The underlying suit, filed in May 2020, alleges that Midland Funding, LLC and Midland Credit Management, Inc. violated the Fair Debt Collection Practices Act by regularly collecting or attempting to collect on past-due debts to which they were not entitled. The case has a lengthy procedural history — it was administratively terminated for nearly three years after a consolidated named plaintiff filed for bankruptcy — and was only reopened in March 2025.
Midland's push for the fee agreements centered on a prior FDCPA case, Dixon v. Jefferson Capital Systems, LLC, litigated in the Southern District of Indiana, where the same plaintiffs' firm — the Kim Law Firm, LLC — was involved. In Dixon, the court ultimately held that neither the plaintiff nor the Kim Firm had met Rule 23(a)'s adequacy requirement because the retainer agreement contractually obligated the plaintiff to pay fees and costs if the case resolved in any manner other than a class action, which the court held meant the plaintiff had functionally contracted away his ability to act as an independent fiduciary of the class. Midland argued that Lerner's fee agreements may be the same or substantially similar to the Dixon agreement, and therefore warranted production now.
Magistrate Judge James B. Clark III was unpersuaded. The court applied the standard from two prior District of New Jersey decisions — In re Front Loading Washing Machine Class Action Litigation and In re Riddell Concussion Reduction Litigation — under which fee agreements are generally not discoverable unless the party seeking discovery makes a preliminary showing of a relevant conflict or a prima facie challenge to the class representatives' adequacy. The court held that Midland had not made that showing, finding that its inference that Lerner's retainer might mirror Dixon's was speculation insufficient to compel production.
The court also pointed to representations the Kim Firm made in a related case, Stromberg v. Midland Funding, LLC — a separate FDCPA putative class action against the same defendants — where the firm declared in 2024 that it had initiated a process to revise its retainer agreements to ensure that clients in fee-shifting cases would not be contractually obligated to pay fees, costs, or expenses. The court noted that because this litigation was ongoing at the time of that declaration, Lerner's agreements would have been subject to those promised revisions, and that any failure to honor those representations to the court would have exposed the Kim Firm to Rule 11 sanctions.
Rather than compel document production, the court directed Midland to pursue its adequacy concerns through depositions — the same alternative endorsed in In re Front Loading and in Fort Worth Employees' Retirement Fund v. J.P. Morgan Chase & Co. — and noted that adequacy is in any event better resolved at the class certification stage once a formal motion has been fully briefed.
The opinion and order was signed by Magistrate Judge James B. Clark III on February 25, 2026, in Civil Action No. 20-7838, with District Judge Brian R. Martinotti as the assigned district judge.