Bhatia v. Silvergate Bank

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 IN RE: SILVERGATE CAPITAL Case No.: 3:23-cv-01406-RBM-BLM CORPORATION 12 ORDER DIRECTING PARTIES TO 13 FILE SUPPLEMENTAL BRIEFING ON MOTION FOR PRELIMINARY 14 APPROVAL 15 [Doc. 66] 16 17 18 Pending before the Court is Plaintiffs’ Motion for Preliminary Settlement Approval 19 (“Preliminary Approval Motion”). (Doc. 66.) In their Preliminary Approval Motion 20 Plaintiffs request that this Court grant preliminary approval of the proposed settlement and 21 defer its approval of the notice and allocation plans, including the separate notice required 22 under the Class Action Fairness Act (“CAFA”). (Id. at 30–33.) Having reviewed the 23 submissions, the Court finds that additional briefing is warranted. 24 Preliminary approval is appropriate when “the court will likely be able to” grant final 25 approval under Federal Rule of Civil Procedure (“Rule”) 23(e). Fed. R. Civ. P. 26 23(e)(1)(B). When parties seek approval of a class settlement before class certification, 27 courts analyze “both the propriety of the certification and the fairness of the settlement.” 28 Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). Any fairness determination 1 requires the Court to “focus[ ] primarily upon whether the particular aspects . . . that directly 2 lend themselves to pursuit of self-interest by class counsel and certain members of the 3 class—namely attorney’s fees and the distribution of any relief, particularly monetary 4 relief, among class members—strictly comport with substantive and procedural standards 5 designed to protect the interests of class members.” Id. at 960. At the preliminary approval 6 stage, “the settlement need only be potentially fair.” Acosta v. Trans Union, LLC, 243 7 F.R.D. 377, 386 (C.D. Cal. May 31, 2007). 8 Notwithstanding Rule 23(e)’s requirements for preliminary approval, Plaintiffs do 9 not provide any information as to the proposed notice and allocation plans or adequate legal 10 authority to support its contention that this Court may preliminarily approve a class action 11 settlement without such proposed plans.1 Nor have Plaintiffs provided the Court with 12 sufficient information regarding the proposed class or their request for attorneys’ fees. 13 Accordingly, the Court ORDERS the Parties to submit supplemental briefing and 14 additional authority on: 15 1. The Parties’ request for preliminary approval of the proposed settlement without a 16 proposed notice plan and without a proposed allocation plan. 17 2. The Parties’ request to postpone their notice obligations under CAFA. 18 3. To the extent possible, any coordination efforts the Parties intend to pursue with 19 counsel for the related actions, any anticipated effect the pending settlements in such 20 related action may have on the instant proposed settlement, or any additional details 21 that may help the Court preliminarily assess whether it will be likely to approve the 22 proposed settlement and certify the class under Rule 23. 23 24 25 26 1 Plaintiffs cite to several cases where district courts have deferred approval of the class 27 notice plan. However, the Court notes that these cases do not reflect the circumstances of this action or its procedural posture. Moreover, Plaintiffs fail to provide any legal authority 28 1 || 4. Any estimates of the proposed class size, any differences among the proposed class 2 members’ claims or lack thereof, or any anticipated or proposed exclusions to the 3 settlement class. If such estimates are not possible, the Parties should explain any 4 plans for these determinations. 5 || 5. Plaintiffs’ proposed request for attorneys’ fees.?_ While Plaintiffs assert that “the 6 settlement agreement leaves the determination and allocation of attorney fees to the 7 sole discretion of the trial court,” they also state that their counsel will submit a fee 8 application seeking a percentage of the fund and “[n]othing about the proposed fee 9 award gives reason to doubt the fairness of the settlement.” (Doc. 66 at 29-30.) 10 Plaintiffs are therefore directed to provide more information or argument regarding 11 the reasonableness of their proposed fee award. See Fed. R. Civ. P. 23(e)(2)(D) 12 (requiring courts to consider “any proposed award of attorney’s fees, including 13 timing of payment’). 14 For the reasons stated above, the Court ORDERS the Parties to file a supplemental 15 brief, jointly or separately, consistent with this Order on or before May 29, 2025. 16 IT IS SO ORDERED. 17 || DATE: May 12, 2025 18 1 Fit mivls, Mpitiryyys D_ 20 HON. RUTH BERMUDEZ MONTENEGRO UNITED STATES DISTRICT JUDGE 21 22 23 24 25 In the proposed settlement agreement, the Parties agree that Defendants will not object to Plaintiffs’ counsel’s fees request if it is under $3.3 million “exclusive of litigation costs 27 || and expenses, and service awards.” (Doc. 61-6 at 14.) Still, Plaintiffs have not explained whether they expect to request an amount lower that this asserted maximum or whether such an amount 1s reasonable under the applicable standards of law.