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THE CIRCUIT COURT OF ST. CLAIR COUNTY, ILLINOIS TWENTIETH JUDICIAL CIRCUIT
MIDLAND FUNDING LLC, ) )
Plaintiff/Counter-Defendant, ) No. 15-L-442 )
v. ) Hon. Christopher T. Kolker )
TERESA RANEY, ) )
Defendant/Counter-Plaintiff. ) )
v. ) )
MIDLAND CREDIT MANAGEMENT, ) INC. )
) Third-Party Defendant )
____________________________________) MIDLAND FUNDING LLC, )
) Plaintiff/Counter-Defendant, )
) No. 15-L-444 v. )
) Hon. Christopher T. Kolker SHIRLEY DARNELL, )
) Defendant/Counter-Plaintiff. )
) v. )
) MIDLAND CREDIT MANAGEMENT, ) INC. )
) Third-Party Defendant )
____________________________________)
JOINT/UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
Counter-Plaintiffs, Teresa Raney and Shirley Darnell (“Counter-Plaintiffs”), along with
Counter-Defendants Midland Funding, LLC (“Midland”) and Midland Credit Management, Inc.
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(“MCM”) (collectively the “Counter-Defendants) submit this Joint Motion for Preliminary
Approval of Class Action Settlement.
1. INTRODUCTION.
The subject litigation arises out of two collection actions1 filed by Counter-Defendant Midland
Funding, LLC against Counter-Plaintiffs to collect outstanding balances on two credit card accounts
opened by the Counter-Plaintiffs with creditors Citibank (not parties to this litigation). Midland set
forth in its collection actions that it purchased the subject accounts from Citibank.
Following years of contested litigation, and arms-length settlement negotiations recognizing
the risks of even further protected litigation, the Parties have negotiated a settlement, in which the
Parties agree to resolve all matters between them, including the allegations contained in the
Consolidated Actions and as set forth herein. Through the settlement, Midland will make available to
class members benefits totaling approximately $4,300,000 as detailed herein. Counsel strongly believes
the Settlement is fair, adequate and reasonable.
By this unopposed motion, the Parties respectfully request that the Court preliminarily
approve the parties’ Settlement Agreement and enter an order that:
1. Certifies the Settlement Class for purposes of settlement only;
2. Preliminarily approves the Settlement Agreement;
3. Appoints Proposed Settlement Class Counsel, David Cates and Chad Mooney of Cates
Mahoney, LLC, and Sean Cronin and Brendan Nester of Donovan Rose Nester, P.C.,
as Settlement Class Counsel;
1 'The two collection actions are Midland Funding v. Teresa Raney (15-L-442) (hereafter, the "Raney" action); Midland Funding, LLC v. Shirley A. Darnell (15-L-444) (hereafter, the "Darnell" action). Collectively, these matters are referred to herein as the Consolidated Actions
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4. Appoints Counter-Plaintiffs Teresa Raney and Shirley Darnell as Class
Representatives;
5. Approves the Notice Plan as described in the Settlement Agreement and attached
Long Form Notice; and
6. Sets a hearing date and schedule for final approval of the settlement and consideration
of Settlement Class Counsel’s motion for award of fees, costs, expenses, and service
awards.
II. CASE HISTORY.
In 2015, Midland filed separate Complaints against Raney and Darnell, alleging that they used
credit cards issued by Citibank, N.A., and failed to make their agreed monthly payments. Midland
purchased Raney’s alleged debt from Citibank on April 23, 2014, and purchased Darnell’s alleged debt
from Citibank on October 14, 2014.
Midland attached an affidavit which stated that Midland “is the current owner of . . . the
obligation sued upon, and was assigned all rights, title and interest to [Raney’s] CITIBANK, N.A.
account.” Midland also attached an Account Statement that was allegedly mailed to Raney, which
stated that “This Account is issued by Citibank, N.A.,” and showed an Account Number ending in
“2509.” (Id.) Finally, Midland attached a Bill of Sale and Assignment, showing the date of assignment.
(Bill of Sale, attached to Raney Compl.) The Bill of Sale and Assignment stated that, “[f]or value
received,” Citibank “does hereby transfer, sell, assign, convey, grant, bargain, set over, and deliver to
[Midland], and to [Midland’s] successors and assigns, the Accounts described in Exhibit 1 and the
electronic file.”
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Likewise, Midland attached an affidavit which stated that Midland “is the current owner of,
and/or successor to, the obligation sued upon, and was assigned all the rights, title and interest to
[Darnell’s] CITIBANK, N.A. account[.]” Midland also attached an Account Statement that was
allegedly mailed to Darnell. The Account Statement stated that “This Account is issued by Citibank,
N.A.,” and showed an Account Number ending in “5931.” (Id.) Finally, Midland attached a Bill of
Sale and Assignment, showing an October 14, 2014 date of assignment. The Bill of Sale and
Assignment stated that, “[f]or value received,” Citibank “does hereby transfer, sell, assign, convey,
grant, bargain, set over, and deliver to [Midland], and to [Midland’s] successors and assigns, the
Accounts described in Exhibit 1 and the electronic file.”
Raney and Darnell each filed putative class action counterclaims, naming Midland Funding,
LLC as a Counter-Defendant, which alleged that Midland failed to attach proof showing that
Counterclaimants’ debt was assigned to Midland by Citibank. Counterclaimants specifically alleged,
that “Midland made a false statement to [Counterclaimants] by claiming that it owned the debt
resulting from the credit card agreement or line of credit agreement, when in fact, it had no legal right
to collect the debt.” (Id. ¶ 35.) Stemming from these allegations, the Counterclaim asserted violations
of the Illinois Collection Agency Act (“ICAA”), Illinois Consumer Finance and Deceptive Business
Practices Act (“ICFA”), and the federal Fair Debt Collection Practices Act (“FDCPA”). In addition,
Counterclaimants sought to represent both a “National Class” and an “Illinois Sub-Class.” The
National Class was defined to include, among others:
All individuals who have been a Defendant in a collection lawsuit that was filed by Midland as Plaintiff . . . since January 1, 2010 . . . where a fraudulent affidavit was attached to the Complaint or the Complaint lacked such an affidavit as an attachment. (Countercl. ¶ 75.) The Illinois class contained a similar definition. (Id.)
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On November 18, 2015 (in the Raney Action), and December 1, 2015 (in the Darnell Action),
Midland moved to compel arbitration of Raney and Darnell’s counterclaims. The parties conducted
written discovery and deposition discovery related to Midland’s motions to compel arbitration, which
included contested discovery motions and court hearings regarding same.
The Trial Court entered an order denying Midland’s motions to compel arbitration in an
opinion and order dated October 14, 2016. Midland appealed that order to the Appellate Court of
Illinois for the Fifth Judicial District (Cons. Appellate No.: 5-16-0479). On January 4, 2018, the
Appellate Court affirmed the Trial Court’s order.
The case remained stayed until the Fifth District Court of Appeals (and leave Application filed
with the Illinois Supreme Court, which was denied) remanded the case back to the Trial Court. In
May 2019, the Raney and Darnell Actions were then further consolidated with the Midland Funding,
LLC v. Hilliker, for discovery purposes. The parties then engaged in discovery motion practice, and
in January 2020 the Counterclaimants filed Amended Counterclaims. The Amended Counterclaims
added Midland Credit Management, Inc. as a Third-Party Defendant, and raised the additional claims
of civil conspiracy, public nuisance, and a violation of the federal Racketeer Influenced and Corrupt
Organizations Act (RICO). Midland then moved to dismiss the Amended Counterclaims, which the
Trial Court denied.
The Parties continued to conduct discovery, which included contested discovery motions, an
order by the Court issuing discovery sanctions, which spawned further appeals to the Fifth Judicial
District (including Appeal No. 20-0015), and the production of thousands of pages of additional
documents by Midland, along with the Trial Court’s appointment of former federal judge the
Honorable Patrick Murphy as a discovery master.
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On July 31, 2020, Midland moved to strike and dismiss Raney and Darnell’s nationwide class
action counterclaims for lack of jurisdiction, which remains pending. On April 27, 2021, Raney and
Darnell filed another set of Amended Counterclaims, instanter, in each of the Consolidated Actions.
On February 17, 2021, and April 27, 2021, the Parties participated in a formal, full-day
mediation session with Hon. Patrick Murphy via Zoom, due to the ongoing Covid-19 pandemic.
Following the mediation, the parties continued to engage in arms-length negotiations under the
guidance of Judge Murphy.
As a result of these negotiations, the Parties have negotiated a settlement, with the assistance
of Judge Murphy, in which the Parties agree to resolve all matters between them, including the
allegations contained in the Consolidated Actions and as set forth herein.
The Parties have agreed to settle the Consolidated Actions on the terms and conditions set
forth herein in recognition that the outcome of the Consolidated Actions is uncertain and that
achieving a final result through litigation would require substantial additional risk, discovery, time, and
expense.
Midland denied and continues to deny all charges of wrongdoing or liability. Despite Midland’s
belief that it is not liable for and has good defenses to the claims alleged in the Consolidated Actions,
Midland desires to settle the Consolidated Actions and thus avoid the expense, risk, exposure,
inconvenience, and distraction of continued litigation of any action or proceeding relating to the
matters being fully settled and finally resolved in this Settlement Agreement. Neither this Settlement
Agreement, nor any settlement negotiation or discussion thereof, is or may be deemed to be or may
be used as an admission of or evidence of any wrongdoing or liability.
Raney and Darnell and Class Counsel have conducted an investigation into the facts and the
law regarding the Consolidated Actions and have concluded that a settlement according to the terms
of the Settlement Agreement and Release, as attached and summarized below, is fair, reasonable,
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adequate, and beneficial to and in the best interests of Raney, Darnell, and the Settlement Class,
recognizing (a) the existence of complex and contested issues of law and fact; (b) the risks inherent in
litigation; (c) the likelihood that future proceedings will be unduly protracted and expensive if the
proceeding is not settled by voluntary agreement; (d) the magnitude of the benefits derived from the
contemplated settlement in light of both the maximum potential and likely range of recovery to be
obtained through further litigation and the expense thereof, as well as the potential of no recovery
whatsoever; (e) Counter-Defendants’ financial condition and ability to fund this settlement; and (f)
Raney, Darnell, and Class Counsel’s determination that the Settlement is fair, reasonable, adequate,
and will substantially benefit the Settlement Class Members.
III. SUMMARY OF SETTLEMENT
A. Settlement Benefits.
Through the Settlement, Midland will make available to class members benefits totaling
approximately $4,300,000 which includes the following: (1) $80 Credit against the outstanding balance
of all Settlement Class Members’ accounts whose accounts are collectible and have an outstanding
balance of more than $80; and (2) if the amount of up to $80 credit would extinguish the outstanding
balance on the class member’s account, Counter-Defendants will apply only such amount as will
reduce the class member’s account to zero. Exhibit A, Settlement Agreement. The settlement is also
structured to cover and include notice and administrative costs, attorneys’ fees and expenses, and
service awards to the named Class Representatives, which is separate from the Settlement Fund. See
Ex. A, Settlement Agreement.
The Settlement Class includes:
All persons against whom Midland filed a collection lawsuit in Illinois between March 12, 2011
and September 30, 2018, subject to the Exclusions detailed below.
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Excluded from the Settlement Class are: (1) all Settlement Class members who paid or settled
their accounts in full without Midland obtaining a judgment as of the date of Preliminary Approval;
(2) all Settlement Class members whose accounts have been discharged in bankruptcy as of the date
of Preliminary Approval; (3) all Settlement Class members whose accounts currently have a zero
balance as of the dates of the Preliminary Approval; (4) all Settlement Class members who are deceased
as of the date of Preliminary Approval; (5) all persons who elect to exclude themselves from the
Settlement Class; and (6) the Court and staff to whom this case is assigned, and any member of the
Court’s or staff’s immediate family (collectively, the “Exclusions”).
The Settlement Class Members, subject to the Exclusions, whose accounts as of the date of
Preliminary Approval have an outstanding balance and are open Midland accounts.
The Counter-Defendants represent that, as of June 1, 2021: (i) the total number of Settlement
Class Members not subject to Exclusions is 57,552; (ii) acknowledge that these numbers are subject
to change over time, and that the foregoing numbers are provided for informational purposes only.
Midland will create a Class List within twenty eight (28) days after the entry of the Preliminary
Approval Order that will include updated numbers for the total number of Settlement Class Members,
as of the date of the entry of the Preliminary Approval Order. Administration of this settlement will
be based on the numbers of class members as of the date of the entry of the Preliminary Approval
Order as updated in the Class List, and not on the numbers provided in this paragraph.
In exchange for the Settlement Benefits, Class Members will release all claims, whether known
or unknown, against Midland and the other Releasees defined in the Settlement Agreement relating
to, arising out of, or concerning in any way Midland’s debt collection activity that were or could have
been asserted in this action against Midland or the Releasees. See Ex. A, Settlement Agreement.
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B. Notice.
Class Counsel has worked to ensure that notice is the best practicable, and reasonably
calculated to apprise interested parties of the action so that they may make a claim, state their
objection, or exclude themselves from the settlement. Notice will be issued by KCC Class Action
Services, LLC (also “KCC”) a nationally-recognized notice expert, and designed to meet constitutional
and due process requirements, and will be provided via a combination of a postcard mailing and
maintenance of a Settlement Website. The postcard notice will provide a link to the Settlement
Website, where Settlement Class Members can access a Long Form Notice describing the case and
settlement, the Settlement Agreement, and other important documents and court filings including the
Complaint, Amended Counterclaims, Preliminary Approval Order, and, when filed, the Final
Approval Order. See Ex. B — Declaration Of David Cates In Support of Joint Motion For
Preliminary Approval Of Class Action Settlement.
C. Credits for Accounts.
Class members who do not object or exclude themselves from the settlement will receive the
Credit without the need to submit any claims.
D. Exclusions.
If a Class Member wishes to opt-out of the Settlement, the Class Member must complete a
Request for Exclusion and submit it to the Settlement Administrator so that it is post-marked by the
Exclusion Deadline, which is approximately forty-five days after the Preliminary Approval Order. See
Ex. A, Settlement Agreement. In order to exercise the right to be excluded, a member of the
Settlement Class must timely send a written request for exclusion to the Settlement Administrator
providing
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his/her name, address, and telephone number; the name and number of this case; a statement that
he/she wishes to be excluded from the Settlement Class; and a signature. See Ex. A, Settlement
Agreement.
E. Objections.
If a Class Member wishes to object to the Settlement, the Class Member must notify the Parties
of their intention to do so by the Objection Deadline that will be set in the Court’s preliminary
approval order. Ex. A, Settlement Agreement. Any Class Member who intends to object must include
in any such objection: (a) his/her full name, address, and current telephone number; (b) the case names
and numbers of these Consolidated Actions; (c) the date range during which he/she was sued by
Counter-Defendant; (d) all grounds for the objection, with factual and legal support for the stated
objection, including any supporting materials; (e) the identification of any other objections he/she has
filed, or has had filed on his/her behalf, in any other class action cases in the last five years; and (f)
the objector’s signature. Ex. A, Settlement Agreement.
F. Service Award, Costs, and Fees.
As part of the Settlement Agreement, Midland agreed not to oppose a Service Award to each
of the Class Representatives in the amount of $5,000. Ex. A, Settlement Agreement. Midland also
agreed not to oppose an award of attorney fees not to exceed $950,000. Ex. A, Settlement Agreement.
The Counter-Plaintiffs will seek approval of attorney fees, as well as the Service Award to Counter-
Plaintiffs, in separate papers, to be filed no more than seven days before the Final Approval Hearing.
Ex. A, Settlement Agreement.
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IV. LEGAL DISCUSSION
A. The Class Should be Certified for Settlement Purposes.
For settlement purposes only, the Parties have agreed that the Court should make preliminary
findings and enter an order granting provisional certification of the Settlement Class
and appoint Plaintiffs and their counsel to represent the Class. “The validity of use of a temporary
settlement class is not usually questioned.” Newberg, § 11.22. The Manual for Complex Litigation
explains the benefits of settlement classes:
Settlement classes — cases certified as class actions solely for settlement — can provide significant benefits to class members and enable the defendants to achieve final resolution of multiple suits. Settlement classes also permit defendants to settle while preserving the right to contest the propriety and scope of the class allegations if the settlement is not approved[.] An early settlement produces certainty for the plaintiffs and defendants and greatly reduces litigation expenses.
