BENELI v. BCA FINANCIAL SERVICES, INC. et al
Filing
25
OPINION filed. Signed by Judge Freda L. Wolfson on 2/6/2018. (mps)
**NOT FOR PUBLICATION**
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
DAVID BENELI, individually and on
behalf of all others similarly situated,
Plaintiff,
v.
BCA FINANCIAL SERVICES, INC.,
Defendant.
:
:
:
:
:
:
:
:
:
:
:
:
Civ. Act. No. 16-2737
OPINION
WOLFSON, United States District Judge:
Before the Court are (i) the Joint Motion for Final Approval of Class Settlement
Agreement and Release, filed by Plaintiff David Beneli (“Plaintiff”) and Defendant BCA
Financial Services, Inc. (“Defendant”), and (ii) the Motion for an Award of Attorney Fees
and Reimbursement of Expenses filed by Plaintiff, through counsel Marcus Zelman LLC.
This settlement will resolve all claims asserted against Defendant BCA Financial
Services, Inc. For the reasons set forth below and on the record at the hearing held on
January 12, 2018, the parties’ joint motion for final approval of settlement is granted, the
Court certifies the proposed settlement class, the Court designates Plaintiff’s counsel as
class counsel, and the Court approves the final settlement fund of $10,000.00 as well as
an award of $1,500 to Plaintiff. Plaintiff’s motion for an award of attorney fees and
reimbursement of expenses is also granted, and Class Counsel, Marcus Zelman LLC is
1
awarded a combined $15,000 in fees and expenses, to be paid by Defendant BCA
separate and apart from the settlement fund.
I. FACTUAL BACKGROUND & PROCEDURAL HISTORY
On May 13, 2016, Plaintiff, individually and on behalf of a class, filed the abovecaptioned class action lawsuit, which alleges that BCA violated the Fair Debt Collection
Practices Act, 15 U.S.C. §§1692, et seq. (“FDCPA”), by, inter alia, sending consumers
written collection communications that contained the consumer’s account number visible
through the glassine window in the envelope in which the communication was mailed.
On June 9, 2016, BCA filed its Answer and affirmative defenses denying any
wrongdoing.
The initial conference in this matter was held on August 19, 2016. Shortly after,
the parties began engaging in settlement discussions. In the October 19, 2016 Pretrial
Scheduling Order, Magistrate Judge Lois H. Goodman stayed formal discovery to enable
the parties to explore settlement. The parties exchanged informal, exploratory discovery,
and were able to reach a settlement in principal. A dispute as to the net worth of the
Defendant remained, so the Plaintiff conducted confirmatory discovery which included
deposing a corporate representative of BCA. After which time, the parties were able to
reach an agreement to settle the claims of the Plaintiff and Settlement Class, which
Agreement has been filed with the Court.
2
The Court preliminarily approved the Agreement on June 5, 2017, and approved
an amendment to the Agreement on August 3, 2017. The Court preliminarily certified a
settlement class of 2,612 members, consisting of:
All New Jersey consumers who were sent a collection letter from BCA, during the
time period of May 13, 2015 to May 13, 2016, in an envelope with a glassine
window, in which the consumer’s reference number assigned by BCA was visible
through the glassine window of the enclosing envelope.
The Court also preliminarily approved Ari Marcus and Yitzchak Zelman of
Marcus & Zelman LLC as class counsel.
Notice of the settlement of this action was mailed by first class U.S. Mail to
Settlement Class members on or before July 5, 2017. Twenty-nine (29) envelopes were
returned by the United States Postal Service, of which nine (9) were returned by the
United States Postal Service with a forwarding address, and were subsequently re-mailed.
Pursuant to the Agreement, class members had forty-five (45) days after the mailing of
the notice to exclude themselves from or object to the proposed settlement. No settlement
class members have opted out or objected to the proposed settlement.
III. TERMS OF SETTLEMENT
The Court previously considered the terms of the Agreement in entering the
Preliminary Approval Order, which are as follows:
(a) BCA will create a class settlement fund of $10,000.00 (“Class Recovery”),
which the Class Administrator, First Class, Inc. will distribute pro rata among
those Settlement Class Members who do not exclude themselves (“Claimants”).
Claimants will receive a pro rata share of the Class Recovery by check. The
shares of any of the Settlement Class Members who cannot be located because the
Notice has been returned as “undeliverable” will be donated as described in
paragraph (c) below. Checks issued to Claimants will be void sixty (60) days from
3
the date of issuance. If any portion of the Settlement Class Recovery remains after
the void date on the Claimants’ checks, these remaining funds will be distributed
pursuant to paragraph (c) below.
(b) BCA shall pay $1,000.00 to Plaintiff for his statutory damages pursuant to 15
U.S.C. § 1692k(a)(2)(B)(i), plus $500.00 in recognition for his services to the
Settlement Class.
(c) The shares of any of the Settlement Class Members who cannot be located and
any checks that have not been cashed by the void date will be donated as a cy pres
award to a charitable organization. The Parties propose that the cy pres award be
donated to Legal Services of New Jersey, and that the award will be expressly
earmarked for the benefit of New Jersey consumers. The Parties’ selection of the
forgoing cy pres recipient is subject to the Court’s approval at the time of the final
fairness hearing.
Agreement, ¶ 12 [ECF No. 19-1]. Of the 2,612 Settlement Class members who were sent
notice, none have objected to or asked to be excluded from the Settlement. Accordingly,
each Settlement Class member will receive three dollars and eighty-two cents ($3.82),
which represents their share of the monetary benefits under the Agreement, and any
monies set aside for those class members who the administrator was unable to locate, will
be donated as a cy pres award to Legal Services of New Jersey.
The Agreement also provides in relevant part that:
BCA agrees to pay Plaintiff’s reasonable attorneys’ fees and costs as provided
under 15 U.S.C. § 1692k in accordance with a fee petition to be submitted by
Settlement Counsel to the Court . . . . The award of fees, costs, and expenses to
Class Counsel shall be in addition and shall not in any way reduce the settlement
amounts to be provided to the Settlement Class Members. Upon payment of the
costs and fees awarded by the Court to Class Counsel, BCA shall have no further
obligation with respect to Class Counsels’ fees, costs, and expenses . . . .
Agreement, ¶ 13 [ECF No. 19-1].
4
IV. JURISDICTION
This Court has subject-matter jurisdiction over Plaintiffs’ claims under 28 U.S.C.
§ 1331, 15 U.S.C. § 1692 et seq., and 28 U.S.C. § 2201. The Court has personal
jurisdiction over defendants, plaintiffs, and all other Class Members. “In the class action
context, the district court obtains personal jurisdiction over the absentee class members
by providing proper notice of the impending class action and providing the absentees
with the opportunity to be heard or the opportunity to exclude themselves from the
class.” In re Prudential Ins. Co. of Am. Sales Practices Litig., 148 F.3d 283, 306 (3d Cir.
1998).
V. CLASS CERTIFICATION
In order to approve a class settlement agreement, “a district court must determine
that the requirements for class certification under Federal Rule of Civil Procedure 23(a)
and (b) are met and must determine that the settlement is fair to the class under Federal
Rule of Civil Procedure 23(e).” In re Insurance Brokerage Antitrust Litigation, 579 F.3d
241, 257-58 (3d Cir. 2009); In re Pet Food Prods. Liab. Litig., 629 F.3d 333, 341 (3d Cir.
2010). (“a district court first must determine that the requirements for class certification
under Rule 23(a) and (b) are met.”). The Third Circuit has consistently observed that
“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.” In re Comm. Bank of N. Va., 622 F.3d 275, 291 (3d Cir. 2010)
(quoting In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability
Litigation, 55 F.3d 768, 799 (3d Cir. 1995) (alterations omitted). “The requirements of
5
[Rule 23] (a) and (b) are designed to insure that a proposed class has ‘sufficient unity so
that absent class members can fairly be bound by decisions of class representatives.’” In
re Prudential Ins. Co., 148 F.3d at 309 (quoting Amchem, 521 U.S. at 621).
Under Rule 23(a), the prerequisites to class certification are:
(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
Fed. R. Civ. P. 23(a); see also Amchem Products, Inc. v. Windsor, 521 U.S. 591, 613
(1997). “Upon finding each of these prerequisites satisfied, a district court must then
determine that the proposed class fits within one of the categories of class actions
enumerated in Rule 23(b).” Sullivan v. DB Investments, Inc., 667 F.3d 273, 296 (3d Cir.
2011).
