Juarez v. Social Finance, Inc. ( 2023 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 RUBEN JUAREZ, et al., Case No. 20-cv-03386-HSG 8 Plaintiffs, ORDER GRANTING MOTION FOR FINAL APPROVAL AND GRANTING 9 v. IN PART AND DENYING IN PART MOTION FOR ATTORNEYS’ FEES 10 SOCIAL FINANCE, INC., et al., Re: Dkt. Nos. 106, 109 11 Defendants. 12 13 Pending before the Court are Plaintiffs’ motions for final approval of class action 14 settlement and for attorneys’ fees, costs, and service awards. Dkt. Nos. 106, 109. The Court held 15 a final fairness hearing on May 11, 2023. For the reasons detailed below, the Court GRANTS 16 final approval. The Court also GRANTS IN PART and DENIES IN PART Plaintiffs’ motion 17 for attorneys’ fees, costs, and service awards. 18 I. BACKGROUND 19 A. Factual Background 20 Plaintiffs Ruben Juarez, Calin Constantin Segarceanu, Emiliano Galicia, and Josue 21 Jimenez allege that Defendants Social Finance, Inc. d/b/a SoFi and SoFi Lending Corp. d/b/a SoFi 22 (collectively, “SoFi”) engaged in lending discrimination. Plaintiffs applied for loans, but allege 23 that SoFi denied their applications because they were not U.S. citizens or lawful permanent 24 residents (“LPRs”). See Dkt. No. 62 (“SAC”) at ¶¶ 120–124. Rather, Plaintiffs had either 25 Deferred Action for Childhood Arrivals (“DACA”) status or temporary green cards as conditional 26 permanent residents (“CPRs”).1 In May 2020, Plaintiffs brought a class action lawsuit against 27 1 SoFi, alleging lending discrimination based on alienage and immigration status in violation of 2 federal and California state law. In early December 2019, after discussions with Plaintiffs’ 3 counsel in this case, SoFi changed its policy to make DACA recipients eligible for loans, but only 4 if they applied by telephone with a co-signer who is a U.S. citizen or LPR—two requirements that 5 are not imposed on citizen applicants. Id. at ¶ 5. At the same time, SoFi also created a designated 6 customer service number to field calls and initiate applications from DACA recipients and other 7 non-citizens seeking loans (the “877 number”). See Dkt. No. 93-2 at ¶ 11. 8 B. Procedural History 9 The parties engaged in an all-day mediation session with JAMS arbitrator David 10 Geronemus, and reached a settlement of this putative class action. See Dkt. No. 93-3, Ex. A 11 (“SA”). Plaintiffs filed a motion for preliminary approval in April 2022, Dkt. No. 93, and after 12 supplemental briefing, the Court granted the motion in December 2022, Dkt. No. 101. The parties 13 now seek final approval of the class action settlement and Plaintiffs seek attorneys’ fees, costs, and 14 service awards for the named Plaintiffs. See Dkt. Nos. 106, 109. 15 C. Settlement Agreement 16 The Court detailed the key terms of the settlement agreement in its order granting the 17 motion for preliminary approval. See Dkt. No. 101 at 2–5. The following key terms are relevant 18 to the discussion below: 19 Class Definition: The parties have proposed two Settlement Classes, which have been 20 defined narrowly: 21 • “National Class” means those individuals who 22 ○ (i) applied for or attempted to apply for any credit product from SoFi; 23 (ii) between December 19, 2019 through the date of preliminary approval; 24 (iii) who held valid and unexpired DACA or CPR status at the time they applied 25 for or attempted to apply for credit; (iv) who called SoFi at the designated 877 26 number regarding the application as set forth in the class data produced by SoFi; 27 (v) who were denied as set forth in the class data produced by SoFi; and (vi) who 1 forth in the class data produced by SoFi; or 2 ○ (i) applied for or attempted to apply for any credit product from SoFi; 3 (ii) between May 19, 2017 through the date of preliminary approval; (iii) who 4 held valid and unexpired DACA or CPR status at the time they applied for or 5 attempted to apply for credit; (iv) who opted out of SoFi’s arbitration provision 6 in writing; (v) who were denied as set forth in the class data produced by SoFi; 7 and (vi) who were not California residents as set forth in the class data produced 8 by SoFi; 9 o Excluded from the National Class are SoFi, all officers, directors, and employees 10 of SoFi, and their legal representatives, heirs, or assigns, and any Judges to whom 11 the Action is assigned, their staffs, and their immediate families. 