Court Denies Certification of Settlement Class Where Settlement Only Benefited Named Plaintiff

The Second Circuit has observed that “[t]he [trial] judge [in a class action] should not regard himself as an umpire in typical adversary litigation. He sits also as a guardian for class members who have not received a notice or who lack the intellectual or financial resources to press objections.” Weinberger v. Kendrick, 698 F.2d 61, 69 n.10 (2d Cir. 1982). And this role is transparently on display when it comes to approving settlements, which is the court’s responsibility under Rule 23(e). Recent decisions in other circuits emphasize, particularly after Wal-Mart, that a court must still engage in a rigorous Rule 23 review even in the context of a settlement. See Rodriguez v. National City Bank, No. 11-8079 (3d Cir. Aug. 12, 2013) (declining to approve settlement class because it failed to meet newly articulated standards of commonality).

In Supler v. FKAACS, Inc., No. 5-11-CV-229 (E.D.N.C. Nov. 6, 2012), Judge Flanagan refused to approve a consent settlement in a Fair Debt Collection Practices case involving a company that allegedly left pre-recorded messages for a debtor without identifying it was a debt collector. She found four different barriers to class certification and settlement approval: (1) it was not administratively feasible to determine who was in the class because the defendant used multiple autodialing machines, only one of which allegedly transmitted illegal messages, and there were no records to show whom it called; (2) the injunctive remedy agreed to wasn’t meaningful or beneficial to the class because defendant wasn’t in the business anymore of collecting past-due accounts; (3) the damages remedy agreed to was not meaningful as it consisted of a $2,500 payment to the named plaintiff and a $17,500 cy pres payment to Legal Aid of North Carolina; and (4) the scope of the class was improperly confined to dates relevant chiefly to the named plaintiff’s interests.