The opinion of the court was delivered by: Amy J. St. Eve, District Court Judge
MEMORANDUM OPINION AND ORDER
Fifty-seven Plaintiffs and Defendant, AT&T Mobility LLC ("AT&T"), have filed a joint motion ("Motion") in this multidistrict litigation for (1) certification of a settlement class, (2) preliminary approval of settlement, (3) approval of a proposed class-settlement notice, and (4) appointment of Analysis Research Planning Corporation ("ARPC") as notice and settlement administrator. For the following reasons, the Court grants the Motion in large part but reserves judgment on whether to appoint ARPC as settlement administrator.
The Judicial Panel on Multidistrict Litigation ("JPML") has transferred dozens of actions to this Court for coordinated pretrial proceedings. (R. 1, 4/7/10 Transfer Order at 3.) Plaintiffs have alleged that AT&T charges customers for taxes, fees, and surcharges on wireless Internet data plans for "smart phones" and laptop computers. The Master Complaint alleges that, "[d]espite the prohibition on taxation of internet access under state and federal law imposed by the [federal Internet Tax Freedom Act ("ITFA")], AT&T improperly and illegally charges its customers state and/or local sales tax" on the wireless Internet data plans. (R. 48, Master Compl. at ¶ 48.) Plaintiffs seek damages, attorneys' fees, costs, and an injunction barring AT&T from collecting the challenged taxes.
The proposed class plaintiffs are Andy Armstrong, Ronald Bendian, Michael Bosarge, Eric Bosse, Vicki L. Campbell, Harvey Corn, Pam Corn, Matthew Cranford, Steven A. DeVore, Jane F. Edmonds, Heather Feenstra-Kretschmar, Adrienne M. Fox, Richard Garner, Stephen S. Girard, David Guerrero, Christopher R. Havron, Christopher Hendrix, Martin Hoke, Meri Iannetti, Christopher Jacobs, Kathy J. Johnson, Jamie Kilbreth, Bert Kimble, Vickie C. Leyja, Jonathan Macy, Rick Manrique, Heather Mazeitis, Bonnae Meshulam, Miracles Meyer, Audrey J. Mitchell, Adrienne D. Munson, Jill Murphy, Gira L. Osorio, Sara Parker Pauley, Joseph Phillips, Heather Rahn, David Rock, Lesley Rock, William J. Rogers, James Marc Ruggerio, Ann Marie Ruggerio, James Shirley, Randall Shuptrine, John W. Simon, Karl Simonsen, Donald Sipple, James K.S. Stewart, Dorothy Taylor, Kirk Tushaus, Matthew Vickery, John W. Wallace, Eleanor T. Wallace, Craig Wellhouser, Aaron White, William A. Wieland, Robert Wilhite, and Penny Annette Wood, all of whom are named plaintiffs in some of the transferred actions. (R. 50-2, Proposed Settlement Agreement at § 1.4.) The proposed class consists of:
All persons or entities who are or were customers of AT&T Mobility and who were charged Internet Taxes on bills issued from November 1, 2005 through [the final date on which AT&T Mobility issues bills to customers prior to implementing the billing system changes pursuant to Section 8.1].
Excluded from the Settlement Class are: (i) AT&T Mobility, any entity in which AT&T Mobility has a controlling interest or which has a controlling interest in AT&T Mobility, and AT&T Mobility's legal representatives, predecessors, successors and assigns; (ii) governmental entities; (iii) AT&T Mobility's employees, officers, directors, agents and representatives; and (iv) the Court presiding over any motion to approve this Settlement Agreement.
(R. 50-2, Proposed Settlement Agreement at § 7.) Additionally, there are proposed subclasses for plaintiffs within the District of Columbia, Puerto Rico, and states in which AT&T is alleged to have unlawfully collected taxes. (R. 48, Master Compl. at ¶¶ 1-55.) The subclasses are defined as:
All persons or entities who are or were customers of AT&T Mobility and who were charged Internet Taxes in [STATE] on bills issued from November 1, 2005 through the final date on which AT&T Mobility issues bills to customers prior to implementing the billing system changes pursuant to Section 8.1 of the Settlement Agreement.
