Rawson v. Source Receivables Management, LLC et al
Filing
318
MEMORANDUM Opinion and Order signed by the Honorable Elaine E. Bucklo on 12/23/2016. Mailed notice. (mgh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
Jerold S. Rawson,
himself and a class
on
behalf
of )
)
)
Plaintiff,
)
)
v.
) Case 11 C 8972
)
)
Source Receivables Management, LLC, )
Resurgent Capital Services, L.P.,
)
)
Defendants.
)
MEMORANDUM OPINION AND ORDER
Plaintiff Jerold Rawson filed this class action under the
Fair
Debt
Collection
Practices
Act
(“FDCPA”),
alleging
that
defendant Source sent him, and two classes of similarly situated
individuals, a letter that violated the statute in two respects.
In Count I of his class complaint,1 plaintiff claims that the
letter unlawfully failed to identify the current owner of the
recipient’s alleged debt. He seeks statutory damages on behalf
of
himself
and
a
class
for
this
violation.
In
Count
II,
plaintiff claims that the letter violated the statute by failing
to disclose that the alleged debt was time barred. He seeks
actual and statutory damages on behalf of himself and a class.
Plaintiff moved successfully for certification of two classes,
1
All references to the complaint refer to plaintiff’s Corrected
Third Amended Complaint, filed at DN 42.
each with a subclass, corresponding to the foregoing counts. The
classes are defined as follows:
Class A consists of:
(a)
all
individuals
in
the
United
States
(b)
to
whom
defendant Source sent a letter in the form represented by
Exhibit A (c) that refers to Resurgent as the “client” of
Source
and
(d)
does
not
otherwise
identify
the
party
claiming to be the current owner of the debt, (e) which
letter was sent on or after December 19, 2010 and on or
before January 8, 2012.
Class B consists of:
(a) all individuals in Illinois (b) to whom Source (c) sent
a letter seeking to collect a debt (d) which debt was a
credit card debt on which the last payment had been made
more than five years prior to the letter (e) which letter
was sent on or after December 19, 2010 and on or before
January 8, 2012.
Each of Classes A and B has a subclass consisting of:
all class members with respect to whom LVNV was the alleged
current owner. If the alleged current owner of each class
member’s
debt
is
LVNV,
as
it
is
with
subclass is coterminous with the class.
Mem. Op. and Order of 02/13/2013 at 2-3, DN 162.
2
Plaintiff,
the
The
parties
liability,
and
defendants’.
later
I
Order
cross-moved
granted
of
for
summary
plaintiff’s
motion
01/06/2016,
DN
274.
I
judgment
and
on
denied
concluded,
with
respect to Count I, that the letter plaintiff received violated
the statute’s explicit requirement that debt collectors disclose
the identity of the creditor. Id. at 5. I further found, with
respect to Count II, that the letter was facially deceptive for
failing to disclose the time-barred nature of the debt, relying
heavily on McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1019
(7th Cir. 2014), in which the Seventh Circuit “explained
‘[w]hether
a
debt
is
legally
enforceable
is
a
that
central
fact about the character and legal status of that debt,’ and
held that letters seeking to collect time-barred debts while
giving no ‘hint that the debts...were vulnerable to an ironclad
limitations
the
defense’
‘misrepresented
the
legal
status
of
debt, in violation of the FDCPA.’” 01/06/2016 Order at 8
(citing McMahon 744 F3d at 1021).
Before
me
is
the
parties’
joint
motion
for
preliminary
approval of a global class settlement involving three cases: the
instant case; McMahon (the selfsame, now pending before Judge
Alonso as Case No. 12-cv-1410 following remand by the Seventh
Circuit); and a case captioned Mitchell v. LVNV Funding et al.,
2:12-cv-523, currently pending before Judge Springmann in the
Northern District of Indiana. The defendants in the three cases
3
are
overlapping
but
not
co-extensive
(Source
Receivables
Management is a party only in Rawson, and only McMahon names
defendant
Tate
&
Kirlin
Associates),
although
the
law
firms
involved in the proposed settlement are identical. Cross-motions
for summary judgment that substantially echo the arguments the
parties raised at summary judgment in this case were filed in
Mitchell,
though
the
motions
were
terminated
based
on
the
parties’ notice of settlement. See Mitchell, DN 129. For the
same
reason,
proceedings
have
been
stayed
in
McMahon,
and
summary judgment motions, though scheduled, have not been filed.
