IN THE
UNITED STATES COURT OF APPEALS
FOR THE SEVENTH CIRCUIT
________________________
No. 07–3402
MAV MIRFASIHI, individually and on behalf of all others
similarly situated,
Plaintiff‐Appellee,
v.
FLEET MORTGAGE CORPORATION,
Defendant‐Appellee.
APPEAL OF: ANGELA PERRY and MICHAEL E. GREEN,
Objectors‐Appellants.
_________________________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 01 C 0722—Joan Humphrey Lefkow, Judge.
__________________________
Argued December 4, 2008—Decided December 30, 2008*
__________________________
Before BAUER, POSNER, and WILLIAMS, Circuit Judges.
POSNER, Circuit Judge. This class‐action suit is before us for
the third time; our previous opinions are reported at 356 F.3d
* This opinion is being released in typescript. A printed copy will be issued
shortly.
No. 07–3402 2
781 (7th Cir. 2004), and 450 F.3d 745 (7th Cir. 2006). The current
appeal like the previous ones presents questions concerning
class‐action procedure.
The suit was brought eight years ago on behalf of ap‐
proximately 1.6 million persons whose home mortgages were
owned by Fleet Mortgage Corporation. The complaint charges
that without their permission Fleet transmitted information
about these persons’ finances (plus personal information such
as phone numbers), obtained from their mortgage files, to tele‐
marketing companies which then, in conjunction with Fleet,
used that information and deceptive practices to try to sell them
financial and other services that they otherwise would not have
been interested in. Fleet’s transmission of the information to the
telemarketers was alleged to violate, among other laws, the fed‐
eral Fair Credit Reporting Act and state consumer protection
statutes. Two plaintiff classes were proposed—a “pure” “in‐
formation‐sharing” class of 1.4 million customers of Fleet whose
financial information Fleet transmitted to the telemarketers but
who did not buy anything from them, and a separate “telemar‐
keting” class composed of 190,000 customers of fleet who made
purchases from the telemarketers. The second class is not di‐
rectly involved in this appeal.
The parties negotiated a settlement, which the judge ap‐
proved in 2002 simultaneously with certifying the classes. But
he did not explain why he thought certification proper; he
merely recited the criteria in Rule 23. The settlement gave noth‐
ing to the information‐sharing class, while barring its members
from bringing individual suits. The treatment of that class was
one of the grounds for our reversing, at the behest of two class
members who had objected to the settlement and intervened in
the litigation, the district court’s judgment approving the set‐
tlement.
On remand the parties negotiated a new settlement, which
the district court (a different judge) approved. This settlement
No. 07–3402 3
required Fleet to pay to public interest law firms (or other chari‐
table groups) concerned with consumer privacy the $243,000
that Fleet had earned from its sale of information to the tele‐
marketers, plus any of the funds earmarked for the members of
the telemarketing class that ended up being unclaimed, minus,
however, considerable expenses. As far as the information‐
sharing class was concerned, the basis of the district judge’s ap‐
proval of the new settlement, which again gave that class noth‐
ing, was that the value of the class members’ claim was zero:
they had no chance of obtaining damages if the case went to
trial and judgment.
We again reversed at the behest of the objecting class
members, ruling that the district judge had not made an ade‐
quate effort to value the claims of the information‐sharing class.
Among other things, she had considered the consumer protec‐
tion statutes of only a few states, even though there were mem‐
bers of the information‐sharing class in every state.
On remand she conducted a more complete survey of state
law and again concluded that the claims had no value. The ob‐
jecting class members again appeal, arguing not only that the
claims have value (perhaps in excess of a billion dollars!) but
also that the objectors should have been awarded a much larger
legal fee than the $18,750 that the judge awarded them.
There is no evidence that any members of the information‐
sharing class suffered any harm from Fleet’s disclosing informa‐
tion about them to telemarketers. Nineteen states plus the Dis‐
trict of Columbia, however, permit an award of statutory dam‐
ages, ranging from $25 in Massachusetts to $10,000 in Kansas
but averaging $1,046.25, for violations of their consumer protec‐
tion statutes. (These figures are based on a table in the supple‐
mental appendix to the appellees’ brief in this court, and are not
contested by the appellants. We exclude two states, California
and Idaho, that allow a $1,000 award of statutory damages in a
class action only to the entire class.)
No. 07–3402 4
It is arguable that the unauthorized disclosure of financial
information violated those statutes. But the statutes do not
permit the award of such damages in a class action. The objec‐
tors do not challenge the application of that limitation to a class
action filed in federal district court. Yet we have held unless
based on state substantive law such a limitation does not bind a
federal court in a class action litigated in that court. Thorogood v.
