NYBY v. CONVERGENT OUTSOURCING, INC.
OPINION. Signed by Judge Esther Salas on 8/3/17. (cm, )
Not for Publication
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ERIK NYBY, on behalf of himself and
all others similarly situated,
Civil Action No. 15-886 (ES) (MAH)
SALAS, DISTRICT JUDGE
This case arises from alleged violations of the Fair Debt Collection Practices Act (the
“FDCPA”), 15 U.S.C. § 1692 et seq. Pending before the Court are the following two motions:
(1) a joint motion for final approval of a settlement between Plaintiff Erik Nyby (“Nyby” or
“Plaintiff”) and Defendant Convergent Outsourcing, Inc. (“Convergent” or “Defendant”), (D.E.
No. 58); and (2) Class Counsel’s motion seeking an award of reasonable costs, attorneys’ fees,
and an incentive award, (D.E. No. 56). On April 6, 2017, the Court held a Fairness Hearing. 1
The Court received no objections and there were two opt-out requests. 2
The Court cites to the transcript of the Fairness Hearing as “4/6/17 Tr.” in this Opinion.
On May 4, 2017, the Clerk of Court posted a letter (dated April 28, 2017) written to the Court in Spanish
by Ms. Carmen Gautreau. (D.E. No. 63). The Clerk entered the letter on the docket as an “objection,” but an
English translation provided by the parties reveals that Ms. Gautreau’s letter takes no issue with the class settlement
agreement nor does it characterize itself as an objection. (D.E. No. 64). As the parties aptly note, at most the letter
amounts to a request to opt out. (See id.). And, although the deadline for any objections or opt-out requests was
March 17, 2017, the parties agreed to permit Ms. Gautreau to exclude herself from the class out of time. (Id.).
For the reasons in this Opinion, the Court certifies the class for purposes of settlement,
grants final approval of the proposed settlement, and awards costs, attorneys’ fees, and an
I. FACTUAL & PROCEDURAL BACKGROUND
Nyby alleges that Convergent sent him a collection letter (the “Letter”) concerning a
certain debt owned by Galaxy Asset Purchasing, LLC. (See D.E. No. 3 (“Am. Compl.”) ¶ 8).
He alleges, however, that the debt Convergent was trying to collect was barred by New Jersey’s
statute of limitation and, therefore, he had no obligation to pay the debt. (Id. ¶ 10). Nyby alleges
that (1) “Defendant falsely represented the character, amount and legal status of the debt through
its [L]etter in violation of 15 U.S.C. § 1692e(2)” and (2) the alleged acts and practices of
Defendant “constitute unfair and unconscionable means to collect a debt in violation of 15
U.S.C. § 1692f.” (Id. ¶¶ 40, 45). In short, Nyby alleges that Convergent’s Letter violated the
FDCPA as to him and a class of similarly situated New Jersey consumers to whom the Letter
Convergent answered Nyby’s Complaint (D.E. No. 5), but then filed a motion for
judgment on the pleadings. (D.E. No. 18). The Court received several submissions in support
and in opposition to Convergent’s motion. (See D.E. Nos. 21, 22, 24, 38, 42 & 43).
Meanwhile, the parties exchanged discovery—including service of interrogatories,
requests for production, and depositions—pursuant to a pretrial scheduling order. (See D.E. No.
15; D.E. No. 59-1 (“Taylor Decl.”) ¶¶ 3-7). During this process, there were several discovery
disputes and extensions of discovery-related deadlines. (See D.E. Nos. 23, 29, 37 & 41).
The Undersigned held a settlement conference, but the parties were unable to reach an
agreement. (See D.E. No. 46). The parties, however, agreed to private mediation in an effort to
resolve this matter. (See D.E. Nos. 46 & 48; Taylor Decl. ¶ 9). The mediation commenced on
August 31, 2016, before the Hon. James R. Zazzali (Ret.), and an agreement in principle was
reached—and confirmed—on September 12, 2016. (Taylor Decl. ¶¶ 10-11).
On October 3, 2016, the parties informed this Court that a settlement on a class-wide
basis had been reached and that the parties would move for preliminary approval from this Court.
(See D.E. Nos. 49 & 50). On November 22, 2016, the parties jointly moved for this Court to
preliminarily approve their class action settlement. (D.E. Nos. 51 & 52). On December 20,
2016, the Court held a telephonic hearing concerning the parties’ joint motion to preliminarily
approve the settlement (see D.E. No. 53) and subsequently issued an order granting the parties’
motion (D.E. No. 55).
That order effectuated the following (among other things): (1) certification of a class for
settlement purposes; (2) preliminarily approval of the class settlement; (3) appointment of
settlement class counsel; (4) appointment of a claims administrator; (5) approval of forms and
procedures for class notice; and (6) appointment of Nyby as the Class Representative. (See D.E.
No. 55). In particular, the Class was defined as follows: “All persons sent a collections notice
from Convergent between February 5, 2014 through the date of entry of this Preliminary
Approval Order that sought to collect on a time-barred debt that was handled by Convergent for
Galaxy Asset Purchasing, LLC.” (Id. ¶ 1(a); see also D.E. No. 52-1 ¶ 2.8; D.E. No. 62-1).
II. OVERVIEW OF THE PROPOSED SETTLEMENT & RESPONSE
The proposed Settlement Agreement provides a “Settlement Fund” of $76,500 “to be paid
by Convergent as set forth in th[e] Agreement to Settlement Class Members.” (D.E. No. 52-1 ¶¶
2.35, 5.1). “Settlement Class Members” are “those persons who are members of the Class, and
who do not timely and validly request exclusion from the Settlement Class.” (Id. ¶ 2.34). The
parties estimated “there are approximately 3,599 individuals in the Class.” (Id. ¶ 2.8).
