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IN THE UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF FLORIDA

GAINESVILLE DIVISION

CONSOLIDATED PLAINTIFFS, et al

Plaintiffs,

v. CASE NO. 1:03-cv-01519-MP-AK

CONSOLIDATED DEFENDANTS, et al

Defendants.

___________________________/

O R D E R 

This matter is before the Court on Doc. 63, Unopposed Motion of Consolidated Plaintiffs

for Order Approving and Adopting Settlement, Dismissing the Consolidated Cases with

Prejudice, and Directing Entry of Final Judgment, and Incorporated Memorandum of Law by

Consolidated Plaintiffs. Plaintiffs have also filed a Motion to Exceed the Page Limitation, Doc.

65. The Court has granted that motion, Doc. 65, and considers Plaintiff's Doc. 63 in its entirety

of 28 pages. The Court denies Plaintiffs' Unopposed Motion for Order Approving and Adopting

Settlement and dismisses the settlement in whole. Plaintiffs have also filed a Motion for

Attorneys' Fees and Costs, Doc. 64. That Motion is denied as moot.

BACKGROUND

This multidistrict litigation arises from the following Consolidated Cases:

(a) Cathryn Smith, Margaret Jones, and Laura Sprague v. The Progressive Corporation, et al.,

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1

 The Settling Defendants are: The Progressive Corporation, Progressive Casualty

Insurance Company, Progressive Specialty Insurance Company, Progressive Classic Insurance

Company, Progressive Halcyon Insurance Company, Progressive Universal Insurance Company

of Illinois, Mountain Laurel Assurance Company, National Continental Insurance Company,

Progressive Hawaii Insurance Corporation, Progressive American Insurance Company,

Progressive Bayside Insurance Company, Progressive Mountain Insurance Company, Progressive

Northeastern Insurance Company, United Financial Casualty Company, Progressive Gulf

Insurance Company, Progressive Home Insurance Company, Specialty Risk Insurance Company,

Progressive Max Insurance Company, Progressive Consumers Insurance Company, Progressive

West Insurance Company, Progressive Northern Insurance Company, Progressive Northwestern

Insurance Company, Progressive Preferred Insurance Company, Progressive Paloverde Insurance

Company, Progressive Express Insurance Company, Progressive Premier Insurance Company of

Illinois, Progressive Southeastern Insurance Company, Progressive County Mutual Insurance

Company, Progressive Michigan Insurance Company, Progressive Marathon Insurance

Company, and Progressive Security Insurance Company (also collectively referred to as

“Progressive”).

Case No: 1:03-cv-01519-MP-AK

Case No. 1:00-CV-210-MMP (N.D. Fla.,Gainesville Division);

(b) Sharele Dikeman and Michael Whitman v. The Progressive Corporation, Case No. CV

01-1465 JE (D. Oregon, Portland Division); 

(c) Paul K. Cooley v. Progressive Insurance Co., Case No. CV 02 2384-S (W.D. Louisiana,

Shreveport Division); 

(d) Timothy James Carlson v. Progressive Insurance Co., Case No. 02- CV-2552 (N.D. Texas,

Dallas Division); and 

(e) Gloria Warren v. Progressive Casualty Ins. Co., Case No. 3:03-1176 (N.D. Ala.). 

Plaintiffs in the Consolidated Cases alleged, among other things, that the Settling

Defendants1 violated the Fair Credit Reporting Act, 15 U.S.C. §§ 1681, et seq. (“FCRA”) by not

providing proper notice of adverse action to Policyholders and Quotation Recipients that were

denied insurance coverage, had insurance coverage cancelled or were charged or quoted higher

premiums based in whole or in part on information contained in their consumer reports. 

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2

 The majority of this discovery was conducted by counsel prior to the consolidation of

these cases.

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Plaintiffs sought compensatory damages for negligent violations of the FCRA, punitive damages,

and statutory damages for willful violations of the FCRA, and injunctive and declaratory relief. 

By Orders dated April 15 and July 3, 2003, the Judicial Panel on Multidistrict Litigation

transferred the consolidated cases to this Court for coordinated and consolidated pre-trial

proceedings pursuant to 28 U.S.C. § 1407. (Doc. 1 & 19).

