Adkins, et al. v. Midland Credit Management, Inc.

Filing 155

FINAL APPROVAL ORDER granting 153 Unopposed Motion for Final Approval of Settlement, Attorneys' Fees and Costs, and Service Awards; directing (1) that final approval is granted in all respects of the terms and provisions of the Class Settlemen t and Release Agreement, (2) Stephanie Adkins and Douglas Short are each awarded a service award, (3) Class Counsel are awarded their attorneys' fees, (4) Class Counsel are awarded their litigation expenses, (5) The Class Administrator is awarde d administrative costs and fees, (6) the class and individual claims in this action are dismissed on the merits and with prejudice, and (7) the Court retains jurisdiction over this action; the Court directs entry of a final judgment as to the matters determined by this Opinion and Order. Signed by Judge Frank W. Volk on 2/3/2022. (cc: counsel of record) (kew)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA
Beckley Division
STEPHANIE ADKINS and
DOUGLAS SHORT, on behalf
of themselves and all others
similarly situated,
Plaintiffs,
v.

CIVIL ACTION NO. 5:17-cv-04107
Judge Frank W. Volk

MIDLAND CREDIT MANAGEMENT, INC.,
Defendant.
PROPOSED FINAL APPROVAL ORDER
Pending before the Court is Plaintiffs’ Unopposed Motion for Final Approval of
Settlement, Attorneys’ Fees and Costs, and Service Awards. For the reasons stated in the Plaintiffs’
memorandum and for good cause shown, the Motion is GRANTED. Accordingly, the Court
hereby FINDS, ORDERS, ADJUDGES, AND DECREES as follows:
I.

Background

In this action, Plaintiffs, on behalf of a class of similarly situated individuals, initially
claimed that Defendant violated the West Virginia Consumer Credit and Protection Act
(“WVCCPA”) and Fair Debt Collection Practices Act (“FDCPA”). Plaintiffs eventually dismissed
their claims under the FDCPA and moved forward with their WVCCPA claim. Specifically,
Plaintiffs alleged that Defendant violated the WVCCPA by sending them and certain class
members letters seeking to collect debt that Defendant’s records indicated had passed its statute of
limitations, which letters failed to provide the required disclosure indicating that, because of the
age of the debt, Defendant “cannot sue you on it.” Plaintiffs alleged that this failure violated, inter

alia, West Virginia Code § 46a-2-128(f). After conducting substantial discovery and engaging in
extensive motions practice, this Court ultimately certified the following class of individuals:
All persons with West Virginia addresses, who did not file bankruptcy on
or after July 4, 2017, to whom Midland sent a debt collection letter on or
after July 4, 2017 seeking to collect a debt that originated from creditors
Barclays Bank Delaware; Capital One; Chase; Citibank; GE Capital Retail
Bank; HSBC; or WebBank, which letter was sent five years after charge off
or five years plus sixty days after last payment, whichever is later, and
which letter failed to provide the following disclosure: “The law limits how
long you can be sued on a debt. Because of the age of your debt, [Midland]
cannot sue you for it.”
Defendant denies all liability.
After a full day mediation session, the Parties agreed to the terms of a proposed settlement
agreement (“Settlement Agreement”). The Court preliminarily approved the Settlement
Agreement on September 14, 2021. That Order outlined the terms of the proposed settlement. The
Court adopts and incorporates herein those portions of that Order.
II.

The Settlement Merits Final Approval
A. Notice is Complete.

The Court finds that the parties have completed all settlement notice obligations imposed
in the Order on Motion for Preliminary Approval of Class Action Settlement and Scheduling
Order. The class notice, which included first-class mailed notice to each class member, constitutes
“the best notice practicable under the circumstances,” as required by Rule 23(c)(2).
B. The Settlement is Fair, Adequate, and Reasonable.
Settlement of class actions must be approved by the Court. Fed. R. Civ. P. 23(e);
Scardelletti v. Debarr, 43 F. App x 525, 528 (4th Cir. 2002); In re Jiffy Lube Sec. Litig., 927
F.2d 155, 158 (4th Cir. 1991); Domonoske

