Anaya v. QuickTrim CA4/1

Filed 7/2/15 Anaya v. QuickTrim CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

TERESA ANAYA et al., D067432

Plaintiffs and Respondents,

v. (Super. Ct. No. CIVVS1201177)

QUICKTRIM, LLC et al.,

Defendants and Respondents;

SANDRA MONSALVE,

Objector and Appellant.

APPEAL from a judgment of the Superior Court of San Bernardino County,

Bryan F. Foster, Judge. Affirmed.

Bursor & Fisher, Scott A. Bursor, L. Timothy Fisher, Annick M. Persinger and

Julia A. Luster, for Objector and Appellant Sandra Monsalve.

Kabateck Brown Kellner, Brian S. Kabateck, Richard L. Kellner and Lina

Melidonian for Plaintiffs and Respondents Teresa Anaya et al.
 Posner Law Corporation, Ashley D. Posner; Nagel Rice, Bruce Nagel and

Diane E. Sammons for Defendants and Respondents Quicktrim, LLC et al.

INTRODUCTION

Teresa Anaya filed a class action against QuickTrim, LLC and others (collectively

QuickTrim), alleging QuickTrim's product labeling and packaging improperly claimed

QuickTrim's products had weight loss benefits. The trial court subsequently approved a

settlement agreement providing for injunctive relief and requiring QuickTrim to

reimburse class members a portion of their purchase price or provide them with coupons

redeemable for future product purchases. The trial court also awarded class counsel

$250,000 in attorney fees and costs.

Class member and objector Sandra Monsalve appeals, contending the trial court

abused its discretion in approving the settlement because the class did not receive

sufficient notice of or adequate relief from the settlement.1 She additionally contends the

trial court abused its discretion by awarding excessive attorney fees to class counsel. We

disagree with these contentions and affirm the judgment

BACKGROUND

In December 2010 class counsel, while representing a different plaintiff, sent

QuickTrim a letter alleging QuickTrim violated the California Consumers Legal

1 Monsalve is also a class member in a competing federal class action. (See Cowan,
et al. v. Windmill Health Products, LLC, et al. (S.D.N.Y. 2012, No. 1:12-cv-01541)
(Cowan action).)
2
Remedies Act (Civ. Code, § 1750 et seq.) (CLRA). The letter demanded QuickTrim

provide refunds to the plaintiff and others like her for their product purchases.

Upon receiving the letter, QuickTrim contacted class counsel and initiated

settlement discussions. For more than a year, the parties engaged in informal discovery

and ongoing, but unsuccessful, settlement negotiations. During this time, class counsel

determined Anaya would be a more suitable class representative.

In March 2012 Monsalve's counsel filed the Cowan action. (See fn. 1, ante.) Six

days later Anaya filed the instant class action, alleging violations of the CLRA, Unfair

Competition Law (Bus. & Prof. Code, § 17200 et seq.), False Advertising Law (Bus. &

Prof. Code, § 17500, et seq.) and other state law claims. The action was filed on behalf

of all United States residents who purchased certain QuickTrim products for personal use

during the preceding four years. In May 2012 Anaya filed a first amended complaint

adding a cause of action for violation of the federal Magnuson-Moss Warranty Act (15

U.S.C., § 2301 et seq.) and broadening the class definition to include all United States

residents who "purchased the QuickTrim Weight Loss System or any of its component

products for personal use." Meanwhile, the parties continued their settlement efforts and,

with the assistance of a respected, retired jurist serving as mediator, reached a

preliminary settlement.

In October 2012 after the parties finalized their settlement agreement, Anaya filed

a motion seeking preliminary approval of the settlement. (See Cal. Rules of Court, rule

3.769(c).) She concurrently sought approval to file a second amended complaint adding

3
numerous defendants and claims. The settlement was intended to dispose of all claims

nationwide, effectively extinguishing the Cowan action.

