WILLIAM B. SHUBB, District Judge.
Plaintiffs brought this putative class action against iYogi, Inc. ("iYogi"), alleging defendant violated the Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA"), by employing aggressive sales tactics to get customers to renew their subscriptions to iYogi and placing calls to consumers regardless of whether they had refused the offer or previously asked that defendant not call. Presently before the court is plaintiffs' motion for preliminary approval of the class action settlement.
iYogi is a technical support company that offers remote computer services to millions of individuals worldwide. Consumers sign up for a year-to-year flat fee service plan. Plaintiffs Vicki Estrada, Patricia Goodman, and Kim Williams-Britt allege they received several calls to their cellphones from iYogi soliciting them to renew their service plans.
Plaintiffs contend defendant violated three provisions of the TCPA. The first provision makes it "unlawful for any person within the United States . . . to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system . . . to any telephone number assigned to a . . . cellular telephone service." 47 U.S.C. § 227(b)(1)(A)(iii). The second provision makes it unlawful to place more than one telephone call within a twelve-month period to persons whose cellular telephone numbers are listed on the national do-not-call registry.
Plaintiffs brought this lawsuit on behalf of a putative class of consumers in the United States who are iYogi subscribers or former subscribers whom iYogi called on their cellphones. Plaintiffs now seek preliminary approval of the parties' stipulated class-wide settlement, pursuant to Federal Rule of Civil Procedure 23(e).
Rule 23(e) provides that "[t]he claims, issues, or defenses of a certified class may be settled . . . only with the court's approval." Fed. R. Civ. P. 23(e). "Approval under 23(e) involves a two-step process in which the Court first determines whether a proposed class action settlement deserves preliminary approval and then, after notice is given to class members, whether final approval is warranted."
This Order is the first step in that process and analyzes only whether the proposed class action settlement deserves preliminary approval.
The Ninth Circuit has declared a strong judicial policy favoring settlement of class actions.
The first part of this inquiry requires the court to "pay `undiluted, even heightened, attention' to class certification requirements" because, unlike in a fully litigated class action suit, the court "will lack the opportunity . . . to adjust the class, informed by the proceedings as they unfold."
The second part of this inquiry obliges the court to "carefully consider `whether a proposed settlement is fundamentally fair, adequate, and reasonable,' recognizing that `[i]t is the settlement taken as a whole, rather than the individual component parts, that must be examined for overall fairness. . . .'"
A class action will be certified only if it meets the four prerequisites identified in Rule 23(a) and additionally fits within one of the three subdivisions of Rule 23(b).
Rule 23(a) restricts class actions to cases where:
Fed. R. Civ. P. 23(a).
Under the first requirement, "[a] proposed class of at least forty members presumptively satisfies the numerosity requirement."
Commonality requires that the class members' claims "depend upon a common contention" that is "capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke."
The proposed class includes "[a]ll individuals who are iYogi subscribers or former subscribers in the United States to whom iYogi or any agent or affiliate of iYogi made or attempted to make outbound calls (including but not limited to subscription renewal calls) to a telephone number assigned to cellular telephone service from September 23, 2009 until November 18, 2013." (Pls.' Mot. at 8.) Like the named plaintiffs, the class would be comprised of individuals alleging that an iYogi employee or agent called their cellphones to convince them to renew their subscription in violation of the TCPA. Due to their common legal contentions, the proposed class meets the commonality requirement.
Typicality requires that named plaintiffs have claims "reasonably coextensive with those of absent class members," but their claims do not have to be "substantially identical."
The putative class members allege a simple set of facts that are essentially identical to those alleged by the named plaintiffs. The class injury for all class members was the aggravation and nuisance of receiving unsolicited and harassing telephone calls and the money paid to wireless telephone carriers for the receipt of such calls. Such injury was caused by the same conduct of iYogi. (
To resolve the question of adequacy, the court must make two inquiries: "(1) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (2) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?"
First, there do not appear to be any conflicts of interest. The named plaintiffs' interests are generally aligned with the putative class members. The putative class members suffered a similar injury as the named plaintiffs, and the definition of the class is narrowly tailored and aligns with the named plaintiffs' interests.
The settlement agreement provides for an incentive award of $1,000 to each of the named plaintiffs, to be paid separate from and in addition to the class recovery of $40 per class member. An incentive award of $1,000 to each of the named plaintiffs does not on its face appear to create a conflict of interest. The Ninth Circuit has specifically approved the award of "reasonable incentive payments" to named plaintiffs.
