UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW … Ga… · 3/23/2017 · case no. 1:14-cv-04281-pac memorandum of law in support of plaintiffs’ motion for final approval

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

HARRY GAO and ROBERTA SOCALL, on behalf of themselves and all others similarly situated, Plaintiffs, v. JPMORGAN CHASE & CO. and CHASE BANK USA, N.A. Defendants.

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Case No. 1:14-cv-04281-PAC

MEMORANDUM OF LAW IN SUPPORT OF PLAINTIFFS’

MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT AND CERTIFICATION OF THE SETTLEMENT CLASS

Case 1:14-cv-04281-PAC Document 78 Filed 03/23/17 Page 1 of 33

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TABLE OF CONTENTS

PAGE I. INTRODUCTION ................................................................................................................. 1

II. PROCEDURAL HISTORY................................................................................................... 2

III. EFFECTUATING THE TERMS OF THE SETTLEMENT................................................. 5

A. CERTIFICATION OF THE SETTLEMENT CLASS ................................................. 5

B. THE SETTLEMENT FUND ........................................................................................ 5

C. THE RELEASES.......................................................................................................... 6

D. NOTICE........................................................................................................................ 6

E. PROPOSED DISTRIBUTION OF THE NET SETTLEMENT FUND....................... 7

F. ATTORNEYS’ FEES AND EXPENSES AND CLASS REPRESENTATIVE SERVICE AWARDS.................................................................................................... 7

IV. ARGUMENT......................................................................................................................... 8

A. THE COURT SHOULD APPROVE THE SETTLEMENT AGREEMENT............... 8

1. The Proposed Settlement Is Procedurally Fair..................................................... 9

2. The Proposed Settlement Is Substantively Fair ................................................. 10

a. The Litigation Is Complex And Would Be Expensive And Lengthy ..................................................................................................... 11

b. The Reaction of the Class has been Positive ............................................ 12

c. Discovery Has Advanced Far Enough to Allow the Parties to Resolve the Case Responsibly .................................................................. 14

d. Plaintiffs Face Substantial Risks Going Forward ..................................... 15

e. The Ability of Chase to Withstand a Greater Judgment ........................... 16

f. The Settlement Fund Created is Substantial in Light of the Possible Recovery and the Risks of Litigation ......................................... 16

B. THE COURT SHOULD CERTIFY THE SETTLEMENT CLASS .......................... 18

1. The Class Meets All Rule 23(a) Prerequisites ................................................... 18

a. The Class Is So Numerous That Joinder Of All Members Is Impracticable............................................................................................. 19

b. Commonality is Met ................................................................................. 19

c. The Plaintiffs’ Claims Are Typical........................................................... 20

d. Adequate Representation .......................................................................... 20

2. The Class Meets All Rule 23(b)(3) Requirements............................................. 21

a. Common Questions Predominate ............................................................. 21


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b. Superiority is Met ..................................................................................... 22

C. THE NOTICE PLAN HAS, AND WILL CONTINUE TO, ADEQUATELY ADVISE SETTLEMENT CLASS MEMBERS OF THEIR RIGHTS....................... 22

D. OBJECTOR FOLLMAN............................................................................................ 23

V. CONCLUSION.................................................................................................................... 25


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TABLE OF AUTHORITIES

PAGE

CASES

Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997).................................................................................................................. 18

Berkson v. Gogo LLC, 147 F. Supp. 3d 123 (E.D.N.Y. 2015). ..................................................................................... 24

Cagan v. Anchor Sav. Bank FSB, No. 88 Civ. 3024, 1990 WL 73423 (E.D.N.Y. May 17, 1990)................................................. 17

Cassese v. Williams, 503 F. App’x 55 (2d Cir. 2012) ................................................................................................ 24

Charron v. Pinnacle Grp. N.Y. LLC, 874 F. Supp. 2d 179 (S.D.N.Y. 2012)................................................................................. 12, 16

Charron v. Wiener, 731 F.3d 241 (2d Cir. 2013).................................................................................................. 8, 12

City of Detroit v. Grinnell Corp., 495 F.2d 448 (2d Cir. 1974)............................................................................................... passim

Clark v. Ecolab Inc., No. 07 Civ. 8623 (PAC), 2010 WL 1948198 (S.D.N.Y. May 11, 2010) ................................... 9

Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473 (2d Cir. 1995)........................................................................................................ 19

D’Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001).................................................................................................... 9

deMunecas v. Bold Food, LLC, No. 09 CIV. 00440 DAB, 2010 WL 3322580 (S.D.N.Y. Aug. 23, 2010)................................ 13

Diaz v. Residential Credit Solutions, Inc., 299 F.R.D. 16 (E.D.N.Y. 2014) ................................................................................................ 20

Dupler v. Costco Wholesale Corp., 705 F. Supp. 2d 231 (E.D.N.Y. 2010) ...................................................................................... 11

Enriquez v. Cherry Hill Mkt. Corp., 993 F. Supp. 2d 229 (E.D.N.Y. 2014) ...................................................................................... 20

Fogarazzao v. Lehman Bros., Inc., 232 F.R.D. 176 (E.D.N.Y. 2005) .............................................................................................. 20

Frank v. Eastman Kodak Co., 228 F.R.D. 174 (W.D.N.Y. 2005)............................................................................................. 16

Gilliam v. Addicts Rehab. Ctr. Fund., No. 05 Civ. 3452, 2008 WL 782596 (S.D.N.Y. Mar. 24, 2008) .............................................. 17


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Handschu v. Special Servs. Div., 787 F.2d 828 (2d Cir. 1986)...................................................................................................... 23

In re “Agent Orange” Prod. Liab. Litig., 611 F. Supp. 1396 (E.D.N.Y. 1985) ......................................................................................... 18

In re Austrian & German Bank Holocaust Litig., 80 F. Supp. 2d 164 (S.D.N.Y. 2000)......................................................................................... 11

In re Austrian & German Bank Holocaust Litig., 80 F. Supp. 2d 164 (S.D.N.Y. 2000)............................................................................. 14, 15, 16

In re Bolar Pharm. Co., Inc., Sec. Litig., 966 F.2d 731 (2d Cir. 1992)...................................................................................................... 24

In re EVCI Career Colls. Holding Corp. Sec. Litig., No. 05 Civ. 10240, 2007 WL 2230177 (S.D.N.Y. July 27, 2007) ............................................. 8

In re Giant Interactive Grp., Inc. Sec. Litig., 279 F.R.D. 151 (S.D.N.Y. 2011) .............................................................................................. 15

In re Ira Haupt & Co., 304 F. Supp. 917 (S.D.N.Y. 1969)............................................................................................ 15

In re Med. X-Ray, No. 93-5904, 1998 WL 661515 (E.D.N.Y. Aug. 7, 1998) ....................................................... 17

In re PaineWebber Inc. Ltd. Partnerships Litig., 117 F.3d 721 (2d Cir. 1997)...................................................................................................... 13

In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig., 986 F. Supp. 2d 207 (E.D.N.Y. 2013) ...................................................................................... 14

In re Presidential Life Sec., 857 F. Supp. 331 (S.D.N.Y. 1994)............................................................................................ 13

In re Sony SXRD Rear Projection Television Class Action Litig., No. 06 CIV. 5173 (RPP), 2008 WL 1956267 (S.D.N.Y. May 1, 2008)................................... 12

In re Top Tankers, Inc. Sec. Litig., No. 06 Civ. 13761, 2008 WL 2944620 (S.D.N.Y. July 31, 2008) ............................................. 9

Maley v. Dale Global Techs. Corp., 186 F. Supp. 2d 358 (S.D.N.Y. 2002)....................................................................................... 12

