Midland Credit Management, Inc. Settles Multidistrict TCPA Class Action

According to papers filed Friday in California federal court, Encore Capital Group, Inc. (Nasdaq: ECPG) subsidiary Midland Credit Management Inc. (Midland), and several related companies (collectively, the Defendants) have agreed to a settlement in multi-district Telephone Consumer Protection Act (TCPA) litigation accusing the Defendants of violating the TCPA when trying to reach debtors. The litigation alleged that Defendants violated the TCPA by using an automatic telephone dialing system or an artificial or prerecorded voice to call cell phones without the prior express consent of the call recipients.

The case, In Re: Midland Credit Management, Inc. Telephone Consumer Protection Act Litigation, (United States District Court, Southern District of California, Case No. 11-md-2286-MMA) arose out of 3 separate TCPA lawsuits filed in 2010 and 2011.

On October 11, 2011, the separate actions were transferred to the Southern District of California Court for coordinated or consolidated pretrial proceedings. See Plaintiffs memorandum of points and authorities in support of motion to approve.

Summary of Settlement

Class Counsel submits to the court that the settlement has a value of at least $20,498,608.00.

The Settlement provides the following benefit to the Class to be paid by Defendants:

$13,000,000 Credit Component, with pro rata credits to be credited to the Approved Claimants’ accounts held by Defendants.
$2,000,000 Cash Component, with pro rata cash payments to be paid to the Approved Claimants that do not have existing accounts with Defendants.
All costs of Notice and Claims Administration presently estimated to be between $3,098,608 and $3,352,407.
Attorneys’ fees and costs of litigation to be paid to Plaintiffs’ counsel, subject to Court approval, in the amount of $2,400,000.
A total of $7,500 in incentive payments is also sought for the three Class Representatives, at $2,500 each. That amount will be paid from the Cash Component of the Settlement Fund.

The Class definition as approved in the Preliminary Approval Order is as follows:

All persons in the United States who were called on a cellular telephone by Defendants or their subsidiaries, affiliates or related companies (other than calls made by Asset Acceptance LLC, Atlantic Credit & Finance, Inc. or Propel Financial Services) using a dialer or by prerecorded voice message without prior express consent during the period from November 2, 2006 through August 31, 2014, inclusive. (Editor’s note: Asset Acceptance LLC, Atlantic Credit & Finance, Inc. or Propel Financial Services are all entities that have been acquired by ECPG.)

Postcard notices were mailed out originally to 6,266,704 Class members for whom there were names and addresses in Defendants’ records. After returns and re-mails, there were 6,034,167 persons that are believed to have received the notice postcards, presumably about 96% of those Class members with names and addresses in Defendants’ records.

In accordance with a preliminary approval order from the court the Claims Administrator put in place a simple, easily followed claims procedure agreed upon in the Settlement Agreement that permitted the Class Member to easily file a claim by calling a toll-free 800 telephone number, or file online, without the necessity of mailing a claim form. The intent was to make submitting a claim as easy as possible to encourage the filing of claims.

329,755 class members filed claims. Each of the 329,755 claimants will receive approximately $23.49 in cash or approximately $58.84 in the form of a credit against what they owe Defendants.

A hearing will be held on August 26, 2016 at 9:00 AM to seek final approval of the settlement.

insideARM Perspective

July has been a busy month for significant TCPA settlements; this is the fourth large settlement. insideARM has written about all of the cases: