Maria Barnes, V. Sea Mar Community Health Centers, Et Ano. ( 2024 )

IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
JEFFRIE ALAN SUMMERS II, on
behalf of himself and all other similarly No. 84910-7-I
situated,
DIVISION ONE
Respondent,
PUBLISHED OPINION
v.
SEA MAR COMMUNITY HEALTH
CENTERS,
Respondent,
MARIA BARNES, objector to class
action settlement,
Appellant.
BIRK, J. — Maria Barnes appeals an order granting final approval to a class
action settlement, challenging the superior court’s denial of her motion to
consolidate six class action lawsuits against the defendant, approval of the class
notice plan, and approval of the settlement as fair, reasonable, and adequate. We
hold the superior court acted within its discretion in making each ruling. First, when
the court entertained consolidation, the proponents of two other pending actions
had reached a preliminary settlement with the defendant, and the superior court
had the discretion to review the potential settlement first, before coordinating the
pending actions. Second, the parties agreed the class would be difficult to reach,
and the superior court appropriately considered that difficulty in approving the class
No. 84910-7-I/2
notice plan as affording the best notice practicable under the circumstances. Last,
in arguing that the settlement fell outside the range the superior court had
discretion to approve as fair, reasonable, and adequate, Barnes fails to point to
more than a speculative possibility that a better settlement might have been
achieved. We affirm.
I
Sea Mar Community Health Centers is a nonprofit organization that
provides healthcare services to low-income, underserved, and under- and
uninsured communities in Washington. On June 24, 2021, Sea Mar learned from
the United States Department of Health and Human Services (HHS) that it had
suffered a data security breach when certain data had been copied by an
unauthorized actor. On October 29, 2021, Sea Mar sent a notice letter to patients
that identified highly sensitive personal and protected health information, such as
social security numbers and medical records, that may have been involved in the
data security incident. The accessed data potentially impacted 1.2 million Sea Mar
patients, guarantors, and employees and included social security numbers for
163,499 individuals. There is no evidence of misuse of any information or that any
of the data has been purchased by cybercriminals.
Between mid-November 2021 and early February 2022, plaintiffs filed six
separate class action lawsuits against Sea Mar in King County Superior Court.1
1
Barnes v. Sea Mar Comty. Health Ctrs., No. 21-2-15063-9 SEA (King
County Super. Ct. Wash. filed Nov. 12, 2021); Hall v. Sea Mar Comty. Health Ctrs,
No. 21-2-15130-9 SEA (King County Super. Ct. Wash. filed Nov. 12, 2021); Lopez
v. Sea Mar Comty. Heath Ctrs., No. 21-2-16263-7 SEA (King County Super Ct.
Wash. filed Dec. 13, 2021); Waliany v. Sea Mar Comty. Heath Ctrs., No. 21-2-
2
No. 84910-7-I/3
Maria Barnes and Derek Gannon filed the first action. Only Jeffrie Summers’s
complaint is before us on appeal, which, based on the data breach incident
described above, alleged several Washington common law and statutory claims
against Sea Mar. Summers and Alan Hall were represented by the same counsel
in different lawsuits and later submitted filings jointly. On January 14, 2022,
according to a Sea Mar attorney’s declaration, Hall served Sea Mar with discovery
requests. On the due date for response, according to the same declaration, Sea
Mar responded by producing responsive documents. On February 8, 2022, Sea
Mar notified HHS of the pending litigation and requested certification that Sea Mar
acted within the scope of a deemed public health services employee. Barnes v.
Sea Mar Cmty. Health Ctrs., No. 2:22-181-RSL-TLF, 2022 WL 1541927, at *1
(W.D. Wash. Apr. 27, 2022) (report and recommendation). On February 11, 2022,
a U.S. attorney filed a notice pursuant to 42 U.S.C. § 233(l)(1) advising the superior
court that the United States was considering whether the United States would
intervene in the action. Id.On February 14, 2022, Barnes2 filed a motion to consolidate the six pending
class action lawsuits. In a declaration supporting the motion, Barnes’s counsel
stated he contacted counsel for plaintiffs in the other five actions and obtained
consent from counsel in the Lopez and Waliany actions to a stipulated
16813-9 SEA (King County Super. Ct. Wash. filed Dec. 23, 2021); Summers v.
Sea Mar Comty. Health Ctrs., No. 22-2-00773-7 SEA (King County Super Ct.
Wash. filed Jan. 14, 2022); Maynor v. Sea Mar Comty. Health Ctrs., No. 22-2-
01713-9 SEA (King County Super. Ct. Wash. filed February 2, 2022).
2
Throughout the proceedings in the trial court, different plaintiffs joined at
different times in different filings. We omit those not necessary to the discussion.
3
No. 84910-7-I/4
consolidation. Counsel for plaintiff in Hall did not agree to consolidation, counsel
for plaintiff in Summers declined to respond, and counsel for plaintiff in Maynor
never provided a position on consolidation.
On February 16, 2022, Sea Mar filed notices of removal of Summers and
Barnes to federal court. Barnes, 2022 WL 1541927, at *1. In its notice of removal
of action under 28 U.S.C. § 1346(b)(1), Sea Mar argued the Public Health Services
Act (PHSA) and Federally Supported Health Centers Assistance Act (FSHCAA),
42 U.S.C. § 233(a), granted Sea Mar immunity from liability and Summers’s only
redress was to sue the United States in federal court as Summers’s claims fell
under the Federal Tort Claims Act, 28 U.S.C. § 1346(b). On February 28, 2022,
the superior court struck Barnes’s motion to consolidate, noting Sea Mar had
sought removal to federal court.
On March 29, 2022, Hall, Summers, and Sea Mar engaged in an
unsuccessful mediation. A former federal judge served as the parties’ mediator.
Before mediation, Sea Mar “provided formal discovery related to the merits of
Plaintiffs’ claims, potential defenses,” and the parties “discussed their respective
positions on the merits of the claims and class certification.” Following the
unsuccessful mediation, the parties continued negotiations and accepted a
mediator’s proposal to settle the class claims.
