1 MICHAEL RUBIN (SBN 80618) EVE CERVANTEZ …...The Settling Defendants are HSBC Card Services Inc....

MEMO. OF PS. AND AUTHS. ISO PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS

ACTION SETTLEMENT; CASE NOS. 2:15-cv-09093-JVS (AFMx), 12-CV-00885-JVS-RNB

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MICHAEL RUBIN (SBN 80618) EVE CERVANTEZ (SBN 164709) P. CASEY PITTS (SBN 262463) Altshuler Berzon LLP 177 Post Street, Suite 300 San Francisco, California 94108 Telephone: (415) 421-7151 Facsimile: (415) 362-8064 E-mail: [email protected] [email protected] [email protected] ABBAS KAZEROUNIAN (SBN 249203) Kazerouni Law Group, APC 245 Fischer Avenue, Unit D1 Costa Mesa, CA 92626 Telephone: (800) 400-6808 Facsimile: (800) 520-5523 E-mail: [email protected]

Attorneys for Plaintiffs

[Additional Counsel on Signature Page]

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

GAIL MEDEIROS, et al., Plaintiffs, v. HSBC CARD SERVICES INC., et al.,

Defendants.

Case No. 2:15-cv-09093 JVS (AFMx) Case No. 12-CV-00885-JVS-RNB Relates to: Medeiros, Fanning, and Lindgren MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT Date: Oct. 17, 2016 Time: 1:30 p.m. Place: Santa Ana, 10C Judge: Hon. James V. Selna

TERRY FANNING, et al.,

Plaintiffs v. HSBC CARD SERVICES INC., et al.,

Defendants. STEFAN O. LINDGREN, Plaintiff, vs. HSBC CARD & RETAIL SERVICES, INC., et al., Defendants.

Case 2:15-cv-09093-JVS-AFM Document 85-1 Filed 08/26/16 of 31 Page ID #:1810

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TABLE OF CONTENTS TABLE OF AUTHORITIES ....................................................................................... iii

INTRODUCTION ........................................................................................................ 1

FACTUAL BACKGROUND ....................................................................................... 1

I. Nature of the Litigation ....................................................................................... 1

II. Procedural History and Status of Proceedings and Discovery ............................ 2

III. Summary of the Settlement ................................................................................. 6

A. The Settlement Class ........................................................................................ 6

B. Settlement Benefits .......................................................................................... 7

C. Notice, Plan of Allocation, and Claims Administration .................................. 8

D. Service Awards to Representative Plaintiffs.................................................. 10

E. Attorneys’ Fees, Costs and Expenses ............................................................ 10

ARGUMENT .............................................................................................................. 11

I. Preliminary Approval of the Settlement Is Appropriate ................................... 11

A. The Strength of Plaintiffs’ Case and the Risk, Complexity, and Likely

Duration of Future Litigation ......................................................................... 12

B. The Amount Offered by the Settlement ......................................................... 14

C. The Extent of Discovery Completed and the Stage of Proceedings .............. 16

D. The Views and Experience of Counsel .......................................................... 16

E. The Absence of Collusion .............................................................................. 17

II. Certification of the Settlement Class for Settlement Purposes Only Is

Appropriate Here .............................................................................................. 18

A. The Requirements of Rule 23(a)(1) Are Satisfied ......................................... 18

1. Numerosity .................................................................................................. 18

2. Commonality ............................................................................................... 18

3. Typicality .................................................................................................... 19

4. Adequacy .................................................................................................... 19

B. The Requirements of Rule 23(b)(3) Are Satisfied ......................................... 20

1. Predominance .............................................................................................. 20


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2. Superiority ................................................................................................... 21

III. Notice of the Settlement .................................................................................... 22

A. Scope and Contents of Notice ........................................................................ 22

B. Requests For Exclusion/Opt-Out and Objections .......................................... 23

1. Opting Out ................................................................................................... 23

2. Objecting ..................................................................................................... 23

CONCLUSION ........................................................................................................... 24


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TABLE OF AUTHORITIES

Page(s)

Federal Cases

Amchem Products v. Windsor,

521 U.S. 591 (1997) ..................................................................................... 20, 21

Arnold v. Fitflop USA, LLC,

No. 11-CV-0973 W KSC, 2014 WL 1670133 (S.D. Cal. Apr. 28, 2014) ......... 17

In re Austrian & German Bank Holocaust Litig.,

80 F. Supp. 2d 164 (S.D.N.Y. 2000) .................................................................. 13

Carnegie v. Household Int’l Inc.,

376 F.3d 656 (7th Cir. 2004) .............................................................................. 21

Churchill Village, LLC v. General Electric,

361 F.3d 566 (9th Cir. 2004) .............................................................................. 22

Eisen v. Porsche Cars N. Am., Inc.,

No. 2:11-CV-09405-CAS-FFMx, 2014 WL 439006

(C.D. Cal. Jan. 30, 2014) .................................................................................... 11

Elliott v. Rolling Frito-Lay Sales, LP,

No. SACV 11-01730 .......................................................................................... 12

Evon v. Law Offices of Sidney Mickell,

688 F.3d 1015 (9th Cir. 2012) ...................................................................... 19, 20

Franklin v. Kaypro Corp.,

884 F.2d 1222 (9th Cir. 1989) ............................................................................ 11

Grant v. Capital Mgmt. Servs., L.P.,

No. 10-CV-2471-WQH BGS, 2014 WL 888665 (S.D. Cal. Mar. 5, 2014) ....... 14

Hanlon v. Chrysler Corp.,

150 F.3d 1011 (9th Cir. 1998) ...................................................................... 18, 19

In re Heritage Bond Litig.,

No. 02-ML-1475 DT, 2005 WL 1594403 (C.D. Cal. June 10, 2005)................ 11


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Local Joint Exec. Bd. of Culinary/Bartender Trust Fund v.

Las Vegas Sands, Inc., 244 F.3d 1152 (9th Cir. 2001) ....................................... 20

In re M.L. Stern Overtime Litig.,

No. 07-CV-0118-BTM (JMA), 2009 WL 995864

(S.D. Cal. Apr. 13, 2009) .............................................................................. 11, 12

McDonald v. Bass Pro Outdoor World,

13-cv-0889-BAS (DHB) (S.D. Cal.) .................................................................. 14

McDonald v. Bass Pro Outdoor World, LLC,

Case No. No. 13-cv-889-BAS(DHB), 2014 WL 3867522

(S.D. Cal. Aug. 5, 2014) ..................................................................................... 11

Mercury Interactive Corp. Sec. Litig. v. Mercury Interactive Corp.,

618 F.3d 988 (9th Cir. 2010) .............................................................................. 10

Officers for Justice v. Civil Service Comm’n,

688 F.2d 615 (9th Cir. 1982) .............................................................................. 11

Quesada v. Bank of America Investment Svcs.,

2013 WL 623288 (N.D. Cal. Feb. 19, 2013) ...................................................... 13

Reed v. 1-800 Contacts,

No. 12-CV-2359 JM BGS (S.D. Cal.) ................................................................ 14

Rigo v. Kason Indus., Inc.,

No. 11-CV-64-MMA (DHB), 2013 WL 3761400 (S.D. Cal. July 16, 2013) .... 17

Rodriguez v. West Publ’g Corp.,

563 F.3d 948 (9th Cir. 2009) .............................................................................. 16

In re Sunrise Sec. Litig.,

131 F.R.D. 450 (E.D. Pa. 1990) ......................................................................... 14

Torres v. Nutrisystem, Inc.,

289 F.R.D. 587 (C.D. Cal. 2013) ........................................................................ 13

Torrisi v. Tucson Elec. Power Co.,

8 F.3d 1370 (9th Cir. 1993) ................................................................................ 12

In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales Practices,

& Prods. Litig., 2013 U.S. Dist. LEXIS 94484 (C.D. Cal. June 17, 2013) ....... 17


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Wal-Mart Stores, Inc. v. Dukes,

131 S. Ct. 2541 (2011) ........................................................................................ 18

Weinberger v. Kendrick,

698 F.2d 61 (2d Cir. 1982) ................................................................................. 14

Wolin v. Jaguar Land Rover N.A., LLC,

617 F.3d 1168 (9th Cir. 2010) ............................................................................ 20

California Cases

Hataishi v. First American Home Buyers Protection Corp.,

223 Cal. App. 4th 1454 (2014) ........................................................................... 13

California Statutes

Cal. Penal Code,

§ 630 ..................................................................................................................... 1

§ 632 ..................................................................................................................... 2

§ 632.7 .................................................................................................................. 5

§ 637.2 .................................................................................................................. 2

Rules

Federal Rules of Civil Procedure

Rule 23 ......................................................................................................... passim

Rule 45 .................................................................................................................. 3

Other Authorities

Manual for Complex Litigation, Fourth, §21.632 (2004) ....................................... 12


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INTRODUCTION

After almost four years of hard-fought litigation and several rounds of

protracted settlement negotiations and mediation with Judge Edward Infante (Ret.) of

JAMS, the settling parties in Fanning et al. v. HSBC Card Services Inc. et al., C.D.

