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Berry v. Lexisnexis Risk & Information Analytics Group, Inc.

United States District Court, E.D. Virginia, Richmond Division

September 5, 2014

GREGORY THOMAS BERRY et al., Plaintiffs,
v.
LEXISNEXIS RISK & INFORMATION ANALYTICS GROUP, INC. et al., Defendants.

MEMORANDUM OPINION

JAMES R. SPENCER, Senior District Judge.

THIS MATTER is before the Court on a Joint Motion for Final Approval of Class Action Settlement ("Motion for Final Approval") (ECF No. 100) filed by Plaintiffs and Defendants (collectively, "Parties"), a Motion for Attorneys' Fees, Expenses, and Service Awards ("Motion for Attorneys' Fees") (ECF No. 102) filed by Plaintiffs, and a Consent Motion to File Amended Complaint ("Motion to Amend") (ECF No. 114) filed jointly by the Parties. For the reasons that follow, the Motion for Final Approval will be GRANTED, the Motion for Attorneys' Fees will be GRANTED, and the Motion to Amend will be DENIED as moot.

I. BACKGROUND

A. FACTUAL AND PROCEDURAL HISTORY

The Motion for Final Approval is the culmination of years of litigation and negotiations between the Parties. The Parties seek final approval of their joint class action settlement agreement ("Settlement Agreement") (ECF No. 101-2) and dismissal of this lawsuit.

Plaintiffs allege that LexisNexis Risk Solutions FL Inc., [1] LexisNexis Risk Data Management Inc., [2] and Reed Elsevier Inc. ("Defendants") violated the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681 et seq., by selling certain Accurint® brand reports to debt collectors without treating the reports as "consumer reports" within the meaning of the FCRA.[3] Defendants have consistently and explicitly taken the position that the Accurint® reports are not "consumer reports" under the FCRA, and as a result, have not attempted to afford customers rights with respect to the Accurint® reports that the FCRA requires with respect to "consumer reports."

The Parties engaged in a series of mediation conferences with the aid of three mediators (United States Magistrate Judge M. Hannah Lauck, the Honorable Dennis Dohnal (Ret.), and Randall Wulff). This lawsuit initially contemplated three classes of people affected by the Defendants' alleged violations of the FCRA: (1) the Impermissible Use Class, which included every person listed in the Accurint® reports; (2) the File Request Class, which included every person who requested a copy of their file from the Defendants; and (3) the Dispute Class, which included every person who filed a dispute regarding the information reported with the Defendants. After mediation, the Parties moved the Court for preliminary certification of two classes for settlement purposes only, pursuant to Federal Rule of Civil Procedure 23. The first proposed class is the Rule 23(b)(2) Settlement Class, which is made up of the Impermissible Use Class. The second proposed class is a Rule 23(b)(3) Settlement Class, which is made up of the File Request and Dispute Classes. The Court granted preliminary certification and approval on April 29, 2013.

The Court appointed Kinsella Media, LLC as the administrator for the Rule 23(b)(2) Settlement Class. Although the Parties state notice of the Rule 23(b)(2) Settlement Class members may not have been mandatory, an extensive and substantial notice plan was negotiated as part of the class settlement. The Rule 23(b)(2) Notice Plan circulated information about the settlement to class members by five different methods:

• The Rule 23(b)(2) Publication Notice was published in various national newspaper supplements and consumer magazines (including Parade, Better Homes and Gardens, National Geographic, Parents, People, and People en Español ). The Publication Notice provides information on how to object to the proposed settlement and directs Rule 23(b)(2) Settlement Class Members to the Class Settlement Website.
• The Rule 23(b)(2) Class Settlement Website contained the following information (1) a brief description of the parties and the claims, (2) a summary of the settlement terms, (3) disclosures regarding Class Counsel and their right to seek separate representation, (4) a summary of Rule 23(b)(2) Class Members' rights and options (including how to object to the proposed settlement), (5) the date, time, and location of the hearing on final approval. The website will be created and maintained by the Settlement Administrator and will also provide the Settlement Agreement, the Rule 23(b)(2) Internet Notice (in English and Spanish), and the Preliminary Approval Order.
• Banner Advertisements were placed on selected websites (Facebook and 24/7 Network). These advertisements directed Rule 23(b)(2) Settlement Class members to the Class Settlement Website.
• Search keywords and phrases relating to the lawsuit were purchased on major search engines.
• A toll-free telephone number was established to provide Rule 23(b)(2) Settlement Class Members with access to recorded information regarding the settlement and live operators who will be able to respond to inquiries regarding the settlement.

