Grissom v. Sterling Infosystems, Inc.Grissom v. Sterling Infosystems, Inc.
OPINION & ORDER
Appearances:
John G. Albanese
Eleanor Michelle Drake
Berger Montague PC
Minneapolis, MN
Counsel for Plaintiff and the Proposed Class
Pamela Q. Devata
John W. Drury
Robert Tadeusz Szyba
Seyfarth Shaw LLP
Chicago, IL and New York, NY
Counsel for Defendant
VERNON S. BRODERICK, United States District Judge:
This class action was filed on September 25, 2020 against Defendant Sterling Infosystems, Inc. (“Defendant” or “Sterling“), a company that creates background check reports. (Doc. 1 ¶ 1–9.) Plaintiff Grace Grissom (“Plaintiff” or “Grissom“) brought this action under the Fair Credit Reporting Act (“FCRA“),
I. Background1
In September 2019, Plaintiff applied to work as a nanny on an online nanny matching service. (Id. at 2.) As part of that website‘s screening process, Plaintiff agreed to undergo a background check conducted by Defendant Sterling. (Id.) Sterling ran Plaintiff‘s Social Security number (“SSN“) through its SSN Trace tool, which searches for, among other things, criminal records. (Id.) Sterling‘s SSN Trace “revealed an ‘alternative name’ of Martell Scott that was associated with Plaintiff.” (Id.) However, Plaintiff had “no relation to” Martell Scott, and never lived in the location where Scott is alleged to have lived. (Id. at 3.) Sterling‘s SSN Trace also revealed that there were five criminal charges associated with Martell Scott. (Id.) Sterling‘s background report therefore incorrectly flagged Plaintiff as having a criminal background. By
The proposed Agreement consists of two settlement classes. The “Injunctive Relief Class” is defined as:
All consumers for whom Sterling matched a record included in a consumer report based on a name developed through a SSN trace from September 25, 2018 through June 4, 2021 wherein the consumer‘s first name, last name and middle name or middle initial did not exactly match the first name, last name, middle name or middle initial of the record reported.
(Agreement § 1.28.) The parties estimate there are approximately 44,658 members of the Injunctive Relief Class, (id.), each of whom will release “their ability to bring claims against Defendant as part of a mass or aggregated proceedings” in exchange for Defendants’ agreement to change the way its SSN Trace tool works. (Mem. at 1–2.)
The “Damages Class” is defined as:
All consumers for whom Sterling matched a record included in a consumer report based on a name developed through a SSN Trace from September 25, 2018 through June 4, 2021 wherein the consumer‘s first name, last name and middle name or middle initial did not exactly match the first name, last name, middle name or middle initial of the record reported; and where the consumer either made a dispute to Defendant regarding the report and an amended report was issued or where a pre-adverse action notice was sent to the consumer regarding the report.
(Agreement § 1.12.) The parties estimate there are approximately 7,469 members of the Damages Class. (Id.) Members of the Damages Class will agree to release SSN-Trace-related claims against Defendant in exchange for Defendant depositing $2,500,000 into a common fund, from which payments will be made to members of the Damages Class. (Mem. at 1.) “If the anticipated fees, costs, and service award are approved, Damages Class Members are expected to receive checks for between $175-200 each, with a double payment for those Damages Class
Plaintiff filed this putative class action on September 25, 2020, alleging that Sterling‘s SSN Trace feature was not a “reasonable procedure[] to assure maximum possible accuracy” in background check reports as required by FCRA,
II. Legal Standard
A. Preliminary Settlement Approval
It is within a district court‘s discretion to approve proposed class action settlements. See Kelen v. World Fin. Network Nat‘l Bank, 302 F.R.D. 56, 68 (S.D.N.Y. 2014). “The compromise of complex litigation is encouraged by the courts and favored by public policy.” Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 114 (2d Cir. 2005) (quoting 4 Alba Conte & Herbert B. Newberg, Newburg on Class Actions § 11:53, at 167 (4th ed. 2002)). The parties and their counsel are in a unique position to assess the potential risks of litigation, and thus district courts in exercising their discretion often give weight to the fact that the parties have chosen to settle.
B. Conditional Settlement Class Certification and Appointment of Class Counsel
Conditional settlement class certification and the appointment of class counsel have several practical purposes “including avoiding the costs of litigating class status while facilitating a global settlement, ensuring notification of all class members of the terms of the proposed settlement agreement, and setting the date and time of the final approval hearing.” Almonte v. Marina Ice Cream Corp., No. 16-cv-00660, 2016 WL 7217258, at *2 (S.D.N.Y. Dec. 8, 2016). A proposed settlement class must meet the requirements of
III. Discussion
A. Preliminary Approval of Class Settlement
Based on the materials Plaintiff has submitted and for the reasons outlined below, I find that the settlement merits preliminary approval.
1. Adequacy of Representation
“Determination of adequacy typically entails inquiry as to whether: (1) plaintiff‘s interests are antagonistic to the interest of other members of the class and (2) plaintiff‘s attorneys are qualified, experienced and able to conduct the litigation.” Cordes & Co. Fin. Servs. v. A.G. Edwards & Sons, Inc., 502 F.3d 91, 99 (2d Cir. 2007) (internal quotation marks omitted).
