The opinion of the court was delivered by: M. James Lorenz United States District Court Judge
ORDER GRANTING JOINT MOTION FOR FINAL APPROVAL OF CLASS ACTION SETTLEMENT
This class action came before the court for a hearing on October 26, 2009 on the parties' Joint Motion for Final Approval of Second Amended Class Action Settlement ("Joint Motion"). Christina E. Wickman, Esq. and Steven A. Wickman, Esq. appeared on behalf of the class and Lead Plaintiff Darrell Ybarrondo, who was present at the hearing. Debbie P. Kirkpatrick, Esq. appeared on behalf of Defendant. David Israel, Esq. appeared telephonically on behalf of Defendant. The court, having considered all filings and representations of counsel made in relation to the Joint Motion, hereby GRANTS the motion. This action is certified as a class action and the Second Amended Class Action Settlement Agreement ("Settlement") is approved as fundamentally fair, adequate, and reasonable.
Lead Plaintiff alleged he received a form debt collection letter from Defendant NCO Financial Systems, Inc. which sought to collect a debt originally owed to American General Finance ("Letter") in violation of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et . and Rosenthal Fair Debt Collection Practices Act, Cal. Civ. Code § 1788 et seq. His complaint sought to certify a class action, obtain a declaratory judgment that Defendant's practices were unlawful, statutory damages, and attorneys' fees, costs and expenses of litigation.
He claims the Letter violated federal and California debt collection laws by stating in part, "your credit bureau report may be reviewed. Now is the time to improve your credit report." He contends that the reference to credit reporting was misleading because the threat to report the account to credit bureaus could not be legally carried out. Further, he argues that the reference to credit bureau reporting was misleading because it incorrectly implied that payment or non-payment of the debt may impact a consumer's credit rating.*fn1 Defendant denied liability asserted in this case.
On May 22, 2007 the parties filed a Joint Motion for Class Certification of a Settlement Class, Preliminary Approval of Class Action Settlement Agreement, and Notice to the Class. On May 29, 2007 the California Attorney General's office issued a letter raising concerns about the settlement; however, the parties did not disclose the letter to the court at that time. This court also found the settlement inadequate to warrant preliminary approval. By order signed June 4, 2007, the court ordered supplemental briefing and identified the areas of concern the parties were to address.
On December 28, 2007 Lead Plaintiff filed a supplemental brief in support of the joint motion, indicating that the parties had renegotiated the settlement. However, concerns regarding settlement fairness and other issues remained. The parties' initial motion was denied without prejudice on January 18, 2008.
Subsequently the parties for the first time engaged in formal discovery. They renegotiated the settlement again, and on December 23, 2008 entered into the Settlement which is the subject of the Joint Motion before the court.
In discovery the parties established that the putative class consists of approximately 1,406 individuals to whom the Letter was sent, and determined the timing of the Letter, other collection efforts by Defendant, and payments by members of the putative class. In sum, 62 of the 1,406 individuals made payments to Defendant at some point in time. Of the 62 individuals who made payments, 18 made at least one payment within 90 days after Defendant sent him or her the Letter. Accordingly, the putative class consisted of 1,406 individuals, and included a putative subclass of 18 individuals who began making payments to Defendant within 90 days of the Letter.*fn2
In exchange for a release, Defendant agreed to pay $23 to each class member with a timely claim. It agreed to pay to each member of the subclass the amount he or she had paid Defendant on the account subject to this action beginning within 90 days of the Letter, provided a timely refund claim is submitted. Furthermore, as to each class member who did not exclude him- or herself from the class, Defendant agreed to waive and forgive the debt referenced in the Letter. Defendant estimates the debt forgiveness face value at $5.8 million. Defendant also agreed to pay Lead Plaintiff $2,000 in statutory damages and as recognition of his services as the class representative. Finally, Defendant promised to pay Class Counsel's reasonable attorneys' fees and costs in the amount to be determined by the court. (Settlement ¶ 24.)
On January 6, 2009 the parties filed a Joint Motion for Certification of a Settlement Class, Preliminary Approval of Second Amended Class Action Settlement Agreement, and Notice to the Class, which was granted by order dated March 4, 2009. The court certified on a preliminary basis and for purposes of settlement only a Class defined as follows: all natural persons with California addresses who meet the following criteria: (a) he/she was sent a letter by NCO in the same or substantially similar form to the Letter represented by Exhibit A attached to the settlement agreement; (b) the Letter was sent on or after November 3, 2004 and on or before March 10, 2006, and the Letter was not returned by the Postal Service; and, (c) the Letter seeks to collect a debt originally owed to American General Finance. NCO represents that there are approximately 1,406 Class Members. There exists within the Class a Subclass of 18 Class Members who made at least one payment to NCO on his or her American General Finance account referenced in the Letter within 90 days of the date NCO sent him or her the Letter.
The court approved the Settlement on a preliminary basis and directed the parties to send notice and claim forms to the Class as provided in the Settlement.
On June 8, 2009 the parties filed the Joint Motion for Final Approval of Settlement. By order dated June 30, 2009 the motion was denied without prejudice because the record did not show that Defendant complied with the notice provisions of the Settlement and the March 4, 2009 order.
On October 8, 2009 the parties filed the instant Joint Motion. According to the affidavits filed in support thereof, the class administrator sent notices to 1,349 Class members after eliminating duplicates. A total of 215 notices were returned as undeliverable and 149 claims were received. Class Counsel sent notices to each of the 18 Subclass members. None were returned as undeliverable and 16 refund claims were received. According to the affidavits and representations of counsel at the hearing, no requests for exclusion from the Class and no objections to the Settlement have been received.
Federal Rule of Civil Procedure 23(e) requires court approval before a class action can be dismissed based on a settlement which could bind class members. The proponents of the Settlement (Lead Plaintiff and Defendant), have the burden of presenting evidence and showing that the Settlement should be approved and the action dismissed. See, e.g., Officers for Justice v. Civil Svc. Comm'n. of the City and County ...