In Robinson v. Nat’l Student Clearinghouse, — F.4th — (1st Cir. 2021), a First Circuit panel unanimously affirmed the district court’s Final Approval Order, approving the class settlement in an action brought under the Fair Credit Reporting Act (FCRA). Plaintiff James Robinson filed the class action lawsuit against National Student Clearinghouse (NSC), alleging NSC violated the FCRA by overcharging for self-verification reports for university degrees and dates of enrollment. NSC charged $14.95 for self-verification reports and imposed an additional surcharge for some consumers, depending on their educational institution. The FCRA’s maximum allowable charge for self-verification reports was $12.00 from 2015 to 2018 and $12.50 from 2019 to 2020. Robinson thus alleged that putative class members were overcharged by $2.95 or $2.45 per self-verification report.

Robinson filed the action on April 18, 2019. On June 20, 2019, before NSC had filed an answer or motion to dismiss, the parties filed a joint motion to stay proceedings, pending their attempt to settle through mediation before retired U.S. Magistrate Judge Diane M. Welsh. NSC provided informal discovery to the plaintiff’s counsel, including the number of self-verification reports provided to putative class members and the amounts charged for the reports. Through mediation, the parties reached a settlement agreement that created a $1.9 million settlement fund. Under the agreement, each class member would receive about $33.45 in cash and would receive one free self-verification report. NSC also agreed to limit charges moving forward.

On January 21, 2020, the district court granted the parties’ motion for preliminary approval and their request for an order directing notice of the class action settlement. Notice was provided to approximately 35,839 individuals, including Paúl Camarena, an attorney located in Chicago, IL. 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. The district court overruled the objections and entered the Final Approval Order approving the class settlement. Camarena, the only objector, appealed.

On appeal, the panel affirmed the Final Approval Order as “fair, reasonable, and adequate.” Two factors underlie the panel’s conclusion. First, even though no formal discovery was apparently done, NSC provided informal discovery to class counsel, including the number of putative class members and the total amount of the alleged overcharge. This information provided a factual basis for the $1.9 million settlement amount. Second, there were significant litigation risks and legal uncertainties for both parties. Specifically, Robinson’s complaint raised an issue of first impression about whether an entity like NSC was a consumer reporting agency regulated by the FCRA. The parties also disputed whether NSC’s self-verification reports were “consumer reports” under the FCRA. Additionally, the proposed class also would have encountered significant challenges related to proving “willfulness,” a prerequisite for an award of statutory damages. The resolution of any of the issues in NSC’s favor likely would have mandated dismissal of the action or, at the very least, significantly reduced putative class members’ monetary recovery.

Camarena also argued that the district court abused its discretion by ignoring his request to submit evidence that he paid more than $14.95 for the self-verification reports. The panel held that he waived this argument by not developing it in the district court. In a footnote, the panel noted that even if Camarena had properly developed the argument, class counsel, Judge Welsh, and the district court were aware that some putative class members had been charged more than $14.95. That fact had already been factored into the class settlement negotiations.

We will continue to monitor this case and cases like it for further developments.