Steinfeld v Discover Fin Servs., 2014 WL 1309352 (N.D. Cal. March 31, 2014).

In this action, a district court in California found that CAFA does not mandate a fresh notice to be sent to a settlement class after an amendment to the Settlement Agreement is made, if the original notice had met the CAFA requirements.

This was a putative class action filed by two consumers Andrew Steinfeld (“Mr. Steinfeld”) and Walter Bradley (“Mr. Bradley”), alleging that the defendants engaged in a systematic practice of calling consumers’ cell phones by using an automatic telephone dialing system or by using an artificial or prerecorded voice, or by using both forms of communication, without a consumer’s prior express consent, in violation of the Telephone Consumer Protection Act (“TCPA”).

Mr. Bradley filed his action Bradley v. Discover Financial Services, No. 11–CV–5746–YGR (“Bradley”) on November 30, 2011. The defendants moved to compel arbitration; thereafter, the parties stipulated to defer the hearing on the motion in order to participate in mediation sessions. The parties subsequently, stipulated that the defendants could withdraw the motion to compel arbitration, without prejudice to renewing it at a later date, so that they could focus their efforts on settlement.

Mr. Steinfeld filed his complaint Steinfeld v. Discover Financial Services, 12–CV–1118–JSW (“Steinfeld”) on March 6, 2012. The parties postponed the initial case management conference several times in order to participate in mediation in the Bradley action. In August 2012, Defendants filed a motion to compel arbitration. However, shortly after it was filed, the defendants withdrew the motion without prejudice to re-filing it at a later time, in light of settlement discussions. Thereafter, the parties stipulated to postpone case deadlines to continue settlement discussions and to finalize the terms of the settlement once they reached an agreement in principle.

In 2013, the plaintiffs filed their first amended complaint, and filed their motion for preliminary approval of a class action settlement. Pursuant to the terms of the settlement, and because Mr. Bradley had been added as a plaintiff to this case, the parties stipulated to dismissal of the Bradley action. In June 2013, the Court issued an order setting forth concerns with the proposed settlement. In July 2013, the parties entered into a First Amendment to Settlement Agreement and Release. The district court entered a preliminary approval order in September 2013.

The Settlement Agreement provided for Prospective Practice Changes, by which Settlement Class Members can submit a revocation request to end all unwanted automated or auto-dialed telephone calls from Defendants. The Settlement Agreement also provides for monetary relief in the form of an $8.7 million fund, which includes funds to pay Settlement Class Members who submit claims, a possible cy pres distribution, and “Settlement Costs.”

In this order, the district court finally approved the Settlement Agreement. In doing so, the district court remarked that after it granted the motion for preliminary approval class members were provided with direct notice by email or mail, and the court also ordered publication notice. The district court found that that the plaintiffs complied with the schedule for the settlement process approved by the court, and thus, satisfied the requirements set forth in In re Mercury Interactive Corporation Securities Litigation, 618 F.3d 988, 994-95 (9th Cir. 2010). The district court observed that class members were provided Notice and access to Class Counsel’s pleading in connection with their motion for final approval of the Settlement and Application for Attorneys’ Fees and Costs, as well as an adequate amount of time to review such information before the deadline for submission of requests for exclusion or objections.

Additionally, the district court observed that the defendants provided notice of the proposed settlement to Federal and State officials, pursuant to 28 U.S.C. § 1715(b). However, after the parties entered into a First Amended Settlement, a notice was not sent out to the class. The district court observed that CAFA requires, “not later than 10 days after a proposed settlement of a class action is filed in court, each defendant that is participating in the proposed settlement shall serve upon the appropriate State official of each State in which a class member resides and the appropriate Federal official, a notice of the proposed settlement,” which should include, inter alia, “any proposed or final class action settlement” or “any settlement or other agreement contemporaneously made between class counsel and counsel for the defendants.” The district court noted that the plain text of § 1715(b) provides that a defendant must give notice of “any proposed or final class action settlement” and “any settlement or other agreement contemporaneously made between class counsel and counsel for the defendants.” Section 1715(b) does not, however, expressly refer to amendments or revisions to settlements and, as the court noted, is “unclear as to its application” in such situations.

In this case, the district court found that the revisions to the settlement provided for a longer claims period and revised the releases, which made the settlement more favorable to the class members. The district court, nevertheless, remarked that given the lack of clear authority, the ambiguity of the statutory provision, and the purposes behind CAFA’s notice provision, and in light of the facts and circumstances in this case, and concluded that additional notice of the Amendment to the settlement was not necessary for the court to finally approve the settlement. In addition, the court found that the notice provided of the original agreement complied with the requirements of Section 1715(b). –JR