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Court approves $10M Fair Credit settlement

Yesterday a Harrisonburg U.S. District Court approved a $9.95 million settlement in a consumer protection class action against Bank of America under the Fair Credit Reporting Act.

U.S. District Court Samuel G. Wilson also approved over $1.8 million in attorney’s fees and costs to the attorneys for the plaintiff class, led by Newport News lawyer Leonard Bennett.

The plaintiffs sued under an FCRA provision that requires lenders to notify loan applicants of the lender’s use of an applicant’s credit score “as soon as reasonably practicable.”

Loan applicants complained that Bank of America was taking up to several weeks to provide such notice, which could impede borrowers’ chances to negotiate a better loan rate by cleaning up credit problems. Suits filed in Virginia’s Eastern and Western District federal courts were consolidated into a single Western District case, Domonoske v. Bank of America N.A.

In April 2010, Wilson nixed a proposed $10 million settlement because he could not go along a provision saying the bank would be following the FCRA if it complied with court-ordered deadlines in the Domonoske case.

Wilson said the bank made it clear the whole proposal hinged on a court declaration of compliance, so the bank could buy peace if sued elsewhere on the same grounds. But Wilson said such a provision “would not be worth the paper it would be written on.”

The parties left that provision on the table when they returned to Wilson’s court.

“The majority rule is that the FCRA does not provide for injunctive relief for private parties,” Bennett said. But his side thinks their negotiation of specific steps BOA must take will offer the same protection.

Bennett pointed out that the $9.95 million settlement in Domonoske settlement provides for pro rata payments up to $100 each to the nearly half-million class members who opted in. The agreement also calls for a $5,000 incentive award to each class representative.

The proposal called for $2.32 million in attorney’s fees. In an earlier review of the case, then-Magistrate Judge Michael Urbanski suggested that a more modest fee award of $604,105 was an appropriate “lodestar” amount

But Wilson used a percentage-of-recovery method, cross-checked against a lodestar analysis, and awarded the plaintiffs a fee of $1,791,000 or 18 percent of the common fund. For support, he cited In re The Mills Corp. Sec. Litig., a 2009 Eastern District class action suit, that applied an 18 percent figure after surveying cases in which awards ranged from 18 percent to 30 percent.

Harrisonburg lawyer Timothy Cupp also represented the plaintiff class, along with Bennett’s colleagues at Consumer Litigation Associates PC.

Asked for comment, Bank of America responded in an email from spokesperson Shirley Norton: “This is the final court approval of a settlement that was reached in mediation last September. We are pleased to put the matter behind us and we are settling to avoid the further cost and risk of litigation.”
By Deborah Elkins

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