12  “California Class” means those individuals who 13 ○ (i) applied for or attempted to apply for a credit product from SoFi; (ii) between 14 December 19, 2019 through the date of preliminary approval; (iii) who held valid 15 and unexpired DACA or CPR status at the time they applied for or attempted to apply 16 for credit; (iv) who called SoFi at the designated 877 number regarding the 17 application as set forth in the class data produced by SoFi; (v) who were denied as 18 set forth in the class data produced by SoFi; and (vi) who were California residents 19 as indicated in the “applied state” data field as set forth in the class data produced by 20 SoFi; or 21 ○ (i) applied for or attempted to apply for a credit product from SoFi; (ii) between May 22 19, 2017 through the date of preliminary approval; (iii) who held valid and unexpired 23 DACA or CPR status at the time they applied for or attempted to apply for credit; 24 (iv) who opted out of SoFi’s arbitration provision in writing; (v) who were denied as 25 set forth in the class data produced by SoFi; and (vi) who were California residents 26 as set forth in the class data produced by SoFi. 27 ○ Excluded from the California Class are SoFi, all officers, directors, and employees 1 the Action is assigned, their staffs, and their immediate families. See SA at § 1.9. 2 3 The parties have explained that these settlement classes were designed to exclude applicants 4 subject to SoFi’s arbitration agreement. See Dkt. No. 109 at 4–7; see also Dkt. 56 at 7–9 (Order 5 Denying First Motion to Compel). Because of how the classes are defined, SoFi also has actual 6 records of—and thus a possible way of identifying—potential settlement class members. See Dkt. 7 No. 109 at 6–7; see also Dkt. No. 99 at ¶¶ 4–6. 8 Settlement Benefits: Defendant will make a $155,000 non-reversionary payment for the 9 settlement fund. See SA at §§ 3.3.2, 3.3.3. It will also provide an additional $25,000 for 10 administration costs. See id. at § 3.3.1. Each California Class Member who submits a Verified 11 Claim shall be entitled to $3,000 (or a pro rata distribution) per denied application. See id. at 12 § 3.3.5. Each National Class Member who submits a Verified Claim shall be entitled to $1,000 (or 13 a pro rata distribution) per denied application. Id. Defendant has also agreed to amend its lending 14 policies and practices to make DACA recipients and CPRs eligible for loans on the same terms as 15 U.S. citizens and LPRs. See id. at § 3.2.1. 16 Attorneys’ Fees and Costs: Class Counsel may file an application for attorneys’ fees not to 17 exceed $300,000. See SA at § 15.1. Unlike any incentive award for Plaintiffs, Defendant will pay 18 any award of attorneys’ fees and costs separately rather than from the settlement fund. See id.; see 19 also id. at §§ 3.3.1, 3.3.4. 20 II. DISCUSSION 21 A. Final Settlement Approval 22 i. Class Certification 23 Final approval of a class action settlement requires, as a threshold matter, an assessment of 24 whether the class satisfies the requirements of Federal Rule of Civil Procedure 23(a) and 25 (b). Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019–1022 (9th Cir. 1998). Because no facts that 26 would affect these requirements have changed since the Court preliminarily approved the class on 27 December 15, 2022, this order incorporates by reference the Court’s prior analysis under Rules 1 ii. The Settlement 2 “The claims, issues, or defenses of a certified class may be settled . . . only with the court’s 3 approval.” Fed. R. Civ. P. 23(e). The Court may finally approve a class settlement “only after a 4 hearing and on finding that it is fair, reasonable, and adequate.” Fed. R. Civ. P. 23(e)(2). Where 5 the parties reach a class action settlement prior to class certification, the Ninth Circuit has 6 cautioned that such settlement agreements “‘must withstand an even higher level of scrutiny for 7 evidence of collusion or other conflicts of interest than is ordinarily required under Rule 23(e) 8 before securing the court’s approval as fair.’” Roes, 1-2 v. SFBSC Mgmt., LLC, 944 F.3d 1035, 9 1048–49 (9th Cir. 2019) (quoting In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 10 (9th Cir. 2011)). A more “exacting review is warranted to ensure that class representatives and 11 their counsel do not secure a disproportionate benefit at the expense of the unnamed plaintiffs who 12 class counsel had a duty to represent.” Id. (quotations omitted). 13 The Ninth Circuit has identified several “subtle signs” the Court should consider to 14 determine whether “class counsel have allowed pursuit of their own self-interests to infect the 15 negotiations.” Roes, 944 F.3d at 1043. These include: (1) “when counsel receive[s] a 16 disproportionate distribution of the settlement; (2) when the parties negotiate a clear-sailing 17 arrangement, under which the defendant agrees not to challenge a request for an agreed-upon 18 attorney’s fee; and (3) when the agreement contains a kicker or reverter clause that returns 19 unawarded fees to the defendant, rather than the class.” McKinney-Drobnis v. Oreshack, 16 F.4th 20 594, 607–08 (9th Cir. 2021) (quotation omitted). 