United States District Court, N.D. California
ORDER RE: MOTION FOR PRELIMINARY APPROVAL OF
SETTLEMENT Re: Dkt. No. 361
MARIA-ELENAJAMES United States Magistrate Judge
nearly nine years of litigation, including a bench trial, the
parties in this certified class action have reached a
settlement as to one of their claims. See
Settlement, Dkt. No. 362. Plaintiffs Eduardo De La Torre and
Lori Kempley (together, ''Plaintiffs'') ask
the Court to (1) preliminarily approve the Settlement, (2)
approve the proposed notice and notice plan, (3) appoint a
settlement administrator, and (4) schedule a final approval
hearing. See Mot., Dkt. No. 361. The Court heard
oral argument on this matter on June 1, 2017. Having
considered the parties‘ positions, the record in this
case, and the relevant legal authority, the Court
GRANTS Plaintiffs‘ Motion for the
reasons set forth below.
Factual Allegations 
February 2006, De La Torre borrowed $2, 600 from Defendant
CashCall, Inc. (''CashCall'') based on an
annual percentage rate of interest (''APR'')
of approximately 98%. Fourth Am. Compl.
(''FAC'') ¶ 24, Dkt. No. 54. In May
2006, Kempley borrowed $2, 525 from CashCall based on an
APR of 99.07%. Id. ¶ 28. Neither De La Torre
nor Kempley could afford their monthly CashCall loan
payments, and their monthly expenses exceeded their income.
Id. ¶¶ 25-26, 29-30.
allege CashCall made loans to De La Torre and Kempley that
were beyond their financial abilities to repay in the time
and manner set forth in the CashCall Promissory Note and
Disclosure Statement. Id. ¶¶ 25, 29. They
contend CashCall did not assess De La Torre‘s or
Kempley‘s earning capacities, monthly expenses, or
outstanding debts when it approved them for their loans.
Id. ¶¶ 27, 31. Plaintiffs further allege
CashCall conditioned the extension of credit on the
consumer‘s repayment by means of preauthorized
electronic fund transfers (''EFTs'').
Id. ¶ 48.
1, 2008, Plaintiffs initiated this action on behalf of
themselves and similarly situated individuals. See
Compl., Dkt. No. 1. On February 25, 2010, they filed the
operative FAC. See FAC. The FAC asserts a total of
six claims. It asserts three claims for violations of (1) the
Electronic Fund Transfer Act (''EFTA''), 15
U.S.C. § 1693; (2) the California Consumer Legal
Remedies Act (''CLRA''), Cal. Civ. Code
§ 1750; and (3) the Rosenthal Fair Debt Collection
Practices Act, Cal. Civ. Code § 1788. Id.
¶¶ 41-72. In addition, the FAC asserts three claims
under California‘s Unfair Competition Law
(''UCL''), Cal. Bus. & Prof. Code §
17200, predicated on the aforementioned violations.
Id. ¶¶ 73-106. As is relevant here,
Plaintiffs‘ EFTA claim is based on CashCall‘s
alleged practice of conditioning the extension of credit on
the consumer‘s repayment by means of preauthorized
electronic fund transfers (''EFTs'') in
violation of 15 U.S.C. § 1693k(1). Id.
¶ 48. This violation is also the basis for one of
Plaintiff‘s UCL claims. Id. ¶ 96.
Class Certification, Summary Judgment, and Appeal
November 15, 2011, the Court certified two classes. Class
Cert. Order, Dkt. No. 100. It certified a Conditioning Class,
which was later limited to ''[a]ll individuals who,
while residing in California, borrowed money from CashCall,
Inc. for personal, family, or household use on or after March
13, 2006 through July 10, 2011 and were charged an
[nonsufficient fund (‗NSF‘)] fee.'' Order
Approving Class Notice Plan, Dkt. No. 130. The Court also
certified a Loan Unconscionability Class of ''[a]ll
individuals who while residing in California borrowed from
$2, 500 to $2, 600 at an interest rate of 90% or higher from
CashCall for personal family or household use at any time
from June 30, 2004 through July 10, 2011.'' Class
Cert. Order at 38. The Court later appointed James
Sturdevant, Arthur Levy, and Whitney Stark as class counsel.
Dkt. No. 127 at 6-7; Dkt. No. 130.
the parties filed cross-motions for summary judgment. Dkt.