By April 18, 2022, Hall, Summers, and Sea Mar signed a settlement
agreement and release. The settlement was subject to court approval. The
agreement would release, discharge, and bar all claims asserted or that could have
been asserted in the Hall lawsuit or any related action, including Barnes, Lopez,
4
No. 84910-7-I/5
Waliany, Summers, and Maynor. Under the terms of the agreement, Sea Mar
would provide compensation for unreimbursed “Ordinary Losses” to a total of
$2,500.00 per person upon submission of a timely, complete, and valid claim form
with necessary supporting documentation. In the alternative, class members may
make a claim for a $100.00 cash payment. Class members who suffer
“Extraordinary Losses” are “also” eligible to receive reimbursement up to
$25,000.00. The agreement entitles all settlement class members to enroll in IDX
Identity Protection Services for three years of three-bureau credit monitoring. IDX
carries a $1 million policy that protects the subscriber, monitors the dark web, and
provides identity restoration services. Sea Mar funded a non-reversionary
settlement fund totaling $4,400,000.00. If the total of settlement payments, IDX
protection services, attorney fees and costs, and other fixed settlement costs does
not exceed the settlement fund, all remaining funds will be distributed on a pro rata
basis to all settlement class members who submit a valid claim up to an additional
$100.00 for each claimant. Any remaining funds after that distribution will be paid
to a cy pres recipient to be agreed upon by the parties and subject to court
approval.
For class notice, the proposed settlement stated, “[T]he Settlement
Administrator shall disseminate” postcard notice “via [U.S. Postal Service] First
Class Mail to all Settlement Class Members.” This was to be done using
“addresses provided by Sea Mar” and after those addresses had been updated
with the National Change of Address database. In addition, the settlement
5
No. 84910-7-I/6
administrator was to establish a settlement website and a toll-free telephone
number for the class members to obtain information.
On April 27, 2022, United States Magistrate Judge Theresa Fricke entered
a report and recommendation. Barnes, 2022 WL 1541927, at *1. According to the
report, the United States filed two notices advising the court that it determined Sea
Mar was not deemed a Public Health Service employee under 42 U.S.C. § 233and removal was procedurally improper. Id. The magistrate judge recommended
the court find that removal under the FSHCAA was procedurally deficient and 42
U.S.C. § 233 did not confer subject matter jurisdiction over the action. Id. at *2.
The magistrate judge recommended Sea Mar’s motion to stay be denied because
a stay is automatic only when an action is properly removed under 42 U.S.C. §
233(l)(2). Id. at *3.
On May 4, 2022, Sea Mar filed a joint motion to remand Summers back to
King County Superior Court, which the federal court granted the following day. On
May 16, 2022, United States District Judge Robert Lasnik entered an order
adopting Judge Fricke’s report and recommendation and remanded Barnes back
to King County Superior Court. Barnes v. Sea Mar Cmty. Health Ctrs., No. C22-
0181RSL-TLF, 2022 WL 1540462, at *1 (W.D. Wash. May 16, 2022) (court order).
On May 20, 2022, Barnes filed a motion to consolidate her lawsuit with
Summers and Hall. Barnes argued the remaining three lawsuits should be
consolidated after remand from federal court. Hall, Summers, and Sea Mar
opposed Barnes’s motion because “consolidation under CR 42(a) is unwarranted”
6
No. 84910-7-I/7
since “this class action case has been settled.” On June 3, 2022, the superior
court denied Barnes’s motion to consolidate.
On June 17, 2022, Summers, on behalf of himself, Hall, and Wright, filed an
“Unopposed Motion for Preliminary Approval of Class Action Settlement and
Memorandum in Support.” On June 29, 2022, Barnes filed a motion to intervene
in Summers and an objection to Summers’s motion for preliminary approval. In
opposing Summers’s motion, Barnes argued Hall, Summers, and Sea Mar had
entered into a collusive settlement that should be rejected, and the court should
consolidate the pending actions. The superior court granted Summers’s motion
for preliminary approval of class action settlement. The order appointed the
attorneys for Hall and Summers as class counsel and appointed Kroll Business
Services as the settlement administrator. The court approved the proposed notice
plan. The court denied Barnes’s motion to intervene. Later, Barnes filed an
objection to final approval of the class action settlement, arguing the proposed
settlement was not fair, reasonable, and adequate.
Hall and Summers subsequently filed a motion for final approval of the
settlement. Before the final fairness hearing, the settlement administrator engaged
in an online media campaign on Facebook and Instagram3 in English and Spanish,
which was substantially completed in a month and generated over eight million
impressions. At the time of the final fairness hearing, 6,210 claims forms had been
received out of a possible 1,179,596 class members, representing a response rate
of approximately 0.5 percent. As to Barnes’s objection, the court ruled that “[w]hile
3
Instagram is a social media platform for sharing photographs.
7
No. 84910-7-I/8
the Court denies the objection,” it found that “valid objections exist.” The court
explained that “[o]n balance . . . the Court finds the settlement to be fair, adequate,
and reasonable.” The court entered a final order and judgment granting final
approval of the class action settlement. The court also granted Summers’s motion
for attorney fees, costs, and service award.
Barnes appeals.
II
Class actions are governed by CR 23. Washington’s CR 23 was once “an
exact counter-part” of Rule 23 of theFederal Rules of Civil Procedure (Fed. R. Civ.
