Gatchalian v. Atlantic Recovery Solutions, LLC

[3] 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA [6] 7 HARRIET GATCHALIAN, Case No. 22-cv-04108-JSC 8 Plaintiff, ORDER RE PARTIES’ MOTION FOR 9 v. PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT AND 10 ATLANTIC RECOVERY SOLUTIONS, PROVISIONAL CLASS LLC, et al., CERTIFICATION [11] Defendants. Re: Dkt. No. 48 [12] 13 Plaintiff brings this putative consumer class action against Defendants for abusive, 14 deceptive, and unfair debt collection practices. (Dkt. No. 1-1.)1 Pursuant to Federal Rule of Civil 15 Procedure 23, the parties now move for provisional certification of a class exclusively for 16 settlement purposes, preliminary approval of a proposed class action settlement, and a stay 17 pending final approval. (Dkt. No. 48.) Having considered Plaintiff’s motion, the Court has 18 concerns regarding the Notice and requires more information about the amount of the settlement. 19 The Northern District of California has issued procedural guidance for class action 20 settlements. See https://cand.uscourts.gov/forms/procedural-guidance-for-class-action21 settlements/. Plaintiff’s motion does not satisfy the guidance in a few material respects. 22 First, the guidance requires Plaintiff to identify “the potential class recovery if plaintiffs 23 had fully prevailed on each of their claims, claim by claim, and a justification of the discount 24 applied to the claims.” 25 [T]o compare the value of the settlement against the expected recovery at trial, the Court must estimate the “maximum amount of 26 damages recoverable in a successful litigation” and compare that with [27] the settlement amount. The maximum amount of damages if 1 Plaintiffs are successful at trial is not discounted by the litigation risk. It is a number which serves as a comparative base, reflecting the full 2 verdict value if the Plaintiff class were successful at trial. 3 Harris v. Vector Mktg. Corp., No. C-08-5198 EMC, 2011 WL 1627973 , at *11 (N.D. Cal. Apr. 4 29, 2011) (cleaned up). The parties fail to provide any information on the maximum potential 5 damages. Plaintiff’s counsel claims “the recovery of $51,975.00 obtained for the Class is fair and 6 reasonable, given Defendants’ net worth.” (Dkt. No. 48-2 ¶ 24); 15 U.S.C. § 1692k(a)(2). While 7 federal law limits recovery to 1% of Defendants’ net worth, there is nothing in the record, under 8 seal or otherwise, regarding Defendants’ net worth. Compare with del Campo v. Am. Corrective 9 Counseling Servs., Inc., 254 F.R.D. 585, 596 (N.D. Cal. 2008) (certifying class action against debt 10 collector “represent[ing] its net worth to be $180,517. If this is indeed the case, the entire class of 11 Plaintiffs would share $1805 between them as a measure of statutory damages under the FDCPA.” 12 (cleaned up)); Abels, 227 F.R.D. at 546–47 (“Here, the Defendants admit that Defendant JBC’s net 13 worth is $250,000. . . .[I]f liability is established and statutory damages are due to the class 14 members, the Court would necessarily award less than $2,500. Distributed pro-rata to a class of 15 10,000 people, these damages would be $.25 per person.”). 16 Second, the proposed Notice is insufficient. It lacks the address for a website, to be 17 maintained by the claims administrator, listing key deadlines and providing links to important case 18 documents such as the Notice, preliminary approval order, motions for preliminary and final 19 approval, and attorneys’ fees. See https://cand.uscourts.gov/forms/procedural-guidance-for-class20 action-settlements/. The Notice lacks a clear statement communicating the date and time of the 21 final approval hearing may change without further notice to the class or a note advising class 22 members to check the settlement website or the Court’s PACER site to confirm the date has not 23 been changed. Further, the Notice lacks instructions on how class members may opt out of the 24 settlement and does not instruct class members who wish to opt out of the settlement via written 25 request as to the information required for identification and opt out. While it correctly tells class 26 members who object they must do so in writing to the Court, it fails to specify the address to 27 which objecting class members should mail their objection. 1 and costs, as well as the service award, when the motion for fees will be filed, how they can access 2 the motion, and how they can object. See In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 3 || 988, 995 (9th Cir. 2010) (holding class members must “have an adequate opportunity to oppose 4 || class counsel’s fee motion”). 5 Third, the parties have not addressed whether Class Action Fairness Act notice is required, 6 and, if so, when it will be given. 7 CONCLUSION 8 For the above reasons, the Court requires a revised Notice and a supplemental declaration 9 explaining the amount recovered in relation to the maximum possible recovery, and why the 10 || settlement amount is fair. Class counsel’s belief it is fair is insufficient to support preliminary 11 approval. Plaintiff is encouraged to review the Northern District procedural guidance, was well as 12 other approved class action notices. See, e.g., Ramirez v. Trans Union, LLC, No. 12-CV-006325 13 JSC, 2022 WL 2817588 (N.D. Cal. July 19, 2022) (approved notices at Docket No. 415.); Dixon v. 14 || Cushman & Wakefield W., Inc., No. 18-CV-05813-JSC, 2021 WL 3861465 (N.D. Cal. Aug. 30, 3 15 2021) (approved notices at Docket No. 129.) Once the supplemental materials are filed, the Court a 16 || will advise the parties if a hearing is required. IT IS SO ORDERED. 18 Dated: September 26, 2023 [19] ACQUELINE SCOTT CORLE United States District Judge