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McDonald v. Bass Pro Outdoor World, LLC

United States District Court, S.D. California

August 5, 2014

GEOFFREY McDONALD, individually and on behalf of all other similarly situated, Plaintiff,
v.
BASS PRO OUTDOOR WORLD, LLC, et al., Defendants.

AMENDED ORDER GRANTING JOINT MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT [ECF No. 45]

CYNTHIA BASHANT, District Judge.

On March 14, 2013, Plaintiff Geoffrey McDonald commenced this putative class action in the San Diego Superior Court, alleging that Defendants Bass Pro Outdoor World, LLC, BPS Direct, LLC, Bass Pro, LLC, and Bass Pro, Inc. (collectively referred to as "Defendants" or "Bass Pro") recorded telephone calls made to or received from California residents without their consent in violation of the California Invasion of Privacy Act, California Penal Code §§ 630, et seq. Thereafter, Defendants removed this action to federal court. Now pending before the Court is the parties' joint motion for preliminary approval of class action settlement.[1]

After more than a year of litigation, the parties have reached a settlement which, upon final court approval, will resolve the claims of Plaintiff and all putative class members. The parties now seek an order conditionally certifying the class, preliminarily approving the proposed settlement, approving the proposed notice, and setting a hearing for final approval, among other things.

I. PROPOSED SETTLEMENT[2]

The proposed settlement agreement applies to class members defined as "[a]ll natural persons who, while present in California and using a telephone with a California area code, participated in at least one recorded telephone call to Bass Pro between March 14, 2012 and March 27, 2013 or at least one recorded telephone call from Bass Pro between March 14, 2012 and April 3, 2013[.]" (Settlement § III.A.) The parties also agree that, subject to the Court's approval, Dostart Clapp & Coveney, LLP will be appointed as class counsel, Plaintiff will be appointed as class representative, and Rust Consulting will be appointed as claims administrator. ( Id. §§ III.C, III.D, & III.E.)

The monetary consideration consists of $6, 000, 000 in cash, plus accrued interest. (Settlement § IV.A.) No later than fifteen court days following the preliminary approval date, Defendants are to transfer the $6, 000, 000 settlement amount into an interest-bearing escrow account administered by the claims administrator. ( Id. )

The proposed settlement also reflects a change in Defendants' business practices in place beginning March 28, 2013 in which they will not record any inbound telephone calls from California area codes without first giving notification at the outset of the call that the call may be recorded. (Settlement § IV.C.) Defendants have not recorded outbound calls to California since April 4, 2014. ( Id. ) Furthermore, Defendants have no intention to change these practices, but reserve the right to change these procedures in the event that there is a change in the law requiring two-party consent, or there is a finding by the California Legislature or California Supreme Court that Defendants' telephone calls do not fall within the scope of the California Invasion of Privacy Act in whole or in part. ( Id. )

The proposed settlement also requires the claims administrator to provide notice by mail and by publication, providing, among other things, a description of the terms of the settlement, instructions for submitting a claim, and directions to accessing the settlement website. (Settlement §§ VII.A & VII.B.) In addition to mail and publication notice, the claims administrator will establish a settlement website on which the administrator will make available the class notice, claim form, settlement agreement, Plaintiff's complaint, the order granting preliminary approval, and any other relevant materials agreed to by the parties. ( Id. § VII.C.) After the notice mailing date, class members will have 60 days to submit a claim form indicating that they wish to participate in, be excluded from, or object to the settlement. ( Id. §§ VII.F, VII.G, & VII.H.) The claims administrator will then determine the validity of each claim form. ( Id. § VII.F.) Class members who submit timely and valid claims forms will constitute the "Participating Class Members"; only participating class members will receive settlement payments. ( Id. )

In advance of the deadline for filing objections, and pursuant to In re Mercury Interactive Corp. Securities Litigation, 618 F.3d 988 (9th Cir. 2010), class counsel will file a motion requesting an award of attorneys' fees of up to thirty percent (30%) of the monetary settlement amount, plus reimbursement of actual litigation expenses not to exceed $150, 000. (Settlement § V.) That motion will also request a service payment to Plaintiff not to exceed $20, 000. ( Id. § VI.) Each of these amounts are subject to the Court's approval.

Following final court approval and occurrence of the "Effective Date, "[3] each participating class member will be entitled to receive a pro-rata portion of the net settlement amount-the amount available for distribution after payment of settlement costs, including attorneys' fees, litigation expenses, a class-representative-enhancement award, and administration expenses. (Settlement § VIII.A.) Each participating class member will receive a settlement payment equal to the net settlement amount divided by the number of participating class members. ( Id. ) Any portion of the settlement amount not distributed to participating class members at the end of 120 days will be paid to a court-approved cy pres recipient. ( Id. § VII.B.) Provided that the effective date occurs, Plaintiff and participating class members in addition to class members who do not timely request exclusion shall be deemed to have released and discharged Defendants from any and all claims that were alleged in the complaint or claims that could have been asserted arising out of facts alleged in the complaint that took place during the class period. ( Id. §§ IX.A, IX.B, & IX.C.)