Cal. Case No. 12-cv-00885 JVS (RNBx); Lindgren v. HSBC Card Services Inc. et

al., C.D. Cal. Case No. 14-cv-05615 JVS (RNBx); and Medeiros et al. v. HSBC

Card Services Inc. et al., C.D. Cal. Case No. 2:15-cv-09093-JVS-AFMx, agreed to

the Settlement Agreement (“Settlement” or “SA”) attached as Exhibit A to the

accompanying Declaration of Michael Rubin (“Rubin Decl.”).1 The Settlement

includes significant relief specifically tailored to this California Invasion of Privacy

Act (“CIPA”) litigation, and creates a non-reversionary settlement fund of 13 million

dollars. The plan of allocation, notice, and claims administration process were

designed to minimize the burden on putative class members, while maximizing

recovery for those class members whom discovery documents suggest were recorded

– and those class members will not be required to file a claim form to obtain their

portion of the settlement award. The Settlement also provides enhanced and efficient

notice provisions and claims procedures, and a fair plan of allocation based on the

strength of various class members’ claims. Accordingly, plaintiffs respectfully move

the Court for certification of a settlement class, preliminary approval of the

settlement, and approval of the proposed notice plan.

FACTUAL BACKGROUND

I. Nature of the Litigation

This dispute involves three almost identical class action lawsuits against the

HSBC defendants alleging that HSBC violated CIPA, Cal. Penal Code §§630 et seq.,

1 The Settling Plaintiffs are Terry Fanning, Tatiana Jabbar, Stefan Lindgren, Gail

Medeiros, Tracy T. Bomberger, Peter Morrissey, and Julie Pulatie (collectively

“Plaintiffs”). The Settling Defendants are HSBC Card Services Inc. and HSBC

Technology & Services (USA) Inc. (collectively, “HSBC” or the “HSBC Entities”).


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by recording telephone conversations with California account holders concerning

their HSBC credit card accounts without the account holders’ consent. CIPA

prohibits various forms of intentional recording of telephone calls without the

consent of all parties to the conversation, and provides for statutory damages of

$5,000 per illegally recorded call. Penal Code §§632(a), 637.2(a)(1).

II. Procedural History and Status of Proceedings and Discovery

On June 4, 2012, plaintiffs Terry Fanning and Tatiana Jabbar filed the first

class action against the HSBC Entities encompassed by this Settlement, in this Court.

Rubin Decl. ¶19. The Fanning complaint asserted claims on behalf of California

HSBC credit card account holders, alleging that HSBC recorded their confidential

telephone conversations without consent in violation of CIPA. Id. The HSBC

Entities answered the Fanning complaint on July 20, 2012. Id.

Plaintiffs in Fanning promptly commenced substantive written discovery with

respect to liability and class certification, including requests for production of

documents, interrogatories, and requests for admission, and took several depositions

of HSBC personnel to obtain evidence of HSBC’s policies and practices with respect

to call recordings. Id. ¶20. The parties’ written discovery gave rise to a number of

disputes, which they subsequently presented to Magistrate Judge Robert N. Block.

Id. Between December 2012 and February 2015, Magistrate Judge Block conducted

14 separate conferences with the parties, many including information technology

experts from plaintiffs and HSBC. Id.

During these discovery conferences, Judge Block set protocols for the

exchange of information between the parties and Capital One Financial Corporation

(“Capital One”), a third party to the Fanning action, which had obtained possession

of HSBC’s accounts and recording data as a result of its May 1, 2012 acquisition of

assets of HSBC Card Services, Inc. (among other HSBC corporate entities). Id.

Some of the significant rulings by Judge Block memorialized in the Minute Orders

after the discovery conferences include: (i) acknowledging and accepting HSBC’s


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stipulation that “none of those recorded conversations would have included a

warning that the call might be recorded” (December 19, 2012 discovery conference);

(ii) setting the relevant time period as March 23, 2009 to May 1, 2012 (when the

HSBC Card Services, Inc. credit card accounts were sold to Capital One) (December

19, 2012 discovery conference); (iii) stating that only recordings of conversations

between representatives of HSBC Card Services, Inc. and putative class members

during that time period were relevant (December 19, 2012 discovery conference);

(iv) allowing plaintiffs to serve a Rule 45 subpoena on Capital One seeking three

categories of data that had been transferred to Capital One (August 15, 2013

discovery conference); and (v) allowing Plaintiffs to obtain HSBC’s auto dialer logs

of calls and samples of monitoring reports reflecting actual recorded conversations

(December 22, 2014 discovery conference). Id.

The Fanning plaintiffs were able to obtain millions of HSBC’s records of call

recordings and data on over half a million former California HSBC account holders,

largely as a result of the progress made during these discovery conferences with

Magistrate Judge Block. Id. ¶21. The Fanning plaintiffs first hired an IT consulting

firm and then an IT expert data analysis firm to review data produced by both HSBC

and Capital One. Id. These experts, working with plaintiffs’ counsel, performed

extensive, time-consuming, and diligent analysis to match millions of records of

nationwide telephone recordings with the California account holder data by, for

example, matching certain fields (e.g., telephone numbers) in what has been referred

to as “Category 1” data (records of recordings) with “Category 2” data (California

account holder information). Id. This painstaking analysis resulted in the Fanning

plaintiffs identifying 100,473 records of recordings for 58,448 unique California

account holders. Id. As described below, these individuals comprise the members of

the “Direct Payment” subclass. Id.

Magistrate Judge Block’s August 12, 2013 Minute Order also allowed the

Fanning plaintiffs to obtain from Capital One a sampling of 300 actual recordings, or


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“Category 3” data in the Capital One subpoena. Id. One of these recordings was the

recording of a telephone conversation between HSBC Card Services and plaintiff

Lindgren. Id. In December 2014, Judge Block allowed the Fanning plaintiffs to

serve a second subpoena on Capital One, which enabled plaintiffs to obtain auto

dialer logs documenting additional outbound calls by HSBC, and result codes

indicating which of those calls resulted in an actual telephone conversation. Id.

Plaintiff Lindgren filed a motion to intervene in the Fanning lawsuit on

October 7, 2013, shortly after learning that he had been recorded by HSBC. Id. ¶22.

HSBC opposed intervention on the grounds that plaintiffs in the Fanning case lacked

Article III standing. Id. On November 19, 2013, upon submission of further briefing

on the standing issue, the Court dismissed Lindgren’s motion to intervene without

prejudice, pending resubmission after the standing of the representative plaintiffs in

Fanning was determined. Id.

During the course of the Fanning litigation, this Court decided many key

substantive factual and legal issues. Id. ¶23. On May 6, 2013, the Court denied

HSBC’s motion for summary judgment, finding a material issue of disputed fact

existed as to whether the privacy provision in HSBC Bank Nevada’s card-member

agreements provided adequate notice to putative class members in the Fanning

matter that their calls would be recorded by HSBC. Id. The Court also ruled that

CIPA was not preempted by the National Banking Act. Id.

On May 5, 2014, the Court shifted the burden of proof regarding the disputed

issue of whether Fanning’s calls were recorded to HSBC. Id. At the same time, the

Court denied plaintiffs’ motion for partial summary judgment, finding a genuine

dispute of material fact as to whether Fanning’s call was recorded. Id.

As a result of these rulings, plaintiff Lindgren filed his class action complaint

entitled Lindgren v. HSBC Card Services, Inc. et al., Case No. 14-cv-05615 JVS

(RNBx) (“Lindgren”) in this Court on July 18, 2014. Rubin Decl. ¶24. Lindgren

also asserted CIPA claims against HSBC and Capital One for recording telephone


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conversations of California HSBC credit card account holders without their consent;

but because HSBC had called Lindgren on his cellular phone, the Lindgren

complaint also asserted a claim under Penal Code §632.7 – a claim that does not

require proof that the recorded conversation was “confidential.” Id. On November

10, 2014, this Court consolidated the Fanning and Lindgren class actions along with

the subpoena enforcement action against Capital One that had been transferred to

this Court from the U.S. District Court for the Eastern District of Virginia, because

all three matters involved the same class. Id.

Additional targeted discovery was served in the Lindgren matter, including

requests for production of documents, interrogatories, and notices of deposition for

HSBC as well as Capital One. Id. ¶25. Capital One propounded discovery on

plaintiff Lindgren, including requests for production, interrogatories and a notice for

deposition. Id. On March 15, 2015, plaintiff Lindgren was deposed by Capital One

relating to standing. Id. After the production of voluminous documents relating to

its purchase of assets from the HSBC Entities, a representative of Capital One was

deposed on June 10, 2015. Id. Lindgren subsequently dismissed the direct liability

claims against Capital One on July 9, 2015, while preserving any successor liability

claims arising out of the May 1, 2012 transaction. Id.

