state of minnesota district court case type: civil … · 2018-11-02 · boulevard, suite 1200,...

STATE OF MINNESOTA DISTRICT COURT

HENNEPIN COUNTY FOURTH JUDICIAL DISTRICTCASE TYPE: CIVIL OTHER

Edain Altamirano Flores; Esperanza Herrera; Lori Nicol; Olutundun Arike Ogundipe;Jason Beck; Patricia Goggin; Norma Juarez; and Bruno Gorostieta, on behalf ofthemselves and all others similarly situated,

Plaintiffs,

v.

Spiros Zorbalas; Stephen Frenz; EquityResidential Holdings, LLC; NationalHousing Fund, LLC; The Apartment Shop,LLC; ERT, LLC; Quarters for Creativity,LTD.; Emerald Square Properties, Inc.;Hennepin Quarters, Inc.; PowderhornQuarters, Inc.; Hiawatha Quarters, Inc.; 25&3146 Properties, Inc.; Lahaha Holdings,Inc.; Arts Avenue Properties, Inc.; SSQuarters, Inc.; Berkeley Holdings, Inc.;1801Properties, Inc.; SZ112, Inc.; S1322,Inc.; R110, Inc.; G121, Inc.; Alpha-Omega Companies, Inc.; JAS Apartments, Inc.;Jennifer Frenz; Mary Brandt; and 2020 Vision Investments, LLC,

Defendants.

Court File No. 27-CV-16-14225Class Action

Judge Mary R. Vasaly

SETTLEMENT AGREEMENT

This Settlement Agreement and Release (the “Settlement Agreement”) is entered into by,

between, and among (1) plaintiffs Edain Altamirano Flores, Esperanza Herrera, Lori Nicol,

Olutundun Arike Ogundipe, Jason Beck, Patricia Goggin, Norma Juarez, and Bruno Gorostieta,

EXHIBIT 1

27-CV-16-14225Filed in District Court

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on behalf of themselves and as representatives of the Class1 (collectively, the “Plaintiffs”), and (2)

defendants Spiros Zorbalas; Stephen Frenz; Equity Residential Holdings, LLC; National Housing

Fund, LLC; The Apartment Shop, LLC; ERT, LLC; Quarters for Creativity, LTD.; Emerald Square

Properties, Inc.; Hennepin Quarters, Inc.; Powderhorn Quarters, Inc.; Hiawatha Quarters, Inc.; 25

& 3146 Properties, Inc.; Lahaha Holdings, Inc.; Arts Avenue Properties, Inc.; SS Quarters, Inc.;

Berkeley Holdings, Inc.; 1801 Properties, Inc.; SZ112, Inc.; S1322, Inc.; R110, Inc.; G121, Inc.;

Alpha-Omega Companies, Inc.; JAS Apartments, Inc.; Jennifer Frenz; and 2020 Vision

Investments, LLC (collectively, the “Defendants”) (Plaintiffs and Defendants are, collectively, the

“Parties”). This Settlement Agreement is entered into by the Parties to effect a full and final

settlement and dismissal of Plaintiffs’ and the Class’s claims against Defendants, on the terms set

forth below, subject to Court approval under Rule 23 of the Minnesota Rules of Civil Procedure.

I. RECITALS

WHEREAS, on September 23, 2016, Plaintiffs commenced the Tenant Class Action by

filing a Class Action Complaint alleging claims against Defendants for violations of the Minnesota

Prevention of Consumer Fraud Act, the Minnesota Deceptive Trade Practices Act, the Statutory

Landlord Covenants under Minn. Stat. § 504B.161, False Advertising, Civil Conspiracy, and

Injunction;

WHEREAS, on January 6, 2017, Plaintiffs filed an Amended Class Action Complaint,

which alleged the same claims as set forth above and added additional parties;

WHEREAS, after denial of motions to dismiss, Defendants answered the Amended Class

Action Complaint, denying the allegations contained therein;

1 Unless otherwise defined herein, all capitalized terms will have the same force, meaning and effect as ascribed in Section II of this Settlement Agreement ("Definitions").


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WHEREAS, on Plaintiffs’ Motion for Class Certification, the Court certified a class on

August 11, 2017, defining the class as:

All Persons who held residential leases with Defendants betweenNovember 13, 2012 and the present, for rental units located within the City of Minneapolis. The class includes lessees of rental units in the 63 subject Properties listed in Exhibit A to the Amended Complaint.

WHEREAS, on Plaintiffs’ Motion for Leave to Amend First Amended Class Action

Complaint to Add Punitive Damages, the Court granted leave to Plaintiffs to so amend;

WHEREAS, on February 26, 2018, Plaintiffs filed a Second Amended Class Action

Complaint, alleging the same claims as the prior complaints with the addition of punitive-damages

claims;

WHEREAS, Defendants answered the Second Amended Class Action Complaint;

WHEREAS, Lori Nicol commenced a putative class action on or about September 5, 2017

in the matter captioned Nicol v. Equity Residential Holdings, LLC, et al., Court file No. 27-CV-

17-13581 (the “Fraudulent Transfer Action”) alleging that the defendants named therein

transferred properties in violation of the Minnesota Uniform Voidable Transactions Act with

respect to a potential judgment in the Tenant Class Action;

WHEREAS, Nicol Amended her Complaint in the Fraudulent Transfer Action on

September 18, 2017, to add defendants;

WHEREAS, the defendants in the Fraudulent Transfer Action answered the Amended

Complaint, denying the allegations contained therein;

WHEREAS, at the time of their answers to Nicol’s Amended Complaint in the Fraudulent

Transfer Action, defendants Equity Residential Holdings, LLC, SS Quarters, Inc., and 2020

Vision, LLC filed counterclaims against Lori Nicol;

WHEREAS, on January 8, 2018, the Court in the Tenant Class Action granted summary


