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Lengel v. HomeAdvisor, Inc.

United States District Court, D. Kansas

April 12, 2017

EMERALD LENGEL, on behalf of herself and all those similarly situated, Plaintiffs,
v.
HOMEADVISOR, INC., Defendant.

          MEMORANDUM AND ORDER

          KATHRYN H. VRATIL, UNITED STATES DISTRICT JUDGE

         On January 13, 2015, Emerald Lengel filed this lawsuit on behalf of all persons who applied for employment with HomeAdvisor, Inc., between January 13, 2013 and June 10, 2015. Plaintiffs claim that HomeAdvisor violated the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681b(b)(2)(A)(i). Specifically, plaintiffs allege that HomeAdvisor failed to provide job applicants a stand-alone disclosure stating that it would obtain a consumer report for employment purposes.[1]

         On January 25, 2017, the Court sustained in part plaintiffs' unopposed Motion For Preliminary Approval Of Class Action Settlement (Doc. #49) filed November 18, 2015. See Memorandum And Order (Doc. #55) (incorporated herein by reference). The Court preliminarily certified the class, appointed Lengel as settlement class representative and appointed Lengel's attorneys as class counsel. The Court overruled the motion for preliminary approval of the proposed settlement and reserved ruling on the proposed form of notice. See id. at 18-19. This matter comes before the Court on Plaintiff[s'] Motion For Preliminary Approval Of Updated Class Action Settlement (Doc. #56) filed February 6, 2017. For reasons set forth below, the Court sustains the motion.

         Analysis

         I. Preliminary Approval Of Amended Settlement

         Plaintiffs ask the Court to preliminarily approve the amended settlement agreement. In deciding whether to approve a settlement, the Court assesses the reasonableness of the compromise, taking into account the context in which the parties reached the settlement. See In re Motor Fuel Temp. Sales Practices Litig., 258 F.R.D. 671, 675 (D. Kan. 2009) (citing Nat'l Treasury Emp. Union v. United States, 54 Fed.Cl. 791, 797 (2002)). Although the Court must assess the strength of plaintiffs' claims, it should “not decide the merits of the case or resolve unsettled legal questions.” Id. (citing Carson v. Am. Brands, Inc., 450 U.S. 79, 88 n.14 (1981)).

         In determining whether a proposed settlement is fair, reasonable and adequate, the Court considers the following factors:

(1) whether the proposed settlement was fairly and honestly negotiated;
(2) whether serious questions of law and fact exist, placing the ultimate outcome of the litigation in doubt;
(3) whether the value of an immediate recovery outweighs the mere possibility of future relief after protracted and expensive litigation; and
(4) the judgment of the parties that the settlement is fair and reasonable.

Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1188 (10th Cir. 2002). While the Court will consider these factors in greater depth at the final approval hearing, they are a useful guide at the preliminary approval stage as well. See In re Motor Fuel Temp. Sales Practices Litig., 258 F.R.D. at 675; Lucas v. Kmart Corp., 234 F.R.D. 688, 693 (D. Colo. 2006); Am. Med. Ass'n v. United Healthcare Corp., No. 00-2800 (LMM), 2009 WL 1437819, at *3 (S.D.N.Y. May 19, 2009).

         In overruling the original settlement agreement, the Court found that the first, second and fourth factors weighed in favor of preliminary approval. Those findings apply to the amended settlement agreement, and the Court incorporates them herein by reference. See Doc. # 55 at 14-15. The Court noted, however, that as to the third factor, although most terms of the original settlement agreement appeared fair and reasonable, the settlement was unclear as to the scope of the release and two points related to payment to class members.

         As to the scope of the release, the Court noted as follows:

The settlement provides that in exchange for a monetary payment, class members will release all claims “arising out of or relating to the facts alleged in the complaint including but not limited to any and all claims under the FCRA, including specifically 15 U.S.C. § 1681b(b)(2)(A), and any parallel or similar state or common-law claims.” Id. at ¶ 38. The broad release of claims relating to the facts alleged in the complaint and not limited to claims under the FCRA potentially covers a range of employment claims far broader than the FCRA claims in the complaint. See In re Adelphia Commc'ns Corp. Sec. & Derivative Litig., 272 Fed.Appx. 9, 13 (2d Cir. 2008) (although broad class action settlements common, released claims must be limited to claims arising out of factual predicate of lawsuit). Here, the settlement amount appears reasonable only if plaintiffs release any FCRA ...

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