Burke v. NoteWorld, LLC
Filing
34
ORDER granting 30 Motion to Certify Class; granting 30 Motion for Settlement; granting 31 Motion for Attorney Fees; the Court: finally certifies the settlement class; finally approves the settlement; directs class representative awards to each Representative Plaintiff; directs the award of settlement administration expenses to Hull Barrett, P.C.; directs the award of class counsel attorneys' fees and expenseses; directs class counsel, Representative Plaintiffs, and NoteWorld to implem ent and consummate the settlement according to its terms and conditions; and, finally, the Court retains jurisdiction over the case to enforce this Order or terms of the settlement agreement, including administration of the cy pres fund; all being done, as outlined in the terms and conditions of this Order.. Signed by Judge J. Randal Hall on 4/18/2012. (jah)
IN THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF GEORGIA
AUGUSTA DIVISION
DIANNE MOREFIELD, on behalf
of herself and all others
similarly situated,
Plaintiff,
CIVIL ACTION FILE NO.
1:10-CV-00117
V.
NOTEWORLD, LLC d/b/a
NOTEWORLD SERVICING CENTER,
Defendant.
HATTIE BURKE, on behalf of
herself and all others
similarly situated,
Plaintiff,
CIVIL ACTION FILE NO.
1:11-CV-00029
V.
NOTEWORLD, LLC d/b/a
NOTEWORLD SERVICING CENTER,
Defendant.
ORDER
Before the Court are Plaintiffs' motions for (1) final
settlement class certification, final approval of class
settlement, and dismissal (1:10-CV-00117, doc. no. 59; 1:11-CV00029, doc. no. 30), and (2) approval of class representative
service awards, administrative expenses, and attorneys' fees and
expenses (1:10-CV-00117, doc. no. 60; 1:11-CV-00029, doc. no.
31). Dianne Morefield, Hattie Burke, and Peggy Stewart (the
"Representative Plaintiffs") are seeking final approval of their
settlement with Defendant NoteWorld, LLC ("NoteWorid") . The
Court concludes that the settlement represents a fair,
reasonable, and adequate compromise of the claims involved.
Thus, for reasons more fully articulated below, the pending
motions are GRANTED.
I. BACKGROUND
In these class action lawsuits (the "Actions"), Plaintiffs
allege that NoteWorld accepted charges, fees, contributions
and/or combinations thereof from the Representative Plaintiffs
and the settlement class on or after July 1, 2003, which, when
considered in conjunction with the total fees charged to Georgia
residents participating in debt settlement/debt adjusting plans
("Debt Settlement Plans") administered by third-party debt
settlement companies ("DSCs"), exceeded those permitted by the
Georgia Debt Adjustment Act (the "Act"), O.C.G.A. H 18-5-1 to 1 This court has jurisdiction over the matter pursuant to 28 U.S.C. §
1332(d) (2): "The district courts shall have original jurisdiction of any
civil action in which the matter in controversy exceeds the sum or value of
$5,000,000, exclusive of interests and costs, and is a class action in which
any member of a class of plaintiffs is a citizen of a State different from
any defendant." Here, Representative Plaintiffs Morefield and Burke are
Georgia citizens and Defendant NoteWorid is a Delaware limited liability
company with its principal place of business in Washington. See 28 U.S.C. §
1332(d)(10) ("For purposes of [class actions), an unincorporated association
shall be deemed to be a citizen of the State where it has its principal place
of business and the State under whose laws it is organized."). Moreover, the
amount in controversy as alleged exceeds $5,000,000.
2
4.
Noteworid denied the allegations contained in Plaintiffs'
claims and denied that its conduct is prohibited by the Act.
In October of 2011, the Representative Plaintiffs entered
into a settlement agreement with NoteWorid whereby the parties
agreed to settle the Actions. The result of the settlement
agreement is a dismissal with prejudice of the claims of
Representative Plaintiffs and the settlement class and a release
of NoteWorid.
On the parties' motion, the Court entered an Order on
January 6, 2012 that (1) preliminarily certified a class for
settlement purposes; (2) preliminarily approved the class
settlement; (3) confirmed class counsel; (4) appointed a
settlement administrator, (5) directed that notice be issued to
the class; and (6) stayed prosecution of the released claims.