Plaintiff‘s interests are not antagonistic to the interest of the other class members. By virtue of the class definitions, Plaintiff and the unnamed class members alike suffered the same harms—factually incorrect or misleading SSN Trace results. Plaintiff and the unnamed class members seek the same relief from these harms, namely monetary damages under FCRA (in the case of the Damages Class) and changes to Sterling‘s allegedly unlawful practices (in the case of the Injunctive Relief Class). (See Mem. at 21; see also id. at 17–18.) Thus, Plaintiff‘s interests are aligned with the interests of the unnamed class members’ interests. Cf. DeMarco v. Robertson Stephens Inc., 228 F.R.D. 468, 471 (S.D.N.Y. 2005) (explaining that a named
Plaintiff‘s attorneys have also demonstrated the necessary qualifications and skill in this matter through their prior results and experience—each of Plaintiff‘s attorneys have over a decade of class action experience—and through their work on this case, which involved substantial discovery and resulted in a successful mediated settlement. (See Drake Decl.; Doc. 43-4 (discussing Plaintiff‘s firm‘s qualifications). Therefore,
2. Existence of Arm‘s-Length Negotiations
The existence of arm‘s-length negotiations further counsels in favor of approving the settlement on a preliminary basis.
3. Adequacy of Relief
In assessing the adequacy of a settlement under
The parties expect each member of the Damages Class to receive a payment of approximately $175 to $200. (Mem. at 12.) This estimate is in line with FCRA‘s per-violation statutory damages range of $100 to $1,000.
The Injunctive Relief Class likewise will receive meaningful relief preventing Defendant‘s SSN Trace from misattributing criminal records in a similar manner as alleged. (Mem. at 13–14.) This relief is especially significant given that FCRA “does not provide for injunctive relief to consumers.” Owoyemi v. Credit Corp Sols. Inc., 596 F. Supp. 3d 514, 519 (S.D.N.Y. 2022).
The risks of further litigation reinforce why the relief Plaintiff obtained on behalf of the class is adequate. These risks include that “FCRA does not provide for strict liability for a [consumer reporting agency] that reports inaccurate information,” Wenning v. On-Site Manager, Inc., No. 14-CV-9693, 2016 WL 3538379, at *16 (S.D.N.Y. June 22, 2016), and that under
The distribution plan here has been formulated by experienced counsel. The Agreement indicates that once the claims administrator notifies each member of the Damages Class by electronic and postal mail, each member will automatically receive a payment, and “those who disputed and had an amended report issued or who attest to further harm will receive a double payment.” (Mem. at 16; Agreement § 8.) I find there is little risk that this process will be unduly demanding or unable to filter out unjustified claims. Therefore, I conclude that this plan is fair, reasonable, and adequate.
In assessing the adequacy of the relief,
Finally, a court must consider “any agreement required to be identified under
4. Equitable Treatment of Class Members
As part of this factor, I must also consider the incentive payments proposed in the Agreement. ”
5. Remaining Grinnell Factors
The Grinnell factors not expressly assessed under
All five of these factors favor preliminary approval. First, the named Plaintiff favors the Agreement, and her approval is probative of the class reactions at this time since notice has not yet been issued. See, e.g., Sonterra Cap. Master Fund, Ltd. v. Barclays Bank PLC, No. 15-cv-3538 (VSB), 2023 WL 3749996, at *5 (S.D.N.Y. June 1, 2023) (“[T]he Representative Plaintiffs favor the Settlement, and their approval is probative of the Class‘s reaction at this time since notice has not yet been issued.“) Second, named Plaintiff has “obtained a sufficient understanding of the case to gauge the strengths and weaknesses of [her] claims and the adequacy of the settlement,” In re AOL Time Warner, Inc., No. 02-cv-5575, 2006 WL 903236, at *10 (S.D.N.Y. Apr. 6, 2006), given, as previously noted, the volume of pre-settlement discovery exchanged. Third, though Sterling potentially could withstand a greater judgment, this fact “does not, standing alone, indicate that the settlement is unreasonable or inadequate.” In re Global Crossing Sec. and ERISA Litig., 225 F.R.D. 436, 460 (S.D.N.Y. 2004) (internal quotation marks omitted). Finally, I have already considered the settlement in light of the best possible recovery and the risks of litigation and have concluded that the Agreement provides adequate recovery for the class. Given the litigation risks already discussed, this is a reasonable and adequate settlement.
B. Conditional Class Certification
The classes meet the requirements for a class set out by
Furthermore, the predominance and superiority requirements of
IV. Conclusion
For the foregoing reasons, Plaintiff‘s unopposed motion for preliminary approval of the settlement is GRANTED on the terms set out in the Order Preliminarily Approving Class Action Settlement, Certifying Conditional Settlement Classes, Appointing Class Counsel, Approving and Directing Notice Plan, Appointing Settlement Administrator, and Setting Fairness Hearing (“Preliminary Approval Order“). The Court will hold a hearing on May 7, 2025 at Thurgood Marshall U.S. Courthouse, 40 Foley Square, New York, NY, at 2:00pm in Courtroom 518.
Accordingly, it is hereby:
ORDERED that, pending the Final Approval Hearing, all deadlines in this action save those set out in this Opinion & Order and the Preliminary Approval Order for the purpose of executing the Agreement are stayed.
The Clerk of Court is respectfully directed to terminate the pending motion at Doc. 43.
SO ORDERED.
Dated: October 30, 2024
New York, New York
Vernon S. Broderick
United States District Judge