Jenkins v. Pech et al

Filing 135

MEMORANDUM AND ORDER - THEREFORE, IT IS ORDERED: The defendants' objection (Filing No. 114 ) to the F&R of the magistrate judge (Filing No. 110 ) is overruled. The Findings and Recommendation of the magistrate judge (Filing No. 110 ) is adopted and incorporated herein by reference. The plaintiff's motion for class certification (Filing No. 41 ) is granted in part and denied in part as set forth in the magistrate judge's Findings and Recommendation (Filing No. 110 ) an d in this order. A class is certified consisting of: (i) all persons residing in Nebraska (ii) to whom Defendants Mr. Pech and/or Pech, Hughes sent, or caused to be sent, a letter in the form of Exhibit A, (iii) in an attempt to collect a purporte d obligation which, as shown by the nature of the alleged obligation, Defendants' records, or the records of the original creditors, was primarily for personal, family, or household purposes. Defendants' motion (Filing No. 128 ) to strike the plaintiff's second supplemental declaration (Filing No. 103 -1) is denied. Ordered by Senior Judge Joseph F. Bataillon. (TCL)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
LEE A. JENKINS, on behalf of himself and
all others similarly situated;
8:14CV41
Plaintiff,
vs.

MEMORANDUM AND ORDER

CHRISTOPHER E. PECH,
PECH,HUGHES, & MCDONALD, P.C.,
d/b/a Litow & Pech, P.C., A Fictitious
Name;
Defendants.

This matter is before the court on the defendants’ objection, Filing No. 114, to the
Findings and Recommendation ("F&R") of the magistrate judge, Filing No. 110, on the
plaintiff's motion for class certification, Filing No. 41.1
This is an action for violations of the Fair Debt Collection Practices Act, 15 U.S.C.
§ 1692, et seq. ("FDCPA") and the Nebraska Consumer Protection Act, Neb. Rev. Stat.

1

Also pending is the defendants’ motion, Filing No. 128, to strike the plaintiff's second
supplemental declaration, Filing No. 103-1. The defendant contends that Mr. Jenkins’s Second
Supplemental Declaration contradicts his earlier deposition testimony. See Filing No. 128-1, Brief at 3.
To the contrary, the record shows that Mr. Jenkins responded at the deposition to the best of his
recollection. See Filing No. 96-1, Index of Evid., Ex. A, Declaration of Tomio Narita ("Narita Decl."), Ex.
AE, Jenkins Dep. at 61, 103; Filing No. 103-1, Second Supplemental Decl. at 1-2. He testified at his
deposition that he believed he used the Bank of America credit card for a cash advance that he used to
purchase a farm. Filing No. 96-1, Ex. A, Narita Decl., Ex. AE at 103. In his Second Supplemental
Declaration, Jenkins acknowledges that his deposition testimony was mistaken and that he used a
different credit card for the cash advance. Filing No. 103-1, Ex. 1, Second Supplemental Declaration at 2.
Documents submitted in support of the declaration show that Jenkins received a cash advance on an
MBNA credit card via a check in the amount of $12,462 on April 12, 2006. Filing No. 103-1, EX. 1,
Jenkins's Second Supplemental Decl. at 2; Ex. A, Billing Records. Further, he has shown the farm was
purchased and the deed was filed as a public record in Platte County, Nebraska on April 26, 2006. Filing
No. 131-1, Index of Evid., Ex. A, Deed; Ex. B, Bank of America account statement at 1 (showing cash
advance on November 29, 2007).
The court finds the motion to strike should be denied and will consider the documents in
connection with this motion.

§§ 59–1601–59–1623 ("NCPA").

The plaintiff alleges that the defendants' routine

practice of sending a misleading debt-collection letter, attached to the amended
complaint as Ex. A, violates these consumer protection statutes. See Filing No. 6,
Amended Complaint, Exs. A, Letter and B, Envelope.

Jenkins alleges defendants

Christopher E. Pech, an attorney, and his law firm, Pech, Hughes, and McDonald, P.C.
(hereinafter, collectively, PHM) violated the FDCPA and NCPA by (1) failing to state in
the letter that the alleged debt would be considered valid by the debt collector; (2)
stating a fictitious name on the envelope; and (3) failing to have meaningful involvement
by an attorney in reviewing an account. 2
The plaintiff moved for certification of two classes: one that related to the letter
and one that related to the envelope. PHM opposed the motion, generally arguing with
respect to both classes that the class was not ascertainable. See Filing No. 48, Brief in
Opposition at 4-13; Filing No. 110, F&R at 5. With respect to the letter class, PHM
argued that the proposed class is not ascertainable because there is no evidence as to
whether the debt was incurred primarily for personal or household purposes rather than
business or commercial purposes so as to fall within the ambit of the FDCPA.
The magistrate judge found that the plaintiff met the numerosity, commonality,
typicality, and adequacy of representation requirements with request to the letter class,
but not with respect to the envelope class. Filing No. 110, F&R at 7-12. The magistrate
judge also found that the letter class was ascertainable under Fed. R. Civ. P. 23(b)(3),

2

Under the FDCPA, a debt collector must send the debtor a written notice containing a statement
that "unless the consumer, within thirty days after receipt of the notice, disputes the validity of the debt, or
any portion thereof, the debt will be assumed to be valid by the debt collector." 15 U.S.C. § 1692g(a)(3).
Further, "[a] debt collector may not use any false, deceptive, or misleading representation or means in
connection with the collection of any debt." 15 U.S.C. § 1692e(10).

