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Zoerb v. National Collegiate Student Loan Trust 2006-3

United States District Court, S.D. California

April 5, 2017

DAWN ZOERB, individually and on behalf of all others similarly situated, Plaintiff,


          Hon. Cynthia Bashant United States District Judge

         On March 3, 2014, Plaintiff Dawn Zoerb (“Plaintiff”) commenced this class action, alleging that National Collegiate Student Loan Trust 2006-3 and the Law Offices of Patenaude and Felix, A.P.C. (“P&F”) (“Defendants”), as assignees of student loan debts, failed to properly identify the original creditor in various state court collections actions. (ECF No. 1.) This case was eventually consolidated with ten other cases making the same allegations against Defendants. (ECF No. 22.)

         Now pending before the Court is plaintiffs' unopposed Motion for Final Approval of Class Action Settlement. (ECF No. 48.) The matter came on for hearing on April 3, 2017. The Court has considered the Settlement Agreement and Release (“Settlement” or “Settlement Agreement”), any objections and requests for exclusion received regarding the proposed Settlement, the record in the above-entitled lawsuit (“the Action”) and the arguments and authorities of counsel. For the reasons stated below, the Court GRANTS this Motion. (ECF No. 48.)


         The proposed Settlement Agreement applies to class members (“Class” or “Class Members”) defined as:

California, Nevada, Oregon, and Washington residents who have an alleged delinquent student loan account with trust Defendants and who were sued by P&F through a state court collections action in which P&F allegedly failed to properly disclose the identity of the original creditor. Included in the class are those persons who have pending litigation as described above, or have had the lawsuit reduced to a judgment. The class period is November 1, 2010, through April 1, 2014. Excluded from the class will be any student loan borrower who has resolved his or her account with the Trust Defendants. [However, ] the named Plaintiffs in [these consolidated] action[s], including Sandi Parra, Reynaldo Raquel, Lisa Alward, Madeline Montry, Rebecca Burlingame, Joel Benoit, Janice Benoit, Robin Goret, Charlene Baxter, Lora Mayhugh, Laurie Alderman, Andrew Toney and Tricia Benavente are included in the class, even if they have resolved their account with Trust Defendants.

(Settlement at §V.)[1]

         The Settlement contemplates that: (1) the parties will stipulate to an injunction requiring Defendants to modify their future behavior and (2) “Defendants will request that the following national credit reporting agencies . . . delete any reporting of the trade lines associated with the student loan accounts which are the subject of the lawsuits: Trans Union, Experian and/or Equifax (“CRA”). By removal of the negative tradeline, Class members may enjoy an increase in credit score and a greater ability to obtain credit at lower cost.” (Settlement at §22.)

         In exchange, Class members release Defendants from any Claims “arising out of, based upon, or in any way relating to the class claims asserted in the lawsuits.” (Settlement at §1D.)

         II. ANALYSIS

         The Ninth Circuit maintains a “strong judicial policy” that favors the settlement of class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir. 1992). However, Federal Rule of Civil Procedure 23(e) first “require[s] the district court to determine whether a proposed settlement is fundamentally fair, adequate, and reasonable.” In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 458 (9th Cir. 2000) (citing Hanlon v. Chrysler Corp., 150 F.3d 1011, 1026 (9th Cir. 1998)). Where the “parties reach a settlement agreement prior to class certification, courts must peruse the proposed compromise to ratify both the propriety of the certification and the fairness of the settlement.” Stanton v. Boeing Co., 327 F.3d 938, 952 (9th Cir. 2003). In these situations, settlement approval “requires a higher standard of fairness and a more probing inquiry than may normally be required under Rule 23(e).” Dennis v. Kellogg Co., 697 F.3d 858, 864 (9th Cir. 2012) (internal quotation marks omitted). Before granting preliminary approval of a class-action settlement, the Court must first determine whether the proposed class can be certified. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 620 (1997) (indicating that a district court must apply “undiluted, even heightened, attention [to class certification] in the settlement context” in order to protect absentees).

         For the reasons outlined in the Court's Order Granting Joint Motion for Preliminary Approval of Class Action Settlement (ECF No. 45), the Court concludes that class certification under Rule 23(a) and Rule (b)(3) of the Federal Rules of Civil Procedure is appropriate in this case.

         The Court further finds that the Proposed Settlement is “fair, adequate and reasonable” under Rule 23(e) of the Federal Rules of Civil Procedure. “It is the settlement taken as a whole, rather than the individual component parts, that must be examined for overall fairness.” Hanlon, 150 F.3d at 1026. A court may not “delete, modify or substitute certain provisions” of the settlement; rather, “[t]he settlement must stand or fall in its entirety.” Id.

         “[S]ettlement approval that takes place prior to formal class certification requires a higher standard of fairness.” Hanlon, 150 F.3d at 1026. Consequently, a district court “must be particularly vigilant not only for explicit collusion, but also for more subtle signs that class counsel have allowed pursuit of their own self-interests and that of certain class members to infect the negotiations.” In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 947 (9th Cir. 2011). Other relevant factors to this determination include, among others, “the strength of the plaintiffs' case; the risk, expense, complexity, and likely duration of further litigation; the risk of maintaining class-action status throughout the trial; the amount offered in settlement; the extent of discovery completed and the stage of the proceedings; the experience and views of counsel; the presence of a governmental participant; and the reaction of the class members to the proposed settlement.” Hanlon, 150 F.3d at 1026; see also Churchill Vill., L.L.C. v. Gen. Elec., 361 F.3d 566, 575 (9th Cir. 2004). Here, as outlined in the Court's Order Granting Preliminary Approval of the Class Action Settlement (ECF No. 45), the parties' Settlement Agreement complies with all of these requirements.

         The Court previously approved the form and manner of Notice to the class members. (ECF No. 45.) The Court now finds the Class Notice program was executed as previously detailed in its Order. (Declaration of Bailey Hughes, ECF No. 48-6.) Class notice was sent to approximately 6, 512 class members via first class mail, 1, 352 of which were returned as undeliverable and 64 of which were returned with a new address and remailed. (Id. ¶¶ 7-10.) Hence, presumably 5, 160 class members received notice. (Id. ¶ 11.) The Court finds this class notice satisfies due process.

         Although the Settlement Administrator received no objections to the settlement, sixteen individuals timely requested exclusion from the class and two individuals requested exclusion after the deadline. (Id. ¶ 13.) The Court finds the fact that the vast majority of the class did not object or opt out of the class further lends support to the Court's conclusion that the settlement is fair and reasonable. See Staton v. Boeing Co., 327 F.3d 938, 958 (9th Cir. 2003) (reaction of the class members to the settlement is one factor that should be considered in determining whether a settlement is fair and reasonable)

         III. ...

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