Filed: Mar. 16, 2004
Latest Update: Feb. 21, 2020
Summary: United States Court of Appeals Fifth Circuit F I L E D IN THE UNITED STATES COURT OF APPEALS March 16, 2004 FOR THE FIFTH CIRCUIT Charles R. Fulbruge III _ Clerk No. 03-60339 _ CLAUDIA SMITH; ET AL., Plaintiffs, CLAUDIA SMITH; WILBERT WALKER, Plaintiffs - Appellees, versus REBECCA CRYSTIAN; MARTHA SHAFFER, Plaintiffs - Appellants, versus TOWER LOAN OF MISSISSIPPI INC.; AMERICAN FEDERATED INSURANCE CO.; AMERICAN FEDERATED LIFE INSURANCE CO.; FIRST TOWER LOAN INC., Defendants - Appellees, versus C
Summary: United States Court of Appeals Fifth Circuit F I L E D IN THE UNITED STATES COURT OF APPEALS March 16, 2004 FOR THE FIFTH CIRCUIT Charles R. Fulbruge III _ Clerk No. 03-60339 _ CLAUDIA SMITH; ET AL., Plaintiffs, CLAUDIA SMITH; WILBERT WALKER, Plaintiffs - Appellees, versus REBECCA CRYSTIAN; MARTHA SHAFFER, Plaintiffs - Appellants, versus TOWER LOAN OF MISSISSIPPI INC.; AMERICAN FEDERATED INSURANCE CO.; AMERICAN FEDERATED LIFE INSURANCE CO.; FIRST TOWER LOAN INC., Defendants - Appellees, versus CL..
More
United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS March 16, 2004
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
_____________________ Clerk
No. 03-60339
_____________________
CLAUDIA SMITH; ET AL.,
Plaintiffs,
CLAUDIA SMITH; WILBERT WALKER,
Plaintiffs - Appellees,
versus
REBECCA CRYSTIAN; MARTHA SHAFFER,
Plaintiffs - Appellants,
versus
TOWER LOAN OF MISSISSIPPI INC.; AMERICAN FEDERATED INSURANCE
CO.; AMERICAN FEDERATED LIFE INSURANCE CO.; FIRST TOWER LOAN
INC.,
Defendants - Appellees,
versus
CLIFTON GRAY; LARRY PICKENS; 693 MOVANT OBJECTORS,
Appellants.
__________________________________________________________________
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 1:98-CV-212-BrR
_________________________________________________________________
Before JOLLY, DUHÉ and STEWART, Circuit Judges.
PER CURIAM:*
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
This appeal challenges the district court’s class
certification under FED. R. CIV. P. 23, its approval of the parties’
settlement, its refusal to hold a third fairness hearing, and the
notice provided for that fairness hearing. For the following
reasons, we AFFIRM.
First, we address the district court’s certification of the
class and note the limited nature of our review:
[T]he district court maintains substantial
discretion in determining whether to certify a
class action, a decision we review only for
abuse. Implicit in this deferential standard
is a recognition of the essentially factual
basis of the certification inquiry and of the
district court’s inherent power to manage and
control pending litigation. Whether the
district court applied the correct legal
standard in reaching its decision on class
certification, however, is a legal question
that we review de novo.
Allison v. Citgo Petroleum Corp., 151 F.3d 402, 408 (5th Cir.
1998)(internal citations omitted); see also Jenkins v. Raymark
Industries, Inc.,
782 F.2d 468, 471-72 (5th Cir. 1986) (stating
“[a]ssuming the court considers the Rule 23 criteria, we may
reverse its decision only for abuse of discretion”).
Against this deferential backdrop, it is clear that the
district court’s certification of a mandatory class under FED. R.
CIV. P. 23 was proper. First, the district court did not abuse its
discretion in finding that the class action prerequisites listed in
Rule 23(a) were satisfied. See James v. City of Dallas, Tex., 254
F.3d 551, 571 (5th Cir. 2001).
2
Second, the district did not abuse its discretion when it
found that the requirements listed in FED. R. CIV. P. 23(b)(1)(A)
were met. In the instant case, numerous claims have already been
filed or are expected to be filed against Tower and each has
requested or probably will request injunctive relief seeking to
modify Tower’s business practices. Moreover, the plaintiffs’
complaint in this case requested multiple equitable remedies. See
Allison, 151 F.3d at 421 n.16. (stating that a risk of inconsistent
adjudications is presented when the parties present claims for
injunctive or equitable relief).1
1
The plaintiff’s second amended complaint requested the
following equitable relief:
(a) A Court determination that the defendant,
Tower, has violated the terms of that certain
Consent Decree with the Federal Trade
Commission, which required the defendant to
include credit life and credit disability
insurance charges as finance charges on the
Truth in Lending Statements furnished to its
borrowers who were charged for Credit Life and
Credit Disability Insurance.
(b) A Court determination of the rights of
plaintiffs and the Class and corresponding
rights of defendants.
(c) An order enjoining defendants from
engaging in further unfair, misleading and
deceptive practices regarding the manner in
which it procures and places credit life,
credit disability and property insurance on
the plaintiffs and Class Members, as well as
future borrowers.
