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Cox v. Clarus Marketing Group, LLC

United States District Court, Ninth Circuit

April 29, 2013

DANIEL COX, JOSEPH M. LYNCH, and NICOLE HALL, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
CLARUS MARKETING GROUP, LLC., a Connecticut corporation; PROVIDE-COMMERCE, INC., a Delaware corporation; and DOES 1 through 50, inclusive Plaintiffs Cox, Hall, and Defendants.

ORDER: 1. Certifying a Class and Subclass for Purposes of Settlement; 2. Granting Final Approval of the Proposed Settlement; 3. Approving the Requested Award of Attorneys' Fees and Costs; and 4. Approving the Requested Incentive Awards for Lynch.

MARILYN L. HUFF, District Judge.

On November 20, 2012, the Court issued an order preliminarily certifying a class and subclass for settlement purposes, granting preliminary approval of the parties' proposed settlement, appointing class representatives and class counsel, approving class notice, and scheduling a final fairness hearing for April 29, 2013. (Doc. No. 27.) On March 13, 2013, Plaintiffs Daniel Cox, Joseph M. Lynch, and Nicole Hall filed a motion for approval of an attorney award of $640, 000 and incentive awards for the class representatives of $5, 000 each. (Doc. No. 30-1.) On April 2, 2013, Plaintiffs filed a motion for final approval of the proposed settlement and a final certification of a nationwide settlement class and subclass. (Doc. No. 33-1.) Defendants Clarus Marketing Group LLC ("CMG") and Provide-Commerce filed notices of non-opposition to Plaintiffs' final approval motion, (Doc. No. 34, ) and no proposed class members have filed objections to the proposed settlement. The Court held a final fairness hearing on April 29, 2013. Attorneys Alisa Martin and Timothy Fisher appeared on behalf of Plaintiffs; attorneys Leo Norton and Blake Bilstad appeared on behalf of Defendants. No objections were raised to the proposed class settlement, attorney fee award, or incentive award at the hearing.

Background

A. Facts

This case arises out of Defendants' allegedly unfair and unlawful offer for "free shipping" to online customers shopping on websites owned and operated by Provide Commerce, Inc. ("Provide Commerce"). Plaintiffs allege that while completing their online purchases on Provide Commerce's website ProFlowers.com, a pop-up window was generated containing a coupon offer for free shipping. (Doc. No. 1, "Compl." ¶17.) Upon clicking the pop-up window, Plaintiffs allege they were directed to an interface operated by Clarus Marketing Group, LLC ("CMG") and presented with an offer for free shipping on their current transaction, plus free shipping rebates on twelve future orders from ProFlowers.com. Id . To accept the offer, Plaintiffs allege that they were asked to enter their email address and zip code. Id . Plaintiffs allege that they were never informed that by accepting the offer, they were authorizing CMG to enroll them in CMG's membership programs, FreeShipping.com Insider's Club or FreeShipping.com ("FreeShipping.com"). Id . Plaintiffs allege that as members of FreeShipping.com, they were charged a monthly fee between $9 and $20. (Id. ¶1.) Plaintiffs allege that they did not supply CMG with their private payment information. (Id. ¶¶17, 25.) Rather, Plaintiffs allege that Provide Commerce provided their information to CMG without their knowledge or consent. Id.

B. Procedural History

On February 16, 2011, Plaintiff Daniel Cox and then-plaintiff Bradley Berentson commenced a civil action in the Northern District of California. Daniel Cox, et al. v. Clarus Marketing Group, LLC, et al., No. 11-cv-0729 (DMR). On March 24, 2011, the case was reassigned to the Honorable Saundra Brown Armstrong. (Doc. No. 23-2, "Proposed Settlement, " ¶A.)

On March 29, 2011, then-plaintiffs Mark McKnight and James Wilson filed a civil action in the Northern District of California. Mark McKnight, et al. v. Clarus Marketing Group, LLC, et al., No. 11-cv-1501 (MEJ). On April 8, 2011, the case was reassigned to Judge Armstrong. (Proposed Settlement ¶B.)

On April 8, 2011, Plaintiff Nicole Hall filed a civil action in the Northern District of California. Nicole Hall v. Clarus Marketing Group, LLC, et al., No. 11-cv-1757 (LB). On May 2, 2011, the case was reassigned to Judge Armstrong. (Proposed Settlement ¶C.)

On April 20, 2011, Plaintiff Hall and then-plaintiffs McKnight and Wilson filed a motion to consolidate the Cox, McKnight, and Hall actions. (Proposed Settlement ¶D.)

On April 29, 2011, Plaintiff Joseph Lynch filed a civil action in the Southern District of California. Joseph M. Lynch v. Clarus Marketing Group, LLC, et al., No. 11-cv-0913 (BEN); (Proposed Settlement ¶E.)

On May 4, 2011, Plaintiff Lynch filed a notice of voluntary dismissal. (Proposed Settlement ¶F.) On May 19, 2011, Plaintiff Cox filed an amended complaint adding Plaintiff Lynch as a new plaintiff and dropping then-plaintiff Berentson. (Proposed Settlement ¶G.)

Then-plaintiffs Wilson and McKnight and Plaintiff Hall filed notices of voluntary dismissal of their respective actions. (Proposed Settlement ¶¶H-J.) On November 14, 2011, Plaintiffs Cox and Lynch filed a notice of voluntary dismissal of the Cox action. (Proposed Settlement ¶K.)