Marisol A. v. Giuliani, 126 F.3d 372 (2d Cir. 1997)................................................................................................ 19, 20

Martens v. Smith Barney, Inc., 181 F.R.D. 243 (S.D.N.Y. 1998) .............................................................................................. 14

McMahon v. Olivier Cheng Catering & Events, LLC, No. 08 CIV. 8713 (PGG), 2010 WL 2399328 (S.D.N.Y. Mar. 3, 2010).................................. 14

McReynolds v. Richards-Cantave, 588 F.3d 790 (2d Cir. 2009)........................................................................................................ 8


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Mohney v. Shelly’s Prime Steak, Stone Crab & Oyster Bar, No. 06 CIV. 4270 (PAC), 2009 WL 5851465 (S.D.N.Y. Mar. 31, 2009)................................ 10

Moore v. Margiotta, 581 F. Supp. 649 (E.D.N.Y. 1984) ........................................................................................... 21

Newman v. Stein, 464 F.2d 689 (2d Cir. 1972)...................................................................................................... 17

Padro v. Astrue, No. 11-CV-1788 (CBA)(RLM), 2013 WL 5719076 (E.D.N.Y. Oct. 18, 2013) ........................ 9

Penn. Pub. Sch. Employees’ Ret. Sys. v. Morgan Stanley & Co., 772 F.3d 111 (2d Cir. 2014)...................................................................................................... 19

Plummer v. Chemical Bank, 668 F.2d 654 (2d Cir. 1982)...................................................................................................... 14

Prasker v. Asia Five Eight LLC, No. 08 CIV. 5811(MGC), 2010 WL 476009 (S.D.N.Y. Jan. 6, 2010)....................................... 9

RMED Int’l, Inc. v. Sloan’s Supermarkets, Inc., No. 94 Civ. 5587, 2003 WL 21136726 (S.D.N.Y. May 15, 2003)........................................... 12

Robidoux v. Celani, 987 F.2d 931 (2d. Cir. 1993)............................................................................................... 19, 20

Rossini v. Ogilvy & Mather, Inc., 798 F.2d 590 (2d Cir. 1986)...................................................................................................... 22

Spann v. AOL Time Warner, Inc., No. 02 Civ. 8238, 2005 WL 1330937 (S.D.N.Y. June 7, 2005)................................................. 8

Sykes v. Mel S. Harris & Assocs. LLC, 7 80 F.3d 70 (2d Cir. 2015); ........................................................................................................ 19

Teachers’ Ret. Sys. Of Louisiana v. A.C.L.N. Ltd., No. 01 Civ. 11814, 2004 WL 1087261 (S.D.N.Y. May 14, 2004)..................................... 17, 18

Trief v. Dun & Bradstreet Corp., 144 F.R.D. 193 (S.D.N.Y. 1992). ............................................................................................. 19

Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016).............................................................................................................. 21

Velez v. Majik Cleaning Serv., Inc., No. 03 Civ. 8698, 2007 WL 7232783 (S.D.N.Y. June 25, 2007)............................................. 15

Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011).............................................................................................................. 19

Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96 (2d Cir. 2005)................................................................................................ 8, 9, 17

Willix v. Healthfirst, Inc., No. 07-cv-1143, 2011 WL 754862 (E.D.N.Y. Feb. 18, 2011) ................................................. 15


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Wright v. Stern, 553 F. Supp. 2d 337 (S.D.N.Y. 2008)....................................................................................... 12

Yang v. Focus Media Holding Ltd., No. 11-Civ. 9051 (CM) (GWG), 2014 WL 4401280 (S.D.N.Y. Sept. 4, 2014)......................... 9

OTHER AUTHORITIES

Manual for Complex Litigation, Third, § 30.42 (1995).................................................................. 9

RULES

Fed. R. Civ. P. 23(a)(1)................................................................................................................. 19

Fed. R. Civ. P. 23(a)(2)............................................................................................................. 8, 19

Fed. R. Civ. P. 23(a)(3)................................................................................................................. 20

Fed. R. Civ. P. 23(a)(4)................................................................................................................. 20

Fed. R. Civ. P. 23(b)(3)........................................................................................................... 21, 22

Fed. R. Civ. P. 23(f)...................................................................................................................... 16


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I. INTRODUCTION

Court appointed counsel Golomb & Honik, P.C. and Trief & Olk (“Class Counsel”1), on

behalf of Plaintiffs, HARRY GAO and ROBERTA SOCALL (collectively, “Plaintiffs”)

respectfully request that this Court finally approve a proposed class action settlement pursuant to

which Defendants have agreed to create a Settlement Fund of over $2 million to resolve this

litigation with the Class in exchange for a release of claims.

The Settlement was negotiated at arm’s length by highly experienced class counsel and

reached only following years of hard-fought litigation. Thus, Plaintiffs and Class Counsel were

fully informed of the strengths and weaknesses of the claims asserted. The Parties’ global

Settlement resolves all claims against Defendants JPMorgan Chase & Co. (“JPMC”) and Chase

Bank USA, N.A. (“CBUSA”) (collectively, “Chase” or “Defendants”) and satisfies all of the

criteria for final approval pursuant to Federal Rule of Civil Procedure 23(b)(3) and (e). In

providing the Settlement Class with significant benefits, the Settlement is more than “fair,

adequate, and reasonable.” Thus, subject to the request to extend the administration timeline

made by joint motion filed this same day and explained below, Plaintiffs and Class Counsel

respectfully urge that final approval will be warranted following the requested supplemental

administration and request at that time an order that:

(1) approves the terms of the Settlement as within the range of fair, adequate, and reasonable;

(2) certifies the Settlement Class pursuant to Federal Rule of Civil Procedure 23(b)(3) and (e) for settlement purposes only;

1 The definitions in the Settlement Agreement and Release (“Agreement”) (Dkt. 70-1), as amended by the Modification and Supplement to the Agreement (“Modification and Supplement”) attached as an Exhibit to the joint motion filed this same day, are hereby incorporated as though fully set forth herein, and capitalized terms shall have the meanings attributed to them in the Agreement, as amended by the Modification and Supplement.


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(3) finds that the Notice Program has satisfied due process and was well effectuated to provide adequate notice to Settlement Class Members pursuant to the terms of the proposed Notice Program as set forth in the Settlement Agreement; and

(4) grants Final Approval of the class action Settlement.

II. PROCEDURAL HISTORY

The proposed Settlement is the culmination of years of vigorously contested litigation.

Class Counsel has previously provided detailed recitations of the history of the case and the

settlement negotiations undertaken. See Memorandum of Law in Support of Plaintiffs’

[Unopposed] Motion for Preliminary Approval of Class Action Settlement (“PA Brief”), at D.E.

# 69, 4-7; Grunfeld Declaration in Support of Plaintiffs’ Motion for Preliminary Approval of the

Class Action Settlement (“Grunfeld PA Dec.”), at D.E. # 70, ¶¶ 9-18; Memorandum in Support

of Plaintiffs’ Unopposed Motion for Approval of Attorneys’ Fees and Service Awards and

Reimbursement of Costs (“Fee Brief”), at D.E. # 75, 2-3; Declaration of Kenneth Grunfeld in

Support of Plaintiffs’ Motion for Approval of Attorneys’ Fees and Service Awards, and

Reimbursement of Costs (“Grunfeld Fee Dec.”), at D.E. # 76, at ¶ 6 (also referencing Grunfeld

PA Dec. at ¶¶ 7-32). The following is a summary of the steps taken since October 25, 2016, the

date the Court entered the Amended Order Granting Preliminary Approval of the Class

Settlement. See D.E. # 72 (“PA Order”).

