Cassese et al v. Washington Mutual, Inc et al
Filing
484
DECISION AND ORDER - It is hereby ORDERED, that Court defers ruling on the late-filed claims issue until Class Counsel submits further explanation as described in the order; and it is further ORDERED, that the Settling Parties and Settlement Administ rator are directed to accept and treat as valid all Class Member unsigned claims received by the Settlement Administrator; and it is further ORDERED, that the Settling Parties and Settlement Administrator are directed to accept and treat as valid all eligible Class Member claims listed on a single Proof of Claim Form; and it is further ORDERED, that the Settling Parties and Settlement Administrator should not accept and treat as valid claims for Class Members who submitted a claim form for only one of their loans; and it is further ORDERED, that the Settling Parties and Settlement Administrator are directed to calculate class member claims by using the default value listed for the claim in the electronic loan database provided to the Settle ment Administrator, or the value supported by the documents submitted by the Class Member accompanying the claim form(s), whichever value is greater or yields the higher claim, regardless of the claim amount listed by the Class Member on the face of the submitted claim form. So Ordered by Judge Arthur D. Spatt on 9/3/2013. (Coleman, Laurie)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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DENISE CASSESE f/k/a DENISE CALIGIURI,
GEORGE SCOTT RUSH, RICHARD
SCHROER and WILLIAM BLOOM,
individually and on behalf of all others similarly
situated,
FILED
CLERK
9/3/2013 3:43 pm
U.S. DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
LONG ISLAND OFFICE
DECISION AND ORDER
05-cv-2724 (ADS)(ARL)
Plaintiffs,
-againstWASHINGTON MUTUAL, INC.;
THE FEDERAL DEPOSIT INSURANCE
COMPANY, in its capacity as receiver for
WASHINGTON MUTUAL BANK, such entity
having incorporated former defendants
WASHINGTON MUTUAL BANK, FA and
WASHINGTON MUTUAL HOME LOANS,
INC.; and
WASHINGTON MUTUAL BANK, FSB,
Defendants.
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APPEARANCES:
TUSA, P.C.
Attorneys for the Plaintiffs
1979 Marcus Avenue, Suite 120
New York, NY 11042
By:
Joseph S. Tusa, Esq., of Counsel
LOWEY DANNENBERG, BEMPORAD, SELINGER & COHEN, P.C.
Attorneys for the Plaintiffs
White Plains Plaza
One North Broadway
White Plains, NY 10601
By:
Peter D. St. Philip, Jr., Esq., of Counsel
WEIL, GOTSHAL & MANGES, LLP
Attorneys for the Defendant Washington Mutual Inc.
767 Fifth Avenue
New York, NY 10153
By:
John Peter Mastando, Esq., of Counsel
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SPATT, District Judge.
This case arises from approval of a settlement ending more than six years of class action
litigation against the Defendant Washington Mutual, Inc. (“WMI”) for alleged violations of
federal and state law in charging pre-payment fees relating to residential mortgage and home
equity loans. Familiarity with the numerous prior orders is presumed.
On February 15, 2011, a Settlement Agreement (the “Agreement”) was filed with the
Court. As part of the Agreement, the Settlement Class Members agreed to relinquish any claims
against WMI. For its part, WMI agreed to deposit a Gross Settlement Fund in the amount of
Thirteen Million Dollars ($13,000,000) into a Settlement Account; provide notice to class
members; and implement a claims process and distribution as described in Article 6 of the
Settlement Agreement. The Agreement provided that, except for limited circumstances not
applicable here, the Gross Settlement Fund was not to be paid out until after the “Effective Date”
of the Agreement, which could not occur until after exhaustion of any appeals.
Relevant here, Article 6 provided that “[a]ny Class Member who does not timely and
validly exclude himself or herself from the Class, but does not submit a valid and timely Proof of
Claim Form . . . will not be entitled to receive any proceeds from the Net Settlement Fund.”