2

but the envelope class was not. Id. at 6-7. Further, the magistrate judge determined
that the plaintiff satisfied the Rule 23(b)(3) requirements of predominance and
superiority with respect to the letter class.

Id. at 12-15.

The magistrate judge

recommended granting class certification to the letter class, consisting of
all persons residing in Nebraska (ii) to whom Defendants Mr. Pech and/or
Pech, Hughes sent, or caused to be sent, a letter in the form of Exhibit A,
(iii) in an attempt to collect a purported obligation which, as shown by the
nature of the alleged obligation, Defendants’ records, or the records of the
original creditors, was primarily for personal, family, or household
purposes.
Filing No. 110, F&R at 15.
PHM challenges the magistrate's findings, again arguing that Jenkins has failed
to identify an ascertainable class. Filing No. 114, Objection at 2. PHM argues Jenkins
has not shown the debts at issue fall under the coverage of the FDCPA and also argues
that Jenkins is not an adequate representative of the class because he used the credit
card account for a commercial purpose.3
I.

FACTS

In addition to the facts set out by the magistrate judge, the record shows that
PHM sent out hundreds of letters in the form of Exhibit A to Nebraska residents. Filing
No. 43-8, Index of Evid., Exhibit ("Ex.") 1, Reinbrecht Decl., Ex. 7, Defendant's Answers
Plaintiff's Interrogatories, Set 1 at 6; Filing No. 43-2, Index of Evid., Ex. 1, Reinbrecht
Decl., Ex.1A, Deposition of Christopher E. Pech, ("Pech Dep.") at 86, 110-11. The letter
3

He also raises an additional challenge to Jenkins's adequacy as a representative, contending
that the letter at issue was not the first communication with the debtor and arguing but that PHM's initial
communication was an appearance in the Douglas County District Court action. The court finds that
argument is specious. The record shows the entry of appearance contains the same allegedly violative
language as the letter at issue. Filing No. 119-2, Index of Evid., Ex. 1, Declaration of William Reinbrecht
("Reinbrecht Decl."), Ex. 1A, Douglas County Court Appearance at 1. Further, the document does not
appear to have been served on Jenkins. Id. at 2.

3

at issue is a standard template bearing the typewritten name, “Christopher E. Pech.” Id.
at 84, 89-90, 166-167. The letter states only that "the debt is assumed valid," without
the qualifier "by the debt collector" as required by the FDCPA. Filing No. 6, Amended
Complaint, Ex. A. Pech did not review each account before the letter was sent. Filing
No. 79-16, Index of Evid., Ex. 2, Defendant's Responses to Plaintiff's Requests for
Admission, Set Two at 2. He did not review the letter sent to the plaintiff. Filing No. 432, Index of Evid., Ex. 1, Reinbrecht Decl., Ex. 1A, Pech Dep. at 126. Further, the only
review his firm conducted is a brief review of the computer screen shots containing
minimal information. Id. at 73-74, 119.
Pech also testified that the firm “reviews” 500 new files each week using only a
couple of attorneys to do the job. Id. at 69-70. Each of these “reviewing attorneys” also
maintains a full schedule in addition to reviewing new files. Id. at 70-71. PHM's debt
collection practice is highly automated. Id. at 51-54, 93-96, 165-67. In his deposition,
Pech identifies information available on PHM's computer system, including a wide
variety of electronic documentation contained in specific fields or compartments. Id. at
53-54.
The creditor of the account about which PHM sent a communication to Jenkins is
FIA Card Services, N.A., ("FIA") which is part of Bank of America.4 Id. at 171; Filing No.
79-7, Ex. 1A, Pech Dep. Ex. 7, Collection Notes at 1.

PHM does not purchase debts

for collection on its own. Filing No. 43-2, Index of Evid., Ex. 1, Reinbrecht Decl., Ex. 1A,

4

See also Repay v. Bank of Am., N.A., No. 12CV10228, 2013 WL 6224641, *1 (N.D. Ill. Nov. 27,
2013) (identifying FIA as a subsidiary of Bank of America Corporation and as a major servicer of Bank of
America, N.A.'s credit cards and stating "FIA services many or all credit cards issued by [Bank of
America].").

