Babcock v. C. Tech Collections Inc. et al

Filing 46

CORRECTED ORDER granting (40) Motion to Certify Class in case 1:14-cv-03124-MDG; granting (26) Motion to Certify Class in case 2:14-cv-03576-MDG, and inter alia, certifying two settlement classes, approving class settlement, attorneys ' fees and cost and awarding a service award to plaintiffs. The Clerk of the Court is respectfully requested to close this case, but this Court retains jurisdiction over consummation and performance of the Settlement Agreement. Ordered by Magistrate Judge Marilyn D. Go on 3/27/2017. Associated Cases: 1:14-cv-03124-MDG, 2:14-cv-03576-MDG (Go, Marilyn) (Main Document 46 replaced on 3/27/2017) (Hugh, Lewis). Modified on 3/27/2017 (Hugh, Lewis).

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - - X
JENNIFER BABCOCK, an individual; on
behalf of herself and all others
similarly situated,
ORDER
Plaintiff,

1:14-CV-3124 (MDG)

- against C. TECH COLLECTIONS, INC., a New York
Corporation; JOEL R. MARCHIANO,
individually and in his official
capacity; JAMES W. ARGENT,
individually and in his official
capacity; CYNTHIA A. MICHELS,
individually and in her official
capacity; and JOHN AND JANE DOES
NUMBERS 1 THROUGH 50,
Defendants.
- - - - - - - - - - - - - - - - - - X
LINDA CAMPBELL-HICKS, individually
and on behalf of all others similarly
situated,

2:14-CV-3576 (MDG)

Plaintiff,
- against C. TECH COLLECTIONS, INC.,
Defendant.
- - - - - - - - - - - - - - - - - - X
GO, United States Magistrate Judge:
Plaintiffs Jennifer Babcock and Linda Campbell-Hicks brought
these consolidated actions alleging that defendants violated the
Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et

seq., by sending collection letters to consumers in which they
attempted to collect unlawful fees for payments made by credit
card.

Plaintiff Babcock additionally asserted a claim for

violation of § 349 of the New York General Business Law ("NY
GBL").

After consenting to having me hear all matters in this

action pursuant to 28 U.S.C. § 636(c), the parties have moved for
final certification of the provisionally certified class pursuant
to Fed. R. Civ. P. 23(a) and (b) and final approval of the
settlement of this class action pursuant to Fed. R. Civ. P.
23(e).
FACTUAL AND PROCEDURAL BACKGROUND
On May 19, 2014, plaintiff Babcock commenced her class
action on behalf of herself and similarly situated individuals
against C. Tech Collections, Inc. ("C. Tech") and its controlling
officers, Joel R. Marchiano, James W. Argent and Cynthia A.
Michels (the "Babcock Action").

On June 6, 2014, plaintiff

Campbell-Hicks filed her lawsuit against only C. Tech (the
"Campbell-Hicks Action").

Both plaintiffs allege in their

respective complaints that each and putative class members
received collection letters stating that a "$3.00 convenience fee
will be added for credit card payments."

Plaintiffs claim that

the letter is an unlawful attempt to collect an unauthorized fee
for payments made using a credit card, in violation of the FDCPA
and, as to the Babcock Complaint, section 349 of the New York

-2-

General Business.

See Babcock Action, DE 11 at ¶ 58 (alleging

violation of 15 U.S.C. §§ 1692e, 1692e(2)(A), 1692e(2)(B), 1692f,
and 1692f(1), and NY GBL § 349); Campbell-Hicks Action, DE 1 at
¶ 21 (alleging violation of 15 U.S.C. §§ 1692e, 1692e(2),
1692e(5), and 1692e(10)).
After engaging in written discovery, the parties began
settlement negotiations, including participating in several
settlement conferences by telephone and in person with the Court.
After the parties reached an agreement on the relief to the
class, plaintiffs filed a motion for conditional certification of
the class action and preliminary approval of the class action
settlement on July 13, 2015.

DE 30.

Plaintiffs also filed a

joint motion to consolidate the Babcock and Campbell-Hicks
actions.

DE 29.

At a hearing held on July 23, 2015, the Court granted the
parties' motion for consolidation.
7/23/15.

See minute entry dated

In the course of the hearing, the parties agreed to

amend the Settlement Agreement to provide that the agreed upon
service awards for the named plaintiffs would be subject to court
approval and any disallowed amounts would revert to the
settlement fund for class members.

Id.

On July 24, 2015,

plaintiffs filed an amended settlement agreement (the "Settlement
Agreement").

See DE 32.

1

Unless otherwise specified, future references to filed
documents shall be to the file number appearing on the docket
sheet of the Babcock Action.
-3-

This Court then entered an order granting both motions, (1)
conditionally certifying the proposed class for settlement
purposes, (2) preliminarily approving the Settlement Agreement,
(3) appointing plaintiffs' counsel as class counsel, and (4)
approving the proposed class notices of settlement of the
litigation.

See DE 33.

Specifically, this Court provisionally

certified a settlement class consisting of two subclasses, the
second of which was a subset of the first.

The classes are

defined as follows:
(1) All consumers to whom Defendants mailed a
written communication in connection with an
attempt to collect a debt, which included a
statement that a "$3.00 convenience fee will be
added for credit card payments," regardless of
whether such fee was paid or not, during a
period beginning May 19, 2013, and ending June
9, 2014 ("Class #1"); and
(2) All consumers to whom Defendants mailed a
written communication in connection with an
attempt to collect a debt, which included a
statement that a "$3.00 convenience fee will be
added for credit card payments," and who paid
such a fee, during a period beginning May 19,
2011, and ending June 9, 2014 ("Class #2").
Under the Settlement Agreement, the defendants agreed to
fund a settlement in the total amount of $90,726.00.

