Phillips v. Caliber Home Loans

Background

The plaintiffs brought related class actions in Minnesota, Texas, and North Carolina based on allegations that Caliber Home Loans, Inc. charged homeowners additional fees when they made mortgage payments by telephone, interactive voice response, or the internet. The claims included breach of contract and alleged violations of various state and federal debt-collection laws. Caliber denied the allegations and denied wrongdoing.

The cases were consolidated for settlement purposes in the Minnesota action. The court had previously dismissed one of the Minnesota plaintiffs’ claims for breach of the implied covenant of good faith and fair dealing but allowed their breach-of-contract and unjust-enrichment claims to proceed. The court also described rulings in the related Texas action, where the breach-of-contract claim was dismissed but the Texas Debt Collection Practices Act claim remained, and noted that the North Carolina action had been stayed while a dismissal motion was pending.

After mediation, the parties reached a global settlement. The court preliminarily approved the settlement on July 19, 2021, and held a final approval hearing on December 16, 2021.

Settlement Terms and Class Notice

The settlement creates a $5,000,000 non-reversionary common fund. The fund will provide cash payments to settlement class members, pay administrative costs, and cover any approved attorneys’ fees, litigation expenses, and service awards. Eligible class members do not need to submit claim forms and will receive payments on a pro-rata basis according to the amount of Pay-to-Pay Fees charged to them.

The settlement class consists of people who were borrowers on residential mortgage loans for properties in the United States, whose loans Caliber serviced, 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.

Caliber had stopped charging or collecting Pay-to-Pay Fees from settlement class members and other borrowers nationwide as of January 21, 2020. Under the settlement, Caliber agreed not to charge or collect those fees from borrowers for at least two years after entry of the final approval order. Class members who did not timely exclude themselves released claims relating to the charging, collection, or attempted collection of Pay-to-Pay Fees through the date of the order.

More than 300,000 potential class members received notice. The court found that the notice plan, which included email and postcard notices, a detailed notice, a settlement website, and a toll-free telephone line, complied with Rule 23, due process, and the Class Action Fairness Act. Six people opted out, and one objection was filed and later withdrawn.

Final Approval and Certification

Under Federal Rule of Civil Procedure 23, a class-action settlement must be approved by the court and found fair, reasonable, and adequate. The court concluded that the settlement met that standard. It relied on the settlement’s approximately 29.38-percent recovery of alleged damages, the immediate payments and injunctive relief, the risks and expense of continued litigation, Caliber’s solvency, and the limited opposition.

The court also found that the settlement was negotiated at arm’s length without evidence of collusion, and that the class representatives and class counsel had adequately represented the class. It finally certified the settlement class for settlement purposes under Rules 23(a) and 23(b)(3), finding that the class was sufficiently numerous, had common questions, had typical claims, had adequate representatives, and was appropriately resolved through a class action.

Attorneys’ Fees, Costs, and Service Awards

The court granted the plaintiffs’ unopposed request for $1,666,500 in attorneys’ fees, equal to 33.33 percent of the gross settlement fund. The court found that counsel had worked on a contingent basis, spent more than 1,000 hours, handled complex claims under multiple state and federal laws, and achieved substantial benefits for the class.

The court also granted $10,410.66 in litigation costs, including filing fees, travel, mediation, photocopying, mailing, telephone, and other litigation expenses.

Finally, the court granted $5,000 service awards to each of the six class representatives: Stephen Phillips, Mary Tourville-Phillips, Sandi Barnett, Gregory Benjamin, Tyrus Davis, and Christopher Bingham. The court cited their work reviewing pleadings and the settlement, communicating information to counsel, and overseeing the litigation.

Disposition

Judge Wilhelmina M. Wright granted the plaintiffs’ unopposed motion for final approval of the class-action settlement. The court finally certified the settlement class for settlement purposes, approved the settlement as fair, reasonable, and adequate, confirmed the class representatives and class counsel, confirmed the notice plan and Habitat for Humanity as the cy pres recipient, and entered final judgment.

Judge Wright also granted the plaintiffs’ unopposed motion for attorneys’ fees, litigation costs, and service awards. The court retained jurisdiction to resolve disputes concerning the settlement’s interpretation, administration, implementation, effectuation, and enforcement.