Summary
certifying FDCPA class of all persons who had collection letters sent to their employers by defendant
Summary of this case from BECK v. MAXIMUS, INC.Opinion
Civil Action No: 01-0138 Section: "R" (2)
January 2, 2002
ORDER AND REASONS
Before the Court is plaintiff's motion for class certification. For reasons set forth below, the Court grants the motion.
I. Background
On January 16, 2001, Mildred Henderson brought this suit under the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq., against defendant Gregory Eaton. Plaintiff alleges, on behalf of herself and a proposed class, that Eaton is a debt collector who violated the FDCPA by communicating with her employer, the Equal Employment Opportunity Commission ("EEOC"), more than once, and by requesting information from her employer that was outside the scope of permissible inquiry under the Act. Eaton's letters to the EEOC asked for confirmation of her place of employment, her wage scale, type of employment, and the full name of her employer, if she had been terminated. Plaintiff asserts that the letters were written as part of an effort to collect a debt owed by plaintiff to Capital One.
Plaintiff seeks a declaratory judgment that the defendant's conduct violated the FDCPA, declaratory and injunctive relief for defendant's violations, actual damages, statutory damages pursuant to 15 U.S.C. § 1692k, and attorney's fees. ( See Id. ¶ 39). On April 16, 2001, plaintiff moved to certify a class of all persons in the United States who had similar letters sent to their employers by the defendant during the period one year before the filing of this action.
II. Discussion
A. Elements and Standards of Rule 23
Class actions are governed by Rule 23 of the Federal Rules of Civil Procedure. A district court has great discretion in determining whether to grant class certification. See Mullen v. Treasure Chest Casino, L.L.C., 186 F.3d 620, 624 (5th Cir. 1999). The court, however, should not grant class certification unless it is satisfied, after "rigorous analysis," that all prerequisites have been met. See Castano v. American Tobacco Co., 84 F.3d 734, 740 ( citing General Tel. Co. v. Falcon, 457 U.S. 147, 161, 102 S.Ct. 2364, 2372(1982)). To be certified, the class must first satisfy four threshold requirements. The rule states:
One or more members of a class may sue or be sued as representative parties on behalf of all 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 satisfying each of these four prerequisites, the party seeking class certification must show that the action falls within one of the categories listed in Rule 23(b). See Amchem Products, Inc. v. Windsor, 521 U.S. 591, 614, 117 S.Ct., 2231, 2245(1997).
B. The Prerequisites of Rule 23(a)
1. Numerosity
Rule 23(a)(1) simply requires that the class be so large that joinder of all members is impracticable. See FED.R.CIV.P. 23(a)(1). Although plaintiff has not provided the Court with specific numbers at this time, she has alleged that the class consists of at least 200 members. The accuracy of plaintiff's estimation is supported by the information plaintiff obtained from the defendant during discovery in which the defendant admitted that he sent the form letter in question an estimated 252 times. See Pl's Reply Memo, Appendix at 1. While there is no magic number, a class of more than 100 members generally satisfies the numerosity requirement. See Mullen, 186 F.3d at 624; Broussard v. Foti, 2001 WL 699525, *2 (E.D.La. 2001) Accordingly, the Court finds that plaintiff has satisfied the numerosity requirement.
2. Commonality
The commonality test of Rule 23(a)(2) is met when there is "at least one issue whose resolution will affect all or a significant number of the putative class." Mullen, 186 F.3d at 624 ( quoting Lightbourn v. County of El Paso, 118 F.3d 421, 426 (5th Cir. 1997)). Because of this minimal requirement, "[t]he threshold of commonality is not high." Jenkins v. Raymark Inds., Inc., 782 F.2d 468, 472 (5th Cir. 1986). In this case, plaintiff states that the employer of every class member received at least one form letter from the defendant that violated the FDCPA because the letters seek improper information from class members' employers. See Cope v. Duggins, 2000 WL 381928, *2 (E.D.La. 2000) (typicality met when allegations state that every class member received a letter from defendants that violated FDCPA)
