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Demmings v. KKW Trucking, Inc.

United States District Court, D. Oregon

September 19, 2018

RODERICK DEMMINGS, on behalf of himself and all others similarly situated, Plaintiff,
v.
KKW TRUCKING, INC., Defendant.

          Justin M. Baxter, BAXTER & BAXTER, LLP, Matthew A. Dooley and Anthony R. Pecora, O'TOOLE, MCLAUGHLIN, DOOLEY & PECORA, LPA, Of Attorneys for Plaintiff.

          Dennis G. Woods and Andrew T. Gust, SCHEER LAW GROUP, Of Attorneys for Defendant.

          OPINION AND ORDER APPROVING SETTLEMENT, ATTORNEY'S FEES, EXPENSES, AND INCENTIVE AWARD

          Michael H. Simon, United States District Judge

         This is a class action under Rule 23 of the Federal Rules of Civil Procedure brought by Plaintiff Roderick Demmings (“Plaintiff” or the “Class Representative”) individually and on behalf of others similarly situated. Plaintiff alleges that Defendant KKW Trucking, Inc. (“KKW”) violated the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681b(b)(2)(B) and 1681b(b)(3)(B). Plaintiff alleges that KKW obtained consumer reports without providing proper notice or obtaining appropriate consent and took adverse action against Class Members based on the content of the consumer reports without providing appropriate notice. Before the Court are Plaintiff's unopposed motions for Final Approval of Class Action Settlement (ECF 99) and for Attorney's Fees, Costs, and Service Award (ECF 98). The Court has considered the motions, the Amended Stipulation of Settlement (“Amended Stipulation” or “Settlement Agreement”), the papers submitted in connection with both motions, the arguments of counsel, the response of the Settlement Class to the Class Notices, and the files, records, and proceedings in the above-captioned action (“Action”). The final approval hearing was held on September 5, 2018. For the following reasons, Plaintiff's motion for final approval of the Settlement Agreement is GRANTED and motion for fees and costs is GRANTED IN PART.

         Class Counsel is awarded attorney's fees in the amount of $165, 000, to be paid from the $550, 000 Settlement Fund. Class Counsel is awarded costs in the amount of $18, 908.50, to be paid out of the Settlement Fund. The Class Representative is awarded $7, 500 as an incentive award, to be paid from the Settlement Fund. Class Counsel shall pay settlement administration costs in the amount of $10, 338, to be paid from the Settlement Fund. The remaining $348, 253.50 in the Settlement Fund shall be distributed to the Class Members as described in the Amended Stipulation.

         STANDARDS

         Rule 23(e) of the Federal Rules of Civil Procedure provides, in part, that “[t]he claims, issues, or defenses of a certified class may be settled, voluntarily dismissed, or compromised only with the court's approval.” When a district court evaluates a class action settlement under Rule 23(e), the court must determine whether the settlement is fundamentally fair, reasonable, and adequate. In re Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th Cir. 2008). “The purpose of Rule 23(e) is to protect the unnamed members of the class from unjust or unfair settlements affecting their rights.” Id.; see also 2 McLaughlin on Class Actions § 6:4 (12th ed. 2015) (“In the context of reviewing a proposed class action settlement, the district court has a special duty to act as guardian for the interests of absent class members because they are not present but will be bound by the disposition of the case.”).

         The Ninth Circuit has a “strong judicial policy that favors settlements, particularly where complex class action litigation is concerned.” Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). “But where, as here, class counsel negotiates a settlement agreement before the class is even certified, courts ‘must be particularly vigilant not only for explicit collusion, but also for more subtle signs that class counsel have allowed pursuit of their own self-interests and that of certain class members to infect the negotiations.'” Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012) (quoting In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 947 (9th Cir. 2011)). “In such a case, settlement approval ‘requires a higher standard of fairness' and ‘a more probing inquiry than may normally be required under Rule 23(e).'” Id. (quoting Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)).

         BACKGROUND

         On March 25, 2014, Neil C. Scott filed the original complaint in this case, on behalf of himself and all others similarly situated. On June 12, 2015, the complaint was amended to add Roderick C. Demmings as a named plaintiff and purported class representative. Mr. Scott later withdrew as a named plaintiff, leaving only Mr. Demmings. Mr. Demmings filed his Second Amended Complaint on November 9, 2016.

