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CARLSON LYNCH SWEET KILPELA & CARPENTER, LLP Todd D. Carpenter (CA 234464) 1350 Columbia Street, Suite 603 San Diego, California 92101 Telephone: (619) 762-1900 Facsimile: (619) 756-6991
[email protected] Attorneys for Plaintiff and Class Counsel
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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MONICA RAEL and ALYSSA HEDRICK, on behalf of themselves and all others similarly situated,
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Plaintiffs, v. THE CHILDREN’S PLACE, INC., Defendant.
Case No: 16CV370-GPC-JMA CLASS ACTION MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION Date: February 9, 2018 Time: 1:30 p.m. Judge: Hon. Gonzalo P. Curiel Courtroom: 2D
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TABLE OF CONTENTS
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Page MEMORANDUM OF POINTS AND AUTHORITIES………………………………...1
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I.
INTRODUCTION………………………………………………………………...1
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II.
BACKGROUND OF THE LITIGATION………………………………………..1
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III.
THE SETTLEMENT……………………………………………………………...3
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A. Settlement Negotiations…………………………………………………….3
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B. The Settlement Agreement………………………………………………....4
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1.
The Benefit to Class Members………………………………..4
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2.
Notice Plan and Claims Process…………………………...….6
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3.
Notice and Administration Costs, Attorneys’ Fees and
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Expenses, and Plaintiffs’ Incentive Awards………………………….6
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THE PROPOSED SETTLEMENT IS FAIR, ADEQUATE, AND
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REASONABLE…………………………………………………………………....7
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A. The Settlement is a Product of Serious, Arms-Length Negotiations………..8
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B. The Settlement Falls Within a Range of Possible Judicial Approval……....10
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C. The Settlement Has No Obvious Deficiencies…………………………......11
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D. The Settlement Does Not Grant Preferential Treatment Over Class
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Representatives or Segments of Class Members………………………..…12 V.
THE PROPOSED CLASS SHOULD BE PROVISIONALLY CERTIFIED FOR
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SETTLEMENT PURPOSES…………………………………………………......14
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A. The Proposed Settlement Class Satisfies Rule 23(a)……………………....14
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1.
Numerosity…………………………………………………...14
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2.
Commonality……………………………………………...….14
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3.
Typicality…………………………………………………….16
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4.
Adequacy……………………………………………………..16
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B. The Proposed Settlement Class Satisfies Rule 23(b)………………………17 1.
Common Questions Predominate…………………………….17
i MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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2.
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A Class Action is the Superior Method to Settle this
Controversy………………………………………………………..18
3 VI.
THE PROPOSED CLASS NOTICE SHOULD BE APPROVED……………...19
4 VII.
PLAINTIFFS SHOULD BE APPOINTED CLASS REPRESENTATIVES AND
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CLASS COUNSEL SHOULD BE APPOINTED FOR THE CLASS FOR
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SETTLEMENT PURPOSES…………………………………………………….21
7 VIII.
THE PROPOSED SCHEDULE OF EVENTS…………………………………..22
8 IX.
CONCLUSION…………………………………………………….…………….22
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TABLE OF AUTHORITIES
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Cases
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Acosta v. Trans Union, LLC, 243 F.R.D. 377 (C.D. Cal. 2007)………………………………………………….7
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Page
Amchem Products, Inc. v. Windsor, 521 U.S. 591 (1997)………………………………………………………14, 17, 19 Balasanyan v. Nordstrom, Inc., 294 F.R.D. 550 (S.D. Cal. 2013)………………………………………………….14 Beck-Ellman v. Kaz USA, Inc., 283 F.R.D. 558 (S.D. Cal. 2012)………………………………………………….17 Chowning v. Kohl’s Dep’t Stores, Inc., 2016 WL 1072129 (C.D. Cal. Mar. 15, 2016)……………………………………11 Churchill Vill., LLC v. Gen. Elec., 361 F.3d 566 (9th Cir. 2004)……………………………………………………..19 Class Plaintiffs v. City of Seattle, 955 F.2d 1268 (9th Cir. 1992)…………………………………………………….7 Fraser v. Asus Computer Int’l, 2012 WL 6680142 (N.D. Cal. 2012)………………………………………….…11 Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998)…………………………………………….…passim Harris v. Palm Springs Alpine Estates, Inc., 329 F.2d 909 (9th Cir. 1964)…………………………………………………..…14 Hoffman v. Dutch LLC, 317 F.R.D. 566 (S.D. Cal. 2016)………………………………………………....16 In re M.L. Stern Overtime Litigation, No. 07-CV-0118-BTM (JMA), 2009 WL 995864 (S.D. Cal. Apr. 13, 2009)…….7 In re Online DVD-Rental Antitrust Litigation, 779 F.3d 934 (9th Cir. 2015)…………………………………………………passim iii MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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In re Syncor ERISA Litigation, 516 F.3d 1095 (9th Cir. 2008)…………………………………………………….7 In re Tableware Antitrust Litig., 484 F. Supp. 2d 1078 (N.D. Cal. 2007)……………………………………….8, 10 In re Tobacco Cases II, 2015 WL 5673070 (Cal. App. Sept. 28, 2015)…………………………………...10 In re Toys R Us-Delaware, Inc.—Fair and Accurate Credit Transactions Act (FACTA) Litigation, 295 F.R.D. 438 (C.D. Cal. 2014)………………………………………………......7
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Jacobo v. Ross Stores, Inc., 2017 WL 3382053 (C.D. Cal. Aug. 2, 2017)……………………………………..11
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Keirsey v. eBay, Inc., No. 12-cv-1200-JST, 2014 WL 644697 (N.D. Cal. Feb. 14, 2014)…………...….21
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Lane v. Facebook, Inc., 696 F.3d 811 (9th Cir. 2012)……………………………………………………..20
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Linney v. Cellular Alaska Partnership, 151 F.3d 1234 (9th Cir. 1998)…………………………………………………....11
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Maxin v. RHG & Co., Inc., 2017 WL 748143 (S.D. Cal. Feb. 27, 2017)……………………………………..18
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Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950)……………………………………………………………...19
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Officers for Justice v. Civil Serv. Com’n of City and County of San Francisco, 688 F.2d 615 (9th Cir. 1982)…………………………………………………...8, 10
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Radcliffe v. Experian Info. Solutions Inc., 715 F.3d 1157 (9th Cir. 2013)…………………………………………………….13
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Rodriguez v. W. Publ’g Corp., 563 F.3d 948 (9th Cir. 2009)…………………………………………………...8, 12
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Satchell v. Federal Express Corp., Nos. C03-2659 SI, C03-2878 SI, 2007 WL 1114010 (N.D. Cal. Apr. 13, 2007)…9 Spann v. J.C. Penney Corp. (“Spann I”), 307 F.R.D. 508 (C.D. Cal. 2015) ………………………..….……………….passim Spann v. JC Penney Corp. (“Spann II”), 314 F.R.D. 312 (C.D. Cal. 2016)………………………………………….…passim Stathakos v. Columbia Sportswear Company, No. 15-cv-4543-YGR, 2017 WL 1957063 (N.D. Cal. May 11, 2017)…………..11 Staton v. Boeing Co., 327 F.3d 938 (9th Cir. 2003)…………………………………………………......13 Stearns v. Ticketmaster Corp., 655 F.3d 1013 (9th Cir. 2011)……………………………………………………17 Tait v. BSH Home Appliances Corp., 289 F.R.D. 466 (C.D. Cal. 2012)…………………………………………………15 Van Bronkhorst v. Safeco Corp., 529 F.2d 943 (9th Cir. 1976)……………………………………………………...7 Vasquez v. Coast Valley Roofing, Inc., 670 F. Supp. 2d 1114 (E.D. Cal. 2009)…………………………………………..12 Wal–Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011)………………………………………………………………15 Wiener v. Dannon Co., Inc., 255 F.R.D. 658 (C.D. Cal. 2009)…………………………………………………14 Wolin v. Jaguar Land Rover North America, LLC, 617 F.3d 1168 (9th Cir. 2010)……………………………………………………16 Zinser v. Accufix Research Institute, Inc., 253 F.3d 1180 (9th Cir. 2001)…………………………………………………….17 Statutes 28 U.S.C. § 1715…………………………………………………………………………6 v MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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Cal. Bus. & Prof. Code § 17200…………………………………………………………..3 Cal. Bus. & Prof. Code § 17500…………………………………………………………..3 Cal. Civ. Code § 1750…………………………………………………………………….3 Fed. R. Civ. P. 23(a)……………………………………………………..………………14 Fed. R. Civ. P. 23(a)(2)…………………………………………………………………..14 Fed. R. Civ. P. 23(a)(3)…………………………………………………………………..16 Fed. R. Civ. P. 23(a)(4)…………………………………………………………………..16 Fed. R. Civ. P. 23(b)(3)…………………………………………………………..17, 18, 19 Fed. R. Civ. P. 23(e)…………………………………………………………………..8, 19 Fed. R. Civ. P. 23(g)(1)(A)……......……………………………………………………..21 Other Authorities Newberg on Class Actions § 13:15 (5th ed. 2014)…………………………………………………………….11 § 11:53 (4th ed. 2013)………………………………………………………….…20
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MEMORANDUM OF POINTS AND AUTHORITIES I.
