MARY GRACE SIMPAO, JANICE CRUZ, and others similarly situated v. Government of Guam

This disposition is not appropriate for publication and is not precedent*
except as provided by 9th Cir. R. 36-3.
NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MARY GRACE SIMPAO, JANICE
CRUZ, and others similarly situated,
Plaintiffs - Appellants,
and
CHRISTINA NAPUTI,
Plaintiff,
v.
GOVERNMENT OF GUAM,
Defendant - Appellee,
FELIX P. CAMACHO, in his official
capacity as Governor of Guam,
Defendant-intervenor -
Appellee.
No. 08-16230
D.C. No. 1:04-cv-00049-FTG
MEMORANDUM *
Appeal from the United States District Court
for the District of Guam
Frances Tydingco-Gatewood, Chief District Judge, Presiding
FILED
MAR 05 2010
MOLLY C. DWYER, CLERK
U .S. C OU R T OF APPE ALS

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Argued and Submitted February 11, 2010
Honolulu, Hawaii
Before: FARRIS, D.W. NELSON and BEA, Circuit Judges.
Janice Cruz and Mary Jane Simpao (collectively, “Simpao”) appeal the
district court’s approval of the settlement of a class action challenging the decision
by the Government of Guam to withhold payment of Earned Income Tax Credit
(“EIC”) from taxpayers. We have jurisdiction pursuant to 28 U.S.C. § 1291 and
we affirm.
I.
Before approving a settlement, “the court must direct to class members the
best notice that is practicable under the circumstances, including individual notice
to all members who can be identified through reasonable effort.” FED. R. CIV. P.
23(c)(2)(B). This court reviews “de novo whether notice of a proposed settlement
satisfies due process.” Torrisi v. Tucson Elec. Power Co., 8 F.3d 1370, 1374 (9th
Cir. 1993).
The settlement received extensive coverage on television stations, talk radio
stations, and websites. The notice was published twice weekly for four weeks in
the Pacific Daily News and the Marianas Variety, two newspapers of significant
general circulation in Guam. Additionally, the Department of Revenue and

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Taxation (“DRT”) mailed notice to 49,378 taxpayers that were identified as
potentially qualified for the EIC for 1995–96, or 1999–2004, or who filed a claim
in 1997 or 1998 but did not yet receive payment. The government used the last
known address of claimants as provided by claimants on their tax returns. The
DRT maintains an updated database of taxpayer contact information, and although
information was entered into the database “as soon as possible,” some information
was not included because there was a cut-off date for data entry. The deputy
director of the DRT set forth an affidavit explaining that the DRT does not have
the financial and technological resources to access the IRS database to locate
claimants.
Under these circumstances, searching government records for updated
claimant contact information was neither practicable nor constitutionally required.
See Jones v. Flowers, 547 U.S. 220, 235–36 (2006). Instead, consistent with
claimants’ due process rights, the government mailed notice to the most reliable
address and supplemented it by publishing notice in multiple media outlets. Thus,
“[t]he means employed [were] such as one desirous of actually informing the
absentee might reasonably adopt to accomplish it,” Mullane v. Cent. Hanover Bank
& Trust Co., 339 U.S. 306, 315 (1950), and we find Guam provided potential
claimants with the best notice practicable under the circumstances, including

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identifying potential claimants through reasonable efforts and providing them
individual notice. See FED. R. CIV. P. 23(c)(2)(B).
We reject Simpao’s argument that the early mailing of settlement checks
violated claimants’ due process rights. Contrary to Simpao’s assertion, the
procedure did not induce class members to act against their interest. Coupling
notice with cash settlement checks prior to final approval did not make the notice
any less likely to “inform all class members of their opportunity to be heard” and
did not deny them “the opportunity to opt out.” In re Gypsum Antitrust Cases, 565
F.2d 1123, 1125 (9th Cir. 1977).
We also find that the notice clearly and concisely stated in plain, easily
understood language all of the information required by Federal Rule of Civil
Procedure 23. Although the notice did not mirror the models provided by the
Federal Judicial Center, the notice was satisfactory because it “generally
describe[d] the terms of the settlement in sufficient detail to alert those with
adverse viewpoints to investigate and to come forward and be heard.” Churchill
Village, L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004) (internal quotation
marks omitted).

