United States District Court, N.D. Illinois, Eastern Division
KEITH SNYDER, SUSAN MANSANAREZ, and TRACEE A. BEECROFT, individually an on behalf of all others similarly situated, Plaintiffs,
U.S. BANK N.A., WILMINGTON TRUST, N.A., and DEUTSCHE BANK NATIONAL TRUST COMPANY, individually and in their capacities as trustees, Defendants.
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, UNITED STATES DISTRICT JUDGE.
named plaintiffs in this case filed suit against U.S. Bank
N.A., Wilmington Trust, N.A., and Deutsche Bank National
Trust Company-collectively referred to as the banks or the
bank defendants-on behalf of a putative class, alleging
violations of the Telephone Consumer Protection Act (TCPA).
Specifically, the plaintiffs allege that the banks owned
certain mortgage loans upon which a third-party servicer
(whom the plaintiffs also sued), Ocwen Loan Servicing, LLC,
attempted to collect. In the course of those collection
efforts, Ocwen and the defendants allegedly violated the TCPA
by using automatic dialing technology to contact the named
plaintiffs and the other members of the putative class.
plaintiffs recently reached a settlement in their suit with
Ocwen on behalf of nearly 1.7 million class members. See
Snyder v. Ocwen Loan Servicing, LLC (Ocwen
III), No. 14 C 8461, 2019 WL 210339, at *1 (N.D.
Ill. May 14, 2019). Soon after that settlement was approved,
the bank defendants moved for summary judgment in this case
on the grounds that (1) the Ocwen settlement
extinguished the plaintiffs' vicarious liability claims
against the banks; (2) the judgment entered in Ocwen
has claim preclusive effect on the claims advanced in this
suit; and (3) the plaintiffs have pointed to no evidence
supporting direct liability. For the reasons stated below,
the Court grants the motion on the claim of direct liability
but otherwise denies it.
and 2016, the named plaintiffs in this case filed two suits
against Ocwen Loan Servicing, LLC, which the Court
consolidated and to which the Court will refer collectively
as the Ocwen case. See Snyder v. Ocwen Loan
Servicing, LLC, No. 14 C 8461 (N.D. Ill.); Beecroft
v. Ocwen Loan Servicing, LLC, No. 16 C 8677 (N.D. Ill.).
They challenged Ocwen's alleged practice of making
debt-collection calls using an automated telephone dialing
system without the call recipients' prior consent.
December 2016, the plaintiffs moved to amend their complaint
to add the banks as defendants in the Ocwen suit.
They argued in support of that motion that they had recently
learned that Ocwen may be unable to fully compensate the
putative class for its claims and that it was therefore
necessary to include the banks to ensure compensation. The
Court ultimately denied the plaintiffs' request to add
the banks to the Ocwen suit. See Case No.
14 C 8461, Order of Dec. 21, 2016, dkt. no. 126. The
plaintiffs then filed this suit. They allege that the illegal
debt-collection calls they received from Ocwen were made on
the banks' behalf, making them also liable for the
resulting violations. The Court found the cases related under
Local Rule 40.4, resulting in the transfer of this case to
the undersigned judge's docket.
Original Ocwen Settlement
understand the present motion, a bit more background on the
Ocwen case is necessary. Several rounds of
settlement negotiations occurred in the Ocwen case.
A mediation in May 2016 with retired Judge James Holderman
was unsuccessful. At a second mediation, this one facilitated
by mediator Rodney Max in October 2016, Ocwen disclosed that
its insurer had denied coverage for the claims asserted by
the plaintiffs and suggested that it had a limited ability to
finance the settlement on its own. These revelations led to
the second mediation's unsuccessful termination.
June 2017, the Court provisionally granted, in the
Ocwen suit, the plaintiffs' motion for
certification of a limited class under Federal Rule of Civil
Procedure 23(b)(2) and for a preliminary injunction to
prevent Ocwen from continuing certain practices that
allegedly violated the TCPA. See Snyder v. Ocwen Loan
Servicing, LLC (Ocwen I), 258 F.Supp.3d 893
(N.D. Ill. 2017). Before the Court's ruling on the motion
for a preliminary injunction, the parties conducted extensive
discovery, including exchanging information regarding calls
made by Ocwen and on whose behalf those calls were made.
