Cornelius Lewis v. H&M Hennes Mauritz GBC SB LLC

Case Number

25CV01802

Case Type

Hearing Date / Time

Wed, 12/17/2025 - 10:00

Nature of Proceedings

Plaintiff’s Second Unopposed Motion For Preliminary Approval Of Class Action Settlement

Tentative Ruling

For Plaintiff Cornelius Lewis: Phillip R. Poliner, Neil B. Fineman, Fineman Poliner LLP

                                   

For Defendant H&M Hennes & Mauritz GBC AB LLC: Ethan D. Millar, Alexander Akerman, Alston & Bird LLP

RULING

For all reasons discussed herein, the second unopposed motion of Plaintiff for preliminary approval of class action settlement is denied without prejudice.

Background

On March 25, 2025, Plaintiff Cornelius Lewis (Plaintiff) filed a class action complaint against Defendant H & M Hennes & Mauritz GBC AB LLC (H&M), alleging six causes of action: (1) violation of Civil Code section 1749.5; (2) violation of Civil Code section 1750 et seq. (the Consumers Legal Remedies Act); (3) violation of Business and Professions Code section 17200 et seq. (the Unfair Competition Law); (4) violation of Business and Professions Code section 17500 et seq. (false advertising law); (5) money had and received; and (6) declaratory relief (Civ. Code, § 1060). As alleged in the complaint:

H&M sells clothing and accessories to the general public in retail stores, and gift cards which can be used to buy these items. (Compl., ¶¶ 16-17 & 24-25.) Within the past year, Plaintiff visited an H&M location in California and used an H&M gift card to pay for items purchased by Plaintiff. (Compl., ¶ 26.) After using the gift card to pay for these items, the balance of the gift card was less than $10. (Compl., ¶ 27.) Plaintiff did not want any other items and requested that the gift card be redeemed for cash, which an employee of H&M refused. (Compl., ¶¶ 28-29.) Statements and advertising on H&M’s web site also state that H&M’s gift cards are not redeemable for cash. (Compl., ¶ 31.)

H&M filed an answer to the complaint on May 13, 2025, generally denying its allegations and asserting thirteen affirmative defenses.

On July 31, 2025, Plaintiff filed an unopposed motion (the first motion) for an order: (1) preliminarily approving a settlement agreement between the parties to this action; (2) provisionally certifying a putative class (the Class) of all consumers in California who possess or possessed an H&M gift card with a balance of less than $10 (the Class Members); (3) preliminarily approving the publishing of a “Summary Notice” in the California editions of USA Today; (4) preliminary approving the posting of a “Full Class Notice” on a Web site (the Class Website) to be created by Class Counsel; (5) appointing Plaintiff as the “Class Representative”; (6) appointing the law firm of Fineman Poliner LLP as “Class Counsel”; and (7) setting a final approval hearing; and separately filed a copy of the “Class Action Settlement Agreement And Release” (the Settlement Agreement) at issue in the first motion.

On September 3, the Court entered a minute order (the Order) adopting its tentative ruling denying the first motion.

On October 7, Plaintiff filed a second unopposed motion (the second motion) for an order: (1) preliminarily approving an amended settlement agreement as fair, reasonable, and adequate; (2) provisionally certifying the Class; (3) preliminarily approving the form, manner, and content of class notices; (4) appointing Plaintiff as the “Class Representative”; (5) appointing the law firm of Fineman Poliner LLP as “Class Counsel”; and (6) setting a final approval hearing. On the same date, Plaintiff separately filed an “Amended Settlement Agreement And Release” (the Amended Agreement).

The Amended Agreement

The Amended Agreement, which is executed by the parties to this action, includes the same definitions appearing in the Settlement Agreement further discussed in the Order, in regard to: the “Class” and the “Class Members”, which include all consumers in California who possess or possessed an H&M gift card with a balance of less than $10; the “Class Period”, which runs from March 25, 2020, through the date the Court enters an order preliminarily approving the Amended Agreement; the “Claims Period”, which ostensibly begins 10 days after the Court approves the Amended Agreement and ends 90 days after the Amended Agreement is finally approved by the Court, or when a limit of 3,853 valid and timely claims for a replacement e-gift card have been made by the Class Members, whichever comes first; the Class Representative, who is Plaintiff; Class Counsel; and the “Class Website” to be created by Class Counsel. (Am. Agmt., ¶¶ 2.2, 3.3-3.5, 3.7-3.8 & 3.16.)

