1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ISMAEL ANTONIO RODRIGUEZ Case No. 23-cv-06704-TSH

PEREZ,

8 Plaintiff, ORDER GRANTING PRELIMINARY 9 APPROVAL OF CLASS ACTION v. SETTLEMENT 10 FIRST TECH FEDERAL CREDIT UNION, Re: Dkt. No. 31 11 Defendant. 12 13 I. INTRODUCTION 14 Plaintiff Ismael Antonio Rodriguez Perez brings this putative class action against First 15 Technology Federal Credit Union, alleging claims for alienage discrimination in violation of the 16 Civil Rights Act of 1966, 42 U.S.C. § 1981, and the California Unruh Civil Rights Act, Cal. Civ. 17 Code §§ 51, et seq. (the “Unruh Act”). Perez alleges First Tech has a policy of denying applicants 18 for residential secured loans based on their immigration and/or citizenship status. 19 Pending before the Court is Perez’s unopposed motion for preliminary approval of class 20 action settlement. ECF No. 31. The Court finds this matter suitable for disposition without oral 21 argument and VACATES the October 17, 2024 hearing. See Civ. L.R. 7-1(b). For the reasons 22 stated below, the Court GRANTS the motion.1 23 II. BACKGROUND 24 A. Background 25 Since 2012, Perez has been a recipient of Deferred Action for Childhood Arrivals 26 (“DACA”). Compl. ¶ 7, ECF No. 1. As part of the DACA initiative, Perez received authorization 27 1 to work in the United States and a Social Security Number. Id. First Union is a member-owned 2 and federally chartered credit union headquartered in San Jose, California. Id. ¶ 9. It offers 3 consumers a range of financial and credit products, including retail banking services, business and 4 life insurance products, personal loans, auto loans, credit cards, and home loans. Id. ¶ 11. 5 In June 2022, Perez applied for a home equity line of credit (“HELOC”) from First Tech. 6 Id. ¶ 15. As part of the process, a First Tech loan officer instructed Perez that he must provide his 7 legal residency card. Id. ¶ 16. Perez informed First Tech that he did not have a permanent 8 residence/green card. Id. ¶ 19. First Tech then requested he upload a current I-94 visa. Id. Perez 9 explained that his I-94 visa was expired, and that his only current documentation was his 10 employment authorization card (“EAD”). Id. First Tech then informed Perez that neither an EAD 11 nor an I-94 would be sufficient documentation on its own, and that DACA recipients are not 12 eligible for the loan he applied for. Id. ¶ 20. On August 1, 2022, First Tech denied Perez’s 13 application and sent an adverse action notice indicating that “excessive obligations,” “insufficient 14 income for total obligations,” and “unable to verify residency” were the principal reasons for the 15 credit denial. Id. ¶ 21. 16 On December 29, 2023, Plaintiff filed the present complaint against First Tech, alleging 17 claims under 42 U.S.C. § 1981 and the Unruh Act. Since that time, the parties have engaged in 18 ongoing negotiations to resolve the claims, ultimately resulting in an agreement in principle to 19 settle this action. ECF No. 29. Perez filed the present motion on September 5, 2024. 20 B. Settlement Terms 21 1. Class 22 For settlement purposes only, Perez seeks certification of the following Settlement Classes, 23 defined as: (i) the “California Class,” consisting of 20 individuals who, according to First Tech’s 24 records, were residing in California and applied for a Residential Secured Loan with First Tech 25 from December 29, 2021 through December 29, 2023, provided an EAD during the application 26 process, and were denied their application solely because of their immigration or citizenship status 27 at the time they applied; and (ii) the “National Class,” consisting of 43 individuals who, according 1 applied for a Residential Secured Loan with First Tech from December 29, 2021 through 2 December 29, 2023, provided an EAD during the application process, and were denied their 3 application solely because of their immigration or citizenship status at the time they applied. 4 Lozada Decl., Ex. A (Settlement Agreement) §§ 1(c) and 1(q). ECF No. 31-2. 5 The Settlement provides two forms of relief for Class Members: (1) corrective action under 6 which First Tech will not deny residential secured loan applications based solely on an applicant’s 7 immigration or citizenship status, unless required by law, rules, or regulations to do so, and will 8 amend its underwriting criteria accordingly, id. § 2; and (2) First Tech will pay $81,500 to be used 9 for individual payments by check made payable to each Class Member (the “Settlement Fund”) to 10 compensate Class Members for the alleged statutory violations and harm suffered, id. §§ 1(m), 11 1(v) and 11. 12 2. Notice 13 The Settlement includes proposed English and Spanish language short form and long form 14 notices to the class members that inform them of the terms of the Settlement and their rights to 15 object to, or opt-out of, the Settlement, or to do nothing and receive the benefits of the Settlement 16 and be bound by it. Id., Exs. 1-2. All Class Members will receive notice by mail, sent to the best 17 available mailing address for each Class Member, updated as appropriate by running the Class 18 Member’s name through the National Change of Address Registry. Settlement Agreement § 5(b). 