ABRAHAM et al v. OCWEN LOAN SERVICING, LLC

Filing 83

MEMORANDUM AND ORDER THAT PLAINTIFF'S MOTION FOR LEAVE TO FILE SUR-REPLY IS GRANTED. THE MOTION OF DEFENDANT OCWEN LOAN SERVICING, LLC TO STRIKE PORTIONS OF THE BECKER REPORT AND REFERENCES TO THE BECKER REPORT IN PLAINTIFFS MOTION FOR CLASS CER TIFICATION IS DENIED. PLAINTIFFS MOTION TO CERTIFY CLASS IS DENIED. THE CONSENT MOTION TO SEAL DEFENDANT OCWEN LOAN SERVICING, LLC'S ASSENTED TO MOTION FOR LEAVE TO FILE UNDER SEAL IS GRANTED; ETC.. SIGNED BY HONORABLE JOHN R. PADOVA ON 6/26/17. 6/26/17 ENTERED AND E-MAILED.(jl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
LISA A. ABRAHAM, LISA CAVE, SCOTT
CAVE, LEE ANN KAMINSKI, and MARK E.
KAMINSKI, on behalf of themselves and all
others similarly situated,
Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC,
Defendant.

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CIVIL ACTION

No. 14-4977

MEMORANDUM
PADOVA, J.

June 26, 2017

TABLE OF CONTENTS

I.

INTRODUCTION ................................................................................................................... 3

II. BACKGROUND ..................................................................................................................... 3
III.

THE CLASS CERTIFICATION RECORD ........................................................................ 5

A. Background Regarding Ocwen’s In-House Balloon Loan Modifications and its
Documentation Systems .............................................................................................................. 5
B. The Class Representatives ................................................................................................... 7
1.

Plaintiffs Lisa and Scott Cave .......................................................................................... 7

2.

Plaintiff Lisa A. Abraham .............................................................................................. 10

3.

Plaintiffs Lee Ann and Mark E. Kaminski (the “Kaminskis”)....................................... 14

C. Expert Evidence ................................................................................................................. 18
1.

Plaintiffs’ Expert Dr. Brian C. Becker ........................................................................... 18

2.

Defendant’s Expert Joseph J. Floyd ............................................................................... 24

3.

Dr. Becker’s Reply to the Floyd Report ......................................................................... 30

4.

Floyd’s Supplemental Report ......................................................................................... 33

IV.

OCWEN’S MOTION TO STRIKE ................................................................................... 36

V. THE CLASS CERTIFICATION MOTION .......................................................................... 40
A. Ocwen’s Preliminary Issues on Loss and Damages .......................................................... 41
1.

Plaintiffs’ Theory of Loss .............................................................................................. 41

2.

Becker’s Model Cannot Be Common Evidence ............................................................ 47

3.

Becker’s Theory of Harm is not Supported by the Record ............................................ 51

B. Ocwen’s Preliminary Issues on the Proposed Class Definitions ....................................... 59
1.

The Pennsylvania and New Jersey Classes are Overbroad ............................................ 59

2.

Time-barred Claims........................................................................................................ 63

3.

The FDCPA Class Definition is Both Flawed and Overbroad....................................... 65

4.

Entitlement to Injunctive Relief ..................................................................................... 71

C. Cohesiveness of the NJCFA Class ..................................................................................... 80
1.

Issues Involving Ascertainable Loss and Damages ....................................................... 83

2.

Issues Involving the Crafting of Injunctive Relief ......................................................... 84

3.

Rescission is an Inherently Individualized Form of Relief ............................................ 85

4.

Disparate Factual Circumstances ................................................................................... 88

D. Ascertainability of a Rule 23(b)(3) Class .......................................................................... 89
E. Rule 23(a) Requirements ................................................................................................... 96
1.

Numerosity ..................................................................................................................... 96

2.

Commonality .................................................................................................................. 99

3.

Typicality ..................................................................................................................... 101

4.

Adequacy...................................................................................................................... 106

F.

Rule 23(b)(3) Predominance and Superiority Requirements ........................................... 107
1.
2.

Causation ...................................................................................................................... 113

3.
VII.

Ascertainable loss ......................................................................................................... 111

Reliance ........................................................................................................................ 119
CONCLUSION ................................................................................................................ 121

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I.

INTRODUCTION
Plaintiffs Lisa A. Abraham, Lisa and Scott Cave, and Lee Ann and Mark E. Kaminski

filed this class action suit against Defendant Ocwen Loan Servicing, LLC (“Ocwen”) alleging
Ocwen violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law
(“UTPCPL”), 73 Pa. Stat. § 201-3, the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C.
§ 1692 et seq., and the New Jersey Consumer Fraud Act (“NJCFA”), N.J.S.A. § 56.8-1, et seq.
They seek to represent classes of similarly situated Pennsylvania and New Jersey homeowners
who have entered into a standard form in-house loan modification agreement with Ocwen that
contained a “Balloon Disclosure” provision that allegedly did not disclose the amount of the
balloon payment. Presently pending are Plaintiffs’ motion to certify three classes, one class for
each statutory claim. Also pending is a Motion by Ocwen to strike portions of Plaintiffs’ expert
report. For the following reasons, the Motion to Strike is denied. Additionally, after rigorous
analysis of the expert submissions, the class certification record, and the arguments of the
parties, the Motion for Class Certification is also denied.

II.

BACKGROUND
Plaintiffs allege that Ocwen violated the UTPCPL, FDCPA and NJCFA by entering into

standard form-written in-house loan modification agreements with class members that contain a
uniform Balloon Disclosure provision that is unfair, deceptive, and misleading because it does
not disclose: (1) the amount of the balloon payment that the borrower will owe at the end of the
term of the loan; (2) the method by which such a balloon payment is calculated; and (3) the
amortization term of the loan and whether it had been changed by the modification. Ocwen’s
Balloon Disclosure states only: “The loan modification for which you have applied contains a
balloon provision. This means that even if you make all payments full and on time, the loan will
3

not be paid in full by the final payment date.” (See Sept. 2, 2016 Declaration of Eric Lechtzin
(“Lechtzin Decl.”) Ex. 4 at Ocwen001040). Plaintiffs assert that this language fails to disclose
the information borrowers need to make informed financial decisions.
Pursuant to Rule 23 of the Federal Rules of Civil Procedure, Plaintiffs move to certify 1 a
Pennsylvania Class represented by Plaintiffs Lisa Abraham, Lisa Cave and Scott Cave consisting
of:
All Pennsylvania homeowners whose mortgage loans have been serviced by
Ocwen, and who have entered into a standard form template Loan Modification
Agreement with Ocwen on or after February 14, 2007 that contains a “Balloon
Disclosure” provision which does not disclose the amount of the balloon payment
that the borrower will owe at the end of the term of the loan (the “Pennsylvania
Class”).
a New Jersey Class represented by Plaintiffs Lee Ann Kaminksi and Mark E. Kaminski
consisting of:
All New Jersey homeowners whose mortgage loans have been serviced by
Ocwen, and who have entered into a standard form template Loan Modification
Agreement with Ocwen on or after February 25, 2009 that contains a “Balloon
Disclosure” provision which does not disclose the amount of the balloon payment
that the borrower will owe at the end of the term of the loan (the “New Jersey
Class”).
and a FDCPA Class represented by Plaintiffs Lisa Cave and Scott Cave consisting of:
All Pennsylvania and New Jersey homeowners for whom servicing of their
mortgage loans was transferred to Ocwen at a time when such homeowners were
in default on their loans, and to whom Ocwen sent a standard form template Loan
Modification Agreement with Ocwen on or after July 21, 2010 that contains a
“Balloon Disclosure” provision which does not disclose the amount of the balloon
payment that the borrower will owe at the end of the term of the loan (the
“FDCPA Class”).

1

Plaintiffs have narrowed the definitions of the Classes from the definitions set forth in
the Second Amended Complaint (“SAC”) (Docket Entry #50) to limit the instant Motion for
Class Certification to borrowers who received in-house loan modification agreements based
upon standardized form templates.
4

(Br. in Support of Pls.’ Mot. for Class Cert. (“Pls.’ Mem.”) (Docket Entry #56-1) at 2.) Plaintiffs
seek certification of the Pennsylvania and New Jersey Classes under Rule 23(b)(2) in order to
obtain injunctive relief pursuant to the UTPCPL and NJCFA. Plaintiffs also seek certification of
all three Classes under Rule 23(b)(3) for their actual and statutory damages as provided by the
UTPCPL, NJCFA and FDCPA.

III.

THE CLASS CERTIFICATION RECORD
A.

Background Regarding Ocwen’s In-House Balloon Loan Modifications and its
Documentation Systems

The balloon modification agreements at issue in this case originate from Ocwen’s “Loan
Resolution Module” or “LRM” computer system. (Lechtzin Decl. Ex. 3, October 28, 2015
Deposition of Max Nieves (“Nieves Tr.”) at 31-32.) Ocwen inputs borrower data for its in-house
loan modifications, including income data, into the LRM. (Nieves Tr. at 32; Lechtzin Decl. Ex.
10, October 2, 2015 Deposition of Rashad Blanchard (“Blanchard Tr.”) at 26.) The data in the
LRM also includes information about the original loan, such as the principal amount of the loan,
the interest rate, and the term of the loan. (Blanchard Tr. at 27, 69-71, 121-24.) The LRM also
contains data or rules (such as restrictions on loan modifications) culled from the pooling and
servicing agreements between Ocwen and the owners or investors in the loans. (Nieves Tr. at
46-50.) Ocwen uses the borrower and loan data in LRM to generate in-house loan
modification agreements based upon blank modification agreement templates, which are
identifiable by unique version numbers or codes. (See id. at 30, 38, 140-44.) Ocwen runs the
loan and borrower data through a “resolution waterfall,” which is an “algorithm within [the]

5

LRM that tells [Ocwen] what the optimal resolution is . . . versus taking it to foreclosure. . . .”
(Id. at 50-52.)
In order to create a modification agreement that is sent to a borrower, Ocwen uses the
LRM system which populates “merged fields” within the agreement template with data such as
the borrower’s name, the property address, the principal balance of the modified loan, the
modified interest rate, the modification effective date, the first payment date, and the loan
maturity date. (Id. at 36-37; Lechtzin Decl., Exs. 4-6, 22-25 (exemplars of templates).) Ocwen
stores copies of all modification agreements that have been accepted by borrowers on Ocwen’s
Central Imaging System or “CIS.” (Nieves Tr. at 34.)
Ocwen’s main loan servicing platform is called “RealServicing.” (Blanchard Tr. at 45.)
Certain information in the LRM is automatically saved in RealServicing. (Nieves Tr. at 35.)
RealServicing also contains a comment log and spreadsheet data that includes loan transaction or
payment histories, amortization tables and loan terms (e.g., interest rate, first payment date,
maturity date, and amortization term). (Blanchard Tr. at 69, 72, 106-09.) Ocwen also records
the identity of the investor in every loan serviced by Ocwen (i.e., the trusts that hold the loans) in
RealServicing. (Id. at 96-98.)
Prior to 2014, Ocwen’s standard template Balloon Disclosure did not disclose the dollar
amount of any balloon payment due at the loan’s maturity date. (Nieves Tr. at 115-16, 147, 19192.) Ocwen’s training manuals from this time period stated: “The agreements will never
indicate the balloon amount.” (Id. at 191, 197; Lechtzin Decl. Ex. 9 (Ocwen Loss Mitigation
Manual at Ocwen010223.)

Similarly, scripting tools utilized by Ocwen representatives

instructed them to answer the question, “What is my balloon at maturity?” by answering: “We
cannot provide a balloon amount which will be due at maturity as the remaining balance

6

becomes the balloon amount.” (Nieves Tr. at 189; Lechtzin Decl. Ex. 8 (Ocwen CCC Best
Practices CCC Resolutions Manual) at Ocwen011487; id. Ex. 9 (Ocwen Customer Care Center
Loss Mitigation Manual) at Ocwen010223.)

However, the same manuals also instruct

representatives that, if an “estimated balloon payment” is reflected in the system for the
borrower, the representative should “advise [the borrower] of the same, as long as you disclose it
is only an estimate [and] [t]he balloon amount depends on how the customer makes the
payments.” (Id.) Ocwen ceased using the balloon modification templates at issue in this case in
late 2013 or early 2014. (Nieves Tr. at 40-42, 62-65.) Since that time, all Ocwen balloon
disclosures state a minimum dollar amount for the balloon payment due at the maturity of the
loan. (Id. at 42, 64-65, 66-72 (identifying blank balloon modification templates).)
B.

The Class Representatives
1.

Plaintiffs Lisa and Scott Cave

Lisa and Scott Cave (“the Caves”), who seek to represent both the Pennsylvania and
FDCPA Classes, are owners of a home located at 491 North Mill Road, Kennett Square,
Pennsylvania, which they purchased in December 2003 for $175,000. (Lechtzin Decl. Ex. 26,
June 24, 2014 Deposition of Scott Cave (“S. Cave Tr.”) at 49, 83.) On November 23, 2005, the
Caves refinanced their home with a 30-year mortgage loan from Saxon Mortgage, Inc. in the
amount of $236,300, which they were required to repay at an annual interest rate of 8.650
percent.

(Lechtzin Decl. Ex. 28, November 23, 2005 Note; Ex. 29 November 23, 2005

Mortgage.) Under the terms of this loan, the Caves’ monthly payment of principal and interest
was $1,842.12. (Id.)
In August 2009, after falling behind on their mortgage payments, the Caves applied to
Saxon for a loan modification under the Home Affordable Mortgage Program (“HAMP”). (S.

7

Cave Tr. at 429-31.) By letter dated April 21, 2011, Saxon advised the Caves that the servicing
of their mortgage was being transferred to Ocwen, effective May 16, 2011. (Lechtzin Decl. Ex.
30.) At the time Ocwen assumed servicing of the Caves’ loan in May 2011, the Caves were in
default on their loan.

(Joint Submission of Material Facts (Docket Entry # 78) ¶ 15.)

Specifically, the Caves’ loan was “due for November 2009,” according to an Ocwen Rule
30(b)(6) witness. (Lechtzin Decl. at Ex. 19, December 20, 2013 Deposition of Paul Myers
(“Myers Tr.”) at 43; Ex. 21, Ocwen Letter of May 19, 2011.) In June 2011, Ocwen sent the
Caves a HAMP solicitation letter, and on June 23, 2011, Ocwen received the Caves’ HAMP
document package. (Myers Tr. at 53-55.) Ocwen reviewed the Caves for a HAMP modification
and sent them a written notice of denial on June 25, 2011. (Id. at 56.)
Also in June 2011, Ocwen sent the Caves an in-house loan modification agreement with
the Balloon Disclosure provision at issue here. (Id. at 58.) Under the terms of the proposed
Cave Modification Agreement, the principal balance increased from $236,300 to $278,203, the
interest rate for the first 60 months was 2 percent, and the rate increased to 4.5 percent for the
remaining term of the loan. (Id. at 72-73; Nieves Tr. at 123-24; Ex. 20, June 28, 2011 Loan
Modification Agreement (“Cave Modification Agreement”).)

Under the proposed Cave

Modification Agreement, the monthly principal and interest payment for the first 60 months is
$1,000.02.

(Myers Tr. at 76.)

The Cave Modification Agreement includes a “Balloon

Disclosure” that is substantially similar to the modification agreements entered into by all other
Pennsylvania Class members, which provides:
The loan modification for which you have applied contains a balloon provision.
This means that even if you make all payments full and on time, the loan will not
be paid in full by the final payment date. A single balloon payment will be due
and payable in full on 12/1/35, provided that all payments are made in accordance
with the loan terms, and the interest rate does not change for the entire loan term.

8

(Lechtzin Decl. Ex. 20.) Ocwen’s 30(b)(6) witness Paul Myers testified that all of Ocwen’s loan
modification agreements had disclosures similar to those made in the Cave Modification
Agreement, which did not state the amount of the balloon payment. (Myers Tr. at 100-04.)
Before the Caves accepted the Cave Modification Agreement, Lisa Cave called Ocwen to
inquire about the amount of the balloon, but, she testified, “[t]hey weren’t able to give me an
amount.” (Lechtzin Decl. Ex. 32 June 23, 2014 Deposition of Lisa Cave (“L. Cave Tr.”) vol. I
at 302.) The Caves accepted Ocwen’s offer by executing the Cave Modification Agreement and
returning the signed agreement to Ocwen along with the requested initial payment of $1,285.39,
which Ocwen accepted and retained. (Id. at 302-03.) Under the Cave Modification Agreement,
Ocwen extended the amortization term from 360 months to 374 months, commencing on
September 1, 2011, the first payment date of the modification.

(Myers Tr. at 86; Cave

Modification Agreement; Nieves Tr. at 121-22.) Ocwen admits that the Cave Modification
Agreement does not disclose this change in the amortization term from 360 months to 374
months. (Nieves Tr. at 124.) Ocwen did not provide the Caves with an amortization schedule
that would have revealed this change in the amortization term of the Caves’ loan. (Myers Tr. at
78.) The Cave Modification Agreement provides that “[a]ll covenants, agreements, stipulations,
and conditions in your Note and Mortgage will remain in full force and effect, except as herein
modified. . . .” (Cave Modification Agreement ¶ 8(b).) Plaintiffs allege that this provision of the
Cave Modification Agreement was misleading and deceptive in light of Ocwen’s failure to
disclose the change to the amortization period of the Caves’ loan. (Pl. Mem. at 9.)
Ocwen admits that the Cave Modification Agreement does not state the amount of the
balloon payment due at the maturity of their loan. (Myers Tr. at 75; Nieves Tr. at 124.)
However, at the time the Caves accepted the Cave Modification Agreement, Ocwen knew that

9

the Caves would be required to make a balloon payment in the amount of $93,524.46 at the
loan’s maturity date if they made all of their scheduled payments in full and on time. (Myers Tr.
at 75, 80-81.)

