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Day v. Persels & Associates

Topic(s): Class Actions – Objections to Proposed Settlements
Date Of Involvement: 12/15/2011

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On behalf of a class member, we filed objections to a class action settlement that releases the claims of a class of about 125,000 consumers against the defendant law firms the class members retained for debt settlement legal services. We argued that the settlement is not fair, reasonable, and adequate as required by Fed. R. Civ. P. 23(e) because it provides no benefit to the class. The settlement requires the class members to surrender all of their claims in exchange for no compensation and provides no injunctive relief that will benefit the class.

The district court held a final approval hearing on February 2, 2012. On March 12, 2012, the court entered an order approving the settlement. We appealed the district court’s decision to the Court of Appeals for the 11th Circuit. On September 10, 2013, the Eleventh Circuit issued a decision vacating the judgment and remanding the case to the district court for further proceedings, holding that the magistrate judge abused his discretion when he found, without adequate evidentiary support, that the defendants could not satisfy a significant judgment.

On remand, the settling parties submitted additional evidence and argument in support of approval of the same settlement agreement, and we again filed objections. The court held a fairness hearing on January 22, 2014. On February 14, 2014, the court issued an order denying final approval of the settlement based on our arguments. Specifically, the court found that the settlement was “grossly unfair” because it would release the claims of 125,000 consumers in 49 states for nothing, while class members in Washington state received a substantial settlement in a statewide class action involving the same claims and defendants. The court also found that the settling parties had failed to establish that defendant CareOne is unable to satisfy a significant judgment or fund a meaningful settlement, or that the risk that CareOne will prevail on a potential appeal of an earlier order denying arbitration justifies a paltry settlement.