Certification pursuant to Rule 23(b)(3), applicable in cases like the one presently
before the Court in which Plaintiffs seek monetary compensation, is permitted where
(1) “questions of law or fact common to class members predominate over any
questions affecting only individual members,” and
(2) “a class action is superior to other available methods for fairly and efficiently
adjudicating the controversy.”
6
Fed. R. Civ. P. 23(b)(3); see Collins v. E.I. DuPont de Nemours & Co., 34 F.3d 172, 180
(3d Cir. 1994); Amchem, 521 U.S. at 618 (“Among current applications of Rule 23(b)(3),
the ‘settlement only’ class has become a stock device”). The “factual determinations
necessary to make Rule 23 findings must be made by a preponderance of the evidence. In
other words, to certify a class the district court must find that the evidence more likely
than not establishes each fact necessary to meet the requirements of Rule 23.” In re
Insurance Brokerage, 552 F.3d at 258 (citations and internal quotations omitted).
Accordingly, “[c]lass certification is proper only if the [] court is satisfied, after a
rigorous analysis, that the prerequisites of Rule 23 are met.” Id. (internal quotation marks
omitted).
“Even if it has satisfied the requirements for certification under Rule 23, a class
action cannot be settled without the approval of the court and a determination that the
proposed settlement is fair, reasonable and adequate.” In re Prudential Ins. Co., 148 F.3d
at 316 (internal quotation marks omitted); see Fed. R. Civ. P. 23(e)(2) (stating that a
district court may approve a proposed settlement “only after a hearing and on finding that
it is fair, reasonable, and adequate”). In In re Insurance Brokerage the Third Circuit
affirmed the applicability of nine factors, established in Girsh v. Jepson, 521 F.2d 153,
157 (3d Cir. 1975), which are to be considered when determining the fairness of a
proposed settlement. “In cases of settlement classes, where district courts are certifying a
class and approving a settlement in tandem, they should be ‘even more scrupulous than
usual when examining the fairness of the proposed settlement.’” In re Nat'l Football
7
League Players Concussion Injury Litig., 821 F.3d 410, 436 (3d Cir. 2016), as amended
(May 2, 2016) (quoting In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 534 (3d Cir.
2004)). However, "if a fairness inquiry under Rule 23(e) controlled certification,
eclipsing Rule 23(a) and (b), and permitting class designation despite the impossibility of
litigation, both class counsel and court would be disarmed." Id. at 621. Thus, it is
important to "apply[] the class certification requirements of Rules 23(a) and (b)
separately from [the] fairness determination under Rule 23(e)." In re Prudential Ins. Co.,
148 F.3d at 308.
Finally, as the Supreme Court has observed, 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. But other specifications of [Rule 23] -- those designed to protect absentees by
blocking unwarranted or overbroad class definitions -- demand undiluted, even
heightened, attention in the settlement context." Amchem, 521 U.S. at 620.
The parties have stipulated, for settlement purposes only, to the following Rule
23(b)(3) class:
All New Jersey consumers who were sent a collection letter from BCA, during the
time period of May 13, 2015 to May 13, 2016, in an envelope with a glassine
window, in which the consumer’s reference number assigned by BCA was visible
through the glassine window of the enclosing envelope.
A. Rule 23(a) Factors
The Court first determines whether Plaintiffs have satisfied the prerequisites for
maintaining a class action as set forth in Rule 23(a).
8
1. Numerosity
Fed. R. Civ. P. 23(a)(1) requires the class be “so numerous that joinder of all
members is impracticable.” With respect to numerosity, a party need not precisely
enumerate the class members to proceed as a class action. In re Lucent Tech. Inc., Sec.
Litig., 307 F. Supp. 2d 633, 640 (D.N.J. 2004). “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.” Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir. 2001) (citing 5
James Wm. Moore et al., Moore's Federal Practice S 23.22[3][a] (Matthew Bender 3d ed.
1999)). “Impracticability does not mean impossibility, but rather that the difficulty or
inconvenience of joining all members of the class calls for class certification.” Weikel v.
Tower Semiconductor, Ltd., 183 F.R.D. 377, 388 (D.N.J. 1998) (citation omitted).
Here, there were 2,612 individuals who met the Class definition each of whom
were sent direct notice of the settlement via U.S. Mail, pursuant to the Order. The number
of Class members in this case plainly satisfies the numerosity requirement of Rule
23(a)(1).
2. Commonality
Commonality requires that “there are questions of law or fact common to the
class.” Fed. R. Civ. P. 23(a)(2). The threshold for establishing commonality is
straightforward: “[t]he commonality requirement will be satisfied if the named plaintiffs
share at least one question of fact or law with the grievances of the prospective class.” In
9
re Schering Plough Corp. ERISA Litig., 589 F.3d 585, 596-97 (3d Cir. 2009) (quoting
Baby Neal v. Casey, 43 F.3d 48, 56 (3d Cir. 1994)) (emphasis added). Indeed, as the
Third Circuit pointed out, “[i]t is well established that only one question of law or fact in
common is necessary to satisfy the commonality requirement, despite the use of the plural
‘questions’ in the language of Rule 23(a)(2).” In re Schering Plough, 589 F.3d at 97
n.10. Thus, there is a low threshold for satisfying this requirement. Newton v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 183 (3d Cir. 2001); In re Sch.
Asbestos Litig., 789 F.2d 996, 1010 (3d Cir. 1986) (highlighting that the threshold of
commonality is not high (quotations and citations omitted)).
Moreover, this requirement does not mandate that all putative class members share
identical claims, see Hassine v. Jeffes, 846 F.2d 169, 176-77 (3d Cir. 1988), and that
“factual differences among the claims of the putative class members do not defeat
certification.” Baby Neal, 43 F.3d at 56. In that regard, class members can assert a single
common complaint even if they have not all suffered actual injury; demonstrating that all
class members are subject to the same harm will suffice. Hassine, 846 F.2d at 177-78.
“Even where individual facts and circumstances do become important to the resolution,
class treatment is not precluded.” Baby Neal, 43 F.3d at 56.
Here, the Settlement Class members have identical legal claims under the FDCPA,
based upon a standardized collection letter sent by BCA to Plaintiff and each Settlement
Class Member, satisfying the commonality requirement.
10
3. Typicality
Fed. R. Civ. P. 23(a)(3) requires that “the claims or defenses of the representative
parties are typical of the claims or defenses of the class.” “The concepts of commonality
and typicality are broadly defined and tend to merge, because they focus on similar
aspects of the alleged claims.” Newton, 259 F.3d at 182. “Both criteria seek to assure
that the action can be practically and efficiently maintained and that the interests of the
absentees will be fairly and adequately represented.” Baby Neal, 43 F.3d at 56; see
General Tel. Co. of Southwest v. Falcon, 457 U.S. 147, 157 n.13 (1982). Despite their
similarity, commonality – like numerosity – evaluates the sufficiency of the class itself,
and typicality – like adequacy of representation – evaluates the sufficiency of the named
plaintiff. See Hassine, 846 F.2d at 177 n.4; Weiss v. York Hosp., 745 F.2d 786, 810 (3d
Cir. 1984), cert. denied, 470 U.S. 1060 (1985).
Typicality acts as a bar to class certification only when “the legal theories of the
named representatives potentially conflict with those of the absentees.” Georgine v.
Amchem Prods., 83 F.3d 610, 631 (3d Cir. 1996); Newton, 259 F.3d 183. “If the claims
of the named plaintiffs and putative class members involve the same conduct by the
defendant, typicality is established regardless of factual differences.” Id. at 184. In other
words, the typicality requirement is satisfied as long as representatives and the class
claims arise from the same event or practice or course of conduct and are based on the
same legal theory. Brosious v. Children’s Place Retail Stores, 189 F.R.D. 138, 146
(D.N.J. 1999); Hoxworth v. Blinder, Robinson & Co., 980 F.2d 912, 923 (3d Cir. 1992)
11
(“Factual differences will not render a claim atypical if the claim arises from the same
event or practice of course of conduct that gives rise to the claims of the class members,
and it is based on the same legal theory.”).
To conduct the typicality inquiry, the court must examine “whether the named
plaintiffs’ claims are typical, in common-sense terms, of the class, thus suggesting that
the incentives of the plaintiffs are aligned with those of the class.” Beck v. Maximus, Inc.,
457 F.3d 291, 295–96 (3d Cir. 2006).
Here, Plaintiff’s claims share the same common issues of fact and law as those
held by the Settlement Class members – namely, BCA mailed Plaintiff and each
Settlement Class member collection letters in envelopes through the glassine window of
which the consumer’s account number was visible. In other words, typicality is clearly
satisfied since Plaintiff’s claims arise from the same course of conduct that gave rise to
the claims of all other Settlement Class Members and are based on the same legal theory.