19 For all notices that are returned as undeliverable, the Settlement Administrator will use standard 20 skip tracing devices to obtain forwarding address information and re-mail the notice. Id. In 21 addition, the parties have informed the Court that First Tech may have email addresses for 22 potential Class Members who provided emails on their loan applications, and for those applicants 23 the Settlement Administrator can send the notice by email in addition to regular mail. ECF No. 24 33. A website will also be established to provide Class Members with additional information 25 relating to the Settlement. Settlement Agreement § 6(g). 26 3. Payment Terms 27 First Tech agrees to create a $81,500 Settlement Fund that will be used to make individual 1 payments in the amount of $500 by check to each National Class Member. Id. § 1(m). The 2 Settlement Fund will be paid to Class Members; First Tech will separately pay the costs of 3 administration, court approved attorneys’ fees and costs, and incentive award. Id. § 1(v). 4 The Settlement does not require Class Members to submit a claim or take any action to 5 claim the monies they are entitled to under the Settlement. Id. § 11(a). Rather, payments will be 6 made to Class Members by check payable to the Class Member and mailed to the Class Member’s 7 last known address. Id. Addresses will be updated by the Claims Administrator through skip- 8 trace or other means. Id. § 5(b). 9 4. Cy Pres Distribution of any Unclaimed Settlement Funds 10 If any checks mailed to Class Members remain uncashed for 120 days after the checks are 11 sent (“Unclaimed Settlement Funds”), those funds do not revert to First Tech. Id. §§ 1(w) and 12. 12 Instead, any Unclaimed Settlement Funds will be paid to a cy pres recipient proposed by Class 13 Counsel and approved by the Court. Id. 14 5. Release 15 In exchange for the settlement, the following release applies:

16 GENERAL RELEASE. Except as to the rights and obligations provided for under the terms of this Agreement, Named Plaintiff, on 17 behalf of himself and each Class Member who does not opt-out (collectively, “Releasors”), hereby releases and forever discharges 18 Defendant, and all of its past, present and future predecessors, successors, parents, subsidiaries, divisions, employees, affiliates, 19 assigns, officers, directors, members, representatives, attorneys, insurers and agents (collectively, the “Releasees”) from any and all 20 losses, fees, charges, complaints, claims, debts, liabilities, demands, obligations, costs, expenses, actions, and causes of action of every 21 nature, character, and description, whether known or unknown, asserted or unasserted, suspected or unsuspected, fixed or contingent, 22 which Releasors now have, own or hold against any of the Releasees that arise out of and/or relate to the facts and claims alleged in the 23 Complaint, including any claims relating to or arising out of the Challenged Practice. 24 25 Id. ¶ 13. 26 6. Attorneys’ Fees and Expenses, Settlement Administrator’s Costs, and Class Representative Service Award 27 1 First Tech in addition to the payments to Class Members. These expenses will be paid separate 2 and apart from the Settlement Fund. Id. at § 1(v). Class Counsel will file a motion seeking 3 approval for its attorneys’ fees and costs. Id. § 9. First Tech will not oppose an application for 4 attorneys’ fees of up to $50,000. Id. § 11(c)(i). Class Counsel estimates fees will not exceed 5 $50,000. Mot. at 5. This estimate of attorneys’ fees encompasses any work conducted by Class 6 Counsel prior to settlement, and any future work conducted following the Court’s order granting 7 preliminary approval, including but not limited to: answering questions from Class Members; 8 reviewing documentation; drafting and submitting a motion for attorneys’ fees and costs, and a 9 motion for final approval. Id. 10 Class Counsel will also file a motion requesting that the Court approve a payment of the 11 Settlement Administrator’s costs up to $13,000. Settlement Agreement § 11(d). Perez requests 12 the Court appoint RG2 Claims Administration, LLC as the Settlement Administrator. Mot. at 5. 13 Class Counsel shall also apply for a Service Award for Perez of up to $5,000 in recognition 14 of his efforts in this case. Id. § 11(b)(ii). 15 III. LEGAL STANDARD 16 A class action settlement must be “fair, reasonable, and adequate,” Fed. R. Civ. P. 23(e)(2), 17 based on the following fairness factors:

18 (1) the strength of the plaintiff’s case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of 19 maintaining class action status throughout the trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the 20 stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the 21 class members of the proposed settlement.