4

Pech Dep. at 170. PHM's only relationship with FIA is as counsel in collection cases for
that entity. Id. at 171.
Pech testified the Jenkins file came to the firm electronically in a batch from
another law firm. Id. at 93. The record also shows the PHM's standard automated
“review” process includes a computerized “filtering” of new files. Filing No. 55-2, Index
of Evid., Ex. 3, Reinbrecht Supp. Decl., Ex. 3A, Pech Dep. at 51-52; Filing No. 79-18,
Index of Evid., Ex. 1, Reinbrecht Decl., Ex. 3A, Deposition of Tyler Grimm ("Grimm
Dep.") at 27-28: Filing No. 80, Index of Evid. (sealed), Pech Dep. Ex. 3, New Account
Review Computer Manual. Files are filtered as they come in by a "software script or
something automated."

Filing No. 79-18, Index of Evid. Ex. 1, Reinbrecht Decl., Ex.

3A, Grimm Dep. at 29-30.

Tyler Grimm, an attorney and former PHM employee,

testified he would open files that were on the exceptions list generated by the
automated process.

Id. at 30-31.

Pech stated that a "judgment file," would not

ordinarily include monthly billing statements from the creditor. Filing No. 55-2, Index of
Evid., Ex. 3, Reinbrecht Decl., Ex. 3A, Pech Dep. at 49-50. The record shows that the
initial data file that comes with the placement of a collection account contains
information—client identifier, agency identifier, total balance, principal balance, cost
balance, interest balance, and fee balance—as lines of data that are imported into the
PHM system. Id. at 51-52; see Filing No. 79-3, EX. 1, Reinbrecht Decl., Ex. 1A, Pech
Dep. Ex. 2. Tyler Grimm testified that his review consisted of a quick look at a computer
screen to make sure there were no obvious problems with an account that were
detected by the computer. Filing No. 79-18, Index of Evid., Ex.3A, Grimm Dep. at 3031, 42-43. Only when something looks “odd” does an attorney actually open the file and
5

look quickly at the computer screen shot. Id. at 30-31, 38. He testified that, by number
of cases, he worked mostly on consumer credit cases. Id. at 33-34. Grimm worked
remotely out of his attic office in Des Moines. Id. at 42-44; Filing No. 79-11, Index of
Evid., Ex.1E, Deposition of Elizabeth Levi ("Levi Dep.") at 23-24.
Both Grimm and PHM employee Linda Hamilton testified that PHM's computer
system has the ability to record the time an attorney spent reviewing the computer
record. Filing No. 79-18, Index of Evid., Ex. 1, Reinbrecht Decl., Ex. 3A, Grimm Dep. at
44; Filing No. 79-8, Index of Evid., Ex. 1, Reinbrecht Decl., Ex. 1B, Deposition of Linda
Hamilton ("Hamilton Dep.") at 45-46.

Further, the evidence shows the reviewing

attorneys do not see the letters sent to debtors—they are produced overnight and sent
to the mailroom in bulk. Filing No. 103-2, Index of Evid., Ex. 1, Reinbrecht Decl., Filing
No. 103-7, Ex. 2E, Deposition of Julie Thomas at 9-10; Ex. 2F, Deposition of Michelle
Daley at 14-16. Although Pech's typewritten signature appears on the letter, he does
not review it before mailing. Filing No. 103-4, Ex. 1, Reinbrecht Decl., Ex.2B, Pech
Dep. at 55; Ex. 2C, Grimm Dep. at 17-18, 46.
Linda Hamilton also testified that the firm's computer screens show a different
color for business as opposed to consumer accounts. Filing No. 79-8, Ex. 1, Reinbrecht
Decl., Ex.1B, Hamilton Dep. at 49, 61-62. Pech and Grimm testified that the firm could
obtain the itemized account statements if they chose to do so. Filing No. 79, Index of
Evid., Ex.1A Pech Dep. at 80-81; Ex.3A, Grimm Dep. at 41-42. Pech testified that
various information can be obtained from PHM's computer system by running certain
queries. Filing No. 79-2, Ex. 1, Reinbrecht Decl., Ex. 1A, Pech Dep. at 87, 168.

6

The record also shows Mr. Jenkins's account was solely in his name as an
individual. Filing No. 79-13, Index of Evid., Ex. 1, Reinbrecht Decl., Ex.1G, Deposition
of Lee A. Jenkins ("Jenkins Dep.") at 47-56. The Douglas County Court collection case
against Jenkins was brought only against him personally and a judgment was entered
against him individually for the full balance sought. Id., Jenkins Dep. at 47-56; Filing
No. 79-13 & 79-14, Jenkins Dep. Exs. 13 & 16. The letter to Jenkins was sent in
reference to a Bank of America credit card account. Id., Ex. 1G, Jenkins Dep. at 68.
Jenkins testified that he normally used the credit card at issue for purchases of food,
clothing and gasoline for his personal use. Id. at 60-61. The plaintiff does not seek
actual damages on behalf of class members. Filing No. 104-1, Index of Evid., Ex. 1,
Declaration of Tomio B. Narita, Ex. A6, Plaintiff's Response to Request for Production of
Documents – First Set at 4.
II.