The parties also agreed that Convergent will “pay all reasonable costs, fees, and expenses
incurred by the Claims Administrator in the course of providing the Class Notice and other
services related to the administration and payment of the Settlement.” (Id. ¶ 5.3). Further, the
parties agreed that Class Counsel would move the Court “for an award of attorneys’ fees and
expenses, to be paid by Convergent separate and apart from the Settlement Fund, in an amount
not to exceed SEVENTY THOUSAND DOLLARS ($70,000.00).” (Id. ¶ 6.1). Finally, the
parties agreed that: (1) “Convergent agrees to pay Plaintiff ONE THOUSAND DOLLARS
($1,000.00) in resolution of his individual claims separate and apart from the Settlement Fund”
(id. ¶ 6.2); and (2) “Plaintiff will also ask the Court to award him an incentive award of FOUR
THOUSAND DOLLARS ($4,000.00) (in addition to the distribution he may receive) for the
time and effort he has personally invested in this Action separate and apart from the Settlement
Fund” (id. ¶ 6.3).
The Claims Administrator received data “on or about December 5, 2016, containing
3,983 Class Members.”
(See D.E. No. 59-2 (“Radetich Decl.”) ¶ 4).
But the Claims
Administrator “identified 437 duplicate records, leaving 3,546 unique Class Member records.”
(Id.). Accordingly, the Claims Administrator “caused 3,546 Notices to be mailed via USPS First
Class Mail” by the Court-ordered deadline of January 30, 2017. (Id. ¶ 6; D.E. No. 55 ¶ 3).
Settlement Class Members had until March 17, 2017 to submit a claim, object or opt out. (D.E.
No. 55 ¶¶ 5-7).
As of March 22, 2017 (the day before the parties’ joint motion for final approval was
due), the Claims Administrator “received 379 timely claims forms,” which represents a filing
rate of “approximately 10.69%.” (Radetich Decl. ¶ 7).
On April 6, 2017, the Court held a Fairness Hearing pursuant to Federal Rule of Civil
At the Fairness Hearing, no objectors appeared.
Further, the parties
informed the Court that the number of claims had increased to 413. (4/6/17 Tr. at 5:19-6:11).
With final approval, each of the 413 claimants will receive $185.23 as their pro rata share of the
Settlement Fund. (Id. at 6:13-14). As of this Opinion, there are two exclusion requests and no
objections to the settlement. (See also Radetich Decl. ¶ 10; 4/6/17 Tr. at 3:25-4:13; D.E. No. 621 ¶ 7; D.E. No. 64).
III. LEGAL STANDARD
Federal Rule of Civil Procedure 23(e) provides that “[t]he claims, issues, or defenses of a
certified class may be settled . . . only with the court’s approval.” “The decision of whether to
approve a proposed settlement of a class action is left to the sound discretion of the district
court.” In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions (“In re Prudential”),
148 F.3d 283, 299 (3d Cir. 1998) (quoting Girsh v. Jepson, 521 F.2d 153, 156 (3d Cir. 1975)).
The “law favors settlement, particularly in class actions and other complex cases where
substantial judicial resources can be conserved by avoiding formal litigation.” In re Gen. Motors
Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig. (“GM Truck Prods.”), 55 F.3d 768, 784 (3d
Cir. 1995). Nevertheless, “[t]he purpose of Rule 23(e) is to protect the unnamed members of the
class from unjust or unfair settlements.” Ehrheart v. Verizon Wireless, 609 F.3d 590, 592-93 (3d
Cir. 2010); see also In re Pet Food Prods. Liab. Litig. (“In re Pet Food”), 629 F.3d 333, 349 (3d
Cir. 2010) (“We have stressed the importance of Rule 23(e), noting that a district court acts as a
fiduciary, guarding the claims and rights of the absent class members.”) (internal quotation
A. Whether Class Certification is Appropriate for Purposes of Settlement
“When deciding a motion for settlement, the Court must first determine whether the
settlement class is appropriate for certification and then turn to whether the settlement itself
should be approved.” Alin v. Honda Motor Co., No. 08-4825, 2012 WL 8751045, at *2 (D.N.J.
Apr. 13, 2012). Rule 23 “is designed to assure that courts will identify the common interests of
class members and evaluate the named plaintiffs’ and counsel’s ability to fairly and adequately
protect class interests.” Sullivan v. DB Investments, Inc., 667 F.3d 273, 296 (3d Cir. 2011) (en
banc) (quoting In re Cmty. Bank of N. Va., 622 F.3d 275, 291 (3d Cir. 2010)). “[A]ctions
certified as settlement classes must meet the same requirements under Rule 23 as litigation
classes.” GM Truck Prods., 55 F.3d at 799.
Accordingly, the Court “first must determine that the requirements for class certification
under Rule 23(a) and (b) are met.” In re Pet Food, 629 F.3d at 341. As discussed below, the
Court finds that the Rule 23(a) and 23(b)(3) requirements are satisfied.
1. Rule 23(a): Numerosity, Commonality, Typicality and
Adequacy of Representation
Rule 23(a) provides that
[o]ne or more members of a class may sue or be sued as
representative parties on behalf of all members only if: (1) the
class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class; (3) the
claims or defenses of the representative parties are typical of the
claims or defenses of the class; and (4) the representative parties
will fairly and adequately protect the interests of the class.
These four requirements are referred to as “(1) numerosity; (2) commonality; (3) typicality; and
(4) adequacy of representation.” In re Prudential, 148 F.3d at 308-09.
Rule 23(a)(1) requires that a class be “so numerous that joinder of all members is
impracticable.” “There is no minimum number of members needed for a suit to proceed as a
class action,” and “Rule 23(a)(1) requires examination of the specific facts of each case.”
