*1383 Opinion
This is a consolidated appeal in one of several coordinated class actions that challenge wireless telephone carriers’ imposition of early termination fees (ETF’s) on customers seeking to cancel cellular telephone contracts. The defendant/respondent in this proceeding is Célico Partnership doing business as Verizon Wireless (Verizon). The case against Verizon (White v. Cellco Partnership (2008, No. RG04137699) (White)) proceeded to jury trial on June 16, 2008, in the Alameda County Superior Court on the claims of California class members. On July 8, 2008, after plaintiffs/respondents 1 had rested their case and the defense presentation had commenced, the parties advised the court that they had signed a memorandum of understanding outlining the terms of settlement. The settlement also encompassed claims of nationwide certified class claimants (excluding California class members) in a proceeding then pending before the American Arbitration Association (AAA), as well as two actions filed in federal district courts.
The terms of the settlement required Verizon to provide a common fund of $21 million, from which all legal fees and costs, including notice and administrative costs, would be paid and from which class members who had actually paid or had been assessed an ETF would be reimbursed, with pro rata reduction, if required, based on the number of claimants. The trial court granted preliminary approval on July 11, 2008. At a noticed hearing on November 6, 2008, appellants 2 objected to final approval, contending that notice of the settlement was inadequate, and that the settlement terms were not fair, reasonable and adequate. Appellants further challenge the propriety of incentive payments awarded to four named class representatives. The trial court approved the settlement. We affirm. In the published portions of this opinion, we discuss the adequacy of notice to the class and the propriety of incentive compensation to the class representatives.
I. Factual and Procedural Background
Verizon is a national cellular telephone service provider. In common with a number of other providers, Verizon charged ETF’s to subscribers who can-celled service agreements prior to the scheduled termination dates. Verizon charged a flat fee of $175, regardless of when the cancellation occurred in the contract term.
*1384
Plaintiffs in the underlying case initially filed suit on July 23, 2003, in Alameda County against Verizon and six other cellular service providers alleging that the ETF’s violated California consumer protection laws, and constituted unauthorized penalties under Civil Code section 1671.
3
(Marlowe v. AT&T Corporation
(Super. Ct. Alameda County, complaint filed 2003, No. RG03108118).) This action and others were coordinated under Judicial Council order (Code Civ. Proc., § 404.3; Cal. Rules of Court, rule 3.524)
4
before Judge Ronald Sabraw in the Alameda County Superior Court as the
Cellphone Termination Fee Cases
(JCCP No. 4332).
(Gatton,
supra,
Pursuant to case management orders in the coordination proceedings, the ETF claims against Verizon were separately pled in a consolidated amended complaint in White. On June 9, 2006, Judge Ronald Sabraw certified a class in that action and in related cases defined as: “ ‘All persons who (1) had a wireless telephone personal account with [Verizon] with a California area code and a California billing address [] who (2) cancelled the account at any time from July 23, 1999, through [March 18, 2007], and (3) were charged an early termination fee in connection with that cancellation.’ ” 5 The class certification was “expressly predicated” on an “aggregate approach to monetary relief and the related setoff and cross-claim issues.” Thus, if the ETF’s were found to be illegal and unenforceable, the wireless carriers would still potentially be entitled to offset against any class recovery for their actual damages in the form of lost profits. 6
By orders dated April 4, 2008, and May 12, 2008, the superior court severed the case against Verizon (and against Sprint) from the coordinated proceeding for purposes of trial. Trial in the White case commenced on June *1385 16, 2008, before Judge Bonnie Sabraw, shortly following a June 12, 2008 jury verdict in the Sprint case. Plaintiffs rested their case on July 2, 2008. A settlement in principle was reached by the parties on July 8, 2008. The trial judge granted prehminary approval of the proposed settlement on July 11, 2008. 7
The Settlement Classes
The preliminary approval order certified two settlement classes, an “ ‘ETF Assessed Class,’ ” encompassing all Verizon contract customers in the United States who were billed a flat-rate ETF by Verizon and/or its legacy companies from July 23, 1999, until the effective date of the publication notice, whether or not any portion of the ETF was actually paid, and a “ ‘Subscriber Class,’ ” defined as all persons in the United States who were or are parties to a contract for a wireless telephone personal account with Verizon and its legacy companies that included or includes a provision for a flat-rate ETF from July 23, 1999, through the effective date of the publication notice.