The defendant concedes that plaintiff presents one common issue, but he argues that plaintiff must present at least two common issues, citing Applewhite v. Reichold Chemicals Inc., 67 F.3d 571, 573 (5th Cir. 1995). See Def's Opp. to Class Cert. at 10. The Applewhite panel stated that "class certification requires at least two issues in common." 67 F.3d at 573. The Applewhite panel relied on Stewart v. Winter, 669 F.2d 328, 335 n. 16 (5th Cir. 1982). Although Stewart noted that a treatise had posed the issue that "by its terms, Rule 23(a)(2) requires more than one common question," ( see 669 F.2d at 335 n. 16.), the court ultimately declined to decide whether one common question would suffice and held that Rule 23(a)(2) requires "that there be at least one issue whose resolution will affect all or significant number of the putative class members." Id. at 335. When there is split among panel opinions of the same circuit court on the same question of law, the earlier case controls, unless the question was resolved by the Supreme Court or the Fifth Circuit sitting en banc. See Barrientes v. Johnson, 221 F.3d 741, 780, n. 30 (5th Cir. 2000); (citing Texaco v. La. Land Exploration Co., 995 F.2d 43, 44 (5th Cir. 1993)); see also Smith v. Penrod Drilling Corp., 960 F.2d 456, 459 n. 2 (5th Cir. 1992) (citing Heitkamp v. Dyke (In re Dyke), 943 F.2d 1435, 1442-43 (5th Cir. 1991)) ("In the event of conflicting panel opinions from this court, the earlier one controls, as one panel of this court may not overrule another."). Here, Stewart is the earlier case, and this Court has found no decision of the Supreme Court or of an en banc panel of the Fifth Circuit that overruled the holding in Stewart. Moreover, other panels of the Fifth Circuit have not followed Applewhite. See Mullen, 186 F.3d at 624; Lightbourn, 118 F.3d at 426. Accordingly, the holding of Stewart that a case must contain "at least one issue whose resolution will affect all or a significant number of the putative class" is an accurate statement of Fifth Circuit law. In any event, the court finds that plaintiff raises more than one common issue. Her complaint raises common issues of fact as to the form of communications sent by defendant, as well as common issues of law concerning whether defendant's inquiries violated the FDCPA in one or more ways. Therefore, plaintiff satisfies the commonality requirement regardless of whether the test requires more than one common issue.
3. Typicality
Rule 23(a)(3) requires that "claims or defenses of the representative parties [be] typical of the claims or defenses of the class." FED.R.CIV.P. 23(a)(3). The test for typicality is not demanding ( Shipes v. Trinity Inds., 987 F.2d 311, 316 (5th Cir. 1993)), and it focuses on the general similarity of the legal and remedial theories behind their claims. Lightbourn, 118 F.3d at 426; Jenkins, 782 F.2d at 472. A claim is typical "if it arises from the same event or practice giving rise to the claims of other class members and is based on the same legal theory as the class members." Broussard, 2001 WL 699525, at *2. Plaintiff satisfies this requirement because she asserts that the same type of communication violated the FDCPA in the same way as to each member of the class. The Court is unpersuaded by defendant's argument that a finding of typicality in this case runs counter to Byes v. Telecheck Services, 173 F.D.R. 421 (E.D.La. 1997). Byes is neither controlling upon nor analogous to this case. In Byes, the defendant sent multiple letters that allegedly violated different provisions of the FDCPA. 173 F.D.R. at 424-425. In this case, plaintiff alleges that defendant sent essentially the same letter to employers and that the letter violated Section 1692c(b) of the FDCPA. Accordingly, Byes does not alter the outcome in this case. Therefore, because plaintiff asserts that defendant sent substantially the same letter to the employers of all of the members of the putative class, she satisfies the typicality requirement.
4. Adequacy of Representation
Rule 23(a) also requires that the representative parties must "fairly and adequately protect the interests of the class." FED.R.CIV.P. 23(a)(4). This requirement is essential to due process, because a final judgment in a class action is binding on all class members." In re American Medical Systems, Inc., 75 F.3d 1069, 1083 (6th Cir. 1996) (citing Hansberry v. Lee, 311 U.S. 32, 42-43, 61 S.Ct. 115, 113-19(1940)). This element requires that the interests of the named plaintiff are aligned with the unnamed class members to ensure that the class representative has an incentive to pursue and protect the claims of the absent class members. Id. Courts must also examine the qualifications of counsel. See Mullen, 186 F.3d at 625; Tarica v. McDermott Int'l Inc., 2000 WL 377817, *5 (E.D.La. 2000) ("In order to satisfy adequacy of representation, counsel must be qualified, experienced, and able to prosecute the action vigorously . . .")
In this case, because there are no apparent conflicts between the plaintiff and the putative class members, the Court finds that the interests of the named plaintiff are aligned with the unnamed class members. Additionally, plaintiff has submitted affidavits of her counsel detailing her counsel's experience in handling class action suits, which the Court finds to be satisfactory. See Pl.'s Ex. C. Furthermore, plaintiff's counsel has competently and vigorously prosecuted this suit. See, e.g., Lyles v. Rosenfeld Attorney Network, 2000 WL 798824, *5 (N.D.Miss. 2000) (finding class counsel's adequacy based on performance in the present case); Mississippi Protection Advocacy System, Inc. v. Cotten, 1989 WL 224953, *3 (S.D.Miss. 1989) (same). Accordingly, the Court finds that the adequacy of representation requirement is met.
