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Dorrance v. ARS National Services Inc.

United States District Court, M.D. Pennsylvania

May 11, 2015

EDWARD DORRANCE, on behalf plaintiff and two classes, Plaintiffs


MALACHY E. MANNION, United States District Judge.

Pending before the court is the parties’ request for final approval of class action settlement. On the terms and for the reasons set forth herein, the parties’ request will be granted.

I. Procedural History

By way of relevant background, on December 14, 2012, the plaintiff, on behalf of himself and two classes, brought the instant action for damages seeking redress for violations of the Fair Debt Collection Practices Act, (“FDCPA”), 15 U.S.C. §1692, et seq., which prohibits debt collectors from engaging in abusive, unfair, and deceptive practices. (Doc. 1). A joint motion for preliminary approval of class action settlement agreement was filed on December 17, 2013. (Doc. 23). After directing the parties to respond to concerns of the court regarding the proposed settlement, (Doc. No. 24, Doc. 27, Doc. 29), by order dated September 26, 2014, the court granted preliminary approval of the proposed class action settlement, (Doc. 31). The court again granted preliminary approval to the parties’ proposed settlement on January 6, 2015, when the terms of the agreement were modified due to an error in calculating the class size. (Doc. 37).

A final fairness hearing was originally set for April 14, 2015. (Doc. 37). By order dated February 20, 2015, the final fairness hearing was re-scheduled to April 24, 2015, (Doc. 38), and was again re-scheduled to April 23, 2015, by order dated March 24, 2015, (Doc. 39).

The plaintiffs submitted their brief in support of the final approval of the class action settlement on April 21, 2015, (Doc. 41), and the final fairness hearing, in fact, took place on April 23, 2015.

II. Discussion

A. Plaintiff’s Complaint

In his complaint, the plaintiff alleges that debt collection letters sent to him by the defendant did not state the date on which the amount due was calculated and did not explain that interest would continue to accrue on unpaid principal. The plaintiff alleges that this allows the letters to be read in two contradictory ways contrary to the provisions of the FDCPA, i.e., that the stated amount of the debt was static, or that the stated amount of the debt was correct only as of the date of the letter. The plaintiff further alleges that the defendant sent letters which contained different settlement proposals and that he was confused by these proposals. As such, he alleges that the defendant again violated the FDCPA.

B. Settlement Agreement

The Settlement Agreement defines the settlement class[1] as “[a]ll natural persons with Pennsylvania addresses who had interest accruing on their accounts and to whom ARS sent one or more letters between December 12, 2011 to November 30, 2012.” (Doc. 23, Ex. 1, Settlement Agreement, ¶8). The Amendment to the Class Action Settlement Agreement, (“Amended Agreement”), identifies that this class is approximately 9, 861[2] persons. (Doc. 36, Ex. 1, p. 3).

The parties propose in the Amended Agreement that the defendant create a class settlement fund in the amount of $30, 000[3], to compensate class members. (Id.). The Settlement Agreement proposes that the costs of providing notice under the class settlement and costs of administering the class settlement are to be paid by the defendant. (Doc. 23, Ex. 1, ¶¶ 13, 14). The Settlement Agreement further provides that the named plaintiff, Mr. Dorrance, be awarded $2, 500 as statutory damages and for his service as class representative.[4] (Id., ¶9(b)). Also proposed under the Settlement Agreement is that class counsel receive $32, 500 for attorney’s fees and costs. (Id., ¶9(d)). Any undistributed funds are to be donated to North Penn Legal Services, Allentown, Pennsylvania, under the terms of the Settlement Agreement. (Id., ¶9(e)).

Notice under the Settlement Agreement was provided to class members by the direct mailing of a short form notice and a claim form to the last known addresses of the class members according to the defendant’s records. A long form notice was also posted to a website for any class member seeking further information about the settlement. Any class member could also request a copy of the long form notice, upon which the defendant or class administrator was to mail a copy. The Settlement Agreement provided the method for class members to exclude themselves from the settlement, as well as the process for objecting to the settlement.

At the final fairness hearing, after having discussed with counsel the concerns of the court relating to the disproportionality of attorney’s fees and costs and the class representative’s fees to the overall recovery of the class members, counsel for both parties agreed that a reasonable amendment to the terms of the agreement would include reducing the amount for the attorney’s fees and costs to $26, 000 (or 40% of the total ...

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