Ocwen admits that the Cave Modification Agreement does not include

instructions as to how the Caves could have calculated the amount of the balloon they will owe
at their loan’s maturity date. (Nieves Tr. at 127.) However, Ocwen 30(b)(6) witness Myers
explained in general terms the steps that one would need to perform to calculate the amount of
the balloon, stating:
You determine the amortization portion. I believe in this case we can certainly
look at the comments. I can tell you what it was amortized over. It was amortized
over 374 months. You take the principal balance, the 278,000 number, you
amortize that. You initially do the amortization schedule over 374 months. You
take a look after month 60, what’s the principal balance. Then turn around and do
a second one starting payment 61 through 374 and that would give you the
amortization over the balance.
(Myers Tr. at 86.) Ocwen 30(b)(6) witness Nieves provided a similar explanation about how to
calculate the amount of the balloon. (Nieves Tr. at 124-127.)
Scott Cave testified that “if I would have been told up front that it [the balloon] was
$90,000 I would have walked away.” (S. Cave Tr. at 70, 218-19.) Lisa Cave testified that
because the balloon amount was not disclosed, “I wasn’t given the opportunity to plan properly
financially. According to the information I have now, if I were to have paid the entire mortgage
and then had to pay the balloon payment, I would have had to take out another loan somewhere
in my 60s.” (L. Cave Tr. vol. II at 323.)
2.

Plaintiff Lisa A. Abraham

Lisa Abraham, who seeks to represent the Pennsylvania and the FDCPA Classes, is the
owner of a home located at 31 Clay Valley Road, Fleetwood, Pennsylvania, which has been her
primary residence since 1992. (Lechtzin Decl. Ex. 14, June 18, 2007 Abraham Note; Lechtzin
10

Decl. Ex. 34, August 28, 2015 Deposition of Lisa A. Abraham (“Abraham Tr.”) at 43, 59-60.)
On June 18, 2007, Abraham refinanced her home with a 30-year Fixed Rate Stepped Payment
Note in the amount of $263,500, with a maturity date of July 1, 2037. (Abraham Tr. at 148-54;
Ex. 14.) Under the terms of the loan, Abraham was to pay interest only at a rate of 8.590 percent
for the first 120 months. (Blanchard Tr. at 182-84.) The initial monthly payment under this loan
was $1,949.76, however after the first 120 months, the monthly payment would increase to
$2,196.79. (Abraham Tr. at 154-55; Ex. 14.) There was no balloon payment provision under
this loan. (Blanchard Tr. at 210.)
In August 2010, Ms. Abraham was going through a divorce and fell behind on her loan
payments. (Abraham Tr. at 170-73.) In order to bring her loan current and resolve pending
litigation, she entered into a Settlement and Release Agreement with Ocwen, which modified the
terms of her loan.

(Id. at 180-88; Lechtzin Decl. Ex. 18, June 2, 2010 Ocwen/Abraham

Settlement and Release Agreement (“Release”).) Under the terms of this agreement, Ocwen
increased the principal amount of her loan to $322,838.81, the interest rate was fixed at 6.4
percent, and her new monthly principal and interest payment increased to $1,867.13. (Release ¶¶
1b-d.) Unlike the modification agreements at issue in this case, Abraham’s Release expressly
stated the amortization term applicable to her modified loan: “this balloon modification is
amortized as if the repayment period was 480 months. . . .” (Id. ¶ 1e; Abraham Tr. at 205.)
In February 2011, Ms. Abraham suffered a stroke and again fell behind on her monthly
loan payments. 2 (Abraham Tr. at 210-12.) By letter dated November 23, 2012, Ocwen offered
Abraham a new Loan Modification Agreement that: (1) reduced the principal balance of her

2

We note that, while there is evidence that Abraham twice fell behind on her payments,
no evidence has been presented that any loan executed by Abraham was “in default” at the time
Ocwen acquired it.
11

loan to $236,040.80; (2) forgave approximately $91,000.00 of her total outstanding debt; (3)
reduced her monthly principal and interest from $1,867.13 to $714.79; (4) lowered her total
monthly payment, including escrow items, from $2,535.16 to $1,319.75; and (5) lowered the
interest rate from 6.4% to 2.0%.

(Lechtzin Decl. Ex. 15, November 23, 2012 Proposed

Modification Agreement (“Proposed Modification Agreement”); Blanchard Tr. at 184-85, 19699.) The Agreement changed the amortization period of the loan to 480 months from 360
months. (Blanchard Tr. 229-31.)
The Proposed Modification Agreement is based upon a standard template document,
which can be identified by its version number, and which Ocwen has used to modify mortgages
on properties located in Pennsylvania.

(Nieves Tr. at 60-61.)

The “Balloon Disclosure”

provision in the Abraham Modification Agreement provides:
The loan modification for which you have applied contains a balloon provision.
This means that even if you make all payments full and on time, the loan will not
be paid in full by the final payment date. A single balloon payment will be due
and payable in full on 7/1/37, provided that all payments are made in accordance
with the loan terms, and the interest rate does not change for the entire loan term.
(Proposed Modification Agreement.) Ms. Abraham accepted Ocwen’s offer by executing the
Proposed Modification Agreement and returning it to Ocwen.

(Blanchard Tr. at 186-87;

Lechtzin Decl. Ex. 16, executed Abraham Modification Agreement.) At the time Abraham
signed the Modification Agreement, she did not know the amount of the balloon payment she
would owe at the loan’s maturity. (Abraham Tr. at 248-49.)
Ocwen admits that the Abraham Modification Agreement does not state the amount of
the balloon payment due at the maturity of her loan. (Blanchard Tr. at 210-11; Lechtzin Decl.
Ex. 17, Ocwen Response to Request for Admission (“Ocwen Abraham Admission”) No. 12.)
Ocwen also admits that it had determined that the estimated balloon payment amount was

12

projected to be $114,236.82 at the time of the loan’s maturity date, provided Abraham made all
scheduled monthly payments due under the Abraham Modification Agreement. (Blanchard Tr.
at 212; Ocwen Abraham Admission No. 14.) According to Ocwen’s records of a phone call with
Ms. Abraham on February 11, 2014, an Ocwen representative informed her orally that her
balloon amount is at least $114,236.82. (Blanchard Tr. at 190-92, 212.) Abraham recalls that
when she asked the representative about the amount of the balloon, he said: “I’m not real sure.
This is not set in stone.” (Abraham Tr. at 248-49, 298-99.)
Ocwen admits that that the Abraham Modification Agreement did not include an
amortization schedule. (Ocwen Abraham Admission No. 7.) Ocwen further admits that “neither
the ‘Balloon Disclosure’ term set forth at Paragraph 5 on Page 2 of the Abraham Modification
Agreement, nor the Balloon Disclosure set forth at Page 4 of the Abraham Modification
Agreement, states the method by which the balloon payment that would be due at the loan’s
maturity date of July 1, 2037 will be calculated.” (Ocwen Abraham Admission No. 13; Nieves
Tr. at 88.) Moreover, “Ocwen admits that neither the Abraham Modification Agreement . . . nor
the cover letter, dated November 23, 2012, enclosing the Abraham Modification Agreement,
provided express instructions as to how Abraham could calculate the amount of the estimated
minimum balloon payment due and payable on July 1, 2037.” (Ocwen Abraham Admission No.
16.)
Abraham admits that the loan modification lowered her monthly payments and made her
life “more comfortable,” but believes she would not have lost her home if she did not enter into
this agreement “[b]ecause I had been paying my loan prior to the 2012 modification.” (Abraham
Tr. at 322.) She testified that if the amount of the balloon payment had been disclosed in the
modification agreement, she would not have agreed to it, because she will be age 77 when the

13

balloon comes due and she would need to take out a new mortgage to pay that amount. (Id. at
350-51 (“That wouldn’t work. It’s not going to work. No one is going to give a 77-year-old
woman, with rheumatoid arthritis, on disability, even a $100,000 mortgage at that age. It’s
impossibility.”).) After Ms. Abraham filed the instant lawsuit, Ocwen stopped sending her
monthly mortgage statements and it no longer allows her to view her loan information on its
website. (Blanchard Tr. at 176-77; Abraham Tr. at 301.)
3.

Plaintiffs Lee Ann and Mark E. Kaminski (the “Kaminskis”)

The Kaminskis, who seek to represent the New Jersey Class, are owners of a home
located at 10 E. Maple Tree Drive, Westampton, New Jersey, which has been their family’s
primary residence since May 2000. (Lechtzin Decl. Ex. 36, September 10, 2015 Deposition of
Lee Ann Kaminski (“L. Kaminski Tr.”) at 15, 28-29.) The Kaminskis purchased their home for
$267,000, of which $135,000 was financed with a mortgage.

(Id. at 31-32.)

In order to

consolidate various debts, on February 24, 2006, the Kaminskis refinanced their home with a 30year, fixed rate mortgage in the amount of $344,250, and a maturity date of March 1, 2036. (Id.
at 44-46; Lechtzin Decl. Ex. 11, February 24, 2006 Kaminski Mortgage at Ocwen005086-5102.)
This loan was amortized over a term of 360 months. (Nieves Tr. at 56-57.) Under the terms of
this loan, the monthly payment was $2,772.58 for the first 120 months, and thereafter the amount
would increase to $3,076.64. (L. Kaminski Tr. at 51.)
The Kaminskis fell behind on their loan in 2007, when Mrs. Kaminski’s job as a longterm substitute teacher came to an end, and Mr. Kaminski lost his job. (Id. at 56-57.) In May
2007, the Kaminskis entered into a forbearance agreement with Ocwen, which called for them to
make increased monthly payments of $3,456 for twelve months so they could cure their
delinquency. (Id. at 60-63.) Although Mr. Kaminski found new employment, the Kaminskis
14

were unable to make all of the forbearance payments. (Id. at 64-65.) They entered into a second
forbearance agreement in January 2008, which contained a “Modification Contingency” that
increased the principal balance of their loan to $367,716.11, and had a fixed interest rate of 8.63
percent. (Id. at 66-70.) To receive this modification, Ocwen required the Kaminskis to pay a
reinstatement amount of $27,565.33, and to make a down payment of $6,902.24. (Id. at 71-72.)
In June 2009, the Kaminskis entered into a new loan modification agreement that increased their
principal balance to $387,168.50, and provided an initial monthly payment of $2,237.12.
(Lechtzin Decl. Ex. 37, June 2009 Home Affordable Modification Agreement effective July 1,
2009.)
By letter dated March 9, 2011, Ocwen offered the Kaminskis a “STREAMLINED LOAN
MODIFICATION,” which provided a monthly payment of $1,979.95, including escrow items
such as property taxes. (Lechtzin Decl. Ex. 12, March 9, 2011 Letter enclosing draft Loan
Modification Agreement (“Kaminski Loan Modification Agreement”) at Ocwen006480-6483.)
The Loan Modification Agreement enclosed with this letter stated that, if the Kaminskis accepted
Ocwen’s offer, the interest rate of their loan would be modified to 2 percent, the new principal
balance would be $377,555.05 (as compared to the original principal amount of $344,250), and
their new monthly principal and interest payment would be $1,143.32. (Id.; Blanchard Tr. at 6667, 101.)

The Kaminski Loan Modification Agreement did not provide any principal

forgiveness. (Blanchard Tr. at 92.)
Ocwen 30(b)(6) witness Nieves testified that the Kaminski Loan Modification Agreement
is based on a standard template document that Ocwen has used to modify mortgages on
properties located in New Jersey. (Nieves Tr. at 25-29, 59-60; Lechtzin Decl. Ex. 1, December
21, 2015 Class Certification Report of Brian C. Becker (“Becker Report”) ¶¶ 36, 38.) The

15

Kaminski Loan Modification Agreement contains a “Balloon Disclosure” provision that
provides:
The loan modification for which you have applied contains a balloon provision.
This means that even if you make all payments full and on time, the loan will not
be paid in full by the final payment date. A single balloon payment will be due
and payable in full on 9/1/2036, provided that all payments are made in
accordance with the loan terms, and the interest rate does not change for the entire
loan term.
(Kaminski Loan Modification Agreement at Ocwen006483.) Although the Kaminskis’ loan was
originally amortized over a period of 360 months, under the Kaminski Loan Modification
Agreement the loan is amortized as though it is payable over a period of 480 months. (Blanchard
Tr. at 104-06.) This change in the amortization term is not disclosed in the Kaminski Loan
Modification Agreement.

(Id. at 115-17.)

The Kaminski Loan Modification Agreement

provides that “[a]ll covenants, agreements, stipulations, and conditions in your Note and
Mortgage will remain in full force and effect, except as herein modified. . . .” (Loan
Modification Agreement at Ocwen006481.)
Ocwen’s March 9, 2011 letter to the Kaminskis was a “blind modification offer,”
meaning that Ocwen solicited the Kaminskis for a modification rather than the Kaminskis
applying to Ocwen for a modification.

(Blanchard Tr. at 43-44, 46; Nieves Tr. at 31.)

According to Ocwen’s records of a phone call with Mrs. Kaminski, as of March 21, 2011, the
Kaminskis had not received the modification offer, even though the March 9 letter stated that
they needed to respond to the offer by March 23. (Blanchard Tr. at 158-60.) Ocwen then sent
the offer via email. Although the Kaminskis had only two days to consider the offer, if they had
stated that they needed more time, Ocwen representatives had the authority to extend the offer.
(Id.) The Kaminskis accepted Ocwen’s offer by signing the Kaminski Modification Agreement

16

on March 24, 2011, and returning it to Ocwen. (Blanchard Tr. at 48; Lechtzin Decl. Ex. 13,
executed Kaminski Loan Modification Agreement Ocwen005127-5129.)
Under the terms of the Kaminski Loan Modification Agreement, if they made all of their
scheduled payments in full and on time, they would owe a balloon payment of $173,421.59 at
the loan’s maturity date of September 1, 2036. (Blanchard Tr. 129-31.) Mrs. Kaminski testified
that she did not know the amount of the balloon payment before she signed the Kaminski Loan
Modification Agreement and that, if she had known the amount of the balloon payment, she
would not have signed it. (L. Kaminski Tr. at 117-20; 149.) Mr. Kaminski testified that he did
not ask Ocwen about the balloon disclosure before signing the Agreement, and that he “would
not know how -- what formula to use, how to amortize. I’m not the financial expert. I would not
know how to arrive at a dollar value based on my situation.” (Lechtzin Decl. Ex. 38, September
10, 2015 Deposition of Mark E. Kaminski (“M. Kaminski Tr.”) at 80-81.) He also testified,
I realize that a balloon payment, the amount could be less or more depending on
us making our payments on time through the course of the loan. It was tacked on,
it’s tacked on to the back end of the loan which is due [and] payable in 2036.
And I don’t know how they derive the number based on our situation, so I have
no other recourse.
(Id. at 81.) Both Plaintiffs expressed concerned that they will be unable to make the balloon
payment when it comes due. (L. Kaminski Tr. at 150; M. Kaminski Tr. at 94.)
Ocwen admits that the Kaminski Loan Modification Agreement “did not include an
amortization schedule.” (Lechtzin Decl. Ex. 39, Ocwen Response to Request for Admission
(“Ocwen Kaminski Admission”) No. 7.) Ocwen also admits that the Balloon Disclosure “does
not state the dollar amount of any balloon payment that would be due on September 1, 2036,
under the terms of the Kaminski Modification Agreement.” (Id. No. 11; Blanchard Tr. at 119;
Nieves Tr. at 86.) Ocwen further admits that the Balloon Disclosure “does not state the method

17

by which the balloon payment that would be due at the loan’s maturity date of September l, 2036
will be calculated.” (Ocwen Kaminski Admission No. 12; Blanchard Tr. at 155.) Moreover,
Ocwen’s “cover letter dated March 9, 2011, enclosing the Kaminski Modification Agreement,
did not provide express instructions as to how the Kaminskis could calculate the amount of the
estimated minimum balloon payment due and payable on September 1, 2036.”

(Ocwen

Kaminski Admission No. 15.) Nor did the Modification Agreement itself “provide express
instructions as to how the Kaminskis could calculate the amount of the estimated minimum
balloon payment due and payable on September 1, 2036.” (Id. No. 16.) Ocwen admits “that on
or around the time the Kaminski Modification Agreement . . . was sent to the Kaminskis, Ocwen
was able to calculate the estimated minimum balloon payment amount at the time of the loan’s
maturity date, if the Kaminskis made all scheduled monthly payments due under the Kaminski
Modification Agreement in full and on time.” (Id. No. 13.)
After the Kaminskis filed the instant lawsuit, Ocwen stopped sending them monthly
statements for their mortgage and no longer allows them to view information concerning their
loan on Ocwen’s website. (Blanchard Tr. at 174-76.) Mrs. Kaminski testified that she cannot
access her account online or make payments online, but must send her payments to Ocwen via
certified mail. (L. Kaminski Tr. at 143.)
C.

Expert Evidence
1.