21 To assess whether a proposed settlement comports with Rule 23(e), the Court may also 22 consider some or all of the following factors: (1) the strength of plaintiff’s case; (2) the risk, 23 expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class 24 action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery 25 completed, and the stage of the proceedings; (6) the experience and views of counsel; (7) the 26 presence of a governmental participant; and (8) the reaction of the class members to the proposed 27 settlement. See id. at 609. In addition, “[a]dequate notice is critical to court approval of a class 1 the proposed settlement is fair, adequate, and reasonable, and that class members received 2 adequate notice. 3 a. Adequacy of Notice 4 Under Federal Rule of Civil Procedure 23(e), the Court “must direct notice in a reasonable 5 manner to all class members who would be bound by the proposal.” Fed. R. Civ. P. 23(e)(1). 6 Rule 23(c)(2)(B) requires “the best notice that is practicable under the circumstances, including 7 individual notice to all members who can be identified through reasonable effort.” The notice 8 must “clearly and concisely state in plain, easily understood language” the nature of the action, the 9 class definition, and the class members’ right to exclude themselves from the class. Fed. R. Civ. 10 P. 23(c)(2)(B). Although Rule 23 requires that reasonable efforts be made to reach all class 11 members, it does not require that each class member actually receive notice. See Silber v. Mabon, 12 18 F.3d 1449, 1454 (9th Cir. 1994) (noting that the standard for class notice is “best practicable” 13 notice, not “actually received” notice). 14 The Court finds that the notice plan previously approved by the Court was implemented 15 and complied with Rule 23(c)(2)(B). See Dkt. No. 101 at 11–14; see also Dkt. No. 109-2 (“Rust 16 Decl.”) at ¶¶ 4–19. As of April, Rust Consulting had sent notice in some fashion to 2,188 of the 17 2,263 potential class members. See id. at ¶ 8. Rust sent 1,495 notices and claim forms via U.S. 18 first class mail; 1,524 notices and claim forms by email; and 2,175 text messages advising 19 potential class members of how to access the notice and claim form through the settlement 20 website. Id. at ¶¶ 8–10, 13–14. In total, only 75 potential class members were not sent any form 21 of notice because the data that SoFi provided did not contain a phone number, email, or physical 22 mailing address for them. 23 Of the 1,495 notice and claim forms that were mailed, 184 were returned as undeliverable. 24 Id. at ¶ 10. Rust Consulting identified valid forwarding addresses for 119 of these potential class 25 members and re-mailed the notice and claim forms. Id. Eight were still returned as undeliverable, 26 but these individuals also received some other form of notice. Id. And although 52 emails were 27 returned as undeliverable, these individuals also received notice by mail and/or text message. Id. 1 general on April 29, 2022. Id. at ¶ 5. During the final fairness hearing counsel confirmed that 2 they had an initial phone call with some attorneys general, but did not receive any further 3 responses from them. 4 In light of these facts, the Court finds that the parties have sufficiently provided the best 5 practicable notice to the class members. 6 b. Fairness, Adequacy, and Reasonableness 7 Having found the notice procedures adequate under Rule 23(e), the Court next considers 8 whether the entire settlement comports with Rule 23(e). 9 In deciding the motion for preliminary approval, the Court considered all three signs of 10 collusion that the Ninth Circuit has identified. See Dkt. No. 101 at 8–10; see also McKinney- 11 Drobnis, 16 F.4th at 607–08. Nothing in the record changes the Court’s preliminary conclusion 12 regarding these factors. The proposed $155,000 settlement is non-reversionary, and none of these 13 funds will be distributed to the attorneys. The settlement also provided significant programmatic 14 relief since class members may now be considered for SoFi loans on the same terms and 15 conditions as U.S. citizens. Particularly because of the clear sailing provision regarding counsel’s 16 request for attorneys’ fees, the Court still carefully scrutinizes the request for attorneys’ fees and 17 incentive awards to ensure that class members’ interests are protected under the settlement. See 18 Section II.B below. The Court finds that other factors also indicate that the proposed settlement is 19 fair, adequate, and reasonable. 