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In re EasySaver Rewards Litigation

United States District Court, S.D. California

February 4, 2013

In re EASYSAVER REWARDS LITIGATION. This document relates to all actions.

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[Copyrighted Material Omitted]

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Alisa Ann Martin, James R. Patterson, Patterson Law Group, LLP, Isam C. Khoury, Kimberly Dawn Neilson, Michael D. Singer, Cohelan Khoury & Singer, San Diego, CA, Bruce W. Steckler, The Steckler Law Firm, Mazin A. Sbaiti, Baron & Budd PC, Dallas, TX, Gene J. Stonebarger, Stonebarger Law, APC, Folsom, CA,

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Jennie Lee Anderson, Andrus Anderson LLP, San Francisco, CA, Diane E. Sammons, Jay J. Rice, Nagel Rice, LLP, Roseland, NJ, for Plaintiffs.

Leo P. Norton, Michael G. Rhodes, Michelle C. Doolin, Cooley Godward Kronish LLP, Ethan Thomas Boyer, Michael L. Kirby, Kirby Noonan Lance and Hoge, LLP, San Diego, CA, Jacie C. Zolna, Myron Milton Cherry, Myron M. Cherry & Associates, LLC, Chicago, IL, for Defendants.

FINAL ORDER APPROVING CLASS ACTION SETTLEMENT; GRANTING PLAINTIFFS' MOTION FOR ATTORNEYS' FEES, COSTS, AND INCENTIVE AWARDS; OVERRULING PERRYMAN'S OBJECTIONS

ANTHONY J. BATTAGLIA, District Judge.

On January 28, 2013, this Court heard plaintiffs Josue Romero, Gina Bailey, Jennifer Lawler, John Walters, Daniel Cox, Christopher Dickey, Grant Jenkins, and Bradley Berentson's (collectively " Plaintiffs" ) Motion for Final Approval of Settlement (Doc. No. 262) and Motion for (1) Attorneys Fees' and Costs, and (2) Incentive Awards (Doc. No. 255). This Court reviewed and considered: (a) Plaintiffs' motions and the supporting papers, including the Settlement Agreement and Release (" Settlement Agreement" ); (b) defendant Provide Commerce, Inc.'s Statement Of Non-Opposition In Support Of Final Approval of Class Settlement (Doc. No. 263); (c) the objection filed by Brian Perryman (" Perryman" ) (Doc. No. 258); and (d) oral argument of counsel at the January 28, 2013 hearing. Based on this review and the findings set forth below, the Court GRANTS Plaintiffs' Motion for Final Approval of Settlement, (Doc. No. 262), and Plaintiffs' Motion for (1) Attorneys' Fees and Costs, and (2) Incentive Awards, (Doc. No. 255). The Court also overrules Perryman's objections for the reasons discussed further below.

Background

Plaintiffs' factual allegations are extensive, as set forth in the Fourth Amended Complaint. (Doc. No. 221). In sum, they allege that Defendants' practices of enrolling customers in the Rewards Programs are unfair and unlawful. Plaintiffs contend that Provide-Commerce transmits its consumers' private payment information to its third party marketing partners, Defendants Regent Group, Inc., doing business under Encore Marketing International and Encore Marketing International, Inc. (referred to collectively as " Encore" ). ( Id. at ¶ 1.) Encore then uses this information to charge the consumers credit or debit accounts without permission under the guise that the consumers authorized the charges when they supposedly joined saving programs such as EasySaver Rewards, Red Envelope Rewards, or Preferred Buyers Pass, which Encore manages on Provide-Commerce's behalf. ( Id. )

Specifically, when class members completed a purchase on one of Provide Commerce's retail websites, they were presented with a pop-up window offering $15 off their next purchase as a " Thank You" gift, and asking them to enter their zip code and email address and click " Accept" to receive the gift. ( Id. at ¶¶ 3, 26.) Regardless of whether Class members actually or knowingly provided their zip code and email address and clicked " Accept," Plaintiffs' allege that Provide Commerce transmitted their private payment information to EMI without consent. ( Id. at ¶ 3.) EMI proceeded to enroll Plaintiffs and Class members in a Rewards Program and charged their credit and debit cards a $1.95 activation fee, followed by a $14.95 monthly fee. ( Id. at ¶¶ 3, 26.) Plaintiffs allege that the Rewards Programs provided

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no meaningful benefits and that Class members were enrolled in the Rewards Programs without their knowledge or consent. ( Id. at ¶ 29.) Plaintiffs challenged Defendants' conduct as violating the California Unfair Competition Law, Cal. Bus. & Prof.Code § 17200, et seq., the California Consumers Legal Remedies Act, Cal. Civ.Code § 1750, et seq., and the Federal Electronic Funds Transfer Act, 15 U.S.C. § 1693, et seq. (as to EMI only), and Plaintiffs further alleged that the conduct constituted fraud, breach of contract, breach of the implied covenant of good faith and fair dealing, invasion of privacy, unjust enrichment, and negligence.