Excluded from the [State] Settlement Class are: (i) AT&T Mobility, any entity in which AT&T Mobility has a controlling interest or which has a controlling interest in AT&T Mobility, and AT&T Mobility's legal representatives, predecessors, successors and assigns; (ii) governmental entities; (iii) AT&T Mobility's employees, officers, directors, agents and representatives; and (iv) the Court presiding over any motion to approve this Settlement Agreement.
(R. 50, Joint Mem. at 4-5.)
Movants have submitted to the Court a 31-page proposed class-action settlement agreement ("Proposed Settlement Agreement"), seeking to resolve all of their claims. While the Proposed Settlement Agreement is discussed in more detail below, its main provisions provide:
* AT&T will cease charging the challenged taxes within 30 days of a preliminary approval order (R. 50-2, Proposed Settlement Agreement at § 8.1);
* AT&T will provide, seek, and coordinate refunds from the taxing jurisdictions to whom it paid the challenged taxes (id. at § 8.3-8.5);
* If a taxing jurisdiction denies a refund claim, AT&T will cooperate if Plaintiffs appeal the denial (id. at § 8.9);
* AT&T will remit vendor's compensation*fn1 (id. at § 8.13);
* Plaintiffs will release AT&T of all claims "that were or could have been asserted or sought in the Actions, relating in any way or arising out of (a) AT&T Mobility's charging of the Internet Taxes (as defined in paragraph 1.17) and (b) any and all claims that were asserted or could have been asserted by the Settlement Class in the Actions with respect to AT&T Mobility's charging of taxes, fees or surcharges on internet access allegedly in violation of ITFA, state and local laws" (id. at § 14);
* AT&T will administer and pay for the class notice (id. at § 15);
* Plaintiffs will be responsible for payments related to distribution of the settlement fund (id.);
* Plaintiffs' counsel will seek a fee "no greater than the lesser of ten percent (10%) of the aggregate value of the settlement or twenty-five percent (25%) of the amounts refunded by Taxing Jurisdictions" (id. at § 12);
* Plaintiffs will seek compensation for the class representatives "in an amount not to exceed $5,000 for each state-specific subclass representative from the funds obtained for the Settlement Class" (id.);
* The Court will retain jurisdiction over the actions to resolve any disputes regarding the interpretation, enforcement, or implementation of the settlement (id. at § 29); and
* Plaintiffs will move to dismiss their actions without prejudice upon final approval and with prejudice upon final distribution of the settlement fund (id. at §§ 13, 19).
"The class-action device was designed as 'an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.'" General Tel. Co. of the S.W. v. Falcon, 457 U.S. 147, 155, 102 S.Ct. 2364, 2369 (1982) (quoting Califano v. Yamasaki, 442 U.S. 682, 700-01, 99 S.Ct. 2545, 2557-58 (1979)); see also Ortiz v. Fireboard Corp., 527 U.S. 815, 832, 119 S.Ct. 2295, 2308 (1999) ("In drafting Rule 23(b), the Advisory Committee sought to catalogue in functional terms those recurrent life patterns which call for mass litigation through representative parties." (internal quotation omitted)). It "is an ingenious device for economizing on the expense of litigation and enabling small claims to be litigated. The two points are closely related. If every small claim had to be litigated separately, the vindication of small claims would be rare." Thorogood v. Sears, Roebuck & Co., 547 F.3d 742, 744 (7th Cir. 2008); see also Simer v. Rios, 661 F.2d 655, 669 n.24 (7th Cir. 1981). In other words, class actions address the unlikelihood that people will pursue small claims "'by aggregating the relatively paltry potential recoveries into something worth someone's . . . labor.'" Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617, 117 S.Ct. 2231, 2246 (1997) (quoting Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997)).