Plaintiffs’ Expert Dr. Brian C. Becker

Plaintiffs have retained Dr. Brian C. Becker to “evaluate whether (a) members of the
proposed class shared common experiences as a result of policies and practices that [Ocwen]
applied uniformly, which caused the same types of damage to all members of the proposed class,
and whether (b) such putative members of the proposed class can be readily identified using data

18

maintained by Ocwen.” (Becker Report ¶ 1. 3) He concludes that that putative Class members
can be identified using common methods applied to Ocwen’s electronic records, that Ocwen’s
electronic records can be queried to extract the borrowers whose loan modification processes
meet the Class definition, and that damages can be calculated for each Class member using
common methods applied to Ocwen’s electronic records. (Id. ¶¶ 4, 10-12.)
Dr. Becker’s method for identifying class members relies upon searchable electronic data
maintained by Ocwen that can be exported, sorted, and analyzed. (Id. ¶ 18.) Specifically, he
relies on (1) Ocwen’s RealServicing system, which includes borrower and loan information,
payment history, comments and the amount and due date of each borrower’s balloon payment;
(2) Ocwen’s LRM, which is Ocwen’s decision engine used to determine a loan’s eligibility for a
modification or alternative loan resolutions such as a short sale or deed in lieu of foreclosure; and
(3) Ocwen’s CIS, which is another database maintained by Ocwen that stores images of certain
letters and documents sent to and received back from borrowers, and retains information on prior
servicers, payment history, customer communications, the mortgage document, the note
document, and modification documents (including actual copies of the modification agreements
sent to and received from borrowers). (Id. ¶¶ 21-23.) Finally, Dr. Becker asserts that RealDoc,

3

Dr. Becker is the President of Precision Economics, LLC, an economics firm focused in
the areas of litigation, regulation, and public policy. (Becker Report ¶ 5.) Prior to founding
Precision Economics in 2001, Becker worked as a consulting economist in both economic
consulting and public accounting firms, focusing on international economics. Over the past
seven years, the majority of his valuation work has concerned financial transactions, including
lending rates, guarantees, and receivables financing. He has testified before the U.S.
International Trade Commission, the Canadian International Trade Tribunal, the Federal Court of
Australia, the U.S. Tax Court, the Tax Court of Canada, and the Delaware Chancery Court. He
has published more than two dozen papers/book chapters and has served as a Visiting Professor
at Johns Hopkins University, The George Washington University, and Marymount University.
He earned a Ph.D. and M.A. in Applied Economics from the Wharton School of the University
of Pennsylvania; and his B.A. in Applied Mathematics and Economics from The Johns Hopkins
University. (Id.)
19

another database maintained by Ocwen, stores the templates of modification agreements sent to
and received back from borrowers. (Id. ¶ 24. 4)
Dr. Becker opines that Ocwen’s own analysis of its loan-level data on its loan
modifications provides evidence that methods exist which can be commonly applied on a classwide basis to identify Class members. (Id. ¶ 26.) He notes that Ocwen’s data analyst, Paul
Britton, produced a table in which he presented the results of queries of Ocwen’s internal loanlevel data, including data contained within RealServicing, to identify modified loans that met
each of the following aspects of the Class definition: (1) borrowers in Pennsylvania or New
Jersey, and (2) borrowers Ocwen placed into non-HAMP modification agreements with balloon
payment features between January 1, 2009 and September 30, 2015. (Id.) Britton’s query
identified 11,157 non-HAMP modifications in Pennsylvania between January 2009 and
September 2015 that had a balloon payment feature, and identified 8,454 non-HAMP
modifications in New Jersey between January 2009 and September 2015 that had a balloon

4

We note that the record does not support Dr. Becker’s assertion that Ocwen’s databases
include actual copies of modification agreements “sent to and received from borrowers.” Becker
cites page 38 of the deposition transcript of Ocwen’s Rule 30(b)(6) witness Paul Myers.
Although Myers discusses the CIS system, he does not assert at page 38 that it records copies of
modification agreements that were merely “sent” to borrowers. (Myers Tr. at 38.) He also cites
pages 26-29 and 66-67 of the deposition transcript of Ocwen Rule 30(b)(6) witness Max Nieves.
In describing information in Ocwen’s LRM database, Nieves states that the information is
initially entered when a customer gives Ocwen a “Request for Mortgage Assistance” form. After
Ocwen employees review certain data, “then the agreement is systematically sent to the mailing
address that we have.” (Nieves Tr. at 29.) This is the only time Nieves used the word “sent” in
relation to an “agreement” and he does not specify if the system records agreements that were
sent but never signed by the borrower. He also did not specifically testify that Ocwen’s RealDoc
database stores “templates of modification agreements sent to and received back from
borrowers”; even if he had, there is no evidence that storing a template is the same thing as
storing actual agreements sent to borrowers.
This distinction is key since borrowers to whom modification agreements were only
“sent” — in contrast to those who actually signed one — are included as members of the FDCPA
Class. Evidence, or the lack thereof, that Ocwen recorded borrowers to whom it “sent”
modification agreements is, accordingly, relevant to whether that Class can be ascertained.
20

payment feature. (Id.) Becker opines that he can identify class members by further refining
Britton’s query by: (1) identifying those borrowers located in a state included in the Class
definition with a modification featuring a balloon payment, and (2) then identifying those
borrowers who did not receive a disclosure of the amount of the balloon payment in their
modification agreement. (Id. ¶¶ 28-30.) He asserts that, based on the documents produced and
deposition testimony in the case, “it is likely that all of Ocwen’s standard in-house modification
agreements with balloon payments made until late 2013 in Pennsylvania and New Jersey would
meet the Class definition.” 5 (Id. ¶ 31.) Becker states that this same data can be used on a classwide basis to establish whether or not there is a violation of state and federal consumer
protection laws under Plaintiffs’ theories, and that the named Plaintiffs are members of the class.
(Id. ¶¶ 34-35.)
On the issue of damages, Dr. Becker opines that Ocwen’s records contain information on
each putative Class member’s payment terms, including unpaid principal balance, monthly
payment amount, interest rate, and the remaining term of the loan that would be sufficient to
generate an appropriate formula to measure the damages applicable to Plaintiffs’ claims. (Id. ¶
39.) To calculate damages, he first assumes “that Class members’ expectation of the balloon
payment and monthly payments would have been the balloon payment and monthly payments
that would have occurred had the modified loan been amortized over the previously disclosed
5

Becker notes that “it is possible that there may be some modifications without disclosed
balloon payment amounts that were not based on a template. Therefore, a systematic data query
of Ocwen’s database for modifications based on template codes may yield an incomplete list of
modifications that meet the Class definition.” (Becker Report ¶ 32.) He opines that, “[e]ven if
these modifications that are not based on templates cannot be identified as having a disclosed
balloon payment amount through a systematic data query, it would still be possible to identify all
of Ocwen’s modifications that were not based on a template (i.e., had no template code) and had
a balloon payment through a systematic data query.” (Id.) His calculation method would
examine the language of these particular modifications using the images of those modification
agreements in Ocwen’s CIS database. (Id.)
21

amortization term.” 6 (Id. ¶ 40.) He asserts that damages through the earlier of (1) the date on
which the last payment on the loan was made, or (2) the date when damages are awarded, can be
defined as “the present value difference to each Class member from his position with the
modification in its actual state and the but-for modification with the same terms except with an
amortization schedule corresponding to the last disclosed amortization term prior to the
modification with the undisclosed balloon amount.” 7 (Id. ¶ 41 (emphasis in original).) He
calculates that, while Lisa Abraham suffered no damages — because the amortization term in her
modification agreement did not change from the last disclosed amortization term — the Caves
suffered damages of $6,173.15 and the Kaminskis suffered damages of $30,240.12. 8 (Id. ¶¶ 4445.)
Dr. Becker opines that, all things being equal, a loan amortized over a longer term will
have a lower monthly payment than a loan amortized over a shorter term. That lower monthly
payment, however, results in the loan principal being paid off at a slower rate than would occur
6

Becker’s model relies on the pre-modification amortization term on the ground that the
borrower’s original loan documents all provide that their terms remain in force if not otherwise
modified. Since the loan modification did not disclose a new amortization term or provide a
balloon disclosure that estimated the balloon payment due at the end of a newly-created
amortization schedule, Becker insists that a but-for world requires that the pre-modification
amortization term be used because Class members’ expectation of the balloon payment and
monthly payments would have been the balloon payment and monthly payments that would
have occurred had the modified loan been amortized over the previously disclosed amortization
term. (Becker Report at ¶ 40.)
7

In constructing this but-for amortization schedule for purposes of calculating damages,
Becker makes several assumptions: (1) that each Class member would have agreed to the higher
monthly principal and interest payment from this but-for amortization schedule at the time they
entered the loan modification; (2) that each Class member would have made her but-for principal
and interest payments at every interval at which she made her actual principal and interest
payments; and (3) that each Class member would have made the same extra principal payments
in the but-for world as he did in the actual world. (Becker Report ¶ 43.)
8

These figures assume that the loan remains payable over its entire term, i.e., the
borrower does not sell the home and the loan is not refinanced.
22

if a larger monthly payment were made. Because the principal balance is paid off more slowly
over the longer amortization term,
the interest being charged each month is larger than what would be charged if the
principal balance were paid off faster, as would occur if the loan payments were
calculated over a shorter amortization term. Therefore, more interest will be paid
over the life of a loan if payments are made according to a longer amortization
term than would be paid if payments are made according to a shorter amortization
term.
(Id. ¶ 46.) Further, because the principal is paid off more slowly when payments are made
according to an amortization schedule with a longer term, “a larger balloon payment is required
at the loan maturity than would be required if payments were made according to an amortization
schedule with a shorter term.” (Id. ¶ 47.) Becker calculates that the Caves’ balloon payment
under the but-for amortization schedule would be $13,558.37 less than the balloon payment
recorded in Ocwen’s RealServicing system; for the Kaminskis, the balloon payment under the
but-for amortization schedule would be $130,390.67 less than the balloon payment recorded in
Ocwen’s RealServicing system; Abraham’s balloon payment would be the same since her
amortization term did not change. (Id. ¶ 48.)
Dr. Becker recognizes, however, that “for many Class members, damages will be
awarded before loan maturity. For those Class members, neither the difference between actual
and but-for balloon payments nor the difference between actual and but-for principal and interest
payments through maturity would be the measure of damages.” (Id. ¶ 50.) He has developed an
equation to capture the measure of damages that can be used for borrowers who paid either the
exact amount of their required monthly modified payments, who paid more than their required
monthly modified payments, or who paid fewer required monthly modified payments. He opines
that, for each scenario, his equation
represents the amount that would place the borrower in the financial position the
23

borrower would have been in at the date on which damages are awarded if a
modification had occurred using the previously disclosed amortization term by
compensating the borrower for differences between the values of the actual
balances and what the balances would have been if a modification had been
implemented with regard to the outstanding principle balance and any accrued
interest. To this difference in principal balance in Equation [1], one adds the
difference between the actual principal and interest payments and what the
principal and interest payments would have been if a modification had been
implemented using the previously disclosed amortization term. Thus, Equation
[1] compensates Class members by calculating the but-for impact of Ocwen’s
failure to implement modifications using the previously disclosed amortization
term on both the Class members’ financial “stocks” and “flows” – the stocks
being the principle balance and the flows being the Class members’ monthly
payments.
(Id. ¶ 52.) Under this equation, as of October 2015, he calculates damages for Abraham to be
$0.00, for the Caves to be $50.36, and for the Kaminskis to be $3.58. (Id. ¶¶ 52-55.)
2.

Defendant’s Expert Joseph J. Floyd

Ocwen has retained Joseph J. Floyd to evaluate the proper method of identifying whether
the named Plaintiffs and putative class members suffered ascertainable financial losses, as well
as to review and comment on the Becker Report. (Forbes Decl. Ex. A, January 27, 2016 Expert
Report of Joseph J. Floyd (“Floyd Report”) at 3. 9) Like Dr. Becker, Floyd opines that the most
appropriate method to evaluate whether a borrower incurred financial damages due to the receipt
9

Floyd is the founder and President of Floyd Advisory LLC, a consulting firm. He
previously served as Managing Director of Huron Consulting Group and as the partner in charge
of Arthur Andersen’s Financial Consulting practice in New England. He has a Bachelor of
Business Administration degree from the University of Massachusetts at Amherst, and a Juris
Doctor degree from Suffolk University Law School. He is a licensed Certified Public
Accountant in New York and has earned the American Institute of Certified Public Accountants’
(“AICPA”) Accreditation in Business Valuation (“ABV”) and Certification in Financial
Forensics (“CFF”). He is a Certified Fraud Examiner (“CFE”). He has worked on numerous
financial analysis engagements, valuation assignments, financial reporting projects, and other
similar assignments; he has also been qualified as an expert on accounting and financial issues in
the United States District Courts in Connecticut, Massachusetts, and Virginia, in the United
States Bankruptcy Courts in New York and Massachusetts, and in the trial courts of various
states. He has also appeared before the U.S. Securities and Exchange Commission (“SEC”) to
discuss and explain the underlying facts, accounting treatment, and reasons for restatement of
public registrants’ previously filed financial statements. (Floyd Report at 3-4.)
24

of a loan modification agreement is a “but-for” analysis. (Id. at 4, 16.) In applying his approach,
Floyd assumes that borrowers could not remain current on their pre-modification loan terms and,
therefore, would face imminent foreclosure without the loan modification since, if the borrower
was not having problems, it is unlikely that a modification would have been offered. (Id.)
Accordingly to Floyd, following their receipt and acceptance of loan modification agreements,
Plaintiffs benefited from comparatively lower monthly payments and lower interest rates;
continued to benefit from the home’s appreciation; avoided the adverse consequences of
foreclosure and loss of their home; and avoided the adverse consequences of potential
bankruptcy filings. (Id. at 5.) He asserts that “[e]ach of these factors is financially favorable to
the Plaintiffs and appears contrary to the existence of any possible financial harm or damage that
may have arisen from the provision of the loan modification agreements by Ocwen.” (Id.)
On the issue of damages, Floyd posits that Dr. Becker’s analyses and calculations are
based on a flawed premise that the alleged failure to disclose the estimated
amount of the loan modification balloon payment due at the loan maturity date
and the loan amortization term caused the Plaintiffs to suffer financial damages.
In my opinion, A) the loan amortization term only impacted the calculation of the
monthly payment; an amount agreed to by the Plaintiffs and B) the Plaintiffs had
access to all of the information needed to determine their balloon payment at any
point in time. Therefore, the alleged failure to disclose the amount of the loan
modification balloon payment and the loan amortization term would not cause the
Plaintiffs to suffer ascertainable loss or financial damages.
(Id.) He adds that Dr. Becker’s analyses and conclusions regarding the Plaintiffs’ alleged
damages are based on a flawed and incomplete comparison because Becker
invents a new loan product – one with no apparent basis in the evidence – and
calculates damages based solely on that hypothetical loan. Therefore, Dr.
Becker’s report not only ignores the benefits of the loan modifications actually
received by the Plaintiffs, it also attempts to calculate damages based on fictional
loan terms.

