Jacobson v. Persolve, LLC et al

Filing 109

ORDER by Judge Lucy H. Koh granting in part and denying in part 96 Motion to Certify Class (lhklc1, COURT STAFF) (Filed on 6/4/2015)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

NORTHERN DISTRICT OF CALIFORNIA

10
SAN JOSE DIVISION

United States District Court
Northern District of California

11
12

SANDRA LEE JACOBSON,
Plaintiff,

13
14
15
16

Case No. 14-CV-00735-LHK
ORDER GRANTING IN PART AND
DENYING IN PART MOTION FOR
CLASS CERTIFICATION

v.
PERSOLVE, LLC, et al.,
Defendants.

Re: Dkt. No. 96

17
18

Plaintiff Sandra Lee Jacobson (“Plaintiff”) brings this putative class action against

19

Defendants Persolve, LLC, d/b/a Account Resolution Associates (“Persolve”) and Stride Card,

20

LCC (“Stride Card”) (collectively, “Defendants”) for alleged violations of the Fair Debt

21

Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (“FDCPA”), and the Rosenthal Fair Debt

22

Collection Practices Act, Cal. Civ. Code §§ 1788 et seq. (“RFDCPA”). Plaintiff contends that

23

Persolve and Stride Card engaged in a routine practice of sending initial debt collection notices

24

that did not disclose to the reader the name of the creditor to whom the debt was owed. (“FAC”),

25

ECF No. 15, ¶ 23. Before the Court is Plaintiff’s motion for class certification. Having considered

26

the submissions of the parties, the relevant law, and the record in this case, the Court hereby

27

GRANTS in part and DENIES in part Plaintiff’s motion for class certification.

28

1
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1
2
3

I.

BACKGROUND
A. Factual Background
This putative class action arises out of Persolve’s attempt to collect consumer debts from

4

Plaintiff and others similarly situated. Plaintiff alleges that she incurred a consumer debt issued by

5

Wells Fargo Bank, N.A. (“the debt”) at an unknown time for personal, family, or household

6

purposes. FAC ¶ 12. The debt was later sold, assigned, or otherwise transferred to Stride Card. Id.

7

¶ 13. Stride Card then allegedly consigned, placed, or otherwise assigned the debt to Persolve for

8

collection. Id. ¶ 14.

9

Plaintiff alleges that on March 4, 2013, Persolve sent an initial collection notice to Plaintiff
on behalf of Stride Card. Id. ¶ 15; ECF No. 1-1. The collection notice listed Wells Fargo as the

11
United States District Court
Northern District of California

10

“Original Creditor.” ECF No. 1-1. The notice did not identify Stride Card, which was the current

12

owner and creditor of Plaintiff’s debt. FAC ¶ 21. Plaintiff alleges that Persolve sends similar

13

collection notices to consumers that do not contain the name of the current creditor when Persolve

14

collects defaulted debts. Id. ¶ 23. Furthermore, Plaintiff alleges Stride Card is vicariously liable for

15

the acts of Persolve as the current creditor, and directly liable as a “debt collector.” Id. ¶ 10.

16
17

B. Procedural History
Plaintiff filed her Original Complaint on February 18, 2014. ECF No. 1. Persolve filed an

18

answer to Plaintiff’s Original Complaint on March 18, 2014. ECF No. 10. On March 26, 2014,

19

Persolve served Plaintiff’s counsel with an Offer of Judgment pursuant to Federal Rule of Civil

20

Procedure 68. ECF No. 21-3. Under the Offer of Judgment, Persolve proposed to pay Plaintiff

21

$3,500.00 to resolve her individual claim. Id. at 1. The Offer of Judgment further provided that

22

Plaintiff would receive reasonable attorneys’ fees and costs incurred in the action, with the amount

23

to be determined by the Court if the parties were unable to agree. Id. at 2. Plaintiff filed the Motion

24

to Strike Persolve’s Offer of Judgment on April 4, 2014. ECF No. 21. Persolve filed an Opposition

25

to Plaintiff’s Motion to Strike on April 18, 2014. ECF No. 25. On the same day, Persolve filed a

26

request for Judicial Notice in support of its opposition. ECF No. 26. Plaintiff filed a Reply in

27

Support of the Motion to Strike Persolve’s Offer of Judgment on April 25, 2014. ECF No. 28. On

28

2
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

August 19, 2014, the Court denied Plaintiff’s motion to strike Persolve’s offer of judgment. ECF

2

No. 55.

3

Plaintiff filed the FAC on March 28, 2014, ECF No. 15, which Persolve answered on April

4

14, 2014, (“Persolve Answer”) ECF No. 24. Persolve’s Answer asserted twelve affirmative

5

defenses: (1) failure to state a claim; (2) statute of limitations; (3) bona fide error; (4) no material

6

misrepresentation; (5) equitable defenses; (6) no intentional or reckless conduct; (7) mitigation of

7

damages; (8) offset; (9) no declaratory relief; (10) no class action; (11) not a debt collector as

8

defined in the FDCPA; and (12) reservation of rights. Id. at 8–10. In response, Plaintiff filed a

9

Motion to Strike Persolve’s Affirmative Defenses on May 5, 2014. ECF No. 29. Persolve opposed
the motion on May 19, 2014, ECF No. 33, and also submitted a Request for Judicial Notice in

11
United States District Court
Northern District of California

10

support of its opposition, ECF No. 34. Persolve attached a Proposed Amended Answer to its

12

opposition, in which Persolve waived all but four of its affirmative defenses. ECF No. 33-1.

13

Plaintiff filed a Reply in Support of the Motion to Strike Persolve’s Affirmative Defenses on May

14

27, 2014, ECF No. 36. On August 19, 2014, the Court granted in part and denied in part Plaintiff’s

15

motion to strike affirmative defenses. ECF No. 55. Persolve filed an amended answer to the FAC

16

on September 9, 2014. ECF No. 61.

