Says settlement creates â€œdivergence of interestsâ€ among class members
The Ninth Circuit Court of Appeals has thrown out a settlement in a case alleging that three leading credit reporting companies had disseminated incorrect information about consumers who had declared bankruptcy.
The suit, which originated as multiple actions in 2005 and 2006, alleged thatÂ ,Â , andÂ Â issued credit reports that claimed consumers had been delinquent in paying down certain debts. In reality, the suit alleged, those debts had been discharged during bankruptcy proceedings. The allegedly erroneous information would constitute a violation of the Fair Credit Reporting Act (FCRA), a federal statute.
The court ruled that the settlement — which Cheap Burberry Cashmere Scarf to taled $45 million — â€œcreated a patent divergence of interests between the named representatives and the classâ€ and thus should not have been approved by the district court.
The settlement offered â€œincentive awardsâ€ to the named plaintiffs in the suit. This is common in class action suits, since those individuals typically spend considerable time helping lawyers prosecute the action.Â
However, the court ruled that, in this case, â€œthese awards were conditioned on the class representativesâ€™ support for the settlement,â€ which â€œcaused the interests of the class representatives to diverge from the interests of the class because the settlement agreement told class representatives that they would not receive incentive awards unless they supported the settlement.â€
The settlement offered â€œactual damage awardsâ€ to class members who could show that they suffered harm from the agenciesâ€™ alleged conduct. Class members who were denied housing would receive $500; those who could not obtain car or credit loans would receive $150; and those who were denied employment would receive $750.Â
Class members who did not suffer economic damage were set to receive a â€œconvenience awardâ€ of around $26.
Lawyers plan to rewrite settlement
The settlement would have been the second-largest ever reached in an FCRA suit, according to plaintiffsâ€™ counsel Michael Caddell of Caddell and Chapman.
“Obviously we’re disappointed,” Caddell toldÂ . “We didn’t believe the settlement agreement was coercive, and the facts were undisputed that our class representatives had decided months before the language was drafted to support it.
Caddell said he planned to rewrite the Cheap Vans Shoes settlement.
(originally published atÂ )