In a ruling that has been circulating quickly throughout the industry, a District Court judge in Pennsylvania has denied a motion to approve a class action settlement in a Telephone Consumer Protection Act case because of a “confluence of negative factors,” including that the judge did not believe that the defendant could only afford to settle the case for $4 million.
A copy of the ruling in the case of Ward v. Flagship Credit Acceptance can be accessed by clicking here.
The original lawsuit was filed back in 2017 against Flagship, a subprime auto lender, after it was accused of using an automated telephone dialing system to try and contact an individual names Charles Walker. The problem was that the lender kept calling Robert Ward who had no idea who Walker was.
The parties reached a preliminary settlement, which would see about 327,000 class members split an equal share of $4 million. Only 67,000 members of the class opted in to the settlement, giving each of them about $35. The judge, concerned about the settlement, appointed a special master to review the terms of the deal, which she did.
“The Court is primarily concerned with three aspects of the proposed settlement: first, the lack of information available to counsel to inform their view and advise the class of the strengths and weaknesses of the case given the early posture in which the parties reached agreement; second, the emphasis on Flagship’s inability to pay more than $4 million when no underlying financial information was provided to the class members, compounded by the Court’s belief, after in camera review of the financials, that this statement is inaccurate; and third, the Court’s skepticism that $4 million is a fair settlement in this case, given that it will result in a de minimis per claimant recovery of $35.30.”
The $35.30 that a class member would receive as part of the settlement would likely not even cover the cell phone bill for one person for one month, the judge noted in denying the motion. The $35.30 is “inconsequential” relative to the “basic maintenance expenses” of owning a cell phone today and the award to each class member is “simply trivial” when put into context of what could be awarded if each class member filed individuals lawsuits instead.