PLAINTIFF’S UNOPPOSED MOTION AND MEMORANDUM IN … · See Shady Grove Orthopedics Case 8:18-cv-03052-CEH-SPF Document 26 Filed 10/03/19 Page 5 of 25 PageID 147. 6 Assocs. v. Allstate

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UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

JOHN A. DIAZ, Plaintiff, v. Case No. 8:18-cv-3052-T-36SPF CHAPTERS HEALTH SYSTEM, INC., Defendant. /

PLAINTIFF’S UNOPPOSED MOTION AND MEMORANDUM

IN SUPPORT OF CLASS CERTIFICATION AND

PRELIMINARY APPROVAL OF

PROPOSED CLASS ACTION SETTLEMENT AND RELEASE

Plaintiff, John A. Diaz (“Plaintiff” or “Class Representative”), on behalf of himself

and all others similarly situated “Settlement Class Members,” submits this Unopposed

Motion and Memorandum of Law in Support of Class Certification and Preliminary

Approval of Proposed Class Action Settlement. Defendant, Chapters Health System, Inc.

(“Defendant” or “Chapters”), does not oppose the relief requested in this Motion and

consents to entry of an order approving class certification for settlement purposes1 and the

Parties’ Settlement Agreement.

I. INTRODUCTION

Plaintiff brought this class action to protect his private statutory rights and those of

a proposed class under the Fair and Accurate Credit Transaction Act (“FACTA”)

amendment to the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. Plaintiff alleged that

1 Defendant, however, has reserved the right to challenge class certification in the event the Settlement Agreement agreed to by the Parties is not approved by the Court.

Case 8:18-cv-03052-CEH-SPF Document 26 Filed 10/03/19 Page 1 of 25 PageID 143

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he was one of a nationwide class of consumers who paid for transactions made at a

Chapters-owned establishment using a credit or debit card, and were provided an

electronically printed receipt which displayed more than the last 5 digits or the expiration

date of the credit or debit card. Plaintiff asserted claims for willful violations of FACTA.

Defendant answered the Complaint and denied Plaintiff’s claims of liability and damages.

This contentious, nearly year-long litigation has included extensive conferral

regarding the nature and accessibility of Defendant’s electronically stored information,

discovery, a court-ordered mediation, and months of negotiation. The settlement

negotiations began at a court-ordered mediation and continued for several weeks thereafter.

Despite their significant differences, the Parties have been able settle this action on behalf

of a nationwide Settlement Class comprised of:

(i) All persons in the United States (ii) who, within the two (2) years prior to the filing of the Complaint, made a payment pursuant to a purchase made at a Defendant-owned establishment (iii) using a credit or debit card (iv) and were provided with a point of sale receipt (v) which displayed more than the last 5 digits of the card number or the expiration date of the credit or debit card.

The Parties have determined that the customers in 70,809 transactions potentially meet this

definition.

The Settlement Agreement was reached after considering such factors as: (1) the

benefits to Plaintiff and Settlement Class Members; (2) the strength of the Parties’

respective positions; (3) the attendant risks and uncertainty of litigation, including the

likelihood of appeal; (4) Defendant’s vigorous defense of the action and continued denial

of the claims and facts at issue; and (5) the desirability of consummating this Settlement

Agreement promptly, to secure important and valuable benefits for Settlement Class

Members.


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As set forth in the attached Settlement Agreement, Chapters will pay $1,274,562.00

to establish a Settlement Fund. The Settlement shall be used to provide the exclusive

recovery and relief for the Class, any reasonable attorneys’ fees and costs approved and

awarded by the Court to Plaintiff’s Counsel, any incentive award approved and awarded

by the Court to Plaintiff Diaz, and the costs of notice and settlement administration.

Agreement, at ¶ III.B.

Accordingly, Plaintiff now moves the Court for an order preliminarily approving

the proposed Settlement, provisionally certifying the Class pursuant to Fed. R. Civ. P.

23(b)(3) for settlement purposes, directing dissemination of class notice, and scheduling a

final approval hearing. The proposed Settlement satisfies all criteria for preliminary

settlement approval under Eleventh Circuit law, as discussed below.

II. HISTORY OF THE LITIGATION

On December 19, 2018, Plaintiff, John A. Diaz, initiated this Action by filing a

complaint seeking statutory damages and injunctive relief against Chapters for alleged

violations of FACTA, to wit: by issuing point-of-sale credit and debit card receipts which

displayed more than the last 5 digits of the card number or the expiration date of the credit

or debit card (the “Complaint”). Defendant filed an Answer alleging twenty-five

affirmative defenses asserting, among other things, that Plaintiff cannot maintain the class

or subclass on behalf of non-cardholders; that class resolution is not an appropriate method

of resolution and that the Court lacks subject-matter jurisdiction over this claim pursuant

to Article III of the United States Constitution (the “Answer”).

To facilitate discovery, and to encourage open and frank discussion, the Parties

jointly moved for a protective order pursuant to Fed. R. Evid. 502(c), which the Court


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subsequently entered on April 1, 2019. [ECF No. 19]. Shortly thereafter, the Parties

engaged in an all-day mediation session which resulted in a conditional settlement, subject

to approval of Chapters’ Board of Directors. To allow time for the Board to meet and

consider the terms of the conditional settlement, the Parties jointly moved for, and were

granted an extension of time within which to move for class certification until October 3,

2019. [ECF No. 23].

