Steven Russell v. Kohl's Department Stores, Inc. ( 2018 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS NOV 5 2018
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
STEVEN RUSSELL, individually and on No. 16-56493
behalf of all others similarly situated and
DONNA CAFFEY, D.C. No.
5:15-cv-01143-RGK-SP
Plaintiffs-Appellees,
ANNE CARD, MEMORANDUM*
Objector-Appellant,
v.
KOHL’S DEPARTMENT STORES, INC., a
Delaware Corporation and DOES, 1 through
100, inclusive,
Defendants-Appellees.
SARAH MCDONALD, No. 16-56650
Objector-Appellant, D.C. No.
5:15-cv-01143-RGK-SP
BARBARA COCHRAN; et al.,
Objectors,
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
v.
STEVEN RUSSELL, an individual;
DONNA CAFFEY,
Plaintiffs-Appellees,
and
KOHL’S DEPARTMENT STORES, INC., a
Delaware Corporation,
Defendant-Appellee,
and
DOES, 1-100, inclusive,
Defendant.
STEVEN RUSSELL, individually and on No. 16-56696
behalf of all others similarly situated and
DONNA CAFFEY, D.C. No.
5:15-cv-01143-RGK-SP
Plaintiffs-Appellees,
BOBBI CECIO,
Objector-Appellant,
v.
KOHL’S DEPARTMENT STORES, INC., a
Delaware Corporation and DOES, 1 through
100, inclusive,
2
Defendants-Appellees.
STEVEN RUSSELL, individually and on No. 16-56764
behalf of all others similarly situated and
DONNA CAFFEY, D.C. No.
5:15-cv-01143-RGK-SP
Plaintiffs-Appellees,
BARBARA S. COCHRAN,
Objector-Appellant,
v.
KOHL’S DEPARTMENT STORES, INC., a
Delaware Corporation and DOES, 1 through
100, inclusive,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Argued and Submitted May 17, 2018
San Francisco, California
Before: N.R. SMITH and FRIEDLAND, Circuit Judges, and LYNN,** Chief
District Judge.
When the parties settled this class action regarding alleged false advertising
by Kohl’s Department Stores, several objectors raised concerns about the
**
The Honorable Barbara M. G. Lynn, Chief United States District Judge for
the Northern District of Texas, sitting by designation.
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settlement—challenging Plaintiffs’ Article III standing, the notice to class
members, the overall fairness of the settlement, and the award of attorney’s fees to
class counsel. The district court overruled the objections and approved the
settlement and attorney’s fees, and four objectors appealed. We conclude that
Plaintiffs had Article III standing and that the district court properly approved the
class notice and settlement. But we vacate the award of attorney’s fees and remand
for the district court to consider objections to the fee award and provide a renewed
opportunity for Objector Cecio to raise such objections.
As a threshold matter, Plaintiffs had Article III standing to bring and to settle
their claims. Plaintiffs had standing to pursue restitution for misleading
promotions. See Maya v. Centex Corp., 658 F.3d 1060, 1069 (9th Cir. 2011). And
because they declared that they would purchase products from Kohl’s again if the
store changed its pricing practices, Plaintiffs also had standing to seek injunctive
relief. See Davidson v. Kimberly-Clark Corp., 889 F.3d 956, 969-70 (9th Cir.
2018).
The district court did not abuse its discretion in concluding that Plaintiffs
were typical members of the settlement class they sought to certify under Federal
Rule of Civil Procedure 23(b)(3). Only one named plaintiff must be a typical class
member to satisfy the requirements for class certification. See Rodriguez v. W.
Publ’g Corp., 563 F.3d 948, 961 (9th Cir. 2009). In moving for class certification
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for the purposes of settlement, Plaintiffs submitted evidence that Russell was a
typical member of the class that would receive gift cards because he had made
several purchases at Kohl’s that would place him in the class. And it appears that
Caffey was probably a member of the class as well, even though she may have
received refunds for some of her purchases.
Notice of the settlement to the settlement class was adequate even though it
did not include an estimate of the amount that each claimant would receive and
even though Objector Bobbi Cecio says she did not receive notice. We have
explained that “the aggregate amount of the proposed settlement and the formula
for computing recoveries [is] all that [is] required” to be included in the notice
because class members’ potential recovery is “a matter of conjecture since it [is]
unknown [when notice is distributed] how many class members w[ill] opt out or
submit claims.” Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1374 (9th Cir.
1993) (quoting Marshall v. Holiday Magic, Inc., 550 F.2d 1173, 1177-78 (9th Cir.
1977)). The notice in this case included the required information. Although Cecio
asserts that she did not receive notice of the settlement and should have, she does
not identify any deficiency in the plan for notice approved by the district court.
Merely asserting a failure to receive notice is not sufficient to show that the notice
plan was inadequate in this case because Federal Rule of Civil Procedure 23(c)
requires the best notice practicable under the circumstances, not actual notice to
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every class member.1 See Silber v. Mabon, 18 F.3d 1449, 1454 (9th Cir. 1994).
The district court did not err in holding that this was not a coupon
settlement. Several Objectors asserted that the district court should have treated
the settlement in this case as a “coupon settlement” under the Class Action
Fairness Act (“CAFA”). But the gift cards in this settlement were similar to gift
cards we held were not coupons under CAFA in In re Online DVD-Rental Antitrust
Litigation, 779 F.3d 934 (9th Cir. 2015), whose factors we re-emphasized in
Romero v. Provide Commerce, No. 16-56307. The gift cards in this case were
transferrable, stackable, usable with other Kohl’s promotions, and large enough to
allow class members to buy more than 1750 items from Kohl’s without spending
their own money. All of these considerations weigh in favor of treating the gift
cards as a non-coupon settlement in this case. See id. at 951-52.