P.). Johnson v. Moore, 80 Wn.2d 531, 532, 496 P.2d 334 (1972). The court stated
the Washington rule was “identical” to the federal rule in Lacey Nursing Center,
Inc. v. Department of Revenue, 128 Wn.2d 40, 46-47, 905 P.2d 338 (1995), Pickett
v. Holland America Line-Westours, Inc., 145 Wn.2d 178, 188, 35 P.3d 351 (2001),
and Schnall v. AT & T Wireless Services, Inc., 171 Wn.2d 260, 271, 259 P.3d 129(2011). CR 23 is no longer “identical” to Fed. R. Civ. P. 23 because of
amendments to the federal rule. However, Washington courts may look to federal
decisions in applying the Washington rules of civil procedure when the Washington
and federal rules are “substantially similar.” Bryant v. Joseph Tree, Inc., 119
Wn.2d 210, 218-19, 829 P.2d 1099 (1992). In class actions, Washington courts
have long looked to federal authority. See DeFunis v. Odegaard, 84 Wn.2d 617,
622-23, 529 P.2d 438 (1974); Johnson, 80 Wn.2d at 533. It remains appropriate
to consider federal decisions in applying CR 23 when there is not a Washington
decision speaking to the issue, the text of the two rules does not indicate
8
No. 84910-7-I/9
divergence, and the rules in respect to their goals and purposes remain
substantially similar.
At the outset, Barnes takes issue with the superior court’s interlineation of
its observation that Barnes presented “valid” objections, but that, “on balance” the
settlement was fair, adequate, and reasonable. Barnes argues if the court found
“any part” of her objections valid, “it could not have appropriately approved” the
settlement. We reject this characterization of the superior court’s interlineation.
During the hearing on final approval of the class settlement, the superior court
expressed concern about the adequacy of notice, the content of the release, and
the removal to federal court. In context, the superior court’s interlineation shows,
consistent with the final fairness hearing transcript, the court made the appropriate
searching inquiry into concerns that were validly presented for the protection of
absent class members, but concluded the settlement met those concerns and
properly served the class’s interest.
A
Barnes argues the superior court abused its discretion by denying her
motion to consolidate the six actions. We disagree.
When actions involving a common question of law or fact are pending
before the court, it may order a joint hearing or trial of any or all the matters in issue
in the actions, or may order the actions consolidated. CR 42(a). The rule allows
a trial court to make such orders “as may tend to avoid unnecessary costs or
delay.” Id. CR 42(a) is permissive. See Leader Nat’l Ins. Co. v. Torres, 51 Wn.
App. 136, 142, 751 P.2d 1252 (1988), affirmed, 113 Wn.2d 366, 779 P.2d 7229
No. 84910-7-I/10
(1989). Consolidation is within the discretion of the trial court. Nat’l Bank of Wash.
v. Equity Inv’rs, 86 Wn.2d 545, 560, 546 P.2d 440 (1976). A decision denying
consolidation will be affirmed unless there has been an abuse of discretion, and
the moving party shows prejudice. Id. A superior court abuses its discretion when
its decision is manifestly unreasonable, based on untenable grounds, or based on
untenable reasons. State v. Dye, 178 Wn.2d 541, 548, 309 P.3d 1192 (2013).
Barnes sought to have the court organize the six actions and plaintiffs’
counsel to pursue the claims against Sea Mar in common. The Manual for
Complex Litigation, Fourth, published in 2004, was produced under the auspices
of the Federal Judicial Center, and contains analyses and recommendations of its
board of editors. FED. JUD. CTR., MANUAL FOR COMPLEX LITIGATION, at 1 (4th ed.
2004) (Manual), https://www.fjc.gov/sites/default/files/materials/30/Manual%20for
%20Complex%20Litigation_Fourth%20Edition_Third%20Printing_2020.pdf. The
Manual is not “authoritative legal or administrative policy,” but sets forth only
“recommendations and suggestions.” Id. Barnes cited section 22.62 of the
Manual, which discusses the organization of counsel. It states, “The judge will
often need to appoint lead counsel or a committee of counsel to coordinate
discovery and other pretrial preparation.” Id. § 22.62, at 405-06. After discussing
the role of lead counsel and committees of counsel, the Manual states, “Where
several counsel are competing to be lead counsel or to serve on a key liaison
committee, the court should establish a procedure for attorneys to present their
qualifications, including their experience in managing complex litigation.” Id. at
406. In a complex case, lead counsel assume major responsibility on behalf of the
10
No. 84910-7-I/11
class for presenting written and oral arguments, working with opposing counsel in
developing and implementing plans for the litigation, initiating and organizing
discovery, conducting depositions, and employing experts, among other tasks. In
re Ivan F. Boesky Sec. Litig., 948 F.2d 1358, 1365 (2d Cir. 1991). Appointing a
single negotiator authorized to speak for the class eliminates opportunities for
“divisive settlement shopping” by the defendant. Id. (citing MacAlister v. Guterma,
263 F.2d 65, 68-69 (2d Cir. 1958)).
One of the ways in which current Fed. R. Civ. P. 23 differs from
Washington’s rule is in establishing express considerations relevant to the
appointment of class counsel. Fed. R. Civ. P. 23(g). Washington’s CR 23 lacks
similar express considerations, stating only, in CR 23(a)(4), that the representative
parties must fairly and adequately protect the interests of the class. The federal
rule states additionally, in reference to class counsel, “If more than one adequate
applicant seeks appointment, the court must appoint the applicant best able to
represent the interests of the class.” Fed. R. Civ. P. 23(g)(2). And, “[t]he court
may designate interim counsel to act on behalf of a putative class before
determining whether to certify the action as a class action.” Fed. R. Civ. P.
23(g)(3). These appointments turn on “the same factors” used to appoint class
counsel generally. E.g. In re Vanguard Chester Funds Litig., 625 F. Supp. 3d 362,
365 (E.D. Pa. 2022). While the provisions of Fed. R. Civ. P. 23(g) are more
specific, Washington law is consistent. It requires that class counsel be “qualified,
experienced, and generally able to conduct the litigation.” Marquardt v. Fein, 25
Wn. App. 651, 656-57, 612 P.2d 378 (1980) (citing Eisen v. Carlisle & Jacquelin,
11
No. 84910-7-I/12
391 F.2d 555, 562 (2d Cir. 1968)). Because the court has responsibility for
“insuring adequate representation” of the class, the court may appoint lead counsel
adequate to the complexity of an action. Id.At the time of Barnes’s motion to consolidate, Hall and Summers’s
preliminary settlement subject to court approval stood to potentially eliminate the
need for future litigation on behalf of the class, and therefore the need for
efficiencies associated with designating lead counsel to manage litigation tasks.
