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Ek Vathana v. EverBank

United States District Court, N.D. California

July 20, 2016

EK VATHANA, Plaintiff,
v.
EVERBANK, et al., Defendants.

          ORDER APPROVING DISTRIBUTION PLAN AND GRANTING MOTION FOR ATTORNEY'S FEES AND COSTS

          RICHARD SEEBORG UNITED STATES DISTRICT JUDGE

         I. BACKGROUND

         Plaintiff Ek Vathana, representing a certified class of investors, brought this action based on his purchase of two certificates of deposit (CD) denominated in Icelandic króna (ISK) from defendants EverBank, EverBank Financial Corporation, and EverBank World Markets (collectively “EverBank”). Vathana claims that EverBank’s decision to close his CDs on their respective maturity dates rather than roll them over amounted to a breach of contract. EverBank maintains its action was authorized and compelled by the banking crisis that gripped Iceland in October of 2008. A class was certified of “[a]ll purchasers of EverBank WorldCurrency Certificate of Deposit denominated in Icelandic krona which matured between October 8 and December 31, 2008.” Vathana became the class representative and served in that capacity throughout the litigation.

         In March 2016, preliminary approval of the class settlement was granted, and Rust Consulting, Inc., was assigned to administer all claims. Rust sent notices to all class members, and only one class member expressed concern about the recovery total. Now, the parties jointly move for final approval of the settlement, and Vathana moves for approval of the following: (1) the plan to allocate funds to class members; (2) an award of attorney fees in the amount of $250, 000 (33.3% of the settlement fund) and $40, 127.28 for expenses; (3) an incentive award in the amount of $12, 500; (4) administration expenses in the amount of $21, 675 ($10, 000 of which will be paid by defendants) and an additional $2, 000 if there must be a second-round distribution; (5) a threshold to halt distributions to class members at $5, 000, whereby all remaining funds will go to the National Endowment for Financial Education (“NEFE”); (7) removal of a class member who has died.

         II. DISCUSSION

         A. Final Approval and Allocation

         Vathana proposes a somewhat complicated method for calculating the percentage of the fund each class member will receive. Each class member will receive a pro rata share that also takes into consideration the conversion loss tied to the difference between EverBank’s conversion rate and that of the Central Bank of Iceland. The proposed formula requires calculating a conversion loss and multiplying that by the amount each class member paid on the date his or her CD matured. Thus:

(Everbank's Conversion Rate / Central Bank of Iceland's Mid Rate -1) x USD Amount EverBank Paid at CD Close

         Vathana created a table with dates and the conversion rates of EverBank and the Central Bank of Iceland for that day to enable each class member to identify the date his or her CD matured and identify the difference between the two conversion rates. The purpose of this formulation is (1) to ensure class members recover an amount commensurate with their investment; and (2) to account for the fact that some class members were harmed more than others because the difference between the conversion rates of EverBank and the Central Bank varied significantly.[1]

         Federal Rule of Civil Procedure 23(e) requires district courts to review the settlement to ensure it is “fundamentally fair, adequate and reasonable” before approving the settlement. Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1375 (9th Cir. 1993) (internal quotation marks omitted). When making that determination, courts consider various factors including: “(1) the strength of the plaintiffs’ case; (2) the risk, expense, complexity and likely duration of further litigation; (3) the risk of maintaining class action status throughout the trial;” (4) the amount of the settlement offer; (5) the stage of the proceedings and discovery; (6) “the experience and views of counsel”; and (7) “the reaction of class members to the proposed settlement.” Chun-Hoon v. McKee Foods Corp., 716 F.Supp.2d 848, 850-51 (N.D. Cal. 2010).

         Vathana and EverBank reached this settlement with the help of an experienced magistrate judge. Where, such as here, the settlement “is the product of arms-length negotiations” with capable counsel, the settlement is presumptively fair and reasonable. Wakefield v. Wells Fargo & Co., No. 3:13-CV-05053 LB, 2015 WL 3430240, at *4 (N.D. Cal. May 28, 2015). Counsel for the class is experienced and he has proven himself to be a zealous advocate for these plaintiffs over the past seven years.

         Had plaintiffs gone to trial, they would have faced numerous challenges. See Vathana v. Everbank, No. C 09-2338 RS, 2012 WL 822554, at *1-7 (N.D. Cal. Mar. 9, 2012), aff’d in part, rev’d in part and remanded, 770 F.3d 1272 (9th Cir. 2014) (granting summary judgment to EverBank). Moreover, a battle of the experts would have ensued at trial, and the possibility remained ever present that the jury would find EverBank’s expert more credible. All in all, the risk at trial would have been great, and while the total recovery for some plaintiffs may seem modest, it is far better than $0 that might have resulted.

         Most class members received notice of the settlement and the opportunity to object. Only one class member submitted a letter to the court, expressing his regret that the total recovery paled in comparison to his losses. Nevertheless, he recognized the risk of prolonged litigation. The class members’ silence in this case speaks to the fairness and reasonableness of the outcome.

         Finally, Vathana’s proposed allocation method is reasonable and fairly calculated to ensure class members’ recovery is proportional to their losses. Accordingly, the ...


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