17

Stride Card filed an Answer to the FAC on May 15, 2014. (“Stride Card Answer”) ECF

18

No. 32. Stride Card’s Answer asserts four affirmative defenses: (1) failure to state a claim; (2)

19

bona fide error; (3) good faith; and (4) offset. Id. at 9–10. On June 5, 2014, Plaintiff filed a Motion

20

to Strike Stride Card’s Affirmative Defenses. ECF No. 40. Stride Card opposed Plaintiff’s Motion

21

to Strike on June 19, 2014. ECF No. 43. Also on June 19, 2014, Stride Card filed a Request for

22

Judicial Notice in support of its opposition. ECF No. 44. Plaintiff filed a Reply in Support of the

23

Motion to Strike Stride Card’s Affirmative Defenses on June 25, 2014. ECF No. 47. On August

24

19, 2014, the Court granted in part and denied in part Plaintiff’s motion to strike affirmative

25

defenses. ECF No. 55.

26
27
28

On February 23, 2015, Plaintiff filed a motion requesting leave to file a second amended
class action complaint. ECF No. 87. Plaintiff filed a motion to shorten time on hearing Plaintiff’s
3
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

motion requesting leave to file a second amended class action complaint on February 25, 2015,

2

which the Court denied on March 3, 2015. ECF Nos. 90, 91. Defendants filed an opposition to

3

Plaintiff’s motion for leave to file a second amended class action complaint on March 9, 2015.

4

(“Opp.”), ECF No. 92. Plaintiff replied on March 16, 2015. (“Reply”), ECF No. 93. On May 1,

5

2015, the Court denied Plaintiff’s motion requesting leave to file a second amended class action

6

complaint. ECF No. 106.
On April 15, 2015, Plaintiff filed a motion for relief from nondispositive pretrial order of a

7
8

magistrate judge, ECF No. 97, which the Court denied on April 23, 2015, ECF No. 103.
Plaintiff filed the instant motion for class certification on April 6, 2015. ECF No. 96.

10

Defendants filed an opposition on April 20, 2015. ECF No. 101. Plaintiff filed a reply on April 27,

11
United States District Court
Northern District of California

9

2015. ECF No. 104.1

12

C. Class Definition
In her motion for class certification, Plaintiff moves to certify the following class:

13
14

(i) all persons with addresses in California (ii) to whom PERSOLVE
sent, or caused to be sent, a notice in the form of Exhibit “1” on
behalf of STRIDE CARD (iii) in an attempt to collect an alleged
debt originally owed to Wells Fargo Bank, N.A. (iv) which was
incurred primarily for personal, family, or household purposes, (v)
which were not returned as undeliverable by the U.S. Post Office
(vi) during the period one year prior to the date of filing this action
through the date of class certification.

15
16
17
18

Mot. at 1. Plaintiff seeks to certify a “hybrid” class under both Rule 23(b)(3) and Rule 23(b)(2).

19
II.

LEGAL STANDARD

20
Federal Rule of Civil Procedure 23, which governs class certification, has two sets of
21
distinct requirements that Plaintiff must meet before the Court may certify a class. Plaintiff must
22
meet all of the requirements of Rule 23(a) and must satisfy at least one of the prongs of Rule
23
23(b).
24

Under Rule 23(a), the Court may certify a class only where “(1) the class is so numerous

25
26
27
28

1

The parties also filed administrative motions to seal in connection with their class certification
briefing. See ECF Nos. 96, 100. The Court addresses the parties’ sealing motions in a separate
order.
4
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

that joinder of all members is impracticable; (2) there are questions of law or fact common to the

2

class; (3) the claims or defenses of the representative parties are typical of the claims or defenses

3

of the class; and (4) the representative parties will fairly and adequately protect the interests of the

4

class.” Fed. R. Civ. P. 23(a). Courts refer to these four requirements, which must be satisfied to

5

maintain a class action, as “numerosity, commonality, typicality and adequacy of representation.”

6

Mazza v. Am. Honda Motor Co., 666 F.3d 581, 588 (9th Cir. 2012).
In addition to meeting the requirements of Rule 23(a), the Court must also find that

7
8

Plaintiff has satisfied “through evidentiary proof” one of the three subsections of Rule 23(b).

9

Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1432 (2013). The Court can certify a Rule 23(b)(2)
class if “the party opposing the class has acted or refused to act on grounds that apply generally to

11
United States District Court
Northern District of California

10

the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting

12

the class as a whole.” Fed. R. Civ. P. 23(b)(2).
“[A] court’s class-certification analysis must be ‘rigorous’ and may ‘entail some overlap

13
14

with the merits of the plaintiff’s underlying claim.’” Amgen Inc. v. Conn. Ret. Plans & Trust

15

Funds, 133 S. Ct. 1184, 1194 (2013) (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541,

16

2551 (2011)); see also Mazza, 666 F.3d at 588 (“‘Before certifying a class, the trial court must

17

conduct a ‘rigorous analysis’ to determine whether the party seeking certification has met the

18

prerequisites of Rule 23.’” (quoting Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186,

19

amended by 273 F.3d 1266 (9th Cir. 2001))). Nevertheless, “Rule 23 grants courts no license to

20

engage in free-ranging merits inquiries at the certification stage.” Amgen, 133 S. Ct. at 1194–95.

21

“Merits questions may be considered to the extent—but only to the extent—that they are relevant

22

to determining whether the Rule 23 prerequisites for class certification are satisfied.” Id. at 1195.

23

Within the framework of Rule 23, the Court ultimately has broad discretion over whether to certify

24

a class. Zinser, 253 F.3d at 1186.

25

III.

26
27
28

DISCUSSION
Plaintiff seeks to certify a California class of individuals who received allegedly illegal

debt collection letters from Defendants during the class period under both Rule 23(b)(3) and Rule
5
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

23(b)(2) as a “hybrid” class. The Court begins by addressing the requirements for class

2

certification under Rule 23(a) before turning to the requirements for class certification under Rule

3

23(b)(3) and Rule 23(b)(2).