INTRODUCTION
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Plaintiffs achieved an outstanding Settlement wherein The Children’s Place has
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agreed to make available a total settlement value of at least $4.8 million for the Class.
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Plaintiffs’ pursuit to protect consumer rights has resulted in a Settlement that effectively
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deters retailers from eluding transparent price advertising. Class Members will be awarded
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a significant, usable benefit—such as $6, $12 or $18 in vouchers—to spend at The
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Children’s Place retail, outlet, and online stores. This benefit allows consumers to purchase
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fashionable children’s clothing apparel and accessories without having to come out of
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pocket.
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Plaintiffs bring this unopposed motion, seeking an order from the Court to: (1)
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preliminarily approve the Settlement Agreement; (2) provisionally certify the Class for
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settlement purposes; (3) preliminarily approve the form, manner, and content of the
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proposed notices to the Class; (4) conditionally appoint named Plaintiffs as Class
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Representatives for settlement purposes; (5) conditionally appoint Carlson Lynch Sweet
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Kilpela & Carpenter, LLP as Class Counsel for settlement purposes; (6) set the date and
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time of the Final Fairness Hearing; (7) determine that Defendant has complied with the
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CAFA notice requirements; and (8) stay all proceedings in the Action until final approval
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of the settlement.
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II.
BACKGROUND OF THE LITIGATION
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Plaintiffs’ Counsel conducted a years-long investigation into The Children’s Place’s
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sale discounting practices at their retail and outlet stores. Third Amended Complaint
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(“TAC”) at ¶¶ 22–23. Plaintiffs contend that their Counsel’s investigation revealed that
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The Children’s Place was engaged in the pervasive practice of continuously discounting
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their merchandise from their “original” or “regular” price tag price for a substantial period
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of time, and sometimes, without ever offering the merchandise at its regular price at all—
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a practice that Plaintiffs allege squarely violates California law prohibiting retailers from
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discounting merchandise from its original price for more than ninety (90) days. Id. at ¶¶ -1MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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1, 22–28. Plaintiff Monica Rael filed her initial complaint on February 11, 2016 and her
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first amended complaint on April 25, 2016. (Dkt. Nos. 1, 9.) Plaintiff Alyssa Hedrick
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joined the action in the second amended complaint filed on August 15, 2016. (Dkt. No.
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19.) Plaintiffs file the operative third amended complaint concurrently with this motion for
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preliminary approval.
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Plaintiffs allege that prior to August 2015, The Children’s Place employed a
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systematic advertising scheme of continuously discounting its merchandise at sale prices
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that were significantly lower than the “regular” or “original” price tag prices for its
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exclusive branded merchandise at its retail and outlet stores. TAC at ¶¶ 1–7. Plaintiffs
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further allege that the advertised discounts were nothing more than mere phantom
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markdowns because the represented “original” price tag prices were false because
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Defendant rarely, if ever, offered for sale the merchandise at the purported “original”
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prices. Id. at ¶ 2, 6. Plaintiffs allege that Defendant’s fraudulent pricing practices mislead
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consumers into believing they were receiving a significant discount on merchandise they
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might not have purchased absent the purported discount. Id. at ¶ 4. Plaintiffs allege that
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in reality, consumers were induced to pay a higher price than they would have paid had the
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products been subject to fair market competition and pricing. Id. at ¶ 25. Plaintiffs allege
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that this pricing scheme is intended to increase sales, but has the effect of depriving
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consumers of the benefit of their bargain. Id. at ¶ 4. Further, Plaintiffs also allege the vast
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majority of merchandise sold at Defendant’s outlet stores is manufactured exclusively for
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the outlet stores. Id. at ¶¶ 30–31. Plaintiff Hedrick alleges that this practice misled herself
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and other consumers by thinking they are getting a substantial discount on merchandise
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that was formerly sold at the The Children’s Place retail stores. Id. at ¶ 30.
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The purchases Plaintiff Monica Rael and Alyssa Hedrick made at Defendant’s retail
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and outlet stores, respectively, mirrored the fraudulent pricing practice that Plaintiffs’
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counsel alleges it had observed for several months preceding and subsequent to their
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purchases. TAC at ¶¶ 22–28. Plaintiff Rael alleges that the cargo pants she purchased on
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sale at Defendant’s retail store for $7.47 bore a $14.95 original price tag price and was -2MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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continuously offered for sale at a discounted price for more than 90 days preceding her
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purchase. Id. at ¶ 22. Plaintiff Hedrick alleges that the jeans she purchased on sale at
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Defendant’s outlet store for $9.99 were continuously on sale at various discounted prices
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in the 90 days leading up to her purchase and were never offered at the regular price of
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$16.50 at any time during that period. Id. at ¶¶ 26–28. Plaintiffs seek damages, restitution,
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and injunctive relief under California’s Unfair Competition Law, Cal. Bus. & Prof. Code
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§§ 17200, et seq.; California’s False Advertising Law (“FAL”), Cal. Bus. & Prof. Code §§
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17500, et seq.; and California’s Consumer Legal Remedies Act (“CLRA”), Cal. Civ. Code
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§§ 1750, et seq. Plaintiffs seek to represent the following nationwide class:
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All individuals in the United States who, from February 11, 2012 through the date the Court enters the preliminary approval order, purchased any product bearing a discount at one of The Children’s Place retail or outlet stores. Excluded from the Class are Defendant, Defendant’s counsel, Defendant’s officers, directors, and employees, and the judge presiding over the action. TAC at ¶ 42. III.