Thus, the typicality requirement of Rule 23(a)(3) is met.
4. Adequacy
A class may not be certified unless the representative class members “will fairly
and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). “Rule 23(a)’s
adequacy of representation requirement ‘serves to uncover conflicts of interest between
named parties and the class they seek to represent.’” In re Pet Food Prod. Liab. Litig.,
629 F.3d 333, 343 (3d Cir. 2010) (quoting Amchem, 521 U.S. at 625). Class
12
representatives “must be part of the class and possess the same interest and suffer the
same injury as the class members.” Id. (citation and internal quotation marks omitted).
This requirement has traditionally entailed a two-pronged inquiry: first, the named
plaintiff’s interests must be sufficiently aligned with the interests of the absentees; and
second the plaintiff’s counsel must be qualified to represent the class. General Motors, 55
F.3d at 800; Newton, 259 F.3d at 187 (same). A named plaintiff is “adequate” if his
interests do not conflict with those of the Class. In re Prudential Ins. Co., 148 F.3d at
312. Pursuant to Rule 23(g), adequacy of class counsel is considered separately from the
determination of the adequacy of the class representatives. Both prongs of the adequacy
requirement are satisfied here.
(i) Adequacy of the Proposed Class Representative
Plaintiff has no interests that are antagonistic to those of the members of the
proposed Class and has no unique defenses from the proposed Class. Plaintiff is alleged
to have suffered injury in the same manner as other class members as a result of
Defendant’s alleged misconduct. Plaintiff is therefore an adequate representative of the
class.
(ii) Rule 23(g) Adequacy of the Proposed Class Counsel
Rule 23(g) requires a court to assess the adequacy of proposed class counsel. To
that end, the court must consider the following: (1) the work counsel has done in
identifying or investigating potential claims in the action; (2) counsel’s experience in
handling class actions, other complex litigation, and claims of the type asserted in the
13
action; (3) counsel’s knowledge of the applicable law; and (4) the resources counsel will
commit to representing the class. Nafar v. Hollywood Tanning Sys., Inc., No. 06-CV3826 DMC, 2008 WL 3821776, at *7 (D.N.J. Aug. 12, 2008).
The Court finds that Class Counsel Ari Marcus & Yitzchak Zelman of Marcus &
Zelman LLC are adequate. Looking first to the work counsel have done in identifying or
investigating potential claims in the action, it appears that counsel (i) interviewed the
plaintiff to address the information necessary to make a professional judgment as to
whether claims existed under the Fair Debt Collection Practices Act; (ii) reviewed
documents provided by the Plaintiff; (iii) conducted legal research into the claims set
forth in the Complaint; (iv) assisted in negotiating a class action settlement for the
plaintiff and the putative class members; and (v) conducted confirmatory discovery as to
the net worth of the Defendant, which included deposing the Defendant. Looking next to
counsel’s experience in handling class actions, other complex litigation, and the types of
claims asserted in the action, it appears that counsel (i) are experienced in handling
complex litigation, and have been plaintiff’s counsel in over seventy five (75) Fair Debt
Collection Practices Act cases in the States of New York and New Jersey; (ii) have been
appointed class counsel in the following matters: Jackson v. RMB, Inc. Civil Case No.
2:14cv2205-MF (Marcus); Willemsen v. Professional Recovery Services, Inc., Civil Case
No. 1:14cv6421 (Marcus); Krady v. A-1 Collection Agency, LLC, Civil Case No.
3:14cv7062 (Marcus); Willis and Shvarts v. iHeartMedia, Inc.¸ Case No. 16-CH-02455
(Cook County, Illinios. (Marcus); and Truglio v. CBE Group, Civil Case No. 3:15-cv14
03813 (Marcus & Zelman); (iii) have been licensed to practice law in the State of New
Jersey since November 2010; (iv) and have had a significant portion of their practice
concentrated in the area of Consumer Protection Law involving matters involving the
Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Telephone
Consumer Protection Act. Finally, looking to the final two considerations, the Court has
no concern about counsel’s knowledge of the applicable law, given their experience in
handling previous FDCPA matters, and has no reason to doubt that Marcus & Zelman,
LLC has been and will continue to be committed to devoting sufficient resources to
represent the class.
B. Rule 23(b)(3) Factors
After meeting the threshold requirements of Rule 23(a), a plaintiff must establish
that the proposed class meets the requirements of Rule 23(b)(3). To certify a class under
Rule 23(b)(3), the Court must find that: “[T]he questions of law or fact common to the
members of the class predominate over any question affecting only individual members,
and that a class action is superior to other available methods for the fair and efficient
adjudication of the controversy. Rule 23(b)(3) requires that “a class action [be] superior
to other available methods for the fair and efficient adjudication of the controversy.”
Fed. R. Civ. P. 23(b)(3). In this case, both considerations weigh in favor of class
certification.
1. Predominance
Here, Plaintiff satisfies the predominance and superiority criteria of Rule 23(b)(3).
In determining whether common questions predominate, courts have focused on the
15
claims of liability against defendants. See Bogosian v. Gulf Oil Corp., 561 F.2d 434, 456
(3d Cir. 1977). When common questions are a significant aspect of a case and they can be
resolved in a single action, class certification is appropriate. See 7A Wright, Miller &
Kane, Federal Practice and Procedure: Civil 2d, § 1788, at 528 (1986). Here, a common
issue of fact – i.e., an identical, computer-generated, collection letter mailed by BCA to
Plaintiff and the Settlement Class Members in the same sized envelope – predominates
over any individual issues relating to Class members. Likewise, a common issue of law –
i.e., whether Defendant’s letters violated the FDCPA – predominates over any individual
issues relating to each Settlement Class Member. Thus, Rule 23’s predominance
requirement is satisfied.
2. Superiority
The Rule sets out several factors relevant to the superiority inquiry: (A) the
interest of members of the class in individually controlling the prosecution or defense of
separate actions; (B) the extent and nature of any litigation concerning the controversy
already commenced by or against members of the class; (C) the desirability or
undesirability of concentrating the litigation of the claims in the particular forum; and (D)
the difficulties likely to be encountered in the management of a class action. Essentially,
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." In re Prudential Ins. Co., 148 F.3d at 316 (internal citations and quotations
omitted); In re Warfarin, 392 F.3d at 532-33.
16
Here, given the large number of individual lawsuits that would be required if a
class were not certified, a class action presents a superior method to fairly and efficiently
adjudicate all of the claims of the Settlement Class in this case, within the meaning of
Rule 23(b)(3). To the extent any Settlement Class members wished to pursue any such
individual claim, they were free to exclude themselves from the Settlement Class under
Rule 23(b)(3). In light of the foregoing, Plaintiff has met the superiority element of Rule
23(b)(3).
Having weighed all the factors and considered all the requirements of class
certification, the Court finds that it is appropriate to certify the class for settlement
purposes.
VI. ADEQUACY OF NOTICE
The Court ruled in the Preliminary Approval Order that the class-notice materials
and the proposed method of dissemination (by first-class mail and publication) met the
requirements of due process, Rule 23 of the Federal Rules of Civil Procedure, and
“constitute[d] the best notice practicable under the circumstances, and constitute[d] due
and sufficient notice to all persons entitled to such notice.” Now that notice has been
provided to the Class, the Court reaffirms its earlier findings concerning the adequacy of
the Notice Program.
Where, as here, the parties have sought simultaneously to certify a settlement class
and settle a class action, the Court must consider Fed. R. Civ. P. 23(c)(2)’s notice
requirements for class certification as well as Rule 23(e)’s notice requirements for
settlement or dismissal. See, e.g., In re Prudential Ins. Co., 148 F.3d at 326-27. For
17
classes certified under Fed. R. Civ. P. 23(b)(3), such as the Class in this action, Rule
23(c)(2)(B) requires “the best notice that is practicable under the circumstances, including
individual notice to all members who can be identified through reasonable effort.” The
Rule also prescribes that the notice state “(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 class members
under Rule 23(c)(3).” Id. Rule 23(e) is less specific, requiring only that notice of a
proposed settlement be given “in a reasonable manner.” Thus, if the notice satisfies Rule
23(c), it will also satisfy Rule 23(e). See, e.g., In re Global Crossing Sec. & ERISA Litig.,
225 F.R.D. 436, 448 (S.D.N.Y. 2004). The Constitution’s Due Process Clause also
imposes certain minimum notice requirements. As the Supreme Court has observed,
however, the “‘mandatory notice pursuant to [Rule 23(c)(2)] . . . is designed to fulfill
requirements of due process to which the class action procedure is of course subject.’”
Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 173-74 (1974) (quoting Fed. R. Civ. P. 23,
1966 Amendment Advisory Comm. Note to Subdiv. (d)(2)). Due process considerations
are therefore satisfied if the notice conforms to Rule 23(c)(2).
A. Best Practicable Notice Methodology
Rule 23(e)(1)(B) requires the Court to direct notice in a reasonable manner to all
class members who would be bound by a proposed settlement, voluntary dismissal, or
18
compromise. The notice procedure sought to reach the greatest number of Class members
possible.
This notice program was clearly “the best notice practicable under the
circumstances including individual notice to all members who can be identified through
reasonable effort,” Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 173 (1974), and meets
the requirements of Fed. R. Civ. P. 23(c) and (e) and due process. See, e.g., see Zimmer
Paper Products, Inc. v. Berger & Montague, P.C., 758 F.2d 86, 90 (3d Cir. 1985) (“It is
well settled that in the usual situation firstclass mail . . . fully satisfy[ies] the notice
requirements of both Fed. R. Civ. P. 23 and the due process clause.”).
B. Sufficient Content of the Notice
The potential Class Members will have received the “best notice that is practicable
under the circumstances” as required by Rule 23(c)(2) if the notice “contain[s] sufficient
information to enable class members to make informed decisions on whether they should
take steps to protect their rights, including objecting to the settlement or, when relevant,
opting out of the class.” In re Nat’l Football League Players Concussion Injury Litig.,
821 F.3d 410, 435 (3d Cir. 2016) (internal quotations omitted).
Here, the Notice detailed the Settlement and the releases that would be exchanged;
summarized the history of the litigation; described the parties and the Class; discussed the
settlement negotiations; detailed the Plan of Allocation; detailed the procedure for filing
Proofs of Claim and provided the deadline for filing; detailed that the attorneys would be
paid from moneys separate from the settlement fund; detailed the reasons for the
19
settlement; described Class members’ right to request exclusion from the Class or appear
through personal counsel of their choosing and/or to object to the Settlement, Plan of
Allocation and/or request for attorneys’ fees and reimbursement of expenses; provided
the deadlines for asserting these rights and procedures for doing so; and provided
addresses, telephone numbers and an email address where Class members could obtain
additional information. The Notice also contained a statement of the average per capita
amount that the Settlement ($3.82) and the amount that would be received by the Class
Representative, David Beneli ($1,000 for individual statutory damages plus $500 for his
service as Class Representative). Accordingly, the notice to the Class met all
requirements of Rule 23(c) and (e), and due process.
VII. FINAL APPROVAL OF SETTLEMENT
At the outset, the Court expresses that the law encourages and favors settlement of
civil actions in federal courts, particularly in complex class actions. In re Warfarin, 391
F.3d at 535; see In re General Motors, 55 F.3d 768, 784 (3d Cir. 1995)("the law favors
settlement, particularly in class actions and other complex cases where substantial judicial
resources can be conserved by avoiding formal litigation"). Accordingly, when a
settlement is reached on terms agreeable to all parties, it is to be encouraged. Bell
Atlantic Corp. v. Bolger, 2F.3d 1304, 1314 n.16 (3d Cir. 1993). The Third Circuit applies
“an initial presumption of fairness in reviewing a class settlement when: (1) the
negotiations occurred at arms [sic] length; (2) there was sufficient discovery; (3) the
proponents of the settlement are experienced in similar litigation; and (4) only a small
fraction of the class objected.” In re Nat’l Football League, 821 F.3d at 436 (internal
20
quotations omitted). This presumption applies even where, as here, “the settlement
negotiations preceded the actual certification of the class . . . .” In re Warfarin Sodium
Antitrust Litig., 391 F.3d 516, 535 (3d Cir. 2004).
Here, the proposed settlement meets the requirements for procedural fairness. The
proposed settlement was not reached until after the Parties voluntarily exchanged
documents and, thereafter, substantive arm’s length negotiations that took place over
several months to resolve the case on a class basis. Likewise, there’s no evidence of fraud
or collusion as BCA has consistently denied all individual and class liability. As reflected
on the Court’s docket, the Parties have been well-represented by their counsel with each
party having obtained enough information to make a reasonable professional judgment as
to the merits of the settlement. The declaration of Class Counsel also demonstrates that he
possessed sufficient ability and experience to effectively represent the class.
Nevertheless, a class action settlement may not be approved under Rule 23(e)
without a determination by this Court that the proposed settlement is "fair, reasonable and
adequate.” See In re Cendant, 264 F.3d at 231; see also Fed. R. Civ. P. 23(e)(1)(A). The
Third Circuit has on several occasions stressed the importance of Rule 23(e), noting that
"the district court acts as a fiduciary who must serve as a guardian of the rights of absent
class members." In re General Motors, 55 F.3d at 785 (citations and quotations omitted);
see also Amchem, 521 U.S. at 623 (noting that the Rule 23(e) inquiry "protects unnamed
class members from unjust or unfair settlements affecting their rights when the
representatives become fainthearted before the action is adjudicated or are able to secure
21
satisfaction of their individual claims by a compromise") (citations omitted). However, in
cases such as this, where settlement negotiations precede class certification and approval
for settlement and certification are sought simultaneously, the Third Circuit requires
district courts to be even "more scrupulous than usual" when examining the fairness of
the proposed settlement. See In re General Motors, 55 F.3d at 805. This heightened
standard is intended to ensure that class counsel has engaged in sustained advocacy
throughout the course of the proceedings, particularly in settlement negotiations, and has
protected the interests of all class members. See In re Prudential Ins. Co., 148 F.3d at
317.
As this Court observed earlier, the Third Circuit has articulated a set of nine
“Girsh factors” that courts should consider when determining the fairness of a proposed
settlement:
(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]
22
(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 quotations omitted); see, e.g.,
In re Johnson & Johnson Deriv. Litig., 900 F. Supp. 2d 467, 479-85 (D.N.J. 2012)
(reciting and applying the Girsh factors). “The settling parties bear the burden of proving
that the Girsh factors weigh in favor of approval of the settlement.” In re Pet Food
Prods., 629 F.3d at 350. “A district court's findings under the Girsh test are those of
fact.” In re Nat'l Football League, 821 F.3d at 437, as amended (May 2, 2016).
Since Girsh, the Third Circuit has held that, “because of a ‘sea-change in the
nature of class actions’ after Girsh was decided thirty-five years ago, it may be helpful to
expand the Girsh factors to include, when appropriate, the following non-exclusive
factors”:
[1] [T]he maturity of the underlying substantive issues . . . ; [2] the existence and
probable outcome of claims by other classes and subclasses; [3] the comparison
between the results achieved by the settlement for individual class or subclass
members and the results achieved – or likely to be achieved – for other claimants;
[4] whether class or subclass members are accorded the right to opt out of the
settlement; [5] whether any provisions for attorneys’ fees are reasonable; and [6]
whether the procedure for processing individual claims under the settlement is fair
and reasonable.
23
In re Pet Food Prods., 629 F.3d at 350 (quoting In re Prudential Ins. Co., 148 F.3d at
323). “Unlike the Girsh factors, each of which the district court must consider before
approving a class settlement, the Prudential considerations are just that, prudential.” In
re Nat’l Football League Players, 821 F.3d at 437 (internal quotations omitted). The
Girsh and Prudential factors are well established law and their continued application in
the class settlement context has been reaffirmed by Third Circuit as recently as April of
this year. See In re Nat’l Football League Players, 821 F.3d at 437.
The proposed settlement here satisfies the Girsh factors as well as the applicable
Prudential considerations.
A. Complexity, Expense, and Likely Duration of Litigation
The first Girsh factor captures “the probable costs, in both time and money, of
continued litigation.” In re Gen. Motors, 55 F.3d at 812. “By measuring the costs of
continuing on the adversarial path, a court can gauge the benefit of settling the claim
amicably.” Id. “Settlement is favored under this factor if litigation is expected to be
complex, expensive and time consuming.” In re Royal Dutch/Shell Transp. Sec. Litig.,
2008 WL 9447623, at *17 (D.N.J. Dec. 9, 2008).
Although the facts of this case are straightforward, the likelihood of success for the
class members if they proceeded to trial is uncertain. BCA has raised several defenses to
the Plaintiff’s individual claims, which it avers would ultimately have defeated the claims
of the putative class. The remainder of the litigation would likely include additional
discovery, motions for class certification and summary judgment, and trial.