LAW
A.

Class certification

In ruling on an objection to a magistrate judge's F&R on class certification, the
court conducts a de novo review of the magistrate judge’s findings. United States v.
Lothridge, 324 F.3d 599, 600 (8th Cir. 2003); 28 U.S.C. § 636(b)(1).

“Rigorous

analysis” is necessary to ensure that the plaintiffs satisfied all Rule 23 requirements for
certifying a class. Powers v. Credit Mgmt. Servs., 776 F.3d 567, 570 (8th Cir. 2015).
This rigorous analysis often results in some overlap with the merits of the plaintiff’s
claim. Wal-Mart Stores, Inc. v. Dukes, —- U.S. ——, 131 S. Ct. 2541, 2551 (2011)
"The class action is 'an exception to the usual rule that litigation is conducted by
and on behalf of the individual named parties only.'" Id. at 2550 (quoting Califano v.
7

Yamasaki, 442 U.S. 682, 700–701, (1979)). Under Fed. R. Civ. P. 23, a class action
may be maintained if the suit satisfies the criteria set forth in subdivision (a)—
numerosity, commonality, typicality, and adequacy of representation—and it also must
fit into one of three categories described in subdivision (b). 5 Shady Grove Orthopedic
Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 397 (2010) (noting that "[b]y its terms
this creates a categorical rule entitling a plaintiff whose suit meets the specified criteria
to pursue his claim as a class action"); Fed. R. Civ. P. 23. “A party seeking class
certification must . . . be prepared to prove that there are in fact sufficiently numerous
parties, common questions of law or fact, etc.” Dukes, 131 S. Ct. at 2551.
The numerosity requirement is met if the class is so large that joinder of all
members is impracticable. Fed. R. Civ. P. 23(a). Commonality is met if there are
“questions of law and fact common to the class.” Id.; see Dukes, 131 S. Ct. at 2551.
Commonality is not required on every question raised in a class action—the Rule "is

5

As relevant herein, Rule 23(b) provides a class action may be maintained if the requirements of
Fed. R. Civ. P. 23(a) are met and if:
(3) the court finds that the questions of law or fact common to class members
predominate over any questions affecting only individual members, and that a class
action is superior to other available methods for fairly and efficiently adjudicating the
controversy. The matters pertinent to these findings include:
(A) the class members' interests in individually controlling the
prosecution or defense of separate actions;
(B) the extent and nature of any litigation concerning the controversy
already begun by or against class members;
(C) the desirability or undesirability of concentrating the litigation of the
claims in the particular forum; and
(D) the likely difficulties in managing a class action.
Fed. R. Civ. P. 23(b).

8

satisfied when the legal question 'linking the class members is substantially related to
the resolution of the litigation.'" DeBoer v. Mellon Mortgage Co., 64 F.3d 1171, 1174
(8th Cir. 1995) (quoting Paxton v. Union Nat'l Bank, 688 F.2d 552, 561 (8th Cir. 1982)).
"Commonality requires the plaintiff to demonstrate that the class members have
suffered the same injury," not merely "that they have all suffered a violation of the same
provision of law.”

Dukes, 131 S. Ct. at 2551.

“Where the circumstances of each

particular class member vary but retain a common core of factual or legal issues with
the rest of the class, commonality exists.” Id. (stating that such claims must depend
upon a common contention the is "of such a nature that it is capable of classwide
resolution—which means that determination of its truth or falsity will resolve an issue
that is central to the validity of each one of the claims in one stroke”).
To demonstrate typicality, the putative class must show that the named parties'
claims are typical of the class. Fed. R. Civ. P. 23(a)(3). The burden on the plaintiff to
prove typicality is “fairly easily met so long as other class members have claims similar
to the named plaintiff.” Alpern v. UtiliCorp United, Inc., 84 F.3d 1525, 1540 (8th Cir.
1996). The presence of a common legal theory, however, does not establish typicality
when proof of a violation requires an individualized inquiry. Elizabeth M. v. Montenez,
458 F.3d 779, 787 (8th Cir. 2006) (involving a substantive due process claim that
invariably “demands an exact analysis of circumstances before any abuse of power is
condemned.”) In certain contexts "[t]he commonality and typicality requirements of Rule
23(a) tend to merge." Dukes, 131 S. Ct. at 2551 and n.5 (noting that "[b]oth serve as
guideposts for determining whether under the particular circumstances maintenance of
a class action is economical and whether the named plaintiff's claim and the class
9