From this

fund, the named plaintiffs will each receive a payment of
$1,000.00 for their individual statutory damages claims under the
NY GBL, plus a service award of up to $3,500.00, subject to court
approval; and plaintiff Babcock will receive an additional
$153.00 for her claims brought under New York General Business
Law § 349 for actual damages sustained.
-4-

The remainder of the

settlement fund will be distributed to members of the two
subclasses who file timely claim forms.

A minimum of $12,000.00

will be made available to members of Class #1 and $69,573.00 will
be made available for Class # 2 members for actual damages
sustained -- i.e., reimbursement of all payments made to the
defendants for the $3.00 charge for payment by credit card.

Any

unclaimed portion of the $69,573.00 fund for Class #2 members and
any disallowed service award to the named plaintiffs will be
added to the fund for Class #1.

Each member of Class #1,

including each member of Class #2, who timely submits a claim
form is entitled to an equal2 portion of the total fund for Class
#1 members.

To the extent that there are any funds from un-

cashed, expired settlement checks, those funds will be paid over
to a cy pres award to be distributed to the National Consumer Law
Center.

The parties further agreed that plaintiffs are the

prevailing parties under 15 U.S.C. § 1692k, and that defendants
would pay reasonable attorneys' fees and costs, which the parties
would attempt to negotiate later.

2

The parties discussed at settlement conferences and
hearings on the motions for preliminary and final approval of the
settlement that the fund for Class #1 would be distributed
equally among class members. The notices sent to class members
stated the "Net Recovery Fund," which would consist of the
original $12,000 for statutory damages to Class #1 members, plus
unclaimed portions of the actual damages fund for Class #2
members and any disallowed service awards, would be divided
"equally" among all members of Class #1 and Class #2. See DE 402 at 9, 21. Although the plaintiffs refer in their submissions
and in the Settlement Agreement to a "pro rata" distribution of
funds to Class #1 members, this Court assumes that they meant a
per capita distribution to all class members who filed claims,
including plaintiffs.
-5-

On November 10, 2014, Babcock filed her motion for final
approval of the Class Settlement and indicated that 3,710 members
of the proposed classes had filed claims,3 eight persons had
requested to be excluded, and no one had objected.
Decl. (DE 40-2) at ¶¶ 9, 10.

Radetich

Of the 3,710 persons who returned a

claim form, 3,244 are from Class #1 and 466 are from Class #2.
Id. at ¶ 9.

At the fairness hearing, the Court granted

plaintiffs' unopposed motion to extend the time to submit claim
forms to November 17, 2015.

Such extension permits inclusion of

the late claims of James Joseph, Kelly Laterra, Janice Knight and
Cherylann Hionas.
45.

See minute entry dated 11/17/15; ct. docs. 42,

By the Court's calculation, each member of Class #1 will

receive approximately $21 and each member of Class #2 will
receive reimbursement of all actual damages sustained, plus a per
capita share of the fund for Class #1.
On the eve of the fairness hearing, plaintiff Babcock
entered into a stipulation with defendants in which defendants
agreed to pay $55,000 to counsel for Babcock for attorneys' fees
and costs.

See DE 40-3.

After the fairness hearing, plaintiff

Campbell-Hicks and defendant C. Tech entered into a stipulation
for payment of $30,000 to counsel for Campbell-Hicks for

3

This Court notes that Youssouf Diakite, Rosetta Rose and
Bernadette Pierre sent their signed proof of claim forms directly
to the Court prior to the deadline for filing claims. See DE 34,
35, and 37. Since these claims were timely sent, but may not
have been submitted to the Claims Administrator, this Court
directs plaintiffs' counsel to insure that these claimants are
included on the list of members of Class #1.
-6-

attorneys' fees and costs.
29.

See Campbell-Hicks Action, DE 29 at

These payments are separate and apart from the funds

provided under the Settlement Agreement.
DISCUSSION
I.

Final Certification of the Settlement Class
The Court certifies the following classes under Fed. R. Civ.

P. 23(e), for settlement purposes:
(1) All consumers to whom Defendants mailed a
written communication in connection with an
attempt to collect a debt, which included a
statement that a "$3.00 convenience fee will be
added for credit card payments," regardless of
whether such fee was paid or not, during a
period beginning May 19, 2013, and ending June
9, 2014 ("Class #1"); and
(2) All consumers to whom Defendants mailed a
written communication in connection with an
attempt to collect a debt, which included a
statement that a "$3.00 convenience fee will be
added for credit card payments," and who paid
such a fee, during a period beginning May 19,
2011, and ending June 9, 2014 ("Class #2").
This Court finds that plaintiffs meet all of the
requirements for class certification under Fed. R. Civ. P. 23(a)
and (b)(3).

Rule 23(a) of the Federal Rules of Civil Procedure

requires that any proposed class action: "(1) be sufficiently
numerous, (2) involve questions of law or fact common to the
class, (3) involve class plaintiffs whose claims are typical of
those of the class, and (4) involve a class representative or
representatives who adequately represent the interests of the
class."

Myers v. Hertz Corp., 624 F.3d 537, 547 (2d Cir. 2010).

-7-

Plaintiffs satisfy Fed. R. Civ. P. 23(a)(1) because there
are over 70,000 potential class members and therefore joinder is
impracticable.

See Consol. Rail. Corp. v. Town of Hyde Park, 47

F.3d 473, 483 (2d Cir. 1995) ("numerosity is presumed at a level
of 40 members").
Plaintiffs satisfy Fed. R. Civ. P. 23(a)(2), because
plaintiffs and the class members share common issues of fact and
law.

The claims all arise from the same boilerplate collection

letter sent by the defendants imposing a $3.00 charge for
payments made by credit card. See Marisol A. ex rel. Forbes v.
Giuliani, 126 F.3d 372, 376 (2d Cir.1997) ("The commonality
requirement is met if plaintiffs' grievances share a common
question of law or of fact").
For the same reasons, plaintiffs satisfy Fed. R. Civ. P.
23(a)(3), typicality, because plaintiffs claims arise from the
same factual and legal circumstances as those of the class
members.

