Hart v. BHH LLC

Background

Joanne Hart and Sandra Bueno brought a class action against BHH, LLC and Van Hauser, LLC. They alleged that ultrasonic pest repellers sold by the defendants failed to work as advertised and asserted claims for fraud, breach of warranty, and violations of the California Legal Remedies Act.

The case had been litigated for about five years. The court had ruled on motions to dismiss, expert-evidence challenges, class certification, summary judgment, and other motions. The case was approaching trial when the parties settled. The court had previously denied preliminary approval of an earlier settlement because it included a provision paying attorneys before class members and proposed arbitration of attorneys’ fees. The parties revised the agreement, removed the early-payment provision, abandoned arbitration, and agreed that plaintiffs would seek no more than $6,500,000 in attorneys’ fees and expenses.

Settlement Terms and Notice

The revised settlement provides refunds for qualifying pest-repeller purchases. A class member who submits proof of purchase showing the price may receive a full refund for up to six units. If proof of purchase does not show the price, the payment is $15 per unit for up to six units. Without proof of purchase, the payment is $15 per unit for up to two units.

The claims administrator sent approximately 900,000 notices, published notice on a website, and used internet advertising. As of August 24, 2020, there were 47 opt-outs or exclusions and no objections. The administrator had validated 72,578 claims covering 143,074 units, with a payout of $2,118,505.24, and estimated a final payout between $2,118,505.24 and $2,472,940.07. The court found the notice reasonable and the settlement procedurally fair because it resulted from arm’s-length negotiations by experienced counsel.

Final Settlement Approval

The court applied the factors commonly used to evaluate class settlements, including the complexity and likely duration of the case, the class’s reaction, the stage of litigation, the risks of proving liability and damages, and the reasonableness of the recovery. The court emphasized that no class member objected, the case had reached an advanced stage, discovery and major motions were complete, and the settlement provided an approximate full refund while avoiding risks at trial. The court also found that unclaimed settlement funds that would remain with the defendants should not be counted as a benefit to the class.

The court therefore approved the proposed settlement and settlement notice. The opinion’s conclusion states that the plaintiffs’ motions were granted, while the earlier ruling specifically states that the final-approval motion was granted and the attorneys’ fee motion was granted in part and denied in part.

Incentive Awards and Expenses

The court approved $5,000 incentive awards for each class representative. The representatives each spent approximately 45 to 50 hours on the case, and the awards would be paid separately by the defendants rather than from the class recovery.

The court also found reasonable the requested $700,227.57 in class counsel’s litigation expenses and allowed those expenses to be reimbursed. Digital Settlement Group, LLC, the notice and claims administrator, could be reimbursed up to $525,000 for its expenses as it submitted bills.

Attorneys’ Fees

Class counsel requested $5,799,772.43 in attorneys’ fees and $700,227.57 in expenses. The court considered both the percentage-of-the-fund method and the lodestar method. A lodestar is the number of hours reasonably worked multiplied by reasonable hourly rates. Because this was a claims-based settlement rather than a traditional common fund, the court found that the lodestar was a more useful primary measure.

The court calculated a lodestar of $2,651,175.00. It recognized counsel’s substantial work, the risks of the litigation, the favorable settlement, and the fact that the defendants would pay the fees separately from the class recovery. But the court was concerned about the requested hourly rates and the size of the requested fee compared with the actual benefit paid to class members. It awarded a 1.5 multiplier, resulting in attorneys’ fees of $3,976,762.50. Those fees could be paid once at least 75 percent of the settlement had been distributed.

Disposition

Judge William H. Pauley III approved the proposed settlement and settlement notice; granted the attorneys’ fee motion in part and denied it in part; awarded class counsel $3,976,762.50 in attorneys’ fees; allowed reimbursement of $700,227.57 in litigation expenses; allowed the administrator to seek up to $525,000 in expenses; awarded $5,000 to each class representative; terminated the pending motions; and directed that the case be marked closed.