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Sinanyan v. Luxury Suites International, LLC

United States District Court, D. Nevada

July 20, 2017

ALICE SINANYAN, an individual; JAMES KOURY, an individual and trustee of the Koury Family Trust; and SEHAK TUNA, an individual, on behalf of themselves and others similarly situated, Plaintiffs,
v.
LUXURY SUITES INTERNATIONAL, LLC, a Nevada limited liability company; RE/MAX PROPERTIES, LLC, a Nevada limited liability company; JETLIVING HOTELS, LLC, a Nevada limited liability company; and DOES 1 through 100, inclusive, Defendants.

          ORDER

          Gloria M Navarro, Chief-Judge United States District Judge

         This action involves claims brought by Alice Sinanyan (“Sinayan”) and Jim Koury (“Koury”) (collectively “Plaintiffs”), individually and on behalf of a putative class of approximately 347 condominium owners, against property rental manager Luxury Suites International, LLC (“LSI”) and its predecessor Re/Max Properties, LLC (“Re/Max”).[1]Plaintiffs allege that LSI violated its contractual, statutory, and common law duties by failing to disclose its collection of a “resort fee” from rental guests, and the parties have now reached a settlement. Pending before the Court is the Joint Motion for an Order, (ECF No. 114), filed by both parties requesting that the Court grant provisional approval of the proposed settlement agreement and preliminarily certify Plaintiffs' proposed class action for purposes of settlement. For the reasons stated herein, the Motion is GRANTED.

         I. BACKGROUND

         On February 9, 2015, Plaintiffs filed the instant action alleging various state law violations on behalf of a putative class comprising all condominium owners at the Signature at MGM Grand (“The Signature”) who contracted with LSI to manage the rental of their condominium units from January 5, 2009, to January 5, 2015 (“Putative Class”). (First Am. Compl. ¶ 75, ECF No. 32). Specifically, Plaintiffs alleges that pursuant to the LSI Rental Agreement, members of the Putative Class were entitled to 65% of a “resort fee” collected by LSI from rental guests. (Id. ¶ 88). According to Plaintiffs, not only did LSI retain all resort fees, LSI also failed to disclose that it was collecting the fee. (Id. ¶ 89). Based on these allegations, the Complaint alleges the following causes of action against LSI: (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) intentional misrepresentation; (4) fraudulent concealment; (5) negligent misrepresentation; (6) violation of Nevada Revised Statutes § 41.600; (7) breach of fiduciary duty; and (8) unjust enrichment.

         On August 22, 2016, the parties reached a tentative settlement through mediation and subsequently submitted a proposed settlement (“Proposed Settlement”) now before the Court. (See Joint Mot. for Order 4:15-18, ECF No. 114). The total settlement amount is $525, 000.00 (“Settlement Amount”), which the parties propose allocating in the following manner: (1) “attorney's fees in the amount of twenty five percent (25%) of the total settlement amounts”; (2) “costs not to exceed Eighty-Eight Thousand Dollars and Zero Cents ($88, 000.00)”; (3) “an incentive payment in the amount of Twenty Thousand Dollars and Zero Cents ($20, 000.00) to be paid to Individual Plaintiff Sinanyan and Ten Thousand Dollars and Zero Cents ($10, 000.00) to be paid to Individual Plaintiff Koury”; (4) “administrative expenses in the amount of Twelve Thousand Dollars and No Cents ($12, 000.00), but not to exceed Fifteen Thousand Dollars and No Cents ($15, 000.00)”; and (5) an allocation of the remaining proceeds “on a pro rata basis based on the Resort Fees Collected by LSI from the rental of the individual Putative Class member's unit divided by the total Resorts Fees Collected by LSI from the rental of all non-opt out Putative Class members' units.” (Id. 6:22-7:9). The Proposed Settlement provides for notice by direct mail to all Putative Class members identified through LSI's business records. (Id. 7:10-15).

         The instant Motion requests that the Court adopt the parties' proposed order by: (1) granting preliminary approval of the proposed class action Proposed Settlement; (2) provisionally certifying the Putative Class; (3) approving the proposed method and form of notice; and (4) scheduling a final approval hearing. (Id. 4:20-22).

         II. LEGAL STANDARD

         The Ninth Circuit has declared that a strong judicial policy favors settlement of class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). However, a class action may not be settled without court approval. Fed.R.Civ.P. 23(e). When the parties to a putative class action reach a settlement agreement prior to class certification, “courts must peruse the proposed compromise to ratify both the propriety of the certification and the fairness of the settlement.” Staton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). At the preliminary stage, the court must first assess whether a class exists. Id. (citing Amchem Prods. Inc. v. Windsor, 521 U.S. 591, 620 (1997)).

