MEMORANDUM OF POINTS AND AUTHORITIESclassaction.kccllc.net/Documents/GOM0001/Motion for Final... · 2015-11-11 · MEMORANDUM OF POINTS AND AUTHORITIES I. SUMMARY This is a California

1 PLAINTIFF’S MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

MEMORANDUM OF POINTS AND AUTHORITIES

I. SUMMARY

This is a California consumer class action alleging that Defendant Golden 1 Credit Union

(“Golden 1” or “Defendant”) charged overdraft fees based on the “available balance” in customer

accounts (i.e., the account balance with a deduction for any holds on pending debit transactions which

have not actually posted and debited from the account) rather than the ledger balance (i.e., the money

actually in the account), in violation of the terms of its customer agreement. Plaintiff also alleges in

the complaint that on certain dates Defendant violated 12 C.F.R. § 1005.17 by enrolling credit union

members in its overdraft program without appropriately obtaining their affirmative consent. Golden 1

has disputed Plaintiff’s contentions throughout the case.

After law and motion practice, extensive discovery into the underlying facts, and an all-day

mediation in Sacramento with the Honorable Ronald Sabraw (Ret.) of JAMS which lasted past 10:00

p.m., the parties reached a settlement of this matter based on a seven-page mediator’s proposal issued

by Judge Sabraw several days subsequent to the all-day mediation. (Declaration of The Honorable

Ronald M. Sabraw (Ret.) in Support of Motion for Final Approval of Class Action Settlement (“Hon.

Sabraw Decl.”), ¶¶ 5-6.) This Honorable Court granted preliminary approval of the proposed

settlement on October 1, 2015, finding preliminarily that the classes as defined in the Settlement

Agreement meet all of the requirements for certification of a settlement class found in section 382 of

the California Code of Civil Procedure and California Rule of Court Rule 3.769. (Preliminary

Approval Order, ¶ 7.) This Court further found that the proposed settlement fell within the range of

reasonableness for potential final approval; was the product of arm’s length negotiations by

experienced counsel through an experienced mediator after extensive litigation and discovery; and,

directed that notice of the settlement be served on class members as per the Settlement Agreement so

that this final approval hearing may be held. (Id., ¶¶ 7, 8.) The parties have now complied with this

Court’s Order regarding notice, and therefore now present the matter for final approval.

The direct notice program approved by this Court has been spectacularly successful.

Specifically, on October 10, 2015, the claims administrator Kurtzman Carson Consultants (“KCC”)


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

caused the court approved Notice and Claim Form to be mailed to 80,318 potential Class Members

and emailed to 62,458 email addresses. (Declaration of Steven J. Powell Regarding Notice and Claim

Administration (“Powell Decl.”), ¶¶ 3, 4.) KCC received 3,330 Notice and Claim Forms returned by

the United States Postal Service (“USPS”) with undeliverable addresses. (Powell Decl. ¶ 3.) KCC

performed a "skip trace" search and found 2,577 new postal addresses, and re-sent to all of these.

(Powell Decl. ¶¶ 3.) Of these records re-mailed to the new address, KCC has not received any

returned as undeliverable for a second time. (Powell Decl. ¶¶ 3.) Based on the foregoing, a total of

approximately 99.06% of the class has received the Notice and Claim Form via mail or email.

(Powell Decl. ¶¶ 5.).

As of the date of the filing of this Plaintiff’s Motion for Final Approval of Class Action

Settlement, Award of Attorney Fees and Costs, and Approval of Class Representative Service Award

(“Motion”), the claims administrator has received only 12 requests for exclusion out of 80,318 notices

mailed, meaning only 0.015% of the class has asked not to participate in the settlement. (Powell

Decl. ¶ 9.) Further, as of the filing of this motion not a single conforming objection has been filed

with the claims administrator. (Powell Decl. ¶10.)1 So as to enable class members to review this

motion for final approval, the time to object or opt out expires on November 25, 2015. Per the

approval schedule in this case, class counsel will file with this Court an update on all objections and

opt-outs by December 2, 2015.

The manner of distribution of the settlement fund is also designed to maximize the likelihood

of the class members actually receiving money from the settlement. Specifically, there was first an

opportunity for all class members to make a claim by November 9, 2015, for up to ten eligible

1Fifty-six class members returned claim forms where they also signed the exemplar objection form on the class notice. Class counsel and the notice administrator do not know whether these class members intended to object or mistakenly believed they were required to sign that portion of the notice. (Powell Decl. ¶ 10.) For example, none of these class members provided a reason for the objection. At class counsel’s request, the claims administrator wrote to each of those class members advising them that if they intended to object, they should file an objection with the Court and explain the reasons for the objection. (Id.) In any event, assuming that all really intended to object, that is still only 0.07% of the class. Class counsel will update this Court by December 2 whether any of these individual actually objected.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

overdrafts to be refunded. (Declaration of Taras Kick in Support of Motion for Final Approval

(“Kick Decl.”), ¶ 2, Ex. 1 – Settlement Agreement, ¶ 8 (Ex. 1 to Kick Decl. is hereafter referred to as

“Settlement Agreement”).) Approximately 87% of the class members had 10 or fewer overdrafts

during the class period, meaning that if they made a claim they likely would receive 100% restitution

(less their pro rata share of fees and costs2). (Kick Decl. ¶ 33, Ex. 3 – Declaration of Arthur Olsen in

Support of Motion for Preliminary Approval of Class Action Settlement, ¶ 8 (Ex. 3 to Kick Decl. is

hereafter referred to as “Olsen Decl.”).) There were 12,541 class members who made such a claim

received by the claims administrator as of November 9, claiming a total of 44,855 overdraft fees, for a

total of approximately $1,233,512.5 (less their pro rata share of fees and costs). (Powell Decl. ¶8;

Kick Decl. ¶ 31.) This means that there will be approximately $3,766,487.50 remaining in the

settlement fund for class members who failed to make a claim (less their pro rata share of fees and

costs), and they will receive their pro rata share of the remaining settlement proceeds via direct

distribution without having to do anything. (Settlement Agreement ¶ 8.), Kick Decl. ¶ 31.)

