UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND€¦ · (KCC Decl. ¶ 11.) Further, the time for class members to opt-out of the proposed settlement being presented to this Court

UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND

MARY KETNER, individually and on behalf of all others similarly situated Plaintiff, v. STATE EMPLOYEES CREDIT UNION OF MARYLAND, INC. and DOES 1 through 10

Defendants.

Civil No.: 1:15-CV-03594-CCB

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF

PLAINTIFF’S MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT, APPROVAL OF ATTORNEYS’ FEES AND COSTS, AND

APPROVAL OF THE CLASS REPRESENTATIVE SERVICE AWARD

Case 1:15-cv-03594-ADC Document 63-1 Filed 11/13/17 Page 1 of 34

i

TABLE OF CONTENTS I. SUMMARY ......................................................................................................................1 II. BACKGROUND ..............................................................................................................2

A. The Settlement is a Very Good Result for the Class Members ............................2 B. Pertinent Procedural History .................................................................................3 C. Investigation and Discovery .................................................................................4

III. LEGAL ANALYSIS .........................................................................................................5

A. The Settlement Should Be Finally Approved .......................................................5

1. The Settlement is Fair ...............................................................................6

a. The Posture of the Case at the Time the Settlement Was Proposed ........................................................................................7 b. The Extent of Discovery that Has Been Conducted .....................7 c. The Circumstances Surrounding the Negotiations .......................8 d. The Experience of Counsel ...........................................................9

2. The Settlement is Adequate ......................................................................9

a. The Relative Strength of Plaintiffs’ Case on the Merits ...............9 b. The Existence of Any Difficulties of Proof or Strong Defenses the Plaintiffs are Likely to Encounter if the Case Goes to Trial ...............................................................................10 c. The Anticipated Duration and Expense of Additional Litigation .....................................................................................11 d. The Solvency of Defendants and the Likelihood of Recovery on a Litigated Judgment .............................................11 e. The Degree of Opposition to the Settlement...............................12

B. The Court Should Approve the Plan of Allocation .............................................13 C. The Requested Fee Award and Litigation Costs Should Be Approved ..............13


ii

1. The Requested Fee is Supported Under the Percentage-of-the- Recovery Approach ................................................................................13

a. The Results Obtained for the Class .............................................14 b. Objections by Members of the Class to the Settlement Terms and/or Fees Requested by Counsel .............................................14 c. The Quality, Skill, and Efficiency of the Attorneys Involved ....14 d. The Complexity and Duration of the Litigation .........................15 e. The Risk of Nonpayment ............................................................15 f. Public Policy ...............................................................................15 g. Awards in Similar Cases .............................................................16

2. The Requested Fee is Supported Under the Lodestar Approach ............17

D. Class Counsel’s Request for Costs Should Be Approved ...................................17

E. The Proposed Cy Pres Recipient Should Be Approved ......................................18 F. The Class Representative’s Service Award Should Be Approved .....................18 G. The Settlement Class Should Be Finally Certified .............................................19

1. The Requirement of Numerosity is Satisfied ..........................................19 2. The Requirement of Commonality is Satisfied .......................................19 3. The Requirement of Typicality is Satisfied ............................................20 4. The Requirement of Adequate Representation is Satisfied ....................21 5. Ascertainability is Satisfied ....................................................................22 6. The Proposed Settlement Class Meets the Requirements of Rule 23(b)(3) ...................................................................................................22

a. Common Questions of Law and Fact Predominate ....................23 b. This Class Action is the Superior Method of Adjudication ........24

V. Conclusion ......................................................................................................................25


iii

TABLE OF AUTHORITIES

Cases Amchem Prods. v. Windsor 521 U.S. 591 (1997) ......................................................................................19, 21, 23, 25 Carnegie v. Household Int’l, Inc. 376 F.3d 656 (7th Cir. 2004) ..........................................................................................25 Central Wesleyan College v. W.R. Grace & Co. 143 F.R.D. 628 (D.S.C. 1992) ........................................................................................20 Chisolm v. TranSouth Fin. Corp. 184 F.R.D. 556 (E.D. Va. 1999) .....................................................................................19 Eisen v. Carlisle & Jacquelin 417 U.S. 156, 94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974) ..................................................21 EQT Prod. Co. v. Adair 764 F.3d 347 (4th Cir. 2014) ..........................................................................................22 Evans v. Jeff D. 475 U.S. 717 (1986) ..........................................................................................................6 Faile v. Lancaster Cty. 2012 U.S. Dist. LEXIS 189610 (D.S.C. 2012) .........................................................14, 16 Flinn v. FMC Corp. 528 F.2d 1169 (4th Cir. 1975) ............................................................................5, 6, 9, 12 Fisher v. Va. Elec. & Power Co. 217 F.R.D. 201 (E.D. Va. 2003) .....................................................................................24 Florida Trailer and Equipment Company v. Deal 284 F.2d 567 (5th Cir. 1960) ........................................................................................5, 6 Goldenberg v. Marriott PLP Corp. 33 F. Supp. 2d 434 (D. Md. 1998) ..................................................................................17 Gray v. Los Angeles Federal Credit Union Los Angeles County Superior Court, Case No. BC625500 ............................................16 Gunnells v. Healthplan Servs. 348 F.3d 417 (4th Cir. 2003) ..........................................................................................23 Hernandez v. Point Loma Credit Union San Diego County Superior Court, Case No. 37-2013-00053519 ..................................16


iv

In re Computron Software, Inc. 6 F.Supp.2d 313 (D.N.J. 1998) .......................................................................................11 In re Jiffy Lube Sec. Litig. 927 F.2d 155 (4th Cir. 1991) ........................................................................................5, 6 In re Mills Corp. Sec. Litig. 265 F.R.D. 246 (E.D. Va. 2009) ............................................................................. passim In re MicroStrategy, Inc. Sec. Litig. 148 F. Supp. 2d 654 (E.D. Va. 2001) .....................................................................5, 6, 17 In re Montgomery County Real Estate Antitrust Litigation 83 F.R.D. 305 (D. Md. 1979) ........................................................................................6, 9 James Foster & Stone Logistics, Inc. v. CEVA Freight, LLC 272 F.R.D. 171, 176 (W.D.N.C. 2011) ...........................................................................24 Jones v. Dominion Res. Servs. 601 F. Supp. 2d 756 (S.D. W. Va. 2009) ........................................................................17 Kay Co. v. Equitable Prod. Co. 749 F. Supp. 2d 455 (S.D. W. Va. 2010) ........................................................................18 Klay v. Humana, Inc. 382 F.3d 1241 (11th Cir. 2004) ......................................................................................23 Lane v. Campus Federal Credit Union Case No. 3:16-cv-00037 (M.D. La. 2017) ......................................................................16 Morris v. Wachovia Sec., Inc. 223 F.R.D. 284 (E.D. Va. 2004) .....................................................................................20 Manwaring v. Golden 1 Credit Union Sacramento County Superior Court, Case No. 34-2013-00142667 ................................16 Manuel v. Wells Fargo Bank, Nat'l Ass'n 2016 U.S. Dist. LEXIS 33708 (E.D. Va. 2016) .............................................................18 Moralez v. Kern Schools Federal Credit Union Kern County Superior Court, Case No. BCV-15-100538 ..............................................16 Murray v. GMAC Mortg. Corp. 434 F.3d 948 (7th Cir. 2006) ..........................................................................................23 Saylor v. Lindsley ` 456 F.2d 896 (2d Cir. 1972)..............................................................................................9