The Settlement Terms
The settlement terms require Verizon to pay $21 million to a fund for the benefit of the national settlement classes, without reversion of any amounts to Verizon. Class members who paid one or more flat-rate ETF’s will receive full credit as an “Allowed Claim” for amounts which the claims administrator verifies as paid based on a review of Verizon’s records. The money will be distributed pro rata on each Allowed Claim in proportion to the total number of such claims to the extent that there are insufficient funds to pay all claims in full. Class members who claim that they paid a flat-rate ETF but are unable to offer any proof of such payment will receive an Allowed Claim of $25, as will class members who allege that they suffered harm as a result of having been charged a flat-rate ETF that they did not pay. The settlement further prohibits Verizon from including a flat-rate ETF in any new customer agreements for a wireless service personal account in the United States for a period of two years.
Settlement of Related Proceedings
The settlement includes a release of the settlement classes’ ETF claims against Verizon, including the claims asserted in three other pending actions.
*1386 The Brown Arbitration
Brown v. Célico Partnership (Cir. Ct. Palm Beach County, Fla., complaint filed May 17, 2004, No. 50 2004CA005063MB-AI) (Brown) is an action asserting both ETF and handset locking claims against Verizon. 8 The lead plaintiff, Brown, filed a demand for class arbitration with the AAA. The AAA granted Brown’s motion to certify two 49-state classes (excluding persons with a California area code and California billing address): (1) a “Payer Class: All persons in the United States who were charged an [ETF] pursuant to a [Verizon] Customer Service Agreement which contained an arbitration clause from November 1, 2000 through November 16, 2006 . . .”; and (2) a “Subscriber Class: All persons in the United States who were parties to a contract for a wireless telephone personal account with Verizon that included a provision for an [ETF] and included an arbitration clause from November 1, 2000 through November 16, 2006 . . . .” Two of the class representatives from Brown, Brown and Schroer, joined with the White plaintiffs to represent the nationwide settlement classes. 9
The Waudby Litigation
Waudby v. Verizon Wireless Services, LLC (D.N.J., complaint filed Jan. 26, 2007, No. 07-0470) (Waudby) asserted essentially the same claims then pending in the Brown arbitration and sought to certify a nationwide class. 10 The arbitrator in Brown granted a motion to enjoin the Waudby litigation in March 2008.
The Gentry Litigation
Gentry v. Célico Partnership (C.D.Cal., complaint filed Nov. 4, 2005, No. CV-05-07888) asserted similar ETF claims against Verizon. The case was stayed on March 22, 2006, on Verizon’s motion pending resolution of ETF proceedings before the Federal Communications Commission (FCC).
*1387 The Settlement Notices
The stipulation and agreement of settlement provided for notice to the classes in three forms: (1) a mail notice to be sent to the last known addresses of the ETF Assessed Class; (2) a one-page short-form publication notice for publication in print media; and (3) a more detailed long-form publication notice for posting on an Internet referral site. Following preliminary approval of the settlement, including the forms of notice, the trial judge made a further sua sponte review of the form of class notice proposed in the settlement and held a subsequent hearing on July 15, 2008. As a result of that hearing the court issued an order requiring the parties to redraft the notices “with the goal of making it easy to understand for non-lawyers” and to make certain that the notice clearly explained the rights and obligations of class members in connection with the settlement. The court sought to “ensure that the notice provides absent class members with a clear picture of not only what the settlement provides, but also what it does not provide and whether it changes any existing contractual relationships between Verizon and absent class members.” The parties submitted revised notices, which were approved by the court subject to some additional changes. The approved mail notice was mailed by the appointed settlement administrator to 2,771,109 identified ETF Assessed Class members 11 and the short-form publication notice was published in 17 newspapers nationally, including the Wall Street Journal, The New York Times, the Chicago Tribune, and USA Today. The parties established a Web site 12 where class members could view, among other documents, the long-form publication notice, the complaint, settlement agreement and plan of allocation, and could obtain answers to frequently asked questions (FAQ’s). The Web site also allowed class members to file a claim form electronically. In addition, the settlement administrator established a toll-free telephone number to listen to FAQ’s in English and in Spanish, request a claim form, or request to speak to a live operator about the settlement.