All class members will be paid by direct deposit into their accounts if they are current Golden

1 credit union members, and will be mailed a check if they no longer have an account with Golden 1.

(Settlement Agreement ¶ 8.) The data produced by Golden 1 indicates that as of May 2015

approximately 98% of the class members are current members of Golden 1, and therefore will have

their share of the settlement deposited directly into their accounts without even having to cash a

check. (Olsen Decl., ¶ 13.) What this means is that the overwhelming majority of class members will

receive money directly deposited into their account. (Kick Decl. ¶ 31.)

Under the settlement agreement, Defendant Golden 1 has agreed to create a $5 million

common fund, with no reversion of any of the money to Golden 1. Per the Settlement Agreement,

this common fund will be used to compensate class members for the alleged improper overdraft fees,

attorneys’ fees in the amount of one-third of the common fund ($1,666,666) for extensively litigating

this action and achieving a strong and favorable settlement, reimbursement of litigation fees not to

2 References to “pro rata share of fees and costs”, hereafter, is intended to include attorneys’

fees, litigation costs, claims administration costs, and service award.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

exceed $100,000 (they actually total $62,129.83), claims administration fees, and a service award to

the class representative Isabel Manwaring (“Plaintiff”) not to exceed $10,000 for her considerable

efforts in representing the provisional settlement class throughout the litigation. Further, as a part of

the settlement, seven days after preliminary approval was granted by this Court, Golden 1 sent a letter

to all of its credit union members in which it reiterated the optional nature of its overdraft program.

This letter is attached as Exhibit 1 to the Settlement Agreement, and was sent on October 8, 2015.

This letter is in addition to a previous letter Golden 1 sent out to its credit union members in March

2014 as a result of this lawsuit, in which it better explained its overdraft policies. (Settlement

Agreement, Ex. 2.) The dollar amount of the settlement represents approximately 90% of a Plaintiff’s

verdict under the likely Defendant's damage theory should the matter have proceeded to trial, and

approximately 43% of the total possible non-interest restitutionary amount that could have been

obtained under a successful verdict under Plaintiff's damage theory, and meanwhile, the settlement

eliminates for the class members all of the risks, costs and delays appurtenant with continuing the

litigation. (Olsen Decl. ¶¶ 8, 12, 13; Kick Decl. ¶ 28.)

In sum, the proposed settlement is an excellent settlement for the class. It provides monetary

consideration as well as improved disclosures regarding the practice. The response by class members

to date is an extremely favorable reaction to the settlement, and further demonstrates that the

settlement is fair, reasonable, and adequate, and should be given final approval.

II. BACKGROUND

A. The Settlement is an Excellent Result for the Class Members

After extensive law and motion practice and discovery into the underlying facts, including

depositions of Defendant employees and third-party witnesses, damage expert analysis, and mediation

with the Honorable Ronald Sabraw (Ret.) of JAMS, the parties reached a settlement. (Hon. Sabraw

Decl. ¶¶ 5-6; Kick Decl. ¶¶ 16-19, 21.) Under its terms, Golden 1 will make an “all in” non-

reversionary payment of $5 million to the class. (Settlement Agreement, ¶¶ 1(x), 8.) In addition to

providing significant monetary benefits to the class, this amount will also be used to reimburse the

litigation costs, the costs of class notice and claims administration, attorneys’ fees in the amount of


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

one-third of the common fund (subject to Court approval), and a service award to the class

representative. (Settlement Agreement, ¶ 8.) Class counsel, as well as the mediator, believes the

settlement is an excellent one for the class. (Kick Decl. ¶ 28; McCune Decl. ¶ 24; Hon. Sabraw Decl.

¶ 9.)

The litigation involves multiple complex legal issues, including banking law, class

certification issues, issues of contractual interpretation, and issues involving the interplay between a

breach of contract cause of action and a statutory UCL claim. The litigation would have had

numerous risks, including a risk that Golden 1’s motion for summary judgment would have been

granted, a risk that the motion for class certification would have been denied, a risk that a trier of fact

would have found that Golden 1 did obtain affirmative consent from members enrolled in the debit

card overdraft program, and a risk that the Court may have disagreed with Plaintiff’s interpretation of

the relevant contractual language. (Kick Decl. ¶ 28.)

With regard to damages, the total possible non-interest restitutionary amount that could have

been obtained at trial had the case been successful under Plaintiff's damage theory is $11,174,142.27.

(Kick Decl. ¶ 28; Olsen Decl. ¶12.) This total class damages number is comprised of the total number

of fees charged on ledger balances that were positive, plus any overdraft fees charged on negative

balances for class members who opted in on the dates in the Opt-In Class definition. (Olsen Decl. ¶¶

6-7, 9-10, 12.) However, Defendant intended to argue that at some point, even if the contract

language was to be interpreted as Plaintiff contends is proper, the class members needed to take

responsibility for further action if they incurred repeated overdraft fees which were contrary to what

they expected. If this number was determined by a trier of fact to be five overdrafts per class member

it would mean total “Sufficient Funds” class overdraft fees of $5,546,879. (Olsen Decl. ¶ 8.) If this

number were determined by a trier of fact to be ten overdrafts per class member, it would mean total

“Sufficient Funds” class overdraft fees of $7,168,394. (Olsen Decl. ¶ 8.) Therefore, if the damage

number is based on five overdrafts then the $5 million settlement represents 90% of the most probable

recovery, and if ten overdrafts then the $5 million settlement represents 70% of the most probable

recovery had the matter gone to trial. Further, even if probabilities were ignored, the $5 million in


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

settlement represents 43% of the total non-interest added restitution number which was alleged to be

at issue for both classes combined. (Olsen Decl. ¶ 12.)