         KKW filed a motion to dismiss, primarily based on standing and the Supreme Court's decision in Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016). The Court denied KKW's motion, primarily based on the Ninth Circuit's then-recent decision in Syed v. M-I, LLC, 853 F.3d 492 (9th Cir. 2017). Although Syed involved claims under 15 U.S.C. § 1681b(b)(2)(A), and Plaintiff's claims are under § 1681b(b)(2)(B) and 1681b(b)(3)(B), the Court found the reasoning of Syed to be persuasive and that the provisions under which Plaintiff brought his claims created similar rights to information and privacy.

         The parties engaged in formal discovery. KKW provided Class Counsel with thousands of pages of documents. These documents included, among other things, its hiring practices, the applicants who were the subject of Consumer Reports during the Class Period, and the documents used by KKW to obtain applicants' Consumer Reports. The parties conducted depositions.

         The parties also participated in three mediations. The first mediation took place on March 30, 2015, with Jeff Batchelor in Portland, Oregon. The second mediation occurred on November 2, 2015, with Judge Terry Lukens in Seattle, Washington. The third mediation was on November 10, 2017, with Rodney Max in Los Angeles, California. The parties continued to discuss settlement after the third mediation with the assistance of Mr. Max. The parties first negotiated a $330, 000 “Class Recovery Fund” to pay the Class Members, the settlement administrative fees, the incentive award for the Class Representative, and approved litigation costs up to $50, 000. The parties then separately negotiated a $220, 000 amount to pay attorney's fees, with the understanding that any amount not awarded by the Court to counsel would go the Class Recovery Fund. The $550, 000 total comprises the Settlement Fund.

         On March 30, 2018, Plaintiff filed an unopposed motion for preliminary approval of class action settlement. The Court denied this motion on April 16, 2018, identifying a number of issues, concerns, and deficiencies raised by the proposed settlement agreement and notice process. After the Court's denial of the first motion for preliminary approval, the parties participated in further negotiations and reached the Amended Stipulation. On May 17, 2018, Plaintiff filed a renewed motion for preliminary approval. The Court granted this motion, preliminarily approving the Amended Stipulation and the Settlement Class; appointing Matthew A. Dooley, Anthony R. Pecora, and Justin Baxter as Class Counsel; authorizing Class Counsel to hire a third-party claims administrator; approving the Class Notice for distribution; and requiring that the Class Notice be mailed and posted on the internet on a website dedicated to the settlement. The Court also set deadlines for opting out of the Settlement Class and objecting to the Settlement Agreement or proposed attorney's fees and incentive award. Class Counsel hired Dahl Administration, LLC (“Dahl”) as claims administrator.

         Dahl received a file containing 993 records of putative class members. After processing all of the data, Dahl created a Class Member database of 942 Class Members. Dahl mailed the Class Notice to all 942 Class Members. The post office returned 118 notices as undeliverable. Dahl sent 115 records without forwarding addresses to a professional tracking service, which was able to locate 26 updated addresses. In total, updated addresses could not be found for 92 Class Members. Thus, 851 Class Members received the Class Notice.

         These actions sufficiently notified Class Members of the proposed settlement of the alleged FCRA violations, the proposed attorney's fees and incentive awards, the right to opt out of the settlement, the right to object to the Settlement Agreement or fee or incentive awards, the process and deadline for lodging an objection, that a final approval hearing on the proposed settlement was scheduled for September 5, 2018, and the process and deadline for requesting participation in the final approval hearing. Plaintiff also filed his motion seeking final approval of the settlement, and requesting attorney's fees, expenses, and incentive awards before the deadline for objections. Only six Class Members opted-out of the Settlement Class. No objections were filed to the Amended Stipulation, proposed attorney's fees or expenses, or proposed incentive award.

         DISCUSSION

         A. Certification of the Settlement Class

         1. Notice to the Class

         The Court granted preliminary approval to the parties' proposed notice procedure after the parties made certain amendments to the notice as requested by the Court. See ECF 94, 95, 96, 97. The Court is satisfied that the notice procedure was carried out according to the applicable standards. The Court finds that notice of the Amended Stipulation was given to the Settlement Class by the best means practicable under the circumstances, including mailing the notice to Class Members and posting the notice, Settlement Agreement, and preliminary approval order on a dedicated website.

