Consumer Protection – Magistrate judge’s jurisdiction not affected by absent class member

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Where 28 U.S.C. § 636(c) provides a magistrate judge with jurisdiction to approve a class action and enter judgment only by consent of the parties, the court, in a case of first impression, joined every other circuit to address the issue in holding that absent class members aren’t “parties.”

Background

This case arises from a class action alleging that Nationstar Mortgage LLC violated federal and state consumer-protection laws in servicing the class members’ mortgage loans. Following protracted litigation, Nationstar and the Robinsons negotiated a $3 million settlement. Pia McAdams, a class member, objected to the settlement, arguing that the class notice was insufficient; the settlement was unfair, unreasonable and inadequate; the release was unconstitutionally overbroad and the attorneys’ fee award was improper. A magistrate judge (acting on a referral by the district court) overruled McAdams’s objections.

Jurisdiction

The magistrate judge could approve the class action and enter judgment only by consent of the parties. McAdams asserts that “parties” for purposes of 28 U.S.C. § 636(c) include absent class members, like her. This is a question of first impression in this circuit.

But every other circuit to address the issue has concluded that absent class members aren’t parties. This court now joins them, holding that the magistrate judge had jurisdiction to approve the settlement. Because the contemporary, common meaning of “parties” excludes absent class members and the statute lacks signs showing any legislative intent to classify them as such, the court concludes “parties,” as used in § 636, doesn’t include absent class members.

Notice

The parties dispute the court’s standard of review. It hasn’t spoken on this question, and other circuits are split. Two circuits review a district court’s finding on the adequacy of class action notice for abuse of discretion. Three others review the issue de novo. But even assuming de novo review is proper, the class notice was adequate.

The magistrate judge approved three types of notice—email, postcard and longform. The settlement administrator emailed notice to class members for whom it had an email address. It also mailed notice to class members for whom it had a physical address. And it searched a national database to update the addresses for those whose postcard notice was returned as undeliverable. Both the email and postcard informed class members that there was a $3,000,000 settlement fund, explained how to file a claim and presented the option to opt-out. They also listed a website and telephone number where class members could get the longform notice.

In sum, the methods of notice here fairly apprised class members of the proceedings as well as their options. Class members had access to information about the total settlement, attorneys’ fees and distribution method. The notices also provided them with the means to find more information if they wanted it. Thus, the notices were adequate.

Fair, reasonable and adequate

McAdams next contests the magistrate judge’s finding that the settlement was fair, reasonable and adequate. McAdams doesn’t claim that the magistrate judge failed to address the relevant criteria under Federal Rule of Civil Procedure 23(e)(2)(C) and addressed the factors from In re Jiffy Lube Securities Litigation, 927 F.2d 155 (4th Cir. 1991); nor does she argue that he improperly weighed them. Instead, she complains that the magistrate judge “failed to make a ‘rough estimate’ of what class members would have received had they prevailed at trial.” But this court has never required such an estimate. Even the out-of-circuit cases McAdams cites don’t require an estimate in every case.

In any event, while the magistrate judge didn’t estimate the potential recovery should the case proceed to trial, he found that most class members “probably only had nominal damages.” That’s consistent with the resulting settlement.

Remaining arguments

McAdams also argues the settlement release is “ambiguous, overbroad, and beyond the permissible scope of release for class action settlements.” The court disagrees. The release is tied to cases arising out of a set action and time frame.

Finally, McAdams contends that the magistrate judge abused his discretion by approving the $1,300,000 attorneys’ fee request because: (1) the magistrate judge didn’t comply with Rule 23(h)(3)’s requirement that he “find the facts and state [his] legal conclusions”; (2) the attorneys’ fee award constitutes an unacceptably large portion of the overall award and (3) the “clear sailing” provision is impermissible. All three challenges fail.

Affirmed.

McAdams v. Robinson (Lawyers Weekly No. 001-027-22, 23 pp.) Albert Diaz, J. Case No. 21-1087. Feb. 10, 2022. From D. Md. at Greenbelt (Timothy J. Sullivan, M.J.) Michael T. Houchin for Appellant. Jonathan K. Tycko and  Erik Wayne Kemp for Appellees. 4th Cir.