Continued litigation also would have been expensive, including the expense of class notice if

the motion for class certification were granted, the expense of expert witnesses and trial consultants,

and millions of dollars in attorneys’ fees for both sides. (Kick Decl. ¶ 29.) The Court would have

needed to rule on the motion for class certification. If denied, Plaintiff almost certainly would have

appealed. If class certification were granted, Golden 1 likely would have filed attempted dispositive

motions, and the case would have gone to trial. Under the Business & Professions Code § 17200

cause of action, the Court would have been required to conduct a bench trial. (Kick Decl. ¶ 29.)

Under the breach of contract cause of action there would have been a jury trial. The losing party then

doubtless would have appealed, leading to years of delay. (Kick Decl. ¶ 29.) Additionally, there is no

governmental action onto which this litigation was coattail riding. (Kick Decl. ¶ 32.)

With respect to the structure of this settlement, it is more favorable than the vast majority of

class action settlements. The relief is in cash, not coupons, and no money will revert to the

Defendant. (Settlement Agreement, ¶8(h).) The manner of distribution is designed to maximize the

likelihood that the class members will actually receive the money, and also to maximize the

likelihood that those class members who feel most strongly that they were wronged by the practice at

issue to receive the fullest recovery. (Hon. Sabraw Decl. ¶ 7; Kick Decl. ¶ 29.) Specifically, the

settlement will have two allocations distributions to the class. (Settlement Agreement, ¶ 8(e).) The

first will be to class members who submit a timely valid claims form. (Id.) As of November 9, 2015,

which is the last date by which claims were to be submitted, there were 12,541 claims, claiming

44,855 overdraft fees, or approximately $1,233,512. (Powell Decl. ¶ 8; Kick Decl. ¶ 31.) Those class

members will receive a refund of up to 10 eligible overdraft fees (less their pro rata share of fees and

costs). Since these claims do not exceed the $5 million settlement fund, there will be no reduction

whatsoever for these class members who made a claim, other than their pro rata share of fees and

costs. (Kick Decl. ¶ 31.) Further, because these claims did not oversubscribe the settlement fund,

there remains a residue in the fund of approximately $3,766,487 for all those class members who did


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

not make a claim. (Id.; Settlement Agreement, ¶ 8(e).) These class members will receive a pro rata

refund from the net settlement fund remaining after the distribution to those who made a claim (but

again capped at 10 overdraft fees, less their pro rata share of fees and costs). (Settlement Agreement,

¶ 8(e).)

Further, if the class member has an account with Golden 1, as 98% of them do as of May 2015

(Olsen Decl. ¶ 13), their payment will be directly credited to their account, meaning the class member

literally has to do nothing to receive this money. (Settlement Agreement, ¶ 8(f).) For the

approximately 2% of class members who do not have an account of Golden 1, their payment will be

mailed to them, again with no need for them to make a claim. (Settlement Agreement, ¶ (8)(f) .)

Finally, while the settlement being designed in the manner it is helps ensure that the maximum

amount of money goes to the class, it is still possible that there might be some residue because, inter

alia, some class members might receive a check in the mail but fail to cash it. If so, that residue will

go a non-profit 501(c)(3) organization (Settlement Agreement, ¶ 12.) Public Citizen was disclosed

as the intended cy pres recipient in Paragraph 9 of the notice sent to class members, and no objections

have been received to it being the cy pres recipient. (Kick Decl. ¶ 27.)

B. Pertinent Procedural History

This action was filed on April 2, 2013. (Kick Decl. ¶ 15.) On July 5, 2013 Golden 1 filed a

demurrer to the complaint. (Kick Decl. ¶ 15.) On October 23, 2013 this Court entered an order

sustaining in part and overruling in part the demurrer. Plaintiff filed a First Amended Complaint on

November 4, 2013. On November 19, 2013, Golden 1 filed a demurrer to the First Amended

Complaint, and a motion to strike the allegations pertaining to alleged violation of 24 C.F.R. §

1005.17 from the First Amended Complaint. (Kick Decl. ¶ 15.) On March 4, 2014 this Court entered

an order overruling the demurrer and denying the motion to strike. (Kick Decl. ¶ 15.) On March 14,

2014, Golden 1 filed an Answer. . (Kick Decl. ¶ 15.)

On March 21, 2015, Golden 1 filed a motion for summary adjudication of the cause of action

pertaining to alleged violation of 24 C.F.R. § 1005.17. (Kick Decl. ¶ 15.) Plaintiff opposed the

motion on April 14, 2015. (Kick Decl. ¶ 19.) Golden1 filed a Reply on April 21, 2015. (Kick Decl.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

¶ 19.) However, the parties reached a settlement and the motion was taken off calendar. (Kick Decl.

¶¶ 19-21.) On August 28, 2015, Plaintiff filed the Motion for Preliminary Approval, and supporting

declarations. (Kick Decl. ¶ 15.) On September 15, Defendant filed a Statement of Non-Opposition to

the Motion for Preliminary Approval. On October 1, 2015, this Court granted the Motion for

Preliminary Approval. (Kick Decl. ¶ 15.)

