Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_14-cv-02418/USCOURTS-casd-3_14-cv-02418-1/pdf.json

Nature of Suit Code: 950
Nature of Suit: Constitutionality of State Statutes
Cause of Action: 28:1331 Fed. Question

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

SONIA HOFMANN, an individual and on 

behalf of all others similarly situated,

Plaintiff,

v.

DUTCH LLC, a California Limited 

Liability Company; and DOES 1 through 

100, inclusive,

Defendant.

Case No.: 3:14-cv-02418-GPC-JLB

TENTATIVE ORDER DENYING 

MOTION FOR PRELIMINARY 

APPROVAL OF PROPOSED CLASS 

SETTLEMENT

[ECF No. 43] 

Before the Court is Plaintiff’s third motion for preliminary approval of the 

proposed class settlement. Dkt. No. 43-1. Because all parties have agreed to the 

proposed settlement, Defendant Dutch, LL (“Defendant”) does not oppose this motion. 

Dkt. No. 45. After considering the parties’ submissions and arguments, and for the 

reasons that follow, the Court is tentatively prepared to DENY Plaintiff’s motion for 

preliminary approval. 

BACKGROUND

1. First Motion for Preliminary Approval 

On April 26, 2016, the Court denied Plaintiff’s initial motion for preliminary 

approval of the class settlement. Dkt. No. 37. The initial proposed settlement provided 

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for: (1) $20 worth of e-gift certificates for each of the class members; (2) $250,000 in cy 

pres awards; and (3) up to $175,000 in plaintiff’s attorney’s fees with a clear sailing 

provision attached.

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The Court identified three problems with the proposed settlement, namely: (1) that 

the e-gift certificates effectively constituted coupons because they required class 

members to pay out of their own pocket before they could redeem them, since while the 

face value of the e-gift certificates was $20, the average price of Defendant’s jeans was –

and still is – around $200, and no item was being sold by Defendant for less than $58.80; 

(2) that the cy pres award failed to meet the objective of the underlying statute of 

consumer protection, since the proposed charities did not promote consumer protection, 

but rather focused on “helping and meeting the needs of women in our society”; and (3) 

that, when considered in conjunction with the other provisions of the proposed 

settlement, the clear sailing provision “created at least a danger of collusion during the 

settlement negotiations which is not refuted by the record.” Id. at 9-15. The Court 

permitted the parties an additional sixty days to file a renewed motion for preliminary 

approval of class action settlement that cured the deficiencies identified by the Court. Id. 

at 15. 

2. Second Motion for Preliminary Approval 

On August 16, 2016, the Court denied Plaintiff’s second motion for preliminary 

approval of the class settlement (Dkt. No. 38). Dkt. No. 41. For the renewed attempt to 

propose a settlement, Plaintiff proposed the following: (1) one denim tote bag ($128 retail 

value) and $20 e-gift certificates for the class members; (2) $250,000 in cy pres awards, 

to the same charities as proposed in the initial settlement; and (3) up to $175,000.00 in 

Plaintiff’s attorney’s fees with the same clear sailing provision attached. See Dkt. No. 38, 

Ex. 1. In other words, the only difference between the first and second proposed 

 

1 The “clear sailing” provision refers to the agreement between Plaintiff’s counsel and Defendants that 

the Plaintiff’s attorney fee award will not exceed a fixed amount. See Dkt. No. 43-1 at 16. 

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settlement was the addition of the denim tote bag. The Court denied the parties’ renewed 

motion for preliminary approval because it did not cure the deficiencies that the Court has 

previously identified. Dkt. No. 41 at 2. In particular, the Court emphasized that the 

second motion did nothing to address the Court’s concern that the proposed cy pres

award did not conform to Ninth Circuit legal authority, which requires a sufficient nexus 

between the charitable purpose of a charity and the objectives underlying the violated 

statute. Id.

3. Third Motion for Preliminary Approval 

Plaintiff filed the instant motion for preliminary approval on October 14, 2016. 

Dkt. No. 43. Here, the proposed settlement consists of (1) a current-Elliot brand tote bag 

(retail value of $128.00) and electronic gift card codes “redeemable on 

www.CurrentElliott.com only and loaded with values of multiples of $20.00 

corresponding to the number of units of Class Products purchased during the Class 

Period”; (2) $250,000 in cy pres awards to be made over five years; (3) and up to 

$175,000 in attorney’s fees, with the same clear sailing provision. Id. at 11-13. 

There are two key differences between this proposed settlement and the previous 

proposal — the first concerns the award for the class and the second concerns the cy pres

award. First, under the new settlement, members of the class will receive at least $20 in 

electronic gift card codes, and possibly more depending on the number of units purchased 

by the class member. Second, here, Plaintiff has modified the proposed cy pres award to 

account for Defendant’s intent to donate $200,000 over four years to a scholarship 

endowment at the consumer science department of a not-for-profit institution of higher 

education. Id. at 12. Although Plaintiffs do not go into any detail regarding the nexus 

between the scholarship endowment and Defendant’s violations of the consumer 

protection laws, they have provided the court with the URL for the homepage of 

California State University, Northridge’s (“CSUN”) consumer science department. Id. 

The mission of CSUN consumer science program is to “enhance and promote consumer 

wellbeing and empowerment through research, education, and outreach.” See Consumer 

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Affairs, http://www.csun.edu/health-human-development/family-consumersciences/consumer-affairs (last visited December 16, 2016). Ultimately, Plaintiffs intend 

for Defendants to donate $200,000 to a scholarship endowment at a department like the 

one at CSUN. Dkt. No. 43 at 12-13. 

Plaintiff’s current proposed cy pres award is different in kind than the previous one 

proposed. For the second proposed settlement, Plaintiff stated that the Defendant 

intended to make $200,000 in donations to “Step Up Women’s Network, FIDM 

Scholarship, Race for the Cure, Juvenile Diabetes Research Foundation and Ability 

First.” Dkt. No. 38-1 at 9. None of those organizations had any obvious connection to a 

consumer rights violation and Plaintiff offered no such connection. See id. That being

said, Plaintiffs’ third proposed cy pres award is, nonetheless, similar to its predecessor in 

that it continues to include a $50,000 donation already made, and not approved by the 

Court, to Step Up Women’s Network. Id. 

Other similarities between this third proposed settlement and those that came 

before it give the Court further pause. 

For one, the proposed class award still requires class members to purchase items 

from Current Elliot in order to reap any monetary benefit. And as the Court has 

previously noted, because the cost of Defendant’s jeans hovers around $200.00, class 

members would have to spend much more than they would gain by receiving $20, $40, or 

even $60 gift cards. That the class members will also receive a free tote bag does not 

obviate this fact. Although the tote bag boasts a retail value of $128, it is unlikely that 

the bag is worth that much, if anything at all, to the class recipients. 

Two, the proposed class settlement does not remove the clear sailing provision in 

Plaintiff’s request for attorney’s fees. The continued presence of that provision fortifies 

the Court’s concern that the attorneys have not proposed a settlement with the best 

interests of the class in mind and invites the Court to continue to apply an exacting 

standard in analyzing the reasonableness of the settlement terms. 

As such, the Court is prepared to DENY Plaintiff’s Third Motion for Preliminary 

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Approval of Class Settlement. 

CONCLUSION

Counsel are advised that the Court’s rulings are tentative, and the Court will

entertain additional argument at the hearing on January 11, 2016. The parties shall

have a combined total of one hour to present their arguments. The time shall be

divided equally between each side, and counsel shall be responsible for keeping time

and reserving time as necessary for response, rebuttal, or both.

IT IS SO ORDERED. 

Dated: January 10, 2017

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