United States District Court, N.D. California, Oakland Division
MOISES ZEPEDA, MICHAEL SPEAR, RONYA OSMAN, BRIAN PATTEE, Y CHING, DENAE ZAMORA, MICHAEL LAVANGA, and GARY MILLER, on behalf of themselves and all others similarly situated, Plaintiffs,
PAYPAL, INC., E-BAY INC., and DOES 1 through 10, inclusive, Defendants.
ORDER RE MOTION FOR FINAL APPROVAL AND MOTIONS FOR
ATTORNEYS' FEES AND SERVICE AWARDS Dkt. 295, 296, 297,
SAUNDRA BROWN ARMSTRONG Senior United States District Judge.
a putative nationwide class action brought by Plaintiffs
Moises Zepeda, Michael Spear, Ronya Osman, Brian Pattee,
Casey Ching, Denae Zamora, Michael Lavanga and Gary Miller
(collectively “Plaintiffs”) against PayPal, Inc.,
and its parent entity, eBay, Inc., (collectively
“Defendants”). Plaintiffs allege that PayPal
improperly handled disputed transactions relating to their
user accounts by unilaterally placing holds and reserves
thereon without explanation. PayPal also is alleged to have
failed to provide annual error-resolution notices and monthly
account statements in violation of the Electronic Fund
Transfer Act (“EFTA”), 15 U.S.C. § 1693, et
seq. The parties have resolved the above-captioned action on
a class-wide basis and entered into a Settlement Agreement,
as amended (“the Settlement”), which the Court
preliminarily approved in a prior order.
parties are presently before the Court on the following
motions: (1) Plaintiffs' Motion for Final Approval of
Amended Class Action Settlement Agreement; (2) Motion for
Award of Attorneys' Fees and Reimbursement for Costs and
Service Awards, filed by the Lexington Law Group and Quantum
Legal LLC (“Class Counsel Fee Motion”); (3)
Motion for Attorneys' Fees and Reimbursement of Expenses
filed by Marina Trubitsky (“Trubitsky Fee
Motion”); and (4) Application for Attorney Fees by
Local Counsel David Hicks (“Hicks Fee
Application”). Also before the Court are various
objections that the Court has received in response to Notice
of the Settlement.
matter came before the Court for a hearing on the
above-mentioned matters on February 8, 2017. The parties in
this action and related action, Fernando v. PayPal,
No. C 10-1668 SBA, appeared through their counsel of record.
Attorney Anthony Ferrigno appeared for Objectors Wally
Collins and Lucinda Christian (collectively “Collins
Objectors”), and Objector Sam Miorelli
(“Miorelli”), an attorney, appeared pro se.
Having read and considered the papers filed in connection
with these matters and upon consideration of the arguments
presented at the hearing, the Court hereby GRANTS
Plaintiffs' Motion for Final Approval, GRANTS IN PART the
Class Counsel Fee Motion and the Hicks Fee Application, and
DENIES the Trubitsky Fee Motion. All objections to final
settlement approval are OVERRULED.
operates an on-line payment processing service that functions
as a third party intermediary to facilitate payments between
buyers and sellers of goods and services sold on-line through
commercial websites, such as eBay. As a condition of using
PayPal's service, subscribers must abide by the PayPal
User Agreement (“User Agreement”), among other
agreements. Third Am. Compl (“TAC”). ¶ 35,
Dkt. 291. The User Agreement provides that upon a breach of
its terms-such as by engaging in defined “Restricted
Activities”-PayPal “may hold funds in a
seller's account by placing reserves on accounts and/or
limiting and/or suspending seller's accounts and holding
the funds in the accounts for up to and in some cases
exceeding 180 days.” Id. ¶ 38. Among
other things, Restricted Activities are defined to include a
breach of the User Agreement or any other agreements with
PayPal, selling counterfeit goods, and providing false or
inaccurate information. Id. ¶ 39. Plaintiffs
are PayPal users who allege that PayPal placed holds on their
account funds TAC ¶¶ 10-17. The foregoing policies
and practices have given rise to several actions including
the instant case, Zepeda v. PayPal, No. 10-2500 SBA,
and Fernando v. PayPal, No. 10-1668
The procedural history of these actions is summarized below.
