Lloyd v. Navy Fed. Credit Union

• Decision Date: 28 May 2019
• Docket Number: Case No. 17-cv-1280-BAS-RBB
• Parties: JENNA LLOYD, JAMIE PLEMONS, on behalf of themselves and all others similarly situated, Plaintiffs, v. NAVY FEDERAL CREDIT UNION, Defendant.
• Court: U.S. District Court — Southern District of California

JENNA LLOYD, JAMIE PLEMONS, on behalf of themselves and all others similarly situated, Plaintiffs, v. NAVY FEDERAL CREDIT UNION, Defendant.

Case No. 17-cv-1280-BAS-RBB

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

May 28, 2019

ORDER:

(1) GRANTING MOTION FOR FINAL APPROVAL OF CLASS SETTLEMENT

[ECF No. 64];

(2) GRANTING IN PART AND DENYING IN PART MOTION FOR ATTORNEYS' FEES, REIMBURSEMENT OF EXPENSES AND SERVICE AWARDS

[ECF No. 65];

(3) DISMISSING ACTION WITH PREJUDICE

AND

(4) DIRECTING CLERK OF THE COURT TO ENTER FINAL JUDGMENT

Plaintiffs Jenna Lloyd and Jamie Plemon (collectively, "Plaintiffs") move for final approval of their $24.5 million class action settlement with Defendant Navy Federal Credit Union ("Navy Federal") in this overdraft fees class action. (ECF No. 64.) Plaintiffs also move for approval of $6,125,000.00 in attorneys' fees requested by Class Counsel, reimbursement of certain expenses Class Counsel incurred, and service awards for Plaintiffs as Class Representatives. (ECF No. 65.) Navy Federal does not oppose these motions, nor has any class member objected to approval of the Settlement or the relief sought in the motions. The Court held a Final Approval Hearing on May 20, 2019. (ECF No. 69.) For the reasons herein, the Court: (1) grants Plaintiffs' motion for final approval, (2) grants in part and denies in part Plaintiffs' motion for attorneys' fees, costs, and service awards, (3) dismisses this action with prejudice, and (4) directs entry of final judgment in this matter.

RELEVANT BACKGROUND

Plaintiffs are California citizens who commenced this case against Navy Federal, "a national bank with its headquarters and principal place of business located in Vienna, Virginia," as a putative class action in June 2017, invoking the Class Action Fairness Act of 2005 ("CAFA"), 28 U.S.C. § 1332(d), as the basis for this Court's jurisdiction. (ECF No. 1 ¶¶ 24, 26-27.) On August 22, 2017, Plaintiffs filed the First Amended Complaint ("FAC"), a pleading largely identical to the original complaint. (ECF No. 4.)

In their then-operative pleadings, Plaintiffs alleged that Navy Federal improperly assessed and collected Optional Overdraft Protection Fees ("OOPS Fees") from Plaintiffs and a putative class of Navy Federal accountholders on certain debit card transactions that were authorized into positive account balances, but which settled into negative balances due to subsequent transactions. Plaintiffs claimed that pursuant to its account agreements with accountholders, Navy Federal was not permitted to charge OOPS Fees on debit card transactions that were authorized on an account with positive funds "to cover" the transaction but settled into a negative account balance. For this alleged improper practice, Plaintiffs asserted state lawclaims for breach of contract, breach of the covenant of good faith and fair dealing, conversion and unjust enrichment on behalf a national putative class. On behalf of a California sub-class, Plaintiffs asserted claims pursuant to the fraudulent prong of California's Unfair Competition Law ("UCL"), Cal. Bus. & Prof. Code § 17200, and California's Consumer Legal Remedies Act ("CLRA"), Cal. Civ. Code §§ 1750 et seq. Navy Federal moved to dismiss all claims in the FAC in September 2017. (ECF No. 9.)

On April 12, 2018, this Court granted in part and denied in part Navy Federal's motion to dismiss. (ECF No. 33.) After considering supplemental briefing from the parties regarding certain choice-of-law issues presented by the dismissal papers, the Court determined that Virginia law applies to the common law claims pursuant to a contractual choice of law provision in Navy Federal's agreements with accountholders. (Id.) The Court denied Navy Federal's motion insofar as it concerned Plaintiffs' breach of contract and conversion claims, but otherwise granted the motion. The Court dismissed with prejudice Plaintiffs' unjust enrichment and CLRA claims and dismissed without prejudice Plaintiffs' UCL fraudulent prong and breach of the implied covenant claims, with the latter to be pleaded as a part of a breach of contract claim in the event Plaintiffs sought to amend the pleadings. (Id.)

Plaintiffs filed the now-operative Second Amended Complaint ("SAC") on May 4, 2018, alleging a breach of contract claim, which incorporated a breach of the implied covenant of good faith and fair dealing claim, and a conversion claim. (ECF No. 38.) Navy Federal answered the SAC and the Parties engaged in informal settlement discussions, including a private mediation before the retired Honorable Walter Kelley Jr. (ECF Nos. 39, 41, 45.) On September 25, 2018, the Parties filed a notice of settlement, indicating that they had agreed to settle the case and that Plaintiffs would seek preliminary approval of the anticipated settlement agreement.

