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Krimes v. JPMorgan Chase Bank, N.A.

United States District Court, E.D. Pennsylvania

May 24, 2017

JESSE KRIMES, on behalf of himself and all others similarly situated, Plaintiff,
JPMORGAN CHASE BANK, N.A., et al., Defendants.


          EDUARDO C. ROBRENO, J.

         Presently before the Court are Plaintiffs' Unopposed Motion for Final Approval of Class Action Settlement and Plaintiffs' Unopposed Motion for Attorneys' Fees, Costs, and Service Awards. After private mediation, Plaintiff, Jesse Krimes, and Defendant, JP Morgan Chase Bank, have agreed to settle Krimes' claims that Chase charged unreasonable fees for the use of a prepaid debit card issued to recently released prisoners. In short, the settlement fund provides for all debit card users to obtain a refund of all card service charges and ATM fees and allows them to obtain any remaining balances from their account via check. Chase has also agreed to pay from a separate fund, attorney fees, costs, and a service award.

         For the reasons that follow, the Court will grant both motions.

         I. BACKGROUND

         In September of 2013, Krimes was released from federal prison. ECF No. 1 ¶ 27. Upon his release, the Bureau of Prisons (“BOP”) provided to him a prepaid Chase debit card pursuant to the U.S. Debit Card program. Id. ¶ 28. The card was loaded with money that Krimes possessed when he was initially incarcerated and funds he accrued while incarcerated. Id.

         According to Krimes, if he and the other releasees “want[ed] their own money after they [were] released from prison, they [were] forced to accept a ‘consumer relationship' with Chase” and “accept the Chase U.S. Debit Card's terms.” Id. ¶¶ 2, 17 (emphasis original). Krimes also contends that Chase charged excessive fees for using the card. Id. ¶¶ 5, 29. For example, card holders were charged for using the card at a bank teller window, using non-network ATMs, checking their account balances, and were charged an inactivity fee. Id. ¶¶ 5-6, 29-30, 35.

         Krimes initiated this action on behalf of himself and others similarly situated on September 11, 2015 against Defendants Chase and Does 1-10, alleging unjust enrichment, conversion, and violations of Pennsylvania's Unfair Trade Practices and Consumer Protection Law. Id. ¶¶ 52-60, 86-108. The Court has jurisdiction under the Class Action Fairness Act. 28 U.S.C. § 1332(d).

         On March 31, 2016, the parties filed a joint motion to stay the proceedings pending mediation. ECF No. 27. The Court granted that motion on April 20, 2016. ECF No. 28. The parties engaged a neutral mediator, Jonathan Marks, and had multiple joint and ex parte telephone conferences with him, culminating in an all-day in-person mediation session on May 12, 2016. These negotiations resulted in the present settlement agreement.

         On August 1, 2016, Plaintiff filed a motion for preliminary approval of a class action settlement. ECF No. 31. The Court set the hearing to consider the motion for August 30, 2016. ECF No. 32. Before the hearing, a potential class member and plaintiff in his own similar suit, Brett Sheib, filed an objection to Plaintiff's motion. ECF No. 33.

         After the September 23, 2016 preliminary approval hearing, ECF No. 42, the Court granted the motion for preliminary approval of the class action settlement and overruled the objection thereto. ECF Nos. 43-44. The Order also set, inter alia, notice procedures, dates for opting in and out of the settlement, and a date for the final approval hearing.

         Plaintiff filed his unopposed motions for final approval and for attorneys' fees, costs, and service award on February 20, 2017. ECF Nos. 48-50. On April 12, 2017, the Court held the final settlement approval hearing.

         A. The Proposed Class Action Settlement

         The terms of the proposed class action settlement are set forth in the Settlement Agreement and Release (“Settlement Agreement”), ECF No. 31-1, and are outlined below.

         1. The Proposed Settlement Class

         The Settlement Agreement provides for a settlement class defined as follows:

All persons in the United States who, up to and including the date of preliminary approval, were issued BOP Debit Cards upon their release from federal correctional facilities as part of the U.S. Debit Card program operated by JPMorgan Chase Bank, N.A. for the United States Treasury Department and the Federal Bureau of Prisons.

ECF No. 31-1 ¶ 43.

         2. The Proposed Settlement Terms

         The Settlement Agreement provides that Chase will pay up to $446, 822 to the settlement class. Id. ¶¶ 45, 71. From this amount, each class member will be entitled to reimbursement of all fees imposed by Chase as well as all third-party ATM surcharges that were incurred on BOP debit cards before the date of preliminary approval. Id. ¶ 71.

