Smith v. Tower Loan of MS , 91 F. App'x 952 ( 2004 )


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  •                                                        United States Court of Appeals
    Fifth Circuit
    F I L E D
    IN THE UNITED STATES COURT OF APPEALS         March 16, 2004
    FOR THE FIFTH CIRCUIT           Charles R. Fulbruge III
    _____________________                   Clerk
    No. 03-60339
    _____________________
    CLAUDIA SMITH; ET AL.,
    Plaintiffs,
    CLAUDIA SMITH; WILBERT WALKER,
    Plaintiffs - Appellees,
    versus
    REBECCA CRYSTIAN; MARTHA SHAFFER,
    Plaintiffs - Appellants,
    versus
    TOWER LOAN OF MISSISSIPPI INC.; AMERICAN FEDERATED INSURANCE
    CO.; AMERICAN FEDERATED LIFE INSURANCE CO.; FIRST TOWER LOAN
    INC.,
    Defendants - Appellees,
    versus
    CLIFTON GRAY; LARRY PICKENS; 693 MOVANT OBJECTORS,
    Appellants.
    __________________________________________________________________
    Appeal from the United States District Court
    for the Southern District of Mississippi
    USDC No. 1:98-CV-212-BrR
    _________________________________________________________________
    Before JOLLY, DUHÉ and STEWART, Circuit Judges.
    PER CURIAM:*
    *
    Pursuant to 5TH CIR. R. 47.5, the Court has determined that
    this opinion should not be published and is not precedent except
    under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
    This    appeal   challenges       the   district   court’s   class
    certification under FED. R. CIV. P. 23, its approval of the parties’
    settlement, its refusal to hold a third fairness hearing, and the
    notice provided for that fairness hearing.          For the following
    reasons, we AFFIRM.
    First, we address the district court’s certification of the
    class and note the limited nature of our review:
    [T]he district court maintains substantial
    discretion in determining whether to certify a
    class action, a decision we review only for
    abuse. Implicit in this deferential standard
    is a recognition of the essentially factual
    basis of the certification inquiry and of the
    district court’s inherent power to manage and
    control pending litigation.       Whether the
    district court applied the correct legal
    standard in reaching its decision on class
    certification, however, is a legal question
    that we review de novo.
    Allison v. Citgo Petroleum Corp., 
    151 F.3d 402
    , 408 (5th Cir.
    1998)(internal citations omitted); see also Jenkins v. Raymark
    Industries, Inc., 
    782 F.2d 468
    , 471-72 (5th Cir. 1986) (stating
    “[a]ssuming the court considers the Rule 23 criteria, we may
    reverse its decision only for abuse of discretion”).
    Against this deferential backdrop, it is clear that the
    district court’s certification of a mandatory class under FED. R.
    CIV. P. 23 was proper.   First, the district court did not abuse its
    discretion in finding that the class action prerequisites listed in
    Rule 23(a) were satisfied.   See James v. City of Dallas, Tex., 
    254 F.3d 551
    , 571 (5th Cir. 2001).
    2
    Second, the district did not abuse its discretion when it
    found that the requirements listed in FED. R. CIV. P. 23(b)(1)(A)
    were met.    In the instant case, numerous claims have already been
    filed or are expected to be filed against Tower and each has
    requested or probably will request injunctive relief seeking to
    modify Tower’s business practices.         Moreover, the plaintiffs’
    complaint in this case requested multiple equitable remedies.       See
    Allison, 
    151 F.3d at
    421 n.16. (stating that a risk of inconsistent
    adjudications is presented when the parties present claims for
    injunctive or equitable relief).1
    1
    The plaintiff’s second      amended    complaint   requested   the
    following equitable relief:
    (a) A Court determination that the defendant,
    Tower, has violated the terms of that certain
    Consent   Decree   with  the   Federal   Trade
    Commission, which required the defendant to
    include credit life and credit disability
    insurance charges as finance charges on the
    Truth in Lending Statements furnished to its
    borrowers who were charged for Credit Life and
    Credit Disability Insurance.
    (b) A Court determination of the rights of
    plaintiffs and the Class and corresponding
    rights of defendants.
    (c) An order enjoining defendants from
    engaging in further unfair, misleading and
    deceptive practices regarding the manner in
    which it procures and places credit life,
    credit disability and property insurance on
    the plaintiffs and Class Members, as well as
    future borrowers.
    (d) A Court Order requiring defendant to
    refund to plaintiffs and all Class Members all
    premiums and related charges made to defendant
    3
    These facts support the district court’s conclusion that this
    case presents an inherent risk that different courts could reach
    “inconsistent or varying adjudications” which would “establish
    incompatible standards of conduct” for Tower.    FED. R. CIV. P.
    or its agents.
    (e) A Court Order requiring the defendant to
    cease and desist from violating Section 75-67-
    121 of Mississippi Code by charging premiums
    not   in  keeping   with   that  usually   and
    customarily paid for like insurance.