The parties, through their respective counsel, conducted intensive investigation and more

than four years of litigation of this matter, including extensive document discovery and

depositions of fact and expert witnesses.2 Class Counsel, on behalf of the named Plaintiffs and

Class Members, contend that they have made a thorough investigation of the facts and

circumstances underlying the issues raised in this case, the applicable law and the relative

strengths of their claims. Class Counsel has reached the conclusion that it was desirable and in

the best interests of the Class Members that the lawsuit be settled on the terms and conditions set

forth in the Settlement Agreement, attached to this Order as Exhibit 1.

The settlement provides that (1) Progressive either has or will adopt new procedures for

giving notice of adverse action, which will be subject to change by Progressive so long as they

are in accordance with state and federal law; (2) each Class Member is entitled to receive one

free credit report so long as they filed a claim form prior to November 5, 2004, or 14 days after

Progressive emails instructions for filing an electronic claim form; (3) the opportunity to engage

in the credit report correction process that is provided by law in accordance with 15 U.S.C. §

1681i; and (4) for Class Members who are current policyholders who find a current error in their

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credit report, they may petition Progressive to review their file and have Progressive determine

on the basis of its own policies whether the Class Member would have been entitled to a better

rate, and if so, Progressive will provide that rate adjustment. In exchange for these benefits,

Class Members agree to dismiss and release Progressive from all claims that previously existed,

exist now, or will arise hereafter, "arising out of Progressive's obtaining and using any Consumer

Report in its underwriting and/or rating of Policies, or any state laws or regulations that impose

obligations on users of Consumer Reports, like Progressive, that are similar, or related to, the

obligations imposed on Progressive under the FCRA." (Exhibit 1). For their efforts in attaining

this settlement, Class Counsel has agreed to not seek more that $4,500,000 and Defendants have

agreed to not contest that fee request.

Following this Court's Order preliminarily approving the settlement and certifying the

Class for settlement purposes, Doc. 54, Defendant sent notice of the settlement to more than

7,000,000 current and former progressive clients that were Class Members and known

individuals who were denied insurance on the basis of a credit rating. Additionally, Defendants

published notice in accordance with this Court's Order. 

Plaintiffs and their respective counsel have agreed to the Settlement Agreement based on

their belief concerning: (i) the substantial benefits to Plaintiffs and the Class under the terms of

the Settlement Agreement; (ii) the uncertainty of being able to prove all of the allegations raised

in the Consolidated Cases, and the uncertainty of being able to overcome Progressive’s legal and

factual defenses thereto; (iii) the attendant uncertainties and risks of litigation, especially in

complex actions such as these, as well as the difficulties and delays inherent in such litigation;

(iv) the uncertainty inherent in various theories of damages, even if Plaintiffs could establish

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Progressive’s liability; and (v) the desirability of consummating the Settlement Agreement

promptly, in order to provide effective relief to Plaintiffs and the Class as soon as possible. 

The Class Representatives and their counsel believe that the settlement is fair, reasonable

and adequate because it provides substantial benefits to and is in the best interests of the Class. 

Class Counsel do, however, stress their confidence in the merits of their case in their motion for

approval of the settlement.

The Settling Defendants have expressly denied the Plaintiffs’ allegations and have

asserted numerous defenses to Plaintiffs’ claims. The Settling Defendants do not admit liability

to any Class Member and do not admit liability in any case for any of Plaintiffs’ allegations.

Further, Settling Defendants deny any wrongful conduct toward Plaintiffs or the Class, and assert

that the alleged wrongful actions were lawful in all respects. 

Progressive and its counsel have agreed to the Settlement Agreement based upon: (i)

Progressive’s desire to address any dissatisfaction that its Current Policyholders, Former

Policyholders and Quotation Recipients may have with respect to disclosures allegedly required

to be made by Progressive pursuant to the FCRA by providing to them benefits fairly, adequately

and reasonably to compensate them for any claims they may have (without acknowledging the

validity of any such claims) as set forth in the Settlement Agreement; and (ii) the desirability of

avoiding the further expense and disruption of its business due to the pendency of the

Consolidated Cases and putting to rest similar allegations that could be raised against Progressive

in other time-consuming and expensive litigation. 

