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Kimber Baldwin Designs, LLC v. Silv Communications, Inc.

United States District Court, S.D. Ohio, Western Division

November 13, 2017

KIMBER BALDWIN DESIGNS, LLC, Individually and on behalf of all others Similarly situated, Plaintiff,


          Timothy S. Black, Judge.


         This civil action is before the Court on the motion of named Plaintiff Kimber Baldwin Designs, LLC for final settlement approval (Doc. 36); Class Counsel's motion for attorneys' fees, expense reimbursement, and class representative award (Doc. 35); and the statements of counsel for both parties at the October 23, 2017 fairness hearing.

         On April 4, 2016, the named Plaintiff, on behalf of itself and all others similarly situated, commenced this civil action against Defendant Silv Communications, Inc. Plaintiff alleges Defendant violated federal law and engaged in fraud by changing the long-distance telephone services of various businesses without authorization. Specifically, Plaintiff alleged Defendant engaged in an unlawful practice known as “slamming” when it obtained recordings of employees of businesses answering “yes” to questions related to the business name, addresses and telephone number, but then manipulated those recordings to fabricate consent to switch to Defendant's long-distance telephone service. Premised on these allegations, the Complaint asserts claims for violations of the Wire or Radio Communications Act, fraud, unjust enrichment, and Ohio Telecommunications Fraud.

         During the required Rule 26 conference, counsel for both parties agreed to request a stay of this case to explore settlement. (Doc. 36 at 5). On January 19, 2017, the Court granted the parties' joint motion for a stay. The parties met three more times over the next few months and exchanged settlement proposals by telephone and email. (Id.) Plaintiff's counsel requested, and received, documents from Defendant for the purpose of evaluating liability and damages, including documents pertaining to Defendant's revenues, ownership structure, customers, complaints, refunds, and third-party vendors. (Id.) The parties eventually reached an agreement, and a final version of their written settlement agreement (“Settlement Agreement”) was executed on June 5, 2017.[1]

         The Settlement Agreement creates a $450, 000 Settlement Fund for the benefit of the Settlement Class, which is defined as:

All individuals and business in the United States that were switched to and billed by Silv Communications, Inc. for unlimited long-distance telephone service from January 1, 2012 to the date of the Order granting preliminary approval of the Settlement (June 13, 2017).

(Doc. 33-1 at 3).

         The Settlement Fund will cover payments to Class Members, costs of notice to the Class and administration of the settlement, reimbursement of Class Counsel's reasonable costs, expenses, and fees, as well as a contribution award for Plaintiff not to exceed $5, 000. (Doc. 33-1 at 3-4). Each Class Member submitting a valid claim shall receive an equal settlement payment not to exceed $120. (Doc. 33-1 at 4). Any leftover money shall revert to and belong to Defendant. (Id.)

         On June 13, 2017, the Court granted Plaintiffs' Unopposed Motion for Preliminary Approval of Settlement Agreement and Order Scheduling Fairness Hearing (the “Preliminary Approval Order”). (Doc. 34). The Preliminary Approval Order: (1) approved of the parties' settlement; (2) approved of the parties' proposed settlement notice; (3) approved of the parties' proposed class action settlement procedure; (4) appointed Plaintiff's counsel as Class Counsel, and (5) scheduled a fairness hearing for October 23, 2017 (after the close of the notice period).

         Following the Court's Preliminary Approval Order, on July 17, 2017, Defendant provided the Settlement Administrator with a list containing the name and last known address of each member of the Class as defined in the Settlement Agreement. (Doc. 36-2 at ¶ 6). After reviewing the list for completeness and accuracy, the Settlement Administrator sent notice of the settlement to 24, 131 class members. (Id. at ¶¶ 6-9). As of October 4, 2017, the Settlement Administrator had received 6, 428 undeliverable notices. (Id. at ¶ 11). Of those, 50 were returned with a forwarding address, and the Settlement Administrator remailed notices to the new address provided. (Id.) Of the forwarded notices, only nine were returned as undeliverable. (Id.) As of October 4, 2017, the Settlement Administrator had only received three valid requests for exclusion from the Class. (Id. at ¶ 15). As of October 4, 2017, the Settlement Administrator had received 1, 126 claim forms. (Id. at ¶ 16).

         On August 22, 2017, Class Counsel filed a motion for attorneys' fees, expense reimbursement, and class representative contribution award. (Doc. 35). On October 9, 2017, Plaintiff filed a motion for final approval of settlement. (Doc. 36). On October 23, 2017, the Court held a fairness hearing. There were no objections at the fairness hearing.