III. SETTLEMENT NEGOTIATIONS

On May 21, 2019, the parties attended an all-day mediation with the highly

respected professional mediator, Jay M. Cohen. Mr. Diaz participated in the conference in-

person, along with his attorneys. In addition to its attorneys, Chapters was represented at

the mediation in person by its CEO, Andrew Molosky. A representative of Chapters’

insurer was also in attendance. The Parties reached an agreement on the basic terms of

settlement for the Settlement Class. But because of its status as a not-for-profit entity and

the interplay between Chapters Health Systems, Inc., and Chapters Health Foundation, Inc.,

the proposed settlement was necessarily subject to approval of Chapters’ Board of

Directors. Chapters committed to present the proposed settlement to its board to seek such

approval, but requested 60 days from the date of mediation to complete the process. For

the next two months, the Parties continued settlement discussions in earnest, negotiating

the specific terms of the agreement and accompanying exhibits. These additional

negotiations and numerous others resulted in the Settlement Agreement the Parties are now

proposing that the Court preliminarily approve.


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IV. THE CLASS MEETS ALL REQUIREMENTS FOR CERTIFICATION

Class certification is a matter for the Court’s discretion. DeLeon-Granados v. Eller

& Sons Trees, Inc., 497 F.3d 1214, 1218 (11th Cir. 2007). The class should be certified if

it is “ascertainable,” and if the class meets the four requirements of Rule 23(a), and at least

one subsection of Rule 23(b). See Carriuolo v. G.M. Co., 823 F.3d 977, 984-85 (11th Cir.

2016), citing Fed. R. Civ. P. 23. Ascertaining the class is not difficult here because

membership is based on objective criteria (electronically-recorded card transaction data),

and requires no significant individual inquiry. See, e.g., Legg v. Spirit Airlines, Inc., 315

F.R.D. 383, 387-88 (S.D. Fla. 2015 (“[Defendant’s] responses to [Plaintiff’s] discovery

requests indicate that its records will identify those to whom [Defendant] issued the

offending receipts.”). Chapters has already provided records containing the credit and debit

card transactions associated with the “offending receipts.”

The four requirements of Rule 23(a) are: (i) the class is so numerous that joinder of

all members would be impracticable (numerosity); (ii) the class members’ claims present

common questions of law or fact (commonality); (iii) Plaintiff’s claim is typical of the class

members’ claims (typicality); and (iv) Plaintiff and his counsel are adequate representatives

of the class (adequacy). See Fed. R. Civ. P. 23(a); DeLeon-Granados, 497 F.3d at 1220.

The part of Rule 23(b) at issue here is subsection (3). It requires: (i) that the

common questions of law or fact “predominate” over any questions that affect only

individual class members, and (ii) that a class action is a superior method for fairly and

efficiently adjudicating the controversy. See Fed. R. Civ. P. 23(b)(3); DeLeon-Granados,

497 F.3d at 1220. As explained below, the proposed class meets all Rule 23 requirements.

Accordingly, Plaintiff is entitled to class certification. See Shady Grove Orthopedics


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Assocs. v. Allstate Ins. Co., 559 U.S. 393, 398 (2010) (“By its terms [Rule 23] creates a

categorical rule entitling a plaintiff whose suit meets the specified criteria to pursue his

claim as a class action.”) (Emphasis added).

A. The Class Meets the Numerosity Requirement – Rule 23(a)(1)

The test for numerosity is that “the class is so numerous that joinder of all members

is impractical.” Fed. R. Civ. P. 23(a)(1). There is no “definite standard” for satisfying this

requirement in terms of how large the class must be, and “plaintiff need not show the

precise number of members in the class.” Evans v. U.S. Pipe & Foundry Co., 696 F.2d 925,

930 (11th Cir. 1983); see also Legg, 315 F.R.D. at 388 (“Parties seeking class certification

do not need to know the ‘precise number of class members…’”); and Fabricant v. Sears

Roebuck, et al., 202 F.R.D. 310, 313 (S.D. Fla. 2001) (“There is no definite standard as to

the size of a given class, and plaintiff’s estimate need only be reasonable.”), citing Kilgo v.

Bowman Transp., Inc., 789 F.2d 859, 878 (11th Cir. 1986). A class size of “more than

forty” is generally adequate. Cox v. American Cast Iron Pipe Co., 784 F.2d 1546, 1553

(11th Cir. 1983).

The proposed class here easily satisfies this low burden. The Parties have

determined that the customers in 70,809 transactions were provided with a point of sale

receipt which displayed more than the last 5 digits of their card number or the expiration

date of their credit or debit card. Plainly, it would be impracticable to join thousands of

customers as plaintiffs. Accordingly, the numerosity requirement is met.

B. The Class Meets the Commonality Requirement – Rule 23(a)(2)

The test for commonality is whether the class claims present “questions of law or

fact common to the class.” Fed. R. Civ. P. 23(a)(2) (emphasis added). This is another “low


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hurdle.” Williams v. Mohawk Indus., Inc., 568 F.3d 1350, 1356 (11th Cir. 2009). Plaintiff

need only show that the class claims present “at least one issue whose resolution will affect

all or a significant number of the putative class members,” or that their claims “are

susceptible to classwide proof.” Id. at 1355, quoting Murray v. Auslander, 244 F.3d 807,

811 (11th Cir. 2001); see also Legg, 315 F.R.D. at 389 (same), citing Williams, 568 F.3d

at 1355.

Here, the class claims present at least two issues affecting each class member: (a)

whether the receipts Defendant’s point-of-sale system printed for class members violated

FACTA’s truncation requirement; and (b) whether Defendant acted willfully, so that the

class members may recover statutory and punitive damages. See 15 U.S.C. 1681c(g) and

1681n. These issues are each amenable to class-wide proof. Accordingly, the class easily

meets the commonality requirement. See Legg, 315 F.R.D. at 389; see also Bush v.

Calloway Consolidated Group River City, Inc., 2012 WL 1016871 at *7 (S.D. Fla. Mar.

26, 2012) (“courts considering whether to certify a FACTA class action on facts similar to

those presented here have routinely found commonality.”)

C. Plaintiff’s Claims Are Typical of the Class’s Claims – Rule 23(a)(3)

The typicality element of Rule 23 simply requires that Plaintiff’s and the class

members’ claims “arise from the same event or pattern or practice and are based on the

same legal theory.” Williams, 568 F.3d at 1356-57, quoting Kornberg v. Carnival Cruise

Lines, Inc., 741 F.2d 1332, 1337 (11th Cir. 1984); see also Ault v. Walt Disney World Co.,

692 F.3d 1212, 1216-17 (11th Cir. 2012).

That is the case here because Plaintiff and the proposed class were subjected to the

same conduct, and their claims present the same legal theory. Plaintiff received a


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transaction receipt that revealed more than the last 5 digits or the expiration date of his

credit or debit card, and Defendant has provided documentation showing this same

information for its other credit and debit card customers during the time period that Plaintiff

made his purchase. “On this basis alone courts have found typicality exists.” Bush, 2012

WL 1016871 at *8, citing Shurland v. Bacci Café & Pizzeria on Ogden, Inc., 259 F.R.D.

151,159 (N.D.Ill.2009); Legg, 315 F.R.D. at 389 (“[Plaintiff]’s claims are typical of those

of the proposed class. [Plaintiff]’s and the class members’ claims both arise from

[Defendant]’s practice of inadequately truncating customers’ credit and debit card numbers

on those customers’ receipts.”). Accordingly, Plaintiff meets the typicality requirement.

D. Plaintiff and His Counsel Meet the Adequacy Requirement –

Rule 23(a)(4)

The adequacy element of Rule 23(a)(4) requires that Plaintiff and his counsel be

able to “fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4).

This means Plaintiff must have “no interests antagonistic to the class,” and his

counsel must be qualified to represent the class. Fabricant, 202 F.R.D. at 314-15, citing

Kirkpatrick v. J.C. Bradford & Co., 827 F.2d 718, 726-28 (11th Cir. 1987); see also

Carriuolo, 823 F.3d at 989 (“[A] party’s claim to representative status is defeated only if

the conflict between the representative and the class is a fundamental one, going to the

specific issues in controversy.”) (citation omitted).

Plaintiff meets this test because his interests are squarely aligned with the class.

Like the class members, he claims Defendant violated his rights under FACTA by printing

a card transaction receipt that reveals the first six and the last four digits of his card account

number, that Defendant acted willfully (i.e. knowingly or recklessly), and thus that

Defendant is liable for statutory damages, punitive damages, costs and attorneys’ fees.


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Plaintiff understands he has a duty to the class members and seeks to stop this

conduct from happening again, as well as to obtain a recovery for the class by, among other

things, assisting his counsel with discovery, sitting for any deposition, attending any

mediation or trial, and communicating with his counsel about the case. See Exhibit A (Diaz

Declaration). Plaintiff also has no interests antagonistic to the class, let alone a

“fundamental one, going to the specific issues in controversy.” Carriuolo, 823 F.3d at 989.

Plaintiff’s attorneys are also adequate. Mr. Owens has been found adequate and

appointed class counsel in numerous FACTA class actions in this Circuit and others. See

Exhibit B (Owens Declaration). Mr. Giardina has been practicing for nearly two decades,

and has extensive courtroom experience in both state and Federal Courts. Mr. Giardina

made thousands of court appearances on debt collection cases, and is intimately familiar

with the mechanics of consumer rights litigation. See Exhibit C (Giardina Declaration). In

sum, they are well-respected members of the legal community who have extensive

experience in the area of consumer rights and class action litigation. They have litigated

hundreds of cases nationally, and have the resources necessary to conduct this litigation.

Plaintiff’s counsel have diligently investigated and dedicated substantial time and

resources to the investigation and prosecution of the class members’ claims. In addition,

Plaintiff’s counsel have a track record for getting strong results for classes in FACTA cases.

This is more than sufficient. See, e.g., Fabricant, 202 F.R.D. at 315 (plaintiff’s counsel

adequate because they “are experienced in class action litigation.”). Plaintiff and his

counsel meet the adequacy requirement.


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E. The Class Meets the Requirements of Rule 23(b)(3)

Once the elements of Rule 23(a) are met, the proposed class need only meet one of

the three subsections of Rule 23(b). Carriuolo, 823 F.3d at 984. Here, the class should be

certified under subsection (b)(3), which provides that a class action may be maintained

where “the questions of law or fact common to class members predominate over any

questions affecting only individual members,” and if “a class action is superior to other

available methods for fairly and efficiently adjudicating the controversy.” Williams, 568

F.3d at 1357, quoting Fed. R. Civ. P. 23(b)(3) (emphasis added). As shown below, this

case easily meets both requirements.

1. Common Question of Law or Fact Predominate

Common issues of law or fact predominate “if they ‘ha[ve] a direct impact on every

class member’s effort to establish liability and on every class member’s entitlement to …

relief.” Williams, 568 F.3d at 1357, quoting Klay v. Humana, Inc., 382 F.3d 1241, 1255

(11th Cir. 2004); see also Carriuolo, 823 F.3d at 985 (common question predominates

when they have a direct impact on class members’ effort to establish liability that is more

substantial than individualized inquires) (citation omitted); and Legg, 315 F.R.D. at 391

(same). That is the case here because the common questions this case presents, which are

listed in the discussion of Rule 23(a)(2)’s “commonality” element above, directly affect

the class members’ ability to establish liability and obtain relief. Specifically, the issue of

whether Defendant violated FACTA by systematically printing credit and debit card

receipts that reveal the first six and the last four digits of purchasers’ account numbers

directly impacts each class member’s ability to establish liability because a “yes” to that

question resolves the liability issue. See 15 U.S.C. §1681c(g); see also Legg, 315 F.R.D. at


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391 (“Plaintiff argues that he satisfies Rule 23(b)(3)’s predominance requirement because

all the putative class members’ claims stem from the same programing error ... The court

agrees that these central issues predominate...”). Likewise, the question of whether

Defendant acted willfully directly impacts each class member’s right to relief because the

complaint only seeks statutory and punitive damages, and that relief is only available if

Chapters acted willfully. 15 U.S.C. §1681n; see also Bush, 2012 WL 1016871 at *10

(“whether Calloway’s noncompliance with FACTA was ‘willful’ applies to all class

members’ claims.”), citing Shurland, 259 F.R.D. at 159. By contrast, this case does not

raise any significant individual issues among class members, let alone any so material that

they could predominate over the common questions. Thus, as is typical in FACTA cases,

the instant case easily meets the predominance requirement. See In re Toys “R” Us –

Delaware, Inc. – Fair and Accurate Credit Trans. Act (FACTA) Litig., 300 F.R.D. at 376

(“The vast majority of courts outside this district have similarly found that common

questions predominate in FACTA class actions.”)

2. A Class Action Is a Superior Method of Resolving This Matter

“Courts routinely find class resolution superior in consumer protection actions,

including those brought pursuant to FACTA.” Bush, 2012 WL 1016871 at *11, citing, inter

alia, Matthews, 248 F.R.D. at 216 (“FACTA claims are especially well-suited to resolution

in a class action….”). This case is no different.

A class action is superior to individual actions here because it promotes efficiency

and judicial economy. Resolving the common questions presented by the class members’

FACTA claims in one lawsuit requires far fewer judicial resources than requiring

potentially thousands of individual lawsuits to repeatedly decide the same questions over


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and over. See Legg, 315 F.R.D. at 392 (“The Court will not preside over hundreds of

thousands of separate cases when one will do.”); Williams, 568 F.3d at 1358 (“If a district

court determines that issues common to all class members predominate over individual

issues, then a class action will likely be more manageable than and superior to individual

actions.”). Indeed, here “[s]eparate actions by each of the class members would be

repetitive, wasteful, and an extraordinary burden on the courts.” Kennedy v. Tallant, 710

F.2d 711, 718 (11th Cir. 1983); see also Carriuolo, 823 F.3d at 989 (“class-wide

adjudication appropriately conserves judicial resources and advances society’s

interests in judicial efficiency.”).

A class action is also superior because it promotes justice and fairness. It ensures

that consumer class members who do not know they have a claim, or who lack the ability

or wherewithal to bring their own lawsuit, can vindicate their rights. See Mace v. Van Ru

Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997) (“These are considerations that cannot be

dismissed lightly in assessing whether a class action or a series of individual lawsuits would

be more appropriate….”). Moreover, in the unlikely event that any class members do “have

a special interest in prosecuting their claims independently, they may opt out of the suit.”

Legg, 315 F.R.D. at 391.

By contrast, there is no legitimate benefit to denying class certification and thereby

requiring each of the numerous class members to file their own individual lawsuit. In fact,

requiring individual class members to file their own suits would deter many from enforcing

their rights because recoverable statutory damages are only $100-$1000 per person, and

then only if they undertake the time-consuming and potentially cost-prohibitive effort to

prove willfulness. See 15 U.S.C. §1681n(a)(1)). Not many individuals can be expected to


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endure or find counsel to take on such efforts for $100-$1000 in statutory damages. A class

action avoids this problem by aggregating what would otherwise be a series of “too small”

potential individual recoveries. See In re Checking Account Overdraft Litig., 286 F.R.D.

645, 659 (S.D. Fla. 2012) (“The class action fills an essential role when the plaintiffs would

not have the incentive or resources to prosecute relatively small claims in individual suits,

leaving the defendant free from legal accountability.”). Accordingly, this case meets the

superiority requirement.

V. SETTLEMENT TERMS

The agreed-upon Settlement Class that the Parties propose the Court to certify for

purposes of the Settlement consists of:

A. Monetary Relief Under the Settlement

Pursuant to the Settlement, Chapters will establish a “common” Settlement Fund of

$1,274,562.00. The Settlement Fund will be used to make payments to Settlement Class

Members who submit timely claims, to pay for the costs of notice and settlement

administration, as well as attorney fees and costs awarded by the Court and any incentive

awards to Plaintiff Diaz approved by the court. The amounts of any checks that are returned

as undeliverable or that remain uncashed more than 90 days after the date on the check

may be used to reimburse Defendant for any payments made for notice and administration

costs. Agreement ¶ III.B.

B. Class Notice, Claims Administration, and Attorneys’ Fees

The costs of providing notice to the Settlement Class and the costs of claims

administration will be paid from the Settlement Fund, provided that there are sufficient


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funds in the Settlement Fund to distribute $18.00 to each class member who makes a valid

claim. In the event that there are not sufficient funds in the Settlement Fund to distribute

$18.00 to each claim member making a valid claim, after payment of fees to class counsel

and incentive award to Mr. Diaz, Defendant will be responsible for paying the fees of the

third party claims administrator above any amounts available in the Settlement Fund.” Id.,

¶ III.B.ii. The cost of providing notice and settlement administration is estimated to fall

between $78,399 and $90,423, depending on the exact number of class members. Subject

to Court approval, Plaintiff will seek an attorney fee award of $424,854.00 (one-third the

amount of the settlement fund)2, to Class Counsel, an award of reasonable costs, and an

incentive award of $10,000 to Plaintiff. As will be detailed at the appropriate time, Class

Counsel’s request for attorneys’ fees is supported under a percentage of common fund

analysis which reflects that the proposed fee award is one-third of the Settlement Fund.

Moreover, commentators have observed that the 11th Circuit requires application of a

percentage method to award attorney fees in common fund settlements, such as the

settlement of this action. See Alan Hirsch & Diane Sheehey, Fed.Judicial Ctr., Awarding

Attorneys’ Fees and Managing Fee Litigation 72-73 (2005) citing Camden I Cond. Ass’n

v. Dunkle, 946 F.2d 768, 774 (11th Cir. 1991) (“Attorneys’ fees awarded from a common

fund shall be based upon a reasonable percentage of the fund established for the benefit of

the class.”). Moreover, there is ample 11th Circuit authority and district courts in this

Circuit supporting awards of attorney fees that exceed twenty-five percent and awards of

one-third.

2 See Muransky v. Godiva Chocolatier, Inc., 922 F.3d 1175, 1194-96 (11th Cir. 2019) (award of 33% of fund to class counsel not excessive in FACTA case).


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The Settlement establishes a Notice Plan that will provide best practicable notice

to Settlement Class Members. Kurtzman Carson Consultants LLC (“KCC”) has been

selected as the Settlement Administrator. Defendant has agreed to cooperate with Class

Counsel’s efforts to retrieve Settlement Class Member information from any third party,

including, but not limited to, Visa, MasterCard, American Express, Discover, the banks

that issued the Settlement Class Members’ credit and debit cards, and any entity involved

in processing Defendant’s debt or credit card transactions.

The Settlement Administrator will send direct mail notice or email notice to all

Settlement Class Members, for whom the Settlement Administrator is given a complete

mailing address or email address. The Settlement Administrator will send a supplemental

postcard notice to those Settlement Class Members to whom email notice is undeliverable.

In addition, the Settlement Administrator will send a reminder email notice to all

Settlement Class Members to whom email notice is directed. Within thirty (30) days after

the Court enters an order preliminarily approving the Parties’ Settlement Agreement, the

Settlement Administrator will deliver the Notice of the Settlement and the opportunity to

opt out of this Settlement Class case and to object to the Settlement by postcards to

Settlement Class Members through the United States Postal Service for those members

whom it obtains a complete mailing address from Defendant and by email for those

members for whom it receives an email address from Defendant. The postcard notice will

direct Class Members to the Settlement Website containing the long-form settlement notice

that advises Settlement Class Members of the binding effect Settlement of the case would

have, how to exclude themselves to avoid being bound, and the procedures for opting out.

