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Hays v. Eaton Group Attorneys, LLC

United States District Court, M.D. Louisiana

February 4, 2019

LINDSAY HAYS, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED
v.
EATON GROUP ATTORNEYS, LLC, AND MIDLAND FUNDING, LLC

          RULING AND ORDER ON JOINT MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT

          JOHN W. DEGRAVELLES UNITED STATES JUDGE

         Before the Court is the motion (Doc. 21) by Plaintiff Lindsay Hays (“Plaintiff”), individually and as a representative of the class of persons defined below in Paragraph 3(a) of the proposed class settlement agreement (Doc. 21-3 at 1-2) (“Class”), and Eaton Group Attorneys, LLC, (“Defendant”) (collectively, the “Parties”) to (i) enter an order which preliminarily approves the Class Settlement Agreement (“Agreement”) (Doc. 21-3), attached as Exhibit 1 to the Declaration of Samuel J. Ford (Doc. 21-2) (the “Declaration”); (ii) set dates for Class members to opt out, object, or return a claim form; (iii) schedule a hearing for final approval of the Agreement; (iv) approve the mailing of the notice to the Class in the form of Exhibit 2 to the Declaration (the “Notice”) (Doc. 21-4.); and (v) find that the mailing of such Notice satisfies both statutory requirements and due process. For the reasons which follow, the motion is granted.

         FACTUAL AND PROCEDURAL BACKGROUND

         THE PLEADINGS

         Plaintiff alleges in her pleadings that Defendant committed Fair Debt Collection Practices Act (“FDCPA”) violations by: (1) making false, deceptive, and misleading representations in connection to the collection of a debt and (2) using unfair and unconscionable means to collect or attempt to collect a debt.

         Plaintiff seeks to certify the case as a class action pursuant to Rule 23 of the Federal Rules of Civil Procedure and proposes to act as representative of a state-wide class consisting of Louisiana consumers who, within one year prior to the filing of this action, “received a collection letter from Defendant offering to discuss a voluntary repayment plan in connection to a signed consent judgment and/or the disclosure of personal, financial, employment, and/or income information.” (Doc. 21-3 at 1-2.)

         Specifically, Plaintiff alleges that on or about May 31, 2016, Defendant mailed a collection letter (the “Letter”) to Plaintiff. Defendant attached to the Letter a drafted consent judgment for a lawsuit captioned Midland Funding LLC versus Lindsay Hays, No. 468028-17, Ascension Parish Court, Parish of Ascension, State of Louisiana (the “Suit”). The consent judgment attached to the Letter was signed by Defendant and only needed Plaintiff's signature to be filed as a judgment against Plaintiff for the full amount of the alleged debt and all costs of the Suit. In signing the consent judgment, Plaintiff would also waive citation, service, petition, and all delays.

         The Letter also contained a requested information section entitled “PLEASE COMPLETE & RETURN, ” requesting the following information from Plaintiff:

a. Name;
b. Social Security number;
c. Address;
d. Phone number;
e. Employer; f. Employer phone number;
g. Employer address;
h. Date of hire;
i. Gross weekly wage;
j. Spouse name;
k. Spouse Social Security number;
l. Spouse employer;
m. Spouse employer phone number;
n. Spouse employer address;
o. Spouse date of hire;
p. Spouse gross weekly wage.

         After the requested information section, the Letter contained signature lines for Plaintiff and a spouse under the statement “AUTHORITY GRANTED THIRD PARTIES TO VERIFY/CORRECT.” The only portion of the Letter actually addressing Plaintiff was an introductory paragraph at the top of the Letter, stating “[i]f you would like to explore a voluntary repayment plan then please provide the requested information. The debt will need to be acknowledged through the attached consent judgment. Please return these forms as soon as possible. This is a communication from a debt collector. This is an attempt to collect a debt. Any information obtained will be used for that purpose.”

         Plaintiff alleges Defendant sent letters with identical or substantially identical language to hundreds of Louisiana consumers. Plaintiff alleges the Letter is false, deceptive, and misleading because an unsuspecting debtor, seeking only to explore a voluntary repayment plan, could be fooled into executing the consent judgment or providing personal income information without knowledge of the consequences.

         THE PARTIES' SETTLEMENT

         The Parties represent that they began to engage in settlement negotiations after Plaintiff filed this action. The parties represent that these discussions were contentious, and each term of the settlement was hard fought. The Defendants and Class counsel ultimately reached an agreement on all terms, which they memorialized in the Class Settlement Agreement (Doc. 21-3). Defendant denies violating the FDCPA and denies all liability to Plaintiff and the Settlement Class. However, Defendant now desires to settle the claims solely to avoid the expense, burden, and uncertainty of further litigation, and to put to rest all claims that have been or could have been asserted by Plaintiff and the Settlement Class against Defendant in this Lawsuit.

         INFORMATION EXCHANGE

         Plaintiff's counsel represent that they have thoroughly investigated the underlying claims and gathered significant factual information through interrogatories, requests for the production of documents, requests for admission, and a deposition of Defendant's Certified Public Accountant.

