The opinion of the court was delivered by: Joel Schneider United States Magistrate Judge
This matter is before the Court on the parties' "Amended Joint Motion for Conditional Certification and Preliminary Approval of Amended Class Action Settlement Agreement" [Doc. No. 34].*fn1 For the reasons to be discussed the parties' joint motion is DENIED. While the Court is aware of the overriding public interest in settling class action litigation, it may not abandon its duty to make an independent and rigorous analysis of the settlement terms. In re Pet Food Products Liability Litigation ("Pet Food"), F.3d , 2010 WL 5127661, at *13 (3d Cir. Dec. 16, 2010)(citation omitted). Background
Plaintiff filed her complaint on August 5, 2009 and her first amended complaint ("FAC") on August 31, 2009, on behalf of herself and all others similarly situated. Plaintiff alleges defendant violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §1692, et seq. The claim arises out of a July 11, 2009 collection or "dunning" letter defendant sent plaintiff regarding payment of a debt due Chase Bank USA, N.A. and/or Kohl's Department Store. FAC ¶8.*fn2 The FAC alleges, inter alia, that the July 11, 2009 letter: (1) fails to adequately disclose the amount of the debt; (2) is not specific "in declaring what components are being included in the alleged debt"; (3) "misleads and deceives the debtor that the determination of [the] debt's validity lies with the Defendant"; and (4) "unfairly confuses the debtor." FAC ¶¶10, 14. The FAC also alleges that "[d]efendant's lack of informed involvement constitutes [illegal] flat rating." Id. ¶12. In addition, plaintiff alleges that while disclaiming "lawyer actions," defendant's letter discusses the "lawyer-type counseling" defendant will provide the creditor and this conduct violates 15 U.S.C. §1692e and/or 15 U.S.C. §1692f. Id.
The FAC alleges defendant is an attorney/debt collector (id. ¶3) and does a "volume" business. Id. ¶19. In addition, the FAC sought to certify a class of "all natural persons within the preceding 12 months to whom the Defendant directed correspondence similar to that received by the Plaintiff alleging that consumer debts were due or owed to third parties." Id. ¶18.
The Court held an initial scheduling conference on December 2, 2009. On March 31, 2010, the parties filed their "Joint Motion for Conditional Certification and Preliminary Approval of Class Action Settlement Agreement."*fn3 Thereafter the parties filed the present amended motion which seeks preliminary settlement approval.
The terms of the proposed settlement are set forth in the parties' "Amended Class Action Settlement Agreement"("Settlement Agreement"). The parties propose a settlement class of all individuals in the United States, Puerto Rico, and Guam who, during the period from August 6, 2008, through the date of the Court's Order preliminarily approving the settlement, were mailed a collection letter by defendant which was not returned as undeliverable. The parties estimate the size of the class to be approximately 800,0000 consumers. In exchange for a release and an agreement not to sue, defendant agrees to pay: (1) a cy pres distribution of $32,289.44 to the United Way Worldwide, designated for financial education activities on a national level; (2) $1,000 to plaintiff for her statutory damages pursuant to 15 U.S.C. §1692k, and an additional $1,000 to plaintiff in consideration for her service to the class; (3) attorney's fees and expenses not to exceed $20,000; and (4) all costs of class administration.
In exchange for the foregoing payments all class members agree to forego their "Released Claims," defined in Article I, Section 1.20 of the Settlement Agreement. For the plaintiff, the Released Claims include "all claims, actions . . . against Defendant . . . as of the date of [the] Agreement." As to the 800,000 consumers included in the class, the Settlement Agreement provides they release:
[A]ll claims, actions, causes of action, demands, rights, damages, costs, attorneys' fees, expenses, and compensation whatsoever that the Class or the Class Members' respective heirs, executors, administrators, successors, assigns, and attorneys could assert against Defendant or any of its principals, members, subsidiaries, and affiliate entities, partners, officers, directors, shareholders, managers, employees, agents, representatives, successors, assigns, insurance carriers, clients, and attorneys as a result of alleged violations of the Fair Debt Collection Practices Act or any state law providing substantially similar protections.
Id. at Section 1.20.2. As to only the California class members, the Agreement provides:
In connection with this release, Plaintiff and the Class expressly waive all rights under Section 1542 of the Civil Code of California and any similar law of any state or territory of the United States. Said section reads as follows:
1542. Certain claims not affected by general release. A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must have materially affected his settlement with the debtor.
Id. at Section 1.20.3. The Agreement does not release any debts owed to defendant's clients. Id. at Section 1.20.4. Defendant's proposed final Order approving the settlement releases defendant from all claims, actions, causes of actions, etc. the class and its members have against defendant and all of its principles, members, corporate parents, etc. "which now exist or which may hereafter accrue on or before ... (the last day of the opt-out period) relating to or arising out of any alleged violations of the Fair Debt Collection Practices Act or any state law providing substantially similar protections." See Proposed Final Order at 7. The proposed Final Order also provides that after the settlement is approved plaintiff and the class are "forever barred and enjoined from ...