    (f) A Court Order requiring the defendant to
    cease and desist from violating Section 85-5-
    35 by engaging in Unfair Competition and
    Practices,    by    making,    publishing  and
    disseminating    to   the   public   false and
    misleading     statements     concerning   the
    availability of loans, the costs of said
    loans, and the collateral to be taken for said
    loans.
    (g) A Court Order requiring the defendants to
    inform all borrowers of the ownership,
    financial connection, and sharing of the
    borrower’s premiums for all insurance charged
    by the defendant, Tower.
    (h) A Court order requiring the defendants to
    terminate all “packing” of credit life, credit
    disability and property insurance unless and
    until the proposed plan is submitted to and
    approved by the Court.
    (i) A Court Order requiring the defendants to
    allow property insurance claims to be filed
    and adjusted without requiring the borrower to
    obtain an appraisal.
    (j) A Court Order establishing a fair method
    by which the borrowers have the option to file
    credit insurance claims directly with the
    insurance company.
    4
    23(b)(1)(A).     For instance, the class sought “[a] Court Order
    establishing a fair method by which the borrowers have the option
    to   file   credit   insurance   claims   directly   with    the   insurance
    company.”    If similar relief is requested in another proceeding, a
    risk of incompatible standards of conduct could present itself if
    the two courts establish conflicting “fair methods” for filing
    credit insurance claims.
    In sum, these considerations persuade us that the district
    court did not abuse its discretion when it certified the class
    under 23(b)(1)(A).2
    Third, it is similarly clear that the district court did not
    abuse its discretion when it approved the parties’ settlement.            We
    initially note the “strong judicial policy favoring the resolution
    of disputes through settlement.”          Parker v. Anderson, 
    667 F.2d 1204
    , 1209 (5th Cir. 1982). Therefore, a district court’s approval
    of a settlement is given great deference and “will not be upset
    unless the court clearly abused its discretion.”            
    Id.
    In the instant case, the district court applied the proper
    standard and found that the settlement was fair and reasonable.
    See id.3    The objectors strenuously contend that the settlement was
    2
    Based upon our decision that the district court did not abuse
    its discretion when it certified the class under 23(b)(1)(A), we
    need not address the alleged error regarding the district court’s
    alternative holding certifying the class under 23(b)(2).
    3
    A district court shall not approve a settlement unless it is
    fair, adequate, and reasonable.     Parker, 
    667 F.2d at 1209
    . In
    evaluating proposed settlements the district court should consider
    5
    inadequate as evidenced by larger settlements and verdicts that
    have been obtained by plaintiffs in other cases.    However, these
    cases are not relevant to the fairness of this settlement unless
    they are shown to be similar to the plaintiffs’ claims against
    Tower -- a showing which has not been made.     Moreover, even if
    these cases establish the appropriate benchmark, there is still no
    clear abuse of discretion because a number of the claims against
    Tower would probably be barred by the statute of limitations or
    subject to arbitration if filed individually.    Thus, even if the
    monetary and compensatory relief provided by the settlement is not
    comparable to the relief provided in other cases, when these awards
    are discounted by the probability that the objectors will lose, the
    district court did not clearly abuse its discretion in approving
    the settlement.
    six factors:
    (1) whether the settlement was a product of
    fraud or collusion; (2) the complexity,
    expense,   and    likely   duration   of   the
    litigation; (3) the stage of the proceedings
    and the amount of discovery completed; (4) the
    factual and legal obstacles [to] prevailing on
    the merits; (5) the possible range of recovery
    and the certainty of damages; and (6) the
    respective opinions of the participants,
    including class counsel, class representative,
    and the absent class members.
    
    Id.
     (citing Pettway v. American Cast Iron Pipe Co., 
    576 F.2d 1157
    (5th Cir. 1978)). Absent a showing of fraud or collusion, “the
    most important factor is the probability of the plaintiffs’ success
    on the merits.” 
    Id.
    6
    Finally, we are not convinced that the district court erred
    when it refused to hold a third fairness hearing given the failure
    of the objectors to demonstrate before the district court any
    substantial issues requiring such a hearing beyond those that had
    been presented previously.        See Cotton v. Hinton, 
    559 F.2d 1326
    ,
    1331 (5th Cir. 1977) (recognizing a district court’s right to
    “limit its proceeding to whatever is necessary to aid it in
    reaching an informed, just and reasoned decision”).             Even assuming
    an error, however, it was harmless given the failure of the
    objectors to demonstrate prejudice to this court on appeal.                 See
    FED. R. CIV. P. 61. Moreover, any allegation that the notice of the
    second fairness hearing was inadequate is without merit. FED. R.
    CIV. P. 23(e); 5 JAMES WM. MOORE     ET AL.,   MOORE’S FEDERAL PRACTICE § 23.83
    (3d ed. 2000).
    In sum, we are convinced that the district court carefully
    considered all of the pertinent objections that were made to the
    settlement agreement.         Indeed, the district court modified the
    settlement in several respects, including narrowing the release to
    ensure that certain claims were not barred by the settlement.               It
    is   therefore   our   view   that   the   district     court   committed   no
    reversible error in its thorough handling of this settlement and we
    AFFIRM essentially for the reasons given in its able opinion.
    AFFIRMED
    7
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