Summers v. Sea Mar Cmty. Health Ctrs.

541 P.3d 381

Jeffrie Alan SUMMERS II, on behalf of himself and all other similarly situated, Respondent,

v.SEA MAR COMMUNITY HEALTH CENTERS, Respondent,Maria Barnes, objector to class action settlement, Appellant.

No. 84910-7-I

Court of Appeals of Washington, Division 1.

Filed January 8, 2024

Thomas Eric Loeser, Hagens Berman Sobol Shapiro, 1301 2nd Ave. Ste. 2000, Seattle, WA, 98101-3810, Kathleen Anne Nelson, Randy Jarl Aliment, Lewis Brisbois Bisgaard & Smith LLP, 1111 3rd Ave. Ste. 2700, Seattle, WA, 98101-3224, Tracy Diana Forbath, Lewis Brisbois Bisgaard & Smith LLP, 550 W. C Street, Suite 1700, San Diego, CA, 92102, for Respondent.

Alexander Strong, Stobaugh & Strong P.C., 126 Nw Canal St. Ste. 100, Seattle, WA, 98107-4970, Anthony L Parkhill, Ben Barnow, 205 W. Randolph St., Suite # 1630, Chicago, IL, 60606, for Appellant Intervenor.

PUBLISHED OPINION

Birk, J.

¶1 Maria Barnes appeals an order granting final approval to a class action settlement, challenging the superior court's denial of her motion to consolidate six class action lawsuits against the defendant, approval of the class notice plan, and approval of the settlement as fair, reasonable, and adequate. We hold the superior court acted within its discretion in making each ruling. First, when the court entertained consolidation, the proponents of two other pending actions had reached a preliminary settlement with the defendant, and the superior court had the discretion to review the potential settlement first, before coordinating the pending actions. Second, the parties agreed the class would be difficult to reach, and the superior court appropriately considered that difficulty in approving the class notice plan as affording the best notice practicable under the circumstances. Last, in arguing that the settlement fell outside the range the superior court had discretion to approve as fair, reasonable, and adequate, Barnes fails to point to more than a speculative possibility that a better settlement might have been achieved. We affirm.

I

¶2 Sea Mar Community Health Centers is a nonprofit organization that provides healthcare services to low-income, underserved, and under- and uninsured communities in Washington. On June 24, 2021, Sea Mar learned from the United States Department of Health and Human Services (HHS) that it had suffered a data security breach when certain data had been copied by an unauthorized actor. On October 29, 2021, Sea Mar sent a notice letter to patients that identified highly sensitive personal and protected health information, such as social security numbers and medical records, that may have been involved in the data security incident. The accessed data potentially impacted 1.2 million Sea Mar patients, guarantors, and employees and included social security numbers for 163,499 individuals. There is no evidence of misuse of any information or that any of the data has been purchased by cybercriminals.

¶3 Between mid-November 2021 and early February 2022, plaintiffs filed six separate class action lawsuits against Sea Mar in King County Superior Court.¹ Maria Barnes and Derek Gannon filed the first action. Only Jeffrie Summers's complaint is before us on appeal, which, based on the data breach incident described above, alleged several Washington common law and statutory claims against Sea Mar. Summers and Alan Hall were represented by the same counsel in different lawsuits and later submitted filings jointly. On January 14, 2022, according to a Sea Mar attorney's declaration, Hall served Sea Mar with discovery requests. On the due date for response, according to the same declaration, Sea Mar responded by producing responsive documents. On February 8, 2022, Sea Mar notified HHS of the pending litigation and requested certification that Sea Mar acted within the scope of a deemed public health services employee. Barnes v. Sea Mar Cmty. Health Ctrs., No. 2:22-181-RSL-TLF, 2022 WL 1541927, at *1 (W.D. Wash. Apr. 27, 2022) (report and recommendation). On February 11, 2022, a U.S. attorney filed a notice pursuant to 42 U.S.C. § 233(l)(1) advising the superior court that the United States was considering whether the United States would intervene in the action. Id.

¶4 On February 14, 2022, Barnes² filed a motion to consolidate the six pending class action lawsuits. In a declaration supporting the motion, Barnes's counsel stated he contacted counsel for plaintiffs in the other five actions and obtained consent from counsel in the Lopez and Waliany actions to a stipulated consolidation. Counsel for plaintiff in Hall did not agree to consolidation, counsel for plaintiff in Summers declined to respond, and counsel for plaintiff in Maynor never provided a position on consolidation.

