Appendix — Ballard v. Martin

v / ries”

of

02 542 0c -3 2009

No.

| OFFICE OF THE CLERK

IN THE

Supreme Court of the Gnited States

TERESA BALLARD, ET AL.,

Petitioners,

¥.

SHEILA MARTIN, ET AL., AND WESTARK FINANCIAL

CONSULTANTS OF JONESBORO, INC., ET AL.,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF THE

STATE OF ARKANSAS

Appendix to

PETITION FOR WRIT OF CERTIORARI

RICHARD A. FISHER DAVID G. NIXON

Counsel of Record

THE FISHER LAW FIRM THE NIXON LAW FIRM

1510 STUART ROAD 2340 GREEN ACRES RD.

SUITE 210 SUITE 12

CLEVELAND, TN 37364 FAYETTEVILLE, AR

72703

TEL: (423) 479-7009 TEL: (479) 582-0020

Counsel for Petitioners Counsel for Petitioners

sittin Poca

APPENDIX A

SUPREME COURT OF ARKANSAS

No. 01-1185

TERESA BALLARD, et al., Opinion Delivered JUL 02

and STEPHEN CAIN, et al., 2002

APPELLANTS, 7

VS. APPEAL FROM THE

CRAIGHEAD COUNTY

SHEILA MARTIN, et al,and | CIRCUIT COURT,

WESTARK FINANCIAL NO. CIV 2000-0669

CONSULTANTS OF HON. DAVID N. LASER,

JONESBORO, INC., et al., JUDGE,

APPELLEES,

AFFIRMED

ROBERT L. BROWN, Associate Justice

This is a check-cashing case that presents the issue of

whether a class-action settlement was fair and adequate. The

appellants are two groups of intervenors, Teresa Ballard et al.

and Stephen Cain et al. (Collectively referred to as Ballard and

Cain). The appellees are Sheila Martin and Jimmie Sue

Spencer, individually and on behalf of the class (collectively

referred to as Martin), who represent the original class of

plaintiffs in this litigation, as well as Westark Financial

Consultants of Jonesboro, Inc. (Westark), together with

eighteen other check-cashing businesses which voluntarily

submitted to the jurisdiction of the Craighead County Circuit

Court as defendants as part of Martin’s amended motion for

class certification (collectively referred to as Westark

defendants). Westark and the other eighteen check-cashing

businesses will be referred to jointly as “Westark appellees.”

On appeal, Ballard and Cain challenge the fairness and

adequacy of the class settlement between Martin and the

la

Westark defendants. Ballard and Cain raise three additional

points: (1) the adequacy of Martin, and class counsel to

represent the interests of the class; (2) whether the trial court

adequately enforced subpoenas against the Westark appellees;

and (3) whether the notice to potential class members was

adequate.

On December 8, 2000, Martin, both individually and

on behalf of a class, filed the complaint against Westark in

Craighead County Circuit Court. According to the complaint,

each potential class member had engaged in deferred-

presentment check-cashing with Westark. The _ typical

deferred-presentment transaction allowed the customer to

write a check for the cash amount exchanged plus a “service

charge,” which the check-casher would defer cashing until the

customer's “payday.” On payday, the customer was instructed

to pick up the held check in exchange for cash in the face

amount of the check. The customer could defer payment by

writing a second check for the amount owed, the original

service charge, and the new service charge. Martin alleged that

these service charges were interest and that Westark had

engaged in usurious lending practices in violation of Arkansas

Constitution Article 19, section 13. She sought damages on that

basis and alleged that the class met the requirements of Rule

23 of the Arkansas Rules of Civil Procedure. On January 8,

2001, she also moved for class certification.

Following the filing of the complaint, Martin

commenced discovery. Through one set of interrogatories and

requests for production propounded by Martin, information

about the arbitration provisions in the customer contracts was

elicited. Martin did request limited information relating to

Westark’s financial condition. However, it is unclear from the

record whether Martin ever received this information. The

class was later estimated to include approximately 18,500

members. On April 26, 2001, Martin filed an amended motion

for class certification in which the Westark defendants were

added as parties defendant. Martin also filed a second

amended complaint that same date with the Westark

defendants listed as parties defendant.

2a

Sometime in mid-to-late April 2001, Martin and the

Westark appellees reached a settlement agreement. On April

30, 2001, the trial court entered an order certifying the class

pursuant to Ark. R. Civ. P. 23, adopting the settlement, and

requiring notice to the class by publication in the Arkansas

Democrat-Gazette and by individual notices to be mailed no

later than May 14, 2001. In the settlement, the eighteen

Westark defendants agreed to submit to the jurisdiction of the

Craighead County Circuit Court with Westark for purposes of

settling all claims against them. The settlement was as follows:

the nineteen check-cashing businesses would deposit $605,000

into a settlement pool. $435,000 of the amount would be used

to purchase Series E bonds totaling $870,000 to pay the claims

of aggrieved customers at a rate of one and one-half times any

fees paid by those customers.! Claims exceeding the face

amount of the bonds would not be paid. This settlement

amount would be subject to set-off for any outstanding

balance due the defendant check-casher for cash advanced and

unpaid. The settlement amount, if any remained after the set-

off, would be paid to the customer in the form of a Series E

savings bond. The savings bonds were worth one-half of their

face value until their maturity in sixteen years, and the class

member was required to wait six months to cash the bond for

the initial one-half value. Class counsel for Martin would

immediately receive a fee of $170,000.

The settlement agreement further provided that the

Westark appellees would continue to operate their businesses

for the next ninety days after the date of the settlement in

order to collect any outstanding checks. The settlement

provided additionally that if any appellate court ruled that the

service charges associated with these transactions were not

usurious, then the defendants would be free to operate in any

1 The appellants assert for the first time on appeal that the United States

Treasury discontinued Series E bonds in 1980, and thus the settlement is

impossible to perform as written. Martin responds that the class of bonds

is now called Series EE instead of Series E, and that this oversight should

not be a basis for invalidating the settlement. We agree.

3a

legal manner. The final “opt-out date” for nonparticipation in

the class or settlement was fixed at August 15, 201.

After this order was entered, notice was given to the

class members together with the conditions of the proposed

settlement. Martin accomplished notice by placing an

advertisement in the Arkansas Democrat-Gazette newspaper on

May 21, 2001. Class counsel also mailed an individual

notification to each potential class member by standard mail

on May 16, 2001.2

Two groups of objectors moved to intervene after

receiving notice. The Ballard group of objectors involved five

members and the Cain group of objectors involved twelve

members. The Ballard objectors filed a motion to intervene on

May 25, 2001. On that same date, they issued subpoenas for

the financial records of the Westark appellees. The Cain

objectors filed their motion to intervene on June 1, 2001. The

trial court granted both motions to intervene on June 1, 2001,

at the beginning of the fairness hearing on the proposed

settlement.

At the fairness hearing, the trial court allowed the

Martin class as well as the Westark appellees to put on

evidence supporting the settlement. The Martin class

presented the testimony of Martin herself, as well as the

testimony of Chris Lawson, a partner at the law firm of Friday,

Eldredge, & Clark in Little Rock. As class representative,

Martin testified that she had been kept abreast of the litigation

and had approved the settlement.3 On cross-examination, she

admitted to a lack of knowledge about some of the details of

the litigation and the settlement agreement. For his part,

Lawson testified that he was involved in class actions against

check-cashing firms, and that he would advise any clients

2 Notice was mailed apparently two days after the May 14, 2001 date

specified in the trial court’s order. This two-day delay is not an issue on

appeal.

3 The record does not reveal whether Jimmie Sue Spencer, the other

class representative, was present at the fairness hearing.

4a

affected by the proposed settlement to remain in the

settlement and not opt out.

The Westark defendants presented the testimony of

one witness, Jeff Forsey, who testified in his capacity as the

chief executive officer of fourteen of the Westark appellees and

as custodian of financial documents for all nineteen Westark

appellees. Forsey did not bring all of the subpoenaed financial

documents with him but did appear in person at the fairness

hearing. The Ballard intervenors moved io enforce the

subpoenas, and Westark defendants moved to quash them.

The trial court ruled that Forsey’s personal appearance and his

partial production of financial records satisfied the subpoenas,

considering how abbreviated the time was that the Westark

defendants had to respond to the subpoenas.

On the stand, Forsey testified that the decision to enter

into the settlement with the Martin class was a cost/benefit

business decision for the Westark appellees. He further

testified that the reason that they chose savings bonds as the

method of payment was in hope that the settlement would

foster “a different perspective on money” among the low-

income class members. He added that the businesses he

represented at the hearing would have difficulty producing

the $605,000 to fund the settlement. On cross-examination,

Forsey testified to the financial condition of the Westark

appellees. Among other things, he testified that the receipts of

the Westark appellees during the ninety-day period after

approval of the settlement could exceed the settlement amount

of $605,000.

On August 7, 2001, the trial court entered its final order

approving the settlement. Ballard and Cain now appeal that

order.

I. Fairness of the Settlement

Ballard and Cain first assert that the trial court abused

its discretion when it approved the class settlement because

the settlement was not fair, reasonable, and adequate. They

5a

urge this court, in measuring the fairness of the settlement, to

adopt the Eighth Circuit Court of Appeal’s standards set out in

Grunin v. Int'l House of Pancakes, 513 F. 2d 114 (8th Cir. 1975).

In Grunin, the Eighth Circuit adopted four factors to

assist in assessing whether a class settlement is fair and

adequate. Those four factors are listed below, with the first

factor being the primary measure of fairness and the

remaining three being secondary to the first:

(1) the strength of the case for the plaintiffs on the merits,

balanced against the amount offered in the settlement;

(2) the defendant's overall financial condition and ability

to pay;

(3) the complexity, length, and expense of further

litigation; and

(4) the amount of opposition to the settlement.

Grunin, 513 F.2d at 124 (citing West Virginia v. Chas. Pfizer &

Co., 440 F.2d 1085 (2d Cir. 1971); City of Detroit v. Grinnell Corp.,

495 F.2d 448 (2d Cir. 1974); Young v. Katz, 447 F.2d 431 (5th Cir.

1971)).

The Eighth Circuit further stated in Grunin that the

fairness of a class settlement is a discretionary matter that rests

with the trial court, and an appellate court should not reverse

a trial court's approval of a class settlement absent an abuse of

its discretion. Grunin, 513 F.2d at 123 (citing Ace Heating &

Plumbing Co. v. Crane Co., 453 F.2d 30 (3d Cir. 1971)). The

Grunin Court quoted the Ace Heating case for the following

proposition:

Such determination is committed to the sound

discretion of the trial judge. Great weight is

accorded his views because he is exposed to

the litigants, and their strategies, positions and

proofs. He is aware of the expense and possible

6a

legal bars to success. Simply stated, he is on the

firing line and can evaluate the action

_accordingly.

