Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 162 of 184 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA HOLLY YENCHA, individually and on behalf of all others similarly situated, Plaintiff, Civil Action vs. No. 14-578 ZEOBIT, LLC, Defendant. ___________________________________ Transcript of HEARING ON MOTION FOR PRELIMINARY APPROVAL OF PROPOSED CLASS SETTLEMENT recorded on April 16, 2015, in the United States District Court, Pittsburgh, Pennsylvania, before The Hon. Joy Flowers Conti, Chief Judge, United States District Court APPEARANCES: For the Plaintiff: Rafey S. Balabanian, Esq. Edelson, P.C. 350 North LaSalle Street, Ste. 1300 Chicago, IL 60654 David McGowan, Esq. Caroselli, Beachler, McTiernan & Conboy 20 Stanwix Street, Seventh Floor Pittsburgh, PA 15222 For the Defendant: Barbara A. Scheib, Esq. Cohen & Grigsby, P.C. 625 Liberty Avenue Pittsburgh, PA 15222 Matthew David Caplan, Esq. Cooley, LLP 101 California Street, 5th Floor San Francisco, CA 94111 Court Reporter: Deborah Rowe, RMR, CRR 700 Grant Street, Ste. 5300 Pittsburgh, PA 15219 (412) 471-2510 2 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 163 of 184 1 P R O C E E D I N G S 2 (12:01 p.m.; conference room proceedings:) 3 THE COURT: This is a hearing on a motion for 4 preliminary approval of a proposed class settlement. It's in 5 Holly Yencha versus ZeoBIT, LLC, Civil 14-578. Will counsel 6 please enter your appearance? 7 MR. BALABANIAN: Good morning, Your Honor. My name 8 is Rafey Balabanian, appearing for Holly Yencha, Plaintiff, 9 in the proposed class settlement, joined by co-counsel -- 10 11 MR. McGOWAN: David McGowan, from Caroselli Beachler, local counsel on behalf of Plaintiffs. 12 13 14 15 16 17 THE COURT: Is your appearance entered for the record? MR. McGOWAN: I think Mr. Caroselli's appearance was entered. THE COURT: He is, but not yours, so you won't be able to speak today. 18 MR. McGOWAN: I don't plan on it. 19 MR. CAPLAN: Good morning, Your Honor. Matt Caplan 20 for the Defendant, ZeoBIT, LLC, appearing pro hac vice. And 21 with me I have -- 22 23 24 25 MS. SCHEIB: Barbara Scheib of Cohen Grigsby on behalf of the Defendant. THE COURT: Okay. I have two matters that I have some serious concerns with. I will go through everything in 3 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 164 of 184 1 conclusion, but I wanted to start with those. And the first 2 thing has to do with the value of the settlement. 3 I have to make some preliminary assessment of 4 fairness here. And when I looked at the amount of money 5 being paid and the number of potential class members, which 6 exceeded 600,000, it appeared to the Court that any 7 individual Plaintiff, if they filed a claim, might be lucky 8 to receive maybe $3 or so if they were lucky. 9 And so I have concerns about that, and you refer in 10 the briefing to other cases that have been approved, and so I 11 would need some more information about what's the expected 12 numbers that may respond, that type of thing, to see if 13 there's really any significant value here to the class 14 members from this kind of settlement. 15 The next issue that I have problems with is the 16 kind of notice. The notice that's going to be sent is 17 twofold. One, if there are valid E-mail addresses of 18 prospective class members, they'll be notified by E-mail, and 19 more than once as I understand it. 20 MR. BALABANIAN: Correct. 21 THE COURT: There's also going to be a web site 22 established by Plaintiff's counsel that will give 23 information. But there will be some members of the class who 24 no longer have valid E-mail addresses. And I don't know how 25 they could be reached because -- and I think just having a 4 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 165 of 184 1 web site, unless you've got notice of something, you would 2 have no reason to be directed to go there. 3 So I have a problem with notice to those because, 4 my understanding, the notice has to be something that could 5 be directed to all members of the class, and so I think that 6 there's going to be a subset that may be incurred by 7 excluding from the class anyone who doesn't maintain or does 8 not have the same E-mail address that was used to place the 9 order. So those people could be excluded, or you're going to 10 have to have some other type of more national notice that 11 would be typical in these types of cases. 