Sears, Roebuck & Co., 547 F.3d 742, 746 (7th Cir. 2008). Having
failed to preserve the issue, the objectors cannot invoke that rul‐
ing—and anyway they haven’t tried to.
They do argue that even if the claims of the members of the
information‐sharing class have no value in a class action, they
have value in individual actions. A number of states do as we
just noted authorize statutory damages in such actions, and
conceivably some of the 1.4 million members of the class (not all
of whom live in such states, however) would sue if not pre‐
cluded by the settlement. That preclusion is a benefit to Fleet,
and the objectors argue that Fleet should pay the class for it. But
after eight years of litigation, the objectors are unable to identify
a single member of the class who would sue on his own dime to
collect the modest statutory damages available in an individual
suit. Cf. id. at 747.
The objectors point out that state consumer protection laws
to one side, the federal Fair Credit Reporting Act, 15 U.S.C. §§
1681 et seq., authorizes the award of statutory damages of not
less than $100 or more than $1000 for a willful violation of the
Act, without need to prove harm. § 1681n(a)(1)(A); see Safeco
Ins. Co. v. Burr, 127 S. Ct. 2201, 2206 (2007); compare § 1681o(a).
But although the Act was mentioned in the complaint, the ob‐
jectors first sought to apply it to the information‐sharing class
after our first remand. That was too late. United States v. Hus‐
band, 312 F.3d 247, 251 (7th Cir. 2002) (a party “‘cannot use the
accident of remand as an opportunity to reopen waived is‐
sues’”). On the second appeal, which followed that remand, the
No. 07–3402 5
parties to the settlement pointed out that the objectors had in‐
deed forfeited their claim under the Act. We did not discuss the
Act in our second opinion, but implicitly excluded it from fur‐
ther consideration by stating that “on remand, the district court
should consider and analyze the full cross‐section of potentially
applicable state law.” 450 F.3d at 751 (emphasis added).
On remand, the district judge nevertheless discussed (and
rejected) the applicability of the Act to the class. She should not
have wasted her time on the issue. United States v. Husband, su‐
pra, 312 F.3d at 251. The objectors argue that the scope of the
remand was ambiguous; it was not; but if the objectors thought
it was, or, more plausibly, wanted us to reconsider the scope of
the remand, they should have petitioned us for clarification or
reconsideration, and they did not. Had they done so, the parties
to the settlement would have argued forfeiture and lack of
merit, and we would have ruled against the objectors and cut
off further litigation on the issue, saving the district judge time
and the parties cost. For besides having been forfeited, the claim
that Fleet violated the Fair Credit Reporting Act has no possible
merit, and in fact is frivolous.
The Act regulates “consumer report[s]” issued by “con‐
sumer reporting agenc[ies].” 15 U.S.C. § 1681a(d)(1). A con‐
sumer reporting agency, so far as pertains to this case, is “any
person which…regularly engages in whole or in part in the
practice of assembling or evaluating consumer credit informa‐
tion or other information on consumers for the purpose of fur‐
nishing consumer reports to third parties.” § 1681a(f). Fleet does
not regularly engage in such practices; it is not a consumer re‐
porting agency—it is a bank. Frederick v. Marquette National
Bank, 911 F.2d 1, 2 (7th Cir. 1990). “Consumer reporting agen‐
cies naturally depend on suppliers of credit to furnish them
with credit information. It is the consumer reporting agency
that is charged with assuring the accuracy, confidentiality and
proper dissemination of this information, however. The [Fair
No. 07–3402 6
Credit Reporting Act] does not impose obligations upon a
creditor who merely passes along information concerning par‐
ticular debts owed to it.” DiGianni v. Stern’s, 26 F.3d 346, 349 (2d
Cir. 1994).
Furthermore, “a creditor who merely passes along informa‐
tion concerning particular debts owed to it” is not a purveyor of
“consumer reports.” For excluded from the definition of “con‐
sumer report” is a “report containing information solely as to
transactions or experiences between the consumer and the per‐
son making the report.” § 1681a(d)(2)(A)(i). What Fleet sold the
telemarketers was “information solely as to transac‐
tions…between the consumer [the Fleet mortgagor] and the
person making the report [Fleet].” See DiGianni v. Stern’s, supra,
26 F.3d at 349; Smith v. First National Bank, 837 F.2d 1575, 1578
(11th Cir. 1988) (per curiam).