For the reasons explained below, I decline to approve the
proposed settlement.
I.
The
global
respective
settlement
subclasses)
identifies
certified
in
the
the
four
three
classes
(and
actions.
The
Rawson classes are those defined above. The McMahon class is
defined as:
(a)
all
Resurgent,
individuals
or
any
in
debt
Illinois
collector
(b)
to
employed
whom
by
LVNV,
LVNV
or
Resurgent (c) sent a letter seeking to collect a debt that
referred to a “settlement” (d) which debt was (i) a credit
card debt on which the last payment had been made more than
five years prior to the letter or (ii) a debt arising out
of the sale of goods (including gas) on which the last
payment had been made more than four years prior to the
letter (e) which letter was sent on or after February 28th
4
2011
and
on
or
before
March
19,
2012,
(f)
where
the
individual after receipt of the letter, (i) made a payment,
(ii)
filed
suit,
or
(iii)
responded
by
requesting
verification or contesting the debt.2
The Mitchell class comprises:
(a) all individuals with addresses in Indiana or Illinois
(b) to whom LVNV, Resurgent, or any debt collector employed
by LVNV or Resurgent (c) sent a letter seeking to collect
(d) a credit card debt on which the last payment had been
made more than five years (Illinois residents) or six years
(Indiana residents) prior to the letter (e) which letter
was sent on or after (i) December 17, 2012 in the case of
Indiana residents or (ii) February 28, 2011 in the case of
Illinois residents and (f) on or before January 7, 2013 (g)
where the individual after receipt of the letter, (i) made
a payment,(ii) filed suit, or (iii) responded by requesting
verification or contesting the debt.
Subclass: those class members who received a copy of the
letter
attached
as
Exhibit
A
to
the
Second
Amended
Complaint.
Case No. 2:12-cv-523-TLS (N.D. Ind.) DN 88 at 21.
The material terms of the proposed global settlement are as
follows: Defendants agree to pay $7,000 to Rawson, and $4,500 to
2
Although the parties represent that this class has been
certified in McMahon, no class certification order has been
entered in that case since the Seventh Circuit determined that
class treatment of the named plaintiff’s claim is appropriate.
Nevertheless, I assume for purposes of this order that a class
as defined above has been or will be certified in McMahon.
5
each of McMahon and Mitchell, as damages for their claims and as
incentive awards for bringing their claims on behalf of the
classes. Defendants further agree to create a class settlement
fund of $175,092, to be distributed pro rata, by check, among
class members who do not opt out of the settlement and who
timely
return
claim
forms.
Defendants
will
bear
all
costs
associated with class notice and claims administration. Class
counsel will file a petition for attorneys’ fees and costs, and
defendants agree not to dispute any award up to $430,000.
The named plaintiffs agree to release all claims against
the defendants that were or could have been brought in their
respective actions. The class members in each case who do not
opt out of the settlement likewise release all such claims,
except they “do not release any claims for actual damages and do
not release any claims or defenses concerning the underlying
debt, specifically (1) whether any debt is in fact owed, (2) the
proper crediting of payments, and (3) the accurate reporting of
the alleged debt to the credit reporting bureaus.” Agreement, at
7-9. DN 307-1.