20 1. Strength of Plaintiffs’ Case, Litigation Risk, and Risk of Maintaining Class Action Status 21 22 Approval of a class settlement is appropriate when plaintiffs must overcome significant 23 barriers to make their case. Chun-Hoon v. McKee Foods Corp., 716 F. Supp. 2d 848, 851 (N.D. 24 Cal. 2010). Difficulties and risks in litigating weigh in favor of approving a class settlement. 25 Rodriguez v. W. Publ’g Corp., 563 F.3d 948, 966 (9th Cir. 2009). “Generally, unless the 26 settlement is clearly inadequate, its acceptance and approval are preferable to lengthy and 27 expensive litigation with uncertain results.” Ching v. Siemens Indus., Inc., No. 11-cv-04838-MEJ, 1 The Court finds that the amount offered in settlement is reasonable in light of the 2 complexity of this litigation and the substantial risk that Plaintiffs would face in litigating the case 3 given the nature of the asserted claims. See Dkt. No. 109 at 11–12. Were the case to proceed, 4 Class Counsel has acknowledged that there are uncertainties about whether SoFi could ultimately 5 be held liable. See id. Counsel acknowledges that they have advanced “a relatively novel theory 6 with numerous unsettled issues,” and SoFi has raised arguments that the Equal Credit Opportunity 7 Act permits consideration of the permanence of residency and immigration status when assessing 8 credit and repayment risk. Id. Additionally, counsel have explained that they would likely face 9 difficulties in certifying a class due to the individualized nature of their loan applications and 10 credit histories. Id. at 11. In reaching a settlement, Plaintiffs have ensured a favorable recovery 11 for the class. See Rodriguez, 563 F.3d at 966 (finding litigation risks weigh in favor of approving 12 class settlement). Accordingly, these factors also weigh in favor of approving the settlement. See 13 Ching, 2014 WL 2926210, at *4 (favoring settlement to protracted litigation). 14 2. Settlement Amount 15 The amount offered in the settlement is another factor that weighs in favor of approval. 16 Based on the facts in the record and the parties’ arguments at the final fairness hearing, the Court 17 finds that the settlement amount falls “within the range of reasonableness” in light of the risks and 18 costs of litigation. See Dkt. No. 71 at 8–10; see also Villanueva v. Morpho Detection, Inc., No. 19 13-cv-05390-HSG, 2016 WL 1070523 *4 (N.D. Cal. March 18, 2016) (citing cases). 20 As an initial matter, the Court notes that the non-monetary, programmatic relief in this case 21 is substantial. See Dkt. No. 109 at 13. SoFi has agreed to abandon the lending policies that 22 Plaintiffs have challenged in this case, and instead extend its loans to current and valid DACA 23 recipients and CPRs on the same terms and conditions as U.S. citizens and LPRs. This change in 24 policy may benefit not only class members, but all DACA recipients and CPRs nationwide. Class 25 Counsel has described this as “the maximum degree of Programmatic Relief that Class Members 26 could possibly obtain.” See id. 27 The monetary relief that Plaintiffs obtained in this case is also significant. California Class 1 $3,000 per denial of a credit application. And National Class Members are eligible to receive 2 individual payments of up to $1,000 per denial of a credit application. Following class notice, 3 Rust Consulting received 147 verified claims from 113 different Class Members (44 California 4 Class Claims and 103 National Class Claims Class). See Rust Decl. at ¶ 18.2 Based on these 5 claims, Class Counsel estimates that Class Members will receive approximately $1,620 for each 6 California claim, which amounts to approximately 40% of the $4,000 statutory damages available 7 under the Unruh Civil Rights Act, and $540 for each National claim. Id. at ¶ 20; see also Dkt. No. 8 109 at 12–13. The highest award for Class Members will be approximately $4,860 and the lowest 9 award will be approximately $540. Rust Decl. at ¶ 20. The average recovery for individual Class 10 Members will be approximately $1,102.13. Id. The Court finds that this recovery is significant, 11 especially when weighed against the litigation risks in this case. In any event, “[i]t is well-settled 12 law that a cash settlement amounting to only a fraction of the potential recovery does not per se 13 render the settlement inadequate or unfair.” Officers for Justice v. Civil Serv. Comm’n of City & 14 County of S.F., 688 F.2d 615, 628 (9th Cir. 1982). The Court finds under the circumstances that 15 this factor weighs in favor of approval. 