SAROZA v. LTD FINANCIAL SERVICES, L.P.
Filing
42
OPINION. Signed by Chief Judge Jose L. Linares on 09/04/2018. (ek)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
NESTOR SAROZA, on behalf ofhimselfand
all others similarly sitttated,
Civil Action No.: 16-6259 (JLL)
OPINION
Plaintiff,
v.
LTD FINANCIAL SERVICES, L.P.,
Defendant.
LINARES, Chief District Judge.
This matter comes before the Court by way of Plaintiff Nestor Saroza’s Motion for Class
Certification. (ECF No. 33). Defendant LTD Financial Services, L.P. has submitted Opposition
(ECF No. 36), to which Plaintiff has replied. (ECF No. 39). The Court decides this matter without
oral argument pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the reasons set
forth below, the Court grants Plaintiffs Motion for Class Certification.
I.
BACKGROUND’
The Court presumes the parties are familiar with the factual background and the allegations
asserted in Plaintiffs Complaint (ECF No. 1) based on the parties’ own involvement in this case.
Accordingly, the Court will set forth the relevant factual and procedural background.
This background is derived from Plaintiff’s Complaint (ECF No. I (“Comph”)) as well as the record submitted by
all parties in support of their respective position with regards to class certification. (ECF Nos. 33, 36, 39).
On October 1, 2016, Plaintiff brought this action on behalf of himself and others similarly
situated. (See general/v Compi.). In his Complaint, Plaintiff alleges Defendant violated the Fair
Debt Collection Practices Act (“FDCPA”). (Id.). In particular, Plaintiff, a consumer as defined
by the FDCPA, received a debt collection “communication” from Defendant, a debt collector as
defined by the FDCPA. (Compl. ¶J 14, 16, 2 1-23). The “communication,” which was in the form
of a letter, contained the following language: “IRS requires certain amounts that are discharged as
a result of the cancellation of debt to be reported on Fonn 1099-C.” (Cornpl.
¶ 25).
According to
Plaintiff, this letter violated the FDCPA because it “provided confusing and incorrect tax
information.” (Compi. J 27-29, 32). As such, Plaintiff asserts that Defendant’s conduct “impeded
[his] ability to make a well-reasoned decision” as it pertained to the outstanding debt. (Cornpl.
¶J
37-38). Accordingly, Plaintiff brought this one count putative class action asserting violations of
the FDCPA. (Cornpl.
¶1 43-57).
Defendant answered Plaintiffs Complaint and the parties proceeded through discovery.
(ECF Nos. 7, 11. 19, 21, 23, 32). Discovery revealed that Defendant maintained detailed records
of the various individuals who received a debt collection letter that contained the aforementioned
language. (ECF No. 33-3 at Ex. C). Specifically, during discovery, Defendant identified 1,151
individuals who received a communication with identical IRS-related language. (Id.).
Accordingly, on July 13, 2018, with leave of Court, Plaintiff filed the subject Motion for
Class Certification, pursuant to Rule 23 of the Federal Rules of Civil Procedure. (See generally
ECF No. 33). Plaintiff argues that, based on the discovery in this case, he can meet all the Rule
23 requirements necessary to certify the Class. (See generally ECF No. 33-1 (“P1. Mov. Br.”)).
Additionally, Plaintiff proposes the following Class Definition:
All consumers located in New Jersey that were sent a letter or notice by
[Defendant] LTD FINANCIAL SERVICES, L.P., during the Class Period,
similar to Exhibit A to the Complaint that included the language, “IRS
requires certain amounts that are discharged as a result of the cancellation
of debt to be reported on a Forn 1099-C.”
(P1. Mov. Br. at 8). Plaintiffs proposed Class Period begins one year prior to the filing of this
matter, i.e., October 1, 2015. (Compl.
¶ 11). Finally, Plaintiff asks this Court to appoint him as
Class Representative and his attorney as Class Counsel. (P1. Mov. Br. at 12-14).