Several Objectors filed objections with this Court. (Doc. 76). The primary objections

were: (1) the notice provided was constitutionally defective due to its failure to provide

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3

 The Court does not address this issue. Only one objector, Dawn Wheelihan, raised this

concern, and due to the Court's rejection of the settlement on other grounds, it is unnecessary to

address this issue.

4

 This group could include individuals who are former policyholders and individuals who

have never held a Progressive policy due to Progressive declining coverage based upon a credit

report.

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information regarding the right to object and the deadlines and procedure for doing so; (2) the

notice was inadequate due to its failure to provide sufficient information concerning the

valuation of the settlement; (3) the relief offered by the settlement for the Plaintiffs is inadequate

and even illusory; (4) the release granted in the settlement is overly broad;3 (5) the Class has an

internal conflict of interest between the current policyholders and those individuals who are not

current policyholders;4this conflict, the objectors argue, is demonstrated by the preferential

treatment granted to current policy holders; (6) the settlement provides no additional

compensation for those Class Members with multiple claims; and (7) the attorney's fees agreed

upon by the Class Counsel and the Defendants is excessive in light of the recovery for Plaintiffs.

This Court held a hearing on the final settlement approval on Friday, October 29, 2004. 

Attorney's for the Class Representatives, Defendants and the Objectors each had an opportunity

to be heard.

DISCUSSION

A district court may approve any settlement only after a finding that the settlement is

"fair, reasonable, and adequate." Fed. R. Civ. P. 23(e); Bennett v. Behring Corp., 737 F.2d 982,

986 (11th Cir. 1984). "Determining the fairness of the settlement is left to the sound discretion

of the trial court and [will not be overturned] absent a clear showing of abuse of that discretion." 

Bennett, 737 F.2d at 986. 

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When reviewing a settlement, the Court should consider (1) the likelihood of success at

trial and the potential recovery; (2) the complexity, expense and duration of the litigation; (3) the

terms of the settlement; (4) the notice procedures provided to Class Members and their

opportunity to be heard; (5) the judgment of Class Counsel; (6) the substance and quantity of

objections to the settlement; and (7) the stage of the proceedings at which settlement was

achieved. See Warren v. City of Tampa, 693 F.Supp. 1051, 1055 (M.D. Fla. 1988). 

The objections primarily reach considerations (3), (4) & (6). Therefore, the Court will

initially address the other factors. 

Regarding the likelihood of success on the merits, Class Counsel represent that both

Plaintiffs and Defendants are very confident in the merits of their argument. (Doc. 63). 

Additionally, both parties had filed motions for summary judgment in the original case before

this Court, Smith, et al v. The Progressive, et al., 1:00cv210 MMP (N.D. Fla. 2000). Class

Counsel has reminded this Court that several issues are highly contested by the parties and the

outcome at trial is uncertain. 

The District Court's role, however, is not to try the merits of the case in evaluating a

settlement. Cotton v. Hinton, 559 F.2d 1326, 1330 (5th Cir. 1977). While litigation of this

matter has been pending in this Court for four years, the consolidated cases have not been before

this Court as long. Neither party has filed a motion for summary judgment since these matters

have been consolidated. The Court agrees with Class Counsel that at this point, several issues

are still contested and that the outcome of the litigation is quite uncertain.

The Court also agrees with Class Counsel that the nature of this litigation is both complex

and expensive. Further, Class Counsel has an extensive background in consumer class action

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5

 The notice directed Class Members to www.fcraNoticeSettlement.com for further

information.

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lawsuits. The Court acknowledges Class Counsel's opinion that the settlement is fair, reasonable,

and adequate. Finally, the stage of the proceeding does not weigh either in favor of adopting the

settlement, or denying it. While one of the consolidated cases has been before this Court for four

years, the entirety of the consolidated cases have been before this Court for only one and a half

years. While that is not an insignificant amount of time, the Court notes that neither party has

renewed any motion for summary judgment since the consolidation of these cases. 

(A) Sufficiency of the Notice to Class Members Concerning the Settlement and

Their Rights

The Objectors raise two significant objections to the notice provided to Class Members. 

The first concern is that the notice does not include any information regarding the right to object,

the process for objecting, or deadlines to file objections. The second concern relates to the

amount of information contained in the notice and its ability to allow Class Members to make an

informed decision. 

