Transcript of Proceedings held on 09/30/21, before Judge Magistrate Judge Donna M. Ryu.… — Plaid Privacy (Dkt. 170)

Summary

A transcript of proceedings on September 30, 2021 before Magistrate Judge Donna M. Ryu in In re Plaid Inc. Privacy Litigation, No. C 20-03056-DMR, in the United States District Court for the Northern District of California, filed April 13, 2022 as Document 170. The appearances list Rachel Geman and Shawn M. Kennedy for plaintiffs and Whitty Somvichian of Cooley for the defendant. The hearing concerns the motion for preliminary approval of class settlement, and the court opens with questions about the change from a nationwide and a California class to one nationwide class. Rachel Geman addresses the CAPA claim and Qualcomm. The court states it looks forward to supplemental materials within a week.

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               Echo Reporting, Inc.
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
Before The Honorable Donna M. Ryu, Magistrate Judge
IN RE:
)
)
PLAID INC. PRIVACY 
)  No. C 20-03056-DMR
LITIGATION
) 
) 
)  
______________________________)
Oakland, California
Thursday, September 30, 2021
TRANSCRIPT OF PROCEEDINGS OF THE OFFICIAL ELECTRONIC SOUND
RECORDING  1:03 - 1:48 = 45 MINUTES
APPEARANCES:
For Plaintiffs:
Lieff Cabraser Heimann & 
  Bernstein LLP
250 Hudson Street, 8th Floor
New York, New York 10013
               BY:  RACHEL GEMAN, ESQ.
Herrera Kennedy LLP
4590 MacArthur Boulevard
Suite 500
Newport Beach, California
  92660
               BY:  SHAWN M. KENNEDY, ESQ.
For Defendant:
Cooley LLP
3 Embarcadero Center
20th Floor
San Francisco, California
  94111
               BY:  WHITTY SOMVICHIAN, ESQ.
Case 4:20-cv-03056-DMR   Document 170   Filed 04/13/22   Page 1 of 35

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               Echo Reporting, Inc.
Transcribed by:
Echo Reporting, Inc.
                              Contracted Court Reporter/
                              Transcriber                    
                    
echoreporting@yahoo.com
Case 4:20-cv-03056-DMR   Document 170   Filed 04/13/22   Page 2 of 35

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               Echo Reporting, Inc.
Thursday, September 30, 2021
1:03 p.m.
P-R-O-C-E-E-D-I-N-G-S
--oOo--
THE CLERK:  Calling civil case C 20-03056-DMR, In
re Plaid Incorporated Privacy Litigation.
Counsel, please state your appearances, starting with
the plaintiff's attorney first.
MS. GEMAN (via Zoom):  Good afternoon.  Rachel
Geman, Lieff Cabraser, for plaintiffs and the proposed
class.
THE COURT:  Good afternoon.
MR. KENNEDY (via Zoom):  Good morning --
afternoon, your Honor.  Shawn Kennedy of Herrera Kennedy on
behalf of the plaintiffs as well.
THE COURT:  Okay.  Good afternoon.
MR. SOMVICHIAN (via Zoom):  Good afternoon, your
Honor.  Whitty Somvichian with Cooley representing Plaid
today.
THE COURT:  Good afternoon.  
All right.  We're here for the motion for preliminary
approval of class settlement.  I have a number of questions
I just want to walk you through as I think about what
findings I need to make here.
I want to start with the change in the class
definition.  
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My understanding is that we now have one nationwide
class instead of a nationwide and a California class, and
the definition is a little different.  I understand the way
in which it's more narrow, so it doesn't include people who
were connected or credentials were provided exclusively
through the managed OAuth process.  That's how it's more
narrow.
But I want to understand how it's broader.  So who
wants to take that up?
MS. GEMAN:  I can speak to that your Honor.  
So as your Honor indicated, it is it is broader, and
it's really broader in a couple of respects.  
Originally, there was a nationwide and a California, so
the CAPA claim, which originally was brought only on behalf
of a proposed California class, is now being proposed to be
settled across a nationwide class for the reasons we set
forth in our brief, namely the propriety or at minimum,
certainly good faith arguable propriety of extraterritorial
application of that claim against a California company.  And
certainly since even we brought the case, another case
brought a nationwide claim under CAPA that Magistrate Judge
Sallie Kim upheld.
Judge Kim did not expressly address and indeed was not
asked to address the scope.  But there is at least one data
point.  That's frankly consistent with our view of the law
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under certain of the cases we cited that, that
extraterritorial application is appropriate here.  
The second -- 
THE COURT:  Excuse me, before you go one, is that
a class cert opinion by Judge Kim?