25

(Id.) Floyd, on the contrary, attempts to compare what he opines is “the relevant data – the
Plaintiff’s financial events and consequences without the modification (such as foreclosure or
becoming current with the pre-modification loan terms) as compared with the modification
terms” which, he concludes, “indicates that none of the Plaintiffs suffered any ascertainable loss,
actual harm, or financial damages.” (Id.) Finally, Floyd asserts that because each Plaintiffs’
financial and economic situations are unique and would require individual considerations to
properly evaluate the existence of each member’s possible financial damages, if any, the inquiry
necessary to determine the existence of financial damages and then perform the calculation of
such damages, if any, are individualized and not capable of proof through evidence that is
common to the class. (Id.)
According to Floyd, “the most appropriate method to evaluate whether a borrower
incurred financial damages due to the receipt of a balloon loan modification is the ‘but-for’
analysis which considers the borrower’s financial events and consequences without the
modification (such as foreclosure or becoming current with the pre-modification loan terms) as
compared with the modification terms.” (Id. at 16.) He identifies several financial events and
consequences to a borrower who was provided a loan modification, which, he asserts, would be
relevant to whether the borrower incurred damages as a result of the modification. (Id.) First,
Floyd notes that the borrower’s modified monthly payments were reduced after the modification
and that the reduction “was in part due to lowered interest rates being provided to the Plaintiffs
pursuant to their loan modification agreements.” (Id. (citing Blanchard Tr. at 166).) He opines
that “interest rates represent the ‘cost’ of funds, and by lowering the interest rate, the borrower is
paying less monthly for the use of the monies.” (Id. at 17.) Second, Plaintiffs received the
economic value for the use of their homes — rather than renting other lodging if the mortgage

26

was foreclosed — which is a significant consideration of the existence and calculation of
damages arising from receipt and acceptance of modification agreements since this factor plays a
significant role in any individual borrower’s decision to enter into the modification agreement.
(Id.) Third, the lower payment option afforded Plaintiffs the ability to pay additional principal if
they chose to do so. (Id.) Fourth, for many borrowers the amount due under the Plaintiffs’ premodification mortgage loan terms was not increased, but some borrowers, like the Caves and
Kaminskis, owed delinquencies and other fees that were added to the principal balance upon
modification, while other borrowers, like Abraham, had a portion of their principal forgiven in
the modification. Fifth, whether a borrower had equity in their home is relevant since, if they
did, a traditional sale would have been possible, while the lack of equity and past payment
defaults are generally triggers to foreclosure. Finally, by lowering the monthly payments, the
mortgage loans became more affordable thus enabling borrowers to hold and sell their homes at
a later date when the market rebounded. (Id. at 16-18.) Floyd opines that each of these factors is
financially favorable to the Plaintiffs and appears contrary to the existence of any possible
financial harm or damage that may have arisen from the loan modification agreements by
Ocwen. Additionally, Abraham, and presumably other putative class members, benefited from
the reduction of the principal balance and total outstanding debt of her loan. (Id. at 18.)
Floyd criticizes Becker’s damages model on several grounds. Using the reduced loan
modification interest rate and the previously-applicable loan amortization term, Dr. Becker
calculates a new monthly payment and balloon payment amount for a hypothetical loan product.
Floyd notes that Becker then compares these amounts to the payments due under the actual loan
modification agreement to present his purported measure of financial damages. (Id. at 19.)
Floyd faults Dr. Becker for assuming that all Plaintiffs, and presumably all putative class

27

members, had an expectation that the amortization term, and the balloon payment, if any, did not
change as a result of the modification. As such, Dr. Becker asserts that the Plaintiffs are entitled
to recover damages for any excess payments the Plaintiffs will allegedly have to make as a result
of the extended amortization term and the resulting balloon payments. (Id. at 20.) Floyd calls
this approach
a mechanistic damage model to hypothesize the impact of maintaining the loan
amortization term in place before any modification . . . . The result of Dr.
Becker’s calculation assumptions is a proposed monthly loan payment that is
higher than the modification monthly payment for two of the three named
Plaintiffs and the same for one of the Plaintiffs. This phenomenon is caused by
his calculation of a revised monthly payment based on the original, premodification amortization period, which is shorter than the loan modification
amortization period for those two Plaintiffs.
(Id. at 20.)
Next, Floyd faults Dr. Becker’s analysis because Becker also assumes that the loan
principal payments must still be sufficient to achieve the loan payoff amount before the end of
the amortization term, thereby causing an increase in the required monthly principal payment
amounts over those reflected in the actual loan modification. A consequence of Dr. Becker’s
calculated higher monthly principal payments, and the assumption of timely payments for the life
of the loan, is a lower hypothetical balloon payment at the end of the contractual mortgage
period. Importantly, “under Dr. Becker’s assumptions, the Plaintiffs’ monthly payments are
higher than they actually have made or were required to make under their actual loan
modifications, creating an unusual financial presentation of damages.” (Id. at 21.) Dr. Becker
also assumes that, for his hypothetical loan product, (1) Ocwen and Plaintiffs would have each
agreed to these alternate terms; (2) each Plaintiff would have been eligible for a modification
based on Dr. Becker’s terms; and (3) each Plaintiff would have been able to pay the higher
monthly payments on the same dates that the actual loan modification payments occurred or
28

were due. Floyd criticizes Dr. Becker’s hypothetical loan because neither he nor Plaintiffs offer
any evidence that any one of the Plaintiffs was eligible for or could have satisfied those higher
monthly payment amounts. (Id.) Floyd notes that, under Dr. Becker’s hypothetical loan, while
Abraham’s monthly payment would remain unchanged, the Cave’s monthly payment would
increase $325.29 and the Kaminski’s monthly payment would increase $328.28. (Id. at 22.)
To calculate damages, Becker first assumes “that Class members’ expectation of the
balloon payment and monthly payments would have been the balloon payment and monthly
payments that would have occurred had the modified loan been amortized over the previously
disclosed amortization term.” (Becker Report ¶ 40.) Floyd criticizes this assumption asserting
that the alleged failure to disclose the loan amortization term “would only be relevant to the
determination of the minimum monthly payment; an amount the Plaintiffs agreed to and
accepted in their loan modification agreements. (Floyd Report at 23.) Floyd further opines that,
once the monthly payment is established, the determination of the outstanding principal balance
is an easy exercise based on the other terms fully disclosed in the loan modification agreement.
Since the Plaintiffs’ modification agreements told them the new principal balance due, the
interest rate, the loan maturity date, and the minimum monthly payment due, Floyd asserts that
this information is sufficient to calculate an expected principal balance outstanding amount after
each payment, including the estimated balloon payment. (Id. at 23.) Floyd has prepared an
amortization schedule solely based on information from a modification agreement.

(Floyd

Report Ex. B.) Because borrowers had this information, Floyd asserts that Dr. Becker’s analyses
and calculations are based on a flawed premise that the alleged failure to disclose the amount of
the loan modification balloon payment and the loan amortization term caused the Plaintiffs to
suffer financial damages. (Id. at 24.)

29

Next, Floyd faults Dr. Becker for failing to address the fact that the Plaintiffs benefited
and agreed to the monthly payments under the actual loan modification agreements, which were
less than previously owed by the Plaintiffs and lower than the revised amounts calculated by Dr.
Becker under his damages approach.

(Id.)

Floyd calculates that as a result of the loan

modification, the net present value benefit realized by the Kaminski Plaintiffs was approximately
$96,000.00. (Floyd Report Ex. C.)
3.

Dr. Becker’s Reply to the Floyd Report

Dr. Becker asserts that Floyd’s but-for alternative to the Ocwen balloon modification —
no modification at all and continuation of the prior loan terms — is an inappropriate model.
(Lechtzin Decl. Ex. 2, February 12, 2016 Reply Class Certification Report of Brian C. Becker
(“Becker Reply”) ¶ 6.) Becker asserts that Plaintiffs did not sue because they were “tricked” into
a modification; rather they were aware they were entering into a new loan with new terms. He
faults Floyd for failing to consider a but-for world where Ocwen maintained the pre-modification
amortization term or offered borrowers a modification with a disclosed balloon payment. (Id.)
Dr. Becker rejects the importance of the factors Floyd listed as allegedly benefiting
borrowers entering into a modification because those factors also compare the Ocwen
modification only to a but-for world continuing the original loan terms. (Id. ¶ 7.) Specific to
Floyd’s assertions that under the Ocwen modification borrowers enjoyed the offsetting benefits
of lowering their monthly payments, avoiding foreclosure and receiving the economic value for
the use of their homes, being able to pay additional principal if they chose to do so, lowering —
or at least not increasing — the principal balance, and permitting them breathing room until the
market stabilized so they could sell the home, Becker opines that that the
correct counterfactual is not the pre-modification payment; it is the postmodification payment had the modification been implemented with the previously
30

disclosed amortization term. Further, the appropriate comparison is not the
overall monthly payment, but the cost of the loan in terms of interest paid [].
Under that comparison, as shown in the Becker Report, the borrower does not
‘benefit’ from Ocwen’s failure to disclose because the Kaminskis would have
paid less in interest under the previously disclosed amortization term.
(Id. ¶ 7 (internal citation omitted).) Regarding Floyd’s assumption that, without the Ocwen
modification a borrower would have faced foreclosure and thus benefited from being able to stay
in their home, Dr. Becker responds that the question as to whether a borrower would face
imminent foreclosure is only relevant to the Floyd Report’s assumed but-for world in which
Ocwen does not modify the borrower’s loan. (Id. ¶ 8.) Becker asserts that this factor is flawed
since it assumes the borrower would have received no modification, and without a proper
balloon disclosure a borrower could not make an informed decision whether to accept the
modification, seek alternate lodging, or try to cure their default through other means such as
bankruptcy proceedings. (Id. ¶ 14.)
Dr. Becker contends that a but-for comparison using a “loan modification with alternative
terms world” is reasonable and a but-for comparison using a “no modification world” is not
reasonable. (Id. ¶ 9.) He asserts that a but-for analysis “requires the construction of what would
have happened, not what actually happened, but-for the conduct. An assumed but-for loan
modification with alternative loan terms is no more ‘hypothetical’ or ‘fictional’, as labeled in the
Floyd Report, as the Floyd Report’s assumption of no loan modification whatsoever.” (Id. ¶ 10.)
While Becker concedes that, in the actual world, neither of those “hypothetical” events occurred,
both he and Floyd agree that loan servicers offer loan modifications because they expect to
benefit from the modification. (Id. ¶ 10 (citing Becker Report ¶ 6; Floyd Report at 5 n.2, 16
n.9).) He asserts that borrowers as well expect to benefit when entering the modification,
relative to making no modification. Hence, Becker concludes that an assumption that a loan

31

modification with alternative terms would have been offered by the servicer but-for the alleged
conduct is a reasonable assumption. (Id.)
Dr. Becker reiterates his assertion that a but-for model should incorporate the
amortization term of the original loan since modification agreement did not disclose new
amortization terms. He contends that this assumption is “consistent with the premise that the
loan terms remained unchanged unless otherwise disclosed in the loan modification agreement.”
He adds that each of the named Plaintiffs’ modification agreements at issue in this case includes
the following language:
All covenants, agreements, stipulations, and conditions in your Note and
Mortgage will remain in full force and affect, except as herein modified, and none
of the your [sic] obligations or liabilities under your Note and Mortgage will be
diminished or released by any provisions hereof, nor will this Agreement in any
way impair, diminish, or affect any of Ocwen’s rights under or remedies on your
Note and Mortgage, whether such rights or remedies arise there under or by
operation of law.
(Id. ¶ 12 (citations omitted).)
Next, Dr. Becker takes issue with Floyd’s assertion that borrowers had access to the data
needed to calculate their prospective balloon payment and could easily have done so. He accuses
Floyd of attempting to shift the blame for Ocwen’s failure to disclose onto the putative class
members. Becker contends that calculating a balloon payment is an “easy” exercise only to
someone with a high level of financial sophistication and/or experience in the mortgage industry.
(Id. ¶ 16.) Becker argues also that “[b]orrowers who become delinquent on their loans, such as
Class members, are likely to exhibit even lower degrees of financial literacy, given that studies
show that a borrower’s numerical ability and financial literacy are negatively associated with the
likelihood of becoming delinquent on a mortgage.” (Id. (citing Kristopher Gerardi, Lorenz
Goette, & Stephan Meier, Numerical ability predicts mortgage default, 110 Proc. Nat’l Acad.

32

Sci. 11267 (July 9, 2013)).) He adds that Floyd’s allegation that Plaintiffs had the necessary
information to determine their balloon payment at any time is inconsistent with the evidence that
they in fact did not, and were unable to perform that calculation, as none of the five named
Plaintiffs, including Lee Ann Kaminski, a former math teacher, testified that he or she knew how
to calculate a balloon payment. (Id.)
Dr. Becker also criticizes Floyd for failing to address the increased interest payments
resulting from the undisclosed change in loan terms. In critiquing Becker, Floyd focuses on the
fact that the Becker model’s but-for monthly payments are greater when the but-for amortization
term is shorter, relative to the actual monthly payments and amortization term. Becker responds
that Floyd ignores the fact that less total interest over the course of the loan is paid by a borrower
when the amortization term is shorter. (Id. ¶ 21.)
4.

Floyd’s Supplemental Report

Finally, Floyd has supplemented his original report by including responses to Dr.
Becker’s deposition, which was held after Floyd submitted his original report. Floyd notes errors
in the Becker Report damages calculations related to: “(i) the comparison of accrued interest as
of the damages date in the actual loan modification terms (‘Actual’) versus the alternate
hypothetical modification scenario in the Becker Report (‘Becker But-For’); and (ii) the
calculation of the present value of principal and interest (‘P&I’) differences between the Actual
and Becker But-For scenarios.” (Forbes Decl. Ex. B, July 29, 2016 Supplement to the Expert
Report of Joseph J. Floyd (“Floyd Supp. Report”) at 1.) Floyd also observes that the Becker
Report damages calculation “arbitrarily assumes an investment return equal to the interest rate on
the named Plaintiffs’ modified loans despite more favorable investment opportunities that were
available to Plaintiffs at the time they obtained their loan modifications and thereafter.” (Id.) In
33

light of these three observations, Floyd has performed corrected calculations using Becker’s own
damages model for the named Plaintiffs.
The first error Floyd identifies relates to the consideration of accrued interest owed by the
Cave Plaintiffs through the damages date, which is assumed to be October 2015 in the Becker
Report. (Floyd Supp. Report at 2.) This portion of the Becker Report damages calculation
captures the difference in accrued interest owed by the named Plaintiffs from the date they
ceased paying P&I through the damages date in the Actual scenario as compared to the Becker
But-For scenario. However, notes Floyd, the Becker Report incorrectly relies on the aggregate
interest due based on a loan amortization schedule that assumes that the Cave Plaintiffs have
continued to make P&I payments, which never actually occurred. (Id.) The impact of correcting
the Becker Report damages calculation for the Cave Plaintiffs to account for this accrued interest
error reduces the Cave Plaintiffs’ alleged financial losses or damages, as calculated in the Becker
Report as of October 2015, from $50.38 to $0.02. (Id.)
The second error Floyd identifies “relates to the Becker Report determination of the
present value of P&I differences between the Actual and Becker But-For scenarios for the named
Plaintiffs. The Becker Report calculates the present value assuming the named Plaintiffs made
their payments on the first day of the month following the payment, without regard for the actual
day the payment occurred.” (Id.) Correcting the calculation to reflect the dates that actual
payments were made by each of the named Plaintiffs, “properly reflects the days that the named
Plaintiffs would benefit from the opportunity to invest the differential between the lower Actual
monthly payments and the higher But-For monthly payments set forth in the Becker Report.”
(Id. at 3.) Floyd calculates that after correcting for the accrued interest error discussed above for
the Cave Plaintiffs and after correcting for the days omitted from the actual payment date

34

through the end of the month for the Cave Plaintiffs and the Kaminski Plaintiffs, “the Cave
Plaintiffs’ alleged ‘damages’ amount changes from an alleged financial loss of $0.02 (after
accounting for the accrued interest error) to a financial benefit of $0.05. . . . [T]he Kaminski
Plaintiffs’ alleged ‘damages’ amount changes from a financial loss of $3.58, as posited in the
Becker Report, to a financial benefit of $11.92.” (Id.) Accordingly, Floyd concludes that,
correcting for just these two errors, none of these named Plaintiffs suffered damages. 10
The third error relates to the Becker Report’s assumption of the named Plaintiffs’
modified loan interest rate (2%) “as the investment rate of return the named Plaintiffs could
realize had they invested the difference between the monthly payment amounts in the Actual and
Becker But-For scenarios.” (Id.) Floyd notes that Becker conceded in his deposition that if the
named Plaintiffs could have invested the savings generated from their lowered monthly
payments at a rate higher than his 2% assumption, “that would make the actual world relatively
better than the but-for world and would lower or potentially erase the damages here.” (Id.
(quoting Forbes Decl. Ex. EE, July 20, 2016 Deposition of Dr. Brian C. Becker (“Becker Tr.”) at
232).) Floyd opines that “investment rates of return higher than the 2-percent assumed in the
Becker Report were available based on conservative and widely-accepted investment vehicles.”
(Id. at 4.) For example, had the named Plaintiffs invested the incremental funds each month in
the Vanguard VGLT exchange-traded fund, Floyd calculates that the Cave Plaintiffs would have
received an aggregate financial benefit of $1.13, and the Kaminski Plaintiffs would have
received an aggregate financial benefit of $1,350.41, when comparing their Actual modification
terms (and the lower monthly payments provided thereby) to the Becker But-For terms (with its
higher monthly payments). (Id.)
10

There is no change for Abraham, whose damages were already determined to be $0 on
the ground that her amortization term did not change.
35

IV.

OCWEN’S MOTION TO STRIKE

Ocwen has moved to strike portions of the Becker Report as well as references to those
portions in Plaintiffs’ class certification papers. Ocwen argues that Becker purports to provide
legal opinions regarding the ascertainability, commonality, and typicality class certification
requirements. The Motion is denied.
The United States Court of Appeals for the Third Circuit has joined other Courts of
Appeals holding that a plaintiff “cannot rely on challenged expert testimony, when critical to
class certification, to demonstrate conformity with [Federal Rule of Civil Procedure] 23 unless
the plaintiff also demonstrates, and the trial court finds, that the expert testimony satisfies the
standard set out in Daubert [v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993)].” In re Blood
Reagents Antitrust Litig., 783 F.3d 183, 187 (3d Cir. 2015).