THE SETTLEMENT A.
Settlement Negotiations
Since the onset of the litigation, the Parties engaged in arm’s-length settlement negotiations, including attending two full day mediation sessions with the Honorable Edward A. Infante (Ret.) of JAMS, Inc. on December 8, 2016 and April 19, 2017. Declaration of Todd D. Carpenter (“Carpenter Decl.”), at ¶ 4. For the first mediation session, Class Counsel also prepared and provided the mediator with Plaintiffs’ detailed mediation statement, which included an analysis of the evidence and discovery, the relevant case law, and a proposed settlement structure. Most importantly, Plaintiffs proffered the Expert Report of Christian Tregillis, CPA, ABV, CFF, CLP, an economist who substantiated Plaintiffs’ damages theory and provided opinion regarding the methodology that can be employed to calculate damages on a class-wide basis. Id. at ¶ 5. Specifically, Mr. Tregillis proposed a methodology by which consumers’ damages could be measured by evaluating consumer expectations and behavior based on both the alleged
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fictitious “original” price of the item, the size of the phantom discount, and the cost to
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produce the item at issue. At the close of the first full day session, and after exchanging
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numerous proposals, the Parties made substantial progress. However, the Parties remained
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at an impasse on numerous issues and did not reach a settlement that day. Id., at ¶ 8.
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Feeling that they were close to a final agreement, the Parties appeared for a second
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full day of mediation with Judge Infante, which concluded with the Parties ultimately
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agreeing to all material terms of the settlement and executing a Memorandum of
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Understanding in the following weeks thereafter. Carpenter Decl., at ¶ 10. Each aspect of
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this Settlement was heavily negotiated, including the distribution scheme of the vouchers,
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and their specifications, such as expiration date and the possibility of any proof of purchase
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requirements. Id. at ¶ 11. The Parties subsequently negotiated, drafted, and executed the
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Settlement Agreement currently before the Court. Class Counsel is confident that the terms
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of the Settlement are fair, adequate, and reasonable.
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B.
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The Settlement Agreement 1.
The Benefit to Class Members
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The Children’s Place will distribute a maximum of 800,000 Vouchers to Class
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Members. Carpenter Decl., Ex. 1 (“Settlement Agreement”) at § 1.331. Claimants who
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submit a valid, timely Claim Form, (see Settlement Agreement, Ex. E), will receive
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Voucher(s), which allow Class Members to elect to receive either (1) $6 off a purchase (no
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minimum purchase) or (2) 25% off a purchase (of the first $100), at any of Defendant’s
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stores in the United States or online. Id. at § 1.32. Similar to the points system approved
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in JC Penney, Claimants are eligible to receive multiple Vouchers under a tiered benefit
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structure based upon the total dollar amount of the qualifying purchases they made during
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the Class Period. Id. at § 2.1. For example, Claimants who spent less than $50 on qualified
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purchases will receive 1 Voucher; those who spent between $50.01–150 will receive 2
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All references to “Exhibit 1” refers to the Settlement Agreement attached to the Carpenter Declaration. -4MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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Vouchers; and those who spent over $150 will receive 3 Vouchers. Id. at §§ 2.1–2.2.
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Claimants seeking to qualify for Tier 2 are required to submit acceptable proof of purchase,
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unless they received direct notice. Id. § 2.1. Claimants seeking to qualify for Tier 3 are
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required to submit acceptable proof of purchase. Id. If the Voucher fund is exhausted in
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the first round of distribution, no 25% Vouchers will be distributed and Claimants will
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receive the pro rata value of the available Vouchers. Id. at 2.4.
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Claimants have the ability to receive additional Vouchers if the Voucher Fund is not
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exhausted in the first round of distribution. Id. at § 2.3. In this scenario, if the number of
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Vouchers remaining after the initial distribution exceeds the amount that was initially
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distributed, then Claimants will receive additional Vouchers in the type and number they
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originally elected on their Claim Form. Id. Alternatively, if the number of Vouchers
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remaining is less than the total number initially distributed, then the final distribution will
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allow Claimants to receive a pro rata portion of the remaining $6 Voucher value. Id. The
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Vouchers will be issued to Class Members within thirty (30) days of the Final Settlement
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Date. Id. at § 2.5.
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Like the gift cards offered in the In re Online DVD-Rental settlement, the Vouchers
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offered in this Settlement are an alternative to cash and are not “coupons” within the
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meaning of CAFA. See In re Online DVD-Rental Antitrust Litigation, 779 F.3d 934, 951
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(9th Cir. 2015). The Vouchers are redeemable for a six-month period upon receipt, are
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fully transferrable, stackable if used at the $6 value, and may be used in connection with
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any promotion or discount. Ex. 1 at § 1.32. The Vouchers provide a real benefit to Class
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Members for use at a retailer like The Children’s Place, which sells fashionable
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merchandise at value prices. Carpenter Decl., at ¶ 12. For example, as of the date of this
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motion, Defendant’s online store offers for sale a variety of girls t-shirts for $3.99–9.75,
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toddler leggings for $4.47–6.57, baby onesies for $4.97, and jeans for $7.992. Class
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See generally, The Children’s Place, www.childrensplace.com/shop/us/home, last accessed September 8, 2017. -5MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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Members “need not spend any of his or her own money and can choose from a large number
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of potential items to purchase.” In re Online DVD-Rental, 779 F.3d at 951.
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2.
Notice Plan and Claims Process
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Defendant retained Kurtzman Carson Consultants LLC (“KCC”) to serve as the
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Claims Administrator. Ex. 1 at § 1.6. Within sixty (60) days after preliminary approval,
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Defendant and KCC will send Email Notice to Class Members and will implement an
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Online Media Notice program through the Google Display Network. Id. at § 3.3. KCC
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will also establish and administer a Settlement Website from which Class Members can
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gather information about the Settlement and can: 1) view the Full Notice, Claim Form,
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Complaint, Settlement Agreement, Preliminary Approval Order, and Motion for
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Attorneys’ Fees and Costs; and 2) electronically submit a Claim Form and valid proof of
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purchase if necessary. Id. at §§ 3.3, 3.6. Moreover, within ten (10) calendar days after this
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motion and executed Settlement Agreement is filed, Defendant served upon relevant
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government officials notice of the proposed settlement in accordance with the CAFA
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Notice provisions set forth 28 U.S.C. § 1715. Id., at § 3.4.
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No later than 120 days after preliminary approval, Class Members must submit valid
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Claim Forms via U.S. Mail or electronically on the Settlement Website. Id. at § 1.28, 3.6.
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Class Members who fail to elect the form of the Voucher will be deemed to have requested
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a $6 Voucher. Id. at § 3.6.
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3.
