Rhodes v. Olson Associates, P.C.

Filing 43

ORDER Granting Plaintiff's 42 Unopposed Motion for Preliminary Approval of Class Action Settlement. A Final Fairness Hearing is set for 8/28/2015 at 01:00 PM in Courtroom A 602 before Judge Christine M. Arguello. By Judge Christine M. Arguello on 06/12/2015. (athom, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 14-cv-00919-CMA-MJW
KELLIE RHODES, on behalf of herself and others similarly situated,
Plaintiff,
v.
OLSON ASSOCIATES, P.C., d/b/a OLSON SHANER,
Defendant.

ORDER GRANTING PLAINTIFF’S UNOPPOSED MOTION FOR PRELIMINARY
APPROVAL OF CLASS ACTION SETTLEMENT

The parties have requested approval of their settlement of this class action
brought under the Fair Debt Collection Practices Act. According to the Settlement
Agreement, each member of the class who presents a timely claim will receive an equal
share of a $23,000 award deposited in the Settlement Fund, and the representative
Plaintiff, Kellie Rhodes, will receive a $2,000 award. Defendant has further agreed to
pay up to $75,000 in attorney fees, costs, and reimbursable expenses, as well as to
fund the administration of the class notice and awards.
After careful consideration of the terms of the proposed settlement and the
interests of the Class, the Court grants Plaintiff’s Unopposed Motion for Preliminary
Approval of Class Action Settlement (Doc. # 42.)

I. BACKGROUND
Plaintiff Kellie Rhodes brought this class action lawsuit against the law firm of
Olson Associates, P.C., d/b/a Olson Shaner, alleging that voicemail messages she
received from Olson Shaner violated the Fair Debt Collection Practices Act (FDCPA or
“the Act”), 15 U.S.C. § 1692 et seq. Specifically, she alleged that Olson Shaner violated
Section 1692d of the Act, by placing “telephone calls without meaningful disclosure of
the caller’s identity,” and Section 1692e(11) of the Act, by failing to disclose, in a
“subsequent communication” with a debtor, that the communication is from a debt
collector.
On March 13, 2015, the Court granted Plaintiff’s Cross-Motion for Summary
Judgment as to Liability and her Motion for Class Certification in accordance with
Federal Rule of Civil Procedure 23(a), (b)(3). (Doc. # 38.) Pursuant to this Order, the
Class consists of all persons located in Colorado for whom Olson Shaner, left, or
caused to be left, a voice message in connection with the collection of a consumer debt
that is materially identical to the following message:
HI, THIS MESSAGE IS FOR (DEBTOR/CO-DEBTOR). THIS IS (OLSON
SHANER EMPLOYEE'S NAME) WITH THE LAW FIRM OF OLSON
SHANER. PLEASE RETURN MY CALL REGARDING A PERSONAL
MATTER. I WILL BE IN THE OFFICE TODAY UNTIL (TIME), AND WILL
RETURN (TOMORROW/ON MONDAY) AT (TIME). YOU CAN REACH
ME AT (NUMBER). 1
(Id. at 31.) On May 22, 2015, Plaintiff filed an Unopposed Motion for Order to
Preliminarily Approve Class Action Settlement. (Doc. # 42.)

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The message must have been left between March 31, 2013 and March 30, 2014.
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Pursuant to the Settlement Agreement, Olson Shaner would pay named Plaintiff
Kellie Rhodes $2,000; in addition, each class member would receive a pro-rata share of
a $23,000 Settlement Fund. (Id. at 3.) Additionally, Olson Shaner would pay up to
$75,000 in attorney fees, costs, and reimbursable expenses. 2 (Id.) Olson Shaner
would also fund the administration of the class action notice and awards. (Id. at 4.)
Specifically, Olson Shaner will hire a third-party class administrator, KCC Class Action
Services, that will send notice of the action to each member of the class via direct mail,
including a claim form and return envelope. (Id. at 11-12.) Plaintiffs have attached a
Proposed Notice to the instant Motion. (Doc. # 42-1 at 36-41.) 3
II. DISCUSSION
A.

The Proposed Settlement
Courts engage in a two-step process to ensure the fairness of any class action

settlement. NEWBERG ON CLASS ACTIONS § 13:12 (5th ed.) The instant Motion
pertains to the first step of this process, in which the Court makes a preliminary
determination regarding the fairness, reasonableness, and adequacy of the settlement
terms. See id. The object of preliminary approval is for the Court “to determine whether

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The Court will closely review the reasonableness of the attorney fees request at the Final
Fairness Hearing; at this juncture, it has received no information regarding, for example, the
number of hours spent litigating the case or the hourly rates of the attorneys. The Settlement
Agreement provides that “[i]n advance of the Final Settlement Hearing, Class Counsel will file
an application for reasonable attorneys’ fees, costs, and expenses. The parties will attempt, in
good faith, to agree upon the proposed amount of reasonable attorneys’ fees, costs, and
expenses.” (Doc. # 42-1 at 12.)