The parties litigated this matter over a period of several years. Then, on June 13, 2012, Plaintiffs' filed an unopposed Motion for (1) Preliminary Approval of Class Action Settlement, (2) Provisional Class Certification, (3) Distribution of Class Notice, and (4) Scheduling of Fairness Hearing. (Doc. No. 248.) The Court granted Plaintiffs' Motion on June 26, 2012, (Doc. No. 252), and Plaintiffs' subsequently filed the instant Motion for Attorneys' Fees and Costs, and Incentive Awards on November 26, 2012, (Doc. No. 255.) On December 7, 2012, class member Perryman filed a response opposing Plaintiffs' Motion for Attorneys' Fees and objecting to the proposed settlement.[1] (Doc. No. 258.) Plaintiffs' filed a response to Perryman's objections, (Doc. No. 262), and Defendant Provide Commerce, Inc. submitted a notice of non-opposition to Plaintiffs' Motion for Attorneys' Fees within their brief in support of final approval of the class settlement, (Doc. No. 265). As noted above, the Court held a hearing regarding final approval of the settlement and the fees, costs, and incentive award requested by Plaintiffs on January 28, 2013.

Proposed Settlement Terms

The proposed settlement agreement is attached to Plaintiffs' Motion for Preliminary Approval, (Doc. No. 248-3), which the Court granted. The Court sets forth some of the more significant terms of the settlement below.

A. Settlement Class

The proposed settlement class consists of:

All persons who, between August 19, 2005 and the date of entry of the Preliminary Approval order, placed an order with a website operated by Provide Commerce, Inc. and were subsequently enrolled by Regent Group Inc. d.b.a. Encore Marketing International, Inc. in one or more of the following membership programs: EasySaver Rewards, RedEnvelope Rewards, or Preferred Buyers Pass.

(Doc. No. 248-3 at § 1.8.) The class excludes: (a) Defendants; (b) any entities in which Defendants have a controlling interest or which have a controlling interest in Defendants; (c) the officers, directors, employees, subsidiaries, affiliates, and attorneys of Provide Commerce or EMI; and (d) the Judges presiding over this action and any of their employees or immediate family members. ( Id. at Ex. B-Long Notice Form.)

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B. Relief to Class

Defendants have agreed to do the following in exchange for a release of claims and subject to this Court's approval:

(1) Defendants will, via a neutral professional claims administrator selected from among three proposed by the parties, notify all Class members via direct email or U.S. Mail about their rights under the Settlement Agreement. (Doc. No. 248-3 at § 3.3(a)-(c).)

(2) Provide Commerce will directly email every class member $20 in the form of a merchandise code (" $20 credit" ). ( Id. at § 2.2.)

• Class members are not required to submit a claim to receive the $20 credit. ( Id. )
• The $20 credits are fully transferable. ( Id. )
• The $20 credits will be valid for one year for online purchases at Proflowers.com, RedEnvelope.com, Berries.com and CherryMoonFarms.com. ( Id. )
• The $20 credits are not valid for use from December 17 to 24, 2012, February 4 to 14, 2013, May 1 to 12, 2013, and December 16 to 24, 2013 (and corresponding time periods in 2014 through the expiration date of the $20 credits). ( Id. )
• The $20 credits are not combinable with discount or gift codes, cannot be used with email offers or promotions, but may be used to purchase markdown, bundled, or discounted products. ( Id. )
• At the time of settlement and at the final approval hearing, Plaintiffs' counsel verified that these websites offered a selection of items under $20.
• The $20 credits may also be applied towards larger purchases.
(3) Defendants will fund a $12.5 million Cash Fund that eligible class members can make claims against for refunds of payments for monthly membership fees. (Doc. No. 248-3 at § 2.1.)
• To make a claim from the Cash Fund, class members can submit their claim electronically at the neutral Claims Administrator's website, a link is provided to them via the direct email notice, or by U.S. Mail. ( Id. at § 3.6.)
• Class members will only be required to submit their contact information and verify that they did not intend to enroll and did not use the benefits of the program (excluding the initial discount code offered for a future Provide Commerce website purchase). ( Id. at § 2.1(d).)
• Class members will not be required to submit documents, or other proof of having been charged to make a claim. ( See id. )
• The Claims Administrator will evaluate and calculate all claims for payment based upon Defendants' records. ( Id. at § 3.7.)
• Claims will be paid on a pro rata basis up to the full amount owed. ( Id. at § 3.6.)
• The parties must meet and confer in good faith to resolve any disputed claims, with EMI's records being entitled to a rebuttable presumption of accuracy. ( Id. at § 3.8.)
• The Cash Fund will also be used to pay attorneys' fees and costs, incentive awards and administration costs. ( Id. at § 2.1(a)-(c).)
• The Cash Fund is non-reversionary, and any remaining funds will be distributed as a cy pres award, subject to Court approval, to fund higher education projects relating

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to internet privacy and consumer protection at California State University at San Diego (" San Diego State University" ), University of California at San Diego (" UCSD" ), and University of San Diego School of Law (" USD Law School" ). ( Id. at § 2.1(e).)

The total settlement will approximate $38 million dollars if the entire class use the credits and ...


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