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Mirfasihi v. Fleet Mortgage Corp.

July 17, 2007

MAV MIRFASIHI, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
FLEET MORTGAGE CORPORATION, DEFENDANT,
ANGELA PERRY AND MICHAEL E. GREEN, INTERVENORS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

MEMORANDUM DECISION

This is the third time that a proposed settlement of this putative class action case is before the district court for approval. The parties are plaintiff Mav Mirfasihi on behalf of himself and all others similarly situated ("plaintiffs") and defendant Fleet Mortgage Corporation ("FMC"). The first time a settlement was before the court was in 2002, when Judge Norgle approved the original settlement. Dkt. No. 88 (Dec. 4, 2002). The Seventh Circuit reversed and remanded the case on January 29, 2004. Mirfasihi v. Fleet Mortgage Corp., 356 F.3d 781 (7th Cir. 2004) ("Mirfasihi I"). On remand, this court granted the motion of Angela Perry and Michael E. Green ("the intervenors") to intervene. Dkt. No. 122 (Nov. 17, 2004). The parties returned to the bargaining table and came up with the Second Proposed Class Action Settlement ("the Settlement"), which this court approved on August 11, 2005. Mem. Decision, Dkt. No. 170 (Aug. 11, 2005). That decision was appealed as well and the Seventh Circuit again reversed and remanded, although this time the scope of remand has been narrowed to a single issue: to fully consider the potential value of the claims of one of the putative classes (the "information-sharing class"). Mirfasihi v. Fleet Mortgage Corp., 450 F.3d 745 (7th Cir. 2006) ("Mirfasihi II"). The intervenors have filed another objection to the Settlement. Class Members and Twice-Prevailing Objectors Michael Green and Angela Perry's Second Objection to the Second Proposed Class Action Settlement [Dkt. No. 195] ("Second Objection"). For the reasons that follow, the Second Proposed Class Action Settlement [#146] is again approved and the intervenors' Second Objection [#195) is denied.

I. Background

The court assumes familiarity with its August 11, 2005 Memorandum Decision and with the proceedings of this case and provides the following background only to give the necessary context for this opinion. This lawsuit was brought on behalf of approximately 1.6 million people whose home mortgages were owned by Fleet Mortgage Corporation ("FMC"). Mirfasihi I, 356 F.3d 781, 782 (7th Cir. 2004). Plaintiffs allege that, without their permission, FMC transmitted information that it had obtained from the mortgage papers regarding their financial needs to telemarketing companies which then, in conjunction with FMC, used that information and deceptive practices to attempt to sell unwanted financial services to FMC customers. Id. Plaintiffs allege that FMC's conduct violated the Truth in Lending Act, 15 U.S.C. § 1601 et seq. ("TILA"), the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. ("FCRA"), the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. § 6102, and state consumer protection laws and common law protections against invasions of privacy.

Judge Norgle's order certified two classes for purposes of settlement: the "telemarketing class" (approximately 190,000 members) and the "information-sharing class" (approximately 1.4 million members), and the Seventh Circuit has left these classes undisturbed. Mem. Decision of Aug. 11, 2005, at 8-9; Mirfasihi I, 356 F.3d at 782. The telemarketing class is composed of the following:*fn1 (1) all FMC customers outside of Minnesota and California who were billed on their mortgage account statements and paid for a telemarketed membership product or service and did not consent to such charges; and (2) all FMC customers nationwide who were billed on their mortgage account statements and paid for a telemarketed accidental death insurance policy and did not consent to such charges.*fn2 Id. The information-sharing class is composed of all FMC customers whose mortgage information was shared with unaffiliated third parties in order to allow those parties to offer products, services, or insurance to FMC customers in the six years preceding the filing of this lawsuit, but who did not buy anything from the telemarketers. Id. The telemarketing class received individual notice of the original settlement, while the information-sharing class received notice of the original settlement by the publication of a notice in USA Weekend. Id.