16 3. Extent of Discovery Completed and Stage of Proceedings 17 The Court finds that Class Counsel had sufficient information to make an informed 18 decision about the merits of the case. See In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 459 19 (9th Cir. 2000). The parties settled only after conducting significant discovery and investigation 20 into the claims over the course of several years. See Dkt. No. 109 at 13–14. Thus, the Court is 21 persuaded that Class Counsel entered the settlement discussions with a substantial understanding 22 of the factual and legal issues, so as to allow them to assess the likelihood of success on the merits. 23 This factor weighs in favor of approval. 24 4. Reaction of Class Members 25 The reaction of the Class Members also supports final approval. “[T]he absence of a large 26 number of objections to a proposed class action settlement raises a strong presumption that the 27 1 terms of a proposed class settlement action are favorable to the class members.” Nat’l Rural 2 Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 523, 528–29 (C.D. Cal. 2004); In re Linkedin 3 User Privacy Litig., 309 F.R.D. 573, 589 (N.D. Cal. 2015) (“A low number of opt-outs and 4 objections in comparison to class size is typically a factor that supports settlement approval.”). 5 As of April 24, 2023, Rust Consulting had not received any objections or requests for 6 exclusion. See Rust Decl. at ¶¶ 15–16. Counsel confirmed that no additional objections or 7 requests for exclusion were received between filing the motion for final approval and the final 8 fairness hearing. The Court finds that the lack of objections and opt-outs indicates overwhelming 9 support among the Class Members and weighs in favor of approval of the settlement. See, e.g., 10 Churchill Village LLC v. Gen. Elec., 361 F.3d 566, 577 (9th Cir. 2004) (affirming settlement 11 where 45 of approximately 90,000 class members objected); Rodriguez v. West Publ. Corp., Case 12 No. CV05–3222 R, 2007 WL 2827379, at *10 (C.D. Cal. Sept. 10, 2007) (finding favorable class 13 reaction where 54 of 376,301 class members objected). 14 * * * 15 After considering and weighing the above factors, the Court finds that the settlement 16 agreement is fair, adequate, and reasonable, and that the Class Members received adequate notice. 17 Accordingly, Plaintiffs’ motion for final approval of the class action settlement is GRANTED. 18 B. Attorneys’ Fees, Costs and Expenses, and Incentive Awards 19 In its unopposed motion and consistent with the Settlement Agreement, Class Counsel asks 20 the Court to approve an award of $300,000 in attorneys’ fees and costs and $25,000 in settlement 21 administration expenses. See Dkt. No. 106 at 8–21. Counsel also seeks a $5,000 incentive award 22 for each of the three class representatives, and $5,540 as an “individual payment” for Ruben 23 Juarez. Id. at 21–25; see also Dkt. No. 109 at 3, & n.3. 24 i. Attorneys’ Fees & Costs 25 a. Legal Standard 26 “In a certified class action, the court may award reasonable attorney’s fees and nontaxable 27 costs that are authorized by law or by the parties’ agreement.” Fed. R. Civ. P. 23(h). In non- 1 Unruh Act, the lodestar method for awarding attorneys’ fees is appropriate. See In re Bluetooth, 2 654 F.3d at 941–42. The Ninth Circuit has explained that in such cases, “the relief sought—and 3 obtained—is often primarily injunctive in nature and thus not easily monetized.” Id. at 941. The 4 “lodestar figure is calculated by multiplying the number of hours the prevailing party reasonably 5 expended on the litigation (as supported by adequate documentation) by a reasonable hourly rate 6 for the region and for the experience of the lawyer.” Id. (citing Staton v. Boeing Co., 327 F.3d 7 938, 965 (9th Cir. 2003)). Trial courts “also retain the discretion to forgo a lodestar cross-check 8 and use other means to evaluate the reasonableness of a requested percentage fee.” Laffitte, 1 Cal. 9 5th at 506. Class Counsel is also entitled to recover “those out-of-pocket expenses that would 10 normally be charged to a fee paying client.” Harris v. Marhoefer, 24 F.3d 16, 19 (9th Cir. 1994) 11 (quotations omitted). 