4

A. Rule 23(a) Requirements

5

Plaintiff bears the burden to show that the proposed class satisfies each requirement under

6

Rule 23(a). Here, Defendants do not contest that Plaintiff has satisfied Rule 23(a)’s requirements.

7

Nonetheless, the Court addresses each requirement in turn.
1. Numerosity

9

Under Rule 23(a)(1), a proposed class must be “so numerous that joinder of all members is

10

impracticable.” Fed. R. Civ. P. 23(a)(1). “Impracticability does not mean impossibility,” but rather

11
United States District Court
Northern District of California

8

asks the court to assess the difficulty or inconvenience of joining all members of the class. Harris

12

v. Palm Springs Alpine Estates, Inc., 329 F.2d 909, 913–14 (9th Cir. 1964). In determining

13

whether numerosity is satisfied, the Court may consider reasonable inferences drawn from the

14

facts before it. Gay v. Waiters’ & Dairy Lunchmen’s Union, 549 F.2d 1330, 1332 n.5 (9th Cir.

15

1977).

16

Plaintiff contends that “at least 469 persons” received the allegedly defective collection

17

letter during the proposed class period. Mot. at 3 (quoting Persolve, LLC’s Responses to Second

18

Set of Requests for Admissions, App’x 3 to Mot.). Moreover, Defendants do not dispute the

19

numerosity of the proposed class. As Plaintiff contends that it is beyond dispute that the proposed

20

class numbers well over forty and joinder would be impracticable, the Court finds that the

21

numerosity requirement is satisfied. See Ries v. Ariz. Beverages USA LLC, 287 F.R.D. 523, 536

22

(N.D. Cal. 2012); see also Californians for Disability Rights, Inc. v. Cal. Dep’t of Transp., 249

23

F.R.D. 334, 346 (N.D. Cal. 2008) (“[V]arious courts have found that the numerosity factor is

24

satisfied if the class comprises 40 or more members . . . .”).

25

2. Commonality

26

“Commonality requires the plaintiff to demonstrate that the class members ‘have suffered

27
28

the same injury,’” which “does not mean merely that they have all suffered a violation of the same
6
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

provision of law.” Dukes, 131 S. Ct. at 2551. The “claims must depend on a common contention”

2

and “[t]hat common contention . . . must be of such a nature that it is capable of classwide

3

resolution—which means that determination of its truth or falsity will resolve an issue that is

4

central to the validity of each one of the claims in one stroke.” Id. Commonality is satisfied by

5

“the existence of shared legal issues with divergent factual predicates” or a “common core of

6

salient facts coupled with disparate legal remedies within the class.” Hanlon v. Chrysler Corp.,

7

150 F.3d 1011, 1019–20 (9th Cir. 1998). All questions of fact and law need not be common to

8

satisfy the rule. Id. Rather, in deciding whether plaintiffs share a common question with the

9

prospective class, the named plaintiffs must share at least one question of fact or law with the
prospective class. Rodriguez v. Hayes, 591 F.3d 1105, 1122 (9th Cir. 2010) (citation omitted); see

11
United States District Court
Northern District of California

10

Mazza, 666 F.3d at 589 (“[C]ommonality only requires a single significant question of law or

12

fact.”).

13

Here, Plaintiff alleges that each proposed class member received the same collection letter

14

from Defendants. Each letter is allegedly defective under the FDCPA and the RFDCPA because

15

the letter failed to identify the name of the creditor to whom the debt was owed. Defendants do not

16

contest that the determination of whether Defendants’ form letter violates the FDCPA and the

17

RFDCPA constitutes a common question of law that satisfies Rule 23(a)’s commonality

18

requirement. See, e.g., Gold v. Midland Credit Mgmt., No. 13-2019, --- F.R.D. ---, 2014 WL

19

5026270, at *6 (N.D. Cal. Oct. 7, 2014) (commonality requirement satisfied where all proposed

20

class members received the “same allegedly misleading letter”). As Plaintiff has identified a

21

“common contention” that “is capable of classwide resolution,” the Court concludes that Plaintiff

22

has satisfied Rule 23(a)(2)’s commonality requirement.

23

3. Typicality

24

Under Rule 23(a)(3) the representative party must have claims or defenses that are “typical

25

of the claims or defenses of the class.” Fed. R. Civ. P. 23(a)(3). Typicality is satisfied “when each

26

class member’s claim arises from the same course of events, and each class member makes similar

27

legal arguments to prove the defendants’ liability.” Rodriguez, 591 F.3d at 1124 (citations

28

7
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

omitted). This requirement is “permissive and requires only that the representative’s claims are

2

reasonably co-extensive with those of the absent class members; they need not be substantially

3

identical.” Hanlon, 150 F.3d at 1020. Reasonably coextensive claims with absent class members

4

will satisfy the typicality requirement, but the class must be limited to “those fairly encompassed

5

by the named plaintiff’s claims.” Dukes at 131 S. Ct. at 2550. “[C]lass certification is

6

inappropriate where a putative class representative is subject to unique defenses which threaten to

7

become the focus of the litigation.” Hanlon, 976 F.2d at 508 (citations omitted). “The purpose of

8

the typicality requirement is to assure that the interest of the named representative aligns with the

9

interests of the class.” Id.

10

Here, the parties do not dispute that Plaintiff and each proposed class member allegedly

United States District Court
Northern District of California

11

received the same collection letter, and therefore suffered the same alleged injury under the

12

FDCPA and the RFDCPA. Each proposed class member’s claims, and Plaintiff’s claims, therefore

13

“arise[] from the same course of events, and each class member makes similar legal arguments to

14

prove the defendants’ liability.” Rodriguez, 591 F.3d at 1124. As such, the Court concludes, and

15

Defendants do not contest, that Plaintiff’s claims are typical of the claims of the class. See, e.g.,

16

Abels v. JBC Legal Grp. P.C., 227 F.R.D. 541, 545 (N.D. Cal. 2005) (“Each of the class members

17

was sent the same collection letter as [plaintiff] and each was allegedly subjected to the same

18

violations of the FDCPA. Therefore, this Court concludes that claims of the class representative

19

are typical of the claims of the class.”).

