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Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 

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* Pursuant to 5TH CIR. R. 47.5, the Court has determined that

this opinion should not be published and is not precedent except

under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

March 16, 2004

Charles R. Fulbruge III

Clerk

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

No. 03-60339

_____________________

CLAUDIA SMITH; ET AL.,

 Plaintiffs,

CLAUDIA SMITH; WILBERT WALKER,

 Plaintiffs - Appellees,

versus

REBECCA CRYSTIAN; MARTHA SHAFFER,

 Plaintiffs - Appellants,

versus

TOWER LOAN OF MISSISSIPPI INC.; AMERICAN FEDERATED INSURANCE

CO.; AMERICAN FEDERATED LIFE INSURANCE CO.; FIRST TOWER LOAN

INC.,

 Defendants - Appellees,

versus

CLIFTON GRAY; LARRY PICKENS; 693 MOVANT OBJECTORS,

 Appellants.

__________________________________________________________________

Appeal from the United States District Court

for the Southern District of Mississippi

USDC No. 1:98-CV-212-BrR

_________________________________________________________________

Before JOLLY, DUHÉ and STEWART, Circuit Judges.

PER CURIAM:*

 Case: 03-60428 Document: 0051525156 Page: 1 Date Filed: 03/16/2004
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This appeal challenges the district court’s class

certification under FED. R. CIV. P. 23, its approval of the parties’

settlement, its refusal to hold a third fairness hearing, and the

notice provided for that fairness hearing. For the following

reasons, we AFFIRM.

First, we address the district court’s certification of the

class and note the limited nature of our review:

[T]he district court maintains substantial

discretion in determining whether to certify a

class action, a decision we review only for

abuse. Implicit in this deferential standard

is a recognition of the essentially factual

basis of the certification inquiry and of the

district court’s inherent power to manage and

control pending litigation. Whether the

district court applied the correct legal

standard in reaching its decision on class

certification, however, is a legal question

that we review de novo.

Allison v. Citgo Petroleum Corp., 151 F.3d 402, 408 (5th Cir.

1998)(internal citations omitted); see also Jenkins v. Raymark

Industries, Inc., 782 F.2d 468, 471-72 (5th Cir. 1986) (stating

“[a]ssuming the court considers the Rule 23 criteria, we may

reverse its decision only for abuse of discretion”).

Against this deferential backdrop, it is clear that the

district court’s certification of a mandatory class under FED. R.

CIV. P. 23 was proper. First, the district court did not abuse its

discretion in finding that the class action prerequisites listed in

Rule 23(a) were satisfied. See James v. City of Dallas, Tex., 254

F.3d 551, 571 (5th Cir. 2001). 

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1The plaintiff’s second amended complaint requested the

following equitable relief:

(a) A Court determination that the defendant,

Tower, has violated the terms of that certain

Consent Decree with the Federal Trade

Commission, which required the defendant to

include credit life and credit disability

insurance charges as finance charges on the

Truth in Lending Statements furnished to its

borrowers who were charged for Credit Life and

Credit Disability Insurance.

(b) A Court determination of the rights of

plaintiffs and the Class and corresponding

rights of defendants.

(c) An order enjoining defendants from

engaging in further unfair, misleading and

deceptive practices regarding the manner in

which it procures and places credit life,

credit disability and property insurance on

the plaintiffs and Class Members, as well as

future borrowers.

(d) A Court Order requiring defendant to

refund to plaintiffs and all Class Members all

premiums and related charges made to defendant

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Second, the district did not abuse its discretion when it

found that the requirements listed in FED. R. CIV. P. 23(b)(1)(A)

were met. In the instant case, numerous claims have already been

filed or are expected to be filed against Tower and each has

requested or probably will request injunctive relief seeking to

modify Tower’s business practices. Moreover, the plaintiffs’

complaint in this case requested multiple equitable remedies. See

Allison, 151 F.3d at 421 n.16. (stating that a risk of inconsistent

adjudications is presented when the parties present claims for

injunctive or equitable relief).1 

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or its agents.

(e) A Court Order requiring the defendant to

cease and desist from violating Section 75-67-

121 of Mississippi Code by charging premiums

not in keeping with that usually and

customarily paid for like insurance.

(f) A Court Order requiring the defendant to

cease and desist from violating Section 85-5-

35 by engaging in Unfair Competition and

Practices, by making, publishing and

disseminating to the public false and

misleading statements concerning the

availability of loans, the costs of said

loans, and the collateral to be taken for said

loans.

(g) A Court Order requiring the defendants to

inform all borrowers of the ownership,

financial connection, and sharing of the

borrower’s premiums for all insurance charged

by the defendant, Tower.