¶5 On February 16, 2022, Sea Mar filed notices of removal of Summers and Barnes to federal court. Barnes, 2022 WL 1541927, at *1. In its notice of removal of action under 28 U.S.C. § 1346(b)(1), Sea Mar argued the Public Health Services Act (PHSA) and Federally Supported Health Centers Assistance Act (FSHCAA), 42 U.S.C. § 233(a), granted Sea Mar immunity from liability and Summers's only redress was to sue the United States in federal court as Summers's claims fell under the Federal Tort Claims Act, 28 U.S.C. § 1346(b). On February 28, 2022, the superior court struck Barnes's motion to consolidate, noting Sea Mar had sought removal to federal court.

¶6 On March 29, 2022, Hall, Summers, and Sea Mar engaged in an unsuccessful mediation. A former federal judge served as the parties’ mediator. Before mediation, Sea Mar "provided formal discovery related to the merits of Plaintiffs’ claims, potential defenses," and the parties "discussed their respective positions on the merits of the claims and class certification." Following the unsuccessful mediation, the parties continued negotiations and accepted a mediator's proposal to settle the class claims.

¶7 By April 18, 2022, Hall, Summers, and Sea Mar signed a settlement agreement and release. The settlement was subject to court approval. The agreement would release, discharge, and bar all claims asserted or that could have been asserted in the Hall lawsuit or any related action, including Barnes, Lopez, Waliany, Summers, and Maynor. Under the terms of the agreement, Sea Mar would provide compensation for unreimbursed "Ordinary Losses" to a total of $2,500.00 per person upon submission of a timely, complete, and valid claim form with necessary supporting documentation. In the alternative, class members may make a claim for a $100.00 cash payment. Class members who suffer "Extraordinary Losses" are "also" eligible to receive reimbursement up to $25,000.00. The agreement entitles all settlement class members to enroll in IDX Identity Protection Services for three years of three-bureau credit monitoring. IDX carries a $1 million policy that protects the subscriber, monitors the dark web, and provides identity restoration services. Sea Mar funded a non-reversionary settlement fund totaling $4,400,000.00. If the total of settlement payments, IDX protection services, attorney fees and costs, and other fixed settlement costs does not exceed the settlement fund, all remaining funds will be distributed on a pro rata basis to all settlement class members who submit a valid claim up to an additional $100.00 for each claimant. Any remaining funds after that distribution will be paid to a cy pres recipient to be agreed upon by the parties and subject to court approval.

¶8 For class notice, the proposed settlement stated, "[T]he Settlement Administrator shall disseminate" postcard notice "via [U.S. Postal Service] First Class Mail to all Settlement Class Members." This was to be done using "addresses provided by Sea Mar" and after those addresses had been updated with the National Change of Address database. In addition, the settlement administrator was to establish a settlement website and a toll-free telephone number for the class members to obtain information.

¶9 On April 27, 2022, United States Magistrate Judge Theresa Fricke entered a report and recommendation. Barnes, 2022 WL 1541927, at *1. According to the report, the United States filed two notices advising the court that it determined Sea Mar was not deemed a Public Health Service employee under 42 U.S.C. § 233 and removal was procedurally improper. Id. The magistrate judge recommended the court find that removal under the FSHCAA was procedurally deficient and 42 U.S.C. § 233 did not confer subject matter jurisdiction over the action. Id. at *2. The magistrate judge recommended Sea Mar's motion to stay be denied because a stay is automatic only when an action is properly removed under 42 U.S.C. § 233(l)(2). Id. at *3.

¶10 On May 4, 2022, Sea Mar filed a joint motion to remand Summers back to King County Superior Court, which the federal court granted the following day. On May 16, 2022, United States District Judge Robert Lasnik entered an order adopting Judge Fricke's report and recommendation and remanded Barnes back to King County Superior Court. Barnes v. Sea Mar Cmty. Health Ctrs., No. C22-0181RSL-TLF, 2022 WL 1540462, at *1 (W.D. Wash. May 16, 2022) (court order).

¶11 On May 20, 2022, Barnes filed a motion to consolidate her lawsuit with Summers and Hall. Barnes argued the remaining three lawsuits should be consolidated after remand from federal court. Hall, Summers, and Sea Mar opposed Barnes's motion because "consolidation under CR 42(a) is unwarranted" since "this class action case has been settled." On June 3, 2022, the superior court denied Barnes's motion to consolidate.

¶12 On June 17, 2022, Summers, on behalf of himself, Hall, and Wright, filed an "Unopposed Motion for Preliminary Approval of Class Action Settlement and Memorandum in Support." On June 29, 2022, Barnes filed a motion to intervene in Summers and an objection to Summers's motion for preliminary approval. In opposing Summers's motion, Barnes argued Hall, Summers, and Sea Mar had entered into a collusive...