NOTICE OF STUDENT LOAN CLASS ACTION SETTLEMENT

Transcription

1 OFFICIAL NOTICE APPROVED BY THE MICHIGAN COURT OF CLAIMS NOTICE OF STUDENT LOAN CLASS ACTION SETTLEMENT If You Obtained A Student Loan To Attend A Michigan College or University, You May Be Entitled To Receive A Cash Payment Of Up To $1, A Michigan court has authorized this Notice to be published by and online. It is not from a lawyer. You are not being sued. As explained below, you are NOT required to submit a claim to receive any settlement benefits. Each class member will automatically receive a settlement check absent a request to be excluded. You are receiving this Notice because there is a proposed settlement of a national class action brought by student loan borrowers against the Michigan Finance Authority ( MFA ) regarding the termination of the Michigan Students First ( MSF ) program. The lawsuit is captioned as Michigan Finance Authority v. Kiebler, et al., Case No.: MZ and is pending before the Hon. Michael J. Talbot, Chief Judge of the Michigan Court of Claims. The Court has not made a determination of the merits of the borrower s claims or the MFA s defenses. Rather than continue to litigate these matters, the parties have reached a settlement. The total monetary value of the settlement is $11.5 million. If you are an eligible borrower, you are entitled to receive a settlement check in the amount of $50.00 to $1, depending on (1) whether your loan is still held by the MFA and (2) the amount of money you originally borrowed. You may determine the amount you are entitled to receive, if any, by reviewing the section entitled How Much Money Will You Get? below. The Court has preliminarily approved the settlement. However, settlement benefits cannot be distributed until after the Court grants final approval of the settlement and after any possible appeals are resolved. Your legal rights are affected and you have the following choices: Your Legal Rights and Options in this Settlement You May Summary Due Date Receive a monetary payment ranging from $50.00 to $1, Exclude Yourself Object If you take no action, and the Settlement is approved by the Court, the Settlement Administrator will issue a check to the borrower ranging from $50.00 to $1, (see How Much Money Will You Get? below for details). You may exclude yourself from the Settlement and you will not be eligible for any settlement benefits outlined in this Notice. If you exclude yourself, you keep your right to sue on your own regarding any claims that are part of this lawsuit. You may file an objection with the Court and explain why you do not like the settlement. You Page 1 of 6 8/15/2014 6/16/2014 6/16/2014

2 may thereafter appear and speak at the Final Fairness Hearing on your own or through your own lawyer to object to or comment on the settlement. How Much Money Will You Get? The parties agreed to a tiered structure to determine how much money each borrower will receive from the settlement. Please keep in mind that the original loan amount ranges listed below are for the total for all of your eligible student loans and not the total per borrower. The amounts listed below are the parties best projections the actual amounts may vary slightly (and therefore increase or decrease) based on the costs of administration, requests for exclusions, and other variables unknown at the time of preliminary approval. For loans that have been consolidated or paid in full: If you consolidated or fully repaid your student loan(s), those loans will not count towards the total original loan amounts ranges below that are used to determine which tier you are eligible for. If you only have consolidated or fully repaid student loan(s) and do not have additional eligible loans of more than $1,000.00, then you will receive the minimum settlement distribution of $ For loans that are still held by the MFA and serviced by Great Lakes, NelNet, and/or Sallie Mae: All loans that are still held by the MFA are eligible for the following settlement benefits based upon the amount you originally borrowed (and disbursed to your school). TIER ORIGINAL LOAN AMOUNT SETTLEMENT BENEFIT Tier One $10.00 to $14, $ Tier Two $15, to $29, $ Tier Three $30, to $59, $ Tier Four $60, to $119, $ Tier Five $120, or higher $1, Remember, some of your student loans may not have been held by the MFA during the applicable time period or may not have been eligible for the Michigan Students First program. If you had other student loans that were never held by the MFA during the applicable time period or were ineligible for the Michigan Students First program, they are not a part of this settlement and you are not entitled to any settlement benefit for those loans. Additional Terms of the Settlement This Notice provides a summary of some, but not all, of the terms of the settlement. The entire Settlement Agreement is posted on the Settlement Website at To take effect, the Settlement Agreement must be approved by the Court. Page 2 of 6

