Case3:11-cv WHO Document296 Filed08/06/14 Page1 of 22 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION

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1 Case:-cv-0-WHO Document Filed0/0/ Page of 0 0 KRONENBERGER ROSENFELD, LLP Karl S. Kronenberger (CA Bar No. ) Jeffrey M. Rosenfeld (CA Bar No. ) 0 Post Street, Suite 0 San Francisco, CA 0 Telephone: () - Facsimile: () - karl@krinternetlaw.com jeff@krinternetlaw.com ARIAS, OZZELLO & GIGNAC, LLP Mike Arias (CA Bar No. ) Alfredo Torrijos (CA Bar No. ) 0 Center Drive West, th Floor Los Angeles, California 00- Telephone: (0) 0-00 Facsimile: (0) 0- marias@aogllp.com atorrijos@aogllp.com Attorneys for Plaintiffs AMBER KRISTI MARSH AND STACIE EVANS AMBER KRISTI MARSH and STACIE EVANS, individually and on behalf of a class of similarly situated persons, v. Plaintiffs, ZAAZOOM SOLUTIONS, LLC, et al., Defendants. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN FRANCISCO DIVISION CLASS ACTION Case No. :-cv-0-who PLAINTIFF S NOTICE OF UNOPPOSED MOTION AND UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT WITH DEFENDANTS FIRST NATIONAL BANK OF CENTRAL TEXAS AND JACK HENRY & ASSOCIATES, INC.; MEMORANDUM OF POINTS AND AUTHORITIES Date: September 0, 0 Time: :00 p.m. Courtroom: Ctrm., th Floor Before: The Hon. William H. Orrick Case No. :-cv-0-who EAST\.

2 Case:-cv-0-WHO Document Filed0/0/ Page of 0 TO ALL PARTIES AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICE THAT on September 0, 0, at :00 p.m., or as soon thereafter as counsel can be heard, before the Honorable William H. Orrick, in Courtroom, th Floor, United States District Court for the Northern District of California, 0 Golden Gate Avenue, San Francisco, California, 0, Plaintiff Amber Kristi Marsh will and hereby does move for an Order: () Granting preliminary approval of the proposed settlement of this matter as a class action as to Defendants First National Bank of Central Texas and Jack Henry & Associates, Inc. only; () Approving the parties proposed plan for issuing the class notice required by Federal Rules of Civil Procedure (c)()(b) and (e)(); () Appointing KCC Class Action Services as the settlement administrator to disseminate notice to the class and administer the settlement; and () Setting a hearing, pursuant to Federal Rule of Civil Procedure (e)(), to consider whether the parties settlement should be given final approval. Plaintiff s motion is based on this notice of motion and motion; the accompanying memorandum in support of this motion; the declaration of Jeffrey M. Rosenfeld in support of this motion; the declaration of Phillip Maez in support of this motion; and all other papers filed and proceedings held in this action. 0 DATED: August, 0 Respectfully Submitted, KRONENBERGER ROSENFELD, LLP By: s/ Jeffrey M. Rosenfeld Jeffrey M. Rosenfeld Attorneys for Plaintiffs Case No. :-cv-0-who EAST\.

3 Case:-cv-0-WHO Document Filed0/0/ Page of 0 0 TABLE OF CONTENTS Page(s) INTRODUCTION... BACKGROUND... A. Factual Allegations... B. Litigation, Discovery, and Settlement Negotiations... ARGUMENT... A. Summary of the Settlement.... The Class.... Benefits to the Settlement Class.... Notice and the Settlement Administration Process.... Attorneys Fees and Incentive Awards... B. Plaintiff s settlement with FNBCT and Jack Henry is fair, reasonable, and adequate..... The strength of Plaintiff s case against FNBCT and Jack Henry and the complexity, expense and likely duration of further litigation weigh in favor of preliminary approval.... The Parties aggressively litigated this case for over three years, completing significant formal and informal discovery, before reaching the settlement..... Class Counsel are experienced in litigating consumer class actions, particularly in the area of new technology There are no subtle signs of collusion.... C. Summary of the Proposed Notice.... Dissemination of Notice.... Automatic Cash Payment.... Request for Exclusion.... Settlement Administration... The Parties have agreed on the appointment of KCC Class Action Services ( KCC ) as the Settlement Administrator. (Agreement 0.) The Settlement Administrator shall be responsible for administering the settlement, including disseminating notice, processing requests for exclusion and objections (if any), and distributing cash payments to Settlement Class Members. Under the Agreement, the fees and expenses of the Settlement Administrator will be paid from the Settlement Fund. (Agreement.)... D. The notice plan provides the best notice practicable under the circumstances..... The notice satisfies the content requirements of Rule (c)()(b) and (e)..... The method of providing notice is adequate.... E. Plaintiff respectfully requests the Court set a schedule for final approval.... CONCLUSION... Case No. :-cv-0-who ii