         II. ANALYSIS

         A. The Settlement Class is appropriate for Rule 23 certification.

         Plaintiff's motion for final approval asks the Court to certify the Settlement Class pursuant to Federal Rule of Civil Procedure 23. (Doc. 36 at 8-14). The benefits of a settlement can be realized only through the final certification of a settlement class. Wess v. Storey, 2011 U.S. Dist. LEXIS 41050, at * 17 (S.D. Ohio Apr. 14, 2011). The Court maintains broad discretion in deciding whether to certify a class. Id. After consideration of the Rule 23 factors, the Court finds it appropriate to certify the Settlement Class.

         1. Numerosity.

         Rule 23(a)(1) requires a plaintiff to demonstrate that “the class is so numerous that joinder of all members is impracticable.” While no specific number of class members is required to maintain a class action, “[w]hen class size reaches substantial proportions . . . the impracticability requirement is usually satisfied by the numbers alone.” In re Am. Med. Sys. Inc., 75 F.3d 1069, 1079 (6th Cir. 1996) (citation omitted). The Court finds the substantial size of the Settlement Class in this case easily satisfies the numerosity requirement.

         2. Commonality.

         Rule 23(a)(2) requires “questions of law or fact common to the class.” This requirement is interdependent with the impracticability of joinder requirement. In re Am. Med. Sys., Inc., 75 F.3d at 1080. Together, these tests form the conceptual basis for class actions. Id. The Sixth Circuit has explained:

The class-action was designed as an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only. Class relief is particularly appropriate when the issues involved are common to the class as a whole and when they turn on questions of law applicable in the same manner to each member of the class. In such cases, the class-action device saves the resources of both the courts and the parties by permitting an issue potentially affecting every class member to be litigated in an economical fashion under Rule 23.

Id. at 1076 (quoting General Telephone v. Falcon, 457 U.S. 147, 155 (1982)).

         Here, each Class Member's claim raises questions of law or fact that are common to the class, i.e. whether Defendant engaged in “slamming” and whether its conduct was unlawful. Because questions of law and fact are common to the class, Rule 23(a)(2) is satisfied.

         3. Typicality.

         Rule 23(a)(3) requires “the claims or defenses of the representative parties [shall be] typical of the claims or defenses of the class.” The typicality element is designed to assess “whether a sufficient relationship exists between the injury to the named plaintiff and the conduct affecting the class, so that the court may properly attribute a collective nature to the challenged conduct.” Sprague v. General Motors Corp., 133 F.3d 388, 399 (6th Cir. 1998). A plaintiff's claim is typical if it arises from the same event or practice or course of conduct that gives rise to the claims of other class members, and if the named plaintiff's claims are based on the same legal theory. In re Am. Med. Sys., Inc., 75 F.3d at 1082.

         Here, the issue of whether Plaintiff was “slammed” is common to all Settlement Class Members. By litigating this central liability issue, the Plaintiff can reasonably be expected to advance the interests of all Class Members. Accordingly, the typicality requirement of Rule 23(a)(3) is satisfied.

         4. Adequacy.

         Rule 23(a)(4) requires that “the representative parties will fairly and adequately protect the interest of the class.” The Sixth Circuit has counseled there are two criteria for determining this element: (1) the representatives must have common interests with the unnamed class members, and (2) it must appear that the representatives will vigorously prosecute the class action through qualified counsel. See Senter v. Gen. Motors Corp., 532 F.2d 511, 524-25 (6th Cir. 1976) (citation omitted).

         Here, Plaintiff and the Class Members are equally interested in obtaining compensation from Defendant for its alleged “slamming” practices. Accordingly, Plaintiff satisfies the first prong of the adequacy requirement. See Int'l Union, United Auto., Aerospace & Agr. Implement Workers of Am. v. Gen. Motors Corp., 497 F.3d 615, 626 (6th Cir. 2007) (“Class representatives are adequate when it appears that they will vigorously prosecute the interest of the class through qualified counsel . . . which usually will be the case if the representatives are part of the class and possess the same interest and suffer the same injury as the class members.”).

         Further, Plaintiff is represented by qualified counsel with experience prosecuting class actions. (See Docs. 35-2, 35-3). Accordingly, the second prong of the adequacy requirement is met. See Stout v. J.D. Byrider, 228 F.3d 709, 717 (6th Cir. 2000) (noting the second prong of Rule 23(a)(4) looks “to determine whether ...

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