claims are so interrelated that the interests of the class members will be fairly and
adequately protected in their absence").
Further, the named plaintiffs must fairly and adequately protect the interests of
the class. Fed. R. Civ. P. 23(a)(4). The adequacy inquiry under Rule 23(a)(4) serves to
uncover conflicts of interest between named parties and the class they seek to
represent. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 625 (1997). The adequacy
heading also factors in competency and conflicts of class counsel. Id. at 626 n.20. “[A]
class representative must be part of the class and ‘possess the same interest and suffer
the same injury’ as the class members.” Id. at 625-26 (quoting East Tex. Motor Freight
System, Inc. v. Rodriguez, 431 U.S. 395, 403 (1977)).
With respect to the Fed. R. Civ. P. 23(b) criteria, the Supreme Court has
instructed that Rule 23(b)(3) does not require a plaintiff seeking class certification to
prove that each element of his or her claim is susceptible to classwide proof. Amgen
Inc. v. Connecticut Ret. Plans and Trust Funds, ––– U.S. ––––, 133 S. Ct. 1184, 1196
(2013). Rather, all that is required is that a class plaintiff show that “common questions
‘predominate.’ ” Id. (quoting Fed. R. Civ. P. 23(b)(3)). “Predominance is a test readily
met in certain cases alleging consumer or securities fraud or violations of the antitrust
laws.” Id. at 625. "[C]ommon questions can predominate if a 'common nucleus of
operative facts and issues' underlies the claims brought by the proposed class."
Messner v. Northshore Univ. HealthSystem, 669 F.3d 802, 815 (7th Cir. 2012) (quoting
In re Nassau County Strip Search Cases, 461 F.3d 219, 228 (2d Cir. 2006)). "If the
issues of liability are genuinely common issues, and the damages of individual class
members can be readily determined in individual hearings, in settlement negotiations, or
10

by creation of subclasses, the fact that damages are not identical across all class
members should not preclude class certification." Butler v. Sears, Roebuck & Co., 727
F.3d 796, 801 (7th Cir. 2013), cert. denied, 134 S. Ct. 1277 (2014); see Leyva v.
Medline Indus. Inc., 716 F.3d 510, 514 (9th Cir. 2013).

The Supreme Court has

explicitly determined that it is “clear that individualized monetary claims belong in Rule
23(b)(3).” Dukes, 131 S. Ct. at 2558.
The class action mechanism was created to vindicate the rights of groups of
people who individually would be without effective strength to bring their opponents into
court. Amchem Prods., Inc., 521 U.S. at 617; Mace v. Van Ru Credit Corp., 109 F.3d
338, 344 (7th Cir. 1997) (stating "[t]he 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").
“Class ascertainability is an essential prerequisite of a class action, at least with
respect to actions under Rule 23(b)(3).” Carrera v. Bayer Corp., 727 F.3d 300, 306 (3d
Cir. 2013); see In re Nexium Antitrust Litig., 777 F.3d 9, 19 (1st Cir. 2015) (recognizing
the implicit requirement of ascertainability in class actions). A plaintiff must show, by a
preponderance of the evidence, that the class is “currently and readily ascertainable
based on objective criteria,” Carrera, 727 F.3d at 306 (quoting Marcus v. BMW of North
America, LLC, 687 F.3d 583, 593 (3d Cir. 2012)). Ascertainability plays a key role as
part of a Rule 23(b)(3) class action lawsuit because:
First, at the commencement of a class action, ascertainability and a clear
class definition allow potential class members to identify themselves for
purposes of opting out of a class. Second, it ensures that a defendant's
rights are protected by the class action mechanism. Third, it ensures that

11

the parties can identify class members in a manner consistent with the
efficiencies of a class action.
Carrera, 727 F.3d at 307.
A. FDCPA and NCPA Generally
Congress enacted the FDCPA in 1977 for the primary purpose of eliminating
abusive debt collection practices.6 Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich
LPA, 130 S. Ct. 1605, 1608 (2010); Dunham v. Portfolio Recovery Assocs., LLC, 663
F.3d 997, 1000 (8th Cir. 2011). “The Fair Debt Collection Practice Act (FDCPA) makes
it unlawful for debt collectors to use ‘any false, deceptive, or misleading representation
or means in connection with the collection of any debt.’” Freyermuth v. Credit Bureau
Servs., Inc., 248 F.3d 767, 770 (8th Cir. 2001) (quoting 15 U.S.C. § 1692e). A debt
collector who 'fails to comply with any [FDCPA] provision . . . is liable to [a plaintiff] for
'actual damage[s],' costs, 'a reasonable attorney's fee as determined by the court,” and
statutory 'additional damages.'"