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judgment dismissing Plaintiffs’ claims against Defendant Mary Brandt;

WHEREAS, on May 17, 2018, the Court in the Tenant Class Action granted summary

judgment dismissing Counts Two and Four of the Second Amended Class Action Complaint;

WHEREAS, the Parties engaged in extensive, hard-fought litigation for more than one-

and-a-half years, which included, among other litigation, motions to dismiss, extensive discovery

(including over 40 depositions and the exchange of approximately 75,000 documents), a motion

for class certification, motions for summary judgment, a motion to assert a claim for punitive

damages, and motions for temporary injunctive relief, appointment of a receiver, and prejudgment

attachment. The intensive litigation, Court rulings, and exchange of information permitted

Plaintiffs, Class Counsel, and Defendants to evaluate the claims and potential defenses and to

meaningfully conduct informed settlement discussions in May and June 2018, shortly before the

trial of the Tenant Class Action was scheduled to commence in July 2018;

WHEREAS, Plaintiffs and Defendants mediated their dispute with retired federal

Magistrate Judge Arthur J. Boylan, in two mediation sessions on May 25, 2018, and June 8, 2018,

totaling approximately 17 hours of mediation;

WHEREAS, after intensive negotiations in mediation, and after initially reaching an

impasse in the negotiations, the Parties agreed to a monetary settlement figure that was proposed

by the mediator (a “mediator’s number”), and then negotiated other settlement conditions in

addition to the monetary payment;

WHEREAS, the parties continued to negotiate final terms in the weeks that followed the

agreement reached at mediation, resulting in this Settlement Agreement;

WHEREAS, the Class Representatives believe that the claims settled herein have

substantial merit, but they and their counsel recognize and acknowledge the expense and length of


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continued proceedings necessary to prosecute the claims through trial, appeal, and ancillary

actions. The Class Representatives and their counsel have also taken into account the uncertain

outcome and risk of continued litigation, as well as the difficulties and delay inherent in such

litigation, and believe that the settlement set forth in this Settlement Agreement confers substantial

benefits upon the Class Members. Based upon a detailed legal and factual evaluation, Class

Counsel has determined that the settlement set forth in this Settlement Agreement is in the best

interests of the Class and represents an excellent result for the Class;

WHEREAS, based upon their review, investigation, and evaluation of the facts and law

relating to the matters alleged in this action, Plaintiffs and Class Counsel have agreed with

Defendants to settle the litigation after considering (among other things): (i) the substantial

monetary and non-monetary benefits to the Class Members under the terms of this Settlement

Agreement; (ii) the risks, costs, and uncertainty of protracted litigation and appeal, especially in

complex actions such as this, as well as the difficulties and delays inherent in such litigation; and

(iii) the desirability of consummating this Settlement Agreement forthwith, in order to provide

effective and prompt relief to the Class Members; and

WHEREAS, nothing in this Agreement will be construed to be an admission by any Party

of liability in the Tenant Class Action or the Fraudulent Transfer Action;

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants,

promises and general releases set forth below, subject to preliminary and final approval of the

Court, the Parties hereby agree as follows:

II. DEFINITIONS

As used in this Settlement Agreement and the attached exhibits, the following terms have

the meanings set forth below, unless this Settlement Agreement specifically provides otherwise:


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A. “Attorneys’ Fee Award” means any Court-approved award to Class Counsel as

further described in Section VIII and payable from the Settlement Fund.

B. “Benefit Amount” means the amount that Class Members will receive as detailed

in Section III and payable from the Settlement Fund.

C. “Class” and/or “Class Members” means all persons who held residential leases with

Defendants between November 13, 2012 and the Preliminary Approval Date (as defined infra),

for rental units located within the City of Minneapolis, and who have not timely excluded

themselves pursuant to the notice of class certification or do not timely exclude themselves (i.e.

become an Opt-Out) pursuant to Section VII, Paragraph C. The Class includes lessees during the

class period of rental units in the 63 subject Properties listed in Exhibit A to the Second Amended

Complaint in the Tenant Class Action who do not opt out of the Settlement.

D. “Class Counsel” means the law firm of Faegre Baker Daniels LLP, 2200 Wells

Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402, including the attorneys set forth

in the Court’s Order Granting Class Certification.

E. “Class Notice” means the Court-approved form(s) of notice to the Class, which will

notify members of the Class of entry of the Preliminary Approval Order and the scheduling of the

Final Approval Hearing, among other things, attached hereto as Exhibit A.

F. “Class Notice Program” means the process devised by the Parties and the

Settlement Administrator, and approved by the Court, for notifying the Class of the Settlement and

Settlement Agreement.

G. “Class Representatives” means Edain Altamirano Flores, Esperanza Herrera, Lori

Nicol, Olutundun Arike Ogundipe, Jason Beck, Patricia Goggin, Norma Juarez, and Bruno

Gorostieta.


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H. “Confidential Information” means the names, phone numbers, account numbers,

and other data concerning Class Members relating to this settlement.

I. “Court” means the Hennepin County District Court and the Judge presiding over

this action (currently the Honorable Mary R. Vasaly).

J. “Days” means calendar days, except that when computing any period of time

prescribed or allowed by this Settlement Agreement, the day of the act, event or default from which

the designated period of time begins to run will not be included. When computing any period of

time prescribed or allowed by this Settlement Agreement, the last day of the period so computed

will be included, unless it is a Saturday, Sunday, or federal or State of Minnesota legal holiday, in

which event the period runs until the end of the next day which is not a Saturday, Sunday, or

federal or State of Minnesota legal holiday.