4 Case:-cv-0-WHO Document Filed0/0/ Page of TABLE OF AUTHORITIES Page(s) 0 0 CASES Acosta v. Trans Union, LLC, F.R.D. (C.D. Cal. 00)... Alberto v. GMRI, Inc., F.R.D. (E.D. Cal. 00)... Barani v. Wells Fargo Bank, N.A., CV-GPC KSC, 0 WL (S.D. Cal. Apr., 0)... Browning v. Yahoo! Inc., 00 WL 0, No. C0-0 HRL (N.D. Cal. Nov., 00)... Class Plaintiffs v. City of Seattle, F.d (th Cir. )... Faigman v. AT & T Mobility LLC, C-0-0-MHP, 0 WL (N.D. Cal. Feb., 0)... Glass v. UBS Fin. Servs., Inc., No. C 0 0 MMC, 00 WL (N.D.Cal. Jan., 00)... Hanlon v. Chrysler Corp., 0 F.d 0 (th Cir. )... In re Bluetooth Headset Prods. Liability Litig., F.d (th Cir. 0)..., In re M.L. Stern Overtime Litig., 0-CV-0-BTM JMA, 00 WL (S.D. Cal. Apr., 00)... In re Mego Fin. Corp. Sec. Litig., F.d (th Cir. 000)... 0 Khanna v. Intercon Sec. Sys., Inc., Case No. :-cv-0-who iii

5 Case:-cv-0-WHO Document Filed0/0/ Page of :0-CV--KJM-EFB, 0 WL (E.D. Cal. Apr., 0) // Linney v. Cellular Alaska P ship, F.d (th Cir. )..., 0 Malta v. Fed. Home Loan Mortgage Corp., 0-CV-0 BEN NLS, 0 WL (S.D. Cal. Feb., 0)... Monterrubio v. Best Buy Stores, L.P., F.R.D. (E.D.Cal.0)... Nat'l Rural Telecommunications Coop. v. DIRECTV, Inc., F.R.D. (C.D. Cal. 00)... 0, Officers for Justice v. Civil Serv. Comm n, F.d (th Cir. )..., Sarabri v. Weltman, Weinberg & Reis Co., L.P.A. :0-CV- AJB NLS, 0 WL (S.D. Cal. Aug., 0) report and recommendation adopted, 0CV AJB NLS, 0 WL 0 (S.D. Cal. Sept., 0)... Schaffer v. Litton Loan Servicing, LP, CV 0-0 MMM JCX, 0 WL 0 (C.D. Cal. Nov., 0)... Torrisi v. Tucson Elec. Power Co., F.d 0 (th Cir.)... Vasquez v. Coast Valley Roofing, Inc., F.R.D. (E.D. Cal. 00)... 0 West v. Circle K Stores., 00 WL, No. CIV. S-0-0 WBS GGH (E.D. Cal. June, 00)... n. West Virginia v. Chas. Pfizer & Co., F. Supp. 0 (S.D.N.Y. 0), aff d, 0 F.d 0 (d Cir. ), cert. denied, 0 U.S. ()... Case No. :-cv-0-who iv

6 Case:-cv-0-WHO Document Filed0/0/ Page of 0 White v. Experian Info. Solutions, Inc., 0 WL, No. SACV 0-00 DOC (C.D. Cal. July, 0)..., // Wright v. Linkus Enterprises, Inc., F.R.D. (E.D. Cal. 00)... STATUTES California Commercial Code 0... California Commercial Code 0... California Commercial Code 0... California Commercial Code 0... California Commercial Code 0... RULES Fed. R. Civ. P. (c)..., Fed. R. Civ. P. (c)()(b)..., Fed. R. Civ. P. (e)..., Fed. R. Civ. P. (e)()..., OTHER AUTHORITIES A. Conte & H.B. Newberg, Newberg on Class Actions, Case No. :-cv-0-who v

7 Case:-cv-0-WHO Document Filed0/0/ Page of INTRODUCTION Plaintiff Amber Kristi Marsh ( Plaintiff ) and Defendants First National Bank of Central Texas and ( FNBCT ) and Jack Henry & Associates, Inc. ( Jack Henry ) have reached an agreement that would resolve the claims asserted in this case against FNBCT and Jack Henry only on a class-wide basis, subject to the approval of this Court. following class: The Court previously certified the 0 0 All residents of California from whom Membership Fees were collected (or who incurred Bank Account Fees in connection with a collection or attempted collection of Membership Fees) by way of remotely created check(s) drafted by Defendant Jack Henry & Associates, Inc. and deposited with First National Bank of Central Texas, from May, 00 to the date of the preliminary approval order (the Class ). [D.E. No..] Plaintiff brings this unopposed motion for preliminary approval of a class action settlement with FNBCT and Jack Henry. Plaintiff also requests that the Court approve her plan for notifying the class of certification and the proposed settlement, as required by Federal Rules of Civil Procedure (c)()(b) and (e)(). Finally, Plaintiff requests that the Court set a hearing to consider whether the Parties settlement should be given final approval pursuant to Federal Rule of Civil Procedure Rule (e)(). // // // Plaintiff Stacie Evans does not claim that First National Bank of Central Texas was the depository bank for any of the allegedly unauthorized remotely created checks drawn in her name, and there are no claims against Jack Henry or FNBCT regarding Ms. Evans. Therefore, while Ms. Evans supports this proposed settlement, she is not a member of the class certified by the Court on February, 0. [D.E. No..] This filing refers to Plaintiff Amber Marsh, FNBCT, and Jack Henry collectively as the Parties, though this term does not include any other Defendant in this action. Unless otherwise defined herein, capitalized terms have the definitions assigned to them in the Settlement Agreement attached as Exhibit to the Declaration of Jeffrey M. Rosenfeld in Support of Plaintiff s Unopposed Motion for Preliminary Approval of Class Action Settlement with FNBCT and Jack Henry. Case No. :-cv-0-who