1. Establishment of Settlement Website and 800 Number.


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A Settlement website will be established when direct mail notice is sent and will

provide access to important documents, including: Plaintiff’s Complaint, the Settlement

Agreement, the Motion for Preliminary Approval, the Preliminary Approval Order, the

Motion for Final Approval and the Final Judgment. Agreement, at ¶ IV.B.ii. In addition,

the Settlement Website will include the deadlines for filing claims, requests for exclusion

from the Settlement Class, objections and final approval and other information pertaining

to the settlement and how to submit claims, FAQ’s, and an interactive function that permits

Settlement Class Members to submit or download a Claim Form online by using a unique

class member identifier contained on the Notice. The Settlement Administrator will also

serve on the Attorneys General of each U.S. State in which there are members of the Class,

the Attorney General of the United States, and other required government officials, the

notice required by CAFA, 28 U.S.C. § 1715, and shall provide Class Counsel with a Notice

to be filed with the Court indicating compliance with § 1715.

C. Objectors and Intervenors

The Parties also propose that the Court establish the following deadlines and

procedures for objectors and/or interveners set forth in the proposed notice and the

Settlement Agreement to ensure that that all interested persons are afforded a reasonable

opportunity to be heard and that the Fairness Hearing may be conducted in an orderly,

efficient, and just manner. First, the Parties propose that any Settlement Class Member or

governmental entity that wishes to object to the proposed Settlement do so by filing a

written objection, containing all information required by the proposed direct-mail notice

with the Court no later than forty-five (45) days from entry of the Preliminary Approval

Order Settlement Class Members. Second, any motion for intervention must be filed with


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the Court no later than forty-five (45) days from entry of the Preliminary Approval Order

Settlement Class Members. Any objector and/or intervener who does not properly and

timely object in the manner set forth above and described more fully in the proposed direct-

mail notice, will not be permitted to appear at the Fairness Hearing or to object, or to

intervene in the case. Plaintiff on behalf of the putative Class request that the Court’s

Preliminary Approval Order contain a temporary injunction enjoining other proceedings

relating to the Released Claims in order to preserve the status quo pending the Court’s final

decision on the reasonableness and fairness of the settlement.

VI. THE SETTLEMENT IS WITHIN THE RANGE OF REASONABLENESS

“[I]n analyzing any settlement, ‘the clear policy in favor of encouraging settlements

must . . . be taken into account.’” Ass'n for Disabled Ams., Inc. v. Amoco Oil Co., 211

F.R.D., 457, 466 (S.D. Fla. 2002) (citation omitted); see Lipuma v. Am. Express Co., 406

F. Supp. 2d 1298, 1314 (S.D. Fla. 2005) (same); Cotton v. Hinton, 559 F.2d 1326, 1331

(5th Cir. 1977) (same). Moreover, “[i]n evaluating a settlement’s fairness, ‘it should [not]

be forgotten that compromise is the essence of a settlement. The trial court should not make

a proponent of a proposed settlement “justify each term of settlement against a hypothetical

or speculative measure of what concessions might [be] gained.’” Ass'n for Disabled Ams.,

211 F.R.D. at 467 (quoting Cotton, 559 F.2d at 1330); Access Now, Inc. v. Claire's Stores,

Inc., 2002 WL 1162422, at *4 (S.D. Fla. May 7, 2002) (same).

Approval of a class-action settlement is a two-step process. In the first step, the

Court determines whether the proposed settlement should be preliminarily approved. See

David F. Herr, Annotated Manual for Complex Litigation § 21.632 (4th ed. 2004). In the

second step, after hearing from any objectors and being presented with declarations and


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materials to support the fairness of the settlement, the Court makes a final decision whether

the settlement should be finally approved. See id. §§ 21.633 - 35. At the preliminary

approval stage, the court makes the original determination whether the proposed settlement

is within the range of fairness, reasonableness and adequacy so as to justify approval of the

settlement, and in this process the court sets a final fairness hearing to decide whether the

proposal is indeed fair, reasonable, and adequate in the ultimate sense. In Re Amino Acid

Lysine Antitrust Litigation; Manual for Complex Litigation § 21.632 (4th ed. 2004). At the

preliminary approval stage, the Court need only “make a preliminary determination of the

fairness, reasonableness and adequacy of the settlement” so that notice of the settlement

may be given to the class and a fairness hearing may be scheduled to make a final

determination regarding the fairness of the Settlement. See 4 Herbert N. Newberg & Alba

Conte, Newberg on Class Actions, §11.25 (4th ed. 2002); David F. Herr, Annotated Manual

for Complex Litigation (“Manual”) §21.632 (4th ed. 2008). In so doing, the Court reviews

the Settlement to determine if it “is ‘within the range of possible approval’ or, in other

words, [if] there is ‘probable cause’ to notify the class of the proposed settlement.” Fresco

v. Auto Data Direct, Inc., 2007 U.S. Dis. LEXIS 37863, at *11-*12 (S.D. Fla. May 11,

2007) (internal citations omitted); Bennett v. Behring Corp., 737 F.2d 982, 986 (11th Cir.

1984) (A proposed settlement must be “fair, adequate and reasonable and [not] the product

of collusion between the parties.”).