v

S.C. Nat'l Bank v. Stone (Stone I) 749 F. Supp. 1419 (D.S.C. 1990) ......................................................................................8 Smilow v. Southwestern Bell Mobile Systems, Inc. 323 F.3d 32 (1st Cir. 2003) .............................................................................................23 Smith v. B & O R.R. Co. 473 F. Supp. 572 (D. Md. 1979) ...............................................................................20, 21 Smith v. Krispy Kreme Doughnut Corp. 2007 U.S. Dist. LEXIS 2392 (M.D.N.C. 2007) ........................................................14, 16 South Carolina Nat'l Bank v. Stone (Stone II) 139 F.R.D. 335 (D.S.C. 1991) ..........................................................................................6 Stillmock v. Weis Mkts., Inc. 385 F. App'x 267 (4th Cir. 2010) ..............................................................................23, 25 Tyson Foods, Inc. v. Bouaphakeo 136 S.Ct. 1036 (2016) .....................................................................................................23 Wal-Mart Stores, Inc. v. Dukes 131 S. Ct. 2541 (2011) ....................................................................................................19 Wells v. Chevy Chase Bank, F.S.B. 363 Md. 232, 251, 768 A.2d 620, 630 (2001) ................................................................24 Windham v. American Brands, Inc. 565 F.2d 59 (4th Cir. 1977) ............................................................................................23 W. Va. v. Chas. Pfizer & Co. 314 F. Supp. 710 (S.D.N.Y. 1970) ...................................................................................9 Vaughns v. Board of Educ. of Prince George’s County 18 F. Supp. 2d 569 (D. Md. 1998) ....................................................................................5 Statutes and Regulations 12 C.F.R. § 1005.17 ......................................................................................................................1 Fed. R. Civ. P. 23 ................................................................................................................ passim Other Authority 7AA Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure § 1779 (3d ed. 2005) ...................................................................................................................25


vi

“An Overview of Federal Class Actions: Past, Present and Future,” Federal Judicial Center Education & Training Series, (2d Ed. 1977)...............................................................................19 Manual for Complex Litigation (Third) § 30.42 (1995) ...............................................................5 Newberg on Class Actions § 14.03 .............................................................................................17 Practicing Law Institute, Current Problems In Federal Civil Practice at 491 (1975) .................23


- 1 -

MEMORANDUM

I. SUMMARY.

This is a putative class action alleging that Defendant State Employees Credit Union of

Maryland, Inc. (“SECU” or “Defendant”) charged overdraft fees based on what it calls the

“available balance” in customer accounts (i.e., a subset of the actual account balance from which

money has been deducted by placing holds on funds earmarked for pending transactions which

have not yet posted) rather than the money actually in the account (sometimes called the “ledger

balance”), allegedly in violation of the terms of its contract governing the overdraft program for

certain types of transactions. Plaintiff also alleges that Defendant violated Regulation E, 12

C.F.R. § 1005.17 (“Reg. E”), by enrolling credit union members in its overdraft program for

subject transactions without obtaining their affirmative consent to do so based on a complete and

valid disclosure of the terms of the program. SECU strongly disputes Plaintiff’s contentions.

After law and motion practice and discovery into the underlying facts, and acceptance by

both sides of the mediator's proposal made by Magistrate Judge A. David Copperthite, the parties

reached a proposed settlement of this matter to which this Honorable Court granted preliminary

approval on September 26, 2017 (Docket No. 62), finding preliminarily that the classes as

defined in the Settlement Agreement meet all of the requirements for certification of a settlement

class found in the Federal Rules of Civil Procedure and applicable case law (Preliminary

Approval Order, ¶¶ 2, 7), that the proposed settlement falls within the range of reasonableness

for potential final approval, and is the product of arm’s length negotiations by experienced

counsel after extensive litigation and discovery. (Id., ¶ 8.) This Court found that the proposed

notice plan to class members satisfied due process, and ordered that notice of the proposed

settlement be served pursuant to it. (Id., ¶ 9.)

The parties have complied with this Court’s Order regarding notice, and Plaintiff

therefore now presents the matter for final approval. As evidenced by the contemporaneously

filed declaration of Ryanne Cozzi of the claims administrator Kurtzman Carson Consultants

(“KCC”), the notice program approved by this Court has been very successful, with 99.3% of

class members successfully receiving the notice. (Declaration of Ryanne Cozzi of KKC


- 2 -

[hereafter "KCC Decl."] ¶11.) Specifically, on October 6, 2017, the claims administrator caused

the court approved Notice Form to be emailed to 21,142 email addresses, and on the same date to

be mailed to 12,161 Class Members. (KCC Decl. ¶¶ 4, 5) Of the 33,303 class members who

were sent notice, ultimately 33,080 received notice which was not returned as undeliverable,

meaning an overall success rate on this Court's ordered class notice program of 99.3%. (KCC

Decl. ¶ 11.)

Further, the time for class members to opt-out of the proposed settlement being presented

to this Court was November 6, 2017, about seven days ago, and as of the time of the filing of this

Motion for Final Approval, the claims administrator reports there only have been a total of 5 opt-

outs. (KCC Decl. ¶ 9.) This means that more than 99.98% of the class members have elected

not to opt out of the settlement, which is a very favorable response. Further, although the time

to object does not expire until November 25, 2017, to date, only one class member has objected

to the proposed settlement, meaning more than 99.99% of class members have elected not to

object. (KCC Decl. ¶ 10.)

Therefore, the response of class members to date to this proposed settlement has been

overwhelmingly favorable.

II. BACKGROUND

A. The Settlement is a Very Good Result for the Class Members

Under the settlement’s terms, SECU Maryland will make an “all in” non-reversionary

payment of $1,700,000 to the class. (Settlement Agreement, ¶¶ (1)(r), (7)(d)(iv).) In addition to

providing significant monetary benefits to the class, this amount will also be used to reimburse

the litigation costs, the costs of class notice and claims administration, attorneys’ fees in the

amount of one-third of the common fund (subject to Court approval), and a service award to the

class representative. (Settlement Agreement, ¶ 7.)

Under the settlement, no money will revert to the Defendant. (Settlement Agreement, ¶

7(d)(v).) Payment will be credited to the class members according to an individualized formula

which takes into account the total improper overdraft charge per class member. Specifically, the

formula divides the net settlement fund by the total improper overdraft charges for the relevant


- 3 -

period and multiplies the resulting figure by an individual class member’s total improper

overdraft charge. (Settlement Agreement, ¶ 7(d)(iii).) As a result, each member will receive an

award in direct proportion to the size of his or her claim. The settlement compensation will be

directly deposited into existing customers’ accounts, and will be distributed by check to the last

known address of all former members. (Settlement Agreement, ¶ (7)(d)(v).) This means the

class member literally has to do nothing to receive this money. Finally, any money that remains

after this distribution process, rather than revert to Defendant, instead will go to a 501(c)(3) non-

profit, Public Citizen, an organization actively involved in protecting consumer rights (if

approved by this Court). (Settlement Agreement, ¶ 11.)

The $1,700,000 settlement fund represents approximately 37.17% of the most likely non-

interest restitutionary amount that could have been obtained at trial had the case been successful

under Plaintiff's damage theory, while avoiding for the class members all of the risks and further

litigation costs appurtenant with continuing. (Declaration of Arthur Olsen in Support of the

Motion for Preliminary Approval of Class Action Settlement [hereafter “Olsen Decl.”] ¶ 10;

Declaration of Taras Kick [hereafter “Kick Decl.”] ¶¶ 17, 22.) This is discussed in more detail in

Section III, infra.

B. Pertinent Procedural History

The Complaint in this action was filed on November 24, 2015 (Docket No. 1

“Complaint”), alleging that SECU Maryland had breached its contracts with its customers and

violated Reg. E by charging overdraft fees for transactions which, to be completed, required less

money than was already in the customers’ actual or ledger balances. (Complaint, ¶ 1, ¶¶ 22-27.)

Plaintiff filed a First Amended Complaint on May 5, 2016. (Docket No. 26). On May 31, 2016,

SECU filed a motion to dismiss the First Amended Complaint (Docket No. 33). Among other

things, Defendant argued that the contractual language did not bar the use of the available

balance to calculate overdraft fees, and that the Reg. E claim was barred by a safe harbor clause.

Plaintiff opposed the motion to dismiss on June 17, 2016 (Docket No. 36), and in support of the

motion SECU filed a reply on July 5, 2016. (Docket No. 37).

///


- 4 -

C. Investigation and Discovery

On May 18, 2016, Plaintiff propounded on SECU her first set of requests for production

of documents, comprised of 11 categories of documents, to which SECU responded on July 20,

2016 and for which SECU provided supplemental responses on August 1, 2016. (Kick Decl. ¶

14.) On October 24, 2016, Plaintiff propounded on SECU her second set of requests for

production of documents, bringing the total number of requested categories to 100, her first set

of special interrogatories, comprised of 25 requests, and her first set of requests for admission,

comprised of 25 requests. (Kick Decl. ¶ 14.) On February 15, 2017, SECU propounded on

Plaintiff its first set of requests for documents, comprised of 11 categories of documents. (Kick

Decl. ¶ 14.) Plaintiff responded to this discovery on March 22, 2017. (Kick Decl. ¶ 14.) On

April 26, 2017 Plaintiff took the deposition of Adrienne Allgire, SECU’s corporate

representative designated as most knowledgeable on subjects related to overdraft fees in

Baltimore, Maryland, and on April 13, 2017, SECU took Plaintiff’s deposition in Annapolis,

Maryland. (Kick Decl. ¶ 14.)