Nos. 159, 166, 175. On July 30, 2014, the Court denied
CashCall‘s Motion for Summary Judgment on
Plaintiffs‘ conditioning and unconscionability claims
and granted Plaintiffs‘ Motion Summary Judgment on the
EFTA violation. Order re: Mots. for Summ. J. (''MSJ
Order''), Dkt. No. 220. CashCall filed a Motion for
Reconsideration as to the Court‘s denial of summary
judgment on the unconscionability claim. Dkt. No. 234. The
Court granted the Motion for Reconsideration and granted
CashCall‘s Motion for Summary Judgment as to the
unconscionability claim. Dkt. No. 239. The Court entered
judgment on this claim pursuant to Federal Rule of Civil
Procedure 54(b) (Dkt. No. 247), and Plaintiffs appealed (Dkt.
Court held a bench trial on September 8 and 9, 2015 on the
issue of whether Plaintiffs are entitled to statutory and/or
actual damages under the EFTA and/or restitution under the
UCL. See Sept. 8, 2015 Trial Tr., Dkt. No. 296;
Sept. 9, 2015 Trial Tr., Dkt. No. 298. On March 16, 2016, the
Court issued its Findings of Fact and Conclusions of Law.
Findings of Fact & Conclusions of Law
(''FFCL''), Dkt. No. 312. The Court (1)
ordered CashCall to pay a statutory penalty of $500, 000 for
its EFTA violation, but found Plaintiffs and the Class
otherwise failed to show they were entitled to actual damages
under the EFTA; and (2) found Plaintiffs had not established
they were entitled to restitution, as they failed to prove
Kempley had standing to pursue a representative action under
the UCL‘s ''lost money or property''
requirement. See Id. The Court further ordered the
parties to submit proposed judgments and a notice plan to
inform the Class about the trial‘s outcome and to
distribute the statutory award to the Class no later than May
2, 2016. Id. The Court also ordered the parties to
file a supplemental status report to address some of its
concerns about the proposed notice plan. May 12, 2016 Order,
Dkt. No. 314.
parties‘ Joint Response to the May 12, 2016 Order,
among other things, CashCall stated it intended to file a
motion under Rule 59 to amend the judgment or for a new
trial. Jt. Resp. at 1, Dkt. No. 315. The basis for
CashCall‘s anticipated motion was the United States
Supreme Court‘s recent decision in Spokeo, Inc. v.
Robbins, 136 S.Ct. 1540 (2016) as revised (May
24, 2016), which CashCall asserted ''compels the
finding that . . . Kempl[e]y [also] lacks standing under the
EFTA.'' Id. The Court stayed any pending
deadlines to allow the parties to file cross-Rule 59 motions.
Dkt. Nos. 319, 325.
moved to amend the FFCL and enter judgment in its favor
pursuant to Rule 59(a)(2), on the ground that Spokeo
made it clear that Kempley lacked standing to pursue damages
under the EFTA on both her own behalf and on behalf of the
Class. CashCall Rule 59 Mot. at 1, Dkt. No. 326. Plaintiffs
opposed CashCall‘s Rule 59 Motion and affirmatively
moved under Rule 59, or alternatively Rule 52, to submit
additional evidence, amend the class definition, and amend
the FFCL. Pls.‘ Rule 59 Mot., Dkt. No. 334. The Court
denied CashCall‘s Motion and granted in part
Plaintiffs‘ Motion. See Relief Order. The
Court found ''Kempley‘s harm, albeit an
intangible one, is sufficiently concrete to satisfy Article
III‘s standing requirement. Through § 1693k(1) of
the EFTA, Congress defined a specific right, which was based
on the risk of real harm, and thereby elevated a violation of
that right to legally cognizable, concrete injury.''
Id. at 13. Specifically,
[t]he EFTA guaranteed Kempley the right to choose her method
of repayment when she sought credit from CashCall. When
CashCall would not allow her to obtain credit without first
agreeing to use EFT payments, it violated that right and
caused her to confront the very harms Congress sought to
avoid: the lack of choice in using EFT payments and the risks
associated with those methods of payments.
Id. at 14 (citing Spokeo, 136 S.Ct. at 1549
(''[T]he violation of a procedural right granted by
statute can be sufficient in some circumstances to constitute
injury in fact. In other words, a plaintiff in such a case
need not allege any additional harm beyond the one Congress
Court also noted that ''[w]hile standing is an
elemental aspect of a UCL claim, . . . this issue was never
raised before the post-trial briefs, and the parties‘
Pretrial Statement limited the issues for trial in accordance
with the Court‗s Pretrial Order.'' Id.
(citing Case Management Order at 2, Dkt. No. 280);
see Jt. Pretrial Conference Statement, Dkt. No. 281.
The Court thus granted Plaintiffs a limited opportunity to
put on evidence of such standing. Relief Order at 21-24.