The Paid Media Program reached approximately 75.1% of potential class members, as estimated by Kinsella Media. The website and toll-free phone number established for the Rule 23(b)(2) class received 199, 867 unique visits and 3, 084 calls, respectively.

The Court appointed Rust Consulting as the administrator for the Rule 23(b)(3) Settlement Class. The Rule 23(b)(3) Settlement Class Members were notified about the settlement by direct mail to each member of the class. The Rule 23(b)(3) Settlement Class Members were identified by the Defendants using commercially reasonable procedures to search their archive logs to identify each person who requested a copy of an Accurint® Report or initiated or submitted a dispute or other inquiry regarding the content of an Accurint® Report between October 1, 2006 and April 29, 2013. The Mail Notice explained that the Rule 23(b)(3) Settlement Class Members have the option of opting out of the class, and if the Member does not do so within sixty days, he or she will be receive their portion of the Settlement Fund and will be bound by the Settlement Agreement. The Mail Notice also indicated that Class Members could stay in the Settlement Class and object to the Settlement Agreement. The Mail Notice directed the recipient to a telephone number and a website for more information.

Rust Consulting created and maintained a Rule 23(b)(3) Class Settlement Website, on which information such as the Settlement Agreement, the Mail Notice, and the Preliminary Approval Order were posted. The website also outlined procedures for opting out of or objecting to the settlement, a description of the Settlement Fund, a section for frequently asked questions, and procedural information regarding the status of the Court approval process. A toll-free telephone number was also established to provide Rule 23(b)(3) Settlement Class Members with access to recorded information regarding the settlement and live operators who were able to respond to inquiries regarding the Settlement Agreement. The website and toll-free phone number established for the Rule 23(b)(3) class received 6, 261 unique visits and 2, 211 calls, respectively.

For both the Rule 23(b)(2) Class and the Rule 23(b)(3) Class, the Parties submitted Class Action Fairness Act (CAFA) Notification, pursuant to 28 U.S.C. § 1815(b), to provide state and federal officials with notice of the proposed Settlement Agreement and an opportunity to object.

On Tuesday, December 10, 2013, the Parties and several objectors were heard by the Court at a Final Fairness Hearing to determine the legality and propriety of the Settlement Agreement. Prior to the Final Fairness Hearing, nine interested parties, (collectively, "Objectors"), filed objections to the Rule 23(b)(2) Settlement Agreement, either with the Court or with the Parties. Seven of these parties are individual class members representing themselves pro se. Two of these parties seek to represent the interest of a large number of class members: the Aaron Objectors are a group of some twenty thousand class members represented by Watts Guerra LLC;[4] the Cochran Objectors include of more than seven thousand Rule 23(b)(2) class members purportedly represented by Attorney Edward Cochran.

B. SETTLEMENT AGREEMENT SUMMARY

The Parties have agreed to provide injunctive relief to the Rule 23(b)(2) Settlement Class pursuant to an Injunctive Relief Order (ECF No. 126-1). The Parties have agreed to a monetary settlement benefiting the Rule 23(b)(3) Settlement Class Members. The terms of the agreements are discussed more fully below.

1. Rule 23(b)(2) Settlement Class

The Parties move the Court to certify a Rule 23(b)(2) Settlement Class, which is composed of all persons about whom information resided in the Accurint® Database from November 14, 2006 to the present (the Impermissible Use Class). Approximately 200 million people fall within the Rule 23(b)(2) class definition. The Parties have determined that the violations alleged by the Impermissible Use Class are largely procedural in nature and any claim for statutory damages by this Class was incidental to its interest in compelling changes to the Defendants' data practices. The Parties have therefore agreed to injunctive relief for the Rule 23(b)(2) Settlement Class under which the Defendants will implement a substantial, nationwide program that addresses the issues raised in the Complaint by the Impermissible Use Class and will result in a significant shift from the currently accepted industry practices. The Injunctive Relief will cause Defendants to become the industry leader among data aggregation companies in the protection of customer information provided to debt collectors.

a. Settlement Terms

Pursuant to the Settlement Agreement, the Defendants will overhaul their currently existing Accurint® for Collections ("AFC") suite of products for the Receivables Management Market, which they currently do not treat as "consumer reports" as defined by the FCRA.[5] The Defendants will split AFC into two newly developed suites of products and services. The first suite, called "Collections Decisioning, " falls within the FCRA definition of a "consumer report" and will be treated as such. The second suite, called "Contact & Locate, " will not be treated as falling within the "consumer report" definition under the FCRA because the Parties agree it does not fall within the FCRA definition.