Grunin, 513 F.2d at 123 (quoting Ace Heating, 453 F.2d at 34).

The Eighth Circuit continued that the trial court is accorded

deference, but that deference is accompanied by a duty to act

as a fiduciary who must serve as guardian of the rights of

absent class members. Grunin, 513 F.2d at 123 (citing Greenfield

v. Village Indus., Inc., 483 F.2d 824 (3d Cir. 1973); Norman v.

McKee, 431 F.2d 769 (9th Cir. 1970); Percodani v. Riker-Maxon

Corp., 50 F.R.D. 473 (S.D.N.Y. 1970), affd sub nom. Farber v.

Riker-Maxon Corp., 442 F.2d 457 (2d Cir. 1971)). It concluded

that no court should accept a settlement that is unfair or

inadequate, and the burden is on the proponents of the

settlement to show that the proposed settlement meets

standards of fairness and adequacy. Grunin, 513 F.2d at 123

(citing City of Detroit v. Grinnell Corp., supra; United Founders Life

Ins. Co. v. Consumers Nat’L Life Ins. Co., 447 F.2d 647 (7th Cir.

1971); Young v. Katz, supra).

We adopt the Grunin factors and wili proceed to

analyze this issue using those factors.

a. The strength of the case for plaintiffs on the merits, balanced

against the amount offered in settlement.

Ballard and Cain first argue that the plaintiff class’s

chance of success on the merits is great. They also point out the

many differences between a possible litigation-generated

recovery versus the settlement agreement, including

differences in financial benefit to class members and

differences to the future of the appellees’ check cashing

businesses. They conclude that the likelihood of success on the

merits versus the offered settlement weighs heavily in favor of

this court's finding that the trial court abused its discretion.

7a

(i) Strength on the merits.

We observe, as an initial matter, that this court has

never directly spoken to the issue of whether the deferred-

presentment transactions, such as we have in the instant case,

are usurious and violate the Arkansas Constitution. However,

many of this court's cases point to the strong constitutional

policy against usury established by Article 19, section 13 of the

Arkansas Constitution, both before and after the adoption of

Amendment 60 in 1982. Article 19, section 13, of the Arkansas

Constitution states in relevant part:

(a) General Loans:

(i) The maximum lawful rate of interest on any

contract entered into after the effective date

hereof shall not exceed five percent (5%) per

annum above the Federal Reserve Discount

Rate at the time of the contract.

**e

(b) Consumer Loans and Credit Sales: All

contracts for consumer loans and credit sales

having a greater rate of interest than seventeen

percent per annum shall be void as to principal

and interest and the General Assembly shall

prohibit the same.

Ark. Const. Art. 19, § 13. See also Luebbers v. Money Store, Inc.,

344 Ark. 232, 40 S.W.3d 745 (2001) (citing this portion of Article

19, section 13, as potentially applicable to the transactions at

issue, but not reaching the merits of the usury dispute).

Historically, this court has closely scrutinized what appeared

to be a non-usurious transaction on its face to reveal the true

usurious nature of the transaction. See Bunn Lumber Co. v.

Weyerhaeuser Co., 268 Ark. 445, 598 S.W.2d 54 (1980) (finding

transaction usurious where interest on account payable was

masked as a service charge); Arkansas Savings & Loan Ass'n v.

Mack Trucks of Arkansas, Inc., 263 Ark. 264, 566 S.W.2d 128

8a

(1978) (finding transaction usurious where interest on loan was

masked as a pre-loan “commitment fee”); Sosebee v. Boswell, 242

Ark. 396, 414 S.W.2d 380 (1967) (finding transaction usurious

where a forfeiture of money placed in escrow was actually

interest, but was masked as liquidated damages, processing

fees, and expenses); Smith v. Eason, 223 Ark. 747, 268 S.W.2d

389 (1954) (finding transaction usurious where interest on loan

was masked as a commission payable to lender's agent);

Strickler v. State Auto Finance Co., 220 Ark. 565, 249 S.W.2d 307

(1952) (finding transaction usurious where interest on loan

policy was masked a service charge and pro rata share of

overhead expenses); Wilson v. Whitworth, 197 Ark. 675, 125

S.W.2d 112 (1939) (finding transaction usurious where interest

charges were masked as insurance and service fees). We

conclude that for decades this court has been willing to delve

into the particulars of a financial arrangement to expose its

usurious nature. As we said in Sparks v. Robertson, 66 Ark. 460,

463-64, 51 S.W. 460, 462 (1899), “The law shells the covering,

and extracts the kernel. Names amount to nothing when they

fail to designate the facts.” As a result, it is obvious that the

transactions presented in this case would receive exacting

scrutiny if they were presented to this court for a merits

determination.

Recently, this court rejected an attempt by the General

Assembly to rename deferred-presentment interest as a non-

usurious fee under Act 1216 of 1999, then codified at Ark. Code

Ann. § 23-52-104(b) (Repl. 2000). See Luebbers v. The Money

Store, Inc., supra; (holding that the determination of what is

interest and what is not interest is for the courts, not the

legislature). See also Strickler v. State Auto Finance Co., supra

(holding statute unconstitutional as violative of separation of

powers where General Assembly tried to deem installment

loan fees as non-interest). The Westark appellees may have

relied on Act 1216 of 1999 in proceeding to do business in this

state. The effect of that reliance, if any, is an issue that has not

been resolved by the courts of this state.

The Westark apellees argue that their agreements with

their customers provide that any customer disputes must be

9a

resolved by arbitration. They note that at the time of the

settlement negotiations, only the case of Showmethemoney Check

Cashers, Inc. v. Williams, 342 Ark. 112, 27 S.W.3d 361 (2000),

which held that the arbitration agreements at issue could not

be enforced due to lack of mutuality of obligation, had been

decided by this court. They further refer to the general release

of claims signed by most of their customers as a defense

against the class-action litigation. Finally, they advance a

practical argument. They underscore the fact that eighteen of

the nineteen Westark appellees voluntarily submitted to the

venue of the Craighead County Circuit Court in order to take

advantage of the terms of the settlement. Those eighteen

defendants assert that despite their voluntary appearance, they

have preserved an objection to venue in the trial court, should

the settlement not be consummated. They further assert that if

this settlement is thwarted, they will seek to withdraw from

the jurisdiction of the Craighead County Circuit Court. If that

happens, any success on the merits will be applicable only to

Westark and not to the other eighteen Westark defendants.

The arbitration defense seems less valid today than it

might have appeared on April 30, 2001, in light of this court's

recent decisions. See, e.g., The Money Place, LLC v. Barnes,

__ Ark. __, ___ S$.W.3d___, 2002 WL 1339861 (Jun. 20, 2002);

Cash in a Flash Check Advance of Arkansas, LLC v. Spencer, 348

Ark. 459, 74 S.W.3d 600 (2002); E-Z Cash Advance, Inc. v. Harris,

347 Ark. 132, 60 S.W.3d 436 (2001). In addition, this court has

yet to consider the viability of the general-release defense. The

point, according to the Westark appellees, is that had they not

settled, they would have contested class certification based on

these two defenses and appealed any adverse order.

Being mindful of this court's strong jurisprudence

against usury as well as Article 19, section 13 of the Arkansas

Constitution, we conclude that Ballard and Cain have a bona

fide argument on the merits. However, we quickly add that by

concluding as we do, we are not deciding the merits of the

usury question in their favor. This distinction was noted by the

Grunin court:

[NJeither the trial court in approving the

settlement nor this Court in reviewing that

approval have the right or duty to reach any

ultimate conclusions on the issues of fact and

law which underlie the merits of the dispute.

Grunin, 513 F.2d at 123 (quoting City of Detroit v. Grinnell Corp.,

495 F.2d at 456 (2d Cir. 1974)). Nor can we proceed in our

analysis with any assumption that the class will prevail and

collect all damages claimed. Armstrong v. Board of School

Directors, 616 F.2d 305 (7th Cir. 1980).

(11) Potential litigation recovery compared to settlement.

Ballard and Cain also contend that the settlement is

inadequate, unfair, and unreasonable when compared to a

likely recovery after litigation. They mount two primary

arguments to support their position. The first concerns the

monetary value of the settlement as opposed to a potential

litigation recovery. The settlement agreement contemplates a

cash outlay of $605,000 by the Westark defendants, including

$170,000 in attorneys’ fees. The face value of the bonds

available for claims is $870,000. Ballard and Cain claim that, in

contrast, a damage recovery following litigation could be as

high as $27 million, based on doubling the fees collected by the

Westark appellees. They also emphasize that the $605,000

settlement is subject to a set-off for the amount of any

outstanding cash advances owed by individual class members.

In a litigated recovery, Ballard and Cain contend that those

outstanding debts would be void as consumer loans under

Article 19, section 13. Finally, they assert that it is unfair to

distribute the settlement funds in the form of savings bonds

which will not mature for sixteen years.

Ballard and Cain further point to the continuing

viability of the Westark appellees following the settlement.

They argue that under the terms of the settlement agreement,

the defendant check-cashing establishments will be free to

continue their businesses so long as they simply re-name the

transactions. For example, instead of calling the transactions

lla

“deferred presentment transactions,” they claim the Westark

defendants could rename the same transactions “pay-day

loans” and still comply with the settlement. Indeed, they point

out that Jeff Forsey, as CEO of fourteen of the nineteen Westark

businesses, testified that he and his board of directors were

looking into that very option. By contrast, Ballard and Cain

assert that a victory on the merits following litigation would

shut down the businesses permanently, either through a

judgment that would bankrupt the corporations or through a

judgment that concluded the business practices were

unconstitutional.

The Westark appellees make three arguments in

response. First, they argue that a settlement is always lower

than a potential litigation recovery, because otherwise there

would be no incentive to settle. They also claim that their

ability to pay a larger sum is limited, and that a large jury

verdict would be unrecoverable in any event, because the

affected businesses would seek bankruptcy protection.

Therefore, they assert that as a practical matter, litigation of the

case would be futile. In addition, the Westark appellees cite

Petrovic v. Amoco, 200 F.3d 1140 (8th Cir. 1999), for the

proposition that once a trial court has determined that a

settlement is fair and adequate, the fact that a defendant could

have paid more is not a legitimate reason to reject the

settlement.

The Westark appellees’ second argument is that the

settlement contains a significant benefit to the class that Ballard

and Cain do not discuss. Under the settlement, the class

members would be able to write off any outstanding debt after

the ninety-day period from the settlement date has expired.

Thus, class members who did not make a claim under the

settlement agreement would not face collection on their checks.

Third, they argue that the settlement agreement hastens the

class members’ recovery and avoids the delays of litigation.