And the district court did not abuse its discretion in deciding that the overall
settlement was fair, reasonable, and adequate. See Fed R. Civ. P. 23(e). We have
explained that district courts deciding whether a settlement submitted for approval
is fair, reasonable, and adequate should discuss their application of several factors:
1
It is concerning that the briefs and record do not reflect any investigation
by class counsel into why Cecio did not receive notice and whether her apparent
lack of notice was indicative of a broader problem with notice in this case. But we
do not see other indications that the distribution of notice was deficient. And the
district court was in the best position in this case to consider whether Cecio’s
objection that she did not receive notice was symptomatic of a larger problem.
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[T]he strength of the plaintiffs’ case; the risk, expense, complexity, and
likely duration of further litigation; the risk of maintaining class action
status throughout the 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.
Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). The district court
does not need to include a detailed analysis of the factors in the final judgment if it
discusses them elsewhere in the record. See In re Online DVD, 779 F.3d at 948.
In its preliminary approval order and at the hearing on final settlement approval,
the district court properly considered the Hanlon factors in deciding that the
settlement was fair, reasonable, and adequate.2
We have identified indicia of collusion among named plaintiffs, class
counsel, and defendants that district courts should consider in assessing
settlements. See In re Bluetooth Headset Prods. Liab. Litig. (In re Bluetooth), 654
F.3d 935, 947 (9th Cir. 2011). Although the settlement here contained a “clear
sailing” provision under which Kohl’s agreed not to challenge a request for
attorney’s fees up to a certain amount, see id. at 940 n.6, the provision raises fewer
2
Objector Cecio raises several specific concerns about the substance of the
settlement, but none are sufficient to show that the district court abused its
discretion. Although analysis of a settlement may involve consideration of similar
settlements in other cases, the relative settlement distribution among class
members, and the sufficiency of discovery conducted before settlement, these
considerations do not compel a conclusion that the district court abused its
discretion here.
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concerns about collusion than the one at issue in In re Bluetooth because class
counsel’s fees here would come from a common fund. Compare id. at 947. And
the remaining indicia of collusion that In re Bluetooth identified do not appear to
be present in this case. Class counsel sought the benchmark percentage of the total
monetary recovery. And the fees not awarded to counsel in this case would not
revert to Kohl’s.
Although notice of the settlement was sufficient and the district court did not
abuse its discretion in concluding that the settlement was fair, reasonable, and
adequate, the class received an insufficient opportunity to examine and oppose
class counsel’s fee motion as required by Federal Rule of Civil Procedure 23(h).
Under In re Mercury Interactive Corporation Securities Litigation, 618 F.3d 988
(9th Cir. 2010), class counsel needed to file the motion for attorney’s fees before
the deadline for objections, to provide an opportunity for class members to object
to the fee request. Id. at 993; see also Fed. R. Civ. P. 23(h)(2). Counsel did not do
so in this case. The district court invited Objector Sarah McDonald and Plaintiffs
to file supplemental briefs with respect to the reasonableness of the fees request.
But this supplemental opportunity for an existing objector to file additional
briefing did not bring the proceeding into compliance with In re Mercury. See
Allen v. Bedolla, 787 F.3d 1218, 1226 (9th Cir. 2015) (“Upon remand, the district
court must give the entire class—and not just the Objectors-Appellants here—the
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opportunity to review class counsel’s completed fee motion and to submit
objections if they so choose.”).
Under the circumstances of this case, however, and particularly given the
comprehensive objections that Cecio filed in the briefing on appeal, the In re
Mercury error is harmless so long as Cecio’s objections are addressed on remand.
Cecio identified new, substantial objections to the fees request on appeal, several
of which raise serious concerns about the fee awarded here. Plaintiffs did not
respond to many of Cecio’s objections on appeal, and because McDonald’s
objections in the district court did not encompass all of Cecio’s objections, the
district court did not address them either. Because those objections are
comprehensive enough that they seem to encompass any objection absent class
members may have made if they had received the notice required by In re
Mercury, we conclude that the In re Mercury error is harmless so long as the
district court provides a renewed opportunity for Cecio to raise objections on
remand. We therefore vacate the district court’s order awarding attorney’s fees
and remand for consideration of Cecio’s objections to the fee award.
The district court’s approval of the settlement can otherwise stand, however,
because vacating the award of attorney’s fees will not render the overall settlement
unfair, unreasonable, or inadequate. The settlement agreement in this case
specifically separated the approval of fees from the rest of the settlement. And the
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district court originally awarded the maximum available fees under the settlement
agreement. Any fees not awarded to counsel on remand will go to the class, so the
remand in this case can only benefit the class.3 See, e.g., In re Mercury, 618 F.3d
at 995 (reversing approval of attorney’s fees award but otherwise affirming
approval of a settlement where fees would come out of a common fund that also
provided monetary relief to class members); Rodriguez, 563 F.3d at 968-69 (same).
We therefore affirm the district court’s approval of the settlement while remanding
for further proceedings on attorney’s fees.
AFFIRMED in part, VACATED in part, and REMANDED. The parties
shall bear their own costs on appeal.
3
If the district court enters a smaller fee award on remand, it is possible that
class members may receive gift cards worth more than $10, which will then not be
exchangeable for cash under California Civil Code § 1749.5(b)(2). But given how
flexible these gift cards are and given that Kohl’s sells a very large number of
items for less than the value of the approximately $10 gift card, our determination
that this was not a coupon settlement under CAFA does not depend on the
availability of a cash alternative. And class members could not have relied on the
availability of an opportunity to exchange the gift cards for cash when deciding
whether to opt out or object, because it was not known at the time those decisions
were made how many class members would submit claims, and thus it was not
known whether the value of the gift cards awarded would be more or less than $10.
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