22 In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 946 (9th Cir. 2011) (cleaned up). 23 However, the Court cannot fully assess these until the final approval hearing. Thus, at this stage 24 “a full fairness analysis is unnecessary,” Alberto v. GMRI, Inc., 252 F.R.D. 652, 665 (E.D. Cal. 25 2008) (cleaned up), and “the settlement need only be potentially fair,” Acosta v. Trans Union, 26 LLC, 243 F.R.D. 377, 386 (C.D. Cal. 2007). Preliminary approval is appropriate where “the 27 proposed settlement appears to be the product of serious, informed, non-collusive negotiations, has 1 no obvious deficiencies, does not improperly grant preferential treatment to class representatives 2 or segments of the class, and falls within the range of possible approval.” In re Tableware 3 Antitrust Litig., 484 F. Supp. 2d 1078, 1079 (N.D. Cal. 2007) (cleaned up). 4 Whether a settlement agreement has been negotiated before a class has been certified or 5 after, courts must also undertake an additional search for “subtle signs that class counsel have 6 allowed pursuit of their own self-interests and that of certain class members to infect the 7 negotiations.” Briseno v. Henderson, 998 F.3d 1014, 1023 (9th Cir. 2021) (applying In re 8 Bluetooth’s red-flag factors to post-class certification settlement approvals). 9 IV. DISCUSSION 10 A. Class Certification 11 Perez requests the Court certify the proposed class for settlement purposes only. Class 12 certification under Federal Rule of Civil Procedure 23 is a two-step process. First, a plaintiff must 13 demonstrate that the four requirements of Rule 23(a) are met: numerosity, commonality, 14 typicality, and adequacy. “Class certification is proper only if the trial court has concluded, after a 15 ‘rigorous analysis,’ that Rule 23(a) has been satisfied.” Wang v. Chinese Daily News, Inc., 737 16 F.3d 538, 542-43 (9th Cir. 2013) (quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 351 17 (2011)). 18 Second, a plaintiff must establish that the action meets one of the bases for certification 19 laid out by Rule 23(b). Perez relies on Rule 23(b)(3) and must therefore establish that “questions 20 of law or fact common to class members predominate over any questions affecting only individual 21 members, and that a class action is superior to other available methods for fairly and efficiently 22 adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). 23 When determining whether to certify a class for settlement purposes, a court must pay 24 “heightened” attention to the requirements of Rule 23. Amchem Prods., Inc. v. Windsor, 521 U.S. 25 591, 620 (1997). “Such attention is of vital importance, for a court asked to certify a settlement 26 class will lack the opportunity, present when a case is litigated, to adjust the class, informed by the 27 proceedings as they unfold.” Id. At the same time, trial “manageability is not a concern in 1 Fuel Econ. Litig., 926 F.3d 539, 556-57 (9th Cir. 2019) (en banc). 2 1. Numerosity 3 Rule 23(a)(1) requires that the class be “so numerous that joinder of all members is 4 impracticable.” Fed. R. Civ. P. 23(a)(1). “Plaintiffs need not state an exact number to meet the 5 threshold requirements of Rule 23. Rather, the rule ‘requires examination of the specific facts of 6 each case and imposes no absolute limitations.’” West v. Cal. Servs. Bureau, Inc., 323 F.R.D. 295, 7 303 (N.D. Cal. 2017) (quoting Gen. Tel. Co. of the Nw. Inc. v. Equal Emp. Opportunity Comm’n, 8 446 U.S. 318, 330 (1980)). As the proposed class consists of approximately 63 individuals, the 9 Court concludes that Perez has satisfied his burden to show that the number of putative class 10 members is sufficiently numerous that their joinder would be impracticable. See Hernandez v. 11 Cnty. of Monterey, 305 F.R.D. 132, 153 (N.D. Cal. 2015) (“A class or subclass with more than 40 12 members raises a presumption of impracticability based on numbers alone.”) (internal quotation 13 marks and citation omitted). 