• January 10, 2009

Mirfashi v. Fleet Mortgage Corp., U.S. Ct. of Appeals, 7th Circuit, Case No. 07-3402

In a typical Posner opinion (offering a definition of chutzpah and concluding with a one-sentence paragraph: “This case is finito,” for example), the Court of Appeals (7th Cir.) considers a more common scenario than some might think: how much is the fair settlement of a baseless or damage-less class action? $243,000 donated to charity to settle the claim of a class of 1.4 million and about $18,000 attorneys fees (cut from twice that because of bad lawyer tactics (!))? Posner concludes, “That’ll do,” and states his clear satisfaction that the case, up on appeal for its third time was finally done after eight years.

This class action lawsuit against Fleet Mortgage included a sub-class, a group of people (1.4 million of them) about whom Fleet Mortgage shared information without authorization with a telemarketer. The class alleged this violated state laws against unauthorized sharing of private financial data and the Fair Credit Reporting Act, but there was no proof of any actual harm or adverse consequences of any kind.

Many states award statutory damages, anywhere from $10 (Massachusetts) to $10,000 (Kansas) for violations of consumer protection statutes and perhaps for Fleet Mortgage’s conduct, the Court recognized, but these states did not allow damages for such claims to be recovered in class actions. The federal Fair Credit Reporting Act provides for statutory damages but the Court of Appeals held that this claim had been waived for failure to have raised it until after the case had been appealed to the Seventh Circuit and remanded. Moreover, Judge Posner and the 7th Circuit panel held that the FCRA claim “has no possible merit, and in fact is frivolous. “

“The improvement that the objectors [i.e., those objecting to the settlement] produced in this case, minus the detriment caused by their courtroom antics, barely justified the modest fee that the judge awarded them.”

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