Zepeda v. PayPal
12, 2010, Ronya Osman and Brian Pattee filed a complaint in
this Court against PayPal and eBay. See Osman v. PayPal,
Inc., No. C 10-2046 PVT. A month later on June 7, 2010,
Moises Zepeda (“Zepeda”) filed the instant action
against PayPal. Two days thereafter, Michael Spear filed a
third complaint against PayPal and eBay in the matter styled
as Spear v. PayPal, Inc. and eBay, Inc., No. C
10-2555 PVT. In July 2010, the plaintiffs in Osman
and Spear voluntarily dismissed their respective
actions under Federal Rule of Civil Procedure 41(a), without
prejudice. In their place, Zepeda filed a First Amended Class
Action Complaint (“FAC”) on August 13, 2010,
which joined the plaintiffs from the Osman and
Spear actions, among others. Dkt. 22.
alleged causes of action against PayPal for: (1) breach of
contract; (2) breach of fiduciary duty; (3) accounting; (4)
violation of California's Consumers Legal Remedies Act
(“CLRA”); (5) violation of California's
Unfair Competition Law (“UCL”), Cal. Bus. &
Prof. Code § 17200; and (6) unjust enrichment. The FAC
was filed on behalf of a nationwide class defined as
“[a]ll PayPal, Inc. account holders whose funds have
been held by Pay[P]al or whose accounts were closed,
suspended, or limited by PayPal, ” along with a natural
person class defined as “[a]ll natural persons whose
funds have been held by Pay[P]al or whose accounts were
closed, suspended, or limited by PayPal.” FAC ¶
57. Mark Todzo of Lexington Law Group LLC and Jeffrey Leon of
Quantum Legal LLC (formerly Complex Litigation Group LLC)
have served as the principal attorneys representing
Plaintiffs and are now Class Counsel.
Plaintiffs filed the FAC, the Honorable Lucy Koh, the judge
originally assigned to the action, recused herself and the
matter was reassigned to the Honorable Jeremy Fogel. On
September 30, 2010, PayPal filed a motion to dismiss the FAC,
pursuant to Federal Rule of Civil Procedure 12(b)(6). Dkt.
26. Shortly thereafter, Plaintiffs filed a motion for the
appointment of lead counsel. Dkt. 28. On February 15, 2011,
Judge Fogel granted PayPal's motion and dismissed all
claims with leave to file a Second Amended Complaint
(“SAC”) within thirty days. See 2/15/11
Order Granting Motions to Dismiss and to Appoint Interim
Lead, Liaison, and Class Counsel (“2/15/11
Order”) (reported as Zepeda v. PayPal, Inc.,
777 F.Supp.2d 1215, 1220-21 (N.D. Cal. 2011)), Dkt. 49. In
the same order, Judge Fogel granted Plaintiffs' motion
for the appointment of lead counsel. Zepeda, 777
F.Supp.2d at 1223-24.
rejecting Plaintiffs' tort and contract claims and demand
for an accounting, Judge Fogel ruled that: (1) the PayPal
User Agreement affords PayPal “sole discretion”
to place holds on its users' accounts, irrespective of
whether the user has engaged in restricted activities; and
(2) PayPal has no contractual obligation to provide users
with an explanation as to why their accounts may have been
frozen. Id. at 1219-221. Judge Fogel also rejected
the CLRA claim on the ground that Plaintiffs are not
“consumers” and therefore lack prudential
standing. Id. at 1222. As to the UCL claim, Judge
Fogel ruled that the pleadings failed to satisfy the
heightened standard for pleading fraudulent conduct under
Federal Rule of Civil Procedure 9(b). Id. at
1222-23. Finally, he dismissed the unjust enrichment claim on
the ground that the parties' relationship was governed by
an express contract. Id. at 1223.