20

4. Adequacy

21

In the Ninth Circuit, to test the adequacy of a class representative, courts ask two

22

questions: “(1) do the named plaintiffs and their counsel have any conflicts of interest with other

23

class members; and (2) will the named plaintiffs and their counsel prosecute the action vigorously

24

on behalf of the class?” Staton, 327 F.3d at 957 (citing Hanlon, 150 F.3d at 1020).

25

The Court finds Plaintiff to be an adequate class representative. Plaintiff and the proposed

26

class share the same claims and interest in obtaining relief, and Plaintiff is vigorously pursuing

27

relief on behalf of the proposed class. The Court also finds that Plaintiff’s counsel has experience

28

8
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

in prosecuting consumer protection and FDCPA class actions. See ECF Nos. 96-5, 96-6, 96-7

2

(Declarations of class counsel detailing experience prosecuting consumer protection class actions).

3

Defendants do not dispute that Plaintiff is an adequate class representative.

4

5. Ascertainability

5

In addition to the “explicit requirements of Rule 23(a),” courts have required plaintiffs
seeking to certify Rule 23(b)(3) classes to “demonstrate that an identifiable and ascertainable class

7

exists.” Sethavanish v. ZonePerfect Nutrition Co., No. 12-2907, 2014 WL 580696 (N.D. Cal. Feb.

8

13, 2014). A class is ascertainable if the class is defined with “objective criteria” and if it is

9

“administratively feasible to determine whether a particular individual is a member of the class.”

10

See Wolph v. Acer America Corp., No. 09-1314, 2012 WL 993531, at *1–2 (N.D. Cal. Mar. 23,

11
United States District Court
Northern District of California

6

2012) (certifying a class where “the identity and contact information for a significant portion of

12

these individuals can be obtained from the warranty registration information and through Acer's

13

customer service databases”); see also Hofstetter v. Chase Home Finance, LLC, No. 10-01313,

14

2011 WL 1225900, at *14 (N.D. Cal. Mar. 31, 2011) (certifying class where “defendants’ business

15

records should be sufficient to determine the class membership status of any given individual.”);

16

Tietsworth v. Sears, Roebuck & Co., No. 09-288, 2013 WL 1303100, at *3–4 (N.D. Cal. Mar. 28,

17

2013) (denying certification where “ascertaining class membership would require unmanageable

18

individualized inquiry”).

19

The parties do not dispute that ascertaining class membership would be relatively

20

straightforward. Defendants have already identified at least 469 putative class members who

21

received the same form letter during the proposed class period. See Mot. at 3. In addition to

22

Defendants’ business records, Plaintiff’s proposed class definition “describes a set of common

23

characteristics sufficient to allow a prospective plaintiff to identify himself or herself as having a

24

right to recover based on the description.” McCrary v. The Elations Co., LLC, No. 13-242, 2014

25

WL 1779243, at *8 (C.D. Cal. Jan. 13, 2014) (internal quotation marks omitted). Thus, even if

26

Defendants’ business records were arguably insufficient to identify each and every proposed class

27

member, individual class members could identify themselves based on Plaintiff’s proposed class

28

9
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

definition. As Plaintiff’s proposed class is sufficiently definite to identify putative class members,

2

the Court finds the proposed class sufficiently ascertainable.

3
4

B. Rule 23(b)(3) Damages Class
For a class action to be certified under Rule 23(b)(3), the class representatives must show

5

that “the questions of law or fact common to the members of the class predominate over any

6

questions affecting only individual members and that a class action is superior to other available

7

methods for the fair and efficient adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3)

8

(emphases added). Defendants do not dispute that Plaintiff has satisfied the predominance

9

requirement, but do dispute whether a class action would be superior. The Court first addresses

10

predominance before turning to superiority.

United States District Court
Northern District of California

11

1. Predominance

12

Under Rule 23(b)(3), plaintiffs must show “that the questions of law or fact common to

13

class members predominate over any questions affecting only individual members.” Fed. R. Civ.

14

P. 23(b)(3).“The Rule 23(b)(3) predominance inquiry” is meant to “tes[t] whether proposed

15

classes are sufficiently cohesive to warrant adjudication by representation.” Amchem Prods., Inc.

16

v. Windsor, 521 U.S. 591, 623 (1997). The Ninth Circuit has held that “there is clear justification

17

for handling the dispute on a representative rather than an individual basis” if “common questions

18

present a significant aspect of the case and they can be resolved for all members of the class in a

19

single adjudication . . . .” Hanlon, 150 F.3d at 1022. In ruling on a motion for class certification

20

based on Rule 23(b)(3), the district court must conduct a rigorous analysis to determine whether

21

the class representatives have satisfied both the predominance and superiority requirements. See

22

Zinser, 253 F.3d at 1186.

23

In the instant case, Plaintiff contends that there is a “common nucleus of operative fact,”

24

because “all class members, by definition, were subjected to Defendants’ policy of sending

25

collection letters in the form of Exhibit ‘1,’ which are alleged to violate the FDCPA and/or the

26

RFDCPA.” Mot. at 7. Here, the standardized collection letters to proposed class members are at

27

the heart of Plaintiff’s FDCPA and RFDCPA claims. As the letters are substantively identical, the

28

10
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

resolution of whether Defendants’ practice of sending collection letters that do not identify the

2

current holder of the debt violates the FDCPA and/or RFDCPA will resolve the claims of the

3

entire class. As such, the Court concludes that “common questions present a significant aspect of

4

the case and they can be resolved for all members of the class in a single adjudication . . . .”

5

Hanlon, 150 F.3d at 1022; see also Abels, 227 F.R.D. at 547 (finding predominance requirement

6

satisfied where the defendants sent identical collection letters to each class member). The Court

7

therefore finds that Plaintiff has satisfied the predominance requirement.

