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Smith v. Tower Loan; Crystian v. Tower Loan

This case involves the settlement of a class action brought on behalf of people who borrowed from respondent Tower Loan of Mississippi between February 15, 1993, and September 1, 2001. The class complaint alleged a variety of predatory lending practices. Under the settlement, the class received a total of $6.62 million (an average of $62.27 per class member), class counsel  received up to $900,000 in attorneys’ fees, and Tower agreed to alter its lending practices for five years, after which it was free to resume the very conduct challenged in this litigation. Over 1,200 class members objected to the settlement and attempted to opt out, believing they could do better pursuing their own claims. Public Citizen represented two objectors in the district court and on appeal to the Fifth Circuit.

Although the action asserted routine consumer claims for monetary damages, the court of appeals affirmed certification of a mandatory, non-opt-out class under Federal Rule of Civil Procedure 23(b)(1)(A). As a result, class members who wished to pursue their claims independently were prohibited from doing so. On behalf of 835 class member objectors, we petitioned the Supreme Court for review of the question whether it was lawful to deny those class members the right to opt out. The Court denied the petition.