Lopez v. Delta Funding Corp et al.

Topic(s): 
Class Actions — Objections to Proposed Settlements
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Case Description: 

In this illustration of class action abuse, a magistrate judge allowed class counsel and defendants to settle valuable home-ownership claims for a pittance, leaving over 66,000 poor and unsophisticated victims of Delta's predatory lending practices worse off than if this lawsuit had never been filed. Together with South Brooklyn Legal Services' Foreclosure Prevention Project, we filed objections to the settlement in the district court. We then joined forces with AARP, Community Legal Services of Philadelphia, Legal Services for the Elderly in Queens, and the Legal Aid Society of New York, to appeal the case to the Second Circuit, where we argued that the settlement was both substantively unfair and improperly certified. We also argued that, by refusing to allow the objectors to elect a hearing before a district court judge, the magistrate judge denied the objectors the rights guaranteed to litigants by Article III of the Constitution. The Second Circuit agreed on that latter issue, did not address the substance of the settlement, and remanded the case to the district court. On remand, the matter was handled primarily by other objectors’ counsel.