Opinion ID: 3015339
Heading Depth: 2
Heading Rank: 4

Heading: The Opt-Out Solicitations

Text: In September 2003, after the class notice was mailed, several law firms mailed letters to members of the plaintiff class urging them to contact the law firms regarding the above settlement, and in some cases urging them to opt out of the class. These law firms and the members of the class whom they solicited and who opted-out are the Appellants before us (“Appellants”). The Appellant law firms are as follows: Walters Bender, Strohbehn & Vaughan (“Walters”) , Nos. 03-4221, 03-4504, 03-4732, 04-1002 - Walters has represented two plaintiff classes in class action suits related to the Shumway scheme. In June 2001, it filed a class action suit in Jackson County, Missouri against CBNV and assignees, alleging violation of the Missouri Second Mortgage Loans Act (“MSMLA”), Mo. Rev. Stat. §§ 408.231, et seq. The Circuit Court of Jackson County granted defendants’ motion to dismiss for failure to state a claim on the ground that their MSMLA claim failed as a matter of law. The Missouri Court of Appeals affirmed. Avila v. Community Bank of N. Va., 143 S.N.3d 1 (Mo. Ct. App. 2003). 12 On April 3, 2003, Walters filed a putative class action in Clay County, Missouri against GNBT for violations of the MSMLA, asserting the same claim that it had asserted against CBNV. After GNBT removed that case to the United States District Court for the Western District of Missouri, that court held that plaintiffs’ MSMLA claims are preempted under Sections 85 and 86 of the National Banking Act. See Phipps v. GNBT, No. 03-420-CV-W-GAF, 2003 WL 22149646 (W.D. Mo. Sept. 17, 2003). The Eighth Circuit affirmed. Phipps v. FDIC, __ F.3d __, 2005 WL 17736118 (8th Cir. 2005). On September 18 and 19, 2003, the Walters firm mailed solicitation letters to borrowers in Missouri and Illinois urging them to object to the fairness of the settlement in the present action but did not urge them to opt out. In an affidavit to the District Court, Attorney J. Michael Vaughan of the Walters firm declared that prior to the September 18, 2003 letter, Walters was asked to advise and represent several Missouri borrowers (aside from those in either of the two Missouri class actions) who had obtained loans from GNBT. According to Walters, a total of nineteen Missouri borrowers filed opt-outs. Following the September 18 letter, thirty-five Missouri borrowers and eightynine Illinois borrowers filed objections to the settlement with the District Court. Attorney Franklin Nix and The Sharbrough Law Firm (“Nix”), Nos. 03-4725, 03-4319, 03-4862, 04-1039 - On September 17, 2003, Attorney Nix mailed a solicitation letter to hundreds of Georgia class members setting forth defendants’ potential liability under the Home Ownership and Equity Protection Act (“HOEPA”), 15 U.S.C. §§ 1601, et seq., and urging class members to opt-out or contact him regarding their settlement claims. Included in the solicitation was a Notice of Opt-Out form letter and a Representation & Fee Agreement contract. The Sharbrough Law Firm sent solicitations to Alabama class members.3 3