On July 29, 2014, the Medeiros plaintiffs filed a class action complaint in the

Southern District of California entitled Medeiros et al. v. HSBC Card & Retail

Services, Inc. et al. (S.D. Cal. Case No. 3:14-cv-01786-JLS-MDD; after transfer,

C.D. Cal. Case No. 2:15-cv-09093-JVS-AFMx). Rubin Decl. ¶26. The Medeiros

complaint also alleges that HSBC violated CIPA by recording telephone

conversations with plaintiffs concerning their HSBC credit card accounts without

consent. Id. An Early Neutral Evaluation Conference was held in the Medeiros case

on March 19, 2015 before Magistrate Judge Mitchell D. Dembin, but the case did not

settle. Id. The Medeiros plaintiffs later reached a settlement with HSBC with the

assistance of Judge Pappas (Ret.) at a mediation on May 15, 2015. Id. On July 7,


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2015, the Medeiros plaintiffs filed their Motion for Preliminary Approval of the

settlement reached at the May 15, 2015 mediation. Id. ¶27. The Fanning/Lindgren

plaintiffs moved to intervene in the Medeiros case in the Southern District on July

16, 2015. Id. On October 9, 2015, Judge Sammartino, who was presiding over the

Medeiros case, granted the Fanning/Lindgren plaintiffs’ motion to intervene. Id. On

October 14, 2015, the Fanning/Lindgren plaintiffs moved to transfer Medeiros to this

Court, which motion was granted on November 23, 2015. Id.

Once all three cases were before this Court, counsel in the Fanning/Lindgren

cases and counsel in the Medeiros case determined that it was in the best interest of

the class to combine their efforts and attempt to reach a more favorable result than

had been previously negotiated by the Medeiros plaintiffs. Id. ¶28. Counsel for all

parties participated in formal mediations before the Hon. Edward J. Infante (Ret.) of

JAMS on February 18, 2016, March 24, 2016, and June 6, 2016. As a result of these

mediations, the parties reached a new settlement in principle in the

Fanning/Lindgren and Medeiros actions. Id.

III. Summary of the Settlement

A. The Settlement Class

Under the terms of the Settlement, the Settling Parties agreed to certification

of the following Settlement Class for settlement purposes only:

[A]ll persons in California who received a telephone call during the

Class Period [March 23, 2009 through May 1, 2012] from or on behalf

of Defendant HSBC Card Services Inc. and whose call was recorded or

monitored by or on behalf of [Defendants HSBC Card Services Inc. or

HSBC Technology & Services (USA) Inc. (collectively, “HSBC”)].

SA ¶2.30. As a result of the extensive investigation and analysis performed in the

Fanning litigation, the plaintiffs located evidence allowing more specific

identification of certain putative class members as follows:

(1) All California credit card account holders listed in the records

identifying HSBC California credit card account holders, which records


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were produced by Capital One in the Fanning Action in or about

September 2014, and whose telephone number(s) appear in the records

of full-time recordings produced by Capital One in the Fanning Action

in or about November 2013 (the “Direct Payment Group”);




September 2014, and who appear on the Mixed-Use Data list produced

by HSBC in the Fanning Action on or about July 19, 2013;




September 2014, whose telephone number(s) appear in the autodialer

logs produced by Capital One in the Fanning Action on or about July

17, 2015 and whose call records contain a result code that indicates that

an actual telephone conversation took place (based on the result code

keys provided by Capital One); and

(4) To the extent not duplicative of the above, all California credit card

account holders listed in the records identifying HSBC California credit

card account holders, which records were produced by Capital One in

the Fanning Action in or about September 2014, and who appear in the

list of persons produced in the Fanning Action by Capital One on or

about August 6, 2013.

SA ¶2.31.

B. Settlement Benefits

The total settlement amount is $13,000,000.00 (“Settlement Fund”), which

includes payments to the class, attorneys’ fees, litigation costs and expenses, service

payments to the class representatives, costs of a third-party data analyst to determine

the Settlement Class List, and the costs of a third-party settlement administrator. SA

¶¶2.33, 2.34, 3.3(A), 3.7(A). There shall be no reversion to HSBC of any unclaimed

funds. SA ¶2.34. A second distribution will be made on a pro rata basis if any

money remains in the Settlement Fund after the expiration date of the checks

distributed, pursuant to SA¶3.7(A), if the money is sufficient to pay at least $10 more


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to each Settlement Class Member who cashed his or her initial Settlement Award

check, after calculating additional administration and mailing costs. SA ¶3.7(B);

Rubin Decl. ¶42. The unclaimed portion of the Settlement Fund remaining after the

second distribution (if any) will be donated upon the Court’s approval to the Rose

Foundation’s Consumer Privacy Rights Fund. SA ¶3.7(C); Rubin Decl. ¶43.

C. Notice, Plan of Allocation, and Claims Administration

Individual notice will be provided by email to the most recent email address

on the Settlement Class List where email addresses are available and the account

holders have not opted out of receiving email. SA¶3.5(A). Account holders who

have no email addresses, whose email was returned as undeliverable, or who opted

out of receiving emails shall receive a postcard in the mail to the most recent mailing

address on the Settlement Class List. SA¶3.5(A). Additionally, the Settlement

Administrator will establish and maintain a Settlement Website, on which will be

posted the Website Notice, Claim Forms, Settlement Agreement, Preliminary

Approval Order, operative Complaints, and any other materials the parties agree to

include or as required by the Court. SA¶3.5(B). Notice will also be provided by

publication of a quarter page advertisement in the Los Angeles and San Francisco

editions of the USA Today newspaper. SA¶3.5(B).

The Plan of Allocation reflects the relative strengths of each category of

putative class members’ claims. Rubin Decl. ¶29. Because plaintiffs assert that the

record evidence shows that telephone calls with individuals in the Direct Payment

Group were recorded, no claim form will be required for such class members. SA

¶3.6A; Rubin Decl. ¶30. Those class members will be paid on a per-call basis for

each recorded call, with the per-call amount being three times the per-call amount

paid to other class members (which the Settlement defines as the “base award”). Id.

For other class members whose names appear on the Settlement Class List (those

listed in §III.A.2-3 above), the existing records show only that such a telephone

conversation might have occurred, and might have been recorded. Rubin Decl. ¶31.


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Such class members must submit a Claim Form and affirm that they received a

telephone call regarding their HSBC credit card during the Class Period in order to

receive a payment, because the existing records do not clearly establish whether they

actually had a recorded telephone conversation. SA ¶3.6 (B)(1); Rubin Decl. ¶31.2

Because the evidence indicates that only three to thirty percent of calls to such

individuals were recorded, these individuals will receive the base award amount for

each call that could have been recorded, rather than the three-times-higher per-call

amount paid to members of the Direct Payment Group. SA ¶3.6 (B)(1); Rubin Decl.

¶32.

The Settlement also calls for publication notice to account for the possibility

that currently available records do not identify all individuals who fit within the class

definition. SA ¶3.6(B)(2); Rubin Decl. ¶33. Such class members will be required to

submit a timely Claim Form, on which they: (a) provide their full name and complete

address (and e-mail address if available); (b) affirm that they received a telephone

call regarding their HSBC credit card during the Class Period; (c) provide the

telephone number at which the call was received; and (d) provide the approximate

time frame when the call was received. Id. Individuals falling into this category

shall be paid the base award amount, without any per-call variation, because there is

no way to calculate or prove how many calls to such individuals (if any) were or

could have been recorded. Id.

The costs of notice and claims administration will be paid out of the

Settlement Fund. SA¶¶2.33, 3.5(A). The claims administrator currently estimates

the cost of settlement administration to be approximately $803,182, with additional

funds required if a second distribution occurs. SA¶3.7(B); Rubin Decl. ¶45. Of this

2 To ensure that class members understand what they must do to receive a payment

from the Settlement Fund, the Settlement includes different notices that will be sent

to those who must submit claim forms to receive a payment and those who do not

need to do so. SA Exs. 3, 4.


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amount, approximately $453,057 will pay for postage to send notice to over one

million potential class members. Id.

D. Service Awards to Representative Plaintiffs

Plaintiffs intend to seek court approval for service awards from the Settlement

Fund to Representative Plaintiffs Terry Fanning and Stefan Lindgren not to exceed

$5,000 each, for their substantial and ongoing contributions to the success of the

litigation, including, in the case of Mr. Lindgren, responding to discovery requests

and appearing for deposition. SA¶3.10; Rubin Decl. ¶46. Plaintiffs also intend to

seek court approval for service awards to Representative Plaintiffs Tatiana Jabbar,

Gail Medeiros, Tracy T. Bomberger, Peter Morrissey, and Julie Pulatie in an amount

not to exceed $1,500 each. SA¶3.10; Rubin Decl. ¶47.

E. Attorneys’ Fees, Costs and Expenses

Although the Settling Parties are providing notice of the amount of attorneys’

fees, costs, and expenses sought by plaintiffs’ counsel, plaintiffs intend to submit the

requests for fees, costs, and expenses separately from their request for a

determination that the Settlement is fair, reasonable, and adequate. SA ¶3.9. In

advance of the deadline for filing objections, pursuant to Mercury Interactive Corp.

Sec. Litig. v. Mercury Interactive Corp., 618 F.3d 988 (9th Cir. 2010), Plaintiffs’

Counsel will file a motion requesting an award of attorneys’ fees of up to one-third

(33-1/3%) of the gross settlement amount, plus reimbursement of actual litigation

costs and expenses incurred up to that point. SA¶3.9; Rubin Decl. ¶48.


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ARGUMENT

I. Preliminary Approval of the Settlement Is Appropriate

The Ninth Circuit maintains a “strong judicial policy” that favors the

settlement of class actions. McDonald v. Bass Pro Outdoor World, LLC, Case No.