Immediately following the entry of the PA Order, the Parties and case managers from

Kurtzman Carson Consultants (“KCC” or “Settlement Administrator”) met to confirm the case

deadlines and begin the process of compliance with the Notice Program requirements to the

Class. See Declaration of Kenneth Grunfeld in Support of Plaintiffs’ Motion for Final Approval

of the Class Action Settlement (“Grunfeld FA Dec.”), that is being filed simultaneously with this

Motion as Exhibit A, at ¶¶ 5-11; Declaration of Eric Robin re: Notice Procedures (“KCC Dec”)


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at ¶ 2. The format of the notice documents, the layout and language in the Settlement Website

(https://eclaim.kccllc.net/caclaimforms/jga/home.aspx) and the Integrated Voice Response

(“IVR”) script to be used for the case’s toll free telephone number (1-855-306-9709) were then

negotiated and finalized by the Parties and KCC so the website and number could go live on

November 11, 2016. See Grunfeld FA Dec. at ¶ 6; KCC Dec. at ¶¶ 8-9. Shortly thereafter, an

initial wire payment was sent by Chase to KCC to cover initial costs of administration. See

Grunfeld FA Dec. at ¶ 7. The Parties and KCC then finalized and prepared for the initial mailing

and emailing of Notice to the Class, which was accomplished starting on December 16 and

completed before December 23, 2016. Id.; KCC Dec. at ¶¶ 5, 7.

Beginning immediately after notice was accomplished, the Parties and KCC worked

together to address class member issues, handle mailing matters to maximize reach, and track

objections, opt-outs and claim filings. Grunfeld FA Dec. at ¶ 8; KCC Dec. at ¶ 2. KCC

provided weekly reports as well. Grunfeld FA Dec. at ¶ 8. On January 25, 2017, Class Counsel

filed a motion for attorneys’ fees, costs and service awards, which was immediately made

available on the Settlement Website. See Fee Brief, D.E. # 75. In reviewing the claims filed, the

Parties and KCC came to understand that a number of claims were being filed that were deficient

because they lacked information required to identify whether these individuals were indeed

members of the Class. Grunfeld FA Dec. at ¶ 9; KCC Dec. at ¶ 13. Accordingly, on February

21, 2017 and continuing on a rolling basis, the Parties and KCC began sending e-mails alerting

potential class members of deficiencies in their claim forms and steps they can take to remediate

any problems. Id. The objection and exclusion deadline was February 15, 2017; there was only

one objector (Arayah Fallman, addressed below in section IV.D infra), and there were only six


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timely opt-outs (one additional opt-out was untimely). Grunfeld FA Dec. at ¶¶ 10, 51; KCC

Dec. at ¶ 10 (addressing the opt-opts specifically).

On March 17, 2017, the claims deadline passed. See PA Order, D.E. # 72. As per the

Notice Program set forth in the Settlement Agreement and preliminarily approved by the Court,

the Notice Administrator adequately notified Settlement Class Members of the Settlement

through direct mail and email notice and the establishment of the Settlement Website and toll

free telephone number that contains all relevant information regarding the settlement approval

process. Grunfeld FA Dec. at ¶ 11; KCC Dec. at ¶¶ 5-9.

As described in more detail in a joint motion to reschedule the Final Approval Hearing

and approve Supplement Notice filed this same day, the Parties were recently alerted to an issue

concerning the total number of Forfeited Points reported for certain Settlement Class Member

Accounts. It was ultimately determined that this issue affected 7,749 of the total 65,984

Accounts, whereby, as a result of an inadvertent, good faith oversight, the total number of

Forfeited Points for these Accounts was underreported by a factor of 100.

To remedy that issue, the Parties have agreed (1) to increase the Settlement Fund ratably

to account for the corrected number of Forfeited Points—increasing the Settlement Fund by

$210,000.00, and thus taking the total cash consideration from $2,085,000.00 to $2,295,000.00—

and (2) to seek to implement a Supplemental Notice Program concerning the affected Settlement

Class Members. Subject to the Court’s approval, this Supplemental Notice Program will require

an extension of certain deadlines in this case, including the Final Approval Hearing, to effectuate

the Supplemental Notice and finalize the Settlement. Class Counsel expect to file a

supplemental brief on final approval, before a rescheduled Final Approval Hearing, to provide

the Court with an update on the supplemental notice and administration.


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III. EFFECTUATING THE TERMS OF THE SETTLEMENT

Class Counsel has previously provided the Settlement Agreement [D.E. # 70-1] and a

detailed recitation of the settlement terms. See PA Brief, [D.E. # 69] at 7-9; Grunfeld PA Dec.

[D.E. # 70] at ¶¶ 19-32. The following is a summary of the steps taken since the PA Order was

entered on October 25, 2016 to effectuate the terms of the Settlement. See D.E. # 72.

A. CERTIFICATION OF THE SETTLEMENT CLASS

The Agreement defines a Settlement Class, for settlement purposes, consisting of:

All Chase Bank USA, N.A. (“CBUSA”) cardmembers in the United States whom CBUSA identifies as having forfeited rewards points, from June 2009 to Preliminary Approval, upon the closure of their CBUSA credit-card account(s) by CBUSA for the reason or reasons for which Plaintiffs’ CBUSA accounts were closed, and who were not given the opportunity to redeem those rewards points post-closure.

See Settlement Agreement, [D.E. # 70-1] at ¶ 39.2 The Settlement Class includes 65,984

Accounts which we have determined are held by 50,320 individuals, encompassing a total of

792,174,651 Points Forfeited. See Grunfeld FA Dec. at ¶ 13; KCC Dec. at ¶ 3.

B. THE SETTLEMENT FUND

Chase originally agreed to provide a Settlement Fund of $2,085,000.00 (Settlement

Agreement. D.E. #70-1] at ¶¶ 37, 40. As discussed above, the Parties have subsequently agreed

to a ratable increase of the Settlement Fund by $210,000.00, for a total Settlement Fund of

$2,295,000.00. The Settlement Fund is designated to cover all payments and costs of the

Settlement, including:

Distribution of payments to Claimants;

2 “Excluded from the Class are all current employees, officers, and directors of CBUSA or … JPMC … , and the judge presiding over this Action and his staff.” Settlement Agreement, at [D.E. # 70-1] at ¶ 39.


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Payment of Class Counsel’s attorneys’ fees and costs;

Payment of Service Awards to Plaintiffs;

Payment of any Taxes on the Settlement Fund Account;

Payment of any costs of Settlement Administration and the Notice Program and Supplemental Notice Program; and

Payment of additional fees, costs, and expenses not specifically enumerated, consistent with the purposes of the Agreement, subject to approval of Class Counsel and Chase.

Id. ¶ 62. None of the money in the Settlement Fund reverts to Chase. Cy pres was contemplated

(see id. at 15) but will not be required immediately because all of the money in the Net

Settlement Fund will be claimed by Settlement Class Members.

C. THE RELEASES

Plaintiffs and the Settlement Class have agreed to Release all claims “that were or could

have been alleged in the Action,” as set forth in Section XIV of the Agreement. The Releases

are standard for class actions. Only six Settlement Class Members have timely elected to

exclude themselves from the Settlement (the Opt-outs). KCC Dec. at ¶ 10. These individuals

and their Accounts are not bound by the terms of the Agreement. Settlement Agreement at ¶ 54.