2017, shortly after the Court granted the motion for a
preliminary injunction, a third mediation was held with
retired U.S. Magistrate Judge Morton Denlow. The banks, by
now defending this parallel suit, participated in the
negotiation. This resulted in an agreement to settle the
claims of the putative class. The original settlement
agreement provided for the establishment of a fund of $17,
500, 000. This would have been used to pay costs of notice
and administration ($1, 600, 000), attorneys' fees ($5,
289, 250), incentive awards for the three named plaintiffs
(collectively $75, 000), and, finally, payment of the claims
of class members who submitted claim forms (the remaining
$10, 535, 150).
original settlement provided for dismissal of not only the
Snyder and Beecroft suits against Ocwen,
but also the present suit by the putative class against the
banks. The banks offered no contribution to the settlement
fund or any other consideration for the dismissal of the case
plaintiffs moved for final approval of the proposed
settlement, for incentive awards for the named plaintiffs,
and for payment of administrative fees and an award of
attorneys' fees from the settlement proceeds. In
September 2018, the Court denied the motion for final
approval for three reasons, including-most importantly for
present purposes-because it would have released the claims
against the bank defendants for nothing. See Snyder v.
Ocwen Loan Servicing, LLC (Ocwen II), No. 14 C
8461, 2018 WL 4659274, at *5-6 (N.D. Ill. Sept. 28, 2018).
Subsequent negotiations and amended settlement
the Court's denial of the motion to approve the final
settlement agreement, the parties returned to mediation. A
fourth mediation session-the second with retired Judge
Denlow-resulted in an improved settlement for the class in
the Ocwen case. The banks again participated in the
mediation. The most significant changes in this amended
settlement were that class counsel sought $500, 000 less in
attorney's fees; Ocwen offered $4, 000, 000 more in
funds; and, critically, "the amended settlement also
provide[d] for dismissal of only the Snyder and
Beecroft suits against Ocwen and d[id] not seek to
release the claims against the bank defendants."
Ocwen III, 2019 WL 2103379, at *3. That is, the
amended settlement expressly provided that "the class is
free to pursue claims against the bank defendants if it
Court ultimately approved the amended settlement. See
generally Id. at *4-11. In so doing, the Court
noted-more than half a dozen times and in various ways- that
one of the key considerations in this approval was that
"the amended settlement no longer concerns the bank
defendants." Id. at *5. Indeed, addressing the
strength of the plaintiffs' case as required under
Wong v. Accretive Health, Inc., 773 F.3d 859, 865
(7th Cir. 2014), the Court explained that:
The parties have . . . addressed the Court's reservations
regarding the bank defendants. . . . The original settlement
agreement sought to release the claims against the banks for
nothing and with no explanation. The amended settlement
addresses this issue. Specifically, the plaintiffs,
Ocwen, and the banks agreed during the fourth mediation that
the amended settlement would not release the claims against
the banks. In short, the banks have been carved out of
the settlement, and the lawsuit against them is proceeding
ahead. This change resolves the Court's concerns about
the settlement's treatment of the bank defendants.
Id. at *7 (emphasis added). The Court placed special
emphasis on the exclusion of the claims against the banks in
its decision that no additional notice was necessary for
class members. See Id. at *9.
Court's memorandum opinion and accompanying order finally
approving the amended settlement were entered on May 14 and
June 4, 2019, respectively. To address any remaining mystery
about what the Court understood the parties to have agreed
to, the Court included the following language in the order:
"For the avoidance of doubt, no claims alleged in
Snyder, et al. v. U.S. Bank, N.A., et al., No.
1:16-cv-11675 MFK (N.D. Ill.), are released." Order
Granting Final Approval of Class Action Settlement, dkt.
no.362, at 15.
6, the bank defendants appeared for a status conference
and-for the first time before this Court-indicated that they
believed, at the time the Court orally approved the amended
settlement of the Ocwen class action, that the
settlement extinguished the claims against the bank
defendants. They conceded that they had not disclosed this
understanding to the Court. On June 13, the banks filed this
motion for summary judgment. At a status hearing on June 19,
counsel for Ocwen confirmed that, even at the time the Court
approved the settlement of the Ocwen class action,
they agreed with the banks' understanding. They, too,
conceded that they had not disclosed this understanding to
the Court when it considered and approved the amended
settlement. Indeed, even class counsel reluctantly admitted
at the June 19 hearing that they had been aware of but had
not indicated in any of their filings the banks' view
that the Court's numerous, conspicuous, and frequent
references to the amended settlement preserving the claims
against the banks were legally ineffective. Dismayed, the
Court stated-as it had on June 6 with respect to the bank
defendants and their counsel-that it had been misled by the
parties in connection with approval of the settlement. The
Court noted that if, in fact, the amended settlement released
the claims against the banks, that would have serious
implications for the continued viability of the
Ocwen settlement given the Court's expressed
(and uncontradicted) contrary understanding at the time of
Court ordered accelerated briefing on the banks' motion
for summary judgment in order to consider their arguments
before the Ocwen settlement became final ...