Opinion
No. C 03-01821 SI.
May 7, 2004
ORDER GRANTING CLASS CERTIFICATION
On May 7, 2004, the Court heard argument on plaintiff's motion for class certification. Having carefully considered the arguments of the parties and the papers submitted, the Court hereby GRANTS plaintiff's motion for the reasons set forth below.
BACKGROUND
Plaintiff Francisco R. Bracamonte brings this action individually and on behalf of others similarly situated to challenge a collection letter under the Fair Debt Collections Practices Act, 15 U.S.C. § 1692-1692o (FDCPA). Second Amended Complaint (SAC) ¶ 1. Bracamonte seeks a declaration that defendants' collection letter violates the FDCPA and to recover damages, attorneys' fees, and costs. Id. Bracamonte is an individual and is a consumer as defined by 15 U.S.C. § 1692a (3). SAC ¶ 3. Defendant Eskanos Adler (E A) is a California attorney-collection firm engaged in debt collection using the mail and telephone. SAC ¶ 4. E A employs defendants Irwin J. Eskanos, Donald R. Stebbins, Jeff Dandle and Jerome M. Yalon (the individual defendants) as attorneys. SAC ¶ 5. Both E A and the individual defendants are "debt collectors" as defined by 15 U.S.C. § 1692 a(6). SAC ¶¶ 4, 5.
In his First Amended complaint, Bracamonte also alleged violation of the California Unfair Buiness Practices Act, Cal. Bus. Prof. Code §§ 17200-17209. On October 27, 2003, this Court denied defendants' motion to dismiss with respect to plaintiff's federal claim and granted defendants' motion to dismiss the state claim with leave granted to amend. Plaintiff filed his Second Amended Complaint on November 7, 2003, alleging only a federal claim.
Bracamonte alleges that E A sent him an initial collection letter on its attorneys' letterhead dated December 18, 2002 seeking to collect a debt allegedly owed by Bracamonte to the Household Finance Corporation. SAC ¶ 6. The letter informed Bracamonte that E A had "been instructed to file suit at the conclusion often days after [he] receive[d] this letter" and that "the lawsuit will claim attorneys' fees and court costs." SAC ¶ 7, Ex. A. The signature line of the letter contained the individual defendants' names underneath "a scrawled, indecipherable signature, or a facsimile signature." SAC ¶ 8. Bracamonte alleges that defendants sent the letter without signing the letter or reviewing a loan file to determine if Bracamonte was liable for the alleged debt or attorneys' fees. SAC ¶ 9. Thus Bracamonte alleges that "the attorneys had no direct personal involvement in the decision to send the collection letter to" him. Id.
Bracamonte attached a copy of the letter as Exhibit A to the original complaint filed in this action. Defendants have attached the December 18, 2002 letter as Ex. 2 to their Request for Judicial Notice. The Court takes judicial notice of the letter, but refers to the letter as Ex. A, since the class definition refers to the letter as "Exhibit A."
On December 31, 2002, defendant E A sent Bracamonte another letter on its attorneys' letterhead stating that its "process server has been asked to deliver a copy of this letter to [him] along with the summons and complaint." SAC ¶ 10, Ex. B. On January 7, 2003, defendants filed a complaint against Bracamonte in the Superior Court for the County of San Mateo. SAC ¶ 11. On January 16, 2003, Bracamonte, through his attorney, advised E A that he disputed the debt and requested validation of the debt. SAC ¶ 12. On February 1, 2003, "before providing validation of the debt," defendants had Bracamonte served with the summons and complaint. SAC ¶ 13. The obligor on the debt was Francisco Bracamonte, instead of Francisco Bracamonte, Sr. SAC ¶ 14. "The original creditor was shown as Beneficial California, Inc., and the loan documents did not require the obligor on the loan to pay attorneys' fees." Id. E A dismissed the state court suit against Bracamonte. SAC ¶ 17.
As with the original letter, plaintiff failed to submit a copy of the second letter with his Second Amended Complaint. Defendants have attached the December 31, 2002 letter as Ex. 3 to their Request for Judicial Notice. The Court takes judicial notice of the letter, and refers to it as Ex. B, since that is how the complaint refers to it.
According to Bracamonte, "Beneficial California, Inc. is a licensed California consumer finance lender and is not allowed attorneys' fees on a common count claim [under] Cal. Civ. Code § 1717.5." SAC ¶ 18. Bracamonte cites Cal. Civ. Code § 1717(a) to explain that "[a]ttorneys' fees may be awarded by a court, `In an action on a contract, where the contract specifically provides for attorneys' fees and costs incurred in enforcing the contract.'" SAC ¶ 19. Bracamonte alleges that the contract produced by E A in support of their claim for attorneys' fees lacks a provision allowing payment of attorneys' fees in enforcing the contract." Id.
Bracamonte filed a copy of the loan documents as "Exhibits F, 1-3" to the original complaint. As with the collection letters, he failed to include copies as exhibits to his Second Amended Complaint, which needlessly complicates the Court's work.
