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Sinanyan v. Luxury Suites International, LLC

United States District Court, D. Nevada

February 8, 2018

ALICE SINANYAN, an individual; JAMES KOURY, an individual and truste 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.

          WOLF, RIFKIN, SHAPIRO, SCHULMAN & RABKIN, LLP DON SPRINGMEYER, ESQ., ROYI MOAS, ESQ., JORDAN BUTLER, ESQ Attorneys for Plaintiffs and the Class

          Cam Ferenbach, Magistrate Judge.

         [PROPOSED] ORDER GRANTING (1) CLASS COUNSEL'S MOTION FOR ATTORNEYS' FEES AND COSTS, AND INCENTIVE AWARDS TO CLASS REPRESENTATIVES RELATING TO SETTLEMENT WITH DEFENDANT LUXURY SUITES INTERNATIONAL, LLC; AND (2) JOINT MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT WITH LUXURY SUITES INTERNATIONAL, LLC

          Honorable Gloria M. Navarro, Chief Judge United States District Judge.

         ORDER

         This action involves claims brought by Plaintiffs/Class Representatives Alice Sinanyan (“Sinanyan”) and James Koury (“Koury”) (collectively, “Plaintiffs”), individually and on behalf of a putative class of 432 condominium owners, against property rental manager Luxury Suites International, LLC (“LSI” or “Defendant”). Plaintiffs' Complaint (ECF No. 1-1) alleged that LSI violated its contractual, statutory, and common law duties by failing to disclose its collection of a “resort fee” from rental guests-all of which LSI disputed and denied. On January 19, 2018 at 9:00 a.m., this Court held a Final Fairness Hearing regarding the parties' Joint Motion for Final Approval of Class Action Settlement with Luxury Suites International, LLC (ECF No. 126), and Class Counsel's Motion for Attorney's Fees and Costs and Incentive Award to Class Representatives Relating to Settlement with Defendant Luxury Suites International, LLC (ECF No. 124).

         For the reasons stated herein, both Motions are GRANTED.

         I. BACKGROUND

         On February 9, 2015, Plaintiffs filed the instant action alleging various state law violations on behalf of a putative class comprising of all condominium owners at the Signature at MGM Grand (“The Signature”) who contracted with LSI to manage the rental of their condominium units between January 5, 2009 and January 5, 2015 (the “Class.”)[1] Specifically, the Amended Complaint alleged that, pursuant to the LSI Rental Agreement, members of the Class were entitled to 65% of a “resort fee” as part of the rental revenue collected by LSI from rental guests. According to Plaintiffs, not only did LSI retain the resort fees, it further failed to disclose to Plaintiffs and the Class that it was collecting the resort fees. (ECF No. 32). Based on these allegations, the Amended Complaint alleged causes of action against LSI for (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) consumer fraud & deceptive trade practices under § 41.600; (7) breach of fiduciary duty; and (8) unjust enrichment. Id.

         On the other hand, LSI contended that “fees, ” especially “resort fees, ” were charged to guests as an offset for expenses connected to LSI's rental management services for which LSI was contractually entitled to full reimbursement; and that unit owners received proper and accurate disbursements of their rental revenues or, in some cases, unit owners received even more than their proper share of the disbursements

         Prior to the discovery cutoff date, Plaintiffs moved for class certification, and Defendant moved for partial summary judgment. With the motions pending, the Parties engaged in mediation with the Hon. Philip M. Pro (Ret.), and, on August 22, 2016, the parties agreed to stipulate to class certification for purposes of settlement. On July 20, 2017, this Court granted the parties' Joint Motion for an Order (1) Conditionally Certifying Putative Settlement Class; (2) Preliminarily Approving of Class Settlement Agreement; (3) Directing that Notice be Sent to Putative Class Members; and (4) Scheduling a Final Fairness Hearing. (ECF No. 121). The total settlement amount is $525, 00.00 (“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); (3) class representative incentive awards in the amount of $20, 000 to Sinanyan, and $10, 000 to Koury; (4) administrative expenses not to exceed $15, 000; (5) allocation of the remaining proceeds to the Class “on a pro rata basis based on 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.” (ECF No. 121:1-5).

         As part of its July 20, 2017 Order, the Court found that the settlement appeared to be fair and reasonable on a preliminary basis, but indicated that more information would be required at the final approval stage to establish fairness in light of the risks implicated by further litigation. (ECF No. 121:15-19). The Court gave pause to the requested incentive awards for Plaintiffs, indicating that it would determine the appropriateness of the awards at the final fairness review based on the proportion of the payments relative to the settlement amount, the size of the payment, the actions plaintiffs took to protect the interests of the class, including the amount of time spent, and the degree to which the class benefited.

         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 when it makes 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. ...


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