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Kaufman v. American Express Travel Related Services Company

August 19, 2010

SAUL M. KAUFMAN AND KIMBERLY STEIGH, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
AMERICAN EXPRESS TRAVEL RELATED SERVICES COMPANY, INC. DEFENDANT.



The opinion of the court was delivered by: Joan B. Gottschall United States District Judge

Judge Joan B. Gottschall

MEMORANDUM OPINION & ORDER

Plaintiffs (the "Kaufman"plaintiffs) brought this class action against defendant American Express Travel Related Services Company, Inc. ("American Express"), challenging certain fees assessed on American Express-issued gift cards. On December 23, 2009, the court issued a Memorandum Opinion and Order (Doc. 128, the "Opinion") certifying a class in this case (the "Class"), which the court defined as:

All purchasers, recipients, holders and users of any and all gift cards issued by American Express from January 1, 2002 through the date of preliminary approval of the settlement, including, without limitation, gift cards sold at physical retail locations, via the Internet, or through mall co-branded programs. Notwithstanding the foregoing, "Be My Guest" dining cards are not included within the settlement. (Op. 10.) The court also: (a) found that the Kaufman plaintiffs could fairly and adequately represent the Class (id.); (b) appointed the law firm of Bock & Hatch, LLC as lead counsel for the Class (id. 11); (c) found that the method by which Class members would make claims was acceptable (id. 14); (d) found the settlement fund and maximum amount of attorneys' fees to be within the range of possible approval (id. 15-16, 18-19); and (e) stayed four related actions.

In its Opinion, the court declined to preliminarily approve settlement. The court specifically identified the following issues that precluded preliminary approval: (1) the appointment of Morris and Associates as "additional class counsel" (Op. 11); (2) the content of any notice provided to the class (id. 12); (3) the method of providing any such notice (id. 13-14); (4) the preferential treatment provided to class representatives (id. 17-18); (5) the use of a cy pres for leftover funds from the settlement amount; and (6) American Express's right to reimbursement from any leftover settlement funds.

This matter is presently before the court on the outstanding issues outlined above, as well as additional issues raised by the parties.*fn1

I. ADDITIONAL CLASS COUNSEL

After the court's expression of concern in regard to the appointment of Morris and Associates as additional Class counsel in this matter, Stephen B. Morris submitted a declaration attesting to his qualifications. (See Doc. 130.) Pursuant to Federal Rule of Civil Procedure 23(g), the court can appoint class counsel after considering: (1) the work counsel has done in identifying or investigating potential claims in the action;

(2) counsel's experience in handling class actions, other complex litigation, and the types of claims asserted in the action; (3) counsel's knowledge of the applicable law; and (4) the resources that counsel will commit to representing the class. Fed. R. Civ. P. 23(g). Morris has practiced as an attorney for over twenty years, working significantly in class action litigation for the bulk of those years. He has served as class counsel or co-class counsel in twenty-five cases. Moreover, Morris represents the named plaintiffs in two of the cases related to the instant litigation. Finally, he has participated in the settlement negotiations in this case, and has secured additional relief for the Class in doing so.

However, the court declines to appoint Morris and Associates as additional Class counsel. While Morris has made contributions to the case thus far, neither Morris nor Class counsel has submitted any evidence or argument that additional Class counsel is necessary going forward, or any legal authority supporting the appointment of additional Class counsel based solely on contributions to the class to date. Without a basis for appointing additional Class counsel to settle this case, the court declines to do so.*fn2

II. NOTICE

In the Opinion, the court noted several deficiencies in the notice's content and its proposed manner of dissemination. American Express has attempted to remedy these deficiencies; the court evaluates the proposed remedies in turn.

A. Content

The revised notice satisfies the requirements of Federal Rule of Civil Procedure 23, specifically, sections (c)(2)(B) and (e)(1) by stating: that a Class member may enter an appearance through an attorney if the member so desires; that the court will exclude from the Class any member who requests exclusion; that a Class judgment is binding on Class members; and that a settlement is proposed. Fed. R. Civ. P. 23(c)(2)(B) & (e)(1); see also Doc. 132 Ex. A. The revised notice also discloses: what information must be included in a proper objection; the incentive payments to named Class members (an issue discussed in greater detail within); and, prominently, the name and address of Class counsel. (Doc. 132 Ex. A.)

As the Opinion required, the Notice also sets forth "the scope of the claims to be released." (Op. 12.) However, as the Goodman intervenors note, the description of the release contained in the notice is beyond the comprehension of the average reader. The description of the release spans nearly fifty lines of text and describes in great detail the parties discharged by the settlement and the claims ...


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