United States District Court, E.D. New York
LEILANI TORRES, on behalf of herself and all others similarly situated, Plaintiff,
TOBACK, BERNSTEIN & REISS LLP, LORAINE CAMPBELL, ARTHUR M. TOBACK, BRIAN K. BERNSTEIN, LEONARD S. REISS, and JOHN DOES 1-10, Defendants.
NICHOLAS G. GARAUFIS, District Judge.
Before the court is the parties' Joint Motion for Class Certification, Appointment of Class Counsel, and Preliminary Approval of Class Action Settlement. (Dkt. 69.) On March 14, 2014, Magistrate Judge Viktor V. Pohorelsky issued a Report and Recommendation ("R&R") recommending that the parties' motion be granted. For the following reasons, the R&R is ADOPTED IN PART, and decision is RESERVED IN PART.
For the factual background of this case, the court refers to the R&R at pages 2-4. On March 21, 2011, Plaintiff Leilani Torres ("Plaintiff' or "Named Plaintiff') brought this action alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692, et seq. ("FDCPA") by Defendants. (See Compl. (Dkt. 37).) Plaintiffs Complaint included claims asserted individually and claims asserted on behalf of a class. (See id.)
On June 20, 2013, the parties filed a Joint Motion for Class Certification, Appointment of Class Counsel, and Preliminary Approval of Class Action Settlement (the "joint motion"). Pursuant to 28 U.S.C. § 636(b)(1)(B) and Federal Rule of Civil Procedure 72(b)(1), the court referred the motion to Judge Pohorelsky for a report and recommendation. (July 22, 2011, Order.) On March 14, 2014, Judge Pohorelsky issued his R&R, recommending that the proposed class be certified, Plaintiffs counsel be appointed as Class Counsel, preliminary approval of the proposed settlement be granted under certain conditions stated in the R&R, and notice be directed to the proposed class with certain modifications. (R&R (Dkt. 77) at 21.)
II. STANDARD OF REVIEW
When a magistrate judge issues a report and recommendation and it has been served on the parties, a party has fourteen days to object to the R&R. Fed.R.Civ.P. 72(b)(2). In reviewing a report and recommendation, the district court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. [The district court] may also receive further evidence or recommit the matter to the magistrate judge with instructions." 28 U.S.C. § 636(b)(1)(C). "Where no objection to the Report and Recommendation has been filed, the district court need only satisfy itself that that there is no clear error on the face of the record.'" Gesualdi v. Mack Excavation & Trailer Serv., Inc., No. 09-CV-2502 (KAM), 2010 WL 985294, at *I, (E.D.N.Y. Mar. 15, 2010) (quoting Urena v. New York, 160 F.Supp.2d 606, 609-10 (S.D.N.Y. 2001)).
No party has objected to Judge Pohorelsky's R&R, and the time to do so has passed. See Fed.R.Civ.P. 72(b)(2). (See also R&R at 21 ("Any objections to the Report and Recommendation above must be filed with the Clerk of the Court within 14 days of receipt of this report.") (citations omitted).) Therefore, the court reviews the R&R for clear error. See 28 U.S.C. § 636(b)(1); Gesualdi, 2010 WL 985294, at *1; La Torres v. Walker, 216 F.Supp.2d 157, 159 (S.D.N.Y. 2000).
A. Class Certification
The court finds no clear error in the R&R's reasoning and conclusions concerning the motion for class certification. However, after the issuance of the R&R, the parties filed a letter with the court correcting the number of class members in the two settlement sub-classes. (See. Mar. 20, 2014, Ltr. (Dkt. 78).) According to the letter, the correct numbers are 255 members for the Perkins Loan Class and 282 members for the Education Loan Class. (Id. at 1.) With these revised numbers, the numerosity requirement under Federal Rule of Civil Procedure 23(a) remains satisfied for each sub-class. See Consols Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 483 (2d Cir. 1995) ("[N]umerosity is presumed at a level of forty members."). The parties aver that under the proposed settlement, these revised numbers will result in statutory damages of $67.16 for each member of the Perkins Loan Class and $60.73 for each member of the Education Loan Class. (Id.) Therefore the court modifies the R&R to define the settlement sub-classes according to the numbers contained in the parties' March 20, 2014, letter. Accordingly the R&R's recommendations that (1) the class be conditionally certified as two sub-classes for the purpose of settlement, and (2) Plaintiff's counsel be appointed as Class Counsel are ADOPTED WITH MODIFICATION. The court notes that if the proposed settlement is not ultimately approved, the class will be automatically decertified.
B. The Proposed Settlement
1. Revisions to the Proposed Settlement and Class Notice
Although the court finds no clear error in the R&R's findings concerning the proposed settlement, preliminary approval of the proposed settlement and the class notice is premature in light of the anticipated revisions to the settlement raised by the R&R and the parties. After the parties filed the joint motion, and in response to issues raised during conferences before Judge Pohorelsky, Plaintiff divided the putative class into two separate sub-classes, which she claims each independently satisfy Rule 23's requirements. (See Pl.'s Mar. 5, 2014, Ltr. (Dkt. 74) at 1-2, 9.) Due to this reorganization, Judge Pohorelsky recommends, and Plaintiff agrees, that the settlement fund should be divided into two equal shares for the two sub-classes rather than allocated pro rata among all class members generally, as currently stated in the settlement. (See R&R at 18; Proposed Settlement (Dkt. 69-3) ¶ 30(4) As mentioned above, the parties also recently corrected the number of class members in each sub-class. The settlement fund reallocation and changes in the number of class members will affect the anticipated statutory damages for each class member. These changes have not been incorporated into the proposed settlement or the proposed class notice. In addition, Judge Pohorelsky highlights that the class notice is missing an advisement that class members may enter an appearance through an attorney, which is required by Federal Rule of Civil Procedure 23(c)(2)03). (See R&R at 21.) Judge Pohorelsky conditioned his preliminary approval of the settlement and notice on these revisions and modifications, and the court agrees. Therefore the ...