C. Investigation and Discovery

On August 22, 2013, Plaintiff served the First Set of Requests for Production comprised of 77

requested categories of documents; the First Set of Special Interrogatories comprised of 18 special

interrogatories; the First Set of Form Interrogatories; and, the First Set of Requests for Admission

comprised of 11 requests. (Kick Decl. ¶¶ 16-17 .) Golden 1 served its responses to this set of

discovery on September 26, 2013. (Kick Decl. ¶¶ 16-17 .) Plaintiff met and conferred at length with

Golden 1 about the responses, including detailed correspondence on October 18 and November 4,

2014. (Id.) On January 30, 2014, Plaintiff served amended Requests for Production, Special

Interrogatories and Requests for Admission to address objections that Golden 1 raised in the meet and

confer process. (Kick Decl. ¶ 16.) Golden 1 provided responses on March 28, 2014. (Id.) Plaintiff

and Golden 1 again met and conferred, including meet and confer correspondence on May 26, 2015,

and a telephonic meet and confer session on June 25, 2014. (Id.) As a result of the extensive meet

and confer discussions, Golden 1 provided a rolling document production which eventually resulted

in the production of more than 14,000 pages of documents. (Id.)

On December 30, 2013, Plaintiff provided responses to Golden 1’s written discovery,

including 39 Special Interrogatories, 54 Requests for Production, Form Interrogatories, and 81

Requests for Admission. (Kick Decl. ¶ 17.)

On August 15, 2014, Plaintiff took the deposition of Thomas Gennessy who is the Senior Vice

President of Information and Technology for Golden 1 and its person most knowledgeable on the

overdraft practice. (Kick Decl. ¶ 18.) On December 10, 2014, Golden 1 took the deposition of

Plaintiff Isabel Manwaring. (Id.) On January 28, 2015, Plaintiff obtained a commission from this

Court to take an out-of-state deposition of non-party Fiserv, which is the outside consultant that


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

designed Golden 1’s overdraft fee program and its customer database. (Id.) The subpoena also

sought production of documents. (Id.) Fiserv was served with the subpoena on February 4, 2015, in

its Wisconsin offices. (Id.) On March 20, 2015, Fiserv produced relevant documents in response to

the subpoena. (Id.) On March 24, 2015, Plaintiff took the deposition of Fiserv’s corporate designee

Robert Weller in Philadelphia, Pennsylvania. (Id.) On April 10, 2015, Plaintiff took the deposition of

Defendant’s designated person most knowledgeable regarding its database (and other issues) Paul

Sidhu, who is a Vice President of Information Technology at Golden 1. (Id.)

On February 5, 2015, Plaintiff served the Second Set of Requests for Production bringing the total to

84 category requests; the Second Set of Special Interrogatories bringing the total to 23; the Second

Set of Form Interrogatories; and, the Second Set of Requests for Admission, bringing the total to 24.

(Kick Decl. ¶¶ .)

Finally, very early in the case, Plaintiff retained overdraft database expert Arthur Olsen.

(Kick Decl. ¶ 23.) Mr. Olsen is considered to be one of the leading experts on overdraft fee database

analysis in the country, and has worked on overdraft litigation database analysis in such matters as the

multidistrict litigation pending in Florida (In re Checking Account Overdraft Litigation MDL No.

2036 (S.D. Fla.)), as well as closer to home in such matters as Gutierrez v. Wells Fargo (N.D. Cal.

2010) 730 F.Supp.2d 1080. (Kick Decl. ¶ 23.) Mr. Olsen comprehensively analyzed Golden 1’s

database to calculate potential aggregate class damages under possible outcomes of the litigation.

(Kick Decl. ¶ 23; Olsen Decl. ¶¶ 7-13.)

III. LEGAL ANALYSIS

A. The Settlement Should be Finally Approved

The proposed settlement meets all the standards set forth in California law for approval of a

class action settlement. The trial court has “broad discretion” to determine whether a class action

settlement is “fair and reasonable.” (Wershba v. Apple Computer (2001) 91 Cal.App.4th 224, 234-

235.) In reviewing a class action settlement, “due regard should be given to what is otherwise a

private consensual agreement between the parties . . . The inquiry must be limited to the extent

necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

by, or collusion between the negotiating parties, and that the settlement taken as a whole is fair,

reasonable and adequate to all concerned.” (7-Eleven Owners for Fair Franchising Inc. v. Southland

Corp. (2000) 85 Cal.App.4th 1135, 1145.) The relevant factors include:

" 'the strength of [the] plaintiffs' case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through 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.)

There is a presumption of fairness when, as here, 1) the settlement was reached through arm’s-

length negotiation, 2) investigation and discovery are sufficient to allow counsel and the Court to act

intelligently, 3) counsel is experienced in similar litigation, and 4) the number of objectors is small.

(Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801.)

The Dunk presumption in favor of approval applies as the settlement was reached through

arm’s-length negotiation (Hon. Sabraw Decl. ¶ 5; Kick Decl. ¶ 21); investigation and discovery were

more than sufficient to allow informed decisions (Kick Decl. ¶¶ 15-19), class counsel is experienced

in similar litigation (McCune Decl.¶ 3; Kick Decl. ¶ 3); and, the number of objectors not only is

small, but to date, there are no objections filed with the claims administrator. (Powell Decl. ¶ 10.)

The following analyzes this proposed settlement through the final approval checklist used by

some complex courts in California, while also covering each one of the above factors.

