DENVER (Legal Newsline) - The U.S. Court of Appeals for the Tenth Circuit has ruled that Western Union has no standing to object to a class action attorneys fee award.
A class action lawsuit brought against Western Union challenged the financial services company’s practice of retaining funds and collecting interest on funds when a transfer failed to process. This is most often caused by invalid contact information or by intended recipients not retrieving money that was sent.
“Some of the money that should have been paid to the class was actually the members' money,” Ronald F. Wick of Cozen O’Connor told Legal Newsliine. “Western Union never disputed in many of those cases that it owed the money.”
The issue came when the plaintiffs attorneys calculated their fee award - “There was nothing in the settlement about the award,” Wick said.
The settlement agreement stated that Western Union would place all unredeemed consumer money into a settlement fund. This fund would be used to issue refunds to class members.
Members could also receive payments for interest accrued on their money. The interest payments would come either from the settlement fund or from a separate fund established by Western Union depending on whether the funds had already become state property under state escheat law.
After the settlement agreement was complete, class counsel calculated their award at 30 percent of the full value of the $135 million settlement fund. Western Union objected.
The company said that because a portion of the funds already belonged to class members, the value gained by members was not equal to the total settlement value, and therefore, the award should be calculated based on a lower number.
It is almost unheard of that a defendant in a class action suit objects to a settlement award, O'Connor said. Usually some provision for the award is made in the settlement itself, and both parties agree on it before any formal calculation takes place.
The actual payment would come out of the settlement, not out of Western Union’s pocket. So, when Western Union objected, the Tenth Circuit was asked to decide whether Western Union had any standing to object to the fee award.
In order for Western Union to have any claim to the money in the settlement, a series of conditions would have to be met. First there had to be money left over in the settlement fund. Then a cy pres fund, a fund from which money could not be paid to class action members needed to exist.
Finally, one or more states would have to refuse to accept pro rata payments and release Western Union, creating a third fund. If this fund was created at all, Western Union’s rights to it would be limited to reimbursement for costs accrued during the suit.
“The court said that was too many ifs,” Wick said. “The Tenth Circuit did not rule that the fee had to be paid, just that Western Union had no standing."