, 790 F. Supp. 2d

; Muhammad

,

2008 WL 5377783, at *3

. “The primary concern addressed by Rule 23(e) is the protection of
2

472

given adequate consideration during
the settlement.” In re Jiffy Lube Sec. Litig., 927 F.2d at 158; see also Groves
,

2011 WL 4382708, at *4

Such approval typically involves a two-step process of “preliminary” and “final” approval.
See Manual for Complex Litigation § 21.632, at 414 (4th ed. 2004); Grice v. PNC Mortg Corp. of
Am., No. 97-3804, 1998 WL 350581, at *2 (D. Md. May 21, 1998) (endorsing Manual’s twostep process); Horton v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 855 F. Supp. 825, 827
(E.D.N.C. 1992). In the first stage, the Parties submit the proposed settlement to the Court for
preliminary approval. In the second stage, following preliminary approval, the Class is notified
and a fairness hearing scheduled at which the Court will determine whether to approve the
settlement. See Bicking v. Mitchell Rubenstein & Assocs., No. 3:11-cv-78, 2011 WL 5325674, at
*4 (E.D. Va. Nov. 3, 2011) (“Prior to granting final approval, the court must direct reasonable
notice to all potentially affected class members, allow time for objection, and provide a ‘fairness
hearing.’”). The Court has already granted preliminary approval.
In determining whether a settlement meets the requirements of Rule 23, the Fourth Circuit
has adopted a bifurcated analysis involving inquiries into the fairness and adequacy of the
settlement. Scardelletti

, 43 F. App x

528

; In re Jiffy Lube Sec. Litig.,

927 F.2d at 158; Groves, 2011 WL 4382708, at *4. A class settlement is fair when it is “reached
as a result of good faith bargaining at arm’s length, without collusion.” In re Jiffy Lube Sec.
Litig., 927 F.2d at 159; Bicking

,

2011 WL 5325674, at *4

. The Court should be satisfied that “the

proposed settlement appears to be the product of serious, informed, non-collusive
negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to
class representatives or segments of the class, and falls within the range of possible
3

2001 U.S. Dist. LEXIS 25071, at *29-30; In re
Shell Oil Refinery, 155 F.R.D. 552, 555 (E.D. La. 1993). “Absent evidence to the contrary, the
court may presume that settlement negotiations were conducted in good faith and that the
resulting agreement was reached without collusion.” Muhammad, 2008 WL 5377783, at *4.
In assessing the fairness of a proposed settlement, the Court must look to the following
factors: (1) posture of the case at the time the settlement is proposed; (2) extent of discovery that
has been conducted; (3) circumstances surrounding the negotiations; and (4) experience of counsel
in the relevant area of class action litigation. Scardelletti, 43 F. App x at 528; In re Jiffy Lube
Sec. Litig., 927 F.2d at 159; Groves, 2011 WL 4382708, at *4; Loudermilk Servs., Inc.
, No. 3:04-cv-966, 2009 WL 728518, at *8 (S.D.W. Va. Mar. 18, 2009).
In determining the adequacy of the proposed settlement, the Court must consider: (1) relative
strength of Plaintiff’s case on the merits; (2) existence of any difficulties of proof or strong
defenses Plaintiff is likely to encounter if the case proceeds to trial; (3) anticipated duration and
expense of additional litigation; (4) solvency of defendant and likelihood of recovery of a litigated
judgment; and (5) degree of opposition to the settlement. Scardelletti, 43 F. App x at 528; In re
Jiffy Lube Sec. Litig., 927 F.2d at 159; Groves, 2011 WL 4382708, at *5; Loudermilk Servs., Inc.,
2009 WL 72818, at *3.
Consideration of the applicable factors reveals that the Parties’ proposed Settlement
Agreement merits final approval. Plaintiffs’ Counsel and Defendant’s Counsel are both
experienced in complex litigation, including class action litigation. Counsel had “a clear view of
the strengths and weaknesses” of their case and were in a strong position to make an informed
decision regarding the reasonableness of a potential settlement. In re Warner Commc’ns Sec.
Litig., 618 F. Supp. 735, 745 (S.D.N.Y. 1985) aff’d, 798 F.2d 35 (2d Cir. 1986). The Parties’
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negotiations with the help of a well-respected mediator experienced in the matters at issue in this
action.
The settlement has no obvious deficiencies and does not grant preferential treatment to the
class representatives or any segments of the class. The intrinsic value of the net settlement payment
to Class Members is readily apparent when one considers the risks inherent in continued and
protracted litigation and the expense and delay that accompany the appeal process.
The settlement is particularly valuable to absent Class Members who, but for the
settlement, likely would be unaware of the existence of their legal claims. Even if they were aware,
given the relatively small amounts of money involved, absent class members and attorneys who
may represent them would have little financial incentive to prosecute individual actions. The
alternative to bringing this case as a class action is bringing hundreds of individual claims.
Realistically, the alternative to a class action under the present circumstances is no action at all.
“[C]ompromise and settlement are favored by the law.” Groves, 2011 WL 4382708, at *4.
The proposed settlement serves the overriding public interest in settling litigation. Van Bronkhorst
v. Safeco Corp., 529 F.2d 943, 950 (9th Cir. 1976). The complexity, expense, and duration of class
action litigation are factors that mitigate in favor of preliminary approval of a settlement. In re
Corp. Litig., 264 F.3d 201, 231, 233 (3d Cir. 2001); Girsh v. Jepson, 521 F.3d 153, 157 (3d Cir.
1975); City of Detroit v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974). While the Parties could
have litigated the case to judgment and taxed the resources of the litigants and the Court, they
chose instead rationally and reasonably to forgo the expense and uncertainty of continued litigation
and focus their efforts on achieving a fair and adequate settlement that took the risks of further
litigation into account.

