United States District Court, W.D. Missouri, Western Division
JAMES KOMOROSKI and GALEN VERHULST, individually and on behalf of those similarly situated, Plaintiffs,
UTILITY SERVICE PARTNERS PRIVATE LABEL, INC. d/b/a SERVICE LINE WARRANTIES OF AMERICA, Defendant.
ORDER CONDITIONALLY CERTIFYING SETTLEMENT CLASS AND
GRANTING PRELIMINARY APPROVAL TO PROPOSED CLASS ACTION
KAYS, UNITED STATES DISTRICT COURT CHIEF JUDGE
case is a putative consumer class action. Plaintiffs James
Komoroski (“Komoroski”) and Galen Verhulst
“Plaintiffs”) purchased utility warranties from
Defendant Utility Service Partners Private Label, Inc., doing
business as Service Line Warranties of America
(“Defendant”), which would defray the cost to
repair and replace the water service line running into their
home. Plaintiffs allege Defendant routinely denied warranty
coverage for some legitimate repair claims.
before the Court are Plaintiffs' motion for preliminary
approval of class action settlement (Doc. 24) and the
parties' Stipulation and Settlement Agreement (“the
Settlement”) (Doc. 26). Finding that a settlement class
should be conditionally certified and that the Settlement is
within the range of reasonableness, the motion for
preliminary approval is GRANTED.
Court has altered the parties' proposed schedule and some
procedures relating to objections and exclusion, so the
parties should read this order carefully.
Rule of Civil Procedure 23(e) mandates judicial review of any
“settlement, voluntary dismissal, or compromise of the
claims, issues, or defenses of a certified class.” In
the Eighth Circuit, “the district court acts as a
fiduciary, serving as a guardian of the rights of absent
class members.” In re Wireless Tel. Fed. Cost
Recovery Fees Litig., 396 F.3d 922, 932 (8th Cir. 2005).
proposed class-wide settlement is reached, it must be
submitted to the court for preliminary approval. W.
Rubenstein, Newberg on Class Actions (5th ed. 2007)
§13:12. District court review of a proposed class action
settlement is a three-step process. Id. §13:10.
Step one is a preliminary, pre-notification determination as
to whether the proposed settlement is “within the range
of possible approval.” Id. If the court grants
preliminary approval, step two is sending notice to the class
describing the terms of the proposed settlement, at which
time “class members are given an opportunity to object
or, in Rule 23(b)(3) class actions, opt out of the
settlement.” Id. The court also holds a
fairness hearing at which class members may appear and
support or object to the settlement. Id. At step
three, the court decides whether to give final approval to
the settlement, taking into account all of the information
learned during the process. Id.
motion concerns the first step, preliminary approval.
Preliminary approval does not require the court to decide the
ultimate question whether a proposed settlement is fair,
reasonable, and adequate. At this stage, the issue is whether
the proposed settlement falls within the range of fairness so
that notice of the proposed settlement should be given to
class members and a hearing scheduled to consider final
approval. See Manual for Complex Litigation, Fourth,
§ 21.632 (2004). If the court determines a proposed
settlement falls within this range and a class has not yet
been certified, its preliminary approval order may
provisionally certify a class and designate class counsel,
class representatives, and a claims administrator.
See Rubenstein §13:12. The preliminary approval
order will also authorize the parties to provide notice of
the proposed settlement to the class and set forth a schedule
for objections, opt-outs, a final fairness hearing, and other
deadlines. See id.
district court cannot certify a class, even for settlement
purposes, “until it is satisfied, after ‘a
rigorous analysis, ' that Rule 23(a)'s certification
prerequisites are met.” In re Target Corp. Customer
Data Sec. Breach Litig., 847 F.3d 608, 612 (8th Cir.
2017) (quoting Wal-Mart Stores, Inc. v. Dukes, 564
U.S. 338, 351 (2011)). This “rigorous analysis”
requires the district court to state “its reasons for
certification in terms specific enough for meaningful
appellate review.” Id. This entails more than
just repeating Rule 23(a)'s language; the district court
must state the basic facts demonstrating each requirement is
certify a class under Rule 23, the plaintiff must first
establish that the proposed class is “adequately
defined and clearly ascertainable.” Sandusky
Wellness Center, LLC v. Medtox Scientific,
Inc., 821 F.3d 992, 996 (8th Cir. 2016). Additionally,
all of the requirements of Rule 23(a) and at least one of the
requirements of Rule 23(b) must be satisfied. Id. at
995. Rule 23(a) requires the moving party to show “(1)
the class is so numerous that joinder of all members is
impracticable . . . (2) there are questions of law or fact
common to the class . . . (3) the claims or defenses of the
representative parties are typical of the claims or defenses
of the class; and (4) the representative parties will fairly
and adequately protect the interests of the class.”
