Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_02-cv-01240/USCOURTS-cand-4_02-cv-01240-0/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 28:1441 Petition for Removal

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United States District Court

For the Northern District of California

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1HFC objects to certain exhibits filed in support of

Movants' motion to opt out as well as the Hulsizer and Ohlhausen

affidavits filed in support of Movants' reply. HFC's objections

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

IN RE:

HOUSEHOLD LENDING LITIGATION

 /

No. C 02-1240 CW

ORDER GRANTING

MOTION TO OPT

OUT

Wade Hulsizer and Beverly Ohlhausen (collectively, Movants)

move for an order allowing them to opt out of the class

settlement of this case or, in the alternative, for an

enlargement of time to opt out. Defendants Household

International, Inc., Household Finance Corporation II, Household

Finance Corporation III, Household Realty Corporation,

Beneficial Finance, Beneficial of Washington, Inc. and other

related Household Finance corporate entities (collectively, HFC)

oppose the motion. The matter was taken under submission on the

papers. Having considered the papers filed by the parties, the

Court grants the motion to opt out out.1

Case 4:02-cv-01240-CW Document 395 Filed 05/27/05 Page 1 of 8
United States District Court

For the Northern District of California

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are overruled. To the extent that the Hulsizer and Ohlhausen

affidavits introduce new matter, they respond to arguments in

HFC's opposition and are therefore admissible. With respect to

the exhibits, the Court relies only on Exhibits A and B;

objections to the other exhibits are overruled as moot. These

exhibits were accompanied by, although not literally attached

to, an affidavit by Supervising Attorney Owen Clarke that

sufficiently authenticates the documents. 

2

BACKGROUND

In October, 2000, Movants, a husband and wife, obtained

loans through HFC secured by their house in Mattawa, Washington. 

Movants subsequently filed for bankruptcy and, in May, 2001,

moved to Mead, Washington. In September, 2003, Movants

purchased a house in Post Falls, Idaho. Movants did not leave a

forwarding address when they moved to Idaho, instead informing

only family, friends and creditors. Movants did not notify HFC

of this move because HFC was no longer one of their creditors. 

In 2002, Movants decided to pursue claims against HFC. 

Movants were unable to obtain private counsel but, in October,

2003, retained University Legal Assistance (ULA), a legal clinic

at Gonzaga University School of Law, to represent them in their

claims against HFC. Movants at that time chose not to

participate in an opt-in class action brought by the Attorney

General for the State of Washington. On December 5, 2003, ULA

sent a letter on Movants' behalf to Andrew Budish, HFC's legal

counsel, demanding compensation for HFC's alleged predatory

lending practices. Clarke Decl., Ex. A. The letter explained

that Movants were represented by ULA and resided in Idaho. 

On December 12, 2003, this Court issued a preliminary order

approving a class action settlement of Movants' claims and

Case 4:02-cv-01240-CW Document 395 Filed 05/27/05 Page 2 of 8
United States District Court

For the Northern District of California

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providing for notice to the class (hereinafter the Acorn action

or Acorn class settlement). That order required any person who

wanted to be excluded from the settlement to mail a request for

exclusion to the Settlement Administrator no later than twentyone days prior to the April 30, 2004 fairness hearing, that is,

no later than April 9, 2004. On April 30, 2004, this Court

issued a final order approving the class settlement and a

judgment. 

Meanwhile, on January 19, 2004, HFC responded to the demand

letter, denying the allegations therein but stating that Movants

would receive a $1,393.20 refund check and an offer from Mr.

Budish to restructure the account if the bankruptcy was

reopened. Clarke Decl., Ex. B. According to that letter,

Movants were sent a carbon copy, with a check enclosed, to their

Mead, Washington address. Movants declare that they never

received the letter with the check. Hulsizer Decl. ¶ 8. 

Movants also never received an opt-out form or other

notification regarding the Acorn class settlement. According to

a representative of the Settlement Administrator, the class

notice was sent on December 22, 2003 to their Mead, Washington

address, and was not returned. Movants were found to be

eligible to receive a claim form. The Settlement Administrator

mailed a claim form to Movants twice, on August 13, 2004 to the

Mead address and on September 9, 2004 to the Mattawa, Washington

address. Both times the form was returned as undeliverable. 

See Jinkens Decl. ¶¶ 4-7. Movants claim that had they received

notice of the Acorn class action, they would have opted out. 

Case 4:02-cv-01240-CW Document 395 Filed 05/27/05 Page 3 of 8
United States District Court

For the Northern District of California

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2 Because final judgment has been entered, Federal Rule of

Civil Procedure 60(b) governs this motion, rather than Federal

Rule of Civil Procedure 6(b)(2) which provides for the

enlargement of time. See In re New England Mut. Life Ins. Co.

Sales Practice Litig., 204 F.R.D. 6, 11 (D. Mass. 2001). 