Plaintiffs were given the opportunity to attempt to replead
their claims, it became apparent to them that filing a SAC
would trigger another motion to dismiss and engender further
delay and cost. Mot. for Prelim. Approval at 3, Dkt. 166. In
addition, Plaintiffs were concerned that, in light of Judge
Fogel's interpretation of the User Agreement, it would be
difficult to cure the deficiencies that resulted in the
dismissal of the FAC. Id. For its part, PayPal was
receptive to discussing settlement. Id. Thus,
instead of amending the pleadings, Plaintiffs commenced
settlement discussions with PayPal. Id.
Fernando v. PayPal and eBay
April 19, 2010, Devinda Fernando and Vadim Tsigel,
represented by New York attorney Trubitsky and local counsel
Hicks, filed the Fernando putative class action
against PayPal and eBay. On March 22, 2011, the plaintiffs
filed a First Amended Class Action Complaint
(“Fernando FAC”), which, inter alia,
joined Michail Zinger, Amy Rickel, Fred Rickel, Ira Gilman,
Lacy Reintsma and Shaul Behr as additional party-plaintiffs.
Fernando FAC, Dkt. 23.
Fernando FAC alleges that PayPal improperly
restricts, freezes or closes customer accounts because of
“suspicious activity, ” without notice,
explanation or responding to the inquiries of affected users.
Id. ¶¶ 23-24. The pleadings also aver that
PayPal freezes the accounts of affected users, thereby
preventing them from cancelling their accounts and recovering
their funds. Id. ¶ 25. Such conduct is alleged
to violate the EFTA, as well as Section III of the Injunctive
Relief portion of the settlement agreement reached in In
re PayPal Litigation (Comb v. PayPal, Inc.), Nos. C
02-1227 JF, C 02-2777 JF. Id. ¶¶
25-26. The Fernando FAC alleges six claims for:
(1) violation of the EFTA; (2) violation of the
Combsettlement agreement; (3) conversion; (4) money
had and received; (5) unjust enrichment; and (6) negligence.
Fernando, Dkt. 1. Although PayPal filed a
motion to dismiss the FAC, the motion was taken off calendar
to facilitate settlement discussions. Id., Dkt. 26,
The Original Settlement
the dismissal of the FAC by Judge Fogel in Zepeda,
PayPal shared detailed and confidential information
concerning its hold and reserve practices with the
Plaintiffs' counsel. Dkt. 166 at 9. The parties
thereafter engaged in settlement negotiations over the course
of several months regarding the underlying claims and facts.
Mot. for Prelim. Approval at 5, Dkt. 112. The parties then
participated in a mediation which took place on or about May
11, 2011, supervised by mediator Randall Wulff of Dispute
Resolution. Id. Those discussions and the
ensuing mediation resulted in the first settlement in this
action. Id.; 2/24/14 Order at 4, Dkt. 205.
to the original Settlement Agreement, “the primary
focus of the settlement is the implementation (or
maintenance) of business practices” with respect to
PayPal's policies and practices regarding “holds,
” “reserves” and “limitations,
” as those terms are used by PayPal. Settlement Agt.
§ 3.3, Dkt. 166-1. To that end, PayPal agreed to provide
prospective injunctive relief to a Settlement Class defined
as “all current and former users of PayPal who had an
active PayPal account between April 19, 2006 and the date of
entry of the Preliminary Approval Order.” Id.
§ 1.26. Defendants agreed to pay $1, 425, 000 into a
Settlement Fund, from which $712, 500 in attorneys' fees,
and $5, 000 in incentive awards for each of the eight class
representatives were to be deducted. Id. §
1.24. The remainder of the Settlement Fund was to be
contributed as a cy pres award to the Electronic Frontier
Foundation (“EFF”). Id. § 3.7. No
part of the Settlement Fund was designated for a monetary
distribution to the Class.
December 20, 2011, the parties in the Fernando
action participated in a separate mediation before the
Honorable Ellen James (Ret.), which resulted in a global
settlement of both actions. Given the overlapping claims of
both lawsuits, the parties decided to merge the settlements
in Zepeda and Fernando in order to
avoid confusing serial notices to the Class. Mot. for Prelim.