See Prasker v. Asia Five Eight LLC, No. 08 Civ. 5811,

2010 WL 476009, at *2 (S.D.N.Y. Jan. 6, 2010).
Plaintiffs also satisfy Fed. R. Civ. P. 23(a)(4) which
requires that "the interests of the class" be "fairly and
adequately protect[ed]."

In making such a determination, the

court must make sure that the members of the class possess the
same interests, and that no fundamental conflicts exist among the
members.
2006).

Denney v. Deutsche Bank AG, 443 F.3d 253, 268 (2d Cir.

Plaintiffs' interests clearly are not antagonistic or at

odds with the class members.

See Diaz v. Eastern Locating
-8-

Servs., Inc., 10 Civ. 4082, 2010 WL 2945556, at *2 (S.D.N.Y. July
22, 2010); Prasker, 2010 WL 476009, at *2.
Plaintiffs also satisfy the requirements of Rule 23(b)(3).
This requirement is met "if resolution of some of the legal or
factual issues that qualify each class member's case as a genuine
controversy can be achieved through generalized proof, and if
these particular issues are more substantial than the issues
subject only to individualized proof."

Myers, 624 F.3d at 547

(internal citation and quotation marks omitted).

Plaintiffs'

common legal claims clearly predominate over any factual or legal
variations among class members given the allegations in the
complaint.

See Diaz, 2010 WL 2945556, at *2; Prasker, 2010 WL

476009, at *2.

For the same reason, plaintiffs satisfy the

superiority requirement because the class action mechanism will
enable disposition of thousands of similar claims in one forum,
conserving judicial resources and benefitting class members,
particularly those who lack the resources to bring their claims
individually.

See Rodolico v. Unisys Corp., 199 F.R.D. 468,

479–80 (E.D.N.Y. 2001) (class actions provide a superior method
for "the efficient resolution of the claims or liabilities of
many individuals in a single action, as well as the elimination
of repetitious litigation and possibly inconsistent
adjudications").
II.

Approval of the Settlement Agreement
In evaluating a proposed settlement under Rule 23(e) of the

-9-

Federal Rules of Civil Procedure, the Court must determine
whether the settlement, taken as a whole, is fair, reasonable and
adequate.

See Joel A. v. Giuliani, 218 F.3d at 138.

Settlements

are strongly favored as a matter of policy, because, "[b]y
lessening docket congestion, settlements make it possible for the
judicial system to operate more efficiently and more fairly while
affording plaintiffs an opportunity to obtain relief at an
earlier time."

Evans v. Jeff D., 475 U.S. 717, 761 n.15 (1986).

Courts should exercise their discretion "in light of the general
judicial policy favoring settlement.'"

In re Sumitomo Copper

Litig., 189 F.R.D. 274, 280 (S.D.N.Y. 1999) (citation omitted);
accord Maley v. Del Global Tech. Corp., 186 F. Supp. 2d 358, 361
(S.D.N.Y. 2002).
A court evaluating the fairness of a settlement should
examine both procedural and substantive fairness.

Wal–Mart

Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir.
2005), citing D'Amato v. Deutsche Bank, 236 F.3d 78, 85-86 (2d
Cir. 2001).
A.

Procedural Fairness

In reviewing the procedural fairness of a settlement, a
court "must pay close attention to the negotiating process, to
ensure that the settlement resulted from 'arm's-length
negotiations and that plaintiffs' counsel have possessed the
experience and ability, and have engaged in the discovery
necessary to effective representation of the class's interests.'"
D'Amato, 236 F.3d at 85 (quoting Weinberger v. Kendrick, 698 F.2d
-10-

61, 74 (2d Cir. 1982)).

A proposed class action settlement

enjoys a strong presumption that it is fair, reasonable and
adequate if, as is the case here, it was the product of arm's
length negotiations conducted by capable counsel, well
experienced in class action litigation.

See Wal-Mart Stores,

Inc. v. Visa U.S.A. Inc., 396 F.3d 96, 117 (2d Cir. 2005); see
also McReynolds v. Richards–Cantave, 588 F.3d 790, 803 (2d Cir.
2009).

In addition, "[i]n appraising the fairness of a proposed

settlement, the view of experienced counsel favoring the
settlement is 'entitled to [] great weight' . . . . [and] there
is thus a strong initial presumption that the compromise as
negotiated herein under the [c]ourt's supervision is fair and
reasonable."

In re Michael Milken and Assocs. Sec. Litig., 150

F.R.D. 46, 54 (S.D.N.Y. 1993) (internal citation omitted).
The parties reached this settlement after the parties had
conducted discovery regarding the boilerplate letter at issue.
Defendants had provided documents and interrogatory responses
with information regarding class size, net worth, identification
of all potential class members and damages calculations.

See

letter dated Dec. 19, 2014 (DE 23) of Arthur Sanders, counsel for
defendant.

The parties then participated in extended settlement

negotiations under Court supervision, and reached agreement on
the terms of the class settlement before settling the amount of
fees.
Significantly, plaintiffs' counsel recommend that this Court
approve the settlement.

Mr. Kleinman, Mr. Thomasson, Mr. Mauro
-11-

and Mr. Bromberg are all attorneys with substantial experience
litigating consumer class actions and FDCPA claims, and devoted
substantial time identifying, investigating, and settling the
claims in this action.

They advised that they also analyzed the

evidence with the assistance of experts.

This Court had the

opportunity to observe counsel's performance in this action at a
number of status, discovery and settlement conferences, and finds
that their performance in both litigating and settling this case
demonstrate their commitment to the Class and to representing the
Class' interests.
Based on the Court's close supervision of the settlement
process, this Court finds that the settlement was a product of
extensive arm's length negotiations by experienced counsel.
There is no hint of coercion or collusion that affected the
process.