12 So those are the two overarching problems. And my 13 other question, and this doesn't have to do with the 14 substance, but where were the forms of release? Where would 15 I find that? 16 MR. BALABANIAN: The release for the Defendant? 17 THE COURT: For the Plaintiffs. 18 MR. BALABANIAN: I'm not sure I understand. 19 THE COURT: Weren't they giving up their claims? 20 MR. BALABANIAN: Yes. The release in the 21 22 settlement agreement? THE COURT: Well, that they would know about it. 23 The members of the class, how will they know what they're 24 giving up? 25 MR. BALABANIAN: The notice speaks to the types of 5 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 166 of 184 1 claims that would be released. And it's by virtue of the 2 notice that they would be directed to the settlement 3 agreement posted on the web site. 4 5 THE COURT: So they would know that that's the release? 6 MR. BALABANIAN: Correct. 7 THE COURT: So we'll have to look when we look at 8 the notice somehow that they have to be specifically 9 instructed that they're going to be releasing these claims, 10 and they must look at the settlement agreement on the web 11 site and give the page and the paragraph number, so they're 12 very clear so that they know what they're giving up. 13 Now, that brings me to another issue that I had. 14 There are a number of claims that were asserted by the 15 Plaintiffs in this case, and you will have to go over them 16 with me. But I think the only one that would be susceptible 17 for settlement class -- by a class action would be the breach 18 of contract, and so I think that can be fixed by the 19 Plaintiffs agreeing to withdraw all those other claims and 20 only going forward with the contract. 21 Why do I say that? Each of the other types of 22 claims would require an assessment of justifiable reliance of 23 some kind. And I've just been through a number of class 24 actions where I had to not certify a class for that reason 25 because there's an individualized inquiry that must be made 6 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 167 of 184 1 2 when you're looking at justifiable reliance. And the way the Supreme Court and the Court of 3 Appeals for the Third Circuit has reviewed class actions, it 4 has made that type of inquiry one that would preclude a 5 District Court from certifying a class action. 6 I don't think that that would apply to the breach 7 of contract because my view of what everyone had here, all 8 the Plaintiffs here had the same type of contract. I don't 9 think there's any dispute about that, and the question is 10 whether the contract was breached by the alleged failure of 11 the Defendant to provide a workable product that was 12 purchased. So I think we have to address that as well. 13 MR. BALABANIAN: Sure. 14 THE COURT: So those are my sort of overarching 15 issues, and I need you to address those before we can maybe 16 move forward here. I don't know that any of them are 17 fundamental impediments, but I think they would require some 18 possible refinement to the settlement agreement. 19 MR. BALABANIAN: I'm happy to speak to the issue, 20 Your Honor. Rafey Balabanian for the Plaintiff, and I 21 appreciate the Court's scheduling this hearing in the middle 22 of a trial. I know you have a lot going on. 23 Okay. So the overall value of the settlement? 24 THE COURT: Yes. 25 MR. BALABANIAN: Let's talk about that first. So 7 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 168 of 184 1 the two million I think is going to be more than sufficient 2 based on our prior experience in these types of cases. 3 THE COURT: Tell me about that. 4 MR. BALABANIAN: The reason being, the claims rates 5 6 7 8 9 10 will lean around 1 to 2 percent of the class. THE COURT: How many would that be, and what would be the expected payment that they would receive? MR. BALABANIAN: I can't do the math, but I expect everybody will get their full purchase price back. THE COURT: So that's the expectation, that any 11 member of the class who submits a claim would receive their 12 full payment back? 13 MR. BALABANIAN: And beyond that, I think there's 14 even going to be some leftover funds after the redistribution 15 up to the purchase price. And the reason we picked the $2 16 million number is because, frankly -- we're not shy about it 17 in our brief -- we have a lot of experience with these exact 18 types of cases. 