IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA
June 13, 2005
IN RE: HOUSEHOLD LENDING LITIGATION
The opinion of the court was delivered by: Claudia Wilken United States District Judge
ORDER DENYING MOTION TO OPT OUT
Beverley Heaverlo moves for an order allowing her to opt out of the class settlement of this case or, in the alternative, for an enlargement of time to opt out. Defendants Household International, Inc., Household Finance Corporation II, Household Finance Corporation III, Household Realty Corporation, Beneficial Finance, Beneficial of Washington, Inc. and other related Household Finance corporate entities (collectively, HFC) oppose the motion.*fn1 Having considered the papers filed by the parties, the Court DENIES the motion to opt out.
On December 12, 2003, this Court issued a preliminary order approving a class action settlement of Movant's claims and providing for notice to the class (hereinafter the Acorn class settlement). That order required any person who wanted to be excluded from the settlement to mail a request for exclusion to the Settlement Administrator no later than twenty-one days prior to the April 30, 2004 fairness hearing, that is, no later than April 9, 2004. On April 30, 2004, this Court issued a final order approving the class settlement and a judgment.
On December 31, 2003, Movant signed a contingent fee agreement with the law firm of Lacy & Kane to represent her in a private suit against Beneficial of Washington, Inc. On January 2, 2004, Mr. Kane sent a letter to Movant informing her of the December 12 settlement, and stating:
You will automatically be included in the settlement unless a written request to be excluded is provided to Household by April 9, 2004. I recommend that you "opt-out" of this settlement. I will prepare an "opt-out" letter on your behalf, but we also need your loan number, the amount of the loan and the address of the property mortgaged. Poulson Decl., Ex. A. On February 22, 2004, Movant sent a letter to Mr. Kane stating that "I am in receipt of the settlement copy and am going to 'opt-out' since it does not adequately cover damages caused to me," and later repeating that "I am opting out of the settlement and have included all required info per your January 2, 2004 letter." Heaverlo Decl., Ex. A.
Based on this correspondence, Movant believed that she had done everything requested of her, and that the opt out process would be completed by her attorneys. Heaverlo Decl. ¶ 7. In March, 2004, Movant's case was assigned to Mr. Poulson, an attorney at Lacy & Kane. Poulson Decl. ¶ 4. Based on his reading of Movant's February 22, 2004 letter, Mr. Poulson believed that Movant had taken the necessary steps to opt out of the Acorn class settlement. Id. ¶ 5. Movant and her attorneys made no further efforts to ensure that Movant opted out of the class settlement. On April 30, 2004, Movant filed a complaint against Beneficial of Washington, Inc. in Chelan County Superior Court. On March 15, 2005, Movant filed this motion to opt out of the Acorn class settlement.
In requesting exclusion from the class after the April 9, 2004 opt-out deadline, Movant is effectively seeking relief from final judgment under Federal Rule of Civil Procedure 60(b).*fn2 The standard for determining whether Movant should be allowed to opt out of the class after the applicable deadline is whether their failure to comply with the deadline is the result of "excusable neglect." Fed. R. Civ. P. 60(b). This standard allows courts, "where appropriate, to accept late filings caused by inadvertence, mistake, or carelessness, as well as by intervening circumstances beyond the party's control." Pioneer Inv. Serv. Co. v. Brunswick Assoc. Ltd. P'ship, 507 U.S. 380, 388 (1993). It is appropriate for courts to accept such late filings when the party's neglect can be considered "excusable," a determination that is "at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission." Id. at 395. The relevant circumstances include "the danger of prejudice to the [opposing party], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was in reasonable control of the movant, and whether the movant acted in good faith." Id.
Movant argues that her good faith reliance on Mr. Kane's January 2, 2004 letter, even if mistaken, constitutes excusable neglect.
In Pioneer, the Supreme Court held that when determining whether failure to act before the bar date was excusable, the proper inquiry was whether the neglect of Movants and their counsel was excusable. Pioneer, 507 U.S. at 396. The Supreme Court reasoned that "clients must be held accountable for the acts and omissions of their attorneys." Id.
Movant argues that she relied in good faith on her attorney's representation that he would complete the opt out process. Indeed, Movant's initial failure to opt out appears to be based on a good faith mistake by Movant and her attorneys. Mr. Kane's January 2, 2004 letter to Movant stated that he would "prepare an 'opt-out' letter on your behalf," leading Movant to believe that she did not need to take further action to opt out of the class settlement. Similarly, Movant's February 22, 2004 letter stated that "I am opting out of the settlement," leading Mr. Poulson to believe that she had successfully opted out. If Movant and her attorneys had quickly discovered their error, and moved to opt out soon after, Movant's argument might have been persuasive.
However, Movant submits no evidence that she or her attorneys made any further efforts to ensure that she successfully opted out of the settlement. Instead, Movant delayed eleven months after the opt out deadline before filing this motion on March 15, 2005. Movant does not explain when or how she and her counsel learned of their mistake, and offers no excuse for the lengthy delay.
Movant also argues that HFC will suffer no substantial prejudice due to the eleven month delay, because Movant filed a lawsuit against HFC on April 30, 2004, putting HFC on "constructive notice" of her decision to opt out. However, even this notice was beyond the April 9, 2004 deadline. Further, lack of prejudice does not render Movant's lengthy delay in filing her opt out motion excusable.
Weighing all of the relevant circumstances, Movant's eleven month delay before filing an opt out motion does not constitute excusable neglect.
For the foregoing reasons, Movant's motion to opt out is DENIED (Docket No. 362). The Court GRANTS Defendants' request for judicial notice (Docket No. 368).
IT IS SO ORDERED.