Edelson Lechtzin LLP is pleased to report that the Judicial Panel on Multidistrict Litigation (JPML) has granted the motion filed on behalf of our clients in the first-filed Baker action1 to centralize the settlement administration kickback lawsuits and transfer the actions to the U.S. District Court for the District of Columbia for coordinated pretrial proceedings before Judge John D. Bates. The JPML ordered that five actions pending across four federal districts be transferred to the District of Columbia and assigned to Judge Bates for coordinated or consolidated pretrial proceedings. The Panel concluded that these actions share common factual questions regarding alleged schemes by settlement administrators and banks involving settlement funds, and that centralization will promote the just and efficient conduct of the litigation.
Significance of the Decision
The Panel found that centralization will eliminate duplicative discovery, prevent inconsistent pretrial rulings (particularly on class certification), and conserve resources of the parties, counsel, and the judiciary. In selecting the District of Columbia, the Panel cited the district’s very light MDL docket, its capacity and convenience, and Judge Bates’s extensive experience with class actions and multidistrict litigation The Panel also declined requests to separate and remand so‑called “digital payment kickback” allegations, determining that breaking the litigation apart was not warranted because the actions arise from a common factual core and involve overlapping defendants and witnesses
Impact on the Cases
The centralized docket encompasses actions originally filed in the Northern District of California (Whalen; Rieger), the Southern District of Florida (Tejon), the Southern District of New York (Whalen), and the Eastern District of Pennsylvania (Baker). The Panel determined that these actions raise factual questions regarding the alleged diversion of settlement deposits to banks in exchange for kickbacks in the form of interest and investment earnings that would otherwise have been distributed to class members or used to reduce administration costs. The complaints seek to represent substantially similar nationwide classes and assert similar federal antitrust, RICO, and common‑law claims. Following centralization, once a consolidated complaint is filed, defendants will have 50 days to respond.
Background of the Allegations
The lawsuits allege that three leading settlement administration companies—Epiq Systems Inc., Angeion Group, and JND Legal Administration—worked with Huntington National Bank and Western Alliance Bank in a kickback scheme involving settlement funds. Plaintiffs allege that the administrators control over 65% of the settlement administrator market and that the two banks control more than 80% of class action settlement funds. Edelson Lechtzin LLP’s proprietary Baker action, filed in the Eastern District of Pennsylvania, further alleges that administrators conspired with digital payment providers—Tremendous LLC, Blackhawk Network Holdings Inc., and Digital Settlement Technologies—to share portions of “breakage” from unredeemed or unclaimed digital payments.
Statement from Edelson Lechtzin LLP
The JPML concluded that centralization in the District of Columbia will streamline proceedings and avoid duplicative discovery and scheduling conflicts, expressing confidence that Judge Bates will steer the litigation on a prudent and expeditious course. “We are pleased that the Panel has recognized the benefits of consolidating the pretrial phase of this litigation in the D.C. District, which will promote the efficient adjudication of this matter,” said Eric Lechtzin.
If you received a digital payment in a class action settlement and would like further information about participating in the case, In Re: Class Action Settlement Administration Litigation, MDL No. 3162 (D.C. District), please contact attorney Eric Lechtzin at 215-867-2399 ext. 1, or by email to [email protected].