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Notice and Administration Costs, Attorneys’ Fees and Expenses, and Plaintiffs’ Incentive Awards Defendant agrees to bear the costs of administering notice to the Class in an amount
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not to exceed $1,000,000, and to pay Class Counsel’s attorneys’ fees, costs, and Plaintiffs’
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incentive awards. Id. at § 2.6–2.7, 2.10. In connection with final approval, Plaintiffs will
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make an application for incentive awards not to exceed $2,500 each and Class Counsel will
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make an application for a fee and costs award not to exceed $1,080,000. Id. at 2.6–2.7.
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Unless otherwise ordered by the Court, Defendant will make such Court-approved
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payments within 10 days after the Final Settlement Date and upon receiving Plaintiffs’ and
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Class Counsel’s W-9 forms. Id. -6MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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THE PROPOSED SETTLEMENT IS FAIR, ADEQUATE, AND REASONABLE The Ninth Circuit recognizes the “strong judicial policy that favors settlement,
3
particularly where complex class action litigation is concerned.” In re Syncor ERISA
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Litigation, 516 F.3d 1095, 1101 (9th Cir. 2008); Class Plaintiffs v. City of Seattle, 955 F.2d
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1268, 1277 (9th Cir. 1992).
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precipitated by the overwhelming uncertainties of the outcome, expense, management, and
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difficulties in proof inherent in class action lawsuits. See Van Bronkhorst v. Safeco Corp.,
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529 F.2d 943, 950 (9th Cir. 1976) (noting that class action settlements are especially
9
favorable in light of “an ever increasing burden to so many federal courts and which
1
10
IV.
The strong preference for class action settlements is
frequently present serious problems of management and expense.”).
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Approval of class action settlement “involves a two-step process in which the court
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first determines whether a proposed class action settlement deserves preliminary approval
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and then, after notice is given to class members, whether final approval is warranted.” In
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re Toys R Us-Delaware, Inc.—Fair and Accurate Credit Transactions Act (FACTA)
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Litigation, 295 F.R.D. 438, 448 (C.D. Cal. 2014) (internal citations and quotation marks
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omitted). At the preliminary approval stage, the focus is simply on whether the settlement
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is “within the range of possible judicial approval.” In re M.L. Stern Overtime Litigation,
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No. 07-CV-0118-BTM (JMA), 2009 WL 995864 at *3 (S.D. Cal. Apr. 13, 2009) (citations
19
and quotation marks omitted). Accordingly, the court need not scrutinize every detail of
20
the settlement at this juncture, since “class members will subsequently receive notice and
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have an opportunity to be heard” at the time before final approval. Id.; see also Acosta v.
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Trans Union, LLC, 243 F.R.D. 377, 386 (C.D. Cal. 2007) (“To determine whether
23
preliminary approval is appropriate, the settlement need only be potentially fair, as the
24
Court will make a final determination of its adequacy at the hearing on Final Approval,
25
after such time as any party has had a chance to object and/or opt out.”) (emphasis in
26
original).
27
The standard inquiry the trial court explores is whether the proposed settlement “is
28
fundamentally fair, adequate, and reasonable.” Hanlon v. Chrysler Corp., 150 F.3d 1011, -7MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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1
1026 (9th Cir. 1998); Fed. R. Civ. P. 23(e). “It is the settlement taken as a whole, rather
2
than the individual component parts, that must be examined for overall fairness.” Hanlon,
3
150 F.3d at 1026 (citing Officers for Justice v. Civil Serv. Com’n of City and County of San
4
Francisco, 688 F.2d 615, 628 (9th Cir. 1982)). Accordingly, the court does not have “the
5
ability to delete, modify or substitute certain provisions.” Id. (citing Officers for Justice,
6
688 F.2d at 630). In other words, the “settlement must stand or fall in its entirety.” Id.
7
“[P]reliminary approval and notice of the settlement terms to the proposed class are
8
appropriate where ‘[1] the proposed settlement appears to be the product of serious,
9
informed, non-collusive negotiations, [2] has no obvious deficiencies; [3] does not
10
improperly grant preferential treatment to class representatives or segments of the class,
11
and [4] falls within the range of possible approval . . . .” In re Tableware Antitrust Litig.,
12
484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007) (internal quotation and citation omitted)
13
(emphasis added). For the reasons set forth in detail below, the proposed Settlement is
14
fundamentally fair, adequate, and reasonable—falling squarely into the range of
15
preliminary approval.
16
A.
The Settlement is a Product of Serious, Arms-Length Negotiations
17
The Ninth Circuit cautions that the trial court’s evaluation of the parties’ agreement
18
“must be limited to the extent necessary to reach a reasoned judgment that the agreement
19
is not the product of fraud or overreaching by, or collusion between, the negotiating parties,
20
and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.”
21
Hanlon, 150 F.3d at 1027 (quoting Officers for Justice, 688 F.2d at 625). This Circuit
22
“does not follow the approach of other circuits that requires district courts to ‘specifically
23
weigh[ ] the merits of the class’s case against the settlement amount and quantif[y] the
24
expected value of fully litigating the matter.’” Spann v. JC Penney Corp. (“Spann II”), 314
25
F.R.D. 312, 323–24 (C.D. Cal. 2016) (quoting Rodriguez v. W. Publ’g Corp., 563 F.3d
26
948, 965 (9th Cir. 2009)).
27
Rather, “[t]his circuit has long deferred to the private consensual decision of the
28
parties.” Rodriguez, 563 F.3d at 965. Perhaps the most critical inquiry to the assist the court -8MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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is determining whether the settlement is “the product of an arms-length, non-collusive,
2
negotiated resolution.” Id. If the answer is yes, courts will presume the settlement is fair
3
and reasonable. Spann II, 314 F.R.D. at 324. “The assistance of an experienced mediator
4
in the settlement process confirms that the settlement is non-collusive.” Satchell v. Federal
5
Express Corp., Nos. C03-2659 SI, C03-2878 SI, 2007 WL 1114010, at *4 (N.D. Cal. Apr.
6
13, 2007).
7
Here, there is no evidence that this Settlement was founded in collusion or fraud.
8
Rather, agreement was reached after hosting numerous informal settlement discussions that
9
evaluated the strengths and weaknesses of the case, informal pre-mediation discovery, and
10
two full-day private mediation sessions facilitated by a highly-experienced mediator, Hon.
11
Edward A. Infante (Ret.). Carpenter Decl., at ¶ 4. Plaintiffs also consulted economist
12
Christian Tregillis to analyze consumer behavior as applied to price discounting and to
13
assess whether there is an available methodology to estimate compensatory damages
14
suffered by the Class as a result of Defendant’s conduct. Id. at ¶ 5. Mr. Tregillis generated
15
a comprehensive expert report outlining his proposed damages theory, which effectively
16
assisted the Parties in continuing settlement discussions and in contemplating a subsequent
17
round of mediation. Id. at ¶ 6. Even after the Parties concluded the first mediation, Class
18
Counsel continued to investigate Defendant’s practices in stores outside of California,
19
confirmed that the deceptive pricing scheme was likely occurring nationwide, and was able
20
to get retained by clients in various other states such as, Florida and New York. Id. at ¶ 9.