K. “Defendants” means Spiros Zorbalas; Stephen Frenz; Equity Residential Holdings,

LLC; National Housing Fund, LLC; The Apartment Shop, LLC; ERT, LLC; Quarters for

Creativity, LTD.; Emerald Square Properties, Inc.; Hennepin Quarters, Inc.; Powderhorn Quarters,

Inc.; Hiawatha Quarters, Inc.; 25 & 3146 Properties, Inc.; Lahaha Holdings, Inc.; Arts Avenue

Properties, Inc.; SS Quarters, Inc.; Berkeley Holdings, Inc.; 1801 Properties, Inc.; SZ112, Inc.;

S1322, Inc.; R110, Inc.; G121, Inc.; Alpha-Omega Companies, Inc.; JAS Apartments, Inc.;

Jennifer Frenz; and 2020 Vision Investments, LLC.

L. “Defense Counsel” means Malcolm Terry, Bernick & Lifson, 5500 Wayzata

Boulevard, Suite 1200, Minneapolis, MN 55416 and Bradley Kletscher, Barna, Guzy & Steffen,

Ltd., 200 Coon Rapids Boulevard, Suite 400, Minneapolis, MN 55433.

M. “Effective Date” means: a) 61 Days after entry of the Final Approval Order and

Judgment if no document is filed within that time seeking appeal, review, or rehearing of the


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judgment or taking some other action that would extend the time for seeking appeal or review of

the Final Approval Order and Judgment; or b) if any such document is filed, five business days

after the date upon which all appellate and other proceedings resulting from such document have

been finally terminated in such a manner as to permit the Final Approval Order and Judgment to

take effect in substantially the form it was entered.

N. “Final Approval Hearing” means the hearing at which the Court hears and

considers final approval of the Parties’ Settlement. The hearing will occur on December 14, 2018,

or as soon thereafter as the Court can schedule the hearing.

O. “Final Approval Order and Judgment” means a final order entered by the Court

after the Final Approval Hearing, granting approval of the Settlement as further described in

Section IX.

P. “Fraudulent Transfer Action” means the civil action, entitled Nicol v. Equity

Residential Holdings, LLC, et al., Court file No. 27-CV-17-13581, in the Hennepin County District

Court, State of Minnesota.

Q. “Incentive Award” has the meaning set forth in Section VIII, Paragraph B.

R. “Notice and Administration Costs” means any and all costs and expenses of notice

and administration relating to this Settlement.

S. “Notice Date” means the first day on which the Settlement Administrator begins

disseminating the Class Notice.

T. “Opt-Out” means a member of the Class who properly and timely submits a request

for exclusion from the Settlement as set forth in Section VII, Paragraph C.


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U. “Opt-Out List” means the list compiled by the Settlement Administrator identifying

those who properly and timely submit a request for exclusion from the Settlement and become

Opt-Outs.

V. “Opt-Out and Objection Date” means the date by which a request for exclusion

must be filed with the Settlement Administrator in order for Class Members to be excluded from

the Settlement, and the date by which Class Members must timely file objections, if any, to the

Settlement in order to preserve any right or ability to object to the Settlement.

W. “Parties” means Plaintiffs and Defendants.

X. “Person” means an individual, corporation, partnership, limited partnership, limited

liability company, association, member, joint stock company, estate, legal representative, trust,

unincorporated association, any business or legal entity and such individual’s or entity’s spouse,

heirs, predecessors, successors, representatives, and assignees.

Y. “Plaintiffs” means Edain Altamirano Flores, Esperanza Herrera, Lori Nicol,

Olutundun Arike Ogundipe, Jason Beck, Patricia Goggin, Norma Juarez, and Bruno Gorostieta,

on behalf of themselves and as representatives of the Class.

Z. “Preliminary Approval Date” means the date the Preliminary Approval Order has

been entered by the Court.

AA. “Preliminary Approval Order” means the order defined in Section V and entered

by the Court preliminarily approving the Settlement.

BB. “Properties” means the 63 properties listed on Exhibit A to the Second Amended

Complaint in the Tenant Class Action.

CC. “Released Claims” means the legal claims released under Section IV of this

Agreement. The following claims are Released Claims:


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• All of the Class Representatives’ claims against Defendants and each of their owners,

members, shareholders, officers, employees, predecessors, and assigns of any and

every kind or nature, known or unknown, absolute or contingent, whether in law,

equity, or otherwise from the beginning of time through the Preliminary Approval Date

that (1) were asserted in the Tenant Class Action and certified for class-action treatment

by the Court’s August 11, 2017, Order Granting Class Certification, and/or (2) could

have been brought as related claims in the Tenant Class Action.

• All of the Class Members’ claims against Defendants and each of their owners,

members, shareholders, officers, employees, predecessors and assigns of any and every

kind or nature, known or unknown, absolute or contingent, whether in law, equity, or

otherwise from the beginning of time through the Preliminary Approval Date that (1)

were asserted in the Tenant Class Action and certified for class-action treatment by the

Court’s August 11, 2017, Order Granting Class Certification, and/or (2) could have

been brought as related claims in the Tenant Class Action. The Class Representatives’

and Class Members’ Released Claims include:

o Defendants’ alleged violations of the Minnesota Prevention of Consumer Fraud

Act based on (1) an alleged illegal rental business due to failure to hold valid

rental licenses for the Properties, and (2) alleged deceptive and systemic failure

to maintain the Properties in compliance with health and safety laws with

respect to systemic maintenance issues regarding laws applicable to asbestos,

lead-based paint, and pest control (Claims I-II);

o Defendants’ alleged violations of the Minnesota Deceptive Trade Practices Act

based on (1) an alleged illegal rental business due to failure to hold valid rental


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licenses for the Properties, and (2) alleged deceptive and systemic failure to

maintain the Properties in compliance with health and safety laws with respect

to systemic maintenance issues regarding laws applicable to asbestos, lead-

based paint, and pest control (Claims III-IV);

o Defendants’ alleged breach of statutory landlord covenants under Minn. Stat. §

504B.161 based on (1) an alleged illegal rental business due to failure to hold

valid rental licenses for the Properties, and (2) alleged systemic failure to

maintain the Properties in compliance with health and safety laws with respect

to systemic maintenance issues regarding laws applicable to asbestos, lead-

based paint, and pest control (Claim V);

o Defendants’ alleged violation of Minn. Stat. § 325F.67 respecting false

advertising based on (1) alleged false, deceptive, and/or misleading advertising

that Defendants held valid rental licenses for the Properties, and (2) alleged

false, deceptive, and/or misleading advertising that Defendants maintained the

Properties in compliance with health and safety laws applicable to asbestos,

lead-based paint, and pest control (Claim VI);

o Defendants’ alleged civil conspiracy in violation of Minn. Stat. § 609.175, subd.