8 Case:-cv-0-WHO Document Filed0/0/ Page of BACKGROUND A. Factual Allegations Defendants ZaaZoom Solutions, LLC, ZaZa Pay LLC, MultiECom, LLC, Online Resource Center, LLC (the ZaaZoom Defendants ) marketed and operated several online membership programs that claimed to provide participants with coupons, shopping discounts, and/or shopping credits (the Membership Program(s) ). The ZaaZoom Defendants charged a monthly subscription fee of up to $. per month to participate in a Membership Program (the Membership Fee(s) ), though the average fee in this case was $. per month or less. Plaintiff has alleged that the ZaaZoom Defendants registered Plaintiff and the other Class 0 members for the Membership Programs without their knowledge or consent. Specifically, 0 Plaintiff has alleged that the ZaaZoom Defendants obtained information regarding consumers from payday loan websites that were operated by the ZaaZoom Defendants. After a consumer completed an online application for a payday loan, the ZaaZoom Defendants used the applicant s personal information to register him/her in the Membership Programs, without the applicant s knowledge or consent. Next, the ZaaZoom Defendants drafted remotely created checks ( RCCs ) from the applicants checking accounts payable to the ZaaZoom Defendants, again without the applicants knowledge or consent. The ZaaZoom Defendants then withdrew, or attempted to withdraw, the Membership Fees from the applicants bank accounts using the RCCs. These attempted withdrawals caused many applicants to incur penalties or fees from their banks as the result of having insufficient funds in their checking accounts to settle the RCCs ( Bank Account Fees ). The ZaaZoom Defendants engaged check processors to assist with the creation, batching, and depositing of the RCCs. Defendants Jack Henry, Data Processing Systems, LLC, and Automated Electronic Checking, Inc. served as Payment Processors, which helped create and deposit the RCCs in depository bank accounts with Defendants First Bank of Delaware and FNBCT (collectively, the Depository Banks ). Plaintiff has alleged that the Payment Processors and the Depository Banks recklessly disregarded the ZaaZoom Defendants misconduct and Case No. :-cv-0-who

9 Case:-cv-0-WHO Document Filed0/0/ Page of provided material assistance to the ZaaZoom Defendants in operating the fraudulent Membership Programs. Plaintiff had her banking information wrongfully used by the ZaaZoom Defendants to draft RCCs payable to the ZaaZoom Defendants. In January 0, Plaintiff applied online for a payday loan. Plaintiff later discovered that the ZaaZoom Defendants had withdrawn a Membership Fee of $. from her checking account for the Liberty Discount Club Membership Program. Plaintiff has alleged that she did not voluntarily enroll in any of 0 0 Defendants Membership Programs nor did she give her informed consent to have the Membership Fees withdrawn. Plaintiff has alleged that Jack Henry drafted the unauthorized RCC in her name, and that FNBCT served as the depository bank for the deposit of the RCC. Plaintiff has further alleged that Jack Henry and FNBCT disregarded overt warning signs that the ZaaZoom Defendants were operating fraudulent Membership Programs when they drafted and accepted the RCC for deposit. Jack Henry and FNBCT dispute these allegations, deny all wrongdoing, and contend that all participants in the Membership Programs enrolled voluntarily and agreed to the terms and conditions of the Membership Programs, including the use of RCCs for withdrawal of the Membership Fees. B. Litigation, Discovery, and Settlement Negotiations On May, 0, Plaintiffs filed their initial complaint in the San Francisco Superior Court against Defendant ZaaZoom Solutions, LLC. The complaint was timely removed to this Court on October, 0. Plaintiffs filed their first amended complaint on July, 0 and their second amended complaint on August 0, 0, both in the San Francisco Superior Court. The second amended complaint named all of the current Defendants, including FNBCT and Jack Henry. After removal to this Court, several Defendants filed motions to dismiss the second amended complaint. On March 0, 0, the Court issued an order granting First Bank of Delaware and FNBCT s joint motion to dismiss and granting in part and denying in part the ZaaZoom Defendants motion to dismiss [D.E. No. ]. // Case No. :-cv-0-who