D. NOTICE

By all metrics, the Notice Program was a success. Settlement Class Members were

provided with adequate Notice of the Settlement and the response was significant. Upon

information and belief, the availability of funds in this settlement for Chase customers whose

accounts were terminated and Points were Forfeited was reported by well known class action

websites (i.e. www.topclassactions.com; http://www.classactionrebates.com), as well as popular

“reward points” websites (i.e., http://www.hustlermoneyblog.com/chase-credit-card-rewards-

points-class-action-lawsuit). See Grunfeld FA Dec. at ¶ 21. By December 16, 2016, 50,320


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individuals were sent direct Mail Notices and 23,446 emails were sent as well to the owners of a

total of 65,984 Accounts. KCC Dec. at ¶¶ 5, 7. KCC received 7,766 Notices returned as

undeliverable by the Post Office (15%). KCC Dec. at ¶ 6. It then performed standard skip traces

for new address and found possible new addresses for 5,012 persons, which were immediately

re-mailed notices. Id.

The robust amount of information provided to Settlement Class Members and the

simplicity of the claims filing process enabled 17,140 Claims to be filed. KCC Dec. at ¶ 13.

E. PROPOSED DISTRIBUTION OF THE NET SETTLEMENT FUND

Pursuant to the Settlement Agreement at ¶ 76, determining the amount to be paid for each

Forfeited Point claimed requires KCC to divide the Net Settlement Fund by the total number of

Forfeited Points for all approved Claimants. Because this determination will likely change

during the supplemental administration period proposed today by the parties, if the Court

approves Supplemental Notice, Class Counsel will submit a supplemental filing upon conclusion

of the extended Settlement administration timeline providing the Court with the estimated per-

point value for approved claims to be paid.

F. ATTORNEYS’ FEES AND EXPENSES AND CLASS REPRESENTATIVE SERVICE AWARDS

Consistent with the Settlement Agreement and PA Order, Class Counsel submitted a

motion for attorneys’ fees, costs, and Service Awards on January 25, 2017, which was 21 days

before the Settlement Class Members’ deadline for filing objections and requests for exclusion.

See Settlement Agreement [D.E. # 70-1] at ¶ 57; Fee Brief, D.E. # 75. The Fee Brief was

immediately made available on the Settlement Website. See KCC Dec. at ¶ 9. The Court

received that motion well in advance of receiving this motion for Final Approval and well before

the Final Approval Hearing. Subject to the Court’s approval, Class Counsel will submit an


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amended motion for fees, costs, and Service Awards in accordance with the schedule proposed in

the joint motion filed this same day.

IV. ARGUMENT

A. THE COURT SHOULD APPROVE THE SETTLEMENT AGREEMENT

Under Rule 23(e)(2) of the Federal Rules of Civil Procedure, a court may approve a class

action settlement “only . . . on finding that [the agreement] is fair, reasonable and adequate.”

Fed. R. Civ. P. 23(e)(2). The “fair, reasonable and adequate” standard effectively requires

parties to show that a settlement agreement is both: (1) procedurally fair; and (2) substantively

fair. See Charron v. Wiener, 731 F.3d 241, 247 (2d Cir. 2013) (citations omitted); accord

McReynolds v. Richards-Cantave, 588 F.3d 790, 803–04 (2d Cir. 2009). In recognition of the

“strong judicial policy in favor of settlements, particularly in the class action context,” courts

evaluating settlement agreements adopt a presumption of both their procedural and substantive

fairness. See McReynolds, 588 F.3d at 803 (citing Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396

F.3d 96, 116 (2d Cir. 2005)); Spann v. AOL Time Warner, Inc., No. 02 Civ. 8238, 2005 WL

1330937, at *6 (S.D.N.Y. June 7, 2005) (“[P]ublic policy favors settlement, especially in the

case of class actions.”). “Absent fraud or collusion, [courts] should be hesitant to substitute

[their] judgment for that of the parties who negotiated the settlement.” In re EVCI Career Colls.

Holding Corp. Sec. Litig., No. 05 Civ. 10240, 2007 WL 2230177, at *4 (S.D.N.Y. July 27,

2007).

In its Order granting Plaintiffs’ Motion for Preliminary Approval of the Settlement, this

Court preliminarily approved the Settlement Agreement. Here, because the Settlement

Agreement is both procedurally and substantively fair, Plaintiffs respectfully ask the Court to

finally approve the Agreement.


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1. The Proposed Settlement Is Procedurally Fair

To determine procedural fairness, courts examine the negotiating process leading to the

settlement. Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96, 116 (2d Cir. 2005); D’Amato

v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001). A party must show that the agreement “is the

product of arm’s-length, good faith negotiation.” McReynolds, 588 F.3d at 804; see also Padro

v. Astrue, No. 11-CV-1788 (CBA)(RLM), 2013 WL 5719076, at *3 (E.D.N.Y. Oct. 18, 2013)

(“Where the integrity of the negotiation process is preserved, a strong initial presumption of

fairness attaches to the proposed settlement.”); Prasker v. Asia Five Eight LLC, 08 CIV.

5811(MGC), 2010 WL 476009 (S.D.N.Y. Jan. 6, 2010). A “presumption of fairness, adequacy

and reasonableness may attach to a class settlement reached in arm’s-length negotiations

between experienced, capable counsel after meaningful discovery.” Wal-Mart Stores, 396 F.3d

at 116 (quoting Manual for Complex Litigation, Third, § 30.42 (1995)); see also D’Amato, 236

F.3d at 85; Prasker, 2010 WL 476009 at *4. “In evaluating the settlement, the Court should

keep in mind the unique ability of class and defense counsel to assess the potential risks and

rewards of litigation; a presumption of fairness, adequacy and reasonableness may attach to a

class settlement reached in arms-length negotiations between experienced, capable counsel after

meaningful discovery.” Clark v. Ecolab Inc., 07 Civ. 8623 (PAC), 2010 WL 1948198, at *4

(S.D.N.Y. May 11, 2010); In re Top Tankers, Inc. Sec. Litig., No. 06 Civ. 13761, 2008 WL

2944620, at *3 (S.D.N.Y. July 31, 2008). Further, participation of a highly qualified mediator in

settlement negotiations “strongly supports [the] finding that negotiations were conducted at

arm’s length and without collusion.” Yang v. Focus Media Holding Ltd., No. 11-Civ. 9051 (CM)

(GWG), 2014 WL 4401280, at *5 (S.D.N.Y. Sept. 4, 2014); see also D’Amato v. Deutsche Bank,

236 F.3d 78, 85 (2d Cir. 2001) (a mediator’s involvement in settlement negotiations “helps to

ensure that the proceedings were free of collusion and undue pressure”).


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Here, Plaintiffs engaged in years of hard-fought litigation and conducted a thorough

investigation and evaluation of the claims. Grunfeld PA Dec. at ¶¶ 7-14. The Settlement was

reached only after Class Counsel undertook extensive steps in, inter alia, evaluating claims,

researching the law, drafting and briefing legal memoranda, preparing for and conducting

discovery, participating in Court hearings and mediation, and negotiating settlement. See

Grunfeld Fee Dec. at ¶ 11.

The Parties also participated in extensive settlement negotiations under the supervision of

this Court and professional mediator Jonathan Marks. See Grunfeld PA Dec. at ¶¶ 16-17. On

August 25, 2016, the Parties agreed to settle the case. See Settlement Agreement at 1. During

the entirety of the action, Plaintiffs and the Class were represented by counsel with significant

experience in consumer and class action litigation. See Grunfeld PA Dec. at ¶ 42. These arm’s-

length negotiations involving sophisticated counsel raise a presumption that the settlement meets

the requirements of due process. See Mohney v. Shelly’s Prime Steak, Stone Crab & Oyster Bar,

06 CIV. 4270 (PAC), 2009 WL 5851465, at *4 (S.D.N.Y. Mar. 31, 2009). Thus, the Agreement

is procedurally fair.