2, to defraud tenants regarding the ownership of the Properties and regarding

whether the Properties were validly licensed rental properties (Claim VII); and

o Plaintiffs’ claim for an injunction prohibiting Defendants from operating the

Properties.

• All of Defendants’ claims of any and every kind or nature, known or unknown, absolute

or contingent, whether in law, equity, or otherwise from the beginning of time through


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the Preliminary Approval Date, against the Class Representatives, or any of them, and

any of their agents or assigns.

For the avoidance of doubt, this Agreement does not release any claims of any Person

against any purchaser of any Frenz/Zorbalas Property except for those asserted in the

Tenant Class Action or the Fraudulent Transfer Action.

DD. “Released Parties” means each Person who is released from claims under this

Agreement, as specified in the definition of “Released Claims,” supra.

EE. “Releasing Parties” means each Party who is releasing claims under this

Agreement, as specified in the definition of “Released Claims,” supra.

FF. “Settlement” means the settlement set forth in this Settlement Agreement.

GG. “Settlement Administrator” means BrownGreer PLC, an independent, reputable,

and competent professional-service company that Class Counsel and Defense Counsel have agreed

will administer Class Notice, maintain the Settlement Website, administer the Settlement in

accordance with this Settlement Agreement, and engage in any other tasks directed by the Court.

HH. “Settlement Agreement” or “Agreement” means this Settlement Agreement,

including all exhibits and addenda thereto.

II. “Settlement Fund” means the cash fund paid by Defendants in the total amount of

$18,500,000.00, as described in Section III, Paragraph A.

JJ. “Settlement Website” means the dedicated website created and maintained by the

Settlement Administrator, which will contain relevant documents and information about the

Settlement, including, without limitation, this Settlement Agreement and the Class Notice.

KK. “Tenant Class Action” means the civil action entitled Flores, et al. v. Zorbalas, et

al., Case No. 27-CV-16-14225, in the Hennepin County District Court, State of Minnesota.


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LL. Terms that are defined in the text of the Agreement, but not otherwise defined in

this Section II, will have the meaning given those terms in the text.

III. SETTLEMENT TERMS AND BENEFITS TO THE CLASS

A. In accordance with the terms and conditions set forth below, Defendants will pay,

jointly and severally, a total of $18,500,000.00 to the Class (the “Settlement Fund”), which will

be distributed as follows and in accordance with the terms of this Settlement Agreement:

1. No later than one business day prior to the date of the Final Approval

Hearing, Defendants will transfer any portion of the $18,500,000.00 that has not previously

been transferred to the Settlement Administrator (pursuant to Section V, infra) into an

interest-bearing bank account (the “Settlement Account”) owned and maintained by the

Settlement Administrator. This amount is the Settlement Fund and will be used to pay 1)

the Benefit Amount to the Class Members; 2) Class Representative Incentive Awards not

to exceed $10,000 per class representative; 3) the Attorneys’ Fee Award to Class Counsel;

and 4) Notice and Administration Costs. Any interest that accrues on the funds in the

Settlement Account will used to offset Notice and Administration Costs. The bank account

will be used exclusively for the Settlement Administrator’s work regarding this settlement,

and will be used in accordance with this Settlement Agreement. The bank account may

only hold funds for such purpose, and will not hold any funds for any other purpose.

2. As soon as reasonably possible after the Effective Date, each Class

Member’s share of the Benefit Amount will be calculated and paid in accordance with the

formula, methodology, and distribution procedures attached hereto as Exhibit B.

Defendants agree to provide all information regarding the Class Members which was not


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previously provided in the class list and which is necessary to implement the settlement

and effect distributions pursuant to the procedures in Exhibit B.

3. Within seven Days after the Effective Date, the Settlement Administrator

will pay to each Class Representative the amount of the Incentive Award ordered by the

Court.

B. Defendants’ provision of these benefits is consideration for the Release of

Defendants set forth in Section IV, and the other terms of the Settlement.

IV. RELEASE

A. In consideration of the mutual covenants and all other consideration in this

Agreement, the Releasing Parties release, acquit, and forever discharge the Released Claims

against the Released Parties. All releases given under this Agreement will become effective as of

the Effective Date.

B. Within seven Days after the Effective Date, the Parties will file a Stipulation of

Dismissal of all claims and counterclaims asserted in the Fraudulent Transfer Action with

prejudice, with each Party to bear his, her, or its own costs, fees, and expenses.

V. PRELIMINARY APPROVAL PROCESS AND CLASS NOTICE

A. Class Counsel will move the Court for a Preliminary Approval Order preliminarily

approving the Settlement and the Class Notice Program. The Motion for Preliminary Approval

will request that the Court enter an Order:

1. Preliminarily approving this Settlement Agreement.

2. Preliminarily finding that the proposed Settlement is fair, reasonable and

adequate to warrant providing notice to the Class, which notice will: (i) describe the

essential terms of the Settlement; (ii) disclose Class Counsel’s intention to file an


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application with the Court for an Attorneys’ Fee Award and provide information relating

to said application; (iii) indicate the time and place of the hearing to consider final approval

of the Settlement, and the method for objection to and/or opting out of the Settlement; (iv)

explain the procedures for allocating and distributing the Settlement Fund; and (v)

prominently display the address of Class Counsel and the procedure for making inquiries.