The Court held that expert

testimony “that is insufficiently reliable to satisfy the Daubert standard cannot ‘prove’ that the
Rule 23(a) prerequisites have been met ‘in fact,’ nor can it establish ‘through evidentiary proof’
that Rule 23(b) is satisfied.” Id.
The Daubert analysis governing the admissibility of expert testimony has been codified in
Federal Rule of Evidence 702, which provides as follows:
A witness who is qualified as an expert by knowledge, skill, experience, training,
or education may testify in the form of an opinion or otherwise if: (a) the expert’s
scientific, technical, or other specialized knowledge will help the trier of fact to
understand the evidence or to determine a fact in issue; (b) the testimony is based
on sufficient facts or data; (c) the testimony is the product of reliable principles
and methods; and (d) the expert has reliably applied the principles and methods to
the facts of the case.
Fed. R. Evid. 702. The proponent of the expert testimony has the burden of establishing its
admissibility by a preponderance of the evidence. Padillas v. Stork-Gamco, Inc., 186 F.3d 412,

36

418 (3d Cir. 1999) (citing Daubert, 509 U.S. at 592 n.10); see also Mahmood v. Narciso, 549 F.
App’x 99, 102 (3d Cir. 2013) (citing In re TMI Litig., 193 F.3d 613, 663 (3d Cir. 1999)).
There are three requirements for the admissibility of expert testimony pursuant to Rule
702, “‘qualification, reliability and fit.’” Calhoun v. Yamaha Motor Corp., U.S.A., 350 F.3d
316, 321 (3d Cir. 2003) (quoting Schneider v. Fried, 320 F.3d 396, 405 (3d Cir. 2003)).
“Qualification requires ‘that the witness possess specialized expertise.’” Id. (quoting Schneider,
320 F.3d at 405). The Third Circuit has ‘“interpreted this requirement liberally,’ holding that ‘a
broad range of knowledge, skills, and training qualify an expert as such.’” Id. (quoting In re
Paoli R.R. Yard PCB Litig., 35 F.3d 717, 741 (3d Cir. 1994) (“Paoli II” ).
The “reliability” prong requires that “the expert’s opinion must be based on the ‘methods
and procedures of science’ rather than on ‘subjective belief or unsupported speculation’; the
expert must have ‘good grounds’ for his or her belief.” Id. (quoting Paoli II at 742 (quoting
Daubert, 509 U.S. at 590)). An assessment of ‘“the reliability of scientific evidence under Rule
702 requires a determination as to its scientific validity.’” Id. (quoting Paoli II at 742). In
determining whether the reliability requirement is met, courts may examine the following factors
where appropriate: (1) whether a method consists of a testable hypothesis; (2) whether the
method has been subject to peer review; (3) the known or potential rate of error; (4) the existence
and maintenance of standards controlling the technique’s operation; (5) whether the method is
generally accepted; (6) the relationship of the technique to methods which have been established
to be reliable; (7) the qualifications of the expert witness testifying based on the methodology;
and (8) the non-judicial uses to which the method has been put. See In re Blood Reagents
Antitrust Litig., Civ. A. No. 09-2081, 2015 WL 6123211, at *8 (E.D. Pa. Oct. 19, 2015) (citing
United States v. Mitchell, 365 F.3d 215, 235 (3d Cir. 2004)). The reliability prong “applies to all

37

aspects of an expert’s testimony: the methodology, the facts underlying the expert’s opinion,
[and] the link between the facts and the conclusion.” ZF Meritor, LLC v. Eaton Corp., 696 F.3d
254, 291 (3d Cir. 2012) (alteration in original; quotations omitted). Where the expert’s “factual
basis, data, principles, methods, or their application are called sufficiently into question, . . . the
trial judge must determine whether the testimony has ‘a reliable basis in the knowledge and
experience of the relevant discipline.’” Id. at 294 (alteration in original) (quoting Kumho Tire
Co. v. Carmichael, 526 U.S. 137, 149 (1999)).
“Fit” means that “‘the expert’s testimony must be relevant for the purposes of the case
and must assist the trier of fact.’” Calhoun, 350 F.3d at 321 (quoting Schneider, 320 F.3d at
405). Fit pertains “‘primarily to relevance.’” Meadows v. Anchor Longwall & Rebuild, Inc.,
306 F. App’x 781, 790 (3d Cir. 2009) (quoting Lauria v. Nat’l R.R. Passenger Corp., 145 F.3d
593, 599 (3d Cir. 1998)). “The expert’s testimony must ‘fit’ under the facts of the case so that ‘it
will aid the [fact finder] in resolving a factual dispute.’” Id. (quoting Lauria, 145 F.3d at 599).
This element “‘requires a valid scientific connection to the pertinent inquiry as a precondition to
admissibility.’” Id. (quoting Lauria, 145 F.3d at 600). “In other words, expert testimony based
on assumptions lacking factual foundation in the record is properly excluded.” Id. (citing Stecyk
v. Bell Helicopter Textron, Inc., 295 F.3d 408, 414 (3d Cir. 2002)).
We reject Ocwen’s arguments seeking to strike Dr. Becker’s discussion of the
ascertainability, commonality and typicality class action requirements. The argument that Dr.
Becker lacks specialized knowledge, expertise, or academic training to provide opinions on the
search capabilities of Ocwen’s proprietary systems or databases is inapposite. Ocwen’s own
Rule 30(b)(6) witness offered fact testimony on the search capabilities. Becker’s opinions relate
to how, as an economist, he uses those capabilities to identify members of a class. Becker

38

specifically states that his method for identifying class members relies upon the searchable
electronic data maintained by Ocwen that can be exported, sorted, and analyzed. (Becker Report
¶ 18.)

He further asserts that Ocwen’s own analysis of its loan-level data on its loan

modifications provides evidence that methods exist which can be commonly applied on a classwide basis to identify Class members. (Id. ¶ 26.) As such, his opinions are based on the
methods and procedures of an economist, rather than on his own subjective belief or unsupported
speculation, and there is nothing in Ocwen’s Motion to suggest that Becker’s method of relying
on Ocwen’s own data is improper or that his conclusions are unreliable.
Ocwen’s argument that Dr. Becker’s discussion of ascertainability, commonality, and
typicality constitute legal conclusions on these class certification issues is also rejected. Expert
witnesses are prohibited from rendering a legal opinion because “it would usurp the District
Court’s pivotal role in explaining the law to the jury.” Berckeley Inv. Grp., Ltd. v. Colkitt, 455
F.3d 195, 217 (3d Cir. 2006) (citing First Nat’l State Bank v. Reliance Elec. Co., 668 F.2d 725,
731 (3d Cir. 1981)). While an expert is prohibited from rendering a legal opinion, his opinion is
not impermissible because it “embraces an ultimate issue to be decided by the trier of fact.”
United States v. Fulton, 837 F.3d 281, 291 (3d Cir. 2016). The Third Circuit has stated that the
key to whether an expert improperly delves into improper legal opinion is whether or not the
expert “give[s] his opinion as to what was required under the law, or whether the defendant
complied with the [law].” Berckeley Inv. Grp., Ltd., 455 F.3d at 218.
Ocwen’s argument lacks merit for several reasons. First, Ocwen concedes that Becker
has expressly disclaimed any intention or ability to provide legal opinions. (Ocwen’s Mem. in
Support of Mot. to Strike (Docket Entry 63) at 8.) Second, Becker is not a lawyer and does not
rely on case law, legal treatises, or other legal sources in reaching his opinions. Third, he has not

39

given an opinion as to what is required by Rule 23. His opinions are confined to an analysis of
the factual record to determine whether it demonstrates that class members meeting the class
definitions could be identified, and whether they share common features with named Plaintiffs.
As such, they are not legal opinions; they are opinions on which a court may rely to reach its
own legal conclusions about the class certification requirements. Cf. Romero v. Allstate Ins.
Co., 52 F. Supp. 3d 715, 723 (E.D. Pa. 2014) (striking expert report of law professor offered for
purposes of defeating class certification where the expert offered no particularized knowledge of
any of the factual issues relevant to a class certification analysis, but rather put forth his own
legal analysis based on his experience as a legal scholar of the class certification factors); Witt v.
Chesapeake Exploration, L.L.C., Civ. A. No. 10-22, 2011 WL 2790174, at *2 (E.D. Tex. July
14, 2011) (striking law professor’s report providing a summary of various legal authorities on
class certification issues and using his interpretation of these authorities to argue that the
requirements for class certification had been met in this case); Woodard v. Andrus, Civ. A. No.
03-2098, 2009 WL 140527, at *2 (W.D. La. Jan. 20, 2009) (rejecting expert report where
proffered testimony from law professor was focused exclusively on whether the legal standard
for class certification has been satisfied, rather than bearing on some factual inquiry).
Accordingly, the Motion to Strike is denied and the Becker Report is admitted into the
class certification record. We examine the merits of Dr. Becker’s opinions, including the weight
to which his conclusions are entitled, when we discuss the individual Rule 23 issues for which
they are offered.

V.

THE CLASS CERTIFICATION MOTION
The United States Court of Appeals for the Third Circuit requires us to “rigorously

assess” the available evidence to assure the prerequisites of Rule 23 are met and to “resolve
40

factual disputes by a preponderance of the evidence and make findings that each Rule 23
requirement is met or is not met, having considered all relevant evidence and arguments
presented by the parties.” In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 320-21 (3d
Cir. 2008). A plaintiff “must be prepared to prove that there are in fact sufficiently numerous
parties, common questions of law or fact, etc.” Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338,
350 (2011) (emphasis omitted). Failure to meet any of Rule 23(a) or 23(b)’s requirements
precludes certification. Danvers Motor Co., Inc. v. Ford Motor Co., 543 F.3d 141, 147 (3d Cir.
2008). It is the plaintiff’s burden to prove each of the prerequisites under Rule 23(a) and that the
class fits within the desired categories of class actions set forth in Rule 23(b) by a preponderance
of the evidence. In re Hydrogen Peroxide, 552 F.3d at 307, 316 n. 14, 320 (citation omitted); see
Hayes v. Wal-Mart Stores, Inc., 725 F.3d 349, 354 (3d Cir. 2013) (“It is plaintiff's burden to
show that a class action is a proper vehicle for this lawsuit”). Rigorous analysis will frequently
“entail some overlap with the merits of the plaintiff’s underlying claim. That cannot be helped.
‘[T]he class determination generally involves considerations that are enmeshed in the factual and
legal issues comprising the plaintiff’s cause of action.’” Dukes, 564 U.S. at 351 (alteration in
original) (quoting Gen. Tel. Co. of SW v. Falcon, 457 U.S. 147, 160 (1982)). The Third Circuit
has also held that issue certification under Rule 23(c)(4), like any other certification decision
under Rule 23, “must be supported by rigorous analysis.” Hohider v. United Parcel Serv., Inc.,
574 F.3d 169, 200-02 (3d Cir. 2009).
A.

Ocwen’s Preliminary Issues on Loss and Damages
1.

Plaintiffs’ Theory of Loss

Preliminary to its arguments on the Rule 23 requirements, Ocwen raises predicate issues,
the first of which is that Plaintiffs have proposed fundamentally flawed theories of causation and
41

ascertainable loss. It asserts that we have already rejected the central theory of Dr. Becker’s
model and should reject any attempt by Plaintiffs to resurrect it to demonstrate economic loss.
This argument has no merit.
Ocwen argues that Plaintiffs’ theory of economic loss assumes that Plaintiffs had to pay a
greater amount of interest over the life of a loan caused by the “undisclosed extension of the
amortization terms under [plaintiffs’ and putative class members’] modified loans.” (Def. Mem.
in Opp. to Mot. to Certify Class (Docket Entry #60) (“Def. Mem.”) at 17 (quoting Pls.’ Mem. at
51).) According to Ocwen, “[t]he central premise of [Dr. Becker’s] theory is the proposition that
whether a putative class member suffered ascertainable loss 11 or harm can be determined by a
comparison of the terms of the actual loan modification provided to each borrower with the

11

Ascertainable loss is an element of both the UTPCPL and NJCFA claims. As we have
previously stated, the essential elements of a UTPCPL claim are: (1) a deceptive act; (2) “an
ascertainable loss of money or property;” (3) that resulted from “the use or employment . . . of a
method, act, or practice declared unlawful by the UTPCPL;” and (4) “that the plaintiffs
justifiably relied on the deceptive conduct.” Abraham v. Ocwen Loan Servicing, LLC, Civ. A.
No. 14-4977, 2016 WL 2866537, at *10 n.3 (E.D. Pa. May 17, 2016) (citations omitted). To
prove a claim under the NJCFA, a plaintiff must show: ‘“(1) an unlawful practice, (2) an
ascertainable loss, and (3) a causal relationship between the unlawful conduct and the
ascertainable loss.’” Harnish v. Widener Univ. Sch. of Law, 833 F.3d 298, 305 (3d Cir. 2016)
(quoting Gonzalez v. Wilshire Credit Corp., 25 A.3d 1103, 1115 (N.J. 2011). We have
previously held that, where a plaintiff asserts omission-based claims, the “plaintiff must [also]
show that defendant (1) knowingly concealed (2) a material fact (3) with the intention that
plaintiff rely upon the concealment.” Abraham, 2016 WL 2866537, at *11 (internal quotations
omitted).
Ascertainable loss is not an element of the FDCPA claim. The essential elements of an
FDCPA claim are: “(1) [the plaintiff] is a consumer, (2) the defendant is a ‘debt collector,’ (3)
the defendant’s challenged practice involves an attempt to collect a ‘debt’ as the Act defines it,
and (4) the defendant has violated a provision of the FDCPA in attempting to collect the debt.”
Jensen v. Pressler & Pressler, 791 F.3d 413, 417 (3d Cir. 2015) (citation omitted). The FDCPA
provides that an entity that attempts to collect “a debt which was not in default at the time it was
obtained by such person” is not a “debt collector” subject to the FDCPA. See 15 U.S.C §
1692a(6)(F)(iii); McAndrew v. Deutsche Bank Nat’l Trust Co., 977 F. Supp. 2d 440, 448 (M.D.
Pa. 2013) (“A loan servicer . . . cannot be a ‘debt collector’ under the FDCPA unless the debt
was in default when it was obtained by the servicer.”).
42

hypothetical terms of what Dr. Becker calls a ‘but-for’ modification that differs from borrower to
borrower.” (Id. (quoting Becker Report at 22, Pls.’ Mem. at 51).) Ocwen notes that Becker
creates a “but-for” loan modification model that retains the reduced interest rate, the loan term,
and the new unpaid principal balance (including any principal forgiveness) of the actual
modification received by each plaintiff, but then shortens the amortization period.

Ocwen

contends that, although the obvious goal of Becker’s model
is to manufacture some form of assumed causation and measurable damages for
each borrower, plaintiffs’ hypothetical modification results in increased higher
monthly payments and presumes without analysis (or facts), a borrower’s actual
ability or willingness to pay those higher amounts — neither of which could be
established other than by case-by-case examination of each borrower’s ability and
desire to pay. . . .
Plaintiffs and the Becker Report base these “but-for” modification terms
on the unsupported assumption that, in entering their actual loan modifications,
putative class members would have “reasonably expected” the amortization
period applicable to their modified loans “to have been the same as the previously
disclosed amortization term of their loans.” Plaintiffs and the Becker Report,
therefore, “assume that Class members’ expectation of the balloon payment and
monthly payments would have been the balloon payment and [higher] monthly
payments that would have occurred had the modified loan been amortized over
the previously disclosed amortization term.”
(Id. at 18 (internal citations to Becker Report omitted; parenthetical and brackets in original).)
Ocwen notes that we have already considered and rejected as implausible the assumption that the
amortization period applicable to their modified loans was to have been the same as the
previously disclosed amortization term of their loans. See Abraham v. Ocwen Loan Servicing,
LLC., Civ. A. No. 14-4977, 2014 WL 5795600, at *8 (E.D. Pa. Nov. 7, 2014) (stating that “If a
loan’s monthly payment is lowered, the term of the loan is not extended, and a balloon payment
provision is added, the correct ‘mathematical imperative’ is that the amortization period of the
loan has to change. It is not reasonable, and is thus implausible, for Plaintiffs to plead reliance
on a purportedly implied amortization period term in their original loan documents, but then

43

ignore the equally implicit modification of the amortization period effected by the modification
agreements for the purpose of lowering their monthly payments.”). Specifically, we found that it
was implausible for Plaintiffs to expect that they retained the right to enforce the original
amortization period after they accepted the modification that reduced their current payments
because that expectation “would destroy the mutual benefits created by the modification, namely
reduced monthly payments over the loan term coupled with the balloon payment, in exchange for
Ocwen’s forbearance on collecting the loan as originally agreed.” Id. at *9. In light of our
rejection of the assumptions underlying plaintiffs’ theory of harm, Ocwen concludes that we
should likewise reject that theory here and disregard the Becker Report’s opinions regarding the
causation and existence of economic loss. In other words, because we have found it implausible
that Plaintiffs were entitled to the original amortization period, they cannot, as Dr. Becker
proposes, assert a theory of economic loss based upon that assertion.
Plaintiffs respond that our prior decision does not foreclose Dr. Becker’s hypothesizing
the original amortization term into his model. They argue that we were not addressing the
validity of a damages model in our earlier decision, but rather addressing a completely different
issue, namely whether Plaintiffs could state a breach of contract claim against Ocwen based upon
Ocwen’s failure to disclose changes to amortization periods of the Kaminskis’ and Caves’ loans.
(Pls.’ Reply in Support of Pls.’ Mot. for Class Cert. (“Pls.’ Reply”) (Docket Entry #70) at 7.)
Plaintiffs note that we specifically differentiated the UTPCPL and NJCFA claims — for which
Dr. Becker’s model is applicable — from the implausible contract claim stating:
First, unlike the proposed SAC’s breach of contract claim — where liability is
premised on a specific, non-existent contract term — the new version of the
UTCPCL claim merely incorporates an additional factual allegation in support of
the previously pleaded theory of the claim. Having previously held that the claim
was plausible because it alleged deceptive conduct that was separate and distinct
from a breach of contract, namely the failure “to disclose the amount of the
44

balloon payment or a method by which it will be calculated,” Abraham, 2014 WL
5795600, at *4, the addition of a more specific explanation of what was
allegedly not disclosed — the amortization period — cannot detract from the
claim’s plausibility.
(Id. at 7-8 (quoting Abraham, 2016 WL 2866537, at *10 (emphasis added in Pls.’ Reply)).)
Moreover, they note that we accepted the premise that damages other than contract damages
could flow from Ocwen’s “failure to disclose the balloon payment that would result from its
adherence to the contract.” Abraham, 2016 WL 2866537, at *10 (citation omitted); see also id.
at *11 (holding that the same reasoning applies to Plaintiffs’ NJCFA claim). Accordingly,
Plaintiffs argue that Dr. Becker’s theory of damages is not foreclosed.
Plaintiffs are correct.