Manual for Complex Litigation (Fourth) § 21.612. Prior to granting preliminary approval of a class
action settlement, a court should determine that the proposed settlement class is a proper class for
settlement purposes. Manual for Complex Litigation (Fourth) § 21.632; Amche Prods. Inc. v. Windsor,
521 U.S. 591, 620 (1997). A class may be certified under Section 2-801 of the Illinois Code of Civil
Procedure if the following “prerequisites” are satisfied: (1) the class is so numerous that joinder of all
members is impracticable; (2) there are questions of fact or law common to the class, which common
questions predominate over any questions affecting only individual members; (3) the representative
parties will fairly and adequately protect the interest of the class; and (4) the class action is an
appropriate method for the fair and efficient adjudication of the controversy. 735 ILCS 5/2-801; CE
Design Ltd. v. C & T Pizza, Inc., 2015 IL App (1st) 131465, 10.
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In this case, the Settlement Class meets all of the applicable certification requirements. For
settlement purposes only, the Settlement Class is submitted for certification under Section 2-801 of
the Illinois Code of Civil Procedure. The Class is defined in the Settlement Agreement and also
appears in § I, supra.
i. The Class is Sufficiently Numerous and Joinder is Impracticable.
Numerosity is met where “the class is so numerous that joinder of all members is
impracticable.” 735 ILCS 5/2-801(1). “Although there is no bright-line test for numerosity, a class of
forty is generally sufficient[.]” Hinman v. M & M Rental Center, Inc., 545 F.Supp.2d 802, 805-06 (N.D.
Ill. 2008); Kulins v. Malco, A Microdot Co., Inc., 121 Ill.App.3d 520, 530 (1st Dist. 1984) (finding that 47
class members was sufficient to satisfy numerosity); Travel 100 Grp., 2004 WL 3105679, at *2 (“The
potential class exceeds 3,000 members. The numerosity requirement is met”) (citing Wood River Area
Development Corp. v. Germania Federal Savings and Loan, 198111. App. 3d 445 (5th Dist. 1990)). Here the
proposed Class encompasses approximately 57,552 individuals. This Class is sufficiently numerous
such that joinder would be impracticable, given the number of individuals in the Settlement Class, and
that absent a class action few members could afford to bring an individual lawsuit over the amounts
at issue since each individual member’s claim is relatively small. See Gordon v. Boden, 224 Ill.App.3d
195, 200 (1st Dist. 1991) (“In cases where there is a substantial number of potential claimants and the
individual amounts of their claims are relatively small, Illinois courts have tended to permit the claims
to proceed as a class action”).
ii. Common Questions of Law and Fact Predominate.
Commonality, the second requirement for class certification, is met where there are “questions
of fact or law common to the class” and those questions “predominate over any questions affecting
only individual members.” 735 ILCS 5/2-801(2). Such common questions of law or fact exist when
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the members of the proposed class have been aggrieved by the same or similar conduct. See Walczak
v. Onyx Acceptance Corp., 365 Ill.App.3d 664, 673-74 (2nd Dist. 2006); Steinberg v. Chicago Ivied. Sch., 69
I11.2d 320, 340-42 (1977); Ellerbrake v. Campbell-Hausfeld, No. 01-L-540, 2003 WL 23409813, at *3 (Ill.
Cir. Ct. July 2, 2003); see also Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998). Further, where “the
defendant allegedly acted wrongfully in the same basic manner as to an entire class ... the common
class questions predominate the case[.]” Walczak, 365 III.App.3d at 674 (citing Clark v. TAP
Pharmaceutical Products, Inc., 343 III.App.3d 538, 548 (2003)).
In this case, all members of the proposed Settlement Class share similar claims arising out of
standardized conduct: Counter-Defendant’s alleged failure to attach the relevant documentation to its
collection complaints in Illinois to establish that Counter-Defendant had the right to collect on the
class members’ accounts. Common questions would include: (1) whether Counter-Defendant obtains
sufficient documentation from the original creditors when its purchases pools of credit card accounts;
(2) whether Counter-Defendant attaches sufficient documentation to its collection complaints in
Illinois; (3) whether the representatives that sign Counter-Defendant’s affidavits in support of its
collection complaints have sufficient personal knowledge of the contents of the affidavit to establish
Midland’s right to collect on the account; (4) whether Counter-Defendant’s actions violate the federal
and state consumer statutes invoked; and (5) whether Counter-Plaintiffs and the Class Members were
damaged by Counter-Defendant’s conduct. Predominance is satisfied “when there exists generalized
evidence that proves or disproves an element on a simultaneous, class-wide basis ... [since such proof
obviates the need to examine each class member’s individual position.”] Golon v. Ohio Says. Bank, No.
98-cv-7430, 1999 U.S. Dist. LEXIS 16452, at *13 (N.D.III. Oct. 15, 1999); see, e.g., JT’s Frames, Inc. v.
Sunhill NIC Co., 2012 IL App (2d) 110676-U, at ¶ 23. Here, the common questions resulting from
Counter-Defendant’s alleged conduct predominate over any individual issues that may exist and can
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be answered on a class-wide basis based on common evidence maintained by Counter-Defendants.
Accordingly, this factor is satisfied.
iii. The Adequacy Requirement is Satisfied.
The third element of Section 2-801 requires that “[t]he representative parties will fairly and
adequately protect the interest of the class.” 735 ILCS 5/2-801(3). The class representatives’ interests
must be generally aligned with those of the class members, and class counsel must be “qualified,
experienced and generally able to conduct the proposed litigation.” See Miner v. Gillette Co., 87 Ill. 2d
7, 14 (1981). “The purpose of the adequate representation requirement is to ensure that all class
members will receive proper, efficient, and appropriate protection of their interests in the presentation
of the claim.” Walczak, 365 III.App.3d at 678 (citing P.J. ‘s Concrete Pumping Service, Inc. v. Nextel West
Corp., 345 Ill.App.3d 992, 1004 (2nd Dist. 2004)); Purcell & Wardrope Chid. v. Hertz Corp., 175 III.App.3d
1069, 1078 (1st Dist. 1988). The adequacy requirement is satisfied where “the interests of those who
are parties are the same as those who are not joined” such that the “litigating parties fairly represent
[them]” and where the “attorney for the representative party `[is] qualified, experienced and generally
able to conduct the proposed litigation.’” CE Design Ltd., 2015 IL App (1st) 131465, ¶ 16 (citing Miner,
87 Ill. 2d at 56)).
Here, Counter-Plaintiffs’ interests are entirely representative of and consistent with the
interests of the proposed Settlement Class: all were sued by Midland with collection actions in Illinois
arising out of credit card accounts that Midland purchased from the account’s original creditor.
Counter-Plaintiffs’ pursuit of this matter has demonstrated that they have been, and will remain,
zealous advocates for the Settlement Class. See CE Design, 2009 U.S. Dist. LEXIS 5842, at *13 (finding
typicality where the defendant’s practice of sending unsolicited advertisements to the named plaintiff
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and the proposed class gave rise to claims “based upon the same legal theory”). Thus, Counter-
Plaintiffs have the same interests as the Settlement Class.
Similarly, proposed Class Counsel have demonstrated a history of engaging in complex
litigation and have extensive experience as Class Counsel in class action lawsuits, including
consumer class actions relating to product misrepresentations. (See Ex. B — Declaration Of David
Cates In Support of Motion For Preliminary Approval Of Class Action Settlement.] Accordingly,
Counter-Plaintiffs’ counsel will adequately represent the class.
iv. Fair and Efficient Adjudication of the Controversy.
The final prerequisite to class certification is met where “the class action is an appropriate
method for the fair and efficient adjudication of the controversy.” 735 ILCS 5/2-801(4). “In applying
this prerequisite, a court considers whether a class action: (1) can best secure the economies of time,
effort and expense, and promote uniformity; or (2) accomplish the other ends of equity and justice
that class actions seek to obtain.” Gordon, 224 Ill.App.3d at 203. In practice, a “holding that the first
three prerequisites of section 2-801 are established makes it evident that the fourth requirement is
fulfilled.” Id. at 204; Purcell & Wardrope Chid., 175 I11.App. 3d at 1079 (“the predominance of common
issues [may] make a class action…a fair and efficient method to resolve the dispute.”) Thus, the fact
that numerosity, commonality and predominance, and adequacy of representation have all been
demonstrated in the instant case makes it “evident” that the appropriateness requirement is satisfied
as well. Id.
Other considerations further support certification in this case. A “controlling factor in many
cases is that the class action is the only practical means for class members to receive redress particularly
where the claims are small.” Gordon, 224 Ill.App.3d at 203-04; Eshaghi v. Hanley Dawson Cadillac Co.,
214 Ill.App.3d 995, 1004 (1st Dist. 1991) (“In a large and impersonal society, class actions are often
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the last barricade of consumer protection.”) A class action is superior to multiple individual actions
“where the costs of litigation are high, the likely recovery is limited” and individuals are unlikely to
prosecute individual claims absent the cost-sharing efficiencies of a class action. Maxwell v. Arrow Fin.
Servs., LLC. No. 03-cv-1995, 2004 U.S. Dist. LEXIS 5462, at *17-18 (N.D. Ill. Mar. 31, 2004). This is
true here, where an individual’s potential for recovery is small in comparison to the extensive litigation
that would be required to successfully try the case.
This case is particularly well-suited for class treatment because the claims of Counter-Plaintiffs
and the proposed Settlement Class Members involve identical alleged violations of federal state
consumer protection statutes. Absent a class action, most members of the Settlement Class would
find the cost of litigating their claims to be prohibitive. It is, thus, unlikely that individuals would invest
the time and expense necessary to seek relief through individual litigation. Moreover, because the
action will now settle, the Court need not be concerned with issues of manageability relating to trial.
When reviewing a request for settlement-only class certification, a court “need not inquire whether
the case, if tried, would present intractable management problems ... for the proposal is that there be
no trial.” Amchem, 521 U.S. at 620. Nor should the Court “judge the legal and factual questions”
regarding certification of the proposed Settlement Class by the same criteria as a proposed class being
adversely certified. See GMAC, 236 III. App. 3d at 493.
A class action is the superior method of resolving large scale claims if it will “achieve
economies of time, effort, and expense, and promote . . . uniformity of decision as to persons similarly
situated, without sacrificing procedural fairness or bringing about other undesirable results.” Amchem,
521 U.S. at 615. Accordingly, a class action is the superior method of adjudicating this action and the
proposed Settlement Class should be certified.
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B. The Settlement Terms are Fair and Reasonable and Warrant Preliminary Approval.
The Settlement represents a fair and reasonable resolution of this dispute and is worthy of
notice to and consideration by the Settlement Class Members. The Settlement will provide financial
relief to participating Settlement Class Members as compensation for the Released Claims. Courts
review proposed class action settlements using a well-established two-step process. Conte & Newberg,
Newberg on Class Actions, sC 11.25, at 38-39 (4th ed. 2002); see e.g., Kaufman v. Am. Express Travel
Related Servs. Co., 264 F.R.D. 438, 447 (N.D. I11.2009); GMAC Mortgage Corp. of Pa. v. Stapleton, 236
I11.App.3d 486, 492 (1st Dist. 1992); Lebanon Chiropractic Clinic, P.C. v. Liberty Mut. Ins. Co., 2016 IL
App (5th) 150111-U, ¶¶ 11, 18; Shaun Fauley, Sabot, Inc. v. Metro. Life Ins. Co., 2016 IL App (2d) 150236,
¶¶ 4, 7, 15. The first step is a preliminary, prenotification hearing to determine whether the proposed
settlement is “within the range of possible approval.” Newberg, § 11.25, at 38-39; Armstrong v. Board of
Sch. Dirs. of City of Milwaukee, 616 F.2d 305, 314 (7th Cir. 1980), overruled on other grounds; see e.g.,
Lebanon, 2016 IL App (5th) 150111-U, ¶ 11; Sabon, 2016 IL App (2d) 150236, ¶ 4. The preliminary
approval hearing is not a fairness hearing, but rather a hearing to ascertain whether there is any reason
to notify the class members of the proposed settlement and to proceed with a fairness hearing.
Newberg, § 11.25, at 38-39; Armstrong, 616 F.2d at 314. The preliminary approval stage is an “initial
evaluation” of the fairness of the proposed settlement based on the written submissions and informal
presentation from the settling parties. Manual for Complex Litigation, § 21.632 (4th ed. 2004). If the
Court finds the settlement proposal “within the range of possible approval,” the case proceeds to the
second step in the review process: the final approval hearing. Newberg, § 11.25, at 38-39.
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Because the essence of settlement is compromise, courts should not reject a settlement solely
because it does not provide a complete victory, given that parties to a settlement “benefit by
immediately resolving the litigation and receiving some measure of vindication for [their] position[s]
while forgoing the opportunity to achieve an unmitigated victory.” In re AT&T Mobility Wireless Data
Services Sales Litig., 270 F.R.D. 330, 347 (N.D. Ill. 2010) (internal quotations and citations omitted);
GMAC, 236 Ill.App.3d at 493 (“The court in approving [a class action settlement] should not judge
the legal and factual questions by the same criteria applied in a trial on the merits.”) There is a strong
judicial and public policy favoring the settlement of class action litigation, and such a settlement should
be approved by the Court after inquiry into whether the settlement is “fair, reasonable, and adequate.”
Quick v. Shell Oil Co., 404 Ill.App.3d 277, 282 (3rd Dist. 2010); Lebanon, 2016 IL App (5th) 150111-U,
¶ 41; Isby v. Bayh, 75 F.3d 1191, 1198 (7th Cir. 1996). “Although this standard and the factors to
measure it are ultimately questions for the fairness hearing that comes after a court finds that a
proposed settlement is within approval range, a more summary version of the same inquiry takes place
at the preliminary phase.” Kessler v. Am. Resorts Int’1, No. 05-cv-5944, 2007 WL 4105204, at *5 (N.D.Ill.
Nov. 14, 2007) (citing Armstrong, 616 F.2d at 314).
The factors ultimately to be considered by a court are: (1) the strength of the case for the
plaintiffs on the merits, balanced against the money or other relief offered in settlement; (2) the
defendant’s ability to pay; (3) the complexity, length and expense of further litigation; (4) the amount
of opposition to settlement; (5) the presence of collusion in reaching a settlement; (6) the reaction of
members of the class to the settlement; (7) the opinion of competent counsel; and (8) the stage of
proceedings and the amount of discovery completed. City of Chicago, 206 Ill.App.3d at 972; See also
Armstrong, 616 F.2d at 314. Of these considerations, the first is most important. Steinberg, 306 Ill.App.3d
at 170; Synfuel Techs., Inc. v. DHL Express (USA), Inc., 463 F.3d 646, 653 (7th Cir. 2006).
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A preliminary application of these factors to this case demonstrates that the proposed
settlement is “fair, reasonable, and adequate.” As to the first factor, the Settlement in this case provides
substantial material benefits to the Settlement Class: every Settlement Class Member will receive a $80
credit; or if their account balance is less than $80, the Settlement Class Members will have the account
balance reduced to zero ($0).
At the same time, while Counter-Plaintiffs believe they would likely prevail on their claims
against Counter-Defendants, they are also aware that Midland has expressed a firm denial of their
allegations, and an intent to raise several legal defenses, including that Midland has sufficient
documentation to prove that it owns the relevant accounts, that Midland complied with all applicable
Illinois pleading rules, predominance of individual issues, and inability to demonstrate individual or
class-wide damages. Such defenses, if successful, could drastically decrease or completely eliminate
any recovery for Counter-Plaintiffs and the proposed Settlement Class Members. Taking these realities
in to account, and recognizing the risks involved in any litigation, the monetary relief available to each
Settlement Class Member in the settlement represents an excellent reward for the Settlement Class.
The amount of the Credits and the benefits to the Settlement Class Members are particularly
significant in light of the inherent risks of ongoing litigation. If Midland were to succeed on any of its
defenses to liability against the Counter-Plaintiffs’ individual claims, Settlement Class Members would
receive nothing. In addition to needing to defeat any defenses on the merits Midland would raise,
Counter-Plaintiffs would also be required to prevail on a class certification motion, which would be
highly contested and for which success would certainly not be guaranteed. See Schulte v. Fifth Third
Bank, 805 F.Supp.2d 560, 586 (N.D.Ill. 2011) (“Settlement allows the class to avoid the inherent risk,
complexity, time, and cost associated with continued litigation”) (internal citations omitted); see also
Coy v. CCN Managed Care, Inc., 2011 IL App (5th) 100068-U, ¶ 25 (stating that settlement allows parties
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to “avoid[] a determination of sharply contested issues and dispens[es] with expensive and wasteful
litigation.”) “If the Court approves the [Settlement], the present lawsuit will come to an end and
[Settlement Class Members] will realize both immediate and future benefits as a result.” Schulte, 805
F.Supp.2d at 586.
