In this action, a Kentucky district court approved a final class-action settlement agreement after the parties complied with all notice requirements under Federal Rule 23 and CAFA.
The named plaintiffs asserted a class action, alleging that defendants charged illegal rates to hundreds of thousands of their telecommunications services customers. In that regard, plaintiffs alleged that, since June 2007, defendants’ monthly bills had systematically included an inconspicuous surcharge, which equaled as much as 2.6% of all other charges on the bills. The plaintiffs claimed that these charges violated the Field Rate Doctrine, which prohibits common carriers from charging rates other than their legal rates (i.e., the tariff rates filed with designated regulatory agencies, such as the FCC).
Subsequently, the parties reached a proposed settlement agreement that brought substantial relief to all settlement class members and provided for the release of all claims. The district court granted preliminary approval for the settlement, and the settlement administrator and defendants mailed notice of the proposed agreement to all potential class members via first-class mail in a form and manner approved by the district court. Further, the settlement agreement, relevant motions, and court orders were posted online. After these notices were mailed, the class representatives moved for final approval of the settlement.
First, the district court found that notice of the proposed settlement comported with due process and was sufficient under Federal Rule 23. In particular, the court found that the notices were “directed in a reasonable manner to all prospective Settlement Class Members who would be bound by the Settlement Agreement and, in a manner that could be understood by the average prospective Settlement Class Member, fairly apprised the prospective Settlement Class Members of the terms of the proposed Settlement Agreement and their options with respect to their decision whether to join in the Settlement Class.” See Int’l Union v. GMC, 497 F.3d 615, 630 (6th Cir. 2007).
Next, the district court noted that CAFA also requires defendants to provide notice of the proposed class-action settlement to appropriate federal and state officials, as defined in 28 U.S.C. § 1715(a). See 28 U.S.C. § 1715(a). Along with these notices, defendants sent, among other things, copies of the class-action complaint, plaintiffs’ motion for preliminary approval of the settlement agreement, the proposed notice to the settlement class, and a copy of the proposed settlement agreement. See id. at § 1715(b). Based on these efforts, the court found that defendants complied with all CAFA notice requirements under 28 U.S.C. § 1715.
In addition to complying with all applicable notice requirements, the court found that the settlement agreement was fair, reasonable, and equitable under the seven factors identified by the Sixth Circuit in International Union v. GMC, 497 F.3d 615, 630 (6th Cir. 2007). Further, the district court found that the distribution and allocation of the settlement proceeds was fair and reasonable under the circumstances. See Ortiz v. Fireboard Corp., 527 U.S. 815, 855 (1999). Finally, the district court held that plaintiffs’ counsel was entitled to $2.5 million in attorneys’ fees based on the Sixth Circuit’s “Ramsey Factors.” See Moulton v. U.S. Steel Corp., 581 F.3d 344, 352 (6th Cir. 2009).
Based on all of these considerations, the district court approved the final settlement agreement, finding that the class-action settlement was fair, reasonable, and adequate in all respects. This order provides a nice summary of the procedure for obtaining final approval of a class-action settlement in the Sixth Circuit, as well as CAFA’s notice requirements under 28 U.S.C. § 1715.