A District Court judge in New Jersey has signed off on a settlement in a class-action Fair Debt Collection Practices Act case that will see 52 class members split $3,250 while the plaintiff’s attorneys will earn more than $66,000 for their work.
The background: The lawsuit was originally filed after a collection law firm, working on behalf of a debt buyer, filed collection lawsuits in New Jersey that allegedly mischaracterized the type of debt at issue. The suits identified the obligations as “personal loans” when, in fact, they arose from credit card debt. The plaintiff argued this was misleading under the FDCPA and also violated New Jersey’s Consumer Fraud Act.
- The class was certified to include 52 consumers against whom such lawsuits were filed between November 2020 and the present. Each of the consumers received or was subject to the allegedly misleading pleadings.
- The settlement process stretched over several years, with multiple notices sent to class members and several postponed fairness hearings. Ultimately, the defendants agreed to place $75,000 in escrow to cover the consumer payouts, attorney fees, administrative costs, and a service award for the named plaintiff.
The ruling: Judge Stacey D. Adams approved the settlement, noting that while the per-person payout of $62.50 was modest, it represented the maximum recovery available under the FDCPA’s statutory damages cap, which limits awards to the lesser of $500,000 or 1% of a collector’s net worth. The court emphasized that “the settlement provides each class member with full relief — the most they could have expected to receive had they prevailed at trial.”
- On attorney’s fees, Judge Adams granted the requested $66,362.50. Class counsel logged 128 hours of work over nearly four years of litigation.
- The judge also approved $7,300 in administration costs and a $1,750 incentive award for the named plaintiff, who the court said had “vigorously pursued a settlement on behalf of all class members.”
- The judge also signed off on directing any uncashed checks to Legal Services of Northwest Jersey, reasoning that consumers had already been made whole under the FDCPA’s framework.