Approval would allow Counter-Plaintiffs and the Settlement Class Members to receive
meaningful payments now, instead of years from now or perhaps never. See id. at 582.
In the absence of settlement, it is certain that the expense, duration, and complexity of the
resulting litigation would be substantial. Not only would the Parties have to undergo significant motion
practice before any trial on the merits could even be contemplated, but evidence and witnesses from
across the country would have to be assembled as witnesses during any trial. Further, given the
complexity of the issues and the amount in controversy, the defeated party would likely appeal both
any decision on the merits (at summary judgment and/or trial), as well as any decision on class
certification. As such, the immediate and considerable relief provided to the Class under the
Settlement Agreement weighs heavily in favor of approval compared to the inherent risk and delay of
a long and drawn out litigation, trial, and appellate process.
The second factor, regarding Counter-Defendants’ ability to pay, further supports the
Settlement. Although Counter-Defendants operate a profitable business, any judgment finally entered
against it in this case could be much larger than its exposure from the Settlement and could constitute
a financial loss to Counter-Defendants.
With respect to factors four and six, presently there is no opposition to the Settlement, and
due to the strength of the Settlement and the award that Settlement Class Members can claim with
very little proof required of the validity of their claims, Counter-Plaintiffs expect little to no opposition
to the Settlement by Settlement Class Members. Indeed, Counter-Plaintiffs themselves have approved
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of the Settlement, and believe that it is a fair and reasonable settlement in light of the defenses raised
by Counter-Defendants in pending dispositive motions, at mediation, and the potential risks involved
with continued litigation.
With respect to factor five, there is an initial presumption that a proposed settlement is fair
and reasonable when it was the result of arms-length negotiations. Newberg, § 11.42; see also Sabon,
Inc., 2016 IL App (2d) 150236, ¶ 21 (finding no collusion where there was “no evidence that the
proposed settlement was not the product of `good faith, arm’s-length negotiations”); Coy, 2011 IL
App (5th) 100068-U, ¶ 31 (finding that there was no collusion where the settlement agreement was
reached as a result of “an arms-length negotiation…entered into after years of litigation and discovery,
resulting in a settlement with the aid of an experienced mediator.”). Here, the Settlement was reached
only after highly-contested, arms-length negotiations that were overseen by former federal Judge
Patrick Murphy (Ret.), with such negotiations followed by several months of extensive further
communication and negotiations before finalization of the Settlement. Such an involved process
underscores the non-collusive nature of the proposed Settlement. Finally, given the excellent result
for the Settlement Class in terms of the monetary relief being made available, it is clear that this
Settlement was reached as a result of good-faith negotiations rather than any collusion between the
Parties.
With respect to factor seven, Counter-Plaintiffs’ counsel believe that the proposed Agreement
is in the best interests of Settlement Class Members because, the Credits provide, Settlement Class
Members with an opportunity for immediate benefit instead of having to wait for the litigation and
any related appeals to run their course. Further, due to the defenses Counter-Defendants have
indicated it would raise should the case proceed though litigation—and the resources that Counter-
Defendants could commit to defend and litigate this matter through appeal—it is possible that the
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Settlement Class would receive no benefit whatsoever in the absence of this Settlement. Counter-
Plaintiffs’ counsel has extensive experience litigating similar class action cases in federal and state
courts, including other consumer protection cases, a fact which gives further force to their support of
the Settlement Agreement, and weighs in favor of granting preliminary approval. See GMAC, 236 Ill.
App. 3d at 497 (finding that the court should give weight to the fact that class counsel supports the
class settlement in light of its experience prosecuting similar cases).
As to factor number eight and as previously discussed, the Settlement Agreement was reached
only after significant informal discovery efforts by the Parties. Had the Parties not reached this
settlement, this case would have proceeded quickly from its initial filing to dispositive motions, and
only later to class certification, with the Parties being required to spend substantial resources to go
forward with their respective claims and defenses while facing significant risk regarding any decision
on the merits of the case and whether a class should be certified.
C. The Proposed Class Notice Should be Approved.
Under Illinois Code of Civil Procedure 2-803, the Court may provide class members notice of
any proposed settlement so as to protect the interests of the class and the parties. See Cavoto v. Chicago
Nat. League Ball Club, Inc., No. 1-03-3749, 2006 WL 2291181, at 15 (1st Dist. 2006) (collecting
authorities and noting that “section 2-803 makes it clear that the statutory requirement of notice is not
mandatory”). However, notice must be provided to absent class members to the extent necessary to
satisfy requirements of due process. Id. at *15 (citing Frank v. Teachers Insurance & Annuity Association
of America, 71 I11.2d 583, 593 (1978)); see also Fed. R. Civ. P. 23(d)(2) (advisory committee note)
(“mandatory notice…is designed to fulfill requirements of due process to which the class action
procedure is of course subject.”). As explained by the U.S. Supreme Court, due process requires that
the notice be the “best practicable, reasonably calculated, under all the circumstances, to apprise
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interested parties of the pendency of the action and afford them an opportunity to present their
objections” as well as “describe the action and the plaintiffs’ rights in it.” Sabon, Inc., 2016 IL App
(2d) 150236, ¶ 36 (citing Phillips Petroleum Co. v. Shuns, 472 U.S. 797, 812 (1985)). However, “[t]his [best
notice practicable] standard can be satisfied even though a particular class member never receives
actual notice.” Medina v. Mfrs. & Traders Trust Co., No. 04-cv-2175, 2004 U.S. Dist. LEXIS 25305, at
*10 (N.D. Ill. Dec. 14, 2004).
The proposed notices in this case satisfy both the requirements of Illinois Code of Civil
Procedure Section 2-803 and due process. As set forth in detail, supra, the Settlement Agreement
contemplates a direct-notice plan designed to reach as many potential Settlement Class Members as
possible. As described above, Notices will be mailed directly to every class member. Additionally, the
Settlement Administrator will establish a website containing the relevant court documents, the Claim
Form, and the Long Form Notice, including information regarding how Settlement Class Members
can exclude themselves from the Settlement Agreement, and which will allow Class Members to easily
submit their claims electronically. The proposed Postcard Notice, Long-Form Notice, and Claim
Form are attached to the Settlement Agreement, and should be approved by the Court. As such, the
proposed methods of notice comport with Illinois Code of Civil Procedure Section 2-803 and the
requirements of due process.
D. Proposed Schedule.
The Parties propose the following schedule leading to the hearing on final approval of the
settlement:
1. Notice Issuance Date: Within 35 days of entry of the Preliminary Approval Order, the Settlement Administrator shall mail notice to the Settlement Class Members (the “Notice Date”).
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2. Objection/Exclusion Deadline: Each Settlement Class Member shall have 45 days from the Notice Date to submit their Objection, or Request for Exclusion.
3. Submission of Papers in Support of Attorneys’ Fees and Expenses: Must be filed no later than 7 days prior to the date of the Final Approval Hearing.
4. Submission of Papers in Support of Final Approval of Settlement: Must be filed no later than 14 days prior to the date of the Final Approval Hearing.
5. Final Approval Hearing: Will occur approximately 100 days after entry of the Preliminary Approval Order, or such other date as ordered by the Court.
V. CONCLUSION
For the foregoing reasons, Counter-Defendants and Counter-Plaintiffs Teresa Raney and
Shirley Darnell respectfully request that this Honorable Court enter an order: (1) granting Motion for
Preliminary Approval of Class Action Settlement, (2) appointing David Cates and Chad Mooney of
Cates Mahoney, LLC, and Sean Cronin and Brendan Nester of Donovan Rose Nester, P.C., as Class
Counsel; (3) preliminarily approving the proposed Settlement Agreement; (4) approving the form and
methods of the proposed notice; (5) ordering the issuance of notice; and (6) granting such further
relief as the Court deems reasonable and just.
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/s/ Sean K. Cronin Sean K. Cronin Brendan M. Nester DONOVAN ROSE NESTER, PC 15 North 1st Street Belleville, Illinois 62220 T: (618) 212-6500 [email protected] [email protected]
/s/ David Cates David Cates Chad Mooney CATES MAHONEY, LLC 216 West Pointe Drive, Suite A Swansea, Illinois 62226 T: (618) 277-3644 [email protected] [email protected]
Counsel for Teresa Raney and Shirley Darnell
/s/ Theodore W. Seitz Theodore W. Seitz (admitted pro hac vice) Dykema Gossett PLLC Capitol View, 201 Townsend Street, Suite 900 Lansing, Michigan 48933 T: (517) 374-9100 [email protected]
/s/ Stephen C. Williams Stephen C. Williams KUEHN, BEASLEY & YOUNG, P.C. 23 South 1st Street Belleville, IL 62220 T: (618)277-7260 [email protected]
Counsel for Midland Funding, LLC and Midland Credit Management, Inc.
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PROOF OF SERVICE
PLEASE TAKE NOTICE that on July 2, 2021, Defendant/Counter-Plaintiff’s Joint/Unopposed Motion for Preliminary Approval of Class Action Settlement was filed electronically with the St. Clair County Circuit Clerk.
Under penalties as provided by law pursuant to Section 1-109 of the Code of Civil Procedure, the undersigned certifies that the statements set forth in this instrument are true and correct. The undersigned further certifies that, in accordance with Supreme Court Rule 12(b)(2), an electronic PDF copy of the foregoing document was served upon the attorneys of record of all parties to the above-styled case by serving same via email to such attorneys at their e-mail address as disclosed by the pleadings of record herein as follows: Theodore Seitz ([email protected]), and Stephen C. Williams ([email protected]) on the aforementioned date, and thus, said document was electronically served on the following attorneys of record: Copies to: Theodore W. Seitz DYKEMA GOSSETT PLLC 201 Townsend St., Suite 100 Lansing, MI 48933 Stephen C. Williams KUEHN, BEASLEY & YOUNG, P.C. 23 South 1st Street Belleville, IL 62220 ______/s/ Sean K. Cronin________
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SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (“Agreement” or “Settlement Agreement”) is entered into by and between Counter-Plaintiffs Teresa Raney (“Raney”) and Shirley Darnell (“Darnell”)(also collectively, “Counter-Plaintiffs” or “Counterclaimants”) and Counter-Defendants Midland Funding, LLC and Midland Credit Management, Inc. (collectively referred to as “Midland” or “Counter-Defendants”) in the consolidated cases of Midland Funding, LLC v. Teresa Raney and Shirley Darnell v. Midland Credit Management, Case Nos.: 15L-442 and15L-0444, both currently pending in the Circuit Court of the Twentieth Judicial Circuit, St.Clair County (also collectively, the “Consolidated Actions”). Counter-Plaintiffs/Counterclaimants and Midland are each referred to as a “Party” and are collectivelyreferred to herein as the “Parties.”
I. FACTUAL BACKGROUND AND RECITALS
1. In 2015, Midland filed separate Complaints against Raney and Darnell, alleging thatthey used credit cards issued by Citibank, N.A., and failed to make their agreed monthlypayments. Midland purchased Raney’s alleged debt from Citibank on April 23, 2014,and purchased Darnell’s alleged debt from Citibank on October 14, 2014.
2. Midland attached an affidavit which stated that Midland “is the current owner of . . . theobligation sued upon, and was assigned all rights, title and interest to [Raney’s]CITIBANK, N.A. account.” Midland also attached an Account Statement that wasallegedly mailed to Raney, which stated that “This Account is issued by Citibank, N.A.,”and showed an Account Number ending in “2509.” (Id.) Finally, Midland attached aBill of Sale and Assignment, showing the date of assignment. (Bill of Sale, attached toRaney Compl.) The Bill of Sale and Assignment stated that, “[f]or value received,”Citibank “does hereby transfer, sell, assign, convey, grant, bargain, set over, and deliverto [Midland], and to [Midland’s] successors and assigns, the Accounts described inExhibit 1 and the electronic file.”
3. Midland attached an affidavit which stated that Midland “is the current owner of, and/orsuccessor to, the obligation sued upon, and was assigned all the rights, title and interestto [Darnell’s] CITIBANK, N.A. account[.]” Midland also attached an AccountStatement that was allegedly mailed to Darnell. The Account Statement stated that“This Account is issued by Citibank, N.A.,” and showed an Account Number ending in“5931.” (Id.) Finally, Midland attached a Bill of Sale and Assignment, showing anOctober 14, 2014 date of assignment. The Bill of Sale and Assignment stated that, “[f]orvalue received,” Citibank “does hereby transfer, sell, assign, convey, grant, bargain, setover, and deliver to [Midland], and to [Midland’s] successors and assigns, the Accountsdescribed in Exhibit 1 and the electronic file.”
4. Raney and Darnell each filed putative class action counterclaims, naming MidlandFunding, LLC as a Counter-Defendant, which alleged that Midland failed to attach proofshowing that Counterclaimants’ debt was assigned to Midland by Citibank.Counterclaimants specifically alleged, that “Midland made a false statement to[Counterclaimants] by claiming that it owned the debt resulting from the credit card
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agreement or line of credit agreement, when in fact, it had no legal right to collect the debt.” (Id. ¶ 35.) Stemming from these allegations, the Counterclaim asserted violations of the Illinois Collection Agency Act (“ICAA”), Illinois Consumer Finance and Deceptive Business Practices Act (“ICFA”), and the federal Fair Debt Collection Practices Act (“FDCPA”). In addition, Counterclaimants sought to represent both a “National Class” and an “Illinois Sub-Class.” The National Class was defined to include, among others:
All individuals who have been a Defendant in a collection lawsuit that was filed by Midland as Plaintiff . . . since January 1, 2010 . . . where a fraudulent affidavit was attached to the Complaint or the Complaint lacked such an affidavit as an attachment.
(Countercl. ¶ 75.) The Illinois class contained a similar definition. (Id.)
5. On November 18, 2015 (in the Raney Action), and December 1, 2015 (in the Darnell Action), Midland moved to compel arbitration of Raney and Darnell’s counterclaims. The parties conducted written discovery and deposition discovery related to Midland’s motions to compel arbitration, which included contested discovery motions and court hearings regarding same.
6. The Trial Court entered an order denying Midland’s motions to compel arbitration in an opinion and order dated October 14, 2016. Midland appealed that order to the Appellate Court of Illinois for the Fifth Judicial District (Cons. Appellate No.: 5-16-0479). On January 4, 2018, the Appellate Court affirmed the Trial Court’s order.
7. The case remained stayed until the Fifth District Court of Appeals (and leave Application filed with the Illinois Supreme Court, which was denied) remanded the case back to the Trial Court. In May 2019, the Raney and Darnell Actions were then further consolidated with the Midland Funding, LLC v. Hilliker, for discovery purposes. The parties then engaged in discovery motion practice, and in January 2020 the Counterclaimants filed Amended Counterclaims. The Amended Counterclaims added Midland Credit Management, Inc. as a Third-Party Defendant, and raised the additional claims of civil conspiracy, public nuisance, and a violation of the federal Racketeer Influenced and Corrupt Organizations Act (RICO). Midland then moved to dismiss the Amended Counterclaims, which the Trial Court denied.
8. The Parties continued to conduct discovery, which included contested discovery motions, an order by the Court issuing discovery sanctions, which spawned further appeals to the Fifth Judicial District (including Appeal No. 20-0015), and the production of thousands of pages of additional documents by Midland, along with the Trial Court’s appointment of former federal judge the Honorable Patrick Murphy as a discovery master.
9. On July 31, 2020, Midland moved to strike and dismiss Raney and Darnell’s nationwide class action counterclaims for lack of jurisdiction, which remains pending. On April 27, 2021, Raney and Darnell filed another set of Amended Counterclaims, instanter, in each of the Consolidated Actions.
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10. On February 17, 2021, and April 27, 2021, the Parties participated in a formal, full-day mediation session with Hon. Patrick Murphy via Zoom, due to the ongoing Covid-19 pandemic. Following the mediation, the parties continued to engage in arms-length negotiations under the guidance of Judge Murphy.
11. As a result of these negotiations, the Parties have negotiated a settlement, with the assistance of Judge Murphy, in which the Parties agree to resolve all matters between them, including the allegations contained in the Consolidated Actions and as set forth herein.
12. The Parties have agreed to settle the Consolidated Actions on the terms and conditions set forth herein in recognition that the outcome of the Consolidated Actions is uncertain and that achieving a final result through litigation would require substantial additional risk, discovery, time, and expense.
13. Midland denied and continues to deny all charges of wrongdoing or liability. Despite Midland’s belief that it is not liable for and has good defenses to the claims alleged in the Consolidated Actions, Midland desires to settle the Consolidated Actions and thus avoid the expense, risk, exposure, inconvenience, and distraction of continued litigation of any action or proceeding relating to the matters being fully settled and finally resolved in this Settlement Agreement. Neither this Settlement Agreement, nor any settlement negotiation or discussion thereof, is or may be deemed to be or may be used as an admission of or evidence of any wrongdoing or liability.