The parties' settlement negotiations at all times were at arm’s length and

adversarial. (Kick Decl. ¶ 15.) On April 27, 2017, the parties participated in a mediation before

the Honorable A. David Copperthite. Although the matter did not settle on that date, Judge

Copperthite made a mediator’s proposal and gave the two sides three weeks to accept or reject it.

(Kick Decl. ¶ 15.) The parties accepted the proposal. (Id.) During the negotiations, SECU

Maryland gave Plaintiff’s expert Arthur Olsen access to the class data, which included

transactional account data for SECU Maryland’s customers during the class period. (Olsen Decl.

¶ 6.) Mr. Olsen is considered to be one of the leading experts on overdraft fee database analysis,

and has worked on overdraft litigation database analysis in such matters as the multidistrict

litigation which took place in Florida (In re Checking Account Overdraft Litigation MDL No.

2036 (S.D. Fla.)), and in such matters as Gutierrez v. Wells Fargo 730 F.Supp.2d 1080 (N.D.

Cal. 2010). (Kick Decl. ¶ 17; Olsen Decl. ¶¶ 3, 5.) As a result of his analysis, Mr. Olsen has

been able to confirm that SECU charged $4,913,910 in overdraft fees when there was enough

money in the account to cover the transaction in question if “holds” on deposits or pending


- 5 -

transactions were not taken into account, which is what the Plaintiff’s “sufficient funds” theory

of the case is, and that after applying credits for reversals, the amount of total damages on the

“sufficient funds” theory is $4,573,375. (Olsen Decl. ¶¶ 8-10.) The new money settlement

amount in this case of $1,700,000 therefore represents approximately 37.17% of the total

“sufficient funds” damages that have been identified in this case.

III. LEGAL ANALYSIS.

A. The Settlement Should Be Finally Approved.

Under Rule 23(e), a class action “shall not be . . . compromised without approval of the

[district] court . . . .” Fed. R. Civ. Pro. 23(e). Accordingly, “the role of a court reviewing the

proposed settlement of a class action” under Rule 23(e) “is to assure that the procedures followed

meet the requirements of the Rule and comport with due process and to examine the settlement

for fairness and adequacy.” In re MicroStrategy, Inc. Sec. Litig., 148 F. Supp. 2d 654, 663 (E.D.

Va. 2001) (quoting Vaughns v. Board of Educ. of Prince George’s County, 18 F. Supp. 2d 569,

578 (D. Md. 1998)); see also Manual for Complex Litigation (Third) § 30.42 (1995) (“The court

must decide whether it is fair, reasonable, and adequate under the circumstances and whether the

interests of the class as a whole are better served if the litigation is resolved by the settlement

rather than pursued.”). “The primary concern addressed by Rule 23(e) is the protection of class

members whose rights may not have been given adequate consideration during the settlement

negotiations.” In re Jiffy Lube Sec. Litig., 927 F.2d 155, 158 (4th Cir. 1991). While due process

requires that the class members’ interests be adequately represented during this process, “it is

entirely in order for the trial court to limit its proceedings to whatever is necessary to aid it in

reaching an informed, just and reasoned decision.” Id. (quoting Flinn v. FMC Corp., 528 F.2d

1169, 1173 (4th Cir. 1975).

“The trial court should not, however, turn the settlement hearing into a trial or a rehearsal

of the trial, nor need it reach any dispositive conclusions on the admittedly unsettled legal issues

in the case.” Flinn, supra., at 1172. “It is not part of its duty in approving a settlement to

establish that ‘as a matter of legal certainty . . . the subject claim or counterclaim is or is not

worthless or valuable.’” Id. (quoting Florida Trailer and Equipment Company v. Deal, 284 F.2d


- 6 -

567, 571 (5th Cir. 1960)). “While the opinion and recommendation of experienced counsel is

not to be blindly followed by the trial court, such opinion should be given weight in evaluating

the proposed settlement.” Flinn, supra. at 1173.

“Ultimately, approval of a class action settlement is committed to ‘the sound discretion of

the district courts to appraise the reasonableness of particular class-action settlements on a case-

by-case basis, in light of relevant circumstances.’” In re MicroStrategy, Inc. Sec. Litig., 148

F.Supp. 2d at 663 (quoting Evans v. Jeff D., 475 U.S. 717, 742 (1986)). “However, ‘there is a

strong initial presumption that the compromise is fair and reasonable.” Id. (quoting South

Carolina Nat'l Bank v. Stone, 139 F.R.D. 335, 339 (D.S.C. 1991)).

The Fourth Circuit has approved bifurcating this analysis into factors which apply to

“fairness” and factors which apply to “adequacy.” See In re Jiffy Lube Sec. Litig., 927 F.2d at

158-59 (adopting the factors set forth in In re Montgomery County Real Estate Antitrust

Litigation, 83 F.R.D. 305, 315 (D. Md. 1979). Under “fairness” the court is to determine

whether “the settlement was reached as a result of good-faith bargaining at arm’s length, without

collusion, on the basis of (1) the posture of the case at the time settlement was proposed, (2) the

extent of discovery that had been conducted, (3) the circumstances surrounding the negotiations,

and (4) the experience of counsel.” In re Jiffy Lube, 927 F.2d at 159. Under “adequacy” the

court should consider “(1) the relative strength of the plaintiffs’ case on the merits, (2) the

existence of any difficulties of proof or strong defenses the plaintiffs are likely to encounter if the

case goes to trial, (3) the anticipated duration and expense of additional litigation, (4) the

solvency of the defendants and the likelihood of recovery on a litigated judgment, and (5) the

degree of opposition to the settlement.” Id.

1. The Settlement is Fair.

“The factors tending to reveal the ‘fairness’ of a settlement are those which indicate the

presence or absence of collusion among the parties.” In re Montgomery County Real Estate

Antitrust Litigation, 83 F.R.D. 305, 315 (D. Md. 1979). “Because of the danger of counsel's

compromising a suit for an inadequate amount for the sake of insuring a fee, the court is obliged

to ascertain that the settlement was reached as a result of good-faith bargaining at arm’s length.”


- 7 -

Id. “The good faith of the parties is reflected in such factors as the posture of the case at the time

settlement is proposed, the extent of discovery that has been conducted, the circumstances

surrounding the negotiations and the experience of counsel.” Id. As shown below, each of these

factors weighs in favor of approval of the settlement.

a. The Posture of the Case at the Time the Settlement Was Proposed.

“The first Jiffy Lube factor directs the Court to evaluate essentially how far the case has

come from its inception.” In re Mills Corp. Sec. Litig., 265 F.R.D. 246, 254 (E.D. Va. 2009).

“[I]n cases in which discovery has been substantial and several briefs have been filed and argued,

courts should be inclined to favor the legitimacy of a settlement.” Id.

Plaintiff has faced a motion to dismiss, which was fully briefed before the Court by both

sides, but on which a ruling had not been issued. (Kick Decl. ¶ 13.) Further, the in-person

mediation session with this Court, through Judge Copperthite, also assisted in the parties further

evaluating and assessing their positions, and likelihood of prevailing. Accordingly, Plaintiff has

had the opportunity to examine SECU Maryland’s arguments, formulate her own, and weigh the

strengths and weaknesses of her case, ultimately reaching an informed judgment of the

likelihood of success on the merits. Accordingly, this factor weighs in favor of approval of the

settlement.

b. The Extent of Discovery that Has Been Conducted.

Also contributing to Plaintiff’s judgment of the merits of her case is the discovery which

has taken place during the pendency of this action. “Like the first factor, the second factor—

evaluating the extent of discovery that has been conducted—enables the Court to ensure that the

case is well-enough developed for Class Counsel and Lead Plaintiffs alike the appreciate the full

landscape of their case when agreeing to enter into this Settlement.” In re Mills Corp. Sec. Litig.,

265 F.R.D. at 254.

As noted above, Plaintiff has propounded two sets of requests for production on

Defendant, one set of special interrogatories, and one set of requests for admission, and has

received documents and Responses produced by Defendant, in addition to taking the deposition

of SECU Maryland’s Person Most Knowledgeable on overdraft issues. (Kick Decl. ¶ 14.)