Approval at 5-6. The Settlement Term Sheet indicated that
Plaintiffs in Zepeda were to file a Second
Amended Complaint that joined eBay as a party-defendant, and
joined the named plaintiffs from Fernando and
incorporated their claims. Hicks Decl. Ex. E, Dkt. 295-2 at
1. In addition, Defendants agreed to contribute an additional
$425, 000 to the global settlement fund in order to settle
the Fernando action, and that Trubitsky and Hicks
counsel”) could submit a fee application seeking up to
50% of the additional settlement funds (i.e., $212, 500).
Trubitsky's Disruptive Conduct
January 2012, Trubitsky informed the other parties that
certain of the Fernando plaintiffs no longer desired
to participate in the global settlement, and demanded the
opportunity to negotiate individual settlements with PayPal
and eBay. 3/29/12 Case Mgt. Conf. Stmt. (“3/29/12 CMC
Stmt.”) at 6-7, Dkt. 80; Moon Decl. in Supp. of
Def.'s Opp'n to Intervenors' Mot to Intervene and
for a Stay of Proceedings ¶¶ 2-5 (“Moon
Decl.”), Dkt. 99-1. Trubitsky reiterated these demands
at the Case Management Conference held on April 19, 2012, and
insisted that the global settlement could not move forward.
4/19/12 Minute Order, Dkt. 84. The Court indicated that any
party who did not desire to be bound by the settlement was
free to opt out and file a separate action. Id.
Counsel representing Plaintiffs in Zepeda, in turn,
indicated their intention to proceed with the settlement and
file a motion for preliminary approval. Stipulation, Dkt. 89.
with the terms of their original settlement, Plaintiffs filed
a SAC in Zepeda on October 9, 2012, which joined
eBay, and added claims for violations of the EFTA and the
Comb settlement, which had been alleged in the
Fernando pleadings. However, the SAC did not join
any of the Fernando plaintiffs as party-plaintiffs.
On October 18, 2012, Plaintiffs in this action filed their
initial motion for preliminary approval. Dkt. 112.
as a result of the Zepeda plaintiffs' decision
to move forward with the settlement without including the
Fernando plaintiffs, Trubitsky began a series of
actions ostensibly intended to derail the Zepeda
settlement. Pls.' Opp'n to Mot. to Extend Deadline to
File Mot. for Prelim. Approval at 2-3, Dkt. 88 at 2-3;
11/27/12 Order at 2, Dkt. 122; 2/24/14 Order at 5. Among
other things, Trubitsky commenced a new lawsuit against eBay,
styled as Dunkel, et al. v. eBay, Inc., No. C
12-1452 EJD, and moved for an order permitting the
Dunkel plaintiffs to intervene in the
Zepeda action. Id. In addition, Trubitsky
separately sought to take control of the Zepeda
action by resurrecting her dormant motions to consolidate
Zepeda and Fernando, to be appointed lead
counsel, and have those motions heard prior to
Plaintiffs' motion for preliminary approval. See
Fernando, Dkt. 79, 51. The Court denied all motions
without prejudice. 11/27/12 Order, Dkt. 122. Finding that it
was in the best interest of all parties to resolve their
differences and reach a global settlement, the Court instead
referred the parties to Magistrate Judge Nathanael Cousins
for a joint, mandatory settlement conference relating to
Zepeda, Fernando and Dunkel.
Id. at 4. Judge Edward Davila, who was presiding
over the Dunkel action, also referred his case to
Judge Cousins for the settlement conference.
global settlement conference was originally scheduled for
January 17, 2013, but was reset to February 7, 2013.
Fernando, Dkt. 84, 88. On February 7, 2013, counsel
in Zepeda, Fernando and Dunkel
appeared, though none of the Fernando plaintiffs
attended the settlement conference, as required.
Id., Dkt. 95. Judge Cousins continued the matter to
the next day for further settlement discussions. Id.