Response to the Notice
As of October 14, 2008, 154,992 class members had submitted claims, either electronically or in paper form. One hundred twenty-nine class members had opted out of the settlement. Eight objections were filed with the court on behalf of 11 individuals. Based on the number of claims, and after deduction of the costs of notice and attorney fees, each Allowed Claim will be paid at approximately 50 percent of the amount claimed. A class member who paid a $175 ETF will therefore receive approximately $87.50 under the terms of the settlement.
*1388 The Objectors
Appellants Dawn Zobrist and Danie van den Berg (collectively Zobrist) and Ann and John Talley (Talleys) are four individuals who objected to approval of the settlement. Dawn Zobrist was a member of the ETF Assessed Class, having paid a $175 ETF “ ‘under protest’ ” in March 2002.
(Zobrist v. Verizon Wireless
(2004)
On October 21, 2008, a hearing was held before Judge Bonnie Sabraw on plaintiffs’ motion for final approval of the settlement. In an order dated November 6, 2008, Judge Sabraw considered and overruled the objections and granted final approval to the settlement, finding that “the total monetary and injunctive relief obtained is reasonable in light of the claims released and the risks of further litigation.” 16 An amended order, correcting what the court termed “an inadvertent discrepancy between the Court’s reasoning and the Court’s order,” but making no other changes, was filed on December 5, 2008.
Zobrist challenges the sufficiency of the notice to the class, alleging that it was both false and inadequate. She contends that the trial court abused its discretion in approving a settlement that was not fair, reasonable and adequate, asserting that the court grossly underestimated the size of the class, and therefore overestimated the value of the common fund, and that the Subscriber Class was improperly denied monetary compensation. She further alleges that class counsel and the named class representatives breached their *1389 fiduciary duty to the class in obtaining unreasonable and excess incentive payments for the representatives. We reject each of these contentions.
II. Discussion
A. Standard of Review
In a class action, the trial court has “broad discretion” to determine “whether a settlement was fair and reasonable, whether notice to the class was adequate, whether certification of the class was proper.”
(Wershba v. Apple Computer, Inc.
(2001)
In reviewing the fairness of a class action settlement, “ ‘[d]ue regard’ . . . ‘should be given to what is otherwise a private consensual agreement between the parties. The inquiry “must be limited to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.” [Citation.] . . .’ ”
(7-Eleven Owners for Fair Franchising v. Southland Corp.
(2000)
In considering whether a settlement is reasonable, the trial court should consider relevant factors, which may include, but are not limited to “ ‘the strength of [the] plaintiffs’ case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and the stage of the proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement.’ ”
(Kullar v. Foot Locker Retail, Inc.
(2008)
*1390 B. Adequacy of the Settlement Notice
On settlement of a class action, “notice of the final approval hearing must be given to the class members in the manner specified by the court. The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.” (Rule 3.769(f).)
The rules specify the content of the notice to class members and the factors the court must consider in determining the manner of notice. Rule 3.766(d) provides in pertinent part: “The content of the class notice is subject to court approval. If class members are to be given the right to request exclusion from the class, the notice must include the following: [f] (1) A brief explanation of the case, including the basic contentions or denials of the parties; [j[] (2) A statement that the court will exclude the member from the class if the member so requests by a specified date; [][] (3) A procedure for the member to follow in requesting exclusion from the class; [Ü] (4) A statement that the judgment, whether favorable or not, will bind all members who do not request exclusion; and [][] (5) A statement that any member who does not request exclusion may, if the member so desires, enter an appearance through counsel.”
