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IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

PHILIP CHARVAT, on behalf of )

himself and others similarly )

situated, )

)

Plaintiffs, )

)

-vs- ) No. 12 C 5746

)

TRAVEL SERVICES, et al., ) Chicago, Illinois

) October 30, 2018

Defendants. ) 10:00 a.m.

TRANSCRIPT OF PROCEEDINGS

BEFORE THE HONORABLE ANDREA R. WOOD

APPEARANCES:

For the Plaintiffs: LAW OFFICE OF MATTHEW MCCUE

1 South Avenue, Suite 3

Natick, Massachusetts

BY: MR. MATTHEW McCUE

BURKE LAW OFFICES, LLC

155 North Michigan Avenue

Chicago, Illinois 60601

BY: MR. ALEXANDER HOLMES BURKE

MR. DANIEL J. MAROVITCH

For Defendant Carnival: SWANSON, MARTIN & BELL, LLP

330 North Wabash Ave.

Chicago, Illinois 60611

BY: MR. JEFFREY SCOTT BECKER

MR. DARREN BRETT WATTS

COLETTE M. KUEMMETH, CSR, RMR, FCRR

OFFICIAL COURT REPORTER

219 South Dearborn Street

Room 1928

Chicago, Illinois 60604

(312) 554-8931

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APPEARANCES: (Continued)

For Defendant Royal

Caribbean and

Norwegian Cruise Lines: FOREMAN FRIEDMAN, PA

2 South Biscayne Blvd., Suite 2300

Miami, Florida 33131

BY: MS. CATHERINE J. MacIVOR

MR. JEFFREY ERIC FOREMAN

ALSO PRESENT:

For Objectors Shelton

and Johnson: MR. JONATHAN HILTON, ESQ.

20 South Third Street, Suite 210

Columbus, Ohio 43215

For Objector Dunlap: MR. ALLEN McDONALD

249 North Peters Road

Knoxville, Tennessee 37923

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(Proceedings heard in open court: )

THE COURT: So we're going to call this matter, and

then I will get appearances from each side.

Enjoli?

THE CLERK: Calling case 12 CV 5646, Charvat versus

Travel Services.

THE COURT: Looks like plaintiffs' counsel is at

this table.

MR. McCUE: Matthew McCue for the plaintiff, Phil

Charvat, who is also in court with us today, your Honor --

THE COURT: Good morning, Mr. Charvat.

MR. McCUE: -- and also for the class.

MR. BURKE: Good morning. Alex Burke for the

plaintiff and the class.

MR. MAROVICH: Dan Marovich for plaintiff and the

class.

MR. BURKE: Also with us is Rob Dewitt from KCC.

THE COURT: Ah. Okay. Good morning, Mr. Dewitt.

MR. DEWITT: Good morning.

THE COURT: Okay. And so then we must have defense

counsel at the other table.

MS. MacIVOR: Catherine MacIvor on behalf of Royal

Caribbean Cruises, Limited, and NCL Bahamas, Limited, and I'm

here with my partner, Jeff Foreman.

THE COURT: Good morning.

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MR. BECKER: Your Honor, Jeffrey Becker and Darren

Watts on behalf of Carnival Corporation PLC.

THE COURT: Okay. And then I believe we have

individuals participating by phone. We were not able to

establish the connection for the video conference with

Mr. Cooper, but my understanding is Mr. Cooper is on the

phone, is that correct?

MR. COOPER: Yes, your Honor. Phil Cooper is

dialed in.

THE COURT: Okay. He's here on behalf of KCC.

And then we have counsel for Mr. Cooper on the

phone as well?

MS. BRYAN: Yes, hi. This Sarah Bryan. I'm

corporate counsel for KCC.

THE COURT: Okay. And I believe that's all for the

parties and the claims administrator, is that correct?

MR. McCUE: That is correct.

MR. BECKER: Correct, your Honor.

THE COURT: Good. When we get to the portion in

the hearing where I will ask to hear from any objectors, then

I will go through the list we put together of the people who

are here and who have asked for an opportunity to address the

Court.

As a note, particularly to those individuals who

may not have been in front of me before, I do read all the

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materials that people submit, including the objections. I

will acknowledge that given the volume of material for

today's hearing I may not be quite as facile in knowing

exactly where things are in the docket in the record here, so

I may ask about that, but you can rest assured that if you

put something in writing and put it in the docket, it will be

read and fully considered in connection with any ruling in

this matter, and you may take that into account in planning

your comments as well.

So as we all know, we're here for the hearing

regarding the final approval of the proposed class settlement

in the action Charvat versus Travel Services, which is case

No. 12 CV 5746, and in particular to consider the proposed

settlement agreement between the plaintiff, Mr. Charvat, and

defendants, Resort Marketing Group, its principal, Elizabeth

Valenti, and the cruise line defendants, Carnival Corporation

and PLC Royal Caribbean Cruises, Limited, and NCL Bahamas,

Limited.

I think what I would like to do is in a moment I'll

ask somebody, probably from plaintiffs' side, to maybe come

to the podium and provide sort of a summary of the settlement

and the settlement terms so that we have established sort of

our baseline here.

I will undoubtedly -- well, I know that I have

questions for the parties, but I think what I would like to

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hear first from the parties on is whatever presentation that

you've prepared in order to establish -- help me in

establishing the criteria for approval of the settlement, and

then we can ask questions.

So if it's a situation where questions may be

directed to both sides and have multiple counsel responding,

I'm amenable to having you do it from the table as long as

everybody is sure to speak into a microphone and to do your

best not to speak over each other. Because I need you to

speak into the microphone, I'm going to suspend the normal

practice of having you stand to address the Court. I think

it's a little easier to speak into the microphone if you're

seated. So don't worry about having to do that.

So let me start, I don't know who on behalf of

plaintiff would like to make a presentation on behalf of

approval of the proposed settlement. Would that be

Mr. McCue, Mr. Burke?

MR. McCUE: That would be myself, your Honor. If

you don't mind, I'm more comfortable at the podium if that's

okay.

THE COURT: Yes. For this portion I think it's

appropriate to do it from the podium.

MR. McCUE: Your Honor, the fact that this case

starts with a 12 itself is telling. It's been around for

quite a while, and we appreciate all the work you've done and

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the work Judge Rowland has done on this case.

I want to acknowledge Mr. Charvat, who is here from

Columbus, your Honor. He is our lead class plaintiff. He

has done an exceptional job on this case. As we've detailed

in our filings, there were a lot of obstacles for him

personally in this case. No. 1, he was sued by the

telemarketer, RMG, who claimed that by tape recording the

calls he violated Illinois law. So putting himself

financially at risk in this case. Keep in mind that he tape

recorded the calls in compliance with Ohio law, where the

telemarketer called him, so it's quite a novel argument.

In any event, they put him at risk personally in

this case. And that's exceptional. And we've laid out in

our briefing why that's exceptional. And incentive award is

one of the issues in this case that we'll deal with, but I

told Mr. Charvat that I will fight for him. And he's

entitled to an award that recognizes what he went through.

But let's put that aside.

The case that's before you now, I propose a $12 and

a half million settlement. This is a vicarious liability

TCPA case. So some of the objectors have said, oh, this is a

typical TCPA case. It's not. A typical TCPA case is a

debtor case where the debtor is -- debt collection calls,

where the company is calling directly. This is vicarious

liability, where the telemarketer, Ms. Valenti and RMG,

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basically in the boiler room made all these calls for the

cruise lines.

To get a real recovery for the consumers, we had to

go up the chain. And to do that, you have to prove vicarious

liability. Which creates a host of challenges in a case like

this. And I just want to put that up front.

But you asked for an overview. So where we're at

now at the end of this process, we have 274,856 valid claims.

The last time we were before you that number was 5,000 lower

than that. And that's because we were going through the cure

process, your Honor.

THE COURT: I'm sorry. So you're at 274 --

MR. McCUE: 856.

THE COURT: -- 856. And those are claims, but some

of those might represent multiple calls --

MR. McCUE: Correct.

THE COURT: -- is that correct?

MR. McCUE: Correct, your Honor. So the average

claimant will get $22.00 in this case. If you break it down

by call, it's about $8.00 a call. There is a three-call cap

on the settlement. So those are the rough numbers.

I submit to you that none of that would have been

possible without Mr. Charvat's work on this case. And we are

proud about the settlement, pleased about the settlement. Is

it a lot of money per consumer? No. But the point in

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consumer class actions is to hold defendants accountable and

to enforce the law. It's not about the latte, it's about

enforcing the TCPA. And that's what we've done in this case.

As a result of Mr. Charvat's work, RMG is out of

business. They closed up shop. They're no longer running a

dialer and calling millions of people. As a result of

Mr. Charvat's work, the cruise lines are now on notice that

they better be careful about who they're getting leads from.

Because attorneys and class representatives will hold them to

account.

There's been 30 objections to this case, your

Honor. Given the volume of claims, that less than .01% of

total claims. A lot of the objections, as we've detailed in

briefing, were filed pro se by consumers who were just

confused. I reached out to a lot of those people to answer

the questions. A lot of those people actually filed claims.

We have a handful of objectors represented by

counsel that are here today. We'll deal with them down the

road at this hearing.

So that is a brief overview about the case.

Really, your Honor, you have a lot of briefing before you.

If you want to, I can go through stuff in great detail, but

really what this case is about, it's the factors for final

approval, is the settlement fair and reasonable. I submit to

you it is.

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A lot of people worked very hard on this case, and

I submit to you that once problems started to arise with the

administration -- and this was a very complicated

administration. You were involved every step of the way

along with us trying to deal with these challenges.

The biggest challenge was the media attention to

this case absolutely went viral. It was on ABC national

news, it was on hundreds of outlets throughout the country.

And it wasn't just extensive media coverage, it was

misleading media coverage that created the problem and

created this expectation for folks that they were going to

get $300, up to $900. When all of the papers in this case,

all of the press releases in this case say pro rata, and that

the number you're going to get depends upon how many claims

are filed. That got -- Fox News missed the memo on that.

We had 2.7 million people file claims. A big issue

in this case has been costs of administration. And on the

phone we have Phil Cooper from KCC, here live we have Rob

Dewitt, who is a vice president of KCC, to explain to you

what happened with costs of admin and why did they go from

800,000 to over three million. The reason for that is

because of the explosion in the claims.

KCC had to commit extensive additional manpower to

this case. They estimate that over 50 employees at KCC

worked on this case. KCC spent over a million dollars in

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out-of-pocket expenses on this case. If you look at man

hours, they spent 7,000 man hours on this case. When

originally anticipated, they anticipated 700 man hours. They

anticipated 800,000 in admin.

THE COURT: I'll stop you there for one moment,

because that brings up a question that I had. Under the

settlement agreement, I believe there was a requirement for

an accounting to be provided by the settlement administrator

14 days prior to the final approval hearing. Was that

provided?

MR. McCUE: The accounting, I'm not aware of a

specific accounting. I know KCC has submitted declarations,

the detailing of their work and their expenses.

THE COURT: The ones that were submitted to the

Court.

MR. McCUE: Correct, your Honor.

THE COURT: So I'm looking at page 25 of the

settlement agreement, it's section 6.3. It says: "The

settlement administrator shall provide an accounting of all

such costs and expenses and all sums received from the cruise

defendants no later than 14 days prior to the final approval

hearing."

Was that a reference to the declarations that were

filed, or is that something else?

MR. McCUE: Your Honor, I have to go back and look

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at that in more detail, but I know that the cruise lines were

required to advance some of these expenses to KCC. It might

be referring to that.

But the bigger picture, your Honor, if at any point

you want more documentation, KCC is prepared to submit to you

whatever you need. So if we need to do an audit, some type

of invoice that shows the 7,000 man hours, they can do that.

THE COURT: So I'll actually back up to the

sentence before that in the settlement agreement which

explains a little bit more what this is in reference to.

I think it says: "The settlement administrator

will maintain detailed records of the amounts spent on the

administration of the settlement and will provide them to

class counsel and the cruise defendants' counsel monthly.

The settlement administrator shall provide an accounting of

all such costs and expenses and all sums received from the

cruise defendants no later than 14 days prior to the final

approval hearing."

So that is what I was noting in the settlement

agreement.

Did the settlement administrator provide the

detailed records, which perhaps were just invoices, to class

counsel and the cruise defendants' counsel monthly?

MR. DEWITT: Your Honor, it probably makes sense

for me to speak on that.

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THE COURT: We're jumping around a little bit, so

go ahead.

MR. DEWITT: Yes, of course. I appreciate the

opportunity.

THE COURT: And this is Mr. Dewitt.

MR. DEWITT: Correct. Yes.

So as Mr. McCue mentioned earlier, the major hiccup

in this case when it comes to administration was the initial

viral activity. And, you know, there became a point in the

administration where everybody involved, both sides, asked us

to limit our costs as much as possible. So the number that

we agreed to limit our costs to at the time was $3 million.

And honestly, at that point, whatever happens after

that, we keep track of it, but that's kind of the end of the

picture for us. So that's the number.

And we keep our records, and continue to maintain

those records, and are happy to provide something to the

Court and the parties, and we have been in touch with the

parties on invoices and things of that nature. But at that

point, that was the number we stopped at. So I think that's

part of this issue.

THE COURT: Is there an accounting that shows how

the costs and expenses were incurred up to the $3 million

amount?

MR. DEWITT: That's certainly available. Yes, your

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Honor.

THE COURT: So I think that is something I would

like, because it is a much higher number I think than what

was contemplated at the time the settlement was preliminarily

approved, and I obviously am fully aware that circumstances

did change, and so that doesn't necessarily indicate that

there's something amiss, but I do think given the substantial

increase from the time of preliminary approval to final

approval would make it prudent for me to have a little bit

more detail. Because I know that's one of the things that's

been raised consistently by several objectors. Frankly, it's

a little bit of a concern of mine.

It's also something I know that certainly our

appellate court here has taken a close look at in several

other cases where there have been issues on it raised with

respect to attorneys' fees and administration fees, so I want

to make sure I have a good idea of how that cost was

incurred.

So yes, I think I would like an accounting. I'm

going to put that on the list of things that I'm going to be

asking for once we finish here. And as I understand it,

Mr. Dewitt, that's available?

MR. DEWITT: Yes. Certainly we can pull everything

together for you. A lot of it's available already.

A couple of points to your point: Our work is

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actually not done in this case yet, so we will continue to

add that to the accounting. I think some of the cure

process, one of the deadlines was yesterday. So that's part

of that.

Also in terms of the total costs here, we have been

the administrator of many very large TCPA settlements,

including Monitronics, Midland Capital, Portfolio Recovery

Associates. And the administration fees in those cases were

all higher than we're asking for here, as a matter of context

for you.

THE COURT: Thank you.

MR. DEWITT: Thank you.

THE COURT: On that note, since the idea of the

unexpected administrative costs and the viral nature of the

news coverage has come up, I'm going to again jump a little

bit ahead of what I had in my notes, Mr. McCue, and put you

on the spot a little bit with a question.

So one of the concerns that I had in reading

through all of the materials and keeping in mind that at the

end of the day the fundamental issue that I have to resolve

is the fairness of this settlement, I'm wondering if the fact

that the parties seem to have so under-estimated the number

of claims that would be submitted speaks to the fairness of

the settlement. Because it seems to me one might take the

position that it illustrates either one of two scenarios.

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Either the parties were right, and there is a substantial

number of fraudulent or improper claims that are still being

counted, or perhaps plaintiffs' counsel substantially

under-valued the case, and you should have actually demanded

much more in settlement because the defendants' exposure has

actually turned out potentially to be more than expected.

In either of those two scenarios, it seems that

somebody might make an argument that maybe there's a

fundamental fairness issue here.

MR. McCUE: Sure.

THE COURT: Why isn't that the case?

MR. McCUE: Your Honor -- and of course those

arguments can be made. Are they legitimate? It really

depends on the context of the case and the facts of the case.

So what we had here was a dialer database, where

the telemarketer made millions and millions of calls, for the

cruise lines and not for the cruise lines. We had specific

campaigns for Mr. Charvat that he had recorded it. So we

knew that those were cruise calls.

So we had a situation where, as class counsel, I

had an obligation to try to allow for consumers to

participate in this process as fairly as possible. That was

my No. 1 objective on advocating for the creation of a

portal.

No one could have anticipated, and if folks want to

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criticize me, that's okay. I mean, I am up for it, and I can

justify what we did and why we did it.

There has never been a case like this where the

media attention went viral, specifically driving people to

the portal, and misrepresenting the amount of the claim. And

I suggest to you when people find out they can get $900,

that's going to motivate them to go to these portals.