24
Settlement eliminates any further risk and expense for the Parties. Considering the
potential risks and expenses associated with continued prosecution of the case, the
probability of appeals, the certainty of delay, and the ultimate uncertainty of recovery
through continued litigation, the proposed settlement is fair, reasonable, and adequate.
This factor supports approval.
B. Class’s Reaction to Settlement
Here, 2,612 Settlement Class members were mailed actual, direct notice, and none
of them have objected or asked to be excluded from the class. The fact that there were no
opt outs or objectors is persuasive evidence of the proposed settlement’s fairness and
adequacy. In re Rite Aid Securities Litig., 269 F. Supp. 2d 603, 608 (E.D. Pa. 2003).
These facts indicate a strong positive reaction by Settlement Class members to the
Agreement and heavily weighs in favor of approving settlement.
C. Stage of Proceedings and Amount of Discovery Completed
The goal of the third Girsh factor is to “capture[] the degree of case development
that class counsel 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 201, 235 (3d Cir. 2001) (citing
General Motors, 55 F.3d at 813). “Even settlements reached at a very early stage and
prior to formal discovery are appropriate where there is no evidence of collusion and the
settlement represents substantial concessions by both parties. . . . Indeed, courts in this
district have approved settlements while the case was in the pre-trial stage and formal
25
discovery had not yet commenced.” In re Johnson & Johnson, 900 F. Supp. 2d at 482;
accord, e.g., In re Nat’l Football League, 821 F.3d at 436-37 (“To the extent objectors
ask us to require formal discovery before presuming that a settlement is fair, we decline
the invitation. In some cases, informal discovery will be enough for class counsel to
assess the value of the class claims and negotiate a settlement that provides fair
compensation.”). Courts in this Circuit frequently approve class action settlement despite
the absence of formal discovery. See, e.g., Schuler v. Medicines Co., No. CV 14-1149
(CCC), 2016 WL 3457218, at *7 (D.N.J. June 24, 2016) (approving settlement prior to
discovery because of counsel’s investigation); In re Johnson & Johnson, 900 F. Supp.2d
at 483 (“Even settlements reached at a very early stage and prior to formal discovery are
appropriate where there is no evidence of collusion and the settlement represents
substantial concessions by both parties.”)
Here, Plaintiff and his counsel had a sufficient understanding of their claims and
defenses in this action. Although there has been no formal discovery, Plaintiff’s Counsel
had ample information to evaluate the prospects for the Class and to assess the fairness of
the Settlement. In this Litigation both the knowledge of Plaintiff and Plaintiff’s Counsel
and the proceedings themselves reached a stage where an intelligent evaluation of the
strengths and weaknesses of the Class’s claims and the propriety of the Settlement could
be made. Here, the disputed issues between the Parties are both legal and factual in
nature. As noted supra, the Parties voluntarily engaged discovery information and the
Parties exchanged sufficient information to gauge the strengths and weaknesses of their
26
claims/defenses to make an informed decision about settlement. Consequently, this factor
also weighs in favor of approval.
D. Risks of Establishing Liability and Damages
“The fourth and fifth [Girsh] factors survey the potential risks and rewards of
proceeding to litigation in order to weigh the likelihood of success against the benefits of
an immediate settlement.” In re Johnson & Johnson, 900 F. Supp. 2d at 483 (internal
quotations omitted). “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.” General Motors, 55
F.3d at 814. In making this assessment, however, “a court should not conduct a mini-trial
and must, to a certain extent, give credence to the estimation of the probability of success
proffered by class counsel.” In re Lucent Techs., Inc. Sec. Litig., 307 F. Supp. 2d 633,
644-45 (D.N.J. 2004) (internal quotations omitted). In complex cases, “[t]he risks
surrounding a trial on the merits are always considerable.” Weiss v. MercedesBenz of N.
Am., 899 F. Supp. 1297, 1301 (D.N.J. 1995).
Here, the likelihood of class members succeeding at trial is uncertain in view of
BCA’s steadfast arguments against liability and class certification; however, the
settlement provides for a damages recovery. Additionally, Plaintiff’s complaint neither
alleges, nor does it appear, that any class member suffered any ascertainable actual
damages as a result of BCA’s conduct, and this settlement provides them with real
27
monetary compensation. Thus, Plaintiff submits that these factors also heavily weighs in
favor of approval.
E. Risks of Maintaining Class Certification
The risk of obtaining and maintaining class certification through trial also supports
approval of the Settlement. Plaintiffs had not yet moved for class certification at the time
of the settlement. Defendants would oppose class certification if this case proceeded.
“The value of a class action depends largely on the certification of the class because, not
only does the aggregation of the claims enlarge the value of the suit, but often the
combination of the individual cases also pools litigation resources and may facilitate
proof on the merits.” In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab.
Litig., 55 F.3d 768, 816 (3d Cir. 1995). “The prospects of obtaining and maintaining class
certification, therefore, have a great impact on the range of recovery one can expect to
reap from the action. In re Safety Components, Inc. Sec. Litig., 166 F. Supp. 2d 72, 90–91
(D.N.J. 2001) (citations omitted). However, in Prudential, “the Circuit stated that
‘[b]ecause the district court always possesses the authority to decertify or modify a class
that proves unmanageable, examination of this factor in the standard class action would
appear to be perfunctory.’” Id. (quoting Prudential, 148 F.3d at 321). “The Circuit
explained that ‘[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.’” Id.
Here, the Class had yet to be certified and there is no guarantee of success, thus the
risks favor settlement. See Harnish v. Widener Univ. Sch. of Law, No. 153888, 2016 WL
28
4363133, at *10 (3d Cir. Aug. 16, 2016) (Class certification denied based on
predominance).
Moreover, even if the Class was certified for other than settlement purposes,
“[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 Ins.
Co., 148 F.3d at 321; see also In re Rent-Way Securities Litigation, 305 F. Supp. 2d 491,
506-07 (W.D. Pa. 2003) (“[A]s in any class action, there remains some risk of
decertification in the event the Propose[d] Settlement is not approved. While this may not
be a particularly weighty factor, on balance it somewhat favors approval of the proposed
Settlement.”).
F. Defendants’ Ability to Pay
This Girsh factor “addresses whether Defendants could withstand a [monetary]
judgment for an amount significantly greater than the [proposed] Settlement.” In re
Johnson & Johnson, 900 F. Supp. 2d at 484 (internal quotations omitted); Cendant, 264
F.3d at 240 (same).
The FDCPA limits class damages to the lesser of $500,000 or 1% of the debt
collector’s net worth. 15 U.S.C. § 1692k(a)(2)(B). Here, as a result of confirmatory
discovery and settlement discussions, the parties agreed BCA will pay $10,000.00 in
damages to the Settlement Class. The parties remain in dispute as to whether $10,000.00
accurately reflects 1% of the net worth of Defendant. Defendant’s position is that
$10,000.00 exceeds 1% of Defendant’s net worth. Plaintiff believes that $10,000.00
29
represents 1% of the net worth. At a minimum, the Settlement Class’s recovery is equal
to or exceeds the maximum allowable recovery under the FDCPA.
A trial in this case would be expensive and lengthy and continued litigation,
including possible appeals, could have depleted BCA’s resources to pay any judgment or
possible future settlement thereby making early settlement even more valuable to the
proposed class members. As such, considering the uncertainties of trial and the possible
difficulty in ultimately proving class liability and damages against BCA, the proposed
settlement is clearly fair, reasonable, and adequate.
G. Range of Reasonableness of Settlement Fund
“The last two [Girsh] factors evaluate whether the settlement represents a fair and
good value for a weak case or a poor value for a strong case.” In re Johnson & Johnson,
900 F. Supp. 2d at 484 (internal quotations omitted). “In conducting this evaluation, it is
recognized that settlement represents a compromise in which the highest hopes for
recovery are yielded in exchange for certainty and resolution and [courts should] guard
against demanding to[o] large a settlement based on the court’s view of the merits of the
litigation.” Id. at 484-85 (internal quotations omitted). These factors inquire “‘whether
the settlement is reasonable in light of the best possible recovery and the risks the parties
would race if the case went to trial.’” Pro v. Hertz Equip. Rental Corp., No. CIV.A. 063830 DMC, 2013 WL 3167736, at *5 (D.N.J. June 20, 2013) (quoting Prudential, 148
F.3d at 322).