The trial court “ ‘has virtually complete discretion as to the manner of giving notice to class members.’ [Citation.]”
(7-Eleven, supra,
The record below reflects that the trial judge carefully reviewed the forms of notice proposed by the parties, and required revisions “with the goal of making it easy to understand for non-lawyers” and to make certain that the notice clearly explained the rights and obligations of class members in connection with the settlement. Zobrist contends that the form of notice provided to class members was nevertheless inadequate because the notices allegedly misled members of the Subscriber Class into believing that they *1391 were “eligible to make claims for any part of the Common Fund,” and also because the notices allegedly did not disclose the “size of the class.” 17
She first argues that the statement in the short-form publication notice that the “settlement will provide $21 million into a Common Fund for claims of subscribers who were charged, paid and/or were subject to a flat-rate ETF,” misled members of the Subscriber Class into believing that they “could share in a portion of the $21 million.” That publication notice, however (as well as the mail notice), directed potential settlement class members to the settlement Web site to learn more about the settlement, and the publication notice specifically referenced the “detailed notice and claim form package” which subscribers would need to submit to “qualify for a payment.” The settlement Web site included the “ ‘Plan of Allocation,’ ” detailing how payments would be made to class members, including the fact that members of the Subscriber Class were only entitled to the injunctive relief described in the settlement, at three different places linked to on the site’s home page: the long-form publication notice (in English and Spanish); the Plan of Allocation of settlement proceedings pleading; and FAQ’s (in English and Spanish). The long-form publication notice, for example, states that payments will be made “on a pro rata basis to Class Members who paid an ETF and payment to Class Members that were charged but did not pay an ETF and prove that they suffered economic harm as a result of the ETF.” The claim form provided electronically on the Web site and in physical form to class members also made clear that subscribers who were not charged an ETF were not eligible to claim monetary relief. The claim form requires that individuals identify themselves as a customer who “paid a flat [ETF],” or who “was charged but did not pay a flat [ETF].” The form does not include a box that can be checked by past or present subscribers who were or are merely subject to a flat-rate ETF but not charged an ETF. Zobrist does not contest the adequacy of the information provided on the Web site. That the Web site was effective as a primary detailed source of information about the litigation and the settlement is evidenced by the fact that the overwhelming majority of claims filed with the settlement administrator (111,992 out of the total of 154,992) were submitted electronically.
Significantly, Zobrist fails to cite any evidence that any class members were actually deceived or misled by the notice, or that anyone inappropriately submitted a claim for monetary relief as a consequence of confusion or *1392 misunderstanding. The notices as a whole, including information provided on the settlement Web site and in the claim form, make clear that monetary relief is limited to members of the ETF Assessed Class.
A similar procedure for notice of a class settlement, utilizing a summary notice directing class members to a Web site containing more detailed notice, was approved in
Chavez
as a “perfectly acceptable” manner of giving notice.
(Chavez v. Netflix, Inc., supra,
Zobrist also argues that notice was defective in failing to disclose the “enormous size” of the class to the EFT Assessed Class. She contends that this did not provide the class members with adequate information for the members to make an informed decision about whether to participate, object, or opt out. She cites no authority for her position that information as to the size of the potential class, or the contingencies of recovery in any particular amount, is required. Courts which have considered such objections in the context of class settlement have rejected the claim.
18
“[T]here is no requirement that the class size be specified in the notice [citation] . . . .”
(In re Lorazepam & Clorazepate Antitrust Litigation
(D.D.C. 2002)
*1393
Both the mail notice and the long-form publication notice identified the total amount of the common fund recovery, the nature of the costs and fees to be deducted from the common fund, and the fact that the balance of the fund would be allocated among qualified class claims. The long-form publication notice makes clear that “[t]he amount paid to Class Members may be larger or smaller than the amount of the claim, depending on how many claims are submitted.” “The aggregate amount available to all claimants was specified and the formula for determining one’s recovery was given. Nothing more specific is needed. [Citation.]”