No. 13-cv-889-BAS(DHB), 2014 WL 3867522, at *2-*3 (S.D. Cal. Aug. 5, 2014)

(citing Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992))

(granting preliminary approval of settlement of CIPA claims). Courts generally look

upon settlements with favor because “settlements offer parties and their counsel

relief from the burdens and uncertainties inherent in trial. . . . The economics of

litigation are such that pretrial settlement may be more advantageous for both sides

than expending the time and resources inevitably consumed in the trial process.”

Franklin v. Kaypro Corp., 884 F.2d 1222, 1225 (9th Cir. 1989). The Ninth Circuit

has recognized that “the very essence of a settlement is compromise.” Officers for

Justice v. Civil Service Comm’n, 688 F.2d 615, 624 (9th Cir. 1982). “[I]t is the very

uncertainty of outcome in litigation and avoidance of wasteful and expensive

litigation that induce consensual settlements.” Id. at 625; see also In re Heritage

Bond Litig., No. 02-ML-1475 DT, 2005 WL 1594403, at *2 (C.D. Cal. June 10,

2005) (settlement “spares the parties the costs of protracted litigation and eases the

congestion of judicial calendars”). Compromise is particularly appropriate in

complex class actions. See Eisen v. Porsche Cars N. Am., Inc., No. 2:11-CV-09405-

CAS-FFMx, 2014 WL 439006, at *3 (C.D. Cal. Jan. 30, 2014). Fed. R. Civ. P. 23(e)

requires judicial approval of a class action settlement.

The class action settlement review and approval process involves two steps.

Preliminary approval is the first step, when the Court determines whether a

settlement falls “within the range of possible judicial approval.” In re M.L. Stern

Overtime Litig., No. 07-CV-0118-BTM (JMA), 2009 WL 995864, at *3 (S.D. Cal.

Apr. 13, 2009) (citation and quotation omitted). If the preliminary evaluation of the

settlement discloses no basis to doubt its fairness or other obvious deficiencies, the


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court may direct that class notice be provided and may set a final fairness hearing.

Manual for Complex Litigation, Fourth, §21.632 (2004). Final approval is the

second step, which occurs after notice of a settlement has been provided to the class.

Id. The Court “need not review the settlement in detail [at the preliminary approval

stage],” because “class members will subsequently receive notice and have an

opportunity to be heard on the settlement” at the final fairness hearing. M.L. Stern

Overtime Litig., 2009 WL 995864, at *3.

When determining whether a settlement is within the range of possible judicial

approval, the court’s discretion is guided by the following factors: (1) the strength of

plaintiffs’ case and the risk, expense, complexity, and likely duration of further

litigation; (2) the amount offered in settlement; (3) the extent of discovery completed

and the stage of proceedings; (4) the experience and view of counsel; and (5) the

absence of collusion. Elliott v. Rolling Frito-Lay Sales, LP, No. SACV 11-01730

DOC(ANx), 2014 WL 2761316, at *3 (C.D. Cal. June 12, 2014). The relative

degree of importance to be attached to any particular factor depends upon the

circumstances of each case. Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1376

(9th Cir. 1993). Analysis of these factors demonstrates that the Settlement is well

within the required range of possible approval.

A. The Strength of Plaintiffs’ Case and the Risk, Complexity, and Likely Duration of Future Litigation

Balancing the risks of continued litigation, the benefits of the Settlement, and

the immediacy and certainty of the significant recovery provided for by the

Settlement shows that the Settlement should be preliminarily approved.

Plaintiffs believe that the claims asserted in the litigation have merit, and

would not have pursued these claims so zealously if it were otherwise. But plaintiffs

also recognize the substantial risks involved in continuing this litigation. HSBC has

aggressively maintained its positions regarding standing, liability, ascertainability,

and damages. Plaintiffs’ counsel are well aware of the inherent problems of proof


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and possible defenses to the claims asserted in the litigation, and recognize the

difficulties in establishing liability on a class-wide basis through summary judgment

or trial, or in achieving a result for the class that is better than the result provided by

the Settlement Agreement.

Further, prosecuting this litigation through trial and appeal would likely be

lengthy and complex, and impose significant costs on all parties. See, e.g., In re

Austrian & German Bank Holocaust Litig., 80 F. Supp. 2d 164, 174 (S.D.N.Y. 2000)

(recognizing that “[m]ost class actions are inherently complex and settlement avoids

the costs, delays, and multitude of other problems associated with them”).

Continued proceedings necessary to litigate this matter to final judgment would

likely include substantial motion practice, further fact discovery, extensive expert

analysis of call recording data, class certification proceedings, further dispositive

motions, and, of course, a trial and appeal.

If the parties continued to litigate the case, class certification could be a

substantial hurdle. The risk is particularly significant in cases involving statutory

damages, such as this, where there are only some records of recordings and only

some means of correlating those records with specific class members, but no clear

way, absent burden-shifting (which plaintiffs contend should apply), to establish

which class members were actually recorded, when or how often. Rubin Decl. ¶17;

see Quesada v. Bank of America Investment Svcs., 2013 WL 623288 (N.D. Cal. Feb.

19, 2013); Torres v. Nutrisystem, Inc., 289 F.R.D. 587 (C.D. Cal. 2013); Hataishi v.

First American Home Buyers Protection Corp., 223 Cal. App. 4th 1454 (2014).

Although plaintiffs believe that these CIPA cases are factually distinguishable, there

is no doubt that a motion for class certification would require significant judicial,

financial, and attorney resources. Further, HSBC has taken the position that even if

plaintiffs were to prevail at class certification, an award of aggregated statutory

damages would violate the excessive fines and due process provisions of the

Constitutions of the United States and the State of California.


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Finally, any decision on the merits would likely be appealed, causing further

delay – particularly in light of the Ninth Circuit’s current case load – as it would

require briefing and likely oral argument. The Settlement, in contrast, delivers a real

and substantial remedy that fairly, reasonably, and adequately addresses the situation

confronting the members of the Settlement Class without the risk and delay inherent

in prosecuting this matter through trial and appeal. See Grant v. Capital Mgmt.

Servs., L.P., No. 10-CV-2471-WQH BGS, 2014 WL 888665, at *3 (S.D. Cal. Mar.

5, 2014) (“The court shall consider the vagaries of the litigation and compare the

significance of immediate recovery by way of the compromise to the mere

possibility of relief in the future, after protracted and expensive litigation. In this

respect, it has been held proper to take the bird in hand instead of a prospective flock

in the bush.”) (citations and quotations omitted); see also Weinberger v. Kendrick,

698 F.2d 61, 73 (2d Cir. 1982) (“There are weighty justifications, such as the

reduction of litigation and related expenses, for the general policy favoring the

settlement of litigation.”); In re Sunrise Sec. Litig., 131 F.R.D. 450, 455 (E.D. Pa.

1990) (approving a class action settlement because, in part, the settlement “will

alleviate . . . the extraordinary complexity, expense and likely duration of this

litigation”).

B. The Amount Offered by the Settlement

This Settlement provides significant relief. The total settlement amount is

thirteen million dollars, inclusive of payments to the class, attorneys’ fees, litigation

costs and expenses, service payments to the class representatives, costs of a third-

party data analyst to determine the Settlement Class List, and the costs of a third-

party settlement administrator. SA ¶¶2.33, 2.34, 3.3(A), 3.7(A). The settlement

amount is larger than other recent CIPA settlements. See, e.g., Reed v. 1-800

Contacts, No. 12-CV-2359 JM BGS (S.D. Cal.) ($11.7 million common fund);

McDonald v. Bass Pro Outdoor World, 13-cv-0889-BAS (DHB) (S.D. Cal.) ($6

million common fund).


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Under the Settlement, class members will receive a monetary recovery that is

at least comparable to settlements in similar cases, if not much improved. The Plan

of Allocation reflects the relative strengths of different categories of putative class

members’ claims. Supra at 8-9; Rubin Decl. ¶29. The relative amounts of recovery

for each putative class member are based upon evidence gathered during discovery

as analyzed by a third party data analyst, including records indicating that only some

recordings of specific telephone calls could be matched with a California credit card

account holder, records indicating that certain telephone conversations with a

California HSBC credit card account holder took place which may or may not have

been recorded, and evidence that additional calls may have been placed and

recorded, even though no records currently exist to document those potential calls or

their recording. Id.

Plaintiffs have identified approximately 100,473 records of recordings for

58,448 unique California account holders. Id. ¶21. These individuals comprise the

“Direct Payment” subclass and will receive a settlement award that is three times the

per-call base award paid to other class members. SA ¶3.6(A); Rubin Decl. ¶¶29-30.

Significantly, these class members will not be required to submit claim forms to

receive compensation, because Plaintiffs contend the evidence proves that their calls

were in fact recorded. Rubin Decl. ¶30. Other putative class members are entitled to

submit claims for relief. SA ¶3.6(B); Rubin Decl. ¶31. Such individuals will be paid

the base award amount for each call that could have been recorded. SA ¶3.6(B)(1);

Rubin Decl. ¶32. These individuals will receive the base award per call (as opposed

to a per-call amount three times higher) because of evidence that only 3-30% of calls

to these individuals were recorded and there is no way to now determine which calls

were indeed recorded. The Settlement also provides a catch-all category (and

publication notice) to account for the possibility that currently available records do

not identify all individuals who fit within the class definition. SA ¶3.6(B)(2); Rubin

Decl. ¶33. Such class members can also submit a claim form, but must provide more


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detailed information. Id. Individuals falling into this category shall be paid the base

award amount for a single call, because there is no way to calculate or prove a “per

call” amount for them. Id.

