United States District Court, S.D. California
JAMES WALTERS, on behalf of himself and all others similarly situated, Plaintiff,
TARGET CORP., Defendant.
ORDER GRANTING MOTION FOR PRELIMINARY APPROVAL OF
CLASS ACTION SETTLEMENT AND CERTIFICATION OF SETTLEMENT CLASS
M. JAMES LORENZ UNITED STATES DISTRICT JUDGE.
before the Court is the Plaintiffs James Walters' and the
proposed class members' (together
“Plaintiffs”) unopposed motion for preliminary
approval of class action settlement [ECF No. 155]. In the
instant motion, Plaintiffs request the Court pursuant to
Federal Rule of Civil Procedure 23 to do the following: (1)
grant preliminary approval of the settlement, (2) certify the
class for settlement purposes, (3) appoint James Walters as
class representative, (4) approve the notice program as
contemplated in the settlement agreement
(“Agreement”) and approve the form and content of
the settlement notices, (5) approve and order the opt-out and
objection procedures set forth in the Agreement, (6) stay the
California Action pending final approval, (7) appoint Class
Counsel as listed in the Agreement, and (8) schedule a final
approval hearing. Upon consideration of the instant motion,
the Court hereby GRANTS Plaintiffs'
motion as follows.
29, 2016, Plaintiff Walters filed the California action
against Target seeking monetary damages, restitution, and
injunctive relief for Target's alleged breach of the
Target Debit Card (“TDC”) Agreement
(“TDC” Agreement”) and California law.
See Doc. 1. On August 15, 2016, Plaintiff Walters
filed a First Amended Complaint (“FAC”) asserting
the following causes of action: (1) breach of contract,
including the implied covenant of good faith and fair
dealing; (2) unjust enrichment; (3) unconscionability; (4)
conversion; (5) violation of the “unfair” prong
of California Unfair Competition Law (“UCL”),
Cal. Bus. & Prof. Code §§ 17200 et
seq.; (6) violation of the “fraudulent prong of
the UCL; (7) violation of the “unlawful” prong of
the UCL; and (8) violation of the Consumer Legal Remedies Act
“(CLRA”), Cal. Civ. Code §§ 1750 et
seq. See Doc. 3. Between September 14, 2016 and
March 8, 2018, the parties engaged in motion practice from
which Plaintiff's FAC claims were limited, and Target
eventually filed its Amended Answer to the FAC. See
Docs. 13, 29, 32, 33, 59. Subsequently, the parties engaged
in fact discovery, depositions, and exchanged expert reports.
See Doc. 155-3 at 4. After the close of discovery,
Target filed a motion for summary judgment, and Plaintiff
filed a motion for class certification. Docs. 90, 98.
September 12, 2018, Plaintiffs Powell and Dixon commenced the
actions, Plaintiffs allege that Target “omits and
misrepresents the risks of using the TDC, ” resulting
in cardholders suffering significant fee penalties when the
checking account linked to their TDC has insufficient funds.
Doc. 155-1 at 9. Plaintiffs further allege that the TDC card
agreements fail to properly describe how the TDC operates on
a slower Automated Clearinghouse Network (“ACH
Network”), unlike other debit card networks, causing
customers to incur fees for insufficient funds as the TDC
does not transmit requests to consumers' banks for days
after a purchase. Id.
March 14, 2019, the Parties mediated both actions in Los
Angeles, California. See Doc. 155-3 at 5. Although
the Parties did not settle that day, the progress made during
mediation laid the foundation to facilitate the Parties
reaching settlement after several weeks of negotiation.
See id. On April 29, 2019, the parties filed a
Notice of Settlement and signed the Settlement on June 18,
2019. See Docs. 155-2 at 22-25; 155-3 at 5.
proposes the Settlement class be an opt-out class under Rule
23(b)(2) and (3) of the Federal Rules of Civil Procedure with
the following definition:
All TDC holders in the United States who, within the Class
Period, incurred at least one [Returned Payment Fee
(“RPF”)] RPF in connection with their TDC, that
was not refunded or waived.
Doc. 155-2 at 6. The Settlement defines the Class Period as
the period between June 29, 2012 and the date this order is
filed. Id. at 4.
Settlement has a total cash value of $8, 222, 330, consisting
of the Cash Settlement Amount of $5, 000, 000 payable by
Target to establish the Settlement Fund and the Debt
Reduction Cash Amount of $3, 222, 330. See Docs.