2. The Proposed Settlement Is Substantively Fair

To determine substantive fairness, courts determine whether the settlement’s terms are

fair, adequate, and reasonable according to the factors set forth in City of Detroit v. Grinnell

Corp., 495 F.2d 448 (2d Cir. 1974). Those factors are:

(1) the complexity, expense and likely duration of the litigation;

(2) the reaction of the class;

(3) the stage of the proceedings and the amount of discovery completed;

(4) the risks of establishing liability;


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(5) the risks of establishing damages;

(6) the risks of maintaining the class action through the trial;

(7) the ability of the defendant to withstand a greater judgment;

(8) the range of reasonableness of the settlement fund in light of the best possible recovery; and

(9) the range of reasonableness of the settlement fund to a possible recovery in light of all the attendant risks of litigation.

Grinnell, 495 F.2d at 463. All of the Grinnell factors weigh in favor of final approval of the

Settlement Agreement. See PA Brief at 11-17.

a. The Litigation Is Complex And Would Be Expensive And Lengthy

Consumer class action lawsuits, like this action, are complex, expensive, and lengthy.

See, e.g., Dupler v. Costco Wholesale Corp., 705 F. Supp. 2d 231, 239 (E.D.N.Y. 2010); In re

Austrian & German Bank Holocaust Litig., 80 F. Supp. 2d 164, 174 (S.D.N.Y. 2000). Plaintiffs

filed this case almost three years ago. See Grunfeld PA Dec. at ¶ 9. Since then, the action has

prompted two motions for dismissal; significant discovery; extensive discovery dispute briefings

and hearings, and private mediation. See Grunfeld Fee Dec. at ¶ 11. Should this Court not

approve the Settlement Agreement, this lengthy litigation would resume, with upcoming disputes

over the scope of discovery, class certification, summary judgment motions, expert testimony,

and potential appeals to the Second Circuit by whichever party ultimately prevailed on the issues

in the District Court. And if this case were to proceed to trial, the resulting fact-intensive trial

would result in significant expenses to all Parties.

Settlement, on the other hand, will result in prompt and equitable payments to the

Settlement Class Members who submit timely and valid Claims. Thus, this factor weighs in

favor of Final Approval.


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b. The Reaction of the Class has been Positive

“It is well-settled that the reaction of the class to the settlement is perhaps the most

significant factor to be weighed in considering its adequacy.” Maley v. Dale Global Techs.

Corp., 186 F. Supp. 2d 358, 362-63 (S.D.N.Y. 2002). Here, over 17,000 total claims were filed.

See KCC Dec. at ¶¶ 13, 14 (discussing potentially deficient Claims as well). Moreover, the lack

of a significant number of class member objections “may itself be taken as evidencing the

fairness of a settlement.” See D’Amato, 236 F.3d (holding that the district court properly

concluded that 18 objections from a class of 27,883 weighed in favor of settlement); Charron v.

Pinnacle Grp. N.Y. LLC, 874 F. Supp. 2d 179, 196 (S.D.N.Y. 2012), aff’d sub nom. Charron v.

Wiener, 731 F.3d 241 (2d Cir. 2013) (finding settlement to possess “initial presumption of

fairness, reasonableness, and adequacy” where 118 class members, or less than 1% of class, filed

objections); RMED Int’l, Inc. v. Sloan’s Supermarkets, Inc., No. 94 Civ. 5587, 2003 WL

21136726, at *1 (S.D.N.Y. May 15, 2003). Similarly, a low opt out rate is also supportive of a

settlement that is fair and warrants approval. See In re Sony SXRD Rear Projection Television

Class Action Litig., No. 06 CIV. 5173 (RPP), 2008 WL 1956267, at *6 (S.D.N.Y. May 1, 2008)

(reasoning that where only 22 of approximately 175,000 class members (0.0126%) chose to opt

out of the class, agreement showed support for approval of settlement); Wright v. Stern, 553 F.

Supp. 2d 337, 345 (S.D.N.Y. 2008) (noting that where 13 out of 3,500 class members objected

and only 3 opted-out, “[t]he fact that the vast majority of class members neither objected nor

opted out is a strong indication” of fairness).

The deadline for objecting to the Settlement Agreement and seeking exclusion was

February 15, 2017. See PA Order at ¶ 37. The deadline for filing a Claim was March 17, 2017.


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Id.3 The Notices sent to Settlement Class Members included explanations of the allocation

formula as well as the number of Points Forfeited for each Account, so that each Class Member

would have an idea of how much they might receive in the Settlement. KCC Dec. at ¶ 3. The

Notices also informed Settlement Class Members that they could object to or exclude themselves

from the Settlement and explained how to do so. See Grunfeld PA Dec. at ¶¶ 24-9. Only one

Class Member out of 50,320 objected to the Settlement, and only six timely opted out. KCC

Dec. at ¶¶ 10-11.

This favorable response demonstrates that the Settlement Class approves of the

Settlement, which supports Final Approval. Maley, 186 F. Supp. 2d at 374 (no objections to a

settlement providing for attorneys’ fees in the amount of 33 1/3% of the settlement fund

indicated class approval); In re PaineWebber Ltd. Partnerships Litig., 171 F.R.D. 104, 126

(S.D.N.Y.), aff’d sub nom. In re PaineWebber Inc. Ltd. Partnerships Litig., 117 F.3d 721 (2d

Cir. 1997) (finding an “extremely favorable response” where nearly 200,000 notices were mailed

to potential class members and only 3 objections were raised); In re Presidential Life Sec., 857 F.

Supp. 331, 336 (S.D.N.Y. 1994) (noting that potential shortcomings of a settlement might have

necessitated rejection of the agreement, “were it not for the absence of objections”); deMunecas

v. Bold Food, LLC, 09 CIV. 00440 DAB, 2010 WL 3322580, at *5 (S.D.N.Y. Aug. 23, 2010);

Wright, 553 F. Supp. 2d at 344-45 (S.D.N.Y. 2008). Further, the Plaintiffs, who have been

active and engaged participants in this case from the beginning, support the Settlement

Agreement. See Grunfeld Fee Dec. at ¶ 28; Declaration of Plaintiff Harry Gao (“Gao Dec”) at ¶

2 and Declaration of Plaintiff Roberta Socall (“Socall Dec”) at ¶ 2 (Plaintiffs’ Declarations

attached to Grunfeld FA Dec.).

3 Should the Court approve Supplemental Notice, then Supplemental Notice Settlement Class Members will have an extended period of time to object, opt out or file a claim.


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Accordingly, the second Grinnell factor weighs in favor of Final Approval.

c. Discovery Has Advanced Far Enough to Allow the Parties to Resolve the Case Responsibly

The Court next considers “whether Class Plaintiffs had sufficient information on the

merits of the case to enter into a settlement agreement . . . and whether the Court has sufficient

information to evaluate such a settlement.” In re Payment Card Interchange Fee & Merchant

Discount Antitrust Litig., 986 F. Supp. 2d 207, 224 (E.D.N.Y. 2013) (citations omitted). “To

approve a proposed settlement, . . . it is enough for the parties to have engaged in sufficient

investigation of the facts to enable the Court to ‘intelligently make . . . an appraisal’ of the

Settlement.” In re Austrian & German Bank Holocaust Litig., 80 F. Supp. 164, 176 (S.D.N.Y.,

2000) (citing Plummer v. Chemical Bank, 668 F.2d 654 (2d Cir. 1982) and quoting Martens v.

Smith Barney, Inc., 181 F.R.D. 243, 263 (S.D.N.Y. 1998)). The proper question is “whether

counsel had an adequate appreciation of the merits of the case before negotiating.” McMahon v.