On November 18, 2011, Plaintiffs filed this action, a putative class action against Defendants CMG and Provide Commerce, asserting causes of action against one or both Defendants for (1) RICO violations, 18 U.S.C. § 1962(c); (2) violations of the Electronic Funds Transfer Act, 15 U.S.C. § 1693; (3) declaratory relief; (4) conversion; (5) negligence; (6) invasion of privacy under the California Constitution; (7) invasion of privacy; (8) violations of the California Consumers Legal Remedies Act, Cal. Civ. Code §1770(a); (9)-(10) unlawful, unfair and fraudulent business practices in violation of Cal. Bus. & Prof. Code §17200; (11) violation of the Connecticut Unfair Trade Practices Act; and (12) violation of the Michigan Compiled Laws § 600.2919a. (See generally Compl.)

Shortly thereafter, Plaintiffs requested that Defendants provide discovery materials, including documents relating to insurance agreements and data concerning class size and revenues generated by Defendants' practices. (Doc. No. 23-1, "Patterson Decl., " ¶7.) Defendants responded to Plaintiffs' discovery requests by producing certain documents on November 22, 2011. Id . On April 10, 2012, the parties participated in a day-long mediation session before an experienced mediator. (Id. ¶¶2-3.) With the mediator's assistance, the parties reached a settlement in principle. Id . On May 25, 2012, Provide Commerce and CMG filed separate answers to the complaint, in which they denied Plaintiffs' allegations and raised various defenses. (Doc. Nos. 13, 14.) On October 2, 2012, the parties entered into a Proposed Settlement. (Patterson Decl. ¶4; Proposed Settlement.)

C. Proposed Settlement

The Proposed Settlement provides relief to a proposed class comprising all persons who, between February 16, 2007 and the date of the Court's order granting preliminary approval, placed an order on a website operated by Provide Commerce and were subsequently enrolled in FreeShipping.com's Insider's Club or FreeShipping.com. (Proposed Settlement ¶1.8.) The Proposed Settlement provides additional relief to a proposed subclass comprising all persons who, between April 1, 2009 and December 13, 2009, placed an order on a Provide Commerce website and were subsequently enrolled in FreeShipping.com's Insider's Club or FreeShipping.com by entering his email address and zip code without any additional contact or billing information. (Id. ¶1.9.)

For class members who are not subclass members, Provide Commerce agrees to provide each a 20% Off Code that is fully transferable and valid for purchases on certain Provide Commerce websites. (Id. ¶2.1.) The 20% Off Code expires one year after distribution and is subject to certain "black out" dates. Id . For subclass members, Provide Commerce agrees to provide a fully transferable $15 credit that is valid for purchases on certain Provide Commerce websites. (Id. ¶2.3.) The $15 credit also expires one year after distribution and is subject to certain "black out" dates. Id . In addition to the $15 credit, Provide Commerce agrees to establish a non-reversionary settlement fund of $500, 000. (Id. ¶2.2.) Eligible subclass members will receive payment "equal to the amount of fees that the Subclass Member paid to CMG for FreeShipping.com, less any partial refund or chargeback received for such fees, up to a maximum payment of $36.00." (Id. ¶2.2(a).) To receive payment, subclass members must submit a claim form stating, among others, that they did not knowingly authorize their enrollment in FreeShipping.com and did not take advantage of any benefits of FreeShipping.com. Id . Subclass members who received a full refund or chargeback, or who were not charged fees at all, will not be eligible to receive payment from the fund, but they may still receive the $15 credit. Id . If the claims exceed the amount of the fund, the payments will be reduced on a pro-rated basis such that the total payments do not exceed the amount of the fund. Id . Any unclaimed portion will be paid to the California Western School of Law to be "used for a chair, professorship, fellowship, lectureship, seminar series, or similar funding, gift, or donation program developed and coordinated between Provide Commerce and California Western School of Law... regarding internet privacy or internet data security." (Id. ¶2.2(b).)

Class members who wish to opt-out must have notified the settlement claims administrator by March 19, 2013.[1] (Id. ¶3.10; Doc. No. 33-2 ("Keough Decl."), Ex. A at p. 4.) Named Plaintiffs agreed not to seek incentive awards in excess of $5, 000 per plaintiff. (Id. ¶2.4.) Class counsel agreed not to seek an award for attorneys' fees and costs in excess of $640, 000. (Id. ¶2.5.)

In exchange, class members, other than those who opt-out, agree to release all claims against Defendants that are based on facts, omissions or other conduct that have been or could have been alleged in this action. (Id. ¶4.2.)

Discussion

When the parties reach a settlement agreement prior to class certification, the court is under an obligation to "peruse the proposed compromise to ratify both the propriety of the certification and the fairness of the settlement." Staton v. Boeing Co. , 327 F.3d 938, 952 (9th Cir. 2003). Thus, the court must first assess whether a class exists, and second, determine whether the proposed settlement is fundamentally fair, adequate, and reasonable. Id.

I. Class Certification

A plaintiff seeking to certify a class under Rule 23(b)(3) of the Federal Rules of Civil Procedure must first satisfy the requirements of Rule 23(a). Fed.R.Civ.P. 23(b). Once subsection (a) is satisfied, the purported class must then fulfill the requirements of Rule 23(b)(3). In the present case, Plaintiffs seek to certify both a class and a ...


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