- 8 -

Meanwhile, Defendant has received responses to requests for production from Plaintiff, and has

taken Plaintiff’s deposition, the preparation for which served to inform Plaintiff of the strengths

and weaknesses of her own case as much as the deposition itself did so for Defendant. (Kick

Decl. ¶ 14.) Further, SECU Maryland has made its database available to Plaintiff’s database

expert, Arthur Olsen, who has analyzed it and fully ascertained the class and class damages.

(Olsen Decl. ¶¶ 6-10.) The facts of this case have been fully explored and uncovered. This

factor weighs in favor of approval.

c. The Circumstances Surrounding the Negotiations.

“The third Jiffy Lube ‘fairness’ factor requires the Court to evaluate the conditions and

circumstances surrounding the settlement negations between Lead Counsel and [Defendant].” In

re Mills Corp. Sec. Litig., 265 F.R.D. at 255. The objective of this factor is to ensure that

‘counsel entered into settlement negotiations on behalf of their clients after becoming fully

informed of all pertinent factual and legal issues in the case.’” Id. (quoting S.C. Nat'l Bank v.

Stone, 749 F. Supp. 1419, 1424 (D.S.C. 1990)).

This proposed settlement meets the gold standard in that regard in that the proposed

settlement is the result of a mediator's proposal accepted by both sides and made by a very

highly- regarded judicial officer of this Court, The Honorable A. David Copperthite. (Kick Decl.

¶ 15.) Specifically, on April 27, 2017, the parties participated in a mediation before the Judge

Copperthite, and although the case did not settle on that date, Judge Copperthite made a

mediator’s proposal with a limit of three weeks to respond, and both sides accepted Judge

Copperthite’s mediator’s proposal. (Kick Decl. ¶ 15.)

Courts have held that the involvement of a mediator in the settlement is a substantial

factor weighing towards approval. In re Mills Corp. Sec. Litig., 265 F.R.D. at 255. “It is

apparent . . . that this settlement was not entered into haphazardly with an underdeveloped

understanding of the merits of the case . . . Negotiations were sufficiently thorough, contentious,

and at arm’s length to ensure the propriety of Class Counsel’s decision to enter into the

settlement and the proceedings leading thereto.” Id.

There is no doubt this factor is satisfied.


- 9 -

d. The Experience of Counsel.

“The final Jiffy Lube ‘fairness’ factor looks to the experience of Class Counsel in this

particular field of law.” In re Mills Corp. Sec. Litig., 265 F.R.D. at 255. Class Counsel not only

are very experienced in consumer class actions, but also specifically in overdraft fee class

actions. (Declaration of Richard McCune ["hereafter "McCune Decl."] ¶¶ 2-5; Kick Decl. ¶¶ 2,

3, 5.) Each has been appointed class counsel in numerous state and federal class actions,

representing classes of consumers. (Id.) Also, Class Counsel are in favor of the settlement, and

in the best interests of the class. (McCune Decl." ¶ 20; Kick Decl. ¶ 20.) "[S]ubstantial weight

should be accorded to the assessment of plaintiff’s counsel that settlement is the preferable

alternative.” In re Montgomery County Real Estate Antitrust Litigation, 83 F.R.D. 305, 317.

Accordingly, this factor also weighs in favor of approval of the settlement.

2. The Settlement is Adequate.

“In evaluating the ‘adequacy’ of a proposed settlement, the court must weigh the

likelihood of the plaintiffs’ recovery on the merits against the amount offered in settlement.” In

re Montgomery County Real Estate Antitrust Litigation, 83 F.R.D. 305, 315 (D. Md. 1979). “It is

not, of course, necessary or desirable to ‘try’ the case to determine whether a settlement is

adequate, since the very purpose of settlement is ‘to avoid the trial of sharply disputed issues and

to dispense with wasteful litigation.’” Id. (quoting Saylor v. Lindsley, 456 F.2d 896, 904 (2d Cir.

1972)). As shown below, based on these factors, the settlement before the Court is adequate.

a. The Relative Strength of Plaintiffs’ Case on the Merits.

“Evaluating the force of Plaintiffs’ case is of the utmost importance because ‘[i]f the

settlement offer was grossly inadequate. . . it can be inadequate only in light of the strength of

the case presented by the plaintiffs.’” In re Mills Corp. Sec. Litig., 265 F.R.D. at 256 (quoting

Flinn, 528 F.2d at 1172). “Conversely, and as Lead Counsel rightly notes, ‘no matter how

confident one may be of the outcome of litigation, such confidence is often misplaced.’” Id.

(quoting W. Va. v. Chas. Pfizer & Co., 314 F. Supp. 710, 743-744 (S.D.N.Y. 1970), aff'd, 440

F.2d 1079 (2d Cir. 1971)).

Here, Plaintiff’s expert, Arthur Olsen, has determined that the total value of the overdraft


- 10 -

fees assessed when SECU Maryland’s customers had enough money in their accounts to pay for

the transaction at issue—which Plaintiff’s counsel believes is the most likely result had this case

proceeded to trial—is $4,573,375 after refunds. (Olsen Dec. ¶¶ 8-10). The total settlement

amount in this case of $1,700,000 therefore represents 37.17% of this value of the case. This is

well within the range of an acceptable settlement. City of Detroit v. Grinnell Corp., 356 F. Supp.

1380, 1386 (S.D.N.Y. 1972) (a recovery of 3.2 % to 3.7 % of the amount sought is “well within

the ball park”), aff'd in part, rev'd on other grounds, 495 F.2d 448 (2d Cir. 1974); see also;

Bellinghausen v. Tractor Supply Co., 306 F.R.D. 245, 256 (N.D. Cal. 2015) (“[I]t is well-settled

law that a proposed settlement may be acceptable even though it amounts to only a fraction of

the potential recovery that might be available to the class members at trial.”).

Further, the Plaintiff class faced significant risks in this case. For example, if this

settlement were not to be approved, the Court next would rule on Defendant’s pending and fully

briefed motion to dismiss, with an uncertain outcome. Should Plaintiff prevail, she would next

face the challenge of an adverse motion for class certification which, if successful, would present

the subsequent challenge of opposing a motion for summary judgment. (Kick Decl. ¶¶ 20-21.)

Finally, the Plaintiff class would face the risk of possible loss at trial. Counsel for defendant has

argued that the contract language does not support Plaintiff’s interpretation, and that Defendant

may assess fees based on the available balance under that language. (Id.)

Accordingly, this factor also weighs in favor of approval.

b. The Existence of Any Difficulties of Proof or Strong Defenses the Plaintiffs are Likely to Encounter if the Case Goes to Trial.

With regard to the breach of contract claim, Plaintiff faces the risk that the Court might

decide that the contractual language permits assessing overdraft fees based on a lack of funds in

the available balance. Should the Court find that the language is ambiguous, and deny the

motion to dismiss on that basis, Plaintiff faces the risk that a trier of fact, in construing the

ambiguous language, would find that it permits Defendant’s practice. With regard to the Reg. E

claim, Plaintiff faces the risk that the Court might decide that the one-year statute of limitations

begins to run when the first improper overdraft fee is issued, taking many of the contested fees

out of consideration. Plaintiff also faces the risk that the Court will determine that the


- 11 -

Defendant’s conduct is protected by a safe harbor clause.

Therefore, this faced cased faced additional not insubstantial risks for Plaintiff.

Accordingly, this factor weighs in favor of approval.

c. The Anticipated Duration and Expense of Additional Litigation.

“The third Jiffy Lube ‘adequacy’ factor asks the Court to weigh the settlement in

consideration of the substantial time and expense litigation of this sort would entail if a

settlement was not reached.” In re Mills Corp. Sec. Litig., 265 F.R.D. at 256. “This factor is

based on a sound policy of conserving the resources of the Court and the certainty that

‘unnecessary and unwarranted expenditure of resources and time benefit[s] all parties.’” Id.

(quoting In re Computron Software, Inc., 6 F.Supp.2d 313, 317 (D.N.J. 1998)).