4

On October 8, 2004, Movants filed suit against HFC in

Spokane County Superior Court. On or about November 5, 2004,

HFC filed an answer, in which it asserted as an affirmative

defense Movants' failure to opt out of the Acorn class

settlement. Counsel for Movants concurrently learned of the

Acorn settlement at a national consumer law conference. Clarke

¶ 9. After obtaining an affidavit from the Settlement

Administrator and local counsel, Movants filed the instant

motion to opt out on January 3, 2005. 

LEGAL STANDARD

In requesting exclusion from the class after the April 9,

2004 opt-out deadline, Movants are effectively seeking relief

from final judgment under Federal Rule of Civil Procedure 60(b).2

The standard for determining whether Movants should be allowed

to opt out of the class after the applicable deadline is whether

their failure to comply with the deadline is the result of

“excusable neglect.” Fed. R. Civ. P. 60(b). This standard

allows courts, “where appropriate, to accept late filings caused

by inadvertence, mistake, or carelessness, as well as by

intervening circumstances beyond the party’s control.” Pioneer

Inv. Serv. Co. v. Brunswick Assoc. Ltd. P'ship, 507 U.S. 380,

388 (1993). It is appropriate for courts to accept such late

Case 4:02-cv-01240-CW Document 395 Filed 05/27/05 Page 4 of 8
United States District Court

For the Northern District of California

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filings when the party's neglect can be considered "excusable,"

a determination that is "at bottom an equitable one, taking

account of all relevant circumstances surrounding the party's

omission." Id. at 395. The relevant circumstances include "the

danger of prejudice to the [opposing party], the length of the

delay and its potential impact on judicial proceedings, the

reason for the delay, including whether it was in reasonable

control of the movant, and whether the movant acted in good

faith." Id.

DISCUSSION

Movants do not challenge the constitutional adequacy of the

class action notice. Indeed, as HFC notes, the Court has

already determined that the notice to class members was

generally adequate. See November 3, 2004 Order Granting in Part

and Denying in Part Movants' Motion to Opt Out (the Barrow

Order) at 5; November 23, 2004 Order Denying Movants' Motion to

Opt Out (the Jamieson Order) at 4-5; and November 23, 2004 Order

Denying Movants' Motion to Opt Out (the Woodward Order) at 4-5. 

Instead, Movants argue that their neglect should be excused

because their failure to opt out was due to circumstances beyond

their control and the relevant circumstances weigh in favor of

allowing them to opt out. 

HFC does not dispute that Movants' failure to opt out was

due to circumstances beyond their control, specifically their

failure to receive actual notice of the class settlement. The

evidence indicates that had Movants received actual notice, they

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would have opted out of the settlement. 

HFC argues that the relevant factors weigh against finding

excusable neglect. Although HFC asserts that it will be

prejudiced if Movants are allowed to file a late request for

exclusion, this claim is not well-taken. Defendants claim that

they will lose a "significant benefit" of the settlement if

Movants are allowed to bring their claims, namely the ability to

determine the number of opt-outs by the April 9 deadline and

thereby "resolve most of the potential claims." Defs.' Opp. at

10. However, any prejudice suffered by HFC does not outweigh

the prejudice caused to Movants due to their failure to opt-out

or participate in a settlement of which they had no actual

notice. Granting Movants' motion will have no negative impact

on the judicial proceedings; other potential class members have

also been allowed to opt out after the deadline. 

The nearly nine month delay between the opt-out deadline

and the instant delay is lengthy, but it is not unjustified. 

For seven of those nine months, Movants and their counsel had no

actual notice of the class action. Once they were made aware,

it took slightly less than two months for Movants to gather the

needed affidavits, obtain local counsel and file the motion. 

Cf. Jamieson Order at 5 (finding neglect inexcusable where

movants offered no explanation for four-month delay other than

the need to retain local counsel). Furthermore, HFC could have

avoided this delay by either sending the class notice to

Movants' counsel of record, obtaining the correct forwarding

address from Movants' counsel, or referring to the Acorn action

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For the Northern District of California

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in its January 17, 2004 letter to Movants' counsel. There is no

indication that Movants' delay was in bad faith, illustrated by

their decision not to opt into the Washington State class action

and their relatively prompt response once informed of the Acorn

action. 

Weighing all of these relevant circumstances and in the

interests of equity, the Court will therefore allow Movants to

opt out of this lawsuit, even though they did not file a request

for exclusion within the applicable time period.

CONCLUSION

For the foregoing reasons, Movants' motion to opt out is

GRANTED (Docket No. 335). Defendants' objections to the reply

affidavits and attachments are OVERRULED (Docket No. 375). The

Court GRANTS Defendants' request for judicial notice of the

Barrow, Jamieson and Woodward Orders (Docket No. 366). 

IT IS SO ORDERED.

Dated: 5/27/05 /s/ CLAUDIA WILKEN 

CLAUDIA WILKEN

United States District Judge

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United States District Court

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c-02-1240 CW

Carole K. Johnston

Law Offices of Carole K. Johnston

2600 Garden Road, Suite 330

Monterey, CA 93940

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