Pursuant to the terms and conditions of the Amended Agreement, H&M agrees: (1) that H&M will comply with Civil Code section 1749.5 (the Gift Card Law) in all of its California locations; (2) that H&M Fashion USA, Inc., (H&M Fashion), which is H&M’s operating affiliate, “will thoroughly review its policies and practices in regard to redeeming its gift cards and update its employee materials, standard operating procedures, etc., to state: ‘In California, H&M gift cards with balances under $10 are redeemable for cash and must be redeemed for cash upon request, or similar language”; (3) that H&M Fashion will, within 60 days of “Final Judicial Approval” as that term is defined in the Amended Agreement, “hold at least one in-person or online session for its existing guest-facing managers and employees in its California locations during which H&M gift card redemption policies and procedures for the redemption of gift cards below $10.00 will be reviewed with employees”; (4) that H&M Fashion will “instruct new employees hired after Final Judicial Approval that in California, H&M gift cards with balances under $10 are redeemable for cash and must be redeemed for cash upon request”; (5) that within 60 days of Final Judicial Approval, H&M Fashion will post for 18 months, a reasonably sized notice in an employee-only area stating the following: “In California, H&M gift cards with balances under $10 are redeemable for cash and must be redeemed for cash upon request, or similar language”; (6) that H&M Fashion will ensure, within 30 days after Final Judicial Approval, that all H&M retail stores in California have the ability to provide cash back on a gift card with a balance of less than $10; and (7) that, within 60 days after Final Judicial Approval, H&M Fashion will publish for 18 months on its gift card terms and conditions page, the following or similar language: “In California, H&M gift cards with balances under $10 are redeemable for cash....” (Am. Agmt., ¶¶ 4.1-4.7.)

The parties further agree that H&M will perform its own internal audits of compliance with the terms set forth above, two times during a two-year period following Final Judicial Approval, and will provide to Class Counsel a declaration from an authorized representative of H&M Fashion confirming such compliance. (Am. Agmt., ¶¶ 4.8-4.9.)

The Amended Agreement also describes the claims process to be administered by Class Counsel, and through which Class Members may seek restitution for discarded gift cards. (Am. Agmt., ¶ 4.10.) Pursuant to this procedure, individual Class Members who, under penalty of perjury, affirm that they discarded an H&M gift card with a remaining balance of less than $10 after being informed by an H&M employee that the card could not be redeemed for cash, will be eligible to receive a $10 replacement e-gift card redeemable at any H&M store in California without a minimum purchase. (Am. Agmt., ¶¶ 4.10 & 4.10.1.)

The total number of replacement gift cards to be issued under this claims process will be capped at 3,853, which the parties agree represents the aggregate remaining balance of $38,530.00 on all affected H&M gift cards with a balance under $10. (Am. Agmt., ¶ 4.10.) The replacement e-gift cards will be provided by H&M or H&M Fashion upon the submission of valid claims during the Claims Period. (Am. Agmt., ¶¶ 4.10.1.)

Instructions for making a claim under the process described above will be set forth on the Class Website within ten days following Final Judicial Approval. (Am. Agmt., ¶ 4.10.1.) The Class Website will include instructions for making a claim for a replacement e-gift card under the process described above. (Ibid.)

To file a claim for a replacement e-gift card, Class Members must provide the affirmation described above within an electronic claim form (the Claim Form). (Am. Agmt., ¶¶ 3.2, 4.10.1 & Exh. 1 [Claim Form].) The Claim Form must identify the Class Member’s name, address, telephone number, and e-mail address, and must be submitted to Class Counsel for processing. (Am. Agmt., ¶ 4.10.1.)

The replacement gift cards described above will be limited to one per household, as determined by the mailing or “IP” address of the claimant. (Am. Agmt., ¶ 4.10.1.) Class Counsel may contact Class Members to follow up on potentially fraudulent claims provided there exists sufficient evidence raising a credible suspicion about that claim (such as multiple claims being made from the same “IP” address). (Ibid.) In addition, H&M may request that Class Counsel or a designated third-party request further information from a Class Member to verify that member’s claim for a replacement e-gift card. (Am. Agmt., ¶ 4.10.2.)

The Amended Agreement further provides that, within seven days after the Claims Period concludes, Class Counsel will transmit to H&M’s counsel by email, a final accounting of all timely and valid claims received by Class Counsel. (Am. Agmt., ¶ 4.10.2.) Within twenty-one days of its receipt of these claims, H&M must respond to Class Counsel and identify any claims that it or its counsel believe are untimely or invalid. (Ibid.) The parties will promptly work together to resolve any disputes regarding the validity of claims, including by mediating any dispute that they are unable to resolve on their own. (Ibid.) To the extent the parties are unable to resolve any disputes, that dispute will be resolved by the Court pursuant to its authority under California Rules of Court, rule 3.769. (Ibid.)