10 Case:-cv-0-WHO Document Filed0/0/ Page0 of 0 After the issuance of the Court s March 0, 0 order, the parties agreed that Plaintiffs would file a third amended complaint and that Defendants would file new motions to dismiss. The parties further agreed that if Plaintiffs claims survived the new motions to dismiss, the parties would attend private mediation. On April 0, 0, Plaintiffs filed their third amended complaint. All of the Defendants filed motions to dismiss this complaint. On December, 0, the Court granted in part and denied in part the motions to dismiss as they related to the Depository Banks and denied the motions as to the ZaaZoom Defendants and the Payment Processors. [D.E. No. ]. Following the Court s December order, claims for violation of the Business and Professions Code 00, conversion, and negligence remained against Jack Henry. The sole claim remaining against FNBCT was for negligence. On March, 0, all of the parties attended private mediation before the Honorable James L. Warren (Ret.) of JAMS. The mediation was not immediately successful as to any Defendant. Even so, the Parties continued intermittent settlement discussions following the 0 mediation. After the Court denied Plaintiff s renewed motion for class certification [D.E. No. ], the Parties renewed their settlement discussions and reached a proposed class-wide settlement as to FNBCT and Jack Henry only. A. Summary of the Settlement ARGUMENT The Parties Class Action Settlement Agreement ( Agreement ) is attached to the Declaration of Jeffrey M. Rosenfeld ( Rosenfeld Decl. ) as Exhibit. Below is a summary of the terms and benefits in the Agreement.. The Class The Court has already certified the following class with respect to Jack Henry and FNBCT: All residents of California from whom Membership Fees were collected (or who incurred Bank Account Fees in connection with a collection or attempted collection of Membership Fees) by way of remotely created check(s) drafted by Defendant Jack Henry & Associates, Inc. and deposited with First National Bank of Central Texas, from May, 00 to the date of the preliminary approval order (the Class ). [D.E. No..] Case No. :-cv-0-who

11 Case:-cv-0-WHO Document Filed0/0/ Page of 0 0. Benefits to the Settlement Class Under the proposed settlement, Jack Henry and FNBCT will create a settlement fund of one hundred fifteen thousand dollars ($,000) (the Settlement Fund ). (Agreement.) Members of the Class who do not exclude themselves from the settlement will receive a cash payment of approximately eleven dollars ($.00). The exact payment amount will be determined by any attorneys fee award, incentive award to Plaintiff, and settlement administration costs. (Agreement ). Notice and the Settlement Administration Process The Settlement Administrator shall disseminate postcard notice to the approximately, Class Members. Jack Henry and FNBCT will provide the Settlement Administrator with the Class members postal address based on the RCCs that were drawn in Class Members names, all of which bear the Class Members address. The Postcard Notice will provide a link to the Long Form Class Notice hosted on a dedicated settlement website. (Agreement 0.) Unless a Class Member excludes him- or herself from the Settlement Class, that Class Member will receive a cash payment of approximately eleven dollars by check without taking any affirmative action. (Agreement.). Attorneys Fees and Incentive Awards At the time of the final approval hearing, Kronenberger Rosenfeld, LLP and Arias, Ozzello & Gignac, LLP ( Class Counsel ) will make a separate motion for an award of attorneys fees, expenses, and incentive awards, all of which will be paid from the Settlement Fund. Class Counsel s motion will request an award of () attorneys fees in the amount of $,0 (i.e., % of the Settlement Fund); () expenses of up to $,000; and () incentive payments to the representative Plaintiff in the sum of $,000. (Agreement,, -.) Class Counsel will provide the Court with full briefing on this request in connection with the final approval hearing, but note that the amount of fees that will be requested is consistent with the Ninth Circuit s benchmark for reasonableness in common fund cases. Hanlon v. Chrysler Corp., 0 F.d 0, 0 (th Cir. ) ( This circuit has established % of the common fund as a benchmark award for attorney fees. ); see also White v. Experian Info. Solutions, Inc., Case No. :-cv-0-who

12 Case:-cv-0-WHO Document Filed0/0/ Page of WL, at *, No. SACV 0-00 DOC (MLGx) (C.D. Cal. July, 0) ( Under the percentage method for calculating attorney s fees in a common fund case, a request that totals twenty-five percent of the class recovery is presumptively reasonable. ). B. Plaintiff s settlement with FNBCT and Jack Henry is fair, reasonable, and adequate. The approval of a class action settlement takes place in two stages. In the first stage, a court preliminarily approves the settlement pending a fairness hearing and authorizes notice to be given to the class. See Alberto v. GMRI, Inc., F.R.D., (E.D. Cal. 00). During the second stage, after notice is given to class members, the court entertains any class member objections to the treatment of the litigation as a class action and/or to the terms of the settlement. See Alberto, F.R.D. at. During this first, preliminary approval stage, the Court determines whether the proposed settlement is within the range of possible judicial approval. Wright v. Linkus Enterprises, Inc., F.R.D., (E.D. Cal. 00) (quoting A. Conte & H.B. Newberg, Newberg on Class Actions,.). The Court need not review the settlement in detail at this juncture, because the settlement class members will be given notice of the settlement and an opportunity to be heard. In re M.L. Stern Overtime Litig., 0-CV-0-BTM JMA, 00 WL, * (S.D. Cal. Apr., 00). To determine whether preliminary approval is appropriate, the settlement need only be potentially fair, as the Court will make a final determination of its adequacy at the hearing on Final Approval, after such time as any party has had a chance to object and/or opt out. Acosta v. Trans Union, LLC, F.R.D., (C.D. Cal. 00) (emphasis in original). In determining whether a settlement is fair, reasonable, and adequate, courts balance several factors, including: the strength of plaintiffs case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class action status throughout the trial; the amount offered in settlement; the extent of discovery completed, and the stage of the proceedings; the experience and views of counsel; the presence of a governmental participant; and the reaction of the class members to the proposed This factor does not apply in this case. Case No. :-cv-0-who