Olivier Cheng Catering & Events, LLC, 08 CIV. 8713 (PGG), 2010 WL 2399328, at *5

(S.D.N.Y. Mar. 3, 2010) (citation omitted). “The pretrial negotiations and discovery must be

sufficiently adversarial that they are not designed to justify a settlement . . . [but] an aggressive

effort to ferret out facts helpful to the prosecution of the suit.” In re Austrian, 80 F. Supp. 2d at

176 (quotation marks omitted).

This case is sufficiently far along to more than meet this standard. Although continuing

to litigate this case through trial would require many more hours of work for both sides, the

Parties have completed enough discovery to be well positioned to evaluate the merits of the case.

See Grunfeld Fee Dec. at ¶ 11; Grunfeld PA Dec. at ¶¶ 13-14. First, the legal issues in this case

have been thoroughly explored, challenged, and pared down through Chase’s motions to dismiss.

See Grunfeld PA Dec. at ¶¶ 10-12. Next, the Parties have engaged in a significant amount of


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discovery, including written discovery, document production and depositions. See Grunfeld Fee

Dec. at ¶ 11; Grunfeld PA Dec. at ¶¶ 13-14. Finally, as part of the preparations for mediation,

the Parties exchanged briefs and research upon which they rely, as well as confirmatory

discovery such that each side has a thorough understanding of the other sides’ case and defenses.

Grunfeld PA Dec. at ¶¶ 16-17. Thus, Plaintiffs and Class Counsel had sufficient information to

evaluate the terms of the Settlement.

d. Plaintiffs Face Substantial Risks Going Forward

The fourth, fifth and sixth Grinnell factors are all met in this case. “Litigation inherently

involves risks.” Willix v. Healthfirst, Inc., No. 07-cv-1143, 2011 WL 754862, at *4 (E.D.N.Y.

Feb. 18, 2011) (citation omitted). Settlements, because they avoid merits and class certification

adjudication, remove uncertainty over establishing a defendant’s liability and maintaining class

certification. See id.; In re Ira Haupt & Co., 304 F. Supp. 917, 934 (S.D.N.Y. 1969); Velez v.

Majik Cleaning Serv., Inc., No. 03 Civ. 8698, 2007 WL 7232783, at *6 (S.D.N.Y. June 25,

2007). In weighing the risks of establishing liability and damages, the court “must only weigh

the likelihood of success by the plaintiff class against the relief offered by the settlement.” In re

Austrian, 80 F. Supp. 2d at 177 (internal quotation marks omitted). The risk of obtaining and

maintaining class status through trial is an important consideration. See In re Giant Interactive

Grp., Inc. Sec. Litig., 279 F.R.D. 151, 162 (S.D.N.Y. 2011).

Class Counsel is confident in its ability to prove Plaintiffs’ case. However, for purposes

of this brief, Plaintiffs concede that they would face hurdles in establishing liability, damages

and obtaining and maintaining class in this case. First, only limited causes of action remain, and

even those that remain are still being challenged by Chase. See Grunfeld PA Dec. at ¶ 18. If

Chase were to succeed in removing any additional claims or were to establish any of its

numerous affirmative defenses, Plaintiffs potentially would not be able to establish liability.


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Second, Plaintiffs must prove that class members suffered injuries that are susceptible to

common proof in a class action. To do so would require significant work to continue to collect

and collate all data from all of Chase’s many credit card products and to defeat potential damage-

related defenses, including those based on statutes of limitations and unclean hands. Third,

maintaining a class through trial here is risky especially in light of the fact that, prior to the

Settlement, the Plaintiffs had not yet moved to certify a class. Doing so, and maintaining the

class through trial, would require extensive and expensive briefing by both Parties, the outcome

of which is by no means assured. Plus, Chase would likely move to decertify, and potentially

might also seek permission to file an interlocutory appeal under Fed. R. Civ. P. 23(f). These

factors favor final approval.

e. The Ability of Chase to Withstand a Greater Judgment

The seventh Grinnell factor—the ability of a defendant to withstand a greater judgment—

has, in practice, transformed into an acknowledgement that it is more important that a class

receive some relief than possibly “yet more” relief. Charron 874 F. Supp. 2d at 201. A

“defendant’s ability to withstand a greater judgment, standing alone, does not suggest that the

settlement is unfair.” Frank v. Eastman Kodak Co., 228 F.R.D. 174, 186 (W.D.N.Y. 2005)

(quoting In re Austrian 80 F. Supp. 2d at 178 n.9). The Settlement here affords Settlement Class

Members substantial monetary benefits, and by resolving the Settlement Class’ claims, the

Settlement removes the Settlement Class’ costs of maintaining this litigation.

f. The Settlement Fund Created is Substantial in Light of the Possible Recovery and the Risks of Litigation

The determination of whether a settlement amount is reasonable “does not involve the

use of a ‘mathematical equation yielding a particularized sum.’” Frank, 228 F.R.D. at 186

(quoting In re Austrian, 80 F. Supp. 2d at 178). “Instead, ‘there is a range of reasonableness


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with respect to a settlement – a range which recognizes the uncertainties of law and fact in any

particular case and the concomitant risks and costs necessarily inherent in taking any litigation to

completion.’” Id. (quoting Newman v. Stein, 464 F.2d 689, 693 (2d Cir. 1972)). The adequacy

of a settlement amount offered should be judged “‘in light of the strengths and weaknesses of the

plaintiff[s’] case.’” In re Med. X-Ray, No. 93-5904, 1998 WL 661515, at *5 (E.D.N.Y. Aug. 7,

1998) (alteration in original).

That a settlement amount is less than the maximum potential recovery is not a barrier to

approval. See Grinnell., 495 F.2d at 455 n.2 (“[T]here is no reason, at least in theory, why a

satisfactory settlement could not amount to a hundredth or even a thousandth part of a single

percent of the potential recovery.”)4 In fact, when settlement assures immediate payment of

substantial amounts to class members, “even if it means sacrificing ‘speculative payment of

hypothetically larger amount years down the road,’” settlement is reasonable under this factor.

Gilliam v. Addicts Rehab. Ctr. Fund., No. 05 Civ. 3452, 2008 WL 782596, at *5 (S.D.N.Y. Mar.

24, 2008) (quoting Teachers’ Ret. Sys. Of Louisiana v. A.C.L.N. Ltd., No. 01 Civ. 11814, 2004

WL 1087261, at *5 (S.D.N.Y. May 14, 2004)).

Here, the calculus is clear and obvious. Settlement Class Members are benefiting from a

Settlement that provides them cash in hand in return for their Forfeited Points, which is a form of

remediation looked upon extremely favorably by courts in this circuit. See Berkson, 147 F.

Supp. 3d at 133. There is a broad range of potential recovery if the case were to be litigated to

judgment by trial. On the one hand, Plaintiffs could prevail on their remaining claims and

4 Courts in this Circuit have approved class settlements even where the amount of the settlement is a small percentage of the best possible recovery. See Spann, 2005 WL 1330397, at *6-7 (granting final approval where $2.9 million class settlement was only 18% of plaintiffs’ highest possible litigation payoff); Cagan v. Anchor Sav. Bank FSB, No. 88 Civ. 3024, 1990 WL 73423, at *3-4 (E.D.N.Y. May 17, 1990) (approving $2.3 million class settlement over objections that the “best possible recovery would be approximately $121 million”).


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recover an amount reflecting their view of the value of Points Forfeited. On the other hand,

Defendants could prevail on their legal arguments to defeat liability entirely, resulting in no

recovery for the Settlement Class Members. As it is, Plaintiffs negotiated a sizable settlement of

almost $2.3 million. In addition, the fact that the Settlement Agreement provides for a prompt

claims period and payment to claimants favors approval of the Settlement. Teachers’ Ret. Sys. of

La2004 WL 1087261, at *5 (citing In re “Agent Orange” Prod. Liab. Litig., 611 F. Supp. 1396,

1405 (E.D.N.Y. 1985) (“[M]uch of the value of a settlement lies in the ability to make funds

available promptly.”) (modified on other grounds).

