Vassalle v. Midland Funding LLC

Summarized by James Morgan , Howard & Howard
12 years 11 months ago

Citation:

Vassalle, et al. v. Midland Funding, et al., Case Nos. 11-3814/3961/4016/4019/4021 (6th Cir. February 26, 2013)

Tag(s):

Ruling:

The Sixth Circuit Court of Appeals reversed the decision of the U.S. District Court for the Northern District of Ohio approving a class action settlement and certifying a nationwide class. The Sixth Circuit found that the settlement was not fair or reasonable because it provided preferential treatment to the class representatives and only perfunctory relief to the unnamed class members. The Sixth Circuit further held that class certification was inappropriate because the class representatives were inadequate and that a class action was not a superior method of resolving the controversy. Finally, the Sixth Circuit ruled that the notice to the class failed to satisfy due process because the notice did not adequately explain the consequences of the releases provided in the settlement.

Procedural context:

Appeal from the decision of the District Court for the Northern District of Ohio approving a class action settlement and certifying a nationwide class.

Facts:

This appeal arose from the consolidated settlement of three class-action lawsuits involving allegations of “robo-signing” affidavits, the signing of hundreds of computer-generated affidavits for use in debt collection actions without the affiant’s personal knowledge of the accounts. All three of the lawsuits involved such claims against Midland Funding LLC and Midland Credit Management, Inc. (collectively, “Midland”). In one of the three cases, the district court held that “robo-signing” affidavits in debt-collection actions violate the Fair Debt Collection Practices Act (“FDCPA”). The individuals in the three lawsuits reached a global settlement with Midland. The settlement provided for both monetary and injunctive relief on a class-wide basis. Pursuant to the settlement, Midland agreed to pay $5.2 million into a common fund. From that fund, the class counsel would receive attorneys’ fees of no greater than $1.5 million, plus costs. The remainder would be used to pay claims of eligible class members who timely filed claims. Based upon the number of claims, those payments were $17.38 each. In addition, the four name plaintiffs were to receive $8,000 collectively. The injunctive relief included the requirement that Midland create and implement written procedures regarding its affidavits and be supervised for compliance with that injunction for one year. Finally, the settlement included a release of Midland which released Midland from any claims based on its use of improper affidavits. Midland was permitted, however, to continue to pursue collections against non-opting out class members, except for the class representatives. The class representatives gave Midland complete releases and, unlike the other class members, were relieved of any debts they owed to Midland. The District Court and certified the class and approved the settlement; eight unnamed class members appealed.

Judge(s):

Circuit Judges Moore and Cole; District Judge Rose, sitting by designation

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