3. Scheduling a Final Approval Hearing for December 14, 2018, or as soon

thereafter as the Court can schedule the hearing, to consider the fairness, reasonableness

and adequacy of the proposed Settlement and whether it should be finally approved by the

Court, and to determine the reasonableness of the requested Attorneys’ Fee Award.

4. Appointing the Settlement Administrator.

5. Approving the Class Notice, and directing the Settlement Administrator to

disseminate the Class Notice in accordance with the Class Notice Program.

6. Finding that the Class Notice Program: (i) is the best practicable notice; (ii)

is reasonably calculated, under the circumstances, to apprise the Class of the pendency of

the Tenant Class Action and of their right to object to or to exclude themselves from the

proposed Settlement; (iii) is reasonable and constitutes due, adequate, and sufficient notice

to all Persons entitled to receive notice; and (iv) meets all requirements of applicable law.

7. Requiring the Settlement Administrator to file proof of compliance with its

obligations under the Class Notice Program no later than seven Days before the Final

Approval Hearing.

8. Requiring any member of the Class who wishes to exclude himself or

herself from the Settlement to submit an appropriate, timely request for exclusion,

postmarked no later than the Opt-Out and Objection Date in strict compliance with the


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provisions of the Settlement Agreement, or as the Court may otherwise direct, to Class

Counsel, Defense Counsel, and the Settlement Administrator at the addresses on the Class

Notice.

9. Ordering that any Class Member who does not submit a timely, written

request for exclusion from the Class (i.e., becomes an Opt-Out) will be bound by all

proceedings, orders, and judgments of the Court.

10. Requiring any Class Member who does not become an Opt-Out and who

wishes to object to the fairness, reasonableness, or adequacy of this Settlement or

Settlement Agreement to timely file with the Court and serve on Class Counsel and

Defense Counsel no later than the Opt-Out and Objection Date a statement of the objection

signed by the Class Member containing all of the information required in Section VII,

Paragraph B.

11. Ordering that any response by Class Counsel or Defense Counsel to any

objection must be filed with the Court no later than seven Days prior to the Final Approval

Hearing.

12. Specifying that any Class Member who does not file a timely written

objection to the Settlement or who fails to otherwise strictly comply with the applicable

requirements will be foreclosed from seeking any adjudication or review of this Settlement

by appeal or otherwise.

13. Requiring that any attorney hired or retained by, or who otherwise provided

legal assistance to, a Class Member for the purpose of objecting to the proposed Settlement

or the Attorneys’ Fee Award and who intends to make an appearance at the Final Approval

Hearing to provide to the Settlement Administrator (who will forward it to Class Counsel


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and Defense Counsel) and to file with the Clerk of the Court and serve on the Parties’

counsel a notice of intention to appear no later than the Opt-Out and Objection Date or as

the Court may otherwise direct.

14. Requiring that any Class Member who files and serves a written objection

and who intends to make an appearance at the Final Approval Hearing must so state in his

or her objection papers or as the Court otherwise may direct.

15. Directing the Settlement Administrator to establish a post office box in the

name of the Settlement Administrator to be used for receiving requests for exclusion and

any other communications, and providing that only the Settlement Administrator, Class

Counsel, Defense Counsel, the Court, the Clerk of the Court, and their designated agents

will have access to this post office box, except as otherwise provided in this Settlement

Agreement.

16. Directing that Class Counsel will file any applications for an Attorneys’ Fee

Award and Incentive Award at least 14 Days prior to the Opt-Out and Objection Date.

17. Ordering the Settlement Administrator to provide the Opt-Out List to Class

Counsel and Defense Counsel no later than seven Days after the Opt-Out and Objection

Date and then file with the Court the Opt-Out List with an affidavit attesting to the

completeness and accuracy thereof no later than seven Days before the Final Approval

Hearing.

18. Containing any additional provisions agreeable to the Parties that might be

necessary or advisable to implement the terms of this Settlement Agreement and the

proposed Settlement.

B. Promptly upon entry of the Preliminary Approval Order, the Parties and the


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Settlement Administrator will execute and file a stipulation in the Fraudulent Transfer Action,

pursuant to which the Court in the Fraudulent Transfer Action will disburse all funds that have

been deposited in Court in the Fraudulent Transfer Action to an interest-bearing bank account

owned and maintained by the Settlement Administrator exclusively for its work regarding this

Settlement. Upon transfer to the Settlement Administrator, such funds will become part of the

Settlement Fund. The Parties agree that all cash presently on deposit with the Clerk of Court of

Hennepin County in the Fraudulent Transfer Action will remain with the Clerk of Court until

such funds are transferred to the Settlement Administrator.

VI. NOTICE TO CLASS MEMBERS

A. Upon entry of the Preliminary Approval Order, the Settlement Administrator will

provide notice to each Class Member as provided in this Section VI.

B. As soon as practicable upon entry of the Preliminary Approval Order, the

Settlement Administrator will send a Class Notice to each Class Member by U.S. mail to the last-

known address for each such Class Member.

C. The Settlement Administrator will direct to Class Members the best notice

practicable under the circumstances, including direct mail notices in substantially similar form and

substance to the Class Notices attached hereto as Exhibit A and some form of publication notice,

which will be detailed in the Motion for Preliminary Approval.

D. If a Class Notice is returned to the Settlement Administrator as undeliverable, the

Settlement Administrator will make a reasonable effort to find a current address for the Class

Member whose Class Notice was returned (i.e., to “skip trace”) using one or more information

databases accessible to the Settlement Administrator, and will re-send the Class Notice to such


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address. The Settlement Administrator will not be required to re-send any Class Notice that is

returned a second time as undeliverable.