So when we looked at the different cases that we've

done, the different cases we've administered, the best we can

do is try to anticipate what the claim response is. That's

the best we can do. No one has a crystal ball to see, you

know, is Fox News going to represent this properly. Is it

going to go viral. No one could have anticipated that.

So in hindsight, I don't know what we would have

done differently or how we could have done differently,

because it was out of our control in terms of how the media

presented this case to the public.

THE COURT: But if we assume that all of the claims

that have been accepted are valid claims, then isn't that the

goal, to get notice as broad as possible? I guess I'm a

little uncomfortable with the idea of being critical of the

viral news coverage, because it allowed counsel to reach more

class members.

MR. McCUE: Yes.

THE COURT: If the criticism is that it encouraged

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fraud --

MR. McCUE: Right.

THE COURT: -- that's a different issue. But if

the criticism is just that it allowed every single member of

the class to know they were a member of the class, isn't that

the goal?

MR. McCUE: I agree, but it kind of goes hand in

hand. I mean, I thought the notice, and that's of course an

element of the fairness. I mean, how can you criticize the

notice. It went everywhere. But then the hard -- the down

side of that is the fraud. And in that, again, I thought we

did absolutely the right thing.

And if this gets approved, the folks who are

getting a check are people that we know are valid claimants.

We had an obligation as class counsel, I had an obligation,

to weed out the fraud. How you do that is what we wrestled

with before you for months and months.

So I think what we did was appropriate and fair. I

thought we were always mindful of trying to treat everyone

fairly, almost I guess too fairly, because what happened was

so many people filed the claims, and then we had fraud, and

then we had to figure out fairly how to do that. But I think

every step of the way we dealt with each challenge as they

came up in a thoughtful way, with your assistance, in a

collaborative way with the defendants to try to treat

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everyone fairly.

And I'm not sure if I could do it all over again

what exactly I would have done differently. Perhaps we

should have done a document verification process from the

very beginning. But even if we did that, your Honor, then

this criticism for, oh, you're putting up too many burdens

for folks to file a claim. When we decided to go with the

documentation verification, that was only after KCC told us

there is fraud here in the portal. I was resistant at the

very beginning of the case to make it really hard for people

to file a claim, because I thought that was unfair.

So it's like every step you take there's an up side

and a down side, and the best I can do as class counsel is

try to navigate the class to an end result in a fair -- the

most fair process possible. And I think we've done that.

So your Honor, back to kind of the overview of the

factors, and they're the Synfuel factors, was there good

notice in the case. Absolutely. Was the settlement at arm's

length. This is a 2012 case. As you can tell from some of

the briefing, even up to today in regards to Mr. Charvat's

incentive award, this was a very adversarial, contentious

process. Not that we didn't get along and act

professionally, but this was not a collusive situation. This

litigation was fought long and hard. We mediated with a

mediator over a full day, and we were able to come to a final

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agreement.

So notice, I submit notice was excellent in this

case. Was it the best notice practicable, yes; was the

settlement arms length, yes.

Then we get into the Synfuel factors, what's the

opposition to the settlement. We have 30 objections. We've

dealt with them in the briefing. A lot of them were based

upon consumers who misunderstood what type of documentation

they had to submit. We have a few remaining objections about

admin costs and fees and incentive award that we can deal

with. But in terms of substantively to the settlement, I'm

not hearing a whole lot of objections to the actual terms of

the settlement.

Opt outs. The courts often look at opt outs. In

this case there were about 280 opt outs. In terms of the

fairness of this process, your Honor, I think that's an

important point, is that when we first came to you for

preliminary approval and we did the claim process, we had the

typical claims objection deadline and opt out. That was

there.

What we did, and what I insisted that we do, is

that when we ran into challenges, for example, we sent out an

email after the media coverage exploded, and if the number of

claims were all valid, people were going to get $2.00. And I

was worried about that, and I wanted to make sure class

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members knew that; that if they wanted to participate, the

check was going to be very small, and give them another

opportunity to opt out. And you approved that. So we opened

up the opt out again.

So then when fraud was found in the portal claims,

and we went through a verification process, class members

were given a third opportunity to opt out. I think that's

important to keep in mind in terms of the fairness, which is

what you're focusing on and what I'm focusing on, is that we

told consumers you could get as little as $2.00. And they

stayed in the case. When we said to consumers you have to

submit a phone bill to show you own the phone, they were

allowed to opt out.

So we have objector counsel here representing

clients, and they want $500 for each of their clients. They

could have opted out. They are all represented by competent

counsel. They could have pursued their own claims on their

own, got a lot more than $500. They chose to stay in this

case.

THE COURT: If you had known at the time you went

to mediation the number of claims that would be submitted and

the number that would be treated as valid claims, do you

think you would have accepted $12.5 million as an upper limit

from the defendants?

MR. McCUE: Yes, your Honor.

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THE COURT: Why would that have been justified? I

appreciate, you know, maybe if you went back in time you

don't know if you would have done anything differently, but I

guess that's what I'm trying to think in terms of --

MR. McCUE: Sure.

THE COURT: -- what the real litigation risk was

here, what the real value of this case is, and the

compromise.

It seems to me that that number of anticipated

claims was something that must have been taken into account

on both sides in deciding what a reasonable compromise was,

and now we know that it turned out to be much different.

MR. McCUE: Sure. Sure. So again, when we're

negotiating a deal, the best we can do is look at what is a

fair expectation of claim response. So we start with

Mr. Charvat's campaign. So that was roughly 400,000 people.

They got a postcard. So we knew from the folks that are in

the Charvat telemarketing logs -- the logs were day to day to

day. So we knew if Charvat was on June 1st, that's a log

that we could look to that we know that those folks got

cruise calls. Those consumers got a postcard. Got actual

notice. The consumers who got indirect notice, media notice,

were people who were in the dialer database, but we didn't

know if they got a cruise call or not or didn't get a cruise

call.

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THE COURT: So is that really the crucial decision

here that has led to sort of everything that followed that

decision to include all the people from that dialer database,

even though, from what I understand, there was nothing in

discovery that indicated that you would be able to

independently establish which of them actually got calls?

MR. McCUE: Sure. So that is a perfect example of

the Catch 22. So I know from the evidence that there's

complaints from consumers, other than Mr. Charvat. I got a

cruise call on X date, I got FOIA records from the FTC that

have hundreds of complaints from consumers of getting

telemarketing calls from RMG relating to the cruise lines on

other dates.

I know as class counsel that if I just focus on

these three Charvat campaigns, all these other folks who got

these calls aren't allowed to participate.

The cruise lines want a general release. We're

trying to provide that release. I want people to participate

in a fair manner. So do I say, oh, it's only 400,000 and

that's it, and nobody else can participate? Is that fair?

Or what I chose, what my team chose to do is advocate for an

open process, where folks could file a claim and have to

attest under pains and penalties that they remember getting a

cruise call.

So there was some type of verification. So it's an

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example of no matter what you do, it can be criticized. And

that's okay. That's part of this process. But when you

asked would I take twelve five if I knew this was the number,

then you need to get into the risk of the litigation. Right?

Because if you don't certify or if a jury doesn't come back

for the plaintiff, there's zero. So you have to look at the

risk.

And we fought this case for six years. We believe

in this case. We believe in Mr. Charvat. There were three

defendants. The evidence as to each of the defendants is

very different. The vicarious liability challenges as to

each of the defendants are different. You have to prove

agency. Actual agency. Apparent agency. Ratification.

These are real legal burdens.

Then you have to deal with ascertainability.

Proving do these call records connect to the consumer. The

cruise lines or RMG came up with arguments that, oh, maybe

sometimes we stopped the dialer. Like even during a Charvat

campaign. Oh, we stopped the dialer. Maybe we put a hotel

prerecord in there. Maybe. So they had different arguments

there they were trying to develop evidentiary to challenge

ascertainability.

There was a battle of the experts over consent.

There is a whole -- so you line up all the different

arguments, and we were prepared to deal with every one. This

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case was fully briefed on class certification. You had our

best shot, and you had their best shot.

But was there risk? Absolutely there's risk.

There's class certification risk and there's trial risk. So

as counsel I need to balance all those factors. Is it better

to be super-aggressive and get zero, or is it better to try

to come to a reasonable settlement? In this case we went to

a reasonable settlement.

THE COURT: And is part of that analysis the idea

that, as you mentioned at the beginning of your presentation,

one of the real goals is to provide a negative incentive here

for this sort of behavior. So it's an idea of what's a

sufficient amount to prevent similarly-situated parties from

engaging in this conduct, and sort of a general deterrence,

specific deterrence kind of thing so that these parties know

you can't make those kinds of calls, and while obviously

there is also a goal of compensating the people who received

the calls, there's an independent kind of goal of this sort

of action of deterring the conduct.

MR. McCUE: That's a huge part of this process,

your Honor. When you look at the TCPA, its legislative

purpose, it was to make consumers like Mr. Charvat into

private attorney generals. You don't see the federal

government enforcing the statute. You don't see it. You see

private consumers enforcing the statute.

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So regardless of the individual per pay out,

$22.00, you can look at that and say, well, that's too low,

or you can look at that and say, hey, good for Mr. Charvat

for fighting for six years to hold these people to account,

and RMG is out of business, and the cruise lines are going to

think really, really hard about who they hire next time.

That's a good result. That's a good result for consumers,

it's a good result for public policy.

So your Honor, the admin expenses you've expressed

concern about, we're going to supplement the record on that.

Opposition to the settlement, I was discussing about how if

actual objections are .01% of total claims. The opt outs,

given how many times people are allowed to opt out, I think

is a significant part of why this is a fair deal.

We have extensively briefed up attorneys' fees,

your Honor, and I'm happy to answer questions that you have

about my fees. What I will say is that we shaved our fee by

over a million dollars to reflect the increase in admin in

this case. Had nothing to do with anything else. Our

initial fee request right after preliminary approval was in

accord with Pearson. We amended our petition to again be in

accord with Pearson after the admin went to three million.

Our expenses are in line with this type of case, significant

investment in a case over five years.

If you have specific questions about fees, I'm

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happy to answer that.

The other issue is Mr. Charvat's incentive award.

He's here today. He's happy to answer any questions you have

about his incentive award. That's all been briefed up. I

will make it crystal clear that it's not Mr. Charvat who has

said I want 50 grand or that's it. I am recommending that

for him because I feel he's entitled to it given what he went

through on this case, looking at other cases and what the

courts have approved in incentive awards.

In our briefing we lay out exactly what happened

and the defendants' attacks on him. They accused him of

committing fraud, which was absolutely inappropriate and

without merit. They accused his daughter of planting consent

evidence on the internet. That's absolutely false.

RMG sued him for wiretap violations, putting

himself at risk. The cruise lines filed a motion to dismiss

saying he acted unethically with unclean hands. All those

efforts were rejected, but they've attacked his reputation at

every turn.

I represent Mr. Charvat in another case where the

first thing the defense attorney did is, oh, he's the guy who

plants consent evidence on the internet. See Carnival Cruise

Lines. That's an impact on someone's reputation.

THE COURT: How many other times have you

represented Mr. Charvat?

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MR. McCUE: I represented Phil for probably 15

years. I represented him in -- I don't know how many cases,

but 15, 20 cases.

MR. CHARVAT: 10 or 15.

MR. McCUE: Phil tells me 10 or 15.

Another important issue with Mr. Charvat, your

Honor, is that key to this case was vicarious liability. The

seminal order on vicarious liability under the TCPA was

issued by the Federal Communications Commission in 2013.

Mr. Charvat was the lead consumer representative on that

file.

So he's been fighting against illegal telemarketing

for a very long time. There has been a pretty concerted

campaign to paint him as a serial professional plaintiff.

I'm not sure what that means. He's a telemarketing activist.

He's proud of what he does. He has been the reason why

appellate court decisions have issued favoring

interpretations of the TCPA in favor of consumers over and

over and over again.

He's been a class representative in a number of

cases that have resulted in significant moneys going back to

class members. And as I pointed out in one of my briefs, in

one of our recent cases called Monitronics, he was offered an

offer of judgment for him to go away and drop the case of

$50,000. And he said no because the offer did not offer

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anything to the class.

So the case went on thankfully because of him, and

the case settled for $28 million in favor of consumers. He's

not even going to get a $50,000 incentive award in that case.

But the reason consumers are going to recover is because he

stood up and fought back and did not accept a pickoff.

So there's been, oh, he's running a business, he's

doing this. No, he's not. He's doing exactly what Congress

told him to do, asked him to do. He's fighting for

consumers.

THE COURT: And I don't know under these

circumstances whether I should consider serial plaintiff as

an insult or a compliment. I don't know that I really care

one way or the other. But it does strike me as a bit odd to

suggest that the particular hardships of this case are a

basis to give him what I would consider to be a fairly

exceptional incentive award, given that frankly he seems like

somebody who must have known what he was getting into.

This isn't a situation where a complete novice

litigant gets involved in litigation for the first time and

then has to deal with all of this stuff. There certainly

have been other cases where his -- where he's been identified

as a serial litigant and questions have been raised. He

knows what's involved in depositions. I can't imagine that

this was the first group of defendants that have gone into

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his background and looked at his internet usage.

Why such a huge bump up in the incentive, given

that he's -- he is an exceptional plaintiff, he's somebody

who, if I accept what you're saying at face value, is more

interested in the principle behind it than the money anyway.

MR. McCUE: Absolutely it is. But was it fair for

him to be sued. Right? Was it fair --

THE COURT: I mean, the defendant that sued him was

RMG.

MR. McCUE: Your Honor, they were in a joint

defense agreement, right? The cruise lines were the first

ones to come up with this theory. On a motion to dismiss,

they tried to say because he tape recorded the calls he had

unclean hands. And they won -- this is before Judge Zagel.

They asked him to dismiss the case. He said no.

Then RMG turns around and files a third party

complaint against him. Do you really think that Beth Valenti

came up with this idea? I submit to you no. They were

acting in concert.

THE COURT: I'm not sure what her abilities would

be to come up with it on her own, because she's been absent

for most of the time that I have been involved in the case,

which is another reason why that particular angle of it,

perhaps just from my vantage point, seems a little odd.

Because since I have been in the case she's only been

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marginally involved and has not participated in the

settlement process at all from what I've seen.

MR. McCUE: Right. Right. Respectfully, why

should it matter if it's the defendants or if it's RMG. He

still was sued, and they left it pending for over a year.

And it was frivolous. They did it to leverage him, to try to

scare him to try to get him to go away. That's what's

exceptional about this case.

They went out to California, deposed his daughter,

asked questions about her boyfriend. They said his daughter

planted evidence on the internet. They said he tried to mask

his IP address. It was all total nonsense. We had to go and

take depositions of these different shady characters in the

lead industry to figure out where these IP addresses came

from. It ended up coming back saying, oh, this is fraud.

That's where the end of the road came down to, is that these

leads they have for Charvat were made up. And we had to

fight for that. We had to fight for his reputation.

So that's what is exceptional about this case.

Yes, he's a tough guy, he's been through this before, he

knows what's going to come back at him. But never before,

never before have defendants gone after someone so personally

as in this case.

And I remind you what he said in his declaration.

He just wants to be treated fairly by you and acknowledged

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for what he does. The exact number, we defer to your good

discretion about what that number is. But I ask that you

acknowledge what he went through. And not the serial

plaintiff stuff, whatever, it's the fact that they sued him.

Is there any other questions that you have, your

Honor?

THE COURT: I think that's all for now. So I think

what I'd like to do is see if there are any of the defense

counsel who would like to add, particularly on the issue of

the overall fairness of the settlement, I'd like to put to

the side for a moment the issues with the incentive fee,

because I do have questions on that, but I think that's a

more extended discussion. I have many --

MR. McCUE: Mr. Charvat is happy to answer

questions personally if you would like, your Honor.

THE COURT: So focusing on the overall -- all of

the factors in considering the fairness and adequacy of the

settlement, I'll hear from defense counsel if there is

anything you would like to add, and I think I indicated some

of my areas of concern in discussion with Mr. McCue. So if

there is something you want to address there, feel free.

Ms. MacIvor?

MS. MacIVOR: Yes, your Honor. And if I'm getting

too detailed, feel free to let me know.

First I'd like to clarify a few things. RMG, and

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we set this forth in our brief, RMG never made calls for the

cruise lines. Not one. There is no agreement to do that,

there is no indication from every RMG deposition that the

plaintiffs took. As a matter of fact, RMG said, every

witness said we made calls for RMG.

The background in that is that RMG used the

cruises, certificates and that type of thing, as a promotion

for their own business, to grow their business, which was a

travel club.