Trubitsky and her clients, however, failed to appear for the
second day of the settlement conference and no settlement was
reached in Fernando. 2/8/13 Minute Order, Dkt. 133.
Accordingly, Judge Cousins issued an order to show cause
(“OSC”) directing Trubitsky and the
Fernando plaintiffs to show cause why that action
should not be dismissed, civil sanctions should not be
imposed, a payment of expenses to the other participants in
the settlement conference should not be awarded, and/or the
pro hac vice admission of Trubitsky should not be revoked.
Order to Show Cause, Dkt. 135; Fernando, Dkt.
The Fernando action was stayed until Judge Cousins
later vacated the OSC. Fernando, Dkt. 158 at 9,
Motions for Preliminary Approval
the unsuccessful global settlement conference before Judge
Cousins, the Zepeda plaintiffs filed a renewed
motion for preliminary approval, based principally on the
settlement they had previously reached with PayPal and eBay
in May and December 2011. Dkt. 166. On February 24, 2014, the
Court denied Plaintiffs' motion on the grounds that the
settlement release was overbroad and the Settlement did not
provide monetary relief for the class. 2/24/14 Order at
11-12. The Court granted the parties leave to resubmit a
renewed motion for preliminary approval within thirty days.
Id. at 12. The parties subsequently requested, and
the Court granted, several continuances of that deadline in
order to facilitate additional settlement discussions. 7/2/14
Order, Dkt. 234.
parties participated in two full-day mediations on March 24,
2014, and June 9, 2014, before Magistrate Judge Edward
Infante (ret.) of JAMS, which eventually led to an Amendment
to Settlement Agreement, which revised certain of the terms
of the original Settlement. Todzo Decl. in Supp. of Mot. for
Prelim. Approval ¶ 3, Dkt. 275-1. PayPal again agreed to
provide the injunctive relief from the original settlement.
But unlike its prior version, the revised Settlement created
a $3, 200, 000 settlement fund to provide two forms of
monetary relief to the class members who had a hold placed on
their account: (1) a Basic Claim, which is a guaranteed
payment based on the amount and length of a hold or reserve;
and (2) an Alternate Claim, which compensates for business
damages, subject to proof of such damages by Claims Class
members. Am. Settlement Agt. §§ 1.2, 1.3, Dkt.
235-1. The payments for Basic Claims are equal to two-thirds
of the average amount of interest at market
rates that would have accrued on the funds
subject to a hold or reserve, subject to a $3 floor and
rounded to the nearest $1 or $10, as follows:
LENGTH OF HOLD/RESERVE
HOLD/RESERVE UNDER $1, 000
HOLD/RESERVE UP TO $1, 000
HOLD/RESERVE OVER $10, 000
Over 150 days
Claims will be paid in full, subject to proof, up to an
individual cap of $2, 000 per claim. Id. § 5.1.
If the total of Alternate Claims (including administration
expenses associated with those claims) exceeds $800, 000, the
Alternate Claims payments will be reduced on a pro-rata
basis. Id. § 5.5.
$3, 200, 000 Settlement Fund, at least $1, 840, 000 will be
available to pay Basic Claims. Id. § 4.4. If
the Settlement Fund is not exhausted by the payment of Basic
Claims, attorneys' fees and administrative costs, then up
to an additional $200, 000 from the Settlement Fund may be
used to pay Alternate Claims. Id. §§ 4.5,
5.4. If the additional $200, 000 is insufficient to cover all
Alternate Claims, Defendants will pay an additional $800, 000
to accommodate those claims. Id. § 5.5. Any
leftover funds from uncashed settlement checks will be
distributed on a cy pres basis to the EFF, a non-profit
organization that works to defend civil liberties in the
digital world, including the rights of users of commercial
websites, such as PayPal. Id. § 4.7. Notably,
the Settlement provides for the upward proration of payments
to Claims Class members to ensure that the maximum possible
relief goes to Settlement Class Members rather than a cy pres
recipient, and that the only funds that need to be
distributed on a cy pres basis are funds from uncashed
settlement checks. Id. § 5.4.
with the above, the Settlement creates two Settlement
Classes: A Claims Class and an Injunctive Relief Class. The
Claims Class is comprised of “all current and former
users of PayPal in the United States who: (1) had an active
PayPal account between April 19, 2006 and the date of entry
of the Preliminary Approval Order; and (2) had a hold or
reserve placed on the account and/or the account was closed
or suspended by PayPal.” Id. § 1.6. The
Claims Class is intended to address claims for damages
allegedly resulting from either a hold or a reserve on funds
held in a PayPal account, or due to the suspension or closure
of a PayPal account. Id. §§ 1.6, 1.7.