II.
LEGAL STANDARD
“Class certification is proper only ‘if the trial court is satisfied, after a rigorous analysis,
that the prerequisites’ of Rule 23 are met.” In re Hydrogen Peroxide Antitrust Litig., 552 f.3d
305, 309 (3d Cir. 2008) (quoting Geiz Tel. Co. o/Sw. v. Fctlcon, 457 U.S. 147, 161 (1982)). To
meet the prerequisites of Rule 23, a plaintiff must establish both that the four requirements of Rule
23(a) have been met
—
those being nurnerosity, commonality, typicality, and adequacy
—
as well as
that the pleading requirements of Rule 23(b)(l), (2), or (3) have been met. fed. R. Civ. P. 23; see
also Hydrogen Peroxide, 552 f.3d at 309 n.6.
In analyzing whether Rule 23’s requirements have been met, “the district court must make
whatever factual and legal inquiries are necessary and must consider all relevant evidence and
arguments presented by the parties.” Hydrogen Peroxide, 552 F.3d at 307. This is true even if
the class certification inquiry overlaps with the merits of the causes of action. Id. Additionally, if
there is any doubt as to whether the Rule 23 requirements have been met, certification should be
denied, regardless of the area of substantive law. Id. at 321 (discussing the 2003 Amendments t
Rule 23).
3
Rule 23(b)(3) requires a finding “that the questions of law or fact common to the class
members predominate over any questions affecting only individual members [(predominance)],
and that a class action is superior to other available methods for fairly and efficiently adjudicating
the controversy [(superiority)].” Fed. R. Civ. P. 23(b)(3); see also Hydrogen Peroxide, 552 F.3d
at 3 10. “Because the nature of the evidence that will suffice to resolve a question determines
whether the question is common or individual, a district court must formulate some prediction as
to how specific issues will play out [at trial] in order to determine whether common or individual
issues predominate in a given case.” Hydrogen Peroxide. 552 F.3d at 311 (citations and quotations
omitted). “If proof of the essential elements of the cause of action requires individual treatment,
then class certification is unsuitable.” Id. (quoting Newton v. Merrill Lynch, Pierce, fenner &
Smith, Inc., 259 F.3d 154, 172 (3d Cir. 2001)). Therefore, in addition to the four requirements
of Rule 23(a), P]aintiffs in this case bear the burden of establishing that common issues of fact and
law predominate and that a class action is superior.
III.
ANALYSIS
The Court finds that class certification is appropriate in this case, as the record shows that
all the requisite elements for class certification have been met here. However, before the Court
engages in the Rule 23 analysis, the Court first addresses Defendant’s argument that the Class
should not be certified because “Plaintiffs Class action claim cannot prevail on the merits.” (ECF
No. 36 (“Def Opp. Br.”) at 6-1 1). According to Defendant. “[t]he challenged language is not
false, deceptive, or misleading on its face.” (Id. at 6). Defendant goes on to note that the next
sentence after the challenged language reads as follows: “You will receive a copy of the Form
4
1099-C if one is required to be filed with the IRS.” (Id. at 7) (emphasis in original). Relying on
26 U.S.C.
§ 6050P, Defendant notes that the IRS requires debts that are settled in excess of $600
to be reported. (Id.). Hence, Defendant asserts that the statement is truthful and, therefore, Class
Certification is inappropriate.
The Court disagrees with Defendant’s argument.
Consistent with Supreme Court
precedent, this Court must perform a “rigorous analysis” to assure that Plaintiff has met the Rule
23 requirements for Class Certification. Cornetist Corp.
V.
Behrend, 569 U.S. 27, 33 (2013). The
Rule 23 analysis will often overlap with the actual merits of a plaintiff’s case. Id. The Third
Circuit has explained that the analysis of the merits is a “preliminary inquiry” rather than an
ultimate determination of same. Hydrogen Peroxide, 552 f.3d at 317.