Continued litigation would be complex, lengthy, and expensive. With regard to expected

duration, as noted, an otherwise strong case could last for a very substantial time if the proposed

settlement were not approved, and be extremely expensive to both sides. (Kick Decl. ¶¶ 20-21.)

Plaintiff’s Counsel believes the likelihood for certification is strong, but there is always some

risk in getting consumer class actions certified, even the ones which have the strongest merits for

certification. If the settlement is not approved, Defendant’s motion to dismiss and motion for

judgment on the pleadings will return to the calendar and, assuming a victory in those battles,

Plaintiff would likely next face a motion for summary judgment. After an expensive trial,

regardless of which party prevailed, there likely would be appellate practice, further delaying the

receipt of actual funds by the class members. (Kick Decl. ¶¶ 20-21.)

d. The Solvency of Defendants and the Likelihood of Recovery on a Litigated Judgment.

“[A] settlement properly discounts the amount of recovery because of the risk inherent in

going to trial and it would be inappropriate for this Court to require the parties to ‘justify each

term of settlement against a hypothetical or speculative measure of what concessions might have

been gained.’” In re Mills Corp. Sec. Litig., 265 F.R.D. at 257. To Plaintiff’s knowledge,

Defendant is solvent, and is not aware of a reason to discount the litigated judgment result out of

a concern for solvency. However, there is always a risk that a full recovery of a $4,573,375


- 12 -

litigated judgment could be avoided for liability reasons. This includes the possibility of a

successful liability judgment for Plaintiff being challenged on appeal : “even if successful at

trial, plaintiffs still face [the] uncertainty [of] appeal.” In re Mills Corp. Sec. Litig., 265 F.R.D.

at 257.

Accordingly, this factor weighs in favor of approval.

e. The Degree of Opposition to the Settlement.

“The final Jiffy Lube ‘adequacy’ factor looks to the reaction of the Class to the proposed

settlement and ‘[t]he attitude of the members of the Class, as expressed directly or by failure to

object, after notice to the settlement is a proper consideration for the trial court.’” In re Mills

Corp. Sec. Litig., 265 F.R.D. at 258 (quoting Flinn, 528 F.2d at 1173). “Thus, an absence of

objections and a small number of opt-outs weighs significantly in favor of the settlement’s

adequacy.” Id.

As noted above, only five class members have requested exclusion from the settlement—

meaning that 99.98% of the class members have elected not to opt out of the proposed

settlement. This is very favorable.

Further, to date there only has been a single objection to the proposed settlement. With

regard to that one objection, by class member David Sanders, it fails to identify any flaw in the

settlement or the settlement distribution plan. Rather, Mr. Sanders’ complaint boils down to the

fact that he does not like SECU's overdraft policy, and would like to receive the $500 to $600

worth of overdraft fees he believes he incurred, rather than the pro-rata share of the settlement

fund that he will receive if the settlement is approved and he elects not to opt out of it. But even

in his objection he states he made phone calls to this credit union attempting to get these

overdraft fees refunded, but was told to just manage his money better. Further, he has failed to

identify any actual flaw in the terms of the settlement, or even specify the actual size of the

settlement that would satisfy him or her; courts have found that objections on these grounds are

presumptively invalid. See, e.g., Hanlon v. Chrysler Corp., 150 F.3d 1011, 1027 (9th Cir. 1998)

(“Of course it is possible, as many of the objectors' affidavits imply, that the settlement could

have been better. But this possibility does not mean the settlement presented was not fair,


- 13 -

reasonable or adequate.”).

Despite this, if Mr. Sanders continues to believe he can do better on his own, if this Court

permits it, Class Counsel is happy to offer Mr. Sanders further time to opt-out of the settlement,

up to the date of the hearing on the Motion for Final Approval, so that he then can pursue

whatever case he believes he might have against the credit union on his own and have the

opportunity to try to accomplish a better result.

In sum, the reaction to the proposed settlement to date by class members has been

overwhelmingly favorable, with 99.98% electing not to opt out, and more than 99.99% to date

not objecting.

B. The Court Should Approve the Plan of Allocation.

“Like the analysis above of the Settlement, the plan of allocation must also meet the

standards of fairness, reasonableness, and adequacy.” In re Mills Corp. Sec. Litig., 265 F.R.D. at

258. “In evaluating a plan of allocation, the opinion of qualified counsel is entitled to significant

respect.” Id. “The proposed allocation need not meet standards of scientific precision, and given

that qualified counsel endorses the proposed allocation, the allocation need only have a

reasonable and rational basis.” Id.

Here, the plan of allocation, under which each class member will receive his or her pro

rata share of the net settlement fund, is by definition fair, reasonable, and rational. Each class

member is being treated in proportion to their harm, receiving his or her portion of the fund

which is proportional to the amount of improper fees he or she paid. Further, the class members

need not come forward to make claims—the money will be distributed to them with no

obligation for action. Accordingly, the plan of allocation should be approved.

C. The Requested Fee Award and Litigation Costs Should Be Approved.

Class counsel requests that the Court approve its application for attorneys’ fees in the

amount of one-third (33.33%) of the settlement fund, which amounts to $566,666.67, and makes

its application alternatively under the percentage-of-the-recovery and lodestar approaches.

1. The Requested Fee is Supported Under the Percentage-of-the-Recovery Approach.

“One-third of the recovery appears to be a fairly common percentage in contingency fee


- 14 -

cases, especially where the total settlement amount is not so large as to produce a windfall to

Plaintiffs’ attorney(s) based solely on the number of class members.” Faile v. Lancaster Cty.,

2012 U.S. Dist. LEXIS 189610, at *27 (D.S.C. 2012); Smith v. Krispy Kreme Doughnut Corp.,

2007 U.S. Dist. LEXIS 2392, at *6 (M.D.N.C. 2007) (“In this jurisdiction, contingent fees of

one-third (33.3%) are common.”). Courts in this Circuit typically apply the following seven

factors in determining an appropriate percentage of recovery: “(1) the results obtained for the

Class; (2) objections by members of the Class to the settlement terms and/or fees requested by

counsel; (3) the quality, skill, and efficiency of the attorneys involved; (4) the complexity and

duration of the litigation; (5) the risk of nonpayment; (6) public policy; and (7) awards in similar

cases.” In re Mills Corp. Sec. Litig., 265 F.R.D. at 260.

a. The Results Obtained for the Class.

“[A] central advantage of the percentage of the fund method is that it looks to the results

actually obtained by Lead Counsel rather than just the number of hours they expended, which

should be an important point in awarding fees.” In re Mills Corp. Sec. Litig., 265 F.R.D. at 261.

The results obtained for the class are excellent by any measure: a payment of

$1,700,000—which represents 37.17% of the total recovery the class could expect to recover

should it have prevailed at trial—into a common fund. No class member will need to submit a

claim, or do anything, to receive payment, and no money will revert to Defendant. Accordingly,

this factor weighs in favor of the fee request.

b. Objections by Members of the Class to the Settlement Terms and/or Fees Requested by Counsel.

Where very few class members have objected to the settlement, courts have found that

this factor weighs in favor of settlement. In re Mills Corp. Sec. Litig., 265 F.R.D. at 261.

As stated, to date only one class member has objected. The overwhelming majority of class

members are in favor of the settlement. Accordingly, this factor weighs in favor of the fee

request.

c. The Quality, Skill, and Efficiency of the Attorneys Involved.

The qualifications of Class Ccounsel, as noted, are set forth in the Declarations of

Richard McCune and Taras Kick. Both Mr. McCune and Mr. Kick have been appointed class


- 15 -

counsel in numerous consumer class actions, and also actually have successfully tried class

actions to judgment. (McCune Decl. ¶¶ 2-5; Kick Decl. ¶¶ 2, 3, 5.) The quality, skill, and

efficiency of the attorneys involved in this case are perhaps best illustrated by the excellent result

that class counsel have obtained for the class members, in a very complicated and esoteric area

of law. Counsel have vigorously opposed a motion to dismiss, engaged in written discovery,

and deposed SECU Maryland’s Person Most Knowledgeable on overdraft issues, and also have

kept their combined costs in this matter to date very efficient.

Accordingly, this factor weighs in favor of approval of the fee request.

d. The Complexity and Duration of the Litigation.

