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Lambeth v. Advantage Financial Services, LLC

United States District Court, D. Idaho

June 16, 2015

Daniel Lambeth, on Behalf of Himself and Others Similarly Situated, Plaintiff,
v.
Advantage Financial Services, LLC, Defendant.

MEMORANDUM DECISION AND ORDER

B. LYNN WINMILL, Chief District Judge.

INTRODUCTION

The Court has before it a motion for preliminary approval of a class action settlement. For the reasons explained below, the Court will grant the motion.

BACKGROUND

Plaintiff Daniel Lambeth brought this lawsuit against Advantage claiming that it violated the Fair Debt Collection Practices Act (FDCPA). Specifically, Lambeth alleged that Advantage would leave phone messages to debtors (1) failing to identify itself as a debt collector; and (2) failing to disclose that any information revealed by the debtor would be used to collect the debt. Lambeth sued on behalf of a class of those who had received such phone messages.

The parties eventually reached a settlement in which (1) a class would be certified under Rule 23(b)(2) of all persons who received the illegal phone messages between February 4, 2014, and February 4, 2015 (including about 40, 000 persons, the parties estimate); (2) Daniel Lambeth, the named plaintiff, would be deemed the Class Representative; (3) the Court would enter an injunction against Advantage requiring that when it contacts debtors in the future, it will identify itself as a debt collector and disclose that it is attempting to collect a debt; (4) Advantage would not admit any wrongdoing; (5) class members would not release their individual claims against Advantage, and would not receive any forgiveness of any debts that were being pursued by Advantage; (6) Lambeth would receive $1, 000, obtain forgiveness of certain debts Advantage was attempting to collect, and release his individual claims against Advantage; and (7) Advantage would pay a cy pres award to Idaho Legal Aid in the sum of $5, 000.

Plaintiffs ask the Court to issue a preliminary approval of the settlement, and set up a hearing where final approval will be considered.

LEGAL STANDARDS

Rule 23(e) requires court approval for class settlements. The Ninth Circuit maintains a "strong judicial policy" that favors the settlement of class actions. Class Plaintiffs v. City of Seattle, 955 F.2d 1268, 1276 (9th Cir.1992). At the same time, settlement approval "requires a higher standard of fairness" when the parties reach a class action settlement prior to class certification, as they did here. Lane v. Facebook, Inc., 696 F.3d 811, 819 (9th Cir. 2012). "The reason for the more exacting review of class settlements reached before formal class certification is to ensure that class representatives and their counsel do not secure a disproportionate benefit at the expense of the unnamed plaintiffs who class counsel had a duty to represent." Id. Courts "must be particularly vigilant not only for explicit collusion, but also for more subtle signs that class counsel have allowed pursuit of their own self-interests and that of certain class members to infect the negotiations." Lilly v. Jamba Juice Co., 2015 WL 1248027 at *6 (N.D.Cal. 2015).

The process begins with a "preliminary determination." See Manual for Complex Litigation, Fourth ยง 21.632 (FJC 2004). The Court's task at the preliminary approval stage is to determine whether the settlement falls "within the range of possible approval." Lilly, 2015 WL 1248027 at *6. Preliminary approval of a settlement is appropriate if "the proposed settlement appears to be the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to class representatives or segments of the class, and falls within the range of possible approval." Id. The Court may consider a number of factors, including:

(1) the strength of plaintiffs' case;

(2) the risk, expense, complexity and likely duration of further litigation;

(3) the risk of maintaining class action status throughout the trial;

(4) the amount offered in settlement;

(5) the extent of discovery completed, and the stage of ...


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