Southern District of California Gives Preliminary Approval to $17.1 Million Class Action Settlement in TCPA Case
The United States District Court for the Southern District of California gave its preliminary approval to a $17.1 million settlement fund in a class action brought under the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § § 227 et seq.
in Malta v. Federal Home Loan Mortgage Corporation, et al.
, No. 10-CV-1290 BEN (NLS), 2013 WL 444619 (S.D. Cal. Feb. 5, 2013). In Malta
, the plaintiffs alleged that one of the defendants, a loan servicer, violated the TCPA by calling the cellular phones of account-holders "without 'prior express consent,' using an 'automatic telephone dialing system,' and/or using an 'artificial or prerecorded voice' in its collection efforts." The class sought the maximum amount of statutory damages available under the TCPA--$500 per negligent violation, and $1,500 per willful violation--for a total of approximately $2.9 billion. The plaintiffs sought provisional certification of a settlement class to be comprised of two subclasses: (1) residential mortgage loan accounts, and (2) automobile loan accounts. The loan servicer, who did not oppose certification, agreed to establish a settlement fund of $17.1 million, with approximately $9 million to be distributed to class members pro rata
based on the number of claimants. The settlement also provided that the loan servicer would establish new procedures to ensure future compliance with the TCPA. After determining that the class met the prerequisites laid out by Fed. R. Civ. P. 23(a) and the requirements of 23(b)(3), the court made a preliminary determination that the settlement was fair. Although the settlement fund would only allow for $2 per claim if every class member filed a claim, the court noted the likely possibility that very few class members would file claims. Moreover, the amount each class member would receive was, in the court's opinion, fair in light of the risk and expense of continued litigation. Finally, the court noted that all class members would benefit from the loan servicer's new procedures, weighing in favor of fairness. The court will conduct its final approval hearing on June 19, 2013. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.