As noted, the litigation was complex, involving the construction of two contracts and

application of an esoteric federal regulation, and while the case did not reach class certification,

the parties did fully brief a motion to dismiss, which will come back on calendar if the settlement

is not approved. In addition, Plaintiff deposed SECU Maryland’s Person Most Knowledgeable

on overdraft issues, and Defendant deposed Plaintiff. The litigation was of sufficient duration

for the parties to fully comprehend the strengths and weaknesses of this case. Accordingly, this

factor also weighs in favor of approval of the fee request.

e. The Risk of Nonpayment.

“The risk of nonpayment incurred by Lead Counsel is evident in the fact that they

undertook this action on an entirely contingent fee basis.” In re Mills Corp. Sec. Litig., 265

F.R.D. at 263. “Indeed, counsel bore a substantial risk of nonpayment…. [t]he outcome of the

case was hardly a foregone conclusion, but nonetheless counsel accepted representation of the

plaintiff and the class on a contingent fee basis, fronting the costs of litigation.” Id. (quotation

omitted). As class counsel took this case entirely on a contingency basis, they faced a significant

risk of receiving nothing for their efforts. Further, they forsake other work they could have

taken. ((McCune Decl. ¶¶ 11, 12; Kick Decl. ¶¶ 9.)

Accordingly, this factor also weighs in favor of the fee request.

f. Public Policy.

“The public benefits when capable and seasoned counsel undertake private action” to


- 16 -

enforce laws which protect the public. In re Mills Corp. Sec. Litig., 265 F.R.D. at 263. “The

cost and difficulty in doing so naturally stands as a deterrent from doing so, and one object of an

award of attorneys’ fees should be to counteract this deterrence and incentivize competent

attorneys to pursue these cases when necessary.” Id. Here, the consumers who banked with

Defendant would have no practical recourse against Defendant’s practice of assessing overdraft

fees when its customers have enough money in their accounts to pay for the transaction at issue

were it not for this lawsuit. As the amount of a single overdraft fee is approximately $30,

litigating this case in anything but a class action would be a sheer impossibility. Accordingly,

this factor also weighs in favor of the fee request.

g. Awards in Similar Cases.

As noted, in similar cases, courts in this Circuit have awarded one-third of the common

fund to class counsel. See Faile v. Lancaster Cty., 2012 U.S. Dist. LEXIS 189610, at *27

(D.S.C. 2012); Smith v. Krispy Kreme Doughnut Corp., 2007 U.S. Dist. LEXIS 2392, at *6

(M.D.N.C. 2007). Additionally, very similar overdraft fee cases have resulted in fee awards of

one-third or more. See, e.g., Towner v. 1st MidAmerica Credit Union, No. 3:15-cv-1162 (S.D.

Ill. 2017) (final approval granted in November 2017, fees awarded of one-third); Lane v. Campus

Federal Credit Union, Case No. 3:16-cv-00037 (final approval granted in August 2017, with fees

awarded of one-third); Hernandez v. Point Loma Credit Union, San Diego County Superior

Court, Case No. 37-2013-00053519 (final approval granted with fees awarded of about 48%);

Gray v. Los Angeles Federal Credit Union, Los Angeles County Superior Court, Case No.

BC625500 (final approval granted in June 2017, with fees awarded of one-third); Moralez v.

Kern Schools Federal Credit Union, Kern County Superior Court, Case No. BCV-15-100538

(final approval granted in June 2017, with fees awarded of one-third); Manwaring v. Golden 1

Credit Union, Sacramento County Superior Court, Case No. 34-2013-00142667 (final approval

granted in December 2015, with fees awarded of one-third). Those, like this case, are all

consumer class action cases involving overdraft fee issues against a credit union, and the

complexity of the issues in those overdraft cases was very similar to the complexity in this case.

Accordingly, this factor weighs in favor of approval of the fee award.


- 17 -

2. The Request Fee is Also Supported Under the Lodestar Approach.

A lodestar methodology also supports the requested fee. “When using lodestar method as

a ‘cross-check,’ the Court needs not apply the ‘exhaustive scrutiny’ typically mandated, and the

Court may accept the hours estimates provided by Lead Counsel.” In re Mills Corp. Sec. Litig.,

265 F.R.D. at 264 (citing Jones v. Dominion Res. Servs., 601 F. Supp. 2d 756, 765-66 (S.D. W.

Va. 2009)). “To apply the lodestar method, the Court determines the attorneys’ fees award by

multiplying the number of hours reasonably worked by a reasonable hourly billing rate for such

services given the geographical area, the nature of the services provided, and the experience of

the lawyer.” Id.

Class Counsel’s lodestar to date is $330,872.50. (McCune Decl. ¶ 15; Kick Decl. ¶ 8.)

This does not count further time which will be spent on this matter, including preparing for and

appearing at the Motion for Final Approval, as well as working with the claims administrator on

post-approval work (should this Court approve the proposed settlement). The requested fee

award of $566,666.67 therefore represents only a multiplier of about 1.71x, which falls well

within precedent in this Circuit. See Jones, 601 F. Supp. 2d at 766 (“Courts have generally held

that lodestar multipliers falling between 2 and 4.5 demonstrate a reasonable attorneys’ fee.”); In

re Mills Corp. Sec. Litig., 265 F.R.D. at 264 (same); Goldenberg v. Marriott PLP Corp., 33 F.

Supp. 2d 434, 439 n.6 (D. Md. 1998) (multiplier of 3.6 approved); Newberg on Class Actions §

14.03 at 14-14 (noting that multipliers of from one to four are common). A multiplier is

warranted here, as the case was complex, requiring construction of two consumer contracts and

federal regulations applied to banking law; the action was contested; counsel have not been paid

a penny to date despite that this case will have been pending for more than two years by the time

of the hearing on the Motion for Final Approval; counsel forsaked other work to take this case;

and, counsel bore considerable risk of total loss. (McCune Decl. ¶¶ 11, 12; Kick Decl. ¶ 9.)

D. Class Counsel’s Request for Costs Should Be Approved.

“The Court is authorized to award costs that are ‘reasonable in nature . . . from the

common fund.” In re Mills Corp. Sec. Litig., 265 F.R.D. at 265 (quoting In re Microstrategy,

Inc., 172 F. Supp. 2d 778 (E.D. Va. 2001)). Class counsels’ costs, which have been enumerated


- 18 -

in the Declarations of Richard McCune and Taras Kick to date total $26,006.91, and anticipate

an additional $800 through the date of the final approval hearing, for a total requested

reimbursement of costs of $26,806.91. (McCune Decl. ¶ 17; Kick Decl. ¶ 16.) The costs were

incurred sensibly in furtherance of this litigation.

E. The Proposed Cy Pres Recipient Should Be Approved.

In the Motion for Preliminary Approval, and in the Settlement Agreement, counsel for

Plaintiff stated that they would propose that Public Citizen, a non-profit organization that

represents the interests of consumers (see Declaration of Robert Weissman in Support of Motion

for Final Approval (“Weissman Decl.”) ¶ 4), be the cy pres recipient in this case. Public Citizen

consistently engages in advocating for consumer rights, including with regard to financial

institutions. (Weissmann Decl. ¶¶ 4, 9, 10.) It intends to use the money from the cy pres in this

matter, if approved by the Court, to support its research and advocacy supporting strong

protections for consumers, including consumers in Illinois. (Weissmann Decl. ¶ 3).1

F. The Class Representative’s Service Award Should Be Approved

The proposed class representative’s service award of $10,000 is within the range of

reasonableness and should be approved. Manuel v. Wells Fargo Bank, Nat'l Ass'n, 2016 U.S.

Dist. LEXIS 33708, at *18 (E.D. Va. 2016) (“the Court finds the $10,000 service award

appropriate”); Kay Co. v. Equitable Prod. Co., 749 F. Supp. 2d 455, 473 (S.D. W. Va. 2010)

(awarding service awards of $15,000 to each named plaintiff). “Serving as a class representative

is a burdensome task and it is true that without class representatives, the entire class would

receive nothing.” Id. The class representative, Ms. Ketner, was very helpful to this matter, at all

times available. She met with Class Counsel for two days to prepare for her deposition;

appeared at and sat for her deposition; provided documents in this matter; and was responsive to

all of Class Counsel's requests, and being ready, willing and able to sit for trial if required. (Kick

1 Neither plaintiff, nor plaintiff’s counsel, nor SECU Maryland, nor defense counsel will benefit financially in any way from the cy pres award. Plaintiff’s counsel are members of Public Citizen, but have no control over how Public Citizen spends its money. Additionally neither class counsel is on a list of firms used by it for litigation. (Kick Decl. ¶ 19; McCune Decl. ¶ 21.)