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The Settlement Agreement also provides that if any funds remain in the Settlement Fund after
the first pro-rata distribution, either a second pro-rata distribution will be made to Class
Members, or the uncashed amount will be paid to an appropriate non-profit(s) that is agreed
upon by the parties as a cy pres recipient. (Doc. # 42-1 at 11.)
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notice of the proposed settlement should be sent to the class, not to make a final
determination of the settlement’s fairness. Accordingly, the standard that governs the
preliminary approval inquiry is less demanding than the standard that applies at the final
approval phase.” Id. § 13:13; see also Lucas v. Kmart Corp., 234 F.R.D. 688, 693 (D.
Colo. 2006) (“The purpose of the preliminary approval process is to determine whether
there is any reason not to notify the class members of the proposed settlement and to
proceed with a [final] fairness hearing”); In re Motor Fuel Temperatures Sales Practices
Litig., No. 07-MD-1840, 2011 WL 4431090, at *5 (D. Kan. Sept. 22, 2011) (internal
quotation omitted) (“The Court will ordinarily grant preliminary approval where the
proposed settlement appears to be the product of serious, informed, non-collusive
negotiations, has no obvious-deficiencies, does not improperly grant preferential
treatment to class representatives or segments of the class and falls within the range of
possible approval.”) If the settlement is preliminarily approved, the Court enters a
preliminary approval order directing the preparation of notice to class members and
setting forth a schedule for objections. NEWBERG ON CLASS ACTIONS § 13:12 (5th
ed.) The second step involves a final fairness hearing, at which point class objectors (if
any) may provide testimony, and the Court again decides whether the settlement is fair,
reasonable, and adequate. Id. § 13:42.
Under F.R.C.P. 23(e)(2), a class action settlement must be “fair, reasonable and
adequate.” In the Tenth Circuit, the following factors are analyzed in determining
whether this standard is met: (1) whether the proposed settlement was fairly and
honestly negotiated; (2) the judgment of the parties that the settlement is fair and

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reasonable; (3) whether serious questions of law and fact exist, placing the ultimate
outcome of the litigation in doubt; and (4) whether the value of an immediate recovery
outweighs the mere possibility of future relief after protracted and expensive litigation.
Rutter & Wilbanks Corp. v. Shell Oil Co., 314 F.3d 1180, 1188 (10th Cir. 2002).
Although the Court will consider these factors in depth at the final approval hearing, they
also provide a useful guide at the preliminary approval stage. In re Motor Fuel
Temperature Sales Practices Litig., 258 F.R.D. 671, 680 (D. Kan. 2009). The proposed
settlement meets each of these four prongs.
First, there are several indications that the settlement negotiations in the instant
case were fair, honest and conducted at arm’s length. There is no indication that the
settlement was the product of collusion. Additionally, the parties “vigorously advocated
their respective positions throughout the pendency of the case.” See Lucas, 234 F.R.D.
at 693 (internal citation omitted). Specifically, the case has been pending for over a
year and has involved fact discovery and motions practice, including well-briefed
dispositive motions, including a Motion for Summary Judgment and a Cross-Motion for
Summary Judgment. Additionally, as discussed in the Court’s order appointing
Plaintiff’s attorneys as Class Counsel in this matter (Doc. # 38 at 28), Class Counsel are
experienced in consumer class actions, and weight is given to their favorable judgment
as to the merits, fairness, and reasonableness of the settlement. See Marcus v. Kan.
Dep’t of Revenue, 209 F.Supp.2d 1179, 1183 (D. Kan. 2002) (“Counsels’ judgment as
to the fairness of the agreement is entitled to considerable weight”); Saunders v. Berks
Credit & Collections, Inc., No. CIV. 00-3477, 2002 WL 1497374, at *10 (E.D. Pa. July