As Defendant is aware, this Court must “analyze the communication
giving
rise to the
FDCPA claim ‘from the perspective of the least sophisticated debtor.” Kayrnark v. Bctnk ofArn.,
NA., 783 f.3d 16$, 174 (3d Cir. 2015) (quoting Rosenati v. Unifttnd Corp., 539 F.3d 21$, 221 (3d
Cir. 200$)). “[W]hile the least sophisticated debtor standard protects naive consumers, ‘it also
prevents liability for bizarre or idiosyncratic interpretations of collection notices by preserving a
quotient of reasonableness and presuming a basic level of understanding and willingness to read
with care.” Brow,? v. c’ard Sen. Ctr., 464 f.3d 450, 454 (3d Cir. 2006) (quoting Wilson v.
Qitadrarned Corp., 225 F.3d 350, 354 (3d Cir. 2000)). Here, a reasonable finder of fact could find
that Defendant’s language would be confusing to the least sophisticated debtor. This is because
nowhere within Defendant’s letter is there mention of the $600 threshold that implicates reporting
to the IRS. Thus, the least sophisticated debtor may be confused by the language and when he or
she would be required to file a Form 1099-C with his or her annual tax return. Hence, Plaintiffs
5
allegations, as well as discovery in this case, support a plausible FDCPA violation claim.
Accordingly, Defendant’s “inability to prevail on the merits” argument is flawed.
The Court also notes that the bulk of Defendant’s remaining arguments in opposition to
Class Certification revolves around a theory that the 1,151 identified accounts are “individuals”
and not “consumers.” (See general/v Def. Opp. Br. at 4-28). However, this argument is also does
not prevail. Discovery indicates in this case that is likely that all 1 ,1 51 accounts identified are all
consumer accounts. For example, Plaintiffs sixth interrogatory to Defendant asked Defendant to
State the number of CONS (IA’IERS located in New Jersey that were sent a
letter or notice by [Defendant], during the CLASS PERIOD, similar to [that
which was sent to Plaintiff and attached as] Exhibit A to [Plaintiffs]
Complaint that included the language: “IRS requires certain amounts that
are discharged as a result of the cancellation of debt to be reported on Form
1099-C.”
(ECF No. 33-3 at Ex. C) (emphasis added). In response, Defendant identified 1,151 “individuals.”
Plaintiffs sixth interrogatory specially asked Defendant to identify New Jersey “consumers,” as
defined by the FDCPA. Accordingly, Defendant’s response indicates that some, if not all, 1,151
individuals are consumers.
Additionally, as Plaintiff correctly notes, nothing within the record indicates that Defendant
is in the business of collecting any non-consumer debts. (ECF No. 39 at 8). Indeed, nowhere
within Defendant’s responses to Plaintiffs interrogatories does Defendant explain that it collects
non-consumer debts.
(ECF No. 33-3 at Ex. C).
Furthermore, none of Defendant’s own
submissions tend to show that Defendant is engaged in non-consumer debt collection.
(See
generally ECF No. 36). As a matter of fact, Defendant testified, in a previous Florida litigation
(see Baez v. LTD Financial Servs., L.P., 2016 U.S. Dist. LEXIS 74788 (M.D. Fla. June 8, 2016)),
6
that is has the information and capability of identifying consumer versus non-consumer accounts.
(ECF No. 33-3 at Ex. B). Hence, the Court concludes that at least some, if not all, of 1,151 are
consumer accounts.
This conclusion is based on Defendant’s response to Plaintiffs sixth
interrogatory, its own representations in previous litigation, and the fact that it has not produced
any evidence to contradict same.
A. Numerosity
Rule 23(a)(1) provides that the proposed class must consist of members that are so
“numerous that joinder of all members is impracticable.”
Fed. R. Civ. P. 23(a)(l).
Notwithstanding, “‘impracticability’ does not mean irnpossibility.” In re Lucent Techs., Inc. Sec.