Thus plaintiff alleges that defendants' collection letter "violated 15 U.S.C. § 1692e2(A) by making false, deceptive and misleading representations as to the character, amount or legal status of the debt i.e. their entitlement to attorneys' fees . . . violated 15 U.S.C. § 1692e(3) by falsely representing that the collection letter is from an attorney, as no attorney was directly and personally involved in reviewing Mr. Bracamonte's file and sending the collection letter to Mr. Bracamonte . . . violated 15 U.S.C. § 1692e(5) by threatening to claim attorneys' fees as the threat was of an action that can not be legally taken or that was not intended to be taken . . . violated 15 U.S.C. § 1692e(1) by the use of false and deceptive means to collect a debt . . . violated 15 U.S.C. § 1962f by the use of an unfair and unconscionable means to attempt to collect a debt of an amount not expressly authorized by the agreement or permitted by law, i.e., attorneys' fees." SAC ¶¶ 29-33.
Now before the Court is plaintiff's motion for class certification Fed.R.Civ.Pro. 23. Plaintiff defines the class as
(i) all persons with addressees in the State of California (ii) to whom collection letters in the form of Exhibit A (attached to the Complaint), (iii) were sent by Eskanos Adler, P.C.; Irwin J. Eskanos; Donald R. Stebbins; Jeff Daniel; and Jerome M. Yalon, Jr. in an attempt to collect a debt incurred for personal, family, or household purposes (iv) sent during the one year period prior to the filing of the complaint in this action (v) which letters were not returned undelivered by the United States Postal Service.
Bracamonte requests that the Court certify the class and appoint him as the class representative and appoint his counsel as class counsel.
DISCUSSION
A court may certify a class if the plaintiff demonstrates that all of the requirements of Federal Rule of Civil Procedure 23(a) are satisfied and at least one of the requirements of Rule 23(b) is satisfied. See Fed.R.Civ.P. 23; Valentino v. Carter-Wallace, Inc., 97 F.3d 1227, 1234 (9th Cir. 1996). Rule 23(a) provides that a court may certify a class only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class. Fed.R.Civ.P. 23(a).In addition to demonstrating that the Rule 23(a) requirements are met, the plaintiffs must establish one or more of the following grounds for maintaining the suit as a class action pursuant to Rule 23(b): (1) that there is a risk of substantial prejudice from separate actions; (2) that declaratory or injunctive relief benefitting the class as a whole would be appropriate; or (3) that common questions of law or fact predominate and the class action is superior to other available methods of adjudication. Fed.R.Civ.P. 23(b).
In determining the propriety of a class action, the question is not whether the plaintiffs have stated a cause of action or will prevail on the merits, but, rather, whether the requirements of Rule 23 are met. Eisen v. Carlisle Jacquelin, 417 U.S. 156, 178, 94 S.Ct. 2140, 2153 (1974) (citing Miller v. Mackey Int'l, Inc., 452 F.2d 424, 427 (5th Cir. 1971)). The Court is obliged to accept as true the substantive allegations made in the complaint. See In re Coordinated Pretrial Proceedings in Petroleum Prods. Antitrust Litig., 691 F.2d 1335, 1342 (9th Cir. 1982); Blackie v. Barrack, 524 F.2d 891, 901 (9th Cir. 1975). However, it "need not blindly rely on conclusory allegations which parrot Rule 23 requirements [and] may . . . consider the legal and factual issues presented by plaintiff's complaints." 2 Herbert Newberg Alba Conte, Newberg on Class Actions § 7.26 (3d ed. 1992). The Court will consider the allegations of the complaint, but going beyond the pleadings to analyze the claims, defenses, relevant facts, and applicable substantive law may be necessary in order to evaluate whether certification is appropriate. Castano v. American Tobacco Co., 84 F.3d 734, 744 (5th Cir. 1996). The decision to certify a class is committed to the discretion of the district court. Doninger v. Pacific Northwest Bell, Inc., 564 F.2d 1304, 1309 (9th Cir. 1977).
1. Rule 23(a)(1) — Numerosity
Under Fed.R.Civ.Pro. 23(a)(1), a class must be "so numerous that joinder of all members is impracticable." To support his claim that the instant proposed class would satisfy the numerosity requirement, Bracamonte attaches as Appendix A to his motion Defendants' Response to Plaintiff's Interrogatory # 3. Interrogatory # 3 required Defendants to "[s]tate the number of persons with addresses within California who were sent letters in the form of Exhibit A since April 3, 2002." (emphasis in the original). Defendants responded that "[t]he number of persons with addresses within California who were sent letters in the form of Exhibit A since April 23, 2002, is approximately 4,673." (emphasis in the original). This number makes joinder of all members impracticable and that the numerosity requirement is therefore satisfied.
2. Rule 23(a)(2) — Commonality
Under Fed.R.Civ.P. 23(a)(2), there must be "questions of law or fact common to the class." Courts look for a common nucleus of operative facts. Hanlon v. Chrysler Corp., 150 F.3d 1011, 1019 (9th Cir. 1998). Bracamonte contends that defendants engaged in standardized conduct toward proposed class members by sending them an attorney form letter when the attorneys had not actually reviewed the letter in advance, and cites Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998) ("Common nuclei of fact are typically manifest where, like in the case sub judice, the defendants have engaged in standardized conduct toward members of the proposed class by mailing them allegedly illegal form letters or documents."). The existence of some factual variation among the class grievances will not defeat a class action. See Rosario v. Livaditis, 963 F.2d 1013 (7th Cir. 1992).