Within seven days of finalizing all timely and valid claims, H&M or its counsel will transmit to Class Counsel an amount of replacement e-gift cards equaling the lesser of the number of valid and timely claims, or 3,853. (Am. Agmt., ¶ 4.10.2.) Class Counsel shall, within seven days, transmit the replacement e-gift cards to Class Members making such claims. (Ibid.) If more than 3,853 timely and valid claims are submitted, only the first 3,853 timely and valid claims will be honored with a $10 replacement gift card. (Ibid.) No other monetary relief will be provided to the Class Members. (Ibid.) In addition, any amounts not provided to the Class Members due to a failure to submit a claim will remain with H&M. (Am. Agmt., ¶ 4.11.)

The parties agree that Plaintiff, as the Class Representative, shall receive an incentive award in the amount of $1,500, in recognition of the risks incurred to commence this action, and the time and effort expended to serve the interests of the class. (Am. Agmt., ¶ 4.13.)

The parties further agree that Class Counsel may recover attorney’s fees and costs in the amount of $75,000, based on the uncertainties of trial, the benefits to be obtained under the proposed settlement, and the costs, risks, and delays associated with the continued prosecution of this litigation, among other things. (Am. Agmt., ¶ 4.14.)

The Amended Agreement includes a general release by Plaintiff. (Am. Agmt., ¶ 5.2.) The Class Members will release “all known claims, rights, liabilities, damages, judgments, indebtedness, losses, liens, demands, actions, and causes of action of any nature, which [p]laintiff or Class Members alleged or could have alleged based on the facts pled in the Action or have, had, or may have against [H&M] in connection with or that arise out of or relate in any manner whatsoever, in whole or in part, to any claim based on any failure by [H&M] to redeem a gift card with a balance of less than $10.00 for cash in California or any statement by [H&M] advising that a gift card with a balance of less than $10.00 is not redeemable for cash in California, including but not limited to, all claims that have been brought or could have been brought based on the facts pled in the Action, and including any claims relating to any policies, practices, or procedures that in any way relate to the redemption of gift cards with a balance of less than $10.00 for cash in California.” (Am. Agmt., ¶¶ 3.17 & 5.1.)

Subject to the Court’s approval, H&M will, within 20 days after the Court preliminarily approves the Amended Agreement, publish a “notice” in the form of a link (the Link Notice) on its online Web sites which will refer readers to the Web site where a “Notice of Pendency of Class Action and Proposed Settlement” (the Full Class Notice), and directions on how to make a claim, may be reviewed. (Am. Agmt., ¶¶ 3.13, 6.2.1 & Exh. 2.) The Link Notice will appear on these Web sites until the expiration of the “Objection and Opt-Out Date”, which is defined as “forty-five (45) days after the first issuance of the Summary Class Notice and Full Class Notice.” (Am. Agmt., ¶¶ 3.6, 3.14 & 6.2.1.)

Class Counsel will, also within 20 days after the Court preliminarily approves the Amended Agreement, publish the Full Class Notice on the Class Website which, within 10 days after Final Judicial Approval, will be modified to provide directions on how to make a claim for a replacement gift card. (Am. Agmt., ¶ 6.2.2.) Class Counsel will bear the cost of purchasing, creating, maintaining, and hosting the Web site. (Ibid.)

Not later than 16 Court days prior to the final fairness hearing, Class Counsel will submit a declaration to the Court certifying that the Link Notice and Full Class Notice described above were provided in accordance with the terms of the Amended Agreement. (Am. Agmt., ¶ 6.2.3.)

Under the terms of the Amended Agreement, Class Members may object to the settlement by either appearing in person at the final approval hearing, or, alternatively, by serving a written objection on Class Counsel by mail no later than the “Objection and Opt-Out Date” described above. (Am. Agmt., ¶ 6.3.) A written objection to the Settlement Agreement must contain the Class Member’s name, home address, and telephone number to permit the parties to confirm that the objector is a Class Member. (Ibid.) Plaintiff must file all timely and valid objections, including any notices of intention to appear at the final approval hearing that may be received from Class Members (if any) with Plaintiff’s motion for final approval of the Amended Agreement. (Ibid.)

Class Members may also opt out of and not be bound by the Amended Agreement by serving a written request for exclusion and delivering that request to Class Counsel, which must be postmarked on or before the Objection and Opt-Out Date. (Am. Agmt., ¶ 6.4.) A written request for exclusion must contain (a) the full name, home address, and telephone number of the person requesting exclusion, (b) the name of this action, and (c) a statement that the person is a Class Member and wishes to be excluded. (Ibid.) Any Class Member who timely and properly requests exclusion will not have any rights under the parties’ settlement, will not be entitled to receive a replacement e-gift card, and will not be bound by the Amended Agreement or the Court’s order finally approving the settlement. (Ibid.) If the number of individuals who submit written requests for exclusion equals or exceeds 100 Class Members, H&M may elect to void the Amended Agreement. (Ibid.)