Injunctive Relief Class is defined as “all current and
former users of PayPal in the United States who had an active
PayPal account between April 19, 2006 and the date of entry
of the Preliminary Approval Order.” Id. §
1.19. The Injunctive Relief Class is intended primarily to
address claims that are not based on damages that
arise from a violation of the settlement in Comb and
related violations of the EFTA, including PayPal's
alleged failure to provide annual error-resolution notices
and monthly account statements. Id. §§
Second Motion for Preliminary
filed a second motion for preliminary approval based on the
revised settlement, which the Court denied on March 25, 2015.
Dkt. 264. The Court found that while the revised settlement
agreement resolved many of the concerns that resulted in the
rejection of the prior agreement, two obvious deficiencies
remained. First, the Court questioned whether it was
appropriate to allege, much less settle, claims based on
alleged violations of the Comb settlement. Since the
judgment in that action specified that any disputes
concerning the agreement must be litigated in that case, the
Court found that this action was not the proper forum to
address or release any claims arising from that settlement.
Id. at 11. Second, the Court noted that, although
the issue was raised in the order denying the first motion
for preliminary approval, the parties still had not explained
why both settlement classes include persons who have been
PayPal accountholders since 2006, even though the practices
at issue allegedly began in 2008. Id. at 12.
Amendment to the Revised Settlement
the denial of Plaintiffs' second motion for preliminary
approval, the parties agreed upon amendments to the
settlement agreement. Todzo Decl. ¶ 6 & Ex. 1
(Amendment to Settlement Agreement), Dkt. 275-1, 275-2. To
address the Court's concerns, the parties agreed that
Plaintiffs would file a TAC that omits any claims based on
the alleged breach of the Comb Settlement. Todzo
Decl. Ex. 1 ¶ 5, Dkt. 275-2. The settlement release has
correspondingly been modified to eliminate any reference to
the Comb Settlement. Id. ¶¶ 1, 2.
With regard to the issue pertaining to the Class Period, the
parties continued to propose that the Class Period for both
of the proposed settlement classes should run from April 19,
2006, which is four years prior to the filing of the
Complaint in the Fernando Action on April
19, 2010. TAC ¶ 59. Importantly, they explained that
this Class Period is appropriate because Plaintiffs claims
include allegations based on the closing or suspending of
accounts and claims arising from PayPal's handling of
buyers' accounts, and these activities occurred both
before and after 2008. To that end, the proposed TAC adds
allegations that PayPal began engaging in the disputed
practices prior to 2006. Id. ¶ 39.
Third Motion for Preliminary
on the above amendments, Plaintiffs filed a third motion for
preliminary approval on September 9, 2015. Dkt. 275. In
connection with said request, Plaintiffs sought: (1)
provisional certification of the two proposed Settlement
Classes (i.e., the Claims Class and the Injunctive Relief
Class); (2) the appointment of (a) the Complex Litigation
Group, (b) Lexington Law Group, (c) Farmer, Jaffe, Weissing,
Edwards, Fistos & Leherman, P.L., and (d) Seeger Weiss
LLP, as Class Counsel; (3) approval of the proposed Class
Notice; and (4) and the scheduling of a final approval
hearing. Proposed Order, Dkt. 275-8. Non-party Reginald
Burgess (“Burgess”), acting pro se, filed an
Objection to Preliminary Approval of Settlement Motion and
Demand Opt-Out if Proposed Settlement in Approved. Dkt. 277.
