The opinion of the court was delivered by: RICHARD B. SURRICK, District Judge
Plaintiff, Maxine Orloff, ("Plaintiff) filed this consumer class
action against Defendants, Syndicated Office Systems ("SOS"), Healthcare
Business Services ("HBS"), and Central Financial Control ("CFC") after
HBS and CFC attempted to collect a debt for medical expenses that
Plaintiff allegedly owed to HBS. Plaintiff alleges that Defendants
violated the Credit Repair Organization Act, 15 U.S.C. § 1679, et.
seq. ("CROA"), the Fair Debt Collection Practices Act,
15 U.S.C. § 1692, et seq. ("FDCPA"), the Pennsylvania Fair Credit Extension
Uniformity Act, 73 PA. CONS. STAT. § 2270.1, et seq. ("FCEUA"), and
the Unfair Trade Practices and Consumer Protection Law, 73 PA. CONS.
STAT. § 201-1, et seq. ("UTPCPL"). On January 21, 2004, we
provisionally certified this case as a class action pursuant to Federal
Rules of Civil Procedure 23(a) and 23(b)(1) for the purpose of achieving
a settlement. On March 29, 2004, we held a fairness hearing to assess the
settlement the parties reached. Presently before the Court is Plaintiff's
Motion for Final Approval of Class Action Settlement (Doc. No. 35) and
Plaintiff's Motion for Award of Attorneys' Fees and Reimbursement of
Expenses (Doc. No. 36). For the following reasons, we will grant both
Motions. I. BACKGROUND
A. Plaintiff's Allegations
Plaintiff's claims are based on two letters that she received from HBS
and CFC seeking to collect money owed to a medical facility where
Plaintiff purportedly incurred unreimbursed medical expenses. (Am. Compl.
¶¶ 10-19.) Both letters allegedly attempted to coerce Plaintiff into
paying a debt that she purportedly owed. (Id. ¶¶ 10, 12.) The
letters allegedly were false, deceptive, misleading, and unfair and
violated CROA, FDCPA, FCEUA, and UTPCPL. Plaintiff alleges that
Defendants' acts caused her actual and consequential damages.
(Id. ¶ 22.)
Plaintiff purports to bring this action on behalf of herself and a
class of persons who received substantially similar letters from
Defendants during the two years prior to the filing of the complaint (the
"Class"). (Id. ¶ 23.) Plaintiff alleges that the Class has
hundreds, if not thousands of members, the precise number of which is
known only to Defendants. (Id. ¶ 24.) Plaintiff argues that
there are questions of law and fact common to the Class that predominate
over other questions, namely, whether Defendants violated CROA, FDCPA and
UTPCPL by mailing letters substantially similar to those mailed to
Plaintiff. (Id. ¶ 25.) Plaintiff states that her claims are
typical of the claims of the Class, which all arise from the same
operative facts and are based on the same legal theories. (Id.
¶ 26.) Plaintiff claims she has fairly and adequately protected the
interests of the Class and that she has retained counsel experienced in
handling class actions and claims involving unlawful business practices.
(Id. ¶ 27.) Finally, Plaintiff argues that this action meets
the other criteria required for class treatment, including the
requirement that a class action be superior to other available litigation
methods for the fair and efficient adjudication of this controversy.
(Id. ¶ 31.) B. The Settlement and the Fairness Hearing
The settlement provides for the following: (1) Defendants shall fully,
finally, and completely forgive ten percent, or approximately $437,000,
on a pro rata basis, of the total debt allegedly owed to Defendants by
the approximately 3,340 members of the Class, and shall report that ten
percent forgiveness to the consumer reporting agencies to which
Defendants report; (2) Plaintiff, as a representative of the Class, shall
receive $5,000 in full settlement and satisfaction of her individual
claims pursuant to 15 U.S.C. § 1692k(a)(2)(B)(i), and as compensation
for her services rendered to the Class as well as a ten percent
forgiveness of her alleged debt; (3) Defendants shall fund all
administration expenses related to the settlement, including the costs
required to provide notice of the settlement to the Class; (4) Defendants
shall confirm that they no longer send the letter attached as Exhibit A
to the complaint in connection with their efforts to collect debts in
Pennsylvania; (5) Defendants shall revise the letter attached as Exhibit
B to the complaint and begin using the form of letter attached to the
Settlement Agreement at Tab 1 in connection with their efforts to collect
debts in Pennsylvania; and (6) Defendants shall pay up to $67,500 to
satisfy Plaintiff's reasonable attorneys' fees and costs, subject to the
approval of the Court.