As a matter of fact, there is evidence in the

record that we cited in our memorandum brief that one of the

cruise lines contacted RMG and they were specifically told

before the complaint was filed and after the complaint was

filed that RMG was not making robo calls referring or

relating to the cruise lines. So I would like to clarify

that.

And additionally, just one other clarification.

We're not necessarily, from the defense perspective, we're

not critical of the media coverage because that goes to

notice. The issue is that it was the wrong information.

That's the problem. It's not the fact that the media was

covering it, it's that they were telling people things that

weren't true.

Now, getting to the fairness factors, the case was

always a challenge for the plaintiffs factually for one of

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the reasons that I've just mentioned. There's no evidence

from any RMG employee, they refuted the fact from the very

beginning, and every witness, including Beth Valenti, there

is an affidavit where she said that the cruise lines were

unaware of what was going on. There is her deposition

testimony, they took the deposition of numerous other people

within RMG.

There are proof issues that they also had that your

Honor has mentioned in court before, mentioned today. Their

own expert admitted that there is no forensic way to

determine whether calls were made referencing the cruise

lines, cruises as a promotion.

Our expert contacted the person who worked with the

manufacturer of the auto dialing equipment, Asteria, and

Asteria, that person, Mr. Ringenback, also said that there

would be no way to forensically determine who made what

calls.

Now getting to the fairness factors, the first one

that the Court mentioned, the expected value. We detailed

that extensively in our brief. And while if everyone in the

class received the full $500, or even if willfulness were

found, there would be millions and millions and potentially

even more than that.

Synfuel takes into account discounts for defenses.

And in order to recover completely, this is what would have

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to happen. If the plaintiff could identify the telephone

numbers that corresponded to the numbers dialed in only three

campaigns, and as I mentioned before, there were serious

issues with that, the manufacturer of the database and the

person who created it said that that couldn't happen. If

class members could demonstrate that they received a call

referencing the cruise lines, which for that reason would be

exceptionally difficult, if the plaintiff could prevail on

class certification and we raised a number of good defenses

to that that I will get to, if they defeated our motion to

strike their expert, it was the only -- that expert was the

sole basis for certifying the class. And he, himself,

admitted that his own methodology was faulty at his

deposition.

And if the plaintiff survived summary judgment, and

it's not coincidental that this settled around the time that

we had prepared and were ready to file a motion for summary

judgment, now, the best case scenario was millions and

millions of dollars. But as the Court is well-aware, we

cited a number of cases where this settlement falls generally

in line with cases that have held that for due process

concerns you can't award in a TCPA case millions and millions

of dollars or potentially even a billion; that the idea, as

the Court mentioned, the idea is to reward some moneys that

they were concerned and to take into account defenses.

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Specifically Synfuel at 463 F.2d 653 and Wong at

773 F.3d 863 through 64 said the value of claims must

discounted based on the numerous difficulties. And here

there were plenty. There is no forensic possibility of

matching the sounds in this database or the recordings with

the numbers that were called.

There has also been a substantial amount of

difficulty finding people. If we were to take everyone in

that database, you can't even match up some of the phone

numbers.

Consent would have been a huge issue to overcome.

There is also existing business relationships. Now, the

issues with consent are that there is consent that RMG

obtained in a number of ways, which we fully briefed in class

certification, I'm sure the Court is aware of that, there is

numerous issues with preexisting -- with existing business

relationships.

As for summary judgment, this is a very big issue

for the plaintiff. In order to demonstrate actual authority,

there is none. There's no agreements, there's a lack of

evidence, most specifically over any control that the cruise

lines, all three of them, collectively or individually

exercised over RMG. There is just none.

Ms. Valenti's testimony was: I was in control, I

created the scripts that were used for the recordings, I

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decided who would be called, when they would be called, what

would be said.

And as far as switching out, what Mr. McCue was

referring to, switching out the recordings, that's important.

Because you would have to assume for the plaintiffs to

prevail that the same recording was made all the time. Even

Mr. Charvat's recordings that he included in his complaint

showed that the recordings were different. That in and of

itself shows that they were switched out from time to time.

And there's plenty of evidence that we provided in

response to class certification and in our memorandum in

support of final approval that demonstrates that that did

happen. Mr. Smith, there's an excerpt from his deposition in

our final approval brief where he said it happened all the

time. There is no evidence to the contrary.

For apparent authority, the plaintiffs would have

to show that the entire class believe that RMG called them as

a cruise lines agent, and that that belief was traceable

somehow to some action made by the cruise lines that would

make them believe that. There is no evidence of that. There

is no evidence of communications directly with the cruise

lines and any of these class members. That would be almost

impossible.

The other issue for a parent agency, like I said,

control also goes to that, which I've addressed.

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THE COURT: You're doing a good job of convincing

me that you shouldn't have settled at all. You should have

just filed your summary judgment motion.

MS. MacIVOR: Believe me, that's something my

clients raised. And all three cruise lines were not happy

with this. This is a case where unfortunately --

THE COURT: Of course, I don't mean to actually

suggest that I have a view --

MS. MacIVOR: I understand.

THE COURT: -- on any of the summary judgment

issues. It was meant more of a comment on the sort of very

detailed, and thorough, and seemingly very strongly-held

view.

MS. MacIVOR: If I'm going into too much detail I

can reel it back. So these are some of the factors -- I

won't go into class certification, I'd just like to give you

a couple things.

Let me go to a couple of the other Synfuel factors.

As for No. 2, the continued litigation, the expense of that,

there were -- at the time of settlement there were 566 docket

entries, 15 depositions in four states, 30 discovery

hearings, 26 status conferences before your Honor, 700,000

documents exchanged. If it hadn't been settled, we estimate

a minimum of 15 additional depositions. We would have asked

for class discovery on consent and on existing business

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relationships.

As for the Synfuel --

THE COURT: Let me stop there. Would it have been

an issue for like each class member -- when you say class

discovery on consent, I'm having a hard time envisioning

that.

MS. MacIVOR: We believe that that was an

individual inquiry, because there was substantial evidence

that there was a lot of consent, which we detailed. And I

could give your Honor the specific references in the briefs,

I would be happy to tell your Honor that. So we would have

to ask for discovery from each -- when we have information

that certain numbers -- we would have to go through, verify

the number, then we would ask for discovery relating to

existing business relationships and as to consent. It would

be the only way we could prove it. It would be very similar

to the way we did with Mr. Charvat and his daughter. You

would have to -- that was an individual issue.

As for the Synfuel factor No. 3, the lack of

opposition to settlement, Mr. McCue touched on that briefly.

287 opt outs is only 0.10% of the class. 30 objections

represent only 0.01% of the class.

When you get to the fifth Synfuel factor, the

amount of discovery completed, time, I touched upon that

above. The cruise lines added an additional benefit of over

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969,000 by processing the supplemental claims. RMG isn't

making calls, based on the cruise lines' request that they

stop doing so. Demand actually.

So we believe that the settlement is fair. It is

more expansive than what the litigation class would have

received otherwise. There are people who would not be able

to prove up their calls if they made individual claims. It

would be difficult for them to do it in a class because there

is no forensic evidence of how to do it.

And I would just like to add, just to clarify the

issue in case I don't get a chance later, as for the

incentive award, RMG was represented by counsel when RMG

sued, so it wasn't just Ms. Valenti.

Other than that, I don't have anything further

unless the Court has questions.

THE COURT: I don't think so at this point. You

addressed them.

MR. BECKER: Very briefly, Judge.

THE COURT: Mr. Becker.

MR. BECKER: Good morning still, your Honor.

Jeffrey Becker on behalf of Carnival.

I'm not going to reiterate everything that

Ms. MacIvor and Mr. McCue just said. This was a hard-fought

lawsuit. The substantive merits of the underlying vicarious

liability and certification issues are well-documented in the

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briefs.

I do want to address a few numbers that I think are

really important for your Honor to understand in context,

because you touched on it with Mr. McCue earlier, and I think

we need to understand the 2.6 million submissions that came

in after the news media came about, those aren't 2.6 million

individualized claims. Those are people. We don't know a

lot about those numbers. They're very raw numbers.

So what we know about this is 2.6 million

submissions came in. How many of them were from the same

person we're not sure. We do know that when KCC did their

fraud analysis multiple submissions, more than 20 in many

cases, came from the same address or the same IP address,

which led them to believe that there was fraud in the system.

What we also know is that once we got to a later

stage in this litigation, once KCC was able to de-duplicate

things, those numbers drastically shrunk from the later

population.

So I want to make sure that when the Court looks at

this and says, gee, 2.6 million submissions came in, doesn't

that make you think that maybe you underestimated the value

of the case earlier on? Absolutely not. From the cruise

lines' perspectives, we came into this in a mediation when

certification had been briefed, when we were ready to file

summary judgment on vicarious liability. And we sat down in

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Florida, we all flew down there together, with a very

experienced mediator who drilled everybody on all of their

strengths and all of their weaknesses, and I think when the

number came out the other end after we had some time to

reflect on this, we came to a settlement we thought was fair.

Because the other thing about that 2.6 million

submissions that you mentioned, those were all from the

indirect class. Right? There were 50,000 direct

submissions. These are the people that were in the three

Charvat campaigns. The only campaigns that the plaintiff

actually sought to certify in their motion. Which means the

2.6 million submissions that got reduced to approximately

400,000 supplemental submissions, they wouldn't have gotten

any relief on a trial on the merits. They weren't part of

the certification in the litigation.

The cruise lines saw that there was certainty in

resolving this on a global basis; that the idea of allowing

the 2.6 million people to provide some information to show

they're connected with that phone number to forego the need

to prove that their call department with a cruise call,

cruise call, quote, versus a non-cruise call, put that to the

side and said everyone is welcome to participate. You don't

have to prove this.

THE COURT: So then the question that I have for

Mr. McCue, which was essentially why go with the broader

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database even though you couldn't show that all of those

people in the database received a call, I think you're

addressing that in part by saying that from the defense

perspective it provided certainty that this issue could be

put to bed.

MR. BECKER: We have 600 docket submissions, and we

haven't even gotten past certification yet. Throughout the

settlement process we've had so much, that's absolutely

right, because even if at the end of the day this case went

past certification, pro or negative, even if it went past

summary judgment, pro or negative, or a trial on the merits,

there are still appeals that we had to deal with. And the

idea that the cost of litigation and the uncertainty as to

where this would go -- because, again, only three campaigns

were being addressed in the case, it allowed us to globally

settle every call that RMG could have possibly made.

So when RMG made these calls, and we then said

we're going to settle this on a global basis, we have the

database, we can cross-reference it through the settlement

administrator, allow us to settle on a class-wide basis, they

allowed us to. And we agreed to that. And that made sense

for us. And for them to be able to offer individuals -- who

would not have been part of any trial on the merits -- relief

of some sort without ever having to prove that they got a

call that mentioned a cruise, that makes sense to everybody.

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And so we have these 2.6 million submissions. We

don't know who they are. How many are duplicative or not.

And then we open up the process to allow for supplemental

evidence to be provided by that population. The response

rate was 14.75% or so, of 400 -- 397,000 submissions came in.

That's actually a higher response rate than the direct notice

response rate, where they didn't have to submit anything.

That was around 14.5%. That's in our briefing.

So the idea is we see a population of individuals

who say, gee, I might get $900 for this? I'm in. Here's my

number. Here's my information.

The fact that we had to go through a process to

verify those claims, because the administrator looked at them

and testified there is an issue here, makes sense.

And we came before you multiple times during this

process to talk about the process, and how we would do it,

and how we would see that it was fair. We made it as easy as

possible for people to submit and show that they have claims.

And they did.

And so now that we have several hundred thousand

individuals who don't have to prove what kind of call they

got, right? 50,000 are from direct, about 250,000 of them

are indirect notice claimants. They don't have to prove what

kind of call they got, what was said. They provided us

documentation, and it provides us with a very vast class now,

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where $22.00 approximately is going to be provided on average

to each of these claimants.

It was enough, your Honor, that if you read the

briefing closely, one of the objectors who originally started

out by mentioning the word vicarious liability a single time

in his objection, saying this would be easy, plaintiff made

it clear in their complaint how easy it is. It's a testament

to a wonderful pleading by the plaintiff, but once the

objectors spoke with the defendants and started looking at

the evidence that wasn't yet in their record on vicarious

liability, that tune changed a bit.

And I believe some of the objectors today are here

to say we're no longer looking at the issue of the amount of

money per claimant as an issue that would stop certification.

They're now saying it's within the realm of fairness and

reasonableness.

So I just want to make sure that when we talk about

these big numbers they're in context. We didn't know what

the 2.6 million population actually looks like. What we do

know is hundreds of thousands of people participated when

given the opportunity to provide additional information.

So when the defendants look at this case and how

much work we put into the process, how much additional

funding we put into this process to make sure that the

settlement fund was there and reasonable for the claimants,

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we think it's absolutely fair and reasonable, and we think

that after a mediation with the mediator that we went through

this with, the fact that two parties on opposite sides of

this were able to figure out a way to make this work as

fairly and reasonably as possible for everybody, including

claimants who would have received zero dollars at trial, I

submit to you that is a reason to proceed with final

certification.

THE COURT: Is there any concern on the defense

side here about the fact that so much of the money that you

agreed to put into this, ostensibly primarily to compensate

people who received the calls, is going to claims

administration and plaintiffs' attorneys' fees?

MR. BECKER: The claims administration process was

extensive. And through our discussions with the claims

administrator, we asked them to reduce and cap their fees. I

believe it would have been substantially higher than $3

million if everything that we had to go through was tagged on

to this.

So, you know, I can't fault KCC for what the media

said. As Ms. MacIvor made a point, we don't fault broad

notice by the media. We're glad to see it reached 88 million

people. That's wonderful. The problem is when 88 million

people receive information that let's them think you're going

to receive $900 -- I've got people in my firm saying, looks

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like I'm getting a free cruise out of this.

It was not clear. And when it led to that many

people submitting claims, and us having to work together with

plaintiffs' counsel, with the administrator, with all of our

clients and the cruise line counsel to find a way to address

that issue, the fact that KCC has capped their fees, I don't

think, when you look at the actual settlement payment coming

out of it, it's unreasonable.

And again, with plaintiffs' fees we're not taking

an issue on plaintiffs' fees, but when you look at the amount

of money left over after all is considered and it allows for

an aggregate payout on average of over $20.00 per claimant,

the fact that we made it into this realm of reasonableness,

when very early on we came to you asking for allow us to send

a notice saying it's going to be a few dollars, the fact that

we are where we are right now I think makes it substantially

reasonable to go forward with the case regardless of what

amount of money you award to plaintiffs' counsel or the

administrator.

THE COURT: Okay. Thank you.

MR. BECKER: Thank you for your time, Judge.

THE COURT: Okay.

MR. McCUE: Briefly, your Honor?

THE COURT: Mr. McCue wants to add something. Go

ahead.

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MR. McCUE: 10,000 foot view, your Honor. I just

want to reemphasize a few things, is that when complications

came up in this admin, I think this is frankly a model

situation where we worked with the defendant and with you to

figure out what to do.

From the plaintiffs' side, we have voluntarily

agreed to shave our attorneys' fees over a million dollars.

From the defendants' side, we negotiated a process where a

lot of the backroom verification work would be done outside

of admin that added another million dollars in value to this

case.

From the class administrator's perspective, they've

agreed to cap their fees and will provide more documentation

about their fees. But I do want to give a little more

elaboration about the class admin. We have worked with KCC

on many cases, we've worked with all of the class action

administrators. They do an excellent job.

THE COURT: How often would you say that you

personally have worked with KCC?

MR. McCUE: Probably ten other class actions. But

I have worked with all of them --

THE COURT: Would you say that that's more frequent

than how often you've worked with other class administrators?

MR. McCUE: I would say that recently, because they

do exceptional work, and they are our administrator more

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often than not, but we've worked with AB Data and Epic on

other cases as well. We also always go through a competitive

bid process, which we did in this case as well. So that is

all done at the front end.

THE COURT: Because the concern might be if I were

an objecting class member that we've got a lead plaintiff,

plaintiffs' firm, and an administrator that perhaps work

together a lot, and they're the ones who, for the most part,

are not taking the cut in their fees as a result of the

changed circumstances.

And I appreciate that KCC has agreed to cap it at 3

million, and I appreciate the efforts that have been made to

try to manage the fees for attorneys and the administrator,

but I can imagine that from the outside, for a typical class

member, one might look and say it's the repeat players who

work together all the time who have structured this to make

sure that when things didn't go the way that was planned,

they still get their money, and our recovery is a whole lot

less.

