Johnson v. NPAS Solutions, LLC

975 F.3d 1244

Charles T. JOHNSON, on behalf of himself and others similarly situated, Plaintiff-Appellee,

Jenna Dickenson, Interested Party - Appellant,

v.NPAS SOLUTIONS, LLC, Defendant - Appellee.

No. 18-12344

United States Court of Appeals, Eleventh Circuit.

September 17, 2020

John W. Davis, Law Office of John Davis, TAMPA, FL, Eric Alan Isaacson, Law Office of Eric Alan Isaacson, LA JOLLA, CA, Charles Benjamin Nutley, Law Office of Charles Benjamin Nutley, PASADENA, CA, for Interested Party - Appellant.

Michael L. Greenwald, Greenwald Davidson Radbil, PLLC, BOCA RATON, FL, for Plaintiff - Appellee.

Michael L. Ehren, Martin Barry Goldberg, Alan D. Lash, Lorelei J. Van Wey, Lash & Goldberg, LLP, MIAMI, FL, Maura K. Monaghan, Jacob W. Stahl, Debevoise & Plimpton, LLP, NEW YORK, NY, for Defendant - Appellee.

Before MARTIN, NEWSOM, and BALDOCK,^* Circuit Judges.

NEWSOM, Circuit Judge:

The class-action settlement that underlies this appeal is just like so many others that have come before it. And in a way, that's exactly the problem. We find that, in approving the settlement here, the district court repeated several errors that, while clear to us, have become commonplace in everyday class-action practice.

First, the district court set a schedule that required class members to file any objection to the settlement—including any objection pertaining to attorneys’ fees—more than two weeks before class counsel had filed their fee petition. In so doing, we hold, the court violated the plain terms of Federal Rule of Civil Procedure 23(h).

Second, in approving the settlement, the district court awarded the class representative a $6,000 "[i]ncentive [p]ayment," as "acknowledgment of his role in prosecuting th[e] case on behalf of the [c]lass [m]embers." In so doing, we conclude, the court ignored on-point Supreme Court precedent prohibiting such awards.

Finally, in approving class counsel's fee request, overruling objections, and approving the parties’ settlement, the district court made no findings or conclusions that might facilitate appellate review; instead, it offered only rote, boilerplate pronouncements ("approved," "overruled," etc.). In so doing, we hold that the court violated the Federal Rules of Civil Procedure and our precedents requiring courts to explain their class-related decisions.

We don't necessarily fault the district court—it handled the class-action settlement here in pretty much exactly the same way that hundreds of courts before it have handled similar settlements. But familiarity breeds inattention, and it falls to us to correct the errors in the case before us. We will reverse in part, vacate in part, and remand for further proceedings.

I

This case began in March 2017, when Charles Johnson—on behalf of both himself and a putative class of similarly situated individuals—sued NPAS Solutions, LLC in the U.S. District Court for the Southern District of Florida, alleging violations of the Telephone Consumer Protection Act, 47 U.S.C. § 227. As relevant here, the TCPA makes it unlawful to "us[e] any automatic telephone dialing system" to call a person without his or her "prior express consent," id. § 227(b)(1)(A) ; it also provides for statutory damages of "$500 ... for each ... violation" and authorizes up to treble damages against anyone who "willfully or knowingly violate[s]" the law, id. § 227(b)(3). Johnson claimed that NPAS—an entity that collects medical debts—had used an automatic telephone-dialing system to call his cell phone without his consent. In particular, Johnson challenged NPAS's practice of calling "wrong number[s]"—i.e. , phone numbers that had originally belonged to consenting debtors but had been reassigned to non-consenting persons.

The case quickly proceeded to the settlement phase. After some preliminary discovery and motions practice, the parties jointly filed a notice of settlement on November 2—less than eight months after Johnson had filed suit. Not long thereafter, Johnson moved to certify the class for settlement purposes; he argued that settlement was in the class members’ best interest because, despite NPAS's possible defenses, he had obtained a meaningful recovery of $1,432,000.

On December 4, the district court preliminarily approved the settlement and certified the class for settlement purposes.¹ The court appointed Johnson as the class representative and his lawyers as class counsel, and its order stated that Johnson could "petition the Court to receive an amount not to exceed $6,000 as acknowledgment of his role in prosecuting this case on behalf of the class members." The district court set March 19, 2018 as the deadline for class members to opt out of the settlement and, more importantly for our purposes, to file objections to the settlement. The court set April 6, 2018—18 days after the opt-out/objection deadline—as the date by which Johnson and NPAS had to submit their motion for final approval of the settlement and their responses to objections, and (more importantly) by which class counsel had to submit their petition for attorneys’ fees and costs.