The settlement provided that class members who purchased QuickTrim products

directly from QuickTrim would automatically receive refunds of 50 percent of the

products' purchase price or, at their election, coupons redeemable for double the products'

purchase price. Class members who purchased QuickTrim products from a retail store

and who had proof of purchase would receive refunds of 50 percent of the products'

purchase price or coupons redeemable for the products' purchase price. Class members

who purchased QuickTrim products from a retail store, but did not have proof of

purchase, would receive refunds of 25 percent of the products' purchase price up to the

amount of two products or coupons redeemable for up to 35 percent of the purchase price

of two products, not to exceed $42. The settlement additionally required QuickTrim to

redesign its labeling and packaging to restate the nature of its products and their benefits.

The settlement further required class counsel to apply for an award of attorney

fees, not to exceed $250,000. QuickTrim agreed not to oppose the application.

Monsalve objected to preliminary approval of the proposed settlement on multiple

grounds, including the sufficiency of the plan for noticing class members of the

settlement and the adequacy of the proposed settlement. After requiring improvements to

the noticing plan, the court granted preliminary approval of the proposed settlement over

Monsalve's objections.

After receiving preliminary approval of the settlement, QuickTrim created a

settlement Web site containing a list of frequently asked questions, a detailed class

4
notice, a claim form, the settlement agreement, and the preliminary approval order.

QuickTrim then provided notice of the settlement through multiple avenues directed at

people with demographic profiles similar to likely class members. The avenues included

those used by QuickTrim to advertise its products. Specifically, QuickTrim sent a press

release to 4,200 print and broadcast outlets and 5,500 online press outlets through the

United States, including the Associated Press. It placed print ads in In Touch, Life &

Style, US Weekly, National Enquirer, Globe, Shape, Star, and OK! Magazine, which had

a combined readership of 53,108,000 people. It placed television ads on several cable

television networks, including Bravo, Food Network, Travel, Oxygen, BET, Oprah

Winfrey Network, Soap, TBS, USA, and Women's Entertainment. It placed digital ads

on Facebook, Google, Yahoo, Bing, and other search portals and Web sites, including its

own. Finally, it sent e-mail ads to over 8 million people.

QuickTrim's noticing efforts produced over 1.4 million hits to the settlement Web

site and 15,895 class member claims. Of the 4,583 claimants who purchased directly

from QuickTrim, 19 requested coupons and the remainder automatically received

compensation. Of the 69 claimants who purchased from a retailer and had proof of

purchase, one requested a coupon and the remainder requested compensation. Of the

11,243 claimants who purchased from a retailer and did not have proof of purchase,

1,159 requested coupons and the remainder requested compensation. The combined

estimated value of the claims was $247,484.68.

In July 2013 Anaya moved for final approval of the settlement agreement. She

concurrently moved for an award of $250,000 in attorney fees and costs to class counsel.

5
 Monsalve objected to final approval of the settlement on essentially the same

grounds she objected to preliminary approval of it. She also argued the settlement release

was overly broad and the settlement appeared to be the product of a reverse auction. She

opposed the attorney fees motion on the ground the requested fees were excessive.

Over Monsalve's objections, the trial court granted final approval of the

settlement, finding the settlement was reached through arm's length negotiations, the

investigation was sufficient to evaluate the class claims, the settlement was adequate,

class counsel had the requisite experience to represent the class, Monsalve was the only

class member who objected to the settlement, and there were questions as to the strength

and ability to prove the class claims. In a later proceeding, after requiring further

substantiation of class counsel's work on the case, the trial court awarded class counsel

$250,000 in combined attorney fees and costs.

DISCUSSION

"In general, questions whether a settlement was fair and reasonable, whether

notice to the class was adequate, whether certification of the class was proper, and

whether the attorney fee award was proper are matters addressed to the trial court's broad

discretion. [Citation.] Our review is therefore limited to a determination whether the

record shows 'a clear abuse of discretion.' [Citation.] Our task is not to determine in the

first instance whether the settlement was reasonable or whether certification was

appropriate. We determine only whether the trial court acted within its discretion in

making the rulings that it did." (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th

224, 234-235 (Wershba); Cho v. Seagate Technology Holdings, Inc. (2009) 177

6
Cal.App.4th 734, 743 (Cho).) However, "[t]o the extent that it appears the trial court's

decision was based on improper criteria or rests upon erroneous legal assumptions, these

are questions of law warranting our independent review." (Wershba, at p. 235.)