C. Rule 23(b)(3)
In addition to satisfying the requirements of Rule 23(a), the Plaintiff must also satisfy the requirements of either Rule 23(b)(1), (2), or (3) in order to qualify for class certification. See Amchem, 521 U.S. at 614, 117 S.Ct. at 2245. Although plaintiff asserts that the proposed class meets the requirements of all three categories under Rule 23(b), the Court need find that plaintiff meets the criteria under only one subsection. Rule 23(b)(3) imposes two prerequisites, predominance and superiority: "[Q]uestions of law or fact common to the members of the class [must] predominate over any questions affecting only individual members, and . . . a class action [must be] superior to the other available methods for the fair and efficient adjudication of the controversy." FED.R.CIV.P. 23(b)(3). See Amchem, 521 at 615, 117 S.Ct. at 2245-46 (characterizing 23(b)(3) as two additional requirements). In Castano, the Fifth Circuit held that a district court may look beyond the pleadings to determine whether the requirements of Rule 23 are met. 84 F.3d at 744. The Castano court specifically directed courts to look at the claims, defenses, relevant facts, substantive law and at how the proposed class claims would be tried. See id.
Plaintiffs also propose to certify the class under Rule 23(b)(2) because they seek injunctive and declaratory relief. The Fifth Circuit, after finding similarities between the FDCPA and the Fair Credit Reporting Act ("FCRA"), noted that the FCRA permits the recovery of money damages but not injunctive relief. See Washington v. CSC Credit Services, Inc., 199 F.3d 263, 268, n. 4 (5th Cir. 2000). In a later case, the Fifth Circuit recognized that a majority of courts have held that the FDCPA does not authorize equitable relief although the court did not squarely rule on this issue. See Bolin v. Sears, Roebuck, Co., 231 F.3d 970, 977, n. 39 (5th Cir. 2000) (citing cases). The Court will not address plaintiff's Rule 23(b)(2) argument in light of the doubt cast on the plaintiff's ability to obtain equitable relief under the FDCPA and the availability of class certification under Rule 23(b)(3).
"In order to 'predominate,' common issues must constitute a significant part of the individual cases." Mullen, 186 F.3d at 626 (citing Jenkins, 782 F.2d at 472). The common issues in this case relate to whether defendant used the form letter to communicate with class members' employers regarding the collection of their debts and whether that conduct violates the FDCPA. The lawfulness of the third-party communication is an essential determination for every potential class members. Further, this issue clearly predominates over any individualized issues.
The defendant contends that there are numerous individualized issues that preclude a finding of predominance, such as (1) the actual damages recoverable by each plaintiff; (2) the number of letters received by each employer; (3) whether the employers actually received the letters; (4) whether and to what extent class member's claims are timely; and (5) the applicability of defenses such as res judicata and accord and satisfaction. See Def.'s Opp. Mot. at 19. Although damage calculations might require some individualized determinations, the computations could also be formulaic. See 15 U.S.C. § 1692k (formula for calculating damages for violations of FDCPA). In either case, the dominant issue in the suit would still be whether the letters received by plaintiffs' employers violate the act. See Bertulli v. Independent Association of Continental Pilots, 242 F.3d 290, 298 (5th Cir. 2001) (individualized damage calculations do not defeat predominance when every other issue is a common issue). Further, the Act contains language for calculating damages in class actions, so it clearly contemplates class actions despite individualized damages calculations. See 15 U.S.C. § 1692k(b). Further, determining whether an individual's employer received one or more letters involves simple proof that will not overwhelm the determination of the ultimate common issue, whether the letters violate the act. Finally, defendant merely advances conclusory arguments that affirmative defenses such as res judicata, accord and satisfaction, and the statute of limitations may be applicable without having pleaded any of these defenses in his answer to plaintiff's complaint or even affirmatively asserting them in his answer to this motion. See FED.R.CIV.P. 8(c); Simi Investment Co., Inc. v. Harris County, 236 F.3d 240, 252, n. 16 (5th Cir. 2000) ("Res judicata is an affirmative defense which is considered waived if not specifically pleaded in the answer or in an amended answer permitted under FED.R.CIV.P. 15(a)") (citing cases); Davis v. Huskipower Outdoor Equip. Corp., 936 F.2d 193, 198 (5th Cir. 1991) (defendant waived statute of limitations defense by failing to raise it in pleadings). Additionally, the application of the statute of limitations does not automatically foreclose certification under Rule 23(b)(3). See Waste Management Holdings, Inc. v. Mowbray, 208 F.3d 288, 296 (1st Cir. 2000) ( citing 5 James Wm. Moore et al., Moore's Federal Practice § 23.46 [3], at 23-210-211 (3d ed. 1999)). Here, the proposed class is limited to persons whose employers were contacted within one year of the filing of this lawsuit. The statute of limitations on FDCPA claims is one year. See 15 U.S.C. § 1692k(d). Individuals with prescribed claims would not even be eligible for inclusion in the class. The Court cannot foresee how the statute of limitations defense will play a major role in this case.