13 Case:-cv-0-WHO Document Filed0/0/ Page of 0 0 settlement. Class Plaintiffs v. City of Seattle, F.d, (th Cir. ) (citing Officers for Justice v. Civil Serv. Comm n, F.d, (th Cir. )). Where the settlement is reached prior to formal class certification, courts also look to see whether any subtle signs of collusion are present. In re Bluetooth Headset Prods. Liability Litig., F.d, (th Cir. 0). These signs include settlements that () give class counsel a disproportionate distribution of the settlement, () contain a clear sailing provision that provides for payment of fees separate and apart from class funds, or () that provide for a reversion of settlement funds to defendants. Id.. The strength of Plaintiff s case against FNBCT and Jack Henry and the complexity, expense and likely duration of further litigation weigh in favor of preliminary approval. If Plaintiff does not settle her claims against FNBCT and Jack Henry, Plain tiff will face a number of obstacles in litigating this case through to judgment. particular, FNBCT and Jack Henry, as a Depository Bank and Payment Processor respectively, are further removed from the misconduct than the ZaaZoom Defendants, who were directly involved in the enrollment of Class Members in the Membership Programs. As a result of FNBCT and Jack Henry s indirect involvement in the misconduct, Plaintiff has faced and would expect to continue to face the following obstacles in litigating this action against FNBCT and Jack Henry: First, FNBCT and Jack Henry have vigorously contested liability in this case, including through multiple rounds of motions to dismiss. After extensive briefing on these motions and multiple oral arguments, FNBCT persuaded the Court to dismiss all but one claim against FNBCT and the other Depository Banks. Specifically, Plaintiff s sole remaining claim against FNBCT is a claim for negligence. As to the Payment Processors, Plaintiff s sole remaining claims are for violations of California s Unfair Competition Law, common law conversion, and common law negligence. Thus, Plaintiff will face greater obstacles in establishing liability as to FNBCT and The Court may wait until the final approval hearing to evaluate this factor, as the class s reaction cannot be fully assessed until after dissemination of class notice. See, e.g., West v. Circle K Stores., 00 WL, at *0, No. CIV. S-0-0 WBS GGH (E.D. Cal. June, 00). Case No. :-cv-0-who In

14 Case:-cv-0-WHO Document Filed0/0/ Page of 0 0 Jack Henry than the ZaaZoom Defendants, who were directly involved in the misconduct. Second, FNBCT and Jack Henry have represented that they would continue to vigorously contest the merits of Plaintiff s claims through summary judgment and trial. While Class Counsel are confident in their ability to prove Plaintiff s claims, there are risks inherent in any litigation, including challenges in proving liability and damages, as well as the possibility that FNBCT and Jack Henry will raise meritorious defenses to the certified claims. This is especially true in class action litigation. As one court observed: It is known from past experience that no matter how confident one may be of the outcome of litigation, such confidence is often misplaced. Merely by way of example, two instances in this Court may be cited where offers of settlement were rejected by some plaintiffs and were disapproved by this Court. The trial in each case then resulted unfavorably for plaintiffs; in one case they recovered nothing and in the other they recovered less than the amount which had been offered at settlement. West Virginia v. Chas. Pfizer & Co., F. Supp. 0, - (S.D.N.Y. 0), aff d, 0 F.d 0 (d Cir. ), cert. denied, 0 U.S. (). In particular, both Jack Henry and FNBCT have argued and would continue to argue that as a matter of law they had no duty of care to Plaintiff, who was not a customer of FNBCT or Jack Henry and who was not in privity of contract with FNBCT or Jack Henry. Further, FNBCT and Jack Henry have contended that their duties are defined by, and Plaintiff s claims are barred by, statutory displacement by California Commercial Code sections 0 and 0. Defendants have argued that those sections provide that depository banks, which accept RCCs (and transferors of RCCs to depository banks), make statutory warranties to other banks that accept such RCCs for payment; that an individual drawer may reject payment of an RCC as unauthorized by notifying his/her bank; that the drawer s bank may then demand a re-credit of that RCC amount from the depository bank; and that this bank-to-bank duty is the sole and fully efficacious remedy applicable to the depository banks in this case. In the same vein, Defendants have argued and would likely continue to argue that Commercial Code sections 0 and 0 did not create any duty of care by FNBCT or Jack Henry to the non-depositor Plaintiff. While Plaintiff successfully overcame these arguments during the motion to dismiss stage of this litigation, Plaintiff is mindful Case No. :-cv-0-who

