United States District Court, District of Columbia
In re: APA Assessment Fee Litigation. ELLEN G. LEVINE, et al., Plaintiffs,
AMERICAN PSYCHOLOGICAL ASSOCIATION, INC., et al., Defendants. ERIC S. ENGUM, Plaintiff,
AMERICAN PSYCHOLOGICAL ASSOCIATION, INC., et al., Defendants. IRA GROSSMAN, Plaintiff,
AMERICAN PSYCHOLOGICAL ASSOCIATION, INC., et al., Defendants.
JOHN D. BATES, District Judge.
Before the Court are plaintiffs' unopposed motion for final approval of the class action settlement and certification of the proposed settlement class, and plaintiffs' unopposed motions for attorney's fees, costs, and incentive awards. On February 12, 2015, this Court entered an Order preliminarily approving the parties' proposed settlement and preliminarily certifying the settlement class. Following entry of that Order, the parties sent notice to the settlement class. No class members have filed objections, timely or otherwise, to the proposed settlement, or to plaintiffs' request for attorney's fees. The Court held a fairness hearing on August 13, 2015, at which it heard argument from the parties on the pending motions. Thereafter, the Court requested and received supplemental briefing on one issue. For the reasons discussed below, the Court concludes that final certification of the class and final approval of the settlement are warranted, and it grants plaintiffs' request for fees, costs, and incentive awards.
Plaintiffs in these cases are members of the American Psychological Association ("APA") who claim that for many years that organization misled members into overpaying their dues. Specifically, they allege that the APA falsely represented on annual dues statements and on the organization's website that practicing clinical psychologists were required to pay an annual "Practice Assessment" to remain APA members-when, in fact, the assessment was required only for membership in a sister organization, the APA Practice Organization (also a defendant here). Plaintiffs say that if APA members had understood the truth about the assessment-which ran between $110 and $140 in the years in question-they would not have paid it.
Plaintiffs filed the first two of these class actions (Levine and Engum) in late 2010, seeking to represent all APA members who had paid the assessment since 2000. Before these consolidated cases reached the class certification stage, however, this Court granted the APA's motion to dismiss, concluding that plaintiffs had failed to state viable claims. In re APA Assessment Fee Litig., 862 F.Supp.2d 1 (D.D.C. 2012); see also In re APA Assessment Fee Litig., 920 F.Supp.2d 86 (D.D.C. 2013) (denying leave to amend). The D.C. Circuit reversed in part, concluding that some claims could go forward. In re APA Assessment Fee Litig., 766 F.3d 39 (D.C. Cir. 2014). On remand, plaintiffs filed an amended class action complaint that put forth claims of unjust enrichment, fraudulent inducement, and negligent misrepresentation. See Am. Compl. [ECF No. 39]. A third case (Grossman), which was transferred to this Court while the first two were pending on appeal, raised essentially identical claims premised on the same facts. In October 2014, the Court granted the parties' joint request to stay all three cases while they pursued settlement negotiations.
The parties' successful negotiations generated the Settlement Agreement and Release. See Settlement Agreement [ECF No. 43-1]. The Settlement Agreement defines the settlement class as "all persons in the United States who are current or former members of APA and paid the APAPO Practice Assessment for APA dues years 2001 through [February 12, 2015], " except for certain interested parties. Id. at 6. The APA agrees to establish a settlement fund of $9, 020, 000.00, and to pay an additional $200, 000 toward the costs of providing notice and claims administration. Id. at 8, 15. After attorney's fees, litigation costs, and incentive awards are deducted from the settlement fund (as well as any notice and administration costs above the $200, 000 mark), the remainder will be paid to class members who file a claim. Id. at 14-15, 27-28. Claimants will receive a pro rata share of the fund based on the amount of Practice Assessment fees they paid during the class period. Id. at 26-28. No portion of the settlement fund will revert to the APA. If after an initial distribution of funds to the class there remain residual funds that cannot feasibly or practically be redistributed, those funds will be given to Mental Health America, a nonprofit organization dedicated to promoting mental health and chosen by the parties. Id. at 28-29. The APA also agrees to rename the Practice Assessment the "APAPO Membership Dues" and to clarify that its payment is not required for APA membership. Id. at 12. In exchange for these benefits, members of the class-except any who choose to opt out of the settlement-release the APA from all claims relating to plaintiffs' allegations. Id. at 33-34.