Defendants identified 3,147 potential Class members and mailed them
notice of the settlement on February 17, 2004. (Doc. No. 40 ¶ 3.) The
notice conformed to the requirements of Rule 23 and informed the Class
members of the existence of this action, the terms of the settlement, and
the Class members' rights with respect to the settlement. Specifically,
the notice informed each Class member that they had the right to
participate in the settlement or opt out of the Class, and to object to
any of the terms of the settlement. The notice also informed each Class member of the procedure necessary to opt out of the Class
and/or object to the settlement, including each Class members' right to
appear at the fairness hearing scheduled for March 29, 2004. Notices
could not be served on 665 Class members, either because their last known
addresses were invalid or the notices were returned as "undeliverable" by
the United States Postal Service. (Id. ¶ 6.) As of March 23,
2004, only one potential Class member opted out of the settlement.
(Id. ¶ 7.) No Class member have objected to the settlement.
(Id. ¶ 8.) On March 29, 2004, a fairness hearing was
conducted with respect to the settlement. No Class members appeared at
that hearing to object to the settlement.
II. FAIRNESS OF THE SETTLEMENT
In order to ensure meaningful appellate review of a decision to approve
a settlement, a district court must present its reasons for approving the
settlement. Eichenholtz v. Brennan, 52 F.3d 478, 488-89 (3d Cir.
1995). "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." Bryan v. Pittsburgh Plate Glass Co., 494 F.2d 799,
804 (3d Cir. 1974). First we will examine the proposed Class to ensure
that it meets the requirements of Rule 23. Then we will evaluate the
fairness of the settlement by following the nine-factor test adopted by
the Court of Appeals for the Third Circuit in Girsh v. Jepson,
521 F.2d 153 (3d Cir. 1975).
On January 21, 2004, we provisionally certified the Class for the
purpose of reaching a settlement. Before we can finally approve the
settlement, however, Plaintiff must demonstrate that the Class meets the
requirements of Rule 23. In re Prudential Ins. Co. of Am. Sales
Practice Litig., 148 F.3d 283
, 308 (3d Cir. 1998) ("[A] district
court must first find a class satisfies the requirements of Rule 23,
regardless whether it certifies the class for trial or for settlement.").
To be certified, the Class must meet all of the requirements of
Rule 23(a), and the action must fit into one of the three categories of class
actions set forth in Rule 23(b)(1), (b)(2) or (b)(3). In re Life USA
Holding Inc., 242 F.3d 136
, 143 (3d Cir. 2001). Rule 23(a) states
One or more members of a class may sue or be sued
as representative parties on behalf of all only if
(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 parties 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.
FED. R. CIV. P. 23(a). "These four elements are often referred to
as numerosity, commonality, typicality, and adequacy of representation,
respectively." In re Life USA, 242 F.3d at 143.
"Numerosity requires a finding that the putative class is so numerous
that joinder of all members is impracticable." Newton v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 182 (3d Cir.
2001). Defendants represent that 3,340 people received the debt
collection letters at issue in this case during the relevant time period.
"No minimum number of plaintiffs is required to maintain a suit as a
class action, but generally if the named plaintiff demonstrates that the
potential number of plaintiffs exceeds 40, the first prong of Rule 23(a)
has been met." Stewart v. Abraham, 275 F.3d 220, 227 (3d Cir.
