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Birchmeier v. Caribbean Cruise Line, Inc.

United States District Court, N.D. Illinois, Eastern Division

March 2, 2017

GERARDO ARANDA, GRANT BIRCHMEIER, STEPHEN PARKES, and REGINA STONE, on behalf of themselves and classes of others similarly situated, Plaintiffs,
v.
CARRIBBEAN CRUISE LINE, INC., ECONOMIC STRATEGY GROUP, ECONOMIC STRATEGY GROUP, INC., ECONOMIC STRATEGY, LLC, THE BERKLEY GROUP, INC., and VACATION OWNERSHIP MARKETING TOURS, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          MATTHEW F. KENNELLY, United States District Judge

         Plaintiffs filed suit on behalf of themselves and similarly situated individuals against Caribbean Cruise Line, Inc. (CCL), Vacation Ownership Marketing Tours, Inc. (VOMT), The Berkley Group, Inc., and Economic Strategy Group and its affiliated entities (collectively ESG). Plaintiffs alleged that defendants violated the Telephone Consumer Protection Act, 47 U.S.C. § 227, by using an autodialer and an artificial or prerecorded voice to call plaintiffs' cellular and landline telephones. After roughly four years of contested litigation, the parties reached agreement on a class-wide settlement of plaintiffs' claims, and plaintiffs have moved for final approval of the proposed settlement. Two purported class members have raised objections to the terms of the agreement. Plaintiffs' counsel have also petitioned for an award of attorney's fees. Defendants and one of the class members have objected to the size of the requested fee. For the reasons stated below, the Court grants final approval of the settlement. The Court will issue a separate decision at a later time concerning the petition for attorney's fees.

         Background

         The Court assumes familiarity with the basic facts of the case, which the Court has already discussed in other written decisions. See, e.g., Aranda v. Caribbean Cruise Line, Inc., 179 F.Supp.3d 817, 820-22 (N.D. Ill. 2016). In short, plaintiffs allege that ESG placed millions of calls to consumers without their consent. The calls featured prerecorded messages explaining to recipients that they would be eligible for a free cruise if they participated in various short political surveys. According to plaintiffs, ESG's true purpose in placing these calls was to sell vacation products at the direction and on the behalf of CCL, VOMT, and Berkley.

         The parties engaged in contested litigation for roughly four years before reaching a settlement agreement. Over that time, the Court denied defendants' motion to dismiss, granted plaintiffs' motion for class certification over defendants' objection, denied defendants' motions for summary judgment, granted in part plaintiffs' motion for summary judgment, and denied defendants' additional motion for summary judgment and class decertification. Before proceeding to trial, the parties engaged in mediation, conducted by Wayne Andersen, a highly respected retired judge of this court. The parties reached agreement on a memorandum of understanding only four days before trial, and that memorandum formed the basis of the agreement that is now before the Court for approval.

         The agreement's definition of the settlement class is the same as the definition of the class in the Court's class certification order. That order certified two classes-one for individuals who received cellular phone calls and one for those who received landline calls-and defined each class as those persons in the United States who received the calls at issue in this case between August 2011 and August 2012 and (a) whose telephone number appeared in defendants' records or the records of third party telephone carriers or (b) whose own records prove that they received the calls. See Birchmeier v. Caribbean Cruise Line, Inc., 302 F.R.D. 240, 256 (N.D. Ill. 2014). The following individuals are excluded from the settlement class under the agreement: the judge in this case, defendants, those who opt out of the class pursuant to Federal Rule of Civil Procedure 23(e)(4), and counsel and their families.

         The agreement provides that defendants will establish a common fund in an amount no lower than $56 million and no higher than $76 million, from which all class members will be paid. The total fund amount will be equal to the sum of the award to class members, settlement administration and notice expenses, any incentive award to class representatives, and any attorney's fee award. Class members may submit claim forms for approval by a settlement administrator, who was selected by plaintiffs and approved by the Court. Each class member who submits an approved claim will be entitled to $500 per call received unless the total of such payments (plus payment of administration expenses, incentive awards to class representatives, and attorney's fees) would exceed the $76 million cap on the fund total. If the cap is met, settlement class members with approved claims will be entitled to a pro rata share of the fund based on the number of calls they received. Plaintiffs' counsel have requested a fee award of 33% of the fund (minus notice expenses), up to a maximum of $24.5 million, and plaintiffs request incentive awards of $10, 000 for each of the four class representatives. No party or class member has objected to the requested incentive award for the class representatives.

         Under the agreement, all cash payments to settlement class members are to be issued via checks that expire and become null and void unless cashed within ninety days. After the first round of cash payments and payment of administration expenses, attorney's fees, and incentive awards, any uncashed checks or unclaimed funds will be issued to settlement class members with approved claims on a pro rata basis. The agreement provides that any uncashed checks and unclaimed funds remaining after this second round of payments will be distributed to a cy pres recipient selected by Judge Andersen.

         In addition to making payments into the settlement fund, defendants have agreed to conduct annual internal audits of their procedures to ensure that they do not make autodialed calls without consumer consent in the future. In exchange for defendants' agreement to make the required payments and conduct internal audits of their procedures, plaintiffs have agreed that settlement class members will be deemed to have released defendants from all claims against them.

         Discussion

         As mentioned above, only two purported members of the class have raised objections to any aspect of the settlement agreement other than the size of the potential attorney's fee award. Before addressing those specific objections, the Court first considers generally whether the agreement meets the requirements of Federal Rule of Civil Procedure 23. The Court must determine, for example, whether the notice provided to the settlement class under the agreement is "the best notice that is practicable under the circumstances." Fed.R.Civ.P. 23(c)(2)(B). With respect to the substance of the proposed settlement, the Court must determine whether it is "fair, reasonable, and adequate." Fed.R.Civ.P. 23(e)(2). In addition, the Court must consider whether there is anything suggesting that the settlement was the product of collusion. See Mirfasihi v. Fleet Mortg. Corp., 450 F.3d 745, 748 (7th Cir. 2006).

         A. Notice to the class

         The notice directed to the settlement class must be "the best notice that is practicable under the circumstances, including individual notice to all members through reasonable effort." Fed.R.Civ.P. 23(c)(2)(B). Where individual members cannot be identified through reasonable effort, "notice by publication, imperfect though it is, may be substituted." Hughes v. Kore of Indiana Enter., Inc., 731 F.3d 672, 677 (7th Cir. 2013). Kurtzman Carson Consultants, LLC, the Court-approved settlement administrator in this case, has implemented the notice plan by providing both direct and publication notice. The Court is satisfied that the notice provided is sufficient under Rule 23(c)(2)(B).

         The settlement administrator delivered notice directly, either through electronic or regular mail, to 78.6% of the 1, 040, 389 names and addresses associated with telephone numbers obtained from defendants' records. Notice was also published in ten prominent newspapers throughout the United States, as well as in a national edition of People magazine. Notice was also placed in online banner advertisements that received over 150 million impressions and was sent to the Attorney General of the United States as well as the Attorneys General of all 50 states, the District of Columbia, Puerto Rico, Guam, the Northern Mariana Islands, the U.S. Virgin Islands, and American Samoa. In addition, a settlement website (www.freecruisecallclassaction.net) provides notice and relevant court documents to website visitors, and the settlement administrator maintains a toll-free telephone number to assist class members. In total, nearly 500, 000 people have visited the settlement website, and over 9, ...


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