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Finally, the “opinion of class action counsel, with substantial experience in litigation of
similar size and scope, is an important consideration.” Muhammad, 2008 WL 4382708, at
*4. “When the parties’ attorneys are experienced and knowledgeable about the facts and claims,
their representations to the court that the settlement provides class relief which is fair,
reasonable and adequate should be given significant weight.” Id. at *4 (quoting Rolland v.
Cellucci, 191 F.R.D. 3, 10 (D. Mass. 2000)). In the present case, appointed class counsel,
who recommends the settlement, is skilled and experienced in consumer class actions. See
Muhammad, 2008 WL 5377783, at *4 (recognizing that Plaintiff’s counsel, Jonathan Marshall
of the law firm Bailey & Glasser, LLP, and Steven Broadwater of the law firm Hamilton,
Burgess, Young and Pollard, PLLC, are “skilled and experienced in class action litigation, and
have served as class counsel in several cases, including consumer lending cases”).
III.

The Requested Attorneys’ Fees and Costs are Reasonable

Awarding attorneys’ fees as a percentage of the benefit to the class is the preferable and
prevailing method of determining fee awards in class actions that establish common funds for the
benefit of the class. The requested award of $331,666.67, which represents one-third of the
Common Fund, is reasonable under the circumstances of this case. It is noteworthy that no class
member has objected to the fees and expenses sought by counsel.
A. The Percentage of Fund Method is the Appropriate Measure for
Determining Fees.
The common fund doctrine is one of the earliest recognized exceptions to the “American
Rule” which generally requires that litigants bear their own costs and attorneys’ fees. Premised
on the equitable powers of the court, the common fund doctrine allows a person who maintains a
suit that results in the creation, preservation or increase of a fund in which others have a common
interest, to be reimbursed from that fund for the litigation expenses incurred. Cent. R.R. & Banking
6