MS. GEMAN:  No, your Honor.  That's a motion to
dismiss, and I can give your Honor the cite.
THE COURT:  Yes, that would be helpful.
MS. GEMAN:  Sure.  So the case there is Welsh v.
Yodlee, Y-O-D-L-E-E, case number 3:20-cv-05991.  Judge
Sallie Kim who upheld the CAPA in an order dated February
16, 2021.  That was docket 54 in the case.
Now, again, the court was not asked to address and did
not undergo the analysis of extraterritoriality, if there's
sufficient connections with California and so forth.  But
there was that holding.  
And between that and that our examination of the
circumstances under which certain California statutory
claims have been held to be extraterritorial, including
those under the Business and Professions Code, we thought
that the simplified class and plan of allocation was in the
best interest of the class here.
THE COURT:  I think you cited, if I remember
correctly, Chavez and Qualcomm on this point.
MS. GEMAN:  We cited a few cases, Chavez and
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Norwest Mortgage, which of course just a -- I mean not
just -- but it is a state case, not a federal.
Your Honor should be aware, and your Honor may well be
aware, that Qualcomm -- which was under the Cartwright Act,
not CAPA, not even UCL -- was overturned just last night.
THE COURT:  Right.  I was wondering about that
because I haven't had a chance to read it.  I don't know
if -- the Ninth Circuit vacated Judge Koh's order that you
cited to, or I guess it's a written -- published opinion
that you cited to.  And I don't know if the Ninth Circuit
reached the question of extraterritoriality.  Did it?
MS. GEMAN:  With respect to the Cartwright Act,
the court rejected the notion that the Cartwright Act could
apply extraterritorially because different states -- of
course, you know this issue has been around this question of
whether indirect purchasers in the antitrust context, which
of course is not here, but whether indirect purchasers can
bring a claim.
There is mature, well understood differences in state
law as to whether a state is a Illinois Brick repealer state
or not.  
So we think that context is quite different from here
where there is no equivalent -- even putting aside
differences between settlement and litigation, it's not as
though we are seeing other states saying no, we don't -- you
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know, we disagree with California.  We don't think it's in
an interest for a company to have to pay a statutory penalty
for this kind of conduct.
And here, of course, we have a California company.  And
certainly Qualcomm did not address or disturb cases such as
Chavez and the authority cited therein.  So our view is that
the Qualcomm case does not change the propriety of finding
that the plan of allocation here is very reasonable and
adequate.
THE COURT:  Okay.  So one way it expanded was by
making it one national class -- 
MS. GEMAN:  Yes, your Honor.
THE COURT:  -- kind of extending that out.
Are there other ways in which the definition was
broadened?
MS. GEMAN:  Yes, your Honor.  The complaint class
definition was focused on persons whose accounts were
accessed by Plaid in connection with apps that enabled
payments.  
In looking at the discovery, we learned that the
template software was used across all of Plaid's apps, at
least those in the case, such that even if somebody had an
app that was for not just transferring payment but perhaps
monitoring their investments or what have you, that they
were still improperly spoofed into providing or deceived
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into providing their account information.  
The other difference is more subtle, which is that in
the complaint, the idea was Plaid -- there had to have been
a successful connection.  The consumer had to enter her
login information and Plaid had to get it. 
Because of the nature of the Fishing Act claim, the
injury is arguably just giving the information, you know,
being induced fraudulently.  So even if there was some
technical difficulty where Plaid may not have gotten and
pulled data for that person, the fact that they gave the
data to Plaid was enough of a basis to add the clarification
that if you gave Plaid your information, you're covered even
if Plaid was not pulling your data.
THE COURT:  Okay.  So I think I understand this. 
We're including instances where the user -- we're using an
app that enables payments or other money transfers.  I think
that's the same.
MS. GEMAN:  That sub-definition of financial
account is the same, yes, your Honor.
THE COURT:  Okay.  And it covers a situation where
the user gave the credentials but didn't necessarily make
any connection.
MS. GEMAN:  Right.  And it's really just covering
that the kind of two -- if you will, there's sort of two
species of wrong here.  
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One is this notion of the dignitary invasion of Plaid's
getting more information than was disclosed or appropriate,
and then the other related harm was the invasion of
believing you were giving information to your bank.
THE COURT:  Okay.  And did I miss anything else? 
I sort of feel like you told me something more about how
this broadened, it had to do the enabling payments.  I'm
sorry if I didn't capture it.
MS. GEMAN:  No, no, no.  I'm sorry if I wasn't --
so it's whereas the complaint class definition was focused
on Fintek apps that enabled payments or money transfers, the
class definition in the settlement includes users of apps
that were not merely for the purpose of transferring
payments.