While we are attuned to the legitimacy of the

arguments made by Ballard and Cain, the Westark defendants

also make valid points about their defenses. We recognize that

12a

the purpose of a settlement is to avoid the delay, expense, and

risk of trial. Grunin v. Int'l House of Pancakes, supra. We further

are reluctant to hold that this settlement does not fall within

the range of reasonableness when compared to what the class

might have ultimately recovered. A full recovery of $27 million

based on collecting twice the amount of interest paid under

section (b) of Article 19, section 13, of the Arkansas

Constitution for all other loans is-somewhat speculative,

considering that the merits of their constitutional claim have

never been decided. But even assuming full recovery, a

settlement which embraces Series EE Bonds totaling $870,000

and forgiveness of debt after ninety days has considerable

value. As one court has put it:

While plaintiffs cannot predict what each

claimant will receive, the Second Circuit has

held that a settlement can be approved even

though the benefits amount to a small

percentage of the potential recovery sought.

Grinnell, 495 F.2d at 455. “The fact that a

proposed settlement may only amount to a

fraction of the potential recovery does not, in

and of itself mean that the proposed

settlement is grossly inadequate and should

be disapproved.” Id. (footnote omitted). The

Court explained: “In fact there is no reason,

at least in theory, why a satisfactory

settlement could not amount to a hundredth

or even a thousandth part of a single percent

of the potential recovery.” Id. at 455 n.2. In

the District Court decision in City of Detroit v.

Grinnell Corp., 356 FSupp. 1380, 1386

(S.D.N.Y. 1972). affd in part, rev'd in part, 495

F.2d 448 (2d Cir. 1974), Judge Charles

Metzner of the Court found a proposed

settlement of 3.2% to 3.7% of the potential

recovery “well within the ball park.”’

13a

In re Milken & Assoc. Securities Litigation, 150 F.R.D. 46, 54

(S.D.N.Y. 1993). In short, we do not find this — to be

dispositive of the issue.

b. The defendant's overall financial condition and ability to pay.

To a lesser extent, the fairness of the class settlement

turns on the Westark appellees’ ability to pay more than the

$605,000 to settle the matter under Grunin. Here, Ballard and

Cain assert that Jeff Forsey’s own testimony swings this factor

in their favor. They point to his statement that during the

ninety-day window alone, the Westark appellees could receive

check-cashing revenues that exceed the value of the cash

outlay - $605,000. They also claim that Forsey’s testimony

revealed such liquidity in the Westark appellees’ businesses

that a far greater settlement agreement could have been

negotiated. According to his figures, the businesses were worth

some $2.7 million as of December 31, 2000, after deducting bad

debt that they would not be able to collect. The Westark

appellees dispute these figures. They also claim that they have

little cash on hand and that operating overhead reduces the

amount available for the settlement fund. We do not consider

the disputed claim that the Westark appellees could have paid

more than $605,000 to be a persuasive reason for overturning

the settlement.

C. The complexity, length and expense of further litigation.

The third factor in determining the fairness of a class

settlement is the burden of litigating the case. This factor is also

subordinate to the first factor but should still be considered in

determining whether the trial court abused its discretion in

approving the settlement. The Westark appellees emphasize

that further litigation would have caused delay, and that delay

would have caused more members of this low-income

transient class to become lost due to relocation. They further

point to the immediate benefit of a settlement versus the

contingency of protracted litigation. We agree that this bird-in-

the-hand argument militates in favor of the settlement.

14a

d. Opposition to the settlement.

The fourth and final factor in determining the fairness

and adequacy of a class settlement is the degree of opposition

to the settlement. Again, this factor is less important than the

first factor. The Westark appellees contend that only seventeen

members of the approximately 18,500 member class objected.

This is true. However, one court has sounded a note of caution

in this regard:

[A] low level of vociferous objection is not

necessarily synonymous’ with jubilant

support. In many class actions, the vast

majority of class members lack the resources

either to object to the settlement or to opt out

of the class and litigate their individual cases.

In re Corrugated Container Antitrust Litigation, 643 F.2d 195,

217-18 (Sth Cir. 1981) See also Bell Atlantic Corp. v. Bolger, 2

F.3d 1304, n.15 (3d Cir. 1993) (noting that absent class

members “have an insufficient incentive to contest an

unpalatable settlement agreement because the cost of

contesting exceeds the objector’s pro rata benefit”).

Again, it was the trial judge who was in the trenches

and lived with this class litigation. He assessed the risk of

litigation, the delay in recovery, the amount of recovery

claimed versus the settlement that was struck, as well as the

other Grunin factors, and concluded that the settlement was

fair and reasonable. We accord the trial court deference in

these matters and are unwilling to second-guess the decision

based on the arguments presented by Ballard and Cain in

this appeal.

é. Collusion

Though not a factor in the Grunin analysis, Ballard

and Cain make the further charge of collusion between

Martin and the Westark appellees due to the fact that the

settlement was reached before the class was certified. Other

15a

jurisdictions have held that when a settlement is entered into

before a class is certified, the settlement should be subject to

heightened scrutiny. See, e.g., In re General Motors Corp. Pick-

up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768 (3d

Cir. 1995); Bowling v. Pfizer, Inc., 143 F.R.D. 141 (S.D. Ohio

1992). Though it is apparent that the settlement under review

was hurried and ultimately global in the number of check-

casher businesses involved, there is no proof that the

settlement was not made at arm’s length. There are definitely

benefits accruing to the class in the form of reimbursements

and debt forgiveness. The fact that the class could have

gotten more does not translate into collusion. We affirm on

this point.

II. Adequacy of Class Representatives

Ballard and Cain next contend that Martin and

Spencer were inadequate representatives to protect the

interests of the class members and that Martin's class counsel

was likewise inadequate.‘ This issue is decided by our recent

case of USA Check Cashers of Little Rock, Inc. v. Island, 349 Ark.

__, __S.W.3d___(May 30, 2002). As we said in that case, we

review a trial court’s grant of class certification under an

abuse-of-discretion standard. See USA Check Cashers, supra.

Rule 23(a) of the Arkansas Rules of Civil Procedure

has as one of the four prerequisites to a class action:

(4) the representative parties will fairly and

adequately protect the interests of the class.

Ark. R. Civ. P. 23(a)(4). See also BPS Inc. v. Richardson, 341

Ark. 834, 20 S.W.3d 403 (2000). This court has previously

interpreted that subsection to require three elements:

(1) the representative counsel must be

qualified, experienced, and generally able to

4 At the fairness hearing, the adequacy of Martin as class representative

was specifically attacked.

16a

conduct the litigation; (2) that there be no

evidence of collusion or conflicting interest

between the representative and the class; and

(3) the representative must display some

minimal level of interest in the action,

familiarity with the practices challenged, and

ability to assist in decision making as to the

conduct of the litigation.

Mega Life & Health Ins. Co. v. Jacola, 330 Ark. 261, 275, 954

S.W.2d 898, 904 (1997). In a similar vein, this court has held that

the element of adequacy is met if the class representative

displays a minimal level of interest in the action, familiarity

with the challenged practices, and the ability to assist in

litigation decisions. See Direct Gen. Ins. Co. v. Lane, 328 Ark. 476,

944 S.W.2d 528 (1997).

Martin testified at the fairness hearing that she was

pleased with the legal representation provided to her and that

her attorneys had kept her informed of what was going on the

case. She also stated that her goal in suing the defendants was

to put an end to the check-cashing practices of the Westark

appellees. She testified that she talks to her attorneys regularly

and is kept abreast of the proceedings. Based on this testimony,

we fail to discern any abuse of discretion in the trial court's

finding that Martin is an adequate class representative.

Furthermore, the allegation that the law firm of Orr,

Scholtens, Willhite & Averitt is inadequate class counsel is

meritless. These attorneys are currently handling a raft of cases

against Arkansas check cashing businesses. They have

extensive class-action experience, and there is nothing to

suggest that they are inadequate counsel for the class in this

case. This court has held that absent a showing to the contrary,

we presume that the class representative’s counsel will

vigorously and competently pursue the litigation. See Mega Life

& Health Ins. Co. v. Jacola, supra (citing Herbert B. Newberg,

Newburg on Class Actions, §§ 3.24, 3.42 (3d ed. 1992)).

We affirm the trial court on this point.

17a

Il. Subpoenas

Ballard’s third point, which Cain does not join, relates

to the subpoenas for financial documents issued five days

before the fairness hearing on June 1, 2001. Ballard sought

full disclosure of the Westark appellees’ financial

information in order to determine their ability to pay more

than the settlement. At the hearing, the businesses, acting

through CEO Forsey, only produced a portion of the

financial documents sought. Nevertheless, the trial court

ruled that this partial production, in addition to the personal

appearance and testimony of Forsey, was sufficient in light of

the short period of time that the companies had to respond.

Ballard argues that this ruling was an abuse of the trial

court's discretion. She points out that it was the short notice

to the class—roughly two weeks before the fairness hearing—

-that prevented her from intervening sooner and from

issuing subpoenas in a more timely manner.

It is boilerplate law that a trial court has broad

discretion in matters pertaining to discovery, and the

exercise of that discretion will not be reversed by this court

absent an abuse of discretion that is prejudicial to the

appealing party. Loghry v. Rogers Group, Inc., 348 Ark. 369, 72

S.W.3d 499 (2002) (citing Alexander v. Flake, 322 Ark. 239, 910

S.W.2d 190 (1995); Rankin v. Farmers Tractor & Equipment Co.,

Inc., 319 Ark. 26, 888 S.W.2d 657, (1994); Jenkins v. Int'l Paper

Co., 318 Ark. 663, 887 S.W.2d 300 (1994)). In the instant case,

Ballard does not illuminate how she was prejudiced by the

lack of additional financial information. Nor does she assert

how her challenge to the settlement would have been

different if she had obtainec full compliance with the

subpoenas. We note that Ballard did argue both to the trial

court and to this court that total liability to the 18,500 class

members was $27 million and that the Westark appellees

would bring in more than $605,000 in revenue during the

ninety-day period following the settlement date. Certainly,

the financial information that she had on hand enabled her to

fully mount her arguments against the settlement. In light of

the fact that the subpoenas came less than a week before the

18a

fairness hearing, it was within the trial court’s discretion to

deem partial compliance sufficient. The trial court's ruling on

this issue is affirmed.

IV. Adequacy of the Notice

Ballard and Cain’s fourth point is that notice of class

certification, the settlement, and the date of the fairness

hearing to class members was inadequate for two reasons.

First, they maintain that the notice came too close in time to

the fairness hearing itself to be effective. Secondly, they

argue that the method of notifying the class-~standard U.S.

mail rather than first-class mail—was inadequate, and thus,

did not meet the due process requirements of Rule 23.

