Payday lender settles class action suit

The class – more than 576,000 individuals throughout the country who took out loans from a loan company with identical terms at unlawfully high interest rates– will share a $65 million cash payment and will receive $76 million in loan cancellation and other nonmonetary relief.

Background

On April 9, 2019, this court stayed the case pending appellate review by the Fourth Circuit regarding American Web Loan and Curry’s motions to compel arbitration. During the ongoing appeal process, the parties engaged a former district to conduct mediation. The parties ultimately agreed to settle the case in exchange for a total settlement value of $141 million, comprised of a $65 million cash payment, $76 million in loan cancellation and other nonmonetary relief. This matter is before the court on plaintiffs’ motion for preliminary approval of class settlement.

Rule 23(a) requirements

The class must comply with the four prerequisites established in Rule 23(a): (1) numerosity of parties; (2) commonality of factual and legal issues; (3) typicality of claims and defenses of class representatives and (4) adequacy of representation.

Numerosity is clearly met in this case. The data provided by AWL indicates that there will be more than 576,000 class members distributed throughout the country. The 23(a)(2) analysis may be subsumed within the court’s review of the class under 23(b)(3). The court finds that the “predominate” requirement of 23(b)(3) is met in this case and, therefore, reserves discussion on the matter till further analysis below.

Typicality is met when “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” Here, plaintiffs allege a uniform injury across the proposed class – that they all took out one or more loans with identical terms at unlawfully high interest rates. Based on this, the court finds that the plaintiffs alleged injury is sufficiently aligned with that of the class.

The court finds the adequacy requirement met when (1) the named plaintiff does not have interests antagonistic to those of the class and (2) plaintiff’s attorneys are “qualified, experienced, and generally able to conduct the litigation.” With this requirement, the court is inquiring whether there are any “conflicts of interest between named parties and the class they seek to represent.” Under these facts, this final requirement is also met. Therefore, the court turns to the Rule 23(b)(3) requirements.

Rule 23(b)(3) requirements

The first step of Rule 23(b)(3) analysis is an inquiry into whether “questions of law or fact common to class members predominate over any questions affecting only individual members.” Here, plaintiffs allege a uniform scheme against defendants which would rely on broadly applicable evidence to prove their claims. Therefore, the court finds that predominance is met in this case.

The second step in the inquiry is to determine if “a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Here, the settlement allows for any class member to opt-out and pursue an individual action. Next, because the proposed settlement class is over 576,000 members distributed across the United States, it is preferable and efficient to have one forum to manage the consolidated resolution of this case.

Additionally, the court agrees with the plaintiffs that “most, of the putative class members are low-to-moderate income consumers who lack the means or incentive to bring an individual suit claiming potentially small individual damages, particularly where, as here, pursuing that suit involves complex questions of sovereign immunity, arbitration and RICO liability.” Accordingly, these facts lead the court to find that superiority is met. Therefore, the court preliminary certifies this defined settlement-only class.

Approval

The court must determine whether the settlement is “fair, reasonable and adequate.” After reviewing each of the factors, the court finds that the settlement meets the fairness requirement. Additionally, the court preliminarily finds the settlement to be adequate. However, at the preliminary hearing, the court inquired of whether the parties had information regarding the amount of total interest paid by the settlement class. Counsel has informed the court with sufficient and comparable figures for the court to find preliminary adequacy. This information should be made available at the final approval hearing. Finally, the court finds that all the procedures outlined in the plaintiffs’ motion clearly meet the standard for notice in Rule 23.

Plaintiffs’ motion for preliminary approval and settlement class certification granted.

Solomon v. American Web Loan Inc., Case No. 17-cv-145, June 26, 2020. EDVA at Newport News (Morgan). VLW 020-3-343. 13 pp.