November 5, 2015, the Court granted Plaintiffs' motion
for preliminary approval. Dkt. 281. In its Order, the Court
conditionally certified a proposed Settlement Class comprised
of a Claims Class and an Injunctive Relief Class, pursuant to
Federal Rule of Civil Procedure 23(a) and (b)(2) & (3).
The Injunctive Relief Class is defined as: “All current
and former users of PayPal in the United States who had an
active PayPal account between April 19, 2006 and the date of
entry of the Preliminary Approval Order.” The Claims
Class is defined as: “All current and former users of
PayPal in the United States who: (1) had an active PayPal
account between April 19, 2006 and the date of entry of the
Preliminary Approval Order; and (2) had a hold or reserve
placed on the account and/or the account was closed or
suspended by PayPal. Excluded from the Claims Class are
judicial officers presiding over this action and the members
of their immediate families and judicial staff.”
Court appointed Plaintiffs Moises Zepeda, Michael Spear,
Ronya Osman, Brian Pattee, Casey Ching, Denae Zamora, Michael
Lavanga and Gary Miller as class representatives pursuant to
Rule 23 of the Federal Rules of Civil Procedure. Only Jeffrey
A. Leon of Quantum Legal LLC and Mark N. Todzo and Howard
Hirsch of Lexington Law Group were appointed as counsel for
the Settlement Class. Epiq Systems (“Epiq”) was
appointed as claims administrator, and deemed responsible for
performing the duties described in the Amended Settlement
Agreement. The preliminary approval order approved, as to
form and content, the proposed form of notice to the class
via email notice, postcard notice, an Internet notice program
and a settlement website including a long-form notice.
10/5/15 Order Granting Pls.' Motion for Prelim. Approval
of Am. Class Action Settlement Agt. at 14-15, Dkt. 281.
Following preliminary approval, notice of the Settlement was
served on the Class Members. Marr Decl. ¶¶ 4-14,
Dkt. 340-2; Leon Decl. ¶ 4, Dkt. 340-1. Per the terms of
the Settlement, PayPal provided email notice to approximately
100 million PayPal customers, including approximately 10.5
million Claims Class members. Mot. for Final Approval at 10,
Final Approval Schedule and Process
January 29, 2016, the Court approved the final approval
schedule proposed by the parties. Dkt. 285, 290. On the same
day, Plaintiffs filed their TAC, as contemplated by the
Settlement. Dkt. 291. In March 2016, Class Counsel and
Fernando counsel filed their respective motions for
attorneys' fees in anticipation of the fairness hearing
then scheduled for July 13, 2016. Dkt. 295, 296, 297. Shortly
before the date set for the fairness hearing, however, the
parties notified the Court that some members of the
Settlement Class may not have received notice in accordance
with the Court's scheduling Order. Stipulation, Dkt. 325.
Thus, at the parties' request, the Court vacated and
reset the fairness hearing and extended the deadlines
governing notice and for the submission of claim forms,
opt-out requests and objections to the Settlement. 7/6/16
Order, Dkt. 329; see also Wilson Decl. ¶ 2-4
& Exs. A & B, Dkt. 350.
November 4, 2016, the claims administrator has received 392,
191 claims, comprised of 379, 720 Basic Claims and 12, 448
Alternate Claims submitted electronically, and 23 paper
claims by mail. Marr Decl. ¶ 8. Epiq has received a
total of 75 opt-outs. Id. ¶ 7. In response to
Notice of the proposed Settlement, the Court has received a
total of 10 objections from: (1) Miorelli; (2) Collins
Objectors; (3) Tammy Perkins (“Perkins”); (4)
Larry A. Guess (“Guess”); (5) Glenn Greene
(“Greene”); (6) Paul Leach (“Leach”);
(7) Frank Phillips (“Phillips”); (8) Steve
Schroeder (“Schroeder”); and (9) Carmen DeBellis
(“DeBellis”). Dkt. 292, 293, 294, 303, 315, 317,
333, 337, 338, 339.
is an out of state attorney and a professional objector.