Court also concluded it had erred in applying EFTA‘s
one-year statute of limitations instead of the UCL‘s
four-year statute of limitations to Plaintiffs‘
conditioning claims. Id. at 25-26 (citing Beaver
v. Tarsadia Hotels, 816 F.3d 1170, 1178 (9th Cir. 2016),
cert. denied, 137 S.Ct. 113 (2016)); see
also Order re Class Definitions, Dkt. No. 127. The Court
allowed the parties to request an evidentiary hearing to
determine whether De La Torre and Kempley had standing to
represent a class of borrowers for the four-year UCL statute
of limitations period. Relief Order at 27. The parties
requested an evidentiary hearing, which the Court scheduled
for April 5, 2017. Dkt. No. 345.
meantime, the parties returned to settlement negotiations.
Dkt. Nos. 347, 350. On March 10, 2017, they reached a
settlement as to the Conditioning Claim. Dkt. No. 350. The
Court accordingly vacated the evidentiary hearing and set a
briefing schedule for Plaintiffs to file the instant motion.
Dkt. No. 356.
provisions of the Settlement are as follows.
The Settlement Class
Settlement provides relief for the Conditioning Class,
defined as ''all individuals who, while residing in
California, borrowed money from CashCall for personal,
family, or household use from March 13, 2006 through July 10,
2011 and were charged an NSF fee.'' Settlement ¶
the terms of the Settlement, CashCall shall pay a maximum of
$1.5 million (the ''Settlement Fund''). The
Settlement allocates $830, 000 of the Settlement Fund to
Class Members who paid NSF fees prior to the cancellation, if
any, of their respective authorizations to collect loan
payments via EFT. Settlement ¶ 3.1. Class Members will
receive a pro rata share of the $830, 000 fund equal to the
ratio of the total NSF fees he or she actually paid prior to
the EFT cancellation, if any, as compared to the total NSF
fees collected from all Class Members prior to EFT
further agrees to release all Class Members from liability
for all NSF fees CashCall charged prior to the cancellation,
if any, of their respective authorizations to collect loan
payments via EFT. Id. ¶ 3.3; see Id.
¶ 6.1(b). The release shall apply to all Class Members,
whether or not they paid NSF fees. Id. ¶ 3.3.
If a Class Member has an open loan account that includes
unpaid charges for NSF fees, CashCall shall recalculate the
loan account to eliminate such charges. Id.
Distribution of Funds
Settlement Administrator shall mail Class Members payment in
the form of a check. Id. ¶ 3.1. Class Members
shall have sixty days from the date of mailing to cash their
payments. Id. ¶ 4.13.
will provide the Settlement Administrator with, among other
things, Class Members‘ contact information, including
their last known mailing and email addresses. Id.
¶ 4.3. The Settlement Administrator shall update Class
Members‘ addresses through the National Change of
Address Database. Id. ¶ 4.5. If a Class Member
cannot be located-i.e., email and mail notices are returned
undeliverable-the Settlement Administrator will not attempt
to mail that Class Member a check, but shall retain any
payment due to that Class Member. Id. ¶ 3.2.
ninety days of the initial distribution, the Settlement
Administrator shall report to the parties the total amount of
funds, if any, related to (1) Class Members who could not be
located, and (2) checks that were mailed but had not been
cashed. Id.; id. ¶ 4.13. The
Settlement requires the parties to meet and confer to discuss
whether a second distribution is appropriate or whether the
residual funds should be paid to a Court-approved cy pres
recipient. Id. (both). The Court shall have final
approval over whether to make a second distribution or to pay
the residual amount to a cy pres recipient. Id.
Opt-Outs and Objections
Members may opt out of the Settlement by mailing a written
request to both CashCall‘s and Plaintiffs‘
counsel. Id. ¶ 4.7. The opt out request must
include (1) the Class Member‘s name, signature,
address, and telephone number; and (2) a statement that the
Class Member requests to be excluded or to opt out of the
Settlement. Id. If more than 100 Class Members-that
is, approximately 0.1% of the Class-request exclusion,
CashCall shall have the option to rescind and void the
Settlement before the Court finally approves the Settlement.
Members may also object to the Settlement and/or request to
be heard at the final approval hearing. Id.
¶¶ 4.8-4.9. The Settlement requires Class Members
to mail their objections to the Class Action Clerk for the
Northern District of California or by filing them with the
Court. The objection must (1) state the Class Member‘s
name, address, and telephone number; (2) include all
documents or testimony supporting such objection; and (3)
provide a detailed statement of any objection asserted,
including the grounds therefor and reasons, if any, for
requesting the opportunity to appear and be heard at the
final approval hearing. Id. ¶ 4.9.
Attorneys' Fees and Costs and Service Awards
Settlement Fund allocates a maximum of $650, 000 in
Plaintiffs‘ attorneys‘ fees and costs.
Id. ¶ 3.5. If the Court awards less than $650,
000 in attorneys‘ fees and costs, the amount by which
$650, 000 exceeds the amount ...