On March 29, 2012, the Court held a final fairness hearing, at
which time it considered the fairness of the proposed settlement
of this class action and provided an opportunity for any
objectors to raise any objections to the settlement and the
final certification of the class for settlement purposes. No
objections were made in writing and filed with the Clerk of
Court, and no objections were made at the March 29, 2012
hearing.
II. DISCUSSION
"Settlement agreements are highly favored in the law and
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will be upheld whenever possible because they are a means of
amicably resolving doubts and uncertainties and preventing
lawsuits." In re Nissan Motor Corp. Antitrust Litig., 552 F.2d
1088, 1105 (5th Cir. 1977) . Before a settlement may be finally
approved, however,
a number of prerequisites must be
established. First, the Court must certify the settlement
class. Fed. R. Civ. P. 23(c). Second, the Court must determine
whether the settlement class members were given reasonable
notice of class certification and settlement. See In re
Checking Account Overdraft Litig., No. 09-MD-02036-JLK, 2011 WL
5873389, at *6 (S.D. Fla. Nov. 22, 2011); Fed. R. Civ. P.
23 (c) (2),
(e) (1) .
Finally, the Court must evaluate the
settlement's fairness and adequacy. Fed. R. Civ. P. 23(e)(2);
see also In re Checking Account Overdraft Litig., 2011 WL
5873389, at *9,
A. Final Settlement Class Certification
The settlement class is defined by the parties' settlement
agreement as follows:
All persons residing in the State of Georgia (a) with
whom NoteWorid entered into a Sign-Up Agreement in
relation to a debt adjusting program, and/or (b) from
whom
NoteWorld
accepted,
either
directly
or
indirectly, any charge, fee, contribution, or
combination thereof in relation to a debt adjusting
program, between and including July 1, 2003 and July
29, 2011.
(Settlement Agreement ¶ 9(i) .)
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To certify a class for settlement purposes the Court must
determine whether the prescriptions of Federal Rule of Civil
Procedure 23 are satisfied. Specifically, certification
requires that each of the four factors set out in Rule 23(a) are
satisfied, along with at least one of the conditions under Rule
23(b). Upon review, the Court finds that the settlement class
satisfies the requisite Rule 23 factors detailed below.
1. Numerosity
Rule 23(a) (1) requires that "the class [be] so numerous
that joinder of all members is impracticable." Impracticable
does not mean impossible, only that it would be difficult or
inconvenient to join all members of the class. Hammett v. Am.
Bankers Ins. Co., 203 F.R.D. 690, 694 (S.D. Fla. 2001). The
settlement class in this action consists of over 7,000 members.
Therefore, the Court finds that the numerosity requirement of
Rule 23(a) (1) is met. See Cox v. American Cast Iron Pipe Co.,
784 F.2d 1546, 1553 (11th Cir. 1986) ("[W]hile there is no fixed
numerosity rule, generally less than twenty-one is inadequate,
[and] more than forty [is] adequate . . . ." (internal
quotations omitted)).
2. Commonality
Rule 23(a) (2) requires that there be "questions of law or
fact common to the class." The commonality element is generally
satisfied when a plaintiff alleges that "[d]efendants have
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engaged in a standardized course of conduct that affects all
class members." In re Terazosin Hydrochloride, 220 F.R.D. 672,
687 (S.D. Fla. 2004) (citing Roper v. Consurve, Inc., 578 F.2d
1106, 1113 (5th Cir. 1978)). Here, commonality is satisfied
because NoteWorid is alleged to have injured each of the class
members in precisely the same way, i.e., by charging fees in
excess of those permitted by law.
3. Typicality
Typicality under Rule 23(a) (3) requires that "the claims or
defenses of the representative parties [be] typical of the
claims or defenses of the class." Here, the Representative
Plaintiffs' claims are typical of those of the settlement class
because, as alluded to above, the claims of each class member
concern the same conduct by NoteWorid, allege the same harm, and
arise from the same legal theories. See Kornberg v. Carnival
Cruise Lines, Inc., 741 F.2d 1332, 1337 (11th Cir. 1984)
(finding typicality satisfied where claims "arise from the same
event or pattern or practice and are based on the same legal
theory").