At any point at which it seemed probable that future litigation would occur that
would benefit from consolidation and appointment of lead counsel, the superior
court might have revisited the question of consolidation. But when a settlement, if
approved, had the potential to resolve the class’s claims, the superior court acted
within its discretion in denying consolidation where it would not save cost or time,
and to the contrary could delay review of the preliminary settlement. Further,
Barnes was not prejudiced, because her opportunity to opt out of or object to the
class settlement was preserved. The superior court did not abuse its discretion by
denying consolidation in the circumstances presented.4
4
The order denying consolidation did not state a basis for the superior
court’s ruling. To the extent this was error it was harmless because “there is
evidence to support the decision in the pleadings and proof,” In re Dependency of
N.G., 199 Wn.2d 588, 600, 510 P.3d 335 (2022), and because Barnes’s right to
object was preserved it affirmatively appears from the record that no injustice
occurred, see Foster v. Carter, 49 Wn. App. 340, 343, 742 P.2d 1257 (1987) (no
injustice occurred where the superior court waived rules concerning the time to file
a summary judgment motion because appellant had received appropriate notice).
12
No. 84910-7-I/13
B
Barnes argues the class notice plan was not the best notice practicable
under the circumstances, and in fact, “ ‘failed.’ ”5 We disagree.
A class action may not be settled without notice to the class. CR 23(e). In
a class action maintained under CR 23(b)(3), the court is required to “direct to class
members ‘the best notice practicable under the circumstances including individual
notice to all members who can be identified through reasonable effort.’ ” Eisen v.
Carlisle, 417 U.S. 156, 173, 94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974) (quoting Fed.
R. Civ. P. 23(c)(2)); CR 23(c)(2); Sitton v. State Farm Mut. Auto. Ins. Co., 116 Wn.
App. 245, 252 n.11, 63 P.3d 198 (2003). This is notice “ ‘reasonably calculated,
under all the circumstances, to apprise interested parties of the pendency of the
action and afford them an opportunity to present their objections.’ ” Roes, 1-2 v.
SFBSC Mgmt., LLC, 944 F.3d 1035, 1045 (9th Cir. 2019) (internal quotation marks
omitted) (quoting Eisen, 417 U.S. at 174). It requires the means one “ ‘might
reasonably adopt’ ” when “ ‘desirous of actually informing the absentee.’ ” Id. at
1045-46 (quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 315,
70 S. Ct. 652, 94 L. Ed. 865 (1950)).
The Advisory Committee note to the 2018 amendments to Fed. R. Civ. P.
23(c)(2) addressed the evolution in technology since the U.S. Supreme Court
addressed the notice requirement in Eisen. While its individual notice requirement
5
Barnes does not challenge on appeal the content of the notice.
Accordingly, we do not address its adequacy. See Nobl Park, LLC. of Vancouver
v. Shell Oil Co., 122 Wn. App. 838, 845, 95 P.3d 1265 (2004) (setting out
requirements for adequacy of notice) (citing Phillips Petroleum Co. v. Shutts, 472
U.S. 797, 812, 105 S. Ct. 2965, 86 L. Ed. 2d 628 (1985)).
13
No. 84910-7-I/14
for identifiable class members led to frequent resort to first class mail,
“technological change since 1974 has introduced other means of communication
that may sometimes provide a reliable additional or alternative method for giving
notice.” Fed. R. Civ. P. 23(c)(2), Committee Note 2018. The committee
commented that “when selecting a method or methods of giving notice courts
should consider the capacity and limits of current technology, including class
members’ likely access to such technology.” Id. The focus should be on the “the
means or combination of means most likely to be effective in the case before the
court.” Id.“[T]he superior court exercises discretion under CR 23(d) in crafting an
appropriate procedure for giving notice of a class action.” Wright v. Jeckle, 121
Wn. App. 624, 629 n.1, 90 P.3d 65 (2004). This accords with the abuse of
discretion standard that we apply generally when reviewing a superior court ruling
that a class settlement was fair, adequate, and reasonable. Pickett, 145 Wn.2d at
192; Deien v. Seattle City Light, 26 Wn. App. 2d 57, 66, 527 P.3d 102 (2023). We
therefore review for abuse of discretion the superior court’s determination that the
notice plan was the best notice practicable under the circumstances.6
6
Consistent with Wright, Pickett and Deien, the parties agree that we review
the superior court’s approval of class notice under the abuse of discretion
standard. We note appellate courts are divided on the standard of review that
applies to orders concerning class notice. Some courts view the notice
requirement as calling on the trial court to assess and adopt a plan from among
the “feasible alternative[s]” suitable to a particular case for “identifying and
contacting persons” in the class, and apply an abuse of discretion standard. In re
Agent Orange Prod. Liab. Litig. MDL No. 381, 818 F.2d 145, 169 (2d Cir. 1987);
see also Pollard v. Remington Arms Co., 896 F.3d 900, 905-06 (8th Cir. 2018)
(abuse of discretion); In re Prudential Ins. Co. Am. Sales Prac. Litig. Agent Actions,
148 F.3d 283, 318 (3d Cir. 1998) (abuse of discretion). Similarly, the Advisory
14
No. 84910-7-I/15
Sea Mar’s counsel described Sea Mar’s patient population as a “low
income, no income homeless population,” and described the population as “a
difficult population to reach generally.” Sea Mar’s counsel stated the difficulty in
reaching the class was anticipated and was the reason Hall and Summers “insisted
on a cy pres provision,” because the settling parties “suspected that there was
going to be a large number that did not respond regardless of what we did.” This
echoes Roes, 1-2, in which the parties “appeared to believe” when formulating a
notice plan that the class members would be “difficult to reach.” 944 F.3d at 1046.
In Roes, 1-2, plaintiffs sought approval of a settlement on behalf of nearly
4,700 exotic dancers at adult entertainment clubs based on their allegedly having
been misclassified as independent contractors rather than employees. Id. at 1039.