Jerman, 559 U.S. at 573 (quoting §15 U.S.C. §

6

This action must be viewed in the context of the evolution of the debt collection business. In
2010, the Federal Trade Commission concluded that in today's collection system, “neither litigation nor
arbitration currently provides adequate protection for consumers. The system for resolving disputes about
consumer debts is broken.” See Federal Trade Comm'n, Repairing a Broken System: Protecting
Consumers in Litigation and Arbitration at 7 n.18 (July 2010) (hereinafter "Broken System"),
http://www.ftc.gov/os/2010/07/debtcollectionreport.pdf, Executive Summary at i-v; Some of the hallmarks
of this broken system include lack of data integrity, lack of proof, inadequate documentation, robo-signing
and other unfair and deceptive acts and practices. Id. Judges, advocates, academics, federal regulators,
state regulators, and Congress have recently addressed the problems in the debt collection industry. See
Consumer Fin. Prot. Bureau, Fair Debt Collection Practices Act Annual Report (Mar. 20, 2013); Federal
Trade Comm'n, The Structure and Practices of the Debt Buying Industry at ii-iii (January 2013),
https://www.ftc.gov/reports/structure-practices-debt-buying-industry (noting that debt buyers usually
purchase bad debts in bulk portfolios, often in the form of a spreadsheet, and rarely obtain the underlying
documents relating to the debt); see also Debt Buyers' Ass'n v. Snow, 481 F. Supp. 2d 1, 4 (D.D.C.
2006); Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443, 445-46 (6th Cir. 2014), as amended
(Dec. 11, 2014); Bureau of Consumer Fin. Prot., Debt Collection (Regulation F), 78 Fed. Reg. 67848-01,
67850 (Nov. 12, 2013) (advance notice of proposed rulemaking).

12

1692k(a)).7

The FDCPA does not specify the amount of statutory damages to be

awarded, but it imposes ceilings: in class actions the named plaintiff may receive no
more than $1,000 and the class as a whole no more than the lesser of either $500,000
or 1 percent of the debt collector's net worth. 15 U.S.C. § 1692k(a)(2)(B).
The FDCPA applies only to debts as they are defined in the statute—debts are
obligations "of a consumer to pay money arising out of a transaction in which the
money, property, insurance, or services which are the subject of the transaction are
primarily for personal, family, or household purposes, whether or not such obligation
has been reduced to judgment." 15 U.S.C. § 1692a(5) (emphasis added). The FDCPA
is not applicable to debts that arises from a commercial transaction. Bloom v. I.C. Sys.,
Inc., 972 F.2d 1067 (9th Cir. 1992); see Duffy v. Landberg, 133 F.3d 1120, 1123 (8th
Cir. 1998) (recognizing that the FDCPA applies to obligations arising out of a “consumer
transaction”).
When considering whether law firm's standardized collection letters violate the
consumer debt collection practices statutes, the need to determine the consumer nature
of a debt does not automatically preclude class certification. Butto v. Collecto Inc., 290
F.R.D. 372, 382 (E.D. N.Y. 2013); see Gold v. Midland Credit Mgmt., Inc., No. 13-CV02019-BLF, 2014 WL 5026270, *3-*5 (N.D. Cal. Oct. 7, 2014) (stating "as many other
courts have determined in considering class certification under the FDCPA, the mere
fact that the debt collection agency does not segregate business and consumer debt

7

Interestingly, the violation at issue in Jerman is similar to that at issue herein. Jerman involved
allegations that defendant debt collecting law firm violated § 1692g, which governs contents of notices to
debtors, by incorrectly stating that the plaintiff's debt would be assumed valid unless it was disputed in
writing. See Jerman, 559 U.S. at 579.

13

accounts is not enough to thwart class certification" and finding it sufficiently
administratively feasible to identify that class members and the nature of the their
purchases by consulting the creditor's records and by propounding questions in a courtapproved notice and claim form);8 Selburg v. Virtuoso Sourcing Grp., LLC, 2012 WL
4514152, *3 (S.D. Ind. 2012) (stating that "[i]f [the need to show that the transactions
involved in a particular case are consumer transactions] alone precluded certification,
there would be no class actions under the FDCPA’”) (internal quotation omitted); Talbott
v. GC Servs. Ltd. P'ship, 191 F.R.D. 99, 106 (W.D. Va. 2000)(stating that
"'determinations of whether each transaction involved a "consumer debt" do not
predominate over issues common to the class.'")(quoting Ballard v. Equifax Check
Services, Inc., 186 F.R.D. 589, 599 n.14 (E.D. Cal. 1999)); Macarz v. Transworld Sys.,
Inc., 193 F.R.D. 46, 57 (D. Conn. 2000) (rejecting the defendant's contention that
definite identification was impossible as a result of defendant's failure to maintain
records that identified the nature of the debt); and Wilborn v. Dun & Bradstreet Corp.,
180 F.R.D. 347, 357 (N.D. Ill. 1998) (also stating that if the need to show the nature of
transaction precluded certification, there would be no FDCPA class actions).