4. Adequacy
Adequacy under Rule 23(a) (4) is queried through the
following: "(1) whether the proposed class representatives have
interests antagonistic to the class; and (2) whether the
proposed class counsel has the competence to undertake the
6
litigation at issue." In re Checking Account Overdraft Litig.,
275 F.R.D. 654, 659 (S.D. Fla. 2011) . Adequacy is satisfied in
this case because there are no conflicts of interest between the
Representative Plaintiffs and the settlement class.
Furthermore, the Court has appointed as class counsel the law
firms of Hull Barrett, P.C. and Claeys, McElroy-Magruder &
Kitchens, and counsel's competence is shown both through prior
class action litigation experience and their efforts in the
present action.
5. Predominance and Superiority
Finally, Rule 23(b) (3) requires that "the questions of law
or fact common to class members predominate over any questions
affecting only individual members, and that a class action is
superior to other available methods for fairly and efficiently
adjudicating the controversy." The Court finds this factor
satisfied. The legal claims of each class member as they relate
to the alleged misconduct by Noteworld are identical, and
prosecution of those claims would, therefore, be nearly
identical. Accordingly, the Court can discern no great need for
individual control of the class members' claims. Furthermore, a
single, coordinated proceeding is superior to thousands of
discrete and disjointed suits addressing precisely the same
legal issue. Finally, there does not appear to have been any
difficulty in managing the settlement class, nor does the Court
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foresee any such difficulty arising in the future.
6. Conclusion
Upon the foregoing,
the motion for final class
certification is GRANTED.
B. Certification and Settlement Notice
Rule 23(c) (2) (B) provides that, "[f]or any class certified
under Rule 23(b) (3), the court must direct to class members the
best notice that is practicable under the circumstances,
including individual notice to all members who can be identified
The Court previously approved
through reasonable effort."
individual mailed notice to each class member. That notice
included each of the elements set out in Rule 23 (c) (2) (B) (i) (vii), adequately apprising these members of the nature of the
action and allowing for exclusion from the settlement class.
Therefore, the Court finds that the notice issued in this case
satisfies the demands of Rule 23 (c) (2) (B)
As to settlement, Rule 23(e) (1) requires that the Court
"direct notice in a reasonable manner to all class members who
would be bound by the [proposed settlement] ." The notice issued
in this case informed class members of the nature of the action,
all claims, defenses, and issues raised therein, as well as the
effect of the settlement. For these reasons, the Court also
finds that the notice issued in this case meets the standard set
8
out in Rule 23 (e) (1).
Finally, because the notice was
"reasonably calculated to apprize interested parties of the
pendency of the action and afford them an opportunity to present
their objections," SR 7 Leasing, Inc. v. Curtis, 189 F.R.D. 681,
683 (M.D. Ala. 1999), the demands of constitutional due process
are satisfied.
C. Final Settlement Approval
A settlement may be approved only if the Court finds it
"fair, reasonable, and adequate." Fed. R. Civ. P. 23(e) (2). "A
settlement is fair, reasonable and adequate when the interests
of the class as a whole are better served if the litigation is
resolved by the settlement rather than pursued." In re Checking
Account Overdraft Litig., 2011 WL 5873389, at *9
In
determining whether a settlement is fair and adequate, the Court
considers several factors:
(1) the existence of fraud or collusion behind the
settlement; (2) the complexity, expense, and likely
duration of the litigation; (3) the stage of the
proceedings and the amount of discovery completed; (4)
the probability of plaintiff's success on the merits;
(5) the range of possible recovery; and (6) the
opinions of the counsel.
Su v. Electronic Arts, Inc., No. 6:05-cv-131-Orl-28JGG, 2006 WL
4792780, at *3 (M.D. Fla. Aug. 29, 2006) (citing Leverso v.
South Trust Bank of Ala., Nat. Assoc., 18 F.3d 1527, 1531 n.6
(11th Cir. 1994))
After a thorough review of the record, the Court concludes
9
that final approval of the settlement is in order. To begin,
there is no evidence of fraud or collusion, and the claims
against NoteWorld involve thousands of individuals and accounts
over which litigation could last for years. Moreover, the
factual record appears to have been sufficiently developed to
allow the parties to identify the precise issues in contention
and appreciate the merits of their respective claims and
defenses. Yet, at the same time, the settlement comes at a
point early enough in the proceedings that class members and
NoteWorld will be spared additional, and perhaps redundant,
expenses. In addition, the legal claims asserted involve
unsettled questions of law; this uncertainty discounts the
likelihood of success on the merits while simultaneously
bolstering the attractiveness of compromise for settlement class
members. As further evidence of the fairness of the settlement,
the amount of the settlement fund - $1,040,000 - exceeds the
amount of fees collected by NoteWorld from class members, and
the parties have indicated that this pool of funds would be
depleted by continued litigation.