The second prong of the adequacy inquiry examines the vigor with which the named plaintiffs and their counsel have pursued the common claims. "Although there are no fixed standards by which `vigor' can be assayed, considerations include competency of counsel and, in the context of a settlement-only class, an assessment of the rationale for not pursuing further litigation."
Plaintiffs' counsel states that he and his colleagues at Edelson PC "are experienced members of the plaintiffs' bar who have built their practice litigating similarly complex consumer class actions, including many under the TCPA." (Balabanian Decl. ¶ 17 (Docket No. 74-2).) Further, plaintiffs' counsel states he has "already dedicated substantial resources to the prosecution of this Action . . . and will continue to do so throughout the Action's pendency." (
In addition, plaintiffs' counsel seems to have seriously considered the risks of continued litigation in deciding to settle this action. For instance, he recognized that if the case were to proceed to trial, defendant would likely assert several "potentially dispositive defenses":
(
An action that meets all the prerequisites of Rule 23(a) may be certified as a class action only if it also satisfies the requirements of one of the three subdivisions of Rule 23(b).
"Because Rule 23(a)(3) already considers commonality, the focus of the Rule 23(b)(3) predominance inquiry is on the balance between individual and common issues."
The class members' contentions appear to be similar, if not identical. Again, although some nuances among the class members' allegations could exist, there is no indication that those variations are "sufficiently substantive to predominate over the shared claims."
Rule 23(b)(3) also requires a showing that "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b) (3). It sets forth four non-exhaustive factors to consider in making this determination:
If the court certifies a class under Rule 23(b)(3), it "must direct to class members the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort." Fed. R. Civ. P. 23(c)(2)(B). Rule 23(c)(2) governs both the form and content of a proposed notice.
The settlement agreement provides that the settlement administrator, Epiq Class Action & Claims Solutions, Inc., will provide notice to the class via e-mail. (Pls.' Mot. at 23-24; Settlement Agreement ¶ 7.1 (Docket No. 74-1).) If an e-mail bounces back or is otherwise undeliverable, the settlement administrator will re-send the email one time. (Settlement Agreement ¶ 7.1.) The e-mail will direct class members to the settlement website. (
The notice explains the proceedings; defines the scope of the class; informs the class member of the claim form requirement and the binding effect of the class action; describes the procedure for opting out and objecting; and provides the time and date of the fairness hearing. The content of the notice therefore satisfies Rule 23(c)(2)(B).
Plaintiffs contend that e-mail will "be particularly effective in this case given that e-mail was one of the primary means by which iYogi communicated with its customers, and each customer that registered for iYogi's services was required to provide a valid e-mail address to do so." (Pls.' Mot. at 23-24; Balabanian Decl. ¶ 20 (Docket No. 74-2).) The reliance on e-mail alone is not generally the best form of notice, especially given that the parties do not have any process in place for correcting out-of-date e-mail addresses. However, given defendant's history of using email to contact customers and the fact that it would likely be prohibitively expensive to provide notice to such a large class through other means, the court is satisfied that this system is reasonably calculated to provide notice to class members and is the best form of notice available under the circumstances.
After determining that the proposed class satisfies the requirements of Rule 23, the court must determine whether the terms of the parties' settlement appear fair, adequate, and reasonable.
At the preliminary stage, "the court need only `determine whether the proposed settlement is within the range of possible approval.'"
The parties represent that the settlement is the result of arms-length settlement negotiations, including a private mediation before the Honorable Morton Denlow (ret.) of JAMS (Chicago). (Balabanian Decl. ¶ 8);
In determining whether a settlement agreement is substantively fair to the class, the court must balance the value of expected recovery against the value of the settlement offer.
The TCPA provides for damages of $500 "for each such violation" of the statute or, at most, $1,500 if defendant's conduct was willful. 47 U.S.C. § 227(b)(3)(B), (c)(5)(B). In contrast, the settlement would provide each class member with $40 in cash, which is only eight percent of the available damages under the TCPA. In addition, the settlement agreement requires class members to take the affirmative step of
While the settlement agreement provides class members with only a small percentage of the possible recovery and contains a potentially unfair opt-in/opt-out requirement, there are many uncertainties associated with pursuing litigation that justify this recovery. As discussed above, plaintiffs' counsel has testified that there are two "potentially dispositive" defenses that iYogi could assert with respect to customers' consent and there are risks of significant delay if defendant challenges a motion for class certification or any final judgment in favor of plaintiffs. (Balabanian Decl. ¶¶ 26-27.) In addition, there is no assurance the class will recover the full amount of damages even if it prevails at trial "given iYogi's financial condition and limited insurance coverage." (
In light of the uncertainties associated with pursuing litigation, the court will grant preliminary approval to the settlement because it is within the range of possible approval.