The parties’ joint motion for approval asserts that the
above terms are fair and reasonable. Their largely boilerplate
analysis notes that the proposed settlement was reached after
arms-length discussion; that defendants deny all liability to
plaintiffs and the class members and desire to settle solely to
6
avoid the “expense, burden, and future uncertainty” of further
litigation;
that
class
counsel
“have
analyzed
the
legal
and
factual issues presented in this action, the risks and expense
involved
in
recovering
pursuing”
damages
in
the
actions,
excess
of
and
those
“the
likelihood
obtained
through
class’s
recovery
of
this
settlement,” among other factors.
Observing
that
the
FDCPA
“caps
a
for
statutory damages at the lesser of 1% of the debt collector’s
net worth or $500,000,” and in consideration of “the financial
information Defendants provided to Plaintiffs’ counsel and the
nature
of
the
claims
alleged,”
the
parties
assert
that
the
settlement is fair, reasonable, and in the best interest of the
classes. In this connection, the parties add that defendants
LVNV and Alegis “deny that they are debt collectors and deny
that their net worth is relevant to any damages calculation in
this case,” and assert that even if the three cases were to
proceed to trial, the class members “would not receive more than
1%
of
the
debt
collectors’
net
worth.”
The
motion
does
not
identify the net worth of any of the defendants, however, nor
does it state what percentage of their individual or collective
net worth is represented by the $175,092 set aside for pro rata
distribution to class members.3
3
At the 12/05/2016 hearing on their motion, counsel provided
partial
information
in
this
respect,
representing
that
7
The
class
parties
members
state
that
the
Rawson,
in
there
are
McMahon,
approximately
175,092
and
classes
Mitchell
combined. Accordingly, if every class member returned a claim
form, each would receive an award of $1.00.
Based on their
experience in similar cases, however (and indeed, all counsel
involved have extensive experience in this area), counsel expect
approximately 10% of class members to return claim forms, which
means that each participating class member is likely to receive
around $10.00.
II.
The FDCPA’s civil liability provision, 15 U.S.C. § 1692k,
provides
statute
that
is
a
debt
liable
collector
for:
1)
found
actual
to
have
damages;
2)
violated
the
“additional
damages” the court may allow, up to a cap, in class actions, of
“the lesser of $500,000 or 1 per centum of the net worth of the
debt collector;” and 3) costs and reasonable attorneys’ fees as
determined by the court. § 1692k(a). Statutory damages do not
require proof of actual damages.
Keele v. Wexler, 149 F.3d 589,
594 (7th Cir. 1998). As noted above, plaintiff Rawson asserted
Resurgent’s net worth is approximately $7.1 million; Source’s
net worth is $0; LVNV’s net worth is approximately $10.6
million; and Tate and Kurlin’s net worth is approximately
$247,000, for a total net worth of approximately $17.9 million.
But this total excludes defendant Alegis’s net worth, which
defendants have not disclosed. See Tr. of 12/05/2016 Hr’g. at
33-34. Additionally, class counsel acknowledged that he had not
taken
discovery
to
confirm
the
accuracy
of
defendants’
representations. Id. at 47.
8
statutory damages on behalf of himself and a class in Count I of
his complaint, and he asserted actual and statutory damages on
behalf of himself and a class in Count II. The plaintiffs in
McMahon
and
Mitchell
damages
in
their
likewise
asserted
respective
single
actual
count
and
statutory
complaints.
All
plaintiffs seek attorneys’ fees and costs.
Before turning to the substantive fairness of the proposed
settlement, I note as a preliminary matter that the parties
articulate no explanation for how I may approve a settlement
that purports to resolve three cases pending on separate dockets
before
three
judges
in
two
different
federal
jurisdictions.
While it is indeed common in cases of this nature, i.e., “cases
in which class counsel want to maximize the settlement and the
defendants don’t want to settle except for ‘global peace,’” for
“counsel to negotiate a single nationwide settlement and agree
to submit it for approval to just one of the district courts in
which the multiple actions had been filed,” Pearson v. NBTY,
Inc.,
772
F.3d
778,
780
(7th
Cir.
2014),
such
cases
are
typically consolidated in some fashion before the judge charged
with evaluating the settlement.