Given this range of possible damages, the Agreement provides a substantial recovery that

falls well within the range that courts have traditionally found to be fair, reasonable, and

adequate under the law. Weighing the benefits of the settlement against the risks associated with

proceeding in the litigation, the settlement amount is reasonable.

B. THE COURT SHOULD CERTIFY THE SETTLEMENT CLASS

A court may certify a settlement class upon finding that the action underlying the

settlement satisfies all Rule 23(a) prerequisites and Rule 23(b) requirements. See Amchem

Prods., Inc. v. Windsor, 521 U.S. 591, 619–22 (1997). In the PA Order [D.E. # 72], this Court

provisionally certified the Settlement Class. Here, because the Settlement Class satisfies all Rule

23(a) prerequisites and Rule 23(b)(2) requirements, Plaintiffs respectfully ask the Court to finally

certify the Settlement Class, for settlement purposes.

1. The Class Meets All Rule 23(a) Prerequisites

The Rule 23(a) requirements are numerosity, commonality, typicality, and adequacy.

The proposed Settlement Class satisfies all of these requirements.


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a. The Class Is So Numerous That Joinder Of All Members Is Impracticable

Under the numerosity prerequisite of Rule 23(a), plaintiffs must show that their proposed

class is “so numerous that joinder of all [its] members is impracticable.” Fed. R. Civ. P.

23(a)(1). This prerequisite is construed liberally. Marisol A. v. Giuliani, 126 F.3d 372, 376 (2d

Cir. 1997) (explaining that numerosity will be found where a proposed class is “obviously

numerous”); see also Robidoux v. Celani, 987 F.2d 931, 935 (2d. Cir. 1993). Though no magic

number of class members exists for meeting the numerosity prerequisite, courts “presume [the

prerequisite is met] for classes larger than forty members.” Penn. Pub. Sch. Employees’ Ret. Sys.

v. Morgan Stanley & Co., 772 F.3d 111, 120 (2d Cir. 2014).

Plaintiffs learned that the class definition comprised 65,984 Accounts held by 50,320

customers. Accordingly, the Settlement Class far exceeds 40 members, rendering joinder

impracticable. See Consol. Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995)

(citation omitted). Accordingly, numerosity is met here.

b. Commonality is Met

Rule 23(a)(2) provides that there must be “questions of law or fact common to the class”

for a suit to be certified as a class action. Fed. R. Civ. P. 23(a)(2). This prerequisite is met

where a proposed class’ members have brought claims that all centrally “depend upon [the

resolution of] a common contention.” Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551

(2011). The Second Circuit has construed this liberally, holding that plaintiffs need only allege

injuries “derive[d] from defendants’ . . . unitary course of conduct.” Sykes v. Mel S. Harris &

Assocs. LLC, 780 F.3d 70, 84 (2d Cir. 2015); Trief v. Dun & Bradstreet Corp., 144 F.R.D. 193,

198-99 (S.D.N.Y. 1992).


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Here, the Court has already ruled that “there are questions of law and fact common to the

Settlement Class Members.” PA Order [D.E. # 72], at ¶ 9. Thus, the commonality prerequisite

of Rule 23(a) is satisfied here.

c. The Plaintiffs’ Claims Are Typical

Rule 23(a)(3) provides that the claims of the Plaintiffs must be “typical of the claims of . .

. the class.” Fed. R. Civ. P. 23(a)(3). The Second Circuit has interpreted this prerequisite to

require plaintiffs to show that “the same unlawful conduct was directed at or affected both the

named plaintiff and the class sought to be represented.” Robidoux, 987 F.2d at 936–37 (citations

omitted). District courts in the Second Circuit have repeatedly found this prerequisite easily

satisfied, particularly in consumer class action cases. See Enriquez v. Cherry Hill Mkt. Corp.,

993 F. Supp. 2d 229, 233 (E.D.N.Y. 2014); Fogarazzao v. Lehman Bros., Inc., 232 F.R.D. 176,

180 (E.D.N.Y. 2005) (“The typicality requirement is not demanding.”) (internal citations and

quotation marks omitted).

Here, the claims of the Plaintiffs and those of the Settlement Class Members arise from

the same alleged conduct. The typicality prong is satisfied here. See PA Order [D.E. # 72], at ¶

9 (“Plaintiffs’ claims are typical of the claims of the Settlement Class Members they seek to

represent for purposes of Settlement”).

d. Adequate Representation

Rule 23(a)(4) requires that “the representative parties fairly and adequately protect the

interests of the class.” Fed. R. Civ. P. 23(a)(4). To do this, plaintiffs must demonstrate that the:

(1) class representatives do not have conflicting interests with other class members; and (2) class

counsel is “qualified, experienced and generally able to conduct the litigation.” Marisol A., 126

F.3d at 378. Courts within the Second Circuit have consistently applied a lenient standard for

meeting both of the adequate representation requirements. Diaz v. Residential Credit Solutions,


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Inc., 299 F.R.D. 16, 20–21 (E.D.N.Y. 2014). For the adequacy of class representatives, Second

Circuit courts have required that plaintiffs merely show that “no fundamental conflicts exist”

between a class’ representative(s) and its members. Charron, 731 F.3d at 249. For the adequacy

of class counsel, courts generally only challenge class counsel’s adequacy when there is a

conflict in the interests of represented plaintiffs, or if class counsel also acts as a class

representative. Moore v. Margiotta, 581 F. Supp. 649, 652 (E.D.N.Y. 1984).

Here, the adequacy prerequisite is satisfied. The Plaintiffs have no fundamental conflicts

with other Settlement Class Members’ interests, as they seek the same type of relief and assert

the same legal claims, as other Settlement Class Members. See Gao Dec. at ¶ 3; Socall Dec. at ¶

3. Similarly, the Court has held that “Plaintiffs have retained experienced counsel to represent

them.” See PA Order [D.E. # 72], at ¶ 9. Class Counsel firms have successfully handled

national, regional, and statewide class actions, as well as other complex mass or multi-party

actions, throughout the United States in both federal and state courts, against national banks and

financial services companies, including against these Defendants. See Grunfeld FA Dec. at ¶ 25;

Grunfeld PA Dec. at ¶ 42 and n.4.

2. The Class Meets All Rule 23(b)(3) Requirements

Rule 23(b)(3) provides that questions of law or fact common to class members must

“predominate over any questions affecting only individual members.” Fed. R. Civ. P. 23(b)(3).

In addition, Plaintiffs must demonstrate that “[a] class action is superior to other methods for

fairly and efficiently adjudicating the controversy.” Id. Both of these requirements are met here.

a. Common Questions Predominate

The Rule 23(b)(3) “predominance inquiry tests whether proposed classes are sufficiently

cohesive to warrant adjudication by representation.” Tyson Foods, Inc. v. Bouaphakeo, 136 S.

Ct. 1036, 1045 (2016).


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Here, the Settlement Class handily satisfies Rule 23(a)’s requirements, which “goes a

long way toward satisfying the Rule 23(b)(3) requirement of commonality.” Rossini v. Ogilvy &

Mather, Inc., 798 F.2d 590, 598 (2d Cir. 1986) (citation omitted). Every Settlement Class

Member’s claims may be proven by the same set of facts. See PA Order [D.E. # 72], at ¶ 9.

b. Superiority is Met

Rule 23(b)(3) asks whether a class action is the superior means to adjudicate the class’s

claims. The rule expressly sets forth a list of relevant factors: class members’ interest in bringing

individual actions; the extent of existing litigation by class members; the desirability of

concentrating the litigation in one forum; and potential issues with managing a class action. Fed.

