A federal judge Monday deferred a final decision on whether to approve a class-action settlement that would resolve a lawsuit over Encore Capital Group Inc.'s collection tactics.
Encore Capital, a San Diego-based debt buyer, agreed earlier this year to settle claims that its Midland Funding LLC unit relied on false affidavits to bring collection lawsuits.
"I will review the record for the umpteenth time and in due course release an opinion," said Judge David Katz following a fairness hearing in U.S. District Court in Toledo, Ohio.
The settlement would provide up to $5.7 million for 1.4 million class members. Last month, 38 state attorneys general opposed the proposed settlement (
The plaintiffs said Encore employed people who signed thousands of affidavits attesting to their knowledge that the company was entitled to collect debt. However, they said these workers, known as "robo-signers," failed to review the underlying documents. So-called robo-signing is more commonly associated with the mortgage foreclosure industry.
The proposed settlement amounted to about $10 per class member at the time it was announced. Since then, the figure has jumped to around $17, the judge said on Monday.
Katz said the hearing provided an opportunity for plaintiffs to counter the result of three years of deliberations and mediations. He said a number of false assumptions were made in filings objecting to the settlement, including accusations of collusion.
Charles Delbaum of the National Consumer Law Center in Boston, said in an interview outside of the courtroom, according to Reuters, that the plaintiffs "are being deprived of the tools that they need to vacate judgments taken against them on the basis of false statements in return for a payment of $10, which is virtually meaningless."
At the hearing, Midland Funding attorney Richard Stone, of law firm Hogan Lovells, called the settlement fair and reasonable. He said Midland Funding changed its affidavit process in September 2009, shortly after the lawsuit was filed and that the main issue in the lawsuit no longer applies.
In a separate action, the state of Texas sued Encore last Friday, alleging the company used illegal and deceptive tactics to collect debts from consumers (
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