The above summary is not intended to be exhaustive in regard to the terms of the Amended Agreement which the Court has reviewed in full.

The Declaration of Plaintiff’s Counsel

The motion is supported by a declaration of Plaintiff’s counsel, Neil B. Fineman, which, subject to exception as further discussed below, does not include additional or new information apart from that which appears in the Fineman declaration submitted in support of the first motion. Instead, the Fineman declaration submitted in support of the first motion provides Plaintiff’s responses to concerns raised in the Order.

Fineman states that the parties agreed that H&M would instead publish the Link Notice through links on multiple Web pages hosted by H&M, including a “Gift Card” Web site, which will direct readers to the Class Website where the Full Class Notice can be reviewed with instructions for submitting a claim. (Fineman Decl. [second motion], ¶ 4.) Fineman contends that this method of notice is superior to the one-time publication in USA Today contemplated in the first motion and Settlement Agreement. (Ibid.)

Fineman contends that, though the Settlement Agreement did not require H&M to include any postings advising any person of the applicable provisions of California law in regard to the redeeming of gift cards, there exists no statute or regulation imposing such a requirement, and that the Legislature recently considered and rejected an amendment to the Gift Card Law that would have imposed an in-store posting requirement. (Fineman Decl. [second motion], ¶ 5.) For these reasons, among others, Fineman contends, the parties declined to add such a requirement to the Amended Agreement. (Ibid.)

Fineman asserts that the requirement that H&M publish, for 18 months, the statement described above ensures that H&M customers will be informed of their rights under the Gift Card Law, in a manner consistent with the law and the Court’s directive. (Fineman Decl. [second motion], ¶ 5.)

Further, Fineman states that the Full Class Notice has been revised to notify the Class Members of the date on which an electronically transmitted request for exclusion must be received by Class Counsel, or postmarked if sent in paper form. (Fineman Decl. [second motion], ¶ 6.)

Fineman also contends that the Gift Card Law does not require a retailer to automatically redeem a gift card for cash, and instead leaves the decision of whether to maintain the remaining balance or request a cash redemption to the consumer. (Fineman Decl. [second motion], ¶ 7.) For this reason, Fineman contends, the requirement that a customer ask for cash back before a gift card will be redeemed for cash is consistent with the text of the Gift Card Law. (Ibid.)

Fineman states that the period in which H&M must post a notice in its employee-only area and publish on its gift card terms and conditions Web page, a notice stating that gift cards with a balance under $10 are redeemable for cash, has been extended to 18 months, which Fineman contends broadens the scope of the notice and ensures the Class and the general public are meaningfully informed of their rights. (Fineman Decl. [second motion], ¶ 8.)

As to the Court’s concerns regarding what appeared to be a unilateral right by H&M to reject claims asserted by Class Members, Fineman asserts that, though the Settlement Agreement did not confer that right on H&M, the Amended Agreement clarifies that, to the extent the parties are unable to resolve any dispute as to the validity or timeliness of any claim after a mediation, the Court will resolve that dispute. (Fineman Decl. [second motion], ¶ 9.) Fineman also asserts that any amounts not provided to Class Members will remain the property of the holder of the gift card until that card is redeemed, and will not result in any profit to H&M. (Fineman Decl. [second motion], ¶ 10.)

Analysis

As noted in the Order, the Court must approve the Amended Agreement after a hearing. (Cal. Rules of Court, rule 3.769(a); Luckey v. Superior Court (2014) 228 Cal.App.4th 81, 93 (Luckey).) A written motion for preliminary approval of a settlement of a class action must include a copy of the settlement agreement, the proposed notice to the members of the putative class, and a proposed order. (Cal. Rules of Court, rule 3.769(c).) As Plaintiff has filed a copy of the Amended Agreement, lodged a proposed order with the second motion, and included the Link Notice and Full Class Notice described above, the Court finds that the second motion is procedurally appropriate.

When a class action is settled before class certification under the procedure described in California Rules of Court, rule 3.769, “certification and settlement approval occur simultaneously.” (Luckey, supra, 228 Cal.App.4th at p. 93.) After the preliminary settlement hearing, the Court makes “an order approving or denying certification of a provisional settlement class….” (Cal. Rules of Court, rule 3.769(d).) If the Court grants preliminary approval of the settlement, the Court’s order must include “the time, date, and place of the final approval hearing; the notice to be given to the class; and any other matters deemed necessary for the proper conduct of a settlement hearing.” (Cal. Rules of Court, rule 3.769(e).)