See In re Holocaust Victim Assets Litig., 105 F. Supp.

2d 139, 146 (E.D.N.Y. 2000) (citing In re Warner Communications
Sec. Litig., 798 F.2d 35, 37 (2d Cir. 1986)).

Given these

circumstances, the presumption of procedural fairness applies and
I find the settlement procedurally fair.

In re Wal-Mart Stores,

396 F.3d at 116.
B.

Substantive Fairness

In evaluating the substantive fairness a class action
settlement, district courts must consider the nine Grinnell
factors enumerated by the Second Circuit: (1) the complexity,
expense and likely duration of the litigation; (2) the reaction

-12-

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.

City of Detroit

v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974).
In applying these factors, the Court may neither substitute
its judgment for that of the parties who negotiated the
settlement nor conduct a mini-trial of the merits of the action.
See Weinberger, 698 F.2d at 74.

Rather, the Court must determine

whether the settlement is within a range that reasonable and
experienced attorneys could accept considering all relevant
risks, facts and circumstances.

See Weinberger, 698 F.2d at 74;

Grinnell, 495 F.2d at 455.
The settlement is substantively fair because all of the
factors set forth in Grinnell weigh in favor of final approval.
1.

Complexity, Expense and Likely Duration of
Litigation

Although this case is not complex, continuing this
litigation would have resulted in delay and further expense.

A

trial and any post-judgment motions and appeals would have
required further expenditure of both time and money.

-13-

Absent a

settlement, the costs incurred by continuing this litigation
would likely have outweighed any potential recovery, particularly
in light of the cap on statutory damages, as discussed below.

In

addition, the delay inherent in further litigation would reduce
the value of any potential recovery.
at 361-62.

See Maley, 186 F. Supp. 2d

On the other hand, the settlement provides certain

compensation to the class members now, rather than awaiting an
eventual resolution that would result in further expense without
any definite benefit to class members.
2.

Reaction of the Class

"It is well-settled that the reaction of the class to the
settlement is perhaps the most significant factor to be weighed
in considering its adequacy."

Maley, 186 F. Supp. 2d at 362-63.

As discussed in further detail below, the notices of the
settlement, which explained the formula for calculating each
class member's award and informed class members of their right to
object or to exclude themselves from the settlement, was sent to
eligible individuals and 3,710 class members filed claims.

No

class member objected to the settlement and eight persons sought
to be excluded from the class.4

This factor weighs in favor of

4

Class member Sophia Morgan submitted a claim form and
appeared at the fairness hearing. She apparently incorrectly
believed that she would be receiving the entire settlement fund,
rather than a portion. After being advised how her share of the
settlement would be determined, she expressed a desire to
withdraw her claim and opt-out of the settlement. I directed her
to confer with Mr. Kleinman as to whether she wanted to persist
in withdrawing her claim. Mr. Kleinman subsequently advised that
he called and left a voicemail message to which she did not
(continued...)
-14-

approval of the settlement.

See Beckman v. KeyBank, N.A., 293

F.R.D. 467, 475 (S.D.N.Y. 2013) (concluding class reaction was
positive where none objected and eight of 1,735 members opted
out); see also Wright v. Stern, 553 F.Supp.2d 337, 345 (S.D.N.Y.
2008) (Chin, D.J.) ("The fact that the vast majority of class
members neither objected nor opted out is a strong indication
that the proposed settlement is fair, reasonable, and adequate");
Prasker, 2010 WL 476009, at *4 (granting final approval where no
class members objected and only 2 class members opted out).
3.

The Stage of the Proceedings and Amount of
Discovery Completed

The stage of the proceedings and the amount of discovery
completed are evaluated to ensure that the parties "have a clear
view of the strengths and weaknesses of their cases."

In re

Warner Comm. Sec. Litig., 618 F. Supp. 735, 745 (S.D.N.Y. 1985),
aff'd, 798 F.2d 35 (2d Cir. 1986).

This litigation settled after

defendant provided written discovery concerning the extent of the
class, net worth and the amounts that were collected from class
members.

The discovery obtained was sufficient for plaintiffs'

counsel to analyze the merits of the case and damages before
engaging in settlement negotiations.

See Maley, 186 F. Supp. 2d

at 364. Thus, this factor weighs in favor of approving the
settlement.

4

(...continued)
respond. See Exh. C to Mr. Thomasson's Nov. 24, 2015 letter, DE
43. Since Ms. Morgan has not submitted any further communication
evidencing her desire to withdraw her claim or commenced a
separate action, she should be included as a member of Class #1.
-15-

4.

Risks in Establishing Liability and Damages and
Maintaining the Class Action Through Trial

The fourth, fifth and sixth Grinnell factors also support
final approval.

"Litigation inherently involves risks," both in

establishing liability and damages. In re PaineWebber Ltd.
P'ships Litig., 171 F.R.D. 104, 126 (S.D.N.Y. 1997), aff'd, 117
F.3d 721 (2d Cir. 1997).

One purpose of a settlement is to avoid

the uncertainty of a trial on the merits.
Defendant had initially denied liability and expressed its
intent to oppose class certification.

Even if the Court were to

grant a class certification motion, the defendants could seek to
file a Fed. Rule Civ. Proc. 23(f) appeal or later move to
decertify, which would require additional rounds of briefing and
delay.

Settlement eliminates the risk, expense and delay

inherent in the litigation process.

See Campos v. Goode, No.

Civ. 224, 2011 U.S. Dist. LEXIS 22959, at *14 (S.D.N.Y. Mar.
2011).
5.

Collectibility and Defendants' Ability to
Withstand a Greater Judgment

It is not certain that defendant could withstand a greater
judgment.
damages.

Defendants' insurer disclaimed coverage for actual
Moreover, recovery in FDCPA class actions is limited to

$1,000 statutory damages for each named plaintiff, and the lesser
of $500,000 or one percent of the net worth of the "debt
collector" defendant.

