Barbara Waldrup v. Countrywide Financial Corporation, 2:13-cv-08833

Background

This is a class action against Countrywide/Bank of America and related entities for allegedly fraudulent appraisal practices (UCL and RICO claims); Waldrup, Reaster, Murphy, and Elizabeth Williams are named plaintiffs and court-appointed class representatives.
The parties negotiated a settlement memorandum (Nov. 4, 2019) and submitted a Settlement Agreement for preliminary approval (filed Feb. 19, 2020) providing $250 million (plus up to $2.5M admin) to ~2.3M class members, no proof-of-claim required; class reps proposed $15,000 incentive awards; attorneys' fees capped at 25% of the common fund.
Three of the four class representatives (Waldrup, Reaster, Murphy) signed the Settlement Agreement; Williams did not sign and objected to the settlement, arguing it undercompensates the class and complaining about representative involvement in negotiations.
Class counsel moved to remove Williams as a class representative and to withdraw from representing her individually (while remaining class counsel) because of an asserted breakdown in the attorney-client relationship and a conflict with the class (filed Feb. 19, 2020); defendants supported the motion.
The court held a telephonic hearing (including in-camera argument from Williams and counsel), found an attorney-client breakdown and a resulting conflict between Williams and the class, and determined removal would not prejudice the class because three other appointed representatives remain and have signed the settlement.
The court granted the motion: Williams was removed as class representative and class counsel was permitted to withdraw from representing Williams in any capacity other than as class counsel should she remain a class member.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Williams should be removed as a class representative under Rule 23(a)(4) for lack of adequacy/conflict	Class counsel: Williams' persistent objections and breakdown in the attorney-client relationship put her in fundamental conflict with the class and preclude adequacy	Defendants: Supported removal (agree settlement is fair and removal is appropriate)	Court removed Williams, finding a conflict and attorney-client breakdown; other class reps remain to represent class
Whether class counsel may withdraw from representing Williams individually while remaining class counsel	Class counsel: Withdrawal warranted because counsel cannot adequately represent a client who objects to a settlement counsel deems in the class's best interest	Defendants: Supported counsel's position	Court permitted class counsel to withdraw from representing Williams in any individual capacity (except as class counsel if she stays in class)

Key Cases Cited

Evon v. Law Offices of Sidney Mickel, 688 F.3d 1015 (9th Cir. 2012) (two-prong adequacy inquiry: conflicts and vigorous prosecution)
Hanlon v. Chrysler Corp., 150 F.3d 1011 (9th Cir. 1998) (class representative adequacy factors)
Nunez v. BAE Sys. San Diego Ship Repair Inc., 292 F. Supp. 3d 1018 (S.D. Cal. 2017) (removal warranted where representative objects to settlement counsel deems fair)
Heit v. Van Ochten, 126 F. Supp. 2d 487 (W.D. Mich. 2001) (counsel cannot continue to represent a class representative who objects to a settlement counsel supports)
Brown v. Am. Airlines, Inc., 285 F.R.D. 546 (C.D. Cal. 2011) (fundamental conflict between representative and class precludes adequacy)