United States District Court, D. Minnesota
Linda Lee Soderstrom, Maria Johnson, Craig Goodwin, Jurline Bryant, and Julio Stalin de Tourniel, on behalf of themselves and others similarly situated, and HOME Line, a Minnesota nonprofit corporation, Plaintiffs,
MSP Crossroads Apartments LLC, a Minnesota corporation, and Soderberg Apartment Specialists SAS, a Minnesota corporation, Defendants.
OPINION AND ORDER GRANTING FINAL APPROVAL OF CLASS
SETTLEMENT, APPROVAL OF NOTICE PLAN, OVERRULING OF OBJECTION,
APPROVAL OF PLAN OF ALLOCATION AND AUTHORIZATION OF
DISTRIBUTION, APPROVAL OF INCENTIVE AWARDS, FEES AND
EXPENSES, AND FOR FINAL CLASS CERTIFICATION AND ENTRY OF
MONTGOMERY U.S. DISTRICT JUDGE
January 23, 2018, the undersigned United States District
Judge heard oral argument on Plaintiffs Linda Lee Soderstrom,
Maria Johnson, Craig Goodwin, Jurline Bryant, and Julio
Stalin de Tourniel (collectively, the “Class
Plaintiffs”), and Plaintiff HOME Line's (together
with Class Plaintiffs, “Plaintiffs”) Motion for
Order and Judgment Granting Final Approval of Class Action
Settlement and Certifying Settlement Class (the
“Motion”) [Docket No. 192]. Kristen G. Marttila,
Esq., Kate M. Baxter-Kauf, Esq., and Charles N. Nauen, Esq.,
Lockridge Grindal Nauen P.L.L.P., Minneapolis, MN, and
Timothy L. Thompson, Esq., Housing Justice Center, St. Paul,
MN, appeared on behalf of Plaintiffs. Margaret R. Ryan, Esq.,
and Bradley J. Lindeman, Esq., Meagher & Greer, PLLP,
Minneapolis, MN, appeared on behalf of Defendants MSP
Crossroads Apartments LLC (“MSP”) and Soderberg
Apartment Specialists (“SAS”) (collectively,
[Docket Nos. 182, 186] to the Motion have been filed by
Claire J. Lee (“Lee”). Lee did not appear at the
reasons set forth below, Lee's Objections are overruled
and the Motion is granted.
February 1, 2016, Plaintiffs commenced this action alleging
that Defendants violated the Fair Housing Act's
(“FHA”) prohibitions against disparate treatment
and disparate impact discrimination under 42 U.S.C. §
3604, and also violated Minn. Stat. § 504B.315. See
generally Compl. [Docket No. 1]. Plaintiffs moved for a
preliminary injunction and Defendants moved to dismiss
Plaintiffs' claims. See Pls.' Mot. Expedited
Prelim. Inj. [Docket No. 15]; Defs.' Joint Mot. Dismiss
[Docket No. 10]. The Court denied Plaintiffs' motion for
a preliminary injunction, denied Defendants' motion to
dismiss Plaintiff's claims under the FHA, and granted
Defendants' motion to dismiss Plaintiffs' claim under
Minn. Stat. § 504B.315. See Mem. Op. Order,
Apr. 15, 2016 [Docket No. 39]; Mem. Op. Order, July 5, 2016
[Docket No. 41].
July 2016 to March 2017, the parties engaged in extensive
discovery, including the production of documents and
responses for at least twelve Plaintiffs, depositions of
three named plaintiffs, third-party discovery, and the
production of more than 2, 300 pages of documents from
Defendants. First Marttila Decl. [Docket No. 178] ¶ 3.
April 2017, the parties participated in multiple mediation
sessions with United States Magistrate Judge Katherine M.
Menendez. Id. ¶ 4. Although no settlement was
reached during these sessions, the parties continued to
negotiate potential settlement terms and participated in
periodic status conferences with Judge Menendez from April
through August 2017. Id.
2017, Judge Menendez entered an order severing the individual
claims of Lee, then a named plaintiff, from the putative
class action claims raised by the Class Plaintiffs.
