Phillips v. Caliber Home Loans

Background

The plaintiffs brought related class actions in Minnesota, Texas, and North Carolina based on Caliber’s alleged practice of charging additional “Pay-to-Pay Fees” when borrowers made mortgage payments by telephone, interactive voice response, or the internet. The claims included breach of contract, unjust enrichment, and alleged violations of state debt-collection laws; the Minnesota plaintiffs later added a claim under the Fair Debt Collection Practices Act. Caliber denied the allegations and any wrongdoing.

After mediation, the parties reached a global settlement. The related plaintiffs were added to the Minnesota case, and the parties executed a settlement agreement on May 14, 2021.

Proposed Settlement

The proposed settlement creates a $5,000,000 non-reversionary common fund. Eligible settlement class members would receive payments on a pro rata basis according to the amount of Pay-to-Pay Fees they were charged. They would not need to submit a claim form. The fund would also cover administration costs and any attorneys’ fees, expenses, and service awards approved by the Court.

The settlement also provides injunctive relief. Caliber had stopped charging or collecting Pay-to-Pay Fees from settlement class members and other borrowers nationwide as of January 21, 2020, and agreed not to charge or collect those fees from borrowers for at least two years after entry of a final approval order. The proposed release covers claims through the date of the order that were or could have been asserted concerning the charging, collection, or attempted collection of Pay-to-Pay Fees.

The proposed settlement class includes people who were borrowers on residential mortgage loans in the United States serviced by Caliber and who paid Caliber a fee for making a loan payment by telephone, interactive voice response, or the internet between January 1, 2013, and January 21, 2020. The Court found that the proposed class had approximately 456,663 members associated with approximately 322,404 loans.

Court’s Analysis

At the preliminary-approval stage, the Court considered whether the settlement was within the range of possible approval and whether there were grounds to doubt its fairness. The Court found preliminarily that the settlement was fair, reasonable, and adequate. It relied on the parties’ arm’s-length negotiations, the litigation and informal discovery conducted, the risks and expense of continued litigation, the settlement’s benefits, and the proposed pro rata allocation.

For settlement purposes only, the Court also found that the proposed class met the requirements of Federal Rule of Civil Procedure 23(a) and 23(b)(3), including numerosity, commonality, typicality, adequacy, predominance, and superiority. The Court did not make a final merits determination about whether Caliber’s fees were unlawful or unauthorized.

The Court approved a notice plan involving email notices, postcard notices, a detailed settlement website, and a toll-free telephone line. Class members would have 105 days after entry of the preliminary approval order to request exclusion or file objections. The Court scheduled a final fairness hearing for December 16, 2021.

Disposition

Judge Wilhelmina M. Wright granted the plaintiffs’ unopposed motion for preliminary approval of the class action settlement and certification of the settlement class. The Court certified the proposed class for settlement purposes only, preliminarily approved the proposed settlement, appointed the named plaintiffs as class representatives, appointed class counsel, ordered Caliber to provide the settlement class member list to the settlement administrator, and approved the proposed notice plan.

The order did not finally approve the settlement. It also did not finally approve the requested attorneys’ fees, litigation expenses, or service awards; those matters were to be addressed before the final approval hearing.