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11, 2002) (“The Court is therefore deferential to the reasoned judgment of the wellinformed attorneys.”)
Similarly, although it is not the role of the Court at this stage of the litigation to
evaluate the merits, Wilkerson v. Martin Marietta Corp., 171 F.R.D. 273, 284 (D. Colo.
1997), it is clear that the parties could reasonably conclude that there are serious
questions of law and fact that exist that could significantly impact this case if it were
further litigated. Although the Court has granted summary judgment as to Defendant’s
liability, the prospect of a trial necessarily involves a risk that the named Plaintiff and
class members would obtain a lesser recovery in damages. Specifically, 15 U.S.C. §
1692k(a)(2)(B)(ii) provides that class members would be limited to the lesser of
$500,000 or one percent of Olson Shaner’s net worth; Defendant has indicated that
application of this standard would result in a recovery far below the $23,000 Settlement
Fund the parties agreed to here. (Doc. # 42 at 7.) Moreover, it might prove difficult for
the named Plaintiff or class members to show actual damages that resulted from the
receipt of one or more voicemails, particularly because there is evidence as to the
named Plaintiff (contested, to be sure), that she was aware Olson Shaner was a debt
collector. In contrast to these uncertain awards, the settlement guarantees all Class
Members an equal cash payment, which could equal anywhere from $7.10 (assuming a
highly unlikely, 100% claims rate), to $71.00 (assuming a 10% claims rate). For these
same reasons, it also seems very likely that the value of an immediate recovery
outweighs the mere possibility of future relief after protracted and expensive litigation; a
trial, post-trial motions, and an appeal could reduce the net value of any recovery.

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For the foregoing reasons, the Court preliminarily approves this settlement, as
fair, reasonable, and adequate, and in the best interests of the Plaintiff Class.
B.

Class Notice
For classes certified under Rule 23(b)(3), “the court must direct to class members

the best notice practicable under the circumstances, including individual notice to all
members who can be identified through reasonable effort.” Fed. R. Civ. P. 23(c)(2)(B).
Rule 23(c)(2)(B) also requires that such notice must clearly and concisely state in plain,
easily understood language:
(i)

the nature of the action;

(ii)

the definition of the class certified;

(iii)

the class claims, issues, or defenses;

(iv)

that a class member may enter an appearance through an attorney if the
member so desires;

(v)

that the court will exclude from the class any member who requests
exclusion;

(vi)

the time and manner for requesting exclusion; and

(vii)

the binding effect of a class judgment on members under Rule 23(c)(3).
As for the method of notice delivery, the parties have agreed to directly mail a

notice to each individual class member, using a third-party claims administrator. (Doc. #
42 at 12.) There is no indication that any of the class members cannot be identified
through reasonable efforts; indeed, the instant Motion indicates that 3,240 class

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members have been identified by Olson Shaner’s records. The Court therefore finds
the proposed manner of delivery sufficient under Rule 23(c)(2)(B).
As to the form and content of the Proposed Notice, the Court has carefully
reviewed the proposed Notice, and finds all of the Rule 23(c)(2)(B) requirements
satisfied. (See Doc. # 42-1 at 36-41.) However, the Proposed Notice outlines several
problematic requirements for class members who wish to object to the Settlement
Agreement. Specifically, the Proposed Notice requires that, in order for class members
to object, they must provide “a detailed statement of the specific legal and factual basis
for each objection, and a list of the legal authority you will present at the settlement
approval hearing,” in addition to providing the “specific reasons” they object to the
settlement. (Doc. # 42-1 at 40.) This requirement is too onerous for lay class members,
whose objections may be valid notwithstanding the fact that they cannot provide the
“specific legal . . . basis” or a “a list of the legal authority” that supports their objections.
See NEWBERG ON CLASS ACTIONS § 13:30 (5th ed.) (“Courts should be cautious of
objection formats that unduly chill class members' capacity to object to the settlement.
. . . [A] court’s role is to safeguard the class’s interest by ensuring that class members,
most of whom are operating in good faith, receive the best opportunity possible to
comprehend and respond to the proposed settlement.”) The Proposed Notice also
requires that class members attend the final fairness hearing in person in order for their
objections to be valid. (Doc. # 42-1 at 40) (“You or your lawyer must appear at the
settlement approval hearing in order to properly object to the settlement.”) The Court
sees no reason why a personal appearance is necessary for the Court’s consideration

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of an objection. See NEWBERG ON CLASS ACTIONS § 13:30 (5th ed.) (“[C]lass
members may file written objections and need not appear at the fairness hearing for
their objections to be considered by the court.”) Additionally, neither of these provisions
were contained in the Settlement Agreement, which provides only that “[i]n the written
objection, the Class Member must state: his or her full name, address, telephone
number, and email address (if available); the reasons for his or her objection; and,
whether he or she intends to appear at the fairness hearing on his or her own behalf or
through counsel.” (Doc. # 42-1 at 10.) As such, both of these provisions shall be
deleted from the Notice prior to its issuance, and the Notice shall be modified as
provided below.
III. CONCLUSION
The Court having preliminarily reviewed the proposed settlement of this action, it
is ORDERED:
1.