14. Following arms-length negotiations, including mediation with an experienced mediator, the Parties now seek to enter into this Settlement Agreement. Raney and Darnell and Class Counsel have conducted an investigation into the facts and the law regarding the Consolidated Actions and have concluded that a settlement according to the terms set forth below is fair, reasonable, adequate, and beneficial to and in the best interests of Raney, Darnell, and the Settlement Class, recognizing (a) the existence of complex and contested issues of law and fact; (b) the risks inherent in litigation; (c) the likelihood that future proceedings will be unduly protracted and expensive if the proceeding is not settled by voluntary agreement; (d) the magnitude of the benefits derived from the contemplated settlement in light of both the maximum potential and likely range of recovery to be obtained through further litigation and the expense thereof, as well as the potential of no recovery whatsoever; (e) Counter-Defendants’ financial condition and ability to fund this settlement; and (f) Raney, Darnell, and Class Counsel’s determination that the Settlement is fair, reasonable, adequate, and will substantially benefit the Settlement Class Members.
15. Considering the risks and uncertainties of continued litigation and all factors bearing on the merits of settlement, the Parties are satisfied that the terms and conditions of this Settlement Agreement are fair, reasonable, adequate, and in their best respective interests.
16. In consideration of the covenants, agreements, and releases set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is agreed by and among the undersigned that the Consolidated Actions be settled and compromised, and that the Releasors release the Releasees of the Released Claims, without costs as to the Parties, Releasees, Class Counsel, or the Settlement Class, except as explicitly provided for in this Agreement, subject to the approval of the Court, on the following terms and conditions.
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II. DEFINITIONS
The following terms, as used in this Agreement, have the following meanings:
17. “Consolidated Actions” shall mean the consolidated actions pending in the Circuit Court of the Twentieth Judicial Circuit, St. Clair County, Illinois, styled Midland Funding, LLC v. Teresa Raney and Shirley Darnell, Case Nos. 15L-442 and 15L-444, inclusive of Midland’s collection actions against Raney and Darnell, and Raney and Darnell’s counter-claims against Midland.
18. “Administrative Expenses” shall mean expenses associated with the Settlement Administrator, including but not limited to costs in providing notice, and communicating with the Settlement Class Members. Any Administrative Expenses shall be paid by Midland. The Settlement Administrator has estimated the Administrative Expenses will not exceed $50,000.
19. “Class,” “Settlement Class,” “Class Member,” or “Settlement Class Member” shall mean each member of the Settlement Class, as defined in Section III of this Agreement, who does not timely elect to be excluded from the Settlement Class and includes, but is not limited to, Counter-Plaintiffs.
20. “Class Counsel” or “Counter-Plaintiffs’ Counsel” shall mean Donovan, Rose, Nester, PC, and Cates Mahoney, LLC.
21. “Counsel” or “Counsel for the Parties” means both Class Counsel and Counter-Defendants’ Counsel, collectively.
22. “Counter-Defendant” shall mean Midland, and/or any or all of their past or present, direct or indirect, parents, subsidiaries, divisions, predecessors, successors, assigns, insurers, reinsurers, directors, officers, partners, shareholders, principals, owners, members, trustees, administrators, executors, managers, representatives, attorneys, accountants, financial and other advisors, investment bankers, underwriters, legal representatives, and successors in interest.
23. “Counter-Defendants’ Counsel” shall mean Dykema Gossett, PLLC and Kuehn, Beasley & Young, P.C.
24. “Counter-Plaintiffs” or “Class Representatives” shall mean the named class representatives, Shirley Darnell and Teresa Raney.
25. “Court” shall mean the Circuit Court of the Twentieth Judicial Circuit, St. Clair County, Illinois, and the Hon. Judge Christopher Kolker, or any judge sitting in his stead.
26. “Day” or “Days” means calendar days.
27. “Effective Date” shall mean the date when the Settlement Agreement becomes Final as that term is defined in Paragraph 30.
28. “Fee and Expense Petition” shall mean the motion to be filed by Class Counsel, in which they seek approval of an award of attorneys’ fees, costs, and expenses.
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29. “Fee Award” means the amount of attorneys’ fees and reimbursement of costs and expenses awarded by the Court to Class Counsel.
30. “Final” means the Final Approval Order has been entered on the docket, and if a timely objection has been submitted (a) the time to appeal from such order has expired and no appeal has been timely filed; (b) if such an appeal has been filed, it has been finally resolved and has resulted in an affirmation of the Final Approval Order; or (c) the Court, following the resolution of the appeal, enters a further order or orders approving the settlement on the material terms set forth herein, and either no further appeal is taken from such order(s) or any such appeal results in affirmation of such order(s).
31. “Final Approval Hearing” means the hearing before the Court where the Counter-Plaintiffs will request a judgment to be entered by the Court approving the Settlement Agreement, approving the Fee Award, and approving a Service Award to the Class Representatives.
32. “Final Approval Order” shall mean an order entered by the Court that:
a. Certifies the Settlement Class pursuant to 735 ILCS §§ 5/2-801;
b. Finds that the Settlement Agreement is fair, reasonable, and adequate, was entered into in good faith and without collusion, and approves and directs consummation of this Agreement;
c. Dismisses the Counter-Plaintiffs’ and Class Members’ claims pending before it with prejudice and without costs, except as explicitly provided for in this Agreement;
d. Approves the Release provided in Section VII and orders that, as of the Effective Date, the Released Claims will be released as to the Releasees; and
e. Finds that, pursuant to 735 ILCS 5/2-1301, there is no just reason for delay of entry of final judgment with respect to the foregoing.
33. “Service Award” shall have the meaning ascribed to it as set forth in this Agreement.
34. “Notice” means the Long-form notice of this proposed Settlement, which is to be provided substantially in the manner set forth in this Agreement and Exhibit A well as the direct Postcard Notice, and is consistent with the requirements of due process.
35. “Objection/Exclusion Deadline” means the date by which a written objection to this Settlement Agreement or a request for exclusion submitted by a person within the Settlement Class must be postmarked and/or filed with the Court, which shall be designated as a date approximately forty-five (45) days after the entry of the Preliminary Approval Order, or such other date as ordered by the Court.
36. “Parties” shall mean Counter-Plaintiffs and the Counter-Defendants, collectively.
37. “Preliminary Approval Order” shall mean the Court’s Order preliminarily approving the Settlement Agreement, certifying the Settlement Class for settlement purposes, and
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directing Notice of the Settlement to the Settlement Class substantially in the form of the Notices set forth in this Agreement.
38. “Released Claims” shall mean any and all claims, suits, actions, controversies, demands, and/or causes of action arising under the Illinois Collection Agency Act (225 ILCS 425/1, et seq.), the Illinois Consumer Fraud and Deceptive Business Practices Act (815 ILCS 505/1, et seq.), the Federal Fair Debt Collection Practices Act (15 U.S.C. § 1692, et seq.) Racketeer Influenced and Corrupt Organizations Act (RICO)(18 U.S.C. § et seq.), or any other law relating to Midland’s alleged debt-collection activity that were or could have been asserted in the action against the Releasees.
39. “Releasees” shall refer, jointly and severally, and individually and collectively, to Midland, and/or any or all of their past or present, direct or indirect, parents, subsidiaries, divisions, predecessors, successors, assigns, board members, agents, insurers, reinsurers, directors, officers, partners, shareholders, principals, owners, managers, representatives, attorneys, accountants, underwriters, legal representatives and successors in interest.
40. “Releasors” shall refer, jointly and severally, and individually and collectively, to Counter-Plaintiffs, the Settlement Class Members, and to each of their predecessors, successors, heirs, executors, administrators, and assigns of each of the foregoing, and anyone claiming by, through or on behalf of them.
41. “Settlement Administrator” means, subject to Court approval, KCC Class Action Services, LLC (also “KCC”) the entity selected and supervised by the Parties to administer the Settlement.
42. “Settlement Fund” means the settlement fund as defined in Section V of this Agreement.
III. SETTLEMENT CLASS CERTIFICATION
43. For the purposes of the Settlement only, the Parties stipulate and agree that (a) the Class shall be certified in accordance with the definition contained in Paragraphs 44 and 45, below; (b) Counter-Plaintiffs shall represent the Class for settlement purposes and shall be the Class Representatives; and (c) Counter-Plaintiffs’ Counsel shall be appointed as Class Counsel.
44. Counter-Defendants do not consent to certification of the Class for any purpose other than to effectuate the Settlement. If the Court does not enter Final Approval of the Settlement Agreement, or if for any other reason Final Approval of the Settlement Agreement does not occur, is successfully objected to, or challenged on appeal, any certification of any Class will be vacated and the Parties will be returned to their positions with respect to the Consolidated Actions as if the Agreement had not been entered into.
45. Subject to Court approval, the following Settlement Class shall be certified for settlement purposes:
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All persons against whom Midland filed a collection lawsuit in Illinois between March 12, 2011 and September 30, 2018, subject to the Exclusions detailed below.
46. Excluded from the Settlement Class are: (1) all Settlement Class members who paid or settled their accounts in full without Midland obtaining a judgment as of the date of Preliminary Approval; (2) all Settlement Class members whose accounts have been discharged in bankruptcy as of the date of Preliminary Approval; (3) all Settlement Class members whose accounts currently have a zero balance as of the dates of the Preliminary Approval; (4) all Settlement Class members who are deceased as of the date of Preliminary Approval; (5) all persons who elect to exclude themselves from the Settlement Class; and (6) the Court and staff to whom this case is assigned, and any member of the Court’s or staff’s immediate family (collectively, the “Exclusions”).
47. The Settlement Class Members, subject to the Exclusions, whose accounts as of the date of Preliminary Approval have an outstanding balance and are open Midland accounts.
48. The Counter-Defendants represents that, as of June 1, 2021: (i) the total number of Settlement Class Members not subject to Exclusions is 57,552; (ii) acknowledge that these numbers are subject to change over time, and that the foregoing numbers are provided for informational purposes only. As detailed below, Midland will create a Class List within twenty eight (28) days after the entry of the Preliminary Approval Order that will include updated numbers for the total number of Settlement Class Members, as of the date of the entry of the Preliminary Approval Order. Administration of this settlement will be based on the numbers of class members as of the date of the entry of the Preliminary Approval Order as updated in the Class List, and not on the numbers provided in this paragraph.
49. If for any reason the Settlement Agreement is not approved, the Court does not enter a Preliminary Approval Order and/or Final Approval Order, or a Final Settlement and resolution of the Consolidated Actions as provided for in this Agreement is not reached, Counter-Defendants’ agreement to certification of the Settlement Class shall not be used for any purpose, including but not limited to in any request for class certification in the Consolidated Actions or any other proceeding.
IV. SETTLEMENT OF THE CONSOLIDATED ACTIONS AND CLAIMS
AGAINST RELEASEES
50. Final Approval of this Settlement Agreement will settle and resolve with finality on behalf of the Counter-Plaintiffs and the Settlement Class, the Consolidated Actions and the Released Claims against the Releasees by the Releasors in the Consolidated Actions.
V. SETTLEMENT FUND
51. Establishment of Settlement Fund.
a. Conditional upon advance receipt of instructions and a Form W-9 from the Settlement Administrator, Counter-Defendants shall pay to the Settlement
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Administrator a total sum not to exceed $1,010,000 to create a Settlement Fund at the following intervals:
i. The first $50,000 within fourteen (14) days of the entry of the Preliminary Approval Order for Administrative Expenses; and
ii. The remaining balance not to exceed $960,000 within fourteen (14) days after the Effective Date. The amount to be paid at this interval will depend on the calculation of the Fee Award as detailed below in this Agreement. The amount to be paid at this interval may be increased only to the extent necessary to pay any Administrative Expenses in excess of $50,000.
b. Provided that Final Approval of this Agreement is granted by the Court without material change, material amendment, or material modification, the consideration described herein will be provided in exchange for a comprehensive release and the covenants set forth in this Agreement, including, without limitation, a full, fair, and complete release of all Releasees from Released Claims, and dismissal of the Consolidated Actions with prejudice.
c. The funds provided by or on behalf of Counter-Defendants to the Settlement Administrator will be maintained by an escrow agent as a Court-approved Qualified Settlement Fund pursuant to Section 1.468B-1, et seq., of the Treasury Regulations promulgated under Section 468B of the Internal Revenue Code of 1986, as amended, and shall be deposited in an interest-bearing account.
d. If the Settlement Agreement is not finally approved, the Settlement Fund belongs to Counter-Defendants less any Administrative Expenses paid to date. Counter-Plaintiffs shall have no financial responsibility for any Administrative Expenses paid out of the Settlement Fund in the event that the Settlement Agreement is not finally approved.
e. The Settlement Fund shall be used to pay: (i) a Service Award to Teresa Raney ($5,000.00); (ii) a Service Award to Shirley Darnell ($5,000.00); (iii) the Fee Award detailed below; and (iv) payment of Administrative Expenses to the Settlement Administrator estimated not to exceed $ 50,000.
f. The Settlement Fund and the Credits described immediately below represents the total extent of the Counter-Defendants’ monetary obligations under the Settlement Agreement. Counter-Defendants’ contributions to the Settlement Fund shall be fixed under this Section and final. Counter-Defendants and the other Releasees shall have no obligation to make further payments into the Settlement Fund and shall have no financial responsibility or obligation relating to the Settlement beyond the Settlement Fund.
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52. Provided that Final Approval of this Agreement is granted by the Court without material change, Midland will apply an irrevocable credit of not more than $80 (the “Credit(s)”) to the account of each Settlement Class Member not subject to an Exclusion. If the amount of the credit would extinguish the outstanding balance on the class member’s account, Midland shall apply only such amount as will reduce the balance to zero, and no refund shall be due. Eligible Settlement Class Members shall receive the Credit without having to submit a claim form or otherwise “opt in” to the Settlement Class.
53. Procedure for Approving Settlement.
a. Counter-Plaintiffs will file the Parties’ joint motion for an order conditionally certifying the Class, giving Preliminary Approval to the Settlement, setting a date for the Final Approval Hearing, and approving the Class Notice and Claim Faun (the “Joint/Unopposed Motion for Preliminary Approval”).
b. At the hearing on the Joint Motion for Preliminary Approval, the Parties will jointly appear, support the granting of the Joint/Unopposed Motion for Preliminary Approval, and submit a proposed order granting conditional certification of the Class and preliminary approval of the Settlement Agreement; appointing the Class Representatives and Class Counsel; approving the forms of Notice to the Class of the Settlement; and setting the Final Approval Hearing.
c. For the purposes of the Settlement and the proceedings contemplated herein only, the Parties stipulate and agree that the Settlement Class shall be conditionally certified in accordance with the definition and on the terms contained above, that Counter-Plaintiffs shall be conditionally appointed Class Representatives, and that Counter-Plaintiffs’ Counsel shall be conditionally appointed as Class Counsel. Should the Court decline to preliminarily approve any aspect of the Settlement Agreement, the Parties will attempt to renegotiate those aspects of the Settlement Agreement in good faith, with the mutual goal of attempting to reach an agreement as close to this Settlement Agreement as possible, and will then submit the renegotiated settlement agreement to the Court for preliminary approval. If and only if the Parties are unable to obtain preliminary approval of a settlement agreement after submitting at least two renegotiated settlements to the Court, the Settlement Agreement will be null and void, and the Parties will have no further obligations under it, and the Parties will revert to their prior positions in the Consolidated Actions as if the Settlement had not occurred.
54. Procedure for Administering Settlement.
a. Class List. Within twenty eight (28) days after entry of the Preliminary Approval Order, Counter-Defendants shall create a Class List, based on readily available information already within its possession (the “Class List”) and provide the Class List to Counter-Plaintiffs’ Counsel and the Settlement Administrator. The Class List shall include, the following, if available: (1) last known name and address, for each Settlement Class member; (2) identification of the Settlement
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Class Members who have a balance of over $80; and (3) identification of the Settlement Class Members who have a balance of between $0-$80. The Settlement Administrator will update the mailing addresses on the Class List using the U.S. Postal Service’s database of verifiable mailing addresses and the National Change-of-Address database.
b. Type of Notice Required.
i. The Notice shall be used for the purpose of informing proposed Settlement Class Members, prior to the Final Approval Hearing, that there is a pending settlement, and to further inform Settlement Class Members how they may: (i) protect their rights regarding the settlement; (ii) request exclusion from the Settlement Class and the proposed settlement, if desired; (iii) object to any aspect of the proposed settlement, if desired; and (iv) participate in the Final Approval Hearing, if desired. The Notice shall make clear the binding effect of the settlement on all persons who do not timely request exclusion from the Settlement Class.
ii. Dissemination of the Notice shall be the responsibility of the Settlement Administrator. The text of the Notice shall be agreed upon by the Parties and shall be substantially in the form attached as Exhibit A.
iii. Within seven (7) days after the Settlement Administrator receives the Class List, individual notice shall be sent via US Mail to the Settlement Class Members in the form of a Postcard Notice, the text of which shall be agreed upon the Parties. The Postcard Notice shall direct the Settlement Class Members to the website described below, where the Settlement Class Members can access the Long-form Notice. For all Postcard Notice mailings returned as undeliverable, the Settlement Administrator shall perform one reverse look-up to find updated addresses and will cause the Postcard Notice mailing to be re-mailed once to those members of the Settlement Class.
iv. Within seven (7) days after the Settlement Administrator receives the Class List, the Settlement Administrator will establish a settlement website containing pertinent case documentation, including a copy of the Complaint, the Settlement Agreement, Preliminary Approval Order, and the Long-form Notice.
