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6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 DEAN BEAVER AND LAURIE Case No. 11-cv-01842-GPC-KSC BEAVER, HUSBAND AND WIFE; 12 et al., ORDER GRANTING PLAINTIFFS’ 13 MOTION FOR A CY PRES 14 Plaintiffs, DISTRIBUTION OF RESIDUAL v. SETTLEMENT FUND 15

16 TARSADIA HOTELS, A CALIFORNIA CORPORATION; et 17 al., 18 Defendants. 19

20 21 Before the Court is Plaintiffs’ motion for a cy pres distribution from the 22 residual settlement fund. (Dkt. No. 326.) No opposition was filed. 23 This class action alleged violations of the disclosure requirements under the 24 Interstate Land Sales Full Disclosure Act (“ILSA”) concerning the sale of 25 condominium units at the Hard Rock in San Diego, CA. (Dkt. Nos. 1, 69.) After 26 years of contentious litigation, the parties settled. On September 28, 2017, the 27 Court granted Plaintiffs’ motion for final approval of class action settlement and 28 judgment and Plaintiffs’ application for attorneys’ fees and costs, and service 1 awards. (Dkt. No. 314.) On May 9, 2018, the Court granted approval of the 2 distribution of settlement funds to Class Members. (Dkt. No. 322.) The final 3 status report states that 100% of the class members have received and cashed their 4 settlement distribution checks. (Dkt. No. 324 at 2.) 624 class members received 5 checks totaling $33,724,038.46. (Dkt. No. 324-1, Sperry Decl. ¶ 8.) After 6 payment of court approved attorney fees and expenses, class representative service 7 awards, class member awards, administration fees and expenses, tax payments, 8 appraiser fees, and private investigator fees, the settlement account has a balance 9 of $48,609.70. (Dkt. No. 326-2, Suppl. Sperry Decl. ¶ 3.) The excess balance is a 10 combination of interest accrued on the account and the remaining funds for private 11 investigator fees not used. (Id.) Plus, the account currently accrues interest at an 12 average of $85/month. (Id.) Remaining are unbilled administration fees and 13 expenses concerning post-distribution work that total $20,112.69. (Id. ¶ 4.) 14 Therefore, the remaining residual amount is $28,497.24. 15 16 If there were a second distribution of residual amounts, estimated 17 administration fees and expense would be about $11,000 to include first-class 18 postage, check printing costs, handling Class member communications, necessary 19 address research and updates, bank account maintenance, and other administration 20 activities. (Id.) Therefore, after administration fees and expenses, the amount for a 21 second distribution would be $17,497.24 which would translate to an average of 22 $28.04 per payee. (Id.) It is to be noted that the original distribution payments 23 averaged $54,044.93 per payee. (Id.) 24 The Distribution Plan, referenced in the Court’s order granting final 25 26 approval of class action settlement, (Dkt. No. 314 at 32), provides that “any 27 leftover Settlement Administration costs, shall be distributed pro rata to Class 28 members who cashed their checks, unless Plaintiffs’ Counsel, with District Court 1 approval, deems the residual too small to efficiently distribute, in which event the 2 residual will be paid cy pres to an appropriate charity or non-profit suggested by 3 Plaintiffs and approved by the District Court.” (Dkt. No. 273-7, Schrag Decl., Ex. 4 E.) 5 The cy pres doctrine “allows a court to distribute unclaimed or non- 6 distributable portions of a class action settlement fund to the ‘next best’ class of 7 beneficiaries.” Nachsin v. AOL, LLC,

(9th Cir. 2011). Courts 8 have approved cy pres where “proof of individual claims would be burdensome or 9 distribution of damages costly.” Six Mexican Workers v. Ariz. Citrus Growers, 10

(9th Cir. 1990). A determination on a cy pres distribution 11 12 must take into account “the nature of the plaintiffs' lawsuit, the objectives of the 13 underlying statutes, and the interests of the silent class members, including their 14 geographic diversity.” Nachsin,

. In Nachsin, the Ninth Circuit 15 held that objectives of the Electronic Communications Privacy Act, at issue, had 16 nothing to do with the cy pres donations to Legal Aid Foundation of Los Angeles, 17 the Boys and Girls Clubs of Santa Monica and Los Angeles, and the Federal 18 Judicial Center Foundation.

While the cy pres recipient need not be ideal, it 19 must bear “a substantial nexus to the interests of the class members.” Lane v. 20 Facebook, Inc.,

(9th Cir. 2012). 21 Here, Plaintiffs argue that a cy pres distribution is appropriate because all 22 class members have already received substantial payments and it would be 23 economically inefficient to distribute such a small residual amount after 24 considering the administrative costs of a second distribution. They contend that it 25 26 would be more appropriate to distribute residual funds to a cy pres recipient. Class 27 counsel has identified San Diego Housing Federation (“SDHF”) as the recipient of 28 the cy pres. Plaintiffs alleged violations of California’s Unfair Competition Law 1 (“UCL”) based on violations of the ILSA concerning the class members’ purchases 2 of condominium units at the Hard Rock in San Diego. California. ILSA imposes 3 disclosure requirements on developers in order to protect purchasers from false and 4 deceptive practices. (Dkt. No. 128 at 7.1) SDHF’s mission includes providing 5 affordable housing opportunities to San Diego residents and educating the public 6 and policymakers about housing trends and initiatives and informing the public 7 about the need for affordable housing in the region. (Dkt. No. 326-1, Russel Decl. 8 ¶ 2.) It has also advocated for local and state legislation that responds to the 9 current housing crisis by creating more opportunities for housing production at all 10 income levels. (Id. ¶ 4.) SDHF further provides professional training, networking 11 opportunities and provides resources for housing policy advocates. (Id. ¶ 3.) 12 Finally, it hosts an annual conference that brings together fair housing 13 practitioners, policy makers housing advocates, and developers, community leaders 14 and top experts in the field of fair housing to discuss barriers to obtain housing. 15 (Id. ¶ 4.) 16 17 The Court agrees that it would be burdensome and inefficient to require a 18 second distribution of the residual settlement fund and a cy pres award is more 19 appropriate. Further, the Court concludes that there is a nexus between the cy pres 20 recipient, SDHF, whose work protects and educates homebuyers, and ILSA’s 21 objective of protecting homebuyers from unscrupulous developers. While SDHF 22 is focused on providing affordable housing to San Diego residents, it also educates 23 the public about housing trends in the San Diego area, and provides training and 24 resources for housing policy advocates and works with developers. Finally, 25 SDHF’s work is geographically focused on San Diego and covers the geographic 26 27 28 1 Page numbers are based on the CM/ECF pagination. 1 scope of the case. Accordingly, the Court GRANTS Plaintiffs’ motion for cy pres 2 || distribution. 3 Conclusion 4 5 Based on the above, the Court GRNATS Plaintiffs’ motion for cy pres 6 distribution from the residual settlement fund and approves the distribution of (1) 7 $20,112.69 to cover remaining unbilled settlement administrator fees, and (2) a cy g ||Pres distribution of $28,497.24 plus further accrued interest to San Diego Housing 9 Federation. The hearing date set for March 13, 2020 shall be vacated. 10 IT IS SO ORDERED. ll Dated: March 9, 2020 2 aaho C4 12 Hon. Gonzalo P. Curiel 13 United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

5 Case No. 1 1-cv-01842-GPC-KS(