Our earlier discussion of the implausibility of the breach of

contract claim was grounded in the allegation that Ocwen breached a term that was not contained
in the original contract, namely the specific amortization term used to calculate each Plaintiff’s
original monthly payment. We held that because that term was not contained in the original
contract, it could not have been retained in the Loan Modification even though that document
provided that all original terms remained in force unless specifically modified. Accordingly, any
claim based upon Ocwen failing to apply the original amortization term to the modified loan was
implausible.
While Ocwen objects that Becker’s attempt to show economic loss by applying the
original amortization term to the but-for world is improper since we have already held that there
could be no contract liability based upon that “failure,” Dr. Becker’s purpose is not to create a
model to calculate contract damages. He has, however, made clear that his model relies on the
pre-modification amortization term on the ground that the borrower’s original loan documents all
provide that their terms remain in force if not otherwise modified. Since the loan modification
did not disclose a new amortization term or provide a balloon disclosure that estimated the
45

balloon payment due at the end of a newly-created amortization schedule, Becker insists that a
but-for world requires that the pre-modification amortization term be used because “Class
members could have reasonably expected the amortization term of the modification to have been
the same as the previously disclosed amortization term of their loans.” (Becker Report at ¶ 40.)
Thus, he assumes for his model that “the balloon payment and monthly payments would have
been the balloon payment and monthly payments that would have occurred had the modified
loan been amortized over the previously disclosed amortization term.” (Id.)
Our prior discussion of the contract claim does not impugn Becker’s model. While
Ocwen disclosed that the modified loans included a balloon payment feature, the remaining
claims are based upon Ocwen’s alleged failure to disclose in the modification documents both a
pro forma calculation of the balloon payment due at the end of the loan term (assuming that all
scheduled payments are made when due), as well as the change in amortization schedule that
permitted the borrowers to make lower monthly payments while not extending the loan term.12

12

See SAC ¶ 97 (alleging an unconscionable commercial practice in violation of the
UTPCPL from the use of Ocwen’s Balloon Disclosure, “which, contrary to its name, does not
reveal the amount of the balloon payment the borrower will owe at the end of the term of the
loan even if the borrower makes all payments in full and on time, and does not disclose how such
a balloon payment will be calculated”); ¶ 98 (alleging that unbeknownst to Plaintiffs and the
Class, “Ocwen changed the amortization terms of their loans without disclosing this material
change in the terms of their loans”); ¶ 99 (alleging that, as a result of this change in the
amortization terms, Ocwen’s statement in the loan modification agreements that ‘“[a]ll
covenants, agreements, stipulations, and conditions in your Note and Mortgage will remain in
full force and effect, except as herein modified....” is false, misleading, and deceptive and
constitutes an unfair and unconscionable commercial practice’”); ¶ 114 (alleging deceptive acts
or practices in violation of the CFA from Ocwen’s representing to Plaintiffs and members of the
New Jersey Class that ‘“[a]ll covenants, agreements, stipulations, and conditions in your Note
and Mortgage will remain in full force and effect, except as herein modified...,’ when in
actuality, Ocwen changed the amortization terms of their loans, as of the effective date of their
loan modifications, without disclosing this material change in the terms of their loans.”). See
also id. ¶¶ 58,77 (alleging that as a result of the changes in the amortization term, Plaintiffs
“sustained economic harm including, but not limited to, being required to pay a greater amount
46

Distinguishing a model proposing to show “benefit of the bargain contract damages” arising
from a change in a contract term from a model proposing to show damages from an
unconscionable commercial practice resulting from an undisclosed change may only be a
difference in semantics. Nonetheless, Becker’s damages model does not appear to claim that the
Plaintiffs have sustained an ascertainable loss because they did not receive the “benefit of the
bargain” of their original amortization schedule after their loan was modified to reduce their
monthly payments. Rather, he applies the original amortization schedule to show how the
premise of the remaining claims — the failure to disclose a pro forma calculation of the balloon
payment due at the end of the loan term (due to the undisclosed amortization change and
assuming that all scheduled payments are made when due) — allegedly changed the Plaintiffs’
bottom line cost for their modified loans. In other words, Becker’s model attempts to isolate the
undisclosed amortization change by assuming all of the other terms of the modified loan remain
as written, while changing the amortization schedule to calculate the bottom line cost differential
if that undisclosed term had not changed. Becker’s model therefore does propose a method for
ascertaining loss using evidence that is common to the class since the Pennsylvania and New
Jersey classes premise membership on receiving a modification that deceptively failed to
disclose the amount of the balloon payment that the borrower owed at the end of the term of the
loan based on the change to the amortization schedule.
2.

Becker’s Model Cannot Be Common Evidence

Ocwen next contends that Plaintiffs’ theory is incapable of proof through evidence that is
common to the class, rather than individual to its members because the proposed
theory/methodology would require multiple individualized steps for each of the putative classes.
of interest than they would have been required to pay under a loan amortized over” their original
amortization periods).
47

These steps include: (1) establishing the “previously disclosed” or “last disclosed” amortization
period for each putative class member, (see Becker Report at 23-24, 26 (“because the
amortization term was not disclosed, Class Members could have reasonably expected the
amortization term of the modification to have been the same as the previously disclosed
amortization term of their loans”)); (2) reviewing what, if any, amortization period had been
disclosed to each putative class member, whether in their original loan documents, any prior
modification agreements, or through verbal disclosure. (See Becker Tr. at 163-64 (stating in
pertinent part that “certainly you would need to have some proof of disclosure to all the Class
Member’s to make that calculation); 165-67 (hypothesizing that, although he looked at the
named Plaintiff’s individual loan documents, there could be a database “disclosing that in
Ocwen’s files that would list all of these potential Plaintiffs and would show their most recent
loan modification and the amortization terms”); (3) creating a “but-for” loan modification for
each putative class member based upon an amortization schedule using individualized loan terms
for each putative class member; (4) individually comparing the “but-for” amortization schedule
and total “but-for” monthly P&I payments to be made over the life of the “but-for” loan with the
actual amortization schedule and the actual monthly P&I payments to be made over the life of
the actual loan (Becker Report at 24-26, 29); and (5) determining the difference between the
actual and “but-for” modification P&I payments over the life of the loan and calculate the
present value of that difference. (See id. at 29-33.) Ocwen contends that this process would
have to be individually repeated for each putative class member.
Plaintiffs respond that,
Ocwen attempts to obscure the effectiveness and relative simplicity of Dr.
Becker’s methodology by asserting that it would require evaluation of data points
unique to each Class member’s loan. . . . In reality, all that is required is
determining the effect of the change in a single variable – the amortization term.
48

Specifically, Dr. Becker’s formula compares the terms of the modified loan –
which Ocwen possesses – and the terms of the “but-for” modification, which is
the same as the modified loan, with the sole exception of the amortization term.
If the amortization term was changed at the time of the modification, then the
“but-for” modification would be based on the amortization term that Ocwen
applied to the loan immediately prior to the modification. Ocwen does not deny
that its databases recorded the pre- and post-modification amortization terms.
Indeed, Ocwen has produced this data for each of the Plaintiffs. Once the actual
and “but-for” modification terms are determined, the only thing that remains is to
apply a mathematical formula to compare the two scenarios. No individual proof
by Class members is required to do this – just a transfer of loan data from Ocwen
to a claims administrator that is capable of implementing Dr. Becker’s formulaic
methodology.
(Pls.’ Reply at 71-72.) Additionally, Plaintiffs point out that there would be no need to use this
methodology to calculate individual damages for the Pennsylvania and FDCPA Classes, as they
are entitled to statutory damages under the UTPCPL13 and FDCPA 14; only the New Jersey Class,

13

The UTPCPL provides that,

(a) Any person who purchases or leases goods or services primarily for personal,
family or household purposes and thereby suffers any ascertainable loss of money
or property, real or personal, as a result of the use or employment by any person
of a method, act or practice declared unlawful by section 31 of this act, may bring
a private action to recover actual damages or one hundred dollars ($100),
whichever is greater. The court may, in its discretion, award up to three times the
actual damages sustained, but not less than one hundred dollars ($100), and may
provide such additional relief as it deems necessary or proper. The court may
award to the plaintiff, in addition to other relief provided in this section, costs and
reasonable attorney fees.
12 P.S. § 201-9.2
14

The FDCPA provides in pertinent part that,

any debt collector who fails to comply with any provision of this subchapter with
respect to any person is liable to such person in an amount equal to the sum of-(1) any actual damage sustained by such person as a result of such failure; (2)(A)
in the case of any action by an individual, such additional damages as the court
may allow, but not exceeding $1,000; or (B) in the case of a class action, (i) such
amount for each named plaintiff as could be recovered under subparagraph (A),
and (ii) such amount as the court may allow for all other class members, without
regard to a minimum individual recovery, not to exceed the lesser of $500,000 or
49

involving approximately 8,454 loans, would require individual damage calculations. (Id. at 8.)
This process, they assert, is no different from applying uniform mathematical formulae to
implement plans of allocation in an antitrust or securities class action, which are routinely
approved by courts.
We find that Ocwen’s common proof argument is meritless. The allegation that the
measure of each class members’ loss is different does not control whether there is a common
method through which it may be ascertained that each members’ suffered an ascertainable loss.
See Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 375 (3d Cir. 2015) (stating that postComcast, ‘“individual damages calculations do not preclude class certification under Rule
23(b)(3)’” (quoting Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1437 (2013) (Ginsburg, J. &
Breyer, J., dissenting) (citing 2 William B. Rubenstein, Newberg on Class Actions § 4:54 (5th
ed. 2012))) (collecting cases). The Neale Court specifically held that it is “a misreading of
Comcast” to interpret it as “preclud[ing] certification under Rule 23(b)(3) in any case where the
class members’ damages are not susceptible to a formula for classwide measurement.” Id. at 375
(quoting In re Deepwater Horizon, 739 F.3d 790, 815 & n.104 (5th Cir. 2014)). Rather, the
Neale Court agreed with sister circuits that “Comcast does not mandate that certification
pursuant to Rule 23(b)(3) requires a finding that damages are capable of measurement on a
classwide basis.” Id. at 375 n.10 (collecting cases). Dr. Becker’s Report provides a common
mathematical formula for which various values for each class member garnered from Ocwen’s
databases may be inputted. The fact that the formula must be applied separately to each class
member does not mean that the formula is not common evidence.

1 per centum of the net worth of the debt collector. . . .
15 U.S.C. § 1692k.
50

3.

Becker’s Theory of Harm is not Supported by the Record

Ocwen next argues that Plaintiffs’ method for determining ascertainable loss and
calculating the value of that loss suffers from a number of fundamental flaws that impact our
rigorous analysis of both the weight and credibility of Plaintiffs’ theory and the Becker Report’s
conclusions. (Def. Mem. at 21.)
a.

Plaintiffs did not Expect a Shorter Amortization Period

Ocwen first asserts that Dr. Becker’s “but-for” comparison lacks factual support since
none of the named plaintiffs “has testified that they would have ‘expected’ a shorter amortization
period”; rather, they testified that they “would not have entered into the actual modification had
the estimated amount of the balloon payment been disclosed.”

(Id. (emphasis in original;

footnote omitted).) On this basis, Ocwen contends, “the more appropriate ‘but-for’ scenario for
assessing harm” should be to examine each plaintiff’s and putative class member’s actual premodification loan terms. (Id.)
Plaintiffs respond that
Ocwen is wrong. The enormous balloon payments under the modified loans are
the result of extending the amortization terms. Dr. Becker’s Report demonstrates
that such balloon payments would be substantially lower for the Caves and the
Kaminskis under the “but-for” scenarios. [] Moreover, Dr. Becker’s analysis,
unlike that of Ocwen’s expert, takes into account the actual terms of the
Modification Agreements, which provide that “[a]ll covenants, agreements,
stipulations, and conditions in your Note and Mortgage will remain in full force
and effect, except as herein modified. . . .” [] Thus, Plaintiffs and the Classes
were justified in believing that the amortization terms of their loans would remain
unchanged.
(Pls.’ Reply at 9-10 (internal citations omitted).) We find that whether the named Plaintiffs or
class members “expected a shorter amortization period” is inapposite. Plaintiffs’ claims are
based on the allegedly deceptive failure to disclose the longer period and the pro forma balloon
payment amount that results from it. Ocwen does not explain how Plaintiffs could have expected
51

information they claim was deceptively withheld from them. The fact that Plaintiffs testified that
they would not have entered into the actual modification had the estimated amount of the balloon
payment been disclosed does not impugn Dr. Becker’s attempt to show ascertainable harm from
that allegedly deceptive omission; it arguably support it.
b.

Becker Assumes Eligibility

Second, Ocwen argues that, while the damage theory assumes each putative class
member would have been eligible for a modification based on the “but-for” terms, would have
agreed to those terms, and would have been able to pay the higher monthly payments, 15 neither
Plaintiffs nor Dr. Becker provide any support for these assumptions.

Further, Dr. Becker

testified that he has no knowledge as to whether putative class members could have afforded or
would have accepted the higher “but-for” monthly payments. 16

Ocwen notes that Becher

considered the borrowers’ abilities to pay the higher but-for payment to be outside of the scope
of his assignment and irrelevant to his analysis. (See Becker Tr. at 202-03 (testifying that “I
15

See Forbes Decl. Ex. EE, July 20, 2016 Deposition of Brian C. Becker, Ph.D. (“Becker
Tr.”) at 225-26 (stating in response to the proposition that if a borrower could not afford the
higher monthly payments called for in his but-for model that “[a]t this stage I haven’t been able
to analyze that. All I’ve been able to do is assume but if the other assumptions come into play I
would have to think about that and whether and how that would come into play. But since the
differences aren’t that significant it hasn’t been a source of focus between the monthly payments
for the but-for and the actual world.”).)
16

See Becker Tr. at 280 (“Q. It’s fair to say that your conclusions and calculations for
the Kaminski’s [sic] and the Cave’s [sic] are based on the assumption that both the Kaminski’s
[sic] and the Cave’s [sic] could have afforded and would have accepted the higher but-for
modification terms that you posit for them; isn’t that correct? A. I don’t know that I’m
assuming they would have accepted it, per se, but I’m assuming that from — that we can use that
from a calculation perspective for damages. Q. And it’s correct, is it not, for any putative Class
Member you have no information as we sit here today as to whether or not they could either have
afforded or would have accepted any but-for higher monthly payment of interest and principal
that you would posit for them; isn’t that correct? . . . THE WITNESS: As I sit here today, no.” .
. . . Q. Right. And you only know that by looking at the individual circumstances of any given
putative Class Member; isn’t that correct? . . . THE WITNESS: Or looking at Ocwen’s analysis
of each of those individual Class members in a database. Yes.
52

haven’t been asked to opine on that at this time” in relation to putative class member’s ability to
pay higher monthly payments), 207-08.) Dr. Becker, however, has admitted that determining
whether a putative class member could afford the higher “but-for” monthly payment amounts
would depend on circumstances specific to the loan at issue and that “[e]ach case would be
different.” (Id. at 209-10 (putative class members “have all different abilities and willingness
and levels of paying and some that [are] able to pay, don’t, and some that [are] unable to pay still
do . . . but it wasn’t an assignment I was asked to do yet”).) Ocwen argues that it is implausible
to assume that:
any borrower would want to make the higher monthly payment called for by Dr.
Becker’s theory when in actuality and practicality, the whole purpose of
modifying a loan is to give the borrower the lowest possible monthly payment
obligation. However, none of the above could be established without the
individual testimony of each individual borrower - the credibility of which would
have to be measured by the fact-finder - as well as the testimony of Ocwen as to
whether any borrower was qualified for the hypothetical “but-for” modification
calling for a higher monthly payment.
(Def. Mem. at 22.) Plaintiffs respond that:
Again, Ocwen is incorrect. Ocwen’s argument would make sense only if
Plaintiffs were seeking implementation of the “but-for” modifications as the
remedy for the Classes. Of course, that is not the remedy Plaintiffs seek, and
Plaintiffs’ damages theory does not depend upon such assumptions. Dr. Becker’s
damages methodology is an economic model, based upon sound economic theory,
created to measure the harm inflicted by Ocwen’s unfair and deceptive practices.
(Pls.’ Mem. at 10.)
We find that whether a class member would have been eligible for a modification based
on the but-for terms, would have agreed to those terms, and would have been able to pay the
higher monthly payments, misses the point of Dr. Becker’s model and does not diminish the
weight we afford his opinion. Becker is attempting to demonstrate that class members suffered
ascertainable harm from the modifications they actually entered into, not that they should have

53

received — or even may have wanted — the but-for modification assumed in his model. As a
method of showing how borrowers’ bottom line results were changed by the allegedly deceptive
balloon payment omission in the modification they were offered and received, the model is not
rendered unsound by failing to cite evidence that borrowers were eligible to receive a loan that,
by definition, was never offered to them and that they did not receive.
c.