19 There's a lot of players in this industry with 20 respect to kind of fix-it software for computers; and in all 21 the other settlements that we've structured, and now I think 22 we have about eight that we've structured, that we've put 23 together and had approved, the last two most recent ones, 24 which are basically a carbon copy of this structure, all-in 25 type structure, no monies revert to the Defendant. 8 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 169 of 184 1 In both of those cases the classes -- the claiming 2 class members all received their purchase price back. The 3 claims rate in all of the cases has not exceeded two percent. 4 And that's just really a function of kind of the price point 5 at which these people are claiming this money. 6 It's unfortunately not easy to get people to move 7 and make a claim for something less than $50 or even $30 8 honestly, Your Honor. I've had settlements where I've had 9 claim amounts of up to $500, and the claims rate lingers 10 around 3 percent, two to three percent. It's just the nature 11 of consumer class actions. 12 13 14 15 16 So I absolutely think there's going to be no issue with the amount people are going to get back. THE COURT: And when you were negotiating this with the mediator, was this part of your discussion? MR. BALABANIAN: Absolutely. It had to be because 17 the real theory is oftentimes the concern by courts is that 18 the fund is actually not reflective of what the actual payout 19 will be. And oftentimes that's -- it's kind of to prop up 20 attorney's fees. So you've got 650,000 class members. Let's 21 just multiply by $39 a person. You have a fund in the tens 22 of millions of dollars. 23 That's not a realistic view of this case. It's not 24 a realistic view of the Defendant's liability. It's not a 25 realistic view of the expected claims rate. 9 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 170 of 184 1 And really what we're supposed to do is put a 2 settlement together that is fair, adequate and reasonable and 3 that accounts for the value of the claims and how much people 4 are actually going to claim. 5 And this settlement absolutely does that. You will 6 see at the end, to the extent the Court grants preliminary 7 approval, I'm quite confident people will be getting their 8 full purchase price. I would be shocked if they got less 9 than $20, but you're going to see the claims rate is going to 10 be around 2 percent, and that's just empirically. There's no 11 way that figure is going to move much to make any impact on 12 what I've said, Your Honor. 13 THE COURT: Okay. 14 MR. CAPLAN: And two points I would like to add in 15 terms of value, and the first is that the net fee includes 16 about 16 different features, and the Complaint really only 17 touches on maybe four or five of them, and that's included in 18 Paragraph 17 of Mr. Richman's declaration and was also 19 included in the preliminary approval motion. 20 And correct me if I'm stating it wrong, but the 21 basis of their claims was never to receive the full value of 22 the product. It was just that there was some amount of 23 overpayment attributable to the alleged features that didn't 24 live up to the expectations. 25 MR. BALABANIAN: Exactly right. It was not a "this 10 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 171 of 184 1 product is worthless." It's this product was overvalued. 2 MR. CAPLAN: The second point is we have a firm 3 number on the number of class members. The 650,000 was an 4 upper bound, and that was something we were very confident of 5 during negotiations, and the exact number that sort of came 6 out as we've been able to get the E-mail addresses and class 7 information is 513,330 class members. 8 THE COURT: So you may want to modify -- 9 MR. BALABANIAN: Well, I don't think the fund needs 10 to be modified or anything like that, but yes, we can be more 11 precise if the Court need be for the record as far as -- 12 THE COURT: Well, you may have to resubmit this if 13 you have to make some other changes based on the other 14 things. 