         The Class Notice provided Class Members with all required information including, among other things: (1) a summary of the Action and the claims asserted; (2) a clear definition of the Settlement Classes and subclasses; (3) a description of the material terms of the Amended Stipulation; (4) the fact that no affirmative action was required to receive the benefit of class membership, but notice that Class Members could opt out of the Settlement Class; (5) an explanation of Class Members' opt-out rights, the date by which Class Members must opt out, and information regarding how to do so; (6) explaining the release of claims should Class Members choose to remain in the Settlement Class; (7) instructions about how to object to the Amended Stipulation and the deadline for Class Members to submit any objections; (8) instructions about how to object to the requested attorney's fees, expenses, and service award and the deadline for Class Members to submit any objections; (9) the date, time, and location of the final approval hearing; (10) the internet address for the settlement website and the telephone number from which Class Members could obtain additional information about the Amended Stipulation; (11) contact information for the settlement administrator and the Court; and (12) information regarding how Class Counsel and the Class Representative would be compensated. The notice is sufficient. See Lane v. Facebook, Inc., 696 F.3d 811, 826 (9th Cir. 2012) (reaffirming that a class notice need only “generally describe[] the terms of the settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come forward and be heard” (alteration in original) (quoting Rodriguez v. W. Publ'g Corp., 563 F.3d 948, 962 (9th Cir. 2009)).

         The form and method of notifying the Settlement Class fairly and adequately advised Class Members of all relevant and material information concerning the Action and the terms of the proposed Amended Stipulation. The Court finds that the notice satisfies the requirements of due process and Rule 23.

         2. Final Certification

         The parties jointly move to resolve this case as a settlement class. In order to certify a settlement class, the requirements of Rule 23 of the Federal Rules of Civil Procedure must be satisfied. See Hanlon, 150 F.3d at 1019. Rule 23 affords this Court with “broad discretion over certification of class actions .” Stearns v. Ticketmaster Corp., 655 F.3d 1013, 1021 (9th Cir. 2011), abrogated on other grounds by Comcast Corp. v. Behrend, 569 U.S. 27 (2013). A plaintiff seeking class certification must satisfy each requirement of Rule 23(a)-numerosity, commonality, typicality, and adequacy of representation-and at least one subsection of Rule 23(b). See, e.g., Lozano v. AT & T Wireless Servs., Inc., 504 F.3d 718, 724 (9th Cir. 2007). The parties agreed to certification of the class for settlement purposes, and the Court previously evaluated the requisite factors in conditionally certifying the class for settlement purposes in the preliminary approval of the Amended Stipulation. When the Court denied Plaintiff's first motion for preliminary certification, however, the Court stated:

[F]or final approval, “[w]hen a district court, as here, certifies for class action settlement only, the moment of certification requires heightened attention” and “rigorous analysis” that is “supported by sufficient findings to be afforded the traditional deference given to such a determination.” In re Hyundai and Kia Fuel Econ. Litig., 881 F.3d 679, 690 (9th Cir. 2018) (quoting Ortiz v. Fibreboard Corp., 527 U.S. 815, 848-49 (1999) (first alteration added, second alteration in original).

ECF 94 at n.1. Thus, the Court performs the requisite rigorous analysis whether to certify for settlement purposes the following Settlement Classes and Subclasses:

         1. The HireRight Disclosure Class:

All persons residing in the United States who applied for a position with Defendant described by 15 U.S.C. § 1681b(b)(2)(C) during the Class Period and about whom Defendant procured a consumer report from HireRight.

         1(a) The 0-2 Year HireRight Disclosure Subclass:

All persons residing in the United States who applied for a position with Defendant described by 15 U.S.C. § 1681b(b)(2)(C) from March 25, 2012 through March 25, 2014 and about whom Defendant procured a consumer report from HireRight.

         2. The Adverse Action Class:

Consumers residing in the United States who applied for a position with Defendant described by 15 U.S.C. § 1681b(b)(2)(C) during the Class Period: (a) who were listed on Defendant's non-hire log as being disqualified for: (1) Points; (2) Accidents; (3) Work History; (4) Criminal; and/or (5) Tested Positive at Prior Employer; and (b) about whom Defendant obtained a consumer report from A-Check and/or HireRight that contained potentially adverse information before Defendant disqualified them from employment. Specifically excluded from the Adverse Action Class definition are consumers on whom Defendant ran only an A-Check report between January 6, 2013 and March 25, 2014.