1. Notice to the class. The class administrator provided notice to the class members as

directed by this Court’s Order of October 1, 2015. Specifically, the claims administrator mailed

80,318 claim forms and notices by first class mail by October 10, 2015. (Powell Decl. ¶ 3.) In

addition, where email addresses were available, class members received an additional notice by email,

which was 64,746 emails. (Id., ¶ 4.) The claims administrator testifies that 99.06% of the members

of the class received direct notice either by first class U.S. mail or email, and in most cases by both.

(Id., ¶¶ 3-5.)

As stated, as of the date of the filing of this Motion, there are no conforming objections and


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

only 12 requests for exclusion out of 80,318 notices mailed, meaning only 0.015% of the class has

asked not to participate in the settlement. (Powell Decl. ¶ 9.)3

As of the filing of this motion, through November 9, 2015, there were 12,541 class members

who made a claim received by the claims administrator, claiming a total of 44,855 overdraft fees, for

a total of approximately $1,233,512.5 (less their pro rata share of fees and costs). (Powell Decl. ¶8;

Kick Decl. ¶ 31.) This means that there will be approximately $3,766,487.50 remaining in the

settlement fund for class members who failed to make a claim (less their pro rata share of fees and

costs), and they will receive their pro rata share of the remaining settlement proceeds via direct

distribution without having to do anything. (Settlement Agreement ¶ 8.), Kick Decl. ¶ 31.)

This means that even class members who did not decide to make a claim will nonetheless receive a

distribution from this settlement. (Kick Decl. ¶¶ 30, 31.)

2. Evaluation of the settlement

As discussed in detail in Section II(A), supra, this is an excellent settlement for the class as it

the nonreversionary funds represent a substantial portion of the damages in this case, class members

were provided better disclosures on the practice, and nearly all class members will receive their funds

being directly deposited to their accounts.

3. Request for attorney’s fees.

Class counsel request attorneys’ fees in the amount of $1,666,666, which is one-third of the

settlement fund. The requested fee award is appropriate under a percentage-of-the-benefit

methodology, as well as under a lodestar methodology.

a. Analysis Pursuant to the Percentage-of-Benefit Methodology.

California law allows the award of attorneys’ fees in class actions based on the percentage-of-

the-fund method. (Chavez v. Netflix (2008) 162 Cal.App.4th 43, 63 [“fees based on a percentage of

3 The time to object or opt out expires on November 25, 2015. Class counsel will file with this

court an update on all objections and opt-outs by December 2, 2015.Plaintiff will file a supplemental declaration with the Court reporting the number of opt outs and the number of objections received, if any, after expiration of the November 25, 2015, deadline to opt out and object. If there are any objections, Plaintiff will file a written response.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the benefits are in fact appropriate in large class actions when the benefit per class member is

relatively low”]; Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 255; Consumer Cause

v. Mrs. Gooch's Natural Food Markets (2005) 127 Cal.App.4th 387, 397 [the common fund doctrine

is “frequently applied in class actions when the efforts of the attorney for the named class

representatives produce monetary benefits for the entire class”].)

Further, the requested fees fall well within the range appropriate under the percentage-of-the-

benefit methodology in a common fund case as it is common to award attorney’s fees to class counsel

of one-third (33-1/3%) of the settlement amount or higher. (Chavez, at 66: “[e]mpirical studies show

that, regardless whether the percentage method or the lodestar method is used, fee awards in class

actions average around one-third of the recovery.”)4 In April 2015, in a case similar to this one,

involving alleged improper overdraft fees by a California credit union filed in state Court, the

Honorable Gail Andler awarded one-third of the total settlement as attorneys’ fees to these same two

class counsel, and praised counsel’s work in the case. (Kick Decl. ¶ 15.)5

Finally, it is the opinion of the mediator who spent more than 12 hours face-to-face working

on this case with the parties, and also generated a detailed 7-page single-spaced mediator’s proposal

analyzing the strengths and weaknesses of the case, that an appropriate percentage-of-the-benefit fee

in this case would be 40% of the $5 million common fund. (Hon. Sabraw Decl. ¶ 8.) Nonetheless,

class counsel seek only one-third.

4 A non-exhaustive list of other cases awarding a percentage of benefit based on the common fund of one-third or more include Castaneda v. Burger King Corp. (N.D. Cal. Jul. 12, 2010)2010 U.S.Dist.LEXIS 78299 [awarding 33%].); In re California Indirect Purchases (Cal. Super. Ct. Oct. 22, 1998) No. 960886, 1998 WL 1031494, at *9 [setting forth a survey of awards approved by trial courts in common fund cases, including In re Milk Antitrust Litigation (L.A.Sup.Ct.1998) Civ. Case No. BC070061 (33⅓% award); ; Carlson v. C.H. Robinson Worldwide (D. Minn. 2006) 2006 U.S.Dist.LEXIS 67108, *21-22 [35%]; Worthington v. CDW (S.D. Ohio 2006) 2006 U.S.Dist.LEXIS 32100, *22 [“Counsel’s requested percentage of 38 and one-third of the total gross settlement”].)

5 The propriety of using the percentage of the benefit method alone in a class action settlement is currently under review by the California Supreme Court in Laffitte v. Robert Half International, S222996. Therefore, while the requested fee is justified under either methodology, Class counsel requests fees if awarded under percentage be found also to have been supported under the lodestar.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

b. Analysis Pursuant to the Lodestar Methodology.

Regarding the lodestar methodology, class counsel’s combined lodestar totals $1,117,805 to

date, prior to the filing of this motion, which means a requested multiplier of only 1.49x. (Declaration

of Richard D. McCune in Support of Motion for Final Approval (hereafter, “McCune Decl.”) ¶ 18;

Kick Decl. ¶ 7.) A lodestar figure is calculated by multiplying the reasonable hours expended by a

reasonable hourly rate. (Wershba v. Apple Computer (2001) 91 Cal.App.4th 224, 254.) The Court

may then adjust the lodestar using a multiplier. (Thayer v. Wells Fargo (2001) 92 Cal.App.4th 819,

833.)