"Rule 23 gives the district courts 'broad discretion to determine whether certification of a class-action lawsuit is appropriate,'" Arreola v. Godinez, 546 F.3d 788, 794 (7th Cir. 2008) (quoting Chavez v. Ill. State Police, 251 F.3d 612, 629 (7th Cir. 2001)); Olson v. Brown, 594 F.3d 577, 584 (7th Cir. 2010), and "provides a one-size-fits-all formula for deciding the class-action question." Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., -- U.S. --, 130 S.Ct. 1431, 1437 (2010). Courts should exercise caution, however, in certifying classes. Thorogood, 547 F.3d at 746. Indeed, "[t]he Supreme Court has made clear that a class 'may only be certified if the trial court is satisfied, after a rigorous analysis, that the prerequisites of Rule 23(a) have been satisfied,' and 'actual, not presumed, conformance with Rule 23(a) remains . . . indispensable.'" Davis v. Hutchins, 321 F.3d 641, 649 (7th Cir. 2003) (quoting General Tel., 457 U.S. at 160-61, 102 S.Ct. 2364); see also Livingston v. Assocs. Fin., Inc., 339 F.3d 553, 558 (7th Cir. 2003) ("Class certification requires a rigorous investigation into the propriety of proceeding as a class. . . ."). In deciding whether to certify a class, courts generally may not analyze a class's claims on the merits. See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177, 94 S.Ct. 2140, 2152 (1974); Retired Chicago Police Assoc. v. City of Chicago, 7 F.3d 584, 598 (7th Cir. 1993).
To be entitled to class certification, a plaintiff must satisfy each requirement of Rule 23(a) -- numerosity, commonality, typicality, and adequacy of representation -- and one subsection of Rule 23(b). See Harper v. Sheriff of Cook Co., 581 F.3d 511, 513 (7th Cir. 2009); Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006). "'Failure to meet any of the Rule's requirements precludes class certification.'" Harper, 581 F.3d at 513 (quoting Arreola, 546 F.3d at 794). Satisfaction of these requirements, on the other hand, categorically entitles a plaintiff to pursue her claim as a class action. See Shady Grove, 130 S.Ct. at 1437. Where, as here, a putative class seeks both equitable and monetary relief, a court may: (1) certify the class under Rule 23(b)(3) for all proceedings, (2) certify the class under Rule 23(b)(2) for the portion of the case addressing equitable relief and Rule 23(b)(3) for the portion of the case addressing monetary relief, or (3) certify the class under Rule 23(b)(2) for both kinds of relief but provide all class members with personal notice and an opportunity to opt out as though certification were under Rule 23(b)(3). See Lemon v. Int'l Union of Operating Eng'rs, Local No. 139, AFL-CIO, 216 F.3d 577, 580 (7th Cir. 2000); Jefferson v. Ingersoll Int'l Inc., 195 F.3d 894, 898 (7th Cir. 1999) ("A Court should endeavor to select the most appropriate subsection [of Rule 23(b)], not just the first linguistically applicable one in the list. When substantial damages have been sought, the most appropriate approach is that of Rule 23(b)(3), because it allows notice and an opportunity to opt out.").
The fact that the parties have reached a settlement is a relevant consideration in the class-certification analysis. See Smith v. Sprint Communications Co., 387 F.3d 612, 614 (7th Cir. 2004); Amchem Prods., 521 U.S. at 619, 117 S.Ct. at 2248. "'Confronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems, for the proposal is that there be no trial.'" Smith, 387 F.3d at 614 (quoting Amchem Prods., 521 U.S. at 620, 117 S.Ct. 2231). A court may not, however, "abandon the Federal Rules merely because a settlement seems fair, or even if the settlement is a 'good deal.' In some ways, the Rule 23 requirements may be even more important for settlement classes." Uhl v. Thoroughbred Tech. & Telecomms., Inc., 309 F.3d 978, 985 (7th Cir. 2002). "This is so because certification of a mandatory settlement class, however provisional technically, effectively concludes the proceeding save for the final fairness hearing." Ortiz, 527 U.S. at 849, 119 S.Ct. at 2316.