MR. McCUE: Sure, your Honor. There is a dark side

interpretation of lots of things. Is that the truth?

Absolutely not. Our fee, we could come before you even under

this number and try to get a third of the gross settlement

fund.

If you look at Pearson, it would be towards the

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upper threshold of Pearson, but it still would be compliant

with Pearson, it wouldn't be over 50%. As class counsel I

was not comfortable with that. I thought I had an obligation

to the class to get as much money, to do everything I could,

but also to recognize the fact that we worked for six years

in this case and spent over 4,000 hours of attorney time on

this file, almost a quarter million dollars in expenses. So

we have agreed to take a significant cut on fees to try to

get this settlement approved.

From the class action administrator's perspective,

no matter who we had selected, we would have the same issues,

your Honor. No one who we selected would have made a

difference. Because they had 2.7 million claims filed, those

have to be processed and assessed. And when you only think

that it's going to be, you know, a hundred thousand claims,

and you get 2.7 million, the numbers are going to go up. No

matter who you hire.

And I do want to emphasize the chronology of what

happened here. We hired them to do the notice, they did

that. The press release, they did that.

And then things go sideways. 2.7 million claims

are filed. Starting from that point, the bid is out the

window. The estimates are out the window. Because you have

to -- you can't just give up on the class and walk away. You

have to administer what you have in front of you.

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So they had to process 2.7 million claims, they had

to create new data infrastructure to do that, assign

additional people to do that. They had to do a fraud

analysis to advise us in terms of are all these all

legitimate claims. They helped us come up with a cure

process. They participated in that. They sent out multiple

new rounds of email notice. They ran call centers responding

to that. All of that was unanticipated. All of that.

Then we get into the verification process. We got

hundreds of thousands of submissions. Some of these are

snail mail, email, portal. All of that data needs to be

organized so that the cruise line attorneys and myself could

assess all that stuff. It still had to be managed and

processed.

We extended the process a few times at your

direction. Emails had to go out about that. Calls came in

about that. This is all new work. And KCC will supplement

the record and back that up.

But I submit to your Honor that 7,000 hours of

time, over 50 people working on it, over a million dollars in

out-of-pocket expenses, it is a lot of money, your Honor,

there is no doubt about that, but it's not unreasonable or

unjustified.

The last thing that we're working on right now is

this cure process. That's another example of how we tried to

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be as fair as possible. So even when we sent out a

verification email to consumers after all this process and

they responded with something, and they made a mistake, they

sent in the wrong phone bill that didn't match their number,

we then contacted them and gave them a two-week process. A

two-week process to cure. That's what just finished up as of

yesterday.

So I think when you look at what we did, why we did

it, we were measured and thoughtful throughout the whole

process. Can objectors now come in and criticize what you

did? Sure they can. But does that take away from the fact

that this settlement is fair and reasonable? No. It's fair,

reasonable, and it should be finally approved.

THE COURT: While you're up there, Mr. McCue, one

other question, which is: Other than Mr. Charvat, is there

any other member of the class that's being treated

differently in any way of terms of what they're getting? For

example, somebody who might have said I'm going to object and

then maybe reached a side agreement that --

MR. McCUE: No, your Honor.

THE COURT: -- resulted in withdrawing that?

MR. McCUE: Absolutely not, your Honor.

Mr. Charvat is here, your Honor, if you have any

questions for him.

THE COURT: Here's what I think I would like to do.

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I think I'm going to hear from the objectors' counsel next,

and then give the parties' counsel an opportunity to respond

substantively if you'd like, if there is anything to respond

to on any points related to the overall approval of the

settlement, at which point after that I'm going to turn to

the specific issue of the incentive fee. Which I know is

going to be raised by the objectors, and I know the parties

are not on the same page, and I know I have some specific

questions on. But I think it would be helpful to hear from

the objectors before turning the focus on Mr. Charvat's

incentive fee.

Mr. Becker?

MR. BECKER: Can I add one piece of factual

information I think it's important for your Honor to be aware

of, because we mentioned this final cure period?

THE COURT: Yes.

MR. BECKER: Do you want me to step up, or is this

okay?

THE COURT: That's fine. You can stay where you

are.

MR. BECKER: Mr. McCue mentioned this final cure

period that's going on, as you may recall. During this final

submission process we gave anyone that submitted

documentation that wasn't sufficient another opportunity to

cure. And that went out to several thousand individuals.

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They had 14 days to do so. I believe the closure date was

either today or yesterday. Yesterday.

So KCC is processing that right now. I just want

the Court to be aware of it, because we do mention in our

briefs that based on the total approved claims thus far,

which was 274,851, you see the average number per claimant of

$22.00 and change that's been approved. But there was at the

time approximately 30,000 or so additional individuals

getting a chance to cure one more time. And so in our briefs

and in plaintiffs' briefs you may have seen numbers where it

said it could go down to this much if 100 percent of those

individuals cure.

We're able to say now, based on the numbers

yesterday from KCC, there have been a total of 2,567

additional approved claims. And they don't expect that

number to go up by more than a thousand after they finalize

their review of everything that's outstanding. So what we

expect to see is less than 3,600 additional approved claims.

Why is it important? It's important because the

estimate we gave you, the range is much smaller now. And the

floor actually won't go much below I think it's $21.80 or so,

whereas in the brief it said it could have gone as low as 19

if everyone had approved. It's important for you to know

that that number is finalizing now and that actually that may

impact certain objectors' positions on things in a positive

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way.

THE COURT: Okay. Thank you.

Before I hear from the objectors who are here,

Mr. McCue, I have another question for you about objectors

generally, which is that I went through the docket and made a

catalog of all of the objections that were filed, and many of

them were people who did express some either confusion or

displeasure, or both, with the process, filing objections

saying we can't get a hold of the claims administrator, we

can't find the phone number associated with our phone, we

can't find proof.

If I went through that list with you of the people

who filed objections, how many of them would you say have now

been resolved in the sense that the people who are saying the

process isn't working for me, they ended up coming out the

other end with a valid claim?

MR. McCUE: Sure. I don't have exact numbers for

you, but from my memory, probably 10 to 15 of those consumers

I specifically had email conversations with, answered their

questions and helped them file claims. I wasn't comfortable,

though, like asking anyone to withdraw the objection, so the

objection is still on the docket. And I can submit a

declaration, your Honor, if that would be helpful on

detailing who I spoke with and attaching the emails or

something like that.

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THE COURT: Would you also be able to confirm with

KCC whether or not they're included as a valid claim?

MR. McCUE: Sure.

THE COURT: So that may go onto my list of

something to get afterwards, because I think to the extent

some people actually had the wherewithal to reach out to the

Court in some way to say this process is flawed because I

couldn't do X, Y, and Z, to the extent that they end up being

able to do whatever they needed to do to have a valid claim,

that might give me some comfort that it's not a bigger

problem where people were excluded.

MR. McCUE: Sure. Just to clarify from my

perspective, do you want a declaration saying these objectors

have filed claims that have been accepted, is that what

you're interested in, or is it do you want to know from me

who I had communications with?

THE COURT: No. Just that the claims have been

accepted. And I'm referring primarily to the people who have

filed objections, so it's of record, and I feel I need to

address them in some way --

MR. McCUE: Yeah.

THE COURT: -- whose objections were based on a

difficulty they were having in complying with the process.

MR. McCUE: Okay.

THE COURT: The substantive issues that people are

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raising about the fairness of the settlement, wanting more

money, the incentive fee is too high, those are all things

that the parties have briefed, the objectors who are here

have weighed in on, and I am comfortable reaching conclusions

on those, or the people who actually are of record saying

that they had a difficulty with the process. I think it

would be useful to know whether or not they actually made it

through the process at the end of the day.

MR. McCUE: Happy to do that, your Honor.

THE COURT: So it's yes or no. I don't need to

know every conversation you had with them, or what was said

or anything. I'll assume that if they're in the valid claim

pile that one way or the other they made it through.

MR. McCUE: Okay. Thank you, your Honor.

MR. BURKE: Your Honor?

THE COURT: Yes, Mr. Burke.

MR. BURKE: Mr. Dewitt wants to say one more thing.

THE COURT: Okay. Mr. Dewitt, if you would like to

approach.

MR. DEWITT: Yes. Just really briefly, your Honor.

I re-read the declaration we have on file, and I

think we could have done a better job showing where costs

would actually be now as opposed to what the ask in that

document is, so we'll do a better job of sketching that out.

I also wanted to note that at every turn any time

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anything was proposed to us by either side we made every

recommendation to minimize costs as much as we possibly

could, even as this administration has continued to take on

new dimensions we've proceeded working fully on that without

any concern about whether we'll be paid for it. We think

it's important to continue the work on this matter. Thank

you.

THE COURT: Thank you.

Okay. So I'm going to turn to the objectors. I'm

going to ask the objectors to try to have your presentations

not go over a maximum of ten minutes, which is actually a

fairly lengthy period of time.

You're free to be as brief and succinct as you're

able to be and to fairly and accurately communicate your

concerns, but in the interest of time, I am going to have

somewhat of a time limit. I always account for the fact that

if I ask you a bunch of questions I'm cutting into your time,

so we can go a little bit longer.

I'm going to start with -- looks like Mr. Warner.

And you're here on behalf of Julie Evancheck?

MR. WARNER: Yes. Thank you, your Honor. Curtis

Warner on behalf of Julia Evancheck. She filed an objection

here, docket No. 632, to the supplemental process of the

proof required, and she further asks this Court to consider

in the factors of Rule 23 whether this is a fair, adequate,

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and reasonable settlement, this second layer of proof

required.

Just as some background about myself, your Honor, I

think when you first took the bench you certified a class

settlement in Florence Musad M.D. SC versus Better Doctor. I

am primarily a plaintiff's counsel. I have, however, one

other time represented objectors in a case successfully in

the Seventh Circuit, Redmond versus Radioshack. That

settlement was overturned on the basis of the objectors who

do serve an important purpose to bring issues to the Court's

attention when you do have two parties that want to settle.

Ms. Evancheck's main objection here, and it's an

unprecedented second step, is for people to come forward with

evidence of that they are actually a called party or a

subscriber that is over eight years old. In this case,

Ms. Evancheck, sometime between 2001 and 2003, opened up a

Verizon cell phone account and was a subscriber of that same

number at all times relevant to this claim.

She then switched in 2014, I believe her affidavit

says -- 2013. She switched then over to AT&T Mobility on a

group plan. She doesn't have any records that would show

that her name goes to that number.

The results of this second layer is what I'm

hearing, the numbers, is 89.82% of persons who made a claim

were disenfranchised. And that's rounding up to the nearest

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hundredth of a percent.

We've heard testimony here today that KCC had

discovered that there was fraud of duplicate addresses and

duplicate IP numbers. The question is why weren't just those

persons sent an email or a letter for them to submit

information. That's not answered here. We haven't heard

anything about why just those people.

Instead there is an email -- there was actually

two. And Ms. Evancheck has attached those to her motion.

They're page ID 23083 through 84, and 23090 through 91.

The notices don't specifically and clearly state

that the person is going to receive $2.00 and they have the

right to opt out. It says there is two million claims with a

fund expected to be $12.5 million. It's not exactly a clear

notice that they do have the right to opt out. And it's --

the question is: Why did it go to everybody? Why do other

people have to submit further information?

The settlement originally did comply with Pearson

versus NBTY, as we bring up, where you just check under

penalty of perjury that I am sufficient. But here now I've

listened for the first time that there was an effort to

identify these people who might be committing fraud to take

money away from class members.

But why is it that everybody has to send in more

information? Which, in Ms. Evancheck's case, she doesn't

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have it. There's no phone books for cell phones. She can't

find Mobility statements because -- Verizon, where her name

was actually on it, is long gone. Why go through this whole

process?

Mr. McCue stood up here and told your Honor that

he's reached out to people. Mr. Burke, who I used to work

with at the same plaintiff's class action firm, walked up to

me and didn't even recognize me, gotten a lot grayer since

he's probably saw me last, and said, are you speaking here

today. Didn't even know that.

Nobody here talked to me from the plaintiffs or the

defendants about Ms. Evancheck's claim.

THE COURT: Did she ultimately have her claim

accepted, or was she just unable to supplement and so she was

excluded?

MR. WARNER: She can't supplement, so she objected.

I was contacted, and -- again, this is unprecedented. What

it does is it disenfranchises. As soon as you look at this,

you're like, well, this doesn't comport with Seventh Circuit

law and NBTY. All you're supposed to do is sign, say under

the penalties of perjury, you know, this is me. But if there

is a -- it just seems that this whole, as we point out in our

brief, this whole second layer is to disenfranchise people to

go that extra step.

THE COURT: What would you have done differently if

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you had been -- you're saying you're experienced --

MR. WARNER: Sure.

THE COURT: -- on the plaintiff's side --

MR. WARNER: Yeah.

THE COURT: -- and you had negotiated a settlement,

and then you realize that there is an indication that there

might be a material amount of fraud. What would you have

come in front of me to ask for if not a second layer of

confirmation?

MR. WARNER: Well, there is two parts to the

question, and I answer the first part, which is what would I

have done. And that's at the beginning of the settlement.

You have to realize that these things can go viral. This is

not the first one that has gone viral. Facebook picks it up.

In fact, other claims administrator do use Facebook ads, and

Facebook posts, and Google banners in order to get there out.

We've used Garden City in the Zara (phonetic) case where

anybody who would seem to have an interest in shopping, in

clothing, or were near the store, would ask where can I buy

clothes. Google ads or their Facebook feeds would then start

to become populated. The special sauce that makes these

companies are what they are. They can go about and find that

information, and then send them banner ads. And then if it's

a settlement, news media do pick up on it.

The succinctness would have been is not to say that

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it's going to be $300, or $900 or so. Even as stated in the

papers, one of the original notices, is that it's going to be

$12 million on a pro rata share. And then typically what you

do is you cite percentages: If 2 million people submit

claims, this is how much you're going to do.

The second part that I would have done differently,

what I heard a lot about, is the allocation of costs. I

think it was in Redmond versus Radioshack is where Judge

Posner in his opinion talked about that really the costs

don't benefit the class members. The costs -- especially if

you have an exponential cost, it reduces the amount of money

that is for the class members.

Typically when I write settlement agreements to

present to the court, the terms are very clear based upon

case law. The defendant pays for it whole-heartedly. It's

separate above from the class. The class members, they have

a settlement fund. If it's a percentage, the attorneys take

a percentage off of that because it draws the interest of the

attorneys in with the members of the settlement class to

increase that settlement fund as large as possible. And then

the class representative has their own separate and distinct

award that is separate from the class settlement fund.

So as far as the beginning of it, that is the

better structure of giving class notice and also structuring

a class action settlement that is here.

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THE COURT: And so you're standing here today and

you're representing a client who is not going to get even the

$28.00, is what you're saying?

MR. WARNER: It appears that she's not. No one has

reached out to me. So she's going to be one of those persons

who's disenfranchised. She can't produce what is there.

Other people probably looked at it and go, ah,

gosh, I don't have the time, two bucks, why should I bother,

why should I go through this.

So there may be other people out there that have

just been simply disenfranchised by the extra step that's

needed in going forward with this.

And so we just ask the Court to take a look at that

again to reevaluate whether or not it falls under being fair,

reasonable, and adequate to require an unprecedented second

verification process that would be contrary to what the first

one was, which was correct under NBTY.

Thank you, your Honor, if there are no further

questions.

And I also have other engagements, including

picking up my children from school, so I kind of need to

leave. Thank you for your time.

THE COURT: Thank you.

Mr. McDonald? And you represent Mark Dunlap?

MR. McDONALD: Yes, your Honor.

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Your Honor, I first would like to say that I do

sympathize with the Court with the settlement and with some

of the questions regardless, settlement that's currently

before the Court. You were presented, I think, with

something that perhaps at first blush would have looked like

a reasonable settlement when it was preliminarily approved.

But then there was evidence of fraud that the Court had

brought before her Honor, which I think required some hard

decisions to be made, but I don't see that there is any real

evidence that there was actual fraud that was being committed

by anybody. I think the net effect was to simply, as the

other counsel said, to simply reduce the number of claims,

disenfranchise some folks, and take it from a measly two- or

three-dollar settlement which the Court would not have been

able to approve, I don't think, to something that seems to be

at the low end of the range of reasonableness.

Frankly the Court was reading my mind perhaps about

some of the lingering questions that there are between the

relationship with class counsel and KCC and Mr. Charvat. I

think it came up in the hearing on Friday, that is a part of

some of my supplemental objection material, that I had

requested the ability to cross-examine Mr. Cooper and perhaps

Mr. Charvat, and I didn't know if the Court was going to

allow me to do that, or should I simply address the points

that I would be making in my questioning of them with the

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Court?