- 19 -

Decl. ¶ 18.)

G. The Settlement Class Should Be Finally Certified.

Class certification is proper if the proposed class, the proposed class representative, and

the proposed class counsel satisfy the numerosity, commonality, typicality, and adequacy of

representation requirements of Rule 23(a). Fed. R. Civ. P. 23(a)(1-4). In addition to meeting the

requirements of Rule 23(a), a plaintiff seeking class certification must also meet at least one of

the three provisions of Rule 23(b). When a plaintiff seeks class certification under Rule

23(b)(3), the representative must demonstrate that common questions of law or fact predominate

over individual issues and that a class action is superior to other methods of adjudicating the

claims. Fed. R. Civ. P. 23(b)(3); Amchem Prods. v. Windsor, 521 U.S. 591, 615-616 (1997).

Because Plaintiff meets all of the Rule 23(a) and 23(b)(3) prerequisites, certification of the

proposed Class is proper.

1. The Requirement of Numerosity is Satisfied.

The first prerequisite of class certification is numerosity, which requires “the class [be] so

numerous that joinder of all members is impractical.” Fed. R. Civ. P. 23(a)(1). There is no

specific number of class members required, though the numerosity requirement is typically

satisfied when the class comprises at least forty members. Chisolm v. TranSouth Fin. Corp., 184

F.R.D. 556, 560 (E.D. Va. 1999) (citing “An Overview of Federal Class Actions: Past, Present

and Future,” Federal Judicial Center Education & Training Series, (2d Ed. 1977) at 22). In this

case, the number is over 30,000. (Olsen Decl. ¶ 10.) Numerosity is satisfied.

2. The Requirement of Commonality is Satisfied.

The second requirement for certification requires that “questions of law or fact common

to the class” exist. Fed. R. Civ. P. 23(a)(2). Commonality is demonstrated when the claims of

all class members “depend upon a common contention . . . that is capable of classwide

resolution.” Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011). This requires that the

determination of the common question “will resolve an issue that is central to the validity of each

one of the claims in one stroke.” Id. “Even a single common question will do.” Dukes, 131 S.

Ct. at 2556. In other words, commonality exists where a question of law linking class members


- 20 -

is substantially related to resolution of the litigation even where the individuals may not be

identically situated. Morris v. Wachovia Sec., Inc., 223 F.R.D. 284, 292 (E.D. Va. 2004)

(“Commonality is a liberal standard, and the fact that there are some factual variances in

individual grievances among class members does not defeat commonality.”); Central Wesleyan

College v. W.R. Grace & Co., 143 F.R.D. 628, 636 (D.S.C. 1992), aff'd 6 F.3d 177 (4th Cir.

1993) (stating that commonality “does not require that all, or even most, issues be common, nor

that common issues predominate, but only that common issues exist.”).

Here, not only do there exist common questions of law and fact, the common questions

predominate over any individual ones. The theories underlying the class claims involve a

uniform overdraft fee practice and uniform contractual terms. It is undisputed that Defendant

uniformly and systematically used what it calls the “available balance” to determine whether to

assess an overdraft fee on a transaction, as opposed to utilizing the actual money in the account

to make this determination. Therefore, answering whether Defendant breached its contract terms

in doing that will by definition predominate for all class members. Additionally, it is also

undisputed that the operative terms regarding the overdraft fee program, and specifically the

balance calculation to be used to determine the assessment of overdraft fees, as set forth in the

Opt-In Contract (e.g. enough money in the account to cover a transaction) were provided to all

class members. (First Amended Complaint at ¶¶ 23-24.)

As such, the commonality requirement is satisfied.

3. The Requirement of Typicality is Satisfied.

Rule 23 next requires that the class representative’s claims be typical of those of the class

members. Fed. R. Civ. P. 23(a)(3). “The ‘typicality’ requirement focuses on the consideration

of whether the representative’s interests are truly aligned and consistent with those of the class

members.” Smith v. B & O R.R. Co., 473 F. Supp. 572, 581 (D. Md. 1979). “Factual differences

will not necessarily render a claim atypical if the representative’s claim arises from the same

event, practice or course of conduct that gives rise to the claims of the class, and is based on the

same legal theory.” Id. “For example, it has been held that the typicality requirement may be

satisfied even though varying fact patterns support the claims or defenses of individual class


- 21 -

members, see, e.g., Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 94 S. Ct. 2140, 40 L. Ed. 2d 732

(1974), and even though there is a disparity between the damages claimed by the representative

and those claimed by the other members of the class.” Id.

Plaintiff’s claims are not only typical of those of the other putative class members, they

are virtually indistinguishable. There is no dispute that Plaintiff entered into the uniform and

standardized Opt-In Contract and that she was assessed overdraft fees when there was enough

money in the account (i.e., the ledger balance) to complete the requested transaction.

Therefore, typicality is satisfied.

4. The Requirement of Adequate Representation is Satisfied.

The final Rule 23(a) prerequisite requires that the proposed class representative has

and will continue to “fairly and adequately protect the interests of the class.” Fed. R. Civ. P.

23(a)(4).

As stated in this district:

The “fairness and adequacy of representation” requirement of 23(a)(4) goes to the legal capacity of the plaintiff's counsel to represent the class as well as to the ability of the representative himself to pursue a course of conduct beneficial to the absent class members. In determining whether an aspiring representative or, as in this case, a group of representatives meets this standard, courts have found several factors to be significant. First, most courts have found that the representative must have interests sufficiently identical to those of the absent class members so that he will vigorously prosecute the suit on their behalf. See 1 H. Newberg, Supra, § 1120. Further, some courts have stated that the plaintiff’s attorney must be qualified, experienced, and generally able to conduct the proposed litigation. See, e.g., Amos v. Board of Directors of Milwaukee, 408 F. Supp. 765, 774-75 (E.D.Wis.), aff'd, 539 F.2d 625 (7th Cir. 1976); 7 Wright & Miller, Supra, § 1766. Finally, some courts have required a showing that the representatives have interests which are not antagonistic or in conflict with the objective of those he purports to represent. See, e.g., Gonzales v. Cassidy, 474 F.2d 67 (5th Cir. 1973); Feliciano v. Romney, 363 F. Supp. 656 (S.D.N.Y.1973).

Smith v. B & O R.R. Co., 473 F. Supp. 572, 581 (D. Md. 1979).

As with the typicality requirement, adequacy requires that the interests of the named

plaintiffs be aligned with the unnamed class members to ensure that the class representative has

an incentive to pursue and protect the claims of the absent class members. See Amchem, 521

U.S. at 626 n. 20, 117 S.Ct. 2231 (“The adequacy-of-representation requirement ‘tends to merge’

with the commonality and typicality criteria of Rule 23(a), which ‘serve as guideposts for

determining whether . . . maintenance of a class action is economical and whether the named


- 22 -

plaintiff’s claim and the class claims are so interrelated that the interests of the class members

will be fairly and adequately protected in their absence.’”)

As stated, proposed Class Counsel, Richard McCune of McCune Wright Arevalo, LLP,

and Taras Kick of The Kick Law Firm, APC, both have significant class action, litigation, and

trial experience, including a very large body of experience in class action overdraft fees

litigation, are competent, and have been competent in representing the class. (McCune Decl. ¶¶

2-5; Kick Decl. ¶¶ 2, 3, 5.) The interests of Plaintiff Mary Ketner are not antagonistic to those

of the other Class members; her interests are wholly aligned because she was charged overdraft

fees when her account had a positive ledger balance. Further, she understands that she is

pursuing this case on behalf of all class members similarly situated and understands she has a

duty to protect the absent Class members. (Ketner Decl. ¶ 2-3; Kick Decl. ¶ 18.) She has

actively participated in the litigation by frequently conferring with class counsel about the case

and its status, assisting class counsel by gathering documents and other information, testifying at

deposition, and being prepared and willing to testify at trial on behalf of the class if necessary.

(Ketner Decl. ¶ 2-3; Kick Decl. at ¶ 18.)

