Juarez v. Social Finance, Inc.

Background

Ruben Juarez, Calin Constantin Segarceanu, Emiliano Galicia, and Josue Jimenez alleged that Social Finance, Inc., doing business as SoFi, and SoFi Lending Corp., also doing business as SoFi, engaged in lending discrimination. They alleged that SoFi denied their loan applications because they were not U.S. citizens or lawful permanent residents. The plaintiffs had either Deferred Action for Childhood Arrivals status or conditional permanent-resident status.

The plaintiffs brought claims under federal and California law. In December 2019, SoFi changed its policy to make DACA recipients eligible for loans, but required them to apply by telephone with a U.S.-citizen or lawful-permanent-resident co-signer. The parties later reached a settlement after mediation and substantial discovery.

Settlement Terms and Notice

The settlement created National and California settlement classes with specific requirements concerning the applicant’s status, application period, contact with SoFi, denial of the application, residence, and, for some applicants, written exclusion from SoFi’s arbitration provision. Ruben Juarez did not fall within either class because he applied before SoFi created the designated telephone number used in the class definitions.

SoFi agreed to provide a non-reversionary $155,000 settlement fund and $25,000 for settlement administration. Eligible California Class Members who submitted verified claims could receive $3,000, or a pro rata amount, per denied application. Eligible National Class Members could receive $1,000, or a pro rata amount, per denied application. SoFi also agreed to make DACA recipients and conditional permanent residents eligible for loans on the same terms and conditions as U.S. citizens and lawful permanent residents.

The settlement administrator sent notice in some form to 2,188 of 2,263 potential class members. The court found that the notice plan provided the best practicable notice and complied with Federal Rule of Civil Procedure 23. No objections or requests for exclusion were received.

Final Settlement Approval

Under Rule 23, a class action settlement requires court approval after a hearing and a finding that it is fair, reasonable, and adequate. The court considered the strength of the plaintiffs’ case, litigation risks, the difficulty of maintaining class-action status, the settlement amount, the discovery completed, and the class members’ response.

The court found that the settlement was reasonable given uncertainty about whether SoFi could ultimately be held liable, SoFi’s argument that federal credit law permitted consideration of residency permanence and immigration status, and potential difficulties in certifying a class because loan applications and credit histories were individualized. The court also considered the substantial policy change, monetary recovery, extensive discovery, and absence of objections or opt-outs.

The court therefore granted the plaintiffs’ motion for final approval of the class action settlement.

Fees, Costs, and Incentive Awards

Class counsel requested $300,000 in attorneys’ fees and costs, to be paid separately by SoFi rather than from the settlement fund, along with $25,000 in settlement-administration expenses. Counsel reported 1,571.60 hours and an updated lodestar—the reasonable hours multiplied by reasonable hourly rates—of $957,996.21. Although the court had concerns about inefficiencies in the billing records, it found the requested amount reasonable because it was less than one-third of the lodestar and the settlement provided significant monetary and policy-related relief.

The court granted the request for $300,000 in attorneys’ fees and costs and awarded $25,000 in settlement-administration costs. It also granted $5,000 incentive awards to Segarceanu, Galicia, and Jimenez. The court found that they had participated in discovery, provided records and other evidence, communicated with counsel, reviewed the settlement, and spent substantial time on the case.

The court denied the requested $5,540 payment to Juarez. Because Juarez was not a member of either settlement class, the court found it inappropriate to use class settlement funds to pay him. The court stated that counsel had not sufficiently supported using class funds for payments to non-class members, even though it did not minimize Juarez’s role in the litigation.

Disposition

The court granted the motion for final approval of the class action settlement. It granted in part and denied in part the motion for attorneys’ fees and incentive awards, awarding the specified fees, costs, and three representative awards while denying Juarez’s requested payment. The parties and settlement administrator were directed to implement the settlement, and the parties were directed to file a short stipulated final judgment within 21 days.