Marcus v. BMW of N. Am., LLC, 687 F.3d 583, 595 (3d Cir. 2012).
Here, there are over 3,500 individuals in the Settlement Class. (See, e.g., D.E. No. 52-2 ¶
19; Radetich Decl. ¶ 4).
The Court finds that joinder of so many individuals would be
impracticable and the numerosity requirement is therefore satisfied. See Stewart v. Abraham,
275 F.3d 220, 226-27 (3d Cir. 2001) (“No minimum number of plaintiffs is required to maintain
a suit as a class action, but generally if the named plaintiff demonstrates that the potential
number of plaintiffs exceeds 40, the first prong of Rule 23(a) has been met.”).
Rule 23(a)(2) requires that “there are questions of law or fact common to the class.”
“Commonality requires the plaintiff to demonstrate that the class members have suffered the
same injury” and that their claims “depend upon a common contention” that “is capable of
classwide resolution.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349-50 (2011) (internal
quotation marks and citation omitted). The contention is capable of “classwide resolution” if the
“determination of its truth or falsity will resolve an issue that is central to the validity of each one
of the claims in one stroke.” Id.; see also In re NFL Players’ Concussion Injury Litig., 307
F.R.D. 351, 371 (E.D. Pa. 2015) (“The [commonality] standard is not stringent; only one
common question is required.”), aff’d, 821 F.3d 410 (3d Cir. 2016).
Here, the common contention is the alleged unlawfulness of a form debt-collection letter.
In other words, the claims at issue are based on the same Letter and concern the same alleged
violations of the FDCPA. The Court finds that the commonality requirement is satisfied. See
Little-King v. Hayt Hayt & Landau, No. 11-5621, 2013 WL 4874349, at *5 (D.N.J. Sept. 10,
2013) (“[T]he Court finds that there are common questions of law or fact shared among the class.
Importantly, all members of the class received a materially identical debt-collection letter from
Defendants. . . . All members of the class also share common questions of law, in particular,
whether that letter was defective under the FDCPA.”).
Rule 23(a)(3) requires that “the claims or defenses of the representative parties [be]
typical of the claims or defenses of the class.” “The typicality requirement is designed to align
the interests of the class and the class representatives so that the latter will work to benefit the
entire class through the pursuit of their own goals.” In re Warfarin Sodium Antitrust Litig., 391
F.3d 516, 531 (3d Cir. 2004). “The typicality criterion is intended to preclude certification of
those cases where the legal theories of the named plaintiffs potentially conflict with those of the
absentees by requiring that the common claims are comparably central to the claims of the
named plaintiffs as to the claims of the absentees.” Baby Neal v. Casey, 43 F.3d 48, 57 (3d Cir.
“However, typicality, as with commonality, does not require that all putative class
members share identical claims.”
Warfarin Sodium Antitrust Litig., 391 F.3d at 531-32.
“Indeed, even relatively pronounced factual differences will generally not preclude a finding of
typicality where there is a strong similarity of legal theories.” Baby Neal, 43 F.3d at 58.
Here, Nyby alleges the same claims and injury as the Settlement Class Members—i.e.,
receiving the same Letter that allegedly violates the FDCPA. Accordingly, typicality is satisfied.
Cf. Weissman v. Gutworth, No. 14-666, 2015 WL 3384592, at *3 (D.N.J. May 26, 2015)
(“Plaintiff’s claims are identical to the class claims. They are predicated on the same legal and
factual circumstances: Defendants’ alleged practice of mailing collection letters with legally
deficient language. Plaintiff’s claims are sufficiently typical.”).
Adequacy of Representation
Rule 23(a)(4) requires that “the representative parties will fairly and adequately protect
the interests of the class.” This requirement “has two components designed to ensure that
absentees’ interests are fully pursued.” Warfarin Sodium Antitrust Litig., 391 F.3d at 532. First,
“the adequacy inquiry tests the qualifications of the counsel to represent the class.” Id.; see also
GM Truck Prods., 55 F.3d at 801 (“Courts examining settlement classes have emphasized the
special need to assure that class counsel: (1) possessed adequate experience; (2) vigorously
prosecuted the action; and (3) acted at arm’s length from the defendant.”). 3 Here, the Court’s
independent review of the background of Class Counsel shows that counsel is qualified—i.e., has
the appropriate experience in class action and FDCPA litigation. (See, e.g., D.E. Nos. 52-2 ¶¶ 46 & 52-3 ¶ 4). Class Counsel litigated this case for nearly two years, taking extensive discovery
and engaging in—at times—hotly contested motion practice. Second, the adequacy inquiry
“seeks to uncover conflicts of interest between named parties and the class they seek to
represent.” Warfarin Sodium Antitrust Litig., 391 F.3d at 532. Here, as noted previously, Nyby
received the same allegedly unlawful Letter as Settlement Class Members, and no conflicts with
persons in the Settlement Class are apparent to this Court.
2. Rule 23(b)(3): Predominance and Superiority
Rule 23(b)(3) provides, in relevant part, that “a class action may be maintained if Rule
23(a) is satisfied and if . . . the court finds that the questions of law or fact common to class
Another court in this District rightly noted that, “[a]s a result of the 2003 amendments to the Federal Rules
of Civil Procedure, the issue of appropriate class counsel is guided by Rule 23(g), rather than 23(a)(4).” In re Royal
Dutch/Shell Transport Sec. Litig., No. 04-374, 2008 WL 9447623, at *14 n.3 (D.N.J. Dec. 9, 2008) (citation
omitted). As in that case, however, “[f]or the sake of convenience . . . the adequacy of counsel is discussed here.”
