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OSLAN v. LAW OFFICES OF MITCHELL N. KAY

November 18, 2002

SALENA OSLAN, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
V.
LAW OFFICES OF MITCHELL N. KAY DEFENDANT.



The opinion of the court was delivered by: Marvin Katz, Senior United States District Judge

MEMORANDUM & ORDER

The parties have requested approval of a settlement of this class action, which consists of claims under the Fair Debt Collection Practices Act, the Pennsylvania Fair Credit Extension Uniformity Act, and the Pennsylvania Unfair Trade Practices and Consumer Protection Law. According to the Settlement Agreement, each member of the Class who has presented a timely claim will receive an equal share of a $20,000 award deposited in the Settlement Fund. The representative Plaintiff, Salena Oslan, will receive an award of $1,000 from the Settlement Fund. Defendant has agreed to pay up to $55,000 in attorneys' fees, costs, and reimbursable expenses and also fund the administration of the notice and awards. After consideration of the terms of the proposed settlement and the interests of the Class, the court approves the settlement under Rule 54(b) of the Federal Rules of Civil Procedure.

A Final Judgment and Order follows.

I. Introduction

A. Background and Allegations

Ms. Oslan ("Plaintiff"), filed this class action lawsuit against the Law Offices of Mitchell N. Kay ("Kay" or "Defendant") on December 3, 2001, alleging that letters mailed to her and others by the Defendant violated the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq., ("FDCPA"); the Pennsylvania Fair Credit Extension Uniformity Act, 73 P.S. § 2270.1 et seq.;*fn1 and the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq. ("CPL"). The Complaint alleged, inter alia, that the Defendant sent the letters knowing that recipients would wrongly believe that a law firm and lawyers were participating in the collection of these debts. Plaintiff also alleged that the letters were objectively false in telling recipients they only had one opportunity to accept the so-called "settlement offer," when in fact Defendant sent subsequent letters with the same offer.

The court held a pretrial conference on February 26, 2002. On March 26, 2002, the court granted Plaintiff's Motion for Class Certification, in accordance with Federal Rule of Civil Procedure 23(b)(2), (b)(3). The plaintiff class ("Class") consists of all persons in the Commonwealth of Pennsylvania to whom, during the two years prior to the filing of this Complaint, Defendant sent two debt collection letters offering initial so-called "one-time settlement offers," in the form of the letters attached to the Complaint, in an attempt to collect a non-business debt, which letters were not returned as undeliverable by the Postal Service.

On May 10, 2002, the case was listed for a jury trial on July 15, 2002. Magistrate Judge Jacob P. Hart held a settlement conference on June 17, 2002. On May 20, 2002, Defendant and Plaintiff filed Motions for Summary Judgment, both of which the court denied on June 20, 2002. After a hearing on July 15, 2002, the court granted Plaintiff's Motion for Preliminary Approval of Settlement Notice to Class.

On November 8, 2002, Plaintiff filed a Motion for Award of Attorneys' Fees and Reimbursement of Expenses, requesting $55,000 plus interest to be paid from the Settlement Fund, and a Motion for Final Approval of Class Action Settlement and Award to Representative Plaintiff.

B. The Terms of the Settlement

Pursuant to the Settlement Agreement, Defendant would pay the sum of $1,000 in full and complete satisfaction of the individual claims of Plaintiff; the sum of $20,000 in full and complete satisfaction of the damages claims of the Plaintiff and the Class in accordance with 15 U.S.C. § 1692k(a)(2)(B) and 73 P.S. § 201-9.2(a); and up to $55,000 in attorneys' fees and costs and reimbursable expenses of the Plaintiff and Class members. Defendant also agreed to fund the costs of notice and claims administration. Following the July 15, 2002 hearing on the Motion for Preliminary Approval of Settlement Notice to Class, Defendant deposited $76,000 into an interest-bearing account at Hudson United Bank ("Settlement Fund").

C. The Fairness Hearing

On November 18, 2002, the court held a fairness hearing on the proposed settlement. Counsel for the Class presented the terms of a final judgment giving effect to the Settlement Agreement. Counsel for the Class and Defendant expressed their continued approval of the settlement as a fair resolution of Plaintiff's claims and the interests of the Class.

Counsel for Defendant raised the concern that Class members were continuing to make claims under the settlement after the deadline for responding to the Notice. With consent of both parties, the court declared that it would deem "late" all claims received by Defendant after November 18, 2002, except as provided by the court. As of November 18, 2002, no members of the Class have made any objections to the settlement and 319 Class members have filed claims under the settlement.

II. Examination of the Settlement

In order to ensure meaningful appellate review, the district court must present its reasoning for approving the settlement. See Eichenholtz v. Brennan, 52 F.3d 478, 488-89 (3d Cir. 1995); Bryan v. Pittsburgh Plate Glass Co., 494 F.2d 799, 804 (3d Cir. 1974), cert. denied, 419 U.S. 900 (1974) ("It is essential in cases such as this that the district court set forth the reasoning supporting its conclusion in sufficient detail to make meaningful review possible; use of `mere boilerplate' language will not suffice."). The court should consider how the substantive terms of a settlement compare to the likely result of a trial and whether the process of negotiating the settlement was free of coercion and conducted by experienced counsel. See Malchman v. Davis, 706 F.2d 426 (2d Cir. 1983) (citing Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 424-25 (1968)). In addition to finding the settlement fair, the court must be satisfied that the Class was properly certified under Federal Rule of Civil Procedure 23 and that members of the Class have received adequate notice of the action and settlement.

A. Class Certification

Although the court may certify a "settlement only" class, it may not substitute a finding of fairness with respect to the proposed settlement for Rule 23(a) and (b) inquiries. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620-21 (1997); Ortiz v. Fibreboard Corp., 527 U.S. 815, 848-49 (1999) (holding that when certifying a class for settlement purposes only, the district court should pay "heightene[d] attention . . . to the justifications for binding the class members . . . . because certification of a mandatory settlement class, however provisional technically, effectively concludes the proceeding save for the final fairness hearing") (citations omitted). See also In re Prudential Ins. Co. of Amer. Sales Practices Litig., 148 F.3d 283, 308 (3d Cir. 1998) ("[A] district court must first find a class satisfies the requirements of Rule 23, regardless of whether it certifies the class for trial or settlement").

By Order dated March 26, 2002, the court granted Plaintiff's Motion for Class Certification. The court found that the Class satisfied numerosity, commonality, typicality, and adequacy of representation under Federal Rule Civil Procedure 23(a) and satisfied Rule 23(b)(2), (b)(3).*fn2 Defendants do not challenge certification for the purposes of settlement.

B. Notice to Members of the Class

Because the Class was certified under Federal Rule of Civil Procedure 23(b)(3), Plaintiff must also satisfy Rule 23(c)(2), which requires "the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable efforts." By Order dated April 18, 2002, the court granted Plaintiff's Motion to Approve Form of Notice to Class Members. On May 31, 2002, the court granted the Joint Motion For Stay of Deadline for Notice to Class because the parties reported that they were near settlement and therefore could conserve resources and reduce confusion by sending members of the Class a single letter notifying them of the action and the proposed settlement.

Federal Rule of Civil Procedure 23(e) states that "notice of the proposed . . . compromise shall be given to all members of the class in such manner as the court directs." Plaintiff provided notice of the proposed settlement and the Final Approval Hearing to Class members via first class mail, based on each member's last known address in Defendant's records, within thirty days of the July 15, 2002 hearing. The notice provided the date and location of the Final Approval Hearing and included instructions on how to opt-out of the Class and object to the settlement and proposed payment. The court ...


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