United States District Court, E.D. California
DAKOTA MEDICAL, INC., individually, and on behalf of all others similarly situated, Plaintiff,
v.
REHABCARE GROUP, INC., et al., Defendants.
ORDER GRANTING PLAINTIFF'S MOTION FOR APPROVAL OF
ADDITIONAL CLASS DISTRIBUTIONS (DOC. NO. 224)
This
matter is before the court on plaintiff Dakota Medical,
Inc.'s motion for approval of additional class
distributions. (Doc. No. 224.) Defendants RehabCare Group,
Inc. and Cannon & Associates, LLC each filed statements
of non-opposition to the motion. (Doc. Nos. 225, 226.) A
hearing on the motion was held on December 17, 2019.
Attorneys Charles Darryl Cordero and Donald R. Fischbach
appeared telephonically on behalf of plaintiff and the class,
and attorneys David L. Jordan and Oliver W. Wanger appeared
telephonically on behalf of defendants. Having considered the
motion, the declarations of Kenneth Jue dated November 19,
2019 and December 19, 2019, defendants' non-oppositions,
and the argument of counsel, the court will grant
plaintiff's motion for approval of additional class
distributions.
On
September 21, 2017, the court granted final approval of the
class action settlement, awarded attorneys' fees and
incentive payments, and directed distribution of the
settlement. (Doc. No. 189.) Pursuant to the terms of the
settlement agreement, the settlement administrator KCC
distributed settlement checks in the total sum of $6, 739,
088.97 to 12, 294 class members. (Doc. No. 215-2 at ¶
3.) This distribution occurred in two parts: Distribution 1A
($2, 256, 563.68) consisted of 4, 823 checks payable to class
members that were entitled to receive less than $600 based on
the settlement formula, and to class members that were
entitled to receive $600 or more and had provided valid
taxpayer identification numbers (“TINs”).
(Id.) Distribution 1B ($4, 482, 525.29) consisted of
7, 471 checks payable to class members that were entitled to
receive $600 or more but had not provided valid TINs.
(Id.) In accordance with the final approval order,
these class members were mailed checks in the amount of
$599.99, as well as a notice informing them that their
payments were limited because KCC did not receive a valid TIN
from them.[1] (Id.) KCC reserved the balance of
funds due to these members for payments in subsequent years.
(Id. at ¶ 6.)
After
Distributions 1A and 1B were completed, 1, 160 class members
provided valid TINs to KCC. (Id. at ¶ 4.)
Accordingly, on December 29, 2017, KCC issued an additional
1, 160 checks totaling $1, 538, 800.29 to these class
members, representing the balance of their payments.
(Id.) KCC identifies this distribution as
Distribution 2A. (Id.)
The
settlement agreement afforded class members 120 days from the
check date in which to negotiate their settlement checks.
(Doc. No. 171 at ¶ 11.A.) From Distributions 1A, 1B, and
2A, a total of 2, 060 checks remained uncashed in the
cumulative amount of $1, 004, 797.29. (Doc. No. 221 at ¶
4.) Under the settlement agreement:
If any portion of the Members' Payment Amount remains
after initial distribution to Settlement Class Members,
including but not limited to amounts represented by Uncashed
Checks and checks returned as undeliverable by the United
States Postal Service, the Settlement Administrator shall
make a further distribution to Settlement Class Members that
timely negotiated checks in the initial distribution, unless
the amounts involved are too small to make individual
distribution economically viable.
(Doc. No. 171 at 14.)
On
August 3, 2018, plaintiff moved for approval of additional
class distributions because a redistribution was economically
viable. (Doc. No. 215-1 at 4.) On September 20, 2018, the
court approved plaintiff's motion and ordered the
settlement administrator to distribute $3, 786, 536.89 to 6,
311 class members that had failed to provide valid TINs, with
the amount per member not exceeding $599.99, and $1, 004,
797.29 to class members that had cashed checks in the initial
distribution or in either Distribution 1B or 2A. (Doc. No.
222 at 3-4.) The court also ordered that KCC take additional
measures to obtain valid TINs and include a notice and form
with each $599.99 check for members to complete and provide a
valid TIN. (Id. at 4.)