30
The Settlement Fund consists of $10,000, which is either at or near the statutory
cap on available class damages set by 15 U.S.C. § 1692k(a)(2)(B). The settlement thus
represents a significant percentage, if not the entirety of the recovery that would have
been available at trial.
H. Maturity of Underlying Issues and Existence of Other Litigation
The Third Circuit suggested in Prudential that courts may consider such additional
factors as “the maturity of the underlying substantive issues” and the existence and
probable outcomes of other individual and/or class actions involving the same underlying
facts. In re Prudential Ins. Co., 148 F.3d at 323. Those considerations are inapposite
here.
Unlike some other types of class actions (such as certain consumer and productliability class actions), this FDCPA class action does not present particularly novel legal
or factual issues that need to mature before the Court can assess the fairness and
adequacy of the proposed settlement.
I. Availability of Opt-Out Rights
The Prudential court held that courts may also consider the availability of opt-out
rights. 148 F.3d at 323. Such rights exist here. Dissatisfied potential Class Members
were free to exclude themselves from the proposed settlement if they provided notice
within forty-five days of the date of mailing.
31
J. Reasonableness of Attorneys’ Fees
The Prudential decision also authorizes consideration of the reasonableness of the
plaintiffs’ request for attorneys’ fees. Id. The fee request in this case does not present
any issues, because BCA agrees to pay Plaintiff's reasonable attorneys' fees and costs as
provided under 15 U.S.C. § 1692k, such that the award of fees, costs, and expenses to
Class Counsel shall be in addition and shall not in any way reduce the settlement amounts
to be provided to the Settlement Class Members.
K. Reasonableness of the Plan of Allocation
Assessment of a plan of allocation of settlement proceeds in a class action under
Fed. R. Civ. P 23 is governed by the same standards of review applicable to the
settlement as a whole – the plan must be fair, reasonable, and adequate. Sullivan v. DB
Invs., Inc., 667 F.3d 273, 326 (3d Cir. 2011) (citation omitted); Ikon, 194 F.R.D. at 184;
Walsh, 726 F.2d at 964 (“The court’s principal obligation is simply to ensure that the
fund distribution is fair and reasonable.”). Courts “generally consider plans of allocation
that reimburse class members based on the type and extent of their injuries to be
reasonable.” Id. at 328. In particular, pro rata distributions are consistently upheld, and
there is no requirement that a plan of allocation “differentiat[e] within a class based on
the strength or weakness of the theories of recovery.” Id. These decisions acknowledge
that the goal of a distribution plan is fairness to the class as a whole, taking into account
the various disclosures during the Class Period and establishing a claim value based on
the market’s reaction to each new piece of information.
32
The plan of distribution in this matter, providing equal, pro rata, $3.82 payouts to
each class member is reasonable.
L. Reasonableness of Claim-Processing Procedures
The claim-processing procedures in this matter are standard and unobjectionable.
Having considered all of the Girsh and Prudential factors, this Court approves the
settlement as fair and reasonable.
VIII. ATTORNEY’S FEES
“In 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.” Fed. R. Civ. P.
23(h). The Fair Debt Collection Practices Act (“FDCPA”) is a fee shifting statute that
mandates the award of costs and reasonable attorney’s fees to a prevailing party. 15
U.S.C. § 1692k(a)(3). The fee shifting provisions serves to encourage the enforcement of
the FDCPA through “private attorneys general.” Graziano v. Harrison, 950 F.2d 107,
113-14 (3d Cir. 1991).
Plaintiff David Beneli (“Plaintiff”), by and through his undersigned counsel,
requests an award of $15,000.00 in attorney’s fees and out-of-pocket expenses, and
$1,500.00 to the named Plaintiff which shall represent $1,000.00 for his statutory
damages pursuant to 15 U.S.C. § 1692k(a)(2)(B)(i), plus $500.00 in recognition for his
services to the Settlement Class. Defendant has agreed to pay these directly, and not from
the Settlement Fund.
Attorneys' fees are typically assessed through the percentage-of-recovery method
or through the lodestar method. In re AT&T Corp. Secs. Litig., 455 F.3d 160, 164 (3d
33
Cir. 2006). The percentage-of-recovery method applies a certain percentage to the
settlement fund. See Welch & Forbes, Inc. v. Cendant Corp., 243 F.3d 722, 732 n.10 (3d
Cir. 2001). The lodestar method multiplies the number of hours class counsel worked on
a case by a reasonable hourly billing rate for such services. In re AT&T, 455 F.3d at 164.
A court, when approving a fee award, must first categorize the action it is adjudicating
and then “primarily rely on the corresponding method of awarding fees.” In re GM
Trucks Litig., 55 F.3d 768, 821 (3d Cir. 1995).
In this case, arising out of a fee shifting statute (the FDCPA), the lodestar method
is the appropriate method for awarding fees. Id. (“Courts generally regard the lodestar
method…as the appropriate method in statutory fee shifting cases.”); In re Prudential
Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 333 (3d Cir. 1998) (“[t]he
lodestar method is more commonly applied in statutory fee-shifting 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.”); Dungee v. Davison Design & Dev.
Inc., 674 F. App'x 153, 156 (3d Cir. 2017) (“When a court applies the lodestar method to
award fees in a class action case that involves a fee-shifting statute, there is a strong
presumption that the lodestar represents the reasonable fee, for class counsel's
work.”) (quotations omitted).
34
A. Lodestar
Under the lodestar analysis, counsel fees are determined by multiplying the
number of hours reasonably spent litigating the matter by counsel's hourly rate. This
yields the presumptively reasonable fee. See Hahnemann Univ. Hosp. v. All Shore, Inc.,
514 F.3d 300, 310 (3d Cir. 2008); Washington v. Philadelphia Court of Common Pleas,
89 F.3d 1031, 1035 (3d Cir. 1996). As the Third Circuit held, in reviewing counsel’s
lodestar,
The lodestar cross-check calculation need entail neither mathematical precision
nor bean-counting. The district courts may rely on summaries submitted by the
attorneys and need not review actual billing records. Furthermore, the resulting
multiplier need not fall within any pre-defined range, provided that the District
Court’s analysis justifies the award.
In re Rite Aid Sec. Litig., 396 F.3d 294, 306-07(3d. Cir. 2005) (citation and footnotes
omitted).
Because the lodestar award is de-coupled from the class recovery, the lodestar
assures counsel undertaking socially beneficial litigation (as legislatively
identified by the statutory fee shifting provision) an adequate fee irrespective of
the monetary value of the final relief achieved for the class.
In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prod. Liab. Litig., 55 F.3d 768, 821
(3d Cir. 1995)
At the time of filing their motion, Class Counsel had expended 40.9 hours on this
litigation, including 28.8 hours for attorney Marcus at an hourly rate of $425/hour and
12.1 hours for attorney Zelman at an hourly rate of $350/hour. Class Counsel’s total fees
to that point are therefore $16,475. In prosecuting this action, Class Counsel incurred
expenses of $2,618.61, including $400 for the filing fee; $55 for a process server;
35
$1,295.78 for flights to the deposition of Defendant’s representative; $43.33 for car rental
to the deposition; and $824.50 for the court reporting fee for the deposition. The lodestar
of Plaintiff’s combined fees and expenses in this matter is therefore $19,093.61. Plaintiff
requests a combined award of fees and expenses of $15,000. The lodestar multiplier in
this matter is therefore 0.79 — considerably less than 1. The Third Circuit has recognized
that “[m]ultiples ranging from one to four are frequently awarded in common fund cases
when the lodestar method is applied....” In re Prudential, 148 F.3d at 341. See In re Ins.
Brokerage Antitrust Litig., 579 F.3d 241, 284-85 (3d Cir. 2009) (affirming fee award
noting that lodestar multiplier was less than one).
After the filing of Plaintiff’s motion, the Court requested additional affidavits from
Class Counsel supporting their claimed hourly billing rates of $425/hour and $350/hour.
On January 3, 2018, Counsel submitted affidavits referencing other cases in which
comparable billing rates have been accepted by courts in this district and other districts in
this Circuit. Counsel’s affidavit also invites the Court to consider the 2015-2016 United
States Consumer Law Attorney Fee Survey Report, which identifies a New Jersey mean
average billable rate of $497 and median average rate of $450. Class Counsel’s affidavits
also provide updated hour expenditures for this matter, including 34.9 hours for attorney
Marcus and 14.5 hours for attorney Zelman. Class Counsel’s affidavits also indicate that
the portion of the hours in these updated totals devoted to travel time to Defendant’s
deposition has now been subjected to a reduced rate of 50%. Accordingly, despite the
now combined 49.4 hour total, Class Counsel claim only $12,975 for attorney Marcus
36
and $3,675 for attorney Zelman, for a total of $16,650 for 49.4 hours, compared with the
previous figure of $16,475 for 40.9 hours. Class Counsel’s expenses remain unchanged at
$2,618.61. Class Counsel’s updated fees and expenses therefore total $19,268.61. Class
Counsel continue to request $15,000 in combined fees and costs. The updated lodestar
multiplier in this case is therefore 0.78, remaining significantly less than 1.