See 15 U.S.C. § 1692k(a)(2)(B).

Also,

recovery under the NY GBL § 349(h) is limited to actual damages.
Given these limitations on damages recoverable, the plaintiffs
-16-

are not likely to obtain a larger judgment at trial since the
settlement amount to the settlement class represents that maximum
actual and statutory damages allowable under the FDCPA and the NY
GBL.

See Mem. of Law in Support of Consent Motion for an Order

of Approval, p. 17 (DE 40-1).

Counsels' concern that defendants'

resources would be depleted had the cases proceeded to trial, was
a significant factor in plaintiffs' decision to settle their
claims and, in this Court's view, weighs in favor of approval.5
See id.;

Maley, 186 F. Supp. 2d at 365 (considering defendant's

"dire financial condition" and recognizing that "obtaining a
greater recovery than provided by the settlement would have been
difficult").
6.

The Range of Reasonableness of the Settlement
Amount in Light of the Best Possible Recovery
and All Risks of Litigation

The determination of a reasonable settlement "'is not
susceptible of a mathematical equation yielding a particularized
sum,' but turns on whether the settlement falls within 'a range
of reasonableness.'"

In re PaineWebber Ltd. P'ship Litig., 171

5

In earlier discussions regarding the statutory cap on
damages based on net worth of the defendants, the parties were in
agreement as to the net worth of C. Tech. It is not clear
whether the net worth of the individual defendants also factored
into discussions. However, there is an absence of any specific
allegations in the complaint regarding the conduct of the
individual defendants. Although courts in the Second Circuit
have held that individuals may be found personally liable for
engaging in prohibited conduct, dismissal of the complaint is
appropriate where there is no specific conduct alleged. Allison
v. Whitman & Meyers, LLC, No. 13 CV 696, 2015 WL 860757, at *2–3
(W.D.N.Y. Feb. 27, 2015) (citations omitted). In any event,
collection from individuals frequently poses even more problems
than from businesses with limited assets and income.
-17-

F.R.D. at 130) (quoting Milken, 150 F.R.D. at 66).

As the Second

Circuit has noted, "[t]he 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."
455.

Grinnell, 495 F.2d at

"In fact, there is no reason, at least in theory, why a

satisfactory settlement could not amount to a hundredth or even a
thousandth part of a single percent of the potential recovery."
Id. at 455 n.2.
Assuming that plaintiffs could have obtained a judgment in
their favor, any victory may be illusory since plaintiffs would
not likely obtain a larger judgment, due to potentially
applicable statutory limitations on damages.

In any event, class

members are not likely to receive more than what they will
receive under the Settlement Agreement, since class members who
suffered actual damages will be made whole and the consumers who
did not pay any convenience charge will receive more than they
would recover had there not been a settlement.

See Lizondro-

Garcia v. Kefi LLC, 300 F.R.D. 169, 180 (S.D.N.Y. 2014)
(preliminarily approving settlement as being within range of
reasonableness where plaintiffs would receive nearly all of their
actual damages"); Ceka v. PBM/CMSI Inc., No. 12 Civ. 1711, 2014
WL 6812127, at *1 (S.D.N.Y. Dec. 2, 2014).
Thus, this Court finds that the settlement reached is well
within the range of reasonableness given the risks and delay of
continued litigation measured against the value of obtaining
-18-

certain compensation more quickly.

See Gilliam v. Addicts Rehab

Ctr. Fund, 2008 WL 782596, at *5 (S.D.N.Y. 2008); In re "Agent
Orange" Prod. Liab. Litig., 611 F. Supp. 1396, 1405 (E.D.N.Y.
1985) ("much of the value of a settlement lies in the ability to
make funds available promptly").
7.

The Plan of Allocation

The plan of allocation must be fair and adequate.
186 F. Supp. 2d at 367.

Maley,

"An allocation formula need only have a

reasonable, rational basis, particularly if recommended by
experienced and competent class counsel."

Id.

In determining

whether a plan of allocation is fair, courts look primarily to
the opinion of counsel.

See PaineWebber, 171 F.R.D. at 133.

That is, "[a]s a general rule, the adequacy of an allocation plan
turns on whether counsel has properly apprised itself of the
merits of all claims, and whether the proposed apportionment is
fair and reasonable in light of that information."

Id.

Courts also consider the reaction of the class to a plan of
allocation.

See Maley, 186 F. Supp. 2d at 367; PaineWebber, 171

F.R.D. at 126.

The notices to class members, which this Court

reviewed and approved, were sent to 79,239 eligible individuals
for whom plaintiffs' counsel and the Claims Administrator were
able to obtain addresses.
In light of the views of counsel, the lack of objections by
class members, the settlement amounts to be paid, and the
attendant risks of litigation, I find that the settlement
provides the class a fair recovery for all class members.
-19-

In sum, because all the relevant factors weigh in favor of
the settlement, I hereby grant the motion for final approval and
unconditionally approve the settlement as set forth in the
Settlement Agreement.
III. Dissemination of the Notices
This Court previously reviewed the notices to prospective
class members.

As discussed at the hearing for preliminary

approval of the settlement, the notices fairly and adequately
advised class members of the terms of the settlement, as well as
the right of members to opt out of the class, to object to the
settlement and to appear at the fairness hearing.
Brian Radetich, Client Service Manager for Heffler Claims
Group (the "Claims Administrator") states in his declaration (DE
49-2, "Radetich Decl.") that notices of the settlement were
timely sent by first-class mail to each eligible individual.

See

id. at ¶ 4-7. After receiving addresses from class counsel, the
Claims Administrator first updated the list through the USPS
Change of Address database before mailing notices to class
members.

Id. at ¶ 4.

The Claims Administrator mailed notices to

79,239 potential class members, and after receiving 1,587
returned notices, re-mailed notices to 947 class members for whom
the administrator was able to obtain updated mailing or
forwarding addresses.