55. Allocation.
a. Within ninety (90) days after the Effective Date, the Counter-Defendants shall cause the Credits to be applied to the appropriate Settlement Class Member accounts.
b. Within twenty one (21) days after the Effective Date, the Settlement Administrator shall send to Teresa Raney a check in the amount of $5,000.00. This amount will be paid to Teresa Raney as 1099 income.
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c. Within twenty one (21) days after the Effective Date, the Settlement Administrator shall send to Shirley Darnell a check in the amount of $5,000.00. This amount will be paid to Shirley Darnell as 1099 income.
d. The Settlement Administrator shall notify the Parties that all payments have been made within seven (7) days of the last such payment. The Settlement Administrator will provide Counsel for the Parties with bi-weekly reports regarding the status of administration of this Settlement.
VI. PROSPECTIVE RELIEF
56. Counter-Defendants have, since October 1, 2018, filed all collection actions in Illinois in compliance with Illinois Supreme Court Rule 280 and will continue to file all collection actions in Illinois in compliance with Illinois law and Illinois Supreme Court Rules. In addition, the Counter-Defendants remain subject to the nationwide federal court injunction and oversight of the Court appointed Special Master in Vassalle et al. v. Midland et al., Case No., 3:11-cv-0096 in the United States District Court for the Northern District of Ohio, along with the agreement provisions entered into with the Illinois Attorney General as part of the Assurance of Voluntary Compliance/Assurance of Discontinuance Agreement, dated November 28, 2018.
VII. RELEASE
57. In addition to the effect of any Final judgment entered in accordance with this Agreement, upon Final Approval of this Agreement, and for other valuable consideration as described herein, Releasees shall be completely released, acquitted, and forever discharged from any and all Released Claims.
58. As of the Effective Date, and with the approval of the Court, all Releasors hereby fully, finally, and forever release, waive, discharge, surrender, forego, give up, abandon, and cancel any and all Released Claims against Releasees. As of the Effective Date, all Releasors will be forever barred and enjoined from prosecuting any action against the Releasees asserting any and/or all Released Claims.
VIII. PRELIMINARY APPROVAL ORDER AND FINAL APPROVAL ORDER
59. This Settlement Agreement shall be subject to approval of the Court. As set forth in Section XIII, Counter-Defendants shall have the right to withdraw from the Settlement Agreement if the Court does not approve the material aspects of the Agreement.
60. Counter-Plaintiffs, through Class Counsel, shall submit this Agreement, together with its exhibits, to the Court and shall move the Court for Preliminary Approval of the settlement set forth in this Agreement, certification of the Settlement Class, appointment of Class Counsel and the Class Representatives, and entry of the Preliminary Approval Order, which order shall seek a Final Approval Hearing date and approve the Notice for dissemination in accordance with the Notice plan.
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61. At the time of the submission of this Settlement Agreement to the Court as described above, the Parties shall request that, after Notice is given, the Court hold a Final Approval Hearing approximately ninety (90) days after entry of the Preliminary Approval Order and approve the settlement of the Consolidated Actions as set forth herein.
62. At least seven (7) days prior to the Final Approval Hearing, or by some other date if so directed by the Court, Counter-Plaintiffs, through Class Counsel, will move for: (a) Final Approval of the Settlement Agreement; (b) Final appointment of the Class Representatives and Class Counsel; and (c) Final certification of the Settlement Class, including for the entry of a Final Order and Judgment, and file a memorandum in support of the motion for Final Approval.
IX. EXCLUSIONS
63. Exclusion Period.
a. Settlement Class Members will have until the end of the Objection/Exclusion Deadline to exclude themselves from the Settlement in accordance with this Section. If the Settlement Agreement is finally approved by the Court, all Settlement Class Members who have not excluded themselves by the end of the Objection/Exclusion Deadline will be bound by the Agreement and will be deemed a Releasor as defined herein, and the relief provided by the Agreement will be their sole and exclusive remedy for the claims alleged by the Settlement Class.
64. Exclusion Process.
a. A member of the Settlement Class may request to be excluded from the Settlement Class in writing by a request postmarked on or before the Objection/Exclusion Deadline.
b. In order to exercise the right to be excluded, a member of the Settlement Class must timely send a written request for exclusion to the Settlement Administrator providing his/her name, address, and telephone number; the name and number of this case; a statement that he/she wishes to be excluded from the Settlement Class; and a signature. A request to be excluded that is sent to an address other than that designated in the Class Notice, or that is not postmarked within the time specified, shall be invalid and the person serving such a request shall be considered a member of the Settlement Class and shall be bound as Settlement Class Members by the Agreement, if approved.
c. Any member of the Settlement Class who elects to be excluded shall not: (i) be bound by any order or the Judgment; (ii) be entitled to relief under this Settlement Agreement; (iii) gain any rights by virtue of this Settlement Agreement; or (iv) be entitled to object to any aspect of this Settlement Agreement. A member of
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the Settlement Class who requests to be excluded from the Settlement Class cannot also object to the Settlement Agreement.
d. The request for exclusion must be personally signed by the person requesting exclusion. So-called “mass” or “class” exclusion requests shall not be allowed.
e. Within three (3) business days after the Objection/Exclusion Deadline, the Settlement Administrator shall provide Class Counsel and Counter-Defendants’ Counsel a written list reflecting all timely and valid exclusions from the Settlement Class.
65. A list reflecting all individuals who timely and validly excluded themselves from the settlement shall also be filed with the Court at the time of the motion for Final Approval of the Settlement.
X . OBJECTIONS
66. The Notices shall advise Settlement Class Members of their rights, including the right to be excluded from or object to the Settlement Agreement and its terms. The Notices shall specify that any objection to this Settlement Agreement, and any papers submitted in support of said objection, shall be received by the Court at the Final Approval Hearing, only if, on or before the Objection/Exclusion Deadline approved by the Court, the person making an objection shall file notice of his/her intention to do so and at the same time: (a) file copies of such papers he/she proposed to submit at the Final Approval Hearing with the Clerk of the Court; and (b) send copies of such papers via US Mail, hand delivery, or overnight delivery to both Class Counsel and the Counter-Defendants’ Counsel. A copy of the objection must also be mailed to the Settlement Administrator at the address that the Settlement Administrator will establish to receive requests for exclusion or objections and any other communication relating to this settlement.
67. Any Settlement Class Member who intends to object to this Settlement Agreement must include in any such objection: (a) his/her full name, address, and current telephone number; (b) the case names and numbers of these Consolidated Actions; (c) the date range during which he/she was sued by Counter-Defendants; (d) all grounds for the objection, with factual and legal support for the stated objection, including any supporting materials; (e) the identification of any other objections he/she has filed, or has had filed on his/her behalf, in any other class action cases in the last five years; and (f) the objector’s signature. If represented by counsel, the objecting Settlement Class Member must also provide the name, address and telephone number of his/her counsel. If the objecting Settlement Class Member intends to appear at the Final Approval Hearing, either with or without counsel, he/she must state as such in the written objection, and must also identify any witnesses he/she may seek to call to testify at the Final Approval Hearing and all exhibits he/she intends to seek to introduce into evidence at the Final Approval Hearing, which must also be attached to, or included with, the written objection.
68. Any Settlement Class Member who fails to timely file and serve a written objection and notice of intent to appear at the Final Approval Hearing on or before the Objection/Exclusion Deadline pursuant to this Settlement Agreement, shall not be
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permitted to object to the approval of the Agreement at the Final Approval Hearing and shall be foreclosed from seeking any review of the Agreement or its terms by appeal or other means.
XI. FINAL APPROVAL HEARING
69. The Parties will jointly request that the Court hold a Final Approval Hearing approximately ninety (90) days after entry of the Preliminary Approval Order. At the Final Approval Hearing, the Parties will request that the Court consider whether the Settlement Class should be certified as a class pursuant to 735 ILCS 2-801 for settlement and, if so, (a) consider any properly-filed objections; (b) determine whether the Settlement Agreement is fair, reasonable and adequate, was entered into in good faith and without collusion, and should be approved, and shall provide findings in connection therewith; and (c) enter the Final Approval Order, including final approval of the Settlement Class and the Settlement Agreement, and a Fee Award.
XII. FINAL APPROVAL ORDER
70. The Parties shall jointly seek entry of a Final Approval Order, the text of which the Parties shall agree upon. The dismissal orders, motions, or stipulation to implement this Section shall, among other things, seek or provide for a dismissal with prejudice and waiver of any rights of appeal.
71. The Parties shall jointly submit to the Court a proposed order that without limitation:
a. Approves finally this Agreement and its terms as being a fair, reasonable, and adequate settlement as to the Settlement Class Members within the meaning of 735 ILCS 2-801 and directing its consummation according to its terms; and
b. Dismisses, with prejudice, all claims of the Parties and the Settlement Class in the Consolidated Actions, without costs and fees except as explicitly provided for in this Agreement.
XIII. TERMINATION OF THE SETTLEMENT
72. The Settlement is conditioned upon Preliminary and Final Approval of the Parties’ written Settlement Agreement, and all terms and conditions thereof without material change, material amendments, or material modifications by the Court (except to the extent such changes, amendments, or modifications are agreed to in writing between the Parties). All Exhibits attached hereto are incorporated into this Settlement Agreement. Accordingly, any Party may elect to terminate and cancel this Settlement Agreement within fourteen (14) days of any of the following events:
a. The number of Settlement Class Members who request exclusion from the Settlement Class exceeds 5% of the total number of Settlement Class Members;
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b. This Settlement Agreement is changed in any material respect to which the Parties have not agreed in writing;
c. The Court refuses to grant Preliminary Approval of this Agreement even after the renegotiation process described in Paragraph 56(c) of this Agreement;
d. The Court refuses to grant Final Approval of this Agreement in any material respect; or
e. The Court refuses to enter a Final judgment in the Consolidated Actions in any material respect.
73. In the event the Settlement Agreement is not approved or does not become Final, or is terminated consistent with this Settlement Agreement, the Parties, pleadings, and proceedings will return to the status quo ante as if no settlement had been negotiated or entered into, and the Parties will negotiate in good faith to establish a new schedule for the Consolidated Actions.
XIV. ATTORNEYS’ FEES, COSTS, AND EXPENSES AND SERVICE AWARD
74. No later than seven (7) days prior to the date of the Final Approval Hearing, Class Counsel will move the Court for an award of attorneys’ fees not to exceed a 40% of the Benefit to the Class, or $950,000.00, whichever is less based on the updated numbers of Settlement Class Members as of the date of Preliminary Approval as provided in the Class List described above. Class Counsel agrees that Class Counsel will not accept any award of fees or costs and expenses to the extent that any such award exceeds these amounts.
75. Notwithstanding any contrary provision of this Agreement, the Court’s consideration of the Fee Award is to be conducted separately from the Court’s consideration of the fairness, reasonableness, and adequacy of the Settlement Agreement, and any award made by the Court with respect to Class Counsel’s attorneys’ fees or expenses, or any proceedings incident thereto, including any appeal thereof, shall not operate to terminate or cancel this Agreement or be deemed material thereto.
76. Class Counsel shall provide the Settlement Administrator with its completed W-9 before the payment of the Fee Award is due. Within seven (7) days after the Counter-Defendants transfer the remaining balance of the Settlement Fund to the Settlement Administrator pursuant to paragraph 52(a)(ii), the Settlement Administrator shall pay to Class Counsel from the Settlement Fund the amount awarded by the Court in the Fee Award, subject to the limitations on the amount of the Fee Award detailed in this Section XIV. Any payment of the Fee Award shall be paid via electronic wire transfer to an account designated by Class Counsel.
77. Prior to or at the same time as Counter-Plaintiffs seek final approval of the Settlement Agreement, Class Counsel shall move the Court for Service Awards for the Class Representatives in an amount not to exceed Five Thousand Dollars ($5,000.00) for Teresa Raney and in an amount not to exceed Five Thousand Dollars ($5,000.00) for Shirley Darnell, and Counter-Defendants agrees that it will not oppose such requests. The Service Awards shall be paid solely from the Settlement Fund by check written by
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the Settlement Administrator within seven (7) days after the Counter-Defendants transfers the remaining balance of the Settlement Fund to the Settlement Administrator pursuant to paragraph 51(a)(ii).
78. In no event will Counter-Defendants’ liability for attorneys’ fees, expenses, and costs, Administrative Expenses, and/or a Service Award exceed the funding obligations set out in this Agreement. Counter-Defendants shall have no financial responsibility for this Settlement Agreement outside of the Settlement Fund and the Credits. Counter-Defendants shall have no further obligation for attorneys’ fees or expenses to any counsel representing or working on behalf of either one or more individual Settlement Class Members or the Settlement Class. Counter-Defendants will have no responsibility, obligation, or liability for allocation of fees and expenses among Class Counsel.
XV. MISCELLANEOUS
79. The Parties agree that the Settlement Agreement provides fair, equitable, and just compensation, and a fair, equitable, and just process for determining eligibility for compensation for any given Settlement Class Member related to the Released Claims.
80. The Parties (a) acknowledge that it is their intent to consummate this Settlement Agreement, and (b) agree, subject to their fiduciary and other legal obligations, to cooperate in good faith to the extent reasonably necessary to effectuate and implement all terms and conditions of this Agreement and to exercise their reasonable best efforts to accomplish the foregoing terms and conditions of this Agreement. Class Counsel and Counter-Defendants’ Counsel agree to cooperate with each other in seeking Court approval of the Preliminary Approval Order, the Settlement Agreement, and the Final Approval Order, and promptly to agree upon and execute all such other documentation as may be reasonably required to obtain final approval of the Settlement Agreement.
81. The Parties intend this Settlement Agreement to be a final and complete resolution of all disputes between them with respect to the Released Claims by Counter-Plaintiffs and the Settlement Class, and each or any of them, on the one hand, against the Releasees, on the other hand. Accordingly, the Parties agree not to assert in any forum that the Consolidated Actions were brought by Counter-Plaintiffs or defended by Counter-Defendants, or each or any of them, in bad faith or without a reasonable basis.
82. The Parties have relied upon the advice and representation of counsel, selected by them, concerning their respective legal liability for the claims hereby released. The Parties have read and understand fully this Settlement Agreement, including its Exhibits and have been fully advised as to the legal effect thereof by counsel of their own selection and intend to be legally bound by the same.
83. Any headings used herein are used for the purpose of convenience only and are not meant to have legal effect.
84. The waiver by one Party of any breach of this Agreement by any other Party shall not be deemed as a waiver of any prior or subsequent breach of this Agreement.
85. This Agreement and its Exhibits set forth the entire Agreement and understanding of the Parties with respect to the matters set forth herein, and supersede all prior
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negotiations, agreements, arrangements, and undertakings with respect to the matters set forth herein. No representations, warranties, or inducements have been made to any Party concerning this Agreement or its Exhibit other than the representations, warranties, and covenants contained and memorialized in such documents.
86. This Agreement may not be amended, modified, altered, or otherwise changed in any material manner except by a written instrument signed by or on behalf of all Parties or their respective successors-in-interest.
87. The Parties agree that Exhibit(s) to this Settlement Agreement are material and integral parts thereof and are fully incorporated herein by this reference.
88. The Parties may agree, subject to the approval of the Court where required, to reasonable extensions of time to carry out the provisions of the Agreement.
89. Except as otherwise provided herein, each Party shall bear its own costs.
90. Counter-Plaintiffs represent and warrant that they have not assigned any claim or right or interest therein as against the Releasees to any other person or party.
91. The Parties represent that they have obtained the requisite authority to enter this Settlement Agreement in a manner that binds all Parties to its terms.
