Muransky v. Godiva Chocolatier, Inc.

• Decision Date: 22 April 2019
• Docket Number: No. 16-16486; 16-16783,16-16486; 16-16783
• Citation: 922 F.3d 1175
• Parties: Dr. David S. MURANSKY, individually and on behalf of all others similarly situated, Plaintiff - Appellee, James H. Price, Eric Alan Isaacson, Interested Parties - Appellants, v. GODIVA CHOCOLATIER, INC., a New Jersey corporation, Defendant - Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

922 F.3d 1175

Dr. David S. MURANSKY, individually and on behalf of all others similarly situated, Plaintiff - Appellee,

James H. Price, Eric Alan Isaacson, Interested Parties - Appellants,

v.GODIVA CHOCOLATIER, INC., a New Jersey corporation, Defendant - Appellee.

No. 16-16486; 16-16783

United States Court of Appeals, Eleventh Circuit.

April 22, 2019

Patrick Christopher Crotty, Scott D. Owens, Scott D. Owens, PA, Hollywood, FL, Michael S. Hilicki, Keith J. Keogh, Keogh Law, LTD, Chicago, IL, Bret Leon Lusskin, Jr., Bret Lusskin, PA, Aventura, FL, for Plaintiff - Appellee.

Wallace Allen McDonald, Lacy Price & Wagner, PC, Knoxville, TN, for Interested Party - Appellant James H. Price.

David S. Almeida, Benesch Friedlander Coplan & Aronoff, LLP, Chicago, IL, Brian Melendez, Barnes & Thornburg LLP, Minneapolis, MN, Charles Philip Flick, Shawn Y. Libman, Bowman & Brooke, LLP, Coral Gables, FL, Linda M. Reck, Greenberg Traurig, LLP, Orlando, FL, Michele L. Stocker, Greenberg Traurig, PA, Fort Lauderdale, FL, for Defendant - Appellee.

Jonathan S. Franklin, Peter B. Siegal, Norton Rose Fulbright US, LLP, Washington, DC, for Amicus Curiae Six Flags Entertainment Corp.

John W. Davis, Law Office of John Davis, Tampa, FL, Eric Alan Isaacson, Law Office of Eric Alan Isaacson, La Jolla, CA, for Interested Party - Appellant Eric Alan Isaacson.

Kevin Brent Huff, Jeremy Samuel Bloch Newman, Kellogg Hansen Todd Figel & Frederick, PLLC, Washington, DC, for Amicus Curiae National Retail Federation, Chamber of Commerce of the United States of America, International Franchise Association.

Before MARTIN, JORDAN, and GINSBURG,^* Circuit Judges.

MARTIN, Circuit Judge:

We sua sponte vacate our previous opinion and publish this one in its place. For ease of reading, the major change is to Part II.B, our discussion of Dr. Muransky's standing to bring this action.

This appeal was brought to contest the approval of a class-action settlement. Dr. David Muransky filed a class action against Godiva Chocolatier, Inc. for violating the Fair and Accurate Credit Transactions Act ("FACTA"). Appellants James Price and Eric Isaacson ("the objectors") objected to a class settlement reached by Dr. Muransky and Godiva. Over their objections, the District Court approved the settlement, class counsel's request for attorney's fees, and an incentive award for Dr. Muransky. After careful review and with the benefit of oral argument, we affirm.

I. Background

In April 2015, Dr. Muransky filed a class action against Godiva for allegedly violating FACTA. FACTA prohibits merchants from printing "more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction." 15 U.S.C. § 1681c(g)(1). We will refer to this as the "truncation requirement."

FACTA authorizes customers to sue merchants that willfully or negligently violate the truncation requirement. 15 U.S.C. §§ 1681n(a) ; 1681o (a). A merchant willfully violates FACTA by acting in knowing violation of its statutory duties or by acting in reckless disregard of those duties. See Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 57–58, 127 S.Ct. 2201, 2208–09, 167 L.Ed.2d 1045 (2007). For willful violations, customers may recover actual damages or statutory damages from $ 100 to $ 1000, and punitive damages. 15 U.S.C. § 1681n(a)(1), (a)(2) ; Safeco, 551 U.S. at 53, 127 S.Ct. at 2206. Customers can recover statutory damages for willful violations even if they cannot show their identity was stolen or credit impacted, 15 U.S.C. § 1681n(a), and even if they received and kept the defective receipt. Engel v. Scully & Scully, Inc., 279 F.R.D. 117, 125–26 (S.D.N.Y. 2011). By contrast, when the violation is a result of negligence, customers can only recover their actual damages as well as attorney's fees. 15 U.S.C. § 1681o (a) ; Engel, 279 F.R.D. at 125–26.