Id. at ¶ 8.

This Court finds that Class Members were provided the best
notice practicable under the circumstances and that the notice

-20-

and distribution of such notices comported with all
constitutional requirements, including due process.
Finally, the Court approves Heffler Claims Group as the
Claims Administrator.

This company is experienced in handling

class action settlements.
IV.

Radetich Decl. at ¶¶ 2-3.

Service Award to Plaintiffs
Plaintiffs Jennifer Babcock and Linda Campbell-Hicks, the

Class Representatives, each seek service awards of $3,500.00,6 in
addition to the statutory damages of $1,000 they will receive
under the Settlement Agreement, as well the actual damages of
$153.00 to Ms. Babcock.
Incentive awards are common in class action cases and are
important to compensate plaintiffs for the time and effort
expended in assisting the prosecution of the litigation, the
risks incurred by becoming and continuing as a litigant and any
other burdens sustained by the plaintiffs.

See Parker v. Jekyll

& Hyde Entm't Holdings, LLC, 2010 WL 532960, at *1 (S.D.N.Y.
2010); McMahon v. Oliver Cheng Catering and Events, LLC, 2010 WL
2399328, at *8-9 (S.D.N.Y. 2010); see also Roberts v. Texaco,
Inc., 979 F. Supp. 185, 200-01 (S.D.N.Y. 1997).
within the discretion of the court.

Such awards are

See Frank v. Eastman Kodak

Co., 228 F.R.D. 174, 187 (W.D.N.Y. 2005) (quoting Roberts v.

6

In his post-fairness hearing declaration, counsel Joseph
Mauro confusingly stated that the defendant had agreed to pay his
client, plaintiff Campbell-Hicks, "an incentive award of
$4,000.00, upon the Court's approval." See Decl. of Plaintiff's
Attorney Joseph Mauro at ¶ 13 (DE 29).
-21-

Texaco, Inc., 979 F. Supp. 185, 200 (S.D.N.Y. 1997)).

"'Courts

look for the existence of special circumstances when determining
whether an award is justified and, if so, in what amount.'"
Torres v. Toback, Bernstein & Reiss LLP, No. 11-CV-1368, 2014 WL
1330957, at *2 (E.D.N.Y. Mar. 31, 2014) (quoting In re AOL Time
Warner ERISA Litig., No. 02 Civ. 8853, 2007 WL 3145111, at *2
(S.D.N.Y. Oct. 26, 2007)).

"Such circumstances include the

personal risk (if any) incurred by the plaintiff applicant in
becoming and continuing as a litigant, the time and effort
expended by that plaintiff in assisting in the prosecution of the
litigation or in bringing to bear added value (e.g., factual
expertise), any other burdens sustained by that plaintiff in
lending himself or herself to the prosecution of the claim and of
course, the ultimate recovery."

Frank, 228 F.R.D. at 187

(quoting Roberts, 979 F. Supp. at 200).
Class counsel state that Ms. Campbell-Hicks attended one of
the settlement conferences held by the Court and both class
representatives were actively engaged in consulting with their
counsel regarding the actions.

However, there has been no

showing that plaintiffs bore any risk in prosecuting this action,
incurred out-of-pocket expenses or devoted a significant amount
of time on tasks related to this litigation.

The plaintiffs were

not deposed nor were they required to execute declarations or
other writings to be filed in this action prior to settlement.
Moreover, the proposed $3,500 award is multiples of the $1,000
maximum statutory damages that plaintiffs would have recovered
-22-

had they brought individual actions.

In fact, under the

settlement, plaintiffs will receive both the maximum statutory
damages and incentive awards which are significantly more than
the recovery afforded class members under the settlement.

See

Torres, 2014 WL 1330957, at *4 (expressing concern over "grossly
disproportionate" incentive award of $8,500 compared to $60 or
$67 for class members); Sheppard v. Consol. Edison Co. of N.Y.,
Inc., No. 94-CV-403, 2002 WL 2003206, at *6 (E.D.N.Y. Aug. 1,
2002) (proposed incentive award "grossly disproportionate to the
compensation to be paid to the absent class members the
plaintiffs seek to represent").

Nonetheless, some service award

is appropriate since the named plaintiffs did contribute to a
successful class action suit.

Thus, I approve a service award to

each plaintiff of $2,500, which I find is more than reasonable
under the circumstances.

See Ortiz v. Chop't Creative Salad Co.

LLC, 89 F. Supp. 3d 573, 582-83 (S.D.N.Y. 2015) (denying
incentive award); Torres, 2014 WL 1330957, at *4 (suggesting
$1,000 incentive ward is appropriate in FDCPA case); Zimmerman v.
Portfolio Recovery Assocs., LLC, No. 09 Civ. 4602, 2013 WL
1245552, at *8 (S.D.N.Y. Mar. 27, 2013) (denying incentive award
in FDCPA case); In re AOL Time Warner, 2007 WL 3145111, at *4
(reducing incentive awards from $20,000 to $1,000 and $500).

In

accordance with the parties' agreement, the disallowed portion of
the service award in the amount of $2,000 should be added to the
$12,000.00 fund for Class #1.

-23-

V.

Attorneys' Fees
Attorneys who create a common fund from which members of a

class are compensated are entitled to "a reasonable fee--set by
the court--to be taken from the fund."

Goldberger v. Integrated

Resources, Inc., 209 F.3d 43, 47 (2d Cir. 2000) (internal
citation omitted).

"What constitutes a reasonable fee is

properly committed to the sound discretion of the district
court[.]"

Id. at 47.

In a case where the requested attorneys'

fees will be paid directly by defendant rather than drawn from a
common fund, "the Court's fiduciary role in overseeing the award
is greatly reduced, because there is not conflict of interest
between attorneys and class members."