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II.
The court reviews “a district court’s decision to approve a class action
settlement for a clear abuse of discretion.” Molski v. Gleich, 318 F.3d 937, 953
(9th Cir. 2003). The court “will affirm if the district judge applies the proper legal
standard and his [or her] findings of fact are not clearly erroneous.” Id. (alteration
in original).
“If the [settlement] proposal would bind class members, the court may
approve it only after a hearing and on finding that it is fair, reasonable, and
adequate.” FED. R. CIV. P. 23(e)(2). “[W]here the court is ‘[c]onfronted with a
request for settlement-only class certification,’ the court must look to the factors
‘designed to protect absentees.’” Molski, 318 F.3d at 953 (quoting Amchem Prods.,
Inc. v. Windsor, 521 U.S. 591, 620 (1997)). Furthermore, “settlements that take
place prior to formal class certification require a higher standard of fairness.” Id.
(quotations omitted).
We reject Simpao’s argument that the settlement was substantively unfair.
Before the district court issued its final approval of the settlement, Guam provided
the district court with data on the value of the claims filed, an estimate of the
potential value of offsets, the number of claims filed and the theoretical number of
total possible claims. The district court balanced the Torrisi factors and had an

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adequate basis to conclude that the settlement was fair. See Torrisi, 8 F.3d at 1375.
Nor were certain class years unfairly compromised. Although the parties disputed
whether claims for tax year 2000 were time-barred, settlement permitted the parties
to avoid this uncertainty; by foregoing interest as part of the settlement, the
claimants avoided the risk that the case could not be sustained as a class action, as
well as litigation over whether the EIC applied to Guam. Provided with the
opportunity to opt out, few potential class members did so and only the Simpao
parties objected. The district court had an adequate record of the value of the
claims before it issued its judgment, and did not abuse its discretion when it held
that the allocation of funds and the decision to waive interest for all class years
satisfied the standard for substantive fairness.
III.
“Because the district court has broad authority over awards of attorneys’ fees
in class actions, we review the award for abuse of discretion.” Powers v. Eichen,
229 F.3d 1249, 1256 (9th Cir. 2000) (internal quotation marks omitted). “The
district court’s underlying factual determinations are reviewed for clear error and
its legal analysis relevant to the fee determination is reviewed de novo.” Shapiro
ex rel. Shapiro v. Paradise Valley Unified Sch. Dist. No. 69, 374 F.3d 857, 861
(9th Cir. 2004). The “district court abuses its discretion if its decision is based on

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an erroneous conclusion of law or if the record contains no evidence on which it
rationally could have based its decision.” In re FPI/Agretech Sec. Litig., 105 F.3d
469, 472 (9th Cir. 1997) (internal quotation marks omitted).
We reject Simpao’s argument that the district court abused its discretion by
awarding Simpao’s counsel insufficient attorneys’ fees and costs. Simpao asserts
that the district court (1) should not have accepted Torres’s block billing while
rejecting Simpao’s block billing, and (2) should not have included all of Torres’s
hours while crediting Simpao only for hours that resulted in a benefit. However,
the district court has “authority to reduce hours that are billed in block format” and
it was proper to credit counsel for time only where it could “determine how much
time was spent on particular activities.” Welch v. Metro. Life Ins. Co., 480 F.3d
942, 948 (9th Cir. 2007). The district court explained that it rejected Simpao’s
block billing “[w]here the tasks were block billed and unclear.” Additionally, the
fact that Simpao served as an objector while Torres joined and promoted the
settlement serves as a reasonable basis for crediting their requested hours
differently. See Vizcaino v. Microsoft Corp., 290 F.3d 1043, 1051–52 (9th Cir.
2002). The district court considered any actual benefit that accrued to the class as
a result of Simpao’s efforts, and articulated its reasons for concluding that some of

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Simpao’s actions resulted in no benefit. The district court’s award of attorneys’
fees was not an abuse of discretion.
AFFIRMED.

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