drive-by inspections, which do not involve entry onto property. Indeed, the complaint in the class action contains no mention of physical entry or trespass. As a result, no common question existed between the two actions.

Njema responds that the JPML determined that both actions contained common questions of fact "worthy of consideration" of a judicial transfer because the JPML accepted Njema's transfer motion for filing and created a briefing schedule. However, the acceptance of a transfer motion and creation of a briefing schedule is an automatic clerical function mandated by JPML Rule 6.2(b); it does not suggest that the JPML believed Njema's transfer motion had any merit. Therefore, the district court did not abuse its discretion in denying Njema's motion to certify trespass as a related claim.³

B. Approval of the Class Action Settlement

A district court may approve a class action settlement only after finding that it is "fair, reasonable, and adequate." Fed. R. Civ. P. 23(e)(2). We review a district court's order approving a class action settlement for abuse of discretion. Marshall v. Nat'l Football League , 787 F.3d 502, 508 (8th Cir. 2015). Njema argues that the district court abused its discretion for five reasons: (1) the court erred in analyzing the factors from Van Horn v. Trickey , 840 F.2d 604 (8th Cir. 1988) ; (2) the settlement will cost class members money, and the court violated the Class Action Fairness Act ("CAFA") by not providing a written finding that non-monetary benefits to the class members substantially outweigh the monetary loss; (3) the release provision unfairly prevents class members from prosecuting related claims, and Wells Fargo violated the preliminary approval order by waiving this release provision in Njema's individual action; (4) the incentive awards to the named plaintiffs were too small; and (5) Wells Fargo violated CAFA notice requirements. We address each argument in turn.

1. Analysis of the Van Horn Factors

To determine whether a settlement is "fair, reasonable, and adequate," district courts must analyze the four Van Horn factors: "the merits of the plaintiff's case, weighed against the terms of the settlement; the defendant's financial condition; the complexity and expense of further litigation; and the amount of opposition to the settlement." Van Horn , 840 F.2d at 607. The first factor is the "single most important factor." Id. On review, "we ask whether the District Court considered all relevant factors, whether it was significantly influenced by an irrelevant factor, and whether in weighing the factors it committed a clear error of judgment." Marshall , 787 F.3d at 508 (quoting Little Rock Sch. Dist. v. Pulaski Cty. Special Sch. Dist. No. 1 , 921 F.2d 1371, 1391 (8th...