14 2. Commonality 15 Rule 23(a)(2) requires that there be “questions of law or fact common to the class.” Fed. 16 R. Civ. P. 23(a)(2). A common question is one “capable of classwide resolution – which means 17 that determination of its truth or falsity will resolve an issue that is central to the validity of each 18 one of the claims in one stroke.” Dukes, 564 U.S. at 350. For the purposes of Rule 23(a)(2), 19 “even a single common question” is sufficient. Id. at 359 (internal quotation marks and alterations 20 omitted). 21 Courts generally find commonality where “the lawsuit challenges a system-wide practice 22 or policy that affects all of the putative class members[]” and divergent ways in which these 23 practices affect individual class members, if any, do not undermine the finding of commonality. 24 Armstrong v. Davis, 275 F.3d 849, 868 (9th Cir. 2001), abrogated on other grounds by Johnson v. 25 California, 543 U.S. 499, 504-05 (2005); Blackie v. Barrack, 524 F.2d 891, 902 (9th Cir. 1975), 26 cert denied, 429 U.S. 816 (1976). Here, common issues include whether First Tech’s challenged 27 practice at the time Perez applied for a HELOC loan denied him and class members the 1 status, and whether First Tech violated § 1981 or the Unruh Act. See Stevens v. Harper, 213 2 F.R.D. 358, 377 (E.D. Cal. 2002) (in the civil rights context, “commonality is satisfied where the 3 lawsuit challenges a system-wide practice or policy that affects all of the putative class 4 members.”). Accordingly, the commonality requirement is satisfied for settlement purposes. 5 3. Typicality 6 In certifying a class, courts must find that “the claims or defenses of the representative 7 parties are typical of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). “The purpose 8 of the typicality requirement is to assure that the interest of the named representative aligns with 9 the interests of the class.” Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir. 1992). “The 10 test of typicality ‘is whether other members have the same or similar injury, whether the action is 11 based on conduct which is not unique to the named plaintiffs, and whether other class members 12 have been injured by the same course of conduct.’” Id. (quoting Schwartz v. Harp, 108 F.R.D. 13 279, 282 (C.D. Cal. 1985)). To satisfy this test, claims need not be “identical.” Armstrong, 275 14 F.3d at 869. 15 Perez alleges (1) he was legally residing in the United States as a DACA recipient, (2) he 16 applied for a residential secured loan from First Tech, (3) using an EAD, and (4) his application 17 was denied based on his immigration or citizenship status. Though some factual differences may 18 exist among class member, the claims arise from the same events or course of conduct and are 19 based upon the same legal theories. Given the structure of the settlement, the proposed class 20 satisfies the typicality requirement for settlement purposes. Wehner v. Syntex, 117 F.R.D. 641, 21 644 (N.D. Cal. 1987) (“Factual differences are acceptable provided the claim arises from the same 22 event or course of conduct and is based on the same legal theory.”). The typicality requirement is 23 thus satisfied. 24 4. Adequacy 25 “[A]dequacy of representation . . . requires that two questions be addressed: (a) do the 26 named plaintiffs and their counsel have any conflicts of interest with other class members and (b) 27 will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?” 1 the Court has not found, any evidence in the record suggesting that Perez has any conflict of 2 interest with the other class members. He shares common claims with the other proposed 3 members of the class and seeks the same relief they do. Additionally, class counsel, the Mexican 4 American Legal Defense and Educational Fund, has submitted a declaration showing they are 5 highly experienced in class actions and immigrants’ rights matters. Lozada Decl. ¶¶ 4-12. The 6 Court concludes Perez and his counsel will adequately represent the proposed class. 7 5. Predominance and Superiority 8 To certify a Rule 23 damages class, the Court must find that “questions of law or fact 9 common to class members predominate over any questions affecting only individual members, 10 and that a class action is superior to other available methods for fairly and efficiently adjudicating 11 the controversy.” Fed. R. Civ. P. 23(b)(3). The predominance inquiry “tests whether proposed 12 classes are sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., Inc., 13 521 U.S. at 623. “When common questions present a significant aspect of the case and they can 14 be resolved for all members of the class in a single adjudication, there is clear justification for 15 handling the dispute on a representative rather than on an individual basis.” Hanlon v. Chrysler 16 Corp., 150 F.3d 1011, 1022 (9th Cir. 1998) (internal quotation marks and citation omitted). 