As to the notice's failure to provide information regarding filing objections, the Objectors

point to the fact that nowhere in the notice, nor in the frequently asked questions section of the

website created for purposes of this settlement,5 was there any information regarding objecting to

the settlement. In order to find information regarding objecting, Class Members had to open the

court documents section of the website and review this Court's Second Amended Order, Doc. 54,

which included the deadlines for filing any objections. Objectors also point out that the Court

specifically ordered that the notice explain procedures for objecting to the Settlement. Id.

Clearly, this was not done.

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6

 Doc. 81 is Doc. 137 as originally incorrectly filed in Smith 1:00cv210 MMP.

7

 It is possible that no objections were filed because the motion was not filed in the

multidistrict litigation docket, but under one of the consolidated cases, Smith.

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Plaintiffs' Motion for Preliminary Approval, Doc .816 p. 15 , specifically states that the

notice includes "a statement of the deadlines for filing objections to the settlement . . ." This is

simply not true. This Court preliminarily approved the settlement and the proposed notice

without recognizing that despite Class Counsel's contention, the notice did not contain an

explanation of the objection process or deadlines for objecting. The Defendants did not contest

the Plaintiffs motion and no objections to that motion were filed.7 The notice went out without

containing any information regarding the right to file an objection to the settlement.

Class Counsel contend that the notice was sufficient because it directed Class Members to

the settlement website wherein individuals who searched deep enough could link to court

documents and if they chose to read them all would find on page 12 of this Court's Second

Amended Order Preliminarily Approving Settlement, Doc. 54, the deadlines, rights, and

procedure for objecting. Alternatively, if an individual chose to follow the maze of links to the

Class Counsel's website, that individual could find an additional frequently asked questions area

that did have information concerning deadlines for objecting to the settlement. Class Counsel

contend that this is sufficient notice.

Class Counsel also make the general argument regarding the Objectors that most of the

Class Members who objected do not fully understand why they are objecting nor how their rights

are truly effected. This argument is disingenuous. Class Counsel argue first that the settlement

is fair in part due to the complex nature of the litigation. Second Class Counsel contend that

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directions concerning filing objections were readily available, but only by reading through all

prior court orders related to the settlement or following a maze of websites. Even then, the right

to object is not explained. Despite the complexity of the case and the need to peruse through

court orders to determine their rights, Class Counsel then claim that because some Class

Members who are objecting are not fully aware of their rights, it demonstrates that the Objectors

lawyers are attempting to drum up their own fees, rather that demonstrating that the notice and

information provided was in fact confusing and did not in plain language explain the available

rights to Class Members. 

Finally, Class Counsel also claim that if Class Members had read the settlement which

was provided on the website, they could have been apprised of their right to object. Similar to

Class Counsel's contention in its motion for preliminary approval, Doc. 81, this is simply untrue. 

The only mention of objections in the entire settlement is contained in Section III, wherein it is

noted that Class Counsel shall file its motion for preliminary approval which would include "the

setting of deadlines for objections and opt out requests." (Exhibit 1). 

The Supreme Court has stated that when rights of an absent plaintiff are being litigated,

the notice provided must describe the action and the plaintiff's rights in that action. See Phillips

Petroleum Co. v. Shutts, 472 U.S. 797, 812 (1985). "An elementary and fundamental

requirement of due process in any proceeding which is to be accorded finality is notice

reasonably calculated, under all the circumstances, to apprise interested parties of the pendency

of the action and afford them an opportunity to present their objections." Mullane v. Central

Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). Due process requires that the right of

absent plaintiffs be adequately represented. In re Jiffy Lube Securities Litigation, 927 F.2d 155,

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158 (4th Cir. 1999).

In this case, Class Counsel allege that if Class Members wanted to find out how to object

they could have found it by searching. This misses the point of the necessity to inform the absent

Class Members of that right. Without being told of the right to object, it is difficult to imagine

that Class Members could conceivably track down the method and deadlines for objecting. It is a

useless right if the Class Members, whom Class Counsel represent, are unaware of such a right. 

The notice provided in the instant case completely failed to adequately apprise the absent Class

Members of their right to object.