Again we turn to the Grunin case for guidance on this

point. Due process requires that notice of a proposed

settlement be given to a class. Grunin v. Int'l House of

Pancakes, supra. The notice given must be “reasonably

calculated, under all of the circumstances, to apprise

interested parties of the pendency of the action and afford

them an opportunity to present their objections.” Id. at 120

(quoting Mullane v. Central Hanover Bank & Trust Co., 339 US.

306, 314 (1950)). The notice must also reasonably convey the

necessary information about the settlement and give

interested class members a reasonable opportunity to make

their appearance and voice any objections. Id.

This court has addressed a related notice issue before.

In SEECO, Inc. v. Hales, 334 Ark. 307, 973 S.W.2d 818 (1998),

we said:

The mechanics of notice to class members is

left to the discretion of the trial court and is

subject only to the reasonableness standard

of due process. See Grunin v. Int'l House of

Pancakes, 513 F.2d 114, 121 (8th Cir. 1975),

cert. denied, 423 US. 864, 96 S.Ct. 124, 46

L.Ed.2d 93 (1975). Arkansas Rule of Civil

Procedure 23(c) provides in part that “the

19a

court shall direct to the members of the class

the best notice practicable under the

circumstances, including individual notice to

all members who can be identified through

reasonable effort.” The United States

Supreme Court has made reference to the

fact that the “best notice practicable” under

Federal Rule 23 is individual notice. Eisen v.

Carlisle & Jacquelin, 417 U.S. 156, 94 S.Ct. 2140,

40 L.Ed.2d. 732 (1974) Notice by publication

is used to supplement individual notice

when class members cannot be identified by

reasonable efforts. See Eisen v. Carlisle &

Jacquelin, Id.

SEECO, Inc. v. Hales, 334 Ark. at 312, 973 S.W.2d at 820-21. In

SEECO, Inc., this court held that notice given thirty days prior

to the opt-out date was adequate under these standards.

In the case before us, Ballard and Cain claim notice was

not timely mailed so as to afford due process protection. The

notice was mailed on May 16, 2001, and the fairness hearing

was held on June 1, 2001. A two-week notice period was

simply too short, they claim. On this point, we note that courts

have approved notices given to a class within a comparable

period before the fairness hearing. See, e.g., Grunin v. Int'l House

of Pancakes, supra (holding that notice sent out nineteen days

before fairness hearing was not a violation of due process);

Armstrong v. Board of School Directors, 616 F.2d 305 (7th Cir.

1980) (holding that notice sent out twelve days before fairness

hearing was not a violation of due process). Further, the notice

contained an opt-out provision which advised the class

members that they could always choose to opt out of the settlement

so long as they did so by August 15, 2001. Thus, class members

had approximately three-months notice of the opt-out

deadline. Opting out of the settlement gave them the recourse

to pursue their own claims against the particular check-casher

businesses with which they were involved.

20a

There is also the point that Ballard and Cain had an

opportunity to appear at the fairness hearing, because they did

so through counsel. Ballard even issued subpoenas to the

Westark appellees five days before the fairness hearing. Had

the abbreviated notice hampered their ability to participate in

the fairness hearing on June 1, 2001, it seems that the

particulars on how they were handicapped would been made

known to the trial court or to this court.

Next, we consider the method of the individual

mailing. In this case, individual notices were mailed to all

potential class members by standard mail. Ballard and Cain,

however, urge that due to the transient nature of this particular

class, the notice should have been mailed first-class U.S. mail,

so that the class members could take advantage of forwarding

addresses, and class counsel could have undeliverable notices

returned to them. We disagree. Martin, in her mailing to class

members, claims that she requested return service for

undeliverable notices at an additional cost. This was for the

purpose of forwarding the notice to transient class members,

according to Martin. Ballard and Cain reply that nothing

regarding remailing returned notices to new addresses is in the

record. But what the record does support is that forwarding

addresses were requested by Martin at an added cost which

presupposes this was for the purpose of remailing. Though,

forwarded notice may have been too late for the June 1 fairness

hearing, it certainly was timely notice of the right to opt out of

the class. Plus, notice of class certification, the settlement, and

the opt-out date (but not the fairness hearing) was

supplemented by published notice in the Arkansas Democrat-

Gazette, a newspaper with statewide circulation, on May 21,

2001. Granted, published notice may not have been read by

some members of the class, but we are unwilling to denigrate

published notice completely as offering no due process

protection. Because individual notices were sent and the notice

was published in a newspaper with a statewide circulation, we

conclude that the notice given comported with minimum

standards of due process. We affirm the trial court on this point

as well.

2la

As a final point, we note that Ballard and Cain have

asserted a number of other deficiencies in the notice, the terms

of the settlement, and the adequacy of class counsel. Those

arguments are as follows: the terms of the settlement are

inadequate because the unclaimed funds revert to the Westark

appellees; the terms of the settlement make no provisions for

claimants with judgments pending against them or whose

debts have been discharged in bankruptcy; class counsel was

inadequate for failing to bring claims against the stockholders

of the Westark appellees and their sureties; and the notice to

class was contradictory because it stated both that class

members would still need to pay their unsatisfied debt and

that collections would cease ninety days after the settlement

date. These arguments are largely unsupported by authority

and are not fleshed out in the briefs. None of them provides a

convincing basis for holding that the trial court abused its

discretion in approving the settlement. Furthermore, it is

axiomatic that a settlement does not have to be perfect in order

to fair. See, e.g., Joel A v. Giuliani, 218 F.3d 132, 144 (2d Cir. 2000)

(“[A] settlement agreement achieved through good-faith, non-

collusive negotiation does not have to be perfect, just

reasonable, adequate, and fair.”); Halderman v. Pennhurst State

School & Hospital, 610 F.Supp. 1221, 1222 (D.C.Pa. 1985) (“As

with all things of this world, the settlement is not perfect. It is,

however, a fair, adequate, and reasonable settlement . . . .”).

Affirmed.

GLAZE, J., not participating.

APPENDIX B

IN THE CIRCUIT COURT OF CRAIGHEAD COUNTY,

ARKANSAS

WESTERN DISTRICT

CIVIL DIVISION

SHEILA MARTIN and JIMMIE

SUE SPENCER, Individually and

0/b/o a Class of Similarly

Situated Persons PLAINTIFFS

TERESA BALLARD, CRYSTAL LUEBBERS,

CHERYL KING, KENISHA BRYANT, and

RICHARD LYNN INTERVENORS

STEVEN CAIN and TERESA CAIN,

ALBERT ANDERSON and LINGI ANDERSON,

JOHN BROWN and MARY BROWN, BRYAN CLAYPOOL

and TRACY CLAYPOOL, LARRY COCHRAN and

REBECCA COCHRAN, JOHN S. FULLER and

DOTTIE MAE REED INTERVENORS

VS. NO. CIV-00-669 (L)

WESTARK FINANCIAL CONSULTANTS OF

JONESBORO, INC., d/b/a AMERICAN

CHECK CASHERS, et al. DEFENDANTS

FINAL JUDGMENT AND ORDER OF DISMISSAL

7 (FILED AUGUST 7, 2001) =

On this 1st day of June, 2001, this cause came on to be

heard pursuant to notice pursuant to the application of

counsel for the parties for final approval of the settlement set

forth in the class—settlement stipulation filed herein.

Plaintiffs’ class representatives appeared in person and by

23a

class counsel, Orr, Scholtens, Willhite & Averitt, P.L.C. and

defendants appeared by company/ corporate

representative(s) and by counsel, Jones, Jackson and Moll,

P.L.C. Intervenors appeared by counsel only, the Ballard

intervenors appearing by the Nixon Law Firma and by

Logan, Thompson, Miller, Bilbo, Thompson and Fisher, P.C.

of Cleveland, Tennessee, and the Cain intervenors appearing

by attorney Robert R. Cloar. Whereupon, a “fairness

hearing” was conducted in order that the Court might

determine whether or not the proposed settlement in this

case should be approved and to otherwise address

challenges made by the intervenors as to the adequacy of the

settlement, class counsel, notice and otherwise. After

consideration of the settlement stipulation, all papers filed

and proceedings had herein, the objections of the intervenors

as set out in the pleadings filed herein and considering the

testimony of witnesses at the hearing along with the

excellent post-trial briefs of all of the parties, and without

considering the supplemental exhibit in support of plaintiffs’

reply to intervenors’ opposition to settlement agreement

filed July 13, 2001, the Court finds, considers, orders and

adjudges as follows:

1. Upon joint motion of the parties and upon finding ©

that all requirements of Arkansas Rule of Civil Procedure 23

(a) and (b) are satisfied, the Court certified a conditional

settlement class on or about April 30, 2001, for settlement

purposes only. The conditional settlement class consists of

all persons who have paid a fee to any of the defendant

businesses for the time periods as set out in the notice

introduced at the hearing as “Exhibit A” as subsequently

modified by the Court so as to insert a closing date of May

14, 2001, rather than June 10, 2001, exclusive of any

customers who have timely requested exclusion from the

conditional settlement class under Arkansas Rule of Civil

Procedure 23 and the terms of the settlement stipulation.

The settlement period is up to and including May 14, 2001.

2. The Court further finds that plaintiffs, Sheila

Martin and Jimmy Sue Spencer, and class counsel, Orr,

24a

a hem wer ee eeernE I Swe om

Scholtens, Willhite, & Averitt, P.L.C., are adequate class

representatives under Arkansas Rule of Civil Procedure 23

(a) (4). Plaintiffs’ counsel have vigorously pursued this case

and other class action “check cashing” litigation and have

negotiated a settlement which brings substantial benefit to

the settlement class when considering the unsettled legal

questions involved, the limited resources of defendants and

the cost and risk of further protracted litigation.

3. The Court approved class counsel as the entity

responsible for receipt of notice of claims, “opt outs,”

objections and other documentation from class members

with responsibility for furnishing claim forms to Westark

Financial Consultants, Inc., for calculation of damages owing

to each claimant and to insure collection of said damages

pursuant to the settlement.

4. The Court has jurisdiction over the subject matter

of the litigation, the plaintiff and all members of the

conditional settlement class, the defendant, and _ the

intervenors for purposes of enforcing the settlement

stipulation and this final judgment.

5. The Court finds that the mailing and publication

of notice and summary of notice in accordance with the

Court’s April 30, 2001, Order constitutes the best notice

practicable under the circumstances to all person who are

members of the conditional settlement class, and fully

satisfies the requirements of Arkansas Rule of Civil

Procedure 23 (c), due process under the Arkansas and

United States Constitutions and other applicable law.

Intervention was permitted and intervenors were afforded a

full hearing in connection with the proposed settlement,

during which intervenors’ counsel vigorously represented

the intervenors’ interests (and the interests of anyone else in

the position of objecting to the proposed settlement) with

full and complete opportunity to present and cross-examine

witnesses, put on additional evidence, fully brief legal issues

and otherwise.

