Court Opinion

ID: 4912000
Source: CourtListenerOpinion
Date Created: 2021-09-17 20:00:44.43615+00
Date Added: 2024-06-11T08:13:36.675353
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 20-1783

  JAMES ROBINSON, on behalf of himself and all others similarly
                            situated,

                      Plaintiff, Appellee,

                               v.

                NATIONAL STUDENT CLEARINGHOUSE,

                      Defendant, Appellee,

                         PAÚL CAMARENA,

                      Objector, Appellant.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
               FOR THE DISTRICT OF MASSACHUSETTS

        [Hon. F. Dennis Saylor, IV, U.S. District Judge]

                             Before

                      Howard, Chief Judge,
                Selya and Lynch, Circuit Judges.

     Anthony Francisco Cruz,* with whom Paúl Camarena and North &
Sedgwick L.L.C. were on brief, for appellant.
     James A. Francis, with whom Stuart T. Rossman, Persis S. Yu,
National Consumer Law Center, and Francis Mailman Soumilas, P.C.,
were on brief, for appellee James Robinson.
     Lisa M. Simonetti, with whom David G. Thomas and Greenberg

    *     On August 23, 2021, the Court granted leave for Anthony
Francisco Cruz, a law student, to participate in oral argument
pursuant to 1st Cir. R. 46.0(f)(1)(B).
Traurig, LLP were   on    brief,   for   appellee   National   Student
Clearinghouse.

                         September 17, 2021
           LYNCH, Circuit Judge.                 James Robinson filed a class

action lawsuit against National Student Clearinghouse ("NSC").                        He

alleged that NSC violated the statutory requirements of the Fair

Credit    Reporting       Act    ("FCRA")          by    overcharging       for    self-

verification      reports       of     university         degrees     and    dates     of

enrollment. After mediation, the parties negotiated a class action

settlement      providing       for    a     $1.9       million     settlement    fund,

injunctive relief, and a free self-verification report for each

class member.      Paúl Camarena, a class member, objected to the

settlement   agreement.              The   district       court     heard   Camarena's

arguments at a fairness hearing, overruled his objections, and

entered a Final Approval Order approving the class settlement.

See Robinson v. Nat'l Student Clearinghouse, No. 1:19-cv-10749,

2020 WL 4873728, at *1 (D. Mass. July 8, 2020).

           Camarena appeals from that approval.                     We affirm.

                                            I.

           On    April    18,     2019,      Robinson      filed     a   class    action

complaint on behalf of himself and similarly situated consumers

against NSC in the United States District Court for the District

of Massachusetts.        Robinson alleged that NSC violated federal and

Massachusetts law by overcharging consumers for self-verification

reports of their university degrees and dates of enrollment.                          NSC

charged   $14.95    for     self-verification             reports    and    imposed   an

additional school surcharge for some consumers, depending on their

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educational institution.      Robinson alleged in part that NSC is a

consumer reporting agency ("CRA") subject to the FCRA and that NSC

violated 15 U.S.C. § 1681j(f) in charging him and other consumers

more than the maximum allowable disclosure charge for their self-

verification reports.     The maximum allowable disclosure charge was

$12.00 from 2015 to 2018 and $12.50 from 2019 to 2020. See Consumer

Fin. Prot. Bureau, Fair Credit Reporting Act Disclosures, https://

www.consumerfinance.gov/rules-policy/final-rules/fair-credit-

reporting-act-disclosures/        (last    visited   Sept.    10,   2021).

Robinson thus alleged that most consumers were overcharged by $2.95

or $2.45 per self-verification report.

              On June 20, 2019, the parties filed a joint motion to

stay proceedings pending the parties' attempt to resolve their

dispute through mediation before the Honorable Diane M. Welsh

(ret.).    The district court granted the motion on June 23, 2019.

Before the mediation, NSC provided informal discovery to class

counsel, including the number of reports provided to class members

and the amounts charged for the self-verification reports. Through

mediation, the parties reached a settlement agreement that created

a $1.9 million settlement fund to support cash payments to class

members.      Each class member would receive approximately $33.45 in

cash   from    the   settlement   fund.     The   class   settlement   also

negotiated     prospective   relief   limiting    NSC's   charges   moving

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forward    and   provided   each   class    member     with   one    free    self-

verification report.

            On   January    21,    2020,    the    district    court    granted

Robinson's motion for an order directing notice of the class action

settlement.        Notice   was    provided       to   approximately        35,839

individuals, including Camarena.           On May 6, 2020, Camarena filed

an objection to the settlement agreement.                He objected to the

representation by class counsel, the content of the notice provided

to the class members, the sufficiency of the recovery for class

members, and the attorneys' fees for class counsel.                 Camarena was

the only class member to submit a timely objection, and no class

member opted out of the settlement.

            On July 7, 2020, the district court held a fairness

hearing.      At the fairness hearing, the district court heard

Camarena's arguments and overruled his objections.              The next day,

the district court entered the Final Approval Order approving the

class settlement.     See Robinson, 2020 WL 4873728, at *1.

            On August 7, 2020, Camarena filed a notice of appeal

challenging the district court's Final Approval Order.

                                     II.