Becker Ignores Relevant Information

Third, Ocwen argues that Plaintiffs’ theory of harm fails to consider several factors
relevant to whether a putative class member suffered ascertainable loss as a result of entering
into a loan modification agreement that omitted the estimated balloon payment amount. Those
factors include: (1) whether the putative class member’s modified monthly payments are lower
than their pre-modification monthly payments; (2) whether the putative class member could
afford the pre-modification monthly payments; (3) whether a portion of the outstanding loan debt
was reduced or forgiven; and (4) whether the borrower had equity in their home. (Def. Mem. at
22-23 (citing Floyd Report at 17-18).) Ocwen notes that Dr. Becker admits that the forgiveness
of principal and fees bestows a benefit on borrowers, 17 but “absent from plaintiffs’ theory is
consideration of the undeniable benefits that the loan modification agreements provided to the
named plaintiffs and putative class members by curing their defaults, or avoiding imminentlylikely defaults on their loans, bringing their loans current, and avoiding foreclosure and loss of
their homes.” (Id. (citing Floyd Report at 24-25).)

17

See Becker Tr. at 82 (“certainly forgiving principal there’s no take from the borrower’s
perspective. So that is a net gain or reducing late fees, there is no take from the borrower there”).
Becker went on to concede that whether any given borrower received a benefit “can be
determined in a general way, but the numbers are different across borrowers. So you would get a
different answer across each borrower.” Id.
54

We find that Ocwen’s criticism is valid and goes to the weight we afford to Dr. Becker’s
analysis. Dr. Becker has entirely failed to account for the benefits each class member may have
received from the loan modification. It stands to reason that they enjoyed financial benefits from
being permitted to make lower monthly payments, that they arguably entered into the
modification because they could not afford the pre-modification monthly payments, and the
record establishes that some borrowers had portions of their outstanding loan debt or fees
reduced or forgiven. If the modification permitted class members to remain in their homes when
faced with foreclosure, they arguably benefited from conserving their equity and retaining
ownership until the housing market recovered. Floyd opines that each of these benefits impacts
Dr. Becker’s assertion of ascertainable loss. (Floyd Report at 5.)
Dr. Becker’s response to Floyd’s criticism is unpersuasive. He rejects the importance of
the lower monthly payments afforded by the modification because “the appropriate comparison
is not the overall monthly payment, but the cost of the loan in terms of interest paid []. Under
that comparison, as shown in the Becker Report, the borrower does not ‘benefit’ from Ocwen’s
failure to disclose because the Kaminskis would have paid less in interest under the previously
disclosed amortization term.” (Becker Supplemental Report ¶ 7) (internal citation omitted).)
This does not address Floyd’s contention that the lower monthly payments provided offsetting
benefits for which Becker did not account, and Becker does not assert that those benefits had no
value while at the same time he refuses to assign them any value.
In response to Floyd’s assumption that, without the Ocwen modification a borrower
would have faced foreclosure and thus benefited from being able to stay in his or her home, Dr.
Becker explains that the question as to whether a borrower would face imminent foreclosure is
only relevant to the Floyd Report’s assumed but-for world in which Ocwen does not modify the

55

borrower’s loan. (Id. ¶ 8.) Becker asserts that this factor is flawed since it assumes the borrower
would have received no modification, and without a proper balloon disclosure a borrower could
not make an informed decision whether to accept the modification, seek alternate lodging, or try
to cure their default through other means such as bankruptcy proceedings. (Id. ¶ 14.) Rather
than defend his own model, Becker simply criticizes Floyd’s model. We find that Floyd’s
criticism that Becker failed to account for the positive impact of the borrowers’ receipt of loan
modifications is aptly drawn. However, this criticism alone does not support a finding that
Plaintiffs cannot show an ascertainable injury using evidence that is common to the class.
Because these arguments challenge the weight of Plaintiffs’ expert evidence, not its fit or
reliability, it merely informs our rigorously analyze the evidence.
d.

Becker’s Calculation Errors

Finally, Ocwen points to flaws identified in the Floyd Supplemental Report concerning
Plaintiffs’ method for determining ascertainable loss for the Caves and Kaminskis. (Def. Mem.
at 24 (citing Floyd Supplement Report 2-4).) Floyd identifies (1) an error in the calculation of
accrued interest for the Caves and (2) an error in the application of the appropriate date on which
to calculate the present value of plaintiffs’ P&I payments. (Floyd Supplemental Report at 2-3.)
The Floyd Supplement Report also (3) corrects the Becker Report’s “arbitrarily-chosen 2%
investment rate of return that the plaintiffs could have realized had they invested the difference
between the monthly payment amounts in the actual and “but-for” worlds, and applies proper
investment-rates-of-return available during the relevant time periods.” 18

18

(Def. Mem. at 24

Ocwen argues the 2% rate is flawed noting that Dr. Becker testified that “as a general
rule the higher rate at which the Caves and the Kaminskis could invest to the degree that they
were investing that money and getting more than 2 percent or 3 percent, that would make the
actual world relatively better than the but-for world and would lower or potentially erase the
damages here.” (See Becker Tr. at 232.)
56

(citing Floyd Supplemental Report at 3-4).) Ocwen notes that, in correcting these flaws, the
Floyd Supplemental Report calculates that the Kaminskis’ Loan Modification Agreement
provided them a $1,350.41 financial benefit and the Caves’ Loan Modification Agreement
provided them a $1.13 financial benefit. (See Floyd Supplement Report at 5.) Thus, it concludes
that even under Plaintiffs’ theory, none of the named Plaintiffs have suffered an ascertainable
loss of money or property.
Plaintiffs respond only to the assertion that the 2% discount rate was improper and do not
address the other two errors. 19 On the discount rate, Plaintiffs argue that:
Ocwen’s entire argument is based upon an extremely high, cherry-picked
“investment rate of return” that Mr. Floyd identified with the benefit of hindsight.
Floyd Tr. at 158 (agreeing, “I did use information historically realized, yes.”).
Mr. Floyd is handicapping a race that’s already been run. Mr. Floyd admitted that
over the same time period, there were investment vehicles that lost money. []
Mr. Floyd admits that his cherry-picked investment vehicle – a particular
Vanguard Fund – is not a risk free investment, and is subject to interest rate risk,
income risk and credit risk, among other things. [] Moreover, Mr. Floyd had no
idea whether Plaintiffs saved any money that they could have invested, and that
he is merely suggesting a hypothetical “investment opportunity.” [] Furthermore,
Mr. Floyd did not consider whether Plaintiffs would have had sufficient funds to
open a brokerage account that would have allowed them to purchase shares of his
preferred Vanguard fund, or whether brokerage fees and commissions for trades
would have eroded their investment returns.
(Pls.’ Reply at 10 (some internal citations omitted).) We reject Floyd’s criticism that Becker’s
discount rate was too low. If the borrowers had used their “freed-up” capital to make additional
principal payments, their rate of return on that “investment” would equal the interest rate they
were paying on their modified loans, which for Abraham and the Kaminskis was 2%, and for the
Caves was 2% for the first 60 months and 4.5% thereafter. This provides some basis for
19

The Court asked Plaintiffs’ Counsel at oral argument if Dr. Becker made calculation
errors. (N.T. 5/16/17 at 29.) Counsel responded “he might have made some arithmetic errors. . .
. We think that the arithmetic mistakes are attributable primarily to the fact that Dr. Becker
couldn’t go in and use Ocwen’s proprietary, real-servicing system to run these figures. Dr.
Becker had to reconstruct everything.” (Id. at 29-31.)
57

Becker’s use of the 2% discount rate. Assuming that borrowers would enjoy a higher than 2%
discount rate would only be a valid criticism if, in the abstract, borrowers chose to forego
reducing debt in favor of some other investment. Plaintiffs aptly assert that, while one may
choose a better investment return in hindsight, it is not reasonable to expect a borrower to always
make better forward-looking choices.
Ocwen’s arguments on the other two errors, which we fully credit, change the bottom line
“loss” result for the Caves and Kaminskis. Floyd has created a chart to display his corrections:

Plaintiff

Financial
loss or
benefit to
the
named
Plaintiffs
per
Becker
Report

Financial loss
or benefit to
the named
Plaintiffs per
Becker Report
Corrected for
Accrued
Interest

Cave
$50.36 loss $0.02 loss
Kaminski $3.58 loss no change
Abraham $0
no change

Financial loss or
benefit to the
named Plaintiffs
per Becker
Report
Corrected for
Accrued Interest
and Omitted
Days

Financial loss or benefit
to the named Plaintiffs
per Becker Report
Corrected for Accrued
Interest, Omitted Days,
and Assuming
Investment in ETF
(VGLT)

$0.05 benefit
$11.92 benefit
no change

$1.13 benefit
$1,350.41 benefit
no change

(Floyd Supplemental Report at 5 (internal footnotes omitted).) The undisputed calculation errors
reduce the Caves’ financial “loss” as found by Becker’s from $50.36 to a net benefit of $0.05.
The Kaminski’s “loss” of $3.58 as found by Becker becomes a net benefit of $11.92 when the
correction is made. Thus, even without considering the discount rate, the errors in Becker’s
findings are (1) relevant to the Kaminskis’ ability to serve as class representatives and (2) call
into question whether Becker’s model may serve as common evidence of ascertainable loss for
the New Jersey Class for whom statutory damages are not available.

58

Overall, we partially credit Ocwen’s arguments concerning the weight we accord to Dr.
Becker’s conclusions. Becker has failed to account for benefits each class member may have
received from the loan modification, and his calculation errors call into question the Kaminskis’
ability to serve as class representatives since they may have suffered no ascertainable loss to
support a claim that does not provide for statutory damages. For Abraham, who suffered no
ascertainable loss from her loan modification because her amortization period was not extended
and her principal was forgiven, and for the Caves, for whom the correction shows they suffered
no monetary loss, we conclude that the faults with Becker’s conclusions is not determinative
since these Plaintiffs assert that they can show ascertainable loss with regard to the classes that
Abraham and the Caves seek to represent in the form of an “informational injury” — discussed
more fully below — which allows those Classes to receive statutory damages in lieu of actual
monetary losses.
B.

Ocwen’s Preliminary Issues on the Proposed Class Definitions

In addition to making preliminary arguments about the Plaintiffs damages model, Ocwen
also asserts preliminary arguments concerning the class definitions.
1.

The Pennsylvania and New Jersey Classes are Overbroad

Ocwen first argues that the Plaintiffs’ proposed Pennsylvania and New Jersey Classes are
overbroad and should not be certified because Plaintiffs have failed to include ascertainable loss,
causation, and justifiable reliance in the class definitions. Because each of these are essential
elements of the UTPCPL and NJCFA claims, Ocwen contends that the classes may contain
members who have no right to recover relief from Ocwen. (Def. Mem. at 25.) Second, it argues
that since, under Dr. Becker’s model, some Plaintiffs like Abraham have no ascertainable loss
because their loan modification did not change the amortization period, they had their interest

59

rates lowered, or they had debt forgiven, a class definition that fails to exclude such members is
improper. (Id. at 26.) Finally, Ocwen also incorporates its earlier arguments regarding the
benefits the Plaintiffs have received but ignored, and the individualized calculations needed to
show ascertainable loss as additional reasons why the classes are overbroad. (Id. at 27.)
Plaintiffs respond that Ocwen’s argument overlooks the United States Supreme Court’s
decision in Tyson Foods, Inc. v. Bouaphakeo, which teaches that, “for purposes of class
certification, only the named plaintiff needs to have an ascertainable loss,” and a proposed class
is not improperly certified where it “may include members who have not sustained any
compensable loss.” (Pl. Reply Mem. at 11-12 (citing 136 S. Ct. 1036, 1049 (2016) (stating in
Fair Labor Standards Act class action that a court is permitted use of representative sample
evidence to establish class-wide liability of defendants and leaving open the possibility that
workers who could not prove that they were denied overtime wages and have no legal right to
any damages can nevertheless share in class recovery). Plaintiffs contend that there is no bar to
class certification because Dr. Becker’s submissions demonstrate that the Kaminskis and the
Caves have sustained actual monetary losses.
Plaintiffs’ citation to Tyson Foods is unavailing. Plaintiffs elide over the fact that the
case was an opt-in collective action under the Fair Labor Standards Act, not a Rule 23 class
action. Case law suggests that Tyson Foods is inapplicable to Rule 23 classes since “Rule 23
actions are fundamentally different from collective actions under the FLSA.”

Genesis

Healthcare Corp. v. Symczyk, 133 S. Ct. 1523, 1529 (2013) (citation omitted); see also Halle v.
W. Penn Allegheny Health Sys. Inc., 842 F.3d 215, 224 (3d Cir. 2016) (noting “unfortunate side
effect of the often blurred lines between” Rule 23 and FLSA, and stating that “[w]hen a named
plaintiff files a complaint containing FLSA collective action allegations, the mere presence of the

60

allegations does not automatically give rise to the kind of aggregate litigation provided for in
Rule 23.”)
One “fundamental[] difference” between Rule 23 and FLSA collective actions is that, in
the latter plaintiffs must “opt-in” to the class, rather than “opt-out,” which occurs in a Rule
23(b)(3) class action. Halley, 842 F.3d at 225; Bobtyk v. Durand Glass Mfg. Co., Inc., 50 F.
Supp. 3d 637, 642 (D.N.J. 2014). In addition, in a Rule 23 class, plaintiffs must establish that
“the putative class meets the threshold requirements of Rule 23(a) as well as one of the three
Rule 23(b) categories,” while in an FLSA collective action, plaintiffs must only establish that
they are “similarly situated.” Bobtyk at 641-42. Every plaintiff who opts in to a collective
action is a party, whereas unnamed class members in Rule 23 class actions are not. Halley at
225. The holding in Tyson Foods — that only the named plaintiff needs to have an ascertainable
loss and a proposed class is not improperly certified where it may include members who have not
sustained any compensable loss — is fundamentally at odds with the Rule 23 predominance,
typicality, and adequacy requirements that depend upon the named plaintiff having the same
legal claims as those absent class members who will be bound by the result of the litigation.
Second, Plaintiffs argue that the Third Circuit has rejected the notion that a class cannot
be certified because it is purportedly “overbroad.” (Pls.’ Reply at 12 (citing Byrd v. Aaron’s
Inc., 784 F.3d 154, 160 (3d Cir. 2015), as amended (Apr. 28, 2015) (reversing on abuse of
discretion grounds the magistrate judge’s ruling that the “classes were ‘overly broad’ because not
‘every [user of a] computer upon which Detective Mode [spyware] was activated will state a
claim under the ECPA for the interception of an electronic communication.’”).) This is also a
misinterpretation of precedent. The Byrd Court held only that overbreadth should not be injected
into the ascertainability analysis. See Byrd, 784 F.3d at 168-69. But, the Third Circuit affirmed

61

that overbreadth is “a potential predominance problem” rather than an ascertainability issue, and
“[t]o the extent Defendants meant to challenge any potential differences between the proposed
class representatives and unnamed class members, such differences should be considered within
the rubric of the relevant Rule 23 requirements — such as adequacy, typicality, commonality, or
predominance.” 20 Id. at 167, 169.
Although Ocwen raises the overbreadth issue as a preliminary reason to deny
certification, we find that its various parts are more appropriately considered with respect to
ascertainability, cohesion, and the Rule 23(b) requirements to which they relate. 21

20

In response to Ocwen’s overbreadth argument, Plaintiffs additionally argue that they
have properly asserted their standing to bring their claims based on a theory that they have
suffered an informational injury. This argument is curious since Ocwen’s overbreadth
contention does not implicate constitutional standing, but rather asserts that the class contains
members who suffered no ascertainable loss and thus have no plausible claim to relief under the
statute. (See Def. Sur Reply in Opp. to Pls.’ Mot. for Class Cert. (Docket Entry #73-2) at 2
(“Plaintiffs improperly conflate their inability to establish ‘ascertainable loss,’ an essential
element of their UTPCPL and NJCFA claims, on a class-wide basis, with ‘injury-in-fact’ for
Article III standing purposes.”); see also id. at 3 (“Ocwen has not challenged either of these
proposed state classes on Article III grounds, and thus, discussion of ‘informational injury’ is a
red herring”).) Ocwen’s standing argument is separate from its overbreadth argument, is limited
to the FDCPA Class, and raises completely different issues that do no overlap. We discuss this
issue later.
21

We do address one preliminarily argument outside the Rule 23 rubric: Ocwen’s
contention that Plaintiffs failed to make ascertainable loss, causation and reliance part of the
class definitions. We reject this argument. Had Plaintiffs incorporated those essential elements
of their statutory claims into the class definition it would have created an improper failsafe class.
A fail-safe class is “one that is defined so that whether a person qualifies as a member depends
on whether the person has a valid claim.” Messner v. Northshore Univ. HealthSystem, 669 F.3d
802, 825 (7th Cir. 2012); see also, e.g., Slapikas v. First Am. Title Ins. Co., 250 F.R.D. 232, 25051 (W.D. Pa. 2008) (defining fail-safe class as one “that impermissibly determines membership
upon a determination of liability”); Bell v. Cheswick Generating Station, Genon Power Midwest,
L.P., Civ. A. No. 12-929, 2015 WL 401443, at *4 (W.D. Pa. Jan. 28, 2015) (defining fail-safe
class as one that ‘“requires the court to address the central issue of liability in the case’”) quoting
Jackson v. Se. Pa. Transp. Auth., 260 F.R.D. 168, 182 (E.D. Pa. 2009))). A fail-safe class
presents ascertainability problems because membership “beg[s] the ultimate question underlying
the defendant’s liability in the case,” and “such liability-begging definitions are administratively
infeasible, as the inquiry into class membership would require holding countless hearings
62

2.

