A judge of the Federal Court has approved a $23.5 million class settlement
with HSBC Business Bank in a case in which the bank is alleged to have
engaged in deceptive practices in administering its “debt suspension”
and “debt cancellation plans.”
The judge approved the settlement amidst objections from the attorneys
general for Mississippi, West Virginia, and Hawaii. Because they are not
members of the class, the judge concluded that they lack the standing
to make an objection. He explained that they may continue to bring claims
coming from their states, but clarified that members of the settlement
will not be able to recover twice on the actions of the state.
Philadelphia class action lawyer Richard Golomb represented the Eastern
District plaintiffs in the case of
Esslinger v. HSBC. “It’s the first time this has ever occurred,” he said
of the objections from the attorneys general. This settlement agreement
applied to six cases from Washington, California, New Jersey, and two
Illinois districts. Golomb explained that the states took a “belt
and suspenders” approach in an effort to make sure their claims
could survive. He agrees with the judge’s reasoning in answering
the objections, calling it sound both equitably and legally.
According to the judge, the mutual complaint seemed to be that the amount
of the settlement was not enough to provide proper compensation to objecting
individuals for his or her losses. While acknowledging the frustrating
experiences of individuals, he notes that settlements are compromises
by nature. He further explains that, considering the many obstacles plaintiffs
must meet to prove their claims, members of the class run the risk of
receiving no compensation without a settlement.
According to the opinion, anyone enrolled in the bank’s “debt
suspension” or “debt cancellation” programs can be members
of the class. Most members will receive anywhere between $15-$60.
As a multinational bank operating in over 88 countries, the judge said
that HSBC would likely be able to survive a larger judgment, but this
is the only factor he found against approving the settlement.
Thirty percent of the settlement was awarded as attorney fees, nearly meeting
the $7.7 million requested by class counsel. They were also awarded approximately
$101,000 in costs.
The two attorneys who represented HSBC could not be reached for comment.