The operative complaint alleges that after Dr. Muransky made a purchase at a Godiva store, Godiva gave him a receipt that showed his credit card number's first six and last four digits. Dr. Muransky sought to represent a class of customers whose credit card numbers Godiva printed on receipts in violation of FACTA. These violations, the complaint says, exposed Dr. Muransky and the class "to an elevated risk of identity theft." According to the complaint, Godiva's violation of FACTA was willful, so the class was entitled to statutory and punitive damages, as well as attorney's fees and costs. See id. § 1681n(a).

Godiva moved to dismiss the complaint on the ground that it did not plausibly allege a willful violation of FACTA. The District Court denied Godiva's motion. After that, the parties engaged in discovery then mediated the case. In late November 2015, the parties notified the court of an agreement in principle to settle the case on a class-wide basis. They requested a stay, which the court granted.

Two months after that request, Dr. Muransky moved for preliminary approval of the class-action settlement. He explained that the parties agreed to a settlement fund of $ 6.3 million from which all fees, costs, and class members would be paid. He estimated that class members who submitted a timely claim form would receive around $ 235 as their pro-rata share of the settlement fund. None of the money would revert to Godiva. Dr. Muransky indicated he intended to apply for an incentive award of up to $ 10,000 and that class counsel would move for an award of attorney's fees of up to one-third of the settlement fund, which would be $ 2.1 million.

In this motion, Dr. Muransky also argued that the amount class members would recover by submitting a claim compared favorably to their possible recovery had the case proceeded to trial. FACTA provides for a combination of actual and statutory damages. 15 U.S.C. § 1681n(a). For statutory damages, FACTA provides for an award of $ 100 to $ 1,000 for each violation. Id. § 1681n(a)(1)(A). Given the nature of the violation, Dr. Muransky acknowledged there was "a good chance" each class member would recover the $ 100 minimum statutory damage award if the case went to trial. At the fairness hearing, the District Court agreed with Dr. Muransky's assessment, saying it was reasonable for class counsel to have estimated that class members "could [receive] more than double what the class members could get if they went to trial and won the case."

Dr. Muransky's motion also addressed some of the risks that favored pre-trial settlement. Most notably, Dr. Muransky pointed to two cases then pending before the Supreme Court: Spokeo, Inc. v. Robins, 578 U.S. ––––, 136 S.Ct. 1540, 194 L.Ed.2d 635 (2016), on Article III standing, and Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. ––––, 136 S.Ct. 1036, 194 L.Ed.2d 124 (2016), on class certification under Federal Rule of Civil Procedure 23(b)(3). The outcomes of those two cases, which at the time were uncertain, posed serious risks to the class members' ability to pursue FACTA claims against Godiva. Dr. Muransky also acknowledged the difficulty of proving the "willfulness" of Godiva's FACTA violation, which the District Court also discussed at the fairness hearing. Without proving "willfulness," the class would not be entitled to statutory damages. See 15 U.S.C. § 1681n(a).

The motion for preliminary approval also contained a proposed class notice and a proposed schedule of notice, opt-out, and motion deadlines. The proposed notice said Dr. Muransky would seek an incentive award of up to $ 10,000 "for his work in representing the class" and that class counsel would seek up to $ 2.1 million in attorney's fees. The District Court granted the motion for preliminary approval, certified the class under Rule 23(b)(3), and approved the form of notice. Under the preliminary approval order, class members who wanted to be excluded from the settlement were required to give written notice of exclusion to the claims administrator. Those who failed to submit an opt-out certification would be included in the settlement class and bound by its terms. Then to get money from the settlement fund, class members had to file a claim form with the claims administrator. Class members could also file objections, which the court would consider as part of its determination of whether the settlement was fair. After extensions by the District Court, the final deadline for class members to submit claims, object, or opt-out was August 23, and the deadline for Dr. Muransky to move for final settlement approval was September 9.

Notice of the settlement was sent to 318,000 class members and over 47,000 submitted claim forms. Only fifteen class members opted out. Five class members, including Mr. Price and Mr. Isaacson, objected to the settlement. In their objections, Mr. Price and Mr. Isaacson said they are members of the settlement class and that they timely submitted claim forms. Among other arguments, they said notice of Dr. Muransky's attorney's fee motion was inadequate under Rule 23(h) ; the court should subject any attorney's fee award to a lodestar analysis; and a $ 10,000 incentive award was not warranted.

On September 7, Dr. Muransky moved for final approval of the class settlement and requested an award of $ 2.1 million in attorney's fees as well as $ 10,000 as an incentive award. At the court's direction, Dr. Muransky filed a separate motion for attorney's fees and expenses. The Magistrate Judge issued a report and recommendation ("R&R") on the attorney's fee motion just four days later, before the objectors filed opposition briefs. The R&R recommended that the District Court grant the motion and award the full amount of $ 2.1 million. Although the R&R was issued before the objectors filed opposition briefs, the Magistrate Judge considered Mr. Price's and Mr. Isaacson's previously filed objections to the settlement. In addition, soon after the R&R was issued, the objectors filed briefs in opposition to the motion for attorney's fees. They later filed objections to the R&R...