THE COURT: What is it that you would want to know

from them? I don't know that I'm inclined to open it up for

questioning. I'm not aware of any legal obligation to permit

objectors to examine anyone in connection with the hearing.

However, if there are specific questions, I may address them

for you. That may be the better way to go about it.

What are your concerns, and go ahead and make your

arguments, and then I can make a determination of how to get

that information.

MR. McDONALD: Okay. Well, just kind of looking at

some of the outline of questions that I had for Mr. Cooper,

one of the questions I would like to have answered is why do

KCC quote a price of $1.5 million for looking at and

analyzing the supplemental claims material but the paralegals

from defense counsel were able to do it for I think $960,000.

That frankly was alarming to me that nonprofessionals, folks

who are not used to handling that type of a process, don't

have the infrastructure for it, would be able to do it for

more than one-third the amount.

The second thing I would like to know is there was

something that was said by Mr. Cooper concerning the

prolonged negotiations that there were between class counsel,

KCC, and I think that the defendants were involved in that

discussion as well regarding their decision to reduce their

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fee request to simply $3 million. I would like to know a

little bit more about what those negotiations are and what

was promised on each side. What exactly was the quid pro

quo?

Frankly I would like to ask what was class

counsel's opening offer, and what did class counsel suggest

in the very beginning would be fair. And to see what the

back and forth was and to see if perhaps there might have

been a threat made or a discussion had about class counsel's

ongoing relationship with KCC if they were not willing to

reduce their fee, and exactly how those discussions went.

Because frankly, this Court has to determine what KCC's fee

is. That's up to the Court.

And I don't know what promises class counsel was

able to make as part of these prolonged negotiations, and nor

do I know what role defense counsel would have possibly had

in those discussions. But I was very intrigued to read in

Mr. Cooper's declaration that that discussion was had.

I'd also like to know about discussions that there

might have been on the front end with any negotiations.

So far, from my extensive review of the record, I

still can't understand how KCC bills. I don't understand the

basis for their charges. I don't know if it's done on an

hourly basis. I don't know if it's on a per task basis.

I think that at the hearing back in the springtime,

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I think the Court inquired somewhat of Mr. Cooper regarding

that with regard to the supplemental notice and the fact that

it was going to cost $50,000. And I think the Court said,

well, you draft up the notice, you have already got these

people's email address, and you hit the send button.

And that's my version very simplistically, not the

Court's words, and the response from Mr. Cooper was, well,

that's a pricing structure we're working on. Well, that's

not an answer. How much did it really cost them to do this,

and how in the world do they have 7,000 hours. Class counsel

has 4,000 hours prosecuting the case and they have 7,000 man

hours in this case? That just seems incredible to me.

So frankly, your Honor, that's some of the

questions that I would have for Mr. Cooper. I don't know if

their rates are publicized. I don't know if there is a rate

chart for them.

THE COURT: On that point, on the point of the

detail, I am, as you heard, I'm going to be requiring

additional submission of detail on the fees and costs.

MR. McDONALD: Will that be made available to

objectors publicly or is that something the Court is going to

review in camera?

THE COURT: Well, I will see if counsel for either

the parties or KCC wants to raise a reason why this should

not be a filing, a supplemental filing. Given that

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Mr. Cooper's affidavits to this point are part of the public

record, I don't know if there is any reason why supporting

detail behind numbers that are already in his affidavit

should not be part of the public record.

I will let Mr. Cooper and KCC counsel mull that

over for a few minutes while I hear the rest of Mr. Dunlap's

points. I'll circle back around to that. But I think that's

a good point, and I will take the opportunity before the

hearing is over to inquire a little bit further into any

negotiations between counsel and KCC to make sure that there

isn't some sort of an arrangement that might have led to that

inflating the costs and expenses associated with

administration that are sort of going to reduce the amount of

funds that are available to go to class members.

MR. McDONALD: Thank you, your Honor.

And there was a point that I was going to make. I

think the point that just crossed my mind is --

THE COURT: Well, I have a question for you.

MR. McDONALD: Yes.

THE COURT: I take it that your client is going

to -- has a valid claim that's been accepted.

MR. McDONALD: Yes, your Honor.

THE COURT: How much is your client going to get?

MR. McDONALD: I'm not sure of that number. I

would think he would be at the $24.00 range.

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THE COURT: One call?

MR. McDONALD: No, three calls. $8.00 a claim. So

he would be in that range, I think. That would be my

expectation for him.

THE COURT: Okay.

MR. McDONALD: Of course, that number could go up

slightly depending upon what the Court does with class

counsel's fee request and KCC's fee request, because after

all, those are reducing the class members' recovery.

There was also some work that Mr. Cooper apparently

did, your Honor, which I didn't understand. It is reflected

in his declaration signed on 10/3/2018, docket No. 679-4,

that he was asked to review and analyze phone numbers by the

defendants to see which of the objecting class members were

in the direct notice class and which ones were in the

indirect notice class.

Frankly, that has nothing to do with settlement

administration in this case. They're all class members.

Frankly, I wonder why Mr. Cooper was doing favors for the

defendants that was not part of the instructions from this

Court. I'm not sure if that was a part of their negotiation,

their prolonged discussions, but I have a few questions for

them about why those activities were undertaken. Because it

doesn't seem to be anything that would have to do with any

part of their work, it was just a failure to try to perhaps

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reduce or influence objectors.

THE COURT: And is your client, was he a direct

claimant or an indirect claimant?

MR. McDONALD: Indirect.

THE COURT: He's an indirect. Okay.

MR. McDONALD: Yes. In fact, if he would have been

a direct notice claim then I might have had some other

possible objections to this process, because what it seems

like is that you really had two silos of claimants. You had

the direct notice claimants that they had a lot of records

on, and then you had the indirect, who we simply had their

phone number.

And what I think you had was the defendants wanted

a broad release, and class counsel wanted a big fee, and so

they met in terms of giving them each exactly what they

wanted, and we had the innumerable problems that have

exploded as a result of those two interests meeting of the

settlement that we have.

THE COURT: How did Mr. Dunlap hear about the

settlement so that he even knew to submit a claim?

MR. McDONALD: I'm not sure where he heard about it

first. He and I talked about it, and he had already I think

heard a little bit about it, so... But I'm really not sure

what the first place he heard of that was.

I'd also like to know from Mr. Cooper when he knew

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that the costs of this administration were going to explode.

Because one of the fundamental problems that I have is that

it appears clear that when -- or that from his declaration he

was -- he obviously being -- he is the project manager for

KCC, they were only expecting 100,000 claims when this

process started. They get 2.7 million. And that's detailed

I think in the submission to the Court that says that they

knew that as of October of 2017.

So someone must have undertaken the mathematical

process of determining how much the claims administration

costs were going to go up. The problem is nobody advised the

class and nobody advised the Court, at least in terms of what

I can see in the record, until much, much later in the

spring. Why not?

As of the time that the objections were filed,

class members were still being told that there was only

$800,000 in administration costs. Obviously KCC had to know

that that wasn't the case. As of the date that my client

filed his objection at the end of October there were over 2

million claims filed.

THE COURT: And why would that be relevant to

approval of the class action? Because it's preliminarily

approved, there is a final approval of a settlement that's

already negotiated at the time of the preliminary approval,

is it just a matter of asking me to cut their costs? But it

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doesn't go to the overall settlement, it just goes to you

should reduce the amount of costs that they can recover here

because of shenanigans, for want of a better word.

MR. McDONALD: That might be one way of putting it.

What I was really wondering about was not only the lack of

notice to the class and possible shenanigans, but what plans

did they put in place as soon as they knew that they were

exploding, or at the time that those costs were exploding,

and what was done to reduce those.

THE COURT: Because I should -- other than reducing

what they can claim, what other remedy would there be for

that now after the fact?

MR. McDONALD: There wouldn't be any other remedy,

but I think that it would be interesting for everyone to know

what their knowledge was and what was being done to reduce

those costs. We know that they stopped the media coverage,

but were there other things being done to minimize the impact

at that time.

THE COURT: Okay.

MR. McDONALD: So that, I think, your Honor, covers

a lot of the topics that I would have had for Mr. Cooper.

And in terms of Mr. Charvat, we've got a problem

obviously with his incentive award, too. I think there was a

little bit of question about Mr. Charvat's history, and one

of the interesting things that I note is that I don't think

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that he started using these particular lawyers as his class

counsel until about 2011, but he's had this little cottage

industry and been fighting for the rights of consumers for

longer than that.

I know that he previously used some other lawyers,

and I wonder if this $50,000 incentive which Mr. Charvat's

lawyers are asking for, he's not asking for it, is a way of

perhaps keeping him as a repeat client for their firm and so

that he doesn't go out shopping for other lawyers. Because

he did use prior lawyers in the past.

And as a final point for Mr. Charvat in his

experiences in this case that he lays at the hands of the

settling defendants, if they were bad actors in this case,

and if the defendants did something wrong, then they should

pay more money and that should go for the benefit of the

class members.

If they could show that, or if the plaintiffs could

show that the defendants were bad actors in front of a jury,

then they should have had to have paid more money and that

would have caused them to pay more money. But as it is now,

class members would be getting less money because Mr. Charvat

wants to take it off the top for his pain, and so the class

members wind up getting less money because of the defendants'

bad actions.

I think that if their bad actions were a calculus

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in this settlement, and it's already been taken into account,

and I don't think Mr. Charvat should be the one to receive

that windfall from their bad actions to the extent that it

could be proven.

Those are my points, your Honor. Thank you.

THE COURT: Okay. Thank you.

I gave Mr. Dewitt and Mr. Cooper and Ms. Bryan a

minute to think about the issue of whether or not there is

any reason that their detailed accounting of the fees and

costs could not be part of the public record.

Perhaps what I'll do is actually start with

plaintiffs' counsel and defense counsel and see if you have a

view on whether that's something that should be filed as part

of the docket or submitted some other way.

MR. McCUE: Your Honor, I've haven't had a chance

to confer with KCC, but from my perspective, that should be

filed under seal. If objector counsel wants to review that,

I would be open to having them agree to a confidentiality

order. But I would suspect that the level of detail you're

asking for is going to invoke proprietary information, trade

secret information that's going to be sensitive to their

business.

I want to get you that information for you to

assess, but I also am sensitive to competitors being able to

access that. We need to think about that.

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THE COURT: But you would not have an objection to

objectors' counsel having access to it?

MR. McCUE: Not if they agreed to attorneys' eyes

only and things like that.

THE COURT: Okay. I'll take that into

consideration.

Any of the defense counsel want to weigh in on that

particular issue?

MS. MacIVOR: We would have no objection to it

being filed under seal, but we don't really take a position

on it. But we would be fine with it under seal and the

objectors being able to see it. If that's the way the Court

wants to go. Otherwise we take no position.

THE COURT: Do you have an objection to it being

part of the public record?

MS. MacIVOR: We don't have a position on it at

all.

THE COURT: I don't know who I should ask on behalf

of KCC. Should I direct this to Ms. Bryan as counsel?

If she's still on the phone. Did we lose

everybody?

Mr. Cooper, are you still on the phone?

MR. COOPER: Yes. I think maybe Rob -- this is

Phil Cooper from KCC. Maybe Rob is the best to address that

question.

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THE COURT: Okay. Very well then. We'll give him

a chance to address it.

MR. DEWITT: Sure. Your Honor, we would sort of

take the same view of it as Mr. McCue, we would have no

problem presenting that information, and then barring some

comment from Ms. Bryan, if the objector wants to review it as

well. We have nothing to hide.

THE COURT: I guess the concern is whether there is

sort of something proprietary or trade secret about it that

would warrant keeping it out of the public domain and putting

some formal restriction on what the objectors can do with it.

MR. DEWITT: Again, that would be something I would

refer to Ms. Bryan. She dropped off, and...

THE COURT: So maybe what I'll do is -- perhaps in

issuing an order I will allow KCC to ask to file it under

seal, to file it provisionally under seal, and indicate -- I

think it should be in the record if there is officially a

request from KCC to have it under seal due to a trade secret

or confidentiality reasons rather than in a situation like

this for me to just assume that it should be under seal and

take it out of the public domain. But thank you.

MR. DEWITT: Thank you.

THE COURT: Mr. Hilton?

MR. HILTON: Your Honor --

MS. MacIVOR: Your Honor, before Mr. Hilton goes,

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would it be possible to take a break after Mr. Hilton is

finished? A quick one.

THE COURT: That's fine. I was thinking we might

do it afterwards.

MS. MacIVOR: No, no. I meant after he's finished.

THE COURT: Oh, after he's finished. I thought you

meant before. That's fine. No pressure now that everybody

knows you're standing between everybody and the break,

Mr. Hilton.

MR. HILTON: Your Honor, and may it please the

Court, Jonathan Hilton for objectors Shelton and Johnson. I

have two brief points of law that I would like to address

today, and then I would also like to say a couple of quick

things.

Mr. Becker had indicated that I might be moving to

withdraw my motion -- sorry, my objection, that it's related

specifically to the adequacy of the amount that each claimant

will receive. So I'd like to address that at the back end if

I may.

THE COURT: Okay.

MR. HILTON: The first point of law that I'd like

to address, your Honor, is one that I do raise in docket --

it's docket 668 at page ID 23332. And it has to do with the

Pearson presumption that we have heard a little bit about

today.

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The Seventh Circuit case, Pearson, on my reading of

it holds that as a general presumption class counsel should

not be able to obtain more than one-third as its fee of

something called the net settlement amount.

THE COURT: I'm going to actually -- sorry to

interrupt you. I think we're going to try to get Ms. Bryan

on the line, and because I think that that may involve a

little bit of chatting on our end I'm going to ask you to

pause for just a moment while we do that.

MR. HILTON: Yes, your Honor.

(Telephone call placed.)

THE COURT: Hello. This is Ms. Bryan?

MS. BRYAN: Yes. Sorry. I got disconnected.

THE COURT: That's fine. This is Judge Wood. I'm

glad we have you back on the line.

We are hearing from Mr. Hilton, who is counsel for

two of our objectors, and he was just getting started in his

presentation.

Mr. Hilton?

MS. BRYAN: Thank you.

MR. HILTON: Yes, your Honor.

So there has been a lot of talk about the Pearson

presumption. So in my view, what the Pearson presumption is

is a line from a Seventh Circuit case by Judge Posner, and it

says very specifically that class counsel should not receive

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as its fee more than "a third or at most one half" of the net

settlement amount.

So that's not the gross settlement amount. That's

not 12.5 million. Rather, that's the 12.5 million once

everything such as administration costs and so on has been

taken out.

Now, class counsel in this case in its amended fee

petition is asking for a third of the net settlement amount,

so much of the controversy that surrounds Pearson is moot

here today, except for one point that's worth probably about

$60,000 to the class. So that point is specifically whether

the litigation expenses that class counsel is seeking to have

reimbursed, which are about $210,000 approximately, maybe a

little more, maybe a little less, but whether those

litigation expenses count towards that net settlement amount

or whether those should also, like administrative costs, be

deducted.

So you can imagine, your Honor, if that $210,000

were taken out of the computation of the net settlement

amount, then class counsel would lose its claim to one-third

of that amount as fees.

So if the Court is following me, what I'd like to

do is just talk very briefly about why I believe that those

litigation expenses are not part of the net settlement

amount.

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THE COURT: Okay.

MR. HILTON: So one is that I believe that Pearson

and another case that's been mentioned today, Redmond versus

Radioshack, I believe that those cases, each individually and

also read together, state very clearly that the net

settlement amount constitutes: One, the fee that class

counsel is seeking, the fee; plus two, what class members

received.

Nothing is said about litigation expenses. The

Seventh Circuit doesn't address litigation expenses. But

from a policy perspective, I think it makes sense to deduct

them just like administrative costs. The class counsel

should be incentivized to keep litigation expenses, just like

administrative costs, relatively low, and also class counsel

is also receiving reimbursement already out of the common

fund for the expenses that it incurred.

So I believe it's a common sense suggestion. And

again, the briefing on it is in doc 668 that I've submitted.

And the reason that I'm bringing it up today is primarily

that I haven't seen any filed response from class counsel on

that, and I want to be sure that if they have arguments that

those are before the Court so that all of the issues are

fairly disputed and properly preserved.

THE COURT: Okay.

MR. HILTON: The second issue of law that I would

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like to address today is on the issue of the residual funds.