The following month, class members were notified about the settlement and informed that NPAS would establish a settlement fund, that class counsel would seek attorneys’ fees amounting to 30% of the fund, and that Johnson would seek a $6,000 incentive award from the fund. In total, 9,543 class members submitted claims for recovery.

When the objection deadline of March 19 arrived, no class member opted out, and only one objected to the settlement—Jenna Dickenson, our appellant. As a procedural matter, Dickenson challenged the district court's decision to set the objection deadline before the deadline for class counsel to file their attorneys’-fee petition, which she contended violated Federal Rule of Civil Procedure 23 and the Due Process Clause. On the merits, Dickenson (1) objected to the amount of the settlement, arguing that it should have been higher; (2) argued that the court should conduct a lodestar calculation in determining reasonable attorneys’ fees; and (3) contended that Johnson's $6,000 incentive award both contravened the Supreme Court's decisions in Trustees v. Greenough , 105 U.S. 527, 26 L.Ed. 1157 (1882), and Central Railroad & Banking Co. v. Pettus , 113 U.S. 116, 5 S.Ct. 387, 28 L.Ed. 915 (1885), and created a conflict of interest between Johnson and other class members.

On the parties’ April 6 filing deadline, Johnson and NPAS opposed Dickenson's objection and urged the district court to approve the settlement as fair, reasonable, and adequate. Johnson also filed a motion for final approval of the settlement and requested attorneys’ fees, costs and expenses of the litigation, as well as an incentive award, all of which he said were reasonable and in line with the amounts approved in similar settlements.

About a month later, the district court held a final fairness hearing. After class counsel, NPAS, and Dickenson had presented their arguments, the district court announced its intention to approve the settlement. The court explained that it "ha[d] carefully considered all of the submissions before the Court," including Dickenson's objection. The court stated that it was "going to overrule that objection, but nevertheless appreciate[d] the argument [Dickenson's] counsel ha[d] made."

The same day, the district court entered a brief, seven-page order approving the settlement. The court's evaluation of the fairness of the settlement consisted of the following sentence:

The Court finds that the settlement of this action, on the terms and conditions set forth in the Settlement Agreement, is in all respects fundamentally fair, reasonable, adequate, and in the best interest of the class members, when considering, in their totality, the following factors: (1) the absence of any fraud or collusion behind the settlement; (2) the complexity, expense, and likely duration of the litigation; (3) the stage of the proceedings and the amount of discovery completed; (4) the probability of the Plaintiff's success on the merits; (5) the range of possible recovery; and (6) the opinions of the class counsel, class representatives, and the substance and amount of opposition to the settlement.

Dist. Ct. Order at 4 (citing Leverso v. SouthTrust Bank of Ala. , 18 F.3d 1527, 1530 (11th Cir. 1994) ).

The order specified that NPAS would create a non-reversionary $1,432,000 settlement fund, from which the following would be deducted before class members received any payout: (1) costs and expenses disbursed in administering the settlement and providing notice to the class; (2) attorneys’ fees in the amount of 30% of the fund (or $429,600), as well as $3,475.52 for class counsel's litigation costs and expenses; and (3) a $6,000 "[i]ncentive [p]ayment" to Johnson, "as acknowledgment of his role in prosecuting this case on behalf of the [c]lass [m]embers." Id. at 5. After subtracting out those deductions, each of the potential 179,642 class members stood to receive only $7.97. (Happily, because only 9,543 class members submitted claims, each stands to receive a whopping $79.) The district court's order provided no analysis to accompany its approval of the attorneys’-fee percentage or the incentive award. The order also stated, without further explanation, that "[t]he objection of Jenna Dickenson is OVERRULED." Id.

This is Dickenson's appeal.

II

Dickenson raises several challenges—three, as we categorize them—to the district court's approval of the settlement. First, she contends that the district court erred when it required class members to file objections to the settlement—including to attorneys’ fees—before class counsel had filed their fee petition. Second, she insists that the district court's approval of Johnson's $6,000 incentive award contravenes Supreme Court precedent. Finally, and more broadly, she maintains that the district court didn't provide sufficient explanation to enable meaningful appellate review—either in awarding attorneys’...