THE COURT:  Okay.  So what kinds of apps are we
talking about here?
MS. GEMAN:  I don't know -- I mean I'm happy to
answer.  I don't know if Mr. Somvichian would prefer to -- 
MR. SOMVICHIAN:  So, your Honor, that could
include any number of different types of apps that don't
have a payment or money transfer function.  As Ms. Geman
referred to, that could be tracking your investments, money
management, setting budgets.  There could be a host of
different kinds of apps.
And the one thing I want to reinforce about the class
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definitions, they are different than what was initially
alleged early on in the consolidated amended complaint, but
they don't introduce any new issues, and that's really the
key.  
We were trying to make the settlement class definitions
precise and to cover the issues raised in the complaint.  
So, as you noted, the first portion of that settlement
class definition -- this is in paragraph 32, the definition
of "financial accounts."  There's a sub one and a sub two. 
The sub one that you pointed to is -- if it's not verbatim,
it's very close to the settlement class definition.
Sub two refers to the Plaid link issue and we wanted to
define that independently of the settlement class because it
was raised front and center in the complaint.  It wasn't
included in the complaint's proposed class definition, but
for purposes of the settlement, we wanted to make sure that
that issue raised in the complaint was adequately addressed.
THE COURT:  Okay.  And that makes total sense to
me.  But I guess the concern is in making a different
definition, are we now broadening the class or including a
lot of different things that really weren't part of the case
or people who weren't necessarily captured by the first
definition in the operative pleading and binding them to a
class settlement?
So what I'd like to know is how did the numbers of
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class members change along with the change of class
definition?  Are we now sweeping in millions and millions
and millions of people who wouldn't have fallen under the
first?  
Ms. Geman?
MS. GEMAN:  Sure, your Honor.  And we do want to
emphasize that the spoofing was very much a part of the case
as brought.  
But answering your Honor's question directly, the
numbers are not hugely different because of the fact that
you had, we understand, many duplicate users.  People would
use many different apps.  And so the people who were using
some of the more -- you could call them more sophisticated
apps, were also often using, for example, a Venmo.  
I think in terms of the -- because -- and keeping in
mind, this is a very large class.  I believe that while
there isn't complete overlap, the non-overlap was something
like less than -- you know, well under 10 percent.
THE COURT:  Okay.  And when we say 98 million
estimated class members, are those individuals or are those
accounts?
MS. GEMAN:  Those are individuals.  And in terms
of translating the sort of user IDs to the individuals, if
your Honor would like to hear about that, I might
respectfully turn to Mr. Kennedy or Mr. Somvichian.  
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But your Honor is correct.  There is a difference
between a person and a user because -- for various reasons,
including using multiple apps.
THE COURT:  Okay.  So we're talking -- if we went
by the number of apps, this number would be way bigger,
right?  We're talking about, generally speaking, a user --
I'm going to use synonymously with an individual.  Although
I get that that's not correct, but just to have that
concept. 
This is 98 million different people.  And if we were
counting by the number of apps they were using instead, it
would be -- we're counting class members, right?
MR. KENNEDY:  Yes, your Honor.  That's -- the best
numbers we have are 98 million individuals, which translates
roughly to 150-, 148 million user IDs associated with
different bank accounts used in different apps.
THE COURT:  Okay.  And what you were explaining on
expanding this to cover other kinds of nonpayment-related
apps is that it doesn't really add many people, it's the
same idea of spoofing, it's just in different categories of
apps.  But the people using those apps typically would have
had one of the ones that was covered in the original
definition, so we're not really bringing in a lot of people. 
The definition might be bringing in more people than
originally pleaded, but it would be something in the range
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of 10 percent.  Have I got that correct?
MS. GEMAN:  Ten percent or less, yes.  And we
believe it is quite likely bringing in more people as
opposed to maybe.  But the numbers are not -- and relative
to this size is not driving this.
THE COURT:  Okay.  Thank you.  
Let's turn to the strength of the claims.  And I
just -- I need to make some findings on this.  I will say
that it's a -- just hearing the number 58 million and
looking at the other cases in the privacy area and
settlement, it certainly compares favorably.  
But usually we have some discussion of well, how do
we -- is this good value for the class, what is the total
exposure or what could be expected and is this a good deal,
even though it looks -- it compares favorably.  If this was
a fantastic case that had way more exposure, I should be
looking at that too.