Despite believing class members would be difficult to reach, and that former
employees in particular would be “difficult to reach by mail,” the notice plan relied
Committee note to the 2018 amendments to Fed. R. Civ. P. 23(c)(2) states, “The
court should exercise its discretion to select appropriate means of giving notice.”
Other courts view the issue as whether the notice satisfies due process,
deemed a question of law reviewed de novo. In re Online DVD-Rental Antitrust
Litig., 779 F.3d 934, 946 (9th Cir. 2015) (de novo); Fidel v. Farley, 534 F.3d 508,
513 (6th Cir. 2008) (de novo); DeJulius v. New England Health Care Emp. Pension
Fund, 429 F.3d 935, 942 (10th Cir. 2005) (de novo); Fauley v. Metro. Life Ins. Co.,
2016 IL App (2d) 150236, ¶ 36, 52 N.E.3d 427, 402 Ill. Dec. 506 (de novo).
The California Court of Appeal uses a mixed standard, stating, “The trial
court ‘has virtually complete discretion as to the manner of giving notice to class
members,’ ” a determination reviewed for abuse of discretion, but “ ‘[t]o the extent
the trial court’s ruling is based on assertedly improper criteria or incorrect legal
assumptions, we review those questions de novo.’ ” Cellphone Fee Termination
Cases, 186 Cal. App. 4th 1380, 1390, 113 Cal. Rptr. 3d 510 (2010) (internal
quotation marks omitted) (quoting 7-Eleven Owners for Fair Franchising v.
Southland Corp., 85 Cal. App. 4th 1135, 1164, 102 Cal. Rptr. 2d 777 (2000); Cho
v. Seagate Tech. Holdings, Inc., 177 Cal. App. 4th 734, 745, 99 Cal. Rptr. 3d 436(2009)).
15
No. 84910-7-I/16
on U.S. mail to the class members’ last known addresses. Id. at 1042, 1046. The
notice plan included, additionally, performing address traces and re-sending when
1,546 notices were returned as undeliverable, establishing a settlement website,
and displaying posters in the dressing rooms at the nightclubs. Id. at 1042. The
notice plan included no reminder notices, no follow up, and no electronic notice,
and after the address traces 560 notices remained undeliverable. Id.
The Ninth Circuit reversed the district court’s approval of the notice plan.
Id. at 1046, 1048. The court was troubled by the parties’ use of U.S. mail without
any additional means of notice despite believing beforehand that the class,
especially former employees, would be difficult to reach that way, and knowing
afterwards that 12 percent of the class received no notice. Id. at 1046. This was
exacerbated by the notice plan’s failure to employ any electronic means of notice,
or offer any reminder notice. Id. The supplemental notice consisting of posters
displayed at the night clubs would alert only current employees, and in no way
answered the difficulty understood to exist in reaching former employees. Id. at
1046-47. Finally, there were “numerous other reasonable options that could have
been pursued to improve the notice process,” identified as social media, targeted
online advertising, and online message boards such as at a website dedicated to
the exotic dancer community. Id. at 1047. Between the known limitations of the
plan that was implemented together with the neglect of available options to
ameliorate those limitations, the court held “something more was required” to meet
the standard of the “ ‘best notice practicable.’ ” Id. at 1048.
16
No. 84910-7-I/17
While the parties here also anticipated difficulty in reaching the class, they
did not rely on only one means of reaching the class, let alone as in Roes, 1-2 a
particular means they believed in advance would be ineffective. The parties here
did “something more” than the parties did in Roes, 1-2, by using first class mail
when addresses were known and using e-mail when e-mail addresses were
known,7 establishing a website and toll-free telephone number, and using online
advertising on Facebook and Instagram in English and Spanish. Over eight million
impressions were delivered via the Facebook and Instagram advertising
campaigns. The record does not indicate a design in the social media advertising
to target groups likely to overlap with the class, and does not indicate the existence
of a website known to be used by a community overlapping with the class, but with
those exceptions the notice employed here did use the “numerous other
reasonable options” insofar as those are identified in Roes, 1-2.
Additionally, as Sea-Mar argued, the superior court was entitled to consider
the nonreversionary nature of the settlement when evaluating a notice plan for a
7
Barnes argues that Hall and Summers improperly deviated from the notice
plan approved by the court when Kroll e-mailed notices to 180,513 e-mail
addresses on file for the class members. Of the 180,513 e-mail addresses
contacted, 34,205 “were rejected/bounced back,” and Kroll was able to follow up
with first class mail notice to 33,070 of those recipients. This case differs from
Roes, 1-2 in that the settling parties here used e-mail addresses if they had them,
otherwise postal addresses, and then postal addresses if available for defective e-
mail addresses. Better practice would have been to return to court to obtain
approval of the procedure actually employed, but Barnes fails to show prejudice
from any deviation from the original plan. In effect, Barnes argues that substituting
e-mail for first class mail notice for approximately 13 percent of the class was
improper. When coupled with Barnes’s argument that first class mail was
inadequate, this impliedly amounts to an argument that only sending both e-mail
and first class mail when such addresses were known could have potentially
satisfied CR 23. Barnes cites no authority supporting this contention.
17
No. 84910-7-I/18
class known to be difficult to reach. Funds unclaimed by class members do not
revert to Sea Mar, but must be paid over to an appropriate cy pres recipient. See
CR 23(f)(2) (directing residual funds to “programs that promote access to the civil
justice system for low income residents of Washington” and for purposes that
relate to “the objectives of the underlying litigation or otherwise promote the
substantive or procedural interest of members of the certified class.”). This also
distinguishes Roes, 1-2, in which significant amounts of the proposed class
settlement would never be funded or would revert to the defendants if not claimed
by the class members. 944 F.3d at 1040-41. When the “distribution of unclaimed
funds” is designed to “indirectly benefit the entire class,” the court may consider
this as a factor mitigating the infeasibility of providing individual notice to persons
who are difficult to reach, while still giving them the benefits of the class form. See
Six (6) Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301, 1305 (9th Cir.