If a negotiated class action settlement includes an award of attorneys' fees, that fee award must be evaluated in the overall context of the settlement.
The settlement agreement provides that plaintiffs' counsel will apply to the court for a fee award of up to $300,000, to be paid by defendant separate and apart from the recovery of the class. (Settlement Agreement ¶ 10.2.) Defendant may oppose plaintiffs' petition for the fee award. (
In deciding the attorney's fees motion, the court will have the opportunity to assess whether the requested fee award is reasonable, by multiplying a reasonable hourly rate by the number of hours counsel reasonably expended.
IT IS THEREFORE ORDERED that plaintiffs' motion for preliminary certification of a conditional settlement class and preliminary approval of the class action settlement be, and the same hereby is, GRANTED.
IT IS FURTHER ORDERED that:
(1) Defendant shall notify class members of the settlement in the manner specified under section VII of the settlement agreement;
(2) Class members who want to receive a settlement payment under the settlement agreement must accurately complete and deliver the claim form to the settlement administrator no later than sixty (60) calendar days after the last day for notice to be provided under section V and VI of the settlement agreement;
(3) Class members who want to object to or comment on the settlement agreement must deliver written objections to plaintiffs' counsel and defendant's counsel, and must file such objection with the court, no later than sixty (60) calendar days after the last day for notice to be provided under section VII of the settlement agreement. Written objections must be filed and postmarked no later than the objection deadline. The objection must include: (a) the name and case number of the action,
(4) Class members who fail to object to the settlement agreement in the manner specified above shall be deemed to have waived their right to object to the settlement agreement and be forever barred from making any such objections (whether in this action or any other action or proceeding).
(5) Class members who want to be excluded from the settlement must, within sixty days after the last day for notice to be provided, submit a request for exclusion indicating (a) the name and case number of the action,
(6) The class is provisionally certified as a class of all individuals who are iYogi subscribers or former subscribers in the United States to whom iYogi or any agent or affiliate of iYogi made or attempted to make outbound calls (including but not limited to subscription renewal calls) to a telephone number assigned to cellular telephone service from September 23, 2009 until November 18, 2013. (Settlement Agreement ¶ 1.35.) Excluded from the class are the judges presiding over the action and members of their families; defendant; all persons who properly execute and submit a timely request for exclusion; all persons whose claims against defendant have been fully and finally adjudicated and/or released; and the legal representatives of any excluded persons.
(7) Plaintiffs Vicki Estrada, Patricia Goodman, and Kim Williams-Britt are conditionally certified as the class representatives to implement the parties' settlement in accordance with the settlement agreement. The law firm of Edelson PC, through Jay Edelson, Rafey S. Balabanian, Benjamin H. Richman, and Courtney C. Booth, is conditionally appointed as class counsel. Plaintiffs and Edelson PC must fairly and adequately protect the class's interests.
(8) The parties agree that Epiq Class Action & Claims Solutions, Inc. will serve as the settlement administrator.
(9) If the settlement agreement terminates for any reason, the following will occur: (a) Class certification will be automatically vacated; (b) plaintiffs will stop functioning as class representatives; and (c) this action will revert to its previous status in all respects as it existed immediately before the parties executed the settlement agreement.
(10) All discovery and pretrial proceedings and deadlines are stayed and suspended until further notice from the court, except for such actions as are necessary to implement the settlement agreement and this Order.
(11) The fairness hearing is set for January 25, 2016 at 2:00 p.m., in Courtroom No. 5, to determine whether the settlement agreement should be finally approved as fair, reasonable, and adequate.
(12) Based on the date this Order is signed and the date of the fairness hearing, the following are the certain associated dates in this settlement:
(b) Pursuant to Local Rule 293, plaintiffs shall file a motion for attorney's fees no later than 28 days prior to the final fairness hearing;
(c) The last day for class members to file a claim, request exclusion, or object to the settlement is 60 days after the date on which notice is provided;
(13) The parties shall file briefs in support of the final approval of the settlement no later than January 11, 2016.
(14) In the case that the fairness hearing be postponed, adjourned, or continued, the updated hearing date shall be posted on the settlement website.