II. ANALYSIS

The Ninth Circuit maintains a "strong judicial policy" that favors the settlement of class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). However, Federal Rule of Civil Procedure 23(e) first "require[s] the district court to determine whether a proposed settlement is fundamentally fair, adequate, and reasonable." In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 458 (9th Cir. 2000) (citing Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)). Where the "parties reach a settlement agreement prior to class certification, courts must peruse the proposed compromise to ratify both the propriety of the certification and the fairness of the settlement." Stanton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). In these situations, settlement approval "requires a higher standard of fairness and a more probing inquiry than may normally be required under Rule 23(e)." Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012) (internal quotation marks omitted).

A. Class Certification

Before granting preliminary approval of a class-action settlement, the Court must first determine whether the proposed class can be certified. Amchem Prods. v. Windsor, 521 U.S. 591, 620 (1997) (indicating that a district court must apply "undiluted, even heightened, attention [to class certification] in the settlement context" in order to protect absentees).

The class action is "an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only." Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2550 (2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 700-01 (1979)). In order to justify a departure from that rule, "a class representative must be part of the class and possess the same interest and suffer the same injury' as the class members." Id. (citing E. Tex. Motor Freight Sys., Inc. v. Rodriguez, 431 U.S. 395, 403 (1977)). In this regard, Rule 23 contains two sets of class-certification requirements set forth in Rule 23(a) and (b). United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union v. ConocoPhillips Co., 593 F.3d 802, 806 (9th Cir. 2010). "A court may certify a class if a plaintiff demonstrates that all of the prerequisites of Rule 23(a) have been met, and that at least one of the requirements of Rule 23(b) have been met." Otsuka v. Polo Ralph Lauren Corp., 251 F.R.D. 439, 443 (N.D. Cal. 2008).

"Rule 23(a) provides four prerequisites that must be satisfied for class certification: (1) the class must be so numerous that joinder of all members is impracticable; (2) questions of law or fact exist that are common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class." Otsuka, 251 F.R.D. at 443 (citing Fed.R.Civ.P. 23(a)). "A plaintiff must also establish that one or more of the grounds for maintaining the suit are met under Rule 23(b), including: (1) that there is a risk of substantial prejudice from separate actions; (2) that declaratory or injunctive relief benefitting the class as a whole would be appropriate; or (3) that common questions of law or fact predominate and the class action is superior to other available methods of adjudication." Id. (citing Fed.R.Civ.P. 23(b)). The parties seek class certification under Rule 23(b)(3).

1. Numerosity - Rule 23(a)(1)

Rule 23(a)(1) requires that the class be so numerous that joinder of all members is impracticable. "[C]ourts generally find that the numerosity factor is satisfied if the class comprises 40 or more members and will find that it has not been satisfied when the class comprises 21 or fewer." Celano v. Marriott Int'l, Inc., 242 F.R.D. 544, 549 (N.D. Cal. 2007).

The proposed class consists of more than 30, 000 individuals who can be identified from Defendants' records, plus additional unidentified individuals for whom Defendants' records do not reflect name or address information. (Hannink Decl. ¶ 13.) Thus, joinder of all members is impracticable for the purposes of Rule 23(a)(1).

2. Commonality - Rule 23(a)(2)

Under Rule 23(a)(2), the named plaintiff must demonstrate that there are "questions of law or fact common to the class." Commonality requires the plaintiff to demonstrate that the class members have suffered the same injury[.]'" Dukes, 131 S.Ct. at 2551 (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 157 (1982)). However, "[a]ll questions of fact and law need not be common to satisfy this rule." Hanlon, 150 F.3d at 1019. "The existence of shared legal issues with divergent factual predicates is sufficient, as is a common core of salient facts coupled with disparate legal remedies within the class." Id.

In this case, all class members were allegedly the subject of undisclosed recording by Defendants of telephone calls made to or received from California residents without their consent. In addition to sharing this "common core of salient facts, " class members also share a common legal issue: whether Defendants' alleged recording of telephone calls violated the California Invasion of Privacy Act.

Accordingly, Rule 23(a)(2) is satisfied.

3. Typicality - Rule 23(a)(3)

To satisfy Rule 23(a)(3), the named plaintiff's claims must be typical of the claims of the class. The typicality requirement is "permissive" and requires only that the named plaintiff's claims "are reasonably coextensive with those of absent class members." Hanlon, 150 F.3d at 1020. "The test of typicality is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct.'" Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992) (quoting Schwartz v. Harp, 108 F.R.D. 279, 282 (C.D. Cal. 1985)). "[C]lass certification should not be granted if there is a danger that absent class members will suffer if their representative is preoccupied with defenses unique to it.'" Id. (quoting Gary Plastic Packaging Corp. v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 903 F.2d 176, 180 (2d Cir. 1990)).

Like the other class members, Plaintiff's claim is that his telephone conversation with Defendants' customer service representatives were recorded without his consent. Thus, Plaintiff and the class members assert the same violation of the California Invasion of Privacy Act. Therefore, Plaintiff's ...


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