15 MR. BALABANIAN: Right. And we can note that, but 16 that won't make a material difference. 17 THE COURT: Right. 18 MR. BALABANIAN: Now on notice? 19 THE COURT: Yes. 20 MR. BALABANIAN: Can I move forward on that? 21 THE COURT: Yes. 22 MR. BALABANIAN: Thank you. The notice plan in 23 this case was carefully tailored to account for these types 24 of consumers, these consumers interacting with the Defendant 25 online only. There's no interaction by way of mail, no real 11 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 172 of 184 1 interaction by way of phone support, that type of stuff. 2 So Rule 23 counsels us to provide the best notice 3 practicable under the circumstances, but of course direct 4 notice is absolutely a key component. 5 I think the Court will see that the direct notice 6 in this case by way of E-mail is going to be extremely 7 effective. I would guess that it's going to exceed 80 to 90 8 percent, and the Center for Class Action -- excuse me -- the 9 Judicial Center on Class Actions has counseled that if 70 10 percent of the class is reached by direct notice, then that's 11 sufficient notice for purposes of Rule 23 and due process. 12 So to the extent that -- 13 14 THE COURT: Where is that found? Where is that authority? 15 16 MR. CAPLAN: The Judicial Guide for Class Action Management I think is where that's -- 17 MR. BALABANIAN: Yes. 18 THE COURT: Complex litigation? 19 MR. BALABANIAN: Yes, Your Honor, the Newberg -- 20 well, it's not just the Newberg. It's -- 21 22 23 THE COURT: It's not the Newberg. Do you have that? MR. BALABANIAN: The Federal Judicial Center that 24 promulgates guidelines as far as notice is concerned, and we 25 always cite it in our brief, and I don't know why we didn't 12 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 173 of 184 1 here. I can certainly provide a citation, but I thought it 2 was in here, Your Honor. 3 THE COURT: Normally you'll see some kind of 4 publication somewhere, and it at least has a national 5 circulation. That's the only thing I have a problem with 6 here. 7 MR. CAPLAN: I think there's two things I could 8 sort of add to this. One, my client actually doesn't have 9 physical mailing addresses for most of these people, and -- 10 THE COURT: Well, I don't expect anything would go 11 by mail. I have no problem with the E-mail. My only problem 12 is if there is no longer an E-mail associated with a 13 particular purchaser, then as I'm understanding it, it's 14 about ten, fifteen percent of the potential class members 15 would not receive notice. Because I don't view the web site 16 as notice. 17 MR. BALABANIAN: It could be, but in the other 18 cases, the percentage has lingered around 95 percent as far 19 as the hit rate for E-mails. And that's -- 20 21 THE COURT: Do we know how many E-mail addresses you have currently -- 22 MR. CAPLAN: We have 513,330 E-mail addresses. 23 THE COURT: But some of them may get a bounce-back. 24 MR. BALABANIAN: Some may be outdated or a 25 bounce-back, in which case the settlement administrator is 13 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 174 of 184 1 charged with the duty to work around that bounce-back or 2 current E-mail. In any class action there's going to be some 3 amount of class that doesn't receive the direct notice. 4 5 THE COURT: I understand that. It's a question of what the alternate notice is under those circumstances. 6 MR. CAPLAN: And I know, speaking to that, we would 7 be willing to issue an agreed-upon press release that would 8 point -- 9 THE COURT: Where would the press release be 10 published? Just issuing one isn't enough because then a lot 11 of the newspapers or wherever wouldn't publish them. 12 MR. BALABANIAN: Well, why don't I suggest this? 13 Another thing we could do, frankly, beyond the press release 14 is we could just have a small component of like an online 15 media, like banner ads or whatnot, and that's relatively 16 inexpensive, and the claims administrator is good -- 17 THE COURT: Where would they go? 18 MR. BALABANIAN: -- directing to the settlement web 19 site. 20 THE COURT: But where would the banners -- 21 MR. BALABANIAN: It would be online. It would be 22 in connection with -- the settlement administrator will do an 23 analysis of the demographic of this class, what web sites 24 they would frequent, and then it would tailor the online 25 advertising -- 14 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 175 of 184 1 2 THE COURT: Okay. That might be sufficient. So if you can -- 3 MR. CAPLAN: We'll work on something. 