See Order, June 14, 2017 [Docket No. 159]. Lee's
individual claims were severed due to “the very
different approaches to the litigation taken by Interim Class
Counsel and Ms. Lee, ” which made it difficult to
achieve progress in the litigation. Id. at 3. A
separate civil case was opened for Lee's individual
claims. See Lee v. MSP Crossroads Apartments LLC, et
al., No. 17-2045 (D. Minn.). Lee's individual case
September 2017, the parties arrived at a finalized Settlement
Agreement. See First Marttila Decl. Ex. 1
(“Settlement Agreement”). The Settlement
Agreement provides that for three years after the effective
date of the Settlement Agreement, Defendants will amend their
screening criteria for applications for tenancy at the
apartment complex formerly known as Crossroads at Penn and
now known as Concierge Apartments (the
“Property”) and will amend all public marketing
materials, application materials, screening criteria
disclosures, and any other public documents, including
websites, to be consistent with the amended screening
criteria. Additionally, if MSP, or an entity in which it or
at least one member or director of MSP beneficially owns,
holds, or controls a membership interest, or an entity that
is an affiliate of MSP, acquires a property located within
the seven-county metropolitan area during the next three
years, and if that property is managed by SAS, Defendants
will apply the amended screening criteria at the newly
acquired property for two years and will amend all materials
during that period. Further, SAS will recommend to the owners
of each of the properties for which it is retained as the
property management company that those owners similarly amend
their screening criteria for tenancy applications. Defendants
will also provide training on the Fair Housing Act to all
leasing agents employed at the Property.
Defendants will pay $650, 000 to resolve all claims in the
lawsuit. The payment will be distributed as follows: (1)
$200, 000 to an Equitable Relief Fund for the purpose of
assisting in the acquisition and preservation of naturally
affordable rental properties in the Twin Cities Metro Area at
risk of conversion to higher rents and the threat of
displacement of low and moderate income residents; (2) $300,
000 in payments to the Settlement Class, which consists of
two subclasses, the Displacement Class and the Application
Class, as defined in the Settlement Agreement; (3) $40, 000
to Plaintiff HOME Line; (4) $76, 000 to pay attorneys'
fees; (5) $14, 000 to pay incentive awards; and (6) $20, 000
to pay notice and administration costs.
the Settlement Agreement, Defendants will be released from
any and all claims that were or could have been raised
arising out of the subject matter of the litigation. The
Settlement Agreement explicitly recognizes that the severed
individual claims asserted by Lee in her separate action are
not affected by the Settlement Agreement. See
Settlement Agreement ¶¶ C, G, I(B)(3), I(B)(24), V.
Court preliminarily approved the Settlement Agreement on
October 19, 2017. See Order [Docket No. 184]
(“Preliminary Approval Order”).
preliminary approval of the settlement, the parties carried
out the Court-approved notice program, which included: (1)
mailing a long-form notice and claim form packet to Class
Members located through reasonable efforts and records from
Defendants; (2) establishing a public website to provide
information regarding the litigation, settlement, and claims
process; and (3) establishing a toll-free telephone hotline
regarding the settlement and claims process. Keough Suppl.
Decl. [Docket No. 205] ¶¶ 3-5. Claims administrator
JND Legal Administration, LLC (“JND” or
“Claims Administrator”) mailed notice and claim
forms to 501 addresses for potential Displacement Class
Members and received 230 claim forms from the Displacement
Class. Id. ¶¶ 7, 9. JND mailed notice and
claim forms to 1, 648 addresses for Application Class Members
and received 131 claim forms from the Application
Class. Id. ¶¶ 7, 9. Lee is the
only Class Member who has objected to the settlement.
Id. ¶ 6.
Defendants mailed notice of the settlement to state Attorneys
General and the U.S. Attorney General, in accordance with the
Class Action Fairness Act., 28 U.S.C. §§ 1715(b).
Marttila Suppl. Decl. ¶ 3. None of the notified federal
or state officials have objected to the settlement or
now move for final approval of the settlement; approval of
the notice plan as comporting with due process; approval of
the proposed plan of allocation for the settlement proceeds;
authorization to distribute the settlement proceeds; approval
of Plaintiffs' request for incentive awards,
attorneys' fees and expenses; conditional certification
of the Settlement Class, and entry of judgment.