         2(a) The 0-2 Year Adverse Action Subclass:

Consumers residing in the United States who applied for a position with Defendant described by 15 U.S.C.§ 1681b(b)(2)(C) from March 25, 2012 through March 25, 2014: (a) who were listed on Defendant's non-hire log as being disqualified for: (1) Points; (2) Accidents; (3) Work History; (4) Criminal; and/or (5) Tested Positive at Prior Employer; and (b) about whom Defendant obtained a consumer report from A-Check and/or HireRight that contained potentially adverse information before Defendant disqualified them from employment. Specifically excluded from this Class are consumers on whom Defendant ran only an A-Check report between January 6, 2013 and March 25, 2014.

         a. Rule 23(a) Requirements

         i. Numerosity

         In this district, there is a “rough rule of thumb” that 40 class members is sufficient to meet the numerosity requirement. Giles v. St. Charles Health Sys., Inc., 294 F.R.D. 585, 590 (D. Or. 2013); see also Wilcox Dev. Co. v. First Interstate Bank of Or., N.A., 97 F.R.D. 440, 443 (D. Or. 1983) (same); 1 McLaughlin on Class Actions § 4:5 (14th ed.) (“The rule of thumb adopted by most courts is that proposed classes in excess of 40 generally satisfy the numerosity requirement.”). With 942 Class Members, the Court finds that the numerosity requirement is met.

         ii. Commonality

         In order to satisfy the commonality requirement, Plaintiff must show that the class members suffered the “same injury”-that their claims depend upon a “common contention.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011) (quotation marks omitted). “That common contention, moreover, must be of such a nature that it is capable of classwide 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. But class members need not have every issue in common: Commonality requires only “a single significant question of law or fact” in common. Mazza v. Am. Honda Motor Co., 666 F.3d 581, 589 (9th Cir. 2012); see also Wal-Mart, 564 U.S. at 359. The Class Members have the significant issues of law and fact in common of whether KKW's notice was adequate under the FCRA, and whether KKW's use of the consumer reports violated the FCRA given the post-use notice provided by KKW. Thus, the commonality requirement is satisfied.

         iii. Typicality

         In order to meet the typicality requirement, plaintiffs must show that the named parties' claims or defenses are typical of the claims or defenses of the class. Fed.R.Civ.P. 23(a)(3). Under the “permissive standards” of Rule 23(a)(3), the “representative's claims are ‘typical' if they are reasonably co-extensive with those of absent class members; they need not be substantially identical.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). “The purpose of the typicality requirement is to assure that the interest of the named representative aligns with the interests of the class.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992). In order to determine whether claims and defenses are typical, courts look to “whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct.” Id. (quotation marks omitted); see also Wolin v. Jaguar Land Rover N. Am., LLC, 617 F.3d 1168, 1175 (9th Cir. 2010).

         Plaintiff alleges that KKW used standard forms and followed a uniform protocol regarding the use of consumer reports to accept or reject an applicant. Thus, Plaintiff presents claims that are typical of the claims held by each Class Member of the respective classes.

         iv. Adequacy of representation

         Rule 23(a)(4) states that before a class can be certified, a court must find that “the representative parties will fairly and adequately protect the interests of the class.” This requirement turns on two questions: (1) whether “the named plaintiffs and their counsel have any conflicts of interest with other class members”; and (2) whether “the named plaintiffs and their counsel [will] prosecute the action vigorously on behalf of the class.” Hanlon, 150 F.3d at 1020. The adequacy requirement is based on principles of constitutional due process; accordingly, a court cannot bind absent class members if class representation is inadequate. Hansberry v. Lee, 311 U.S. 32, 42-43 (1940); Hanlon, 150 F.3d at 1020.

         Plaintiff has shown that he understands and accepts his responsibilities as Class Representative. Plaintiff has not demonstrated interests that are adverse to the Class Members. Further, Plaintiff and the Class Members requested uniform statutory damages as the result of KKW's alleged violations of the FCRA. There is no potential for conflicting interests in this action, and there is no disagreement between Plaintiff's interests and those of the Class Members. Additionally, Class Counsel are experienced in class action litigation and are competent to represent the interests of the Class Members. Thus, the Court finds adequacy of representation.

         v. ...


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