See In re: Target Corp. Customer Data Sec. Breach
Litig., No. MDL142522PAMJJK, 2016 WL 4942081, at *1 (D.
Minn. Jan. 29, 2016). Collins Objectors are represented by
the attorneys who are suing PayPal and eBay in a competing
state court class action styled as, Chen v. eBay,
Inc., Alameda Cty. Super. Ct., No RG 15780778. Perkins
is represented by attorney Matthew Kurilich, a professional
objector. The remaining Objectors submitted pro se
Motion for Final Approval and Fee Motions
November 14, 2016, Plaintiffs filed a Motion for Final
Approval of Amended Class Action Settlement. In their motion,
Plaintiffs seek an order (1) conferring final approval of the
Settlement Agreement and Amendment to Settlement Agreement,
see Dkt. No. 275-2; and (2) confirming certification
of the Settlement Class as defined therein. In addition,
Plaintiffs' motion responds to each of the objections to
the Settlement. Separately, in their companion Motion for
Award of Attorneys' Fees, and Reimbursement for Costs and
Service Awards, Plaintiffs seek payment of: (1) $902, 000 in
attorneys' fees; (2) $38, 000 in costs; and (3) incentive
(service) awards in the amount of $20, 000 ($2, 500 for each
of the named plaintiffs in Zepeda).
Fernando counsel filed separate fee motions
requesting payment of $212, 500.
hearing on the aforementioned motions took place on February
7, 2017. Mark Todzo and Jeffrey Leon appeared on behalf of
the Zepeda Plaintiffs; David Hicks and Christine
appearing for Trubitsky- appeared on behalf of the
Fernando Plaintiffs; Julia Strickland and David Moon
appeared by telephone for Defendants eBay and Paypal; Anthony
Ferrigno appeared for Collins Objectors; and Objector
Miorelli appeared pro se. At the conclusion of the hearing,
the Court took all matters under advisement.
Ninth Circuit maintains “a strong judicial
policy” that favors class action settlements. Allen
v. Bedolla, 787 F.3d 1218, 1223 (9th Cir. 2015).
Nonetheless, the Court may finally approve of a class
settlement “only after a hearing and on finding that it
is fair, reasonable, and adequate.” Fed.R.Civ.P.
23(e)(2). To assess the fairness of a settlement, courts are
to consider the eight “Churchill factors,
(1) the strength of the plaintiff's 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 offered in settlement;
(5) the extent of discovery completed and the stage of the
proceedings; (6) the experience and view of counsel; (7) the
presence of a governmental participant; and (8) the reaction
of the class members of the proposed settlement.
In re Online DVD-Rental Antitrust Litig., 779 F.3d
934, 944 (9th Cir. 2015) (quoting Churchill Vill., L.L.C.
v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004)).
“Additionally, when (as here) the settlement takes
place before formal class certification, settlement approval
requires a ‘higher standard of fairness.'”
Lane v. Facebook, Inc., 696 F.3d 811, 819 (9th Cir.
2012) (citation omitted). The rationale for the heightened
standard is to ensure that “class representatives and
their counsel have [not] sacrificed the interests of absent
class members for their own benefit.” Id.
must examine “the settlement taken as a whole, rather
than the individual component parts” for fairness.
Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th
Cir. 1998). The Court may approve or reject the settlement
and cannot “delete, modify or substitute certain
provisions” of the settlement. Id. “The
proposed settlement is not to be judged against a
hypothetical or speculative measure of what might have been
achieved by the negotiators.” Officers for Justice
v. Civil Serv. Comm'n of San Francisco, 688 F.2d
615, 624 (9th Cir. 1982). Rather, “the court's
intrusion upon what is otherwise a private consensual
agreement negotiated between the parties to a lawsuit must be
limited to the extent necessary to reach a reasoned judgment
that the agreement is not the product of fraud or
overreaching by, or collusion between, the negotiating
parties, and that the settlement, taken as a whole, is fair,
reasonable and adequate to all concerned.” Id.
To that end, the Court should consider whether there are any
objections to the proposed settlement ...