On February 12, 2015, the Court preliminarily certified the settlement class and preliminarily approved the settlement. See Order [ECF No. 44]. Shortly after, the parties' claims administrator began sending notice of the proposed settlement to the roughly 75, 000 class members. See Borges Decl. [ECF No. 48-1] ¶¶ 4-5. Email notice was successfully sent to roughly 51, 000 class members; the remainder were mailed postcard notices. See id. ¶¶ 5-8. The administrator also established a website and telephone number that APA members could visit and call for information about the settlement. See id. ¶¶ 11-12. As of September 17, 2015, the administrator had received 21, 750 claims forms, representing 29% of the class. Borges Supp. Decl. [ECF No. 51-1] ¶ 4. Based on these numbers-and assuming the Court grants plaintiffs' requested attorney's fees, costs, and incentive awards-the estimated average payout per class member claimant would be roughly $303, which in turn is 27% of the average amount of Practice Assessment fees paid by class members during the class period. See id. ¶ 5.
To date, no member of the class has objected to the terms of the proposed settlement, or to plaintiffs' request for attorney's fees, costs, and incentive awards. Nor has any member of the class chosen to opt out of the settlement. On August 13, 2015, the Court held a fairness hearing at which counsel for both parties urged final certification of the class and approval of the settlement. No members of the class requested to speak at the hearing.
A class can be certified for "settlement purposes only, " and such practice has become increasingly common. Radosti v. Envision EMI, LLC, 717 F.Supp.2d 37, 50 (D.D.C. 2010) (citing Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 618 (1997)). Class actions seeking certification and settlement at the same time, however, require "closer judicial scrutiny" than settlements that are reached after class certification. Manual for Complex Litigation, Fourth, § 21.612 (2004). Class actions that settle early in the case "sometimes make meaningful judicial review more difficult and more important." Id .; see also Amchem, 521 U.S. at 620. Plaintiffs bear the burden of convincing the court that the requirements of Federal Rule of Civil Procedure 23 are satisfied, except that "a district court need not inquire whether the case, if tried, would present intractable management problems, for the proposal [in the settlement-only certification context] is that there be no trial." Amchem, 521 U.S. at 620 (citation omitted).
A proposed class action settlement requires the Court's approval. Fed.R.Civ.P. 23(e). The Court has the discretion to approve or reject the proposed settlement. In re Lorazepam & Clorazepate Antitrust Litig., 205 F.R.D. 369, 375 (D.D.C. 2002). When deciding whether to grant approval, "the Court must strike a balance between a rubber stamp approval and the detailed and thorough investigation that it would undertake if it were actually trying the case." Meijer, Inc. v. Warner Chilcott Holdings Co. III, Ltd., 565 F.Supp.2d 49, 54 (D.D.C. 2008) (internal quotation marks omitted). Although the Court should undertake careful scrutiny of the settlement terms, the discretion to reject a settlement is "restrained by the principle of preference' that encourages settlements." In re Lorazepam, 205 F.R.D. at 375 (quoting Pigford v. Glickman, 185 F.R.D. 82, 103 (D.D.C. 1999)); see also United States v. District of Columbia, 933 F.Supp. 42, 47 (D.D.C. 1996) ("The trial court in approving a settlement need not inquire into the precise legal rights of the parties nor reach and resolve the merits of the claims or controversy, but need only determine that the settlement is fair, adequate, reasonable and appropriate under the particular facts and that there has been valid consent by the concerned parties." (internal quotation marks omitted)).
I. CLASS CERTIFICATION
Before examining whether the proposed settlement should be finally approved, the Court examines whether the proposed class meets the requirements of Rule 23. The class must first satisfy the four requirements of Rule 23(a). It must then satisfy one of the three requirements of Rule 23(b)-in this case, Rule ...