Co. v. Pettus, 113 U.S. 116 (1885). “[A] litigant or a lawyer who recovers a common fund for the
benefit of persons other than himself or his client is entitled to a reasonable attorney’s fee from the
fund as a whole.” Boeing Co. v. Van Gemert, 444 U.S. 472, 478 (1980).
“Although the Fourth Circuit has not determined the preferred method for calculating
attorney fees where the common fund has been generated on behalf of a class, nearly all circuits,
as well as district courts within this Circuit, that have considered the issue have found that the trial
court may use the percentage method.” Dijkstra v. Carenbauer, No. 5:11-cv-152, 2015 WL
12750449, at *6 (N.D.W. Va. July 29, 2015); see also Good v. West Virginia-American Water
Co., No. 14-1374, 2017 WL 2884535, at *20 (S.D.W. Va. July 6, 2017); Archbold v. Wells Fargo
Bank, N.A., No. 3:13-cv-24599, 2015 WL 4276295, at *3 (S.D.W. Va. July 14, 2015); Kidrick v.
ABC Television & Appliance Rental, No. 3:97-cv-69, 1999 WL 1027050 *1 (N.D.W. Va. 1999)
(“Where there is a common fund in a class settlement, application of a percentage method to
calculate an attorney’s fee award is now favored.”) (citing Boeing Co. v. Van Gemert, 444 U.S.
472, 478 (1980)); Goldenberger v. Integrated Res., Inc., 209 F.3d 43 (2d Cir. 2000); Cook v.
Niedert, 142 F.3d 1004, 1013 (7th Cir. 1998); In re Thirteen Appeals Arising out of San
Juan DuPont Plaza Hotel Fire Litig., 56 F.3d 295, 307 (1st Cir. 1995); In re Wash. Pub Power
Supply Sys. Litig., 19 F.3d at 1291, 1295 (9th Cir. 1994); Gottlieb v. Barry, 43 F.3d. 474 (10th
Cir. 1994); Rawlings v. Prudential-Bache Props., Inc., 9 F.3d 513, 516 (6th Cir. 1993);
Longden v. Sunderman, 979 F.2d 1095, 1099 (5th Cir. 1992); see also In re Cont’l Ill. Sec.
Litig., 962 F.2d 566 (7th Cir. 1992); Paul, Johnson, Alston & Hunt v. Graulty, 886 F.2d 268,
272 (9th Cir. 1989); Brown v. Phillips Petroleum Co., 838 F.2d 451, 454, 456 (10th Cir.), cert.
denied, 488 U.S. 822 (1988); Camden I Condo. Ass’n, 946 F.2d 768, 773-74 (11th Cir. 1991);
Bebchick v. Wash. Met. Area Transit Comm’n, 805 F.2d 396, 406-7 (D.C. Cir. 1986). In fact,

7

of the percentage of fund method. Swedish Hosp. Corp. v. Shalala, 1
F.3d 1261, 1271 (D.C. Cir. 1993); Camden I Condo. Ass’n, 946 F.2d at 774; see generally 1 Alba
Conte, Attorney Fee Awards § 2.02 at 31 (2d ed. 1993); Court Awarded Attorney Fees, Report of
the Third Circuit Task Force (“Task Force Report”), 108 F.R.D. 237 (1985) (Prof. Arthur R.
Miller, Reporter).
The percentage method “is designed to allow courts to award fees from the fund in a
manner that rewards counsel for success and penalizes it for failure.” In re Prudential Ins. Co. Am.
Sales Litig., 148 F.3d 283, 333 (3d Cir. 1998) (citing In re Gen. Motors Corp. Pick-Up Truck Fuel
Tank Prods. Liab. Litig., 55 F.3d 768, 821 (3d Cir. 1995)). Percentage-based attorney’s fees:
(1) align the interests of claimants and lawyers by rewarding superior
performance and punishing failure;
(2) minimize the need to evaluate the reasonableness of attorneys’ efforts ex
post, which is both time consuming and often hard to do; and
(3) transfer the burden of financing lawsuits and other risks from claimants to
attorneys who are better able to bear them.
In keeping with the larger point of this Report, Judge Easterbrook also maintained
that because claimants use contingent percentage fees almost exclusively, judges
should use them when awarding fees in claimant representations.
Kirchoff v. Flynn, 786 F.2d 320, 326 (7th Cir. 1986); see also Muhammad, 2008 WL 5377783, at
*7.
In its 1985 report, the Third Circuit Task Force recommended that in the traditional
common fund situation, a district court “should attempt to establish a percentage fee arrangement.”
Task Force Report, 108 F.R.D. 237, 255 (1985); see also Muhammad, 2008 WL 5377783, at *7.
Since that time, the Third Circuit has, on several occasions, “reaffirmed that application of a
percentage-of-recovery method is appropriate in common-fund cases.” In re Cendant Corporate
PRIDES Litig., 243 F.3d 722 (3d Cir. 2001) (collecting cases).