E. The Settlement Administrator will certify to Class Counsel and Defense Counsel in

writing the date or dates on which Class Notice was mailed to the Class Members (the “Notice

Date”).

F. The reasonable fees and costs incurred by the Settlement Administrator will be paid

from the Settlement Fund; provided, however, that the Settlement Administrator must first provide

notice of its fees and costs (and a detailed statement of the basis for them) to Class Counsel and

obtain permission from Class Counsel to pay its fees and costs from such funds. The Settlement

Administrator will not be entitled to payment from the Settlement Fund of any fees and costs to

which Class Counsel objects, and any disputes regarding such fees will be resolved between the

Settlement Administrator and Class Counsel or, if necessary, by the Court. The Settlement

Administrator will maintain detailed records of the work it has performed and the amounts spent

on the administration of the Settlement and will provide those to the Parties monthly or as the

Parties otherwise request.

VII. OBJECTIONS AND OPT-OUT RIGHTS

A. Any Class Member who intends to object to the Settlement must do so no later than

35 Days after the Notice Date (the “Opt-Out and Objection Date”). Any attempted objection that

fails to comply with the requirements set forth herein will be deemed by the Parties and the

Settlement Administrator to be wholly ineffectual, null, and void. All notices will contain language

consistent with the provisions set forth herein.


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B. In order to object, a Class Member must, no later than the Opt-Out and Objection

Date, file with the Court and serve on both Class Counsel and Defense Counsel in the manner

specified in Exhibit A a written objection containing all of the following:

1. The name, address, telephone number of the Person objecting, and, if

represented by or otherwise receiving any legal advice or assistance by counsel, the name,

bar number, address, and telephone number of counsel;

2. A signed statement of all objections to the Settlement and the legal and

factual basis for each objection; and

3. A statement of whether he or she intends to appear at the Final Approval

Hearing, either with or without counsel, and if with counsel, the name of his or her counsel

who will attend. The Parties will have the same right to seek discovery from any objecting

Class Member as they would if the objector was a party in the Tenant Class Action,

including the right to take the objector’s deposition, as permitted by the Court.

4. Any Class Member who fails to strictly comply with the foregoing, and fails

to timely file with the Court and serve on Class Counsel and Defense Counsel a written

objection and notice of his or her intent to appear at the Final Approval Hearing pursuant

to this Paragraph, or fails to respond to discovery or make himself or herself available for

deposition, will not be permitted to object to the approval of the Settlement at the Final

Approval Hearing, will be deemed to have assented to the Settlement for all purposes, and

will be foreclosed from seeking any review of the Settlement or the terms of the Settlement

Agreement by appeal or other means.

C. A member of the Class who wishes to opt out of the Settlement must complete and

send to the Settlement Administrator a request for exclusion that is postmarked no later than the


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Opt-Out and Objection Date. The request for exclusion must be personally signed by the member

of the Class requesting exclusion, and contain a statement that indicates his or her desire to be

excluded from the Settlement. A member of the Class may opt out on an individual basis only. So-

called “mass” or “class” opt-outs, whether filed by third parties on behalf of a “mass” or “class”

of Class Members or multiple Class Members where no personal statement has been signed by

each and every individual Class Member in strict compliance with this provision, will not be

allowed.

D. Except for those Class Members who timely and properly serve and file a request

for exclusion (Opt-Out), all Class Members will be deemed to be Class Members for all purposes

under the Settlement Agreement, and upon the Effective Date will be bound by its terms.

E. Any Class Member who properly and timely opts out of the Settlement will not: (i)

be bound by any orders or judgments entered by the Court or relating to the Settlement; (ii) be

entitled to relief under, or be affected by, the Settlement Agreement; (iii) gain any rights by virtue

of the Settlement Agreement; or (iv) be entitled to object to any aspect of the Settlement, appeal

or otherwise, or be entitled to seek any adjudication or review of this Settlement by appeal or

otherwise.

F. The Settlement Administrator will provide Class Counsel and Defense Counsel

with the Opt-Out List within seven Days after the Opt-Out and Objection Date.

VIII. AWARD OF ATTORNEYS’ FEES, EXPENSES, AND PAYMENT TO CLASS

REPRESENTATIVES

A. Class Counsel will make an application to the Court for an award of reasonable

attorneys’ fees plus their reasonable expenses and costs incurred (collectively, the “Attorneys’ Fee

Award”) no later than 14 Days prior to the Opt-Out and Objection Date, which will be payable


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from the Settlement Fund. The Court will determine the amount of any Attorneys’ Fees Award.

Defendants will have a right to object to the requested attorneys’ fees and any expenses.

B. The Class Representatives will make an application to the Court to award each of

them a payment for the time, effort, expense, and service that each invested in the Tenant Class

Action (“Incentive Award”) no later than 14 Days prior to the Opt-Out and Objection Date,

which will be payable from the Settlement Fund. Defendants will not object to such payment to

be paid to the Class Representatives from the Settlement Fund and said payment shall not exceed

$10,000 per Class Representative.

C. The Settlement Administrator will pay the Attorneys’ Fee Award by wire transfer

to Faegre Baker Daniels LLP’s trust account according to instructions to be supplied by Class

Counsel. The Attorneys’ Fee Award will be payable to Class Counsel from the Settlement Fund

immediately following the entry of the Court’s order awarding such fees and expenses,

notwithstanding any objections thereto, or potential for appeal therefrom, or collateral attack on

the Settlement or any part thereof, subject to the obligation of Class Counsel to repay such funds

into the Settlement Fund if, as a result of any appeal and/or further proceedings on remand or

successful collateral attack, the Attorneys’ Fee Award is reduced or the Settlement is disapproved

by final order. Class Counsel will only be required to repay such funds into the Settlement Fund

to the extent that the Attorneys’ Fee Award is reduced or affected by any such proceedings.