I

Class Notice

Monsalve contends the notice to the class members was insufficient because it

failed to reach most of the class. As support for this contention, she notes only a small

percentage of potential class members became claimants. She also asserts the noticing

plan did not require individual notice to potential class members identifiable from retailer

records; the noticing plan did not comply with Civil Code section 1781, subdivision (d);

and the noticing plan did not fully comply with rule 3.766(d)(3)-(5) of the California

Rules of Court.

A

Trial court management of a class action is governed by California Rules of Court,

rule 3.760 et seq. When a class action settles, these rules require that "notice of the final

approval hearing must be given to the class members in the manner specified by the

court. The notice must contain an explanation of the proposed settlement and procedures

for class members to follow in filing written objections to it and in arranging to appear at

the settlement hearing and state any objections to the proposed settlement." (Cal. Rules

of Court, rule 3.769(f).)

"The trial court ' "has virtually complete discretion as to the manner of giving

notice to class members." ' " (Cellphone Termination Fee Cases (2010) 186 Cal.App.4th

7
1380, 1390 (Cellphone).) "In determining the manner of the notice, the court must

consider: [¶] (1) The interests of the class; [¶] (2) The type of relief requested; [¶] (3)

The stake of the individual class members; [¶] (4) The cost of notifying class members;

[¶] (5) The resources of the parties; [¶] (6) The possible prejudice to class members who

do not receive notice; and [¶] (7) The res judicata effect on class members." (Cal. Rules

of Court, rule 3.766(e).) We review the trial court's determination for abuse of discretion.

(Cellphone, supra, at p. 1390.) "The standard is whether the notice has 'a reasonable

chance of reaching a substantial percentage of the class members.' " (Wershba, supra, 91

Cal.App.4th at p. 251.)

B

1

QuickTrim's claims administrator estimated there were several hundred thousand

potential class members. As described above, QuickTrim utilized multiple means to

reach these potential class members, including individual notice to direct purchasers as

well as demographically targeted print ads, digital ads, social media ads, television ads,

and e-mails. Based on QuickTrim's noticing plan and the claims administrator's past

experience handling similar class actions, the claims administrator estimated it would

receive 6,000 claims. QuickTrim's noticing plan produced results far in excess of these

expectations and far in excess of the results produced in other similar class actions

handled by the claims administrator. Although Monsalve is unsatisfied with the claims

rate and regards it as proof of the noticing plan's insufficiency, she has not directly

challenged the claims administrator's evidence or produced any countervailing evidence

8
of what would be a reasonable claims rate for this type of class action. She, therefore,

has not established any inadequacy in the noticing plan based on the claims rate.

2

Monsalve additionally faults the court for not requiring QuickTrim to search

retailer records for potential class members to whom individual notice could be sent.

However, the court was not obliged to do this. "If personal notification is unreasonably

expensive or the stake of individual class members is insubstantial, or if it appears that all

members of the class cannot be notified personally, the court may order a means of notice

reasonably calculated to apprise the class members of the pendency of the actionfor

example, publication in a newspaper or magazine; broadcasting on television, radio, or

the Internet; or posting or distribution through a trade or professional association, union,

or public interest group." (Cal. Rules of Court, rule 3.766(f); see Cho, supra, 177

Cal.App.4th at p. 746 [when it is unnecessary or infeasible to personally notify all

potential class members of an action, the court may require notice by other means

reasonably calculated to apprise the class members of the action's pendency].)

3

The court's failure to require newspaper publication under Civil Code section

1781, subdivision (d), also did not render the notice to the class members insufficient.

This code section provides: "If [a consumer action under the CLRA] is permitted as a

class action, the court may direct either party to notify each member of the class of the

action. The party required to serve notice may, with the consent of the court, if personal

notification is unreasonably expensive or it appears that all members of the class cannot
9
be notified personally, give notice as prescribed herein by publication in accordance with

Section 6064 of the Government Code in a newspaper of general circulation in the county

in which the transaction occurred." (Civ. Code, § 1781, subd. (d), italics added.) On its

face, this code section is permissive, rather than mandatory. It authorizes a court to

permit publication notice in specified circumstances, but it does not require publication

notice in those circumstances nor does it preclude other forms of notice in those

circumstances.