(Agreement ¶6.2.) The Agreement defined “Net Settlement Fund” as that portion of the Gross
Settlement Fund that remained after the payment of attorneys’ fees and other administrative
expenses.
Article 6 also required that all Proof of Claim Forms be submitted no later than fifteen
days prior to the “Final Fairness Hearing.” Similarly, Article 6 mandated that “[a]ny Proof of
Claim Form received after such date or any Proof of Claim Form that does not satisfactorily meet
the submission requirements set forth herein and in the Proof of Claim Form shall be rejected by
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the Settlement Administrator and Class Members submitting such forms shall not be entitled to a
distribution from the Net Settlement Fund.” (Id. ¶6.3.) Article 6 also provided that if a Disputed
Claim could not be resolved by the Settlement Administrator without objection by Class Counsel
or WMI Counsel, or by good faith conferrals between them, the claim could be submitted to the
Court for resolution. (Id. ¶6.4.) In addition, the Settlement Account Agent was required to
deliver Claim Payments to Claiming Class Members within 120 days of the Effective Date.
Finally, Article 6 provides that any funds remaining in the “Net Settlement Fund” after
Distribution of Claim Payments “shall be returned to WMI’s bankruptcy estate for subsequent
distribution in accordance with the Plan.” (Id. ¶6.6.)
On March 10, 2011, the Court (1) entered a Preliminary Order Approving the Settlement
Agreement; (2) scheduled a “Final Fairness Hearing” for September 15, 2011; (3) directed Class
Members to submit their Proof of Claim Forms to participate in the Settlement’s financial
distribution by August 31, 2011.
On September 15, 2011, the Court (1) held a “Final Fairness Hearing”; (2) certified the
proposed class for settlement purposes only; (3) overruled any objections; (4) approved the
Settlement Agreement and application for attorneys’ fees; (5) excluded opt-out claimants; and
(6) deemed the distribution plan set forth in Article 6 to be fair and reasonable.
A few objectors unsuccessfully appealed the award of attorneys’ fees. After those
appeals were exhausted, the “Effective Date” of the Settlement Agreement occurred sometime in
May 2013. Accordingly, under the terms of the Settlement Agreement, claim payments are due
sometime in September 2013.
Class Counsel, counsel for WMI, and the Settlement Administrator have been conferring
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regarding the nearly 500,000 Proof of Claim Forms submitted by Settlement Class Members.
However, certain disputes regarding the Distribution of the Claim Payments have arisen. In a
letter dated August 13, 2013, the parties jointly requested the Court’s rulings on these disputes.
I.
DISCUSSION
1. As to Late-Filed Proof of Claim Forms
The Settlement Administrator has determined that approximately 2,652 Proof of Claim
Forms were received after the August 31, 2011 deadline, but prior to the “Effective Date” of the
Settlement Agreement. Approximately 496,036 Proof of Claim Forms were timely filed. Class
counsel believes that these late-filed claims should be allowed, while WMI believes that these
late-filed claims should be disallowed.
Courts in this and other circuits have delineated four factors to aid the Court in
addressing untimely claims in a class action settlement. These factors (the “Pioneer factors”)
include: 1) the danger of prejudice to the nonmovant; 2) the length of the delay and its potential
effect on judicial proceedings; 3) the reason for the delay, including whether it was within the
reasonable control of the movant; and 4) whether the movant acted in good faith. Pioneer Inv.