Code of Civil Procedure section 382 authorizes class actions “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the Court, one or more may sue or defend for the benefit of all.” (Code Civ. Proc., § 382.) “Class certification requires proof (1) of a sufficiently numerous, ascertainable class, (2) of a well-defined community of interest, and (3) that certification will provide substantial benefits to litigants and the Courts, i.e., that proceeding as a class is superior to other methods. [Citation.]” (Fireside Bank v. Superior Court (2007) 40 Cal.4th 1069, 1089.)

To determine whether a class is ascertainable, the Court examines “(1) the class definition, (2) the size of the class, and (3) the means available for identifying class members. [Citation.]” (Reyes v. San Diego County Bd. of Supervisors (1987) 196 Cal.App.3d 1263, 1271.) “A related inquiry is manageability of the proposed class[.]” (Global Minerals & Metals Corp. v. Superior Court (2003) 113 Cal.App.4th 836, 849.) “The community of interest requirement embodies three factors: (1) predominant common questions of law or fact; (2) class representatives with claims or defenses typical of the class; and (3) class representatives who can adequately represent the class.” (Richmond v. Dart Industries, Inc. (1981) 29 Cal.3d 462, 470.) “The burden is on the party seeking certification to establish the existence of both an ascertainable class and a well-defined community of interest among the class members.” (Washington Mutual Bank, FA v. Superior Court (2001) 24 Cal.4th 906, 913.)

“Because a Court evaluating certification of a class action that settled prior to certification is considering certification only in the context of settlement, the Court’s evaluation of the certification issues is somewhat different from its consideration of certification issues when the class action has not yet settled. In some ways, the Court’s review of certification of a settlement-only class is lessened; as no trial is anticipated in a settlement-only class case, ‘the case management issues inherent in the ascertainable class determination need not be confronted.’ [Citation.] However, other certification issues, ‘those designed to protect absentees by blocking unwarranted or overbroad class definitions’ require heightened scrutiny in the settlement-only class context ‘for a Court asked to certify a settlement class will lack the opportunity, present when a case is litigated, to adjust the class, informed by the proceedings as they unfold.’ [Citation.]” (Luckey, supra, 228 Cal.App.4th at pp. 93-94.) To protect absent class members whose rights may not have been considered by the settling parties, and to ensure the absence of fraud and collusion, heightened scrutiny is required if there has been no adversary certification. (Ibid.)

Though the Amended Agreement provides a definition of the Class and Class Members, absent from the second motion is any evidence or information showing the size of the class, the means available for identifying class members, whether there exist a community of interest, why Plaintiff’s claims are typical of the Class, or why Plaintiff can adequately represent the Class, among other things. Instead, the motion asserts that, because the Court did not identify in the Order any deficiencies with respect to certification of the proposed class definition, Plaintiff “does not restate the arguments in support of class certification previously presented. Instead, through the accompanying [Fineman declaration], Plaintiff addresses the concerns the Court raised regarding the original Settlement Agreement and demonstrates how the Amended Settlement Agreement remedies those issues consistent with the [Order].” (Memorandum at p. 5, l. 27- p. 6, l. 5.)

The Court understands the statement appearing in the second motion and described above to incorporate the information, evidence, and arguments appearing in the first motion, or its supporting papers, in the second motion and will therefore refer to that motion or those papers where necessary.

Information appearing in the first motion shows that, prior to filing this action, Fineman’s firm hired private investigators to determine whether employees at H&M’s retail stores in California were complying with the Gift Card Law. (Fineman Decl. [first motion], ¶¶ 7 & 10.) These investigations revealed that employees at those retail stores were frequently failing to comply with lawful requests for cash back from gift cards under $10. (Fineman Decl. [first motion], ¶ 7.)

Fineman further states that, after the complaint was filed, Fineman’s firm prepared and served informal and formal requests for H&M’s policy and procedures manuals and spreadsheets of gift card counts and balances. (Fineman Decl. [first motion], ¶¶ 7 & 11.) Upon the receipt and review of H&M’s verified responses to that discovery, Fineman performed additional investigation and analyses including by hiring an investigator to perform a second set of investigations and audits to determine H&M’s compliance with the law, and by researching marketing databases and secondary sources related to gift card sales and redemptions. (Ibid.)

According to Fineman, the identity of each member of the putative class is not known to the parties because the names of the purchasers of H&M gift cards are not recorded, the gift cards are transitory, and the final holder of each gift card is unknown. (Fineman Decl. [first motion], ¶ 14.) Fineman states that, based on H&M’s discovery responses, there exist approximately 10,100 gift cards sold by H&M in California with a present balance of less than $10. (Fineman Decl. [first motion], ¶ 4.)