Furthermore, this case is clearly distinguishable from the type of cases in which predominance has not been found. Castano involved claims against a number of tobacco companies based on an "immature tort" — not a federal statutory violation. In Castano, some class members had developed symptoms and others were asymptomatic, and the class members were from a variety of states, which required the application of a host of legal standards. See id. at 741-45. Similarly, in Amchem, in which predominance was also lacking, members of the proposed class were exposed to asbestos-containing products form different sources over different time periods; some plaintiffs had developed symptoms and others were asymptomatic, and the class members were from many states which involved the application of different legal standards. See 521 U.S. at ___, 117 S.Ct. at 2250. Here, on the other hand, plaintiffs assert claims against a single defendant for violation of the same federal statute. Further, the proposed class challenges defendant's conduct during the same one-year period.
The superiority prong of Rule 23(b)(3) is also met. The manageability concerns expressed in Castano are not present in this case. In Castano, the court was faced with complex choice of law problems, millions of potential plaintiffs, and a novel addiction-as-injury cause of action. See Mullen, 186 F.3d at 627-28 (noting the distinguishing characteristics of proposed Castano class). Here, there is one federal statute at issue, there are only hundreds of potential plaintiffs, and liability is predicated on a well-known, statutory cause of action. Furthermore, the proof required to establish that plaintiffs' employers received letters is simple and will not cause manageability problems.
The Court notes that some courts find the availability of attorneys' fees to be a basis for finding that superiority is lacking because this significantly decreases the financial risk for each potential plaintiff. See Castano, 84 F.3d at 748. Several courts, however, have certified class actions in cases involving violations of the FDCPA even though the statute expressly provides for the recovery of attorney's fees. See Walton v. Franklin Collection Agency, Inc., 190 F.R.D. 404, 416 (N.D.Miss. 2000); Cope, 2000 WL 381928 at *3-4; Blair v. Equifax Check Services, Inc., 1999 WL 116225 (N.D.Ill. 1999), aff'd, 181 F.3d 832 (7th Cir. 1999); Wells v. McDonough, NPC, 188 F.R.D. 277 (N.D.Ill. 1999) (noting that a majority of courts in the Seventh Circuit have certified classes under the FDCPA). But see Lyles, 2000 WL 798824 at *6-7. The FDCPA implicitly recognizes that the availability of attorney's fees does not automatically preclude class certification because it specifically includes provisions for calculating damages in class action suits brought under it. See 15 U.S.C. § 1692k(a) and (b). Further, in a case such as in which the individual recoveries will be small, the attorney's fees provision should not be a bar to class certification. This follows because the purpose of the fee provision is to encourage private enforcement of the Act by class actions in order to deter future violations and to achieve the Act's remedial purposes. See Mace v. Van Ru Credit Corporation, 109 F.3d 338, 344 (7th Cir. 1997) (attorney's fee provision makes class action more likely to proceed in case with de minimis recoveries thereby helping to deter future violations). Further, class certification is a more efficient mode of proceeding than requiring hundreds of plaintiffs to file individual lawsuits in which they put on the same proof.
Section 1692k(a)(3) provides that a successful plaintiff can obtain:
the costs of the action, together with a reasonable attorney's fee as determined by the court. 15 U.S.C. § 1692k(a)(3).
In light of the predominance of common issues and that claimants are unlikely to bring individual small claims, despite the availability of attorney's fees, the Court concludes that a class action is superior to other methods of adjudication in this case. In sum, this Court shares the concerns aptly expressed by the Walton court:
Individual actions by claimants would produce considerable duplication of effort, increase the cost of litigation and consume judicial resources through repetition. Furthermore, even though the individual claims are small, each class member has a stake in vindicating his rights, and the public has an interest in seeing that the Fair Debt Collection Practices Act is obeyed. 190 F.R.D. at 412-13.
Accordingly, the Court finds that plaintiff meets the requirements of Rule 23(b)(3).
III. Conclusion
For the reasons stated above, the Court GRANTS plaintiff's motion to certify the class under Rule 23(b)(3).