         Second, the court must determine whether the proposed settlement “is fundamentally fair, adequate, and reasonable.” Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998). Pre-class certification settlements “must withstand an even higher level of scrutiny for evidence of collusion or other conflicts of interest than is ordinarily required under Rule 23(e) before securing the court's approval as fair.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011). This heightened scrutiny “ensure[s] that class representatives and their counsel do not secure a disproportionate benefit ‘at the expense of the unnamed plaintiffs who class counsel had a duty to represent.'” Lane v. Facebook, Inc., 696 F.3d 811, 819 (9th Cir. 2012) (quoting Hanlon, 150 F.3d at 1027). As such, courts must evaluate the settlement for evidence of collusion. Id.

         If the court preliminarily certifies the class and finds the proposed settlement fair to its members, the court schedules a fairness hearing where it will make a final determination as to the fairness of the class settlement. Finally, the court must “direct notice in a reasonable manner to all class members who would be bound by the proposal.” Fed.R.Civ.P. 23(e)(1).

         III. DISCUSSION

         The Motion contends, inter alia, that the Court should (1) certify the proposed Putative Class and (2) grant preliminary approval of the Proposed Settlement.

         A. Conditional Class Certification

         Plaintiff seeks conditional certification of a settlement class under Rule 23(a) and (b)(3) and satisfies all of Rule 23's certification requirements. (See Joint Mot. for Order 6:3-20, ECF No. 69). To obtain class certification, a plaintiff must satisfy the four prerequisites identified in Rule 23(a) as well as one of the three subdivisions of Rule 23(b). Amchem Prods., 521 U.S. at 614. “The four requirements of Rule 23(a) are commonly referred to as ‘numerosity, ' ‘commonality, ' ‘typicality, ' and ‘adequacy of representation' (or just ‘adequacy'), respectively.” United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union, AFL-CIO v. ConocoPhillips Co., 593 F.3d 802, 806 (9th Cir. 2010). Certification under Rule 23(b)(3) is appropriate where common questions of law or fact predominate and class resolution is superior to other available methods. Fed.R.Civ.P. 23(b)(3). The party seeking class certification bears the burden of affirmatively demonstrating that the class meets Rule 23's requirements. Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2553 (2011).

         In general, “[b]efore certifying a class, the trial court must conduct a ‘rigorous analysis' to determine whether the party seeking certification has met the prerequisites of Rule 23.” Mazza v. Am. Honda Motor Co., Inc., 666 F.3d 581, 588 (9th Cir. 2012). However, when evaluating class certification in the context of a proposed settlement, courts “must pay undiluted, even heightened, attention to class certification requirements” because the court will lack the opportunity, present when a case is litigated, to adjust the class, informed by the proceedings. Hanlon, 150 F.3d at 1019; see also Amchem Prods., 521 U.S. at 620. The Court finds that Plaintiffs have has met the numerosity, commonality, typicality, and adequacy requirements under Rule 23(a) as well as the certification requirements under Rule 23(b).

         i. Rule 23(a)

         1. Numerosity

         Rule 23(a)(1) requires that a class be so numerous that joinder of all members is impracticable. Generally, courts have held that numerosity is satisfied when the class size exceeds forty members. See, e.g., Slaven v. BP Am., Inc., 190 F.R.D. 649, 654-56 (C.D. Cal. 2000); In re Cooper Cos. Inc. Secs. Litig., 254 F.R.D. 628, 634 (C.D. Cal. 2009).

         In this case, the Putative Class consists of approximately 347 unit owners who contracted with LSI for rental management of their units during the relevant period. (Joint Mot. for Order 7:3-4). Therefore, the Court can safely conclude that the Putative Class is sufficiently numerous such that the joinder of each member would be impracticable.

         2. Commonality

         To demonstrate commonality, a plaintiff must show that there are “questions of law or fact common to the class.” Fed.R.Civ.P. 23(a)(2). “A class has sufficient commonality ‘if there are questions of fact and law which are common to the class.'” Hanlon, 150 F.3d at 1019. As clarified in Dukes, a plaintiff must demonstrate that the class members “have suffered the same injury” and that their claims “depend upon a common contention . . . of such a nature that it is capable of classwide resolution-which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Dukes, 131 S.Ct. at 2551.

         Here, the Amended Complaint raises several common questions of law and fact, including (1) whether LSI failed to disclose the resort fee to the Putative Class and (2) whether LSI failed to treat the resort fee as gross rental revenue. (First Am. Compl. ¶ 79, ECF No. 32). If Plaintiffs continued to press this action, the answers to these questions would result in classwide resolution of the claims asserted. Therefore, the Court finds that Plaintiffs have satisfied the commonality requirement.

         3. ...


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