So I looked at the comps.  I also know from having
ruled on the motion to dismiss that the CAPA issue is fairly
new law.  And it's the only one that has a statutory damage
provision.  And that valuing damages in the privacy area is
tricky where there isn't something -- I think one of the
comps was about an actual data breach, right?  I forget
which case that was.  And that had higher numbers,
relatively higher numbers, but that's a different situation. 
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You've got actual breach and exposure to potential ID
hacks.  And this is a little bit short of that.  
So tell me why 58 million is a good number, given the
claims themselves and the exposure and the risks.
MS. GEMAN:  So, your Honor, we think it is a great
number.  It's a lot in absolute terms.  It comes with robust
and important injunctive relief.  
I think the point you made on other cases is a good
one.  And I think another distinguishing factor with some of
the data breach cases is here, candidly, the class was not
out-of-pocket.  With some of those other kinds of cases,
whether they're data breach or information acquisition,
maybe somebody bought a laptop or a TV and they spent money
and they might have spent less money had they -- or not
purchased the product or stayed at the hotel at all had they
known of the privacy risk.
So I do think your Honor is absolutely correct to note
that distinguishing feature between not only the fact of the
mature breach versus the potential one but also the
out-of-pocket expenditure, or not, that a class member has. 
We also took into account that the CAPA claim is
untested.  Obviously, the plaintiffs strenuously think this
case fits, you know, it's a fit for that claim.  But we also
recognize that, unlike with even the biometric Illinois law,
which has been sort of tested by the Illinois Supreme Court,
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this one is new.
I mean the other case I cited to your Honor was
literally decided five days after your Honor heard oral
arguments from us.  There's been no merits finding beyond
the pleadings on issues such as adversely affected and so
on, to say nothing of how this would look if it went all the
way with issues of proportionality and such.  
So whereas it's of course tempting to say, "Wow, this
is a -- if 100 million people got $5,000, that's, you know,
half a trillion dollars," that's just never going to happen.
Nobody gets a half a trillion dollars.  No company can pay
half a trillion dollars, not even the Facebooks of the
world.
So we were also -- and that was a consideration for us
as well as the fact that, as your Honor noted, we -- your
Honor did dismiss the UCL claim which would have provided a
direct route to a certain kind of restitutionary recovery
but also federal statutory claims that carried lesser
penalties.  
The fact that the settlement was reached after,
frankly, contentious settlement negotiations with the
mediator's proposal, that doesn't itself tell your Honor
that the number is high enough, good enough, but it does
suggest a process where we really were trying to optimize
the number for the class in tandem with the injunctive
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relief.  
So we think sort of careful comparisons to other cases,
is it -- you know, what are the claims, how mature are the
claims, what sort of loss could the class be said to have
suffered.  Did people have their information in the dark web
or not.  Did people spend money they wouldn't have spent.
If you sort of look at all that together, while the
conduct here we consider very egregious, we think that the
settlement amount, particularly given the injunctive relief
that is dramatically changing that conduct, is adequate.
THE COURT:  Okay.  Thank you.
Let's move on to the value to the class members.  And
here I'd like to just go through the math.  This was not
terribly clear in the papers.
So I'm trying to figure out how much are claimants
likely to get with the best estimates that we have.  So
going to the math, if we take the 58 million, we're going to
subtract the fees and costs, service awards, escrow account,
tax liabilities and tax expenses, cost of CAFA notice,
administrator costs.  
Where do we get to if we take all those things out and
if you were to get an award on fees that is what you're
asking for?
MS. GEMAN:  So using that kind of math, we would
get down to probably about 40 million, maybe a little bit
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higher, frankly.  
I mean just just to be very candid, it depends a little
bit of course on the claims rate in terms of the cost of
notice and administration.  We put before your Honor the
estimated claims rate of one to four percent, and we did
some math that on the one hand looked at one percent, on the
other hand looked at four percent.
So on the one hand you have 980,000 claimants, on the
other four times that.  And each of those might be attached
to estimated notice costs.  And our estimate is class
members might expect to receive between about 10 and 40.
THE COURT:  Okay.  And if we have a low claims
rate, it's going to be something like $40 per person?
MS. GEMAN:  Yes.
THE COURT:  And on the high end, if we have a good
turnout, it will be something like $10?
MS. GEMAN:  Yes.
THE COURT:  Okay.  And the administrative costs
are not spelled out.  I know that they're estimated to be
roughly -- well, 5.5 million sort of dedicated toward that
that Plaid is going to kick it another half million if it
goes above that.  I take it that if it went above that, it
would come out of class funds.
MS. GEMAN:  Meaning if it went above six?
THE COURT:  Yes.
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MS. GEMAN:  Yes, but at that point -- well, yes.