The concurrently filed declaration of Richard Pearl, one of California’s leading experts on

attorneys’ fees and the author of California Attorney Fee Awards, Continuing Education of the Bar,

sets forth an exhaustive listing of California hourly attorney fees and provides both the foundation

that the hourly fees sought here are appropriate, and also the opinion that they are. (See generally,

Declaration of Richard Pearl in Support of Motion (“Pearl Decl.”), ¶¶ 12-17.)

Further, the same hourly rates sought by class counsel were most recently approved in a case

very similar to this case, a class action on behalf of California consumers against a California credit

union for alleged improper overdraft fees, by the Honorable Gail Andler of the complex courthouse in

Orange County Superior Court. (Kick Decl. ¶ 5.) Prior to that, in 2014, the Honorable Amy Hogue

of the complex courthouse in Los Angeles County Superior Court, Central Civil West, approved the

same hourly rates of The Kick Law Firm’s attorneys as being sought here. (Kick Decl. ¶ 5.) The

historical hourly rates of McCune Wright also have been approved by numerous state and federal

courts, and their current rates that went into effect as of January 1, 2015, are also reasonable.

(McCune Decl. ¶ 17.) 6 The rates are well within the range of rates awarded in class action litigation

in Southern California. (In re Toyota Motor (C.D. Cal. 2013) 2013 U.S. Dist.Lexis 123298

6 Under California law, although this Court may award the attorney’s fees without the attorney’s timesheets (Concepcion v. Amscan Holdings (2014) 223 Cal.App.4th 1309, 1324; Raining Data v. Barrenchea (2009) 175 Cal.App.4th 1363, 1375-76 [“[t]he law is clear, however, that an award of attorney fees may be based on counsel's declarations, without production of detailed time records”]), nonetheless, Plaintiff will bring to the hearing f this matter time sheets and make them available for in camera review by this Honorable Court if the Court so wishes.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

[approving rate of $950]; Banas v. Volcano Corp. (N.D. Cal. 2014) 47 F.Supp.3d 957 [approving

2014 rate of $1,095; In re High Tech Emple. Antitrust Litig., (N.D. Cal. 2015) 2015 U.S. Dist. LEXIS

118052 *33 [approving rates of $975 an hour].)

In this case, a multiplier of only 1.49 of the lodestar would bring the fees to the requested

$1,666,666. Although there are a number of valid reasons for a multiplier in this case, one is

contingent risk as explained by the California Supreme Court in Ketchum v. Moses (2001) 24 Cal.4th

1122, 1133: “A lawyer who both bears the risk of not being paid and provides legal services is not

receiving the fair market value of his work if he is paid only for the second of these functions.” In

Ketchum, our Supreme Court went on to explain the rationale behind contingent risk fee

enhancements as follows:

The economic rationale for fee enhancement in contingency cases has been explained as follows: "A contingent fee must be higher than a fee for the same legal services paid as they are performed. The contingent fee compensates the lawyer not only for the legal services he renders but for the loan of those services. The implicit interest rate on such a loan is higher because the risk of default (the loss of the case, which cancels the debt of the client to the lawyer) is much higher than that of conventional loans." (Posner, Economic Analysis of Law (4th ed. 1992) pp. 534, 567.) "A lawyer who both bears the risk of not being paid and provides legal services is not receiving the fair market value of his work if he is paid only for the second of these functions. If he is paid no more, competent counsel will be reluctant to accept fee award cases." (Leubsdorf, The Contingency Factor in Attorney Fee Awards (1981) 90 Yale L.J. 473, 480; see also Rules Prof. Conduct, rule 4-200(B)(9) [***385] [recognizing the contingent nature of attorney representation as an appropriate component in considering whether a fee is reasonable]; ABA Model Code Prof. Responsibility, DR 2-106(B)(8) [same]; ABA Model Rules Prof. Conduct, rule 1.5(a)(8).)

(Id.)

Further, the 1.49 multiplier sought here is modest. As the court of appeals in Wershba held

that, “Multipliers can range from 2 to 4 or even higher.” (Wershba, 91 Cal.App.4th at 255.) Other

courts are in accord. (Vizcaino v. Microsoft (9th Cir. 2002) 290 F.3d 1043, 1050 (3.6x multiplier); In

re Veritas Software Corp. Secs. Litig. (N.D. Cal. 2005) 2005 U.S.Dist.LEXIS 30880, *43 (4x

multiplier); Natural Gas Anti-Trust Cases, I, II, III & IV (Cal. Super. Ct. Dec. 11, 2006) No. 4221,

4228, 4224, 4226, 2006 WL 5377849, at *4 [“This Court and numerous cases have applied

multipliers of between 4 and 12 to counsel’s lodestar in awarding fees.”];Wal-Mart Stores, Inc. v.

Visa U.S.A. Inc. (2nd Cir. 2005) 396 F.3d 96, 123 (“`multipliers of between 3 and 4.5 have become

common’”); In re Linerboard Antitrust Litig. (E.D. Pa. 2004) 2004 U.S.Dist.LEXIS 10532, *50


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

(noting that “during 2001-2003, the average multiplier approved in common fund class actions was

4.35”); In re Superior Beverage/Glass Container Consol. Pretrial (N.D. Ill. 1990) 133 F.R.D. 119,

131 (courts have characterized multipliers of 3 or higher as average in many class actions).