Further, neither the notice, nor any information readily available on the settlement

website provide a valuation of the settlement benefits for the Class Members nor an explanation

of basis for the attorneys' fees requested. This failure, coupled with the failure to provide

information regarding objecting, further complicates the analysis regarding the fairness of the

settlement. As noted by the Objectors, the Middle District of Florida, and Class Counsel in their

Motion for final approval, the number and type of objections filed is an indication of the fairness

of the settlement. See Warren, 693 F.Supp. at 1055.

The Objectors note that because the objection process is so critical to the fairness

evaluation, the failure to provide adequate guidance regarding objections is fatal. This failure

coupled with the inadequate description of the settlement value and attorneys' fees provides little

for Class Members to evaluate and decide whether to object even if they were aware of such a

right. 

Stunningly, Class Counsel do not back down from this argument nor suggest that the

number of objections is an insignificant factor. Rather, Class Counsel point to the fact that there

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were only 16 objectors as a sign of resounding support among the other 10,000,000 Class

Members. Class Counsel point out that only a minuscule amount of people objected when

compared to the size of entire Class, demonstrating the support the other members had for the

settlement. 

Class Counsel unfortunately miss the irony of arguing both that the notice's failure to

mention objections is an insignificant problem and then arguing that the lack of objections is a

significant factor supporting approval of the settlement. This Court does recognize the

contradiction and notes that both of these factors weigh heavily in favor of rejecting the

settlement.

(B) Sufficiency of the Benefits Provided to Class Members in the Settlement

The remainder of the objections address the third factor cited in Warren, the terms of the

settlement. Id. This factor is similar to two factors that the Eleventh Circuit stated should be

considered in Bennett, (1) the range of possible recovery, and (2) the point on or below that range

where the settlement is fair, reasonable and adequate. 737 F.2d at 986. The proposed settlement

falls so far below in this regard that it would likely be rejected regardless of the problems with

notice. 

The Objectors raise several concerns regarding the benefits provided to Class Members. 

The objections as to each specific benefit offered in the settlement are addressed in detail below. 

It is necessary to first look at the range of possible recovery for Class Members' claims. The

Objectors note that FCRA allows for actual, statutory and punitive damages. 15 U.S.C. §§ 1681n

& 1681o. Actual damages can include both financial loss and compensatory relief for mental

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8

 The Court is not giving its opinion on the likelihood of recovery of any specific form of

damages. The Court is only addressing the type of relief that is available.

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anguish and embarrassment as a result of the adverse action.8 See Pinner v. Schmidt, 805 F.2d

1258 (5th Cir. 1986); Bryant v. TRW, Inc., 689 F.2d 72 (6th Cir. 1982); Millstone v. O'Hanlon

Reports, Inc., 528 F.2d 829 (8th Cir. 1976). In order to collect statutory or punitive damages,

Plaintiffs must prove a willful violation of the FCRA. 15 U.S.C. 1681n. If a willful violation is

proven, statutory damages are available from $100 to $1,000. Id. 

Class Counsel and Defendants stress that damages are only available if Plaintiffs can

prove Defendants willfully violated the FCRA. They each point out that this was a highly

litigated issue. This Court, as noted above, is not determining the case on its merits at this point. 

Essential to the review of the settlement is the fact that the Plaintiffs have sought such statutory

and punitive damages for willful violations. Further, Class Counsel has not withdrawn it claim

for such damages. Therefore, these damages are part of the range of possible recovery that

should be considered by this Court. Additionally, Class Counsel's and Defendants' emphasis on

statutory and punitive damages ignores the fact that actual damages are provided for under FCRA

Section 1681o. These damages, while difficult to foresee at this stage, must be included in the

possible range of recovery for Class Members. 

Class Counsel present the argument that this settlement essentially provides for Class

Members everything they would have been entitled to if Progressive had originally followed the

FCRA guidelines. Class Counsel claim this settlement puts the Class Members in as close to, if

not the same position, they would have been in had Defendants complied at the outset. For

instance, Class Members would have (1) received notice of the adverse action, (2) notice of the

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consumer report that was the basis of that report, (3) the right to a copy of that report, and (4) the

right to correct that report. 

Class Counsel note that it is impossible to get historical credit reports, so therefore the

current report is the best substitute. Within this regard, Class Counsel point out that the purpose

of the settlement is to finally fulfill the requirements of the FCRA for the class members. 