1990) (“Fluid recovery or ‘cy pres’ distribution avoids these difficulties by permitting
aggregate calculation of damages, the use of summary claim procedures, and
distribution of unclaimed funds to indirectly benefit the entire class.”). Factoring
the cy pres provision into the evaluation of the notice plan is appropriate to the
purpose of cy pres distributions, which are justified when a recovery cannot
“feasibly” be distributed to the “intended beneficiaries.” Pearson v. NBTY, Inc.,
772 F.3d 778, 784 (7th Cir. 2014).
Barnes argues the low response rate from the class shows that the notice
plan was inadequate. The law generally does not view a low response rate from
the class as necessarily an indicator of inadequate notice, as opposed only to a
18
No. 84910-7-I/19
factor that may be considered. Pollard v. Remington Arms Co., LLC, 896 F.3d
900, 906 (8th Cir. 2018) (“In the end, the low claim submission rate, while not ideal,
is not necessarily indicative of a deficient notice plan.”); In re Prudential Ins. Co.
Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 318 n.63 (3d Cir. 1998).
Characterizing a claims rate as high or low depends on the context of the relief a
proposed settlement affords. McAdams v. Robinson, 26 F.4th 149, 154 n.4 (4th
Cir. 2022).
One court has cited evidence that “response rates in class actions generally
range from 1 to 12 percent, with a median response rate of 5 to 8 percent.” Gascho
v. Glob. Fitness Holdings, LLC, 822 F.3d 269, 290 (6th Cir. 2016); accord Jones
v. Monsanto Co., 38 F.4th 693, 698 (8th Cir. 2022), cert. denied, 143 S. Ct. 2458
(2023) (“ ‘a claim rate as low as 3 percent is hardly unusual in consumer class
actions and does not suggest unfairness.’ ”) (quoting Keil v. Lopez, 862 F.3d 685,
697 (8th Cir. 2017)); Sullivan v. DB Invs., Inc., 667 F.3d 273, 329 n.60 (3d Cir.
2011) (“ ‘[C]onsumer claim filing rates rarely exceed seven percent, even with the
most extensive notice campaigns.’ ”) (quoting App’x 1550)). In Roes, 1-2, the court
viewed a response rate of 18.5 percent as low, but that case was not a consumer
class action or specifically a data breach claim, but an employee classification case
in which class members “stood to receive hundreds of dollars if they made a claim.”
944 F.3d at 1046 n.7. In Pearson, the court was critical of a class settlement in
which the claims rate was 0.25 percent overall and, for those who received
postcards, 0.64 percent, but the court’s criticism came in the context of other
significant concerns including excessive attorney fees, a reversionary fund, and an
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No. 84910-7-I/20
agreement that attorney fees the court did not permit to be paid to class counsel
also would revert to the defendants, leading the court to conclude the claims
process had been structured to discourage claims. 772 F.3d at 780, 782-83.
In contrast, Pollard was a class action on behalf of the then “current” owners
of “approximately 7.5 million” firearms produced since 1948. 896 F.3d at 903.
Initially, notice consisted of circulation for 24 months between February 2015 and
February 2017 of postcard notices, magazine notices, posters, website postings,
internet banners, and Facebook advertising. Id. at 904. Concerned about the
claim submission rate, the trial court ordered further notice consisting of a targeted
social media campaign, national radio campaign, e-mail notification, and additional
postcards and posters. Id. at 905. Ultimately, 22,000 claims were received
representing approximately 0.29 percent of the 7.5 million firearms at issue. Id.The court placed the response rate in the context of the class settlement affording
class members benefits worth approximately $70.00, $12.00, or $10.00. Id. at 904,
906. Given the exhaustive efforts at notice, notwithstanding the low response rate
“the notice plan was adequate and satisfied the methods and mechanisms for
disseminating notice set forth in” Rule 23. Id. at 906-07. These decisions show
that a response rate is relevant only secondarily to the examination of the notice
that was provided in the context of the possible forms of notice reasonably
available.
The superior court focused on the adequacy of the notice plan, commenting
at the final fairness hearing that “the thing that stands out to [the court] the most
as being potentially deficient is the notice.” In executing a notice plan using known
20
No. 84910-7-I/21
e-mail and postal addresses, the parties appropriately started with the U.S.
Supreme Court’s baseline rule requiring individual notice to class members who
can be identified through reasonable effort. Eisen, 417 U.S. at 173. Expanding
the notice plan, as well as evaluating the response rate, must take into account the
fact the class is admittedly one that is difficult to reach, and the extent to which
additional means of notice are available. Here, the notice approved by the superior
court relied additionally on the Facebook and Instagram posts, the settlement
website, and the toll-free telephone number. Beyond these, Barnes points to the
possibility of posting notice in “ ‘homeless shelters, libraries, and transportation
centers,’ ” on a “ ‘city’s’ ” website, and direct distribution in person to the unhoused
population. However, all of these forms of notice—those that were used and the
ones Barnes urges—are subject to the limitations inherent in notice other than
direct notice to the class member, as it is understood that “notice by publication or
via the Internet tends to be ineffectual when the class consists of consumers.”
Pearson, 772 F.3d at 784.
The notice plan heeded the concerns of Roes, 1-2 to do “more” than rely on
mail alone, by using known e-mail addresses, online advertising, and a toll-free
phone number to call. The above decisions and our standard of review instruct
that, provided a notice plan affords individual notice to members who can be
identified through reasonable effort, it is within the superior court’s discretion to
assess the extent to which additional available means of notice must be employed
to provide the best notice practicable under the circumstances. This includes, and
may require, means of cumulative individual notice such as reminder notices and
21
No. 84910-7-I/22
use of e-mail in addition to first class mail, and means of non-individual notice such
as advertising, general postings, or other community outreach. Together with the
settlement anticipating and mitigating the difficulty of notice by providing for cy pres
relief, the superior court had a tenable basis to rule that the level of notice given in
this case was sufficient without additionally requiring further steps. The superior
court therefore did not abuse its discretion.