25a

6. Pursuant to, and in accordance with the

requirements of Arkansas Rule of Civil Procedure 23(e), the

Court approves the settlement of this litigation as set forth in

the settlement stipulation and each of the releases and other

terms set forth therein as fair, reasonable and adequate to

the conditional settlement class. The parties to the settlement

stipulation shall complete and finalize the settlement in

accordance with the terms of the settlement stipulation.

7. Except for claims by persons who have validly

and timely requested exclusion from the conditional

settlement class, all claims that are asserted or could have

been asserted in this litigation are dismissed with prejudice,

with each party bearing their own costs.

8. Each member of the conditional settlement class is

hereby deemed to have fully, finally and forever released

and discharged all claims against the named defendants

herein, their agents, stock holders, servants, employees,

bonding companies or otherwise, arising out of this class

action lawsuit or in any way based on their transactions with

any of the defendants through the date of the settlement.

9. All members of the conditional settlement class

are permanently barred and enjoined from filing or

prosecuting, in any capacity and in any court, administrative

tribunal or other form, any action or proceeding which

involves or asserts any of the claims released herein.

10. All persons who file valid and timely requests for

exclusion from the conditional settlement class shall not be

bound by this final judgment or by the settlement

stipulation. |

11. The Court approves as fair and reasonable class

counsel’s attorney's fees and costs as set forth in the

settlement stipulation, which shall be paid in accordance

with the settlement stipulation.

26a

12. The Court retains continuing jurisdiction over the

litigation, the plaintiffs, the conditional settlement class, and

the defendants for the purposes of supervising the

implementation, enforcement, construction and

interpretation of the settlement stipulation.

13. The motion of the Ballard intervenors to appoint

class representatives, class counsel and to reconsider and

certify the class filed (June 18, 2001), should be, and it is,

hereby denied given the hereinabove findings to the effect

that the settlement herein involved is fair, equitable,

reasonable and adequate, and as relates to the adequacy of

present class counsel. Intervenors and others who do not

wish to participate in the settlement have the prerogative to

“opt out” pursuant to the terms of the settlement/ notice.

CONSIDERED, ORDERED AND ADJUDGED this 7

day of August, 2001.

“s/David Laser”

Circuit Judge

Law Bk 56 Pg 520-524

DATE: 08-08-2001

TIME: 09:58:23 AM

RECORDED IN

OFFICIAL RECORDS OF

CRAIGHEAD COUNTY, AR.

ANN HUDSON

CIRCUIT CLERK

“s/ Bridget Haines”, D.C.

27a

APPENDIX C

IN THE CIRCUIT COURT OF CRAIGHEAD COUNTY,

ARKANSAS

WESTERN DISTRICT

~. ea ——-

SHEILA MARTIN, and JIMMIE SUE SPENCER,

individually and 0/b/o a class of similarly situated

persons PLAINTIFFS

VS. NO. CIV-2000 0669(L)

WESTARK FINANCIAL CONSULTANTS OF LITTLE

ROCK, INC., WESTARK FINANCIAL CONSULTANTS

OF NORTH LITTLE ROCK, INC; WESTARK

FINANCIAL CONSULTANTS OF JONESBORO, INC.;

WESTARK FINANCIAL CONSULTANTS OF

JACKSONVILLE, INC.; WESTARK FINANCIAL

CONSULTANTS OF PINE BLUFF, INC.; WESTARK

FINANCIAL CONSULTANTS OF ROGERS, INC,;

WESTARK FINANCIAL CONSULTANTS OF

SPRINGDALE, INC.; WESTARK FINANCIAL

CONSULTANTS OF RUSSELLVILLE, INC.; WESTARK

FINANCIAL CONSULTANTS OF FAYETTEVILLE, INC.;

WESTARK FINANCIAL CONSULTANTS, INC.; CASH

ADVANCE OF BENTON, INC.; CASH ADVANCE OF

NORTH LITTLE ROCK, INC.; CASH ADVANCE OF |

LITTLE ROCK, INC.; EXECUTIVE CASH ADVANCE OF ‘

LITTLE ROCK, INC.; C & B ENTERPRISES, INC., H&S i’)

ENTERPRISES OF ROGERS, INC.; H&S ENTERPRISES '

OF FAYETTEVILLE, INC.; H&S ENTERPRISES OF

SPRINGDALE, INC.; AND PAYDAY ADVANCE OF

FORT SMITH, INC. DEFENDANTS

ORDER PRELIMINARILY CERTIFYING CLASS

AND APPROVING SETTLEMENT OF CLASS

28a

ACTION, DIRECTING NOTICE OF PENDENCY AND

SETTLEMENT, AND SETTING DATE FOR HEARING

ON FINAL APROVAL OF SETTLEMENT OF CLASS

ACTION

(FILED APRIL 30, 2001)

On April 27, 2001, the parties appeared, by and

through counsel for the Plaintiffs, and moved this Court to

certify a conditional settlement class for purposes of

settlement only. Having considered the joint request of the

parties, the settlement that has been entered into by the

Plaintiffs and the Defendants which is attached to the Joint

Motion to Certify Class, Approve Settlement of Class Action,

Direct Notice of Pendency and Settlement, and Set Date for

Hearing on Final Approval of Settlement of Class Action

(“Joint Motion”) as Exhibit A, and statements of counsel, the

Court hereby enters this Order preliminarily certifying a

settlement class, directing notice of pendency and

settlement, and setting a date for a hearing for the Court to

consider the final approval of the settlement agreed to by the

parties herein.

IT IS HEREBY ORDERED as follows:

1. For purposes of this Order, the Court adopts the

Settlement Agreement entered into by the parties and

incorporates it by reference herein.

2. For purposes of settlement only, the Court

preliminarily certifies this cause as a class action and

preliminarily certifies a settlement class as detailed in

Exhibit A to the Joint Motion. The conditional settlement

class shall consist of all customers who have engaged in

check cashing transactions with any of the defendants

herein, exclusive of any customers who request exclusion

from the conditional settlement class pursuant to Arkansas

Rule of Civil Procedure 23 (c).

3. Plaintiffs are approved as the representatives of

the settlement class, and the law firm of Orr, Scholtens,

29a

Willhite & Averitt, PLC is approved as counsel for the

settlement class.

4. The Court finds that the requirements of Rule 23

of the Arkansas Rules of Civil procedure have been satisfied

and has made a preliminary determination that Plaintiffs are

adequate class representatives of the settlement class.

5. The Court preliminarily approves the settlement

of this class action lawsuit, as being fair, just, reasonable and

adequate as to the settlement class and its members, subject

to further consideration at the settlement hearing described

below.

6. The Court approves as to form and content, and

for distribution to the settlement class, the Notice of

Pendency and Proposed Settlement of Class Action and

Settlement hearing (“Notice”) and the Proof of Claim and

Release (“Proof of Claim”) substantially in the forms

attached to the Joint Motion as Exhibit B and C.

7. Defendants shall identify all persons who are part

of the settlement class as provided herein. The Defendants

shall cause to be mailed by U.S. Standard Mail the Notice to

Settlement Class Members to the last known addresses

provided by Defendants. The Defendants shall also cause a

summary of the Notice to be published one time in the

Arkansas Democrat-Gazette. The mailing and publication of

the Notice and summary of Notice shall be completed no

later than May 14, 2001. Defendants shall file with the Court

and serve upon Plaintiffs’ Counsel no later than ten (10)

days prior to the settlement hearing a declaration stating

that the mailings and the publication have been completed

in accordance with the terms of this Order.

8. The Court finds that dissemination of the Notice

in the manner required by the preceding paragraph

constitutes the best notice practicable under the

circumstances to settlement class members and meets the

requirements of Rule 23 of the Arkansas Rules of Civil

30a

=

ee TT te ees

Procedure, due process under the Untied States

Constitution, and any other applicable law, and shall

constitute due and sufficient notice to all persons entitled

thereto.

9. Any person falling within the definition of the

settlement class, as defined herein, may, upon request, be

excluded from the settlement. Any such person must submit

to Plaintiffs’ Counsel a request for exclusion (“Request for

Exclusion”), postmarked no later than August 15, 2001. A

Request for Exclusion must state: (1) the name, address,

social security number and telephone number of the person

requesting exclusion, and (2) that the person wishes to be

excluded from the settlement class. All persons who submit

valid and timely Requests for Exclusion in the manner set

forth in this paragraph shall have no rights under the

settlement and shall not be bound by the settlement or the

final judgment. Plaintiffs’ Counsel shall provide copies of

any and all Requests for Exclusion to Defendants’ Counsel.

10. Any settlement class member who objects to the

proposed settlement set forth herein shall have a right to

appear and be heard at the settlement hearing. No later than

three (3) days before the settlement hearing, any such person

must file with the Court and deliver to plaintiffs’ Counsel

and Defendants’ Counsel a written notice of objection and

any brief opposing the settlement. The manner by which a

notice of objection should be prepared, filed and delivered

shall be stated in the Notice. Only settlement class members

who have filed and delivered valid and timely written

notices of objection will be entitled to be heard at the

settlement hearing unless the Court orders otherwise.

11. The settlement hearing will be held on June 1,

2001, at 8:00 a.m., or as soon thereafter as possible, at the

Craighead County Courthouse, 511 South Main Street,

Jonesboro, Arkansas 72401, to determine whether the

proposed settlement of this cause of action, as set forth

herein, should be approved as fair, reasonable and adequate

to the members of the settlement class, and whether the

~ 3la

judgment approved in the settlement should be entered. The

Court may adjourn or continue the settlement hearing

without further notice to settlement class members.

13. The proceedings connected with this action shall

not be construed as an admission or concession by

Defendants of the truth of any of the allegations made by the

Plaintiffs herein or of any liability, fault or wrongdoing of

any kind.

14. The judgment will permanently bar and enjoin

the Plaintiffs and all members of the settlement class from

instituting or prosecuting, in any capacity, any action or

proceeding that involves or asserts any of the claims that

were’ asserted, or that could have been asserted, in this

action.

15. The Court may, for good cause, extend any of the

deadlines set forth in this order without further notice to the

settlement class members.

16. In the event the Court disapproves the settlement,

the rights and duties of the parties will continue as if no

settlement had been entered into and the conditional

settlement class will be decertified without further order of the

Court, and Defendants will not be prohibited from pursing

any of the objections raised in their answer, including but not

limited to, objections to venue and class certification.

IT ISSO ORDERED.

Dated: 4/30/01 “s/ David N. Laser”

HONORABLE DAVID N. LASER

CRAIGHEAD COUNTY CIRCUIT JUDGE

32a

“s/Chris A. Averitt”

Chris A. Averitt

Attorney for Plaintiffs

“s/ Mark Moll”

Mark Moll

Attorney for Defendants

PO ADD SDA DL EAP LAS I A ANE BRO

33a

APPROVED AS TO SUBSTANCE AND TO FORM

Law Bk 55 Pg 927-932

DATE :0501-2001

TIME :10:35:31 AM

RECORDED IN

OFFICIAL RECORDS OF

CRAIGHEAD COUNTY, AR

ANN HUDSON

CIRCUIT CLERK

“s/ Bridget Haines”, D.C.