See, e.g., In re Amino Acid
Lysine Antitrust Litigation, MDL No. 1083, 1996 WL 197671 (N.D.
Ill. Apr. 22, 1996) (Shadur, J.) (preliminary fairness review of
cases consolidated in MDL); Pearson v. NBTY No. 11-cv-7972, 2014
WL 30676 (approving global settlement of cases consolidated in a
9
second amended complaint), rev’d, 772 F.3d 778 (2014). That has
not happened here, despite the parties’ suggestion before Judge
Alonso that some “mechanism” for consolidating the cases was
appropriate
for
the
purpose
of
effectuating
their
proposed
global settlement. See McMahon, Case No. 12-cv-1410, DN 208 at 2
(joint motion for extension of time, stating that parties were
“still trying to ascertain the appropriate mechanism to have the
McMahon
case
and
the
Mitchell
cases
administered
by
Judge
Bucklo.”). If there is precedent or reasoned analysis supporting
my authority to approve the settlement of two class actions not
before me, the parties have not identified or articulated it.
Nor is the question of my authority one I may take lightly.
The Seventh Circuit has admonished district judges to “exercise
the
highest
degree
of
vigilance
in
scrutinizing
proposed
settlements of class actions,” and, indeed, has “gone so far as
to term the district judge in the settlement phase of a class
action suit a fiduciary of the class, who is subject therefore
to the high duty of care that the law requires of fiduciaries.”
Reynolds v. Beneficial Nat. Bank, 288 F.3d 277, 279-80 (7th Cir.
2002). My fiduciary duty requires me to “evaluate, among other
things, the probability of plaintiff prevailing on its various
claims, the expected costs of future litigation, and hints of
collusion.” Mirfasihi v. Fleet Mortg. Corp., 450 F.3d 745, 748
(7th Cir. 2006). In the present posture, my fiduciary duty is to
10
the Rawson classes only. This observation alone goes a long way
toward explaining why I decline to approve the proposed global
settlement.
First,
members
by
when
identifying
the
actions
only
are
the
total
combined,
the
number
of
parties’
class
motion
obscures the fact that the Rawson classes are several orders of
magnitude smaller than the classes in the other cases. At a
hearing on the parties’ motion, plaintiff’s counsel represented
that the Rawson classes together comprise 698 class members,
while the
Mitchell
class has 12,644 members and the
McMahon
class has 161,750 members. See Tr. of 12/05/2016 Hr’g, 36-37.
This matters because in this circuit, the plaintiffs in each
class action are entitled to seek statutory damages up to a
maximum
of
1%
of
defendants’
total
net
assets.
That
is
the
logical extension of the Seventh Circuit’s determination in Mace
v. Van Ru Credit Corp., 109 F.3d 338, 347 (7th Cir. 1997), that
“the
FDCPA
does
not
require
a
nation-wide
class,”
and
its
holding in Sanders v. Jackson, 209 F.3d 998, 1002 (7th Cir.
2000), that “there is no provision that limits defendants being
exposed to more than one FDCPA class action lawsuit.”
district
courts
here
and
elsewhere
have
construed
Indeed,
Mace
and
Sanders as expressly allowing “serial” FDCPA lawsuits that may
increase
the
Groups,
Inc.,
defendant’s
2006
WL
liability.
897867
11
See
(N.D.
Nichols
Ill.
v.
Mar.
Northland
31,
2006)
(certifying classes that plaintiff’s counsel—the same counsel
who represents the classes here—acknowledged were “designed to
increase
Northland’s
Bureau,
Inc.,
(rejecting
expansion
132
liability”);
F.
proposed
of
the
Supp.
class
class
Graff
3d
v.
470,
settlement
“diluted
United
483
on
(E.D.N.Y.
the
class
Collection
2016)
ground
that
settlement,”
and
explaining that the “exponential increase in the size of the
class without any measureable benefit to class members renders
the
settlement,
Zimmerman
v.
as
drafted,
Zwicker
&
inadequate
Associates,
and
P.C.,
unreasonable”);
Civ.