         SUMMARY OF THE SETTLEMENT TERMS

         Counsel for the Parties represent that they have analyzed the legal and factual issues presented in this action, the risks and expense involved in pursuing the Lawsuit to conclusion, the likelihood of recovering damages in excess of those obtained through this settlement, the protracted nature of the litigation, and the likelihood, costs, and possible outcomes of one or more procedural and substantive appeals. Based upon counsels' review and analysis, the Parties have entered into the Agreement to settle and compromise this Lawsuit on the terms and conditions embodied in the Agreement and agree as follows:

a. Settlement Class. All persons in the State of Louisiana who received a collection letter from Defendant offering to discuss a voluntary repayment plan in connection to a signed consent judgment and/or the disclosure of personal, financial, employment, and/or income information between February 15, 2016 and February 15, 2017. There are approximately 1051 persons that fall within this class.
b. Relief to Plaintiff. Defendant through its insurer, agrees to pay $2, 500.00 to Plaintiff for her damages and her service as the Class Representative.
c. Relief to Settlement Class. Defendant, through its insurer will create a class settlement fund of $7, 000.00 (“Class Recovery”), which will distribute pro rata among Class members who do not exclude themselves and who timely return a valid claim form (“Class Claimants”). The term pro rata shall mean a distribution percentage based upon the $7, 000.00 Class Recovery divided by the total amount of claims submitted by persons who do not exclude themselves and who timely submit a claim form. Class Claimants will receive a pro rata share of the Class Recovery by check. Checks issued to Class Claimants shall be void after 60 days from the date of issuance. On or after 90 days following issuance of the last Class Claimants' checks, any uncashed checks or undistributed funds will be paid back to Defendant's insurer to offset its cost associated with sending class notice.
d. Attorneys' Fees and Costs. Counsel for Plaintiff and the Class shall petition the Court for approval of an award of fees in the amount of $22, 500.00. Pending the Court's approval, Defendant's insurer shall pay counsel for Plaintiff and the Class that amount which the Court deems reasonable, not to exceed $22, 500.00, as attorneys' fees. Defendant's insurer shall also pay all costs incurred by counsel for Plaintiff and all costs related to class notice and administration;
e. Class Notice. Within fourteen (14) days of entry of the Preliminary Approval Order, Defendant shall cause actual notice, in the form of Exhibit 2 to the Declaration, to be sent to the last known addresses of the Settlement Class members, according to Defendant's records. Defendant shall distribute the notice via any form of U.S. Mail providing address forwarding. Each notice shall be sent with a request for forwarding addresses. In the event that a notice is returned as undeliverable and a forwarding address is provided, Defendant shall cause to be forwarded any such returned notice to the address provided within seven days of receipt. Defendant is not required to skip trace any letters that are returned as undeliverable. If final approval is granted, Defendant shall retain all documents and records generated during its administration of the settlement, including records of notice given to the Settlement Class, records of undelivered mail, claim forms and payments to Class Claimants for a period of at least six months following the issuance of an order dismissing this Lawsuit with prejudice and the expiration of all deadlines for appeal from such order.
f. Class Members' Right to Opt Out. Any Class Member who properly files a timely written request for exclusion from the Class shall be excluded from the Class and shall have no rights as a Class Member pursuant to the Agreement. A request for exclusion must be in writing and state information, including the name, address, and phone number of the person(s) or entity seeking exclusion. The request must be mailed to Defendant's Counsel at the address provided in the Class Notice and received by such date as set by the Court. A request for exclusion that does not include all of the foregoing information, or that is sent to an address other than the one designated in the Class Notice, or that is not received within the time specified shall be invalid and the person(s) serving such request shall remain a Class Member and shall be bound as a Class Member by the Settlement, if approved. Defendant has an obligation to forward any objections or requests for exclusions received to Class Counsel within five (5) days of receipt.

(Doc. 21-3.)

         CLASS CERTIFICATION LEGAL STANDARD AND APPLICATION

         Rule 23 of the Federal Rules of Civil Procedure governs the conditional or preliminary certification sought by the Parties. The recent amendment to Rule 23(e) makes clear that its procedural safeguards apply to a “class proposed to be certified for purposes of settlement” and requires the Court to conclude that it will likely be able, after final hearing, to certify the class. Fed.R.Civ.P. 23(e). As the 2018 Advisory Committee Note to Rule 23(e)(2) explains:

The decision to give notice of a proposed settlement . . . should be based on a solid record supporting the conclusion that the proposed settlement will likely earn final approval after notice and an opportunity to object. . . . The amended rule also specifies that the standard the court should use in deciding whether to send notice--that it will likely be able both to approve the settlement proposal under Rule 23(e)(2) and, if it has not previously certified a class, to certify the class for purposes of judgment on the proposal.

         The 2018 Advisory Committee Note to Rule 23(e)(1) reiterates the same message in a different way, stating that “[t]he court should not direct notice to the class until the parties' submissions show it is likely that the court will be able to approve the proposal after notice to the class and a final approval hearing.” Fed.R.Civ.P. 23(e)(1) advisory committee's note to 2018 amendment.

         The 2018 Advisory Committee Note to Rule 23(e)(2) also makes clear that, “in addition to evaluating the proposal itself, the court must determine whether it can certify the class under the standards of Rule 23(a) and (b) for purposes of judgment based on the proposal.” Fed.R.Civ.P. 23(e)(2) advisory committee's note to 2018 amendment.

         Under Rule 23(a), the party seeking certification bears the burden of establishing four threshold requirements: (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 party 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. Unger v. Amedisys, 401 F.3d 316, 320 (5th Cir. 2005) (citing Berger v. Compaq Computer Corp., 257 F.3d 475, 479-80 (5th Cir 2001)). The certification requirements of Rule 23 generally apply when certification is for settlement purposes. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997); Fed.R.Civ.P. 23(e)(2) advisory committee note to 2018 amendment.

         Solely for the purposes of this motion and to effectuate the proposed settlement, Defendant does not dispute that the Settlement Class should be certified.[1]

         Rule 23(a)(1) - Numerosity: Rule 23(a) requires that the class be so large that joinder of all members is impracticable. To satisfy this requirement, “a plaintiff must ordinarily demonstrate some evidence or reasonable estimate of the number of purported class members.” Pederson v. La. State Univ., 213 F.3d 858, 868 (5th ...


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