Here, there are several reasons why the proposed Settlement Agreement is within

the realm of reasonableness and provides probable cause to provide notice of it to the

Settlement Class:


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A. Recovery Under the Circumstances is Significant

“[A] settlement can be satisfying even if it amounts to a hundredth or even a

thousandth of a single percent of the potential recovery.” Beherens v. Wometco Enterprises,

Inc., 18 F.R.D. 534, 542 (S.D. Fla. 1988). This Settlement meets a critical test in gauging

its fairness and reasonableness; it provides significant, concrete relief to affected

Settlement Class Members. The proposed Settlement would create a Settlement Fund of

$1,274,562.00 to compensate people who received point-of-sale credit or debit card

receipts from a Chapters-owned establishment which displayed more than the last 5 digits

of the card number or the expiration date of the credit or debit card.

The proposed Settlement is a significant FACTA class action settlement. The total

recovery compares favorably to recent common fund FACTA settlements. Plaintiffs have

negotiated a common fund settlement of more than $1.27 million dollars. Settlement Class

Members who submit timely valid claims will receive their pro rata share of the Settlement

Fund, not to exceed $18.00, in the form of a check or electronic deposit (after any attorneys’

fees, costs and incentive awards awarded by the Court, and any costs of claims

administration and notice are deducted). The significance of this settlement is underscored

by the fact that many other plaintiffs have failed to achieve class certification in similar

FACTA cases. See, e.g., Leysota v. Mama Mia I, Inc., 2009 WL 10668631 (S.D. Fla. Sept.

4, 2009); Hill v. T-Mobile USA, Inc., 2011 WL 10958888 (N.D. Ala. May 16, 2011);

Grimes v. Rave Motion Pictures Birmingham, L.L.C., 264 F.R.D. 659 (N.D. Ala. 2010).

In this case, there are prominent factors that support the Parties’ agreement that

Defendant should retain all unclaimed funds. First, Defendant is not in the business of

selling retail goods. Chapters’ Life’s Treasures stores (where the violative receipts were


20

printed), similar to Salvation Army or Habitat for Humanity, accept tax deductible

donations of new and used items for resale. All proceeds of this not-for-profit organization

support Chapters’ hospice programs: LifePath Hospice in Hillsborough County and HPH

Hospice in Pasco County. The direct benefit Defendant’s work confers on those in need

arguably provides an equal if not greater public benefit that any traditional cy pres

recipient. See Poertner v. Gillette Co., 618 Fed.Appx. 624, 626 (11th Cir. 2015) (noting

that it is appropriate to consider the charitable donation in evaluating the settlement overall

because it indirectly benefits the class). Therefore, the proposed Settlement represents a

significant recovery, both in terms of the Settlement Fund of $1.27 million and the

anticipated recovery per Settlement Class Member, and for those struggling with end-of-

life needs.

The circumstances of the Defendant vis-à-vis its ability to survive a judgment in

favor of the Settlement Class at issue is also a relevant consideration. “Because class

actions vary so widely in their circumstances, the trial judge is vested with broad

discretionary control over the conduct of such actions enabling the presiding judge to

respond fluidly to the varying needs of particular cases.” Officers for Justice v. Civil

Service Com'n of City and County of San Francisco, 688 F.2d 615, 633 (9th Cir. 1982).

Absent a settlement, the final resolution of this action through the trial process may require

several more months or years of protracted adversary litigation and appeals, which may

delay relief or entirely eliminate any obtainable relief to Settlement Class Members. The

Settlement imposes a significant financial burden on Defendant for the benefit of

Settlement Class Members but does not annihilate Defendant.


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That this Settlement would eliminate the delay and expenses of litigation strongly

weighs in favor of approval. See e.g., In re Telectronics Pacing Sys., Inc., 137 F. Supp. 2d

985, 1013 (S.D. Ohio 2001). For class actions in particular, courts view settlement

favorably because it “avoids the costs, delays and multitudes of other problems associated

with them.” Id. at 1013. “[C]lass action suits have a well-deserved reputation as being most

complex.” Cotton, 559 F.2d at 1331. “The Court should consider the vagaries of litigation

and compare the significance of immediate recovery by way of the compromise of the mere

possibility of relief in the future, after protracted and extensive litigation. In this respect,

[as other Courts within this Circuit have observed] ‘[i]t has been held proper to take the

bird in the hand instead of a prospective flock in the bush.’” Borcea v. Carnival Corp., 238

F.R.D. 664, 674 (S.D. Fla. 2006) (citation omitted).

This is a complex case, involving perennially fluid legal issues. A rigorously

contested issue arising from this litigation is the question of whether Defendant willfully

violated FACTA. Chapters previously complied with FACTA but the implementation of a

new point-of-sale system resulted in it allegedly becoming non-compliant. Defendant

contends that if there was any violation of FACTA, that such violation was negligent, not

willful. Although Plaintiff was confident that there was a substantial basis to prove

willfulness, there was a substantial risk that at trial a jury could find that Defendant’s

alleged violations were not willful. In addition, defendants frequently challenge significant

FACTA awards on due process grounds. See, e.g., Aliano v. Joe Caputo & Sons -

Algonquin, Inc., No. 09 C 910, 2011 U.S. Dist. LEXIS 48323, at *13 (N.D. Ill. May 5,

2011) (finding that substantial damages award under FACTA presents potential due

process issues.)