2001); see also Oslan v. Collection Bureau of Hudson Valley,
206 F.R.D. 109, 111 (E.D. Pa. 2002) (finding numerosity requirement met when
there were either 740 or 941 class members). A class with 3,340 potential
members satisfies the numerosity requirement. 2. Commonality
Commonality demands that there are "questions of law or fact common to
the class." FED. R. CIV. P. 23(a)(2). "The commonality requirement will
be satisfied if the named plaintiffs share at least one question
of fact or law with the grievances of the prospective class."
Stewart, 275 F.3d at 227 (quoting Baby Neal v. Casey,
43 F.3d 48, 56 (3d Cir. 1994)). Generally, courts have held that the
commonality requirement is satisfied when "the defendants have engaged in
standardized conduct towards members of the proposed class by mailing to
them allegedly illegal form letters or documents." Saunders v. Berks
Credit & Collections, Inc., No. 00-3477, 2002 WL 1497374, at *6
(E.D. Pa. July 11, 2002) (citing Keele v. Wexler, 149 F.3d 589,
594 (7th Cir. 1998)). Furthermore, courts in this district have
previously found commonality in debt collection letter class action
lawsuits. See, e.g., Saunders, 2002 WL 1497374, at *6 (finding
commonality requirement met when consumers sent substantially similar
debt collection letters); Hudson Valley, 206 F.R.D. at 111
(same); Schilling v. Let's Talk Cellular & Wireless, No.
00-3123, 2002 WL 391695, at *1 n.1 (E.D. Pa. Feb. 6, 2002) (same).
Plaintiff claims that Defendants sent her debt collection letters that
were substantially similar to those sent to the other Class members and
that those letters violated the same federal and state debt collection
statutes. These allegations are sufficient to show questions of law or
fact that are common to the Class.
Typicality requires that "the claims or defenses of the representative
parties are typical of the claims or defenses of the class." FED. R. CIV.
P. 23(a)(3). The central inquiry in a typicality evaluation is whether
"the named plaintiff's individual circumstances are markedly different or
. . . the legal theory upon which the claims are based differs from
that upon which the claims of other class members will perforce be based." Eisenberg v.
Gagnon, 766 F.2d 770, 786 (3d Cir. 1985) (quoting Weiss v. York
Hosp., 745 F.2d 786, 809 n. 36 (3d Cir. 1984). "The heart of this
requirement is that the plaintiff and each member of the represented
group have an interest in prevailing on similar legal claims."
Seidman v. Am. Mobile Sys., Inc., 157 F.R.D. 354, 360 (E.D.
Plaintiffs claims and those of the other Class members are typical
because Plaintiff and the other Class members received substantially
similar letters and claim that those letters violated the same federal
and state statutes. Other courts have found the typicality requirement
satisfied under similar circumstances in debt collection class actions.
See, e.g., Saunders, 2002 WL 1497374, at *7; Hudson
Valley, 206 F.R.D. at 112; Schilling, 2002 WL 391695, at *1
n.1. We are satisfied that the typicality requirement has been met here.
4. Adequacy of Representation
A class representative is adequate if (1) the class representative's
counsel is competent to conduct a class action; and (2) the class
representative's interests are not antagonistic to the class's interests.
In re General Motors Corp. Pick-up Truck Fuel Tank Prods. Liab.
Litig., 55 F.3d 768, 800-01 (3d Cir. 1995). A number of courts in
this district have found that Plaintiff's counsel are competent to
prosecute class actions such as this. See, e.g., Saunders, 2002
WL 1497374 at *8 ("Defendants do not challenge the qualifications of
Saunders' counsel [Francis & Mailman P.C.] and the Court finds them
to be well qualified"); Hudson Valley, 206 F.R.D. at 112
("Francis & Mailman P.C. and Donovan Searles LLC, possess sufficient
qualifications, skill, and experience in consumer law and class action
practice to prosecute this suit to its conclusion."). We concur.
Plaintiffs counsel is very experienced in prosecuting ...