Dupler v. Costco Wholesale

Corp., 705 F. Supp. 2d 231, 243 (E.D.N.Y. 2010) (quoting McBean
v. City of N.Y., 233 F.R.D. 377, 392 (S.D.N.Y. 2006)).

In fact,

the parties here did not negotiate the amount of attorneys' fees
to be paid by defendants until after an agreement was reached on
the amount of money to be paid to the class.

Since the amount of

the attorneys' fee will not affect the class recovery, this
weighs in favor of finding the fee reasonable.

See Shapiro v. JP

Morgan Chase, No. 11 Civ. 8331, 2014 WL 1224666, at *25
(S.D.N.Y. Mar. 24, 2014); Dupler, 705 F. Supp. 2d at 243; In re
Sony SXRD Rear Projection Television Class Action Litig., No. 06
Civ. 5173, 2008 WL 195267, at *15 (S.D.N.Y. May 1, 2008).
Fees may be awarded under either the lodestar or percentage
of the funds methods, but in this Circuit, the percentage method
is the "trend."

McDaniel v. County of Schenectady, 595 F.3d 411,
-24-

417 (2d Cir. 2010); Wal-Mart Stores, 396 F.3d at 121.

This is

because:
[T]he percentage method directly aligns the interests
of the class and its counsel and provides a powerful
incentive for the efficient prosecution and early
resolution of litigation . . . . [It] is also the most
efficient means of rewarding the work of class action
attorneys, and avoids the wasteful and burdensome
process - to both counsel and the courts - of preparing
and evaluating fee petitions . . . .
In re Lloyd's American Trust Litig., No. 96 Civ. 1262, 2002 WL
31663577, at *25 (S.D.N.Y. Nov. 26, 2002).

In addition, the

percentage method is intended to mirror the private marketplace
where contingent fee attorneys typically negotiate percentage fee
arrangements with their clients.

See In re Am. Bank Note

Holographics, Inc., 127 F. Supp. 2d 418, 432 (S.D.N.Y. 2001).
However, either approach is appropriate.

See McDaniel, 595 F.3d

at 419.
Regardless of which method is utilized, courts in this
Circuit must consider the following factors in determining what
constitutes a reasonable fee: (1) the time and labor expended by
counsel; (2) the magnitude and complexities of the litigation;
(3) the risk of the litigation; (4) the quality of
representation; (5) the requested fee in relation to the
settlement; and (6) public policy considerations.

See

Goldberger, 209 F.3d at 50.
If the Court were to employ the percentage method in this
case, the fees and costs sought would amount to approximately 48%
of the approximately $175,000 total settlement.

-25-

Such a high

percentage is permissible, however, because fees were negotiated
after an agreement was reached on the class members' recovery and
because higher percentages are generally allowed for relatively
small total settlements.

See Seekamp v. It's Huge, Inc., No. 09-

CV-18, 2014 WL 7272960, at *1 (N.D.N.Y. Dec. 18, 2014); In re
Independent Energy Holdings PLC, No. 00 Civ. 6689, 2003 WL
22244676, at *6 (S.D.N.Y. Sept. 29, 2003) ("the percentage used
in calculating any given fee award must follow a sliding-scale
and must bear an inverse relationship to the amount of the
settlement"); see also Savoie v. Merchants Bank, 166 F.3d 456,
461 (2d Cir. 1999) (affirming use of lodestar approach where
attorneys' fees were determined after settlement payment to
class).
On the other hand, the FDCPA allows for an award of "the
costs of the action, together with a reasonable attorney's fee as
determined by the court."

See 15 U.S.C. § 1692k(a)(3).

Statutory fee shifting provisions are designed in part to secure
counsel for plaintiffs whose claims are too small to attract
qualified counsel under traditional fee arrangements.

See Tucker

v. City of New York, 704 F. Supp. 2d 347, 359 n.10 (S.D.N.Y.
2010) (requiring proportionality in small cases "would generate
fees so low that they would attract only lawyers willing, in
effect, to appear pro bono or to accept being vastly
undercompensated"); Estrella v. P.R. Painting Corp., 596 F. Supp.
2d 723, 727 (E.D.N.Y. 2009); Baird v. Boies, Schiller & Flexner
LLP, 219 F. Supp. 2d 510, 520 n.7 (S.D.N.Y. 2002).
-26-

In this case,

given the efforts expended by counsel which benefitted not only
the individual plaintiffs but class members, a larger percentage
is necessary to compensate counsel for the work completed.

See

Frank, 228 F.R.D. at 189.
Under the lodestar method, the "lodestar" is calculated by
using "the number of hours reasonably expended on the litigation
multiplied by a reasonable hourly rate," which results in a
"presumptively reasonable fee."

Hensley v. Eckerhart, 461 U.S.

424, 433 (1983); Arbor Hill Concerned Citizens Neighborhood Ass'n
v. Cty. of Albany, 522 F.3d 182, 188-90 (2d Cir. 2008); see also
Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 551-53 (2010)
(discussing lodestar methodology).

A reasonable hourly rate is

"the rate a paying client would be willing to pay," "bear[ing] in
mind that a reasonable paying client wishes to spend the minimum
necessary to litigate the case effectively."
F.3d at 190.

Arbor Hill, 522

Reasonable hourly rates should be based on "rates

prevailing in the community for similar services of lawyers of
reasonably comparable skill, experience, and reputation."

Cruz

v. Local Union No. 3 of IBEW, 34 F.3d 1148, 1159 (2d Cir. 1994)
(citing Blum v. Stenson, 465 U.S. 886, 894 (1984)).

The

determination of the prevailing market rates may be based on
evidence presented or a judge's own knowledge of hourly rates
charged in the community.

See Farbotko v. Clinton County of New

York, 433 F.3d 204, 209 (2d Cir. 2005); Chambless v. Masters,
Mates & Pilots Pension Plan, 885 F.2d 1053, 1059 (2d Cir. 1989).

-27-

The "community" is generally considered the district where the
district court sits.