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
“The twin requirements of Rule 23(b)(3) are known as predominance and
superiority.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 310 (3d Cir. 2008).
So, under Rule 23(b)(3), “two additional requirements must be met” in this case: “(1)
common questions must predominate over any questions affecting only individual members (the
predominance requirement), and (2) class resolution must be superior to other available methods
for the fair and efficient adjudication of the controversy (the superiority requirement).” See
Warfarin Sodium Antitrust Litig., 391 F.3d at 527 (internal quotation marks omitted).
“Parallel with Rule 23(a)(2)’s commonality element, which provides that a proposed
class must share a common question of law or fact, Rule 23(b)(3)’s predominance requirement
imposes a more rigorous obligation upon a reviewing court to ensure that issues common to the
class predominate over those affecting only individual class members.” Sullivan, 667 F.3d at
297. The “predominance inquiry tests whether proposed classes are sufficiently cohesive to
warrant adjudication by representation.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623
(1997). “[T]he focus of the predominance inquiry is on whether the defendant’s conduct was
common as to all of the class members, and whether all of the class members were harmed by
the defendant’s conduct.” Sullivan, 667 F.3d at 298.
Here, as already discussed, it is plainly apparent that the common question of the legality
of the Letter dominates all class claims. As Class Counsel aptly noted during the Fairness
Hearing, if the Court resolved Convergent’s motion for judgment on the pleadings against Nyby,
“everybody’s case would be done”; if the Court resolved the motion in favor of Nyby,
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“everybody in the class would have their FDCPA claim.” (See 4/6/17 Tr. at 7:20-8:4). The
Court thus finds that the common issues here adequately predominate over any individual issues.
Cf. Weissman, 2015 WL 3384592, at *3 (“Plaintiff alleges that Defendants sent all class
members a collection letter with specific statements that violated the FDCPA. Because every
class member’s claim proceeds from this factual nucleus, all claims uniformly turn on the
question of whether FDCPA liability flows from Defendants’ letters.
predominates over any questions related to individuals, and satisfies the Rule 23(b)(3)
“The superiority requirement ‘asks the court to balance, in terms of fairness and
efficiency, the merits of a class action against those of alternative available methods of
adjudication.’” Warfarin Sodium Antitrust Litig., 391 F.3d at 533-34 (quoting In re Prudential,
148 F.3d at 316).
The Court finds that the class action route is the superior method here. Nothing suggests
that individuals are more likely to file individual actions or settle and recover on individual
actions. Given the allegations in this case, the Court finds that the “class action mechanism is
the superior method for bringing the present class members’ claims” because it “offers prompt
relief and averts the undue costs class members would incur in prosecuting their claims
individually.” See Weissman, 2015 WL 3384592, at *4.
B. Analysis of the Girsh Factors
Rule 23(e)(2) provides that, “[i]f the proposal would bind class members, the court may
approve it only after a hearing and on finding that it is fair, reasonable, and adequate.” “In this
process, ‘trial judges bear the important responsibility of protecting absent class members,’ and
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must be ‘assur[ed] that the settlement represents adequate compensation for the release of the
class claims.’” Sullivan, 667 F.3d at 319 (quoting In re Pet Food, 629 F.3d at 349) (alterations
in original). And, “where settlement negotiations precede class certification, and approval for
settlement and certification are sought simultaneously, . . . district courts . . . [should] be even
‘more scrupulous than usual’ when examining the fairness of the proposed settlement.”
Warfarin Sodium Antitrust Litig., 391 F.3d at 534 (quoting GM Truck Prods., 55 F.3d at 805).
In so doing, the Court must consider the Girsh factors:
(1) the complexity, expense and likely duration of the litigation;
(2) the reaction of the class to the settlement; (3) the stage of the
proceedings and the amount of discovery completed; (4) the risks
of establishing liability; (5) the risks of establishing damages; (6)
the risks of maintaining the class action through the trial; (7) the
ability of the defendants to withstand a greater judgment; (8) the
range of reasonableness of the settlement fund in light of the best
possible recovery; and (9) the range of reasonableness of the
settlement fund to a possible recovery in light of all the attendant
risks of litigation.
Girsh v. Jepson, 521 F.2d 153, 157 (3d Cir. 1975) (internal quotation marks and ellipses
omitted); see also GM Truck Prods., 55 F.3d at 785; McDonough v. Horizon Healthcare Servs.,
Inc., No. 09-571, 2014 WL 3396097, at *4 (D.N.J. July 9, 2014) (“The key question the Court
must address in considering an application for approval of a class action settlement is whether
the proposed settlement is ‘fair, reasonable and adequate.’ The Third Circuit has set forth a
number of factors relevant in making this determination [which are known as] the ‘Girsh factors
. . . .’”) (citation omitted), aff’d sub nom. McDonough v. Horizon Blue Cross Blue Shield of N.J.,
641 F. App’x 146 (3d Cir. 2015).
Girsh factor one: the complexity, expense and likely duration of the litigation
“This factor captures ‘the probable costs, in both time and money, of continued
litigation.’” In re Cendant Corp. Litig., 264 F.3d 201, 233 (3d Cir. 2001) (quoting GM Truck
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Prods., 55 F.3d at 812). As the parties state, this case involved a fervently litigated legal issue
that—no matter how the Court resolved—was bound for appellate review. (See D.E. No. 59 at
5-6; 4/6/17 Tr. at 8:10-25). And, absent an order for an interlocutory appeal, this issue would not
be before the Third Circuit until after litigation over class certification and additional motion
practice. (See id.). Finally, inherent in all of this, of course, is the risk that the Class receives no
relief at all. The Court finds that the first Girsh factor weighs in favor of approval.