8

2. Superiority

9

A class action brought under Rule 23(b)(3) must be “superior to other available methods
for fairly and efficiently adjudicating the controversy.” Fed. R. Civ. P. 23(b)(3). To make this

11
United States District Court
Northern District of California

10

determination the Court considers: (1) the class members’ interests in individually controlling the

12

prosecution or defense of separate actions; (2) the extent and nature of any litigation concerning

13

the controversy already begun by or against class members; (3) the desirability or undesirability of

14

concentrating the litigation of the claims in the particular forum; and (4) the likely difficulties in

15

managing a class action. Fed. R. Civ. P. 23(b)(3)(A)–(D).

16

The superiority requirement tests whether “classwide litigation of common issues will

17

reduce litigation costs and promote greater efficiency.” Valentino v. Carter–Wallace, Inc., 97 F.3d

18

1227, 1234 (9th Cir. 1996). “If each class member has to litigate numerous and substantial

19

separate issues to establish his or her right to recover individually a class action is not superior.”

20

Zinser, 253 F.3d at 1192.

21

The Court finds that a class action is the most efficient manner in which to adjudicate the

22

proposed class members’ claims against Defendants. As discussed above, whether Defendants are

23

liable for violations of the FDCPA and the RFDCPA will turn on the allegedly defective form

24

collection letter sent to each and every member of the proposed class. Rather than litigate each of

25

the 469 proposed class member’s claims as to the same questions of law and fact individually,

26

class litigation would efficiently adjudicate the issue of Defendants’ liability under the FDCPA

27

and the RFDCPA in one fell swoop. Moreover, as several other courts have recognized, the

28

11
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

FDCPA specifically contemplates class actions for a variety of reasons. For instance, individual

2

claimants are “most likely unaware of their rights under the FDCPA,” and “the size of any

3

individual damages claims under the FDCPA are usually so small that there is little incentive to

4

sue individually.” Hunt v. Check Recovery Sys., Inc., 241 F.R.D. 505, 514–15 (N.D. Cal. 2007)

5

(citing Amchem, 521 U.S. at 615); see also Gold, 2014 WL 5026270, at *9 (“[I]ndividual recovery

6

[under the FDCPA] is small, and resorting to alternative mechanisms would be unduly

7

inefficient.”); see generally Newberg on Class Actions § 21:29 (discussing FDCPA cases).
In opposition, Defendants do not dispute that individual class members are most likely

8
9

unaware of their claims or that recoveries are usually too small to incentivize individual suits. Nor
do Defendants contest that class litigation would be more efficient than alternative methods.

11
United States District Court
Northern District of California

10

Instead, Defendants contend that Plaintiff cannot show that class litigation is superior because

12

Defendant Persolve, LLC has a negative net worth and class litigation would result in zero

13

recovery for class members.2 As to Defendant Stride Card, Defendants contend that any recovery

14

would be de minimis because Stride Card’s net worth is less than $35,000.3 Opp. at 7. Under the

15

FDCPA, individual plaintiffs can recover actual damages and up to $1,000 in additional damages.

16

15 U.S.C. § 1692k(a)(1)–(2)(A). In a class action under the FDCPA, each named plaintiff may

17

seek up to $1,000 in additional damages, but the class recovery cannot “exceed the lesser of

18

$500,000 or 1 per centum of net worth of the debt collector.” Id. § 1692k(a)(2)(B). According to

19

Defendants, because Defendants have little or no net worth, class litigation is not superior to

20

individual litigation, as 1 percent of Defendants’ negative or de minimis net worth would result in

21

little or no recovery for the class. The Court finds this argument unpersuasive for two reasons.

22
23
24
25
26
27
28

2

The parties dispute whether Defendant Persolve, LLC’s net worth should be calculated as the net
worth of the separate sub-units (“Persolve, LLC-Legal-Series 2” and “Persolve, LLC-Legal-Series
1”). For purposes of this motion, this dispute is ultimately immaterial as Defendants argue that
even the combined net worth of both sub-units is apparently negative.
3
Defendants also argue that Stride Card’s net worth is irrelevant to class certification because
Stride Card is not a “debt collector” under the FDCPA. Whether or not Stride Card is a “debt
collector,” is an issue better resolved at summary judgment, as that argument goes to Stride Card’s
liability, not the appropriateness of class certification. Stride Card’s status as a “debt collector” is
of limited relevance to whether Plaintiff has satisfied Rule 23, and the Court declines to delve into
the merits of Plaintiff’s claim against Stride Card at this juncture. See Amgen, 133 S. Ct. at 1195.
12
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

First, Plaintiff disputes whether Defendant Persolve’s net worth is actually negative.4

2

Plaintiff contends that Defendant Persolve has obtained 106 judgments in Santa Clara County with

3

a total face value of over $1.2 million dollars between January 2012 and March 2015. See Reply at

4

4 (citing ECF Nos. 97-8, 97-9, 97-10, 97-11, 97-12, 97-12). According to Plaintiff, these

5

judgments can be sold for value and are “far more collectable than a bare receivable.” Reply at 4.

6

Moreover, while the Court conducts a “rigorous analysis” at the class certification stage, such

7

analysis does not require that Plaintiff provide an exact damages calculation at this stage. See

8

Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1433 (2013) (holding that damages “[c]alculations

9

need not be exact” for class certification); see also In re Cathode Ray Tube (CRT) Antitrust Litig.,

10

No. 07-5944, 2013 WL 5391159, at *6–7 (N.D. Cal. Sept. 19, 2013) (“[N]either Comcast nor any

11
United States District Court
Northern District of California

1

other precedent requires the [plaintiffs] to provide exact calculations of their damages at the class

12

certification stage.”). Here, Plaintiff has introduced evidence indicating that Defendant Persolve

13

has acquired substantial assets. Accordingly, at this stage the Court is not persuaded that

14

Defendants’ professed negative net worth would render a class action inferior to individual

15

litigation.