As your Honor knows, in the declaration of Phil Cooper, which

is doc 670 at page ID 23350, that continues on to 51, Phil

Cooper has asked that KCC rather than the named or proposed

cy pres recipient receive as a payment on the back end for

its administrative fees a share of the residual funds, what's

left over after the first round of claims have been made and

then have continued to a point that's called administrative

infeasibility.

Now, the settlement agreement at Section 8.4,

that's doc 569-1, page ID 22457, and continues on to 58, the

settlement agreement gives a definition for administrative

infeasibility. And what it says, its very brief definition,

and perhaps calling it a definition is a little bit fast and

loose, but it does say in parentheses administratively

feasible, and then as a parentheses, and then it says i.e.,

meaning that is, comma, and it goes on to say each class

member would receive at least $5.00.

Now, KCC has also asked, this is in its declaration

at -- it's doc 679-2, page ID 23478, KCC has stated it will

use whatever definition of administrative infeasibility that

it is instructed to use. And it has also said that it will

only -- that it will use that definition if: "Provided the

settlement agreement calls for it."

So what I submit to the Court today is that the

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current definition is that if a class member in a subsequent

distribution were to receive less than $5.00 in that

subsequent distribution, then whatever is left in the

residual funds is going to go to KCC. I would like to

maximize the recovery for the class members. And KCC in its

declaration frankly admits that it's possible that it might

be feasible to send payments to class members as low as

$2.50.

The parties have responded briefly in the record to

this point that I've made. I believe it's in the cruise

defendants' omnibus brief in which they respond to all

objections, but what I haven't seen yet is any sort of a

modification of the settlement agreement or a promise from

the parties to use the best definition of administrative

infeasibility.

And to that point I would like to propose my own

definition. It's actually a definition taken from a case in

the Third Circuit. That case is In Re: Baby Products

Antitrust Litigation, which is 708 F.3d 163. And the

definition is found at pages 168 to 69. That's a Third

Circuit decision from 2013. And that decision defines

administrative infeasibility as the situation where: "The

cost of distributing individually to all class members

exceeds the amount to be distributed."

Basically that means if there aren't sufficient

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funds left in the common fund to pay to distribute any money

at all to class members, then that's the point of

administrative infeasibility. And under the parties' current

proposal, that money would then go to KCC as a fee on the

back end.

So my hope is that this is something that can be

resolved fairly quickly among the parties, but I just bring

it up because it has not been resolved yet, and I would

object to not accepting a definition of administrative

infeasibility that results in the maximum recovery for the

class.

The third point that I'd like to make is just one

briefly about what I believe class counsel referred to as the

latte. This is my argument made back in October, that when

the class stood to receive only about $4.00, in my opening

objection on behalf of objectors Shelton and Johnson and I

said, well, usually the market rate for one of these

settlements is about the price of a nice restaurant meal, not

just a pumpkin spice latte. I said $4.00 wasn't enough. And

in that objection I said something -- for the settlement to

be approved, essentially something needs to happen so the

class members get more.

What I have heard today is that class members are

standing to receive about $21.00 or so on average. That

number could go up or down slightly. Based on the case law

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that I've presented in my original objection, and then also

Objector Dunlap's original objection that is represented by

Mr. McDonald, $20.00 per claimant does seem to me, at least

as far as comparing this settlement against other settlements

of comparable strength as to the per-claimant amount, $20.00

may well be fair and reasonable.

I do just have one question, though, that I would

like the parties to clarify, which is whether the three-call

cap, meaning a maximum of $24.00, eight times three, $8.00

per call, $24.00 if you have three calls, if that three-call

cap applies now that the settlement is pro rata or whether

that three-call cap only applied when we were talking about

class members receiving $300 or $900.

The reason that I'm bringing this up now is that in

the omnibus brief submitted by the cruise defendants against

all of the objections made by all objectors, my understanding

from that is that there are some claimants who under the pro

rata formula might be receiving as many as $500 because there

is no three-call cap.

If I've misread the brief in any way, my apologies,

and I hope that it can be clarified. But just on behalf of

my clients, who have affidavits in to the Court that they

recall receiving more than three calls, who I believe the

call records will show, although I don't know for a fact, I

believe that they will be receiving -- that they received

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more than three calls in the dialer database. My clients

would stand to receive more money if we didn't use the

three-call cap now that it's a pro rata distribution. And so

I would just push for that as being a more fair way to

distribute the funds.

The only thing that I believe is -- that is on the

docket from objectors' end that explains why the three-call

cap is unfair was actually an objection filed last October, I

believe by Attorney Amy Wilkins on behalf of Cathleen

Schilling -- or I might have the objector's name and the

counsel's name reversed. But it just occurred today as I was

listening to Mr. McCue's presentation, and so that's why I

wanted to address it.

THE COURT: I believe you're correct. It's Amy

Wilkins on behalf of Cathleen Schilling. I believe that was

one of the issues raised there.

MR. HILTON: That would be it, your Honor. And so

I would just ask the Court to consider that objection. If

there is any ambiguity as to what pro rata means, I would

just ask that the Court choose the one that allows for those

who got more than three calls to recover a higher share. And

I believe that that's the objection presented by Ms. Wilkins.

Then the very, very last point that I want to make,

hopefully the only time I ever bring this up today, is that I

did notice the objectors' fee petition for this morning. I

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believe that it has been fully briefed, unless either of the

parties would anticipate filing a surreply. So I believe

that's all submitted.

The only question I have is whether the Court would

like to order me and the other objectors who participated in

that to submit their time sheets for review in camera.

THE COURT: I don't think that's necessary at this

time. Depending how I decide to resolve that issue, it may

be in the future.

MR. HILTON: Thank you, your Honor. That's all I

have.

THE COURT: Thank you, Mr. Hilton.

Perhaps before I lose track of this point and

quickly before we take a break, my sense from Mr. Becker is

he wanted to address the issue of whether switching to a pro

rata distribution now means that some people are getting I

guess much bigger awards, or if there is still a three-call

cap in place that would limit everything.

Is this going to be a long response?

MR. BECKER: No. I can address that now, and then

we can take a break if you would like. Obviously I want to

respond to the other objections. But for that specific

purpose, no, there is a three-call cap still in place, it's

clearly in place throughout the settlement agreement and all

orders. The reason individuals may receive -- claimants may

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receive more than the 20 or so dollars for three calls would

be if they have more than one phone number associated with

their claim. So if you have a cell phone and a residential

phone, both of those --

THE COURT: Is there somebody who's getting $500?

MR. BECKER: I believe there is an institution.

KCC or plaintiff could speak to that better than I could.

MR. McCUE: University of Minnesota or something

like that where their HR put in claims for cell phones

assigned to staff. That's kind of an anomaly, but that's one

example of how -- I think that's the top end of where they're

getting back over $500.

THE COURT: And that's because of the number of

individual phone lines times three that they submitted claims

for?

MR. McCUE: Associated with it. So if you look at

the University of Minnesota, I hope that's the entity, I'm

not sure, if you look at that entity as the claimant, they

have an awful lot of phone numbers. And then there is a

three-call cap on each number. And that claimant then has

multiple claims.

MR. BECKER: So claimants can have a variety of

different resolutions here. If they have three phone lines,

one of which got one call, one of which got five calls, one

of which got two calls, there would be a one call, two call,

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three call collection. Right? Because they're capped at

three for each phone line. That's how it would work.

THE COURT: Okay. So with that, I guess everybody

will have a chance, or at least counsel for the parties will

have a chance to respond to the objectors. I may have some

questions for Mr. Cooper based on some of the things that

were raised.

How much time do the parties need for a break?

I'll start by asking Ms. MacIvor.

MS. MacIVOR: Five minutes?

THE COURT: We'll do ten minutes. We'll pick up

again at 12:40. We're in recess.

(Short recess.)

THE COURT: Okay. So we just finished hearing from

the objectors who are here and who participated. I will give

counsel for -- counsel of record for the parties a chance to

respond to the various objections that are raised.

Who would like to go first? Mr. Becker?

MR. BECKER: Thank you, your Honor, and good

afternoon. Jeff Becker on behalf of Carnival Corporation

again.

I'll briefly address the arguments raised by the

three objectors that have come before you today, beginning

with Mr. Warner on behalf of Ms. Evancheck.

I think it's important to understand that

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Mr. Warner is counsel of record who lives here in Chicago,

and did not participate in any proceeding throughout this

entire settlement process. Had he done so, he would have

been before you during the multiple hearings we had where you

delved deeply into the supplemental proof process where we

discussed on the phone with KCC, with plaintiffs' counsel

present and with us present, the pros and cons of running a

supplemental check process on everybody in the indirect

notice class, or some threshold number above that.

It was determined after a long discussion and your

analysis we should do it starting with zero. Everybody would

be checked.

This is not a process that's unheard of. It

happened later in the case because of the exigent

circumstances we were facing. However, oftentimes in class

action settlements individuals are required to provide some

form of evidence or proof of their appropriateness in the

class.

This was cited in our objection omnibus brief

docket entry 681 on page 23529. We cite the settlement

administration section of the Manual of Complex Litigation

and case law where class claimants are asked to submit

information.

I also think it's important to point out this is

not something where you can simply look at it and say just

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have the fraud-feasors do it, because it's not immediately

evident who is a fraud-feasor and who is not. As the Court

recognized at one of our hearings, one might be a smarter

fraud-feasor than another. So it made sense for us to

provide a uniform basis by which the entire population of

indirect claimants would provide information. That process

worked.

To Mr. Warner's point, again, he misses the point

that the 2.6 million submissions that came in are not an

actual number one can rely upon. It's a raw number that

doesn't tell you how many of those are the same person,

multiple claims or not.

THE COURT: I actually think his point was that his

client was excluded. And that demonstrates the lack of sort

of fairness that people like his client were excluded.

MR. BECKER: Sure. Well, to be clear, he tried

throwing out a big number of 88% of people that were

disenfranchised because they didn't respond. Again, that's

based on looking at 400,000 compared to 2.6 million, when you

cannot do that. You can't say there is 6.4 million people,

and only 400,000 responded, and the response rate is only

this, and therefore only 86% or more people are

disenfranchised. That's my point on that.

As far as his client, let's be clear on this.

Mr. Warner contacted myself and counsel for Royal Caribbean

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Norwegian and had conversations where he asked for payment of

money in order to settle his client's objection. Which we

refused to do uniformly across the board for all objections.

Mr. Warner's client isn't in a different situation than many

claimants who contacted counsel for the plaintiff and KCC,

and I'll allow them to attest to this, and said, hey, I can't

find the document of my phone bill back in the day. I've

switched phone lines. I'll attest under penalty this was my

phone line, I'll provide you with whatever information I can,

but I can't find it, and I'm reaching out to you. And

counsel for plaintiff asked those be submitted and accepted,

and they were.

So there are multiple people that are part of this

class today that didn't have the phone bill that are in the

same situation as Ms. Evancheck, who could have become part

of the class. She also could have opted out, because we

opened that process up again, which she did not choose to do.

Instead he came before you to complain that the entire

process was no good.

This is a process that we took a lot of time

dealing with and addressing, and I think it is the most fair

and reasonable way to address the issues that are before the

Court and in front of the parties at that time. It's a

process that, if it had been done at the beginning of the

case, would have similarly been acceptable. But we did it

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when we did it because KCC presented the issues it saw from

its analysis, doing this for decades and decades, of issues

that looked like fraud. And they presented it to you, you

agreed, which is why we implemented the process.

That leads me to Mr. McDonald's objections on

behalf of Mr. Dunlap. Mr. McDonald talks about how there's

no evidence of fraud. I don't know that he can stand here

and say this. I don't know that we could do much more than

rely upon an administrator who has done this extensively to

say this is not a normal procedure, and especially alongside

the misleading news media it makes sense for us to assess

this further and get us to where we are today.

As far as the questions he asked for Mr. Cooper,

I'm not going to address them, except for one, which is that

he wants to know why KCC looked up the phone numbers of

objectors to see whether they were in the direct or indirect

class.

I think that's a very good question to you, Judge,

and I think it's a very clear answer to you. There is one

individual of all the objectors who is actually in the direct

notice class. The rest are indirect. And it's important for

us to know that, because these objectors who stand before you

complaining about the amount of money, and the supplemental

process, these are objectors who would get no money at trial.

We mentioned this earlier when I spoke about final

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approval. These objectors, including Ms. Evancheck, and

Mr. Dunlap, are not direct notice claimants.

THE COURT: Is it appropriate for the direct and

indirect claimants to be part of the same class? Why aren't

there are two class definitions, or subclasses, or something

like that, even for purposes of settlement?

MR. BECKER: I think it's appropriate that they're

part of one class. I don't think that the manner by which we

provided direct notice versus opening up to everybody --

because in any place there is going to be public notice

given. The individuals part of the Charvat claims were given

direct notice because in looking at and assessing

consideration as to who is more likely to have gotten a call

that may or may not have mentioned the cruise lines,

Mr. Charvat had evidence of that, whereas the rest of the

world did not.

Again, if you think about what we're talking about

here, we're saying that we're allowing everybody to resolve

this case, even if they don't present evidence that they got

an actual cruise call, even if they're not part of

Mr. Charvat's campaigns, they do not have to prove to us the

call they got mentioned the cruise lines versus Branson,

Missouri or Las Vegas. We're going to accept their sworn

statement when they sign off that they got a call that

mentioned a cruise. And we're not going to require both a

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phone bill and some proof that this was a cruise call versus

something that didn't mention cruises.

So I don't think it's wrong to treat everybody

similarly, because they got phone calls, the value of the

settlement should be the same among all of them. What we're

really talking about is who got indirect notice and who did

not. But to that point, if you think about the people that

got indirect notice, these are the individuals who did not

have to be part of a Charvat campaign, were not asked to

present any evidence of their association with a phone call

that actually received a cruise reference.

So when you look at Mr. Dunlap, for example, who

comes here and says this process is unfair, and we're not

getting enough money, the reality is they're getting more

money than they would get otherwise.

Ms. Evancheck, who said I have no proof that I had

a phone number associated with a number that was called,

would never be able to succeed on the merits of her claim.

THE COURT: I want to understand why that's the

case. Because under the class definition, if it went to

trial, so we have a certified class action that goes to

trial, then the class members, why would they necessarily not

be members of the class unless the class definition were

altered so that it's only people who were involved in these

three campaigns, or something else that ties it to how the

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numbers were maintained rather than just getting a call.

Because the parties are using being in this database, or if

you had taken a different approach, being a member of these

three campaigns involving Mr. Charvat as a proxy for

determining who received calls under the class definition,

the whole direct notice/indirect notice thing is almost kind

of an artificial construct, I think, for us to manage the

settlement.

MR. BECKER: Here's what we have to make sure we're

clear on. There is a litigation class and a settlement

class. The litigation class is the class the plaintiffs

presented in their certification briefing as to who would be

part of their class if this case went forward on the merits.

And that litigation class was limited to the three Charvat

claims.

THE COURT: Was it?

MR. BECKER: That's correct.

THE COURT: I haven't looked at your class

certification briefing in quite some time.

Mr. McCue, what was your class definition proposed

in the briefing?

MR. McCUE: It would be the same definition that

was in the class complaint, but it narrowed who would be in

the class to the consumers that are in three Charvat

campaigns.

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THE COURT: Ah-ha. So whereas the settlement class

is not so limited. It's just got a time frame and refers to

any subscribers.

MR. BECKER: It's any individual who had a phone

call that was within the RMG database. Right? So the RMG

database is made up of dozens and dozens and dozens of

campaigns. I don't know the exact number anymore, but it was

a lot of campaigns. And plaintiff narrowed the scope of

their class definition from when they filed the lawsuit to

anyone RMG called to these three. And that's their strategic

decision because they thought that they had a better chance

of being able to show those three campaigns received calls

that actually mentioned cruises. Right? Because Mr. Charvat

had recorded his calls.

When we broadened it for settlement purposes, we

went back to the original definition of the complaint very

early on of anyone RMG called which is evidenced by the phone

numbers in the dialer database. Right?

So when you're looking at a much broader class

definition, we're now including individuals who were not part

of those three campaigns, who do not have necessarily proof

of their phone number, proof that they got a call that

mentioned a cruise line, so on and so forth. But as we can

all agree now, those individuals received public notice, they

submitted a claim, they gave information that showed that

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their phone number was associated with them. Right? Whether

it was a declaration, whether it was a phone bill, whatever

it might have been, they presented supplemental proof, they

were brought into the class, and now they're going to receive

relief without ever having to prove they got a

cruise-line-referenced call versus a call mentioning

something else.

So there is a substantial difference between what

the litigation class actually looked like, the three

campaigns, and the rest of these indirect notice claimants.

