ARMSTRONG v. GALLIA METROPOLITAN HOUSING AUTHORITY

NORAH McCANN KING, Judge

This action challenges the manner in which Gallia Metropolitan Housing Authority ["GMHA"] calculates and assesses utility allowances, "washer fees," and maintenance charges, at Gallia Metro Estates ["GME"] and various other practices of defendants. The parties have consented to disposition of the action by the undersigned, 28 U.S.C. § 636(c). This Court certified a class of plaintiffs pursuant to Fed.R.Civ.P. 23(b)(2), consisting of all past, present and future residents of GME. Opinion and Order (March 31, 1999). On January 31, 2001, the parties jointly moved for approval of their Stipulation of Settlement. This matter is now before the Court for final approval of this proposed settlement. A formal fairness hearing was held, pursuant to Fed.R.Civ.P. 23(e), on April 12, 2001.

I

This case was filed in 1998 by residents of Gallia Metro Estates alleging, inter alia, that the utility allowance offered by GMHA is inadequate, that the "washer fee" is inappropriately assessed as excess consumption and that GMHA has assessed additional maintenance fees in contravention of the rights of the plaintiffs and the plaintiff class.

Plaintiffs have not pursued certain other allegations contained in the original complaint.

On February 5, 2001, the Court directed the plaintiffs to provide to the class notice of the Stipulation of Settlement and of the Rule 23(e) fairness hearing. Plaintiffs' counsel has confirmed that the required notification was made in almost all respects. Report on Notice of Fairness Hearing (April 6, 2001). Although counsel could not confirm that written notice was actually posted at the Rio Grande One-Stop County Services Office, the Veterans Affairs Office or the Gallipolis area office of the Social Security Administration, counsel represents that copies of the notice were sent to those entities or agencies for posting. Supplemental Report on Fairness Hearing Notice, at 1 (April 18, 2001). The notice requirement of Rule 23(e) serves "to guide courts in protecting due process rights of absent plaintiffs and affording the maximum preclusive effect to class judgments." Battle v. Liberty Nat'l Life Ins. Co., 770 F. Supp. 1499, 1515 (N.D. Ala. 1991). Accordingly, "[d]ue process and Rule 23 merely require good faith compliance with the presumptively valid notice procedures ordered by the court." In re VMS Securities Litigation, No. 89C9448, 1992 WL 203832, at *3 (N.D. Ill. Aug. 13, 1992). Plaintiffs' counsel has established that he took all reasonable steps to comply with the Court's order relating to notice to the class. Therefore, the Court concludes that there was substantial compliance with the Court's order. Moreover, the notice actually made and confirmed, which includes actual notice to all current tenants as well as through various media, was sufficient to protect the class members' due process interests. Therefore, the fact that plaintiffs' counsel cannot confirm that all aspects of notice was provided in strict conformity to the Court's directions does not affect the fairness of the settlement agreement or of the procedures under Fed.R.Civ.P. 23(e).

Notice of the proposed settlement explicitly required that objections were to be filed with the Court no later than April 5, 2001. No objection whatsoever has been made to the proposed settlement.

II

The Stipulation of Settlement ["Agreement"] outlines the various changes in policies and procedures to be made by GMHA as a result of this litigation. Specifically, the agreement encompasses changes in the method by which utility allowances are to be calculated, termination of the washer fee, changes to the policies and practices regarding repairs and maintenance charges, and changes to GMHA's procedures regarding entry into tenant dwellings.

The Agreement contemplates an increase in utility allowances effective upon the next interim or annual redetermination of rent, and provides that GMHA will adopt and comply with a policy by which tenant households with special needs may seek individual increases in their utility allowances. The Agreement also provides that GMHA will review and revise the utility allowances for GME tenants as required by 24 C.F.R. § 965.501 et seq., as amended, by obtaining a record of actual consumption of electricity for each unit at GME over the approximate 12 month period since the last review and considering, for each type of unit, the number of such units as to which actual consumption during the previous year was equal to, less than, or more than the allowance afforded for that time. Under the Agreement, GMHA will no longer assess a fee for the use of a tenant-owned washing machine. The Agreement confirms that GMHA will not charge tenants for any repairs resulting from normal wear and tear. Moreover, GMHA will not charge any amount for repair or maintenance of a unit unless GMHA has reliable information upon which to conclude that the tenant has intentionally or negligently damaged the premises, or permitted others on the premises to negligently or intentionally damage the premises. No tenant may be billed for any repair amounts without notice pursuant to 24 C.F.R. § 966.4(d)(8).

In regard to GMHA's procedure for entering tenant dwellings, the Agreement provides that, unless there is reasonable cause to believe an emergency exists, GMHA will not permit entry into tenants' units by its employees or agents without providing at least 48 hours prior written notice to the tenant specifying the purpose of the entry. The Agreement proposes that GMHA will have the right to enter the premises during the hours of 8:00 a.m. through 4:30 p.m. to perform inspections, to make repairs, or to show the premises for re-leasing. In the event that the tenant and all adult members of tenant's household are absent at the time of entry, GMHA will leave a written statement specifying the date, time and purpose of entry. The Agreement also provides that GMHA will revise the present written notice policy concerning entry to reflect these changes and will deliver a copy to each unit, to each new tenant family at move-in, and to each employee or agent of GMHA. At the initial lease signing, GMHA will provide each new tenant with a copy of GMHA's grievance procedure and house rules. New copies of these documents will be offered to tenants at their annual recertification, and immediately following any revisions of such documents or policies.