155-1 at 12; 155-2 at 4. The Cash Settlement is earmarked to
pay: (1) Settlement Class Member Cash Payments; (2) any Court
awarded attorneys' fees and litigation costs; (c) any
Court awarded Class Representative Service Awards; and any
Administrative Costs. See Doc. 155-2. Settlement
class members will not have to submit claims to receive
benefits under the Settlement. Doc. 155-1 at 12. Instead, the
Settlement Administrator will automatically distribute
Settlement Class Member Cash Payments and Debt Reduction Cash
Amountsto the Settlement Class. Ibid. To
the extent any funds remain in the Settlement Fund Account
after the distributions, those funds will: “(a) be
distributed to Settlement Class Members who cashed their
checks via a secondary distribution, if economically
feasible; or (b) through a residual cypres program
benefitting the National Endowment for Financial
Education.” Doc. 155-1 at 13; see doc. 155-2
at 15. Under no circumstance will the funds revert to Target,
except where the Settlement is terminated according to its
Settlement Agreement also provides three forms of
non-monetary relief. First, “Target agrees not to
implement or assess RFP [sic] or any equivalent fee,
in connection with TDC transactions that are less than $7.00,
for a period of two years[.]” See Doc. 155-2
at 7. Second, “Target agrees that any RFP
[sic] charged will be the lesser of the RFP
[sic] as disclosed by the TDC Agreement or the
amount of the TDC transaction that was returned unpaid, for a
period of two years[.]” Ibid. Third, the
Parties will collaborate until final approval of the
Settlement to inform TDC holders about how use of the TDC
could cause RPFs due to non-sufficient funds or overdraft
fees from the customer's banking institution(s).
the context of a case in which 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.”
Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir.
2003). The Court first weighs whether the proposed class
meets the certification requirements and next whether the
proposed settlement is “fundamentally fair, adequate,
and reasonable.” Id. Rule 23(a) provides the
four perquisites for class certification: (1) numerosity; (2)
commonality; (3) typicality; and (4) adequacy. Fed.R.Civ.P.
23(a). Under Rule 23(b)(3), a class action can exist if
“the court finds the questions of and fact common to
class members predominate over any questions affecting only
individual members, and that a class action is superior to
other available methods of fairly and efficiently
adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3). A
class action can also be maintained under Rule 23(b)(2) if
“the party opposing the class has acted or refused to
act on grounds that apply generally to the class, so that
final injunctive relief or corresponding declaratory relief
is appropriate respecting the class as a whole[.]”
the proposed settlement must be fair, consistent with
counsel's fiduciary obligations to the class, and not the
product of collusion, even if the proposed terms are not
ideal. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1027
(9th Cir. 1998). A court must balance the following factors
in evaluating a proposed settlement:
[T]he strength of the plaintiffs' case; the risk,
expense, complexity, and likely duration of further
litigation; the risk of maintaining class action status
throughout the trial; the amount offered in settlement; the
extent of discovery completed and the stage of the
proceedings; the experience and views of counsel; the
presence of a governmental participant; and the reaction of
the class members to the proposed settlement. Id. at
1026 (citations omitted).
evaluating a class action settlement, courts must pay
“undiluted, even heightened attention” to the
class certification requirements. Amchem Prods., Inc. v.
Windsor, 521 U.S. 591, 620 (1997).
“the class is so large that joinder of all members is
impracticable[, ]” the numerosity requirement is
satisfied. Fed.R.Civ.P. 23(a)(1). Here, the numerosity
requirement is satisfied as the proposed Settlement Class
consists of thousands of TDC holders and joinder of all class
members is impracticable.
crux of . . . commonality [is] the rule requiring a plaintiff
to show that ‘there are questions of law or fact common
to the class.'” Wal-Mart Stores, Inc. v.
Dukes, 564 U.S. 338, 349 (2011). The common contention
“must be of such a nature that it is capable of class
wide resolution-which means that determination of its truth
or falsity will resolve an issue that is central to the
validity of each one of the claims in one stroke.”
Id. at 350. Plaintiffs point out the following
questions of law and fact common to the class: (1) whether
Target's TDC processing practices violate the TDC
Agreement; and (2) whether the TDC Agreement and allegedly
deceptive TDC marketing injured all Settlement Class members
through imposition of RPFs. Doc. 155-1 at 30. The Court finds
that determination of the truth or falsity of Target's
TDC processing or marketing mechanisms would necessarily
determine the validity of these questions for each class
member. Accordingly, the commonality requirement is
requires “the claims or defenses of the representative
parties [to be] typical of the claims or defenses of the
class[.]” Fed.R.Civ.P. 23(a)(3). The Ninth Circuit has
found the typicality requirement satisfied when the named
plaintiffs do not set forth different claims or subject a
defendant to setting forth unique defenses from those brought
by any other class member. See e.g., Kayes v. Pacific
Lumber Co., 51 F.3d 1449, 1463 (9th Cir. 1995).
Plaintiffs contend the typicality requirement is satisfied
because “[The named] Plaintiffs' claims are
reasonably coextensive with those of the absent [class]
members[.]” Doc. 155-1 at 30. The ...