The Court finds that these contentions satisfy the commonality requirement.
3. Rule 23(a)(3) — Typicality
The "claims or defenses of the class representative must be typical of the claims or defenses of the class." Fed.R.Civ.P. 23(a)(3). In the Ninth Circuit, "under the rule's permissive standards, representative claims are typical if they are reasonably co-extensive with those of absent class members; they need not be substantially identical." Hanlon v. Chrysler Corp., 150 F.3d 1011, 1020 (9th Cir. 1998). See also California Rural Legal Assistance v. Legal Services Co., 917 F.2d 1171, 1175 (9th Cir. 1990) (Rule 23 "does not require the named plaintiffs to be identically situated with all other class members. It is enough to share a `common issue of law or fact.'" (internal citations omitted)). The class representative must be able to prove actual injury, but all class members need not have suffered the same injury as the class representatives. See Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir. 1992).
The plaintiff whose claim is typical will ordinarily establish the defendants' liability to the entire class by proving his or her individual claim. See 4 Herbert Newberg Alba Conte,Newberg on Class Actions § 18.08 (3d Ed. 1992). The test of typicality is "whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct." Schwartz v. Harp, 108 F.R.D. 279, 282 (C.D. Cal. 1985).
Under the circumstances of this case, the Court finds that Bracamonte has asserted claims which are typical of the other class members' claims, in that each of the class members was sent the same letter, was subjected to the same alleged violation and was injured, if at all, in the same way.
4. Rule 23(a)(4) — Representativeness
Under Fed.R.Civ.P. 23(a)(4), plaintiffs seeking to represent a class must be able to "fairly and adequately protect the interests" of all class members. Representation is considered adequate if (1) the attorney representing the class is qualified and competent; and (2) the class representatives are not disqualified by interests antagonistic to the remainder of the class." See Lerwill v. Inflight Motion Pictures, Inc., 582 F.2d 507, 512 (9th Cir. 1978).
Plaintiff has submitted a declaration stating that he understands his responsibilities as a class representative and is willing to undertake them. Would-be class counsel have submitted unopposed declarations outlining their considerable experience in cases of this nature. Counsel further argue that the "identical nature of the claims" obviates any potential for conflicting interests in this action.
The Court agrees, and finds that Bracamonte and his counsel will be able to fairly and adequately represent the class.
5. Rule 23(b)(2) and (3)
In addition to demonstrating that the Rule 23(a) requirements are met, plaintiffs must establish one or more of the following grounds for maintaining the suit as a class action pursuant to Rule 23(b): (1) that there is a risk of substantial prejudice from separate actions; (2) that declaratory or injunctive relief benefitting the class as a whole would be appropriate; or (3) that common questions of law or fact predominate and the class action is superior to other available methods of adjudication. Fed.R.Civ.P. 23(b). Bracamonte contends that the requirements of both Rule 23(b)(2) and Rule 23(b)(3) are satisfied, and therefore asks the Court to certify the class pursuant to both subparts.
As to Rule 23(b)(2), Bracamonte seeks declaratory relief against defendants, thus meeting its requirements. With regard to Rule 23(b)(3), Bracamonte argues that he must only show an essential common factual link between all class members and the defendant for which the law provides a remedy. Valentino v. Carter-Wallace, Inc., 97 F.3d 1227 (9th Cir. 1996). He contends that the legal issues for all potential class members are the same, since they all received the same letter, namely Exhibit A. Arguing that the standardized "document is the focal point of the analysis," Bracamonte concludes that common questions predominate and that a class action will most efficiently and consistently resolve his claim concerning a standardized collection letter. Furthermore, since the individual claims are small, the class action will protect the rights of individual class embers who are unable or unwilling to protect themselves. This Court agrees.
At oral argument, plaintiff's counsel suggested that defendants have already agreed that they will no longer use this particular form letter, and thus that declaratory relief may no longer be needed. If and when this is determined, the Court will enter an appropriate order.
CONCLUSION
For the foregoing reasons, the Court GRANTS plaintiff's motion for class certification [docket # 45] and certifies the following class under provisions (b)(2) and (b)(3) of Rule 23:
(i) all persons with addressees in the State of California (ii) to whom collection letters in the form of Exhibit A (attached to the Complaint), (iii) were sent by Eskanos Adler, P.C.; Irwin J. Eskanos; Donald R. Stebbins; Jeff Daniel; and Jerome M. Yalon, Jr. in an attempt to collect a debt incurred for personal, family, or household purposes (iv) sent during the one year period prior to the filing of the complaint in this action (v) which letters were not returned undelivered by the United States Postal Service.
In accordance with discussions at oral argument, counsel are directed to meet and confer to formulate a proposed form of notice, notification plan and opt-out procedure and timetable. Counsel shall submit same to the Court for its review on or before May 21, 2004 and shall attend a further case management conference on May 28, 2004 to discuss implementation of the notice plan.