So the claims of the information‐sharing class are indeed
worthless, and if so even $243,000 might seem excessive com‐
pensation—and the amount will grow if not all the settlement
money allocated to the telemarketing class is claimed by mem‐
bers of the class—and maybe therefore those claims ought sim‐
ply to be dismissed. But even if the settlement is merely a nui‐
sance settlement, such settlements are permitted; defendants
can be trusted to make such settlements only if it is their best
interest to do so.
We are disheartened that the litigation by the information‐
sharing class has been allowed to drag on for eight years, when
it had no merit—and that as a matter of law, without need to
take evidence. It is an example of the typical pathology of class
action litigation, which is riven with conflicts of interest, as we
discussed recently in Thorogood v. Sears, Roebuck & Co., supra,
547 F.3d at 744–46. The lawyers for the class could not concede
the utter worthlessness of their claim because they wanted an
award of attorneys’ fees. The lawyers for Fleet were reluctant to
argue the utter worthlessness of the claim because they were
No. 07–3402 7
able to negotiate a settlement that cost their client virtually
nothing—provided they did not take such a strong stand that it
jeopardized the class lawyers’ shot at a generous award of at‐
torneys’ fees, and hence the settlement. And the objectors were
motivated to exaggerate the value of the claim of the informa‐
tion‐sharing class so that they could get a generous award of
attorneys’ fees. At the very outset of the case, before certifying
the class, the district court should have required the parties to
present the belatedly presented survey of the consumer protec‐
tion laws of the 50 states, plus argument concerning the scope
of the Fair Credit Reporting Act, to demonstrate the existence of
a colorable claim.
With what can only be described as chutzpah, defined by
Leo Rosten as “gall, brazen nerve, effrontery, incredible ‘guts,’
presumption plus arrogance such as no other word and no
other language can do justice to,” the objectors ask us to substi‐
tute them for the lawyers for the information‐sharing class and
award them the entire $750,000 in attorneys’ fees that the dis‐
trict judge awarded those lawyers; in other words, the objectors
are asking us for 40 times the $18,750 attorneys’ fee that she
awarded them. The request is preposterous.
It is true that they twice prevailed on appeal and that the
sequel to the first appeal was a genuine improvement in the set‐
tlement with respect to the telemarketing class. But the sequel
to the second was only a very slight improvement in the settle‐
ment with respect to the information‐sharing class; and it was
an improvement less because the $243,000 went to charity,
rather than to the other class, than because that figure may
grow (though only to a maximum of $804,000, because of the
expenses we mentioned) The benefit to the information‐sharing
class would still be meager no matter how much money went to
a public interest law firm or a charity rather than to the mem‐
bers of the class.
No. 07–3402 8
As important to a proper evaluation of the objectors’ con‐
tribution is the meagerness of the relief that they obtained by
extending the litigation by several years is their lack of con‐
structive activity in the district court. They did not propose
terms of settlement or otherwise participate constructively in
the litigation other than to appeal. A proper attorneys’ fee
award is based on success obtained and expense (including op‐
portunity cost of time) incurred. See, e.g., Farrar v. Hobby, 506
U.S. 103, 114–15 (1992); Hensley v. Eckerhart, 461 U.S. 424, 435–37
(1983); Cole v. Wodziak, 169 F.3d 486, 487–88 (7th Cir. 1999). The
success obtained by the objectors was meager, as we have said,
and the cost incurred—unknown. The fee applications that they
submitted to the district court were barren of the detail required
for an assessment of that cost. Moreover, the district judge ini‐
tially determined their fee to be $37,500, which she later cut in
half as a sanction for their irresponsible litigation tactics (paral‐
leled in this court by the many inaccurate and misleading
statements in their briefs and post‐argument submission) that
exasperated a very patient district judge.
We are mindful that “it is desirable to have as broad a range
of participants in the [class action] fairness hearing as possible
because of the risk of collusion over attorneysʹ fees and the
terms of settlement generally,” and that “this participation is
encouraged by permitting lawyers who contribute materially to
the proceeding to obtain a fee.” Reynolds v. Beneficial National
Bank, 288 F.3d 277, 288 (7th Cir. 2002). But “the principles of res‐
titution that authorize such a result also require…that the objec‐
tors produce an improvement in the settlement worth more
than the fee they are seeking; otherwise they have rendered no
benefit to the class.” Id. The improvement that the objectors
produced in this case, minus the detriment caused by their
courtroom antics, barely justified the modest fee that the judge
awarded them.
This case is finito.
No. 07–3402 9
AFFIRMED.