Approval of Class Action Settlement
Federal Rule of Civil Procedure 23(e), a court may only
approve a proposed class action settlement if the settlement
is “fair, reasonable, and adequate.” Fed.R.Civ.P.
23(e)(2). To determine whether a class action settlement
satisfies these standards, the court must consider:
“(1) the merits of the plaintiff's case, weighed
against the terms of the settlement; (2) the defendant's
financial condition; (3) the complexity and expense of
further litigation; and (4) the amount of opposition to the
settlement.” In re Wireless Tel. Fed. Cost Recovery
Fees Litig., 396 F.3d 922, 932 (8th Cir. 2005).
Eighth Circuit recognizes that “‘strong public
policy favors [settlement] agreements, and courts should
approach them with a presumption in their favor.'”
Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1148 (8th
Cir. 1999) (quoting Little Rock Sch. Dist. v. Pulaski
Cty. Special Sch. Dist. No. 1, 921 F.2d 1371, 1388 (8th
Cir. 1990)). Accordingly, courts in the Eighth Circuit have
held that “there is a presumption of fairness when a
settlement is negotiated at arm's length by well informed
counsel.” In re Charter Commc'ns, Inc. Sec.
Litig., No. 02-1186, 2005 WL 4045741, at *5 (E.D. Mo.
June 30, 2005); see also In re Zurn Pex Plumbing Prods.
Liab. Litig., No. 08-1958, 2012 WL 5055810, at *6 (D.
Minn. Oct. 18, 2012) (“There is usually a presumption
of fairness when a proposed class settlement, which was
negotiated at arm's length by counsel for the class, is
presented for approval.”) (quoting 4 Alba Conte &
Herbert Newberg, Newberg on Class Actions § 11.41 at 90
(4th ed. 2002)).
settlement is presumptively valid. It is the product of
substantial expertise and diligence of both plaintiff and
defense attorneys. The settlement was negotiated by counsel
with expertise in class action litigation generally as well
as housing law specifically. Marttila Suppl. Decl. ¶ 6;
Marttila Aff. Supp. Mot. Appoint Interim Class Counsel
[Docket No. 71] Exs. 1-2. Prior to reaching settlement, the
parties diligently litigated multiple motions and engaged in
extensive discovery. The assistance of Judge Menendez as a
neutral mediator to facilitate settlement negotiations
further demonstrates that the settlement was negotiated
fairly and honestly at arm's length.
Merits of Case vs. Settlement Terms
the settlement was not presumptively valid, it satisfies the
fairness criteria for Rule 23(e) established by the Eighth
Circuit. The most important consideration is the strength of
Plaintiffs' case on the merits versus the amount offered
in the settlement. See Petrovic, 200 F.3d at 1150.
In deciding on the merits, the Court need not “go
beyond an amalgam of delicate balancing, gross approximation,
and rough justice.” White v. Nat'l Football
League, 822 F.Supp. 1389, 1417 (D. Minn. 1993) (internal
merits of Plaintiffs' case were arguably strong but raised
considerable legal and factual challenges. Litigation under
the Fair Housing Act is complex and poses difficult legal
issues. Additionally, the putative class faced multiple risky
litigation hurdles, including class certification, summary
judgment, Daubert motions, a lengthy trial, and
probable appeals. On the other side of the scale, the amount
offered in the settlement includes a large lump sum payment
and substantial equitable relief. Not only has the settlement
been described by affordable-housing advocates as the largest
of its kind in the nation,  it provides immediate and certain
benefits to Class Members. Thus, this factor weighs in favor
of approving the settlement.
Defendants' Financial Condition
is no evidence questioning Defendants' financial
condition. This factor weighs in favor of approval.
Complexity and Expense of Further Litigation
class actions “place an enormous burden of costs and
expense upon [ ] parties.” Marshall v. Nat'l
Football League, 787 F.3d 502, 512 (8th Cir. 2015)
(quoting Schmidt v. Fuller Brush Co., 527 F.2d 532,
535 (8th Cir. 1975)). This case is no exception. The costs
and delay of litigating this case through trial and probable
appeal would have potentially exceeded any damages award.