3 1. Why is this Notice being provided? The parties are providing this Notice to inform potential Class Members about the terms of the settlement of this class action lawsuit before the Court decides whether to give final approval to the settlement. This Notice explains the lawsuit, the settlement, your legal rights, what benefits are available, who is eligible for those benefits and how to get them. If the settlement is ultimately approved, the benefits will be provided to Class Members. 2. What is this lawsuit about? After Hans Kiebler and Donovan Visser filed Notices of Intent to File Claims regarding the termination of the MSF program, the MFA filed a lawsuit against both borrowers in the Ingham County Circuit Court for declaratory relief a confirmation that neither borrower had any valid claim against the MFA. In response, student loan borrowers Hans Kiebler and Donovan Visser brought a class action counterclaim against the MFA. For settlement purposes, five other student loan borrowers involved in other litigation Guy Atkinson, Joshua McCann, Scott Burger, Thomas Randall, and James Forbes are consolidating their claims into the Kiebler action. These individuals are collectively referred to as the Class Representatives. Each Class Representative may be contacted through Class Counsel at the address listed below. The lawsuit alleges that the MFA illegally terminated the MSF program in Under the MSF program, the MFA reduced student loan interest rates to zero percent (0%) after the borrower completed making 36 on-time monthly payments. The Class Representatives allege that borrowers were forced to pay higher interest rates as a result of the MFA s termination of the MSF program. Through their counterclaim, the Class Representatives sought monetary damages for the increased interest payments, injunctive relief reducing the applicable interest rates, and declaratory relief confirming that the MFA has breached the terms of the student loan contracts. The MFA has denied and continues to deny all of the allegations in the Class Representatives counterclaim. This case has been vigorously litigated on both sides and has been appealed to the Michigan Court of Appeals and the Michigan Supreme Court. 3. What is a class action and who is involved? In a class action lawsuit, one or more people (the Class Representatives) sue on behalf of numerous other people who have similar claims. The people together are called the Class or Class Members. The Class Representatives, through Class Counsel, have reached the settlement with the MFA. The Court has allowed, or certified, this case to proceed as a class action solely for purposes of the settlement, and all decisions that the Court makes concerning the settlement will affect all Class Members. 4. Why is there a Settlement? The Court did not decide in favor of the Class Representatives or the MFA. The Class Representatives and Class Counsel believe that the claims asserted in the action have merit, but that the settlement is in the best interests of the Class. Class Counsel have evaluated information made available in the course of the action and settlement negotiations and have taken into account the risks and uncertainties of proceeding with the action. If the Class Representatives had succeeded, they may have obtained damages stemming from the increased interest payments they paid on their loans as a result of the termination of the MSF program. The risks and financial consequences were significant on both sides of the case. If the MFA had succeeded, they may have obtained a judgment stating that the Class Representatives and other borrowers had no claims against the MFA. Those risks also include the uncertainty of prevailing on the merits, certifying a contested Class, proving damages at trial, and prevailing on post-trial motions and potential appeals. Based upon their consideration of these factors, and on the substantial time and expense that will be incurred, Class Counsel believe it is in the best interest of the Class to settle the action on the terms described below. Page 3 of 6

4 5. Am I a Class Member? The Class includes any individual who as of June 30, 2010 owed a balance on a student loan that was owned by the MFA and potentially eligible for benefits under the Michigan Students First Borrower Benefit Program offered by the MFA or the Michigan Higher Education Student Loan Authority, provided that (i) as of June 30, 2010 such loan had not yet qualified for the 0% interest benefit offered under the Michigan Students First Borrower Benefit Program because 36 on-time interest payments had not been made on such loan, (ii) as of June 30, 2010 such loan had not been disqualified from the 0% interest benefit offered under the Michigan Students First Borrower Benefit Program by reason of a late payment, and (iii) as of February 4, 2014 such loan was not or previously had not been in default under applicable federal family education loan program terms. Excluded from the Class are (a) all persons who are employees, directors, officers, and agents of the Michigan Finance Authority or its affiliated entities; (b) persons who timely and properly exclude themselves from the Class as provided in this Settlement Agreement; (c) the Court, the Court s immediate family, and Court staff; (d) all counsel of record in the Actions; (e) David Israel; and (f) Joseph Mouton, Jr. If you did not receive Notice of this settlement by or postcard, but believe you are a Class Member; please contact CPT Group, the Settlement Administrator, at 1 (844) If I remain in the Class, what rights am I giving up? If you remain in the Class, you give up your right to sue in court or be part of any other lawsuit against the MFA regarding any issues relating to the Released Claims, as more fully described in the Settlement Agreement. Additionally, all of the Court s orders will apply to you and legally bind you. 7. How will Class Counsel and the Class Representatives be paid? The MFA will pay Class Counsel s Court-awarded attorneys fees and costs, and the Class Representatives incentive awards. Class Counsel s motion for these amounts will be filed with the Court during the time you have to decide whether to participate in the settlement, and you may obtain a copy if you wish. Although Class Counsel has not yet moved for approval of a specific amount of attorneys fees, Class Counsel will seek, and the MFA will not to oppose, attorneys fees and costs in an amount not to exceed one-third of the total settlement, which equals $3,833, In addition, the MFA further has agreed not to oppose an application for incentive awards to the seven Class Representatives, in an amount not to exceed a total of $130, How do I participate in the Settlement? You do not need to take any action to participate in the settlement. If you take no action, and the settlement is approved by the Court, you will receive the relief described above in the How Much Money Will You Get section. 9. Why would I ask to be excluded? You may want to exclude yourself from the Class if you already have filed (or intend to file) a lawsuit against the MFA based on the settled claims and want to continue that lawsuit individually, on your own behalf. If you do not exclude yourself, you will be legally bound by all orders of the Court in the above case regarding the Class and the settlement. If the Court approves the settlement, all of the settled claims will be released. All persons in the Class who do not ask to be excluded will be forever barred from asserting any of the Released Claims, as more fully described in the Settlement Agreement. In addition to requesting exclusion, any Class member may intervene in the Action. Page 4 of 6