For all reasons discussed above, the first motion is sufficient to show the existence of a numerous, ascertainable class with a well-defined community of interest consisting of 10,100 holders of gift cards sold by H&M with a balance of less than $10, who were or may have been denied a cash redemption as required by Civil Code section 1749.5, subdivision (b)(2).

In addition, though it appears that the identity of each holder of a gift card with a balance of less than $10 is not known, there appears to be a sufficient means available to identify the number of putative members of the class from spreadsheets provided to Plaintiff by H&M. Considering the allegations of the complaint and information appearing in the declaration submitted by Plaintiff in support of the first motion, which states that Plaintiff requested but was denied the cash balance of Plaintiff’s gift card with a balance of less than $10, Plaintiff appears to have claims typical of the Class and to be able to adequately represent that class. (See Lewis Decl. [first motion], ¶¶ 3-6.) For these reasons, there appears to be reasonable support for provisional certification of the settlement class.

To protect the rights of class members including the named Plaintiff, the Court must also determine if the proposed class action settlement is fair, adequate, and reasonable. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1800–1801 (Dunk).) The Court considers relevant factors including “the strength of [Plaintiff’s] case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and the stage of the proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement.” (Id. at p. 1801.) The Court’s inquiry is limited “ ‘to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.’ [Citation.]” (Ibid.)

“[A] presumption of fairness exists where: (1) the settlement is reached through arm’s-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the Court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small.” (Dunk, supra, 48 Cal.App.4th at p. 1802.) “Public policy generally favors the compromise of complex class action litigation.” (In re Microsoft I-V Cases (2006) 135 Cal.App.4th 706, 723, fn. 14.)

Information presented in the first motion and described above shows that Plaintiff engaged in informal investigations and discovery to which H&M has responded. After reviewing the discovery responses of and documents produced by H&M, the parties participated in a private mediation with Judge William McCurine, Jr. (Retired) of Judicate West, who proposed a cap of 3,853 claims because the amount of money remaining on all gift cards under $10 totals approximately $36,620. (Fineman Decl. [first motion], ¶¶ 7, 9 & 11-12.) Fineman explains that, if all replacement gift cards worth $10 were claimed, the amount of money disgorged from H&M would total $36,620. (Ibid.) The parties and Judge McCurine agreed that it would be unjust and unfair if H&M was required to disgorge more money than that which presently exists on gift cards with a balance of less than $10. (Ibid.)

Fineman also asserts that the statutory consumer claims alleged in the complaint would not permit a private individual to obtain pecuniary damages, notwithstanding whether the alleged violations of the Consumers Legal Remedies Act, the Unfair Competition Law, and the false advertising law permit limited injunctive relief on behalf of the putative class. (Fineman Decl., ¶ 5.) Plaintiff believes that the injunctive relief agreed upon by the parties exceeds the kind and type of injunctive relief that could be ordered by the Court if this matter went to trial and Plaintiff was successful. (Ibid.) In addition, Fineman states that the recovery for each class member, if the settlement is approved, will include equitable relief through H&M’s implementation of changes to its policies and practices, and restitution consisting of replacement e-gift cards valued at $10. (Fineman Decl., ¶ 6.) Fineman also contends that all Class Members and those California consumers who own an H&M gift card with a gift card balance above $10, as well as all future H&M gift card holders, will receive equitable benefits if the settlement is approved by the Court. (Fineman Decl., ¶ 13.)

Upon review of further information presented in the second motion, it appears to the Court that the Amended Agreement is the product of an arms-length mediation and subsequent negotiations by the parties, including negotiations resumed by the parties after the Order was entered. (See, e.g., Memorandum [second motion] at p. 5, ll. 18-20.)

In addition, the claims released by Class Members are appropriately limited to those which were or could have been brought based non the facts pleaded in this action, as to any failure by H&M to redeem a gift card with a balance of less than $10 or statement by H&M that a gift card with a balance of less than $10 is not redeemable for cash in California. (Am. Agmt., ¶ 3.17.)

Plaintiff has also presented evidence of the risks of uncertainty associated with protracted litigation in regard to the scope of relief available for any violation of the Gift Card Law and the certification of the Class. ((Memorandum [first motion] at pp. 20-21; Fineman Decl. [first motion], ¶ 26.) Class Counsel also appear to have sufficient experience with wage and hour litigation matters. (See Fineman Decl. [first motion], ¶¶ 15-18; Poliner Decl. [same], ¶¶ 4-5.)