Litig. (“LucentT’), 307 F. Supp. 2d 633, 640 (D.N.J. 2004). “To meet the numerosity requirement,
class representatives must demonstrate only that ‘common sense’ suggests that it would be difficult
or inconvenient to join all class members.” In re Prudential Ins. Co. of Am. Sales Prctctices
Litig., (“Prudential T’), 962 F. Supp. 450, 510 (D.N.J. 1997) (citing Lerch v. Citizens first
Bancorp,
Inc., 144 F.R.D. 247, 250 (D.N.J. 1992)), aff’d, 148 F.3d 283 (3d Cir. 199$) (“Prudential
IT’),
denied, 525 U.S. 1114 (1999).
cert.
When dealing with a large class, that numbers in the hundreds, joinder will be
impracticable. Id. (quoting I Herbert Newberg & Alba Conte, Newberg on Class Actions
(“Newberg”)
§ 3.05, at 3-25) (stating that even a number less than one hundred will ctsctally satisfy
the numerosity requirement of Rule 23(a)(l)).
Additionally, the Third Circuit has held that
“generally if the named plaintiff demonstrates that the potential nttmber of plaintiff exceeds 40,
the first prong of Rule 23(a) has been met.” Stewart v.Abraham, 275 F.3d 220, 226-27 (3d Cir.
7
2001) (emphasis added).
Here. joinder of all Class Members is impracticable because
approximately 1,200 potential Class Members have been identified. Accordingly, Rule 23(a)(1) is
satisfied.
B. Commonality and Predominance
It is customary in Rule 23(b)(3) class actions for courts
to
jointly apply the Rule
23(a)(2) commonality requirement and the Rule 23(b)(3) predominance tests. Pritdentiall, 962 F.
Supp. at 510
(citing
I Newberg
§ 3.13, at 3-71). This approach has been approved by the Third
Circuit. See In re Warfarin Sodhtm Antitrust Litig., 391 F.3d 516, 528 (3d Cir. 2004) (“the Rule
23(b)(3) predominance requirement. which is far more demanding, incorporates the Rule
23(a) commonality requirement
citations omitted); Georgine
i’.
Accordingly. we analyze the two factors together.”) (internal
Amchem Prods., 83 F.3d 610, 626 (3d Cir. 1996).
Another prerequisite to a class action is that “there are questions of law or fact common to
the class.” fed. R. Civ. P. 23(a)(2). “This requirement is satisfied ‘if the named plaintiffs share
at least one question of fact or law with the grievances of the prospective class.” PrttdentialL 962
F. Supp. at 510 (quoting Baby A1eal v. Cctsey, 43 F.3d 48, 56 (3d Cir. 1994) (citation omitted)).
Here, the commonality requirement is met because there are several common questions, including
the following:
a. Whether Defendant is a debt collector pursuant to the FDCPA;
b. Whether Defendant violated the FDCPA, 15 U.S.C. § 1692 etseq.; and
c. Whether Defendant’s letters sent to Plaintiff, and those similarly
situated, contained false, misleading, and/or deceptive language.
8
for a class that is certified under Rule 23(b)(3), which is what Plaintiff is seeking here, the
Court must find that these common questions predominate over individual issues. Prttdentiat I,
“To evaluate predominance, the Court must determine whether the
962 F. Supp. at 510-il.
efficiencies gained by class resolution of the common issues are outweighed by individual issues
presented for adjudication.” Id. at 511 (citing 1 Newberg
§ 4.25, at 4-81 to 4-86). Courts have
readily held that even a few common issues can satisfy this requirement where their resolution will
significantly advance the litigation. Id. (gathering authority). for example, in cases where it is
alleged that the defendant made similar misrepresentations, non-disclosures, or engaged in a
common course of conduct, courts have found that said conduct satisfies the commonality and
predominance requirements. Id. (gathering authority). Predominance has been found to not be
met in cases that “required individualized proof of ‘highly case-specific factual isscies.” Elkijis v.