See Arbor Hill, 522 F.3d at 190.

Plaintiff Babcock requests attorneys' fees and costs in the
amount of $55,000 and plaintiff Campbell-Hicks requests fees of
$30,000.

Plaintiff Babcock's counsel provide billing records

reflecting 239.887 hours of work that Mr. Bromberg and Mr. Mauro
performed at an hourly rate of $350, and $1,307.47 in costs
incurred; and counsel for plaintiff Campbell-Hicks provide
records reflecting approximately 89 hours of work by Mr. Kleinman
and Mr. Thomasson billed at an hourly rate of $300,8 and $475 in
costs incurred. See Thomasson Decl. (DE 40-3) at ¶¶ 17, 18, 22;
Kleinman Decl. (DE 40-4) at ¶ 8; letter from Andrew T. Thomasson
dated November 24, 2015 and attachments (DE 43); letter from
Andrew T. Thomasson dated November 30, 2015 and attachment (DE
44); Bromberg Decl. (DE 30 in Campbell-Hicks Action) at ¶¶ 3, 36;
Mauro Decl. (DE 29 in Campbell-Hicks Action) at ¶¶ 3, 16.
Applying the lodestar method, the award plaintiff CampbellHicks' counsel seeks is slightly less than the amount they could
have charged a client.

Similarly, the fees sought by counsel for

plaintiff Babcock are less than their lodestar, even after Mr.
Thomasson took a 20% reduction to account for any duplication and

7

In their declarations, Babcock's counsel claim that they
spent 254.1 hours litigating this case but their billing records
show 239.88 hours.
8

Although Mr. Kleinman states in his declaration that his
billing rate is $350 per hour, his billing records reflect a rate
of $300 per hour.
-28-

omitted billings for time spent by his law clerk and seeks no
multiplier.

See Thomasson Decl. at ¶ 17.

In addition, the fees

sought are inclusive of any expenses incurred.
The rates requested of $300-$350 per hour are within the
range of reasonableness for FDCPA attorneys of similar background
and experience.

See Douyon v. NY Med. Health Care, P.C., 49 F.

Supp. 2d 328, 347 (E.D.N.Y. 2014) (approving rates in FDCPA case
of $325-$400 per hour); Tito v. Rubin & Rothman, LLC, 2014 WL
1092845, at *3 (E.D.N.Y. 2014) (discussing range of partner rates
in FDCPA cases of $300-$400 per hour).

After reviewing the

detailed time records submitted by class counsel, this Court also
finds the time spent litigating this action was appropriate for
the work completed.

While there may have been some duplication

of work given the number of attorneys involved, Mr. Thomasson
counsel for Ms. Campbell-Hicks, has taken a 20% reduction in fees
and Mr. Bromberg is seeking compensation at a lower hourly rate
that ordinarily sought in this district by attorneys with
comparable experience.

They also do not include compensation for

additional time and effort they will be required to expend
administering the settlement going forward also supports their
fee request.

See deMunecas v, Bold Food, LLC, No. 09 Cv. 440,

2010 WL 3322580, at *10 (S.D.N.Y. Aug. 23, 2010).
Thus, I find that the the fees requested are reasonable
under the circumstances of this case and grant the amounts
requested.

-29-

CONCLUSION
For the foregoing reasons, the plaintiffs' motion for
approval of the class settlement (DE 40, 1:14-cv-03124; DE 26,
2:14-cv-03576) is granted as follows: plainti
1.

The Settlement Agreement filed on July 13, 2015 (DE 30-

2) is unconditionally approved, and, pursuant to Fed.R.Civ.P.
23(a) and (b)(3), the following two classes described in the
Settlement Agreement are certified for settlement purposes:
(1) All consumers to whom Defendants mailed a
written communication in connection with an
attempt to collect a debt, which included a
statement that a "$3.00 convenience fee will be
added for credit card payments," regardless of
whether such fee was paid or not, during a
period beginning May 19, 2013, and ending June
9, 2014 ("Class #1"); and
(2) All consumers to whom Defendants mailed a
written communication in connection with an
attempt to collect a debt, which included a
statement that a "$3.00 convenience fee will be
added for credit card payments," and who paid
such a fee, during a period beginning May 19,
2011, and ending June 9, 2014 ("Class #2").
2.

The Court approves the "Plan of Allocation" governing

the payments to Class Members and directs the Parties and the
Claims Administrator to implement and disburse those payments in
accordance with the terms of the Settlement Agreement, except
that the fund for Class #1 members shall be increased by
unclaimed monies from the fund for Class #2 members and by the
$2,000 deducted from the service awards to the plaintiffs, as
discussed above.

Also, counsel should insure that the list of

class members should include the persons whose late claims were

-30-

allowed at the fairness hearing and the persons who may have
filed claims directly with the Court, but not with the Claims
Administrator, as discussed above.

The Court further directs

that any funds that remain in the settlement fund after the void
date on the Settlement Agreement shall be donated as a cy pres
award to the National Consumer Law Center with all funds strictly
earmarked for the benefit of New York consumers.
3.

The Court approves the payment of attorneys' fees and

costs of $55,000 to counsel for plaintiff Babcock and $30,1000 to
counsel for plaintiff Campbell-Hicks.
4.

The Court approves payment of a service award of $2,500

to each of the plaintiffs, which shall be in addition to payments
for statutory damages of $1,000 each under the Settlement
Agreement, $153.00 to plaintiff Jennifer Babcock for actual
damages, and any amount they are entitled to receive as members
of Class #1.
5.

Without affecting the finality of this Order in any way,

this Court hereby retains jurisdiction over consummation and
performance of the Agreement.
6.

The Clerk of the Court is respectfully requested to

close this case.
SO ORDERED.

Dated:

Brooklyn, New York
March 27, 2017
/s/
MARILYN DOLAN GO
UNITED STATES MAGISTRATE JUDGE
-31-