D. If the Attorneys’ Fee Award is reduced or reversed on appeal, Class Counsel will

make all necessary repayments to the Settlement Fund within five business days of a final order

by the Court of Appeals or the Supreme Court directing such reduction or reversal. If the

Settlement becomes final despite the reduction or reversal, such funds will be distributed by the

Settlement Administrator in accordance with the formula, methodology, and distribution


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procedures attached hereto as Exhibit B.

E. The Attorneys’ Fee Award and Incentive Awards set forth in Paragraphs A and B,

respectively, are subject to and dependent upon the Court’s approval. However, this Settlement is

not dependent or conditioned upon the Court’s approving the Class Representatives’ or Class

Counsel’s requests for such payments or awarding the particular amounts sought by the Class

Representatives or Class Counsel. In the event the Court declines the Class Representatives’ or

Class Counsel’s requests or awards less than the amounts sought, this Settlement will continue to

be effective and enforceable by the Parties. The Class Representatives and Class Counsel retain

all appellate rights concerning the failure of the Court to award the amount of Attorneys’ Fee

Award or Incentive Award requested.

IX. FINAL APPROVAL ORDER AND JUDGMENT AND RELEASES

A. Class Counsel will, after the Opt-Out and Objection Date, request that the Court

enter a Final Approval Order and Judgment pursuant to the Minnesota Rules of Civil Procedure

and all applicable laws that, among other things:

1. Finds that the Court has personal jurisdiction over Plaintiffs and all Class

Members and that the Court has subject matter jurisdiction to approve this Settlement and

Settlement Agreement and all exhibits thereto.

2. Grants final approval to this Settlement Agreement as being fair,

reasonable, and adequate as to all Parties and consistent and in compliance with all

requirements of due process and applicable law, and directs the Parties and their counsel

to implement and consummate this Settlement Agreement in accordance with its terms and

provisions.

3. Finds that all of the requirements for a class action under Minn. R. Civ. P.


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23 are met, including that the class is so numerous that joinder of all members is

impracticable; there are questions of law or fact common to the class; the claims or defenses

of the representative parties are typical of the claims or defenses of the class; the

representative parties will fairly and adequately protect the interests of the class; and the

prosecution of separate actions by or against individual members of the class would create

a risk of (1) inconsistent or varying adjudications with respect to individual members of

the class which would establish incompatible standards of conduct for the party opposing

the class, or (2) adjudications with respect to individual members of the class which would

as a practical matter be dispositive of the interests of the other members not parties to the

adjudications or substantially impair or impede their ability to protect their interests; or (b)

the party opposing the class has acted or refused to act on grounds generally applicable to

the class, thereby making appropriate final injunctive relief or corresponding declaratory

relief with respect to the class as a whole; or (c) the court finds that the questions of law or

fact common to the members of the class predominate over any questions affecting only

individual members, and that a class action is superior to other available methods for the

fair and efficient adjudication of the controversy.

4. Declares this Settlement Agreement and the Final Approval Order and

Judgment to be binding on and have res judicata and preclusive effect in all pending and

future lawsuits or other proceedings encompassed by the releases provided by or on behalf

of the Class Members.

5. Finds that the Class Notice Program: (1) constituted the best practicable

notice; (2) constituted notice that was reasonably calculated under the circumstances to

apprise the Class of the pendency of the Tenant Class Action, of their right to object to or


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exclude themselves from the proposed Settlement, of their right to appear at the Final

Approval Hearing and of their right to seek monetary and other relief; (3) constituted

reasonable, due, adequate, and sufficient notice to all Persons entitled to receive notice;

and (4) met all requirements of due process and any other applicable law (including but not

limited to Minn. R. Civ. P. 23 and Minnesota state law).

6. Dismisses the Tenant Class Action now pending before the Court on the

merits and with prejudice and without fees or costs except as provided herein, in

accordance with the terms of the Final Approval Order and Judgment.

7. Adjudges that the Parties and the Class Members have conclusively

compromised, settled, dismissed, and released any and all Released Claims.

8. Without affecting the finality of the Final Approval Order and Judgment for

purposes of appeal, reserves jurisdiction over the Settlement Administrator, Defendants,

Plaintiffs, and the Class Members as to all matters relating to the administration,

consummation, enforcement, and interpretation of the terms of the Settlement, the

Settlement Agreement and Final Order and Judgment, and for any other necessary

purposes.

9. Determines that the Settlement Agreement and any proceedings taken

pursuant thereto are not and should not in any event be offered, or received as evidence of,

a presumption, concession, or admission of liability. However, reference may be made to

this Settlement Agreement and the Settlement provided for herein in such proceedings

solely as may be necessary to effectuate or enforce the Settlement Agreement.

10. Approves the Opt-Out List and determines that the Opt-Out List is a

conclusive and complete list of all members of the Class who have timely and effectively


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requested exclusion from the Class and, accordingly, will neither share in nor be bound by

the Final Order and Judgment.

11. Authorizes the Parties, without further approval from the Court, to agree in

writing to such amendments, modifications, and expansions of this Settlement Agreement

and all exhibits hereto as (1) will be consistent in all material respects with the Final

Approval Order and Judgment; and (2) do not limit the rights of the Parties or Class

Members.

B. As of the Effective Date, the Releasing Parties are deemed to have fully released

and forever discharged the Released Parties of and from all Released Claims by operation of entry

of the Final Order and Judgment.

C. Subject to Court approval, all Class Members who have not timely and properly

excluded themselves from the Class will be bound by this Settlement Agreement, and their

Released Claims will be dismissed with prejudice and released, regardless of whether they

received actual notice of the Tenant Class Action or this Settlement.