THE COURT:  So can you tell me what's driving --
why I don't have a better estimate of the administrative
costs at this point?  What are the variables?  I think
you're pointing toward how many people.  
MS. GEMAN:  Right.  You want me to -- 
THE COURT:  So maybe you can spell that out for
me.
MS. GEMAN:  Sorry. 
Mr. Kennedy, do you want me to turn it over to you?
MR. KENNEDY:  Yeah.  The best estimate that we
have from the class administrator is between two and a half
million and four and a half million based on the claims rate
that's anticipated.
So like we said in the motion, we don't anticipate
hitting that five and half million number, but that's
something we negotiated with Plaid in the event it gets that
high, that that's an additional benefit to the class.  
So those estimates that Ms. Geman put out, those are
using those rough estimates of class cost.  And it really
depends on how many people are responding.
THE COURT:  Okay.  And it sounds if people turn
out in the way that you estimate currently, we're not going
to hit the 5.5, correct?
MR. KENNEDY:  Correct.
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THE COURT:  All right.  But you've built in
another half million just in case that will be added to the
kitty outside of the 58 million, right?
MR. KENNEDY:  That's right.
THE COURT:  Okay.  So where do you get the one to
four percent claim rate?
MS. GEMAN:  So, your Honor, that was provided by
the claims administrator.  And he in turn got it -- and
indeed we did our own independent examination of recent
cases -- from a number of cases that are similar.  
It sort of implicates the reach of the notice, the type
of claim.  Your Honor noted in your ASUS opinion that there
tends to be different rates depending on how much -- the
types of issues.  I think your Honor noted that when there's
large purchases, that might suggest a slightly higher rate
than when there's maybe something like a false advertising.
And so we agree with your Honor that the type of claim
informs our thinking about it.  
Although we do have a fulsome notice plan, the
empirical reality is with classes of this size and with
these types of claims, that's what the rates tend to be.  
We don't really ex ante have any reason to think we
will go outside that norm.
THE COURT:  One area I would like a
supplementation of the record is on the claims made -- 
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MS. GEMAN:  Certainly, your Honor.
THE COURT:  -- so maybe it's Weisbrot (phonetic),
maybe a declaration explaining how he came up with that, and
perhaps one by counsel, just so you know I understand that
there's a factual basis for those estimates.  
MS. GEMAN:  Certainly, your Honor.
THE COURT:  I understand kind of the underlying
theory, but I want to see the data.
MS. GEMAN:  Right.  And, your Honor, we do have a
number of case -- would your Honor like those case cites in
the declaration as opposed to our just reading them into the
record now or -- 
THE COURT:  The declaration would be very helpful. 
MS. GEMAN:  Thank you, your Honor.
THE COURT:   When do you think you can get those
materials in?
MS. GEMAN:  We'll have to speak with the claims
administrator, but I have no reason to think it would take
more than a couple of business days, unless I'm hearing
otherwise because we have gathered this information.  
THE COURT:  Okay.  Well, why don't I say -- I'll
order that you submit those materials within a week.  That
sounds like it will give you plenty of time.  
Okay.  So let's talk about pro rata distribution.  What
did the data show?  Because obviously I need to justify why
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we're going to do one person, one claim.  And if the data
shows there's a real disparity in that a lot of people only
have one and lots of people have many -- more have many, I
don't know.  What's the justification for doing it this way?
MS. GEMAN:  Well, your Honor, I think the
justification is that -- you mean that specifically somebody
who only had Venmo versus someone who had Venmo and
something else?
THE COURT:  Yes.  What is an objector came up and
said, you know, this is not a fair settlement because I have
20 different accounts and I get the same amount as this
person who just has Venmo.  
And if that's a one-off, I get it, but hopefully you
looked more deeply to see whether it's fair to do this pro
rata one claim per person.  
MS. GEMAN:  Well, it's all going to the same
place, your Honor, so it would be one thing if somebody had
20 claims in 20 different entities, we're getting it, and
there could be some argument that that person was at 20-fold
the risk of X, Y, and Z happening.  
But here it's all funneling to the same place.
THE COURT:  But no matter how many accounts you
had, Plaid ended up with it, is what the argument would be.
MS. GEMAN:  Yes.
THE COURT:  It wasn't going to -- okay.  I get it.
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MR. SOMVICHIAN:  And, your Honor, on that point,
we have established with plaintiffs -- and we've made this
point from day one in the case, that there was never any
sale of the data.  Plaid facilitated the connection to the
app that the user wanted to enable.  And beyond that, the
data was never provided, never sold to any third party.