         Settlement class members who still have active BOP debit card accounts will receive their settlement payments via deposit back into their accounts. Id. ¶ 73. Alternatively, they may choose to receive either a paper check or replacement debit card at no charge. Id. Class members who no longer possess an active BOP debit card account can request their payment via a paper check. Id. ¶ 75. Any class member requesting a check may also request that it include, in addition to his or her settlement payment, any residual balance in his or her debit card account. Id. ¶ 77.

         Notice and claims administration costs have been paid by Chase. Id. ¶ 47. If any of the money remains unclaimed after the initial distribution of payments, Chase will deduct the costs of notice and claims administration before making a supplemental distribution on a pro rata basis. Id. ¶ 76. Chase will also separately pay Plaintiff's requested service award, attorneys' fees, and costs not to exceed $250, 000. Id. ¶ 46-47. Specifically, Plaintiff's Counsel has requested $230, 312.89 for attorneys' fees, $14, 687.11 in costs, and a service award of $5, 000 for Krimes. ECF No. 49 at 7.

         In exchange for the benefits provided by the settlement, settlement class members agree to release all claims:

that were or could have been alleged in the Action and result from, arise out of, are based upon, or in any way relate to Chase's possession of Settlement Class Members' funds, or Settlement Class Members' access to their funds, as part of the BOP Debit Card Program; imposition on Settlement Class Members of Chase Fees or ATM Surcharges in relation to the BOP Debit Card Program; or any disclosures or other communication to Settlement Class Members by Chase concerning BOP Debit Cards.

ECF No. 31-1 ¶ 89.

         3. Class Notice

         The parties selected, and the Court approved, Kurtzman Carson Consultants (“KCC”) to disseminate notice and handle claims administration. ECF No. 31-1 ¶ 37; see ECF Nos. 43-44 (approving the employment of KCC and the notice program). The notices were designed to apprise the settlement class of their rights: (a) to make claims in the event they wished to elect to receive checks in the amount of their settlement share, and if requested, any residual balances remaining in their debit card accounts, (b) to exclude themselves from the settlement, or (c) to object to the settlement's terms or class counsel's anticipated fee application and request for Krime's service award. See Id. ¶¶ 53-68.

         The Class Notice program was comprised of: (a) direct mail notice; (b) publication notice in three periodicals; (c) a Settlement Website; (d) a toll-free telephone number; and (e) a long-form notice with more detail than the direct mail or publication notices, which were available on the Settlement Website or upon written or telephonic request. See Id. ¶¶ 61, 64-66.

         The forms of notice included, inter alia: (a) a description of the settlement; (b) the deadline for class members to make a claim or form-of-payment election, exclude themselves from the settlement class, or object to the settlement; (c) the address of the settlement website; and (d) the number of the toll-free telephone line. Id. ¶¶ 55-60.


         Under Federal Rule of Civil Procedure 23(e), the settlement of a class action requires court approval. Fed.R.Civ.P. 23(e)(2). A district court may approve a settlement agreement only “after a hearing and on finding that it is fair, reasonable, and adequate.” Id. When presented with a class settlement agreement, the court must first determine that the requirements for class certification under Rule 23(a) and (b) are met and then must separately determine that the settlement is fair to the class under Rule 23(e). In re Nat'l Football League Players Concussion Injury Litig., 775 F.3d 570, 581 (3d Cir. 2014).

         The factual determinations necessary to make Rule 23 findings must be made by a preponderance of the evidence. In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 320 (3d Cir. 2008). “‘The decision of whether to approve a proposed settlement of a class action is left to the sound discretion of the district court.'” In re Prudential Ins. Co. Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 299 (3d Cir. 1998) (quoting Girsh v. Jepson, 521 F.2d 153, 156 (3d Cir. 1975)). Where, as here, the court has not already certified the class prior to evaluating the settlement, the court must determine whether the proposed settlement class satisfies the requirements of Rule 23(a) and (b). Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 619 (1997); In re Pet Food Prods. Liab. Litig., 629 F.3d 333, 341 (3d Cir. 2010).

         Under Rule 23(h), at the conclusion of a successful class action, class counsel may apply to a court for an award of attorneys' fees. The amount of an attorneys' fee award “is within the district court's discretion so long as it employs correct standards and procedures and makes finding of fact not clearly erroneous[.]” Sullivan ...

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