Notice to the class must “contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.” (Cal. Rules of Court, rule 3.769(f); Cellphone Termination Fee Cases (2010) 186 Cal.App.4th 1380, 1390.) “The content of the class notice is subject to Court approval.” (Cal. Rules of Court, rule 3.766(d).) “The manner of giving notice is subject to the trial Court’s virtually complete discretion.” (Chavez v. Netflix, Inc. (2008) 162 Cal.App.4th 43, 58, original italics.)

To the extent Class Members may request exclusion from the Class, the notice must include all the items set forth in California Rules of Court, rule 3.766(d), which include “[a] statement that the Court will exclude the member from the class if the member so requests by a specified date[]” and “[a] procedure for the member to follow in requesting exclusion from the class[.]” (Cal. Rules of Court, rule 3.766(d)(2) & (3).)

 In addition, to determine the sufficiency of the manner of giving the notice to class members, the Court considers the factors set forth in California Rules of Court, rule 3.766(e). “If personal notification is unreasonably expensive or the stake of individual class members is insubstantial, or if it appears that all members of the class cannot be notified personally, the Court may order a means of notice reasonably calculated to apprise the class members of the pendency of the action--for example, publication in a newspaper or magazine; broadcasting on television, radio, or the Internet; or posting or distribution through a trade or professional association, union, or public interest group.” (Cal. Rules of Court, rule 3.766(f).)

The Court has reviewed the proposed Full Class Notice, which is attached to the Amended Agreement. Though that notice is easy to understand and informs Class Members of the pendency of the present action, the manner in which the Link Notice and the Full Class Notice will be given does not appear sufficient to notify Class Members of their rights and obligations in connection with the proposed settlement, or to comply with due process. (Martorana v. Marlin & Saltzman (2009) 175 Cal.App.4th 685, 694-695; 7-Eleven Owners for Fair Franchising v. Southland Corp. (2000) 85 Cal.App.4th 1135, 1164.)

As a threshold matter, the Court notes that the Amended Agreement defines the “Class Notices” to include “the Summary Class Notice and Full Class Notice.” (Am. Agmt., ¶ 3.6.) The information appearing in the Fineman declaration and further described above shows that the parties have agreed to forgo using the “Summary Class Notice” at issue in the first motion. For this reason, and notwithstanding that the definition of “Class Notices” appearing in the Amended Agreement appears inaccurate, the Court understands this term to refer to the Link Notice described above, which H&M will publish on its Web sites.

Considering that the available evidence and information, which was ostensibly derived from H&M’s discovery responses, shows that the 10,100 gift cards at issue were “sold in California locations...” (Memorandum [first motion] at p. 11, ll. 18-19; Fineman Decl. [first motion], ¶ 6), and absent any evidence or information showing that a substantial majority of the gift cards at issue with a present balance of less than $10 were sold through the Web sites on which the Link Notice will be published, it appears that the publishing of the Link Notice on H&M’s Web site is insufficient to give reasonable notice to the putative members of the Class.

It is also unclear from information appearing in the first motion and the second motion whether there exists a mechanism to ascertain the retail locations where the gift cards at issue were sold from the discovery provided by H&M and described in the Fineman declarations. To the extent these locations may be ascertained from that data, it is also unclear why notice to putative members of the Class will not be provided in a conspicuous location at those physical retail store locations, where those consumers who have or are ostensibly likely to view or purchase H&M’s products or gift cards would be most likely apprised of the pendency of this action and the parties’ settlement, among other things.

Furthermore, the Link Notice is described in a general and conclusory manner without any information in regard to the text of the Link Notice, or the specific manner in which that notice will be given on the Web sites of H&M. Absent a sufficiently detailed description of the Link Notice or the manner in which the Link Notice will be published, and for all reasons further described above, the Court is unable to determine whether the publishing of the Link Notice on any H&M Web site is sufficient to provide notice to the putative class of the pendency of or the claims and defenses asserted in this action, or their rights in connection with the proposed settlement.

The Court further notes that the Amended Agreement requires that H&M and Plaintiff publish, respectively, the Link Notice and the Full Class Notice within 20 days after the Court preliminarily approves the Amended Agreement. (Am. Agmt., ¶¶ 6.2.1-6.2.2.) The Amended Agreement does not specify whether the Link Notice and the Full Class Notice may be published on the same or different dates.

The Court also notes that the “Objection and Opt-Out Date” by which Class Members must either submit objections to or opt out of the Amended Agreement runs from forty-five days after the “first issuance” of the Link Notice and the Full Class Notice. (Am. Agmt., ¶ 3.14.) To the extent the Link Notice and the Full Class Notice are published or posted at different times within the 20 day period stated above, the “Objection and Opt-Out Date” appears unclear, and dependent upon whether Plaintiff or H&M first publishes notice. This gives rise to some question as to whether the notice plan is sufficient or reasonable.