4

The fact QuickTrim's publication, retail, and e-mail ads did not fully comply with

the California Rules of Court's content requirements also did not render notice to the

class insufficient. The California Rules of Court generally require class notice to include

"[a] procedure for the member to follow in requesting exclusion from the class," "[a]

statement that the judgment, whether favorable or not, will bind all members who do not

request exclusion," and "[a] statement that any member who does not request exclusion

may, if the member so desires, enter an appearance through counsel." (Cal. Rules of

Court, rule 3.766(d)(3)-(5).) However, the trial court had the discretion to grant relief

from compliance with these requirements. (Cal. Rules of Court, rule 3.760(b).) In

addition, the publication, retail, and e-mail ads referred potential class members to the

settlement Web site, which Monsalve acknowledges had a fully compliant notice.

Appellate courts have previously sanctioned this two-step process of using a summary

notice to direct potential class members to a Web site containing a more detailed notice.

(See Cellphone, supra, 186 Cal.App.4th at pp. 1391-1392; Chavez v. Netflix, Inc. (2008)

10
162 Cal.Ap.4th 43, 58.) Using the Internet's capability in this manner is a sensible and

efficient way to provide class notice. Moreover, "[w]e do not look for perfection. '[A]

large body of case law reflect[s] the view that "the whole concept of a large class-action

might easily be stultified by insistence upon perfection in actual notice to class-

members." ' " (Cellphone, supra, at p. 1392.)

5

Lastly, the absence of evidence the retailers actually displayed the class notices

they received does not, by itself, establish the class notice was insufficient. As described

above, QuickTrim's noticing program was multifaceted and the record contains

substantial evidence the program as a whole achieved its purpose.

II

Class Settlement

A

1

Monsalve next contends the trial court erred in approving the settlement because

the court had insufficient evidence to independently assess the case's strengths and

weaknesses and the settlement does not provide adequate relief to the class. "The trial

court has broad discretion to determine whether a class action settlement is fair. It should

consider factors such as the strength of plaintiffs' case; the risk, expense, complexity and

likely duration of further litigation; the risk of maintaining class action status through

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

11
participant; and the reaction of the class members to the proposed settlement. [Citations.]

But the 'list of factors is not exclusive and the court is free to engage in a balancing and

weighing of factors depending on the circumstances of each case. [Citation.]' [Citation.]

In sum, the trial court must determine that the settlement was not the product of fraud,

overreaching or collusion, and that the settlement is fair, reasonable and adequate to all

concerned. [Citation.]

"The burden is on the proponent of the settlement to show that it is fair and

reasonable. [Citation.] However, there is a presumption of fairness when (1) the

settlement is reached through arm's-length bargaining; (2) investigation and discovery are

sufficient to allow counsel and the trial court to act intelligently; (3) counsel is

experienced in similar litigation; and (4) the percentage of objectors is small." (Reed v.

United Teachers Los Angeles (2012) 208 Cal.App.4th 322, 336-337.)

2

The presumption of fairness applies in this case because the record shows the

settlement was reached through arm's length bargaining with the assistance of a

respected, retired jurist serving as mediator; class counsel has the requisite experience;

and the percentage of objectors was small. The record also shows there was sufficient

investigation and discovery to allow counsel and the court to act intelligently.

At base, this case is about whether QuickTrim's labeling and packaging

misrepresented its products' efficacy for weight loss. The record before the court at the

time it finally approved the settlement included general information about the parties'

respective litigation positions, QuickTrim's products, their average cost, and the number

12
of products sold during the class period. The record also includes examples of the

challenged labeling and packaging. Coupled with Anaya's second amended complaint,

this information was sufficient to enable the court to balance the strength of the class

claims against the settlement amount offered, and to satisfy itself the settlement amount

was "within the 'ballpark' of reasonableness." (Kullar v. Foot Locker Retail, Inc. (2008)

168 Cal.App.4th 116, 130, 133.) The court was not required to conduct " 'the detailed

and thorough investigation that it would undertake if it were actually trying the case.' "

(Id. at p. 130.) The court was only required to "receive and consider enough information

about the nature and magnitude of the claims being settled, as well as the impediments to

recovery, to make an independent assessment of the reasonableness of the terms to which

the parties have agreed." (Id. at p. 133.)