On May
15, 2019, plaintiff filed a status report regarding the
additional (series 3) distributions made pursuant to the
court's September 20, 2018 order. (Doc. No. 223.) On
October 22, 2018, KCC distributed $3, 875, 576.34 to some 11,
542 class members in two parts. (Doc. No. 224-1 at 2.) In
Distribution 3A, $423, 833.87 in funds from uncashed checks
in the series 1 distributions were redistributed to 5, 791
class members. (Id.) In Distribution 3B, $3, 451,
742.47 were distributed to 5, 751 class members that were
entitled to receive $600 or more but that had not provided
valid TINs and were, accordingly, issued checks in the amount
of $599.99. (Id. at 2-3.) KCC declared that 15% of
all checks issued in Distributions 3A and 3B were not cashed
(Doc. No. 223-1 at ¶ 4), and the value of those uncashed
checks totals $673, 232.87 (Doc. No. 230 at ¶
5).[2]
In addition, plaintiff explained that because the number of
class members that had not provided valid TINs remained high,
plaintiff directed KCC to increase its outreach efforts to
members that remain eligible for $600 or more. (Doc. No. 223
at 2.) Plaintiff advised the court that a formal motion for
additional class distributions would be made after the
results of that outreach effort became known. (Id.)
As a result of KCC's efforts to obtain valid TINs from
this group of class members, including a telephone outreach
campaign in May and June, KCC has obtained valid TINs from an
additional 1, 247 members. (Doc. No. 224-1 at 3.) According
to plaintiff, by the end of 2019, KCC will distribute the
balance of funds due these members, totaling $1, 181, 328.23.
(Doc. No. 230 at ¶ 3.)
KCC now
holds $6, 005, 199.23 in class funds, which represents the
amounts from uncashed checks, the reserved amounts payable to
class members that have not provided valid TINs, the amounts
payable to class members who have provided TINs, and the
reserve amount of $18, 898.70 for administrative expenses.
(Doc. No. 230 at ¶ 6.) Plaintiff now requests that this
court approve three additional distributions: (1) a
distribution in December 2019 for class members that have not
provided a TIN, with payments capped at $599.99; (2) a
distribution in January 2020 for class members that have
still failed to provide a TIN, again with payments capped at
$599.99; and (3) a distribution of the excess funds from
uncashed checks for class members that cashed checks from the
series 3 distributions, less the administrator's expenses
for the three distributions. (Doc. Nos. 224-1 at 2, 5; 230 at
¶¶ 5, 6.)
KCC is
prepared to distribute funds in December 2019 to class
members that are eligible to receive $600 or more but that
have not provided valid TINs. (Doc. No. 224-1 at 4.) KCC
projects a total distribution of $2, 031, 730.66 to 3, 520
class members, with a cost of $9, 872. (Id.) KCC
also projects that this distribution will complete the
payouts of reserved funds to some 370 class members.
(Id.)
Similarly,
KCC is prepared to distribute $1, 141, 434.21 in January 2020
to class members that have not provided valid TINs (3, 180
class members). (Id.) KCC projects that this
proposed 2020 distribution would complete the payouts of
reserved funds to 3, 059 members that did not provide valid
TINs, leaving $850, 808.63 remaining to be distributed to 127
members that have not provided valid TINs. (Id.) KCC
anticipates that payouts to the remaining members, with
annual payments capped at $599.99, would be completed by
2024, with the vast majority completed in 2022. (Id.
at 4-5, n. 2.) Two class members would receive their last
payment in 2023, and only one class member would receive a
payment in 2024. (Id.) KCC projects this January
2020 distribution will cost $9, 026.70. (Id.)
Additionally,
Plaintiff believes a redistribution of uncashed checks is
economically viable and requests this court approve a
redistribution of the funds from uncashed checks ($673,
232.87), less administrative expenses for the three proposed
distributions ($18, 898.70), for a total distribution of
$654, 334.17. (Doc. No. 230 at ¶ 5.) KCC projects that
at least 9, 808 class members are eligible to participate in
this proposed redistribution because they cashed checks in
the series 3 distributions. (Doc. No. 224-1 at 5.)
Specifically, $342, 848.67 would be distributed to the 6, 622
members that provided TINs or for whom TINs are not required,
and the balance would be credited to the accounts of the 3,
186 members that have failed to provide TINs and payable
subject to the $599.99 per annum ceiling. (Id. at
5-6.) KCC projects this redistribution will cost $5, 844.
(Id. at 5.)
Accordingly,
it is hereby ordered that:
1. The settlement administrator shall, no later than December
31, 2019, distribute $2, 031, 730.66 to 3, 520 class members
that have not provided valid taxpayer identification numbers
to KCC. The amount payable per member shall not exceed
$599.99. KCC shall include a notice with each check that
informs the member that payment was limited because the
member failed to provide a valid taxpayer ...