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Class Settlement Denied in TCPA and FDCPA Case Against Ocwen

Link: Snyder v. Ocwen Loan Servicing, LLC, Case No. 16-cv-8677 (N.D. Ill., Sept. 28, 2018).

In this large TCPA / FDCPA case against mortgage servicing company Ocwen, judge Matthew F. Kennelly denied the parties’ motion for final approval of a class which was potentially enormous: Ocwen’s records showed that it had made, during the period covered by the limited class proposed for preliminary injunctive relief, over 146 million calls to 1.45 million unique telephone numbers.

Once Plaintiffs (represented by Burke Law Offices and others) realized Ocwen’s insurer would not be covering them (Ocwen failed to give its insurer notice), there was a question whether Ocwen would be able to cover any settlement or if it would need to fold, leaving the class with nothing. Plaintiffs responded by trying to add in the banks and trusts Ocwen was working for, but the court in an earlier ruling denied that request as not timely. Plaintiffs then filed suit against the banks and trusts themselves.

The judge rejected the final $17,500,000 settlement on two grounds: One, that there was nothing in the record that showed Ocwen would not be able to pay, which might account for the relatively low amount of money given the number of calls. Two, the settlement called for the dismissal of the second case filed against the banks and trusts, but there did not appear to be any consideration given by the banks in the settlement agreement.

As a refresher on getting a class settlement approved, here’s the standard the court used:

A district court may approve a proposed settlement of a class action only after it directs notice in a reasonable manner to all class members who would be bound and finds, after a hearing (which the Court has already held), that the proposed settlement is “fair, reasonable and adequate.” Fed. R. Civ. P. 23(e)(2). In making the latter determination, courts in this circuit typically consider the following factors:

(1) the strength of the case for plaintiffs on the merits, balanced against the extent of settlement offer; (2) the complexity, length, and expense of further litigation; (3) the amount of opposition to the settlement; (4) the reaction of members of the class to the settlement; (5) the opinion of competent counsel; and (6) the stage of the proceedings and the amount of discovery completed. . . . The most important factor relevant to the fairness of a class action settlement is the strength of plaintiff’s case on the merits balanced against the amount offered in the settlement.

Wong v. Accretive Health, Inc., 773 F.3d 859, 863-64 (7th Cir. 2014) (internal quotation marks and citations omitted). The Court notes that as of December 1, 2018, absent contrary Congressional action, an amendment to Rule 23(e)(2) setting forth a list of points a court must consider in determining whether a proposed class action settlement is fair, reasonable, and adequate. The Court will address these points as well. They include whether:

• the class representatives and class counsel have adequately represented the class;

• the proposal was negotiated at arm’s length;

• it treats class members equitably relative to each other; and

• the relief provided by the settlement is adequate, taking into consideration the costs, risks, and delay of trial and appeal; the effectiveness of the proposed method of distributing relief; the terms of any proposed award of attorney’s fees; any agreements made in connection with the proposed settlement.

Proposed Fed. R. Civ. P. 23(e)(2) (eff. Dec. 1, 2018).

Posted in FDCPA, TCPA

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