It happens to be an indirect notice claimant is

really someone who received public notice and submitted

information, and now they're able to stand before you and

receive money. They're also objecting, however, saying it's

not enough, if this case went forward on the merits I would

have gotten more; but would they? Would Ms. Evancheck even

be able to claim any money, present any proof at all, because

these attorneys here wouldn't have been representing her

after the class certification motion had gone forward.

THE COURT: Why is that something that's even

appropriately considered by me at this point? Because the

parties defined the settlement class, and within that class

why should I consider any indirect notice person sort of less

worthy of full consideration of their circumstances and

objections than a direct notice person?

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MR. BECKER: I think it's more so in your

assessment of fairness. These people are complaining about

not getting as much as money as they would at trial, but

they're getting money. They're receiving what counsels have

described now as at least within the realm of fairness as an

amount of money they're going to get they otherwise would not

get.

THE COURT: Because of what I understand to be a

concession that the defense valued, because it allowed you to

have the broadest possible class so you have the broadest

possible release, as is pointed out by counsel, so there is

definitely value to the defendants there. I'm not sure yet

what the incentive was for plaintiffs' counsel to agree to

the broadest possible release, but it just strikes me as

interesting that you are suggesting that certain people who

are within the class definition that the parties agreed upon

and presented to me should somehow be discounted in their

claim.

Because that's essentially what you're saying.

You're saying there are certain people who are indirect

notice people who, you know, I should be less worried about

their objections because they somehow have less of a claim to

the money in this fund than the people who would have been

within the litigation class definition.

MR. BECKER: I don't want you to leave here today

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thinking that's what I'm saying. What I'm saying is when you

have people stepping before you complaining about the process

and how much money they're going to get, you need to remember

that many of those people are people that, within a trial on

the merits -- which is what we have to look at here. When

you look at Synfuel, and you look at the risks, and the

costs, and the benefits, a number of people here are being

given the opportunity to participate in settlement and

receive a payout, a fair and reasonable payout that they may

not otherwise ever have been able to get.

THE COURT: So then answer this question for me,

which is: Why isn't that indicative of the fact that your

settlement class definition is too broad? Because the

inclusion of the additional people in the class is reducing

the recovery for the people who would have been in the

litigation class. And you're representing, I think, that

those are the only people who would have been able to receive

funds if this had gone to trial. Their recovery is less

because of a settlement class definition that was agreed upon

by the parties.

Why isn't that a fairness issue?

MR. BECKER: Two points that are very important to

understand. We have never conceded that the litigation class

made up of the Charvat campaigns would have received any

money at trial. Our position has always been, through our

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expert testimony, and our challenges of the database itself,

and the plaintiffs' expert testimony, our position has always

been that there is no easy way to identify which individuals

received a call that mentioned a cruise and which ones did

not.

There is substantive evidence, there is deposition

testimony, there's evidence from the dialer database, that

the way the dialer database was preserved, you could only

tell what recording was played on the very last call of a

campaign. And you have deposition testimony saying we, this

RMG entity, will make calls, and our primary focus is to sell

our vacation club, and sometimes we'll mention cruises as an

incentive, and sometimes we'll mention Vegas, and we'll

change that depending upon what seems to be selling on that

day.

So everybody in this case is relatively similar in

one respect. We don't believe it's easy to tell who received

an actual call that mentioned cruises and who did not. The

plaintiff had decided from a strategic standpoint throughout

the course of the litigation we're going to proceed on three

campaigns because it may be easier for us to prove that than

on every campaign.

But we didn't agree with that. Our certification

briefing surely took issue with their ability to do that. So

nobody in this case had a freebie, we're going to win, the

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evidence is clear we got a cruise call, except maybe

Mr. Charvat, who recorded his call. Outside of that, this

was very hard-fought on class certification and vicarious

liability. We don't concede anybody can just walk in and say

I got a cruise call. We believe everyone would have had to

do that on a relatively individualized basis. So now we've

opened it up to a global resolution, which is important to

our clients, who have been through this process now, the

settlement process now for over a year, agreed to a

twelve-and-a-half-million-dollar payment, even though none of

our clients made a single phone call, and our clients firmly

believe there was no agency relationship, we're willing to do

this to provide certainty and closure to the case.

The plaintiffs understood that throughout the

mediation process and understood global resolution was

important to us. Because we don't want to settle with three

campaigns and then have everybody else coming out later. So

we opened it up to everybody --

THE COURT: I understand your incentives very well,

Mr. Becker. I'm sensitive to time, we've been going for

awhile, and I think I understand this point. Were there

other --

MR. BECKER: If you understand it, then I can move

on. The last point I'll make with respect to Mr. Hilton's

objections, he mentions -- the only part that I want to

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address is the infeasibility issue. With respect to the

infeasibility issue, we do say in our documentation we would

support lowering the infeasibility from $5.00 to $2.50. I

don't think it makes sense to lower the definition all the

way to even a penny or two cents to be paid out to claimants.

There needs to be some reasonable threshold there. Other

than that, I don't take issue with Mr. Hilton's objections.

And thank you for your time and your patience in me

saying all these things, because it's been a long-fought and

long-litigated even settlement process, and we want the Court

to understand we truly believe the settlement fund that we're

trying to preserve here is giving a fair and reasonable

payment to any claimant, regardless of what they're able or

not able to prove.

MS. MacIVOR: May I say one thing? I'll be very

brief, I promise.

THE COURT: Yes.

MS. MacIVOR: Following up on what Mr. Becker was

talking about your Honor's questions, basically the objection

is the class settlement is unfair because the direct notice

claimants will get money -- I'm sorry. Let me rephrase that.

The class settlement is unfair because the litigation class

would be better off if there was no settlement. But the

problem is he would not be included in it.

So I've never really seen, in the years I have been

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doing this, where an objector complains about getting money.

He wouldn't be included, his client wouldn't be included in

the litigation class. So, I mean, the objection, to me at

least, doesn't even make sense. So the fact of the matter is

the objection should just be summarily denied.

The other thing is they would never have been able

to prove on a class-wide basis the point -- and I just want

to reiterate that, there is no evidence, and their own expert

agreed that there would be no way to prove that.

So I don't know where these objections are coming

from other than the fact that they're not really terribly

familiar with the case. And the people standing before you

who negotiated the settlement have fought this case for five

years, and who sat through all these depositions, extensive

analysis by experts on both sides. We're familiar with it.

We knew what would come. And a litigation class would have

been practically impossible, and that's what the objectors

don't understand. And I can't fault them. They weren't in

it for five years. And they weren't in the nuts and bolts of

this litigation. But we were. And that's what came together

to settlement.

We've actually got a settlement that's more broad

and is giving people relief that they would never have been

able to get it. Does it benefit us in a way that we get a

release? Of course it does. It also benefits the class.

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Because they would not have been able to get anything but for

the fact that we agreed to it. So it's mutually beneficial.

That's all I wanted to say.

THE COURT: Okay. Mr. McCue, can you start with --

I indicated I understand why the defense would be comfortable

negotiating a settlement class definition that's broader than

the litigation class definition. That makes sense to me.

Why was plaintiffs' counsel on board with doing that?

MR. McCUE: To be blunt, there would have been no

settlement. They were not interested in negotiating a

limited release because they knew that if they only resolved

three campaigns they were subject to exposure on all kinds of

other calls. So as a practical matter of trying to settle

the case, that was their condition of settlement.

THE COURT: Did you negotiate more money as a

result of that? Is that the tradeoff?

MR. McCUE: Yes, your Honor. The

twelve-and-a-half-million-dollar settlement is one of the

largest TCPA vicarious liability settlements ever. So that's

what you look at in terms of what is the reality of trying to

settle this case. What are you willing to give, what are you

willing to give up, what are your risks on going forward. We

talked a lot about that today.

But what I wanted to do as class counsel is I

wanted to represent everybody and get everybody a chance.

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And I don't see any distinction between direct notice and

indirect notice. They're all class members.

The direct notice people who were in the Charvat

campaigns, we had an articulable basis to say they got cruise

calls. Just like the indirect notice claimants. We made

them say under pains and penalties, I remember getting these

calls. So everybody was treated the same as long as there

was a factual evidentiary basis to say they got cruise calls.

So you asked a question about why aren't there two

different classes. Because they're all the same. They got

the sample exact prerecorded call, there was no consent, and

they provided some type of evidentiary support to get those

calls. If you did that, you were part of the class, whether

you're direct or indirect. The only difference between

direct and indirect is direct got postcard, indirect got

media notice. So that's where I come down on that issue.

A couple quick questions. Real quick comments.

Mr. Hilton raised a few concerns about Pearson, attorneys'

fees, and expenses, and what would you take off of net, how

you define net. Sounds very academic. Sounds like he's

planning his appeal already. And we'll deal with that. But

it doesn't matter. We're asking for $3.150 million in

attorneys' fees. And that's reasonable under any analysis.

If you take the net here or take the net there, no matter how

you crunch the math, it's a reasonable fee given the result,

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and given the time and effort that we put into this case.

Mr. McDonald raised a few kind of conspiracy

concerns about KCC. I will tell you flat out that when I

learned about the admin was in the late winter, early spring,

right before we notified you, your Honor, of what was going

on. And Mr. Dewitt and I had a number of uncomfortable

conversations where I was upset about the expenses but

understanding of the circumstances.

There was no collusion. There was no back dealing.

It's nonsense. If anything, I was pushing KCC to recognize

that we need to cap costs. We need to reduce costs if we're

going to get this deal approved. And to KCC's credit, they

were willing to work with me and cap their costs. So there

is a lot of work that they did after they agreed to cap costs

they are basically writing off.

So we can throw darts at KCC, but I can tell you

from working through this with them for a long time, they did

an awful lot of work on this case, and there was no deals, no

no agreement, nothing. That's all nonsense.

THE COURT: So in order to entice KCC to sort of

trim back some of its estimates and agree to take less than

they might otherwise have come in front of me claiming that

they were entitled to, was there any -- I think the word, the

term used was horse trading, perhaps, that went on.

MR. McCUE: The answer is no, but if I did, I don't

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think there is anything wrong with that, if I said to him,

look, Rob I'm never going to hire you guys again unless you

work with me on reduced costs for the class, I don't see

anything wrong with that. But I knew from working with KCC

and Rob that when there are extenuating circumstances in

cases that they would work with us to cap costs to reduce

costs.

They repeatedly came up with ideas, your Honor,

about how to reduce costs. I remember one exchange we had

with you where you were asking about postcard notice and

saying that's the best way to give notice, which it probably

is, but KCC said, your Honor, that's going to cost hundreds

of thousands of dollars. And that's when we agreed to do an

email. KCC probably could have made more money off sending

postcards. But it's just an example of how -- that they were

working with us to do the best they could for the class.

The last comment, your Honor, I ask Mr. Charvat to

address the Court briefly. He wanted to address the Court

specifically about kind of an insinuation about when did he

hire me and different things like that.

THE COURT: Yes. Mr. Charvat, please do. And use

the microphone.

MR. CHARVAT: Thank you, your Honor. Good

afternoon. This is unfamiliar turf for me.

There was an insinuation, which is unfortunately

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typical in lots of cases, that for some reason I somehow

colluded with Mr. McCue based on the fee rewards that you may

get or may not get in a class action case.

I had an attorney for many years that I was very

happy with. It was Jack Faren in Columbus, Ohio. I did

nothing but private cases with him, not class action cases.

And unfortunately on December 24th, 2010, he had a near-fatal

stroke. He survived, but not well enough to ever practice

law again.

So the only reason I switched lawyers was not

because of some enticement from Mr. McCue, but it was because

of practicality. I had several cases going, and I had no

lawyer.

THE COURT: Okay. I do have one --

MR. CHARVAT: I have one other comment if you don't

have specific questions.

THE COURT: I will have some more questions for

you, but I'll let you go ahead and make your comment.

MR. CHARVAT: I'm one of the early people that

pursued cases in general, along with many others that came

along. We did private cases. And private cases meaning we

sued for ourselves, not class action.

We expected initially that there would be some

change in the telemarket industry, but they were so small

compared to the revenues the telemarket industry realizes

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that collectively all of our suits had no impact on the

industry. I and my friends received ever more telemarketing

calls over the years. And it's our collective belief and

experience that we made no impact whatsoever. However, if

you can have some class action cases, as occurred in this

case, you can get a response from the defendants that they

take it seriously. They change their behavior, may get out

of doing the illegal telemarketing altogether. But in order

for all of that to happen, you have to have people who are

willing to take on class action cases.

I've described what went on in this case to some of

my friends who have asked me and have done private cases.

Well, should I get into a class action case? And I described

easy cases to them, and I've described this case to them.

And so far, all of them have said I'm not going to wait for

that long to maybe get something when I could file on my own,

not worry about a class, and get some compensation for the

calls I received.

So I defer to your decision. I don't envy you.

Solomon only had to cut the baby into two parts. You have a

lot of portions here. But you must also consider something

that isn't in the briefs, and that is you have to have an

adequate reward for people to take on these class action

cases. Otherwise they'll just do a private case, and that

will ripple down into effectively no enforcement of the TCPA.

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Thank you.

THE COURT: So Mr. Charvat, are you a lawyer?

MR. CHARVAT: Am I --

THE COURT: Are you a lawyer?

MR. CHARVAT: Of?

THE COURT: Of any kind. An attorney. Did you go

to law school, do you practice?

MR. CHARVAT: Oh, I didn't hear you.

THE COURT: I'm sorry. I'll speak into the

microphone and try to speak more clearly.

I'm curious if you're a lawyer. It seems that

you've invested a lot in learning about the TCPA and class

actions.

MR. CHARVAT: No, I'm not a lawyer. I'm a parent

who was aggrieved when my wife and I were trying to raise two

kids and the phone wouldn't stop ringing. And I tried

everything. I blew whistles in the phone, I hung up the

phone, I left the phone off the hook, I told people I'd never

buy anything from telemarketing, and nothing stopped it.

My mother-in-law clipped out an article, said, you

know -- this is way back -- there is a law you can actually

sue under this. That's when I started doing this.

I decided, as I think it was Edmund Burke said, all

that's necessary for the triumph of evil is good men do

nothing. And I took it on. Because this was obnoxious.

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Constant interruptions.

So later I did go to a paralegal school, that was

many years after I had already done this, in order to try and

learn a little bit more about the ins and outs. Turns out I

knew about as much as what went on in paralegal school from

practical experience.

THE COURT: And what do you do for a living? Are

you still employed?

MR. CHARVAT: For many, many years, for about four

decades I was a software person. Started in IT. Software

analysis. In recent years I've got a retirement job, I'm a

school bus driver for Westerville City schools.

THE COURT: I think this was raised in the

briefing, and I at one point did see the opinion that at

least one other judge had raised the question of if this

practice of calling is so vexing for you, why don't you put

yourself on the do-not-call list. I think that judge might

have actually required you to put yourself on the do-not-call

list.

MR. CHARVAT: That was in the case of my third suit

against the Columbus Dispatch. I had sued them, won at the

Supreme Court of Ohio pro se. They called again later; I

sued them a second time. They settled out of court. Sued a

third time. In that third suit, it was started before my

attorney had his stroke, and I was pressed into a situation

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of not having an attorney represent me. There was a hearing

that was scheduled for attorney fees for the defendant after

I had dismissed the case without prejudice.

I believe if you would read the briefing you would

find if there were any offenses it was done by the other

side, not myself. But in any case, to settle the case, since

I had no attorney, I agreed to a settlement. And the

settlement was formalized in the form of an order that I

would put my numbers on the do-not-call list.

The Dispatch was very frustrated with the fact that

I had sued them three times, but they didn't ever complain

about the fact that they kept calling even after a suit. So

they pressed hard, I had no attorney, and I decided to do

that.

In the past before that I had managed, as was

available under the law, to try and issue individual

do-not-call requests to companies. It's ineffective. For

the reasons I told you earlier. So I settled that case and

several others, since I had no attorney, that were

outstanding in order to move on at that point in time.

THE COURT: Okay. And now there is a more

comprehensive way that you can make yourself do not call for,

you know, in general. Are you a do-not-call person, or are

you -- I don't know if your settlement required you to

specifically just indicate that to -- was it the Columbus

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Dispatch, or to get on the national --

MR. CHARVAT: The requirement was I put my numbers

on the do-not-call list.

THE COURT: On sort of the national do-not-call

registry.

MR. CHARVAT: National do-not-call list. Which

they are and have been.

THE COURT: Has that effectively put an end to your

lawsuits?