No.
09-3905
(RMB/JS), 2011 WL 65912, at *5-*6 (D.N.J. Jan. 10, 2011) (same).
Regardless
statutory
of
the
class
total
damages
amount
under
that
may
be
appropriate
§ 1692k(2)(B),
1/698
of
as
that
amount is surely a better deal than 1/175,092 of it.4
To
illustrate,
suppose
that
instead
of
settling,
Rawson
proceeded to a damages trial, and that I ultimately determined
that the maximum allowable statutory penalty were warranted.5
Based
on
the
parties’
representation
4
that
1%
of
defendants’
This obvious advantage of a smaller class is not lost on
plaintiff’s counsel, who in the course of litigating McMahon
defended the decision to narrow the class to “reduce the number
of class members and thereby avoid the class receiving a de
minimis recovery pursuant to § 1692k.” 12-cv-1410 (N.D. Ill.) DN
132 at 10.
5
Before the parties announced that they had reached a
settlement, a bench trial on damages had been set for August 17,
2016.
12
total net worth is in the neighborhood of $179,000,6 the pro rata
share to each Rawson class member of statutory class damages
would be approximately $256. Compare this with the settlement
value of their statutory damages claim, which, as noted above,
is
expected
to
be
between
$1.00
and
$10.00.
Given
that,
in
addition, the Rawson claims have already been established, while
the McMahon and the Mitchell claims have not, it is exceedingly
difficult to perceive any way in which the Rawson class members
are well-served by having their claims combined with those of
the class members in the other cases.
Moreover, I am perplexed by class counsel’s disavowal, at
the preliminary approval hearing, of the class members’ ability
to “get three bites at the apple” in separate class actions,
each of which may seek statutory damages up to the 1% maximum
for the certified classes. See Tr. of 12/05/2016 Hr’g. at 40.
The parties cite no authority for requiring separately filed
actions to consolidate for the purpose of narrowing their claims
to a single “bite” at statutory damages. And while I am mindful
that cases such as Mace and Nichols addressed the problem of
continuing
violations,
alleged
these
proposed
in
while
cases
settlement
all
ceased
does
agree
around
not
6
that
2012,
include
any
I
the
note
violations
that
the
commitment
on
Although, as noted above, this total does not account for
defendant Alegis’s net worth. See supra, n. 3; Tr. of 12/05/2016
Hr’g. at 33-34.
13
defendants’ part not to engage in the same or similar unlawful
conduct in the future. This is especially troubling in view of
Rawson’s
emphasis,
at
the
class
certification
stage,
on
a
“recurrent pattern” of unlawful conduct by Resurgent and LVNV,
identifying no fewer than ten separate cases involving these
defendants. DN 156 at 7-8.
Equally perplexing is the parties’ assertion that if these
cases went to trial, class members “would not receive more than
the 1% of the debt collector’s net worth (Alegis and LVNV deny
that
they
are
debt
collectors).”
Mot.
at
7.
First,
as
I
explained at the hearing, the liability of all defendants has
already been established in Rawson. If Alegis and LVNV wished to
deny liability on the ground that they are not debt collectors,
it was incumbent upon them to raise that argument in opposition
to
Rawson’s
summary
judgment
motion.
Indeed,
each
of
the
substantive provisions on which Rawson’s claims are based is
explicitly directed to the conduct of “debt collectors,” as that
term
is
defined
in
the
statute.