Servs. v. Brunswick Assoc. Ltd. P’ship, 507 U.S. 380, 395, 113 S. Ct. 1489, 123 L. Ed. 2d 74
(1993)); accord In re Oxford Health Plans, Inc., 383 F. App’x 43, 45 (2d Cir. 2010); In re Visa
Check/Mastermoney Litig., No. 96-CV-2538, 2009 WL 7230400, at *1 (E.D.N.Y. Nov. 19,
2009). Especially relevant to this determination is the reason for the delay and whether it was in
the claimants’ control. See In re Oxford Health Plans, Inc., 383 F. App’x at 45 (“[B]ecause in the
ordinary case there will be little prejudice or disruption caused by allowing a late-submitted
claim, we focus our analysis on the asserted reason for the claimant’s delay”); see also In re Gilat
Satellite Networks, Ltd., No. 02-CV-1510, 2009 WL 803382, at *6 (E.D.N.Y. Mar. 25, 2009)
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(“Because there is no showing of delay or prejudice, the late filed claims should be included in
the class for settlement disbursement.”). Some courts have likened this inquiry to a showing of
“excusable neglect.” See In re Auction Houses Antitrust Litig., No 00-CV-0648, 2004 WL
3670993, *9 (S.D.N.Y. Nov. 17, 2004).
Here, while Class Counsel asserts that accepting late-filed claims would have a negligible
impact on the recovery for timely-filed claims, the Court requires additional information before it
can make a determination. In particular, Class Counsel fails to provide the reasons for the delays
or explain just how lengthy the particular delays were. Nor does Class Counsel indicate, in any
quantifiable terms, the average payout for Class Members, either including or excluding the latefiled claims. Without such calculations, its remains unclear the extent to which WMI, which
appears to retain a reversionary interest in any undistributed funds, would be prejudiced by the
inclusion of late-filed claims. Dahingo v. Royal Caribbean Cruises, Ltd., 312 F. Supp. 2d 440,
447 (S.D.N.Y. 2004) (prejudice is found where the defendant was entitled to receive back any
excess not paid out for claims, attorneys' fees and costs, or administrative expenses). For this
reason, at this time, the Court defers ruling on the dispute over the late-filed claims. Class
Counsel is directed to submit further explanation on this issue, not to exceed 20 pages, within 20
days of the date of this order. Class Counsel should fully address why, in light of each of the
four Pioneer factors, the Court should allow late-filed claims as part of the Settlement
distribution.
2. As to Unsigned Proof of Claim Forms
The Settlement Administrator has advised the parties that approximately 45,063 Proof of
Claim Forms were timely received, but unsigned. The instructions to the Proof of Claim Form
directed all Class Members to execute their claims forms, and by their signature, the Settlement
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Class Members are verifying that they are entitled to receive a Claim Payment. However,
relying on Dahingo, Class Counsel believes that the Settlement Class Members’ efforts to
complete and submit their Proof of Claim Form to the Settlement Administrator evinces
sufficient intent to participate in the Settlement. The Court agrees.
To be sure, in Dahingo, the Court granted an application for an order providing claimants
who submitted timely but unsigned claims the opportunity to submit signed claim forms. Given
the (1) protracted nature of this litigation; (2) the upcoming negotiated 120-day deadline to
disburse Claim Payments; and (3) the lack of opposition by WMI on this issue, the Court sees no
reason to require these claimants to submit signed claim forms, thereby further extending this
litigation. Accordingly, the Court grants Class Counsel’s request to direct the Settling Parties
and the Settlement Administrator to accept and treat as valid all Class Member unsigned, timely
claims received by the Settlement Administrator.
3. Single Proof of Claim Forms Submitted for Multiple Qualifying Claims
Certain Class Members are eligible to submit multiple claims. Instead of separately
mailing Proof of Claim Forms to the same Class Member for each eligible claim, and to save
postage costs, the Settlement Administrator included multiple Proof of Claim Forms in a single
mailing to Class Members eligible to receive multiple forms. Each Proof of Claim Form
indicated on its face that separate Proof of Claim Forms were to be submitted for each claim.
The Settlement Administrator has informed the parties’ counsel that approximately 8,636
Settlement Class Members attempted to submit multiple eligible claims on a Single Proof of
Claim Form. Based on the loan database obtained through discovery by Class Counsel, and
provided to the Settlement Administrator, the Settlement Administrator can identify and compute
the amount of multiple claims submitted on a single Proof of Claim Form by eligible Settlement
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Class Members. Class Counsel believes that all included eligible claims listed on a single proof
of Claim Form should be accepted.
