Midland Funding Robo-Signing Class Action Settlement Struck Down

Under the terms of the settlement reached in several class actions against Midland Funding for its (apparently past) practice of employing robo-signers to execute affidavits for debt buyer lawsuits, each class member would receive under $20 — and that’s it. The Sixth Circuit rightly decided this was unfair (pdf).

Unfortunately, the Sixth Circuit seemed to think the settlement was unfair primarily because the named plaintiffs (i.e., those whose names actually appeared on the complaints) would receive $8,000 plus the elimination of their debts. The class members who opted into the settlement just got $17.38 each, and still owed their debts:

this disparity in relief is so great that we conclude the district court abused its discretion in finding that the settlement was fair, reasonable, and adequate

Which is true, but this reasoning would seem to suggest that the settlement would be just fine if the named plaintiffs took home $100 each and still owed their debts. That would be just as unfair, unreasonable, and inadequate. But wait! The 6th Circuit is not done (fortunately)! Here’s what else it had to say about that $17.38:

the relief actually provided to the unnamed class members is perfunctory at best

In other words, $17.38 is a pretty shitty consolation prize when you probably owe hundreds or thousands, when you will be prevented from raising the inadequacy of the plaintiff’s affidavits in court again, and when you would be entitled to $1,000 in statutory damages if you brought a Fair Debt Collection Practices Act claim yourself.

(via CL&P Blog)