12 b. Discussion 13 Class Counsel here seeks $300,000 in attorneys’ fees and costs, which SoFi will pay 14 separately and not out of the settlement fund. See Dkt. No. 106. Although the requested fees and 15 costs are significantly more than the $155,000 that will be distributed to Class Members, Class 16 Counsel urges that its requested fees are far below its lodestar, reflect the changes to SoFi’s 17 lending policies that counsel helped broker, and is appropriate given the work invested in this 18 case. Id. 19 As previously discussed, the settlement provides monetary relief, and the average Class 20 Member will recover over $1,000. See Rust Decl. at ¶ 20. Moreover, no one objected to the 21 adequacy of the settlement amount. The Court finds that this alone represents a good result for 22 Class Members. But given the nature of this case, the Court agrees with Class Counsel that “the 23 most significant and valuable component of the settlement” is the change in SoFi’s lending 24 policies. See Dkt. No. 106 at 9. Because of this litigation, SoFi “has agreed to change its policies 25 to make its consumer credit products available to DACA recipients and CPRs on the same terms 26 and conditions as it offers credit to U.S. citizens and LPRs.” See id. The Ninth Circuit has 27 explained that the lodestar method for calculating attorneys’ fees is appropriate in cases “where 1 monetized . . . .” See In re Bluetooth, 654 F.3d at 941–42. 2 Class Counsel urges that their requested fees and costs are below their lodestar, and thus 3 reasonable. See Dkt. 106 at 10–15. In support of the motion for attorneys’ fees, Class Counsel 4 calculated that as of January 20, 2023, it had spent 1,454.70 hours on this case, with a lodestar of 5 $897,880.20. See Dkt. No. 106-1 (“Miazad Decl.”) at ¶ 41. Counsel thus points out that the 6 $300,000 in requested fees only reflects .33 times their lodestar. See id. at ¶ 42. In support of this 7 calculation, counsel provided a “summary chart” of the time each attorney spent on the case. See 8 id. at ¶ 41; see also Dkt. No. 106-2, Ex. A. But counsel did not provide any detail about or records 9 of the actual work performed on this case. Counsel also calculated that it incurred $21,494.78 in 10 costs for this case. See Dkt. No. 106-2, Ex. A. During the final fairness hearing, the Court 11 indicated that it would need more detailed records to support the request for fees and costs, and 12 issued an order requesting more detailed attorney billing records for in camera review. Counsel 13 therefore provided billing records to the Court for in camera review. These records provide an 14 updated lodestar of $957,996.21 for 1,571.60 hours of work spent on this case. Class Counsel’s 15 requested fees thus reflects .31 times their lodestar. 16 Having reviewed these records, the Court has some reservations about the efficiency of 17 counsel’s time incurred on this case. The size of the case team—8 attorneys and 6 support staff— 18 appears to have led to some inefficiencies, with substantial time devoted to internal 19 communications between team members. The records also reflect significant time for simple 20 administrative tasks such as “saving documents” to the “case file.” But even if the Court 21 discounted counsel’s time, they are still requesting far less than their modified lodestar would be 22 after accounting for these billing discrepancies. Counsel is seeking less than a third of their 23 lodestar. The Court accordingly finds that an award of $300,000 for attorneys’ fees and costs is 24 reasonable under the circumstances. 25 * * * 26 The Court accordingly GRANTS the request for attorneys’ fees and costs, and awards to 27 Class Counsel $300,000 in attorneys’ fees and costs. The Court also GRANTS the requested 1 ii. Incentive Awards 2 Lastly, Class Counsel requests an incentive award of $5,000 for Plaintiffs Segarceanu, 3 Galicia and Jimenez as class representatives, and an “individual payment” of $5,540 for Plaintiff 4 Juarez, who falls outside the class definitions under the settlement agreement. See Dkt. No. 106 at 5 21–25; Dkt. No. 109 at 3, & n.3. Because Mr. Juarez is not a class member, the Court addresses 6 the incentive award requests for Plaintiffs Segarceanu, Galicia and Jimenez separately from the 7 request for Mr. Juarez. 8 a. Class Representatives 9 District courts have discretion to award incentive fees to named class representatives. See 10 In re Mego Fin. Corp. Secs. Litig., 213 F.3d 454, 463 (9th Cir. 2000). “Service awards as high as 11 $5,000 are presumptively reasonable in this judicial district.” See Wong v. Arlo Techs., Inc., No. 12 5:19-CV-00372-BLF, 2021 WL 1531171, at *12 (N.D. Cal. Apr. 19, 2021). However, the Court 13 shares the Ninth Circuit’s concern that “if class representatives expect routinely to receive special 14 awards in addition to their share of the recovery, they may be tempted to accept suboptimal 15 settlements at the expense of the class members whose interests they are appointed to guard.” See 16 Staton v. Boeing Co., 327 F.3d 938, 975 (9th Cir. 2003); Radcliffe v. Experian Information Sols. 17 Inc., 715 F.3d 1157, 1163–64 (9th Cir. 2013) (noting that the Ninth Circuit has “expressed 18 disapproval of these incentive agreements” and that “in some cases incentive awards may be 19 proper but . . . awarding them should not become routine practice”). The Ninth Circuit has 20 cautioned that “district courts must be vigilant in scrutinizing all incentive awards to determine 21 whether they destroy the adequacy of the class representatives . . . .” Radcliffe, 715 F.3d at 1165 22 (quotations omitted). This is particularly true where “the proposed service fees greatly exceed the 23 payments to absent class members.” Id. 24 Class Counsel represents that Plaintiffs Segarceanu, Galicia and Jimenez closely 25 participated in every aspect of this case. See Dkt. No. 106 at 22–23; see also Miazad Decl. at 26 ¶¶ 29–40. They produced records related to their online applications, credit reports, emails with 27 SoFi personnel, and evidence of phone calls with SoFi’s customer service department. See id. 1 communicated frequently with counsel, and reviewed the proposed settlement. Id. Plaintiffs also 2 submitted individual declarations describing the time they spent on this case. See Dkt. No. 112-3; 3 Dkt. No. 112-4; Dkt. No. 112-5. Mr. Segarceanu estimates that he spent over 40 hours meeting 4 with counsel, participating in discovery, and reviewing case documents including the settlement 5 agreement. See Dkt. No. 112-3 at ¶ 8. Mr. Galicia estimates that he spent approximately 30 hours 6 and Mr. Jimenez that he spent approximately 16 hours on these same tasks. See Dkt. No. 112-4 at 7 ¶ 8; Dkt. No. 112-5 at ¶ 8. Considering all the circumstances of this case, including the reasonable 8 proportionality between the average class members’ recovery and the requested awards, the Court 9 finds that the presumptive $5,000 service award is reasonable to compensate Plaintiffs for their 10 efforts. The Court therefore GRANTS the request for an incentive award in the amount of $5,000 11 for Plaintiffs Segarceanu, Galicia and Jimenez. 12 b. Mr. Juarez 13 Class Counsel explains that because Mr. Juarez applied for loans before SoFi created the 14 877 number, he does not fall within either the California or National class definitions. See Dkt. 15 No. 106 at 23–24. However, counsel urges that these class definitions were designed to ensure 16 that potential class members could be identified and notice provided. See Dkt. No. 109 at 6–7; see 17 also Dkt. No. 99 at ¶¶ 4–6. They therefore request that Mr. Juarez, a non-class member who was 18 actively involved in this litigation, receive $5,540 as an “individual payment.” Dkt. No. 106 at 19 21–25; Dkt. No. 109 at 3, & n.3. According to Class Counsel, this reflects a $5,000 incentive 20 award like the other class representatives, and an additional $540 in recognition that Mr. Juarez 21 will not receive any monetary relief from the Settlement Fund. Id. 22 In its order granting preliminary approval, the Court expressed concern about whether Mr. 23 Juarez is properly entitled to any incentive award since he is not a member of either settling class. 24 The Court stated that it would consider the evidence presented at the final fairness hearing and 25 evaluate the reasonableness of any incentive award request. Following the hearing, the Court also 26 gave counsel an opportunity to supplement the record with case law supporting their requested 27 award for Mr. Juarez. See Dkt. No. 110. Counsel provided a supplemental brief. See Dkt. No. 1 However, the Court remains concerned that class settlement funds simply should not be 2 used to pay non-class members, even someone like Mr. Juarez who has been actively involved in 3 the case. Counsel acknowledges that Mr. Juarez is not a class member or class representative 4 because of the way they defined the settlement classes. Yet they are still asking that he receive 5 approximately five times more than the average Class Member. See Rust Decl. at ¶ 20. 6 Class Counsel urges that “[u]nder applicable precedent, plaintiffs are not required to be 7 class members or representatives to recover for their individual release of claims or their services 8 to the class as part of a settlement.” See Dkt. No. 112 at 1. Counsel cites, for example, Mitzie 9 Perez v. Wells Fargo & Co., in which the court approved the award of $17,000 individual 10 payments to non-class member plaintiffs. Case No. 17-cv-00454-MMC (N.D. Cal. Jan. 8, 2021), 11 Dkt. No. 366. Yet as discussed at length during the final fairness hearing, the court in Mitzie 12 Perez simply adopted counsel’s proposed order. Id. Neither the order nor the transcript from the 13 final fairness hearing addresses why it is appropriate to award non-class members money from the 14 settlement fund. It is not even clear from the face of the order that the “individual plaintiffs” are 15 not members of the settlement class. See id. at 8 (simply concluding that “individual payments for 16 Plaintiffs Mitzie Perez and Sergio Barajas in the amount of $17,000 each are fair and reasonable”). 