            We review the district court's approval of the class

settlement for abuse of discretion.               See Bezdek v. Vibram USA,

Inc., 809 F.3d 78, 82 (1st Cir. 2015).             We review embedded legal

issues de novo and factual findings for clear error.                See id.

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            A class action settlement must be "fair, reasonable, and

adequate."        Fed.   R.   Civ.   P.    23(e)(2).      Where     "the    parties

negotiated at arm's length and conducted sufficient discovery, the

district court must presume the settlement is reasonable."                    In re

Pharm. Indus. Average Wholesale Price Litig., 588 F.3d 24, 32-33

(1st Cir. 2009).         The district court considers a "laundry list[]

of factors" pertaining to the reasonableness of a class action

settlement, but "the ultimate decision by the judge involves

balancing    the    advantages       and   disadvantages     of    the     proposed

settlement as against the consequences of going to trial or other

possible but perhaps unattainable variations on the proffered

settlement."       Nat'l Ass'n of Chain Drug Stores v. New England

Carpenters Health Benefits Fund, 582 F.3d 30, 44 (1st Cir. 2009).

We   have   further      explained    that     "the    district    court    enjoys

considerable range in approving or disapproving a class action

settlement, given the generality of the standard and the need to

balance [the settlement's] benefits and costs."                 Id. at 45.

            Here, the district court did not abuse its discretion in

approving the class settlement.              The district court considered

relevant factors and concluded that the class action settlement

was "fair, reasonable, and adequate" under Rule 23(e)(2).

            The    district    court       considered    that     the   settlement

agreement was the product of arm's-length negotiation between

class counsel and NSC in mediation before Judge Welsh.                          The

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district court stayed its proceedings pending the parties' attempt

to resolve their dispute through mediation.                 Before the mediation,

NSC provided disclosures to class counsel, including the number of

class members and the total amount of the alleged overcharge.                        The

district      court    thus    properly     concluded        that     "the     parties

negotiated at arm's length and conducted sufficient discovery."

In re Pharm. Indus., 588 F.3d at 32-33.

              The district court also considered the litigation risks

and legal uncertainty related to the litigation for both parties.

Robinson's     class    action    complaint      raised      an   issue      of   first

impression about whether an entity like NSC is a CRA regulated by

the   FCRA.      The    parties    also    disputed         whether       NSC's   self-

verification reports qualify as "consumer reports" under the FCRA.

No court had yet ruled on whether an entity like NSC is subject to

regulation under the FCRA.1         The plaintiff class also encountered

serious    challenges         related     to     proving       "willfulness,"          a

prerequisite for an award of statutory damages.2                          The district

      1   To date, NSC maintains                that   it    is     not    subject   to
regulation under the FCRA.
      2   In Safeco Insurance Company of America v. Burr, the
Supreme Court held that to obtain statutory damages under the FCRA,
a plaintiff must demonstrate that a defendant knowingly violated
the statute or acted with reckless disregard. 551 U.S. 47, 52,
56-57 (2007).     The Supreme Court further held that if the
defendant's interpretation of the statute is not "objectively
unreasonable," there can be no finding of recklessness. Id. at
69-70.

                                        - 7 -
court properly credited both parties' arguments that settlement

was preferable to continued litigation given the litigation risks

for both sides.

           Camarena argues on appeal that the district court abused

its discretion by ignoring his request to submit evidence that he

paid more than $14.95 for his self-verification reports, the

baseline   amount   indicated   by   class   counsel   and   NSC    in   the

settlement agreement.    He argues that the district court could not

have made an informed decision that the class settlement was fair

and reasonable without considering evidence of his individual

damages.

           Camarena never made this objection or offer in his

written objections to the settlement agreement.        Nor did he supply

a declaration with the evidence he wanted to provide.              Camarena

instead requested to supplement the record with his individual

damages for the first time during the final fairness hearing.            The

district court did not abuse its discretion in declining this

request that was not briefed and was raised for the first time in

oral argument.    We do not consider this undeveloped claim that was

made in passing to the district court during oral argument.              See

McCoy v. Mass. Inst. of Tech., 950 F.2d 13, 22 (1st Cir. 1991).3

     3    Even had Camarena properly briefed and preserved this
argument before the district court, the district court did not
abuse its discretion in declining to consider Camarena's evidence
of his own, individual damages. The district court was aware that

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          As to Camarena's argument that we should adopt the

position that the district court must act as a full fiduciary in

class actions, this argument too has been waived.     Camarena did

not develop this argument before the district court, and no

exceptional circumstances warrant consideration of this argument

for the first time on appeal.   See United States v. Rodrigues, 850

F.3d 1, 13 n.6 (1st Cir. 2017); Johnston v. Holiday Inns, Inc.,

595 F.2d 890, 894 (1st Cir. 1979).

                                III.

          Affirmed.

NSC charged some class members more than the uniform $14.95 based
on the school surcharge for certain institutions. That some class
members paid more than $14.95 was known to class counsel and Judge
Welsh during the mediation and factored into the class settlement
negotiations.   Camarena's proffered evidence that he, too, was
charged more than $14.95 could not have affected the district
court's determination that the class settlement was "fair,
reasonable, and adequate."

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