16

Second, as Plaintiff correctly notes, the likelihood of de minimis class recovery under the

17

FDCPA is not a bar to class certification. While the Ninth Circuit has not explicitly addressed de

18

minimis recoveries in the FDCPA context, the Court finds the Seventh Circuit’s reasoning in

19

Mace v. Van Ru Credit Corp., 109 F.3d 338, 344–45 (7th Cir. 1997), to be persuasive. The

20

Seventh Circuit explained:

21

[W]e believe that a de minimis recovery (in monetary terms) should
not automatically bar a class action. The policy at the very core of
the class action mechanism is to overcome the problem that small
recoveries do not provide the incentive for any individual to bring a
solo action prosecuting his or her rights. A class action solves this

22
23
24
25
26
27
28

4

Plaintiff further argues that Defendant Persolve has shifted assets and liabilities between related
entities in order to render judgment proof the entities that might be subject to suit. See Reply at 3–
4. However, the Court denied Plaintiff’s motion for leave to file a second amended complaint
adding theories of alter ego liability and additional defendants to this action. Plaintiff’s alternative
theories are therefore not relevant to the instant motion.
13
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

problem by aggregating the relatively paltry potential recoveries into
something worth someone’s (usually an attorney’s) labor.

1
2

5

True, the FDCPA allows for individual recoveries of up to $1000.
But this assumes that the plaintiff will be aware of her rights, willing
to subject herself to all the burdens of suing and able to find an
attorney willing to take her case. These are considerations that
cannot be dismissed lightly in assessing whether a class action or a
series of individual lawsuits would be more appropriate for pursuing
the FDCPA’s objectives.

6

Id.; see also Kalish v. Karp & Kalamotousakis, LLP, 246 F.R.D. 461, 464 (S.D.N.Y. 2007) ($ 2.50

7

per class member); Warcholek v. Medical Collections Sys., Inc., 241 F.R.D. 291, 295–96 (N.D. Ill.

8

2006) (certifying 23(b)(3) FDCPA class where defendant claimed negative net worth).

3
4

9

In Mace, the Seventh Circuit concluded that even a recovery of only $ 0.28 per class
member would not necessarily bar class certification. 109 F.3d at 344. Relying on similar logic,

11
United States District Court
Northern District of California

10

district courts in this circuit have certified FDCPA class actions where the estimated recovery per

12

class member ranged from $ 0.00000111 to $11.28. See del Campo v. Am. Corrective Counseling

13

Servs., Inc., 254 F.R.D. 585, 595–96 n.9 (N.D. Cal. 2008) ($ 0.00000111 per class member);

14

Abels, 227 F.R.D. at 546–57 ($ 0.25 per class member); Bogner v. Masari Investments, LLC, No.

15

8-1511, 2010 WL 2595273, at *2 (D. Ariz. June 24, 2010) (Docket No. 60, $ 11.28 per class

16

member).

17

In opposition, Defendants rely on Kohlenbrener v. Dickinson, No. 94-4696, 1996 WL

18

131736, at *2 (N.D. Ill. Mar. 15, 1996), but that case is distinguishable. In Kohlenbrener, the court

19

denied class certification where the plaintiff had failed to adduce any “proof that any of the

20

defendants in th[e] case ha[d] a positive net worth.” Id. Here, in contrast, Plaintiff has put forth

21

evidence of at least $1.2 million dollars in assets. Defendants also cite Bryant v. Bonded Account

22

Serv./Check Recovery, Inc., 208 F.R.D. 251 (D. Minn. 2000), but the Court finds Bryant

23

unpersuasive. In Bryant, the court concluded that a class recovery of $17,500, or $100 per class

24

member, was insufficient where the 175 absent class members could each recover up to $1,000 in

25

individual actions. Id. at 260–61. The Bryant court did not consider the hurdles individual

26

plaintiffs might face, including their lack of knowledge of existing claims, the possibility of

27

smaller recoveries, and the difficulty of finding counsel. See id. Instead, the Bryant court assumed

28

14
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

that the difference between certifying and not certifying an FDCPA class was the award of

2

$17,500 for a class or $175,000 in individual claims. The Court is not persuaded, however, that

3

denying class certification here would result in 459 plaintiffs bringing individual claims. See, e.g.,

4

Macarz v. Transworld Sys., Inc., 193 F.R.D. 46, 54–55 (D. Conn. 2000) (concluding that “the vast

5

majority, if not all, of those potential plaintiffs would fail to pursue” individual FDCPA claims if

6

the court did not certify a class). FDCPA class actions exist precisely because individual claims

7

are unlikely to be brought and aggregating claims incentivizes suits that produce the “deterrent and

8

curative effect of eliminating abusive collection practices intended by Congress.” Id.; see also

9

Mace, 109 F.3d at 344.

10

Furthermore, mandatory notice and opt-out provisions under Rule 23(c)(2) will protect the

United States District Court
Northern District of California

11

interests of those proposed class members that may wish to pursue individual claims. See Fed. R.

12

Civ. P. 23(c)(2); Warcholek, 241 F.R.D. at 296. While Defendants contend that a class should not

13

be certified if a high number of opt-outs are likely, Defendants have submitted no evidence

14

indicating such opt-outs are likely and have not explained why the Court should expect many opt-

15

outs. To the contrary, other courts have concluded that the small individual recoveries and

16

difficulties of finding counsel willing to take on individual FDCPA claims on a contingency basis

17

make individual claims unlikely. See, e.g., Mace, 109 F.3d at 344–45; Macarz, 193 F.R.D. at 54–

18

55. Similarly, while the Court acknowledges the possibility that attorney’s fees may be greater

19

than the class recovery, such an outcome is not necessarily at odds with the underlying goals of

20

the FDCPA. As the Mace court recognized, the FDCPA provides for attorney’s fees because

21

attorneys would otherwise have little incentive to take such cases, and the fees provision “makes

22

the class action more likely to proceed, thereby helping to deter future violations.” 109 F.3d at

23

344. Here, the Court is not persuaded that a hypothetical attorney’s fees request by Plaintiff’s

24

counsel renders the proposed class inferior to alternative methods of litigation.