Fed.R.Civ.P. 23(a). These requirements are often summarized
as numerosity, commonality, typicality, and adequacy. In
re Constar Int'l Inc. Sec. Litig., 585 F.3d 774, 780
(3d Cir. 2009). Rule 23(b) requires a showing that
(1) prosecuting separate actions by or against individual
class members would create a risk of:
(A) inconsistent or varying adjudications with respect to
individual class members that would establish incompatible
standards of conduct for the party opposing the class; or
(B) adjudications with respect to individual class members
that, as a practical matter, would be dispositive of the
interests of the other members not parties to the individual
adjudications or would substantially impair or impede their
ability to protect their interests;
(2) the party opposing the class has 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; or
(3) the court finds that the questions of law or fact common
to class members predominate over any questions affecting
only individual members, and that a class action is superior
to other available methods for fairly and efficiently
adjudicating the controversy. The matters pertinent to these
(A) the class members' interests in individually
controlling the prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the
controversy already begun by or against class members;
(C) the desirability or undesirability of concentrating the
litigation of the claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b)(3).
Kansas City, Missouri, (“City”), residents
receive tap water through a series of underground pipes
called water mains that, in residential neighborhoods,
typically run underground in easements along City streets.
City water mains and connections to it are regulated and
maintained by the City's Water Services Department
(“WSD”). City water mains connect to smaller
pipes, called service lines, which run underground from the
mains into buildings and homes.
galvanized pipe was used for the water service lines
connecting water mains to buildings and homes. Galvanized
pipes are steel pipes that have a protective zinc coating.
The zinc coating prevents corrosive substances from reaching
the more delicate part of the pipe-the steel- which is
susceptible to corrosion. Over time, the zinc coating erodes
and corrosion sets in, weakening the steel and eventually
causing a rupture. More recently, WSD required that
galvanized pipe be replaced with copper pipe for service
lines whenever the line is repaired because copper is more
resistant to corrosion.
City, through the WSD, is responsible for maintenance and
upkeep of water mains, and homeowners are responsible for
maintenance of the service lines connecting their homes to
the water mains. If a service line breaks, the burden to pay
the cost of repair/replacement falls on the homeowner.
building and home connected to the City's water system
has a water meter. Historically, a water meter was placed at
the end of a service line, inside a home. More recently,
water meters at residential locations are placed in
underground “meter pits” near the connection
between the City's water main and the service line. WSD
now requires homeowners to relocate inside water meters
outside whenever the service line is repaired.
sells utility warranties. A utility warranty is essentially a
contract whereby a consumer pays a monthly or annual premium
to a warranty provider, such as Defendant, in exchange for
warranty protection against certain leaks, ruptures, and
other needed repairs to utility lines. For example, if a
homeowner purchases a warranty covering his water service
line and the service line subsequently ruptures, the warranty
provider is required to repair or replace the service line,
subject to the terms of the warranty. Defendant sold
approximately 9, 500 of these warranties to customers in
Kansas City, Missouri, which were in effect as of February
purchased a water service warranty from Defendant, and has
not made a claim under that warranty. Verhulst purchased a
water service warranty from Defendant and did experience a
ruptured service line. After making a claim under his
warranty, Verhulst incurred costs associated with the repair
he believes should have been covered by his warranty.
February 17, 2016, Komoroski filed a Petition in the Circuit
Court of Jackson County, Missouri, entitled Komoroski v.
Utility Service Partners Private Label, Inc., d/b/a/ Service
Line Warranties of America (the
“Action”). The Petition alleges Defendant routinely
denied warranty coverage for the cost of replacing galvanized
steel pipes with copper ones, and for relocating interior
water meters outside whenever a service line had to be
repaired. It alleges violations of the Missouri Merchandising
Practices Act (“MMPA”), breach of contract, and
breach of the duty of good faith and fair dealing. It seeks
declaratory relief and damages, including statutory
attorneys' fees under the MMPA. On March 24, 2016,
Verhulst joined the Action as a class representative.
denied the allegations and, on April 1, 2016, removed the
Action to this Court. The case was assigned to the Honorable
Howard F. Sachs, Senior United States District Court Judge.
After removal, Defendant filed a motion to dismiss, which
Judge Sachs denied, and the parties engaged in informal
discovery and extensive arms-length settlement negotiations,
including at least one session with a third-party mediator.
5, 2016, the parties notified Judge Sachs that they had
reached a settlement of all material terms and were “in
the process of finalizing the form of settlement agreement
and motion for preliminary approval to be submitted to the
Court.” Joint Mot. for Stay at 1 (Doc. 20). On January
23, 2017, the parties submitted an initial proposed
settlement (Doc. 24-1). Judge Sachs recused on February 13,
2017, and the case was reassigned to this Court. On February
20, 2017, the parties submitted a slightly modified proposal,
Settlement creates a settlement class (“the Settlement
Class”) defined as “all individuals with
galvanized steel water service lines or interior water meters
in Kansas City, Missouri who purchased a Warranty Agreement
from [Defendant] which was still in effect as of February 17,
2016.” Settlement ¶ ...