While
Source
is
the
debt
collector claimed to have sent Rawson and the Rawson classes the
unlawful letters, Source allegedly acted at the direction of
Resurgent, another debt collector that was itself attempting to
collect debts on behalf of LVNV, also a debt collector and the
debt owner. And while none of the complaints in these cases
alleges
that
Alegis
is
a
debt
14
collector,
each
asserts
that
Resurgent’s
acts
are
attributable
to
Alegis
as
Resurgent’s
general partner. Because none of the defendants argued, at the
liability
stage,
that
they
are
outside
the
statute’s
scope
because they are not “debt collectors,” they may not now, at
least
in
Rawson,
seek
to
avoid
paying
damages
(or,
more
precisely, to avoid having their assets “count” for the purpose
of
determining
defendants’
collective
liability
cap
under
§ 1692k) on that basis.7 Nothing in the text of § 1692k supports
that interpretation, nor have defendants cited any authority for
it.
Second, what about actual damages under § 1692k(a)(1)? The
parties’ insistence that no class member would receive more than
a
pro
rata
share
of
1%
of
the
defendants’
total
net
worth
ignores that any claim member who actually made a payment after
receiving a letter that violated the statute is entitled to
prove actual damages and to recover that amount. Counsel is
quick to point out that the proposed settlement preserves these
claims for future litigation, but this reservation of rights is
7
It seems to me that whether defendants may yet assert this
defense in either McMahon or Mitchell is a question that must be
decided by the judges before whom those cases are pending. I
note, however, that defendants did not assert it in the summary
judgment motion they filed in Mitchell before that case was
stayed. At all events, if the defense potentially remains viable
in those cases, that would only exacerbate the unfairness to the
Rawson
classes
of
having
their
claims
consolidated
for
settlement, since the availability of a defense in McMahon and
Mitchell that is no longer available in Rawson presumably
heightens the comparative value of the Rawson claims.
15
evidently of little value.
When I asked plaintiff’s counsel
what he intended to do about the people with actual damages
claims, his response was: “I would be happy to represent them.”
Tr. of 12/05/2016 Hr’g at 55. That is what counsel is supposed
to be doing in these cases. If class counsel is willing to
relinquish
pursuit
of
these
claims
at
this
juncture,
after
defendants’ liability has been established in Rawson and the
proceedings are at an advanced stage in all of the cases, how am
I to credit his professed enthusiasm for bringing a new case on
these claimants’ behalf?
True, the proposed settlement would be
even worse for the class members if it released their claims for
actual damages. But the fact that it preserves them is, from all
that appears, a Pyrrhic victory.
And while my primary concern,
as a fiduciary, is that the settlement be fair to the Rawson
classes, I note that class counsel’s abandonment of the class
members’
actual
McMahon
and
classes
were
damages
Mitchell,
limited,
claims
where,
by
at
is
especially
plaintiff’s
definition,
to
mystifying
insistence,
individuals
in
the
with
colorable claims for actual damages.8
8
I pause here to note that in McMahon, the Seventh Circuit
stated that “the proposed class was estimated to have 3,000
members.” McMahon v. LNVN Funding, LLC, 807 F.3d 872, 875 (7th
Cir. 2015). At the approval hearing in this case, the parties
represented that this number referred to McMahon class members
with actual damages. See Tr. of 12/06/2016 Hr’g. at 36-37. Yet,
the class to which the Seventh Circuit referred appears to be
the very class that Judge Alonso has certified. Accordingly, the
16
Moreover, there is no question that taking actual damages
out of the equation lets defendants off easy. Although class
counsel stated at the hearing that they “don’t know how much
exactly [defendants] collected” on time barred debts, Tr. of
12/05/2016
defendants
Hr’g.
at
admitted
56,
they
collecting
represented
over
$6.7
elsewhere
million
in
that
payments
from the class members in McMahon, and Judge Springmann found
that defendants collected more than $11.4 million in payments
from the two classes in Mitchell. See Pl.’s Class Cert. Mem. in
McMahon, DN 132 at 10; Op. and Order of 11/10/2015 in Mitchell,
DN
88
at
9.9
Defendants’
proposed
payment
of
$175,092
in
statutory penalties for engaging in unlawful conduct that netted
them millions of dollars isn’t a “penalty” at all; it’s the cost
of doing business, and a pretty low one at that.
basis for the parties’ assertion that the McMahon class includes
over 161,000 people is unclear. I need not solve this mystery,
however, to deny their motion for settlement approval.