Equitable Life Ins.
Co.,
1998) (quoting Jackson
v.
1998 U.S. Dist. LEXIS 1557, at *49 (M.D. Fla. Jan. 27,
Motel 6 Multipurpose,
130
F.3d 999,
1004-05
(11th Cir.
1997) (involving whether Motel 6 had a practice or policy of racial discrimination)). Hence,
“predominance is satisfied when a legal claim is ‘capable of proof at trial through evidence that is
common to the class rather than individual to its members.” Martinez-Santiago v. Pub. Storcige,
312 F.R.D. 380, 389 (D.N.J. 2015).
Here, the predominance requirement is also satisfied.
This is because there is no
individualized fact-sensitive inquiry necessary for each Class Member,
nor
will there be any
“highly case-specific factual issues.” Rather, as noted above, the inquiry in this matter will be
limited to whether the challenged language did in fact violate FDCPA and who received same,
consistent with the proposed Class Definition. As such, the Court finds that there are no individual
9
inquiries necessary and the common issues in this matter outweigh the individual issues, which
are non-existent. Hence, Plaintiff satisfies the predominance reqctirement.
C. Typicality
Rule 23 reqtiires also that “the claims or defenses of the representative parties are typical
of the claims or defenses of the class.” fed. R. Civ. P. 23(a)(3). In essence, “the typicality
requirement is said to limit the class claims to those fairly encompassed by the named plaintiffs
claims.” Gen. Tel. Co. v. EEOC, 446 U.S. 318, 330 (1980). “Typicality lies where there is a strong
similarity of legal theories or where the claims of the class representatives and the class members
arise from the same alleged course of conduct by the defendant.” Prttdential I, 962 F. Supp. at
518 (citations omitted). Hence, even where there may be factual differences between the claims
of the class representatives and other class members, it does not rule out a finding of
typicality. Litcentl, 307 F. Supp. 2d at 640 (citing Pritdentictlll, 148 F.3d at 310).
The Court concludes that the typicality requirement of Rule 23 is also met in this case.
This is because the legal theory that underlies Plaintiffs claims is typical of the claims asserted by
the Class Members. Specifically, Plaintiff asserts that Defendant violated the FDCPA when it sent
him a letter that contained the aforementioned challenged language because same was confusing
and/or misleading to the least sophisticated debtor.
Members’ claims.
This claim is identical to all the Class
Hence, the common question relating to, as well as the common claim
steinming from, said letters, which is typical to Plaintiff as well as the Class Members, is whether
or not Defendant violated the FDCPA when it sent a collection letter that contained the challenged
language. Indeed, there is an extremely similar, if not identical, legal theory underlying Plaintiffs
10
claims and those of the Class Members. Thus, the Coui-t finds the typicality requirement of Rule
23 satisfied in this case.
D. Adequacy of Representation
As for the adequacy of representation factor, Rule 23(a)(4) requires that “the representative
parties [must] fairly and adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4).
Courts look at two factors: “(1) the plaintiffs attorney must be qualified, experienced, and
generally able to conduct the proposed litigation, and (2) the plaintiff must not have interests
antagonistic to those of the class.” Prttdentiat I, 962 F. Supp. at 519. A party challenging the
Class’ representation has the burden to prove that the representation is not adequate. Id.
The aforementioned requirements have been met in this case. First, the Court notes that
Class Counsel, Mr. Lawrence Hersh, Esq., is more than an adequate representative of the Class.
This is clear based on Mr. Hersh’s Certification submitted in support of this Motion. (See ECF
No. 33-3). Therein, Class Counsel explains that he has been practicing law since 198$ and has
worked for at least one well-known and prominent law firm. (Id. at ¶ 10). Class Counsel also lists
a host of additional credentials, including the fact that he is a registered patent attorney. (Id.
¶
12).