15 Case:-cv-0-WHO Document Filed0/0/ Page of 0 0 of the complexity of this statutory structure and the risk of any litigation construing these laws. By settling this action with FNBCT and Jack Henry, Plaintiff and the class avoid the uncertainty in litigating their negligence claims against these Defendants. Regarding Plaintiff s conversion claim, Defendants will continue to argue that in the context of RCCs, Commercial Code section 0 prevents a claim for common law conversion. Section 0 provides, An action for conversion of an instrument may not be brought by () the issuer or acceptor of the instrument. The Commercial Code defines an issuer as a drawer, or a person who signs or is identified in a draft as a person ordering payment. Comm. Code 0, 0. While Plaintiff successfully overcame arguments attacking her conversion claim at the motion to dismiss stage, this argument continues to be a complex issue of fact and law. Third, FNBCT and Jack Henry have argued that Plaintiff will not be able to establish liability as to either Defendant because Plaintiff and the other Class members voluntarily enrolled in the Membership Programs and expressly authorized Defendants to withdraw the Membership Fees from their bank accounts. More specifically, FNBCT and Jack Henry have contended and would continue to contend that the RCCs submitted for deposit were made payable to the ZaaZoom Defendants, endorsed by the ZaaZoom Defendants, and deposited with FNBCT accounts held for the benefit of the ZaaZoom Defendants. Based on this argument, FNBCT and Jack Henry have and would argue that the RCCs show a properly created RCC with a proper endorsement, with no mismatch between the payee and the endorser. Although Plaintiff disputes Defendants contentions, Plaintiff recognizes that establishing Defendants misconduct on a classwide basis will be a significant undertaking and a costly endeavor fraught with the risk associated with any litigation. In summary, these factors weigh in favor of preliminary approval of the settlement.. The Parties aggressively litigated this case for over three years, completing significant formal and informal discovery, before reaching the settlement. The Court must also evaluate whether the parties have sufficient information to make an informed decision about settlement. Linney v. Cellular Alaska P ship, F.d, (th Cir. ). As the Ninth Circuit reiterated, [i]n the context of class action settlements, formal Case No. :-cv-0-who

16 Case:-cv-0-WHO Document Filed0/0/ Page of 0 0 discovery is not a necessary ticket to the bargaining table where the parties have sufficient information to make an informed decision about settlement. In re Mego Fin. Corp. Sec. Litig., F.d, (th Cir. 000) (quoting Linney, F.d at ). Here, the Parties engaged in over three years of active litigation before reaching the settlement. As discussed above, Defendants challenged the pleadings on multiple occasions, bringing one successful and one partially successful motion to dismiss. As a result of Defendants aggressive defense, Plaintiff only has one remaining claim against FNBCT for negligence. The Court previously dismissed the other claims against FNBCT. Plaintiff s only remaining claims against Jack Henry are for negligence, conversion, and violation of California s Unfair Competition law. Additionally, Plaintiff, FNBCT, Jack Henry, and the other Defendants have engaged in significant informal and formal discovery, including both inter-party discovery and third party discovery. (Rosenfeld Decl..) After extensively meeting and conferring about various discovery objections, Defendants produced thousands of documents, including internal s, website design documents, class member enrollment data, RCC images, summary financial data regarding the Membership Programs and the RCCs deposited with FNBCT, and check return data. (Rosenfeld Decl. ). As a result of the above-described litigation and discovery, the Parties have sufficient information to make an informed decision about settlement, and this factor weighs in favor of preliminary approval. (Rosenfeld Decl. ). Class Counsel are experienced in litigating consumer class actions, particularly in the area of new technology. The judgment and views of experienced counsel entering into a settlement are entitled to considerable deference. See Vasquez v. Coast Valley Roofing, Inc., F.R.D., (E.D. Cal. 00). In fact, great weight is accorded to the recommendation of counsel, who are most closely acquainted with the facts of the underlying litigation. See id.; Nat'l Rural Telecommunications Coop. v. DIRECTV, Inc., F.R.D., (C.D. Cal. 00). Courts have adopted this standard because parties represented by competent counsel are better positioned than Case No. :-cv-0-who 0