C. The Extent of Discovery Completed and the Stage of Proceedings

The first case in this litigation was filed over four years ago. Rubin Decl. ¶19.

The discovery and motions practice is detailed supra. See also Rubin Decl. ¶¶19-28.

Plaintiffs’ counsel have significant experience in privacy and consumer class actions

and are knowledgeable about the legal claims and risks in this case. Rubin Decl.

¶¶7-9. Plaintiffs’ counsel have been actively and aggressively advancing this matter

from the outset and were able to obtain millions of HSBC’s records of call

recordings and data encompassing over half a million former California HSBC

account holders. Id. ¶21. The rigorous analysis performed by the IT experts retained

by the Fanning/Lindgren plaintiffs to analyze the data, coupled with counsel’s own

analysis, allowed Class Counsel to match millions of records of nationwide

telephone recordings with the California account holder data, by for example,

matching certain fields (e.g., telephone numbers) in what has been referred to as

“Category 1” data (records of recordings) with “Category 2” data (California account

holder information), which resulted in our identification of 100,473 records of

recordings for 58,448 unique California account holders. Id. “Category 3” data

generated through a subpoena to Capital One allowed the Fanning plaintiffs to

obtain a sampling of 300 actual recordings, and a second subpoena to Capital One

allowed plaintiffs to receive auto dialer logs documenting additional outbound calls

by HSBC, as well as result codes indicating which of those calls resulted in an actual

telephone conversation.

D. The Views and Experience of Counsel

“Parties represented by competent counsel are better positioned than courts to

produce a settlement that fairly reflects each party’s outcome in litigation.”

Rodriguez v. West Publ’g Corp., 563 F.3d 948, 967 (9th Cir. 2009). When both


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parties are represented by experienced counsel, their mutual desire to adopt a

proposed settlement’s terms “while not conclusive, ‘is entitled to significant

weight.’” Arnold v. Fitflop USA, LLC, No. 11-CV-0973 W KSC, 2014 WL

1670133, at *7 (S.D. Cal. Apr. 28, 2014) (quoting Bros. v. Cambridge Lee Indus.,

Inc., 630 F. Supp. 482, 488 (E.D. Pa. 1985)). The Settlement is supported by

experienced and well-qualified counsel. Rubin Decl. ¶¶10-18. The collective

experience of plaintiffs’ counsel is extensive and unparalleled. Additionally, the

services of Judge Infante, a professional mediator and retired federal magistrate

judge, further support a finding that the Settlement value and structure was not

collusive. In re Toyota Motor Corp. Unintended Acceleration Mktg., Sales

Practices, & Prods. Litig., 2013 U.S. Dist. LEXIS 94484, at *237 (C.D. Cal. June

17, 2013). Plaintiffs’ counsel support the Settlement and believe it to be fair,

reasonable, and adequate.

E. The Absence of Collusion

Courts find settlements to be free of fraud or collusion when “the parties were

represented by experienced counsel [and the] settlement was reached through arms-

length negotiations.” Rigo v. Kason Indus., Inc., No. 11-CV-64-MMA (DHB), 2013

WL 3761400, at *6 (S.D. Cal. July 16, 2013) (citations omitted). The Settlement is

the product of over four years of litigation and extensive negotiations conducted by

experienced counsel. Rubin Decl. ¶¶19-28. The settlement negotiation process was

difficult, comprising thee separate mediations: February 18, 2016, March 24, 2016,

and June 6, 2016. Id. ¶28. In addition to face-to-face meetings, there were multiple

telephone conversations, several exchanges of proposals and counter-proposals, and

then a final mediation session on August 24, 2016 to resolve disputes over the scope

of the release. The Settling Parties fought hard for the interests of their respective

clients, and the result is a substantial and valuable recovery for the Settlement Class.

See id. ¶¶10-18.


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II. Certification of the Settlement Class for Settlement Purposes Only Is

Appropriate Here

To be certified for class action treatment, the requirements of Rule 23(a) must

be satisfied in addition to the requirements of one of the subsections of Rule 23(b).

See Fed. R. Civ. P. 23. As detailed below, the requirements of Rule 23(a) and Rule

23(b)(3) are satisfied here. As such, certification of the Settlement Class for

settlement purposes only is appropriate.

A. The Requirements of Rule 23(a)(1) Are Satisfied

1. Numerosity

Rule 23(a)(1) requires that a class be “so numerous that joinder of all members

is impracticable.” Fed. R. Civ. P.23(a)(1). Based on the records produced by HSBC

and/or Capital One in the Fanning Action as analyzed by AB Data, the class consists

of (1) almost 60,000 individuals whose telephone number(s) appear in records of

full-time recordings; (2) over one million individuals whose telephone number(s)

appear in the autodialer logs and whose call records contain a result code that

indicates that an actual telephone conversation took place, meaning that these

individuals may have been recorded; and (3) tens of thousands of additional

California credit card account holders as to whom there is some indication that a

telephone call may have been recorded. Rubin Decl. ¶13.

2. Commonality

Rule 23(a)(2) requires the existence of a question of law or fact that is

common to all class members and capable of class-wide resolution, the

determination of which is central to the validity of all Settlement Class members’

claims. Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011). “All questions

of fact and law need not be common to satisfy the [commonality requirement]. The

existence of shared legal issues with divergent factual predicates is sufficient, as is a

common core of salient facts coupled with disparate legal remedies within the class.”

Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998).

The predominating common issues of fact and law here include whether


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HSBC’s telephone calls to credit card accountholders are “confidential

communications” within the meaning of the California Penal Code and whether

HSBC obtained legally adequate consent from its California credit card

accountholders to record these telephone calls. Rubin Decl. ¶13. The evidence

obtained in the Fanning litigation shows that HSBC had standard procedures with

respect to the handling and recording of outbound telephone calls to its credit card

accountholders. Id. ¶14. Moreover, HSBC relied on the call-recording advisory set

forth in the written card member agreement between credit card account holders and

HSBC Bank Nevada, and did not have a policy for providing verbal advisories that

would give notice to account holders that HSBC would record their calls. Id.

Finally, the question of damages also raises a common issue, because plaintiffs

limited the relief requested to the statutory damages amount ($5,000 per call) rather

than actual damages incurred. Id.

3. Typicality

The focus of Rule 23(a)(3)’s typicality requirement “is whether other members

have the same or similar injury, whether the action is based on conduct which is not

unique to the named plaintiffs, and whether other class members have been injured

by the same course of conduct.” Evon v. Law Offices of Sidney Mickell, 688 F.3d

1015, 1030 (9th Cir. 2012). A class representative’s claims are typical if they are

“reasonably co- extensive with those of absent class members; they need not be

substantially identical.” Hanlon, 150 F.3d at 1020. Plaintiffs’ claims are typical of

the claims of the other Settlement Class Members. Plaintiffs and the other Settlement

Class Members’ claims and injuries arise from substantially the same conduct

because the named plaintiffs, like all the other class members, allege that their

telephone calls with HSBC were “confidential communications” and were recorded

by defendants without the account holders’ consent. Rubin Decl. ¶15.

4. Adequacy

Rule 23(a)(4) requires that representative plaintiffs and class counsel


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adequately represent the interests of the class. Fed. R. Civ. P. 23(a)(4). When

analyzing adequacy, courts ask: “(1) do the named plaintiffs and their counsel have

any conflicts of interest with other class members and (2) will the named plaintiffs

and their counsel prosecute the action vigorously on behalf of the class?” Evon, 688

F.3d at 1031 (quoting Hanlon, 150 F.3d at 1020). Plaintiffs are adequate class

representatives because they are not subject to any unique defense, have no conflicts

with the class, and have retained experienced counsel. Rubin Decl. ¶15. Plaintiffs’

counsel have extensive experience prosecuting complex class actions, including

privacy cases. Id. ¶¶7-9. As demonstrated by their efforts in this litigation to date,

Plaintiffs’ counsel have and will continue to vigorously prosecute this matter on

behalf of the Settlement Class.

B. The Requirements of Rule 23(b)(3) Are Satisfied

1. Predominance

The predominance inquiry tests whether the proposed class is “sufficiently

cohesive to warrant adjudication by representation.” Amchem Products v. Windsor,

521 U.S. 591, 623 (1997); Wolin v. Jaguar Land Rover N.A., LLC, 617 F.3d 1168,

1172 (9th Cir. 2010). Predominance requires that “questions of law or fact common

to class members predominate over any questions affecting only individual

members.” Fed. R. Civ. P. 23(b)(3). “‘When common questions present a

significant aspect of the case and they can be resolved for all members of the class in

a single adjudication, there is clear justification for handling the dispute on a

representative rather than on an individual basis.’” Local Joint Exec. Bd. of

Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152, 1162 (9th

Cir. 2001) (quoting Hanlon, 150 F.3d at 1022). As noted above, several questions

of law and fact common to all members of the Settlement Class exist in this

litigation, and they predominate over any potential questions affecting only

individual Settlement Class Members.