Having reviewed Class Counsel’s affidavits, the Court declines to rule on whether
Counsel’s $425/hour and $350/hour fees are reasonable, in light of the fact that Class
Counsel’s fee request evidences far lower actual, effective average rates. Class Counsel
requests a combined $15,000 for fees and expenses, effectively $12,381.39 in fees and
$2,618.61 in expenses. Class Counsel’s effective, blended hourly rate is therefore
$251/hour ($12,381.39 in fees / 49.4 hours). This compares with the claimed blended
hourly rates of $402/hour in their original motion ($425/hour for Marcus and $350/hour
for Zelman) and $337/hour in their supplementary affidavits.
Applying the lodestar method, then, the Court finds that Class Counsel’s request
for $15,000 in fees and costs is reasonable and warranted.
37
B. Gunter Factors
The Third Circuit “require[s] district courts to clearly set forth their reasoning for
fee awards so that [the Circuit Court] will have a sufficient basis to review for abuse of
discretion.” In re Rite Aid Corp. Sec. Litig., 396 F.3d 294, 301 (3d Cir. 2005), as
amended (Feb. 25, 2005). A district court should consider seven factors when analyzing a
fee award in a common fund case:
(1) the size of the fund created and the number of persons benefitted;
(2) the presence or absence of substantial objections by members of the class to the
settlement terms and/or fees requested by counsel;
(3) the skill and efficiency of the attorneys involved;
(4) the complexity and duration of the litigation;
(5) the risk of nonpayment;
(6) the amount of time devoted to the case by plaintiffs' counsel; and
(7) the awards in similar cases.
Rite Aid, 396 F.3d at 301 (citing Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 195
n.1 (3d Cir. 2000). This list is not exhaustive. In Prudential, the Third Circuit noted
three other factors that may be relevant and important to consider: (1) the value of
benefits accruing to class members attributable to the efforts of class counsel as opposed
to the efforts of other groups, such as government agencies conducting investigations,
Prudential, 148 F.3d at 338; (2) the percentage fee that would have been negotiated had
the case been subject to a private contingent fee agreement at the time counsel was
retained, Id. at 340; and (3) any "innovative" terms of settlement, Id. at 339. The fee
38
award reasonableness factors "need not be applied in a formulaic way" because each case
is different, "and in certain cases, one factor may outweigh the rest." Rite Aid, 396 F.3d at
301 (quoting Gunter, 223 F.3d at 195 n.1). The Court may give some of these factors
less weight in evaluating a fee award. See In re Cendant, 264 F.3d at 283; Prudential,
148 F.3d at 339. Moreover, the analysis of the Gunter factors overlaps with the Girsh
factors used to assess the appropriateness of the settlement. In that regard, the Court will
refer to its earlier findings when reviewing this fee application.
1. The Fund Is Substantial and Confers a Benefit Upon The Class Members
The first Gunter factor “consider[s] the fee request in comparison to the size of the
fund created and the number of class members to be benefitted.” Rowe v. E.I. DuPont de
Nemours & Co., 2011 WL 3837106, at *18 (D.N.J. Aug. 26, 2011). That is because the
sheer magnitude of damages has a heavy impact on the amounts defendants are willing to
pay to settle their liability.
The proposed Settlement is favorable to the Settlement Class, and Participating
Class Members will receive an immediate benefit, in the form of notice and direct
monetary payments. The settlement is substantial and favorable to the Class because it
arguably constitutes the maximum possible recovery capped by statute. Up to 2,612 class
members will benefit from the Settlement Fund of $10,000, in the amount of roughly
$3.82 each. See Marcus Decl. at19. Further, the Notice, which was sent to all Class
Members, advised individuals of certain of their rights under the FDCPA. Thus, aside
39
from the monetary benefit, all Class Members benefitted from Class Counsel’s efforts. In
short, Class Counsel have conferred a real benefit to the Settlement Class.
2. Absence of Objection to the Fee Request
Here, Class Counsel have received no objections or opt outs. The Class Notice,
which was mailed to the last known address of the Settlement Class Members, informed
the members of the Settlement Class that, inter alia, that Class Counsel would request
fees not payable from the Settlement Fund. The Class Notice also advised all potential
Settlement Class Members of the option and process of objecting to any aspect of the
proposed Settlement.
As numerous district courts have held, the dearth of objections “strongly supports
approval of the requested fee.” In re Flonase Antitrust Litig., No. 08-cv-3149, 2013 WL
2915606, at *7 (E.D. Pa. June 14, 2013); see also In re Schering-Plough Corp. Enhance
ERISA Litig., No. 08-cv-1432, 2012 WL 1964451, at *6 (finding the “lack of objections
to the requested attorneys’ fees supports the request”); Moore v. Comcast Corp., No. 08cv-773, 2011 WL 238821, at *5 (recognizing as significant that “not one member of the
class ha[d] filed an objection to the settlement” despite the fact that notice was mailed to
35,360 class members). See Marcus Decl. at 20. The absence of the same strongly
supports approval of Class Counsel’s requested fee award. See Barel v. Bank of Am., 255
F.R.D. 393, 404 (E.D. Pa. 2009)(in approving fee request, stating “[i]mportantly, there
were no objections”).
40
The lack of any negative feedback after notice suggests that the Class generally
and overwhelmingly approves of the settlement. See Varacallo v. Mass. Mutual Life Ins.
Co., 226 F.R.D. 207, 237-38 (D.N.J. 2005) (finding exclusion and objection requests of
.06% and .003%, respectively, “extremely low” and indicative of class approval of the
settlement).
3. Class Counsel Prosecuted This Action With Skill And Efficiency
Class Counsel’s skill and efficiency is “measured by the quality of the result
achieved, the difficulties faced, the speed and efficiency of the recovery, the standing,
experience and expertise of the counsel, the skill and professionalism with which counsel
prosecuted the case and the performance and quality of opposing counsel.” Hall v. AT&T
Mobility LLC, No. CIV.A. 075325 JLL, 2010 WL 4053547, at *19 (D.N.J. Oct. 13,
2010).
The Settlement obtained for Plaintiff and the Settlement Class Members would not
have been achieved without the skill and experience of Class Counsel. As set forth in the
Marcus Declaration, Class Counsel are experienced and well versed in consumer class
action litigation. See Marcus Decl. at 2. Indeed, in this District, the attorneys comprising
Class Counsel previously served as class counsel in FDCPA class actions including
Jackson v. RMB, Inc., No. 14-cv-02204-MF (D.N.J 2015), Krady v. A-1 Collection
Agency, LLC No. 14-cv-7062-TJB (D.N.J. 2016), Willemsen v. Professional Recovery
Services, Inc. 14-cv-6421 JHR-AMD (D.N.J. 2016), O’Brien v. Waldman & Kaplan, P.A.
41
15-cv-7429 BRM-LHG (D.N.J. 2017), and Truglio v. CBE Group No. 15-cv-3813 (D.N.J
2017) along with several other FDCPA matters in other circuits. See Marcus Decl. at 2.
In prosecuting the Lawsuit, Class Counsel engaged in discovery, a deposition,
briefing and settlement negotiations with Defendant. See Marcus Decl. The success of the
settlement itself speaks to the skill and efficiency of Class Counsel. In re AremisSoft
Corp. Sec. Litig., 210 F.R.D. 109, 132 (D.N.J. 2002) (“‘the single clearest factor
reflecting the quality of class counsels’ services to the class are the results obtained’”)
(quoting Cullen v. Whitman Med. Corp., 197 F.R.D. 136, 149 (E.D. Pa. 2000)).
Moreover, the quality and vigor of opposing counsel is also important in
evaluating the services rendered by Class Counsel. See, e.g., Ikon, 194 F.R.D. at 194; In
re Warner Commc’ns Sec. Litig., 618 F. Supp. 735, 749 (S.D.N.Y. 1985) (“The quality of
opposing counsel is also important in evaluating the quality of plaintiffs’ counsels’
work.”), aff’d, 798 F.2d 35 (2d Cir. 1986). Here, Defendants were represented by able
counsel in Fineman, Krekstein & Harris, PC. Thus, the fact that Class Counsel achieved
this Settlement for the Class in the face of formidable legal opposition further evidences
the quality of their work.