17 Case:-cv-0-WHO Document Filed0/0/ Page of 0 0 courts to produce a settlement that fairly reflects each party's expected outcome in the litigation. See Nat l Rural Telecommunications Coop., F.R.D. at. Thus, courts, absent fraud, collusion, or the like, should be hesitant to substitute their own judgment for that of experienced class and defense counsel. Id. Here, Class Counsel and counsel for FNBCT and Jack Henry are well known for their respective experience and success in prosecuting and defending class actions, and all of the Parties counsel fully support this settlement. (Declaration of Mike Arias in Support of Plaintiff s Unopposed Motion for Preliminary Approval of Class Action Settlement with Defendant First Bank of Delaware [D.E. No. ] ( Prior Arias Decl. ) - and Declaration of Karl S. Kronenberger in Support of Plaintiff s Unopposed Motion for Preliminary Approval of Class Action Settlement with Defendant First Bank of Delaware [D.E. No. ] ( Prior Kronenberger Decl. ) -.) The fact that qualified and well-informed counsel endorse the settlement as being fair, reasonable, and adequate favors this Court s approval of the Settlement.. There are no subtle signs of collusion. The proposed settlement does not have any of the subtle signs of collusion that might give a court pause. See In re Bluetooth, F.d at. First, the Agreement does not give Class Counsel a disproportionate distribution of the settlement. See In re Bluetooth, F.d at. Class Counsel will seek attorneys fees of % of the Settlement Fund (Agreement, - ), which is presumptively reasonable. White, 0 WL, at *. In fact, the Ninth Circuit has established % of a common settlement fund as the benchmark award for attorney fees. Torrisi v. Tucson Elec. Power Co., F.d 0, (th Cir.). Second, the Agreement does not contain a clear sailing provision that provides for payment of fees separate and apart from class funds. In re Bluetooth, F.d at. Class Counsel s fees are to be paid directly from the Settlement Fund. (Agreement -.) Finally, the Agreement does not provide for a reversion of any Settlement Funds to FNBCT or Jack Henry. See In re Bluetooth, F.d at. Any unclaimed settlement proceeds will be remitted under the cy pres doctrine to the University of California for the Samuelson Law, Technology & Public Policy Clinic at the UC Berkeley School of Law (Boalt Hall), an academic Case No. :-cv-0-who

18 Case:-cv-0-WHO Document Filed0/0/ Page of center and litigation clinic that has a close substantive connection to the driving nexus of this action. (Agreement.). The proposed settlement will provide Class members with substantial relief. The proposed settlement of $,000 will provide each Class Member with a substantial benefit in relation to the Class s aggregate, potentially-recoverable damages. If this action 0 proceeded to trial, Plaintiff would seek to recover approximately $0,. This amount consists of $, in Membership Fees paid by Class members and $, in Bank Fees paid by Class members. (Rosenfeld Decl..) Thus, the proposed Settlement Fund amounts to % of the aggregate Class damages. Naturally, a class action settlement agreement normally embodies a compromise; in exchange for the saving of cost and elimination of risk, the parties each give up something they might have won had they proceeded with litigation. See Officers for Justice v. Civil serv. Comm n of City & Cnty. Of San Francisco, F.d, (th Cir. ). It is well-settled law that a cash settlement amounting to only a fraction of the potential recovery will not render the settlement inadequate or unfair. See id. Thus, courts in the Ninth Circuit have frequently 0 approved class settlements where the ratio of the settlement amount to the damages at issue was much smaller than here. See Monterrubio v. Best Buy Stores, L.P., F.R.D., (E.D.Cal.0) (finding a recovery of approximately 0 percent of estimated damages to favor settlement); Khanna v. Intercon Sec. Sys., Inc., :0-CV--KJM-EFB, 0 WL, at *-* (E.D. Cal. Apr., 0) (approving class settlement amounting to %-% of recoverable damages (depending on claim)); Glass v. UBS Fin. Servs., Inc., No. C 0 0 MMC, 00 WL, at * (N.D.Cal. Jan., 00) (finding settlement of a wage and hour class action for % to % of the claimed damages to be reasonable in light of the uncertainties involved in the litigation). Because the proposed settlement will provide Class members with a substantial benefit in relation to the aggregate Class damages, the settlement is fair, reasonable, and adequate. Case No. :-cv-0-who

19 Case:-cv-0-WHO Document Filed0/0/ Page of C. Summary of the Proposed Notice. Dissemination of Notice The Agreement provides for individual postcard notice by U.S. Mail along with a dedicated Settlement Website. Postcard: As part of the online payday loan application process, Settlement Class 0 0 Members were required to provide a valid postal address, which was reflected in the RCCs that were created in their names. Jack Henry has retained images of all of the RCCs that it created and deposited with FNBCT for payment for the Membership Programs. (Declaration of Phillip Maez in Support of Plaintiff s Unopposed Motion for Preliminary Approval of Class Action Settlement With Defendant First National Bank of Central Texas -) Based on this information, the Settlement Administrator will send an individual postcard to each such Class Member via U.S. Mail. The text of the postcard will contain a brief summary of the settlement and will include a link to the Long Form Notice available on the Settlement Website. (Agreement Ex. A (Long Form Notice) and Ex. B (Postcard Notice).) Website: A dedicated Settlement Website will be established, which will contain the Settlement Agreement; relevant pleadings, motions, and orders; the Long Form Notice; and contact information for Class Counsel. (Agreement,.). Automatic Cash Payment Unless a Class Member elects to exclude him- or herself from the Settlement Class, he or she will automatically receive a cash payment of approximately eleven dollars. The cash payment will be made by check mailed to each Settlement Class Member by U.S. Mail.. Request for Exclusion To be excluded from the settlement, Class Members must submit a request for exclusion to the Settlement Administrator within forty-five calendar days after the completion of the dissemination of the Postcard Notice.. Settlement Administration The Parties have agreed on the appointment of KCC Class Action Services ( KCC ) as the Settlement Administrator. (Agreement 0.) The Settlement Administrator shall be responsible Case No. :-cv-0-who

