Jenkins v. Pech et al

Filing 155

MEMORANDUM AND ORDER - IT IS ORDERED: The parties' joint motion for preliminary approval of class action settlement (Filing No. 154 ) is granted. An order in conformity with this Memorandum and Order and in substantial conformity with the parties' proposed Order Preliminarily Approving Class Action Settlement (Filing No. 154-2, Ex. C) will issue this date. Ordered by Senior Judge Joseph F. Bataillon. (TCL)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
LEE A. JENKINS, on behalf of himself and
all others similarly situated;
8:14CV41
Plaintiff,
v.

MEMORANDUM AND ORDER

CHRISTOPHER E. PECH, AND
PECH,HUGHES, & MCDONALD, P.C.,
d/b/a Litow & Pech, P.C., A Fictitious
Name;
Defendants.

This matter is before the court on the parties' Joint Motion for Settlement. Filing
No. 154. This is an action for alleged violations of the Fair Debt Collection Practices
Act, 15 U.S.C. § 1692, et seq. (“FDCPA”), and the Nebraska Consumer Protection Act,
Neb. Rev. Stat. § 59-1601, et seq. (“NCPA”).
I.

Certification

This case was earlier certified to proceed as a class action. See Filing No. 135,
Memorandum and Order; Jenkins v. Pech, No. 8:14CV41, 2015 WL 3658261 (D. Neb.
June 12, 2015). In the order certifying the class, this court found the prerequisites of
Fed. R. Civ. P. 23 (a) and (b) were satisfied. Id. at 7-11.
For purposes of settlement only, the parties now seek certification of the
following settlement class:
(a) All persons residing in Nebraska (b) to whom Defendants Christopher
E. Pech and/or Pech, Hughes & McDonald, P.C. sent, or caused to be
sent, a letter in the form of Exhibit A (attached to the First Amended
Complaint), (c) in an attempt to collect a purported obligation which, as
shown by the nature of the alleged obligation, Defendants’ records, or the
records of the original creditors, was primarily for personal, family, or
household purposes.

Filing No. 154-1, Ex. A1, Class Action Settlement Agreement at 3. Excluded from the
settlement class are any persons already subject to an existing release; deceased
persons and any person who has filed for bankruptcy protection under Title 11 of the
United States Code; and any Class Members who timely mail a request for exclusion.
Id.

The earlier certified class differs from the proposed settlement class only with

respect to the persons excluded.
For the reasons stated in the court's earlier order, the court finds the proposed
settlement class meets the requirements of Fed. R. Civ. P. 23. The parties have shown
that the requirements of numerosity, commonality, typicality, and adequacy are
satisfied, as well as establishing that there are questions of law and fact common class
that predominate over the questions affecting only individual class members. Further,
the parties have shown that a class action is the superior method for fair and efficient
adjudication of the dispute under Fed. R. Civ. P. 23(b)(3)(a)-(D). William L. Reinbrecht
and Pamela A. Car of the law firm Car & Reinbrecht, P.C., L.L.O., and attorney O.
Randolph Bragg of the law firm Horwitz, Horwitz & Associates, LTD, were appointed
class counsel.
For settlement purposes only, the court preliminarily finds that the action satisfies
the applicable prerequisites for class action treatment under Fed. R. Civ. P. 23, namely:
The class members are so numerous that joinder of all of them in the action is
impracticable; there are questions of law and fact common to the class members that
predominate over any individual questions; the claims of the plaintiff class
representative, Lee A. Jenkins, are typical of the claims of the class members; the

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plaintiff and class counsel have fairly and adequately represented and protected the
interest of all of the class members; and class treatment of these claims will be efficient
and manageable, thereby achieving an appreciable measure of judicial economy, and a
class action is superior to other available methods for a fair and efficient adjudication of
this controversy.
II.

Preliminary Approval

In considering preliminary approval, the court makes a preliminary evaluation of
the fairness of the settlement, prior to notice. Manual of Complex Litigation (Fourth) §
21.632 (2010); see also Fed. R. Civ. P. 23(e). First, the court must make a preliminary
determination of the fairness, reasonableness and adequacy of the settlement terms
and must direct the preparation of notice of the proposed settlement and the date of the
fairness hearing. Id. After an agreement is preliminarily approved, the second step of
the process ensues: notice is given to the class members of a hearing, at which time
class members and the settling parties may be heard with respect to final court
approval. Id.
A "district court may only approve a class action settlement if it is 'fair,
reasonable, and adequate.'" Marshall v. Nat'l Football League, 787 F.3d 502, 508 (8th
Cir. 2015) (quoting Fed. R. Civ. P. 23(e)(2)). "To make the determination, the district
court must consider four factors: '(1) the merits of the plaintiff's case weighed against
the terms of the settlement, (2) the defendant's financial condition, (3) the complexity
and expense of further litigation, and (4) the amount of opposition to the settlement.'"
Marshall, 787 F.3d at 508 (quoting In re Uponor, Inc., F1807 Plumbing Fittings Products
Liab. Litig., 716 F.3d 1057, 1063 (8th Cir. 2013)). The single most important factor in
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determining whether a settlement is fair, reasonable, and adequate is a balancing of the
strength of the plaintiff's case against the terms of the settlement. Marshall, 787 F.3d at
508 (quoting Van Horn v. Trickey, 840 F.2d 604, 607 (8th Cir. 1988)). Van Horn, 840
F.2d at 607.
A settlement agreement is “presumptively valid.”