Notwithstanding the presumption of fairness, Monsalve contends the settlement is

inadequate because its cash value is less than $100,000 and its other components,

coupons and injunctive relief, are worthless. Even if we accept her valuation of the

settlement and its components, which Anaya and QuickTrim strongly contest, a

settlement is not required to meet a minimum dollar or percentage threshold to be deemed

adequate. Rather, the adequacy of a settlement amount is evaluated in light of litigation

uncertainties and class expectations. Both favor the adequacy of the settlement in this

case.

Litigation of the case would be risky and expensive as QuickTrim had multiple

viable defenses. Conversely, the class members' individual damages would be small

because of the products' relatively low price points. No class member opted out of the

13
settlement and only one class member, Monsalve, objected to it, indicating the class as a

whole is satisfied with it. In addition, the record belies any assertion coupons formed an

excessive part of the settlement as 90 percent of the claimants opted for cash, rather than

coupons. Accordingly, we cannot conclude the settlement is outside the ballpark of

reasonableness.

B

Relying exclusively on Trotsky v. Los Angeles Fed. Sav. & Loan Assn. (1975) 48

Cal.App.3d 134 (Trotsky), Monsalve also contends the court abused its discretion in

approving the settlement because the settlement included an overly broad release

intended to extinguish the Cowan action. (See fn. 1, ante.) Trotsky, however, is factually

distinguishable.

In Trotsky, the appellate court reversed a judgment approving a class action

settlement because the settlement encompassed a class claim not shared by the named

plaintiffs nor asserted in the operative class action complaint. (Trotsky, supra, 48

Cal.App.3d at pp. 145, 153-154.) The apparent purpose of including the claim in the

settlement was to foreclose another pending class action. (Id. at p. 149.) The appellate

court concluded the settlement was invalid as to the claim because the named plaintiffs

were not appropriate representatives for the claim. The appellate court additionally

concluded a class action settlement may not release a claim beyond the scope of the class

action complaint. (Id. at pp. 146-147.) The appellate court was also concerned the trial

court approved the settlement without full knowledge of the facts because the parties

14
failed to inform the trial court of the other class action before the approval hearing.

(Id. at pp. 149-150.)

None of these circumstances is present in this case. The operative class complaint

encompassed all of the released claims, Monsalve does not assert Anaya is an inadequate

representative for the released claims, and the trial court was well-aware of the Cowan

action before finally approving the settlement. Anaya disclosed the Cowan action in her

case management statement, which she filed before the court heard her motion for

preliminary approval of the settlement. In addition, the preliminary and final approval of

the settlement were delayed while Monsalve attempted to remove this case and have it

transferred to the federal court handling the Cowan action.2 As Trotsky, supra, 48

Cal.App.3d 134 has no application here, Monsalve has not established the court abused

its discretion by failing to follow Trotsky and disapprove the settlement as overly broad.

C

Monsalve further contends the trial court abused its discretion in approving the

settlement because it resulted from a reverse auction. A reverse auction occurs when the

defendant in a series of class actions chooses to negotiate a settlement with the most

ineffectual class lawyers in the hope the trial court will approve a weak settlement that

precludes other claims against the defendant. (Negrete v. Allianz Life Ins. Co. (9th Cir.