(Marshall v. Holiday Magic, Inc.
(9th Cir. 1977)
The trial court did not abuse its discretion in the manner of giving notice and the content of the notices was adequate to “ ‘ “fairly apprise the prospective members of the class of the terms of the proposed settlement and of the options that are open to them in connection with [the] proceedings.” [Citations.]’ [Citation.]”
(7-Eleven, supra,
C. Fairness *
D. Alleged Breach of Fiduciary Duty and the Incentive Payments
The court approved incentive awards in the amount of $10,000 each to class representatives White, Schroer, Brown and Nguyen. Zobrist argues that the class representatives breached their fiduciary duties to the class by receiving the incentive awards and that they sought “ ‘individual gain’ ” at the expense of the class. She does not dispute the extent of the participation of the class representatives in the litigation, but rather focuses on the disparity between the amount of the awards and the recovery by individual class members. She alleges that Schroer and White received amounts grossly disproportionate to the average recovery of the ETF Assessed Class, and asserts that Nguyen and Brown (members of the Subscriber Class) received “pay-offs to induce them to sell out the Subscriber Class.”
While there has been scholarly debate about the propriety of individual awards to named plaintiffs, “[incentive
awards
are fairly typical in class action cases.”
(Rodriguez v. West Publishing Corp.
(9th Cir. 2009)
There is a surprising dearth of California authority directly addressing this question. The threshold question of whether a class representative is entitled to a fee in a California class action was recently answered in the affirmative in
Clark v. American Residential Services LLC
(2009)
“[T]he rationale for making enhancement or incentive awards to named plaintiffs is that they should be compensated for the expense or risk they have incurred in conferring a benefit on other members of the class.”
(Clark, supra,
The court here received evidence that each of the class representatives actively participated in the litigation and worked with class counsel to assist in the prosecution of the litigation. White “produced documents, answered interrogatories and submitted to a deposition. [S]he testified at trial as a witness for plaintiffs. She also traveled across the country from her home in Portland, Oregon to testify at the June 12, 2008 hearing” before the FCC regarding ETF’s. Schroer, a claimant in the Brown arbitration, “produced documents, answered interrogatories, submitted to a deposition and participated in conferences with counsel to prepare for trial and to discuss trial strategy for the Brown matter.” Schroer also “personally attended three days of evidentiary hearings in the Brown matter, flew across the country from his home in New York to testify at trial in California as a witness for plaintiffs in the White action, and traveled to Washington, D.C. to testify before the FCC at the June 12, 2008 public hearing regarding . . . ETF’s.” Brown, also a claimant in the Brown arbitration, “produced documents, answered interrogatories and traveled from Florida to New York City to give deposition testimony in the Brown matter. Brown also participated in conferences with counsel to prepare for trial and to discuss trial strategy for the Brown matter.” Nguyen “produced documents, answered interrogatories and gave deposition testimony.” Counsel noted that Nguyen’s willingness to participate in a deposition was “significant because she cleans houses for a living.”
In contrast to the more detailed analysis given by the trial court to other aspects of the settlement, the discussion of the incentive awards was sparse. There is no “ ‘presumption of fairness’ ” in review of an incentive fee award.
(Clark, supra,
*1396 III. Disposition
The judgment is affirmed.
Jones, P. J., and Needham, J., concurred.
On July 27, 2010, the opinion was modified to read as printed above.
Notes
Plaintiffs/respondents are Molly White, Christina Nguyen, Patricia Brown and Harold Schroer and are collectively referred to as “plaintiffs.”
We refer to Dawn Zobrist and Danie van den Berg (objectors/appellants in appeal No. A124038) and Ann and John Talley (objectors/appellants in appeal No. A124048) collectively as “appellants.”
In addition to the ETF claims, plaintiffs alleged other unfair business practices by the named defendants, including handset locking policies and deposit requirements.