92. The Parties specifically acknowledge, agree, and admit that this Settlement Agreement and its Exhibits, along with all related drafts, motions, pleadings, conversations, negotiations, correspondence, orders, or other documents shall be considered a compromise within the meaning of Illinois Rule of Evidence 408, and any other equivalent or similar rule of evidence, and shall not, except in accordance with Paragraph 98 of this Agreement, (a) constitute, be construed, be offered, or received into evidence as an admission of the validity of any claim or defense, or the truth of any fact alleged or other allegation in the Consolidated Actions or in any other pending or subsequently filed action, or of any wrongdoing, fault, violation of law, or liability of any kind on the part of any Party, or (b) be used to establish a waiver of any defense or right, or to establish or contest jurisdiction or venue. This Agreement is not a concession or admission and shall not be used as an admission or indication with respect to any claim of any fault, concession, or omission against any of the Releasees regardless of whether the Settlement Agreement is finally approved.
93. The Parties also agree that this Settlement Agreement and its Exhibits, along with all related drafts, motions, pleadings, conversations, negotiations, correspondence, orders or other documents entered in furtherance of this Settlement Agreement, and any acts in the performance of this Settlement Agreement, are not intended to establish grounds for certification of any class involving any Settlement Class Member other than for certification of the Settlement Class for settlement purposes.
94. Except in accordance with this Agreement, this Settlement Agreement, whether approved or not approved, revoked, or made ineffective for any reason, and any proceedings related to this Settlement Agreement and any discussions relating thereto shall be inadmissible as evidence of any liability or wrongdoing whatsoever and shall not be offered as evidence of any liability or wrongdoing in any court or other tribunal in any state, territory, or jurisdiction, or in any manner whatsoever. Further, neither this Settlement Agreement, the settlement contemplated by it, nor any proceedings taken
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under it, will be construed or offered or received into evidence as an admission, concession, or presumption that class certification is appropriate, except to the extent necessary to consummate this Agreement and the binding effect of the Final Order and Judgment.
95. The provisions of this Settlement Agreement, and any orders, pleadings, or other documents entered in furtherance of this Settlement Agreement, may be offered or received in evidence solely (a) to enforce the terms and provisions hereof or thereof, (b) as may be specifically authorized by a court of competent jurisdiction after an adversary hearing upon application of a Party hereto, (c) in order to establish payment, or an affirmative defense of preclusion or bar in a subsequent case, (d) in connection with any motion to enjoin, stay, or dismiss any other action, or (e) to obtain Court approval of the Settlement Agreement.
96. This Agreement may be executed in one or more counterparts exchanged by hand, messenger, or PDF as an electronic mail attachment, and any such signature exchanged shall be deemed an original signature for purposes of this Settlement Agreement. All executed counterparts and each of them shall be deemed to be one and the same instrument, provided that counsel for the Parties to this Agreement all exchange signed counterparts.
97. This Agreement shall be binding upon, and inure to the benefit of, the successors and assigns of the Parties hereto and the Releasees.
98. This Agreement shall be governed by and construed in accordance with the laws of the state of Illinois.
99. This Agreement is deemed to have been prepared by counsel for all Parties as a result of arms-length negotiations among the Parties. Whereas all Parties have contributed substantially and materially to the preparation of this Agreement and its Exhibits, it shall not be construed more strictly against one Party than another.
100. Unless otherwise stated herein, any notice required or provided for under this Agreement shall be in writing and shall be sent by electronic mail or hand delivery, postage prepaid, as follows:
If to Class Counsel: Sean K. Cronin Brendan M. Nester DONOVAN ROSE NESTER, PC 15 North 1st Street Belleville, Illinois 62220 T: (618) 212-6500 [email protected] [email protected]
David Cates Chad Mooney CATES MAHONEY, LLC 216 West Pointe Drive, Suite A
If to Counter-Defendants’ Counsel: Theodore W. Seitz (admitted pro have vice) Dykema Gossett PLLC Capitol View, 201 Townsend Street, Suite 900 Lansing, Michigan 48933 T: (517) 374-9100 [email protected]
Stephen C. Williams KUEHN, BEASLEY & YOUNG, P.C. 23 South 1st Street Belleville, IL 62220
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ATTORNEYS FOR TERESA RANEY
and SHIRLEY DARNELL
Sean K .Cronin, Esq. Donovan Rose Nester, P.C. 15 North 1st Street, Suite A Belleville, IL 62220
David Cates, Esq. Cates Mahoney, LLC 216 W. Pointe Drive, Ste. A Swansea, IL 62226
ATTORNEYS FOR MIDLAND
FUNDING, LLC and MIDLAND
CREDIT MANAGEMENT, INC.
Theodore W. Seitz, Esq. DYKEMA GOSSETT PLLC 201 Townsend St., Ste. 900 Lansing, MI 48933
Stephen C. Williams, Esq. KUEHN, BEASLEY, & YOUNG, P.C. 23 South 1st Street Belleville, IL 62220
097356.000427 4849-7320-9584.1
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IN THE CIRCUIT COURT TWENTIETH JUDICIAL CIRCUIT
ST. CLAIR COUNTY, ILLINOIS MIDLAND FUNDING, LLC, ) )
Plaintiff/Counter-Defendant, ) ) vs. ) No. 15-L-442 ) TERESA RANEY, ) Hon. Christopher T. Kolker ) Defendant/Counter-Plaintiff. ) ) ) MIDLAND FUNDING, LLC, ) ) Plaintiff/Counter-Defendant, ) ) v. ) ) SHIRLEY DARNELL, ) ) Defendant/Counter-Plaintiff. )
DECLARATION OF DAVID CATES
IN SUPPORT OF COUNTER-PLAINTIFFS’ UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
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I, David Cates, declare and state to the best of my knowledge as follows:
1. I am a Partner at Cates Mahoney, LLC (“Cates Mahoney” or the “Firm”). I submit
this Declaration in support of Counter-Plaintiff’s unopposed motion for preliminary approval of
the proposed class action settlement in this Action.
2. All capitalized terms used in this Declaration have the meanings set forth in the
Stipulation of Settlement (“Settlement Agreement”) attached to the Joint Motion for Preliminary
Approval of Class Action Settlement as Exhibit A, unless otherwise stated.
A. Class Counsel’s Professional Qualifications
3. A copy of Cates Mahoney, LLC’s firm biography, which includes my own
professional biography and those of the other Firm attorneys with primary responsibility for this
Action, is attached hereto as Exhibit 1.
4. Cates Mahoney, LLC has been engaged in the practice of class action and other
complex litigation for over thirteen years. The Firm has been recognized by courts for its ability
and experience in handling major complex litigation, including the field of class action litigation.
5. In conjunction with Donovan Rose Nester, P.C., the two firms serve as the
primary day-to-day counsel in this Action.
6. Donovan Rose Nester, P.C. has been engaged in the practice of complex civil
litigation for over forty years and has been recognized by various courts for its competence and
experience in handling complex civil matters. The firm resume of Donovan Rose Nester, P.C. is
attached hereto as Exhibit 2. Both firms have relevant experience in class action litigation.
B. Settlement Negotiations
7. Upon Counter-Defendants’ initiation, the Parties began discussing the prospects
of settlement approximately two and half years after Counter-Plaintiffs filed their initial
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Counterclaims on July 17, 2015 and July 22, 2015. The settlement discussions were prompted as
the parties spent several years in hard fought litigation, including an appeal to the Fifth District
Appellate Court to resolve disputed issues, and significant discovery, which demonstrated that a
resolution may be possible.
8. Prior to February 9, 2021, counsel for the parties held several phone conferences
and informal in-person meetings to discuss the prospects of settlement. No settlement was
reached. However, the Parties agreed to pursue discovery to facilitate further settlement
discussions.
9. Subsequently, the parties held discussions about a formal mediation and discussed
jointly as to who would serve as the mediator. It was decided that retired federal judge G. Patrick
Murphy would serve as the mediator.
10. Prior to the mediation, the Counter-Plaintiffs indicated to Counter-Defendants a
need for additional discovery to properly ascertain the merits of any proposed settlement and this
information was provided prior to the mediation.
11. Judge Murphy had already been appointed a mediator for discovery in this case
by the Court and was familiar with the nature of the case as well as the claims and defenses of
each party.
12. The parties each submitted detailed mediation statements to Judge Murphy laying
out the arguments in the case, the information each party believed was necessary to evaluate the
disputed legal issues, information on class size and damages and relief available should the case
proceed, and proposals for resolution for Judge Cueto to consider.
13. On February 17, 2021 and April 27, 2021, the parties held a formal online
mediation via Zoom with Judge Murphy. Over the course of that day, the parties spent time with
Judge Murphy both separately and jointly to discuss various issues in the case. No settlement was
Page 4 of 9
reached on that date. However, the parties did agree to more discovery and to continue to discuss
resolution on a parallel track as the parties also worked to prepare the case for trial. In addition,
Counter-Plaintiffs filed additional discovery requests and motions related to discovery and set the
same for a hearing.
14. In accordance with the guidance given the parties by Judge Murphy, the Parties
reached agreement on the general contours of a settlement. Substantial negotiations were still
needed to supply many necessary details, particularly with respect to the allocation of the
Common Fund and the amounts that would be provided as well as final determination of class
members and sizes.
15. The parties engaged in weeks of further detailed negotiations on settlement.
16. The Parties began drafting a settlement proposal concerning the essential terms
of the settlement. During that process, additional issues arose that required clarification among
the Parties and the exchange of further information and discovery. This process involved
extensive back and forth discussions, data analysis, and follow-up questions. The Parties then
began drafting the Settlement Agreement and related exhibits. These aggregate efforts were
slowed in part due to the COVID-19 pandemic and its strains on the Parties and their counsel.
The Parties agreed to the final settlement proposal in June 2021. They are in the process of
executing the final Settlement Agreement.
17. Attorneys’ fees and litigation expenses were negotiated only after the settlement
amount and substantive terms of the settlement were reached.
C. Discovery
18. As this Court is aware, this matter involves consolidated cases. In all cases,
discovery was sent by the parties in 2015, 2016 and 2021. Counter-Plaintiffs sent formal
document requests to Defendants seeking twenty-eight categories of documents. Counter-
Page 5 of 9
Defendants responded and supplemented answers at least four times for each set of discovery.
19. Both Parties produced documents on a rolling basis, summarized below.
1. Defendants’ Document Productions
20. Counter-Defendant produced several thousands of pages of documents over a
period of several months. The productions consisted of, among other things, account level
records, asset purchase agreements, internal company policies and controls, spreadsheets
containing class member information, information related to the original creditors for the charged
off debts, communications related to the purchase of the charged off accounts of the class
members, documentary evidence of the diligence applied to verification of the charged off
accounts, among many other types of documents. Counter-Plaintiffs reviewed the document
productions and Excel files in detail, which was a time-consuming process and which often led
to Counter-Plaintiffs’ request for follow-up documents or information.
21. Throughout this process, Plaintiff posed myriad questions regarding the data,
engaged in detailed discussions with Defendants about the data, and requested additional
information.
i. Zero Balance Exclusions
22. As part of the ongoing negotiations over settlement, the parties sought to
adequately define the Class but also determine a damages model that could apply to a class with
over 100,000 members. At Counter-Plaintiffs’ request, Defendants produced discovery indicating
that a substantial number of class members had either already paid off the amount due on their
alleged debts or that the amount remaining was zero. Counter-Plaintiff raised several issues with
the data and had questions about the structure as the parties continued negotiation and the parties
continued to refine the class definition and the value model.
Page 6 of 9
23. It was determined after multiple reviews of the data and negotiation with the
Counter-Defendant that class members who had voluntarily paid off their accounts without a
judgment being issued, or whose balance was zero or who had their debt discharged for another
reason would not be appropriate class members for this settlement. For those class members,
they are being excluded for the settlement and no release will issue.
ii. Balance Class Member Damages Model
24. After exclusions, the remaining members of the class total 57,522 members with
a balance pending. In regard to the class members, a settlement was reached that would provide
an automatic credit of $80 to all of these class member’s accounts.
25. There are approximately 57,522 members of the Balance class. The automatic
credit to the account results in Counter-Defendant effectively paying $4,601,760.00 in
compensation to the class.
26. The model was conceived and prepared as a result of significant negotiation
between the Parties. It was designed as a simplified means of allocating compensation for all
damages incurred by the Balance class members, with the understanding that Counter-Defendant
maintained confidence in many of their defenses.
D. Harm to Plaintiff and Settlement Class Members
27. Settlement Class Members have alleged they suffered as the result of improper
debt collection actions by the Counter-Defendant.
28. Settlement Class Members also alleged they incurred significant time, effort, and
inconvenience in connection with the actions of Counter-Defendant in attempting to collect
alleged debts.
I. Defenses
29. Counter-Defendant raised various defenses in the course of the settlement
Page 7 of 9
negotiations, discussed below. This is just a sampling of Counter-Defendant’s many arguments
on the key legal issues in the case. Although Counter-Plaintiff had colorable arguments in its favor
on these issues, substantial litigation risk nevertheless existed, which impacted the settlement
value of the case. The below is in addition to the res judicata and voluntary payment doctrine
defenses listed above.
1. Arbitration
30. Counter-Defendant relied heavily on an arbitration clause contained in the
contracts of the class representatives. The arbitration issue ultimately was resolved in Counter-
Plaintiffs’ favor after appeal to the Fifth District Appellate Court, but this did not foreclose the
Counter-Defendant from attempting to raise it later in the action against members of the class
after it was certified. The arbitration clauses at issue would have been unique to each class
member and thus substantial costs, expenses and efforts would have been necessary to
demonstrate arbitration was not applicable for over 57,000 potential class members.
31. Counter-Defendant took the position that the arbitration could not be conducted
on a class-wide basis because the arbitration clause did not expressly allow class arbitrations in
the representative contracts of the class representatives.
32. If Counter-Defendant prevailed on these arguments, Counter-Plaintiffs’ class
action would need to be dismissed and could be brought only as non-class arbitration on behalf
of just the named Counter-Plaintiffs individually.
2. Class Certification
33. Counter-Plaintiffs submit that the Court would certify the proposed class if
litigated on the merits. Counter-Defendant argued otherwise, asserting that individual issues
would overwhelm the common issues, thus defeating class certification under 735 ILCS 5/2-
801(2).
Page 8 of 9
3. Substantive Issues
34. Counter-Defendant also raised strong defenses to each count in the operative
Counterclaim. Counter-Defendant argued that the Illinois Collection Agency Act (“ICAA”)
claims did not apply to Counter-Defendant because the ICAA did not define Counter-Defendant
in the group of entities it intended to regulate. Additionally, Counter-Defendant argued that there
is no private right of action allowed under the ICAA and thus Counter-Plaintiff could not collect
monetary penalties for breach even if Counter-Defendant was governed by the ICAA.
35. Counter-Defendant argued that the Illinois Consumer Fraud count could not
apply because it was derivative of the ICAA claim and failed to adequately show a violation of
the statute.
36. Counter-Defendant argued that the Fair Debt Collection Practices Act
(“FDCPA”) claim failed because Counter-Plaintiffs were effectively using pleading violations to
bootstrap an FDCPA claim.
Attorneys’ Fees and Litigation Expenses
37. As of July 2, 2021, counsel for the Counter-Plaintiffs have spent over 5 years and
hundreds of hours litigating this case.
38. The Illinois Supreme Court has held that courts in Illinois are vested with the
discretion to determine the fee award in a common fund class action case. Brundidge v. Glendale
Federal Bank, F.S.B., 168 Ill.2d 235, 659 N.E.2d 909 (Ill. 1995).
39. Importantly, in this case, counsel for Counter-Plaintiffs are not asking this Court
to award any money from the funds created for the Class.
40. Rather, Counter-Defendant has agreed not to object to an award of attorneys’
fees and costs, separate from class recovery, in an amount not to exceed $950,000.00, which
represents 21% of the total monetary benefit conferred to the class. Counter-Defendant will pay
Page 9 of 9
this amount separate and apart from the Class relief.
41. Given the time spent, the litigation risks, and the claims at issue, and that fees and
costs to counsel for Counter-Plaintiffs will be paid separately and will not reduce any amount of
the common fund to the class members, the fees and costs are inherently reasonable. This is even
more true in that Counter-Plaintiffs’ counsel will continue to incur fees and expenses up until
final approval and the dismissal of the case. The proposed fee award represents the total amount
Class Counsel will receive in this Action, subject to Court approval.
42. Circuit Courts have discretion to award attorney fees to class counsel based on a
percentage of the benefit provided to the class. See Brundidge v. Glendale Fed. Bank, 168 Ill.2d 235,
243-44 (1995). Here the benefits to the Settlement Class total up to $$4,601,760.00, not including
incentive awards and administration costs, which Counter-Defendant will pay also pay separately.
