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TCPA Settlement Denied Due to Attorney Fees Inconsistent with Plaintiff’s “Relative Lack of Success”

Oct 31, 2018 | Posted by James P. Leonard | Topic: Class Actions

An Illinois federal judge recently denied a proposed settlement in a series of three TCPA cases known as the Ocwen cases essentially because the amount request for attorney fees—over $5.2 million—was too high, given class counsel’s “relative lack of success.”

Ocwen Loan Servicing (“Ocwen”) was accused of initiating over 150 million debt collection calls using an autodialer without prior consent.  After multiple mediations, the parties agreed to a $17.5 million settlement, which was broken down as follows:  (1) $1.6 million for costs associated with notice and administration of the class; (2) over $5.2 million for attorney’s fees; (3) $75,000 for incentive awards for the three named plaintiffs; and (4) the remainder was for the class members who submitted a form, which meant that each such class member would receive $39. 

In light of the breakdown of the settlement, the Court noted, “It is conceivable that the court could be persuaded to approve a settlement at the current overall dollar amount if the amounts for attorney's fees were reduced drastically, to take account of counsel's relative lack of success reflected from obtaining a settlement with a relatively low value given the size of the class and the number of calls made…”  The Court also explicitly targeted the motivations of class counsel, noting, “On the record before the court, it is fair to say that there is a good chance that class counsel have sold the case short—at least, the court cannot determine otherwise on the present record…” 

A likely read of the Court’s order indicates that a re-worked settlement agreement with lower attorney’s fees will have to be made if the parties wish to resolve the litigation, especially since Ocwen has indicated it would not be able to pay much more than the proposed settlement amount.