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Esparza v. Smartpay Leasing, Inc.

United States District Court, N.D. California

September 12, 2019

SHAWN ESPARZA, on behalf of herself, and all others similarly situated, Plaintiff,




         In this class action for alleged violations of the Telephone Consumer Protection Act, plaintiff moves for preliminary approval of a proposed class settlement. For the reasons explained below, the motion is Granted.


         In early 2016, plaintiff Shawn Esparza allegedly terminated her lease of a mobile phone from defendant Smartpay Leasing, Inc. She nonetheless continued to receive promotional text messages from defendant on a different phone. The messages continued even after plaintiff requested defendant stop sending them. Defendant later learned that a coding error in its platform prevented individuals from opting out of receiving the texts. Based on these allegations, plaintiff filed her initial complaint in June 2017 asserting two claims for negligent and willful violations of the TCPA (Compl. ¶¶ 19, 22-29, 53-63). A June 2019 order certified the following class:

STOP” Text Message Class: All persons within the United States (i) to whose cellular telephone number (ii) SmartPay Leasing, Inc. sent a text message (iii) using its vendor Twilio, Inc.'s platform (iv) from September 29, 2015 to June 13, 2017, (v) after texting the word “STOP.”

         In July 2019, following mediation with the Honorable Leo S. Papas, Ret. of Judicate West in San Diego, the parties reached a settlement. Plaintiff now moves for preliminary approval of the class action settlement agreement (Dkt. Nos. 89, 99, 103). Defendant does not oppose. This order follows full briefing and oral argument.


         Federal Rule of Civil Procedure 23(e) provides that “[t]he claims, issues, or defenses of a certified class . . . may be settled . . . only with the court's approval.” Preliminary approval is appropriate if “the proposed settlement appears to be the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to class representatives or segments of the class, and falls within the range of possible approval.” In re Tableware Antitrust Litig., 484 F.Supp.2d 1078, 1079 (N.D. Cal. 2007) (Chief Judge Vaughn Walker). Here, the proposed settlement agreement satisfies these requirements.

         1. Benefit to Class Members.

         The proposed class settlement establishes a gross $8, 679, 000 non-reversionary settlement fund to be distributed evenly among 23, 144 class members. Each class member would accordingly receive a gross payment of $375. Because the TCPA provides for statutory damages of $500 per violation, this settlement amounts to 75% of the monetary damages plaintiff contends is owed to the class. This is before any deductions from the settlement fund, which deductions will include any future awards for plaintiffs' attorney's fees and litigation expenses, any incentive award, and payments to the claims administrator.

         Although the settlement fund reflects a discount on plaintiff's claims, there exists a risk that defendant would go bankrupt and the class would be left with much less (if anything) even if plaintiffs did succeed at trial. This motion follows the parties' exchange of key written and documentary discovery and motion practice, with defendant consistently denying plaintiff's allegations. The difference between the possible recovery and the gross settlement fund accounts for the avoided risks and costs of continued litigation and thus appears reasonable. The reasonableness of the benefit to class members will ultimately hinge, however, on the amount allocated towards the settlement administrator, attorney's fees, litigation expenses, and any incentive award. As of now, the settlement amount falls within the range of approval.

         2. Scope of Release.

         The proposed settlement agreement defines the class using the same definitions set forth in the class certification order. The agreement also only releases all claims that relate to automated text message pursuant to the TCPA, U.S.C § 227 and parallel state law claims related to such text messages sent by SmartPay to class members during the defined class period. The scope of the class definition and release in the ...

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