4 MR. BALABANIAN: We can certainly do that. 5 THE COURT: I mean I'm not looking to create costs 6 here. I'm just thinking it should be for that extra number 7 some way that I could logically infer that members of this 8 class might see it. I can't guarantee that they would see 9 it, but they might. 10 MR. BALABANIAN: Understood, Your Honor. 11 THE COURT: Okay. All right. What was the -- 12 MR. BALABANIAN: I'm sorry -- the release, I 13 14 believe? THE COURT: Yes. So we just would have to modify 15 the notice slightly to make sure that they look at that. And 16 then what do you want to do about the claims I don't think I 17 can certify? 18 19 MR. BALABANIAN: I think that the unjust enrichment claim doesn't have a reliance element. 20 THE COURT: Yes, it does. 21 MR. BALABANIAN: Does it in Pennsylvania? I 22 thought it didn't. 23 THE COURT: You can look it up. 24 MR. BALABANIAN: I don't question the Court. The 25 Court knows better than I do. 15 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 176 of 184 1 2 THE COURT: It has to -- well, let's look. It may not be exactly reliance, but it's something -- 3 MS. SCHEIB: A change in position and reliance. 4 THE COURT: Something like that. There's something 5 6 where I think you have to look at the individual. MR. BALABANIAN: It's conferral of a benefit, and 7 then it's acceptance of that benefit unjustly. And it has to 8 be unjust. 9 THE COURT: It's the unjust that they have to have 10 some -- okay. Here it is. It says the elements of an unjust 11 enrichment involve benefits conferred on Defendant by 12 Plaintiff, appreciation of such benefits by Defendant, and 13 acceptance and retention of such benefits under such 14 circumstances that it would be inequitable for Defendant to 15 retain the benefit without payment of value. 16 The most significant element of the doctrine is 17 whether the enrichment of the Defendant is unjust. The 18 doctrine does not apply simply because the Defendant may have 19 benefited as a result of the actions of the Plaintiff. But 20 it is a quasi-contract. 21 MR. BALABANIAN: It is. So my overall view would 22 be we have no problem withdrawing the claims other than the 23 breach of contract, but I would contend that the unjust 24 enrichment should stay -- 25 THE COURT: Well, you can meet and confer about 16 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 177 of 184 1 that. 2 MR. CAPLAN: That would be fine. 3 THE COURT: And see if there's any dispute between 4 the parties about that, and I'll take another look at it as 5 well. 6 MR. BALABANIAN: Sure. And to the extent we reach 7 agreement on that, shall we file an Amended Complaint or a 8 notice -- 9 THE COURT: I just think you're going to have to 10 say as part of the settlement, because until I approve it, I 11 don't think it would be necessary. But the parties have to 12 be advised that those claims are being withdrawn as part of 13 the settlement and that the class is being certified on the 14 basis of the breach of contract claim. 15 MR. BALABANIAN: Understood. 16 THE COURT: And -- or plus the unjust enrichment 17 also could survive. 18 MR. BALABANIAN: Very well. 19 THE COURT: But I think we need to make those 20 slight modifications, and I had a couple other things in the 21 notice. Look on page 3. 22 23 24 25 MR. BALABANIAN: Of the long form notice, Your Honor? THE COURT: Yes. This is where you're talking about what does the settlement provide? It says the 17 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 178 of 184 1 Defendant has agreed to create a $2 million settlement fund, 2 blah, blah, blah, claim up to $39.95. 3 Then at the end it says, "The amount each claimant 4 will be paid depends upon the number of claims submitted," 5 and then say while there will be numerous -- something to the 6 effect, while there will be numerous members of the class, it 7 is not expected that any significant number of those -- based 8 on experience with similar settlements, it's not expected 9 that a significant number of claims will be submitted. 