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Spine and Sports Chiropractic Inc. v. Zirmed, Inc.

United States District Court, W.D. Kentucky, Louisville Division

May 4, 2015

SPINE AND SPORTS CHIROPRACTIC, INC. an Ohio corporation, individually and as the representative of a class of similarly-situated persons, Plaintiffs,
v.
ZIRMED, INC. and JOHN DOES 1-10, Defendants.

MEMORANDUM OPINION AND ORDER

THOMAS B. RUSSELL, Senior District Judge.

This matter is before the Court on the Settling Parties' motion for preliminary approval of the class-action settlement. (Docket No. 74). No objections were filed, and the motion was unopposed. This matter is now ripe for adjudication. For the following reasons, the Court, having reviewed the record and being fully advised, preliminarily approves the settlement agreement. Plaintiff's Motion for Preliminary Approval of Class Settlement Agreement is GRANTED.

BACKGROUND

Plaintiff Spine and Sports Chiropractic, Inc. ("S&S"), alleges that on November 8, 2012, it received an advertisement, (Docket No. 1-2), via its facsimile machine for various products and services offered by Defendant ZirMed. ( See Docket No. 34-3). S&S alleges ZirMed had not received permission to send this advertisement, and the fax ad did not include an opt-out notice meeting the requirements of the Telephone Consumer Protection Act ("TCPA"). The TCPA makes it unlawful "to send to a telephone facsimile machine an unsolicited advertisement, unless-" certain requirements are met. 47 U.S.C. 227(b)(1)(C). S&S claims entitlement to the statutory damages provided by the TCPA.[1] On June 30, 2014, the Court certified a class consisting of the 663 subscribers of the fax numbers to whom ZirMed successfully sent the ZirMed Fax. The Court named S&S as the representative of the class. Following a settlement conference, S&S now submits this unopposed motion requesting preliminary approval of the Class Settlement Agreement, approving the proposed notice and plan for distribution of the settlement funds, approving the means of identifying subscribers, and setting a date for a final approval hearing.

STANDARD

Class actions may only be settled with the court's approval. Fed.R.Civ.P. 23(e). Approval of class settlements is often bifurcated into preliminary and final approval proceedings. "At the stage of preliminary approval, the questions are simpler, and the court is not expected to, and probably should not, engage in analysis as rigorous as is appropriate for final approval." David F. Herr, Annotated Manual for Complex Litigation (Fourth) § 21.662 (2012). Instead, the Court must only "make a preliminary determination on the fairness, reasonableness, and adequacy of the settlement terms and must direct the preparation of notice of certification, proposed settlement, and date of the final fairness hearing." Manual for Complex Litigation § 21.632 (4th ed.2004); see Fed.R.Civ.P. 23(e)(2) ("[T]he court may only approve [the settlement] after a hearing and on finding that it is fair, reasonable, and adequate."). Fairness, reasonableness, and adequacy are separate determinations.

Fairness calls for a comparative analysis of the treatment of class members vis-á-vis each other and vis-á-vis similar individuals with similar claims who are not in the class. Reasonableness depends on an analysis of the class allegations and claims and the responsiveness of the settlement to those claims. Adequacy of the settlement involves a comparison of the relief granted relative to what class members might have obtained without using the class action process.

Manual for Complex Litigation § 21.62 (4th ed. 2004). In making these determinations, the Court "must take care not to intrude upon the private settlement negotiations of the parties any more than is necessary to determine that the agreement is not the result of fraud or collusion, and that it is fair and adequate in light of the potential outcome and costs of litigation." Smith v. Ajax Magnethermic Corp., 2007 WL 3355080 (N.D. Ohio Nov. 7, 2007). In the face of a motion for preliminary approval, the Court's role is to "evaluate whether the proposed settlement appears to be the product of serious, informed, non-collusive negotiation, has no obvious deficiencies, does not improperly grant preferential treatment to class representatives or segments of the class, and falls within the range of possible approval.'" Hyland v. HomeServices of Am., Inc., 2012 WL 122608, at *2 (W.D. Ky. Jan. 17, 2012) (quoting In re Nasdaq Market-Makers Antitrust Litig., 176 F.R.D. 99, 102 (S.D.N.Y. 1997)).

DISCUSSION

A. The Proposed Settlement is Fair, Reasonable, and Adequate

Upon preliminary review, the Court finds that the proposed settlement agreement is fair, reasonable, and adequate. Under the agreement, ZirMed has agreed to pay the total sum of $380, 650.00 into a settlement fund in consideration for a release of claims by the Class Members for any TCPA violations. The funds will be allocated as follows. Class Counsel will request an award of $126, 833, which represents 33% of the Settlement Fund. Additionally Class Counsel anticipates requesting an award of expenses which will likely be approximately $17, 000. As Class Representative, S&S will receive an incentive award of $10, 000. The remaining settlement fund will be allocated to the Class Members on a pro rata basis, up to a maximum of $500 per class member. If all Class Members are eligible to receive a share of the fund, each would receive $342.10. If the fund is not exhausted, either from fewer claims than expected or uncashed checks, any remaining funds will be retained by ZirMed.

The proposed settlement is fair. "Fairness calls for a comparative analysis of the treatment of class members vis-á-vis each other and vis-á-vis similar individuals with similar claims who are not in the class." Manual for Complex Litigation § 21.62 (4th ed.2004). The terms of the settlement are fair to the Class members because members are treated equally.

Next, the proposed settlement is reasonable. "Reasonableness depends on an analysis of the class allegations and claims and the responsiveness of the settlement to those claims." Id. The settlement is reasonable because the payments are sufficient to ameliorate the injuries suffered by the class, and are near to the statutorily prescribed damages amount.

Finally, the proposed settlement is adequate. "Adequacy of the settlement involves a comparison of the relief granted relative to what class members might have obtained without using the class action process." Id. The economic injury allegedly suffered by each class member is small. Only by proceeding in aggregate does the potential amount of damages become sufficient to provide for the payment of the expenses necessary to pursue the alleged claims. Accordingly, the proposed settlement is more than ...


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