21
In addition, both parties were represented by counsel highly-experienced in complex class
22
litigation, which lent to the careful consideration of all strengths and weaknesses in order
23
to achieve efficient resolution. Id. at ¶ 13. Thus, the Parties were well-versed with the
24
relevant law, the challenges present in calculating damages on a class-wide basis, and the
25
risks of continued litigation and recovery. Accordingly, all evidence indicates that this
26
Settlement was not “the product of fraud or overreaching by, or collusion between, the
27
negotiating parties.” Spann II, 314 F.R.D. at 324–25.
28
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B.
1
The Settlement Falls Within a Range of Possible Judicial Approval
2
This Settlement provides significant relief to the Class and clearly falls within the
3
range of possible judicial approval. “To evaluate the range of possible approval criterion,
4
which focuses on substantive fairness and adequacy, courts primarily consider plaintiff’s
5
expected recovery balanced against the value of the settlement offer.” In re Tableware
6
Antitrust Litig., 484 F. Supp. 2d at 1080. “As the Ninth Circuit has noted, ‘the very essence
7
of a settlement is compromise, a yielding of absolutes and an abandoning of highest
8
hopes.’” Spann II, 314 F.R.D. at 325 (quoting Officers for Justice, 688 F.2d at 624).
9
Here, the Settlement provides that The Children’s Place will distribute a maximum
10
of 800,000 Vouchers to Class Members. Ex. 1 at § 1.33. Vouchers allow Class Members
11
to elect to receive either (1) $6 off a purchase (no minimum purchase) or (2) 25% off a
12
purchase (of the first $100), at any of Defendant’s stores in the United States or online. Id.
13
at § 1.32. As addressed in Section III.B.1, Class Members have the ability to claim up to
14
three (3) Vouchers depending upon the amount of money spent at The Children’s Place
15
during the Class Period, and also have the potential of earning additional Vouchers in a
16
subsequent round of distribution. Id. at § 2.3. If we calculate the total fund based upon an
17
election of the $6 Voucher, this creates a potential Settlement Fund of at least $4.8 million.
18
If calculated based upon the coupon of 25% off the first $100 spent, this creates a potential
19
Settlement Fund of $20 million.3 This Settlement benefit is expected to provide Class
20
Members with “sufficient compensation” to purchase at least one, if not a few, items at The
21
Children’s Place. See Spann II, 314 F.R.D. at 325.
22
This recovery is significant not only because of the valuable benefit obtained for the
23
Class, but also because Plaintiffs would have faced a significant risk in litigating this case
24
through trial. “Even if plaintiff were to prevail at trial, there is a very real risk that plaintiff
25
could recover nothing.” Spann II, 314 F.R.D. at 326; see e.g., In re Tobacco Cases II, 2015
26 27 28
3
This calculation is based upon the hypothetical that each Class Member claims the 25% off coupon and spends at least $100 to receive a $25 benefit. - 10 MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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WL 5673070, at *5–9 (Cal. App. Sept. 28, 2015) (declining to award restitution because
2
plaintiffs failed to establish a price/value differential despite prevailing on liability under
3
the UCL and FAL); Linney v. Cellular Alaska Partnership, 151 F.3d 1234, 1242 (9th Cir.
4
1998) (“The fact that a proposed settlement may only amount to a fraction of the potential
5
recovery does not, in and of itself, mean that the proposed settlement is grossly inadequate
6
and should be disapproved.”) (internal quotation marks omitted). While Plaintiffs feel
7
confident about the merits of their case, the state of the law regarding the appropriate
8
method for calculating damages or restitution in these type of false pricing cases is in flux.
9
See e.g., Stathakos v. Columbia Sportswear Company, No. 15-cv-4543-YGR, 2017 WL
10
1957063 (N.D. Cal. May 11, 2017) (granting summary judgment in favor of defendants
11
with regard to plaintiffs’ three proposed measures of restitution); accord Jacobo v. Ross
12
Stores, Inc., 2017 WL 3382053, at *1 (C.D. Cal. Aug. 2, 2017); Chowning v. Kohl’s Dep’t
13
Stores, Inc., 2016 WL 1072129, at *12 (C.D. Cal. Mar. 15, 2016). In sum, in light of the
14
risks presented by protracted litigation, the Settlement provides the Class a “guaranteed,
15
fixed, immediate, and substantial recovery” and is thus, within the range of possible
16
judicial approval. See Spann II, 314 F.R.D. at 327. C. The Settlement Has No Obvious Deficiencies
17 18
“Beyond the value of the settlement, courts have rejected preliminary approval
19
when the proposed settlement contains obvious substantive defects such as . . . overly broad
20
releases of liability.” Newberg on Class Actions § 13:15, at p. 326 (5th ed. 2014); see e.g.,
21
Fraser v. Asus Computer Int’l, 2012 WL 6680142, *3 (N.D. Cal. 2012) (denying
22
preliminary approval where settlement provided “nationwide blanket release” in exchange
23
for payment “only on a claims-made basis,” without establishment of a settlement fund or
24
any other benefit to the class).
25
Class Members who do not timely exclude themselves from the Settlement will be
26
deemed to have released Defendant from claims related to the instant litigation. Ex. 1 at
27
§§ 1.10, 2.11. Although these provisions release both known “Class Released Claims” and
28
“Unknown Claims,” the Release is limited to a universe of claims “arising out of or relating - 11 MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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to any of the acts, omissions or other conduct that have or could have been alleged or
2
otherwise referred to in the Complaint, or any preceding version thereof filed in the Action,
3
including, but not limited to, any and all claims related in any way to the advertisement of
4
prices by The Children’s Place, Inc. or any of its subsidiaries or affiliates.” Id. at § 1.10.
5
Since the Release is limited to the scope of the litigation, it is fair and adequate for
6
preliminary approval. See e.g., Spann II, 314 F.R.D. at 327–28 (“With this understanding
7
of the release, i.e., that it does not apply to claims other than those related to the subject
8
matter of the litigation, the court finds that the release adequately balances fairness to
9
absent class members and recovery for plaintiffs with defendants’ business interest in
10
ending this litigation with finality.); Vasquez v. Coast Valley Roofing, Inc., 670 F. Supp.
11
2d 1114, 1126 (E.D. Cal. 2009) (“These released claims appropriately track the breadth of
12
Plaintiffs’ allegations in the action and the settlement does not release unrelated claims that
13
class members may have against defendants.”). Accordingly, the Settlement has no obvious
14
defects.
16
The Settlement Does Not Grant Preferential Treatment Over Class Representatives or Segments of Class Members The Settlement Agreement authorizes each named Plaintiff to seek an Individual
17
Settlement Award in an amount no greater than $2,500 for their service to the Class in
18
bringing the lawsuit. Ex. 1 at § 2.6. Importantly, the Plaintiffs’ incentive awards are to be
19
paid separate and apart from the Class award, and any reduction of the incentive awards by
20
the Court shall not affect the rights and obligations under the Settlement. Id., at § 2.8.
15
21
D.
The Ninth Circuit recognizes that service awards given to named plaintiffs are “fairly
22
typical” in class actions.