8

Defendant has asked the court to take judicial notice of a later ruling in the Gold case on a
motion for summary judgment. Filing No. 122-2, Defendants’ Request for Judicial Notice in Support of
Defendants’ Opposition to Plaintiff’s Statement of Objections to Magistrate Judge’s Order, Ex. A; Gold v.
Midland Credit Mgmt., Inc., No. 13cv2019, Filing No. 113, Order (N.D. Ca. March 10, 2015). The court
takes judicial notice of the case, has considered it and finds it is not relevant to the issues herein. The
record in the Gold case shows the parties stipulated to decertification after summary judgment was
granted in favor of the defendant on the unrelated issue of whether the defendant was a debt collector.
See id., Filing Nos. 112, Summary Judgment Order (Mar. 10, 2015); 114, Stipulation (Mar. 24, 2015).

14

The FDCPA “applies to the litigating activities of lawyers” and "imposes some
constraints on a lawyer's advocacy."9 Jerman, 559 U.S. at 600. In fact, attorneys are
generally held to a higher standard. See Pollard v. Law Office of Mandy L. Spaulding,
766 F.3d 98, 106-07 (1st Cir. 2014) (stating "[a]n attorney's imprimatur conveys
authority," induces a consumer to act more quickly, and "reinforces the perception that it
threatens immediate litigation"); Campuzano-Burgos v. Midland Credit Mgmt., Inc., 550
F.3d 294, 301 (3d Cir. 2008) (stating “[u]nder the [FDCPA], attorney debt collectors
warrant closer scrutiny because their abusive collection practices "are more egregious
than those of lay collectors" and noting that attorneys have privileges such as the ability
to file suit not applicable to lay debt collectors) (internal quotation omitted); Nielsen v.
Dickerson, 307 F.3d 623, 632 (7th Cir. 2002) (noting that an attorney's letter, with the
implicit message that the attorney has assessed the validity of the debt and is prepared
to take legal action makes the attorney letter a particularly effective method of debt
collection); Avila v. Rubin, 84 F.3d 222, 228-29 (7th Cir. 1996) (recognizing that a
delinquency letter from an attorney conveys authority). Courts have held that an
attorney must have direct and personal involvement in the mailing of the letter—by
reviewing the file to determine whether the letter should be sent, or by approving the
mailing based on recommendations of others—in order for it not to mislead the recipient
as to the nature of his involvement with the debt. See, e.g., Avila, 84 F.3d at 229 (a
debt collection letter from an attorney implies that the attorney supervised or actually

9

"A 1986 amendment applied the FDCPA's substantive prohibitions to litigation activities of
attorneys who regularly engage in consumer debt collection." See Powers, 776 F.3d at 570; Heintz v.
Jenkins, 514 U.S. 291, 294 (1995).

15

controlled the procedures by which the letter had been sent); Clomon v. Jackson, 988
F.2d 1314, 1321 (2nd Cir. 1993) (noting that there will be few, if any, cases in which a
mass-produced collection letter bearing the facsimile of an attorney's signature will
comply with FDCPA requirements that communications must not be false, deceptive, or
misleading because it will frequently be false to the extent that the letter suggests that
an attorney was directly involved in the process by which the letter was prepared and
sent and that the attorney had formed a professional opinion as to how the individual
debtor's case should be handled); Miller v. Wolpoff & Abramson, LLP., 321 F.3d 292,
304 (2nd Cir. 2003) (finding a mere review of basic information such as name, social
security number, address, telephone number, account number and alleged balance due
alone is not the exercise of professional judgment needed concerning the existence of a
valid debt before sending a collection letter—some degree of attorney involvement is
required before a letter will be considered “from an attorney” within the meaning of the
FDCPA).
Under the NCPA “unfair methods of competition and unfair or deceptive acts or
practices in the conduct of any trade or commerce shall be unlawful.” Neb. Rev. St. §
59-1602. The NCPA provides a cause of action to “any person who is injured in his or
her business or property” resulting from a violation. Neb. Rev. St. § 59-1609. Like the
FDCPA, the NCPA is remedial consumer protection statute that is to be liberally
construed. See Kuntzelman v. Avco Fin. Servs. of Neb., Inc., 291 N.W.2d 705, 707
(1980).
III.

DISCUSSION

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The court has conducted a rigorous de novo review of the magistrate judge's
finding and recommendation and the evidence presented in connection with the class
certification issue. The court agrees that the plaintiff has shown that class action is
appropriate.
The common contention among class is that PHM's standard debt collection
leader was misleading in that it failed to state the party that would assume the validity of
the debt and implied an attorney reviewed and supervised the mailing. The misleading
nature of the letter and the adequacy of review are issues pivotal to the lawsuit and
capable of determination “in one stroke.” Dukes, 131 S. Ct. at 2551.