17 Here, the proposed class is sufficiently cohesive to warrant certification. For settlement 18 purposes, common questions of fact and law affecting class members predominate over any 19 questions that may affect only individual members. Perez challenges First Tech’s residential 20 secured loan underwriting criteria and policies that apply to all class members. Common 21 questions as to their nature and legality can be adjudicated collectively and will drive the 22 resolution of class claims. See Ellis v. Costco Wholesale Corp., 285 F.R.D. 492, 509 (N.D. Cal. 23 2012) (predominance is satisfied as to discrimination claims where plaintiffs challenged “specific 24 employment practices” that applied “companywide”). 25 Whether Rule 23’s superiority factor is met rests on factors like individual class members’ 26 desire to bring individual actions and the utility of concentrating the litigation in one forum. Fed. 27 R. Civ. P. 23(b)(3). Here, “there is no indication[] that class members seek to individually control 1 forum is undesirable for any reason.” Tierno v. Rite Aid Corp., 2006 WL 2535056, at *11 (N.D. 2 Cal. Aug. 31, 2006). Further, a class resolution is superior to other available means for the fair 3 and efficient adjudication of the controversy. See Hanlon, 150 F.3d at 1023. The superiority 4 requirement involves a “comparative evaluation of alternative mechanism of dispute resolution.” 5 Id. The alternative method of resolution would be individual claims, subject to proof, for 6 relatively small amounts of damages, which would be uneconomical for potential plaintiffs. 7 Therefore, a class resolution is superior to any other available methods. Accordingly, common 8 questions of law and fact predominate, and this dispute is best adjudicated on a representative 9 basis. 10 The Court concludes that provisional certification of the proposed class is appropriate for 11 the purposes of settlement. 12 B. Settlement Process 13 The Court first considers “the means by which the parties arrived at settlement.” Harris v. 14 Vector Mktg. Corp., 2011 WL 1627973, at *8 (N.D. Cal. Apr. 29, 2011). It must be satisfied that 15 the parties “have engaged in sufficient investigation of the facts to enable the court to intelligently 16 make an appraisal of the settlement.” Acosta, 243 F.R.D. at 396 (cleaned up). Courts thus have 17 “an obligation to evaluate the scope and effectiveness of the investigation plaintiffs’ counsel 18 conducted prior to reaching an agreement.” Id. 19 The process here was fair. “‘An initial presumption of fairness is usually involved if the 20 settlement is recommended by class counsel after arm’s-length bargaining.’” Harris, 2011 WL 21 1627973, at *8 (quoting Riker v. Gibbons, 2010 WL 4366012, at *2 (D. Nev. Oct.28, 2010). The 22 settlement agreement is the result of more than seven months of direct discussions and 23 negotiations between the parties regarding the legal issues raised in this case, the merits of Perez’s 24 claims, the accurate identification of proposed settlement class members, and the alleged potential 25 damages. The parties, through counsel: exchanged informal discovery, including credit 26 application and records, copies of policies and procedures, and records regarding First Tech’s 27 membership base, to assess the merits of Perez’s discrimination claims, and the number of 1 the terms of court-approved class action settlements in similar cases filed by class counsel against 2 several banks, the parties negotiated the terms of the settlement, including the payments to 3 individual class members and First Tech’s obligation to pay for attorneys’ fees, the cost of an 4 incentive award and the cost of administration in addition to the payments to class members. 