23
compensate class representatives for work done on behalf of the class, to make up for
24
financial or reputation risk undertaken in bringing the action, and sometimes, to recognize
25
their willingness to act as a private attorney general.” Id. at 958–59. In evaluating whether
26
the Settlement grants preferential treatment to Plaintiffs, “the court must examine whether
27
there is a ‘significant disparity between the incentive awards and the payments to the rest
28
of the class members’ such that it creates a conflict of interest.” Spann II, 314 F.R.D. at
Rodriguez, 563 F.3d at 958. Incentive awards serve “to
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328 (citing Radcliffe v. Experian Info. Solutions Inc., 715 F.3d 1157, 1165 (9th Cir. 2013)).
2
In arriving at such determination, courts will consider “the number of named plaintiffs
3
receiving incentive payments, the proportion of the payments relative to the settlement
4
amount, and the size of each payment.” In re Online DVD-Rental, 779 F.3d at 947 (quoting
5
Staton v. Boeing Co., 327 F.3d 938, 977 (9th Cir. 2003).
6
Here, the requested awards are unlikely to create a conflict of interest between
7
named Plaintiffs and absent Class Members because the Settlement Agreement will remain
8
in full force and effect, notwithstanding any reduction of the awards. See Spann II, 314
9
F.R.D. at 328–29. Ms. Rael and Hedrick’s awards were not predicated on the existence of
10
any special treatment. Carpenter Decl., at ¶ 14. The basis for such awards is purely to
11
compensate Plaintiffs for their efforts in initiating the lawsuit, staying abreast of all aspects
12
of the litigation, and fairly and adequately protecting the interests of the absent class
13
members. Id., at ¶ 15. Thus, the awards do not constitute preferential treatment over
14
Plaintiffs.
15
Most importantly, even though $2,500 represents more than the individual share that
16
each absent Class Member will receive from the Settlement, it is also unlikely that this rises
17
to the level of unduly preferential treatment. See Spann II, 314 F.R.D. at 329. Only two
18
Class Representatives will, at most, seek $2,500 each, representing only 0.001% of the
19
potential $4.8 million total Class Settlement amount (if calculated based off the $6 Voucher
20
election). This amount is undoubtedly reasonable considering its miniscule proportion to
21
the overall settlement fund. See e.g., id. at 328–29 (approving a $10,000 plaintiff incentive
22
award which made up only 0.02% of the total $50 million settlement fund); In re Online
23
DVD-Rental, 779 F.3d at 947–48 (approving nine plaintiff incentive awards of $5,000
24
which made up only .17% of the total settlement fund); Cf. Staton, 327 F.3d 938 (reversing
25
approval of incentive awards that made up roughly 6% of potential $14.8 million settlement
26
fund). Accordingly, the Settlement does not grant preferential treatment of Plaintiffs Rael
27
and Hedrick over the rest of the Class.
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V.
THE PROPOSED CLASS SHOULD BE PROVISIONALLY CERTIFIED FOR SETTLEMENT PURPOSES
2
The Ninth Circuit recognizes the propriety of certifying a settlement class to resolve
3
consumer lawsuits. See Hanlon, 150 F.3d at 1019. At the preliminary approval stage, the
4
Court’s threshold task is to determine whether the proposed class satisfies the Rule 23(a)
5
requirements: (1) numerosity, (2) commonality, (3) typicality, and (4) adequacy, and the
6
requirements set forth in Rule 23(b)(3). Id., citing Amchem Products, Inc. v. Windsor, 521
7
U.S. 591, 613 (1997). Here, when ruling on class certification in the settlement context,
8
the court need not explore the issue of manageability, “for the proposal is that there be no
9
trial.” Amchem, 521 U.S. at 620. Here, provisional certification of the proposed Class for
10
purposes of the Settlement is warranted because Plaintiffs satisfy all requirements set forth
11
in Rule 23.
12 13
A.
The Proposed Settlement Class Satisfies Rule 23(a) 1.
Numerosity
14
Numerosity is satisfied if “the class is so numerous that joinder of all members is
15
impracticable.” Fed. R. Civ. P. 23(a); Wiener v. Dannon Co., Inc., 255 F.R.D. 658, 664
16
(C.D. Cal. 2009); see also Harris v. Palm Springs Alpine Estates, Inc., 329 F.2d 909, 913–
17
14 (9th Cir. 1964) (“impracticability” exists where there is a “difficulty or inconvenience
18
of joining all members of the class”). “In determining whether numerosity is satisfied, the
19
court may consider reasonable inferences drawn from the facts before it.” Balasanyan v.
20
Nordstrom, Inc., 294 F.R.D. 550, 558 (S.D. Cal. 2013.) Numerosity is clearly established
21
here. The Parties conducted pre-mediation discovery and investigation, wherein Defendant
22
agreed to not dispute numerosity for purposes of settlement. Carpenter Decl., ¶ 3.
23
Accordingly, because the Class Members are certainly too numerous to join as plaintiffs,
24
the numerosity requirement is met.
25
2.
Commonality
26
Commonality is satisfied if “there are any questions of law or fact common to the
27
class. Fed. R. Civ. P. 23(a)(2). The inquiry regarding commonality involves whether
28
Plaintiffs can show a common contention such that “determination of its truth or falsity - 14 MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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will resolve an issue that is central to the validity of each one of the claims in one stroke.”
2
Wal–Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011). “The existence of shared legal
3
issues with divergent factual predicates is sufficient, as is a common core of salient facts
4
coupled with disparate legal remedies within the class.” Hanlon, 150 F.3d at 1019.
5
“District courts in California routinely certify consumer class actions arising from alleged
6
violations of the CLRA, FAL and UCL.” Spann v. J.C. Penney Corp. (“Spann I”), 307
7
F.R.D. 508, 518 (C.D. Cal. 2015), citing Tait v. BSH Home Appliances Corp., 289 F.R.D.
8
466, 480 (C.D. Cal. 2012).
9
Here, the proposed Class Members each suffered the same injury: they all purchased
10
exclusive, branded merchandise from The Children’s Place (whether at the retail store,
11
outlet store, or online) that was subjected to Defendant’s alleged false price discounting
12
scheme. See TAC at ¶¶ 9, 45. Thus, Class Members’ claims involve the same alleged
13
misrepresentations (i.e. an advertised discount from a “regular” or “original” price) as
14
applied to items with the same common characteristics (i.e. Children’s Place exclusive
15
branded merchandise). See Spann I, 307 F.R.D. at 518. Moreover, Class Members share
16
several additional common questions of law and fact, including: (1) whether Defendant’s
17
deceptive discount pricing scheme violates the UCL, the FAL, and the CLRA; (2) whether
18
Defendant used false “price tag” or “original” price labels and falsely advertised price
19
discounts on its Children’s Place branded products sold in its retail and outlet stores; (3)
20
whether Defendant’s advertised “price tag” or “original” prices were the prevailing market
21
prices for the respective Children’s Place branded products during the 90 days preceding
22
dissemination and/or publication of the advertisement; and (4) whether Class Members are
23
entitled to damages and/or restitution and the proper measure of such loss. TAC at ¶ 45;
24
see e.g., Spann I, 307 F.R.D. at 518. These common questions regarding whether The
25
Children’s Place “original” or “regular” prices are false and misleading are undoubtedly
26
susceptible to common proof which will drive common answers for each Class Member.
27
See e.g., Spann II, 314 F.R.D. at 321. Thus, the commonality requirement is readily
28
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3.