20 Case:-cv-0-WHO Document Filed0/0/ Page0 of 0 0 for administering the settlement, including disseminating notice, processing requests for exclusion and objections (if any), and distributing cash payments to Settlement Class Members. Under the Agreement, the fees and expenses of the Settlement Administrator will be paid from the Settlement Fund. (Agreement.) D. The notice plan provides the best notice practicable under the circumstances. Federal Rule of Civil Procedure (c)()(b) requires that members of a certified class be given notice of the suit and its class action status. Federal Rule of Civil Procedure (e)() requires that members of a certified class be given notice of a proposed settlement. All class members are entitled to receive the best notice that is practicable under the circumstances and in a reasonable manner. Fed. R. Civ. P. (c)()(b). In class-action settlements, it is common practice to provide a single notice program that satisfies both of these notice standards. Browning v. Yahoo! Inc., 00 WL 0, at * n., No. C0-0 HRL (N.D. Cal. Nov., 00).. The notice satisfies the content requirements of Rule (c)()(b) and (e). Under Federal Rule of Civil Procedure (c)()(b), the notice must state: (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 (c)(). Here, the proposed Long Form Notice and Postcard Notice are adequate because they contain each of the required items of information. (Agreement Exs. A, B.) The proposed Long Form Notice and Postcard Notices are accurate, informative, and written in plain, easy to understand language, and model the notices approved by the Court in a previous settlement in this case with First Bank of Delaware. (Agreement Exs. A, B) In addition, the notices satisfy the requirement of Federal Rule of Civil Procedure (e) The Parties obtained two cost proposals for the administration of the settlement. KCC s proposal, which was the most economic, estimates administration costs at $,. (Rosenfeld Decl..) Case No. :-cv-0-who

21 Case:-cv-0-WHO Document Filed0/0/ Page of 0 0 because they describe the benefits to be provided under the settlement, provide Class Members with information on how to obtain a copy of the Agreement, and notify Class Members of their right to request exclusion from or object to the settlement.. The method of providing notice is adequate. The Postcard Notice satisfies the individual notice requirement of Rule (c)()(b). This notice plan of individual postcard notice via U.S. Mail and a dedicated Settlement Website is modeled after similar notice plans that have been approved by other courts. See Schaffer v. Litton Loan Servicing, LP, CV 0-0 MMM JCX, 0 WL 0 (C.D. Cal. Nov., 0) (approving use of postcard notice directing recipients to settlement website); Malta v. Fed. Home Loan Mortgage Corp., 0-CV-0 BEN NLS, 0 WL (S.D. Cal. Feb., 0) (same); Faigman v. AT & T Mobility LLC, C-0-0-MHP, 0 WL (N.D. Cal. Feb., 0) (same); Sarabri v. Weltman, Weinberg & Reis Co., L.P.A., :0-CV- AJB NLS, 0 WL (S.D. Cal. Aug., 0) report and recommendation adopted, 0CV AJB NLS, 0 WL 0 (S.D. Cal. Sept., 0) (same); Barani v. Wells Fargo Bank, N.A., CV-GPC KSC, 0 WL (S.D. Cal. Apr., 0) (same). Thus, the method of notice in the Agreement meets the standards of Federal Rule of Civil Procedure (c) and (e) and satisfies due process by providing for individual notice to all class members via U.S. Mail with an express reference to a dedicated Settlement Website. E. Plaintiff respectfully requests the Court set a schedule for final approval. Assuming the Court preliminarily approves the proposed settlement, Plaintiff must notify the Class Members of the proposed settlement. Such notice is necessary to allow Class Members an opportunity to opt-out or file any objections, and to hold a final approval hearing. Toward those ends, Plaintiff proposes the following schedule (which Defendants do not oppose) based on the terms of the Agreement: Deadline to complete dissemination of class notice: Twenty-five () days after Preliminary Approval Date Case No. :-cv-0-who

22 Case:-cv-0-WHO Document Filed0/0/ Page of Deadline to file motion for final approval and fee application papers: Deadline for class members to opt-out of the settlement: Thirty-five () days after Class Notice Date Forty-five () days after Class Notice Date 0 Deadline for class members to file objections to the settlement Forty-five () days after and/or fee application: Class Notice Date Deadline to file any reply briefs in further support of motion Fifty-six () days after for final approval or fee application: Class Notice Date Final settlement approval hearing: Seventy days (0) after Class Notice Date CONCLUSION For the reasons stated herein, Plaintiff respectfully requests that the Court preliminarily approve the proposed settlement and schedule the date of the fairness hearing and the other related deadlines as presented to the Court. 0 DATED: August, 0 Respectfully Submitted, KRONENBERGER ROSENFELD, LLP By: s/ Jeffrey M. Rosenfeld Jeffrey M. Rosenfeld Attorneys for Plaintiffs Case No. :-cv-0-who