Girsh factor two: the reaction of the class to the settlement
“In an effort to measure the class’s own reaction to the settlement’s terms directly, courts
look to the number and vociferousness of the objectors.” GM Truck Prods., 55 F.3d at 812. A
“vast disparity between the number of potential class members who received notice of the
Settlement and the number of objectors creates a strong presumption that this factor weighs in
favor of the Settlement, and the objectors’ arguments otherwise are not convincing.” In re
Cendant Corp. Litig., 264 F.3d at 235.
Here there are 413 claims, 2 opt-out requests, and, notably, no objections. Further, Class
Counsel represented at the Fairness Hearing that receiving 413 claims out of the 3,546 unique
Class Members—which equates to a claims rate of over 10%—in a consumer class action case
such as this one represents an “above average” response. (See 4/6/17 Tr. at 9:1-10:10). In light
of Class Counsel’s experience with consumer class actions (in particular, FDCPA cases), the
Court sees no reason at this time to doubt their representation that this reflects a good response
rate. Moreover, the Court finds it telling that 34 additional claims were received between March
22 (the date before the March 23 deadline for the parties’ motion for final approval) and the April
6 Fairness Hearing. Accordingly, this factor weighs in favor of approval.
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Girsh factor three: the stage of the proceedings and the amount of
“This factor ‘captures the degree of case development that class counsel have
accomplished prior to settlement. Through this lens, courts can determine whether counsel had
an adequate appreciation of the merits of the case before negotiating.’” In re Cendant Corp.
Litig., 264 F.3d at 235 (quoting GM Truck Prods., 55 F.3d at 813).
Here, Nyby was deposed, Convergent’s corporate designee was deposed, and discovery
has been exchanged pursuant to Federal Rules of Civil Procedure 33 and 34. The parties have
had discovery disputes that required Magistrate Judge Hammer’s involvement (much to the
(See D.E. Nos. 29, 30, 34 & 37; D.E. No. 59-1 ¶¶ 12-14).
Sufficient discovery has been exchanged to inform the parties’ settlement negotiations.
Moreover, this case involved a hotly contested legal issue—i.e., the legality of the Letter sent to
Nyby and the settlement class—that the parties extensively briefed. The Court finds that this
factor weighs in favor of approval.
Girsh factors four and five: the risks of establishing liability and
the risks of establishing damages
“By evaluating the risks of establishing liability, the district court can examine what the
potential rewards (or downside) of litigation might have been had class counsel elected to litigate
the claims rather than settle them.” GM Truck Prods., 55 F.3d at 814. The fifth Girsh factor
“attempts to measure the expected value of litigating the action rather than settling it at the
current time.” Id. at 816. So, “[t]he fourth and fifth Girsh factors survey the possible risks of
litigation in order to balance the likelihood of success and the potential damage award if the case
were taken to trial against the benefits of an immediate settlement.” In re Prudential, 148 F.3d at
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Here again, the Court finds relevant the parties’ dispute over liability—i.e., the legality of
the Letter. (See D.E. Nos. 21, 22, 24, 38, 42 & 43). Convergent vigorously contested liability.
This dispute, of course, carried the attendant risk that the Court would resolve Convergent’s
motion for judgment on the pleadings against Nyby and, effectively, against those in the class.
And the risk of establishing damages is even more pronounced because the FDCPA limits
recovery to the lesser of $500,000.00 or 1% of the net worth of Convergent. See 15 U.S.C. §
1692k(a)(2)(B); Weiss v. Regal Collections, No. 01-881, 2006 WL 2038493, at *2 (D.N.J. July
19, 2006) (“Notably, the FDCPA would have placed a ceiling upon damages in this action based
upon the financial resources of the Defendant.”).
This is critical because Convergent’s
position—which it supports with its disclosures and proffered calculation—was that its net worth
was essentially zero. (See D.E. No. 59-1 ¶¶ 12-14). 4 Therefore, given the unequivocal risks
regarding liability and damages, the Court finds that the fourth and fifth Girsh factors weigh in
favor of approving the settlement.
Girsh factor six: the risks of maintaining the class action through the trial
“Under Rule 23, a district court may decertify or modify a class at any time during the
litigation if it proves to be unmanageable.” In re Prudential, 148 F.3d at 321. Notably, “the
prospects for obtaining certification have a great impact on the range of recovery one can expect
to reap from the action.” GM Truck Prods., 55 F.3d at 817. That said, when “[c]onfronted with
a request for settlement-only class certification, a district court need not inquire whether the case,
if tried, would present intractable management problems . . . for the proposal is that there be no
trial.” Amchem Prods., 521 U.S. at 620.
In the interests of brevity, the Court declines to set forth the parties’ competing views on calculating
Convergent’s net worth. Suffice it to say, the Court notes that the parties have adequately set forth those views.
(See, e.g., 4/6/17 Tr. at 12:3-20).
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On the other hand, “[t]here will always be a ‘risk’ or possibility of decertification, and
consequently the court can always claim this factor weighs in favor of settlement.” In re
Prudential, 148 F.3d at 321. Because there are no issues apparent to the Court that might have
led to decertification, the Court finds this factor neutral.
Girsh factor seven: the ability of the defendants to withstand a greater judgment
This factor “is concerned with whether the defendant could withstand a judgment for an
amount significantly greater than the Settlement.” In re Cendant Corp. Litig., 264 F.3d at 240.
Resolution of this factor seems to beg the same question discussed under the fifth Girsh factor:
What would be the net worth of Convergent?
Convergent maintains it would be zero.
Accordingly, the Settlement provides Class Members immediate benefits that, quite possibly,
would not be available to them after motion practice and appellate review. Thus, the Court finds
this factor weighs in favor of approval.
