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Rosenau v. Unifund Corp.

August 10, 2009

RICHARD ROSENAU, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
UNIFUND CORPORATION A/K/A UNIFUND GROUP CORPORATION AND UNIFUND CCR PARTNERS, DEFENDANTS.



The opinion of the court was delivered by: Rufe, J.

MEMORANDUM OPINION AND ORDER

The parties in this putative class action alleging violations of the Fair Debt Collection Practices Act ("FDCPA")*fn1 have negotiated a class action settlement ("Settlement") and now seek approval of the same. Plaintiff Richard Rosenau's Motion for final approval of the Settlement, in addition to approval of Class Counsel's fees and costs and of an award to Plaintiff as the Class Representative, is presently before the Court.*fn2 For the reasons that follow, the Court will approve the Settlement, as well as the fees and costs of Class Counsel and the award to Plaintiff as the Class Representative.

I. FACTUAL AND P ROCEDURAL BACKGROUND

Plaintiff Richard Rosenau filed a class action complaint on March 29, 2006 against Defendants Unifund Corporation (a/k/a Unifund Group) and Unifund CCR Partners under the FDCPA.*fn3 Plaintiff alleged that he received a deceptive debt-collection letter from Defendants, purporting to be from the "Legal Department" despite the lack of an attorney involvement.*fn4

Defendants answered Plaintiff's Complaint on May 11, 2006.*fn5 On October 27, 2006, Plaintiff filed a Motion for class certification,*fn6 while on the same day, Defendants filed a Motion for judgment on the pleadings or, in the alternative, for summary judgment.*fn7 On November 16, 2006, Plaintiff filed its opposition to Defendants' dispositive Motion.*fn8 Defendants filed their opposition to Plaintiff's Motion for class certification on November 17, 2006.*fn9 Plaintiff filed a reply in further support of his Motion for class certification on November 22, 2006.*fn10

In a June 28, 2007 Memorandum Opinion and Order, the Court granted Defendants' Motion for judgment on the pleadings, dismissed Plaintiff's Motion for class certification and dismissed Plaintiff's Complaint with prejudice.*fn11 The Court held that the letter of which Plaintiff complained was not false, deceptive or misleading under the FDCPA, as not even the least sophisticated debtor could reasonably interpret the letter as having been written or reviewed by an attorney.*fn12 Although the Court granted Defendants' Motion for judgment on the pleadings and dismissed Plaintiff's Complaint, the Court also found that the class Plaintiff sought to represent satisfied the requirements for a Rule 23(b)(3) class action.*fn13

On July 3, 2007, Plaintiff appealed the grant of Defendant's Motion for judgment on the pleadings and the dismissal of his Complaint to the Court of Appeals for the Third Circuit.*fn14 In an August 20, 2008 opinion, the Third Circuit reversed the June 28, 2007 Order of this Court, holding that "it is possible that a debtor receiving a collection letter from Unifund could reasonably infer that the Legal Department contains attorneys who played a role in writing or sending the letter."*fn15 On September 17, 2008, the Third Circuit remanded this matter for further proceedings.*fn16

On December 15, 2008, the Court held a scheduling conference in this matter,*fn17 and issued a scheduling order the next day to govern further proceedings.*fn18 Plaintiff renewed his Motion for class certification and in light of the Court's findings in its June 28, 2007 Memorandum Opinion and Order, the Court certified the Class on contest, defining the Class as follows:

All persons with addresses in the Commonwealth of Pennsylvania to whom collection letters were sent by Defendants Unifund Corporation and Unifund CCR Partners from March 30, 2005 to March 30, 2006 in an attempt to collect a debt incurred primarily for personal, family or household purposes, in which Defendants state that the letter came from or was otherwise authored by the "Legal Department."*fn19

In the same December 31, 2008 Order, the Court also appointed Plaintiff Richard Rosenau as Class Representative; Plaintiff's counsel as Class Counsel; and First Class, Inc. of Chicago as Class Action Administrator ("CAA").*fn20

In the meantime, the parties had resumed discovery upon remand and motion practice was required for discovery issues that arose. Plaintiff filed his first Motion to Compel on December 9, 2008.*fn21 The parties were not able to resolve the issues among themselves, and Plaintiff filed yet another Motion to Compel on January 5, 2009.*fn22 After Defendants failed to respond to either Motion, the Court granted both of Plaintiff's Motions to Compel as unopposed on January 27, 2009.*fn23 Among the discovery conducted by the parties after remand were interrogatories and requests for documents from Plaintiff that Defendants answered.*fn24 Plaintiff also took three depositions in a location close to Defendants' Ohio offices concerning liability and other class issues.*fn25 Finally, Plaintiff subpoenaed and deposed Defendant's certified public accountant ("CPA") on January 13, 2009 in New York City to probe Defendants' net worth.*fn26

II. SETTLEMENT, P RELIMINARY APPROVAL AND CLASS NOTICE

On March 5, 2009, after counsel advised the Court that they had reached a settlement in principle, the Court issued an amended Scheduling Order.*fn27 By March 18, 2009, all parties had signed the Class Action Settlement Agreement and Release ("Settlement Agreement").*fn28 Under the terms of the Settlement Agreement, in exchange for a release of the Class claims, Defendants agreed to make a class-wide settlement payment of $100,000 into a settlement fund to be divided equally among the class members on a claims-made basis.*fn29 A cy pres donation of any unclaimed, undistributed or undistributable monies in the settlement fund would be made in equal parts to the Senior Law Center and to Legal Aid of Southeastern Pennsylvania.*fn30 Separate from the settlement fund, Defendants also agreed to pay Class Counsel's fees and costs,*fn31 an award of $4,000 to Plaintiff as the Class Representative, including a $1,000 individual award and a $3,000 incentive award,*fn32 as well as the costs of the CAA.*fn33 At the time of the Settlement Agreement, the parties had not yet agreed on the amount of Class Counsel's fees and costs.