8

In sum, there is a clear consensus among the federal and state courts, consistent with
Supreme Court precedent, that the award of attorneys’ fees in common fund cases should be based
on a percentage of the recovery. This consensus derives from the recognition that the percentage
of fund approach is the better-reasoned and more equitable method of determining attorneys’ fees
in such cases. Muhammad, 2008 WL 5377783, at *7.
B. The Percentage Requested by Class Counsel is Fully Supported by the
Work Performed, Risks Taken, and Results Obtained.
Both state and federal courts in West Virginia recognize the presumptive reasonableness
of an attorneys’ fee equal to one-third of a recovery. Id. As explained in Eriksen Const. Co., Inc.
v. Morey, 923 F. Supp. 878, 881 (S.D. W. Va. 1996):
The Court notes a one-third contingency fee is presumptively reasonable in
West Virginia. See Hayseeds, Inc. v. State Farm Fire & Cas., 177 W.Va. 323,
352 S.E.2d 73, 80 (1986). Nevertheless, a forty percent (40%) contingency fee
is a common fee contract provision for cases that proceed to trial.
Id.; see also F.S.&P. Coal Co. v. Inter-Mountain Coals, Inc., 179 W. Va. 190, 366 S.E.2d 638
(1988) (a one-third attorneys fee is the “going rate” in contingency fee cases). This authority
supports the requested award in this case.
Some courts also consider certain factors in analyzing the reasonableness of fees
determined by the percentage of recovery method. Muhammad, 2008 WL 5377783, at *8. These
factors can include:
(1) the size of the fund created and the number of persons benefited; (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.
Cendant, 243 F.3d at 733 (quoting Gunter v. Ridgewood Energy Corp., 223 F.3d 190, 195 n.1 (3d
Cir. 2000)) (citations omitted); see also Muhammad, 2008 WL 5377783, at *8. The Gunter Court
9

instructed that there is no specific formula for analyzing these factors. “Each case is different, and
in certain cases, one factor may outweigh the rest.” Gunter, 223 F.3d at 195 n.1.
All of these considerations warrant an award of the requested fees in this case. The fund
established for Class Members is substantial in light of the size of the class. One class member
chose to opt out of the settlement. However, judging by the fact that no Class Member has objected
to the proposed Settlement, the Class Members overwhelmingly support the settlement.
Additionally, class counsel are skilled and experienced in class action litigation, and have served
as class counsel in several cases.
The case involved complex issues related to Defendant’s policies and application of state
consumer protection law and had been vigorously litigated for nearly four years prior to settlement.
Considering the possibility of appeals, resolution of the litigation could have taken countless
additional years, and counsel bore a substantial risk of nonpayment. This Court or the Court of
Appeals could have ruled for Defendant on class certification or the merits. The outcome of the
case was hardly a foregone conclusion, but nonetheless class counsel accepted representation of
the Plaintiffs and the class on a contingent fee basis, fronting the costs of litigation. “In so doing,
counsel have achieved a quite satisfactory settlement result.” Muhammad, 2008 WL 5377783, at
*8.
Finally, the one-third fee requested by counsel is very much in line with fee awards in
similar common-fund cases. Cox v. BB&T, No. 5:17-cv-01982, 2019 WL 164814, at **5-6 (S.D.
W. Va. Jan. 10, 2019) (awarding one-third of settlement in WVCCPA action); Dijkstra, 2015 WL
12750449, at *7 (same); Archbold, 2015 WL 4276295, at *6 (same); Muhammad, 2008 WL
5377783, at *8 (same); Triplett v. Nationstar Mortgage, LLC, No. 3:11-cv-238 (S.D. W. Va. 2012)

10

(same); Hackworth v. Telespectrum Worldwide, Inc., No. 3:04-cv-1271 (S.D. W. Va. 2004)
(awarding fees of one-third amount of settlement in WARN Act class action settlement).
Accordingly, consideration of all of these factors overwhelmingly supports the requested
award of one-third of the amount of the common fund established for the Class.
IV.