Finding no prejudice to WMI or the other Class Members, the Court grants Class
Counsel’s request to direct the Settling Parties and the Settlement Administrator to accept and
treat as valid all eligible Class Member claims listed on a single Proof of Claim Form.
4. Multiple Qualifying Loans but Submitted Claim for only One Loan
Relatedly, certain Class Members who are eligible to submit multiple claims only
submitted a claim for one loan. The Settlement Administrator has informed the parties’ counsel
that approximately 7,880 loans in the electronic loans database remain unclaimed by Settlement
Class Members who submitted a claim for another loan. Class Counsel believes that these Class
Members should be eligible to receive a Claim Payment for all the Loans. The Court disagrees.
In the Court’s view, these Class Members apparently evinced an intent to submit a claim for only
one of their loans.
5. Settlement Class Members who Claim Lower Amounts than Indicated in Discovery
The default value of the Disputed Fees paid by Claiming Class Members for purposes
of computing their share of the “Net Settlement Fund” is determined by the information in the
electronic loan database obtained through discovery by Class Counsel, and provided to the
Settlement Administrator. Nonetheless, the Court approved a process whereby Settlement Class
Members could (but were not required to) indicate the amount of their alleged claim on the face
of the Proof of Claim Form. Settlement Class Members who claimed an amount greater than the
default amount reflected in the loan database were required to submit documents to support an
upward adjustment. The parties’ counsel and the Settlement Administrator are currently
reviewing such claims and documents. The Settlement Administrator reports that approximately
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3,588 claims contain Proof of Claim Forms seeking an amount lower than the default values
indicated in the loan database. In this instance, Class Counsel recommends that the higher value
represented by the electronic database be used to calculate the Settlement Class Member’s claim.
The Court agrees. Settlement Class Members were not actually required to indicate the
amount of their alleged claim on the face of the Proof of Claim Form and, presumably, they were
not aware of the default value recovery. Under these circumstances, the Court identifies no
reason to penalize those Settlement Class Members who claimed a lower amount than indicated
in discovery.
6. Inclusion of Supporting Documents without Listing the Amount of Their Claims
In addition to the Class Members who submitted documents supporting specified claim
amounts above or below the default indicated by the Electronic Loan Database, others submitted
documents without indicating the amount of their claims. The Settlement Administrator advises
that 38,061 such claims were received. Class Counsel contends that the submission of
documents indicates a request that those documents be reviewed to determine whether they
support an upward adjustment to the default claim value indicated in the electronic database.
The Court agrees. These Class Members apparently evinced an intent to seek an upward
adjustment to the default claim value.
II.
CONCLUSION
For the foregoing reasons, it is hereby
ORDERED, that Court defers ruling on the late-filed claims issue until Class Counsel
submits further explanation as described in the order; and it is further
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ORDERED, that the Settling Parties and Settlement Administrator are directed to accept
and treat as valid all Class Member unsigned claims received by the Settlement
Administrator; and it is further
ORDERED, that the Settling Parties and Settlement Administrator are directed to accept
and treat as valid all eligible Class Member claims listed on a single Proof of Claim
Form; and it is further
ORDERED, that the Settling Parties and Settlement Administrator should not accept and
treat as valid claims for Class Members who submitted a claim form for only one of their
loans; and it is further
ORDERED, that the Settling Parties and Settlement Administrator are directed to
calculate class member claims by using the default value listed for the claim in the
electronic loan database provided to the Settlement Administrator, or the value supported
by the documents submitted by the Class Member accompanying the claim form(s),
whichever value is greater or yields the higher claim, regardless of the claim amount
listed by the Class Member on the face of the submitted claim form.
SO ORDERED.
Dated: Central Islip, New York
September 4, 2013
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Arthur D. Spatt
ARTHUR D. SPATT
United States District Judge
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