5 10. How do I exclude myself from the Settlement? You may exclude yourself from the Class by mailing a Request for Exclusion from Class Action Settlement form (available online at The form must be mailed to: (1) the Settlement Administrator; (2) Class Counsel; and (3) MFA s Counsel. The addresses for all three recipients are listed in the next section. You will not receive any benefits from the Settlement if you exclude yourself. To be effective, a mailed Request For Exclusion From Class Action Settlement form must be signed by the Class Member, postmarked no later than June 16, 2014 and must, as determined in the discretion of the Settlement Administrator, substantially include the following: (i) the Class Member s name, last four digits of your social security number, address, telephone number; (ii) the loan number(s) of any applicable student loans; (iii) a sentence confirming that he or she is a member of the Class; and (iv) the following statement (or other words expressing unambiguous desire to be excluded, as determined by the Settlement Administrator ): I request to be excluded from the settlement in Michigan Finance Authority v. Kiebler, et al., Case No.: MZ. Without the written authorization of the Class Member, no person other than the Class Member may exclude that Class Member from the settlement. 11. Can I object to the Settlement? Yes. Objecting is telling the Court that some aspect of the settlement is unfair, unreasonable, or inadequate. You will still be bound by all Court orders, even if your objection is overruled. To object, you must file must file a written objection with the Michigan Court of Claims, and serve the same on Class Counsel, and the MFA s Counsel. Objections must be filed or delivered no later than June 16, 2014 to be considered by the Court. If you do not file an objection, you waive your right to appeal any Court order or judgment related to the settlement. The written objection(s) MUST include: (a) the case name and number; (b) your full name; (c) your current address; (d) a statement of whether you intend to appear at the Final Fairness Hearing; (e) a detailed statement of your objection(s) as well as the specific reasons, if any, for each objection, including any evidence and legal authority you wish to bring to the Court s attention in support of your objection(s); (f) any other supporting papers, materials or briefs you wish the Court to consider when reviewing the objection(s); and (g) a statement of whether you or your lawyer will appear at the Final Fairness Hearing to talk about your objections. You may object on your own or through an attorney hired at your own expense. If you hire an attorney to represent you, the attorney must file a notice of appearance with the clerk of court no later than June 16, 2014 and otherwise comply with the requirements outlined in this Notice. You must file or deliver your objection no later than June 16, 2014 to all of the addresses below: Settlement Administrator Class Counsel MFA s Counsel MFA v Kiebler Administrator ATTN: Objections Aston Street Irvine, CA Christopher Ridout Caleb Marker Ridout Lyon + Ottoson LLP 555 E. Ocean Blvd., Suite 500 Long Beach, CA Molly McManus Warner Norcross & Judd LLP 900 Fifth Third Center 111 Lyon Street NW Grand Rapids, MI Page 5 of 6

6 12. When and where will the Court decide whether to approve the Settlement? The Court will hold a Final Fairness Hearing, or other manner of making a final disposition determination, on July 2, 2014 at 2:00 p.m. at the Michigan Court of Claims, Cadillac Place, 3020 West Grand Boulevard, Suite , Detroit, MI At the Final Fairness Hearing, the Court will consider if the settlement is fair, reasonable and adequate, and whether it should be granted final approval. If there are objections, the Court will consider them. Class Counsel will also ask the Court for approval of their request for attorneys fees and costs, and incentive awards for the Class Representatives. The Final Fairness Hearing may be rescheduled without further notice. 13. Do I have to attend the Final Fairness Hearing? No. Your attendance at the Final Fairness Hearing is not required. Class Counsel will answer any questions the Court may have. If you submit a written objection or comment, you do not have to come to the Final Fairness Hearing to talk about it. As long as you filed your written objection on time, the Court will consider it. However, you or your attorney may attend the hearing if you would like at your own expense. 14. May I speak at the Final Fairness Hearing? Yes. You may speak at the Final Fairness Hearing, but only if you filed a written objection as described above. You may also speak through an attorney hired at your own expense. If you want to speak at the Final Fairness Hearing, your objection must include a statement that you intend to appear and be heard at the Final Fairness Hearing and the rest of the requirements discussed above. 15. What lawyers represent Class Members in this case? The Court has preliminarily appointed Ridout Lyon + Ottoson LLP of Long Beach, California, Sommers Schwarz P.C. of Southfield, Michigan, and Hank Law PLLC of Lansing, Michigan to represent Class Members. They are called Class Counsel. 16. Where can I get more information? This Notice only summarizes the proposed Settlement. Complete copies of certain case-related documents, including the Settlement Agreement, are available on the Settlement Website at If you wish to contact Class Counsel, you may contact attorney Caleb Marker of the law firm of Ridout Lyon + Ottoson LLP. You may contact him by sending an to c.marker@rlollp.com, calling (562) , or writing to: Caleb Marker, Ridout Lyon + Ottoson LLP, 555 E. Ocean Boulevard, Suite 500, Long Beach, CA Please do not contact the Court, the MFA, or the MFA s lawyers concerning this Notice. Page 6 of 6