(Gatton v. T-Mobile USA, Inc.
(2007)
All further undesignated rule references are to the California Rules of Court.
Judge Ronald Sabraw initially declined to certify a class consisting of current subscribers. That portion of his order was reversed by this court. (Cellphone Termination Fee Cases (June 9, 2008, A115457) [nonpub. opn.].)
In a December 27, 2006 pretrial order, Judge Ronald Sabraw described the trial procedure as follows: “. . . The Court will permit Plaintiffs to present aggregate damage calculations for the claims of the entire class and will require the trier of fact to state the damages owed to the members of the Plaintiff class in the aggregate. The Court will also permit Defendants to present aggregate damage calculations for their cross-claims against the entire class and will require the trier of fact to state the damages that the members of the Plaintiff class might owe to Defendants. The Court will then set off the two numbers. If the net amount owed is a positive for Plaintiffs, then the Court will enter judgment in favor of the Plaintiff class for that amount. If the net amount owed is zero or a negative for the Plaintiffs, then the Court will enter judgment of zero in favor of the Plaintiff class. Defendants will not be permitted to recover money from the Plaintiff/Cross-Defendant class.” (Fn. omitted.)
Pursuant to the terms of the settlement, the parties stipulated to the filing of a fourth consolidated amended complaint encompassing the expanded class claims.
We grant Verizon’s September 30, 2009 unopposed request that we take judicial notice of a class determination award by the arbitrator in the Brown arbitration and a subsequent correction and amendment of that order. We deny Verizon’s concurrent request that we take judicial notice of an order in Schneider v. Verizon Internet Services, Inc. (C.D.Cal., 2009, No. CV 08-07856 R CWx) dismissing ETF claims similar to those raised here under Federal Rules of Civil Procedure, rule 12(b)(6) (28 U.S.C.). This order was not before the trial court and is irrelevant to the issues before us.
One of the lead trial counsel for the class here also served as the designated lead counsel in the Brown arbitration.
Plaintiffs contend that the pleading allegations in the Brown case were copied verbatim into the Waudby complaint by appellant Zobrist’s former counsel.
Of the mail notices returned to the settlement administrator, 13,032 were remailed to updated addresses and 196,027 were designated by the post office as undeliverable.
<http://www.VerizonETFSettlement.com> (as of June 28, 2010).
Zobrist filed an action against Verizon on August 9, 2002
(Zobrist v. Verizon Wireless
(Cir. Ct. Madison County, 111., No. 02-L-1088)). Zobrist asserted ETF claims against Verizon on behalf of a putative Illinois class of Verizon customers. In 2004, an Illinois appellate court granted Verizon’s motion to compel arbitration.
(Zobrist,
supra,
Danie van den Berg’s declaration states that his wife was erroneously assessed an ETF following termination of one of three telephone lines at the end of the contract term, but that the assessment was reversed by Verizon after protest.
The Talleys’ opening brief simply joins in and adopts the Zobrist brief, without any reference to any portion of the record or citation of authority.
The court also awarded fees to class counsel in the amount of $6,349,788.65 plus $1,000,211.35 in costs and expenses. The appellants did not challenge below, and do not challenge here, the court’s award of fees and costs.
Zobrist also objects that the short-form publication notice failed to disclose to the members of the Subscriber Class that they were members of the class certified in the Brown arbitration in New York. The long-form publication notice, however, specifically stated that the settlement would resolve the claims asserted in the Brown arbitration: “The settlement will also likely resolve other pending cases that challenge Verizon Wireless’s flat[-rate] ETF, including Brown, Zobrist & Cellco Partnership d/b/a Verizon Wireless, [AAA], Case Nos. 11 494 01274 05 and 11 494 0032 05, pending before the [AAA] in New York, New York . . . .”
“ ‘California courts may look to federal authority for guidance on matters involving class action procedures.’ [Citations.]”
(Apple Computer, Inc.
v.
Superior Court
(2005)
See footnote, ante, page 1380.