5 Lozada Decl. ¶¶ 23–24. The parties exchanged multiple offers and counter-offers over this period 6 until a settlement in principle was reached. Id. ¶ 16. Class counsel initially demanded full 7 payment of the potential damages for each class member, but based on potential defenses to the 8 class member claims, including through the development of discovery demonstrating 9 nondiscriminatory factors considered in First Tech’s underwriting process, the parties eventually 10 agreed to payments to each class member of 75% of statutory damages, along with a commitment 11 by First Tech to modify its underwriting criteria. Id. The Court also notes the parties did not 12 negotiate the amount of class counsel’s fees and costs as part of the settlement; they only 13 negotiated the source of funds for the payment of fees and costs and the other costs associated 14 with the settlement. This factor weighs in favor of granting preliminary approval. 15 C. Obvious Deficiencies 16 At this stage, there are no obvious deficiencies in the Settlement Agreement, and this factor 17 weighs in favor of granting preliminary approval. 18 D. Preferential Treatment 19 The Court next examines whether the settlement agreement “improperly grant[s] 20 preferential treatment.” In re Tableware, 484 F. Supp. 2d at 1079. The only preferential treatment 21 is a service award to Perez, subject to Court approval. Such “[i]ncentive awards are fairly typical 22 in class action cases . . . to compensate class representatives for work done on behalf of the class 23 [and] to make up for financial or reputational risk undertaken in bringing the action.” Rodriguez v. 24 W. Publ’g Corp., 563 F.3d 948, 958 (9th Cir. 2009) (cleaned up). The service award is within the 25 range of possible approval, and this factor weighs in favor of preliminary approval. See Staton v. 26 Boeing Co., 327 F.3d 938, 976-78 (9th Cir. 2003) (discussing cases approving incentive awards in 27 the range of $2,000 to $25,000). 1 E. Range of Possible Awards 2 The last inquiry focuses on “substantive fairness and adequacy” and considers a plaintiff’s 3 “expected recovery balanced against the value of the settlement offer.” In re Tableware, 484 F. 4 Supp. 2d at 1080 (cleaned up); see also Harris, 2011 WL 1627973, at *11 (noting that courts 5 “must estimate the maximum amount of damages recoverable in a successful litigation and 6 compare that with the settlement amount” (cleaned up)). “[A] proposed settlement may be 7 acceptable even though it amounts only to a fraction of the potential recovery that might be 8 available to class members at trial.” Nat’l Rural Telecomms. Coop. v. DIRECTV, Inc., 221 F.R.D. 9 523, 527 (C.D. Cal. 2004); see also In re Mego Fin. Corp. Sec. Litig., 213 F.3d at 459 (“[T]he 10 Settlement amount of almost $2 million was roughly one-sixth of the potential recovery, which, 11 given the difficulties in proving the case, is fair and adequate.”). 12 Here, the settlement agreement is within the range of possible approval. After initial 13 review of the parties’ agreement, the Court requested the parties answer this question: “If the 14 parties did not settle and this matter were to proceed to trial, what do they estimate would be First 15 Tech’s total exposure? At this stage, can the parties estimate how the settlement amount compares 16 to First Tech’s potential damages?” ECF No. 32. In response, the parties provided calculations 17 estimating First Tech’s total exposure, as well as an analysis of how they arrived at their estimate. 18 ECF No. 33. The parties estimate First Tech’s risk-adjusted total exposure is $123,000. Id. The 19 gross settlement fund of $81,500, which is just over 65% of First Tech’s estimated potential 20 exposure. This weighs in favor of preliminary approval. See Dimercurio v. Equilon Enterprises 21 LLC, 2022 WL 17669711, at *5 (N.D. Cal. Dec. 14, 2022) (finding settlement agreement was 22 within the range of approval where it equaled roughly 37% of defendant’s potential total 23 exposure). On the other hand, continued litigation brings a risk Perez and the class will receive 24 nothing. This factor weighs in favor of preliminary approval. 25 F. Class Notice Plan 26 For any class certified under Rule 23(b)(3), class members must be afforded “the best 27 notice that is practicable under the circumstances, including individual notice to all members who 1 state:

2 (i) the nature of the action; (ii) the definition of the class certified; (iii) the class claims, issues, or defenses; (iv) that a class member may 3 enter an appearance through an attorney if the member so desires; (v) that the court will exclude from the class any member who requests 4 exclusion; (vi) the time and manner for requesting exclusion; and (vii) the binding effect of a class judgment on members under Rule 5 23(c)(3). 6 Id. “Notice is satisfactory if it generally describes the terms of the settlement in sufficient detail to 7 alert those with adverse viewpoints to investigate and to come forward and be heard.” Churchill 8 Village, L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) (cleaned up). 9 The proposed class notice includes each of the seven requirements above. In addition, 10 after its preliminary review of the parties’ proposed settlement, the Court asked them to address 11 the following issues:

12 Class Notice Under the terms of the parties’ agreement, all class members will be 13 mailed a notice of the proposed settlement and its terms. However, Rule 23 requires the “best practicable notice,” and in most 14 circumstances a single mailed notice does not meet this requirement. Roes, 1-2 v. SFBSC Mgmt., LLC, 944 F.3d 1035, 1046 (9th Cir. 2019). 15 Would it be feasible to use another method as well, such as email?

16 Objections/Exclusions The parties’ agreement provides that any class member who wishes 17 to be excluded from the settlement or to object to its terms must do so by mailing a written exclusion/objection to the settlement 18 administrator. Would it be feasible to use another method as well, such as email or a form on the settlement website created by the 19 settlement administrator?

20 ECF No. 32. In response to the first question, the parties state: 21 First Tech may have email addresses for potential Class Members 22 who provided emails on their loan applications. The Parties are in the process of verifying whether email addresses exist for each potential 23 Class Member. For those Class Members who provided First Tech with email addresses, the Settlement Administrator can send the 24 Notice by email in addition to regular mail. If an email bounces back because of an incorrect address, the Settlement Administrator can 25 perform a “skip trace” to locate a potentially valid email address. . . . Thus, the Parties believe that email notice can be provided in addition 26 to the mail notice described in the Settlement Agreement. 27 ECF No. 33. 1 The Settlement Administrator will provide an email address on the Notice forms for potential Class Members to email opt-outs or 2 objections to the Settlement. The Settlement Administrator will also set up forms on the website for potential Class Members to use to 3 submit opt-outs or objections. The Parties have submitted with this joint statement proposed forms for opt-outs and objections that can be 4 posted to the Settlement Website. 5 Id. 6 The Court finds these proposed changes adequately address its concerns and therefore 7 approves the notice plan with these changes. The parties shall add the email and website form 8 options for opt-outs/exclusions to the following sections of the proposed notice at ECF No. 31-2: 9 1) “SUMMARY OF YOUR OPTIONS” table, “EXCLUDE YOURSELF FROM 10 THE SETTLEMENT” and “OBJECT TO THE SETTLEMENT” (ECF p. 16 of 11 23); 12 2) “YOUR OPTIONS,” No. 6 “What are the critical deadlines” (ECF pp. 17-18 of 13 23); 14 3) “EXCLUDING YOURSELF FROM THE SETTLEMENT,” No. 12 “How do I 15 exclude myself from the Settlement?” (ECF p. 19 of 23); and 16 4) “OBJECTING TO THE SETTLEMENT,” No. 15 (ECF pp. 19-20 of 23). 17 G. Attorneys’ Fees 18 Rule 23(h) provides for an award of attorneys’ fees and costs in a certified class action 19 where it is “authorized by law or by the parties’ agreement.” Fed. R. Civ. P. 23(h). “[C]ourts 20 have an independent obligation to ensure that the award, like the settlement itself, is reasonable, 21 even if the parties have already agreed to an amount.” In re Bluetooth, 654 F.3d at 941. 