(h) A Court order requiring the defendants to

terminate all “packing” of credit life, credit

disability and property insurance unless and

until the proposed plan is submitted to and

approved by the Court.

(i) A Court Order requiring the defendants to

allow property insurance claims to be filed

and adjusted without requiring the borrower to

obtain an appraisal.

(j) A Court Order establishing a fair method

by which the borrowers have the option to file

credit insurance claims directly with the

insurance company.

4

These facts support the district court’s conclusion that this

case presents an inherent risk that different courts could reach

“inconsistent or varying adjudications” which would “establish

incompatible standards of conduct” for Tower. FED. R. CIV. P.

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2Based upon our decision that the district court did not abuse

its discretion when it certified the class under 23(b)(1)(A), we

need not address the alleged error regarding the district court’s

alternative holding certifying the class under 23(b)(2).

3A district court shall not approve a settlement unless it is

fair, adequate, and reasonable. Parker, 667 F.2d at 1209. In

evaluating proposed settlements the district court should consider

5

23(b)(1)(A). For instance, the class sought “[a] Court Order

establishing a fair method by which the borrowers have the option

to file credit insurance claims directly with the insurance

company.” If similar relief is requested in another proceeding, a

risk of incompatible standards of conduct could present itself if

the two courts establish conflicting “fair methods” for filing

credit insurance claims. 

In sum, these considerations persuade us that the district

court did not abuse its discretion when it certified the class

under 23(b)(1)(A).2

Third, it is similarly clear that the district court did not

abuse its discretion when it approved the parties’ settlement. We

initially note the “strong judicial policy favoring the resolution

of disputes through settlement.” Parker v. Anderson, 667 F.2d

1204, 1209 (5th Cir. 1982). Therefore, a district court’s approval

of a settlement is given great deference and “will not be upset

unless the court clearly abused its discretion.” Id.

In the instant case, the district court applied the proper

standard and found that the settlement was fair and reasonable.

See id.3 The objectors strenuously contend that the settlement was

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six factors:

(1) whether the settlement was a product of

fraud or collusion; (2) the complexity,

expense, and likely duration of the

litigation; (3) the stage of the proceedings

and the amount of discovery completed; (4) the

factual and legal obstacles [to] prevailing on

the merits; (5) the possible range of recovery

and the certainty of damages; and (6) the

respective opinions of the participants,

including class counsel, class representative,

and the absent class members.

Id. (citing Pettway v. American Cast Iron Pipe Co., 576 F.2d 1157

(5th Cir. 1978)). Absent a showing of fraud or collusion, “the

most important factor is the probability of the plaintiffs’ success

on the merits.” Id.

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inadequate as evidenced by larger settlements and verdicts that

have been obtained by plaintiffs in other cases. However, these

cases are not relevant to the fairness of this settlement unless

they are shown to be similar to the plaintiffs’ claims against

Tower -- a showing which has not been made. Moreover, even if

these cases establish the appropriate benchmark, there is still no

clear abuse of discretion because a number of the claims against

Tower would probably be barred by the statute of limitations or

subject to arbitration if filed individually. Thus, even if the

monetary and compensatory relief provided by the settlement is not

comparable to the relief provided in other cases, when these awards

are discounted by the probability that the objectors will lose, the

district court did not clearly abuse its discretion in approving

the settlement. 

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Finally, we are not convinced that the district court erred

when it refused to hold a third fairness hearing given the failure

of the objectors to demonstrate before the district court any

substantial issues requiring such a hearing beyond those that had

been presented previously. See Cotton v. Hinton, 559 F.2d 1326,

1331 (5th Cir. 1977) (recognizing a district court’s right to

“limit its proceeding to whatever is necessary to aid it in

reaching an informed, just and reasoned decision”). Even assuming

an error, however, it was harmless given the failure of the

objectors to demonstrate prejudice to this court on appeal. See

FED. R. CIV. P. 61. Moreover, any allegation that the notice of the

second fairness hearing was inadequate is without merit. FED. R.

CIV. P. 23(e); 5 JAMES WM. MOORE ET AL., MOORE’S FEDERAL PRACTICE § 23.83

(3d ed. 2000).

In sum, we are convinced that the district court carefully

considered all of the pertinent objections that were made to the

settlement agreement. Indeed, the district court modified the

settlement in several respects, including narrowing the release to

ensure that certain claims were not barred by the settlement. It

is therefore our view that the district court committed no

reversible error in its thorough handling of this settlement and we

AFFIRM essentially for the reasons given in its able opinion.

AFFIRMED

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