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Wornicki v. Brokerpriceopinion.Com, Inc.

United States District Court, D. Colorado

August 2, 2017

KATHY WORNICKI and EDWARD LAINE, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
BROKERPRICEOPINION.COM, INC., FIRST VALUATION, LLC, FIRST VALUATION SERVICES, LLC, FIRST VALUATION TECHNOLOGY, LLC, CARTEL ASSET MANAGEMENT, LLC, WALTER COATS, and VALUTECH, INC., Defendants.

          ORDER

          PHILIP A. BRIMMER United States District Judge.

         This matter is before the Court on Plaintiffs' Unopposed Motion for Preliminary Approval of Class Action Settlement [Docket No. 149]. The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332(d).

         I. BACKGROUND

         This case arises from allegations that Brokerpriceopinion.com (“Brokerprice”) failed to pay its brokers in a timely fashion. Docket No. 149 at 8-9. Defendant Brokerprice provides real estate valuation services to mortgage companies, banks, securities dealers, investment firms, and vendors for a variety of purposes. Docket No. 133 at 1. Brokerprice operates online and its brokers sign up through an online application process, submitting required brokers' licenses and other information. Id. at 2. Brokers complete work orders for Brokerprice and Brokerprice in turn promises payment to its brokers within 30-45 days of when Brokerprice shipped completed orders to its clients. Id. Plaintiffs argue that Brokerprice fell behind on its payments and owes its brokers millions of dollars. Id. at 3.

         Plaintiffs filed a class action complaint on December 2, 2013. Docket No. 1. Plaintiffs originally alleged claims for breach of contract and unjust enrichment under Colorado law.[1] Id. On October 15, 2015, plaintiffs filed a motion for class certification. Docket No. 79. Concurrently, plaintiffs moved for leave to amend the second amended complaint to add Walter Coats, the Brokerprice CEO, as a defendant and add Colorado state law claims for negligent misrepresentation and fraudulent inducement. Docket No. 81. The Court granted plaintiffs' motion. Docket No. 97.

         On September 20, 2016, the Court granted plaintiffs' motion for class certification in part, certifying a class comprised of all persons and entities who provided broker price opinions on behalf of Brokerpriceopinion.com, Inc., First Valuation, LLC, First Valuation Services, LLC, First Valuation Technology, LLC, Cartel Asset Management, LLC, Walter Coats, or ValuTech, Inc. between December 2, 2007 and the date of final disposition of this action and who have not been paid for their services in accordance with defendants' terms of payment. Docket No. 133 at 30. On November 3, 2016, the Court approved the parties' proposed notice plan and ordered the parties to disseminate class notice within 14 days.[2] Docket No. 138.

         The parties held a settlement conference before an arbitrator on December 6, 2016. Docket No. 149-2 at 12-13, ¶ 20. At the conference, defendants insisted that they would be financially unable to pay a large settlement, while plaintiffs insisted that defendants must provide complete financial information to allow plaintiffs to assess defendants' financial situation. Id. The parties did not reach a settlement that day, but in the wake of the conference defendants produced financial information that convinced plaintiffs that settlement was in the best interest of the class. Id. at 13, ¶ 20.

         On March 10, 2017, plaintiffs filed their unopposed motion for preliminary approval of class action settlement. Docket No. 149.

         II. STANDARD FOR PRELIMINARY CERTIFICATION OF A SETTLEMENT CLASS

         Approval of a class action settlement takes place in two stages. In the first stage, the court preliminarily certifies a settlement class, preliminarily approves the settlement agreement, and authorizes that notice be given to the class so that interested class members may object to the fairness of the settlement or opt out of the settlement. See In re Motor Fuel Temperature Sales Practices Litig., 258 F.R.D. 671, 675 (D. Kan. 2009). In the second stage, after notice is given to the putative class, the court holds a fairness hearing at which it will address the fairness, reasonableness, or adequacy of the settlement terms. Fed.R.Civ.P. 23(e)(2); see Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1188 (10th Cir. 2002).

         “Preliminary approval of a class action settlement, in contrast to final approval, is at most a determination that there is . . . ‘probable cause' to submit the proposal to class members and hold a full-scale hearing as to its fairness.” Davis v. J.P. Morgan Chase & Co., 775 F.Supp.2d 601, 607 (W.D.N.Y. 2011). A proposed settlement of a class action should therefore be preliminarily approved where it “appears to be the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, [and] does not improperly grant preferential treatment to class representatives.” See In re Motor Fuel, 286 F.R.D. at 492. “The standards for preliminary approval of a settlement class are not as stringent as those applied for final approval.” Id.

         III. ANALYSIS OF PROPOSED SETTLEMENT

         A. Overview of the ...


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