(ECF No. 48.)

Plaintiffs filed an unopposed motion for preliminary approval of the settlement on October 15, 2018, which outlined the terms of the settlement and the proposed notice plan. (ECF No. 51.) The Court granted Plaintiffs' motion on October 22, 2018, setting April 22, 2019 as the Final Approval Hearing and requiring Plaintiffs to provide amended class notices to address certain concerns the Court had with the originally proposed notice and objection procedure. (ECF No. 54.) Plaintiffs corrected the deficiencies in their proposed notices and proceeded with their notice plan with the Court's approval. (ECF Nos. 55, 56.) At the parties' joint request, the Court reset the Final Approval Hearing for May 20, 2019 to account for issues with notice administration. (ECF Nos. 58, 59.)

Plaintiffs filed their present unopposed motions on April 4, 2019, 46 days before the Final Approval Hearing. (ECF Nos. 64, 65.) Both parties attended the Final Approval Hearing on May 20, 2019, at which counsel responded to certain questions of the Court. (ECF No. 66.) No objectors appeared. The Court now turns to the merits of Plaintiffs' unopposed motions.

SETTLEMENT OVERVIEW¹

Although the Court previously described the Settlement in its preliminary approval order, the Court recounts its salient aspects here once more. The Settlement Class is defined as follows:

All current and former Navy Federal members who were charged an OOPSFee on a transaction that was authorized into a positive available balance during the Class Period, excluding individuals who enrolled in OOPS for the first time after February 13, 2017.

All Settlement Class Members who have not opted out of the Settlement are bound by the release set forth in the Agreement. (Agreement ¶¶ 84-88.)

The Settlement provides for Navy's Federal's establishment of a Settlement Fund of $24,500,000.00 for the benefit of Settlement Class members, as well as Navy Federal's separate commitment to pay up to $500,000.00 in Settlement Administration Costs. (Id. ¶¶ 29, 55.) The Settlement Fund will be used to: (a) pay Settlement Class Members their respective Settlement Class Member Payments, (b) Class Counsel for any Court awarded attorneys' fees and litigation expenses and costs, (c) any court-awarded Service Awards for the Class Representatives, (d) Settlement Administration Costs above the Navy Federal Settlement Administration Costs Cap, and, in the event funds remain after the initial distribution to Settlement Class Members, (e) reimburse Navy Federal up to its cap. (Id.) The Settlement contemplates a $5,000.00 Service Award for each of the named Plaintiffs. (Id. at ¶ 93.) It also provides that Class Counsel is authorized to request, and Navy Federal will not oppose, attorneys' fees of up to 35% of the Settlement Fund, as well as reimbursement of litigation costs and expenses incurred in connection with the Action. (Id. at ¶ 89.)

Settlement Class members do not have to submit claims or take any other affirmative step to receive relief under the Settlement or to receive a Settlement Class Member Payment. Instead, within 30 days following the Effective Date of the Settlement, Navy Federal and the Settlement Administrator will distribute the Net Settlement Fund to all Settlement Class Members. (Id. ¶ 73.) All Settlement Class Members who are entitled to a Settlement Class Member Payment will receive a pro rata distribution from the Net Settlement Fund based on the number of RelevantOverdraft Fees, as identified by Plaintiffs' expert, the Settlement Class Member paid or was assessed during the Class Period. (Id. ¶ 76.) Payments to Settlement Class Members who are Current Account Holders will be made by Navy Federal crediting such Settlement Class Members' Accounts, and notifying them of the credit, or by checks mailed by the Settlement Administrator. (Id. ¶ 81.) Past Account Holders will receive payments from the Settlement Fund by checks mailed by the Settlement Administrator. (Id. ¶ 74.) Any uncashed or returned checks will remain in the Settlement Fund, during which time the Settlement Administrator will make reasonable efforts to effectuate delivery of the Settlement Class Member Payments. (Id. ¶ 82.)

In the event funds remain in the Settlement Fund after the initial distribution to Settlement Class Members, Navy Federal shall be reimbursed for the Settlement Administration Costs it paid. Thereafter, if funds remain, to the extent feasible, those funds shall be distributed in a second distribution to those Settlement Class Members that were paid or credited with a Settlement Class Member Payment in the first distribution. All Settlement Administration Costs of a second distribution will be paid out of the Settlement Fund, including those related to Navy Federal's facilitation of Account credits in the event of a second distribution. If a second distribution is not feasible, or if funds remain after a second distribution, those funds shall be distributed to a cy pres recipient or recipients, proposed by the Parties and to be approved by the Court, that work to promote financial literacy, including for members of the military or veterans. (...