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2. Superiority

Rule 23(b)(3) requires a class action to be “superior to other available methods

for the fair and efficient adjudication of the controversy,” and examines the

following factors: (A) the class members’ interest in individually controlling the

prosecution or defense of separate actions; (B) the extent and nature of any litigation

concerning the controversy already begun by or against class members; (C) the

desirability or undesirability of concentrating the litigation of the claims in the

particular forum; and (D) the likely difficulties in managing a class action. Fed. R.

Civ. P. 23(b)(3). Concerns about manageability that may exist when a court certifies

a class for litigation purposes are not present when a class is certified for settlement

purposes only, because the case is not to be tried. Amchem, 521 U.S. at 621. “[A]

class action has to be unwieldy indeed before it can be pronounced an inferior

alternative—no matter how massive the fraud or other wrongdoing that will go

unpunished if class treatment is denied—to no litigation at all.” Carnegie v.

Household Int’l Inc., 376 F.3d 656, 661 (7th Cir. 2004).

A class action is superior to any other available means for the fair and efficient

adjudication of this controversy. The damages, harm, and other detriment suffered

by Settlement Class Members are relatively small compared to the burden and

expense that would be required to individually litigate their claims against HSBC,

making it wasteful and impracticable for Settlement Class Members to individually

bring actions against HSBC relating to the call recordings without consent. Rubin

Decl. ¶15. Even if Settlement Class Members could afford individual litigation, the

court system should not be required to bear the burden and expense of such

inefficiency. Individualized litigation also creates the potential for inconsistent or

contradictory judgments and increases the delay and expense to all parties and the

court system. By contrast, the class action device provides the benefits of a single

adjudication, economy of scale, and comprehensive supervision by a single court.

Thus, the requirements of Rule 23 are satisfied and certification of the Settlement


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Class for settlement purposes only is appropriate.

III. Notice of the Settlement

A. Scope and Contents of Notice

Pursuant to Fed. R. Civ. P. 23(e)(1), “[t]he court must direct notice in a

reasonable manner to all class members who would be bound by the proposal.” “The

notice must clearly and concisely state in plain, easily understood language: (i) the

nature of the action; (ii) the definition of the class certified; (iii) the class claims,

issues, or defenses; (iv) that a class member may enter an appearance through an

attorney if the member so desires; (v) that the court will exclude from the class any

member who requests exclusion; (vi) the time and manner for requesting exclusion;

and (vii) the binding effect of a class judgment on members under Rule 23(c)(3).”

Fed. R. Civ. P. 23(c)(2)(B). Notice is satisfactory if it “generally describes the terms

of the settlement in sufficient detail to alert those with adverse viewpoints to

investigate and to come forward and be heard.” Churchill Village, LLC v. General

Electric, 361 F.3d 566, 575 (9th Cir. 2004). The Notices required by the Settlement

are specifically tailored to meet the needs of the various categories of putative class

members identified in this litigation and meet all these requirements.

The Notices are designed to provide information about the proposed

settlement, along with clear, concise, easily understood information about Settlement

Class members’ legal rights. SA ¶3.5; Rubin Decl. ¶¶34-40. The relevant documents

include Email Notice, Postcard Notice, Publication Notice, and a detailed notice

available on the settlement website. SA ¶3.5. There are two separate forms of post

card notice – one to be sent to the Direct Payment class, and the other to be sent to

class members who must submit a claim form to obtain a settlement award – so there

will be no confusion among class members about whether a claim form is required.

SA ¶3.5(A).

The Notices provide a fair summary of the Settling Parties’ litigation

positions, the general terms of the settlement, instructions on how to object to or opt


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out, the process and instructions for submitting claims and the date, time, and place

of the Final Fairness Hearing. See Notice Plan, SA Exs. 3-6; Rubin Decl. ¶¶34-40.

The Notices set forth information that a reasonable person would consider material

in making an informed, intelligent decision whether to opt out or remain a member

of the Settlement Class and be bound by a final judgment, and direct individuals to a

convenient location to obtain more detailed information. See id. Altogether, the

Notice Documents fairly apprise the Settlement Class Members of the terms of the

Settlement and the options that are open to them in connection with the proceedings

B. Requests For Exclusion/Opt-Out and Objections

1. Opting Out

A Person wishing to opt out of the Settlement Class may do so by timely

submitting written notice of such intent to the designated mailing address established

by the Claims Administrator no later than the opt-out and objection deadline. SA

¶3.11. A valid opt-out or exclusion request must (1) be signed by the person in the

Settlement Class who is requesting exclusion; (2) include the full name, address,

telephone number(s), and account number(s) of the person in the Settlement Class

requesting exclusion (except that persons in the Settlement Class who do not have

and have not had a credit card relationship with HSBC Bank Nevada, N.A. shall not

be required to include an account number); and (3) include the following statement:

“I/we request to be excluded from the settlement in the Fanning Action, the Lindgren

Action and the Medeiros Action.” Id.

2. Objecting

Any objection must be in writing and filed with the Court by the opt-out and

objection deadline and also mailed to counsel for the parties. SA ¶3.12(b).

Settlement Class members desiring to object to the Settlement may appear at the

Final Approval Hearing but only if they have submitted a timely written notice of

their objection. SA ¶3.12(A).


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CONCLUSION

As demonstrated above, the Settlement readily meets the standard for

preliminary approval. Accordingly, plaintiffs respectfully request that the Court enter

an order granting preliminary approval of the Settlement and providing the other

relief requested herein.

Dated: August 26, 2016 Respectfully submitted,

By: /s/ Michael Rubin

Michael Rubin

MICHAEL RUBIN

EVE CERVANTEZ

P. CASEY PITTS

Altshuler Berzon LLP

177 Post Street, Suite 300

San Francisco, California 94108

(415) 421-7151

(415) 362-8064 (fax)

[email protected]

[email protected]

[email protected]

ELIZABETH J. ARLEO

Arleo Law Firm, PLC

16870 West Bernardo Drive, Ste 400

San Diego, CA 92127

(858) 674-6912

(760) 789-8081 (fax)

[email protected]

AZRA Z. MEHDI

The Mehdi Firm, PC

One Market

Spear Tower, Suite 3600

San Francisco, CA 94105

(415) 293-8039

(415) 293 8001 (fax)


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[email protected] STEPHEN C. MAXWELL (admitted phv)

RANDALL E. TURNER (admitted phv)

BAILEY & GALYEN

1300 Summit Avenue, Ste. 650

Fort Worth, Texas 76102

(817) 417-9660

(817) 719-9484 (fax)

[email protected]

[email protected] Attorneys for Plaintiffs Terry J. Fanning,

Tatiana Jabbar, and Stefan O. Lindgren

JOSHUA B. SWIGART

DAVID J. MCGLOTHLIN

Hyde & Swigart

2221 Camino Del Rio South, Suite 101

San Diego, CA 92108

Telephone: (619) 233-7770

Facsimile: (619) 297-1022

[email protected]

[email protected] ABBAS KAZEROUNIAN

Kazerouni Law Group, APC

245 Fischer Avenue, Unit D1

Costa Mesa, CA 92626

Telephone: (800) 400-6808

Facsimile: (800) 520-5523

E-mail: [email protected] TODD M. FRIEDMAN

Law Offices of Todd M. Friedman, P.C.

324 South Beverly Blvd., Suite 725

Beverly Hills, CA 90211

Telephone: (877) 206-4741

[email protected] Attorneys for Plaintiffs Gail Medeiros, Tracy T.

Bomberger, Peter Morrissey, and Julie Pulatie


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[PROPOSED] ORDER (1) CONDITIONALLY CERTIFYING A SETTLEMENT CLASS, (2) PRELIMINARILY APPROVING CLASS ACTION SETTLEMENT, (3) APPROVING NOTICE PLAN AND (4) SETTING FINAL

APPROVAL HEARING

LA 52005897



GAIL MEDEIROS, et al.,

Plaintiffs, vs.

HSBC CARD SERVICES, INC. and HSBC TECHNOLOGY & SERVICES (USA), INC.,

Defendants.

TERRY J. FANNING, et al., Plaintiffs,

vs.

HSBC CARD SERVICES INC. and HSBC TECHNOLOGY & SERVICES (USA), INC.,

Defendants.

Case Nos. 2:15-cv-09093-JVS-AFM 8:12-cv-00885-JVS-RNB 14-cv-05615-JVS-RNBx [PROPOSED] ORDER (1) CONDITIONALLY CERTIFYING A SETTLEMENT CLASS, (2) PRELIMINARILY APPROVING CLASS ACTION SETTLEMENT, (3) APPROVING NOTICE PLAN AND (4) SETTING FINAL APPROVAL HEARING Date: October 17, 2016 Time: 1:30 p.m. Location: Courtroom 10A 411 W. Fourth St. Santa Ana, CA 92701

STEFAN O. LINDGREN, Plaintiff, vs. HSBC CARD SERVICES, INC. and HSBC TECHNOLOGY & SERVICES (USA), INC., Defendants.