2008) 523 F.3d 1091, 1099.) The settlement of one class action during the pendency of

2 We grant QuickTrim's opposed motion for judicial notice of the federal court
records related to the attempted removal and transfer solely for procedural history
purposes. (Evid. Code, §§ 452, subd. (c), 459, subd. (a).)
15
another parallel class action is not a sufficient basis for concluding a reverse auction took

place. (Id. at pp. 1099-1100.) Generally, there must be concrete evidence of collusion,

such as a bidding war. (Gallucci v. Gonzales (9th Cir. Feb. 24, 2015, No. 12-57081)

2015 U.S. App. LEXIS 2949; Rutter & Wilbanks Corp. v. Shell Oil Co. (10th Cir. 2002)

314 F.3d 1180, 1189.) There is no concrete evidence of a bidding war or other forms of

collusion in this case. To the contrary, the evidence shows the settlement was the product

of lengthy negotiations aided by the efforts of a respected, retired jurist serving as a

mediator. Accordingly, Monsalve has not established the trial court abused its discretion

by failing to disapprove the settlement on this ground.

III

Attorney Fees Award

Monsalve contends the trial court abused its discretion in awarding attorney fees

and costs of $250,000 because the award is grossly disproportionate to the class's

recovery. "Because of the potential for fraud, collusion or unfairness, thorough judicial

review of fee applications is required in all class action settlements and the fairness of the

fees must be assessed independently of determining the fairness of the substantive

settlement terms." (In re Consumer Privacy Cases (2009) 175 Cal.App.4th 545, 555.)

"[T]he ' "experienced trial judge is the best judge of the value of professional services

rendered in his court, and while his judgment is of course subject to review, it will not be

disturbed unless the appellate court is convinced that it is clearly wrong." ' [Citations.]

For this reason '[o]ur review of the amount of attorney fees awarded is deferential.'

[Citations.] We apply an abuse of discretion standard. [Citation.] Fees approved by the

16
trial court are presumed to be reasonable, and the objectors must show error in the

award." (Id. a p. 556.)

" ' " '[T]he primary method for establishing the amount of "reasonable" attorney

fees is the lodestar method. The lodestar (or touchstone) is produced by multiplying the

number of hours reasonably expended by counsel by a reasonable hourly rate. Once the

court has fixed the lodestar, it may increase or decrease that amount by applying a

positive or negative "multiplier" to take into account a variety of other factors, including

the quality of the representation, the novelty and complexity of the issues, the results

obtained, and the contingent risk presented.' [Citation.] 'The purpose of such adjustment

is to fix a fee at the fair market value for the particular action. In effect, the court

determines, retrospectively, whether the litigation involved a contingent risk or required

extraordinary legal skill justifying augmentation of the unadorned lodestar in order to

approximate the fair market rate for such services.' " ' " (Consumer Privacy Cases, supra,

175 Cal.App.4th at p. 556.)

In this case, Monsalve does not identify any particular flaw in the trial court's

application of the lodestar method. Rather, Monsalve challenges the amount of the

attorney fees award because she does not believe class counsel could have worked more

than 500 hours on the case based on the results counsel achieved. Notwithstanding

Monsalve's skepticism, the record includes declarations from class counsel detailing the

time spent and tasks performed by each of counsel's staff members from the inception to

the conclusion of the case in the trial court. Monsalve does not point to any deficiencies

17
in any of the declarations and, collectively, they provide substantial evidence to support

the amount of the fee award.3

Monsalve also challenges the fee award because it was the subject of a " 'clear

sailing' " provision in the settlement agreement, under which QuickTrim agreed not to

object to an attorney fees award up to $250,000. (See Cellphone, supra, 180 Cal.App.4th

at p. 1120; Consumer Privacy Cases, supra, 175 Cal.App.4th at p. 552.) However, "

'clear sailing' " provisions are common in class action settlement agreements and are not

improper under California law. (Consumer Privacy Cases, supra, at p. 553.) Thus, the

existence of the "clear sailing" provision in the settlement agreement does not provide a

sufficient basis for reversing the attorney fees award. (See Cho, supra, 177 Cal.App.4th

at p. 744.)

DISPOSITION

The judgment is affirmed. Respondents are awarded their appeal costs.

MCCONNELL, P. J.

WE CONCUR:

BENKE, J.

NARES, J.

3 We need not address Monsalve's alternative arguments regarding the percentage of
the benefit method of calculating attorney fees as there was no common fund in this case
and the record does not show the trial court used this method.
18