Moreover, Class Counsel certifies that he is well versed in the field of FDCPA law, and has also
been appointed as class counsel in two New Jersey FDCPA cases.
(Id.
Nepomuceno v. Midland Credit Mgrn ‘t, No. 14-5719 (D.N.J. June 13, 2016);
¶J
14-18) (citing
Shumakerv. Vengroff
Williams, Inc., MID-L-5367-15 (N.J. Super. Ct. Law Div. 2015)). Finally, the named Plaintiff is
an appropriate Class Representative, as he has no interest which is antagonistic to the rest of the
Class Members and has expressed his willingness to represent them.
11
The Court rejects Defendant’s arguments that both Plaintiff and Class Counsel are
inadequate. (Def. Opp. Br. at 24-27). According to Defendant, Plaintiff is inadequate because
“his FDCPA claims are not common or typical of the other putative 1,151 individuals.” (Id. at
25). However, as explained above, the Court already rejected this argument and has found that
Plaintiffs claims are in fact
Defendant.
common
and typical to those of the 1,151 individuals identified by
The Court also i-ejects Defendant’s argument that “Plaintiff is not an adequate class
representative because he will ‘lack the same financial stake as the other members of the class’
and ‘have different incentives in terms of [sic] much time, energy, and money he is willing to
spend.” (Id.). Defendant makes this assertion without any citation to the record to support its
position. Indeed, Defendant fails to explain how Plaintiff will have a different financial stake or
why he would be incentivized to act in a manner that would be contrary to the benefit of the other
Class Members. The Court sees nothing in the record to support the assertion that Plaintiff has
any interest that is antagonistic to the other Class Members. Accordingly, the Court finds that
Plaintiff is in fact an adequate Class Representative.
Finally, the Court is not persuaded by Defendant’s arguments in opposition to appointing
Mr. Hersh as Class Counsel. According to Defendant, Class Counsel has “failed to meet various
case management deadlines.” (Id. at 25-26). Defendant goes on to list a few instances where Mr.
Hersh allegedly violated case management orders. (Id. at 26). However, none of these instances
rebut the fact Mr. Hersh is well versed in class actions and/or FDCPA matters. As noted above,
Mr. Hersh has listed a significant amount of experience such that he meets the requirements to be
appointed as Class Counsel. Defendant cites to no, nor has this Court found any, case law that
supports Defendant’s position that a failure to comply with a case management order renders an
12
attorney incapable of serving as an adeqctate Class Counsel. Accordingly, the Court finds Mr.
Hersh “qualified, experienced, and generally able to conduct the proposed litigation,” and,
therefore, appoints him as Class Counsel.
F. Superiority
Having found all four requirements of Rule 23(a) satisfied, the Court turns its attention to
Rule 23(b)(3), which requires “that a class action [be] supetior to other available methods for the
fair and efficient adjudication of the controversy.” Fed. R. Civ. P. 23(b)(3). The Rule provides
the Court with four non-exclusive factors to aid in its superiority determination:
(I) the interest of individual members of the class in individually controlling
the prosecution of the action; (2) the extent of litigation commenced
elsewhere by class members; (3) the desirability of concentrating claims in
a given forum; and (4) the management difficulties likely to be encountered
in pursuing the class action.
Prudential 1, 962 F. Supp. at 522.
Here, since the financial hanu to most of the Class Members is relatively small,
very few individuals, if any, would have an interest or ability to pursue their own individual
case. Along the same thought process, it is unlikely that the individual Class Members
would have the resources to pursue successful litigation on their own, partly because the
cost of litigating separate actions would be far more than the amount each individual Class
Member would recover. Thus, the Court finds that a class action is a superior method of
adjudicating the controversy.
IV.
CONCLUSION
13
________________
for the aforementioned reasons. Plaintiffs Motion for Class Certification is hereby
granted. An appropriate Order, which includes the above espoused Class definition, accompanies
this Opinion.
DATED:
201$
—
JOS/
14
LI ARE
Judge, United States District Court
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