J. Settlement Administrator’s Declaration
43. Attached as Exhibit 4 is a Declaration prepared by the Settlement Administrator,
KCC. The Declaration addresses the steps the Settlement Administrator will take in
disseminating notice to the Settlement Class and otherwise administering the Settlement.
I declare under penalty of perjury that the foregoing is true and correct to the best of
my knowledge.
Respectfully Submitted,
By: /s/David Cates DAVID CATES #6289198 CHAD M. MOONEY #6311237 CATES MAHONEY, LLC 216 West Pointe Drive, Suite A Swansea, IL 62226 Telephone: (618) 277-3644 Facsimile: (618) 277-7882 Email: [email protected] Email: [email protected] Counsel for Counter-Plaintiffs and the
Class
CATES MAHONEY, LLC Attorneys at Law
www.catesmahoney.com
Offices:
Swansea, Illinois
216 West Pointe Drive, Suite A Swansea, Illinois 62226
Telephone: (618) 277-3644 Facsimile: (618) 277-7882 Toll Free: (877) 455-6376
FIRM BACKGROUND
CATES MAHONEY, LLC is a civil litigation firm specializing in complex litigation and providing a multitude of services to the various clients it represents. The firm practices in State and Federal Courts across the country as well as various administrative courts. The firm’s clients include municipal bodies, individuals and corporations. The firm has years of experience handling all types of complex litigation from class actions to medical malpractice cases. The firm has tried numerous trials to verdicts, and has set a record for medical malpractice verdict in Illinois and set a national record for the largest verdict ever involving a single plaintiff in a workplace harassment trial. The firm has also settled individual malpractice cases for records over 8 figures. The firm has also successfully resolved numerous class actions, including cases where the entirety of claiming class members received the entire value of the their loss.
CATES MAHONEY, LLC focuses on cases involving class and mass actions, catastrophic personal injuries, wrongful death, commercial litigation and financial investment misconduct.
The firm has extensive experience in both state and federal court involving a wide variety of consumer and commercial issues and is currently active in cases in federal and state courts across the country representing client interests. The Firm has been
lead counsel on numerous class actions and has been appointed to the Executive Committee related to mass tort litigation pending in the Southern District of Illinois.
MEMBER PROFILES
DAVID I. CATES
David Cates is a partner at CATES MAHONEY who concentrates his practice primarily in personal injury law and complex litigation, including mass actions, class actions and financial misconduct. Mr. Cates has represented injured clients suffering from mesothelioma and other asbestos related diseases, as well as car and truck accidents and people who have been harmed by defective drugs and medical devices. Mr. Cates has been part of the trial teams that have obtained multiple record setting verdicts, including medical malpractice cases and what is believed to be the largest sexual harassment verdict in U.S. history. Mr. Cates has also argued in the 5th District Appellate Courts and successfully defended judgments and orders in that forum. Mr. Cates has personally been named lead counsel in class actions pending in state courts; been appointed as interim Executive Committee counsel in a class action pending in the Southern District of Illinois involving a nationwide class; and been appointed to the Executive Committee involving mass tort litigation in the Southern District of Illinois. Mr. Cates has dedicated his practice to representing those injured by another’s wrongful conduct. Mr. Cates received his undergraduate degree from Vanderbilt University and graduated from Loyola University School of Law – Chicago. He is licensed in Illinois and Kentucky, as well as the Northern and Southern District Courts of Illinois. Mr. Cates is active in numerous professional associations, including the Illinois Trial Lawyers Association, where he is a member of the Board of Governors; the Illinois State Bar Association; the American Association for Justice, where he is a Board of Governors Member for Illinois; the consumer advocacy group, Public Justice, where he is a State Coordinator for Illinois; the St. Clair County Bar Association where he was appointed to a committee of lawyers and judges related to the newly instituted requirements for electronic filing; and the East St. Louis Bar Association. In addition, Mr. Cates has been named a “Rising Star” by Super Lawyers every year since 2013; a member of the Class Action Trial Lawyers since 2012; and a member of the Top 100 Trial Lawyers by the National Association of Trial Lawyers since 2014, among numerous other awards and distinctions. He is also a frequent presenter and nationwide conferences focusing on legal practice issues.
RYAN J. MAHONEY Ryan Mahoney is a partner at CATES MAHONEY who built his reputation litigating complex matters involving business and real estate. Mr. Mahoney has shifted his focus to representing injured clients who have suffered damages as the result of car, truck and railroad accidents, medical negligence, defective drugs, defective medical devices, consumer harm and the diagnosis of mesothelioma or other asbestos related diseases. He has tried cases in St. Clair and Madison County, Illinois, and successfully argued appeals in the Illinois Appellate Courts. Mr. Mahoney is licensed in Illinois, Missouri and Minnesota, and admitted to practice in the United States District Courts for the Northern and Southern Districts of Illinois. Mr. Mahoney received his undergraduate degree in Business Law from the University of St. Thomas in St. Paul, Minnesota and received his law degree from Loyola University Chicago School of Law. Mr. Mahoney is also a member of numerous professional associations, including the Illinois Trial Lawyers Association, the American Association for Justice, the Illinois State Bar Association, the St. Clair County Bar Association and the Madison County Bar Association.
www.drnpc.com
15 North 1st Street Suite A
Belleville, Illinois 62220 618.212.6500
618.212.6501 (facsimile) [email protected]
CIVIL LITIGATION Donovan Rose Nester, P.C. is a civil litigation firm concentrating in complex civil litigation. Our experienced trial lawyers are well-versed in all aspects of the litigation process and handle a wide breadth of cases for businesses and individual clients. Donovan Rose Nester, P.C. attorneys have decades of experience in complex civil litigation involving everything from products liability, medical malpractice, legal malpractice, toxic tort, insurance coverage, employment law, mass and class torts, employment law, labor law, commercial litigation and consumer protection. Donovan Rose Nester, P.C.’s diverse practice has included representation in numerous national class action and mass action lawsuits filed in both state and federal courts, on behalf of defendants, plaintiffs and the class. Donovan Rose Nester, P.C. has an extensive and successful appellate practice in the Illinois Supreme Court, the Illinois Appellate Court, the Missouri Appellate Court, and the United States Circuit Courts of Appeal for the Seventh Circuit and the Eighth Circuit.
SEAN K. CRONIN
Sean K. Cronin is a partner at Donovan Rose Nester, P.C., and concentrates his practice primarily in personal injury law and complex litigation, including commercial litigation, mass actions and class actions. Mr. Cronin has represented individual and commercial clients in numerus mass and class actions in both state and federal courts, on behalf of defendants, plaintiffs and the class. Mr. Cronin received his undergraduate degree from Loyola University, New Orleans, and graduated from St. Louis University School of Law. He is licensed in Illinois and Missouri, the Central and Southern District Courts of Illinois and the United States Court of Appeals for the Seventh Circuit.
Brendan M. Nester
Brendan Nester is a partner at Donovan Rose Nester, P.C., and concentrates his practice primarily in personal injury law and complex litigation on behalf of both plaintiffs and defendants, including workers compensation and medical malpractice. Mr. Nester has represented individual and commercial clients in both state and federal courts. Mr. Nester received his undergraduate degree from St. Louis University, and graduated from Southern Illinois University School of Law. He is licensed in Illinois and the Southern District Court of Illinois.
THE CIRCUIT COURT OF ST. CLAIR COUNTY, ILLINOIS TWENTIETH JUDICIAL CIRCUIT
MIDLAND FUNDING LLC, ) ) Plaintiff/Counter-Defendant, ) No. 15-L-442 ) v. ) Hon. Christopher T. Kolker ) TERESA RANEY, ) ) Defendant/Counter-Plaintiff. ) ) v. ) ) MIDLAND CREDIT MANAGEMENT, ) INC. ) ) Third-Party Defendant ) ____________________________________) MIDLAND FUNDING LLC, ) ) Plaintiff/Counter-Defendant, ) ) No. 15-L-444 v. ) ) Hon. Christopher T. Kolker SHIRLEY DARNELL, ) ) Defendant/Counter-Plaintiff. ) ) v. ) ) MIDLAND CREDIT MANAGEMENT, ) INC. ) ) Third-Party Defendant ) ____________________________________)
PROPOSED ORDER GRANTING JOINT/UNOPPOSED MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
Counter-Plaintiffs, Teresa Raney and Shirley Darnell (“Counter-Plaintiffs,” “Class
Representatives,” OR “Counterclaimants”) have moved the Court for Preliminary Approval of a
proposed class action settlement with Plaintiff/Counter-Defendant/Third-Party/Counterclaim
Defendants Midland Funding, LLC (“Midland”) and Midland Credit Management, Inc. (“MCM”)
(collectively “Counter-Defendants”), the terms and conditions of which are set forth in the Settlement
Agreement filed with the Court as Exhibit A to the Motion for Preliminary Approval of Class Action
Settlement.
I. INTRODUCTION.
The subject litigation arises out of two collection actions filed by Counter-Defendant Midland
Funding, LLC against Counter-Plaintiffs to collect outstanding balances on two credit card accounts
opened by the Counterclaimants with creditor Citibank (not parties to this litigation). Midland Funding,
LLC sets forth in its collection actions that it purchased the subject accounts from Citibank.
In response to each of Midland Funding’s collection actions, the Counter-Plaintiffs filed
counterclaims against Midland Funding, which counter-Plaintiffs later amended and added Third-Party
Defendant Midland Credit Management, Inc. alleging the following causes of action1 violations of the
Illinois Collection Agency Act (225 ILCS 425/1, et seq.); (2) violations of the Illinois Consumer Fraud
and Deceptive Business Practices Act (815 ILCS 505/1, et seq.); (3) violations of the Federal Fair Debt
Collection Practices Act (15 U.S.C. § 1692, et seq.), violations of the Racketeer Influenced and Corrupt
Organization Act (18 U.S.C. § 1961 et seq.), along with other common law claims. In their
counterclaims, the Counter-Plaintiffs alleged that Midland Funding did not have the requisite
documentation to prove that it purchased any rights to the Counter-Plaintiffs’ accounts, and the
Counter-Plaintiffs alleged that Midland Funding did not attach the relevant documentation to its
collection complaints to establish that Midland Funding had the right to collect on the Counter-
1 The three collection actions are Midland Funding v. Raney (15-L-442) (hereafter, the “Raney” action); Midland Funding v. Shirley A. Darnell (15-L-444) (hereafter, the “Darnell” action); Collectively, these matters are referred to herein as the Consolidated Actions.
Plaintiffs’ accounts. The Counter-Plaintiffs’ alleged that these actions violated various provisions of
the above statutes. The Counter-Plaintiffs’ counterclaims in Raney and Darnell were filed on behalf of
the Debtors individually, as well as a purported class of similar persons. The Counter-Defendants
steadfastly deny the material allegations of the Counter-Plaintiffs’ counterclaims.
Following years of contested litigation, and arms-length settlement negotiations recognizing
the risks of even further protracted litigation, the Parties have negotiated a settlement, in which the
Parties agree to resolve all matters between them, including the allegations contained in the
Consolidated Actions and as set forth herein. Through the settlement, the Counterclaim Defendants
will make available to class members benefits totaling approximately $4,300,000 as detailed herein.
II. CASE HISTORY.
In 2015, Midland filed separate Complaints against Raney and Darnell, alleging that they used
credit cards issued by Citibank, N.A., and failed to make their agreed monthly payments. Midland
purchased Raney’s alleged debt from Citibank on April 23, 2014 and purchased Darnell’s alleged debt
from Citibank on October 14, 2014.
Midland attached an affidavit which stated that Midland “is the current owner of . . . the
obligation sued upon, and was assigned all rights, title and interest to [Raney’s] CITIBANK, N.A.
account.” Midland also attached an Account Statement that was allegedly mailed to Raney, which
stated that “This Account is issued by Citibank, N.A.,” and showed an Account Number ending in
“2509.” (Id.) Finally, Midland attached a Bill of Sale and Assignment, showing the date of assignment.
(Bill of Sale, attached to Raney Compl.) The Bill of Sale and Assignment stated that, “[f]or value
received,” Citibank “does hereby transfer, sell, assign, convey, grant, bargain, set over, and deliver to
[Midland], and to [Midland’s] successors and assigns, the Accounts described in Exhibit 1 and the
electronic file.”
Likewise, Midland attached an affidavit which stated that Midland “is the current owner of,
and/or successor to, the obligation sued upon, and was assigned all the rights, title and interest to
[Darnell’s] CITIBANK, N.A. account[.]” Midland also attached an Account Statement that was
allegedly mailed to Darnell. The Account Statement stated that “This Account is issued by Citibank,
N.A.,” and showed an Account Number ending in “5931.” (Id.) Finally, Midland attached a Bill of
Sale and Assignment, showing an October 14, 2014 date of assignment. The Bill of Sale and
Assignment stated that, “[f]or value received,” Citibank “does hereby transfer, sell, assign, convey,
grant, bargain, set over, and deliver to [Midland], and to [Midland’s] successors and assigns, the
Accounts described in Exhibit 1 and the electronic file.”
Raney and Darnell each filed putative class action counterclaims, naming Midland Funding,
LLC as a Counter-Defendant, which alleged that Midland failed to attach proof showing that
Counterclaimants’ debt was assigned to Midland by Citibank. Counterclaimants specifically alleged,
that “Midland made a false statement to [Counterclaimants] by claiming that it owned the debt
resulting from the credit card agreement or line of credit agreement, when in fact, it had no legal right
to collect the debt.” (Id. ¶ 35.) Stemming from these allegations, the Counterclaim asserted violations
of the Illinois Collection Agency Act (“ICAA”), Illinois Consumer Finance and Deceptive Business
Practices Act (“ICFA”), and the federal Fair Debt Collection Practices Act (“FDCPA”). In addition,
Counterclaimants sought to represent both a “National Class” and an “Illinois Sub-Class.” The
National Class was defined to include, among others:
All individuals who have been a Defendant in a collection lawsuit that was filed by Midland as Plaintiff . . . since January 1, 2010 . . . where a fraudulent affidavit was attached to the Complaint or the Complaint lacked such an affidavit as an attachment. (Countercl. ¶ 75.) The Illinois class contained a similar definition. (Id.)
On November 18, 2015 (in the Raney Action), and December 1, 2015 (in the Darnell Action),
Midland moved to compel arbitration of Raney and Darnell’s counterclaims. The parties conducted
written discovery and deposition discovery related to Midland’s motions to compel arbitration, which
included contested discovery motions and court hearings regarding same.
The Trial Court entered an order denying Midland’s motions to compel arbitration in an
opinion and order dated October 14, 2016. Midland appealed that order to the Appellate Court of
Illinois for the Fifth Judicial District (Cons. Appellate No.: 5-16-0479). On January 4, 2018, the
Appellate Court affirmed the Trial Court’s order.
The case remained stayed until the Fifth District Court of Appeals (and leave Application filed
with the Illinois Supreme Court, which was denied) remanded the case back to the Trial Court. In
May 2019, the Raney and Darnell Actions were then further consolidated with the Midland Funding,
LLC v. Hilliker, for discovery purposes. The parties then engaged in discovery motion practice, and
in January 2020 the Counterclaimants filed Amended Counterclaims. The Amended Counterclaims
added Midland Credit Management, Inc. as a Third-Party Defendant, and raised the additional claims
of civil conspiracy, public nuisance, and a violation of the federal Racketeer Influenced and Corrupt
Organizations Act (RICO). Midland then moved to dismiss the Amended Counterclaims, which the
Trial Court denied.
The Parties continued to conduct discovery, which included contested discovery motions, an
order by the Court issuing discovery sanctions, which spawned further appeals to the Fifth Judicial
District (including Appeal No. 20-0015), and the production of thousands of pages of additional
documents by Midland, along with the Trial Court’s appointment of former federal judge the
Honorable Patrick Murphy as a discovery master.
On July 31, 2020, Midland moved to strike and dismiss Raney and Darnell’s nationwide class
action counterclaims for lack of jurisdiction, which remains pending. On April 27, 2021, Raney and
Darnell filed another set of Amended Counterclaims, instanter, in each of the Consolidated Actions.
On February 17, 2021, and April 27, 2021, the Parties participated in a formal, full-day
mediation session with Hon. Patrick Murphy via Zoom, due to the ongoing Covid-19 pandemic.
Following the mediation, the parties continued to engage in arms-length negotiations under the
guidance of Judge Murphy.
As a result of these negotiations, the Parties have negotiated a settlement, with the assistance
of Judge Murphy, in which the Parties agree to resolve all matters between them, including the
allegations contained in the Consolidated Actions and as set forth herein.