R. Civ. P. 23(b)(3)(A-D).

This requirement is met. See PA Order [D.E. # 72], at ¶ 9. Only one Class Member has

filed an objection and only six have timely opted out. KCC Dec. at ¶¶ 10-11. Moreover, no

Class Member has expressed any interest in or brought any individual actions. See Grunfeld FA

Dec.at ¶ 51. Certification of the Settlement Class now in this Court will allow for efficient

adjudication of claims that would likely not be brought owing to prohibitive legal expenses,

while at the same time preserving scarce judicial resources. Accordingly, a class action is the

best available method for the efficient adjudication of this litigation.

C. THE NOTICE PLAN HAS, AND WILL CONTINUE TO, ADEQUATELY ADVISE SETTLEMENT CLASS MEMBERS OF THEIR RIGHTS

Due Process and the Federal Rules of Civil Procedure require that notice to the class of a

class action settlement “fairly apprise the prospective members of the class of the terms of the

proposed settlement and of the options that are open to them in connection with the

proceedings.” Visa U.S.A., Inc., 396 F.3d at 114. The standard for determining whether a class

action settlement notice satisfies this requirement “is measured by reasonableness.” Id. at 113.


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Plaintiffs are especially proud of the effectiveness of the Notice Program in this case. See

Settlement Agreement at ¶¶ 46-48. All of the requirements of Rule 23 have been met. Chase

provided contact information for each Settlement Class Member on October 21, 2016. See KCC

Dec. at ¶ 3. The Settlement Administrator then provided notice to Settlement Class Members

through Mail Notice and email notice on December 16, 2016. Id. at ¶ 5. On November 11,

2016, KCC established a toll-free telephone number dedicated to answering telephone inquiries

from Settlement Class Members, and a Settlement Website

(www.ChaseRewardsProgramSettlement.com) was created to provide additional notice of and

information about the settlement. Id. at ¶¶ 8-9. All told, 50,320 notices have been sent through

traditional mail and another 23,446 have been sent via email. Id. at ¶¶ 5, 7.

The Notice Program has proven effective in providing notice to Settlement Class

Members. The successful reach of a class action settlement notice can be judged, in part, by the

reaction of the class. See Handschu v. Special Servs. Div., 787 F.2d 828, 833 (2d Cir. 1986).

The Settlement Website, which went live on November 11, 2016, has received more than 31,000

hits. See KCC Dec. at ¶ 9. Overall, the positive reaction and extensive reach of the class action

settlement notice further demonstrates its success. The Settlement Class Members began

submitting claims in earnest on immediately following Notice. See Grunfeld FA Dec. at ¶ 8.

Over 17,000 Claim Forms have been filed. See KCC Dec. at ¶ 13. Therefore, Plaintiffs

respectfully submit that the Notice Program has been a success and has adequately advised

Settlement Class Members about the case and of their rights.

D. OBJECTOR FOLLMAN

Aryeh Follman is a Class Member who received notice of this Court’s October

25, 2016 order granting Preliminary Approval. On January 20, 2017, he filed an objection with

the Court (“the Follman Objection”). See Grunfeld FA Dec. at ¶ 62 and attached exhibit. Mr.


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Follman raises several generalized bases for why he believes the Settlement does not fully and

fairly represent or compensate Settlement Class Members like himself, and consequently argues

that this Court should grant his objection and decline to enter an order for Final Approval, or in

the alternative, that he be permitted to opt-out of the Settlement. Id. He is the only Class

Member out of over 50,000 that has objected. Id. at ¶ 60.

In matters concerning objections to the propriety of a class action settlement agreement,

the trial court is vested with broad discretion in deciding whether an objector’s challenge holds

merit. See Cassese v. Williams, 503 F. App’x 55, 57 (2d Cir. 2012); In re Bolar Pharm. Co.,

Inc., Sec. Litig., 966 F.2d 731, 732 (2d Cir. 1992) (recognizing that “the district court, which is

intimately familiar with the nuances of the case” is best positioned to make decisions concerning

the propriety of the terms of a proposed settlement).

Mr. Follman believes that Class Counsel’s requested attorneys’ fees in the amount of

one-third of the Settlement Fund means that each Class Member’s recovery decreases by one-

third. Id. at 64. This concern is based on a faulty understanding of the disbursement formula,

and ignores the benefits of a high claims-filed rate and a fair, percentage-based distribution of

available funds. Id. He next alleges that the “true” value of a reward point is greater than one

cent based on how much he thinks he would have to pay otherwise for goods, services or travel

that the points might have been redeemed for (or potentially sold on what may exist in an

underground, grey market) had they not been forfeited. Id. at ¶ 65. To start, this position fails

because cash is always a preferable remedy. See Berkson v. Gogo LLC, 147 F. Supp. 3d 123,

133 (E.D.N.Y. 2015). But more fundamentally, it ignores that this is a Settlement, and thus

involves compromise. As discussed above, there is a broad range of potential recovery if this

case were to be litigated to judgment, and if Defendants prevailed on their legal arguments to


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defeat liability entirely, there would be no recovery for any Settlement Class Members. Finally,

he is concerned that if everyone files a Claim, he could end up getting very little. Id. at ¶ 66. As

set forth in this brief, that concern has not come to fruition.

Class Counsel was able to negotiate a Settlement that is fair, reasonable, adequate

and extremely popular among the Class given the otherwise absence of objections, and which

provides real and substantial benefits to the Settlement Class Members. Mr. Follman’s objection

should be rejected and the Class Settlement of this long fought litigation should be approved.

V. CONCLUSION

For the foregoing reasons, Plaintiffs respectfully request that this Court enter Final

Approval of the Settlement and certify the Settlement Class for the purpose of the settlement.

Dated: March 23, 2017 /s/ Kenneth J. Grunfeld Richard M. Golomb, Esquire

[email protected] Kenneth J. Grunfeld, Esquire [email protected] Golomb & Honik, P.C. 1515 Market Street, Suite 1100 Philadelphia, PA 19102 Tel. 215-985-9177 Fax. 215-985-4169

Ted Trief, Esquire [email protected] Barbara Olk, Esquire [email protected] Trief & Olk 150 E. 58th St., 34th Floor New York, NY 10155 Tel.: 212-486-6060 Fax: 212-317-2946

Attorneys for Plaintiffs and the Proposed Class


CERTIFICATE OF SERVICE

The undersigned hereby certifies that a true copy of the forgoing Memorandum of Law

in Support of Plaintiffs’ Motion for Final Approval of Class Action Settlement and

Certification of the Settlement Class, with all exhibits, was served on the following via the

court’s CM/ECF filing system which generates a notice of filing to all counsel of record and by

electronic mail pursuant to agreement of the Parties:

Noah Levine, Esquire Alan E. Schoenfeld, Esquire

Hanna A. Baek, Esquire WILMER CUTLER PICKERING

HALE AND DORR, LLP 7 World Trade Center 250 Greenwich Street New York, NY 10007 Tel: (212) 230-8800 Fax: (212) 230-8888

[email protected] [email protected]

[email protected]

Attorneys for Defendants JP Morgan Chase & Co. and Chase Bank USA, N.A. This the 23rd day of March, 2017.

/s/ Kenneth J. Grunfeld Kenneth J. Grunfeld, Esquire


Documents

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW … Ga… · 3/23/2017 · case no. 1:14-cv-04281-pac memorandum of law in support of plaintiffs’ motion for final approval