Nyree Belton v. GE Capital Consumer Lending, Inc.

Background

Nyree Belton filed for bankruptcy in 2012 and received a discharge order. She later reopened the bankruptcy case and filed a class action in the Bankruptcy Court against GE Capital Consumer Lending, Inc., also identified in the opinion as GE Money Bank and GE Capital Retail Bank. Belton alleged that the bank had a policy of failing to update credit-report information to show that certain Chapter 7 debts had been discharged. She alleged that this pressured people to repay discharged debts to remove negative information from their credit reports and violated the bankruptcy discharge injunction. The bank denied the allegations and denied violating the injunction.

The case was one of several related class actions involving allegations of similar conduct by different banks. The parties negotiated a settlement after extensive litigation and mediation. The Bankruptcy Court had preliminarily approved the settlement, conditionally certified the class for settlement purposes, and appointed Belton as class representative and Boies Schiller Flexner LLP and Charles Juntikka & Associates LLP as class counsel.

Settlement terms and class

The court recertified the settlement class under Rule 23(b)(3) of the Federal Rules of Civil Procedure. The class consisted of individuals who had GE Capital Retail Bank credit-card accounts, whose related debts were charged off and sold to a debt buyer during specified periods, and who later obtained Chapter 7 discharges of those debts during specified periods.

The settlement required GECRB to address credit-report tradelines for affected accounts and to request that credit-reporting agencies update, delete, or suppress those tradelines as appropriate, subject to the settlement’s terms. It created a settlement fund of up to $8.455 million. Eligible class members who paid discharged debts to GECRB or to a debt buyer could seek reimbursement. Qualifying claimants would receive a proportional share, up to $175 per claim. Settlement notice was sent directly to identified class members, and the court found the notice reasonable and sufficient under due-process and Rule 23 requirements.

Court’s rulings

The court granted the parties’ joint motion to withdraw the bankruptcy reference. It affirmed certification of the settlement class and affirmed the designation of Belton as class representative and the two law firms as class counsel.

The court granted final approval of the settlement, finding it fair, reasonable, and adequate. It concluded that the settlement resulted from good-faith, arm’s-length negotiations between experienced counsel and that the settlement’s terms were substantively fair after considering the complexity and duration of the litigation, the absence of objections, the litigation risks, and the potential recovery.

The court also granted the motion for attorney’s fees, costs, and an incentive payment. It awarded class counsel $2,000,000 in fees and expenses and awarded Belton a $10,000 incentive payment, with both amounts to be paid from the settlement fund. The court ordered GECRB to fund the settlement as required by the settlement agreement. The underlying action against GE Money Bank was terminated with prejudice.