MR. CHARVAT: No. And it does not put an end to

the tele-terrorism, as Senator Hollings called it. In spite

of all my suits for 20-plus years, private and class, the

number of calls that I receive. And also in spite of the

fact that I'm on the RRDNC, the really, really do not call

him list, that's a private list of people that sell it to

telemarketers of lists of numbers of TCPA plaintiffs, these

are the people you really don't want to call, I still get

more calls than I ever have.

It's an industry that's out of control. And this

is the only effective means of having some attempt to bring

it under control.

THE COURT: And Mr. Charvat, do you have any

financial relationship, or are you receiving any financial

incentive, directly or indirectly, from any of the attorneys

or law firms that are involved in this case?

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MR. CHARVAT: Not only not in this case, not in any

other case. Anything other than is public record, the awards

I do or don't get from the class action cases.

THE COURT: And I should probably, given that

you've submitted an affidavit which was a declaration and has

the effect of being under perjury, I'm going to do this a

little reversed, and did not put you under oath when I

started asking you questions, so instead what I'm going to do

is ask Colette to place you under oath now, and I'm going to

ask you whether the statements that you just made in court

are all true and accurate to the best of your knowledge.

So Colette, if you would do that.

(Mr. Charvat sworn.)

THE COURT: So all the statements that you just

made when you stood up and volunteered statements, as well as

the statements in response to my questions, were they true

and correct to the best of your knowledge?

MR. CHARVAT: Yes.

THE COURT: Let me see if I have other questions.

Mr. Charvat, were you involved in consulting with

your counsel about how to handle the issues that came up with

class notice, and how the news reports had gone out, and

there were many more claims that were filed than expected?

Were you involved in discussions with your attorneys about

that issue?

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MR. CHARVAT: Yes. He kept me abreast of it. Not

to the level of the detail that has come out here, but when

problems arose, he would contact me, either email or phone,

and we would talk about we've got this overwhelming response,

and that they were going to come before you and try and

figure out what to do about it.

THE COURT: Were you concerned by the large number

of claimants who initially responded when the press reports

went viral?

MR. CHARVAT: Yeah. It was obviously unexpected.

It certainly never occurred in any of my other class cases to

have that overwhelming response, but again, there was never

any national publicity that occurred like that.

THE COURT: Were you satisfied with how those

issues were resolved?

MR. CHARVAT: Yes. Especially -- I mean, even at

the time he was keeping me abreast of what was going on, but

especially after hearing everything this morning from both

sides I'm even more impressed with the fact that it was

handled in a way that -- the best way that I think could

probably come out of it.

It's a very difficult situation. You do have

people that don't have telephone records that may have gotten

calls, and you have people like myself who can prove the

calls, but those are very, very few and far between, the

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number that can actually prove it to the extent that I could

with a recording. And how to perfectly make things fair I

believe is impossible. Because how do you make everything

and anything in life perfectly fair. And these look like

reasonable approaches that were taken in order to find who

the appropriate class members were. And I endorse them. I

think it's a fair settlement.

THE COURT: You've received incentive payments

before for being a class representative, is that correct?

MR. CHARVAT: Yes.

THE COURT: I take it you have not received a

$50,000 incentive payment previously?

MR. CHARVAT: They have ranged in the past from 10

to $30,000.

THE COURT: Mr. McCue has represented that your

experience in this case was unusual, and that's one of the

reasons why he's asking for a higher incentive fee. Can you

describe for me in what ways your experience here was more

difficult or challenging than what your prior experiences

have been as a class representative?

MR. CHARVAT: Certainly. It's well-covered in the

briefing as well as the statements he made earlier. The

primary things were that I've never had a counterclaim filed

in a class action suit. And one that I personally believe

was frivolous. As a result of it, I spent many, many hours

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in the law library downtown Columbus at the courthouse where

you get free access to Westlaw, as well as many, many hours

on my own using things like Google search, researching all

the telemarketing cases that I could find -- not

telemarketing, I'm sorry -- all the call recording cases that

I could find to find if there's any precedent for such a

claim, where someone in a single party state consent for

recording was sued by someone in an all party consent state,

and I could find no appropriate case that was similar to this

one. But it took many, many hours.

When we prepared that affidavit I originally -- the

original draft of it, I had 900 hours in there, is how much

time I spent on this case. And Matt said (indicating

inaudibly). I have no doubt that I spent that much time on

this case. Because I had to always prepare for the fact that

that counterclaim may survive, and I may have to litigate it,

I may have to take it up on appeal. So I dug in and did the

research on it.

Also the accusations against my daughter. They

proved ultimately, at great expense to my attorney in time

and money, they proved to be baseless. They were based on

records that were proved to be fraudulent. Yet those claims

were never dropped by the defendants. Even when they became

aware of things, there was never a withdrawal of anything.

There was never an admission that they were wrong. I never

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to this day and point in time received an apology for the

assertion of those things that my daughter had somehow

instigated this. She did not. I did not. And the claims

were baseless.

As an example of what goes on in the telemarketing

industry, in another case that's pending right now, the first

thing out of the block, as Mr. McCue mentioned this morning,

was they apparently did some research, found out about this

case, and ginned up a similar accusation. Fortunately in

that case it was so poorly done that within 48 hours from

public records we were able to prove that it was wrong.

Every bit of it. It's the standard go-to defense that occurs

in the telemarketing industry these days. From my experience

and vicarious experience of other people I deal with, you

file a claim, and the first thing is, you went to a website

and granted consent. To my knowledge it's never been proven

to be true. Proving you didn't go to a website is nearly

impossible. But in this case we were able to, and in the

other case I referred to we were able to.

THE COURT: Okay. Was there anything you wanted to

add, Mr. Charvat?

MR. CHARVAT: Just that I defer to your judgment on

the matter, I agree you have a very difficult set of

decisions to make, and I can tell that you're paying close

attention to every detail, and I appreciate it. Thank you.

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THE COURT: Thank you.

MR. McCUE: Anything else for me, your Honor?

THE COURT: I don't believe so.

MR. McCUE: Okay. I'll pop back up if you think of

anything else.

THE COURT: In fact, I may --

MR. BECKER: Your Honor?

THE COURT: Yes.

MR. BECKER: If I may just clean up one thing from

when I was up there before. I just want to point out that

there were approximately 350,000 direct claim notices that

had gone out. There was not a single objection by a direct

claim recipient concerning how much money they were going to

receive comparing them to indirect notice claimants.

I think the insinuation started coming up during

the Dunlap objection, and we talked about it briefly, but I

want to make it clear only a single objection that I'm aware

of was made by a direct notice claimant, and that was

objector Johnson, and it was not on that basis.

THE COURT: Okay. And what conclusion would you

like me to draw from that fact?

MR. BECKER: That the treatment of the class as a

whole in a uniform manner is fair and reasonable; that anyone

who wanted to participate in the settlement who was within

the database is able to receive a fair and reasonable payment

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regardless of whether they were a direct recipient or

indirect recipient, whether they were part of the litigation

class or not.

THE COURT: Mr. McCue, I do have another question

for you since I'm now much more focused on the difference

between the class definition that was being presented to me

in the class certification briefing where we didn't get to a

ruling as opposed to the definition that is in front of me

for settlement purposes.

Is there a difference -- and I suppose I could go

back and get the class certification brief and compare it to

the settlement approval brief and sort of crosscheck how the

different factors for class certification are addressed there

in terms of whether this is a class that would support a

finding of typicality and commonality and all of that, but

from your perspective is there a difference in terms of the

ability for counsel to support that the requirements for

class treatment, which are slightly different in the

settlement context but the general principles are the same,

based on your earlier definition versus this one -- let me

rephrase it a different way.

Do you believe that you could have supported class

certification using the definition for the settlement class

if that had been what you briefed way back when we still had

active contested litigation?

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MR. McCUE: I certainly could have, your Honor.

You've heard a lot of argument today about how the dialer

database contained a lot of non-cruise-line calls. That was

their argument. We were prepared to take the position that

that entire database was cruise calls. Proving that is

different. But certainly could I take a position that could

have been? Absolutely. For litigation purposes we made a

strategic decision to limit the class to certain campaigns.

Due process is one of the reasons. There are

decisions out there now where some of these TCPA cases, the

Department of Justice versus Dish Network went all the way to

trial, and the judge ended up ordering about $2.00 a call

because the number of calls were so massive it created due

process concerns. That's one issue. Consent. So we wanted

to limit how many different consent arguments they could

raise at trial. By focusing on the Charvat campaigns we

simplified things for trial. But that has nothing to do with

kind of standing to represent the class or could we do it

this way.

And I come back to the fact that everyone is the

same. Everybody in the dialer database is the same. If

they're a direct notice recipient, we know they're in the

Phil Charvat campaigns, we have a good faith basis to know

they got cruise calls. If they're not, then they're able to

provide some type of evidence, pains of penalties or

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verification. So then those people are all the same. There

is no reason to treat them differently. They got the same

call, they didn't consent, same exact situation.

So I think it would be unfair to treat the indirect

notice claimants in any other way. Everyone is being treated

the same, they're getting the same recovery, same pro rata

recovery.

I hope I'm answering your question, your Honor.

THE COURT: Yes, I think so. The short answer is

yes, you feel that you could have defended this class

definition, which the class definition is not about -- in

theory it's focused on people who are in the dialer database

who received calls mentioning these specific defendants,

which is, again, we talk about direct notice and indirect

notice as a way of distinguishing between different types of

class members, but under the class definition, it's just one

class definition.

MR. McCUE: Correct, your Honor. If we had gone to

trial on that expanded definition, our argument would have

been every person in that dialer database got a cruise call

and here's why. The only reason why we agreed to a smaller

class was litigation-specific strategy, how to make the case

easier to prove. We still had numbers -- we had 400,000

calls.

THE COURT: And you would have been able to if you

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had to brief and support findings of commonality typicality,

the adequacy of the class representative based on the broader

class definition?

MR. McCUE: Yes, your Honor. And I could tick

through those if you would like.

THE COURT: I don't know that that's needed because

I think it's sort of in the approval brief.

MR. McCUE: Right.

THE COURT: Okay. I don't know that I have any

further questions. I think what I would like to do is set a

timeline to get the couple of additional submissions that

I've asked for, which include the more detailed cost

breakdown at least up to the $33 million cap for KCC.

And Ms. Bryan, are you still there?

MS. BRYAN: Yes.

THE COURT: I think you may have mentioned the

point of the hearing where I indicated that I was going to

grant the sort of provisional leave to file under seal KCC's

more detailed breakdown. It was suggested that the level of

detail might reveal trade secrets, or confidential

information, proprietary information that could be helpful to

your competitors, so I sort of indicated that if that is

KCC's position, that you can file it under seal.

I'll look at it, and what it means is if I think

that's not an appropriate approach I might ask for the

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parties' input on that of why it should remain under seal.

But you will be granted the ability to file it under seal in

the first instance, and then I would like for Mr. McCue, sort

of the supplemental affidavit just indicating whether at

least the people who filed objections indicating that they

were having difficulties with the claim process ever actually

ended up submitting a valid claim. I guess we had one person

here represented by counsel who had concerns about the

process who didn't make it through, and so I'd like to know

if the others, I think there might have been a couple dozen

that actually filed something on the docket, did or did not

make it through. I suppose that begs the question of whether

it's because they didn't reach out to the parties as opposed

to for some other reason.

MR. McCUE: To be clear, your Honor, I don't think

the objector tried to make some submission. It's not that

they didn't make it through the process, something didn't

happen in the process. The objector didn't file anything.

THE COURT: Didn't submit anything to try to submit

anything through the claims process.

MR. McCUE: Correct.

THE COURT: Because there was a filing with the

court, and I guess that may be the case for some of the

people who are on the docket -- did you have a practice of

reaching out to pro se objectors who made filings on the

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docket indicating that they were having difficulty with the

process?

MR. McCUE: Yes, your Honor. Not just on the

docket. I had a lot of consumers reach out to me directly,

and my practice was to respond to every single one of them.

It was definitely my practice that if someone filed something

on the docket, on ECF, or made it known to me that there was

an objection, it was my practice to respond to each one of

those class members. Some of them didn't respond, many of

them did.

THE COURT: I suppose that perhaps raised the

question of why you didn't reach out to Mr. Warner when you

saw that he had filed an objection on behalf of

Ms. Evancheck.

MR. McCUE: To clarify, I reached out to pro se

objectors who didn't have counsel thinking they needed help.

I didn't think of the same if someone had their own counsel.

THE COURT: Why not?

MR. McCUE: I thought if counsel had a question

they would call me. It wasn't the same level of concern.

The ones I wanted to make sure I responded to was someone who

was confused, or someone thought, oh, I can't find my

historical phone bill; you don't have to submit a historical

phone bill. Those are the folks I focused on.

THE COURT: Is that because you had ethical

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concerns as sort of class counsel if there was somebody who

was potentially in the class but had their own attorney, and

so you didn't want to reach out to them directly?

MR. McCUE: To be honest, your Honor, it was more

just a practical concern that if someone has an attorney, I

would think that they're represented by that attorney, but if

someone is pro se and is confused, I felt an obligation as

class counsel to reach out to them and make sure they got

help. And that's all I was trying to do.

THE COURT: Okay. So those are the two items that

I would like to receive. I suppose the more difficult one

may be the KCC detail, though I imagine the information about

whether or not the people who filed the objections ended up

getting valid claims recognized is probably a task that KCC

needs to be involved in as well. So perhaps I can find out

from Mr. Cooper or Mr. Dewitt how much time will be needed to

put together that information.

MR. DEWITT: That would be a better question for

Mr. Cooper.

THE COURT: Mr. Cooper?

MR. COOPER: Yes, your Honor. I think it will

probably only take us a couple of days to get that together.

THE COURT: So today is the 30th. Because I'm sure

it will take a little bit of time to kind of put it into a

format and have folks look at it, I'll give you until the end

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of next week. You can submit it sooner if you would like.

So until November 9th for those two submissions.

Once I receive that, I will take the matter under

advisement for ruling. Given the number of issues, legal and

factual that have been raised, I'm anticipating I'll be

issuing a pretty detailed ruling with specific findings with

respect to the propriety of accepting the class settlement.

I don't think there is any other paper that I need

on this. I've got a lot of paper. So what I will do is set

a status date off in the future hoping that -- well, I

suppose if I approve the class settlement, then there will be

orders that are issued to set everything in motion and

finalize with funding the settlement, et cetera.

If the settlement is not approved, then we'll need

a status date to figure out what's going to happen next. So

if I'm getting the information no later than the 9th, I'll

set our status -- I'm going to set the status hearing for

December 19th, at 9:30. And once we know the outcome of the

ruling and have a better idea of what needs to be

accomplished, if anything, at that status, I may specifically

ask that everybody be here in person or I'll allow telephonic

appearances. I just don't know at this point what we're

going to need to do.

Anything else before we adjourn for the afternoon?

MR. McCUE: Nothing from the plaintiff. Thank you,

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your Honor.

MR. BECKER: Thank you, Judge.

MS. MacIVOR: Thank you.

MR. HILTON: One very quick point for objectors.

May I approach?

THE COURT: Yes, you may approach.

MR. HILTON: Thank you, your Honor.

About I think roughly 20 minutes ago Mr. Becker

with the cruise defendants had represented what he believed

objector Johnson had argued regarding the direct versus

indirect notice. Objector Johnson, whom I represent, and I

just felt it was appropriate for me to clarify on the record

what objector Johnson's objections are, he is the only

objector who was a direct notice claimant, so he's the only

postcard recipient.

Mr. Becker made the point objector Johnson didn't

say or make any objections about the fact that he was a

direct notice claimant and here are these other indirect

notice claimants who are being included in the settlement. I

just wanted to direct your attention to one document that I

did file on his behalf that addresses this issue. It's

docket 651, page ID 23227. And the objection is not that

objector Johnson wishes the settlement to be disapproved

based on the fact that he had a postcard and all of these

other people didn't, instead, it was targeted towards how

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objector Johnson views class counsel's performance in light

of the fact that there was this global release, but the

litigation would have proceeded with just a smaller 400,000

class. And objector Johnson in that brief submits that class

counsel shouldn't receive any additional risk enhancement in

its class counsel fee award based on that, and that also

class counsel should be limited under Pearson to one-third of

the net settlement fund, which is a holding of that case, and

I submit it's not purely academic.

Thank you.

THE COURT: Thank you. Anything else from the

objector counsel?

Okay. Good. That's all I have for now. Thank

you. We are adjourned.

(End of proceedings.)

C E R T I F I C A T E

I certify that the foregoing is a correct transcript

from the record of proceedings in the above-entitled case on

October 30, 2018.

/s/Colette M. Kuemmeth

Court Reporter

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