Girsh factors eight and nine: the range of reasonableness of the settlement fund in
light of the best possible recovery and the range of reasonableness of the settlement
fund to a possible recovery in light of all the attendant risks of litigation
“The last two Girsh factors ask whether the settlement is reasonable in light of the best
possible recovery and the risks the parties would face if the case went to trial.” In re Prudential,
148 F.3d at 322; see also Pro v. Hertz Equip. Rental Corp., No. 06-3830, 2013 WL 3167736, at
*5 (D.N.J. June 20, 2013) (“The final two Girsh factors are typically considered in tandem.”). In
other words, the “last two Girsh factors evaluate whether the settlement represents a good value
for a weak case or a poor value for a strong case.” Warfarin Sodium Antitrust Litig., 391 F.3d at
538. “In order to assess the reasonableness of a proposed settlement seeking monetary relief,
‘the present value of the damages plaintiffs would likely recover if successful, appropriately
discounted for the risk of not prevailing, should be compared with the amount of the proposed
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settlement.’” In re Prudential, 148 F.3d at 322 (quoting GM Truck Prods., 55 F.3d at 806).
“The fact that a proposed settlement may only amount to a fraction of the potential recovery does
not, in and of itself, mean that the proposed settlement is grossly inadequate and should be
disapproved.” In re Cendant Corp. Sec. Litig., 109 F. Supp. 2d 235, 263 (D.N.J. 2000) (internal
quotation marks and citation omitted).
With final approval, each of the 413 claimants will receive $185.23 as their pro rata share
of the Settlement Fund. As Class Counsel aptly noted, this means that each Settlement Class
Member would receive over $175 for having received the Letter. (See 4/6/17 Tr. 14:16-24). As
discussed above, the Settlement provides for immediate benefits to Nyby and the Class Members
that arguably would not be available after motion practice and/or appellate review. This risk is
not just any risk; it is a very real one based on the Court’s review of the parties’ positions
concerning liability and damages. Furthermore, the parties brought this Court’s attention to other
FDCPA class-action settlements (see D.E. No. 59 at 9) that resulted in awards that are similar or
less than the one here. See, e.g., Weissman, 2015 WL 3384592, at *7; Weiss, 2006 WL 2038493,
at *1-3. Accordingly, the Court finds that this Settlement is reasonable in light of the best
possible recovery and the risks inherent in this case.
Summary of the Court’s Analysis of the Girsh Factors
“The district court must make findings as to each of the nine Girsh factors in order to
approve a settlement as fair, reasonable, and adequate, as required by Rule 23(e).” In re Pet
Food, 629 F.3d at 350. Having done so, the Court concludes that the Girsh factors weigh in
favor of approval of the Settlement. It is fair, reasonable, and adequate given the history, risks,
and complexities associated with this case.
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C. Whether Notice is Adequate
Rule 23 “contains two distinct notice provisions.” In re Prudential, 148 F.3d at 326.
“For classes certified under 23(b)(3), members must be provided with ‘the best notice practicable
under the circumstances, including individual notice to all members who can be identified
through reasonable effort.’” Weissman, 2015 WL 3384592, at *4 (quoting Fed. R. Civ. P.
Further, because the parties seek simultaneous certification of the Class and
approval of the proposed Settlement, “notice must satisfy both the requirements of Rule
23(c)(2)(B) and Rule 23(e)(1).” In re NFL Players’ Concussion Injury Litig., 307 F.R.D. at 38283.
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 through reasonable effort.” The
Rule provides that the 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).
And Rule 23(e)(1) provides that “[t]he court must direct notice in a reasonable manner to
all class members who would be bound by the proposal.” Notably, due process requires that
notice be “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.” Mullane v.
Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950).
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The Court finds that the notice provided to Class Members in this case meets the
aforementioned requirements. (See D.E. No. 59-2, Ex. A to Radetich Decl.). It concisely, but
clearly describes the action and the claim against Convergent. (See id. at 1). It describes the
scope of the conditionally certified Settlement Class (including the approximate number of
people in the Class) and the proposed Settlement terms. (See id. at 2). It sets forth detailed
procedures for opting out, submitting a claim, or objecting—including the deadline by which to
do so. (See id. at 1-4). It describes the consequences of Class Members’ choices (for example,
that filing a claim means the member cannot sue or be part of any other lawsuit against
Convergent about the claims or issues in this case). (See id.). It provides the time, place, and
reason for the Fairness Hearing. (See id. at 3). It identifies Class Counsel, but also states that a
Class Member may choose his or her own attorney who must enter an appearance with the Court
under a heading that says “The Lawyers Representing You.” (Id.).
As for the method of providing notice, Convergent was directed by this Court to provide
each Class Member’s last known address (based on Convergent’s records) and the Claims
Administrator would mail the notice. (D.E. No. 55 ¶ 3). To be sure, the Claims Administrator
was directed to confirm, correct and/or update addresses that were provided. (Id.). In fact, the
Claims Administrator found duplicate records, which narrowed the universe of potential class
members. (See Radetich Decl. ¶ 4). “[T]o provide the best notice practicable,” the Claims
Administrator ran the address data “through the USPS National Change of Address (‘NCOA’)
database and updated the data with the address changes received from NCOA.” (Id.). In the
end, the Claims Administrator “caused 3,546 Notices to be mailed via USPS First Class Mail” by
the Court-ordered deadline of January 30, 2017. (Id. ¶ 6; D.E. No. 55 ¶ 3). Settlement Class
Members had until March 17, 2017 to submit a claim, object or opt out. (D.E. No. 55 ¶¶ 5-7).