Case 2:15-cv-09093-JVS-AFM Document 85-2 Filed 08/26/16 Page 1 of 11 Page ID #:1841

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APPROVAL HEARING LA 52005897

STROOCK & STROOCK & LAVAN LLP

2029 Century Park East

Los Angeles, California 90067-3086

This matter came before the Court on Plaintiffs’ Motion for Preliminary

Approval of the proposed class action settlement (the “Settlement”) of the cases

entitled Fanning et al. v. HSBC Card Services, Inc. et al., Case No. 12-cv-00885-

JVS-RNBx (“Fanning”); Lindgren v. HSBC Card Services, Inc. et al., Case No. 14-

cv-05615-JVS-RNBx (“Lindgren”); and Gail Medeiros, et al. v. HSBC Card Services

Inc., et al., Case No. 2:15-cv-09093-JVS-AFM (“Medeiros”) (collectively “the

Actions”). The Actions were brought by plaintiffs Terry Fanning, Tatiana Jabbar,

Stefan Lindgren, Gail Medeiros, Tracy T. Bomberger, Peter Morrissey, and Julie

Pulatie, individually and on behalf of all others similarly situated, against defendants

HSBC Card Services Inc. and HSBC Technology & Services (USA) Inc. (“HSBC”).

Collectively, Gail Medeiros, Tracy T. Bomberger, Peter Morrissey, Julie Pulatie,

Stefan O. Lindgren, Terry J. Fanning and Tatiana Jabbar are referred to herein as the

“Plaintiffs” and together, with HSBC, the “Parties.”

Based on this Court’s review of the Parties’ Settlement Agreement and

Release (the “Agreement”), Plaintiffs’ Motion for Preliminary Approval of

Settlement, and the arguments of counsel, THE COURT HEREBY FINDS AND

ORDERS AS FOLLOWS:

1. Settlement Terms. Unless otherwise defined herein, all terms in this

Order shall have the meanings ascribed to them in the Agreement.

2. Jurisdiction. The Court has jurisdiction over the subject matter of the

Actions, the Parties, and all persons in the Settlement Class.

3. Scope of Settlement. The Agreement resolves all claims alleged in the

operative complaints filed in each of the Actions.

4. Preliminary Approval of Proposed Agreement. The Court has

conducted a preliminary evaluation of the Settlement as set forth in the Agreement.

Based on this preliminary evaluation, the Court finds that: (a) the Agreement is fair,

reasonable and adequate, and within the range of possible approval; (b) the


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Agreement has been negotiated in good faith at arm’s length between experienced

attorneys familiar with the legal and factual issues of this case; and (c) with respect

to the forms of notice of the material terms of the Settlement to persons in the

Settlement Class for their consideration (Exs. 3, 4, 5 and 6 to the Agreement), that

notice is appropriate and warranted. Therefore, the Court grants preliminary

approval of the Settlement.

5. Class Certification for Settlement Purposes Only. The Court, pursuant

to Rule 23 of the Federal Rules of Civil Procedure, conditionally certifies, for

purposes of this Settlement only, the following Settlement Class:

All persons in California who received a telephone call between March 23, 2009 and May 1, 2012 from or on behalf of HSBC Card Services Inc. and whose call was recorded or monitored by or on behalf of HSBC Card Services Inc. or HSBC Technology & Services (USA) Inc.

“Settlement Class Member” means any person in the Settlement Class who does not

validly exclude themselves.

6. The Settlement Class Satisfies Rule 23’s Requirements. In connection

with this conditional certification, the Court makes the following preliminary

findings:

(a) The Settlement Class appears to be so numerous that joinder of all

members is impracticable;

(b) There appear to be questions of law or fact common to the

Settlement Class for purposes of determining whether the Settlement should be

approved;

(c) Plaintiffs’ claims appear to be typical of the claims being resolved

through the Settlement;

(d) Plaintiffs appear to be capable of fairly and adequately protecting

the interests of all members of the Settlement Class in connection with the

Settlement;


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(e) For purposes of determining whether the Agreement is fair,

reasonable and adequate, common questions of law and fact appear to predominate

over questions affecting only individual persons in the Settlement Class.

Accordingly, the Settlement Class appears to be sufficiently cohesive to warrant

settlement by representation; and

(f) For purposes of the Settlement, certification of the Settlement

Class appears to be superior to other available methods for the fair and efficient

settlement of the claims of the Settlement Class.

7. Class Representatives. The Court appoints Plaintiffs to act as the

representatives of the Settlement Class pursuant to Rule 23 of the Federal Rules of

Civil Procedure.

8. Class Counsel. The Court appoints Hyde & Swigart, Kazerouni Law

Group, APC, Law Offices of Todd M. Friedman, P.C., Altshuler Berzon LLP, The

Mehdi Firm PC, Arleo Law Firm PLC, and Bailey and Galyen as Class Counsel

pursuant to Rule 23 of the Federal Rules of Civil Procedure.

9. Final Approval Hearing. At _____ _.m. on __________, 2017, in

Courtroom 10A of the United States Courthouse, 411 West Fourth St., Santa Ana,

CA 92701, or at such other date and time later set by Court Order, this Court will

hold a Final Approval Hearing on the fairness, adequacy and reasonableness of the

Agreement and to determine whether (a) final approval of the Settlement embodied

by the Agreement should be granted, and (b) Class Counsel’s application for

attorneys’ fees and expenses, and service awards to Plaintiffs, should be granted, and

in what amount. No later than February 14, 2017, Plaintiffs must file papers in

support of Class Counsel’s application for attorneys’ fees and expenses and the

service awards to Plaintiffs. No later than May 15, 2017, which is thirty (30) days

after the Opt-Out and Objection Deadline, papers in support of final approval of the

Settlement and response to any written objections must be filed.


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10. Settlement Claims Administrator. KCC LLC is hereby appointed as the

Claims Administrator and shall be required to perform all the duties of the Claims

Administrator as set forth in the Agreement and this Order.

11. Class Notice. The Court approves the proposed plan for giving notice to

the Settlement Class directly (using e-mail and post cards), Publication Notice and

through establishment of a Settlement Website, as more fully described in Plaintiffs’

Motion and the Agreement (“Notice Plan”). The Notice Plan, in form, method and

content, complies with the requirements of Rule 23 of the Federal Rules of Civil

Procedure and due process, and constitutes the best notice practicable under the

circumstances. The Court hereby directs the Parties and the Claims Administrator to

complete all aspects of the Notice Plan no later than January 15, 2017 (“Notice

Deadline”).

12. Proof of Class Notice. The Claims Administrator will file with the

Court by no later than May 15, 2017, which is thirty (30) days after the Opt-Out and

Objection Deadline, proof that notice was provided in accordance with the

Agreement and this Order.

13. Opt-Out and Objection Deadline. Persons in the Settlement Class who

wish to either object to the Settlement or request exclusion from the Settlement Class

must do so by April 15, 2017, which is ninety (90) days after the Notice Deadline.

Persons in the Settlement Class may not both object and opt-out. If a person both

requests to opt-out and objects, the request to opt-out will control.

14. Exclusion from the Settlement Class. To request exclusion from the

Settlement Class, a person in the Settlement Class must follow the directions in the

Class Notice and send a compliant request to the Claims Administrator at the address

designated in the Class Notice by the Opt-Out and Objection Deadline. Exclusion

requests must: (i) be signed by the person in the Settlement Class who is requesting

exclusion; (ii) include the full name, address, telephone number(s), and account


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number(s) of the person in the Settlement Class requesting exclusion (except that

persons in the Settlement Class who do not have and have not had a credit card

relationship with HSBC Bank Nevada, N.A. shall not be required to include an

account number); and (iii) include the following statement: “I/we request to be

excluded from the settlement in the HSBC California Call Recording Lawsuits.” No

request for exclusion will be valid unless all of the information described above is

included. For any person in the Settlement Class who has more than one account, the

exclusion request shall include all accounts. No person in the Settlement Class, or

any person acting on behalf of or in concert or participation with that person in the

Settlement Class, may exclude any other person in the Settlement Class from the

Settlement Class.

15. Filing of Exclusion Requests. The Claims Administrator will retain a

copy of all requests for exclusion. Not later than thirty (30) days after the Opt-Out

and Objection Deadline, the Claims Administrator will file, under seal, with the

Court a declaration that lists all of the exclusion requests received.

16. Objections to the Settlement. To object to the Settlement, Settlement

Class Members must follow the directions below and in the Class Notice and file a

written objection with the Court by the Opt-Out and Objection Deadline.

Settlement Class Members also must mail the objection by the Opt-Out and

Objection Deadline to each of the following: (a) Class Counsel – Abbas

Kazerounian, Kazerouni Law Group, 245 Fischer Avenue, Unit D1, Costa Mesa,

CA 92626, and Michael Rubin, Altshuler Berzon LLP, 177 Post Street, Suite 300,

San Francisco, CA 94108; and (b) HSBC’s Counsel – Julia B. Strickland, Stroock

& Stroock & Lavan LLP, 2029 Century Park East, Los Angeles, California 90067.