25

Ultimately, the “unfortunate reality . . . that most of Defendant’s . . . FDCPA violations

26

would probably go unnoticed absent this lawsuit” must be balanced against the possibility that any

27

class recovery may be relatively minimal. Kalish, 246 F.R.D. at 464–65. In light of the probability

28

15
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

that most individual plaintiffs are unaware of their claims and because of the small incentives for

2

bringing individual FDCPA claims, the Court finds that class certification would be superior to

3

any alternative, notwithstanding the possibility of a de minimis class recovery.

4
5
6
7

In sum, the Court concludes that Plaintiff has demonstrated that class certification is
appropriate under Rule 23(b)(3).
C. Rule 23(b)(2) Injunctive or Declaratory Relief
Plaintiff seeks to certify a “hybrid” class under Rule 23(b)(3) and Rule 23(b)(2). As

8

discussed above, the Court concludes that Plaintiff has satisfied the requirements for certification

9

of a damages class under Rule 23(b)(3). The Court now addresses whether Plaintiff has satisfied

10

United States District Court
Northern District of California

11

the requirements for an injunctive or declaratory relief class under Rule 23(b)(2).
As a threshold matter, Defendants dispute whether Plaintiff may seek declaratory relief

12

under the FDCPA. While the Ninth Circuit has not addressed the issue, every circuit court that has

13

considered this question has concluded that private litigants may seek damages but not injunctive

14

and declaratory relief under the FDCPA. See Weiss v. Regal Collections, 385 F.3d 337, 341 (3d

15

Cir. 2004) (“Because the [FDCPA] explicitly provides declaratory and equitable relief only

16

through action by the Federal Trade Commission, we believe the different penalty structure

17

demonstrates Congress’s intent to preclude equitable relief in private actions.”); Crawford v.

18

Equifax Payment Servs., Inc., 201 F.3d 877, 882 (7th Cir. 2000) (holding in class action context

19

that “all private actions under the Fair Debt Collection Practices Act are for damages”); Sibley v.

20

Fulton DeKalb Collection Servs., 6778 F.2d 830, 823 (11th Cir. 1982) (“[E]quitable relief is not

21

available to an individual under the civil liability section of the [FDCPA].”). The Second and Fifth

22

Circuits have not squarely addressed the issue, but have noted that the other circuits and many

23

district courts have concluded that equitable relief is unavailable to private litigants under the

24

FDCPA. See Hecht v. United Collection Bureau, Inc., 691, F.3d 218, 223 n.1 (2d Cir. 2012) (“We

25

do not here decide whether the FDCPA permits private plaintiffs to seek injunctive relief because

26

the issue is not squarely presented, but we note that every federal appeals court to have considered

27

the question has held that it does not.”); Bolin v. Sears, Roebuck & Co, 231 F.3d 970, 977 (5th Cir.

28

16
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

2000) (“We note, however, that although this circuit has not definitively ruled on the issue, courts

2

uniformly hold that the FDCPA does not authorize equitable relief.”).

3

Plaintiffs cite various district court cases certifying Rule 23(b)(2) classes or hybrid

4

23(b)(2) and 23(b)(3)under the FDCPA, but the Court notes that none of those decisions actually

5

concluded that the FDCPA authorizes any form of relief other than damages for private litigants.

6

See Reply at 9–10 (citing; Bogner, 257 F.R.D. at 534; Schwarm v. Craighead, 233 F.R.D. 655,

7

663 (E.D. Cal. 2006); Hunt, 241 F.R.D. at 512–13; Gonzales v. Arrow Fin. Servs., LLC, 233

8

F.R.D. 577, 582–83 (S.D. Cal. 2006), aff’d on other grounds, 660 F.3d 1055 (9th Cir. 2011);

9

Ballard v. Equifax Check Servs., Inc., 186 F.R.D. 589, 596 (E.D. Cal. 1999); Bracamonte v.

10

Eskanos & Adler, et al., No. 03-1821, 2004 WL 1146624, at *4–5 (N.D. Cal. May 7, 2004)).5
To the contrary, cases cited by Plaintiff that actually discuss the availability of equitable

United States District Court
Northern District of California

11
12

relief under the FDCPA noted that the FDCPA does not provide for injunctive relief. See del

13

Campo, 254 F.R.D. at 583(“Plaintiffs fully concede that injunctive relief is not a remedy under the

14

FDCPA. (Reply at 6.) Injunctive relief, however, is authorized under the [California Unfair

15

Business Practices Act].”); Gammon v. GC Servs. Ltd. Partnership, 162 F.R.D. 313, 329 (N.D. Ill.

16

1995) (“[T]his Court agrees with the conclusion in the above cases that injunctive relief is not

17

available to [plaintiff] under the FDCPA. [Plaintiff] is therefore left with his claims for declaratory

18

relief and statutory damages.”); Mann v. Acclaim Fin. Servs., Inc., 232 F.R.D. 278, 285–86 (S.D.

19

Ohio 2003) (“[A]s a general matter, injunctive relief is not authorized in FDCPA cases. However,

20

corresponding declaratory relief has been allowed in FDCPA cases.”); Tedrow v. Cowles, No. 6-

21

637, 2007 WL 2688276, at *8–9 (S.D. Ohio Sept. 12, 2007) (citing Mann, 232 F.R.D. at 285–86).