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The Court finds that the notice in this case—in terms of both content and method of
dissemination—meets the requirements that Due Process and Federal Rule of Civil Procedure 23
D. Whether the Plan of Allocation is Appropriate (a.k.a. Plan of Distribution)
“The Court must determine whether the Plan of Allocation contemplated in the
Settlement Agreement is ‘fair, reasonable, and adequate.’” In re Ins. Brokerage Antitrust Litig.,
297 F.R.D. 136, 147 (D.N.J. 2013) (quoting Fed. R. Civ. P. 23(e)(2)).
Here, Settlement Class Members will be entitled to a pro rata share of the Settlement
Fund—i.e., each of the 413 claimants will receive $185.23 as their pro rata share of the
Settlement Fund. (E.g., D.E. No. 52-1 ¶¶ 5.1, 5.2; D.E. No. 59-2, Ex. A to Radetich Decl.;
4/6/17 Tr. at 5:19-6:14). Further, the parties nominated the Center for Social Justice at Seton
Hall School of Law as a cy pres recipient—which would receive money from the Settlement
Fund left over following the expiration of checks issued after a second distribution. (D.E. No. 59
at 10-11; D.E. No. 52-1 ¶ 12.3; see also D.E. No. 59-2, Ex. A to Radetich Decl. at 2 (providing
notice to Class Members about cy pres dispersal)). 5 “No money remaining in the Settlement
Fund shall revert to or otherwise be paid to Convergent.” (D.E. No. 52-1 ¶ 12.3; D.E. No. 59-2,
Ex. A to Radetich Decl. at 2).
Finally, as noted above, “Convergent agrees to pay Plaintiff ONE THOUSAND
DOLLARS ($1,000.00) in resolution of his individual claims separate and apart from the
Settlement Fund.” (D.E. No. 52-1 ¶ 6.2). Class Counsel argues that this is for resolution of
Nyby’s individual claim. (D.E. No. 56-1 at 5). The FDCPA provides, in relevant part, that “any
debt collector who fails to comply with any provision of this subchapter with respect to any
“The Center for Social Justice at Seton Hall School of Law . . . provides pro bono legal services for
economically disadvantaged residents throughout the State of New Jersey.” Mansour v. Seas & Assocs., LLC, No.
14-2935, 2016 WL 6652461, at *3 (D.N.J. Jan. 25, 2016).
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person is liable to such person in an amount equal to the sum of . . . in the case of any action by
an individual, such additional damages as the court may allow, but not exceeding $1,000.” 15
U.S.C. § 1692k(a)(2)(A). But the FDCPA also provides that, “any debt collector who fails to
comply with any provision of this subchapter with respect to any person is liable to such person
in an amount equal to the sum of . . . in the case of a class action, (i) such amount for each named
plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may
allow for all other class members.” Id. § 1692k(a)(2)(B). To the extent approval of the $1,000
for resolution of Nyby’s individual claim is required (which, as Class Counsel notes, is unclear
under the law (see D.E. No. 56-1 at 5)), this appears appropriate under the FDCPA. See 15
U.S.C. § 1692k(a)(2); cf. Little-King, 2013 WL 4874349, at *2 (“Per the Settlement, Defendants
have agreed to pay the named Plaintiff $1,000 in full and complete satisfaction of her statutory
claims under the FDCPA, as well as an additional $1,000 to Plaintiff as an incentive award for
serving as class representative.”)
In sum, the Court finds that there are no apparent issues with the plan of distribution.
VI. ATTORNEYS’ FEES/COSTS & INCENTIVE AWARD
Class Counsel seeks an award of reasonable costs, attorneys’ fees, and an incentive
award. (D.E. No. 56). Specifically, Class Counsel requests the following: (1) $70,000 in
attorney fees and costs; (2) $4,000 in an incentive award to the named Plaintiff. (Id.).
A. Attorneys’ Fees and Costs
Convergent has agreed to pay Class Counsel up to $70,000 for fees and expenses as part
of the Settlement Agreement. (D.E. No. 52-1 ¶ 6.1). The notice to Settlement Class Members
discussed above contains the following language: “Subject to the Court’s approval, Convergent
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will pay Class Counsel a total of not more than $70,000.00 as attorneys’ fees and costs incurred
with respect to the Plaintiff and the Class claims.” (D.E. No. 59-2, Ex. A to Radetich Decl.).
Federal Rule of Civil Procedure 23(h) provides that, “[i]n a certified class action, the
court may award reasonable attorney’s fees and nontaxable costs that are authorized by law or by
the parties’ agreement.”
Rule 23(h) further provides, in relevant part, that the following
(1) A claim for an award must be made by motion under Rule
54(d)(2), subject to the provisions of this subdivision (h), at a
time the court sets. Notice of the motion must be served on all
parties and, for motions by class counsel, directed to class
members in a reasonable manner.
(2) A class member, or a party from whom payment is sought, may
object to the motion.
(3) The court may hold a hearing and must find the facts and state
its legal conclusions under Rule 52(a).
As Class Counsel’s own cited case law (e.g., D.E. No. 56-1 at 2) states:
“The Court must analyze the attorneys’ fee provision under Rule
23(e) in much the same fashion as the settlement itself. Attorneys’
fees provisions included in proposed class action settlement
agreements are, like every other aspect of such agreements, subject
to the determination whether the settlement is ‘fundamentally fair,
adequate, and reasonable.’”
Little-King, 2013 WL 4874349, at *18.