The Parties have agreed to settle the Consolidated Actions on the terms and conditions set
forth herein in recognition that the outcome of the Consolidated Actions is uncertain and that
achieving a final result through litigation would require substantial additional risk, discovery, time, and
expense.
Midland denied and continues to deny all charges of wrongdoing or liability. Despite Midland’s
belief that it is not liable for and has good defenses to the claims alleged in the Consolidated Actions,
Midland desires to settle the Consolidated Actions and thus avoid the expense, risk, exposure,
inconvenience, and distraction of continued litigation of any action or proceeding relating to the
matters being fully settled and finally resolved in this Settlement Agreement. Neither this Settlement
Agreement, nor any settlement negotiation or discussion thereof, is or may be deemed to be or may
be used as an admission of or evidence of any wrongdoing or liability.
Following arms-length negotiations, including mediation with an experienced mediator, the
Parties now seek to enter into this Settlement Agreement. Raney and Darnell and Class Counsel have
conducted an investigation into the facts and the law regarding the Consolidated Actions and have
concluded that a settlement according to the terms set forth below is fair, reasonable, adequate, and
beneficial to and in the best interests of Raney, Darnell, and the Settlement Class, recognizing (a) the
existence of complex and contested issues of law and fact; (b) the risks inherent in litigation; (c) the
likelihood that future proceedings will be unduly protracted and expensive if the proceeding is not
settled by voluntary agreement; (d) the magnitude of the benefits derived from the contemplated
settlement in light of both the maximum potential and likely range of recovery to be obtained through
further litigation and the expense thereof, as well as the potential of no recovery whatsoever; (e)
Counter-Defendants’ financial condition and ability to fund this settlement; and (f) Raney, Darnell,
and Class Counsel’s determination that the Settlement is fair, reasonable, adequate, and will
substantially benefit the Settlement Class Members.
III. SUMMARY OF SETTLEMENT
A. Settlement Benefits.
Through the Settlement, Midland will make available to class members benefits totaling
approximately $4,300,000 which includes the following: (1) $80 Credit against the outstanding balance
of all Settlement Class Members’ accounts whose accounts are collectible and have an outstanding
balance of more than $80; and (2) if the amount of up to $80 credit would extinguish the outstanding
balance on the class member’s account, Counter-Defendants will apply only such amount as will
reduce the class member’s account to zero. Ex. A, Settlement Agreement. The settlement is also
structured to cover and include notice and administrative costs, attorneys’ fees and expenses, and
service awards to the named Class Representatives, which is separate from the Settlement Fund. Ex.
A, Settlement Agreement.
The Settlement Class includes:
All persons against whom Midland filed a collection lawsuit in Illinois between March 12, 2011
and September 30, 2018, subject to the Exclusions detailed below.
Excluded from the Settlement Class are: (1) all Settlement Class members who paid or settled
their accounts in full without Midland obtaining a judgment as of the date of Preliminary Approval;
(2) all Settlement Class members whose accounts have been discharged in bankruptcy as of the date
of Preliminary Approval; (3) all Settlement Class members whose accounts currently have a zero
balance as of the dates of the Preliminary Approval; (4) all Settlement Class members who are deceased
as of the date of Preliminary Approval; (5) all persons who elect to exclude themselves from the
Settlement Class; and (6) the Court and staff to whom this case is assigned, and any member of the
Court’s or staff’s immediate family (collectively, the “Exclusions”).
The Settlement Class Members, subject to the Exclusions, whose accounts as of the date of
Preliminary Approval have an outstanding balance and are open Midland accounts.
The Counter-Defendants represent that, as of June 1, 2021: (i) the total number of Settlement
Class Members not subject to Exclusions is 57,552; (ii) acknowledge that these numbers are subject
to change over time, and that the foregoing numbers are provided for informational purposes only.
Midland will create a Class List within twenty eight (28) days after the entry of the Preliminary
Approval Order that will include updated numbers for the total number of Settlement Class Members,
as of the date of the entry of the Preliminary Approval Order. Administration of this settlement will
be based on the numbers of class members as of the date of the entry of the Preliminary Approval
Order as updated in the Class List, and not on the numbers provided in this paragraph.
In exchange for the Settlement Benefits, Class Members will release all claims, whether known
or unknown, against Midland and the other Releasees defined in the Settlement Agreement relating
to, arising out of, or concerning in any way Midland’s debt collection activity that were or could have
been asserted in this action against Midland or the Releasees. Ex. A, Settlement Agreement.
B. Notice.
Class Counsel has worked to ensure that notice is the best practicable, and reasonably
calculated to apprise interested parties of the action so that they may make a claim, state their
objection, or exclude themselves from the settlement. Notice will be issued by KCC Class Action
Services, LLC (also “KCC”) a nationally-recognized notice expert, and designed to meet constitutional
and due process requirements, and will be provided via a combination of a postcard mailing and
maintenance of a Settlement Website. The postcard notice will provide a link to the Settlement
Website, where Settlement Class Members can access a Long Form Notice describing the case and
settlement, the Settlement Agreement, and other important documents and court filings including the
Complaint, Amended Counterclaims, Preliminary Approval Order, and, when filed, the Final
Approval Order. See Ex. B — Declaration Of David Cates In Support of Joint Motion For
Preliminary Approval Of Class Action Settlement.
C. Credits for Accounts.
Class members who do not object or exclude themselves from the settlement will receive the
Credit without the need to submit any claims.
D. Exclusions.
If a Class Member wishes to opt-out of the Settlement, the Class Member must complete a
Request for Exclusion and submit it to the Settlement Administrator so that it is post-marked by the
Exclusion Deadline, which is approximately forty-five days after the Preliminary Approval Order. See
Ex. A, Settlement Agreement. In order to exercise the right to be excluded, a member of the
Settlement Class must timely send a written request for exclusion to the Settlement Administrator
providing
his/her name, address, and telephone number; the name and number of this case; a statement that
he/she wishes to be excluded from the Settlement Class; and a signature. Ex. A, Settlement
Agreement.
E. Objections.
If a Class Member wishes to object to the Settlement, the Class Member must notify the Parties
of their intention to do so by the Objection Deadline that will be set in the Court’s preliminary
approval order. Ex. A, Settlement Agreement. Any Class Member who intends to object must include
in any such objection: (a) his/her full name, address, and current telephone number; (b) the case names
and numbers of these Consolidated Actions; (c) the date range during which he/she was sued by
Counter-Defendant; (d) all grounds for the objection, with factual and legal support for the stated
objection, including any supporting materials; (e) the identification of any other objections he/she has
filed, or has had filed on his/her behalf, in any other class action cases in the last five years; and (f)
the objector’s signature. Ex. A, Settlement Agreement.
F. Service Award, Costs, and Fees.
As part of the Settlement Agreement, Midland agreed not to oppose a Service Award to each
of the Class Representatives in the amount of $5,000. Ex. A, Settlement Agreement. Midland also
agreed not to oppose an award of attorney fees not to exceed $950,000. Ex. A, Settlement Agreement.
The Counter-Plaintiffs will seek approval of attorney fees, as well as the Service Award to Counter-
Plaintiffs, in separate papers, to be filed no more than seven days before the Final Approval Hearing.
Ex. A, Settlement Agreement.
IV. FINDINGS AND HOLDINGS.
Having considered all matters submitted to it at the hearing on the Motion for Preliminary
Approval of Class Action Settlement and otherwise, including the complete record of this action, and
good cause appearing therefore, the Court hereby finds that the Settlement is fair, adequate and
reasonable, grants the Motion for Preliminary Approval of Class Action Settlement, and hereby finds
and concludes as follows:
1. The capitalized terms used in this Order shall have the same meaning as defined in the
Settlement Agreement except as otherwise expressly provided.
2. The Court preliminarily approves the Settlement Agreement as within the range of
possible final approval and as meriting submission to the Settlement Class for its consideration. The
Settlement was reached as a result of extensive arm’s length negotiations between the parties and
their counsel and involved a well-respected and experienced mediator. Extensive discovery was
conducted in this case prior to Settlement. Plaintiffs and their counsel had sufficient information to
evaluate the strengths and weaknesses of the case and to conduct informed settlement discussions.
3. For purposes of the Settlement only, the Court provisionally certifies the Settlement
Class, as defined herein above. The Court preliminarily finds and concludes, solely for purposes of
considering this settlement, that the requirements of 735 ILCS 5/2-801 and 735 ILCS 5/2-807(b) are
conditionally satisfied for certification of the Settlement Class for the reasons set forth in the
Joint/Unopposed Motion for Preliminary Approval of Class Action Settlement, as well as for the
reasons that follow.
4. The Court finds that: (1) the class is so numerous that joinder of all members is
impracticable; (2) there are questions of fact or law common to the class, which common questions
predominate over any questions affecting only individual members; (3) the representative parties will
fairly and adequately protect the interest of the class; and (4) the class action is an appropriate method
for the fair and efficient adjudication of the controversy.
5. The Settlement represents a fair and reasonable resolution of this dispute and is worthy
of notice to and consideration by the Settlement Class Members. The Settlement will provide financial
relief to participating Settlement Class Members as compensation for the Released Claims. The
Settlement in this case provides substantial material benefits to the Settlement Class. The amount of
the Credits and the benefits to the Settlement Class Members are particularly significant in light of the
inherent risks of ongoing litigation. If Counter-Defendants were to succeed on any of its defenses to
liability against the Counter-Plaintiffs’ individual claims, Settlement Class Members would receive
nothing. In addition to needing to defeat any defenses on the merits the Counter-Defendants would
raise, Counter-Plaintiffs would also be required to prevail on a class certification motion, which would
be highly contested and for which success would certainly not be guaranteed. In the absence of
settlement, it is certain that the expense, duration, and complexity of the resulting litigation would be
substantial. Not only would the Parties have to undergo significant motion practice before any trial on
the merits could even be contemplated, but evidence and witnesses from across the country would
have to be assembled as witnesses during any trial. Further, given the complexity of the issues and the
amount in controversy, the defeated party would likely appeal both any decision on the merits (at
summary judgment and/or trial), as well as any decision on class certification. As such, the immediate
and considerable relief provided to the Class under the Settlement Agreement weighs heavily in favor
of approval compared to the inherent risk and delay of a long and drawn out litigation, trial, and
appellate process.
6. This Court finds that the proposed Agreement is in the best interests of Settlement
Class Members because, between the Credits, including the zeroing of the balance of a significant
amount of the class member’s accounts, Settlement Class Members are provided with an opportunity
for immediate benefit instead of having to wait for the litigation and any related appeals to run their
course. Further, due to the defenses Counter-Defendants have indicated it would raise should the case
proceed though litigation—and the resources that Counter-Defendants could commit to defend and
litigate this matter through appeal—it is possible that the Settlement Class would receive no benefit
whatsoever in the absence of this Settlement. Counter-Plaintiffs’ counsel has extensive experience
litigating similar class action cases in federal and state courts, including other consumer protection
cases, a fact which gives further force to their support of the Settlement Agreement, and weighs in
favor of granting preliminary approval.
7. The Court hereby approves the Proposed Class Notice as set forth in the Motion for
Preliminary Approval of Class Settlement. The proposed notices in this case satisfy both the
requirements of Illinois Code of Civil Procedure Section 2-803 and due process. The Settlement
Agreement contemplates a direct-notice plan designed to reach as many potential Settlement Class
Members as possible. Notices will be mailed directly to every class member. Additionally, the
Settlement Administrator will establish a website containing the relevant court documents, and the
Long Form Notice, including information regarding how Settlement Class Members can exclude
themselves from the Settlement Agreement, and which will allow Class Members to easily submit their
claims electronically. The proposed Postcard Notice, Long-Form Notice, and Claim Form are
attached to the Settlement Agreement, and are hereby approved by the Court.
8. The Court hereby designates and approves KCC Class Action Services, LLC to serve
as the Settlement administrator.
9. The Court conditionally designates the law firms of Cates Mahoney, LLC, and
Donovan Rose Nester, P.C. as Class Counsel, and Shirley Darnell and Teresa Raney as Class
Representatives for Purposes of Settlement. The Court preliminarily finds that the Class
Representatives and Class Counsel fairly and adequately represent and protect the interests of the
absent Settlement Class Members.
10. The Court hereby approves the following schedule leading to the hearing on final
approval of the settlement:
a) Notice Issuance Date: Within 35 days of entry of the Preliminary Approval Order, the Settlement Administrator shall mail notice to the Settlement Class Members (the “Notice Date”).
b) Objection/Exclusion Deadline: Each Settlement Class Member shall have 45 days from the Notice Date to submit their Objection, or Request for Exclusion.
c) Submission of Papers in Support of Attorneys’ Fees and Expenses: Must be filed no later than 7 days prior to the date of the Final Approval Hearing.
d) Submission of Papers in Support of Final Approval of Settlement: Must be filed no later than 14 days prior to the date of the Final Approval Hearing.
f) Final Approval Hearing: Will occur approximately 100 days after entry of the Preliminary Approval Order, or such other date as ordered by the Court.
11. Pending the Court’s issuance of a Final Approval Order, the Court hereby stays all
proceedings in this case, other than those proceedings necessary to carry out or enforce the terms and
conditions of the Settlement Agreement.
12. The Court finds that the Notice plan is reasonably calculated to provide notice to the
Settlement Class of the pendency of the Action, certification of the Settlement Class, the terms of the
Settlement Agreement, and the Final Approval Hearing, and complies filly with the requirements of
due process, 735 ILCS 5/2-803, and any other applicable law. The Parties and the Settlement
Administrator shall comply with the notice plan as set forth in the Settlement Agreement.
13. No later than five (5) days before the Final Approval Hearing, the Settlement
Administrator shall prepare and deliver to the Parties a list of the names of the Persons who, pursuant
to the Class Notice, described herein, have excluded themselves from the Settlement Class in a valid
and timely manner. Counsel for the Class shall file that list with the Court. The Court retains
jurisdiction to resolve any disputed exclusion requests.
14. Any member of the Settlement Class who elects to be excluded shall not receive any
benefits of the Settlement, shall not be bound by the terms of the Settlement Agreement, and shall
have no standing to object to the Settlement or intervene in the Action. If the Settlement is granted
Final Approval, all Settlement Class Members who do not timely submit a valid request for exclusion
will be bound by the Final Approval Order and final judgment and enjoined from bringing or
prosecuting any action related to the Released Claims as defined in the Settlement Agreement.
15. Any Settlement Class Member who does not submit a valid and timely request for
exclusion may submit an objection to the Settlement Agreement. The written objection must satisfy
the requirement de4scribed in the Settlement Notice. An objection must be electronically filed or
postmarked no later than thirty (45) days from the Notice Date or it will be rejected.
16. Any Settlement Class Member shall have the right to appear and be heard at the Final
Approval Hearing, either personally or through an attorney retained at the Settlement Class Member’s
own expense. However, if the Settlement Class Member wishes to object to the Settlement at the Final
Approval Hearing, the Settlement Class Member must submit a written objection as set forth herein.
17. Defendant/Counter-Plaintiffs shall file their motion for final approval and class
representative payments no later than fourteen (14) days prior to the Final Approval Hearing and their
motion for an award of attorney’s fees, costs, and expenses no later than fourteen days prior to the
Final Approval Hearing. Those motions and all supporting documentation shall simultaneously be
posted to the Settlement Website.
18. This Order shall not be construed as, offered in evidence as, and/or deemed to be
evidence of a presumption, concession, or an admission by Plaintiff/Counter-Defendants of the truth
of any allegations or of any lability or fault of any kind.
19. The Court may, for good cause, extend any of the deadlines set forth in this Order
without further notice to the Settlement Class Members. The Final Approval Hearing may, from time
to time and without further notice to the Settlement Class Members, be continued by Order of the
Court.
Dated: Hon. Christopher T. Kolker Twentieth Judicial Circuit Court
Sean K. Cronin Brendan M. Nester DONOVAN ROSE NESTER, PC 15 North 1st Street Belleville, Illinois 62220 T: (618) 212-6500 [email protected] [email protected]
David Cates Chad Mooney CATES MAHONEY, LLC 216 West Pointe Drive, Suite A Swansea, Illinois 62226 T: (618) 277-3644 [email protected] [email protected]
Counsel for Teresa Raney and Shirley Darnell
Theodore W. Seitz (admitted pro have vice) Dykema Gossett PLLC Capitol View, 201 Townsend Street, Suite 900 Lansing, Michigan 48933 T: (517) 374-9100 [email protected]
Stephen C. Williams KUEHN, BEASLEY & YOUNG, P.C. 23 South 1st Street Belleville, IL 62220 T: (618)277-7260 [email protected]
Counsel for Midland Funding, LLC and Midland Credit Management, Inc.