Typicality
2
Typicality is satisfied if the class representatives’ claims or defenses are typical to
3
those of the Class. Fed. R. Civ. P. 23(a)(3). The Ninth Circuit applies the typicality
4
requirement liberally: “representative claims are typical if they are reasonably coextensive
5
with those of absent class members; they need not be substantially identical.” Hanlon, 150
6
F.3d at 1020. The “typicality” requirement is essential to ensure that the claims of the class
7
representative is aligned with those of the class as a whole. Wolin v. Jaguar Land Rover
8
North America, LLC, 617 F.3d 1168, 1175 (9th Cir. 2010). “The test of typicality is whether
9
other members have the same or similar injury, whether the action is based on conduct
10
which is not unique to the named plaintiffs, and whether other class members have been
11
injured by the same course of conduct.” Id. As addressed immediately above, Plaintiffs
12
Rael and Hedrick’s claims are typical to those of the Class because they are based upon the
13
same facts and the same legal and remedial theories as those of the Class. See Spann I, 307
14
F.R.D. at 519.
15
4.
Adequacy
16
Adequacy is satisfied if the class representatives “will fairly and adequately protect
17
the interests of the class.” Fed. R. Civ. P. 23(a)(4). The Ninth Circuit utilizes two questions
18
to determine legal adequacy: “(1) do the named plaintiffs and their counsel have any
19
conflicts of interest with other class members and (2) will the named plaintiffs and their
20
counsel prosecute the action vigorously on behalf of the class?” Hanlon, 150 F.3d at 1020.
21
Plaintiffs Rael and Hedrick are adequate class representatives because they share the
22
common goal to pursue truthful advertising regarding retailer’s sale discount pricing
23
practices. See Hoffman v. Dutch LLC, 317 F.R.D. 566, 574–75 (S.D. Cal. 2016). There is
24
no evidence in the record that either Plaintiff harbors any interests antagonistic to the
25
interests of the Class. Carpenter Decl., at ¶ 16. Plaintiffs have stayed abreast of the
26
proceedings thus far and if necessary, would sit for depositions and participate in discovery.
27
Id. Further, Class Counsel are experienced consumer class action attorneys, have litigated
28
many cases involving UCL, FAL, and CLRA claims, and have vigorously investigated and - 16 MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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prosecuted this case since its inception. Carpenter Decl., at ¶ 17. Therefore, the adequacy
2
requirement is satisfied.
3
B.
The Proposed Settlement Class Satisfies Rule 23(b)
4
Class actions under Rule 23(b)(3) must also satisfy the following two requirements,
5
which are commonly referred to as “predominance” and “superiority,” respectively: (1)
6
“the questions of law and fact common to class members predominate over any questions
7
affecting only individual members, and” (2) “that a class action is superior to other
8
available methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P.
9
23(b)(3). Plaintiffs have satisfied both of these requirements.
10
1.
Common Questions Predominate
11
Predominance inquires “whether proposed classes are sufficiently cohesive to
12
warrant adjudication by representation.” Hanlon, F.3d at 1022 (citing Amchem, 521 U.S.
13
at 623). Although predominance is inherently related to commonality in that it assumes a
14
prerequisite of common issues of law and fact, “Rule 23(b)(3) focuses on the relationship
15
between the common and individual issues.” Id (emphasis added). Where the core question
16
driving the litigation “would require the separate adjudication of each class member’s
17
individual claim or defense, a Rule 23(b) action would be inappropriate.” Zinser v. Accufix
18
Research Institute, Inc., 253 F.3d 1180, 1189 (9th Cir. 2001) (internal citation omitted).
19
The Ninth Circuit makes clear that since California consumer protection laws apply
20
a reasonable consumer standard, “relief under the UCL is available without individualized
21
proof of deception, reliance and injury.” Stearns v. Ticketmaster Corp., 655 F.3d 1013,
22
1020 (9th Cir. 2011), abrogated on other grounds. “Similarly, because Plaintiff’s other
23
claims under the FAL and CLRA rely on the same objective test, that is, whether members
24
of the public are likely to be deceived, these other claims also do not require individual
25
analysis of class members’ injury.” Beck-Ellman v. Kaz USA, Inc., 283 F.R.D. 558, 568
26
(S.D. Cal. 2012) (internal quotation marks and citation omitted). “For the purposes of class
27
certification, it is sufficient that the alleged material omission was part of a common
28
advertising scheme to which the entire class was exposed.” Id. (finding predominance - 17 MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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where the core of plaintiff’s claims rested on the deceptive marketing of defendant’s
2
heating pads, which failed to include an injury warning despite any variations in
3
packaging); see also Spann I, 307 F.R.D. at 521–22 (finding predominance where plaintiff
4
claimed defendant’s pricing practices are likely to deceive consumers because they do not
5
reflect bona fide original prices).Where the “thrust of plaintiff’s claim, which is that
6
defendant operated a systematic and pervasive unlawful price comparison policy,…
7
evidence of such a policy or scheme is common to all putative class members and
8
predominates over any individual facts or questions.” Spann I, 307 F.R.D. at 522. Similar
9
to Spann, Plaintiffs’ theory of liability is rooted in the allegation that The Children’s Place
10
engaged in a scheme of deceptive discount pricing applied uniformly to all of Defendant’s
11
merchandise. TAC at ¶ 49. Plaintiffs also allege that each class member was exposed the
12
same uniform pricing misrepresentations about the merchandise’s “bona fide” regular price
13
and corresponding phantom discount, regardless of the product type or size of the discount.
14
Id.
15
evidentiary or factual issues that could arise in litigation.” Maxin v. RHG & Co., Inc., 2017
16
WL 748143, at *4 (S.D. Cal. Feb. 27, 2017). Here, similar to Spann, where “essential
17
questions at the heart of plaintiff’s claims [are] common”, these issues “would predominate
18
over any other individualized issues, largely due to the fact that plaintiff would rely almost
19
entirely on common evidence in the form of defendant’s internal pricing guidelines . . . and
20
California sales data.” Spann II, 314 F.R.D. at 322.
21
“Further, for purposes of settlement, Class Members are not required to prove any
2.
A Class Action is the Superior Method to Settle this Controversy
22
Superiority examines whether the class action device “is superior to other available
23
methods for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3).
24
In evaluating superiority, courts consider the following factors: “(A) the class members’
25
interests in individually controlling the prosecution or defense of separate actions; (B) the
26
extent and nature of any litigation concerning the controversy already begun by or against
27
class members; (C) the desirability or undesirability of concentrating the litigation of the
28
claims in the particular forum; and (D) the likely difficulties in managing a class action.” - 18 MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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1
Id. “[T]he purpose of the superiority requirement is to assure that the class action is the
2
most effective means for resolving the controversy. Where recovery on an individual basis
3
would be dwarfed by the cost of litigating on an individual basis, this factor weighs in favor
4
of class certification.” Wollin, 617 F.3d at 1175–76 (citation and internal quotation marks
5
omitted). In the settlement context, manageability of the class action device is not a
6
concern. See Spann II, 314 F.R.D. at 323 (“the other requirements of Rule 23(b)(3) such
7
as the desirability or undesirability of concentrating the litigation of the claims in the
8
particular forum and the likely difficulties in managing a class action, are rendered moot
9
and irrelevant”); see also Amchem Prods., Inc., 521 U.S. at 620 ("Confronted with a request
10
for settlement-only class certification, a district court need not inquire whether the case, if
11
tried, would present intractable management problems, for the proposal is that there be no
12
trial.").