5. Ascertainability is Satisfied.

The Fourth Circuit has “recognized that Rule 23 contains an implicit threshold

requirement that the members of a proposed class be ‘readily identifiable,’” which has been

described as an “‘ascertainability’ requirement.” EQT Prod. Co. v. Adair, 764 F.3d 347, 358

(4th Cir. 2014). Under this requirement, “[a] class cannot be certified unless a court can readily

identify the class members in reference to objective criteria.” Id. Here, not only is the class

ascertainable by objective standards, but its exact constituency already actually has been

ascertained, with 99.3% of class members having successfully received the direct notice ordered

by this Court. (Olsen Dec. ¶ 10; KCC Decl. ¶ 11.)

6. The Proposed Settlement Class Meets the Requirements of Rule 23(b)(3).

Once the prerequisites of Rule 23(a) have been met, a plaintiff must also demonstrate

that she satisfies the requirements of Rule 23(b). Id. To certify a class under Rule 23(b)(3), the

plaintiff must show that (1) the common questions of law and fact predominate over questions


- 23 -

affecting only individuals and (2) the class action mechanism is superior to other available

methods for adjudicating the controversy. Fed. R. Civ. P. 23(b)(3).

a. Common Questions of Law and Fact Predominate.

The predominance requirement questions whether the proposed class is “sufficiently

cohesive to warrant adjudication by representation.” Amchem, 521 U.S. at 623. “Where the

damages are capable of mathematical or formula computation, the class action comes rather

close to an ideal one and there is certainly no question of the lack of ‘predominance’ of the

common questions.” Windham v. American Brands, Inc., 565 F.2d 59, 68 n.22 (4th Cir. 1977)

(quoting Practicing Law Institute, Current Problems In Federal Civil Practice at 491 (1975)).

“Critically, Rule 23(b)(3)’s commonality-predominance test is qualitative rather than

quantitative.” Stillmock v. Weis Mkts., Inc., 385 F. App'x 267, 273 (4th Cir. 2010) (citing

Gunnells v. Healthplan Servs., 348 F.3d 417, 429 (4th Cir. 2003); see also Murray v. GMAC

Mortg. Corp., 434 F.3d 948, 953 (7th Cir. 2006) (denying class certification was improper where

the primary issue was the value of an offer to the consumer in aggregate, i.e., a normal customer,

and thus did not require individualized analysis); Smilow v. Southwestern Bell Mobile Systems,

Inc., 323 F.3d 32, 40 (1st Cir. 2003) (“The individuation of damages in consumer class actions is

rarely determinative under Rule 23(b)(3). Where . . . common questions predominate regarding

liability, then courts generally find the predominance requirement to be satisfied even if

individual damages issues remain.”) . . . Klay v. Humana, Inc., 382 F.3d 1241, 1255 (11th Cir.

2004) ("Common issues of fact and law predominate if they have a direct impact on every class

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

monetary relief.") (internal quotation marks and alteration marks omitted). That is certainly the

case here. (Olsen Decl. ¶¶ 6-10.)

As the Supreme Court most recently explained:

When one or more of the central issues in the action are common to the class and can be said to predominate, the action may be considered proper under Rule 23(b)(3) even though other important matters will have to be tried separately, such as damages or some affirmative defenses peculiar to some individual class members.

Tyson Foods, Inc. v. Bouaphakeo, 136 S.Ct. 1036, 1045 (2016). Both the contract claims and

violation of Regulation E claims are subject to common proof, and thus it would be more


- 24 -

efficient to decide those common issues via the class action mechanism.

The primary issues on liability in this case are class-wide. As SECU does not dispute its

practice of charging fees based on the available balance while the ledger balance contains

enough money to pay for the transaction, the issue is whether the contract permitted it to do so.

Further, under Maryland law, the determination of the parties’ intent in entering a contract is a

question of objective intent. Wells v. Chevy Chase Bank, F.S.B., 363 Md. 232, 251, 768 A.2d

620, 630 (2001) (“Under the objective interpretation principle, where the language employed in a

contract is unambiguous, a court shall give effect to its plain meaning and there is no need for

further construction by the court.”). For this reason, among others, courts in this circuit have

granted class certification for classes alleging breach of a common contract. James Foster &

Stone Logistics, Inc. v. CEVA Freight, LLC, 272 F.R.D. 171, 176 (W.D.N.C. 2011) (“Plaintiffs

maintain that if CEVA has breached certain provisions of the operating agreement by failing to

comply with the federal regulations, it has breached those provisions in an identical manner for

all class members.”)

The common questions for claims for violation of Regulation E also predominate over

any individualized issues. The Opt-In contract states, “[a]n overdraft occurs when you do not

have enough money in your account to cover a transaction, but we pay it anyway.” (FAC, Ex. 2.)

The central liability question—whether the above language describes “in a clear and readily

understandable way” SECU’s actual overdraft service -- predominates over any individualized

questions.

b. This Class Action is the Superior Method of Adjudication.

Rule 23(b)(3) also requires that a certifying court find that “a class action is

superior to other available methods for fairly and efficiently adjudicating the controversy.”

Fed. R. Civ. P. 23(b)(3); see also Fisher v. Va. Elec. & Power Co., 217 F.R.D. 201, 213 (E.D.

Va. 2003) (“The superiority inquiry tests whether a class action is superior to other available

methods for fairly and efficiently adjudicating the controversy.”) “The rule requires the court to

find that the objectives of the class-action procedure really will be achieved in the particular

case. In determining whether the answer to this inquiry is to be affirmative, the court initially


- 25 -

must consider what other procedures, if any, exist for disposing of the dispute before it.”

Stillmock v. Weis Mkts., Inc., 385 F. App'x 267, 274 (4th Cir. 2010) (quoting 7AA Charles Alan

Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure § 1779 (3d ed.

2005)).

As the Supreme Court stressed in Amchem, 521 U.S. at 617: The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights. A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone’s (usually an attorney’s) labor. As Judge Posner has stated, “[t]he realistic alternative to a class action is not 17 million

individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30.” Carnegie

v. Household Int’l, Inc., 376 F.3d 656, 661 (7th Cir. 2004). Here, under Judge Posner’s

formulation, there is no feasible alternative to a class action, as the amount in each instance is at

most an overdraft fee, something over which, as Judge Posner stated, only a fanatic or lunatic

would pursue litigation in a non-class action context. There is no question that a large number of

class members have suffered damages in an amount that could not justify or sustain individual

lawsuits, and the only choice is between a class action and no action. Plaintiff is not aware of

any additional suits instituted by or against the class members concerning the subject matter of

the settlement. Superiority is met.

As shown, all factors weigh in favor of class certification.

V. Conclusion.

Plaintiff respectfully requests that the Court grant final approval of the settlement, the

request for attorney’s fees and costs, the request for approval of class administrator expenses,

and the request for a service award to the class representative, in the entirety.

Dated: November 13, 2017 Respectfully submitted,

/s/ Taras Kick Taras Kick, Pro Hac Vice [email protected] Robert Dart, CA State Bar #264060* [email protected] THE KICK LAW FIRM, APC


- 26 -

815 Moraga Drive Los Angeles, California 90049 Telephone: (310) 395-2988

Facsimile: (310) 395-2088 Richard D. McCune, Pro Hac Vice [email protected] Jae (Eddie) K. Kim, CA State Bar #236805* [email protected] MCCUNE • WRIGHT • AREVALO LLP 3281 East Guasti Road, Suite 100 Ontario, California 91761 Telephone: (909) 557-1250 Facsimile: (909) 557-1275

Robert K. Jenner, Esquire (Bar No. 04165) Lindsey M. Craig, Esquire (Bar No. 29522) Adam P. Janet, Esquire (Bar No. 11222) JANET, JENNER & SUGGS, LLC 1777 Reisterstown Road, Suite 165 Baltimore, Maryland 21208 Telephone: (410) 653-3200 Facsimile: (410) 653-6903 [email protected] [email protected] [email protected]

Counsel for Plaintiff Mary Ketner and the Putative Class


- 27 -

CERTIFICATE OF SERVICE

I hereby certify that on November 13, 2017, a copy of the foregoing document was

electronically filed using the CM/ECF system which will send a notice of electronic filing to all

CM/ECF participants.

Respectfully submitted, /s/ Robert Dart_____________


Documents

UNITED STATES DISTRICT COURT DISTRICT OF MARYLAND€¦ · (KCC Decl. ¶ 11.) Further, the time for class members to opt-out of the proposed settlement being presented to this Court