In fact, even in cases where no restitution was obtained at all for the class, only corrective

corporate conduct, multipliers to a lodestar are appropriate. (E.g., Krumme v. Mercury Ins. Co.,

(2004) 123 Cal.App.4th 924, 947 (affirming multiplier of 1.5x in case which stopped unlawful

business practice but where class members did not get restitution.) This case, in addition to

substantial monetary relief, also resulted in improved disclosures regarding Golden-1’s overdraft fee

practices, first on April 1, 2014, when in response to this lawsuit Golden 1 mailed a letter to its credit

union members explaining the overdraft practices at issue in the lawsuit (Settlement Agreement, Ex.

2), and then again after Preliminary Approval when on October 8, 2015, pursuant to the Settlement

Agreement, Golden 1 mailed a letter to credit union members informing them that the overdraft

program is optional, and that they can opt out of it. (Settlement Agreement, Ex. 1.) This non-

monetary relief alone would be sufficient to support a lodestar fee award with a 1.49x multiplier as

sought here.

Finally, fee expert Richard Pearl declares the multiplier requested in this case understates its

risk. (Pearl Decl. ¶ 17.)7

5. Request for litigation costs. Plaintiff seeks reimbursement of necessary litigation

costs in the amount of $62,129.83. Those costs include deposition costs, the fees for expert

consultant Arthur Olsen who analyzed the electronic data produced by Golden 1, mediation fees,

travel, and legal research (Lexis and Westlaw). (Kick Decl. ¶ 13; McCune Decl. ¶ 21.)

6. Class representative service award. The settlement seeks a service award payment

of $10,000 for the class representative, Isabel Manwaring. This award is reasonable in recognition of

Ms. Manwaring’s assistance on behalf of the class. She gathered financial records, was deposed,

7 As to the fee-sharing agreement between class counsel, the two firms have an agreement that

fees will be shared equally between them. (Kick Decl. ¶ 12.) This was disclosed to the class representative in writing before the start of the case and approved by her, and it has not resulted in any manner in higher fees being sought. (Manwaring Decl. ¶ 6; Kick Decl. ¶ 12.)


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

gathered documents for production, reviewed and verified discovery responses. (Kick Decl., ¶ 34,

Ex. 4 – Declaration of Isabel Manwaring in Support of Motion for Preliminary Approval of Class

Action Settlement, ¶¶ 7-8 (Ex. 4 to Kick Decl. is hereafter referred to as “Manwaring Decl.”).) She

was in constant communication with class counsel and consulted with them regarding the mediation

and settlement, and was helpful to the success of the case. (Kick Decl. ¶ 26.)

Courts in California have routinely approved incentive award of $10,000 or higher. (Buccellato

v. AT&T Operations, Inc. (N.D. Cal. June 30, 2011) 2011 WL 4526673, at *4 (approving $20,000

award to lead plaintiff and $5,000 to each of four additional class representatives); Glass v. UBS

Fin. Servs., Inc. (N.D. Cal. Jan. 26, 2007) 2007 WL 221862, at *17 (approving payments of

$25,000 to each of four named plaintiffs).) Given Ms. Manwaring’s valuable contribution to the

litigation, class counsel suggests that $10,000 is an appropriate award.

7. Claims administration costs. The claims administration costs to date are $80,850,

are estimated to toal $151,433, and are guaranteed not to exceed $210,000. (Powell Decl. ¶ 12.)

8. Cy pres recipient. The proposed cy pres recipient in this matter is Public Citizen, a

non-profit organization that represents the interests of consumers against businesses, including

financial institutions. (Kick Decl. ¶ 35, Ex. 5 – Declaration of Robert Weissman in Support of Motion

for Preliminary Approval of Class Action Settlement, ¶ 4 (Ex. 5 to Kick Decl. is hereafter referred to

as “Weissman Decl.”).) It is often involved in litigation in California, and consistently engages in

advocating for consumer rights, including with regard to financial institutions. (Weissman Decl. ¶¶ 4,

9.) It intends to use the money from the cy pres in this matter, if approved by the Court, to

particularly focus on advocating for financial rights which may be unique to California consumers.

(Weissman Decl. ¶ 3.)8

9. Notice of final judgment. The parties will provide notice of the Final Judgment to the

8 Neither plaintiff, nor plaintiff’s counsel, nor Golden 1, nor defense counsel will benefit

financially in any way from the cy pres award. Plaintiff’s counsel, Taras Kick, is an ordinary member of Public Citizen, but has no control over how Public Citizen spends its money. Additionally neither CLASS COUNSEL is on a list of firms used by it for litigation. (Kick Decl. ¶ 27; McCune Decl. ¶ 25.)


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

class by posting a copy of it on the class administrator’s website.

B. The Court Should Finally Certify the Settlement Class

The requirements for class certification are:

“The party advocating class treatment must demonstrate the existence of an ascertainable and sufficiently numerous class, a well-defined community of interest, and substantial benefits from certification that render proceeding as a class superior to the alternatives. `In turn, the ‘community of interest’ requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.”

(Sav-On Drugs v. Sup. Ct. (2004) 34 Cal.4th 319, 326.)

As all prerequisites to certification have been satisfied, the settlement class should be finally

certified.

1. An Ascertainable and Sufficiently Numerous Class Exists

a. The Class Members are Ascertainable.

The ascertainability requirement is satisfied when the class is defined by objective

characteristics and common transactional facts “making the ultimate determination of class members

possible.” (La Sala v. Am. Sav. & Loan Assn. (1971) 5 Cal.3d 864, 875-76 [whenever a fair reading

of the complaint permits, courts should employ the full measure of their discretion “to define classes

in a manner that will permit utilization of the class action procedure.”].)

