Rawson v. Source Receivables Management, LLC et al

Filing 162

Enter MEMORANDUM Opinion and Order Signed by the Honorable Elaine E. Bucklo on 2/13/2013. Mailed notice (jdh)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

of )
)
)
)
Plaintiff,
)
)
v.
)
SOURCE RECEIVABLES MANAGEMENT, LLC, )
RESURGENT CAPITAL SERVICES, L.P., )
ALEGIS GROUP LLC, and LVNV FUNDING, )
)
LLC,
)
)
Defendants
JEROLD S. RAWSON, on
plaintiff and a class

behalf

Case No. 11 C 8972

MEMORANDUM OPINION AND ORDER
On December 19, 2011, plaintiff Rawson brought this putative
class action against defendants Source Receivables Management, Inc.
(“Source”), Resurgent Capital Services, LP (“Resurgent”),

Alegis

Group LLC (“Alegis”), and LVNV Funding (“LVNV”), asserting claims
under the Fair Debt Collection Practices Act, 15 U.S. C. §§ 1692 et
seq (“FDCPA”).

Now before me is plaintiff’s Second Amended Motion

to Certify Class, which I grant for the following reasons.
I.
The third amended complaint alleges that on or around November
3, 2011, Source sent Rawson a form dunning letter naming Resurgent
as its “Client” and stating that Rawson had a
$11,426.29.

“Current Balance” of

The letter did not identify the original creditor, nor

did it identify defendant LVNV as the current owner of the debt.

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Plaintiff claims that the underlying debt is an expired credit card
debt that can no longer be enforced under Illinois’ five year statute
of limitations.
The

body

of

the

letter

plaintiff

received

reads,

in

its

entirety:
RESURGENT CAPITAL SERVICES LP has placed your account with
Source Receivables Management to recover the above
referenced Amount Due. To avoid further collection
efforts, please contact us at the number listed below to
make arrangements for payment or remit the balance of the
Amount Due to the address provided on the remittance
coupon below.
Source Receivables Management
877-251-3771
We are a debt collector attempting to collect a debt and
any information obtained will be used for that purpose. If
your financial institution rejects or returns your payment
for any reason, a service fee, the maximum permitted by
applicable law, may be added to the Amount Due.
In Count I of the complaint, plaintiff asserts that defendants
violated the FDCPA by sending a dunning letter that concealed the
identity of LVNV as the current debt owner and misleadingly portrayed
Resurgent as the current owner.

In Count II, plaintiff asserts that

defendants violated the FDCPA by (1) failing to disclose that the
debt was time-barred, and that defendants could not sue on the
time-barred debt, and (2) representing or implying that the debt was
legally enforceable when it was not.
Plaintiff seeks to certify two classes, and their respective
subclasses, defined as follows:
Class A consists of:
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(a) all individuals in the United States (b) to whom
defendant Source sent a letter in the form represented by
Exhibit A (c) that refers to Resurgent as the “client” of
Source and (d) does not otherwise identify the party
claiming to be the current owner of the debt, (e) which
letter was sent on or after December 19, 2010 and on or
before January 8, 2012.
Class B consists of:
(a) all individuals in Illinois (b) to whom Source (c)
sent a letter seeking to collect a debt (d) which debt was
a credit card debt on which the last payment had been made
more than five years prior to the letter (e) which letter
was sent on or after December 19, 2010 and on or before
January 8, 2012.
Each of Classes A and B has a subclass consisting of:
all class members with respect to whom LVNV was the
alleged current owner. If the alleged current owner of
each class member’s debt is LVNV, as it is with Plaintiff,
the subclass is coterminous with the class.
II.
A class may be certified if the proposed class both meets the
prerequisites of Fed. R. Civ. P. 23(a) and complies with at least one
subsection of Rule 23(b).
591,

614

(1997).

Rule

Amchem Prods., Inc. v. Windsor, 521 U.S.
23(a)

establishes

four

threshold

requirements: “(1) numerosity (a ‘class [so large] that joinder of
all members is impracticable’); (2) commonality (‘questions of law
or fact common to the class’); (3) typicality (named parties’ claims
or defenses ‘are typical ... of the class’); and (4) adequacy of
representation (representatives ‘will fairly and adequately protect
the interests of the class’).”
ellipses).