“There are two basic methods for calculating attorneys’ fees—the percentage-ofrecovery method and the lodestar method.” In re Prudential, 148 F.3d at 333. The FDCPA has
a fee shifting provision permitting recovery of costs and reasonable attorneys’ fees. See 15
U.S.C. § 1692k(a)(3). Indeed, the Third Circuit has interpreted the FDCPA as requiring an
award of attorneys’ fees to the prevailing party. See Graziano v. Harrison, 950 F.2d 107, 113
(3d Cir. 1991) (“Section 1692k(a) sets forth the three standard components of liability for
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violations of the Act: it states that a debt collector who violates the act ‘is liable’ for actual
damages, statutory damages as determined by the court, and a reasonable attorney’s fee. Given
the structure of the section, attorney’s fees should not be construed as a special or discretionary
remedy; rather, the Act mandates an award of attorney’s fees as a means of fulfilling Congress’s
intent that the Act should be enforced by debtors acting as private attorneys general.”).
This is relevant because the “lodestar method is more commonly applied in statutory feeshifting cases, and is designed to reward counsel for undertaking socially beneficial litigation in
cases where the expected relief has a small enough monetary value that a percentage-of-recovery
method would provide inadequate compensation.” See In re Prudential, 148 F.3d at 333; see
also Alexander v. Coast Professional Inc., No. 12-1461, 2016 WL 861329, at *7 (E.D. Pa. Mar.
7, 2016) (“Because the FDCPA is a fee shifting statute, this Court will apply the lodestar method
in determining the reasonableness of the requested award of attorneys’ fees.”). 6
“The lodestar award is calculated by multiplying the number of hours reasonably worked
on a client’s case by a reasonable hourly billing rate for such services based on the given
geographical area, the nature of the services provided, and the experience of the attorneys.” In re
Rite Aid Corp. Sec. Litig., 396 F.3d at 305; see also Alexander, 2016 WL 861329, at *7 (“Under
the lodestar method, a court begins the process of determining the reasonable fee by calculating
the ‘lodestar;’ i.e., the number of hours reasonably expended on the litigation multiplied by a
reasonable hourly rate.”).
“Generally, a reasonable hourly rate is calculated according to the prevailing market rates
in the relevant community. The court should assess the experience and skill of the prevailing
party’s attorneys and compare their rates to the rates prevailing in the community for similar
Cf. In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 300 (3d Cir. 2005) (“The percentage-of-recovery method
is generally favored in common fund cases because it allows courts to award fees from the fund in a manner that
rewards counsel for success and penalizes it for failure.”) (internal quotation marks and citation omitted).
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services by lawyers of reasonably comparable skill, experience, and reputation.” Maldonado v.
Houstoun, 256 F.3d 181, 184 (3d Cir. 2001). “In calculating the hours reasonably expended, a
court should review the time charged, decide whether the hours set out were reasonably
expended for each of the particular purposes described and then exclude those that are excessive,
redundant, or otherwise unnecessary.” Id. (internal quotation marks and citation omitted).
Here, Class Counsel submits “firm time sheets reflecting work billed on behalf of Nyby
and the class” showing that 203.35 hours were expended for litigating this action. (See D.E. No.
56-2 ¶ 14 & Ex. A thereto). This excludes (among other things) time expended for filing the
motions now pending before the Court relating to final approval—namely the parties’ joint
motion for final approval of a settlement and Class Counsel’s motion seeking an award of
reasonable costs, attorneys’ fees, and an incentive award.
And Class Counsel provided
declarations supporting the applicable hourly rates (including paralegal assistance)—which range
from $125/hr to $450/hr—and the bases for these hourly rates. (See D.E. No. 56-2 & Ex. A
thereto; D.E. No. 56-6).
Based on the submitted time sheets, the lodestar here would be
(See D.E. No. 56-2 ¶ 14 & Ex. A thereto).
Finally, Class Counsel submits
documentation supporting $10,706.73 in costs. (See D.E. No. 56-2 ¶ 15 & Exs. B & C thereto).
Accordingly, the Court finds that the agreed-upon $70,000 for fees and expenses is
B. Incentive Award
“Incentive awards are not uncommon in class action litigation and particularly where . . .
a common fund has been created for the benefit of the entire class.” Sullivan, 667 F.3d at 333
n.65 (citation omitted). “The purpose of these payments is to compensate named plaintiffs for
the services they provided and the risks they incurred during the course of class action litigation,
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and to reward the public service of contributing to the enforcement of mandatory laws.” Id.
(citation and quotation marks omitted).
Here, Class Counsel seeks an incentive award of $4,000 “for the time and effort [Nyby]
has personally invested in this Action separate and apart from the Settlement Fund.” (D.E. No.
52-1 ¶ 6.3). The Court approves this incentive award.
First, Nyby has been an active participant in this litigation by conferring with Class
Counsel regularly, reviewing pleadings and documents, and participating in two in-person
settlement conferences (one before this Court and one in private mediation). (D.E. No. 56-2 ¶
17). Further, he was deposed concerning his individual case and fitness to serve as a class
Second, the requested incentive award aligns with others granted to
plaintiffs in FDCPA class action cases. See, e.g., Weissman, 2015 WL 3384592, at *6; Gross v.
Washington Mut. Bank, F.A., No. 02-4135, 2006 WL 318814, at *6 (E.D.N.Y. Feb. 9, 2006);
Bonett v. Educ. Debt. Servs., Inc., No. 01-6528, 2003 WL 21658267, at *7 (E.D. Pa. May 9,
2003). Finally, Convergent agrees to pay $4,000; it will not be taken from the Settlement Fund.
(See D.E. No. 52-1 ¶ 6.3; 4/6/17 Tr. at 23:11-25:15).
For the reasons in this Opinion, the Court certifies the class for purposes of settlement (as
defined above), approves the proposed settlement, approves the requested attorney’s fees and
costs, and approves the class representative incentive award. An appropriate Order accompanies
Esther Salas, U.S.D.J.
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