Debt collector settles DA’s letterhead lawsuit for $ 1 million

“While the plaintiffs hoped to recover more for the class members, the risk of non-recovery is substantial whether or not the plaintiffs prevail over their claims,” ​​the plaintiffs’ attorneys wrote in the court file. “Courts have found settlements with similar or even lower recoveries to be fair and adequate where the risks of continued litigation are significant. “

In his decision On Wednesday, US District Judge Vince Chhabria ruled the settlement “fundamentally fair, adequate and reasonable on the basis of the relative strengths and weaknesses of the class claims and the risks for the classes to continue the trial.”

In a previous decision, Chhabria did not find anything inappropriate about the companies ‘use of prosecutors’ seals and letterheads in summons because county district attorneys had hired the company to administer their programs. embezzlement of bad checks. This program allows bad check writers to avoid lawsuits if they pay restitution and take financial responsibility courses.

However, the judge dismissed Victim Services’ motion for summary judgment over allegations that he had charged illegal and excessive fees. The plaintiffs claim that victim services charged people accused of writing bad checks for financial responsibility categories $ 185, debit / credit card fees $ 10, class rescheduling fees $ 25 and $ 10 late fee.

State law that authorized California’s bounced check diversion program allows district attorneys to charge a “processing fee” of up to $ 50 and a “bank charge” fee of up to $ 15. $. It also allows courts to require writers of convicted bad checks to cover the full or partial cost of the financial liability categories based on their ability to pay.

Further litigation and a potential lawsuit would have determined whether these charges were “reasonably proportionate” to the services provided by victim services and whether the charges were authorized by a legal mechanism, such as the approval of a county supervisory board. .

Victim Services and its affiliates paid a fine of $ 50,000 and agreed to stop using attorney seals and letterheads in their formal notices as part of a 2015 settlement with Consumer Financial Protection Office.

The judge before arguments rejected that the 2015 agreement released the company from any liability for “wrongly” taking money from alleged bouncers of bad checks. Chabria also certified a category of people who received formal notices from December 1, 2013 to May 7, 2015, during which time the company used the seals and letterheads of prosecutors in its collection letters.

The two sides began mediated settlement talks with U.S. magistrate Laurel Beeler last November and accepted a settlement offer proposed by Beeler at the end of the month.

In their motion for approval of a preliminary settlement, lawyers for the plaintiff group noted the protracted and difficult nature of the litigation, which lasted more than six years before a petition for settlement was filed in court on January 29.

“It’s a bit of a cliché for lawyers to characterize litigation as ‘protracted’ and ‘hard fought’ when seeking approval for a class settlement, but that qualification is really appropriate in this case,” said lawyers in their case.

Lawyers for the plaintiff group are asking for $ 275,000 in legal fees and $ 135,000 in litigation costs. If approved, the claim will deduct a total of $ 410,000 in legal fees and expenses from the settlement fee. Three named plaintiffs are also seeking compensation of $ 3,000 each for the prosecution of the case.

The cost of notifying class members of the agreement and administering claims and payment processes is estimated to be $ 106,000.

After deducting these costs, the class members would receive $ 575,000 in total compensation, of which $ 20,000 in legal damages under the Fair Debt Collection Practices Act would be divided equally among all class members. The remaining $ 535,000 in actual damages will be distributed in proportion to the amount of fees that each class member has paid to Victim Services and its affiliates.

The deadline to file claims or objections for the settlement is July 9.

A videoconference hearing on a motion for final approval of the settlement is scheduled for August 5.

Group attorney Michael Ram of Morgan & Morgan and Victims Services Inc. attorney Michael Taitelman of Freedman & Taitelman did not immediately return emails and phone calls seeking comment on Wednesday.

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