22

The cases Plaintiff relies on, therefore, either involve a different statutory basis for injunctive

23

relief, see del Campo, 254 F.R.D. at 583, or the courts concluded that the FDCPA provides for

24

damages and declaratory relief but not injunctive relief. Del Campo is distinguishable, as there is

25
26
27
28

5

Plaintiff string cites several other cases in her reply on page 10, footnote 42. With the exception
of cases specifically distinguished above, none of the other cases address the availability of
equitable remedies under the FDCPA and it appears the parties in the string cited cases did not
brief or raise the issue of what remedies are available under the FDCPA.
17
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

no California Unfair Business Practices Act claim here and thus no alternative statutory basis for

2

equitable relief,6 and the Court finds the remaining authority unpersuasive.
Neither Plaintiff nor these decisions explain why the FDCPA’s explicit provision of a

3
4

damages remedy to private litigants would preclude injunctive relief but somehow allow

5

declaratory relief. In the absence of controlling Ninth Circuit authority, and in light of the uniform

6

agreement by the other circuits, the Court concludes that neither injunctive nor declaratory relief is

7

available to a private litigant under the FDCPA. As the Third Circuit explained in Weiss, the

8

FDCPA “contains no express provision for injunctive or declaratory relief in private actions.” 385

9

F.3d at 341. Instead, the FDCPA provides only for damages and counsel fees as remedies in
private actions. Id. In contrast, in administrative enforcement actions brought by the Federal Trade

11
United States District Court
Northern District of California

10

Commission, the Commission may pursue injunctive and declaratory relief. Id. (citing 15 U.S.C. §

12

16921). In light of this separate statutory scheme for enforcing the FDCPA, the Third Circuit

13

concluded that Congress did not intend to provide private litigants with any remedy other than the

14

one that Congress expressly provided: damages and fees. See id. The Court agrees, and therefore

15

concludes that Plaintiff cannot seek declaratory relief under the FDCPA. See also Varnado v.

16

Midland Funding LLC, 43 F. Supp. 3d 985, 993 (N.D. Cal. 2014) (dismissing requests for

17

declaratory and injunctive relief because “[r]emedies for claims made under the FDCPA are

18

limited to damages, attorney’s fees and costs”); Wyatt v. Creditcare, Inc., No. 04–3681–JF, 2005

19

WL 2780684, at *3 (N.D. Cal. Oct. 25, 2005) (“[Plaintiff] is no longer entitled to injunctive or

20

declaratory relief . . . given that FDCPA remedies are limited to damages, attorney’s fees and

21

costs.”).
Moreover, the Court also notes that even if Plaintiff could state some basis for her

22
23

declaratory relief claim, it is not evident that any immediate or real controversy exists. Declaratory

24
25
26
27
28

6

Plaintiff does not argue that declaratory or injunctive relief is available under the RFDCPA.
Other courts have concluded that the RFDCPA only provides for damages, attorney’s fees, and
costs. See Varnado, 43 F. Supp. 3d at 993 (citing Cal. Civ. Code §§ 1788.30 and 1788.17); Wyatt,
2005 WL 2780684, at *3; Ohlendorf v. Am. Home Mortgage Servicing, 279 F.R.D. 575, 584–85
(E.D. Cal. 2010)).
18
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

relief, like all other claims, requires that a party demonstrate an actual “case or controversy.” City

2

of Los Angeles v. Lyons, 461 U.S. 95, 104 (1983). Plaintiff has failed to allege, much less produce

3

any evidence that Plaintiff is likely to receive an allegedly illegal collection letter from Defendants

4

again. Plaintiff’s proposed class, by definition, is limited to Defendants’ past conduct. See Mot. at

5

(“[P]ersons . . . to whom PERSOLVE sent, or caused to be sent, a notice in the form of Exhibit

6

“1” on behalf of STRIDE CARD . . . during the period one year prior to the date of filing this

7

action through the date of class certification.”). Furthermore, Plaintiff concedes that Defendants no

8

longer use the form collection letter at issue. See Reply at 11; Opp. at 12–13; see also Gold, 2014

9

WL 5026270, at *9–10 (finding that “declaratory judgment would be moot because [defendants]
have stopped using the letter at issue in this [FDCPA] litigation”). Where, as here, Plaintiff’s

11
United States District Court
Northern District of California

10

FDCPA and RFDCPA claims will be resolved on the merits through either dispositive motions or

12

trial, and there is no risk of injury absent declaratory relief, the Court is not persuaded that

13

declaratory relief is appropriate or necessary. See, e.g., Tirabassi v. Chase Home Finance, LLC,

14

No. 14-8790, 2015 WL 1402016, at *10–11 (C.D. Cal. Mar. 24, 2015) (“[A] federal court may

15

decline to consider a claim for declaratory relief where the substantive lawsuit will resolve the

16

issues raised by the claim for declaratory relief.”).
The Court therefore denies Plaintiff’s request to certify a class pursuant to Rule 23(b)(2).

17
18
19

IV.

CONCLUSION
For the foregoing reasons, the Court GRANTS in part and DENIES in part Plaintiff’s

20

motion for class certification. Plaintiff has satisfied the requirements of Rules 23(a) and 23(b)(3),

21

and the Court CERTIFIES the following Rule 23(b)(3) class:

22
23
24
25
26

(i) all persons with addresses in California (ii) to whom PERSOLVE
sent, or caused to be sent, a notice in the form of Exhibit “1” on
behalf of STRIDE CARD (iii) in an attempt to collect an alleged
debt originally owed to Wells Fargo Bank, N.A. (iv) which was
incurred primarily for personal, family, or household purposes, (v)
which were not returned as undeliverable by the U.S. Post Office
(vi) during the period one year prior to the date of filing this action
through the date of class certification.
The Court APPOINTS Plaintiff Sandra Jacobson as the class representative, and Fred Schwinn of

27
28

19
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION

1

the Consumer Law Center, Inc., Raeon Roulston of the Consumer Law Center, Inc., and Randolph

2

Bragg of Horwitz, Horwitz & Associates, Ltd. as class counsel. The Court DENIES Plaintiff’s

3

motion for class certification of a hybrid class under Rule 23(b)(2) and Rule 23(b)(3).

4

IT IS SO ORDERED.

5

Dated: June 4, 2015

6
7

______________________________________
LUCY H. KOH
United States District Judge

8
9
10

United States District Court
Northern District of California

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

20
Case No.14-CV-00735-LHK
ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR CLASS CERTIFICATION