So the point that Ms. Geman made is correct and is
something that we verified in the settlement process.  
THE COURT:  Okay.  Is there something in the
record that says that, what you just said, Mr. Somvichian?
MR. SOMVICHIAN:  I believe that may have been
addressed in some of the discovery responses.  It came up
numerous times in the parties' discussions and was certainly
a fact that was central in the settlement discussions to get
them comfortable that that was the case.
I can't point you to a piece of evidence produced in
discovery or interrogatory responses at my fingertips, but
it was a central point that we established in the course of
the negotiations.
THE COURT:  Does Plaid have any objection to
putting in something on the record so that it's clear?
MR. SOMVICHIAN:  No.
THE COURT:  Okay.  So in the same time line, if
you could get -- whether it's somebody -- a declaration or
putting the interrogatory response in the record or whatever
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it is to establish that, I think that helps justify this
approach.  Okay?
MR. SOMVICHIAN:  Yes.
THE COURT:  Okay.  Great.
Injunctive relief looked meaningful, and I just had a
couple questions.
On deleting the data, so I think -- the allegation
certainly was that when there's a connection, then Plaid is
not just getting access to -- Plaid can go in and it's not
just about the transaction that was the subject of getting
connected in the first place, like making a payment to
somebody.  Actually Plaid could go in and scrape everything
from that account and other accounts that were linked to
that account.  
I think that was the allegation.  Am I right, Ms.
Geman?
MR. KENNEDY:  That's correct, your Honor.
THE COURT:  Okay.  So I don't know what happened
in discovery, whether that panned out, but what I want to
understand now is what will Plaid be getting and what will
they be deleting?
MR. KENNEDY:  I can address that.  
So the injunctive relief is really based -- and the
contours of it are based on what we learned from Plaid
through formal discovery and informal discovery.  And it's
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specifically around its historic business practices in the
way that it connected to bank accounts and collected data
and then its more recent business practices.  
And so there was a time where the allegations in the
complaint more accurately described what was going on and
there was a time where that stopped happening.
And so the injunctive relief is really directed toward
that former business practice and deleting the data that
resulted from that business practice.  And that's what that
aspect of it is aimed at.
Then you also have the data minimization piece, which
really addresses the ongoing business practices in
collecting data and specifically limiting it to data that is
necessary for the app and actually requested by the app so
there's not a disconnect between the data that Plaid is
collecting behind the scenes and what is actually delivered
up to the app on the consumer's behalf.  
THE COURT:  Okay.  Great.  Thanks for the
explanation.  
One small point.  On the injunctive relief regarding
Plaid Portal, your motion says that Plaid will provide a
prominent reference and link to Plaid Portal on its website
homepage along with the plain language description of the
user controls available on Plaid Portal. 
It cites to -- the motion cites to paragraphs 58 and 59
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of the settlement agreement, which I don't think says that. 
And I don't recall seeing it in the settlement agreement. 
Can you just point me to where Plaid has agreed to make
these changes regarding the Plaid Portal?
MR. SOMVICHIAN:  Your Honor, it actually is on
page 13 of the settlement agreement at paragraph 58, sub A
through C, which refers to Plaid Portal and the ways in
which Plaid will more prominently publicize those user
controls.  
THE COURT:  Well, the first -- 58 talks about what
the class notice is going to say.  And 59 talks about email
reminders.  So I don't -- 
MR. SOMVICHIAN:  Yes.  So then up -- your Honor, also
look at 54A --  
THE COURT:  Okay.  
MR. SOMVICHIAN:  -- which refers to revisions to
the website, including a reference to Plaid Portal.  
THE COURT:  Great.  Thank you.  That's helpful.  
I think 54A is what I was -- 54 is what I was looking
for.  Thank you.  That takes care of that one.  
Let's go to notice and claim form.  All right.  So on
notice, it looks like you're going to be -- I think Plaid is
undertaking to give 65 million email addresses to the
administrator.  Am I right about that?
MR. SOMVICHIAN:  Yes, your Honor.  We're -- I
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don't know where the number will ultimately end up.  There's
a decryption process that has to be completed before we can
compile the final email notice list.
THE COURT:  Okay.  
MR. SOMVICHIAN:  That was an estimate at the time,
but whatever emails Plaid is able to gather, we'll provide
those to the claims administrator to facilitate a direct
notice to that group of users.  
And I would add that for that group where Plaid is able
to identify a user associated with an email address, the
plan is to send them a claims notice that leads to a much
simplified and truncated claim form.
THE COURT:  Right.  