To be valid, the objection must: (i) attach documents establishing, or provide

information sufficient to allow the parties to confirm, that the objector is a

Settlement Class Member, including but not limited to the objector’s full name,


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address, and the telephone number(s) called by or on behalf of HSBC within the

Class Period; (ii) include a statement of the specific objections; (iii) state the

grounds for objection, as well as identify any documents which the objector desires

the Court to consider; (iv) whether the objector intends to appear at the Final

Approval Hearing on his or her own behalf or through counsel; and (v) disclose

every prior objection to any class action settlement ever made by the objector

including the case name, case number, and disposition of the prior objection(s).

The Court will not consider an objection unless the objection includes all of the

foregoing information.

17. Settlement Binding on Settlement Class Members. Any Settlement

Class Member who fails to timely comply with Paragraph 16 will not be permitted to

object to the Settlement at the Final Approval Hearing, will be foreclosed from

seeking any review of the Settlement by appeal or other means, will be deemed to

have waived his, her or its objections, and will be forever barred from making any

objections in the Action or any other related action or proceeding. All Settlement

Class Members will be bound by all determinations and judgments in the Action,

whether favorable or unfavorable to the Settlement Class. If a timely and valid

exclusion request is made by a person in the Settlement Class, then the Agreement

and any determinations and judgments concerning the Settlement will not bind the

excluded person.

18. Clerk of the Court to Redact Objections. For any objection filed, the

Clerk of the Court is ordered to redact any social security number, the street address,

telephone number and last name except first letter of last name in order to protect the

objector’s privacy. The objector’s first name and city, state and zip code, as well as

the objection, will not be redacted.

19. Stay of These Actions. Pending the final determination of whether the

Settlement should be approved, all pre-trial proceedings in these Actions are stayed.


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20. Stay of Actions or Claims Asserting Released Claims by Plaintiffs or

the Settlement Class. Pending the final determination of whether the Settlement

should be approved, Plaintiffs and all persons in the Settlement Class are hereby

stayed and enjoined from commencing, pursuing, maintaining, enforcing or

prosecuting, either directly or indirectly, any Released Claims in any judicial,

administrative, arbitral or other forum, against any of the Released Parties. Such

injunction will remain in force until the Court enters the Final Approval Order or

until such time as the Parties notify the Court that the Settlement has been

terminated. Nothing herein will prevent any person in the Settlement Class, or any

person actually or purportedly acting on behalf of any such person (s), from taking

any actions to stay or dismiss any Released Claim(s). This injunction is necessary to

protect and effectuate the Agreement, this Preliminary Approval Order, and the

Court’s flexibility and authority to effectuate the Agreement and to enter judgment

when appropriate, and is ordered in aid of this Court’s jurisdiction and to protect its

judgments. This injunction does not apply to any person who requests exclusion

from the Settlement.

21. Conditional Certification of the Settlement Class. If for any reason

whatsoever this Settlement is not finalized or the Settlement as detailed in the

Agreement is not finally approved by the Court, the certification of the Settlement

Class shall be void and the Parties and the Action will return to the status quo as it

existed prior to the Agreement, and no doctrine of waiver, estoppel or preclusion will

be asserted in any proceedings, in response to any motion seeking class certification,

any motion seeking to compel arbitration or otherwise asserted at any other stage of

the Action or in any other proceeding. No agreements, documents or statements

made by or entered into by any Party in connection with the Settlement, including

but not limited to confirmatory discovery, may be used by Plaintiffs, any person in

the proposed Settlement Class, HSBC or any other person to establish liability, any


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defense and/or any of the elements of class certification, whether in the Action or in

any other proceeding.

22. Termination. In the event that the Settlement is not approved, or is

terminated, canceled or fails to become effective for any reason, the money

remaining in the Settlement Fund (including accrued interest), less expenses and

taxes incurred or due and owing and payable from the Settlement Fund in accordance

with the Agreement, shall be returned to HSBC within 15 days of the event that

causes the Agreement to not become effective.

23. No Admission of Liability. The Agreement and any and all

negotiations, documents, and discussions associated with it, will not be deemed or

construed to be an admission or evidence of any violation of any statute, law, rule,

regulation or principle of common law or equity, or of any liability or wrongdoing by

HSBC, or the truth of any of the claims. Evidence relating to the Agreement will not

be discoverable or used, directly or indirectly, in any way, whether in the Actions or

in any other action or proceeding, except for purposes of demonstrating, describing,

implementing or enforcing the terms and conditions of the Agreement, this Order and

the Final Approval Order.

24. Reasonable Procedures to Effectuate the Settlement. Counsel are

hereby authorized to use all reasonable procedures in connection with approval and

administration of the Settlement that are not materially inconsistent with this Order

or the Agreement, including making, without further approval of the Court, minor

changes to the form or content of the Class Notice and Claim Form and other

exhibits that they jointly agree are reasonable and necessary. The Court reserves the

right to approve the Agreement with such modifications, if any, as may be agreed to

by the Parties without further notice to persons in the Settlement Class.

25. Schedule of Future Events. Accordingly, the following are the

deadlines by which certain events must occur:


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IT IS SO ORDERED.

Dated:

By:

January 15, 2017

Deadline for notice to be provided in accordance with the

Agreement and this Order (Notice Deadline)

February 14,

2017

[30 days after the

Notice Deadline]

Deadline for filing of Plaintiffs’ Motion for Attorneys’ Fees

and Costs and Service Awards

April 15, 2017

[90 days after the

Notice Deadline]

Deadline to file objections or submit requests for exclusion

(Opt-Out and Objection Deadline)

April 15, 2017

[90 days after the

Notice Deadline]

Deadline for Settlement Class Members to Submit a Claim

Form (Claim Period)

May 15, 2017

[30 days after the

Opt-Out and

Objection

Deadline]

Deadline for Parties to file the following:

(1) List of persons who made timely and proper requests

for exclusion (under seal);

(2) Proof of Class Notice; and

(3) Motion and memorandum in support of final approval,

including responses to any objections.

______, 2017 at

____ p.m.

Final Approval Hearing


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Honorable James V. Selna United States District Judge


PROOF OF SERVICE

CASE NOS. 2:15-cv-09093-JVS (AFMx), 12-CV-00885-JVS-RNB

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MICHAEL RUBIN (SBN 80618) EVE CERVANTEZ (SBN 164709) P. CASEY PITTS (SBN 262463) Altshuler Berzon LLP 177 Post Street, Suite 300 San Francisco, California 94108 Telephone: (415) 421-7151 Facsimile: (415) 362-8064 E-mail: [email protected] [email protected] [email protected] ABBAS KAZEROUNIAN (SBN 249203) Kazerouni Law Group, APC 245 Fischer Avenue, Unit D1 Costa Mesa, CA 92626 Telephone: (800) 400-6808 Facsimile: (800) 520-5523 E-mail: [email protected]

Attorneys for Plaintiffs



GAIL MEDEIROS, et al., Plaintiffs, v. HSBC CARD SERVICES INC., et al.,

Defendants.

Case No. 2:15-cv-09093 JVS (AFMx) Case No. 12-CV-00885-JVS-RNB Relates to: Medeiros, Fanning, and Lindgren PROOF OF SERVICE

TERRY FANNING, et al.,

Plaintiffs v. HSBC CARD SERVICES INC., et al.,

Defendants. STEFAN O. LINDGREN, Plaintiff, vs. HSBC CARD & RETAIL SERVICES, INC., et al., Defendants.


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PROOF OF SERVICE

CASE NOS. 2:15-cv-09093-JVS (AFMx), 12-CV-00885-JVS-RNB

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PROOF OF SERVICE

I declare that I am employed in the office of a member of the bar of this Court

at whose direction the service was made. I am over the age of 18, and not a party to

this action. My business address is 177 Post Street, Suite 300, San Francisco, CA

94108. On August 26, 2016, I served the following document(s):

1. NOTICE OF MOTION AND MOTION FOR PRELIMINARY

APPROVAL OF CLASS ACTION SETTLEMENT

2. MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT

OF PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF

CLASS ACTION SETTLEMENT

3. DECLARATION OF MICHAEL RUBIN IN SUPPORT OF

PLAINTIFFS’ MOTION FOR PRELIMINARY APPROVAL OF

CLASS ACTION SETTLEMENT

4. [PROPOSED] ORDER (1) CONDITIONALLY CERTIFYING A

SETTLEMENT CLASS, (2) PRELIMINARILY APPROVING

CLASS ACTION SETTLEMENT, (3) APPROVING NOTICE PLAN

AND (4) SETTING FINAL APPROVAL HEARING

5. PROOF OR SERVICE

On all interested parties in this action by ECF as follows:

VIA ECF: Julia Strickland ([email protected]) Arjun P. Rao ([email protected]) Shannon Dudic ([email protected]) Stroock & Stroock & Lavan LLP 2029 Century Park East Los Angeles, CA 90067-3086

VIA ECF: Joshua B. Swigart ([email protected]) Hyde & Swigart 2221 Camino Del Rio South, Suite 101 San Diego, CA 92108-3551

VIA ECF: Abbas Kazerounian ([email protected]) Kazerouni Law Group, APC 245 Fischer Avenue, Unit D1 Costa Mesa, CA 92626


1 MICHAEL RUBIN (SBN 80618) EVE CERVANTEZ …...The Settling Defendants are HSBC Card Services Inc....

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