The Collections Decisioning suite will be created for the Receivables Management Marke. It will be available only to customers who have completed a credentialing process and customers will be permitted to use the information only for a permissible purpose under 15 U.S.C. § 1681b, including, but not limited to, for extension of credit, review or collection of a customer's account, or to review a consumer's credit account to determine whether the consumer continues to meet the terms of the account. The Defendants will also have a compliance program designed to provide reasonable procedures to assure the Collections Decisioning products and services are used for permissible purposes under § 1681b. When a user enters into the Collections Decisioning suite for the first time in each user session, a message will be displayed, indicating the reports fall under the FCRA.[6] The user will also be required to certify a permissible purpose under § 1681b and that the information will be used only for purposes permitted by the FCRA. The Defendants acknowledge that the Collections Decisioning products and services meet the FCRA definition of a "consumer report." Accordingly, the Defendants will put customers through a credentialing process consistent with § 1681e(a) and the customers' contractual commitments and certifications will be consistent with the regulatory framework governing the Collections Decisioning product or service.

The Contact & Locate suite of products and services will be created to assist the Receivable Management Market to locate debtors and to locate assets securing debt for the purpose of repossession. The Contact & Locate suite of products and services will not involve the provision of "consumer reports" under the FCRA. The data available will include only: (1) information that does not contain "seven characteristic" information; (2) information that does not bear on any eligibility determination for credit, insurance, employment, or any other purpose in connection with which a consumer report may be used under the FCRA; (3) information bearing a relationship to the location of a debtor or the location of assets securing debt for the purpose of repossession, even if such information may arguably bear on an eligibility determination under the FCRA; and (4) information that includes any combination of the first three types of information. Use of the Contact & Locate suite of products is intended only for the limited purpose of finding and locating debtors or locating assets securing debt for purposes of repossession. When a user enters the Contact & Locate suite of products and services for the first time during each user session, a message will indicate Contact & Locate is not provided by consumer reporting agencies as defined in the FCRA and may not be used in determining eligibility for credit, insurance, or employment, or for any other eligibility purpose that would qualify as a consumer report under the FCRA.[7] The customers' contractual commitments and certifications will be consistent with the non-FCRA characterization and treatment of the Contact & Locate suit of products and services. The Parties agree that the contemplated design for the new Contact & Locate suite meets the limitations on data defined above.

In spite of the fact the Parties agree that the Contact & Locate suite of products and services do not constitute "consumer reports" as defined under the FCRA, a "Consumer Access Program" for the Contact & Locate suite will be created. The Consumer Access Program will include procedures that permit an individual to obtain a free copy of a Contact & Locate Comprehensive Report regarding the individual once per year. Additionally, a cover letter accompanying consumer's information responsive to a request made under the FCRA, § 1681g(a), will include the following language: "An affiliate of [Consumer Reporting Agency] provides debt collectors with contact and locate' information about consumers. That information is not a consumer report' under the FCRA and is not enclosed in this mailing. For more information about this contact and locate' information, or to request a copy of such report about you, please visit [website] or call [number]." The Consumer Access Program will further include procedures that permit an individual to submit a statement of up to 100 words regarding any phone number or address displayed in the Contact & Locate suite. All such comments will be made available via a link on the main page and search forms where the phone number or addresses may be displayed in the Contact & Locate Suite. In addition, the Defendants will provide customer educational seminars and materials, free of charge, regarding their use of and responsibilities relating to Collections Decisioning and Contact & Locate. The Defendants will also provide training for employees who work on or with Collection Decisioning and Contact & Locate regarding the requirements of the Injunctive Relief.

The Settlement Agreement sets the following timeline for the Defendants to implement the Injunctive Relief:

• Release of the initial versions of Collection Decisioning and Contact & Locate by December 31, 2013.
• Defendants will market Collections and Contact & Locate to all new online Receivable Management Market customers and provide new online access to Collections Descisioning and Contact & Locate by December 31, 2013.
• Defendants will initiate the migration of existing online Receivable Management Market customers to Collections Decisioning and Contact & Locate beginning on or before December 31, 2013 and will use reasonable and good faith to complete migration as soon as practicable, but will complete the migration by December 31, 2015.
• Defendants will initiate the migration of all other existing Receivable Management Market customers to Collections Decisioning and Contact & Locate beginning on or before December 31, 2013 and will use reasonable and good faith to complete migration as soon ...

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