D. Nothing in the releases provided under this Agreement will preclude any action to

enforce the terms of this Settlement Agreement, including participation in any of the processes

detailed herein.

X. NOTICES

A. All notices (other than the Class Notice) required by this Settlement Agreement

must be made in writing and communicated by mail and electronic mail (e-mail) to the following

addresses:


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All notices to Class Counsel must be sent to Class Counsel, c/o:

Michael CocksonFaegre Baker Daniels LLP2200 Wells Fargo Center90 South Seventh StreetMinneapolis, MN 55402

[email protected]

All notices to Defense Counsel provided herein must be sent to Defense Counsel, c/o:

Malcolm TerryBernick & Lifson P.A.

5500 Wayzata BoulevardSuite 1200

Minneapolis, MN [email protected]

and

Bradley KletscherBarna, Guzy & Steffen, Ltd.200 Coon Rapids Boulevard

Suite 400Minneapolis, MN 55433

[email protected]

B. The notice recipients and addresses designated above may be changed by written

notice.

C. Upon the request of any of the Parties, the Parties agree to promptly provide each

other with copies of comments, objections, requests for exclusion, or other documents or filings

received as a result of the Class Notice.

XI. MISCELLANEOUS PROVISIONS

A. Interpretation. This Settlement Agreement contains the entire agreement among

the Parties hereto and supersedes any prior discussions, agreements, or understandings among

them as well as any and all prior drafts of this Settlement Agreement. All terms are contractual.


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For the purpose of construing or interpreting this Settlement Agreement, the Parties agree that the

Settlement Agreement is to be deemed to have been drafted equally by all Parties hereto and will

not be construed strictly for or against any Party, and the Parties further agree that any prior drafts

may not be used to construe or interpret this Settlement Agreement.

B. Confidential Information. The Parties agree that the names, addresses, telephone

numbers, and other data and materials concerning Class Members used in implementing this

Settlement (“Confidential Information”) are highly confidential. Therefore, it is agreed that no

Person, other than the Settlement Administrator and the employees of such Administrator; Class

Counsel and the employees of such counsel; Defendants and Defendants’ Counsel; and such other

Persons as the Court may order after hearing on notice to all counsel of record, will be allowed to

access any Confidential Information.

C. Binding Effect. The terms herein are and will be binding upon each of the Parties

hereto, their respective administrators, agents, assigns, attorneys, executors, heirs, partners,

representatives, predecessors-in-interest, and successors, as well as upon all other Persons

claiming any interest in the subject matter hereto through any of the Parties hereto including any

Class Members.

D. Headings. The headings contained in this Settlement Agreement are for reference

purposes only and will not affect in any way the meaning or interpretation of this Settlement

Agreement.

E. No Rescission on Grounds of Mistake. The Parties acknowledge that they have

made their own investigations of the matters covered by this Settlement Agreement to the extent

they have deemed it necessary to do so. Therefore, the Parties agree that they will not seek to set

aside any part of the Settlement Agreement on the grounds of mistake. Moreover, the Parties


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understand, agree, and expressly assume the risk that any fact not recited, contained, or embodied

in the Settlement Agreement may turn out hereinafter to be other than, different from, or contrary

to the facts now known to them or believed by them to be true, and further agree that the Settlement

Agreement will be effective in all respects notwithstanding, and will not be subject to termination,

modification, or rescission by reason of any such difference in facts.

F. Amendment. This Settlement Agreement may be amended or modified only by a

written instrument signed by the Parties or their counsel. Amendments and modifications may be

made without notice to the Class unless notice is required by law or by the Court.

G. Integration Of Exhibits. Any exhibits to this Settlement Agreement are hereby

incorporated and made a part of the Settlement Agreement.

H. Jurisdiction. The Hennepin County District Court has jurisdiction over the Parties

to this Settlement Agreement and the Class.

I. No Admission. Nothing in this Settlement Agreement will be construed to be an

admission by any of the Parties.

J. Governing Law. This Settlement Agreement will be governed by and construed in

accordance with the internal laws (as opposed to the conflicts of law provisions) of the State of

Minnesota.

K. Counterparts. This Settlement Agreement may be executed in counterparts and

may be executed by facsimile or by pdf transmission via email, and as so executed will constitute

one original Agreement.

L. Confidentiality. All agreements made and orders entered during the course of the

Tenant Class Action and the Fraudulent Transfer Action relating to the confidentiality of

information will survive this Settlement Agreement.


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M. Stay. The Parties stipulate to stay all proceedings in the Tenant Class Action and

the Fraudulent Transfer Action until the approval of this Settlement Agreement has been finally

determined, except the stay of proceedings will not prevent the filing of any motions necessary to

obtain and preserve final judicial approval of this Settlement Agreement.

N. Best Efforts. In the event that there are any developments in the effectuation and

administration of this Settlement Agreement that are not dealt with by the terms of this Agreement,

then such matters will be dealt with as agreed upon by the Parties, and failing agreement, as may

be ordered by the Court. The Parties will execute all documents and use their best efforts to perform

all acts necessary and proper to promptly effectuate the terms of this Agreement and to take all

necessary or appropriate actions to obtain judicial approval of this Settlement Agreement in order

to give this Agreement full force and effect.


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A court has authorized the mailing of this Notice to you.

This is not a solicitation from a lawyer. You are not being sued.

•

•

•

•

EXHIBIT 2


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•

•

Flores, et al. v. Zorbalas, et al.


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State of Minnesota

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Flores, et al. v. Zorbalas, et al.


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Edain Altamirano Flores, et al. v. Spiros Zorbalas, et al.


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cy pres

EXHIBIT 3


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cy pres


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infra


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cy pres


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Cy Pres

cy pres

cy

pres


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state of minnesota district court case type: civil … · 2018-11-02 · boulevard, suite 1200,...

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