Quinn et al v. Specialized Loan Servicing, LLC

Filing 74

MEMORANDUM Opinion and Order signed by the Honorable Elaine E. Bucklo on 2/9/2017. Mailed notice. (mgh, )

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

THOMAS QUINN and THERESA
QUINN, individually and on
behalf of a class of
similarly situated persons,
Plaintiffs,
v.
SPECIALIZED LOAN SERVICING,
LLC,
Defendant.

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Case No. 16 C 2021

MEMORANDUM OPINION AND ORDER
Plaintiffs Thomas and Theresa Quinn (“the plaintiffs,” “the
Quinns”) have brought this suit, individually and on behalf of a
purported class, against Specialized Loan Servicing, LLC (“SLS”)
for violations of the Fair Debt Collection Practices Act
(“FDCPA,” “the Act”), 15 U.S.C. § 1692 et seq.1 Presently before
me is SLS’s motion to bifurcate class and merits discovery. For
the reasons below, the motion is denied.
I.

1

The plaintiffs’ amended complaint also asserted claims under
the Illinois Consumer Fraud and Deceptive Practices Act, 815
ILCS 505/1 et seq. I dismissed these claims in ruling on SLS’s
previous Rule 12(b)(6) motion. See Quinn v. Specialized Loan
Servicing, LLC, No. 16 C 2021, 2016 WL 4264967, at *7 (N.D. Ill.
Aug. 11, 2016).

Briefly stated, the plaintiffs’ amended complaint alleges
that after they defaulted on their mortgage loan, SLS began
contacting them in an attempt to collect payment. Among other
things, the plaintiffs claim that SLS sent “field inspectors” to
their home for the ostensible purpose of determining whether the
property was still inhabited. In several instances, inspectors
visited the home while the plaintiffs were away and left a door
hanger at the residence containing the following message: “AT
THE REQUEST OF SPECIALIZED LOAN SERVICE, AN INDEPENDENT FIELD
INSPECTOR CALLED ON YOU TODAY. PLEASE CONTACT SPECIALIZED LOAN
SERVICING AT 1-800-306-6062.” Am. Compl. ¶ 39. According to the
plaintiffs, they called the number expecting to speak with a
representative about home inspections and instead were connected
to SLS’s collections department.2 The plaintiffs maintain that
this constituted a violation of § 1692e of the Act, which
prohibits the use of false, deceptive, or misleading
representations in attempting to collect a debt. In addition,
the plaintiffs separately claim that SLS violated § 1692c(a)(2)
of the FDCPA by communicating with them directly despite its
awareness that they were represented by counsel.

2

Plaintiffs also assert that SLS violated § 1692d of the FDCPA
by engaging in harassing, oppressive, or abusive conduct in
attempting to collect a debt. Since this claim is not brought on
a class-wide basis, I do not discuss it for purposes of this
motion.

2

SLS denies that calling the phone number listed on the door
hangers connected consumers directly to SLS’s collections
department. It claims to have evidence clearly showing that
after dialing the number, the phone prompts gave callers the
option of speaking with representatives regarding other issues.
According to SLS, this defeats the plaintiffs’ FDCPA claims
because it refutes the plaintiffs’ contention that the door
hangers constituted communications made “in connection with the
collection of any debt” as required by the statute. SLS also
claims to have definitive evidence that it was expressly
authorized by plaintiffs’ counsel to communicate with plaintiffs
directly, thereby defeating their § 1692c(a)(2) claim. SLS
argues that if it is allowed to conduct limited discovery into
these issues, it will be able to obtain summary judgment on
plaintiffs’ individual claims and make it unnecessary to engage
in any further merits or class discovery.
II.
Rule 23 provides that “[a]t an early practicable time after
a person sues or is sued as a class representative, the court
must determine by order whether to certify the action as a class
action.” Fed. R. Civ. P. 23(c)(1)(a). It is well settled that
the issue of certification should generally be resolved prior to
addressing the merits of the plaintiff’s claims. See, e.g., Bell
v. PNC Bank, Nat. Ass’n, 800 F.3d 360, 376 (7th Cir. 2015)
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(“[T]he default rule is that a court may not resolve merits
questions at the class certification stage.”); Thomas v. City of
Peoria, 580 F.3d 633, 635 (7th Cir. 2009) (“First ruling on the
merits of the federal claims, and then denying class
certification on the basis of that ruling, puts the cart before
the horse, as we have emphasized in previous cases.”); Joseph M.
McLaughlin, McLaughlin on Class Actions § 3:12 (13th ed. 2016)
(“It is axiomatic that at the class certification stage a court
may not resolve substantial, disputed factual issues concerning
the merits unless those issues also are relevant to a Rule 23
determination.”).
To be sure, where merits and certification issues are
inextricably linked, a preliminary inquiry into the merits may
be necessary. In such cases, however, “Rule 23 grants courts no
license to engage in free-ranging merits inquiries at the
certification stage.” Amgen Inc. v. Connecticut Ret. Plans &
Trust Funds, 133 S. Ct. 1184, 1194-95 (2013). Rather, “[m]erits
questions may be considered to the extent -- but only to the
extent -- that they are relevant to determining whether the Rule
23 prerequisites for class certification are satisfied.” Id. at
1195. (citations and quotation marks omitted); see also Manual
for Complex Litigation § 21.14 (“At [the precertification]
stage, the court should not decide or even attempt to predict
the weight or outcome of the underlying claims and defenses....
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A preliminary inquiry into the merits may be required to decide
whether the claims and defenses can be presented and resolved on
a class-wide basis.”).
Here, SLS does not argue that its proposed merits discovery
is necessary for addressing Rule 23’s certification
requirements. Rather, SLS contends that preliminary discovery on
the merits of the plaintiffs’ claims will make it unnecessary to
inquire into certification issues at all. In support of its
position that such precertification merits discovery is
permissible, SLS relies on a handful of cases from the Northern
District of Indiana in which magistrate judges have bifurcated
merits and class discovery and have permitted merits discovery
to proceed first. See Brittingham v. Cerasimo, Inc., No. 2:08CV-216TLSPRC, 2008 WL 5156645, at *1 (N.D. Ind. Dec. 8, 2008);
Stavroff v. Midland Credit Mgmt. Inc., No. 3:05-CV-127 AS, 2005
WL 6329149, at *1 (N.D. Ind. June 8, 2005); Sheets v. Nat’l
Action Fin. Servs., 2005 U.S. Dist. LEXIS 8439 (N.D. Ind. May 9,
2005).3 These decisions opine that, in light of the 2003

