Lawyers for California immigrants who allege they were charged steep hidden fees to wire money to Mexico filed a new class-action lawsuit against Western Union, MoneyGram and Orlandi Valuta in an effort to circumvent a federal injunction that had blocked their original cases from moving forward.
The lawsuit, filed Tuesday in Los Angeles County Superior Court, represents 2,500 California plaintiffs who have opted out of a national settlement now awaiting approval by a federal judge in Illinois, as well as all Californians who wired money to Mexico since Sept. 1 of this year.
It circumvents a federal injunction put in place earlier this year when a federal judge in Chicago gave preliminary approval to a national settlement. That injunction prevented all lawsuits against the wire-transfer giants, including three in California, from moving forward.
The settlement was brokered by plaintiff's lawyers in Illinois and offers discount coupons to those who wired money to Mexico over the past decade through the three companies. It also promises $4.6 million to a coalition of Latino community organizations. It would also create a nonprofit Latino community development fund administered by Western Union and Orlandi Valuta parent First Data Corp. and MoneyGram Payment Systems Inc. and financed by a percentage of the billions of dollars wired to Mexico through the companies yearly.
While some political leaders and Latino community organizations have lined up behind the coupon-based offer, others have blasted it as unfair because alleged victims would benefit only by offering return business to the companies they are suing. Opponents also argue that community organizations should not benefit from a settlement that offers no cash to plaintiffs.
The plaintiffs named in the lawsuit filed this week by attorneys Fred Kumetz and Ian Herzog have opted out of the national settlement. The new suit also includes a class of plaintiffs who wired money through the companies since last September. Attorneys argue that the injunction and settlement offer do not apply to those plaintiffs.
A fairness hearing to determine whether to grant final approval to the proposed settlement is scheduled for Jan. 18 in federal court in Chicago.