The parties' experienced
counsel agree that the settlement is fair, reasonable, and
mutually beneficial under the present circumstances.
Finally,
no objections have been filed to the settlement. In light of
this record, the Court finds that the parties' settlement is
fair, reasonable, and adequate.
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Furthermore, the Court hereby approves the establishment
and administration of the cy pres fund, as contemplated by
paragraph 14 of the settlement agreement, in favor of Goodwill
Industries of Middle Georgia, Inc. The Court ORDERS class
counsel to update the Court at the appropriate time so this
Court and class counsel can establish the amount of the cy pres
fund and the Court can oversee and administer the disposition of
the cy pres fund with the assistance of class counsel, pursuant
to the settlement agreement.
After thorough review, the motion for final approval of the
parties' settlement is GRANTED.
D.
Approval
Class
of
Representative
Service
Awards,
Administrative Expenses, and Attorneys' Fees and Expenses
1. Representative Service Awards
Service awards compensate class representatives for
services provided and risks incurred during the class action
litigation on behalf of other class members.
In re Checking
Account Overdraft Litig., 2011 WL 5873389, at *20. In this
case, the Representative Plaintiffs expended time and effort by
initiating and/or aiding in the prosecution of the class action,
notwithstanding the legal uncertainty surrounding their claims.
For that, they deserve to be compensated. The amount of the
requested service awards - $5,000 per Representative Plaintiff is fair and reasonable.
See id. (awarding $5,000 per class
11
representative).
The service awards, totaling $15,000, are
therefore APPROVED.
2. Administrative Expenses
R. Lynne Hamrick, a paralegal at the law firm of Hull
Barrett, P.C., was appointed settlement administrator. She was
charged with administering notice to the class members and
monitoring the parties' performance, including, but not limited
to, supervising and accrediting all actions required by
NoteWorid pursuant to the settlement agreement and the Court's
preliminary approval Order. As shown by the affidavit of
Christopher A. Cosper, a class member attorney, and documents
attached thereto, the settlement administrator has incurred
actual expenses in the amount of $14,898.44. An additional
$6,000 to $8,000 in expenses is anticipated to complete
administration of the settlement agreement, including the
printing and disbursement of settlement checks, and these
anticipated expenses are in-line with those already incurred.
Finally, a fee of $4,000 to $6,000 to the administrator has been
included in the request. The Court hereby APPROVES the request
for administrative expenses in the amount of $27,266 as fair and
reasonable.
3. Attorneys' Fees and Expenses
Class counsel has requested a fee of 33 1/3 of the
settlement fund for its efforts in litigating the case and
12
facilitating the settlement. A court must look to a number of
factors when assessing the reasonableness of attorneys' fees in
class action settlements:
(1) the time and labor required; (2) the novelty and
difficulty of the questions involved; (3) the skill
requisite to perform the legal service properly; (4)
the preclusion of other employment by the attorney due
to acceptance of the case; (5) the customary fee; (6)
whether the fee is fixed or contingent; (7) time
limitations imposed by the client or the
circumstances; (8) the amount involved and the results
obtained; (9) the experience, reputation, and ability
of the attorneys; (10) the "undesirability" of the
case; (11) the nature and the length of the
professional relationship with the client; (12) awards
in similar cases.
Camden I Condominium Ass'n, Inc. v. Dunkle, 946 F.2d 768, 772
n.3 (11th Cir. 1991). Applying these factors here, the Court
concludes that the requested award is fair and reasonable.
Class counsel has exercised diligence in investigating the
facts, researching the law, prosecuting these Actions, and
facilitating settlement. The Actions presented novel questions
of law, and counsel's knowledge and experience in class action
litigation were necessary to shepherd the claims through the
litigation process. The results obtained for the settlement
class are, for reasons already noted, favorable to class
members, and no class member has objected to the requested
award. Finally, the requested award is consistent with other
such awards in the Eleventh Circuit. See, e.g., In re Checking
Account Overdraft Litig., 2011 WL 5873389, at *28 (awarding fees
13
of 30% of settlement); Allapattah Servs., Inc. v. Exxon Corp.,
454 F. Supp. 2d 1185, 1241 (S.D. Fla. 2006) (awarding fees of 31
1/3% of settlement)
Class counsel also requests $2,126.73 in litigation
expenses. The affidavit of Christopher Cosper and an itemized
report show the expenses to be attributable to mediation,
research, copying, postage, and long distance phone charges.