10 What's troubling for the Court is if somebody 11 thinks they're going to get $39, and what if 100,000 people 12 file or 200,000 claims come back in? So I think they need to 13 have a sense of that there are numerous claims, hundreds of 14 thousands of claims, but experience with similar settlements 15 is that just a minor percentage will return claims. 16 17 MR. BALABANIAN: Yes. We can certainly provide more detail. 18 THE COURT: Just a little detail there just so that 19 somebody -- if per chance 100,000 people come back and you're 20 shocked that they're all filing a claim, then people should 21 know that if they get $2 or $3, it was a risk that we 22 assumed. 23 MR. BALABANIAN: Absolutely, Judge. 24 THE COURT: And why, for someone to be excluded, do 25 they have to send a letter, but to make a claim, you only 18 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 179 of 184 1 2 3 4 5 6 have to send an E-mail? MR. BALABANIAN: Well, I've done it a couple ways as far as opt-outs. We've actually prepared an opt-out -THE COURT: Not that I think many people are going to opt out. MR. BALABANIAN: There will be one or two, 7 literally like one or two, but we've done it where we 8 provided a form to class members. We found that sometimes 9 there's a risk that it can be confusing when you've got a 10 claim form and then you've got the opt-out form. So that's 11 something that we try to guard against. 12 But as far as what they need to send in, honestly, 13 Judge, that's just a common practice that we've established. 14 And I don't think it's very onerous for them to say I just 15 want to opt out of this case. 16 But I don't know any other real -- I don't know any 17 other way that they can do it other than us providing them a 18 form, which I'd be open to doing. I don't know that it would 19 make a material difference. 20 THE COURT: Well, I mean why couldn't they just 21 send an E-mail with the same information to the claims 22 settlement person? 23 24 25 MR. BALABANIAN: That would be fine. How about both just in case somebody -THE COURT: Right, either by mail or by E-mail? 19 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 180 of 184 1 MR. BALABANIAN: Sure. 2 THE COURT: I don't think you need to have the 3 form, but I think -- people today don't send mail. I mean 4 younger people, if they bought this, they're not going to go 5 out and buy a stamp and mail it. So it would just strike me 6 that if we're going to let people submit the claim by E-mail, 7 they could also do the other. 8 MR. BALABANIAN: I'm sure that's fine. 9 THE COURT: All right. The other thing, this is 10 one change I feel would be important. It has to do with 11 whether somebody objects and they come to the hearing. 12 You're requiring at page 6 that if, in addition to submitting 13 a written objection to the settlement, you wish to appear and 14 be heard at the hearing on the fairness, you or your attorney 15 must say so in your written objection. I think it should be 16 you should say so. 17 MR. BALABANIAN: Yes, Your Honor. 18 THE COURT: And then in 20, "May I speak at the 19 hearing?" I would say if you do not exclude yourself from 20 the settlement class, you may speak at the hearing concerning 21 any part of the post settlement period. I mean I'm not going 22 to have people be so restricted that if they showed up, if 23 they take the time and effort to come -- I don't expect 24 anybody to be coming by the way. But should they do that, if 25 they haven't gone through the hoops of filing something in 20 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 181 of 184 1 writing, I don't know that I would necessarily preclude them 2 from doing that. 3 MR. BALABANIAN: Understood, Your Honor. 4 THE COURT: I think that was all I had on that. 5 Then you'll have something that directs them for the 6 release -- 7 8 9 10 MR. BALABANIAN: Yes. We'll have it in the notice, and we'll direct them for more details to go -THE COURT: To the settlement web site and look at the settlement agreement paragraph. 