The basic terms of the Settlement are as follows. The telemarketing class is eligible for certain monetary relief.*fn3 For the information-sharing class, FMC has agreed to disgorge the $243,000 it received from selling the information to unaffiliated third parties and to make a charitable contribution in that amount to the Electronic Privacy Information Center, a public interest research center devoted to privacy education and protection, and/or other charitable institutions devoted to consumer privacy concerns to be determined by mutual agreement of the parties and approved by the court. The information-sharing class will not receive a direct payment in any form.

FMC's maximum payment under the various provisions is $2.4 million, which is exclusive of fees and expenses. After subtracting any amounts paid to satisfy the claims of any class members, including class counsel's fees, any class notice, and costs, whether in the present litigation or otherwise, and subtracting all the amounts FMC paid to settle a related California action, including class counsel's fees and expenses,*fn4 the balancewill be paid to the Electronic Privacy Information Center and/or other charitable institutions devoted to consumer privacy concerns. There will be no reversion of any portion of the $2.4 million to FMC.*fn5

In its 2006 decision, the Seventh Circuit said that "the district court properly analyzed (and disposed of) the objectors' ... complaints not relating to the information-sharing class's claims evaluation and we need not address those issues here (nor need the district court revisit them upon remand." Mirfasihi II, 450 F.3d 745, 749 n.1 (7th Cir. 2006). It found, however, that this court "failed to consider with adequate specificity the reasonableness of an entire class receiving a 'big fat zero' in the settlement. Specifically, [this] court did not canvas all potential avenues of recovery to determine whether the information-sharing class's claims were indeed essentially hopeless (and thus worthless) under the pertinent controlling law." Id. at 747. "The analysis should have considered, at a minimum, the pertinent consumer protection statutes (and other potential bases for claims) in the states where the information-sharing class members resided." Id. at 749. "In any event, in basic terms, a claim analysis under these circumstances would require consideration of (1) the probability of the information-sharing class's having grounds for recovery under any applicable law; (2) the probability of such favorable law applying to the entire information-sharing class (rather than differing subsets); and (3) the probability of winning on the merits." Id. at 750. "Thus, on remand, [this] court should consider and analyze the full cross-section of potentially applicable state law and arrive at a clearer estimate of the potential value of the information-sharing class's claims to allow proper evaluation of the reasonableness of the proposed settlement." Id. at 751.

II. Analysis

In their "Second Objection to the Second Proposed Class Action Settlement," the intervenors raise several arguments against approving the Settlement, most of which are the same as arguments that they have raised at least once before.*fn6 First, they argue that the plaintiffs' claims have value because FMC's conduct constitutes a per se violation of all state consumer protection statutes that are based on the Federal Trade Commission Act, 15 U.S.C. § 45 et. seq ("FTC Act"). Second, the intervenors argue that plaintiffs' federal law claims under TILA and the FCRA have value. They suggest that the plaintiffs might have a claim under TILA based on FMC's nondisclosure of telemarketing charges on its mortgage statements to customers. The intervenors also contend that FMC violated the FCRA, arguing that FMC is a "credit reporting agency" that assembled "credit reports" and that the telemarketing firms used those reports to determine whether FMC's customers were eligible for personal insurance or credit transactions.*fn7 Third, the intervenors have again raised their "new" claim against FMC for attempting to settle this case "in a manner than violated due process and was substantively unfair." Second Objection, at 9. This is again based primarily on FMC's support for the requirement of an appeal bond of $3.15 million after the original settlement was approved in 2002. Finally, the intervenors complain that class counsel have a conflict of interest and that new individual class notice should be provided to the information-sharing class.

In response, FMC and the plaintiffs argue that many of the intervenors' arguments are outside the scope of the Seventh Circuit's remand. Additionally, they emphasize their key points that the information-sharing plaintiffs cannot recover because, inter alia, they have not suffered any actual damages and the information that FMC sold was already a matter of public record.

FMC and the plaintiffs conclude that the information-sharing plaintiffs' claims appear to be meritless, and therefore the Settlement should be approved again.

This court took the suggestion of the Seventh Circuit and "request[ed] additional briefing ... to obtain greater information and analyses pertinent to claims evaluation in this case." Id. at 751. Plaintiffs and FMC have each provided the court with ...


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