Per the amended Scheduling Order, Plaintiff filed his uncontested Motion for preliminary approval of the class settlement and notice to the class on March 30, 2009.*fn34 The Court granted that Motion for preliminary approval soon thereafter, setting a final settlement hearing date for August 3, 2009 at 10:00 a.m.*fn35 The Court also approved the sample Class Notice and Claim Form.*fn36 Among other things, the Class Notice included information on the proposed class settlement;*fn37 instructions class members could follow in order to make a claim to, object to or opt out of the proposed settlement;*fn38 and information regarding the fairness hearing set for August 3, 2009.*fn39 As the fees and costs of Class Counsel had yet to be determined, the Class Notice stated that "Class Counsel will ask the court to award fees and expenses not to exceed $205,000."*fn40 The Class Notice also included a toll-free telephone number that class members could contact for more information.*fn41 This toll-free number was established and maintained by Class Counsel, and many class members did contact it for further information.*fn42 Class Counsel provided the class list to the CAA.*fn43 The CAA processed the class list through the Coding Accuracy Support System ("CASS") which corrects zip codes and verifies that the address is correctly formatted.*fn44 The CAA also processed the list though the National Change of Address ("NCOA") update process certified by the United States Postal Service which provides current address information, if available, as well as information regarding deliverability.*fn45 Finally,

the CAA checked for duplicate records, removing the three that were found.*fn46 On April 14, 2009, the CAA mailed the Class Notice packets including the Claim Form to 6,028 class members via First Class mail with postage prepaid and forwarding service requested.*fn47 Any Class Notice packets that were returned with a forwarding address were sent out again. 525 packets were returned to the CAA as undeliverable with no forwarding address and no further information provided by the United States Postal Service.*fn48

The Class Notice notified class members that they had until June 19, 2009 to file a timely Claim Form.*fn49 The Class Notice also gave a deadline of May 19, 2009 for class members to either object to the Settlement, and to exclude themselves from it.*fn50 Hence, according to the terms of the Class Notice, class members had over a month from the time the Class Notice packets were mailed to either object to the Settlement or to opt out of it. They had over two months to file a claim.

III. NEGOTIATION OF CLASS COUNSEL' S F EES AND C OSTS

As of July 8, 2009, Class Counsel, using the lodestar method, calculated that they had accrued $194,287.56 in fees and costs that they were owed.*fn51 Class Counsel calculated their lodestar as $184,222 in fees, which included 172.30 hours billed by Senior Partner Cary Flitter at a rate of $515 per hour for a total of $88,734.50; 191.10 hours billed by Junior Partner Theodore E. Lorenz at a rate of $370 per hour for a total of $70,707; 27.20 hours billed by Associate Andrew M. Milz at a rate of $210 per hour for a total of $5,712; 74.30 hours billed by Associate K. Timily Frazier at a rate of $210 per hour for a total of $15,603; 12.60 hours billed by Paralegal Joan M. Raughley at a rate of $145 per hour for a total of $1,827; and 11.30 hours billed by law clerks at a rate of $145 per hour for a total of $1,638.50.*fn52 Class Counsel also incurred $10,065.56 in costs.*fn53 Nevertheless, in negotiations following the Settlement Agreement, the parties agreed in June of 2009 that Class Counsel would cap their fees and costs at $165,000.*fn54

IV. RESPONSE TO THE CLASS NOTICE AND FAIRNESS HEARING

In response to the mailed Class Notice packets, and pursuant to instructions provided therein, the CAA received from class members 947 timely claims for payment, 16 late claims and 3 requests for exclusion.*fn55 The CAA did not receive any objection to the Settlement, either in the form specified in the Class Notice, or otherwise.*fn56 Nor did the CAA receive any objection to the proposed amount of Class Counsel's fees and costs, or to the award to Plaintiff as the Class Representative.*fn57 No class member submitted a notice of intention to appear at the August 3, 2009 Fairness Hearing. In sum, no objection, to any aspect of the Settlement, has been registered by a class member.

On July 15, 2009, Plaintiff filed a timely Motion for final approval of the Settlement, as well as for approval of attorneys' fees and costs and the award to Plaintiff.*fn58 The Court held a Fairness Hearing on August 3, 2009, at which counsel provided information on the record. One member of the Class, Ms. Maribel Cancel, did personally appear at the Fairness Hearing, but did not make a statement nor raise any other issue during the hearing.*fn59 As Class Counsel later determined that Ms. Cancel had already filed a timely claim for payment, her appearance at the hearing has no effect on the instant Motion. Also at the hearing, Class Counsel requested without opposition from Defendants that the Court approve treating the 16 late claims as timely. Counsel for Defendants joined in the instant Motion, ...


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