Additionally, Class Counsel now argue that the purpose of these lawsuits is to get what is

deserved under the FCRA and that the settlement is a success in that regard.

Class Counsel and Defendants seem to overlook two key points. First, as noted by the

inability to locate historical credit reports, the period when compliance was necessary is in the

past. Now, Class Members who were denied their rights under the FCRA would have a right to

actual damages and possibly statutory or punitive damages. If Defendants violated the FCRA,

this right to damages cannot be erased. Additionally, Plaintiffs in these consolidated cases did in

fact sue for damages. When considering the range of possible recovery, the Court must consider

the possibility that successful Plaintiffs may be able to collect damages.

The second flaw in Class Counsel's reasoning is that it suggests the Class Members

received notice of an adverse action and the credit reporting company that was the basis of that

adverse action through this lawsuit's settlement notice. This is simply not true. Class Members

that received the settlement notice only received notice that they may have had adverse action

taken against them, not that it actually took place, nor information concerning when or for which

transaction it took place. 

In addition to this settlement not truly informing Class Members of whether an adverse

action was taken, nor providing the report which was the basis of that action, the third and fourth

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items that Class Counsel claim this settlement restores for class members, the right to a free copy

of the Class Members' credit report and the right to correct any errors, are either completely

illusory or of less value than Class Counsel proffers. These aspects are discussed in greater detail

below, wherein the Court analyzes the specific benefits for Class Members provided by this

settlement.

The other objection which addresses the settlement in its entirety is that the settlement

does not provide any additional compensation for those Class Members with more than one

claim. Class Counsel and Defendants stressed during the hearing that Defendants only utilize

credit reports during the initial policy review phase and that therefore, Class Members could have

only been wronged under the FCRA once, so that this one time correction essentially rectifies the

problem. This argument ignores that Sub-Class B in the settlement consists of those people who

were denied coverage. It is very conceivable that those same individuals re-applied over the past

seven years and were either denied coverage again or were quoted higher rates due to a credit

report. Nor does that argument recognize that of the 10,000,000 Class Members some may have

received a higher rate, accepted Progressive insurance, later switched to another insurance

company, only to re-apply to Progressive. These scenarios could result in multiple violations of

the FCRA. Therefore, Class Counsel and Defendants have not adequately explained the lack of

compensation for those individuals with multiple claims.

(i) New Progressive Policies Concerning Adverse Action Notice

The first benefit offered to Class Members is that Progressive has agreed to change its

policies concerning its adverse action notice. Specifically, "Progressive further agrees that it

shall provide an Adverse Action Notice to all New Policyholders who would have received a

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lower premium rate but for information contained in a Consumer Report." (Exhibit 1). 

Unfortunately, as pointed out by Class Counsel and Defendants, Progressive only utilizes credit

reports when it first issues new policies. Therefore, for all existing policyholders, according to

Defendants, this will offer no value at all to the Class. Further, while this may assist future

Progressive clients, it does not remedy any past wrong if Defendants did in fact violate the

FCRA. 

There are other reasons that this "benefit" offers little to no value. First, it is unclear

whether Progressive has already implemented such a policy change. If Progressive has instituted

such a change, it cannot be argued that the change that already exists is being offered in

consideration for this settlement. In fact, it would seem to be to Progressive's benefit to have

already changed its policy in order to avoid a willful violation claim in the future, now that this

lawsuit may have put Progressive on notice that its policies might not comply with the FCRA. 

Further, as noted above, one of Progressive's reasons for policy change is to appease its

customers. This rational would exist independently of this settlement. 

What is most important, however, is that this "benefit" is illusory in the most basic sense.

Progressive has not truly agreed to take any action. The settlement states, "It is agreed and

understood between the parties, that the New Adverse Action Procedures used by Progressive are

subject to change from time to time, provided that, any changes to the New Adverse Action

Procedures comply with applicable state and federal law." (Exhibit 1). Progressive is already

obligated to have policies that comply with the law. Also, a promise to change a policy for as

long as the promisor sees fit, is no promise at all. There are no safeguards built into this promise. 

Any future change in these policies does not have to be reviewed by Class Counsel, this Court or

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an independent third party. The settlement does not place any additional limits beyond those

already in place in state and federal law, which would limit Progressive in its future alteration of

its "New Adverse Action Procedures."