11 MR. BALABANIAN: Page blah, blah, blah. 12 THE COURT: Whatever it is. All right. I had a 13 couple other things here. These short questions, this is 14 "What can I get from the settlement?" This talks something 15 along the lines of what we said before. There could be 16 numerous claims. It's not expected that a significant number 17 will apply, but -- 18 19 MR. BALABANIAN: You're talking about the shorter claim form? 20 THE COURT: Yes. Something in there. 21 MR. BALABANIAN: Yes, Your Honor. 22 THE COURT: And then in the "Do I have a lawyer?" 23 I would say yes -- okay. The last sentence, it says the 24 Court has also chosen Holly Yencha. I would say the Court 25 has also appointed. I didn't choose her. I appointed her. 21 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 182 of 184 1 2 3 4 5 6 7 8 9 MR. BALABANIAN: Apologies for the loose language, Your Honor. THE COURT: Wasn't there something about if more than a thousand people exclude themselves? MR. BALABANIAN: Yes. Well, the Defendant has the sole right to terminate the settlement. THE COURT: Okay. I didn't see that in the short notice. I'm not expecting that to happen. MR. BALABANIAN: No. Well, the reason it's not in 10 there is only because the case law counsels that that's not 11 something that necessarily has to be included. If that's 12 something the Court would like included, we can, but I think 13 it's -- I don't know -- as the Court said, I don't think it's 14 a real possibility at all. But -- 15 16 17 18 THE COURT: Educate me a little bit about those other classes. MR. BALABANIAN: How many opt-outs? Less than five in each case. 19 THE COURT: So the likelihood of that happening -- 20 MR. BALABANIAN: Is zero. It's zero, Your Honor, 21 unless there's some conspiracy against this case. But I 22 don't see it happening. 23 24 25 THE COURT: So it's not a significant risk that would need to be in the short form? MR. BALABANIAN: No. I don't believe so, Judge. 22 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 183 of 184 1 MR. CAPLAN: We don't think so either. 2 THE COURT: I know it's just there's a fail safe -- 3 MR. CAPLAN: Just in case. 4 THE COURT: Right. One other quick look through 5 here, I guess this is unknown claims. It means claims which 6 could have been raised in the action and that you do not know 7 or suspect to exist, that you're releasing those. 8 This is the reason I wanted them to be directed to 9 this. I wanted to know where the release was, because this 10 is something where it's typically in a general release where 11 you release all known and unknown claims. 12 MR. BALABANIAN: Yes. And that language is 13 required to be in there by virtue of California consumers 14 since it's a nationwide settlement. That's why that's in 15 there. But it's covered in the release regardless. 16 17 THE COURT: So as long as you direct them to the release, that would be good. 18 MR. BALABANIAN: Yes, Your Honor. 19 THE COURT: Okay. You might want to put that in 20 the short form, too, somewhere. 21 MR. BALABANIAN: Yes, Your Honor. 22 THE COURT: Okay. I think that's it. So if you 23 would just get those to me, we can have a telephone call and 24 go through it. You won't have to come back in in person, and 25 I'll just quickly go through the other factors and get those 23 Case 2:14-cv-00578-JFC Document 36-1 Filed 05/20/15 Page 184 of 184 1 on the record. But I think I raised with you the areas that 2 I had concerns with, that if they're fixed, I think I'd be 3 able to approve the settlement. 4 5 MR. BALABANIAN: Thank you, Your Honor. Thank you for your time. 6 THE COURT: At least on a preliminary basis. 7 MR. BALABANIAN: Of course. We will meet and 8 confer immediately, and we should have a submission to the 9 Court within the next two weeks probably. 10 MR. CAPLAN: That would be fine. 11 THE COURT: If you can get it in before early May, 12 then we'll get a conference call in early May, and then you 13 can be off and running. 14 MR. BALABANIAN: Terrific. Your Honor, thank you 15 for your time and for fitting us in in your trial schedule. 16 THE COURT: No problem. 17 MR. CAPLAN: Thank you very much. 18 (Proceedings were concluded at 12:33 p.m.) 19 - - - 20 C E R T I F I C A T E 21 22 23 I, Deborah Rowe, certify that the foregoing is a correct transcript from the record of proceedings in the above-titled matter. 24 S/Deborah Rowe __________________________________ 25 Certified Realtime Reporter