4. The Complexity, Expense, and Likely Duration of Litigation Weigh in Favor of
the Court’s Award
The fourth Gunter factor is intended to capture “the probable costs, in both time
and money, of continued litigation” and favors the requested fee. See In re General
Motors, 55 F.3d at 812 (quoting Bryan v. Pittsburgh Plate Glass Co., 494 F.2d 799, 801
(3d Cir. 1974)).
42
Many hours of effort were expended in investigating Plaintiff and the Settlement
Class’s claims, discovery, preparing for and conducting a deposition, and subsequent
settlement negotiations. This Lawsuit involves additional risks, with arguably no
additional benefit to the Settlement Class given the fact that the FDCPA has a statutory
cap in damages. That Class Counsel was able to receive the statutory maximum recovery
in this case, and an amount that the Defendant contests is above the statutory maximum
recovery. Had the Lawsuit not settled, Class Counsel was prepared to devote substantial
additional time and effort to pressing the Settlement Class’ claims, including invariably
contested class certification and summary judgment motions.
5. Class Counsel Undertook the Risk of Non-Payment
Class Counsel undertook this action on an entirely contingent fee basis, taking the
risk that the litigation would yield no or very little recovery and leave it uncompensated
for its time, as well as for its out-of-pocket expenses. Courts across the country have
consistently recognized that the risk of receiving little or no recovery is a major factor in
considering an award of attorneys’ fees. In re Schering-Plough Corp. Enhance Sec. Litig.,
No. CIV.A. 08-2177 DMC, 2013 WL 5505744, at *28 (D.N.J. Oct. 1, 2013).
6. Class Counsel Spent Significant Time Investigating and Litigating the Case
The sixth Gunter factor looks at counsel’s time devoted to the litigation. Gunter,
223 F.3d at 199. This factor is usually considered with the lodestar to look at
reasonableness of counsel’s requested fee. I have reviewed the affidavits in this case and
find the 40.9 hours spent prosecuting this Lawsuit on behalf of Plaintiff and the
43
Settlement Class to be significant. See Marcus Decl. at 23. The hours spent were devoted
to, inter alia, work that was necessary to ultimately settle this matter. Indeed, it took
months of additional settlement negotiations between counsel, including numerous
conference calls and the exchange and revisions of numerous draft settlement documents,
before the Settlement could be agreed to by all Parties. See Marcus Decl. at 10.
Moreover, the hours expended by Class Counsel does not include the work Class
Counsel will expend overseeing the Settlement administration, including the distribution
of the Settlement’s proceeds. This additional work represents a material portion of time
that counsel will spend for the Settlement Class that is not reflected in the lodestar
calculation reflected above. See, e.g., In re Merck & Co., Inc. Vytorin ERISA Litig., No.
08-cv-285, 2010 WL 547613, at *11 (noting “the time dedicated and expenditures
incurred do not include costs that will arise immediately in the future, such as the
settlement hearing conducted before this Court”).
Accordingly, the number of hours devoted by Class Counsel to this Lawsuit
supports the requested fee award.
7. The Court’s Award Is Consistent With Awards in Similar Cases
See Good v. Nationwide Credit, Inc., 314 F.R.D. 141 (E.D. Pa. 2016)(In FDCPA
case, court approved $125,000 in negotiated attorney’s fees and costs separate and apart
from settlement fund representing the maximum statutory recovery, noting that “[e]ven if
the Court were to approve less than the $125,000 negotiated amount, the class would not
gain a greater recovery.”); Magness v. Walled Lake Credit Bureau, LLC, et al, No. 12-cv44
06586)(awarding $220,000 in attorney’s fees on an FDCPA settlement fund of
$500,000.00).
Indeed, courts commonly award attorney’s fees in FDCPA cases which, unlike
here, far exceed the amount of the settlement fund. See Volyansky v. Hayt, Hayt &
Landau, et al, No. 13-cv- 03360 (E.D. Pa.)(awarding $91,500.00 in attorney’s fees where
settlement fund was $7,500.00); Weissman v. Gutworth, No. 14-cv-00666, 2015 WL
3384592, (D.N.J., May 26, 2015) (awarding $20,000.00 in attorney’s fees on an FDCPA
settlement fund of $4,400), citing e.g., Harlan v. Transworld Sys., Inc., No. 13-cv-5882,
2015 WL 505400, at *11 (E.D.Pa. Feb.6, 2015) (finding attorneys’ fees and costs of
$44,450.00 reasonable where common fund was $22,900.00). Given that Class Counsel
here has obtained such a large recovery here, and seeks fees separate and apart from the
settlement fund, Class Counsel’s fee request is imminently reasonable.
45
B. Class Counsel’s Expenses Were Reasonable and Necessary to Litigate the Action
In the event of a successful enforcement action, the FDCPA mandates the award
of “the costs of the action” to plaintiff’s counsel. Gsell v. Rubin & Yates, LLC, No. 2:13cv-05723, 2014 U.S. Dist. LEXIS 123937 *21 (E.D. Pa. Sept. 4, 2014) citing 15 U.S.C. §
1692k(a)(3). In prosecuting this Lawsuit, Class Counsel have incurred $2,618.61 in
expenses. See Marcus Decl. at 26. These expenses reflect the costs typically associated
with litigating these types of claims. Although many of these expenses were incurred
more than a year ago, Class Counsel is seeking reimbursement of the actual expenses and
has not made any upward adjustment. Notably, this expense request is factored into the
combined $15,000 fee request.
C. Plaintiff is Entitled to an 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. 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, and to reward the
public service of contributing to the enforcement of mandatory laws.” Sullivan v. DB
Investments, Inc., 667 F.3d 273, 333 n. 65 (3d Cir. 2011) (quotations omitted)
Here, Mr. Beneli prosecuted his claims on behalf of the Settlement Class. He was
engaged during the litigation process and provided valuable assistance to Class Counsel.
This assistance included: (1) submitting to interviews with Class Counsel; (2) providing
Class Counsel with documents and information; (3) participating in conferences with
46
Class Counsel; and (4) conferring with Class Counsel regarding the parameters of any
proposed settlement. See Marcus Decl. at 34-36. These are the kinds of activities that
warrant reimbursement for class representatives for their lost wages and business
opportunities. ScheringPlough, 2013 WL 5505744, at *56 (reviewing pleadings,
corresponding with Class Counsel, and preparing for and attending mediation); In re Par
Pharm. Sec. Litig., No. CIV.A. 06-3226 ES, 2013 WL 3930091, at *11 (D.N.J. July 29,
2013) (similar); Schuler, 2016 WL 3457218, at *11 (reviewed filings, conferred with
class counsel, remained apprised about the case and the company); Yedlowski v. Roka
Bioscience, Inc., No. 14-CV-8020-FLW-TJB, 2016 WL 6661336, at *23 (D.N.J. Nov.
10, 2016) (same).
Accordingly, and in recognition of the substantial benefit he conferred on the
Settlement Class and his efforts generally, a modest Case Contribution Award of $500
above his statutory damage of $1,000 to Plaintiff is entirely appropriate. This request is
in-line with similar enhancement awards in analogous actions. See, e.g., Smith v. First
Union Mortgage Corp., No. 98-cv-5360, 1999 U.S. Dist. LEXIS 18299 (E.D. Pa. Dec. 1,
1999) (approving incentive award of $7,500 to two class representatives in an FDCPA
class Action settlement); Bonett, 2003 U.S. Dist. LEXIS 9757, *23 (award of $4,000 to
class representative to compensate her for “her service to the Class”); see also Barel v.
Bank of Am., 255 F.R.D. 393, 404 (E.D. Pa. 2009) (awarding $10,000 to named plaintiff
in FCRA class litigation). As with the other requests, no Settlement Class Member has
47
objected to Plaintiff’s requested Case Contribution Award. Importantly, this award is not
being paid from and does not dilute the Settlement Fund.
IX. CONCLUSION
The Court therefore certifies the proposed settlement class, approves the proposed
settlement, grants Class Counsel’s fee request in amount of $15,000.00, which includes
reimbursement of expenses, and grants Plaintiff David Beneli a Case Contribution Award
in the amount of $500.00 plus $1,000.00 in statutory damages.
Dated: _____2/6/2018_____________
/s/ Freda L. Wolfson
The Honorable Freda L. Wolfson
United States District Judge
48
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?