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Accordingly, it is clearly advantageous for Settlement Class Members to obtain this

monetary relief without further delay and for sums certain. The proposed Settlement

Agreement is the most realistic and the best current outcome as could be expected in the

particular circumstances of this action, for the Settlement Class Members and Defendant.

This provides a compelling reason why it should be preliminarily approved and Notice

provided to the Settlement Class.

B. The Settlement is the Product of Serious, Informed, Non-

collusive Negotiations and Contentious Litigation

Furthermore, where a settlement results from “arm’s length negotiations between

experienced counsel after significant discovery ha[s] occurred, the Court may presume the

settlement to be fair, adequate, and reasonable.” Lucas v. Kmart Corp., 234 F.R.D. 688,

693 (D. Colo. 2006) (citations omitted). Here, as detailed above, this action has involved

ongoing negotiations lasting nearly a year. Discovery produced significant information

about the class and the merits, including the number of potentially affected transactions,

the circumstances that caused the alleged FACTA violations to occur, and the third parties

involved in the same. Despite their significant differences, the Parties—fully informed as

to the facts and circumstances, the size and nature of the Settlement Class and represented

by experienced counsel—have been able to settle this case.

The Parties attended in-person mediation conducted by Jay M. Cohen, a highly-

regarded professional mediator, at the offices of Carlton Fields on May 21, 2019. Mr. Diaz

participated in the conference in-person, along with his attorneys. In addition to its attorneys,

Chapters Health System, Inc. was represented at the mediation in person by its CEO, Andrew

Molosky. A representative of Chapters Health Systems, Inc.’s insurer also attended the

mediation.


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C. Settlement Class Members Will Be Afforded Ample Due Process

A central aim of the preliminary approval process is to authorize notice and provide

notice of the settlement to the class so that the merits of the settlement can be reviewed by

all those affected. Under Rule 23(e), the Court must “direct notice in a reasonable manner

to all class members who would be bound” by the proposed settlement. Fed. R. Civ. P.

23(e)(1). The “Individual members in a Rule 23(b) (3) action have a right to opt out of the

class proceedings.” David F. Herr, Manual for Complex Litigation § 21.311 at 287 (4th ed.

2004). “Rule 23(c)(2)(B) requires that individual notice in 23(b)(3) actions be given to

class members who can be identified through reasonable effort.” Id.; see Wright, Charles

Alan and Miller, Arthur R., 7AA Fed. Prac. & Proc. Civ. § 1786 (3d ed.). The proposed

notice plan will provide the best practicable notice to Settlement Class Members because

it includes direct mail notice or email notice to all Settlement Class Members. In addition,

the notice plan will provide a significant targeted internet campaign and a Settlement

Website will be maintained that will provide the settlement notice, claim form, other

important documents and answers to frequently asked questions about the Settlement. The

notice reasonably informs Settlement Class Members of: (1) the litigation, the Settlement

Class and the essential terms of the proposed Settlement and its binding effect on those

members who stay in the Settlement Class; (2) information about this Court’s final

approval procedure; (3) how to object to the Settlement and intervene; (4) how to request

to be excluded from this Class Action Settlement; and (5) the Attorneys’ Fee and Costs

Award and Class Representative incentive awards amounts that Class Counsel will be

requesting. Due Process and Rule 23(e) are therefore satisfied. Notice of this Class Action

Settlement should proceed.


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VII. CONCLUSION

Based on the foregoing, Plaintiff on behalf of the putative Class respectfully request

that this Court issue an order certifying this action to proceed as a class action pursuant to

Fed. R. Civ. P. 23, and granting preliminary approval of the Settlement Agreement

consistent with the attached proposed order.

Certification of Conferral Pursuant to Local Rule 3.01(g)

I hereby certify that the undersigned counsel has conferred with opposing counsel;

and am authorized to state the opposing counsel has no opposition to the motion.

Dated: October 3, 2019

Respectfully submitted, s/ Scott D. Owens Scott D. Owens, Esq. Scott D. Owens, P.A. 3800 S. Ocean Dr., Ste. 235 Hollywood, FL 33019 Tel: 954-589-0588 Fax: 954-337-0666 [email protected] James. S. Giardina, Esq. The Consumer Rights Law Group, PLLC 3104 W. Waters Ave., Ste. 200 Tampa, FL 33614 Tel: 813-435-5055 Fax: 866-535-7199 [email protected]


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CERTIFICATE OF SERVICE

I hereby certify that on October 3, 2019, I electronically filed the foregoing document with the Clerk of this Court using the CM/ECF. I also certify that the foregoing document is being served this date via US mail and/or some other authorized manner for those counsel or parties below, if any, who are not authorized to received electronically Notices of Electronic Filing.

By: s/ Scott D. Owens Scott D. Owens, Esq.


Documents

PLAINTIFF’S UNOPPOSED MOTION AND MEMORANDUM IN … · See Shady Grove Orthopedics Case 8:18-cv-03052-CEH-SPF Document 26 Filed 10/03/19 Page 5 of 25 PageID 147. 6 Assocs. v. Allstate