Rule

Id. at 613 (original alterations and

23(b)(3)-the

subsection
3

plaintiff

invokes

here–requires that common questions of law or fact predominate over
individual questions, and that the class action be superior to other
available methods of resolving the controversy. Id. at 615. I have
broad

discretion

appropriate.
is

to

determine

whether

class

certification

is

Keele v. Wexler, 149 F.3d 589, 592 (7th Cir. 1998). It

plaintiff’s

burden

to

establish

that

all

of

the

foregoing

requirements are met. Hernandez v. Midland Credit Management, Inc.,
236 F.R.D. 406, 410 (N.D. Ill. 2006) (citing Retired Chicago Police
Ass’n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993)).
There is no magic number required to satisfy the numerosity
requirement, nor must the exact number of class members be known.
Keele v. Wexler, No. 95 C 3483, 1996 WL 124452, at *3 (N.D. Ill. Mar.
19, 1996) (Gettleman, J.), aff’d, 149 F.3d 589 (7th Cir. 1998).
may

make

common

sense

assumptions

in

assessing

whether

I

this

requirement is met. Id. Here, plaintiff asserts that numerosity can
be inferred based on the fact that the dunning letter is, on its
face,

a form letter.

I agree that this supports a finding of

numerosity, and, indeed, defendants do not dispute that the proposed
classes satisfy this element of Rule 23(a).
Nor do defendants dispute that the proposed classes satisfy the
commonality requirement, which is usually met where “a common nucleus
of operative facts” is alleged.

Keele, 149 F.3d at 594.

Where, as

here, the defendants are alleged to have “engaged in standardized
conduct towards members of the proposed class by mailing to them

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allegedly illegal form letters,” commonality is satisfied.

Id.

The typicality analysis is closely related to the commonality
inquiry.

Id. at 595.

A “plaintiff’s claim is typical if it arises

from the same event or practice or course of conduct that gives rise
to the claims of other class members and his or her claims are based
on the same legal theory.” De La Fuente v. Stokely-Van Camp, Inc.,
713 F.2d 225, 232 (7th Cir.1983) (citations and internal quotation
omitted).

That is plainly the case here.

Defendants’ argument that

plaintiff’s individual claim is subject to particular defenses–and
is therefore “weakened”–on the basis of plaintiff’s testimony that
he understood the letter and was ultimately able to identify the debt
as an expired credit card debt, has no merit under the weight of the
law in this circuit.1

Whether the dunning letter was deceptive or

misleading in violation of § 1693e is an objective test, based on
what an “unsophisticated consumer” would understand.

Lox v. CDA,

Ltd., 689 F.3d 818, 826 (7th Cir. 2012). Indeed, “it is unimportant
whether the individual that actually received a violative letter was
misled or deceived.” Id. Accordingly, the typicality of plaintiff’s
1

Defendants’ sole support for their position is Turner v.
Diversified Adjustment Service, Inc., No. 00 C 463, 2000 WL 748124
(N.D. Ill. May 31, 2000) (Shadur, J.). While it is true that the
Turner court noted the plaintiff’s “disclaimer of any confusion on
his own part” as among the factors weighing against the
plaintiff’s typicality and adequacy in a putative FDCPA class
action suit, no other district court in this circuit has denied
class certification on this basis, and certainly none since the
Seventh Circuit’s unambiguous statement in Lox (and, before that,
in Turner v. J.V.D.B. & Assoc., 330 F.3d 991, 995 (7th Cir.
2003)), that the unsophisticated consumer test is an objective
one.
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claim does not turn on whether he subjectively understood the letter
in the same manner as the proposed class members.

Nothing in

defendants’ opposition meaningfully disputes that plaintiff’s claims
“have the same essential characteristics as the claims of the
class[es] at large,”

De La Fuente, 713 F.2d at 232, and are

therefore typical.
Adequacy of representation requires an inquiry into two factors:
first, whether plaintiff’s counsel is qualified, experienced, and
generally able to conduct the proposed litigation; and second,
whether the named plaintiff and the proposed class have antagonistic
or conflicting interests.
1018 (7th Cir. 1992).

See Rosario v. Livaditis, 963 F.2d 1013,

Defendants raise no objection with respect to

the first prong, and, indeed, the firm representing plaintiff has a
long history of litigating cases such as this one, including in many
instances against defendants’ counsel.