Proposed Settlement. The proposed settlement between the Plaintiff class and
the Defendant appears to be within the range of reasonableness and accordingly
shall be submitted to the Class Members for their consideration and for a Final
Fairness Hearing under Fed. R. Civ. P. 23(e).

2.

Final Fairness Hearing. A hearing shall be held in Alfred A. Arraj United States
Courthouse, 901 19th Street, Courtroom A602, Denver, CO 80294, on Friday,
August 28, 2015 at 1:00 PM, to consider whether the settlement is fair,
reasonable, and adequate and should receive the Court’s final approval.

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i. Objections by class members to the proposed settlement will be
considered if filed in writing with the clerk on or before August 11,
2015. 4 In his or her notice of objection, a class member must include
his or her full name, address, telephone number, the specific reason(s)
for his or her objection, and whether he or she intends to appear at the
fairness hearing on his or her own behalf or through counsel. Class
Members who do not submit a valid and timely objection will be barred
from seeking review of the proposed class action settlement by appeal
or otherwise.
ii. At the hearing, class members may be heard orally in support of or in
opposition to the settlement, provided such persons file with the clerk
by August 11, 2015, a written notification of their desire to appear
personally on his or her own behalf or through counsel.
iii. Any Class Member who desires to be excluded from the class must
send a written request for exclusion to the Class Administrator with a
postmark date no later than August 11, 2015. 5 Any Class Member
who submits a valid and timely request for exclusion will neither be

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The Settlement Agreement provides that “Any Class Member who intends to object to the
fairness of this settlement must file a written objection with the Court within 60 days from the
Court’s entry of the Order of Preliminary Approval of Class Action Settlement.” (Doc. # 42-1 at
9) (emphasis added).
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The Settlement Agreement provides that “[a]ny Class Member who desires to be excluded
from the class must send a written request for exclusion to the Class Administrator with a
postmark date no later than 60 days after the Court’s entry of the Order of Preliminary Approval
of Class Action Settlement.” (Doc. # 42-1 at 9.)
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bound by the terms of the Settlement Agreement, nor receive any of
the benefits of the Settlement Agreement.
iv. Counsel for the Class and for the Defendant should be prepared at the
hearing to respond to objections filed by class members and to provide
other information, as appropriate, bearing on whether or not the
settlement should be approved.
3.

Notice. The parties to the proposed settlement shall, as expeditiously as
possible, but at the latest as of July 3, 2015, 6 cause to be mailed in the name of
the clerk, by first class mail, postage prepaid, to members of the class the
Proposed Notice attached as Exhibit C to Doc. #42-1. However, it is ORDERED
that the Proposed Notice shall be edited to as follows (strikethroughs indicate
deleted language, brackets indicate added language):
You must include the name of the case, your full name, address,
telephone number, your signature, [and] the specific reasons why you
object to the settlement[.], a detailed statement of the specific legal and
factual basis for each objection, and a list of the legal authority you will
present at the settlement approval hearing. You or your lawyer must
appear at the settlement approval hearing in order to properly object to the
settlement. You or your lawyer must appear at the settlement approval
hearing in order to properly object to the settlement. [You and/or your
lawyer may attend the Settlement Approval Hearing, but are not required
to do so. This Hearing will be held at 1:00 PM on Friday, August 28, 2015,
at the U.S. District Court for the District of Colorado, Alfred A. Arraj
Courthouse, 901 19th Street, Courtroom A602, Denver, CO 80294. If you

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The Settlement Agreement provides that “[t]he Class Administrator will, as expeditiously as
possible but not to exceed 30 days from the Court’s entry of the Order of Preliminary Approval
of Class Action Settlement, provide notice of the settlement to the Class Members.” (Doc. # 421.) As applied here, this would require notice to be mailed as of July 12, 2015. However,
because Class Members are also only given until August 11, 2015 to object, and because three
weeks is more than adequate time for a professional claims administrator to provide notice to
Class Members, the Court has changed this date so that notice shall be mailed as of July 3,
2015.
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and/or your lawyer wish to attend the Settlement Approval Hearing in
person, please indicate that you will do so in your written objection.]
Additionally, the parties SHALL add the Courtroom number (A602) as applicable
throughout the Notice.
4.

FURTHER BRIEFING. Further submissions by the Parties, including
memoranda in support of the proposed settlement, responses to any objections,
petitions for attorney fees and reimbursement of costs and expenses by Class
Counsel, shall be filed with the Court no later than August 18, 2015.

DATED: June 12, 2015
BY THE COURT:

_______________________________
CHRISTINE M. ARGUELLO
United States District Judge

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