MR. SOMVICHIAN:  Those people are essentially
pre-verified, and they will have to submit very little
information.  And so the claim form that you've seen in the
exhibits really relates to the other group for whom Plaid is
not able to identify ahead of time and associate with an
email address but might submit claims after seeing something
in the online advertising notice campaign, for example, or
seeing the settlement website.
THE COURT:  Okay.  I saw two claim forms, and one
I assumed was the one -- 
MR. SOMVICHIAN:  Yes.
THE COURT:  It's where you get an ID.
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MR. SOMVICHIAN:  Yes.
MR. KENNEDY:  Yes.
THE COURT:  And that's generically by -- the
pre-verification.
Okay.  So for the emails, they're going to be sent over
after they're decrypted and collected.  The administrator is
going to update them and send them out and then it says
"Resend any soft bounces or not delivered," and that's
really what's going to happen with emails.  Right?
And then the mail is only going to people with mail
addresses but no email addresses.  So if somebody has an
email address and a mail address, are they only going to get
an email?  And if so, why?
MR. KENNEDY:  That's correct, your Honor.  
The number of email addresses -- they had more email
addresses than than any other contact information.  The data
that Plaid has for all of its records is spotty, so
65 million obviously isn't the whole group.  
There are certain people that they have no contact
information for because Plaid is not the app that has the
direct relationship with the consumer, by and large.
And so sometimes there is an overlap and they have
email and mailing address.  And in a few cases, they only
have mailing address.  And where they only have the mailing
address, we're going to use that for the direct notice, but
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the reliance really, if you look at the entire program,
is -- the emphasis is on a combination of media notice
through all of the ways that we're going to try to get in
front of this this class, whether that's by the social media
or banner ads.  All of that is designed to reach 80 percent
of the class -- 
THE COURT:  I understand.  I'm trying to -- but,
look, the old way of thinking and perhaps the current way of
thinking is if you've got a mail address, send mail.  So I'm
trying to -- if you're saying we've got 98 million, and
Plaid is not the holder of these accounts so it's hard to
get -- we're not going to have good email addresses for
everybody.  I understand that.  We think maybe's roughly 65
million email addresses.  
How many more do we have hard addresses for; do you
know?
MR. KENNEDY:  It's a number of -- it's tens of
millions.  I don't think we've translated that over into
number of users like we have with the other number, because
we determined that sending out that many mailers in this
situation would be cost prohibitive and would not add that
much more value to the overall notice program when you're
looking at all the other aspects.
THE COURT:  But that part of the analysis was not
really in anybody's declaration.  That's what I'm trying to
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understand.  Or maybe if it is, point me to it.  
But if you're saying this is cost prohibitive, I need
to understand why that is, because it seems like if you want
to get money in people's pockets, right, then what you're
trying to do is reach them.  And you can have a very robust
social media campaign.  But as was just pointed out, if
people don't get their email notice, then they're going to
have to go through a more onerous process to file a claim. 
We want to get as many people in there as possible that
don't have to file the more onerous claim form, so it seems
to me we would want to rely on email or direct mailing,
unless there's something that is cost prohibitive and not
likely to be much of a return.
That critical piece is not in your papers, at least
that I could find.
MR. KENNEDY:  Your Honor, that is not in the
papers.  That analysis is not in the papers.  That's
something that we'd be happy to supplement with the other
portions because it's really based on the considered opinion
of our settlement administrator and -- 
THE COURT:  But he needs to give me facts.  I'm
sure, you know -- he has to just his thinking on that. 
It may be completely justifiable that if we look at the
numbers on cost and if he says "In my experience" or "Based
on the following experiences or data, in this kind of class,
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it's just not going to get to that many more people," then
at least we'll have a factual basis for making that kind of
decision to not mail things out when we have their
addresses.  Okay?  But that's -- could you please include
that with the other piece that he's supposed to be putting
in within a week.  Okay?
MR. SOMVICHIAN:  Your Honor, would be relevant for
this question.  If there is data on the relative claims rate
between a mail notice and an email notice -- you know, if
for example, the email notices are very unlikely to return a
significant portion of claims as opposed to emails (sic),
that seems like a relevant data point for this exercise.  
THE COURT:  Yes, it could be helpful, depending on
what how generalized it is or how specific it is, but yes,
absolutely.  If there's information on that, that would be
very helpful.  I think we're always looking for that
information because people are trying to study that.  
So, yeah, feel free to put whatever you have in the
record just so we've got that, so I can make a ruling but
also if questions come up, that there's a record to
establish the point.
Okay.  On the checks, can you make them say that they
only have 90 days to cash them so it's clear?  Is that hard?
Mr. Kennedy?