Defendants insist, however,

that Rawson is not an adequate class representative, raising two
arguments.

The

first

is

largely

indistinguishable

typicality argument, and it fails for the same reason.

from

their

The second

argument is that plaintiff is inadequate “because he has radically
changed his position regarding the basis for Count II of the
complaint.”

It is not at all clear, and defendants do not explain,

why an evolving theory of the case in itself is an obstacle to
adequate representation. Nor am I persuaded by defendants’ argument
that plaintiff cannot adequately represent the class because he
testified that he believed the dunning letter “implied or threatened
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litigation.”

As noted above, plaintiff’s subjective understanding

of the letter is irrelevant to the class claims regardless of
plaintiff’s theory.
Satisfied

that

plaintiff

has

established

the

Rule

23(a)

prerequisites, I now move on to the analysis under Rule 23(b)(3).
The

first

question

is

whether

common

issues

of

law

or

fact

predominate, to which I find that the answer is unquestionably yes.
Plaintiff identifies three common issues: whether the dunning letter
(1) discloses the current owner of the debts, (2) incorrectly implies
that the owner is Resurgent when that is not true, and (3) discloses
the time-barred nature of the debt.

Defendants’ insistence that

resolution of plaintiff’s claims on a class-wide basis would require
“individual inquiries into context” is belied by their failure to
identify a single individual issue relevant to plaintiff’s claims.
Instead, defendants emphasize the undisputed points that 1) only a
statement that would mislead the unsophisticated consumer violates
the FDCPA, citing Wahl v. Midland Credit Management, Inc., 556 F.3d
643 (7th Cir. 2009) (reiterating that the test is objective); and 2)
only “material” statements are actionable under the statute, citing
Hahn v. Triumph Partnerships LLC, 557 F.3d 755 (7th Cir. 2009)
(immaterial
consumer).

statement

would

not

mislead

the

unsophisticated

These arguments are red herrings that plainly do not

refute plaintiff’s assertion that common issues predominate over
individual ones.

Nor do defendants’ speculations about putative

class members who, for example, “may not have read the letter,” or
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whose

subjective

understood it.

circumstances

may

have

influenced

how

they

Indeed, defendants cite no authority for their

argument that “these individual examinations and determinations will
be necessary” to the resolution of the class claims alleged.
Defendants’ final argument is that a class action is not the
superior method of adjudicating plaintiff’s claims because Source
lacks the financial wherewithal to pay more than a de minimis
amount to compensate the proposed class.

The parties go back and

forth in their briefs about which of the defendants would be
responsible for paying any judgment if plaintiff prevails; but that
dispute can be left for another day because I conclude that a class
action

is

the

superior

method

for

adjudicating

regardless of whose coffers are at stake.

these

claims

Even assuming that class

members could expect no more than a de minimis recovery, other
interests are at stake.

As I have noted in the past, “if class

actions can be said to have a main point, it is to allow the
aggregation of many small claims that would otherwise not be worth
bringing, and thus to help deter lawless defendants from committing
piecemeal highway robbery, a nickel here and a nickel there, that
adds up to real money, but which would not be worth the while of an
individual plaintiff to sue on.”
503, 506 (N.D. Ill. 2001).

Miller v. McCalla, 198 F.R.D.

While it is true that the statute

allows for individual recoveries of up to $1000, “this assumes that
the plaintiff will be aware of her rights, willing to subject

8

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.” Mace v. Van Ru Credit Corp., 109 F.3d 338,
344-45 (7th Cir. 1997) (“we believe that a de minimis recovery (in
monetary terms) should not automatically bar a class action”).
And of course, judicial efficiency is served by aggregating claims
into one lawsuit, rather than resolving the same issue in multiple,
individual suits.

In short, even if I assume that the putative

class could expect, at best, a de minimis monetary recovery, I am
nevertheless convinced that a class action is the superior method
of adjudicating plaintiff’s claims.
III.
For

the

foregoing

certification is granted.

reasons,

plaintiff’s

motion

for

class

Two classes, Class A and Class B, and

their respective subclasses, as defined above, shall be certified.

ENTER ORDER:

____________________________
Elaine E. Bucklo
United States District Judge
Dated: February 13, 2013
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