Uponor, 715 F.3d at 1063

(quoting Little Rock Sch. Dist. v. Pulaski Cnty. Special Sch. Dist. No. 1, 921 F.2d 1371,
1391 (8th Cir. 1990). The courts' "guiding principle" is that '"a class action settlement is
a private contract negotiated between the parties.'" Marshall, 787 F.3d at 508 (quoting
In re Wireless Tel. Fed. Cost Recovery Fees Litig., 396 F.3d 922, 934 (8th Cir. 2005)).
The court's role in reviewing a negotiated class settlement is to ensure that the
agreement is not the product of fraud or collusion and that, taken as a whole, it is fair,
adequate, and reasonable to all concerned. Id.
A court may also consider procedural fairness to ensure the settlement is "not the
product of fraud or collusion." In re Wireless, 396 F.3d at 934. The experience and
opinion of counsel on both sides may be considered, as well as whether a settlement
resulted from arm's length negotiations, and whether a skilled mediator was involved.
See DeBoer v. Mellon Mortgage Co., 64 F.3d 1171, 1178 (8th Cir. 1995). A court may
also consider the settlement's timing, including whether discovery proceeded to the
point where all parties were fully aware of the merits. See City P'ship Co. v. Atlantic
Acquisition Ltd. P'ship, 100 F.3d 1041, 1043 (1st Cir. 1996).
The notice of a class action settlement "need only satisfy the 'broad
"reasonableness" standards imposed by due process.'" Petrovic v. Amoco Oil Co., 200
F.3d 1140, 1154 (8th Cir. 1999) (quoting Grunin v. International House of Pancakes,
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513 F.2d 114, 123 (8th Cir. 1975)). It is adequate if it is “reasonably calculated, under
all the circumstances, to apprise interested parties of the pendency of the action and
afford them an opportunity to present their objections.” Petrovic, 200 F.3d at 1154
(quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950)).
The court has reviewed the parties' proposed settlement agreement. Filing No.
154-2, Index of Evid., Ex. A, Declaration of Tomio B. Narita ("Narita Decl."), Ex. A1,
Class Action Settlement Agreement.

In the proposed settlement agreement, the

defendants have agreed to establish a settlement fund of $19,000.00, and to pay
$33.92 to each of the approximately 560 class members who elect to participate in the
Settlement. Id. at 6. The fund will be administered by First Class Inc., class action
administration service of Chicago, Illinois. Id. at 5. To the extent any settlement checks
go uncashed after the claims administrator takes all reasonable steps to forward checks
to any forwarding addresses, such funds will be redistributed equally between the
National Consumer Law Center and the National Association of Consumer Advocates,
as cy pres recipients. Id. at 6-7. Importantly, the defendants have agreed not to send
any collection letters in the form of the debt collection letter at issue. Id. at 7. Finally,
the defendants have agreed to pay class counsel's attorneys’ fees, costs, and expenses
in the amount not to exceed $176,273.00, subject to Court approval, as well as the
claims administration costs, separate and apart from and in addition to the relief
provided to the class. Id. at 6-7. Also, in recognition of his services as the Class
Representative and for his individual settlement damages, the defendants agree to pay
plaintiff Lee A. Jenkins the amount of $4,500.00. Id. at 6.

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The proposed settlement also provides for notice to each member of the
proposed class by individual mailed notices. Id. at 5. Counsel for the parties have also
submitted a proposed class notice.

Filing No. 154-2, Ex. B.

The court finds the

proposed form and method for notifying the class members of the settlement and its
terms and conditions meets the requirements of Fed. R. Civ. P. 23(c)(2)(B) and satisfies
due process. The court finds that the individual mailed notices are the best notice
practicable under the circumstances. Further, the proposed notice is clearly designed
to advise the class members of their rights and to explain procedures for exclusions and
objections. The Court approves the form and substance of the notice of class action
settlement described in the proposed settlement agreement and attached to the joint
motion as Exhibit B.
The parties have shown that they conducted extensive arms-length negotiations
with the assistance of United States Magistrate Judge Thomas Thalken. Both parties
were represented by competent experienced counsel. The parties conducted discovery
and the case has proceeded to a point where the parties were fully aware of the merits
of their respective positions.

The parties represent that they have exchanged

information regarding the net worth of the defendants, and the defendants contend that
their net worth is substantially negative. See Filing No. 154-1, Joint Brief at 21.
It appears to the court that the proposed settlement is fair and adequate to the
putative class members. Because the putative class members’ recovery is limited to the
lesser of 1% of the net worth of the debt collector or $500,000.00 under 15 U.S.C. §
1692k(a)(2)(B)(ii), the putative class members run the risk of nonrecovery. In view of
the attendant risks and burdens of continued litigation, the total class recovery of
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approximately $33.92 per class member appears, on preliminary review, to provide a
fair, reasonable and adequate result for class members and is within the range of
reasonableness.

The class members and other consumers also benefit from the

change on the defendants' business practices.
Accordingly, the court finds the proposed partial settlement should be submitted
to class members for their consideration and a fairness hearing under Fed. R. Civ. P.
23(e), after which an order of final approval will issue. Accordingly,
IT IS ORDERED:
1.

The parties’ joint motion for preliminary approval of class action settlement

(Filing No. 154) is granted.
2.

An order in conformity with this Memorandum and Order and in substantial

conformity with the parties' proposed Order Preliminarily Approving Class Action
Settlement (Filing No. 154-2, Ex. C) will issue this date.
Dated this 4th day of November, 2015
BY THE COURT:
s/ Joseph F. Bataillon
Senior United States District Judge

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