C
Barnes argues the settlement is not fair, reasonable, or adequate because
the settlement amount is inadequate, a circumstance Barnes ties to her argument
that the settlement is the product of collusion between the settling parties. We
disagree.
“In class action cases, the courts have ‘an independent obligation to protect
the interests of the class.’ ” Deien, 26 Wn. App. 2d at 65 (quoting In re Nat’l
Football League Players Concussion Injury Litig., 821 F.3d 410, 430 (3d Cir.
2016)). “Although CR 23 is silent in guiding trial courts in their review of class
settlements, it is universally stated that a proposed class settlement may be
approved by the trial court if it is determined to be ‘fair, adequate, and
reasonable.’ ” Pickett, 145 Wn.2d at 188 (quoting Torrisi v. Tucson Elec. Power
Co., 8 F.3d 1370, 1375 (9th Cir. 1993)).
The superior court’s determination involves a balancing of several factors,
including
the likelihood of success by plaintiffs; the amount of discovery or
evidence; the settlement terms and conditions; recommendation and
experience of counsel; future expense and likely duration of litigation;
22
No. 84910-7-I/23
recommendation of neutral parties, if any; number of objectors and
nature of objections; and the presence of good faith and the absence
of collusion.
Pickett, 145 Wn.2d at 188-89. This list of factors is not exhaustive and every factor
will not necessarily be relevant in every case. Id. However, the court’s “ ‘role in
evaluating a proposed settlement must be tailored to fulfill [these] objectives.’ ”
Deien, 26 Wn. App. 2d at 67 (alteration in original) (quoting Officers for Justice v.
Civil Serv. Comm’n of City & County of San Francisco, 688 F.2d 615, 625 (9th Cir.
1982)). Courts apply “heightened scrutiny” when “assessing class settlements
negotiated prior to class certification.” Roes, 1-2, 944 F.3d at 1048; accord
Sullivan, 667 F.3d at 319; Mars Steel Corp. v. Cont’l Ill. Nat. Bank & Tr. Co. of
Chicago, 834 F.2d 677, 681 (7th Cir. 1987); Weinberger v. Kendrick, 698 F.2d 61,
73 (2d Cir. 1982).
In reviewing a superior court’s determination of whether a class settlement
was fair, adequate, and reasonable, we apply an abuse of discretion standard.
Pickett, 145 Wn.2d at 191-92. “Due to the consensual nature of settlements, the
trial court’s inquiry is ‘delicate’ and ‘largely unintrusive.’ ” Deien, 26 Wn. App. 2d
at 67 (quoting Pickett, 145 Wn.2d at 189, 35 P.3d 351). Our task is even more
limited than that of the superior court. Id. In reviewing an order granting approval
of a class settlement, we accord great weight to the superior court’s views. Id.Barnes argues that Hall and Summers’s counsel engaged in a collusive
effort with Sea Mar to thwart Barnes’s effort to consolidate the actions, ultimately
arriving at a settlement that was not in the class’s interests. Barnes points to the
removal as preventing the superior court from reaching her first motion to
23
No. 84910-7-I/24
consolidate. The timeline rebuts Barnes’s theory of collusion. Sea Mar received
Hall’s first discovery requests in January 2022. Sea Mar notified HHS of the
litigation and sought certification of immunity under the PHSA and FSHCAA.
Barnes, 2022 WL 1541927 at *1. Then, a United States attorney filed a notice
advising the superior court that the United States was considering whether it would
intervene in the action. Id. These actions occurred six and three days,
respectively, before Barnes filed her motion to consolidate. Sea Mar was already
preparing to remove the six lawsuits to federal court before being served with the
motion to consolidate. And even if Sea Mar had filed its notice of removal in bad
faith, which the federal court never found, Sea Mar did not stipulate to remand
Hall’s and Summers’s actions until after the magistrate judge’s report and
recommendation, id., and Barnes’s action was remanded to state court allowing
her to fully present her arguments in support of coordination in her second motion
to consolidate filed on May 20, 2022.
Barnes further points to Hall and Summers opposing consolidation and
settling unilaterally, arguing the absence of appointed lead counsel undermined
the class’s negotiating position. Lead counsel may be appointed by the trial court
to engage in settlement negotiations, and that responsibility may call for
appropriate communication with other counsel representing class members.
Boesky, 948 F.2d at 1365. In cases in which lead counsel has been appointed, a
court may consider lead counsel’s communications with other counsel as a factor
bearing on whether to approve a settlement. Id. At the same time, when reviewing
requests for approval of attorney fees, courts may conclude that counsel for other
24
No. 84910-7-I/25
plaintiffs and class members may not merit compensation from a class settlement
if their efforts did not “ ‘create, discover, increase, or preserve the class’s ultimate
recovery.’ ” In re Volkswagen “Clean Diesel” Mktg., Sales Pracs. & Prods. Liab.
Litig., 914 F.3d 623, 644-45 (9th Cir. 2019) (internal quotation marks omitted)
(quoting In re Cendant Corp. Sec. Litig., 404 F.3d 173, 197 (3d Cir. 2005)). It
follows that counsel pursuing a putative class action may negotiate a proposed
settlement with the defendant without involving counsel pursuing other actions
against the defendant, subject to review under Pickett.
The court appropriately considers “the presence of good faith and the
absence of collusion” in evaluating a class settlement. Pickett, 145 Wn.2d at 188-
89. Barnes points to the danger of “a ‘reverse auction’—where ‘the defendant in
a series of class actions picks the most ineffectual class lawyers to negotiate a
settlement with in the hope that the district court will approve a weak settlement
that will preclude other claims against the defendant.’ ” Swinton v. SquareTrade,
Inc., 960 F.3d 1001, 1005 (8th Cir. 2020) (quoting Reynolds v. Beneficial Nat’l
Bank, 288 F.3d 277, 282 (7th Cir. 2002)). A “reverse auction” may be signaled by
the presence of suspiciously generous attorney fees, mendacity, or underhanded
activity. See id. at 1005-06. It may also be signaled by such behaviors as “ ‘a
Machiavellian plan to undercut the movants’ negotiating position,’ ” such as in one
case, “leaving the law firm that first filed the case and commencing a second,
competing action.” Id. at 1006 (quoting Tech. Training Assocs. v. Buccaneers Ltd.