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SLS also cites two decisions from the District of New Jersey in
which a magistrate judge bifurcated merits and class discovery
and allowed merits discovery to proceed first. See Loreaux v.
ACB Receivables Mgmt., Inc., No. CIV.A. 14-710 MAS, 2015 WL
5032052 (D.N.J. Aug. 25, 2015); Physicians Healthsource, Inc. v.
Janssen Pharm., Inc., No. CIV.A. 12-2132 FLW, 2014 WL 413534
(D.N.J. Feb. 4, 2014). I find these decisions unpersuasive for
the same reasons as the Northern District of Indiana cases,
which I discuss below.
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amendments to Rule 23 -- which changed the language requiring
the district court to decide the issue of certification “as soon
as practicable” to the requirement that certification be decided
“[a]t an early practicable time” -- it is no longer necessary to
decide the issue of certification before addressing the merits.
In reaching this conclusion, each of the decisions places
significant weight on the comment in the Advisory Committee’s
notes accompanying the 2003 amendment that “[t]he party opposing
the class may prefer to win dismissal or summary judgment as to
the individual plaintiffs without certification and without
binding the class that might have been certified.” Fed. R. Civ.
P. 23(c)(1)(a) advisory committee’s note.
I find the reasoning of these cases unpersuasive. As an
initial matter, I disagree with these decisions’ reading of the
Advisory Committee’s notes. In the passage quoted above, the
Advisory Committee merely states that the certification decision
may be delayed until after a defendant has filed a dispositive
motion on the named plaintiff’s claims. That is not what SLS
seeks to do with the instant motion. (Indeed, SLS has already
had the opportunity to file a Rule 12(b)(6) motion to dismiss.
See Quinn v. Specialized Loan Servicing, LLC, No. 16 C 2021,
2016 WL 4264967, at *1 (N.D. Ill. Aug. 11, 2016)). Rather, SLS
argues that it is entitled to engage in precertification
discovery for the purpose of challenging the merits of the
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plaintiffs’ claims before the court addresses issues of class
certification. Nothing in the Advisory Committee’s notes
supports such precertification discovery. On the contrary, the
Advisory Committee’s notes make clear that any initial merits
discovery should be confined to issues bearing on certification:
Although an evaluation of the probable outcome on the
merits is not properly part of the certification
decision, discovery in aid of the certification
decision often includes information required to
identify the nature of the issues that actually will
be presented at trial. In this sense it is appropriate
to conduct controlled discovery into the “merits,”
limited to those aspects relevant to making the
certification decision on an informed basis.
Fed. R. Civ. P. 23(c)(1) advisory committee’s note.
A deeper problem with the reasoning underlying the Sheets
line of cases is that it has no limiting principle. Taken to its
logical conclusion, the logic of these decisions suggests that
courts should routinely allow precertification merits discovery,
given the possibility that it might render certification issues
moot. Supreme Court and Seventh Circuit cases decided after
Sheets, Stavroff, and Bettingham make clear that the 2003
amendments to Rule 23 did not disturb the general rule that the
merits are to be addressed only after the issue of certification
has been addressed. See, e.g., Amgen, 133 S. Ct. at 1194-95;
Bell, 800 F.3d at 376; Thomas, 706 F.3d at 849.

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Finally, even if the free-ranging precertification merits
discovery it seeks were permissible, I am not convinced that
bifurcation would contribute to a more efficient resolution of
this suit. Among other things, bifurcating discovery may give
rise to disputes over whether a particular discovery request
relates to the merits or to class certification. See, e.g., True
Health Chiropractic Inc. v. McKesson Corp., No. 13-CV-02219-JST,
2015 WL 273188, at *2 (N.D. Cal. Jan. 20, 2015) (denying motion
to bifurcate class and merits discovery in part on the ground
that “bifurcation could raise a slew of issues as to what
discovery relates to the class, as opposed to the named
plaintiffs, thereby causing additional litigation regarding the
distinction between the two”).
III.
For the reasons above, SLS’s motion to bifurcate is denied.

ENTER ORDER:

Elaine E. Bucklo
United States District Judge
Dated: February 9, 2017

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