Accordingly, this factor also supports final approval of the
Opposition to the Settlement
more than 2, 000 notices mailed to potential Class Members,
only one individual objected. This strongly weighs in favor
of approving the settlement.
on the foregoing, the Court finds that the settlement is
fair, reasonable, and adequate. The settlement is approved.
Court next considers whether certification of the Settlement
Class is appropriate. Rule 23(a) requires as a prerequisite
for class certification that the following be shown: (1) the
class is so numerous that joinder is impracticable; (2)
questions of law or fact are common to the class; (3) the
representative parties' claims or defenses are typical of
the claims or defenses of the class; and (4) the
representative parties will fairly and adequately protect the
class interests. Fed.R.Civ.P. 23(a)(1-4).
the Rule 23(a) prerequisites are met, the class action may be
maintained if the court determines that a Rule 23(b) factor
is met. Plaintiffs request certification under Rule 23(b)(2).
This factor permits class certification if “the party
opposing the class has [allegedly] acted or refused to act on
grounds that apply generally to the class, so that final
injunctive relief or corresponding declaratory relief is
appropriate respecting the class as a whole.”
Rule 23(a) Prerequisites
proposed class here meets all the prerequisite requirements
of Rule 23(a). Courts in Minnesota have found that putative
class sizes of forty will support a finding of numerosity,
and much smaller classes have been certified by courts in the
Eighth Circuit. See, e.g., Lockwood
Motors, Inc. v. Gen. Motors, Corp., 162 F.R.D. 569,
574 (D. Minn. 1995) (approving of classes of as few as forty
members); Ark. Educ. Ass'n v. Bd. of Educ. of
Portland, Ark. Sch. Dist., 446 F.2d 763, 765-66 (8th
Cir. 1971) (approving class of twenty members). Here, the
proposed Settlement Class size is in the hundreds, as
evidenced by the number of claims forms received from
eligible Class Members. Given the numerosity of Class
Members, joinder is impracticable. Moreover, no party or
Class Member has challenged the numerosity prerequisite.
Accordingly, this Court finds the class sufficiently numerous
to satisfy Rule 23(a)(1).
second prerequisite, commonality, is also met. The threshold
for commonality is low, requiring only that the legal
question “linking the class members is substantially
related to the resolution of the litigation.”
DeBoer v. Mellon Mortg. Co., 64 F.3d 1171, 1174 (8th
Cir. 1995). “When the claim arises out of the same
legal or remedial theory, the presence of factual variations
is normally not sufficient to preclude class action
treatment.” Donaldson v. Pillsbury Co., 554
F.2d 825, 831 (8th Cir. 1977). Here, the Class Members'
claims all derive from the same legal theories: disparate
impact and disparate treatment discrimination under the FHA.
Common questions of law and fact include whether
Defendants' application criteria have a disparate impact
on protected classes; whether Defendants intentionally
discriminated in violation of the FHA; and, if discrimination
is found, whether injunctive relief and punitive damages are
third prerequisite, typicality, exists when there are
“other members of the class who have the same or
similar grievances as the plaintiff.” Id. at
830; see also E. Tex. Motor Freight Sys. Inc. v.
Rodriguez, 431 U.S. 395, 403 (1977). “Typicality
is satisfied when the claims of the named plaintiffs emanate
from the same event or are based on the same legal theory as
the claims of the class members.” Lockwood
Motors, 162 F.R.D. at 575 (internal quotations omitted).
Here, all named Plaintiffs are members of the Displacement
Class because they were residents of Crossroads at Penn on
September 30, 2015, do not reside at Concierge Apartments
now, and belong to households that include at least one
person qualifying as a member of a protected class under the
FHA under one of the following categories: non-white;
handicapped as defined by the FHA; national origin; and
familial status (which, for purposes of this settlement, is
limited to tenants who had or desired to have more than two
individuals reside in a unit due to at least one individual
under the age of 18 residing in the unit). First Marttila
Decl. ¶ 15. Moreover, named Plaintiffs Linda Soderstrom,
Maria Johnson, and Jurline Bryant are also members of the
Application Class because they are members of a protected
class as described above and also applied for tenancy at the
property but were ...