APPENDIX D

IN THE CIRCUIT COURT OF CRAIGHEAD COUNTY,

ARKANSAS

WESTERN DISTRICT

SHEILA MARTIN, and JIMMIE SUE SPENCER,

individually and o/b/o a class of similarly situated

persons PLAINTIFFS

vs. NO. CIV-2000 0669(L)

WESTARK FINANCIAL CONSULTANTS OF LITTLE

ROCK, INC., WESTARK FINANCIAL CONSULTANTS

OF NORTH LITTLE ROCK, INC; WESTARK

FINANCIAL CONSULTANTS OF JONESBORO, INC.;

WESTARK FINANCIAL CONSULTANTS OF

JACKSONVILLE, INC; WESTARK FINANCIAL

CONSULTANTS OF PINE BLUFF, INC.; WESTARK

FINANCIAL CONSULTANTS OF ROGERS, INC;

WESTARK FINANCIAL CONSULTANTS OF

SPRINGDALE, INC.; WESTARK FINANCIAL

CONSULTANTS OF RUSSELLVILLE, INC.; WESTARK

FINANCIAL CONSULTANTS OF FAYETTEVILLE, INC.;

WESTARK FINANCIAL CONSULTANTS, INC.; CASH

ADVANCE OF BENTON, INC.; CASH ADVANCE OF

NORTH LITTLE ROCK, INC.; CASH ADVANCE OF

LITTLE ROCK, INC.; EXECUTIVE CASH ADVANCE OF

LITTLE ROCK, INC.; C & B ENTERPRISES, INC., H&S

ENTERPRISES OF ROGERS, INC.; H&S ENTERPRISES

OF FAYETTEVILLE, INC.; H&S ENTERPRISES OF

SPRINGDALE, INC.; AND PAYDAY ADVANCE OF

FORT SMITH, INC. DEFENDANTS

JOINT MOTION TO CERTIFY CLASS,

APPROVE SETTLEMENT OF CLASS ACTION, DIRECT

NOTICE OF PENDENCY ANDSETTLEMENT, AND SET

DATE FOR HEARING

| ON FINAL APPROVAL OF SETTLEMENT OF CLASS

ACTION

(FILED APRIL 27, 2001)

Comes now all of the parties involved herewith, by

and through their attorneys of record, and state the

following as their Joint Motion to Certify Class, Approve

Settlement of Class Action, Direct Notice of Pendency and

| Settlement, and Set Date for Hearing on Final Approval of

Settlement of Class Action:

1. The parties have entered into a Settlement

Agreement resclving all issues raised herein. Attached

hereto as Exhibit “A” is a true and correct copy of the

Settlement Agreement.

2. The parties jointly request the Court preliminarily

certify this cause as a class action and preliminarily certify a

settlement class as detailed in Exhibit A. The conditional

settlement class should consist of all customers who have

engaged in check cashing transactions with any of the

Defendants herein, exclusive of any customers who request

exclusion from the settlement class pursuant to Arkansas

Rule of Civil Procedure 23(c).

3. The parties jointly request the Court to approve

Plaintiffs as the representatives of the settlement class, and

the law firm of Orr, Scholtens, Willhite & Averitt, PLC as

counsel for the settlement class.

4. The parties jointly request the Court to find that

the requirements of Rule 23 of the Arkansas Rules of Civil

Procedure have been satisfied and that Plaintiffs are

adequate class representatives of the settlement class.

35a

5. The parties jointly request the Court to

preliminarily approve the settlement of this class action

lawsuit, as being fair, just, reasonable and adequate as to the

settlement class and its members.

6. The parties jointly request the Court to approve as

to form and content, and for distribution to the settlement

class, the Notice of Pendency and Proposed Settlement of

Class Action and Settlement Hearing (“Notice”) and the

Proof of Claim and Release (“Proof of Claim”) substantially

in the forms as attached hereto as Exhibit B and C. The

parties also jointly request the Court to preliminarily certify

the class and approve the settlement of the class action. The

parties also jointly request the Court to direct notice of

pendency and settlement, and to set a date for hearing on

the final approval of the settlement of the class action. See

Exhibits B and C.

7. The parties jointly request the Court find that the

dissemination of the Notice in the manner required by the

Proposed Order Preliminarily Certifying Class and

Approving Settlement of Class Action, Directing Notice of

Pendency and Settlement, and Setting Date for Hearing on

Final Approval of Settlement of Class Action constitutes the

best notice practicable and meets the requirements of Rule

23 of the Arkansas Rules of Civil Procedure, due process

under the United States Constitution, and any other

applicable law, and shall constitute due and sufficient notice

to all persons entitled thereto.

8. The parties jointly request that a settlement

hearing be held on June 1, 2001, at 8:00 a.m., or as soon

thereafter as possible, at the Craighead County Courthouse.

9. The parties jointly request that the proceedings

connected with this action not be construed as an admission

or concession by Defendants of the truth of any of the

allegations made by the Plaintiffs herein or of any liability,

fault or wrongdoing of any kind.

36a

hee I.

WHEREFORE, the parties hereto jointly request the

Court approve the Settlement Agreement, Notice of

Settlement, and enter a Proposed Order Preliminarily

Certifying Class and Approving Settlement of Class Action,

Directing Notice of Pendency and Settlement, and Setting

Date for Hearing on Final Approval of Settlement of Class

Action.

RESPECTFULLY SUBMITTED,

ORR, SCHOLTENS, WILLHITE

& AVERITT, PLC

P.O. Box 1267

Jonesboro, AR 72403

(870) 972-1500

By:_“s/Chris A. Averitt”

Chris A. Averitt AR Bar #398-123

ATTORNEYS FOR PLAINTIFFS

JONES, JACKSON & MOLL, PLC

P.O. Box 2023

Fort Smith, AR 72902

(501) 782-7203

By: “s/Mark Moll”

Mark Moll AR Bar #79-210

ATTORNEYS FOR DEFENDANTS

Approved:

“s/Chris A. Averitt”

Chris A. Averitt, Attorney for Plaintiff

“s/ Mark Moll”

Mark Moll, Attorney for Defendant

Law Bk 55 Pg 756-757

DATE: 04-02-2001

TIME: 10:57:26 AM

RECORDED IN OF

OFFICIAL RECORDS

CRAIGHEAD COUNTY, AR

ANN HUDSON

37a

CIRCUIT CLERK

“s/ Bridget Haines” D.C.

RII OBES Rate a isk AGO aN ie BY AAT LPR cant Bea AE be SBE Sn Site eats

Senile

38a

[EXHIBIT A TO APPENDIX D]

IN THE CIRCUIT COURT OF CRAIGHEAD COUNTY,

ARKANSAS

WESTERN DISTRICT

SHEILA MARTIN and JIMMIE SUE

SPENCER, individually and

0/b/o a class of similarly situated persons PLAINTIFFS

v. Case No. CIV-200-0669(F)

WESTARK FINANCIAL CONSULTANTS

OF JONESBORO, INC. d/b/a AMERICAN

CHECK CASHERS DEFENDANT

[CONFIDENTIAL]

DEFENDANT'S SETTLEMENT OFFER

Payment to members of Defendants will purchase E

class: Series Bonds having a total face

value of up to but not exceeding

$870,000.00. The smallest bond to

be purchased will have a face

value of $50.00. A claimant will

be entitled to receive a bond

based on the following formula:

Fees paid X 1.5 less balance of

amount financed on any unpaid

Deferred Presentment

Agreement rounded to the

nearest increment of $25.00. Any

claim which iotals $37.50 or less

will receive a check in that

amount as opposed to a bond. If

the claims made by the members

of the class exceed the total

Payment of attorneys

fees:

Stores involved:

amount of the settlement fund,

then the claims will be prorated.

Defendants would pay the law

firm of Orr, Scholtens, Willhite &

Averitt, PLC the sum of

$170,000.00, to be paid $85,000.00

immediately following the

court's approval of the class

action settlement and the balance

of $85,000.00 on the day the

savings bonds and, if applicable,

checks are mailed to the

claimants.

The class will consist of

customers of the stores owned by

the following corporations; WFC

of Little Rock, WFC of North

Little Rock, WFC of Jonesboro,

WEC of Jacksonville, WFC of

Pine Bluff, WFC, Inc., WFC of

Rogers, WFC of Springdale,

WFC of Russellville, and WFC of

Fayetteville, (“WFC” is an

abbreviation for Westark

Financial Consultants), Cash

Advance of Benton, Inc., Cash

Advance of North Little Rock,

Inc., Cash Advance of Little

Rock, Inc., Executive Cash

Advance of Little Rock, Inc., C&B

Enterprises, Inc., H&S

Enterprises of Rogers, Inc., H&S

Enterprises of Fayetteville, Inc.,

and Payday Advance of Fort

Smith, Inc. (Collectively

“Defendants” )

40a

Notice:

(1) Counsel will agree on one

notice to be sent to potential

members of the class, notifying

them of the litigation, their

opportunity to opt out of the

class, the terms of the proposed

settlement, and a claim form will

be enclosed.

(2) Plaintiff's counsel will be

responsible for obtaining the

court’s permission to send the

notice.

(3) Defendants will use their

computer databases and

archived files to obtain a list of all

customers’ name and addresses

that Defendants can reasonable

(sic) obtain and take

responsibility for mailing the

notices to the customers by

regular mail.

(4) Defendants will run one

display ad in the Arkansas

Democrat. The ad will contain a

summary of the mailed notice

and notify potential members of

the class that they can obtain a

copy of the complete notice by

contacting plaintiffs’ counsel.

(5) Defendants will pay the cost

of the newspaper advertisement.

Plaintiffs’ counsel will be

responsible for paying one-half

of the cost of the notice to class

members, but defendants will

advance all of the expenses and

deduct plaintiffs’ share of the

cost from the first payment due

to plaintiffs’ counsel.

(6) The notice will expressly state

4la

Claim Procedure:

Time period for counsel

to agree on form of

notice and claim form;

Defendants to work on

computer software and

acquire address cf

customers:

Deliver notices, claim

forms and mailing

labels to printer:

Preparation and mailing

of notices:

Final preparation of

spreadsheet showing-

names of customers and

calculation of damages:

Opportunity for

plaintiffs counsel to

review spreadsheet:

that a class member's obligation

to pay the Defendants has not

been eliminated.

A member of the class must

complete a claim form in order to

be entitled to participate in the

distribution of the settlement

funds. A customer who wants to

make a claim fills out the claim

form and sends or delivers it to

plaintiffs’ counsel. The claim

forms will then be sent to

Westark Financial Consultants,

Inc. in Fort Smith for calculation

of the damages.