MR. KENNEDY:  Can we direct the class members that
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they only have 90 days to -- 
THE COURT:  Usually on the check if it's --   
MR. KENNEDY:  -- cash?
THE COURT:  This is going to expire within 90
days, right?  So sometimes when we have that situation with
checks, we just put it right on there, "This check only good
for 90 days."  Any problem with doing that?
MR. KENNEDY:  I don't imagine there's any problem
on our end, but we can -- 
MS. GEMAN:  I can represent, your Honor, there is
no problem with doing that.
THE COURT:  Okay.  Again, it's just I think a
minimal cost to make sure that money gets in class members'
pockets, which is the whole goal here.  
MS. GEMAN:  Absolutely, your Honor.  
THE COURT:  A technical issue on the claim forms,
so when you're -- I think in either claim form, it prompts
you to put in your email address and then it asks whether
you want to be paid by PayPal, Venmo or check.
And the question is, what if someone says PayPal but
their PayPal account uses a different email than the email
they just gave you, which I think is not uncommon.  Is the
money going to get to the right person if they don't have
that email to get to the PayPal account?
MS. GEMAN:  Your Honor, our understanding is, yes,
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it will get to the right person.  
THE COURT:  Okay.  So I guess you're saying you
vetted that issue.  We're not going to have some weird
technical "oops" down the road.
MS. GEMAN:  Yes, your Honor.  We definitely want
to avoid a weird technical oops.  
THE COURT:  Okay.  All right.  And you've
addressed that very question with your administrator?
MS. GEMAN:  Yes, your Honor.  I'm in fact in real
time doing so, yes.  
THE COURT:  Okay.  
MS. GEMAN:  Reconfirming as it were.
THE COURT:  Great.  
And then on cy pres, how likely is it that there's
going to significant unclaimed funds; do we know?
MR. KENNEDY:  How likely is it?
THE COURT:  I guess it's about people, whether
they're going to cash a $10 check or a $20 check.
MR. KENNEDY:  Yeah, we -- 
MR. SOMVICHIAN:  I would point out, your Honor,
there's also the mechanism that's built in the settlement
process that we contemplated where there is an amount -- 
usually it's from uncashed checks, right? -- and if we
determine that it's economically rational to send that out,
for example, to people who have already received some amount
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through an electronic means that we have already
successfully paid through, that we send out those additional
funds.  So it's hard to see a significant amount remaining
for cy pres. 
MS. GEMAN:  And I would add to that, your Honor,
given the nature of this class in particular and the options
that we've afforded for the Venmo and the PayPal -- I don't
want to say the hope is people don't do check.  People can
choose what they want, but certainly the fact that there's
those different options we think further blunts against the
specter of significant unclaimed or uncashed checks.
THE COURT:  Okay.  So we think -- I mean nobody
can be totally sure, but we think probably not significant
unclaimed funds or at least you've done what you can to
minimize that.  
If there are, then you're going to look at whether it's
economically feasible for a second distribution and only
then will it go to the two cy pres designees.
So are there any connections between class counsel or
clients with these two cy pres designees?
MS. GEMAN:  No, your Honor.
THE COURT:  Have you done that check to make sure?
MR. KENNEDY:  Yes.
THE COURT:  Okay.  So you're representing to the
Court for all, I guess, 12 main plaintiffs as well as your
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firms, there's nobody who's been on the board or, you know,
whatever the connection might be?  Because I think that is
sometimes a vulnerability.
MR. KENNEDY:  Yes.  We ran that check.
THE COURT:  Okay.  Well, those are the questions I
had.  I look forward to getting your supplemental materials
within a week.  And I will finish checking everything out,
but it certainly looks like a significant -- this is
significant relief.  
So thank you.  Is there anything further from counsel?
MR. KENNEDY:  No, your Honor.
MR. SOMVICHIAN:  No, your Honor.
THE COURT:  All right.  Thank you all.
MS. GEMAN:  Thank you for your Honor's time.
MR. KENNEDY:  Thank you very much.
MR. SOMVICHIAN:  Thank you, your Honor.
(Proceedings adjourned at 1:48 p.m.)
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CERTIFICATE OF TRANSCRIBER
I certify that the foregoing is a true and correct
transcript, to the best of my ability, of the above pages of
the official electronic sound recording provided to me by
the U.S. District Court, Northern District of California, of
the proceedings taken on the date and time previously stated
in the above matter.
I further certify that I am neither counsel for,
related to, nor employed by any of the parties to the action
in which this hearing was taken; and, further, that I am not
financially nor otherwise interested in the outcome of the
action.
Echo Reporting, Inc., Transcriber
Wednesday, April 13, 2022
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