The Agreement also contemplates monetary relief to the members of the plaintiff class regarding "washer fees" and fees charged for certain repairs. A total of $130,000 has been set aside by defendant GMHA to fund the settlement. The Agreement provides for the appointment of a Special Master to administer the claims process and establishes a procedure for filing claims and appealing from the Master's determination.

Once a claim has been filed by a class member, a representative of plaintiffs' counsel and a representative of GMHA will review the claim, as well as tenant and administrative records concerning the claim, and will jointly calculate, for presentation to the Special Master, the amount of any washer fees paid by the claimant, will determine whether repair charges were paid by the tenant, the amount thereof and the billings to which such payment related, and will chart utility allowance factors relevant to the claim. The Master will then review the claim, records, and recommendation and make a determination regarding the amount of the claim. If the Master finds that insufficient objective evidence supports GMHA's repair and maintenance charges, the Master will approve the claim in the amount of all sums actually paid toward the repair. Furthermore, the Master will offset approved claims relating to repairs against any unpaid rent owed to GMHA by the claimant, and such amounts will be paid to GMHA at the time of final disbursement of the settlement funds. If any class member reapplies for housing with GMHA, moreover, the tenant will be provided with both notice and opportunity to contest any unpaid repair fees before GMHA rejects the rental application or conditions acceptance of the application on payment. For each claimant who resided at GME for a continuous period of at least 12 months between September 1, 1980 and December 31, 2000, the Master will calculate the amount of the claim in regard to utility allowances based on the chart included in the Agreement at ¶ XIII(4)(A)-(H). Monetary claims of less than $10.00 will be rejected as de minimus; claims may not exceed $1,000.00.

The Agreement also provides that, if any claimant or party disagrees with the Master's determination, that claimant or party may object in writing within thirty (30) days of the date of that determination. The Court will resolve any such objections at the hearing to review the Master's report. The Court will also retain jurisdiction over the execution of the terms of the settlement for no more than three (3) years after disbursement of the settlement funds unless such jurisdiction is shortened or extended for good cause.

III

This Court must now determine whether the agreement is fair, adequate and reasonable. See Baily v. Great Lakes Canning, Inc., 908 F.2d 38, 42 (6th Cir. 1990); United States v. Jones Laughlin Steel Corp., 804 F.2d 348, 351 (6th Cir. 1986). The agreement may not be the result of fraud or collusion between the parties. See Ohio Public Interest Campaign v. Fisher Foods, 546 F. Supp. 1 (N.D. Ohio 1982). Approval of a proposed class action settlement falls within the discretion of the Court. Id.

Various factors should be considered by the Court in evaluating a proposed class action settlement, including balancing the likelihood of plaintiffs' ultimate success against the amount and form of relief offered in the settlement; the expense, complexity and duration of the litigation; the judgment of experienced trial counsel; any objections by class members; and the public interest in the settlement. Williams v. Vukovich, 720 F.2d 909, 922 (6th Cir. 1985); Bronson v. Board of Educ. of City Sch. Dist. of City of Cincinnati, 604 F. Supp. 68, 73 (S.D. Ohio 1984). The Court's role in this evaluation process is limited; the Court may only approve or disapprove the settlement. It "does not have the power to change the terms of the proposed settlement which it may not like[;] `only the parties, during arms-length negotiations . . . have the power to agree upon changes." Enterprise Energy Corp. v. Columbia Gas Transmission Corp., 137 F.R.D. 240, 246 (S.D. Ohio 1991) (quoting Bronson, 604 F. Supp. at 73). See also Evans v. Jeff D., 475 U.S. 717, 726-27 (1986).

Applying these factors to the proposed settlement presently before it, this Court concludes that the proposed settlement is fair, adequate and reasonable and is not the product of fraud or collusion. The Agreement reflects a vigorous effort by both sides to resolve tenant concerns regarding utility allowances, "washer fees," repair and maintenance fees, and GMHA's procedure for entering tenant dwellings. The Agreement provides the plaintiffs and class members significant economic and non-economic benefits without subjecting them to the uncertainties of trial. Furthermore, the comprehensive nature of the relief offered is favorable to plaintiffs and to the members of the plaintiff class.

Consideration of the possible expense, duration, and complexity of this litigation also weighs in favor of the proposed settlement. Furthermore, at the time of the Agreement, the parties had completed discovery and prepared the case for trial. As a result of their vigorous preparation, the parties are aware of the strengths and weaknesses of their respective positions. Thus, the Agreement is the product of the parties' thorough investigation. "[W]hen significant discovery has been completed, the Court should defer to the judgment of experienced trial counsel who has evaluated the strength of his case." Bronson, supra, 604 F. Supp. at 73. Likewise important is the fact that no objections to the proposed settlement have been filed by any named plaintiff or class member, nor did any class members appear at the fairness hearing to object to the settlement agreement.

IV

The Court therefore concludes that the proposed settlement agreement is fair, adequate and reasonable in all respects. The Court therefore GRANTS final approval of the Stipulation of Settlement. The Clerk is ordered to enter FINAL JUDGMENT in this matter.

The parties may have until April 27, 2001 to file a motion for appointment of a Special Master.

The Court will schedule a status conference in approximately ninety (90) days for the purpose of reviewing the claims process.