By Gina Tabonares
Variety News Staf

U.S. DISTRICT Court of Guam and NMI Chief Judge Frances Tydingco-Gatewood yesterday granted the preliminary approval of the earned incomes tax credit settlement agreement between Gov. Felix P. Camacho and members of the EITC classes.
The initial court endorsement of the $90 million proposed settlement agreement will trigger an immediate payout of $10 million to 1997 and 1998 class members as planned by the Camacho administration.
Judge Tydingco-Gatewood said the settlement agreement is "sufficiently within the range of reasonableness."
The governor and the two EITC classes--the Santos and the Torres groups—agreed on the settlement agreement on May 26, 2006.
While the EITC class is believed to have more than 10,000 taxpayers, the modified settlement agreement has redacted provisions concerning non-filers.
Acting Gov. Mike Cruz said an initial payment of $10 million will be made within the required 60 days.
There are three EITC class actions filed before the District Court: the petition filed by Julie Santos represented by Atty. Mike Phillips, the class of Charmaine Torres represented by Peter Perez, and the group of Mary Grace Simpao with Atty. Curtis Van de Veld as the counsel.
The federal court earlier ordered the three groups of petitioners to consolidate their cases. However, only the classes of Santos and Torres agreed and entered into a $90 million settlement deal with the governor.
The Simpao class, meanwhile, described the settlement agreement as "coercive" and "unfair" to other class members.
After reviewing the arguments presented to court by all parties, the chief judge consulted the EITC mediator, Retired Judge William J. Cahill, and decided that other concerns raised by the Simpao class will be addressed at a fairness hearing.
Judge Tydingco-Gatewood also granted the motion for conditional certification of the EITC class for settlement purposes and picked petitioners Santos and Torres as class representatives.
The chief judge also appointed Phillips as lead counsel for the purposes of the settlement, citing his long work experience on EITC cases.
Although the $90 million settlement is still subject for final or fairness hearing, class action lawyers and government counsels expressed satisfaction with the latest court ruling, saying it will finally allow them to move forward with the settlement.
"I am glad that after three years, it looks like we will be able to resolve this case for the working poor. In addition to obtaining $90 million for the class, we were also able to guarantee the government implements the EITC program and that it remains in effect for the future," Phillips told Variety.
He said the EITC case is an example of a case where they have to fight and not give up.
"Nobody else wanted to take this case or represent the EITC class until after the government indicated it wanted to settle the case. This is our third settlement. Besides the huge court battles, we also spent weeks negotiating a final settlement to this case. All sides had to give and take a little, and in the end, the EITC class receives a guaranteed $90 million for arrears and the immediate implementation of the EITC program for uture years," he added.
Phillips thanked all the participating parties for negotiating in good faith. He also thanked Sen. Ben Pangelinan for his assistance during the last two rounds of negotiations last year.
In light of the preliminary approval, the court will direct the Camacho administration to give direct notice to all class members who would be bound by a proposed settlement, voluntary dismissal or compromise.
Under the law, the notice should define the class and subclass, and describe the options open to the class members and the deadlines for taking action.
The notice should also describe the essential terms of the proposed settlement, disclose any special benefits provided to the class representatives, and provide information regarding attorney fees.
The parties proposed that each class member be mailed a notice of the proposed class action, and the notice should explain the procedures for allocating and distributing settlement funds.
It should also display the address and phone number of the class counsel and the procedure for making inquiries.
The court instructed the parties to submit a hard copy of a proposed scheduling order setting as required by the settlement agreement and the proposed notice of settlement should include the applicable dates no later than two days after the court issues the scheduling order.
After setting the schedule for the dates, the court will issue an order requiring the parties to provide the notice to the potential class members.
The settlement agreement is the result of three full days of negotiations held last year with the aid of Judge Cahill.
The delays in the EITC class actions were attributed mainly to the lack of a sitting district judge. There were six different judges who handled the case since the first petition was filed three years ago.
It was also stalled by issues concerning the legal representation of the governor, as raised by former Attorney General Douglas Moylan.
Acting Gov. Mike Cruz acknowledged the court decision as a "victory" for the working people.
"The decision from the district court is a victory for our working people who have waited too long for money that is rightfully theirs. This issue has lingered on since 1995 and I applaud Governor Camacho for the political courage he took in standing up for our working families," he said.
Cruz said Camacho’s efforts as a senator led to the legislation of a payout for 1997.
"And as governor, he fought from the start to make these payments possible. The real winners here are people with fixed incomes and parents who now will have more money in their pockets to provide for their children," Cruz added.