Class Counsel estimate a value for Progressive's policy change of $9,000,000. The Court

cannot find a reasonable basis for placing such an exorbitant value on Progressive's promise to

follow the existing law in the manner it sees fit.

(ii) Free Credit Report

 The second benefit offered to the Class Members is the right to a free credit report

from Experian Information Solutions, Inc. Class Counsel proffer that the fair market value of a

credit report is $9 and that therefore, the value of this benefit to the entire Class is $90,000,000. 

While the free credit report is something that does have value, the Court does not accept Class

Counsel's representation that the value is $9 per Class Member and therefore a total benefit to the

Class of $90,000,000.

Initially, the Objectors note that recently enacted laws under the Fair and Accurate Credit

Transactions Act ("Fact Act") entitle all consumers to one free credit report a year from each of

the three major credit reporting agencies. Class Counsel acknowledges this law change and the

right to such a free credit report. Additionally, the Objectors note, and Class Counsel does not

deny, that prior to that the enactment of the FACT Act, consumers were able to gain free credit

reports online via websites such as www.freecreditreport.com. 

Class Counsel responds by noting that the FACT Act has not become effective

throughout the entire country and will not be fully effective until later this year. Further, the free

online credit reports require consumers to register for a pay service that includes a free period

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9

 The FACT Act will be fully effective nationwide as of September 1, 2005.

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and then cancel that service or they will be charged. Finally, Class Counsel point out that

consumers can benefit from reviewing their credit reports on multiple occasions throughout the

year. 

All of Class Counsel's arguments in this regard are well taken. However, they do not

completely rebut the argument that the value to the Class of a free credit report is not as large as

Class Counsel and Defendants contend. While the FACT Act is not fully effective,9 many of the

Class Members do already have the right to the free credit report granted by that act. Other Class

Members most certainly have in fact and will in the future take advantage of the free online

credit reports without difficulty in cancelling any temporary service. Further, while it may be

advantageous in some instances for individuals to check their credit reports multiple time

throughout the year, the value of such a benefit could have decreasing value to the Class

Members. 

The other flaw in the value attached to the free credit report comes from the limitation

placed upon the Class Members in receiving such a report. For those Class Members that have

already filed a claim, they will received their free report within 60 days of the approval of the

settlement. For those individuals that have not yet filed a claim, Progressive will issue

instructions on how to file a claim electronically and the Class Members will have 14 days to

electronically file a claim and request a free credit report. Essentially, if this settlement were

approved, Class Members would receive their credit reports in about one to two months. There

is no option to receive the report at any other time throughout the year. 

This aspect also devalues the credit report. It is entirely conceivable that many Class

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Case No: 1:03-cv-01519-MP-AK

Members would have very recently, in this new year or at the end of last year, already received a

credit report from some source, if not one from each major reporting agency. While there is a

value to receiving multiple reports, that value is diminished when the Class Members are

handcuffed into receiving the report on Progressive's timetable, regardless of whether the Class

Members have recently received a credit report recently or not. Part of the $9 value of the credit

reports that can be purchased is the value of attaining the report when you need it. A report that

is merely redundant or is provided at an otherwise inconvenient time, does not carry the same

value.

While the free credit report is a true benefit to the Class Members, the Court does not

accept Class Counsel's valuation. The value to the Class is considerably less than $90,000,000.

(iii) The Right and Opportunity to Engage in the Credit Report Correction

Process

The third "benefit" conferred on the Class Members is the right, following their receipt of

the free credit report, to take advantage of the credit correction process specifically outlined in

FCRA section 1681i. This provides no benefit to the Class at all. The settlement states that

Experian Information Solutions, Inc. will follow the legal obligations it already has in providing

credit correction. Listing this as a benefit to Class Members is simply adding filler. Such a

reassurance of existing rights is not a benefit and is irrelevant. This third "benefit" adds no value

to the settlement.

(iv) Potential Premium Adjustment for Current Policyholders

The final benefit offered by the settlement is that those Class Members who are current

policyholders that find an error on their free credit report and have that error corrected, may be

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Case No: 1:03-cv-01519-MP-AK

entitled to a premium adjustment on their current policies. No premium increases will be made

on the basis of the correction process. 