9
In response to questions I raised at the hearing, defendants
sent a letter stating that with respect to Count II in Rawson,
“Source Receivable received payments from 6 individuals totaling
$842.00” from members of Class B (asserting claims based on
time-barred debts). In the same letter, defendants state that of
the approximately 174,000 class members in McMahon and Mitchell,
they “did not break out the number of persons who made
payments,” but that “LVNV collected approximately $3,062,435.74
from debt ownership acquisition through 7/31/2012.” How these
numbers may relate to the ones admitted or found elsewhere is
unclear, but it is beyond dispute that defendants collected
multiple millions of dollars from individuals who received
collection letters on time-barred debts.
17
Nor am I persuaded that the expected cost of establishing
the amount of defendants’ liability for actual damages warrants
class counsel’s complete abandonment of these claims.
It may be
that “some testimony is probably required to establish actual
damages.” Tr. of 12/05/2016 Hr’g, 57.
But if the percentage of
class members who ultimately return claim forms is as low as the
parties
expect,
defendants’
then
records
surely
which
the
of
burden
those
of
ascertaining
individuals
made
from
payments
after receiving a deceptive letter (and thus narrowing the field
of
potentially
viable
actual
damage
claims)
is
not
unreasonable.10 Defendants insist that these individuals would
still need to be cross-examined “to establish the reason they
paid.” Tr. of 12/05/2016 Hr’g, 57. Even assuming that is true,
the information the parties have provided does not persuade me
that the number of individuals who would require a hearing of
some sort is so great as to be cost-prohibitive.
There are additional ways in which the Rawson class members
seem
to
get
settlement.
the
The
short
end
parties’
of
the
stick
boilerplate
10
in
this
statement
proposed
that
the
Indeed, as noted in footnote 9, above, defendants assert that
Source received payments from six members of Rawson’s Class B
(asserting time-barred debts), for a total of $842. Assuming for
purposes of illustration that these payments were evenly
distributed among the class members, each would be entitled to
$140 in actual damages, while the marginal cost of establishing
these damages, in the context of this litigation as a whole, is
unlikely to be significant.
18
settlement is fair based upon “the nature of the claims alleged”
fails to account for the fact that at least some Rawson class
members have two substantively distinct claims. While it is true
that Rawson seeks only statutory damages for Count I (based on
defendants’ failure to identify the current owner of the alleged
debt), it stands to reason that the settlement value of two
already-proven claims exceeds the settlement value of a single,
as-yet-unproven
claim.
Yet
the
parties’
proposed
settlement
treats all of the class members the same, without any reasoned
explanation. When I asked counsel in court, “[w]hy shouldn’t the
Rawson people get more?” plaintiff’s counsel admitted, “[i]t is
difficult to articulate a reason why because the class happened
to be defined in such a manner as to produce disparate number of
plaintiffs in the three cases. But the violation is the same
thing.
That’s
together.”
why
Tr.
we
of
thought
it
12/05/2016.
was
As
I
fairer
have
to
just
put
them
observed,
however, at least some Rawson class members assert a different
violation from the ones alleged in McMahon and Mitchell. More
importantly, while it may be fortuitous that the Rawson classes
are significantly smaller than the other two, Rawson’s counsel
has
a
duty
to
advocate
zealously
for
the
Rawson
classes,
regardless of whether other classes certified in other cases can
expect
to
prevailing
receive
on
similar
smaller
claims.
statutory
Class
19
damages
counsel’s
awards
willingness
for
to
treat the members of all classes equally in the proposed global
settlement raises serious conflict of interest concerns.
III.
For the reasons explained above, I decline to approve the
proposed settlement.
ENTER ORDER:
Elaine E. Bucklo
United States District Judge
Dated: December 23, 2016
20
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