Phillips v. Caliber Home Loans, 0:19-cv-02711

Background

Six putative class actions (Minnesota, Texas, North Carolina) were consolidated into Phillips v. Caliber alleging Caliber charged "Pay-to-Pay" processing fees for telephone/IVR/internet mortgage payments from Jan 1, 2013 to Jan 21, 2020; Caliber denied wrongdoing.
Parties mediated (Mar 31, 2021) and agreed to a global Settlement memorialized May 14, 2021; notices filed and additional plaintiffs added to the Phillips suit.
Settlement creates a $5,000,000 non-reversionary common fund (≈29.38% of alleged damages) to be distributed pro rata to class members based on fees paid; no claim form required for distributions.
Injunctive relief: Caliber had already ceased charging Pay-to-Pay fees as of Jan 21, 2020 and agrees not to charge such fees for at least two years after final approval.
Settlement Class: all U.S. residential mortgage borrowers whose loans were serviced by Caliber and who paid a Pay-to-Pay fee during the class period; opt-out and objection procedures, notice by email/postcard/website, and a toll-free line provided.
Class Counsel may seek up to 33.33% of the fund for fees and costs; Service Awards up to $5,000 each for six named plaintiffs; fee and service requests subject to separate court review.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Preliminary approval — fairness and adequacy of settlement	Settlement provides immediate monetary and injunctive relief to >1M class members and conserves resources; negotiated at arms-length	Caliber denies liability and litigatory defenses existed; but did not oppose preliminary approval	Court granted preliminary approval, finding settlement within range of reasonableness and negotiated at arm's length
Class certification for settlement purposes under Fed. R. Civ. P. 23(a)/(b)(3)	Class is numerous, common questions (authorization of fees), typicality and adequacy satisfied; class action is superior for modest claims	Caliber contested liability but did not defeat settlement-class certification at this stage	Court certified Settlement Class for settlement purposes only, finding requirements of Rule 23 met
Notice plan adequacy	Email + postcard + long-form website and toll-free line are best practicable notice given small per-member recovery	No substantive opposition to notice method; Caliber to provide class contact data	Court approved the proposed notice plan as complying with Rule 23 and due process
Attorneys’ fees and service awards	Counsel will petition for up to 33.33% of fund and costs; service awards up to $5,000 each justified by participation	Caliber reserves right to oppose any fee request	Court found fee/service requests reasonable in structure but required a separate detailed fee motion and lodestar information before final approval
Scope of release and injunctive relief	Release covers claims relating to charging/collecting Pay-to-Pay fees through the date of order; injunctive relief prevents fees for ≥2 years	Caliber agreed to injunctive term and provided class data for notice; retained rights to oppose fees	Court approved the release and injunctive terms as part of the settlement framework pending final approval

Key Cases Cited

Liles v. Del Campo, 350 F.3d 742 (9th Cir. 2003) (describing preliminary-approval stage standards)
Martin v. Cargill, Inc., 295 F.R.D. 380 (D. Minn. 2013) (lowered standard for preliminary approval)
In re Traffic Exec. Ass'n—E. R.R.s, 627 F.2d 631 (2d Cir. 1980) (preliminary approval as "probable cause" to proceed to fairness hearing)
Grove v. Principal Mut. Life Ins. Co., 200 F.R.D. 434 (S.D. Iowa 2001) (arm's-length negotiation presumption for experienced counsel)
Holden v. Burlington N., Inc., 665 F. Supp. 1398 (D. Minn. 1987) (settlement avoids delay and loss of immediate benefits)
Strougo ex rel. Brazilian Equity Fund, Inc. v. Bassini, 258 F. Supp. 2d 254 (S.D.N.Y. 2003) (defendant's denial of allegations weighs in settlement analysis)
Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) (due process notice requirements for class actions)
Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974) (individual notice to identifiable class members required)
In re Online DVD-Rental Antitrust Litig., 779 F.3d 934 (9th Cir. 2015) (email notice supplemented by postcard can satisfy due process)
Lane v. Facebook, Inc., 696 F.3d 811 (9th Cir. 2012) (notice must describe settlement terms sufficiently to allow investigation and objection)