The definitions of the settlement classes are as follows:

“Sufficient funds class”: Any member of Defendant (Golden 1) who between April 2, 2009 and April 30, 2015, incurred an overdraft fee for a debit card, check, or ACH transaction when they had a positive ledger balance in their account that was sufficient to cover the transaction, despite an insufficient available balance to cover the transaction, and whose such overdraft charges exceed credits received within thirty days of such overdraft charges.

“No opt-in class”: Any member of Defendant (Golden 1) who opted in through Defendant’s website to the Courtesy Pay for Everyday Debit Card Transactions program on the following dates, and who incurred overdraft fees for debit card transactions on or after the date on which the opt-in occurred and before the date of any subsequent opt-out up to April 30, 2015, whose such overdraft charges exceed credits received within thirty days of such overdraft charges: November 13, 2011, December 14, 2011, December 15, 2011, May 11, 2012, May 12, 2012, May 13, 2012, May 14, 2012, May 15, 2012, May 16, 2012, May 17, 2012, May 18, 2012, May 19, 2012, June 12, 2012, June 13, 2012, June 14, 2012, June 15, 2012, June 16, 2012, June 17, 2012, June 18, 2012, June 19, 2012, June 20, 2012, and June 21, 2012.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

This definition has in fact led to the actual ascertainment from Defendant’s database of all

class members. (Olsen Decl. ¶ 13.) Therefore, the ascertainability requirement has been met.

b. The Class is Sufficiently Numerous

The class is indisputably numerous, as the claims administrator sent notice to 80,318 class

members by first class mail. (Powell Decl. ¶ 3.) The numerosity requirement has been met.

2. Common Questions of Law or Fact Predominate Over any Individual Questions

To determine whether common questions of law or fact predominate, “[w]e begin by

identifying the principal legal issues and examining the substantive law that will govern” in order to

answer “whether the operative legal principles, as applied to the facts of the case, render the claims

susceptible to resolution on a common basis.” (Ayal v. Antelope Valley Newspapers, Inc., (2014) 59

Cal.4th 522, 530.) In doing so, courts consider, “whether the theory of recovery advanced by the

proponents of certification is, as an analytical matter, likely to prove amendable to class treatment.”

(Sav-On Drugs Inc. v. Sup.Court, (2004) 34 Cal.4th 319, 327.)

In this case, Plaintiff challenges a corporate-wide policy and practice that allegedly breaches

the terms of a standard and uniformly disseminated contract by charging overdraft-fees when the

money in the account is equal to or greater than the amount of the transaction. The predominating

question to establish liability is whether Defendant’s corporate-wide policy and practice violates the

terms of the standard contract, and therefore, constitutes a breach of contract. The contract

interpretation issue is a common one. Under California law, contractual terms are interpreted using

an objective test: "[i]t is the objective intent, as evidenced by the words of the contract, rather than the

subjective intent of one of the parties, that controls interpretation.” (Founding Members of the

Newport Beach Country Club v. Newport Beach Country Club (2003) 109 Cal.App.4th 944, 956.)

Thus, the common issue of whether Defendant violated the terms of its contractual agreement with

the class by assessing them overdraft fees based on the available balance predominates.9

9 Common issues also predominate as to the “No Opt-In Class.” During the dates in the class

definition, Defendant Golden-1 utilized a prechecked box as part of the enrollment process for its overdraft program. (Kick Decl. ¶ 25.) The legality of this under 24 C.F.R. § 1005.17 is common to the class.


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3. Plaintiffs’ claims are typical.

Typicality does not require that a plaintiff’s claims be identical or even substantially identical

with those of other class members; as long as the claims of the class members are based on the same

legal theories, even pronounced factual variances will not defeat typicality. (Classen v. Weller (1983)

145 Cal.App.3d 27, 46.) In this case, the claims of Plaintiff are virtually identical, if not identical, to

the claims of the members of the Settlement Classes. (Kick Decl. ¶ 25.)The claims are based on

Defendant using an automated system of charging class members overdraft fees on transactions where

the ledger balance was positive (money in the account), or on using a pre-checked box as part of the

online enrollment process. (Kick Decl. ¶ 25 .)

4. Adequacy of Plaintiff and Class Counsel

The requirement that class representatives fairly and adequately represent the class is met by

fulfilling two conditions: (a) the named plaintiff must be represented by counsel experienced and

qualified to conduct the pending litigation; and (b) the named plaintiffs’ interests cannot be

antagonistic to those of the potential class members. (McGhee v. Bank of America (1976) 60

Cal.App.3d 442, 450.) Both criteria are met here.

Plaintiff’s Counsel has significant class action, litigation, and trial experience, and is

competent and has been competent in representing the putative class. Both law firms representing the

putative class have extensive experience in consumer class actions, and the McCune firm has a

particular expertise in overdraft fee litigation. (Kick Decl. ¶ 3; McCune Decl. ¶¶ 3-5.) Further, the

proposed class representative satisfies the adequacy requirement. Not only are her interests not

antagonistic to those of the other members of the Settlement Class, they are wholly aligned.

(Manwaring Decl.; Kick Decl., ¶ 25.) No such conflict even remotely exists here.

In this case, Plaintiff’s interests are essentially identical, if not identical, to the interests of all

the members of the Settlement Class. Plaintiff was charged overdraft fees on multiple occasions

where her account was in a positive ledger balance. (Kick Decl., ¶ 25.) Further, the class

representative Ms. Manwaring understands she is pursuing this case on behalf of all class members

similarly situated, understands she has a duty to protect the absent class members, and was prepared

and willing to testify at trial on behalf of the class if necessary. (Manwaring Decl., ¶ 5.) Ms.