(d) A Court Order requiring defendant to
refund to plaintiffs and all Class Members all
premiums and related charges made to defendant
3
These facts support the district court’s conclusion that this
case presents an inherent risk that different courts could reach
“inconsistent or varying adjudications” which would “establish
incompatible standards of conduct” for Tower. FED. R. CIV. P.
or its agents.
(e) A Court Order requiring the defendant to
cease and desist from violating Section 75-67-
121 of Mississippi Code by charging premiums
not in keeping with that usually and
customarily paid for like insurance.
(f) A Court Order requiring the defendant to
cease and desist from violating Section 85-5-
35 by engaging in Unfair Competition and
Practices, by making, publishing and
disseminating to the public false and
misleading statements concerning the
availability of loans, the costs of said
loans, and the collateral to be taken for said
loans.
(g) A Court Order requiring the defendants to
inform all borrowers of the ownership,
financial connection, and sharing of the
borrower’s premiums for all insurance charged
by the defendant, Tower.
(h) A Court order requiring the defendants to
terminate all “packing” of credit life, credit
disability and property insurance unless and
until the proposed plan is submitted to and
approved by the Court.
(i) A Court Order requiring the defendants to
allow property insurance claims to be filed
and adjusted without requiring the borrower to
obtain an appraisal.
(j) A Court Order establishing a fair method
by which the borrowers have the option to file
credit insurance claims directly with the
insurance company.
4
23(b)(1)(A). For instance, the class sought “[a] Court Order
establishing a fair method by which the borrowers have the option
to file credit insurance claims directly with the insurance
company.” If similar relief is requested in another proceeding, a
risk of incompatible standards of conduct could present itself if
the two courts establish conflicting “fair methods” for filing
credit insurance claims.
In sum, these considerations persuade us that the district
court did not abuse its discretion when it certified the class
under 23(b)(1)(A).2
Third, it is similarly clear that the district court did not
abuse its discretion when it approved the parties’ settlement. We
initially note the “strong judicial policy favoring the resolution
of disputes through settlement.” Parker v. Anderson, 667 F.2d
1204, 1209 (5th Cir. 1982). Therefore, a district court’s approval
of a settlement is given great deference and “will not be upset
unless the court clearly abused its discretion.”
Id.
In the instant case, the district court applied the proper
standard and found that the settlement was fair and reasonable.
See id.3 The objectors strenuously contend that the settlement was
2
Based upon our decision that the district court did not abuse
its discretion when it certified the class under 23(b)(1)(A), we
need not address the alleged error regarding the district court’s
alternative holding certifying the class under 23(b)(2).
3
A district court shall not approve a settlement unless it is
fair, adequate, and reasonable. Parker, 667 F.2d at 1209. In
evaluating proposed settlements the district court should consider
5
inadequate as evidenced by larger settlements and verdicts that
have been obtained by plaintiffs in other cases. However, these
cases are not relevant to the fairness of this settlement unless
they are shown to be similar to the plaintiffs’ claims against
Tower -- a showing which has not been made. Moreover, even if
these cases establish the appropriate benchmark, there is still no
clear abuse of discretion because a number of the claims against
Tower would probably be barred by the statute of limitations or
subject to arbitration if filed individually. Thus, even if the
monetary and compensatory relief provided by the settlement is not
comparable to the relief provided in other cases, when these awards
are discounted by the probability that the objectors will lose, the
district court did not clearly abuse its discretion in approving
the settlement.
six factors:
(1) whether the settlement was a product of
fraud or collusion; (2) the complexity,
expense, and likely duration of the
litigation; (3) the stage of the proceedings
and the amount of discovery completed; (4) the
factual and legal obstacles [to] prevailing on
the merits; (5) the possible range of recovery
and the certainty of damages; and (6) the
respective opinions of the participants,
including class counsel, class representative,
and the absent class members.
Id. (citing Pettway v. American Cast Iron Pipe Co.,
576 F.2d 1157
(5th Cir. 1978)). Absent a showing of fraud or collusion, “the
most important factor is the probability of the plaintiffs’ success
on the merits.”
Id.
6
Finally, we are not convinced that the district court erred
when it refused to hold a third fairness hearing given the failure
of the objectors to demonstrate before the district court any
substantial issues requiring such a hearing beyond those that had
been presented previously. See Cotton v. Hinton,
559 F.2d 1326,
1331 (5th Cir. 1977) (recognizing a district court’s right to
“limit its proceeding to whatever is necessary to aid it in
reaching an informed, just and reasoned decision”). Even assuming
an error, however, it was harmless given the failure of the
objectors to demonstrate prejudice to this court on appeal. See
FED. R. CIV. P. 61. Moreover, any allegation that the notice of the
second fairness hearing was inadequate is without merit. FED. R.
CIV. P. 23(e); 5 JAMES WM. MOORE ET AL., MOORE’S FEDERAL PRACTICE § 23.83
(3d ed. 2000).
In sum, we are convinced that the district court carefully
considered all of the pertinent objections that were made to the
settlement agreement. Indeed, the district court modified the
settlement in several respects, including narrowing the release to
ensure that certain claims were not barred by the settlement. It
is therefore our view that the district court committed no
reversible error in its thorough handling of this settlement and we
AFFIRM essentially for the reasons given in its able opinion.
AFFIRMED
7
8
