495 F.Supp.3d 337
D.N.J.2020Background
- Plaintiffs (Somogyi and Sieleman) sued Freedom Mortgage Corp. (FMC) under the TCPA alleging unsolicited automated sales calls/voicemails from 9/1/2013–7/22/2019 and deletion of do-not-call requests. Cases were consolidated and vigorously litigated through motions and discovery.
- The proposed nationwide settlement class: FMC portfolio clients (borrowers/co-borrowers, spouses, successors) who received one or more FMC calls/voicemails during the class period; about 1,523,970 class members after exclusions.
- Monetary settlement: $9.5 million non-reversionary fund; after fees, costs, administrator fees, and 79,330 valid claims, participating claimants estimated to receive ~$75.30 each.
- Non-monetary relief: designation of a senior TCPA compliance manager, TCPA/do-not-call training, and procedures to improve TCPA compliance.
- Notice and claims: Heffler administered notice and claim intake; only 24 opt-outs and no substantive objections; settlement preliminarily approved February 24, 2020; final fairness hearing held September 10, 2020.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Class certification under Rule 23 (numerosity, commonality, typicality, adequacy, predominance, superiority, ascertainability) | Class is large (≈1.5M), common injury (unwanted calls), common ATDS defense makes issues classwide, and members are identifiable from FMC records | FMC disputes liability and ATDS use but does not show individualized issues predominate | Certified for settlement purposes: Rule 23(a) and 23(b)(3) requirements satisfied; class ascertainable and appropriate for settlement-only certification |
| Fairness of settlement under Rule 23(e)(2) and Girsh factors (procedural and substantive fairness) | Settlement provides immediate monetary relief, meaningful compliance reforms, resulted from arm's-length mediation after discovery and motion practice, and class reaction was overwhelmingly positive | FMC stressed defenses (no ATDS, consent, informational calls) making recovery uncertain; settlement amount reflects risks | Settlement is fair, reasonable, and adequate: negotiations were arm's-length, sufficient discovery, experienced counsel, low opt-outs/objections, and Girsh/Prudential factors support approval |
| Distribution method and claim process (pro rata vs individualized allocation; claims certification requirement) | Simple certification and pro rata distribution are efficient and administratively feasible; claims process was reasonable | Not argued to require more granular allocation based on calls per claimant | Approved: simple certification by claim form and pro rata payments deemed effective and reasonable |
| Incentive awards and attorney fee timing | Named plaintiffs deserve $5,000 each for service; counsel requests $3M in fees and costs; fees to be paid only after class payments | FMC did not oppose terms; challenged by some commentary in other courts | Incentive awards approved as reasonable under Third Circuit precedent; court reserves a separate opinion on fees and orders fees not paid before class payments |
Key Cases Cited
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (class-commonality standard)
- Girsh v. Jepson, 521 F.2d 153 (3d Cir. 1975) (factors for settlement fairness)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (settlement-only certification guidance)
- In re Lamictal Direct Purchaser Antitrust Litig., 957 F.3d 184 (3d Cir. 2020) (rigorous Rule 23 analysis)
- Marcus v. BMW of N.Am., LLC, 687 F.3d 583 (3d Cir. 2012) (ascertainability requirement)
- Sullivan v. DB Investments, Inc., 667 F.3d 273 (3d Cir. 2011) (predominance and common course of conduct)
- In re Prudential Ins. Co. Am. Sales Practice Litig., 148 F.3d 283 (3d Cir. 1998) (Prudential settlement factors)
- In re Baby Products Antitrust Litig., 708 F.3d 163 (3d Cir. 2013) (direct benefit and reasonableness of claims process)
- Stewart v. Abraham, 275 F.3d 220 (3d Cir. 2001) (numerosity and typicality guidance)
- NFL Players Concussion Injury Litig., 821 F.3d 410 (3d Cir. 2016) (presumption of fairness when counsel experienced and small objection rate)
- In re Warfarin Sodium Antitrust Litig., 391 F.3d 516 (3d Cir. 2004) (defendant's ability to pay not dispositive for settlement fairness)