For example, to the extent H&M first publishes the Link Notice and before Class Counsel publishes the Full Class Notice, the “Objection and Opt-Out Date” would expire forty-five days later without regard to the date on which the Full Class Notice was later published. The same would occur to the extent Class Counsel first published the Full Class Notice and before H&M published the Link Notice. For these reasons, the notice plan described in the Amended Agreement gives rise to a substantial risk that Class Members will not be sufficiently or accurately informed of the correct deadline by which they must object to or opt out of the settlement. Notwithstanding these deficiencies, the Court may be willing to approve a notice plan which provides that the “Objection and Opt-Out Date” expires forty-five days from the last issuance of the Link Notice and Full Class Notice.

The Full Class Notice also states that any objection to or request to be excluded from the Class which is transmitted electronically must be “received” by Class Counsel by the “Objection and Opt-Out Date”. (Am. Agmt., Exh. 2.) It is unclear whether the term “received” means transmitted by the member of the Class, or something else, or why any electronic transmission cannot be made on the same date on which any written request must be postmarked. (Am. Agmt., ¶¶ 6.3-6.4.) Plaintiff fails to explain this inconsistency or why this procedure does not give rise to different deadlines depending on whether a request by a Class Member is transmitted electronically or by mail.

The Full Class Notice and Amended Agreement are also inconsistent. For example, the Full Class Notice states that H&M will publish for 12 months the language described above, whereas the Amended Agreement requires H&M to publish this language for 18 months. (Am. Agmt., ¶ 4.7 & Exh. 2 at pdf p. 21.)

Considering that the information and evidence submitted with the first motion shows or suggests that H&M employees frequently refused to comply with lawful requests by H&M customers to redeem gift cards under $10 (see Fineman Decl. [first motion], ¶ 7), the Court questions why the language further described above will be posted for 18 months only, or why there is any time limit for the publishing of language notifying H&M employees of the requirements of the Gift Card Law, or advising H&M customers of their rights under that law.

Moreover, as noted in the Order, an employee and a customer must first be aware of rights afforded under California law in regard to redeeming of gift cards before a customer can request and an employee can provide a gift card redemption, in particular if customers have in the past, and as alleged in this action, frequently been denied a cash value redemption by employees of H&M. As H&M has ostensibly agreed to publish this language with the condition that H&M may remove it after the passage of 18 months, there exists some question as to whether there exists any overreaching in this regard.

As to Plaintiff’s contention that the Legislature considered and rejected an in-store posting requirement, the Court’s copy of Plaintiff’s request for judicial notice of various legislative history materials does not include copies of those materials as stated in that request.

In addition, Plaintiff fails to advance any reasoned argument showing the content of the posting requirement rejected by the Legislature, the circumstances under which any posting requirement would be imposed, why that posting requirement was rejected, or why any such rejection is relevant to the Court’s consideration of the fairness or adequacy of the terms and conditions of a class action settlement pursuant to which a retailer has agreed to a posting requirement as opposed to a unilateral requirement imposed upon all retailers notwithstanding whether that retailer is a party to a class action settlement addressing alleged violations of that law. For these all further reasons discussed above, the Court will deny Plaintiff’s request for various legislative history materials which do not appear to be relevant to the issues presented including whether the Amended Agreement is fair, reasonable, or adequate under the circumstances present here. (Mangini v. R. J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063, overruled on other grounds in In re Tobacco Cases II (2007) 41 Cal.4th 1257, 1276.)

The examples provided above are intended to be illustrative and not exhaustive, and the Court declines to issue an advisory opinion as to the manner in which the Amended Agreement or notice plan may be revised. For all reasons further discussed above, the Court is unable to find that the notice plan contemplated by the Amended Agreement is adequate to provide sufficient or reasonable notice of the present action or the terms and conditions of the Amended Agreement including the procedures that must be followed to request a replacement gift card or to file written objections or requests for exclusion, among other things. For these reasons, the Court is unable to conclude that the settlement is fair or adequate, and not the product of overreaching or collusion. (Dunk, supra, 48 Cal.App.4th at p. 1801.) Therefore, and notwithstanding that the Court would be inclined to grant Plaintiff’s request for provisional certification of the Class and for an order appointing Plaintiff as Class Representative and Plaintiff’s counsel as Class Counsel as requested in the second motion, the Court will deny that motion for all reasons discussed herein, without prejudice to any future motion for preliminary approval of any revised agreement that may be reached by the parties.