The class

members here have all allegedly suffered the same injury—they received a debt
collection letter that did not specify that the debt would be assumed valid by the debt
collector in violation of the FDCPA, and they received a communication from a debtcollecting attorney that was misleading in that it implied an attorney had reviewed and
verified the debt, when in fact the attorney debt collectors had not done so.
The issue of whether PHM's standardized practices violated the FDCPA and the
NCPA is the most significant issue in this case. No individualized inquiry is necessary
on the issue of liability. This case presents the classic case for treatment as a class
action: that is, the commonality linking the class members is the dispositive question in
the lawsuit. The court is not convinced that determining whether the individuals who
received the subject letters—560 individuals in all—had incurred consumer as opposed
to business debt involves individual issues that predominate over the common
questions involved in this case. Plaintiffs have shown that the task of distinguishing

17

between personal and business debts can be efficiently performed by examining the
defendant's records and/or the underlying documentation for the debts.
Contrary to the defendant's assertions, the need to differentiate between
consumer transactions and business transactions does not render the class
unidentifiable or defeat the predominance requirement.

This court's review of the

evidence shows that the debts were most likely primarily incurred for consumer or
household purposes. The evidence shows that PHM sent the debt collection letter to
the plaintiff on behalf of FIA Card Servs., Inc., Bank of America's credit card processing
arm.

Tyler Grimm testified that most of the accounts he reviewed were consumer

credit-card accounts.

Plaintiff has demonstrated through his declaration that his

financial obligation was incurred on a credit card issued by Bank of America with which
he purchased goods and services primarily for personal or household use.
The information as to the nature of the underlying obligation with respect to other
class members is either in the possession of PHM, or, by defendant's admission, can be
readily obtained from its client, FIA. Both Grimm and Pech testified that the information
could be obtained from FIA by merely asking for it. 10 The plaintiff has shown that it is
sufficiently administratively feasible to identify the class through the defendant's
records.11 The court is persuaded by the rationale expressed in numerous cases that

10

This issue is closely related to the discovery dispute between the parties involving the propriety
of subpoenaing the records of FIA. See Filing No. 115, Plaintiff's Objection To Magistrate Judge's Order
On Motion To Compel, Filing No. 111, Order on Motion To Compel, Filing No. 93, Motion to Compel.
11

Jenkins proposes that whether the class members' alleged credit card debts were incurred for
consumer or business can be determined through a three-step process involving ascertaining whether the
debt was incurred in the name of an individual or a business, reviewing a credit card account to determine
the purchases made with the credit card (purchases of clothing, groceries, medical services and products,
etc., would presumably for personal purposes), and finally by asking class members if the credit card was

18

have held that the need to differentiate business from consumer debt is not an obstacle
to class certification.

See supra at 14-15. That a portion of a debt may be shown to

have been incurred for a business or commercial purpose will not negate a showing that
the primary obligations incurred on the credit cards were for personal or household
expenses. The court finds the plaintiff has met his burden of demonstrating that the
class is ascertainable.
Further, the court is familiar with the experience and competence of proposed
class counsel and finds Proposed class counsel can adequately prosecute the interests
of the class.

Also, plaintiff's claim is typical of the claims of other putative class

members, all of whom received the same allegedly misleading letter. The record also
shows that a similar attorney-review procedure was followed in all the cases.
Further, the court agrees with the magistrate judge's conclusion that a class
action is superior to other methods of adjudication of the controversy. Because of the
ceiling on recovery and the difficulty of proving actual damages, an individual has little
incentive to bring a solo action to vindicate his or her rights. In light of the consumerprotection goals of the FDCPA and NCPA, which permit, even encourage, consumers to
act as private attorneys general to pursue FDCPA claims, the court finds certifying a
reasonably ascertainable FDCPA class for purely statutory damages will serve the
purposes of the Act, which is targeted at abusive debt collector activities.
THEREFORE, IT IS ORDERED:

primarily used for family, household, or business purposes or primarily used for business purposes. Filing
No. 78, Reply Memorandum in Support of Plaintiff’s Motion for Class Certification at 5-14.

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1.

The defendants’ objection (Filing No. 114) to the F&R of the magistrate

judge (Filing No. 110) is overruled.
2.

The Findings and Recommendation of the magistrate judge (Filing No.

110) is adopted and incorporated herein by reference.
3.

The plaintiff’s motion for class certification (Filing No. 41) is granted in part

and denied in part as set forth in the magistrate judge's Findings and Recommendation
(Filing No. 110) and in this order.
4.

A class is certified consisting of:

(i) all persons residing in Nebraska (ii) to whom Defendants Mr. Pech
and/or Pech, Hughes sent, or caused to be sent, a letter in the form of
Exhibit A, (iii) in an attempt to collect a purported obligation which, as
shown by the nature of the alleged obligation, Defendants’ records, or the
records of the original creditors, was primarily for personal, family, or
household purposes.

5.

Defendants’ motion (Filing No. 128) to strike the plaintiff's second

supplemental declaration (Filing No. 103-1) is denied.
DATED this 12th day of June, 2015
BY THE COURT:
s/ Joseph F. Bataillon
Senior United States District Judge

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