Objectors raise several concerns regarding this benefit to the Class. First, the Objectors

point out that valuation of this benefit is very difficult because it is impossible to estimate how

many Class Members will be able to take advantage of this option or the amount that will

actually be refunded for those that do qualify. Second, Progressive's obligations under this

benefit are unclear, which decreases the value to the Class Members. Finally, the Objectors point

out that this benefit creates an intra-Class conflict between current policyholders and those Class

Members that are not current policyholders. 

Class Counsel recognize the incredible difficulty determining the value of an

unforeseeable number of rate adjustments for unforeseeable amounts. For this reason, Class

Counsel does not place any value on this benefit. Class Counsel does point out though that this

benefit goes beyond any remedies available under the FCRA, as policy adjustments were not

contemplated under that act. 

The Objectors are correct that even if this benefit did confer a calculable value, that value

is suspect because of the procedures for realizing the rate reduction. This benefit suffers from

similar shortcomings as Progressive's agreement to institute new policies. The Class Member

who corrects an error and brings the correction to Progressive only has the right to take part in a

procedure to determine whether or not a rate reduction is available. Ultimately, it is Progressive

that will determine if a better rate would have been quoted absent the error. The mechanism for

determining the adjustment is wholly under Progressive's control. Further, there is no oversight

of this benefit. Progressive is not obligated to publish the basis for its decisions prior to making

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10 While not addressed in the objections, the Court notes that it is possible for Class

Members to be members of both sub-classes.

Case No: 1:03-cv-01519-MP-AK

these determinations. Neither Class Counsel, this Court, nor a third party has been assigned to

oversee the rate reduction payout. 

Defendants responded in open court that Progressive uses a preset formula mechanism for

determining rates and that therefore, there is truly no discretion involved. While Progressive may

use such a formula, it has not provided that formula, nor made assurances that the formula will

not be changed in the interim. Also, any formula Progressive uses must involve certain variables

that are adjusted at Progressive's discretion. These adjustments would alter the amount of rate

reductions available. There is no oversight provided for such adjustments nor an appeal process

established for Class Members that are told they do not qualify for the rate reduction. A Class

Member that finds a credit report error, yet is told by Progressive that he/she would not have

been offered a better rate, has no recourse. All of these factors taken together greatly diminish

the significance of this benefit.

The other primary objection to this benefit is that it unfairly discriminates between Class

Members. The Class is subdivided by those individuals that received no obligation quotes and

those individuals who either have or had policies with Progressive.10 Yet, this benefit is only

conferred on current policyholders. There is no subclass of current policyholders only. 

Objectors point out that this creates a conflict among the Class and possibly between the Class

Representatives, Class Counsel and the absent Class Members. Class Counsel does not provide

any articulated basis for this discrimination. 

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(v) Attorneys' Fees

The final objection raised is that the attorneys' fees agreed to by both the Class Counsel

and the Defendants are too great in relation to the value of the settlement. Some Objectors even

raised the issue of a conflict of interest and claimed that the $4,500,000 attorneys' fees were

evidence of collusion to the detriment of the absent Class Members. This Court does not need to

reach this issue, however, because the settlement is rejected and the attorneys' fees provision is a

part of that settlement.

CONCLUSION

The proposed settlement essentially confers upon the Class Members only the benefit of a

free credit report that must be collected within, at most, two months following approval of the

settlement. The other benefits provided to the Class are either completely illusory or negligible

when the process of collecting those benefits is considered. In consideration for these meager

benefits, Class Members must agree to fully release Defendants from any and all past, current or

future claims, concerning Defendants use of credit reports. For their efforts in attaining these

benefits, Class Counsel will receive $4,500,000. This Court finds that this settlement is not fair,

reasonable, and adequate.

ORDERED AND ADJUDGED:

1. Plaintiffs' Motion to Exceed Page Limitation, Doc. 65, is GRANTED.

2. Plaintiffs' Motion to Approve and Adopt the Settlement, Doc. 63, is DENIED. 

The settlement is rejected.

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3. Plaintiffs' Motion for Attorneys' Fees and Costs, Doc. 64, is DENIED as moot.

DONE AND ORDERED this 23rd day of February, 2005.

 s/Maurice M. Paul 

 Maurice M. Paul, Senior District Judge

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