P’ship, 874 F.3d 692, 695, 697 (11th Cir. 2017)).
25
No. 84910-7-I/26
The facts of Swinton are if anything more concerning than those presented
here, yet still the court did not find a collusive reverse auction. In Swinton, a later-
filing class action plaintiff reached a settlement with the defendant. Id. The later-
filing plaintiff copied another plaintiff’s first-filed complaint, and the first filing plaintiff
sought to intervene in the settling plaintiff’s action. Id. The proposed intervenor
defeated an arbitration defense in his first-filed action. Id. at 1003. The later-filing
plaintiff never litigated the defendant’s arbitration defense, and did not complete
discovery, but instead negotiated a class settlement. Id. at 1006.
There is a rough similarity between the settling plaintiff in Swinton evidently
not doing the work to defeat the arbitration defense and Hall and Summers here
allegedly not aggressively fighting the removal to federal court and asserted
immunity defense. But the superior court nevertheless found the settlement on
balance to be fair, adequate, and reasonable. At the final fairness hearing, the
settling parties denied that they settled due to a compromise for the alleged
immunity defense, and the superior court was entitled to conclude that was
accurate. While there was risk of a reverse auction to the extent there is in any
case in which multiple proposed class actions are presented, Barnes’s lead
argument that Sea Mar’s removal to federal court was designed to frustrate
consolidation is not borne out by the record. It further ignores that after remand
Barnes had a full hearing on her motion to consolidate. Barnes does not point to
any other circumstances such as suspiciously generous attorney fees, mendacity,
underhanded activity, “Machiavellian” plans, or any other machinations suggesting
26
No. 84910-7-I/27
anything other than evaluation of Hall and Summers’s proposed settlement on its
merits in relation to the class’s claims.
Barnes seeks to show the settlement was a “ ‘weak’ ” settlement, and
leverages her argument that it was borne of Hall and Summers’s counsel’s rush to
settle before potentially losing control in the consolidated proceeding that Barnes
advocated. Barnes argues, “The only explanation for the inadequate Settlement
amount is that Settling Counsel discounted for the risk of not being appointed
interim lead counsel and for Sea Mar’s immunity defense, which was easily
defeated by Barnes and the other Non-settling Plaintiffs prior to preliminary
approval.” But Barnes fails to support her argument that the settlement was “weak”
without resort to speculation.
The parties agree the settlement here provides a fund up to approximately
$3.66 per class member. Barnes argues the relevant point of comparison is
whether Social Security numbers were compromised and points to cases she says
resulted in settlements of $17.82 per class member and $53.28 per class member
in such cases, compared to settlements of $2.88 and $1.02 per class member for
breaches affecting only payment card information and website login credentials.
Meanwhile, in addition to the fact that less than a fifth of the class here had Social
Security numbers compromised, Hall and Summers point to settlements, they say
involving compromise of Social Security numbers, amounting to $0.90, $0.76,
$1.31, and $0.85 per class member. However, the parties do not provide an
adequate record supporting these data, and they do not attempt to explain why
these cases and aggregate settlement figures are similar or dissimilar for
27
No. 84910-7-I/28
settlement purposes to the claims advanced by the class. This led the superior
court to comment, “[I]t was somewhat disappointing to see that what should be a
pretty cut and dry factual matter about what other cases settled for seems to be in
dispute and there seems to be some claim that there has been less than
transparency on this issue.”
A proposed settlement is not judged against a hypothetical or speculative
measure of what might have been achieved. Officers for Justice, 688 F.2d at 625.
A possibility that the settlement could have been better does not mean it was not
fair, reasonable, or adequate. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1027 (9th
Cir. 1998), overruling recognized on separate grounds by Castillo v. Bank of Am.,
NA, 980 F.3d 723, 729 (9th Cir. 2020). The nature and claims of a particular class
harmed by a data breach may differ from those of another class. For instance, the
class action may be as broad as one “affecting the personal information of almost
150 million Americans.” In re Equifax Inc. Customer Data Sec. Breach Litig., 999
F.3d 1247, 1257 (11th Cir. 2021), cert. denied, 142 S. Ct. 431 (2021), and cert.
denied, 142 S. Ct. 765 (2022). Or, a class may be narrowly comprised of banks
that issued credit cards compromised in a data breach. In re Home Depot Inc.,
931 F.3d 1065, 1072 (11th Cir. 2019). In the absence of a basis for comparing the
settlement at issue to the settlement in any other case, supported if necessary by
a documentary record, it is speculative to say the amount of the settlement is
inadequate in comparison to other cases.
Finally, Barnes argues the scope of the release is not clearly limited to
claims based on the data breach or alleged in the litigation, but improperly releases
28
No. 84910-7-I/29
other claims, such as claims arising out of class members’ employment or medical
care. A class settlement agreement may preclude a party from bringing a related
claim in the future “ ‘even though the claim was not presented and might not have
been presentable in the class action,’ ” but only where the released claim is
“ ‘based on the identical factual predicate as that underlying the claims in the
settled class action.’ ” Hesse v. Sprint Corp., 598 F.3d 581, 590 (9th Cir. 2010)
(quoting Williams v. Boeing Co., 517 F.3d 1120, 1133 (9th Cir. 2008); Class
Plaintiffs v. City of Seattle, 955 F.2d 1268, 1287 (9th Cir. 1992)). The settlement
agreement provides “a general release of Sea Mar for all claims and causes of
action pleaded or that could have been pleaded that are related in any way to the
activities stemming from the Sea Mar Data Incident described in the operative
Complaint.” The scope of the release is cabined by the data security incident as
described in the Summers complaint. The release is not improperly overbroad.
Affirmed.
WE CONCUR:
29