17 Many of counsel’s other cases lack any explicit analysis of this issue. See, e.g., Bennett v. 18 SimplexGrinnell LP, No. 11-CV-01854-JST, 2015 WL 12932332, at *7 (N.D. Cal. Sept. 3, 2015). 19 The only Ninth Circuit case that counsel cites is Chambers v. Whirlpool Corp., 980 F.3d 20 645, 670 (9th Cir. 2020), in which the Court concluded that the district court did not abuse its 21 discretion in approving a class action settlement. As relevant to this case, the Court in Chambers 22 addressed an objector’s challenge to “service payments to several non-class members.” Id. 23 Specifically, the objector argued that these payments violated the typicality and adequacy 24 requirements of Rule 23(a)(3) and (4). See id. The Ninth Circuit rejected this argument, 25 concluding that Rule 23 does not apply to non-class members because they are not class 26 representatives. The Court did not, however, hold that payments to non-class members from a 27 class fund are appropriate. Chambers did not involve a common fund at all. And to the extent the 1 noted that “non-class compensation is independent of the class recovery, and requires non-class 2 members to execute a separate release as consideration.” Id. Here, in contrast, Mr. Juarez’s non- 3 class recovery would come directly out of the class fund. See SA at § 3.3.4. 4 Moreover, Plaintiffs’ own cases suggest that when considering the reasonableness of an 5 incentive payment, the Court should consider the equities as between “named class members” and 6 “unnamed class members.” In Carlin v. DairyAmerica, Inc., for example, the court explained: 7 Given that service awards are at the discretion of the district court, 8 whatever the method used, the Court must make sure that where there is a “very large differential in the amount of damage awards between 9 the named and unnamed class members,” that differential is justified by the record. 10 11 12 380 F. Supp. 3d 998, 1025 (E.D. Cal. 2019) (quoting Staton v. Boeing Co., 327 F.3d at 978). 13 Staton v. Boeing, in turn, suggests that it could be an abuse of discretion to award class funds to 14 non-class members. See 327 F.3d at 977–78. In Staton, the son of a class representative and a 15 non-class member received an incentive award under the terms of a consent decree in an 16 employment discrimination class lawsuit. Id. The Ninth Circuit recognized that such individuals 17 could contribute meaningfully to a case, but cautioned that “if those [non-class] individuals 18 rendered compensable services to the lawyers, then the lawyers should pay for those services from 19 the amount of the fund properly awarded for costs or fees, as appropriate.” Id. at 978. The Court 20 further indicated that the consent decree “should be approved only if the provision awarding that 21 person or those persons damages is deleted.” Id. 22 In short, the Court finds that Class Counsel has not sufficiently supported its contention 23 that class funds can be used to pay non-class members. The Court does not minimize Mr. Juarez’s 24 substantive role in this case. But because he is not a class member, the Court finds it inappropriate 25 to award Mr. Juarez any money from the class fund, given the Court’s obligation to assess whether 26 the settlement is fair to the class. The request for an inventive award for Mr. Juarez is thus 27 DENIED. 1 Wl. CONCLUSION 2 Accordingly, the Court GRANTS the motion for final approval of class action settlement 3 and GRANTS IN PART and DENIES IN PART the motion for attorneys’ fees and incentive 4 award. The Court awards attorneys’ fees and costs in the amount of $300,000; settlement 5 administrator costs in the amount of $25,000; and incentive awards to Plaintiffs Segarceanu, 6 Galicia and Jimenez in the amount of $5,000 each. 7 The parties and settlement administrator are directed to implement this Final Order and the 8 settlement agreement in accordance with the terms of the settlement agreement. The parties are 9 || further directed to file a short stipulated final judgment of two pages or less within 21 days from 10 || the date of this order. The judgment need not, and should not, repeat the analysis in this order. 11 IT IS SO ORDERED. 12 || Dated: 6/8/2023 Abstr 5 Mbt) 4 HAYWOOD S. GILLIAM, JR. United States District Judge 2 16 18 19 20 21 22 23 24 25 26 27 28