Plaintiffs have met their burden of satisfying the Rule 23(a) and (b) requirements. Accordingly, the Court certifies the class for settlement purposes under Rule 23(b)(3).*fn2 See Ingersoll Int'l, 195 F.3d at 898 (finding that where, as here, the class seeks substantial damages, certification should be pursuant to Rule 23(b)(3)).
A. Rule 23(a) Requirements
Rule 23(a)(1) requires that the class be "so numerous that joinder of all members is impracticable." Fed. R. Civ. P. 23(a)(1). A party seeking class certification "cannot rely on 'mere speculation' or 'conclusory allegations' as to the size of the putative class to prove that joinder is impractical for numerosity purposes." Arreola, 546 F.3d at 797 (quoting Roe v. Town of Highland, 909 F.2d 1097, 1100 n.4 (7th Cir. 1990)). Ordinarily, however, numerosity is "not difficult to ascertain if a class approach would be useful to avoid the practical problems of trying to join many named plaintiffs or otherwise clog the docket with numerous individual suits." Eggleston v. Chicago Journeymen Plumbers' Local Union No. 130, U.A., 657 F.2d 890, 895 (7th Cir. 1981); Subedi v. Merchant, No. 09 C 4525, 2010 WL 1978693, at *2 (N.D. Ill. May 17, 2010).
Here, the proposed class consists of "[a]ll persons or entities who are or were customers of AT&T Mobility and who were charged Internet Taxes on bills issued from November 1, 2005 through the final date on which AT&T Mobility issues bills to customers prior to implementing the [agreed-to] billing system changes. . . ." Movants contend that AT&T has over 80 million subscribers, that the class includes 29 million accounts, and that the number of people falling within the class definition is "in the millions."*fn3 (R. 50, Joint Mem. at 5, 11.) Courts in the Seventh Circuit have found that substantially-smaller classes satisfy the numerosity requirement. See Swanson v. Am. Consumer Indus., Inc., 415 F.2d 1326, 1333 n.9 (7th Cir. 1969) (noting that a group of forty would have been sufficiently large for Rule 23(a) purposes); Gaspar v. Linvatec Corp., 167 F.R.D. 51, 56-57 (N.D. Ill. 1996) (eighteen class members satisfied numerosity requirement); Chandler v. S.W. Jeep-Eagle, Inc., 162 F.R.D. 302, 307-08 (N.D. Ill. 1995) (classes of fifty and one hundred fifty sufficiently numerous); Riordan v. Smith Barney, 113 F.R.D. 60, 62 (N.D. Ill. 1986) (twenty-nine-member class is sufficient and collecting cases finding numerosity with fewer class members). Accordingly, the proposed class is so numerous that joinder of all members would be impracticable.
Rule 23(a)(2) requires that there be "questions of law or fact common to the class," and "'[a] common nucleus of operative fact is usually enough to satisfy'" this requirement. Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998) (quoting Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir. 1992)); see also Kaufman v. Am. Express Travel Related Servs. Co., 264 F.R.D. 438, 442 (N.D. Ill. 2009) ("The commonality requirement does not necessitate every class member's factual or legal situation to be a carbon copy of those of the named plaintiffs, so the low commonality hurdle is easily surmounted." (internal quotation omitted)). "Common nuclei of fact are typically manifest where . . . the defendants have engaged in standardized conduct towards members of the proposed class," Keele, 149 F.3d at 594, and "[t]he fact that there is some factual variation among the class grievances will not defeat a class action." Rosario, 963 F.2d at 1017; see also Chandler, ...