22 Class counsel will file a separate motion seeking approval for its attorneys’ fees and costs. 23 Settlement Agreement § 9. First Tech will not oppose an application for attorneys’ fees of up to 24 $50,000. Id. § 11(c)(i). This estimate of attorneys’ fees encompasses any work conducted by 25 class counsel prior to settlement, and any future work conducted following the Court’s order 26 granting preliminary approval. At this stage, the request is not so out of bounds as to warrant 27 denying preliminary approval. Accordingly, class counsel shall file a motion for attorneys’ fees 1 objections. See In re Mercury Interactive Corp. Sec. Litig., 618 F.3d 988, 993–94 (9th Cir. 2010) 2 (noting that Rule 23(h) “requires that any class member be allowed an opportunity to object to the 3 fee motion”). The motion shall include declarations and billing records so that the Court may 4 determine an appropriate lodestar figure, and to allow class members the opportunity to object to 5 the requested fees. See id. at 995 (holding that class members must “have an adequate opportunity 6 to oppose class counsel’s fee motion”). 7 H. Cy Pres Award 8 “District courts may approve settlements with cy pres provisions that affect only a portion 9 of the total settlement fund.” In re Google Inc. St. View Elec. Commc’ns Litig., 21 F.4th 1102, 10 1111 (9th Cir. 2021). Here, if any checks mailed to class members remain uncashed for 120 days 11 after the checks are sent, those funds do not revert to First Tech. Settlement Agreement §§ 1(w) 12 and 12. Instead, any such funds will be paid to a cy pres recipient proposed by class counsel and 13 approved by the Court. Id. At the final approval stage, the Court will assess whether the selected 14 cy pres beneficiary is “tethered to the nature of the lawsuit and the interests of the . . . class.” 15 Dennis v. Kellogg Co., 697 F.3d 858, 867 (9th Cir. 2012) (cleaned up). 16 V. CONCLUSION 17 For the reasons stated above, the Court GRANTS the motion for preliminary approval. 18 The Court (1) conditionally certifies the proposed class for the purposes of settlement only; (2) 19 preliminarily approves the settlement agreement and notice plan (with the additions specified 20 above in Section IV.F); and (3) preliminarily appoints the Mexican American Legal Defense and 21 Educational Fund as class counsel, Perez as class representative, and RG2 Claims Administration, 22 LLC as settlement administrator. The Court ORDERS as follows: 23 1. Within 10 business days of this Order granting preliminary approval, First Tech will 24 provide class members’ information to the Settlement Administrator; within 15 calendar days 25 thereafter, the Settlement Administrator will mail (and email, for Class Members who provided 26 emails on their loan applications) the approved class notice to class members. 27 2. When the Settlement Administrator mails out the class notice, Class counsel shall file a 1 3. Within 21 days of this Order, Class counsel shall file a motion for attorneys’ fees and 2 || costs. First Tech may file an opposition within 14 days thereafter, and class counsel may file a 3 || reply within 7 days thereafter. 4 4. Perez shall file a motion for final settlement approval on December 12, 2024. 5 5. The Court will hear argument on the motion for attorneys’ fees and costs and the motion 6 || for final settlement approval at the Final Approval Hearing, which will take place in person on 7 January 23, 2025 at 10:00 a.m. 8 6. If the parties wish to adjust any of the above dates, they shall submit a stipulation. The 9 stipulation shall cite, with line numbers if applicable, the portions of this Order, the Settlement 10 || Agreement, or the approved class notice that are affected by the stipulation. The parties shall also 11 ensure that before the approved class notice is sent to class members, it is amended to reflect any 12 || dates that are changed by the stipulation (1.e., the date on which class counsel will file their motion 5 13 || for attorneys’ fees and costs; the date of the final approval hearing). 14 IT IS SO ORDERED. 15 16 Dated: October 8, 2024

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18 THOMAS S. HIXSON United States Magistrate Judge 19 20 21 22 23 24 25 26 27 28