The Court finds these expenses to be fair and reasonable as they
relate to Counsel's efforts to facilitate settlement of the
case. Class counsel's requested attorneys' fees and expenses
are therefore APPROVED - class counsel shall receive $346,666.66
in attorneys' fees and $2,126.73 in expenses.
4. Conclusion
The motion for award of class representative service
awards, administrative expenses, and attorneys' fees and
expenses is GRANTED.
IV. CONCLUSION
For the reasons detailed above, Plaintiffs' motions for (1)
final settlement class certification, final approval of class
settlement, and dismissal (1:10-CV-00117, doc. no. 59; 1:11-CV0029, doc. no. 30), and (2) approval of class representative
service awards, administrative expenses, and attorneys' fees and
expenses (1:10-CV-00117, doc. no. 60; 1:11-CV-0029, doc. no. 31)
are hereby GRANTED.
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1.
Accordingly, the Court: (1) FINALLY CERTIFIES the
settlement class pursuant to Federal Rules of Civil Procedure
23(a), (b) (3), (c), and (e); (2) FINALLY APPROVES the
settlement; (3) AWARDS each Representative Plaintiff a class
representative service award of $5,000; (4) AWARDS the firm of
Hull Barrett, P.C. $27,266 in settlement administration
expenses; (5) AWARDS class counsel attorneys' fees of 33 1/3 of
the settlement common fund plus $2,126.73 in expenses; (6)
DIRECTS class counsel, Representative Plaintiffs, and NoteWorld
to implement and consummate the settlement according to its
terms and conditions; (7) DISMISSES WITH PREJUDICE all released
claims of the Representative Plaintiffs and each class member;
and (8) RETAINS jurisdiction for the purpose of enforcing this
Order or the terms of the settlement agreement, including the
administration of the cy pres fund.
The terms of the settlement agreement and of this Final
Order shall be forever binding on the Representative Plaintiffs
and class members, except the successful opt-outs, as well as
their heirs, executors and administrators, successors and
assigns, and anyone acting on behalf of class members, or for
their benefit. Those terms shall have res judicata and other
preclusive effect in all pending and future claims, lawsuits, or
other proceedings maintained by or on behalf of any such
persons, to the extent those claims, lawsuits, or other
15
proceedings involve the released claims. Neither this Order nor
any aspect of the settlement agreement is to be construed or
deemed an admission of liability, culpability, negligence, or
wrongdoing on the part of NoteWorid.
NoteWorid specifically
denies any liability. Each of the parties entered into the
settlement agreement with the intention to avoid further
disputes and litigation with the attendant risk, inconvenience,
and expenses.
The release of claims, as set forth in the settlement
agreement, is expressly incorporated herein in all respects and
is effective as of the date of this Final Order, and the parties
and class members, except the successful opt-outs, shall
thereupon be fully, finally, and forever released from all
released claims and other matters within the scope of the
release contained in the settlement agreement. The release will
apply to all class members, except the successful opt-outs,
irrespective of the class member's actual receipt of payment
under or other participation in the settlement agreement by any
class member. Accordingly, as of the date of the Final Order,
the parties and class members, except the successful opt-outs,
are forever barred and enjoined from commencing, prosecuting, or
continuing to prosecute, either directly or indirectly, in this
or any other jurisdiction or forum, any of the claims that are
released by the settlement agreement or barred by the entry of
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judgment in these Actions.
Nothing in this Final Order, however, shall preclude any
action to enforce the terms of the settlement agreement, nor
shall anything herein preclude the Representative Plaintiffs or
other class members from participating in the settlement
administration process described in the settlement agreement if
they are entitled to do so under the terms of the settlement
agreement.
ORDER ENTERED at Augusta, Georgia, this ____ day of April,
2012.
HONORP4BLE '. PiGDAL HALL
UNITE] STATES DISTRICT JUDGE
QUTHRN DISTRICT OF GEORGIA
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