April 24 - May 4, 2001.

May 5, 2001.

May 6 - May 14, 2001.

September 15 through October

30, 2001.

November 1 through November

15, 2001.

42a

Purchase and mailing of November 15, 2001.

savings bonds:

Release: The class will release the

defendants and their

shareholders, directors, agents,

employees and bonding

company of all causes of action

and claims that have been

alleged in the pleadings or which

could have been alleged in the

pleadings. The releases will

specifically provide that the

defendants have paid

compensatory and not punitive

damages.

Collections: Ninety (90) days following the

date that the court enters an

order approving the settlement,

the Defendants will no longer

use deferred presentment

agreements and will write-off

and not attempt to collect any

unpaid deferred presentment

agreements unless a customer

has, prior to that date, agreed to

a partial payment plan.

“s/ Mark Moll”

Mark Moll

JONES JACKSON & MOLL, PLC

P.O. Box 2030

401 North 7* Street

Fort Smith, AR 72902-2023

For Each Offeror

43a

Accepted subject to court approval:

“s/Chris A Averitt”

ORR, SCHOLTENS, WILLHITE

& AVERITT, PLC

113 East Jackson Avenue (72401)

P.O. Box 1267

Jonesboro, AR 72403-1267

[EXHIBIT B TO APPENDIX D]

IN THE CIRCUIT COURT OF CRAIGHEAD COUNTY,

ARKANSAS

WESTERN DISTRICT

SHEILA MARTIN, and JIMMIE SUE

SPENCER, individually and o/b/o

a class of similarly situated persons PLAINTIFFS

WESTARK FINANCIAL CONSULTANTS OF LITTLE ROCK,

INC.; WESTARK FINANCIAL CONSULTANTS OF NORTH

LITTLE ROCK, INC; WESTARK FINANCIAL

CONSULTANTS OF JONESBORO, INC; WESTARK

FINANCIAL CONSULTANTS OF JACKSONVILLE, INC.;

WESTARK FINANCIAL CONSULTANTS OF PINE BLUFF,

INC; WESTARK FINANCIAL CONSULTANTS OF ROGERS,

INC.; WESTARK FINANCIAL CONSULTANTS OF

SPRINGDALE, INC.; WESTARK FINANCIAL

CONSULTANTS OF RUSSELLVILLE INC; WESTARK

FINANCIAL CONSULTANTS OF FAYETTEVILLE, INC;

WESTARK FINANCIAL CONSULTANTS, INC; CASH

ADVANCE OF BENTON, INC.; CASH ADVANCE OF

NORTH LITTLE ROCK, INC., CASH ADVANCE OF LITTLE

ROCK, INC.; EXECUTIVE CASH ADVANCE OF LITTLE

ROCK, INC., C&B ENTERPRISES, INC.; H&S ENTERPRISES

OF ROGERS, INC.; H&S ENTERPRISES OF FAYETTEVILLE,

INC.; H&S ENTERPRISES OF SPRINGDALE, INC.; AND

PAYDAY ADVANCE OF FORT SMITH, INC.

DEFENDANTS

TO: PERSONS WHO RECEIVED PAYDAY LOANS OR

DEFERRED PRESENTMENT OPTION

TRANSACTIONS (“CASH ADVANCES”) AT ANY

OF THE STORES LISTED BELOW AND DURING

THE TIME PERIOD LISTED BELOW.

45a

CHECK CASHING STORE TIME PERIOD DURING

WHICH CLAIMS HAVE |

ARISEN UNDER THE |

SETTLEMENT |

AMERICAN CHECK DECEMBER 8, 1995

CASHERS THROUGH JUNE 10, 2001

CASH ADVANCE OF DECEMBER 8, 1995

BENTON THROUGH JUNE 10, 2001

CASH ADVANCE OF DECEMBER 8, 1995 |

LITTLE ROCK THROUGH JUNE 10, 2001 |

CASH ADVANCE OF DECEMBER 8, 1995

LITTLE ROCK 2 THROUGH JUNE 10, 2001

CASH ADVANCE OF DECEMBER 8, 1995

NORTH LITTLE ROCK THROUGH JUNE 10, 2001

CHECKS 2 CASH DECEMBER 8, 1995

THROUGH JUNE 10, 2001

PAYDAY MONEY STORE OCTOBER 27, 2000

THROUGH JUNE 10, 2001

PAYDAY ADVANCE OF NOVEMBER 20, 2000

FORT SMITH THROUGH JUNE 10, 2001

RIVER VALLEY CHECK APRIL 29, 2001 THROUGH

CASHERS JUNE 10, 2001

READ THIS NOTICE CAREFULLY, AS IT MAY AFFECT

YOUR RIGHTS.

I. INTRODUCTION

This notice is provided pursuant to Rule 23 of the Arkansas

Rules of Civil Procedure and the Order of the Circuit Court of

Craighead County, Arkansas (“the Court”) to advise you of

46a |

the conditional certification, for purposes of settlement only, of

the plaintiff class described below, the proposed settlement of

the litigation with the Defendants (‘the settlement”), as well as

to describe the rights you may have under the settlement and

what steps you may take with respect to the settlement.

The following description of the Litigation and its background

and the summary of the settlement have been prepared by

counsel for the parties to the settlement. The Court has made

no finding with respect to such matters, and the Notice is not

an expression by the Court as to the merits of any claim or

defense asserted by the parties in this litigation. This litigation

relates to the business of “payday lending” or “deferred

presentment option transactions” in which the Defendants are

engaged in locations throughout the state of Arkansas.

Plaintiffs claim that the Defendants’ customers have been

subjected to fees which exceed the usury limit set forth in the

Arkansas Constitution. These claims are discussed below.

The parties to the settlement are (i) the representative

Plaintiffs, Sheila Martin and Jimmie Sue Spencer (“Plaintiffs”)

and the members of the plaintiff class described herein, and (ii)

the Defendants in this litigation which operate under the

fictitious names listed above. The settlement Agreement is on

file and available for inspection in the Office of Clerk of the

Court.

Il. BACKGROUND AND A DESCRIPTPION

OF THE LITIGATION

Defendants are engaged in businesses of originating payday

loans or Deferred Presentment Option Transactions. Typically,

the customers write checks which are held by the Defendants

for different periods of time. The checks are written for the

amount of the cash advanced to the customer, plus a finance

charge (also called check cashing fees and deferred

presentment fees).

Plaintiffs commenced this litigation on December 8, 2000 by

filing a complaint on behalf of current and former customers

47a

of Westark Financial Consultants of Jonesboro, Inc. who have

engaged in deferred presentment option transactions.

Plaintiffs later amended their complaint to include all of the

above companies operating as any of the above fictitious

names. Plaintiffs claim that Defendants charge interest rates in

excess of the legal limit. Defendants deny any wrongdoing

and contend that the fees charged do not constitute interest for

purposes of Arkansas usury law. Prior to filing this action,

Plaintiffs’ counsel conducted an_ extensive informal

investigation which included inspection of documents

obtained from non-parties and consultation with prospective

witnesses and research of the applicable law. Plaintiffs’

counsel have also engaged in formal discovery pursuant to the

Arkansas Rules of Civil Procedure. Plaintiffs’ counsel have

engaged in arm’s length settlement negotiations with counsel

for Defendants. All of the pleadings involved in this action are

available on file for inspection at the Craighead County

Courthouse located at 511 Main Street, Jonesboro, Arkansas

72401.

Ill. SHE PROPOSED SETTLEMENT

A proposed settlement of the litigation has been reached by

Plaintiffs’ counsel and Defendants’ counsel. Defendants have

vigorously denied, and continue to deny, all liability with

respect to any and all of the facts or claims alleged in the

complaint, but consider it desirable to settle and dismiss the

claims on the merits with prejudice, thereby eliminating the

substantial expense, inconvenience and distraction of

continued litigation.

DEFENDANTS WILL PURCHASE E SERIES U.S. SAVINGS

BONDS HAVING A TOTAL FACE VALUE OF UP TO BUT

NOT EXCEEDING $870,000. The smallest bond to be

purchased will have a face value of $50.00. A claimant will be

entitled to receive a bond based upon the following formula:

Fees paid X 1.5 less the balance of amount financed on any

unpaid deferred presentment agreement rounded to the

nearest increment of $25.00. Any claim which totals $37.50 or

less will receive a check in that amount as opposed to a bond

48a

ee

which will be offset against the acquisition price of the bonds

available for settlement. If the claims made by the members of

the class exceed the total amount of the settlement fund, then

the claims will be prorated. THE SETTLEMENT DOES NOT

ELIMINATE ANY OBLIGATION THAT A CLASS MEMBER

HAS TO PAY ANY OF THE CHECK CASHING STORES

LISTED ABOVE.

IN ORDER TO BE ELIGIBLE TO RECEIVE A PORTION OF

THE SETTLEMENT FUND, A CLASS MEMBER MUST

COMPLETE, EXECUTE AND MAIL TO ORR, SCHOLTENS,

WILLHITE & AVERITT, PLC, P.O. BOX 1267, JONEBORO,

ARKANSAS 72403, A PROOF OF CLAIM AND RELEASE

WHICH IS ENCLOSED WITH THIS NOTICE. SUCH PROOF

AND RELEASE MUST BE POSTMARKED BY AUGUST 15,

2001.

A CLASS MEMBER WHO WISHES TO BE EXCLUDED

FROM THE TERMS OF THIS SETTLEMENT MUST GIVE

NOTICE IN WRITING AND MAIL THE NOTICE TO ORR,

SCHOLTENS, WILLHITE & AVERITT, PLC, P.O. BOX 1267,

JONESBORO, ARKANSAS, 72403. THIS NOTICE MUST BE

POSTMARKED BY AUGUST 15, 2001. Other than this notice

and a display ad to be run in the Arkansas Democrat Gazette,

no further notice of the settlement will be provided to class

members if the Court approves the settlement.

A class member's obligation to pay the Defendants has not

been eliminated by the terms of this settlement.

After all of the claims have been received, Defendants shall

prepare a spreadsheet which shall demonstrate the names,

addresses, and damages for each class member by October 30,

2001. Plaintiffs’ counsel shall review the spreadsheet and

approve it by November 15, 2001.

Defendants shall purchase the savings bonds for claims over

$37.50 and will mail the checks for claims in the amount of

$37.50 or less on November 15, 2001. The savings bonds will

be issued to the class members by the U.S. Treasury

49a

Department and, therefore, Defendants have no control over

when the class members will receive the bonds. Class

members should consult with a tax preparer or certified public

accountant of ‘heir choice with regards to any tax

consequences of this settlement that may or may not exist.