13
Accordingly, because each Class Members’ claim is common to the class and
14
relatively small in amount, a class action is the superior method for efficiently adjudicating
15
Plaintiffs’ claims.
16
VI.
THE PROPOSED CLASS NOTICE SHOULD BE APPROVED
17
Rule 23(e) requires the trial court to “direct notice in a reasonable manner to all class
18
members who would be bound by the proposal.” Fed. R. Civ. P. 23(e)(1). This requirement
19
contemplates that class notice be “reasonably calculated, under all the circumstances, to
20
apprise interested parties of the pendency of the action and afford them an opportunity to
21
present their objections.” In re Toys R Us, 295 F.R.D. at 448 (citing Mullane v. Central
22
Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950)). A class action settlement notice is
23
deemed “satisfactory if it generally describes the terms of the settlement in sufficient detail
24
to alert those with adverse viewpoints to investigate and to come forward and be heard.”
25
Churchill Vill., LLC v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004). “However, Rule
26
23(e) ‘does not require detailed analysis of the statutes or causes of action forming the basis
27
for the plaintiff class’s claims, and it does not require an estimate of the potential value of
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1
those claims.’” In re Online DVD-Rental, 779 F.3d at 946 (citing Lane v. Facebook, Inc.,
2
696 F.3d 811, 826 (9th Cir. 2012)).
3
The content of the Full Notice, Email Notice, and Online Media Notice provides
4
sufficient information to satisfy these standards. See Exhibits B, C, and D to the Settlement
5
Agreement. Each Notice clearly and conspicuously: identifies who is a Class Member;
6
describes the factual background of the litigation and the Parties to the action; outlines
7
Class Members’ legal rights, including the right to either participate in the Settlement,
8
exclude themselves, or object, and deadlines to pursue each available course of action;
9
provides the amount of the benefit and details of the relief; states the amount of attorneys’
10
fees and Plaintiffs’ incentive awards requested by Class Counsel; and sets forth the contact
11
information of the Claims Administrator. See generally, id. The Full Notice includes a
12
table of contents modeled in a “frequently asked questions” format and includes answers
13
to questions such as, “How do I know if I am part of the Settlement,” “What is the
14
difference between excluding myself and objecting to the Settlement,” and “How can I get
15
a Voucher or Vouchers?” See Settlement Agreement, Exhibit B. This format constitutes
16
adequate notice in that it is conducive to providing essential Settlement information to the
17
Class. See 4 Newberg on Class Actions § 11:53, at p. 167 (4th ed. 2013) (“[N]otice is
18
adequate if it may be understood by the average class member.”).
19
Moreover, the method of providing notice to Class Members is adequate and
20
reasonably likely to ensure all claimants are apprised of the Settlement terms and given an
21
opportunity to be heard. Within sixty (60) calendar days after entry of this Order, the
22
following Notice will disseminate to the Class: KCC will post the Full Notice on the
23
Settlement Website where it will remain until at least the Final Settlement Date; Defendant
24
will provide Email Notice to those Class Members for whom it has valid email addresses
25
and will provide the Settlement Website address, along with KCC’s contact information;
26
and KCC will implement the Online Media Notice program through Google Display
27
Network. Ex. 1 at § 3.3. These forms of Notice constitute “the best notice practicable”
28
under the circumstances. See e.g., Keirsey v. eBay, Inc., No. 12-cv-1200-JST, 2014 WL - 20 MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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1
644697, at *1–2 (N.D. Cal. Feb. 14, 2014) (finding that disseminating notice primarily
2
through email, and supplemented with information on the class website and through
3
internet news sources constituted a proper form and method of notice).
4
Accordingly, both “the procedure of providing notice and the content of the class
5
notice constitute the best practicable notice to class members.” Spann II, 314 F.R.D. at 332;
6
see also In re Online DVD-Rental, 779 F.3d at 946 (describing adequate notice).
7
VII.
PLAINTIFFS SHOULD BE APPOINTED CLASS REPRESENTATIVES AND CLASS COUNSEL SHOULD BE APPOINTED FOR THE CLASS FOR SETTLEMENT PURPOSES Plaintiffs also request that the Court designate Plaintiffs Monica Rael and Alyssa
8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Hedrick as Class Representatives to implement the terms of the Settlement. As detailed above, Plaintiffs will fairly and adequately represent and protect the interests of the Class. Plaintiffs also seek to appoint Todd D. Carpenter of the law firm of Carlson Lynch Sweet Kilpela & Carpenter, LLP (“Carlson Lynch”) as Class Counsel for the Class. In appointing Class Counsel pursuant to Rule 23(g), the Court “must consider: (i) the work counsel has done in identifying or investigating potential claims in the action; (ii) counsel’s experience in handling class actions, other complex litigation, and the types of claims asserted in the action; (iii) counsel’s knowledge of the applicable law; and (iv) the resources that counsel will commit to representing the class.” Fed. R. Civ. P. 23(g)(1)(A). As set forth above, Carlson Lynch is highly experienced and knowledgeable in complex consumer class action litigation and well-equipped to vigorously and efficiently represent the proposed Class. See Carpenter Decl., at ¶ 17. Moreover, Class Counsel has expended a substantial amount of time investigating The Children’s Place fraudulent sale discounting practices and researching the viability of Plaintiffs’ claims for liability and damages. Id. Accordingly, the Court should appoint Todd Carpenter of Carlson Lynch as Class Counsel for the Class. /// /// /// - 21 MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION
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1 VIII.
THE PROPOSED SCHEDULE OF EVENTS
2
Based on the date of entry of the Preliminary Approval Order and the date the Court
3
sets for the Final Fairness Hearing, the following represents certain Settlement-related
4
dates:
5 6 7 8 9 10 11 12 13 14 15
Event
Timing
Last day for Defendant, through KCC, 60 days after entry of this Order to send Email Notice, start operating Settlement Website, and begin to provide Online Media Notice Last day for Plaintiffs to file fee 90 days after entry of this Order petition Last day for Class Members to file a 120 days after entry of this Order claim, request exclusion or object to the Settlement Last day for Parties to file briefs in 10 days before Fairness Hearing support of the Final Order and Judgment First day Final Fairness Hearing can No earlier than 160 calendar days after be set entry of this Order IX.
CONCLUSION
16
For the reasons set forth above, Plaintiffs respectfully request that the Court grant
17
the instant unopposed motion for preliminary approval of class action settlement and all
18
related requests therein.
19 20 21 22 23 24 25 26 27
Date: November 22, 2017
Respectfully submitted, /s/ Todd D. Carpenter CARLSON LYNCH SWEET KILPELA & CARPENTER, LLP Todd D. Carpenter (CA 234464) 1350 Columbia Street, Suite 603 San Diego, California 92101 Telephone: (619) 762-1900 Facsimile: (619) 756-6991
[email protected] Attorneys for Plaintiff and Class Counsel
28 - 22 MEM. OF P’S & A’S ISO UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF SETTLEMENT AND PROVISIONAL CLASS CERTIFICATION