The Requested Expenses are Reasonable

Consistent with the terms of the Agreement, the WVCCPA’s fee-shifting provision entitles
a consumer to recover “all or a portion of the costs of litigation” which includes not only
“reasonable attorney fees” but “court costs and fees.” W. Va. Code § 46A-5-104. West Virginia
courts therefore award costs separately from attorney fees to prevailing plaintiffs in
WVCCPA actions. See Muhammad, 2008 WL 5377783 at *9; Quicken Loans, Inc. v. Brown, 737
S.E.2d 640, 664, 230 W. Va. 306, 330 (2012).
As set forth in the declaration of Jonathan Marshall, Class Counsel have incurred
$10,881.17 in reasonable litigation expenses. The vast majority of these expenses were for
professional mediation and administrative services. The other costs were incurred for deposition
fees, filing fees, legal research, and printing/copying.
V.

The Proposed Service Awards Are Justified and Appropriate

Incentive or service awards reward representative plaintiffs’ work in support of the class,
as well as their promotion of the public interest. Archbold v. Wells Fargo Bank, No. 3:13cv-24599 2015 WL 4276295, at *6 (S.D.W. VA. Courts around the country have allowed
such awards to named plaintiffs or class representatives.

Id., citing In re Domestic Air

Transp. Antitrust Litig., 148 F.R.D. 297, 357-58 (N.D. Ga. 1993) (awarding $142,500 to
class representatives out of $50 million fund); In re Dun & Bradstreet Credit Servs.
Customer Litig., 130 F.R.D. 366, 373-74 (S.D. Ohio 1990) (awarding $215,000 to several class
representatives out of an $18 million fund).
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say that incentive awards are “routinely approve[d].”
Id., citing Cullen v. Whitman Med. Corp., 197 F.R.D. 136, 145 (E.D. Pa. 2000).

The

purpose of such awards is to encourage socially beneficial litigation by compensating
named plaintiffs for their expenses on travel and other incidental costs, as well as their
personal time spent advancing the litigation on behalf of the class and for any personal risk they
undertook. Id., citing Muhammad, 2008 U.S. Dist. LEXIS 103534, at *25; Varcallo v. Mass.
Mut. Life Ins. Co., 226 F.R.D. 207, 257 (D.N.J. 2005).
Class members would have received nothing had Plaintiffs not been willing to step up
and file this action. Plaintiffs gave their time and effort to prosecute the case. They were both
deposed, and they contributed to extensive discovery efforts. They consulted with counsel
regarding critical aspects of the settlement. They made themselves available to counsel whenever
they were needed and stood willing to do whatever tasks would be asked of them as the
case progressed. Accordingly, the proposed service awards are justified and appropriate. See
Archbold, 2015 WL 4276295, at *6.
VI.
Conclusion
In accordance with the foregoing analysis, the Court ORDERS as follows:
(1) that pursuant to Fed. R. Civ. P. 23(e), final approval is granted in all respects of the
terms and provisions of the Class Settlement and Release Agreement (“Settlement Agreement”),
which the Court preliminarily approved by Order entered on September 14, 2021;
(2) Plaintiffs and Class Representatives Stephanie Adkins and Douglas Short are each
awarded a service award of $10,000 in recognition of their service to the class;
(3) Class Counsel are awarded their attorneys’ fees from the settlement fund in the amount
of $331,666.67, which represents one-third of the settlement fund;

12

(4) Class Counsel are awarded their litigation expenses from the settlement fund in the
amount of $10,881.17;
(5) The Class Administrator is awarded administrative costs and fees incurred from the
settlement fund;
(6) The class and individual claims in this action are dismissed on the merits and with
prejudice; and
(7) The Court retains jurisdiction over this action for the purpose of interpretation and
enforcement of the Settlement Agreement, including oversight of settlement administration and
distribution of settlement funds.
Under Rule 54(b), there being no just reason for delay, the Court directs entry of a final
judgment as to the matters determined by this Opinion and Order.
The Clerk is requested to forward a copy of this written Opinion and Order to all counsel
of record.
Entered: February 3, 2022

The Honorable Frank W. Volk
United States District Judge

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