As part of this settlement, participating class members will

release Defendants from any and all claims which include any

claims which were, or which could have been asserted in the

litigation during the time periods listed above. All class

members who do not timely and validly request exclusion will

be bound by the settlement. If the settlement is approved by

the Court, at the conclusion of the settlement payout, this

litigation will be dismissed with prejudice as to all of the class

members who have not exercised their right to be excluded

from the terms of the settlement. Each class member shall be

permanently barred from instituting any action against any of

the Defendants which in any way relates to any released

claims. If the settlement is disapproved of by the Court, the

rights and duties of the parties will continue as if no settlement

had been entered into.

COLLECTIONS: Ninety (90) days following the date that the

court enters an order approving the settlement, the

Defendants wil’ no longer use deferred presentment

agreements and will write-off and not attempt to collect any

unpaid deferred presentment agreements unless a customer

has, prior to that date, agreed to a partial payment plan.

However, in the event an Arkansas Appellate court should

issue an opinion holding that the fees associated with deferred

presentment agreements do not constitute interest subject to

the usury limit in Article 19, Section 13 of the Arkansas

Constitution, Defendants shall be free to operate in any legal

manner.

ORR, SCHOLTENS, WILLHITE & AVERITT, PLC has been

approved by the Court as counsel for the class. The Court has

also approved this notice and the notice procedure used

herewith.

50a

IV. NOTICE OF THE SETTLEMENT HEARING

The Settlement Hearing will be held on June 1, 2001, at 8:00

a.m., or as soon thereafter as possible, at the Craighead County

Courthouse, 511 South Main Street, Jonesboro, Arkansas

72401, to determine whether the proposed settlement of this

cause of action, as set forth herein, should be approved as fair,

reasonable and adequate to the members of the settlement

class, and whether the Judgment approving the settlement

should be entered. The Court may adjourn or continue the

Settlement Hearing without further notice to settlement class

members. IF YOU APPROVE OR DO NOT OPPOSE THE

SETTLEMENT, YOU DO NOT NEED TO APPEAR AT THE

SETTLEMENT HEARING.

If you have questions concerning this notice, please write to

ORR, SCHOLTENS, WILLHITE & AVERITT, PLC, P.O. BOX

1267, JONESBORO, ARKANSAS 72403. Do not contact the

clerk of the Court or Judge David Laser.

V. ATTORNEYS’ FEES AND EXPENSES

Defendants shall pay the law firm of Orr, Scholtens, Willhite &

Averitt, PLC the sum of $170,000 to be paid $85,000.00

immediately following the Court's approval of the class action

settlement and the balance of $85,000.00 on the day the savings

bonds and checks are mailed to the claimants. Defendants will

pay the cost of the newspaper advertisement. Orr, Scholtens,

Willhite & Averitt, PLC will be responsible for paying one-half

of the cost of the notice to class members, but Defendants will

advance all of the expenses and deduct Orr, Scholtens, Willhite

& Averitt, PLC’s share of the cost from the first payment of

attorneys’ fees.

**If You Wish Tc Make A Claim, Fill Out The Enclosed Claim

Form**

5la

TO:

OFFICIAL COURT NOTICE

ALL PERSONS WHO RECEIVED PAYDAY LOANS

OR DEFERRED

PRESENTMENT

OPTION

TRANSACTIONS (“CASH ADVANCES’) AT ANY

OF THE STORES LISTED BELOW AND DURING

THE TIME PERIOD LISTED BELOW.

CHECK CASHING TIME PERIOD DURING

STORE WHICH CLAIMS HAVE

ARISEN UNDER THE

SETTLEMENT

AMERICAN CHECK DECEMBER 8, 1995

CASHERS THROUGH JUNE 10,

2001

CASH ADVANCE OF DECEMBER 8, 1995

BENTON THROUGH JUNE 10,

2001

CASH ADVANCE OF DECEMBER 8, 1995

LITTLE ROCK THROUGH JUNE 10,

2001

CASH ADVANCE OF DECEMBER 8, 1995

LITTLE ROCK 2 THROUGH JUNE 10,

2001

CASH ADVANCE OF DECEMBER 8, 1995

NORTH LITTLE ROCK THROUGH JUNE 10,

2001

CHECKS 2 CASH DECEMBER 8, 1995

THROUGH JUNE 10,

2001

PAYDAY MONEY OCTOBER 27, 2000

STORE THROUGH JUNE 10,

2001

PAYDAY ADVANCE NOVEMBER 20, 2000

OF FORT SMITH THROUGH JUNE 10,

2001

RIVER VALLEY CHECK APRIL 29, 2000

CASHERS THROUGH JUNE 10,

2001

52a

READ THIS NOTICE CAREFULLY, AS IT MAY AFFECT

YOUR RIGHTS

Notice is hereby given that a proposed settlement has been

reached in the class action entitled Sheila Martin, and Jimmie

Sue Spencer v. Westark Financial Consultants of Little Rock,

Inc.; Westark Financial Consultants of North Little Rock,

Inc.; Westark Financial Consultants of Jonesboro, Inc.;

Westark Financial Consultants of Jacksonville, Inc.; Westark

Financial Consultants of Pine Bluff, Inc.; Westark Financial

Consultants of Rogers, Inc.; Westark Financial Consultants

of Springdale, Inc; Westark Financial Consultants of

Russellville, Inc.; Westark Financial Consultants of

Fayetteville, Inc.; Westark Financial Consultants, Inc.; Cash

Advance of Benton, Inc.; Cash Advance of North Little Rock,

Inc.; Cash Advance of Little Rock, Inc.; Executive Cash

Advance of Little Rock, Inc.; C&B Enterprises, Inc.; H&S

Enterprises of Rogers, Inc.; H&S Enterprises of Fayetteville,

Inc.; H&S Enterprises _of Springdale, Inc.; and Payday

Advance of Fort Smith, Inc., Craighead County Circuit Court

Case No. CIV-2000-0669(L).

ARE YOU A CLASS MEMBER?

You are member of the settlement class if you have entered

into a payday loan or deferred presentment agreement

(“cash advance”) from any of the Defendants listed above

operating under any of the above names during the dates

listed above.

WHAT ARE THE TERMS OF THE SETTLEMENT?

Defendants will purchase E Series U.S. savings bonds having

a total face value of up to but not exceeding $870,000.00. The

smallest bond to be purchased will have a face value of

$50.00. A claimant will be entitled to receive a bond based

upon the following formula: Fees paid X 1.5 less balance of

any amount financed on any unpaid deferred presentment

agreement rounded to the nearest increment of $25.00. Any

53a

claim which totals $37.50 or less will receive a check in that

amount as opposed to a bond, which will be offset against

the acquisition price of the bonds available for settlement. If

the claims made by the members of the class exceed the totai

amount of the settlement fund, then the claims will be

prorated.

WHEN MUST I MAKE A CLAIM?

In order to be eligible to receive a portion of the settlement

fund, a class member must complete, execute and mail a pre-

addressed proof of claim and release form which can be

obtained from Orr, Scholtens, Willhite & Averitt, PLC, P.O.

Box 1267, Jonesboro, Arkansas 72403. CLAIMS MUST BE

POSTMARKED BY AUGUST 15, 2001.

THIS NOTICE IS ONLY A SUMMARY.

If you think you may be a member of the class and you did

not receive the written settlement notice by mail, you should

request one by writing to Orr, Scholtens, Willhite & Averitt,

PLC, P.O. Box 1267, Jonesboro, Arkansas 72403.

WHAT IF I STILL OWE ONE OF THE STORES LISTED

ABOVE?

If you currently have an obligatior. to any of the check

cashing stores listed above, then your obligation to pay still

exists; it has not been eliminated by the terms of the

settlement.

THE LAST DAY TO OPT OUT OF THE SETTLEMENT IS

AUGUST 15, 2001.

PLEASE DO NOT CONTACT THE COURT OR THE

COURT CLERK.

[EXHIBIT C TO APPENDIX D]

IN THE CIRCUIT COURT OF CRAIGHEAD COUNTY,

ARKANSAS

WESTERN DISTRICT

SHEILA MARTIN, and JIMMIE SUE

SPENCER, individually and o/b/o

a class of similarly situated persons PLAINTIFFS

WESTARK FINANICAL CONSULTANTS OF LITTLE ROCK,

INC.; WESTARK FINANCIAL CONSULTANTS OF NORTH

LITTLE ROCK, INC.; WESTARK = FINANCIAL

CONSULTANTS OF JONESBORO, INC; WESTARK

FINANCIAL CONSULTANTS OF JACKSONVILLE, INC.;

WESTARK FINANCIAL CONSULTANTS OF PINE BLUFF,

INC; WESTARK FINANCIAL CONSULTANTS OF ROGERS,

INC.; WESTARK FINANICAL CONSULTANS- OF

SPRINGDALE, INC.; WESTARK FINANCIAL

CONSULTANTS OF RUSSELLVILLE INC.; WESTARK

FINANCIAL CONSULTANTS FAYETTEVILLE, INC;

WESTARK FINANCIAL CONSULTANTS, INC.; CASH

ADVANCE OF BENTON, INC.; CASH ADVANCE OF

NORTH LIETLE ROCK, INC.; CASH ADVANCE OF LITTLE

ROCK, INC.; EXECUTIVE CASH ADVANCE OF LITTLE

ROCK, INC; C&B ENTERPRISES, INC.; H&S ENTERPRISES

OF ROGERS, INC.; H&S ENTERPRISES OF FAYETTEVILLE,

INC.; H&S ENTERPRISES OF SPRINGDALE, INC.; AND

PAYDAY ADVANCE OF FORT SMITH, INC.

DEFENDANTS

CLAIM FORM

The Proposed claim form shall be a separate document

included with the notice. The claim form shall be

preaddressed to ORR, SCHOLTENS, WILLHITE & AVERITT,

PLC, P. O. BOX 1267, JONESBORO, ARKANSAS 72403. Each

claimant shall be responsible for postage. The following shall

be clearly printed on each form. This claim form may be

modified to include information necessary for Defendants to

discover and calculate each claimants’ claim as well as

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information that may be necessary to purchase the appropriate

savings bonds on behalf of each claimant. :

CLAIM FORM

My name is:

My current address is:

My current phone number

(if available) is:

My social security number is:

I did business with the following

Check cashing store(s):_

I believe I have a claim arising out of the settlement

entered in Craighead County Circuit Court Case No. CIV-

2000-0669(L). Please accept this as my proof of claim and

mail me the amount that I am due, if any, to the above

address. I acknowledge that, as a member of the class, I am

releasing any and all claims that I may have as the release

is described in the notice that I have received. :

My signature.

*THIS CLAIM FORM IS VOID UNLESS POSTMARKED

BY AUGUST 15, 2001*

I AM AWARE THAT I AM RESPONSIBLE FOR

POSTAGE

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