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Walters v. Target Corp.

United States District Court, S.D. California

December 2, 2019

JAMES WALTERS, on behalf of himself and all others similarly situated, Plaintiff,
v.
TARGET CORP., Defendant.

          ORDER GRANTING MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT AND CERTIFICATION OF SETTLEMENT CLASS [DOC. 155]

          HON. M. JAMES LORENZ UNITED STATES DISTRICT JUDGE.

         Pending 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[1] pending final approval, (7) appoint Class Counsel as listed in the Agreement[2], and (8) schedule a final approval hearing. Upon consideration of the instant motion, the Court hereby GRANTS Plaintiffs' motion as follows.

         I. Background

         On June 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.[3] Docs. 90, 98.

         On September 12, 2018, Plaintiffs Powell and Dixon commenced the Minnesota Action.

         In both 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.

         On 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.

         II. Settlement

         Plaintiff 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.

         The 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[4] and Debt Reduction Cash Amounts[5]to 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 terms. Id.

         The 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). Ibid.

         III. Legal Standard

         “[I]n 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[.]” Fed.R.Civ.P. 23(b)(2).

         Additionally, 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).

         IV. Discussion

         A. Class Certification

         When 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).

         1. Numerosity

         If “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.

         2. Commonality

         “The 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 satisfied.

         3. Typicality

         Typicality 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 ...


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