Time-barred Claims

Ocwen next argues that the FDCPA class cannot be certified because the Caves’ claim
under the FDCPA is time-barred. According to Ocwen, the Caves, who are the only named
Plaintiffs asserting that claim, see SAC ¶ 103, did not include the claim in any pleading until
February 14, 2013. The claim, it continues, accrued on July 8, 2011, the date the Caves entered
into their loan modification. Ocwen argues that the claim is thus time-barred under the one year
statute of limitation applicable to FDCPA claims. See 15 U.S.C. § 1692k(d). We reject this
argument.
The Caves included a FDCPA claim in their initial class action complaint filed on July
20, 2011 in the related action styled Cave v. Saxon Mortgage Services, Inc., et al., Civ. A. No.
11-4586 (“Cave I”). Paragraph 70 of the initial complaint in Cave I alleged that the Ocwen
modification offer did not include an amortization schedule, but it did contain a
‘BALLOON DISCLOSURE,’ which advised Plaintiffs that the modified loan will
have a balloon feature such that even if Plaintiffs make all payments in full and on
time, their loan will not be paid in full by the final payment date. Instead, a single
balloon payment will be due on December 1, 2035. However, this purported
disclosure does not reveal the amount of the balloon payment or even how such a
payment will be calculated. In essence, this balloon payment is a financial black
hole.

resembling ‘mini-trials.’” Newberg on Class Actions § 3:6 (5th ed.). A class definition that
requires a determination on the merits before membership may be ascertained “creat[es] what the
Supreme Court called [a] ‘one-way intervention.’” Zarichny v. Complete Payment Recovery
Servs., Inc., 80 F. Supp. 3d 610, 624 (E.D. Pa. 2015) (quoting Am. Pipe & Constr. Co. v. Utah,
414 U.S. 538, 547 (1974)).
If Plaintiffs had sought to incorporate the ascertainable loss, causation, and reliance
elements of the statutory claims into the class definitions, the classes were certified, and Ocwen
then prevailed on those claims at trial, no class would have existed and the putative class
members, unbound by any judgment, would be free to pursue individual claims. “Class actions
are generally binding on absent class members,” but a fail-safe class “impermissibly skirts the
bar of res judicata.” Zarichny, 80 F. Supp. 3d at 624.
63

(Cave I, Docket Entry 1 ¶ 70.) In Count IV of Plaintiffs’ initial complaint, titled “Violation of
the Fair Debt Collection Practices Act,” the Caves incorporated the Balloon Disclosure
allegations and specified that they were asserting a class claim. (Id. ¶¶ 123-24.) The initial
complaint further alleged that Ocwen “violated 15 U.S.C. § 1692f(1) by attempting to collect an
amount from Plaintiffs that is not expressly authorized by the agreement creating the debt,” and
“violated 15 U.S.C. § 1692e(2)(A) by sending Plaintiffs communications that misrepresented the
amount and legal status of Plaintiffs’ mortgage debt.” (Id. ¶ 128.)
The February 2013 date referenced by Ocwen in its Memorandum was the date Plaintiffs
filed their First Amended Complaint (“FAC”) in Cave I. (See Civ. A. No. 11-4586, Docket
Entry 60.) Count IV of the FAC reasserts the FDCPA claim, and Paragraphs 118-119 of FAC
Count IV are identical to Paragraphs 123-124 of Count IV of the original complaint. By
stipulation of the parties entered on August 11, 2014 in response Ocwen’s Motion to sever
claims against it that were included in the Cave I FAC, the Caves’ claims against Ocwen were
severed from Cave I, consolidated with the claims separately filed by Abraham in Civ. A. No.
14-1776, and assigned a new docket number by the Court “in order to avoid duplicative litigation
and inconsistent rulings.” (Civ. A. No. 11-4586, Docket Entry 85 at ¶¶ 1-2.)
We find that the FAC relates back to the date of the original Cave I complaint because
“the amendment asserts a claim or defense that arose out of the conduct, transaction, or
occurrence set out – or attempted to be set out – in the original pleading.” See Fed. R. Civ. P.
15(c)(1)(B); Glover v. F.D.I.C., 698 F. 3d 139, 146 (3d Cir. 2012) (reiterating that “relation back
of amendments that ‘restate the original claim with greater particularity or amplify the factual
circumstances surrounding the pertinent conduct’” are proper (citation omitted)). Only where
the original pleading “does not give a defendant ‘fair notice of what the plaintiff’s [amended]

64

claim is and the grounds upon which it rests,’ the purpose of the statute of limitations has not
been satisfied and it is ‘not an original pleading that [can] be rehabilitated by invoking Rule
15(c).’” Glover, 698 F.3d at 146 (alterations in original) (quoting Baldwin Cty. Welcome Ctr. v.
Brown, 466 U.S. 147, 149 n.3 (1984) (internal marks and citation omitted in Glover); and citing
6A Wright et al., Federal Practice & Procedure § 1497 (“Although not expressly mentioned in
the rule, . . . courts also inquire into whether the opposing party has been put on notice regarding
the claim or defense raised by the amended pleading. Only if the pleading has performed that
function . . . will the amendment be allowed to relate back . . . .”)). The Caves’ amplification of
their original FDCPA claim against Ocwen in succeeding complaints clearly relate back to their
original filing in July, 2011. Under these circumstances, the Caves have an actionable class
claim under the FDCPA against Ocwen and therefore are not rendered incompetent to serve as
class representatives on this ground.
3.

The FDCPA Class Definition is Both Flawed and Overbroad

Citing Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1550 (2016), Ocwen argues that the
FDCPA class definition is flawed because it contains putative class members that lack Article III
standing. It argues that the Caves allege only that Ocwen violated the FDCPA because the
balloon disclosure confused them as to “the correct amount allegedly owed under the
mortgage[s]” and made “confusing and deceptive representations about the principal and interest
charges and the amounts allegedly owed under the mortgage.” (SAC ¶ 106.) It asserts that the
Caves have not suffered an actual, concrete injury-in-fact as a result of the allegedly confusing
balloon disclosure because the loan modifications provide numerous benefits to borrowers such
as the Caves and other putative class members. (Def. Mem. at 29-30 (citing Floyd Report at 2324; Nieves Decl. at ¶¶ 10-12)). Specifically, Ocwen notes that the Caves’ Loan Modification

65

Agreement reduced their initial monthly P&I payments by over $800.00, reduced their interest
rate, cured the Caves’ pre-modification delinquency, and removed the threat of foreclosure.
Those benefits, it argues, must be considered in assessing any ascertainable loss suffered and,
when applied to the Caves, confirm that they have not suffered “any ascertainable loss, actual
harm, or financial damages.” (Id. at 30 (citing Floyd Report at 25; Floyd Supplement Report at
4-5)).
Ocwen further asserts that, even if the Caves had standing, the proposed FDCPA Class is
likely to include putative class members who have suffered no actual, concrete injury-in-fact,
and thus lack standing. Ocwen notes that the proposed class definition includes individuals who
were merely “sent,” but did not actually “enter into” or even “receive,” an allegedly confusing
modification agreement, and thus suffered no actual and concrete injury-in-fact. Accordingly, it
asserts that the class, as defined, is overbroad and cannot be certified.
The Caves respond by relying on their own expert and record submissions to show they
have suffered economic harm that was caused by entering into the Modification Agreement,
which failed to disclose the actual cost of borrowing. (Pls.’ Reply at 16 (citing Becker Report at
¶¶ 52-55)). They point to admissions in the record from Ocwen’s representatives to show that
they had no way of knowing when they entered into the their Modification Agreement that, even
if they made all of their scheduled payments, they would still be obligated to make a balloon
payment of $93,524.46 at the loan’s maturity date. (See Myers Tr. at 75 (“Q. Does this
modification agreement . . . indicate the amount of the balloon that you just referenced, the
93,000 and change? A. No, it does not.”), 80-81 (“Q. but at the time this agreement was offered
to the Caves, Ocwen had in its possession the information about how much the balloon payment
would be if they made their payments in full and on time without prepayments? A. Yes.”). The

66

Caves point out that the record shows that the Modification Agreement does not include
instructions as to how they could have calculated the amount of the balloon they will owe at their
loan’s maturity date. (Nieves Tr. at 127 (“Q. Are there any instructions as to how to [calculate
the amount of the balloon payment] in the Cave modification agreement? A. No. We would
hope that they call in. Q. Are there any instructions as to how to do that in the balloon
disclosure attached to the Cave modification agreement? A. No.”). Further, the Caves testified
that they would not have accepted the agreement if Ocwen had disclosed the balloon amount. (S.
Cave Tr. at 70, 218-19 (“if I would have been told up front that [the balloon] was $90,000 I
would have walked away”).)
We find that the Caves have standing to assert their FDCPA claim. The Spokeo Court,
while reiterating that an intangible injury created by a statute is sufficient to satisfy the injury-infact requirement, went on to hold that Article III standing 22 requires an injury that is both
particularized and concrete even in the context of a statutory violation. 136 S. Ct. at 1549.
Numerous courts have applying Spokeo found a sufficient “injury in fact” to support a FDCPA
22

To invoke the j u di c i a l power under Article III, a litigant must have standing. See
Hollingsworth v. Perry, 133 S. Ct. 2652, 2661 (2013). It is the plaintiffs’ burden to prove
standing. Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992). The standing doctrine
“limits the category of litigants empowered to maintain a lawsuit in federal court to seek redress
for a legal wrong.” Spokeo, 136 S. Ct. at 1547 (citations omitted). The “irreducible
constitutional minimum” of standing consists of three elements. Lujan, 504 U.S. at 560. The
plaintiff must prove (1) an injury in fact (2) fairly traceable to the challenged conduct (3) that is
likely to be “redressed by a favorable judicial decision.” Hollingsworth, 133 S. Ct. at 2661
(citing Lujan, 504 U.S. at 560-61). An injury in fact requires “an invasion of a legally protected
interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural
or hypothetical.” Lujan, 504 U.S. at 560 (internal quotation marks and citations omitted);
Spokeo, 136 S. Ct. at 1545 (“[T]he injury-in-fact requirement requires a plaintiff to allege an
injury that is both concrete and particularized.” (emphasis in original)). “Injury in fact is a
constitutional requirement, and ‘[i]t is settled that Congress cannot erase Article III’s standing
requirements by statutorily granting the right to sue to a plaintiff who would not otherwise
have standing.’” Spokeo, 136 S. Ct. at 1547-48 (quoting Raines v. Byrd, 521 U.S. 811, 820 n.3
(1997)) ; see also Gladstone, Realtors v. Vill. of Bellwood, 441 U.S. 91, 100 (1979) (“In no
event . . . may Congress abrogate the Art. III minima”).
67

claim from allegations that a plaintiff suffered an “informational injury” because the character of
a debt had been misrepresented. See Prindle v. Carrington Mort. Servs., LLC, Civ. A. No. 131349, 2016 WL 4369424, at *4, 9 (M.D. Fla. Aug. 16, 2016) (stating that “[a]s the object of
allegedly false, deceptive, and or/misleading representations in connection with the collection of
a debt, Prindle has alleged that she ‘has suffered injury in precisely the form the [FDCPA] was
intended to guard against.’ . . . She therefore ‘need not allege any additional harm beyond the
one Congress has identified.’”) (citing Spokeo, 136 S.Ct. at 1549) (emphasis in original; internal
citation omitted); see also Pisarz v. GC Servs. Ltd. P’ship, Civ. A. No. 16-4552, 2017 WL
1102636, at *4-5 (D.N.J. Mar. 24, 2017) (collecting cases finding concrete injury in FDCPA
claims); Sullivan v. Allied Interstate, LLC, Civ. A. No. 16-203, 2016 WL 7187507, at *5 (W.D.
Pa. Oct. 18, 2016), report and recommendation adopted, 2016 WL 7189859 (W.D. Pa. Dec. 9,
2016) (stating “[s]ince Spokeo was decided, the overwhelming majority of courts that have faced
Article III standing challenges in FDCPA cases . . . have determined that a violation of the
FDCPA produces a ‘concrete injury.’”) (citing Dittig v. Elevate Recoveries, LLC, Civ. A. No.
16-1155, 2016 WL 4447818, at *2 n.1 (W.D. Pa. Aug. 24, 2016) (finding a concrete injury
where plaintiff alleged defendant violated the FDCPA by sending him a collection notice
containing a “settlement offer” for a time-barred debt); Irvine v. I.C. Sys., Inc., 198 F. Supp. 3d
1232, 1237 (D. Colo. July 29, 2016) (holding that plaintiff alleged a concrete injury sufficient to
confer Article III standing where the defendant allegedly gave plaintiff false information
regarding her debt and also allegedly supplied information to creditors regarding the debt
without informing the creditors that the debt was disputed); Dickens v. GC Servs. Ltd. P’ship,
Civ. A. No. 16-803, 2016 WL 3917530, at *2 (M.D. Fla. July 20, 2016) (finding a concrete
injury where plaintiff’s only alleged harm stemmed from the defendant’s failure to disclose that

68

certain of plaintiff’s rights under the FDCPA had to be exercised in writing)); Quinn v.
Specialized Loan Servicing, LLC, Civ. A. No. 16-2021, 2016 WL 4264967, at *4 (N.D. Ill. Aug.
11, 2016) (finding that the failure to provide a debtor with information she was entitled to under
the FDCPA is not a mere procedural violation of the statute).
While the Third Circuit has not yet spoken on the issue, it recently decided In re
Nickelodeon Consumer Privacy Litig., 827 F.3d 262 (3d Cir. 2016), a case asserting violations of
the Video Privacy Protection Act. Plaintiffs in that case alleged that the defendants failed to
disclose that they placed “cookies” on the computers of children who used their websites in order
to track communications with other websites for the purpose of advertising. Id. at 267-69. In
discussing the injury-in-fact requirement of standing, the Third Circuit observed that “in some
cases an injury-in-fact may exist solely by virtue of statutes creating legal rights, the invasion of
which creates standing,” and noted that “Spokeo directs us to consider whether an alleged injuryin-fact ‘has traditionally been regarded as providing a basis for a lawsuit,’” and that “Congress’s
judgment on such matters is . . . ‘instructive and important.’” Id. at 273-74 (quoting In re Google
Inc. Cookie Placement Consumer Privacy Litig., 806 F.3d 125, 134 (3d Cir. 2015) and Spokeo,
136 S.Ct. at 1549). The Nickelodeon court determined that nothing in Spokeo
calls into question whether the plaintiffs in this case have Article III standing.
The purported injury here is clearly particularized, as each plaintiff complains
about the disclosure of information relating to his or her online behavior. While
perhaps “intangible,” the harm is also concrete in the sense that it involves a clear
de facto injury, i.e., the unlawful disclosure of legally protected information.
Insofar as Spokeo directs us to consider whether an alleged injury-in-fact “has
traditionally been regarded as providing a basis for a lawsuit.” Google noted that
Congress has long provided plaintiffs with the right to seek redress for
unauthorized disclosures of information that, in Congress’s judgment, ought to
remain private.

69

Id. at 274 (quoting Spokeo, 136 S. Ct. at 1549; Google, 806 F.3d at 134 n.19.). Accordingly, the
Third Circuit concluded that the Nickelodeon plaintiffs’ allegations with regard to the
defendant’s use of cookies were sufficient to establish Article III standing. Id.
Finally, in Church v. Accretive Health, Inc., 654 F. App’x 990 (11th Cir. July 6, 2016), a
case brought under the FDCPA, the United States Court of Appeals for the Eleventh Circuit held
that a claim that a letter sent by the defendant to the plaintiff that did not contain all of the
FDCPA’s required disclosures sufficiently alleged that the plaintiff “had sustained a concrete —
i.e., ‘real’ — injury because she did not receive the allegedly required disclosures.” Id. at 995.
The Eleventh Circuit explained that:
The invasion of Church’s right to receive the disclosures is not hypothetical or
uncertain; Church did not receive information to which she alleges she was
entitled. While this injury may not have resulted in tangible economic or physical
harm that courts often expect, the Supreme Court has made clear an injury need
not be tangible to be concrete. [] Rather, this injury is one that Congress has
elevated to the status of a legally cognizable injury through the FDCPA.
Accordingly, Church has sufficiently alleged that she suffered a concrete injury,
and thus, satisfies the injury-in-fact requirement.
Id. at 995 (internal citations and footnotes omitted).
We find that the Caves have standing to pursue their FDCPA claim. As the case law
makes clear, it is sufficient under Spokeo if the FDCPA claim asserts that the character of a debt
has been misrepresented since that is the kind of injury the FDCPA was intended to guard
against, and no additional harm need be alleged. Ocwen’s assertion that the Caves possibly
benefited from their loan modification does not negate their having a concrete informational
injury from the allegedly deceptive balloon disclosure.
Ocwen’s other argument, focusing on putative class members who were merely “sent,”
but did not actually “enter into” or even “receive,” an allegedly confusing modification
agreement is more substantial.

While Plaintiffs correctly respond that ‘“[o]nce threshold
70

individual standing by the class representative is met, a proper party to raise a particular issue is
before the court, and there remains no further separate class standing requirement in the
constitutional sense’” (Pls.’ Reply at 18 (quoting In re Prudential Ins. Co. Am. Sales Practice
Litig. Agent Actions, 148 F.3d 283, 306-07 (3d Cir. 1998) (citing 1 Newberg on Class Actions §
2.05 at 2–29 (3d Ed.1992))), Ocwen’s argument vis-à-vis this aspect of the class definition is not
concerned with constitutional standing. Rather, Ocwen argues the class definition is overbroad.
As noted earlier, the Third Circuit has held that over breadth is “a potential predominance
problem” and, “[t]o the extent Defendants meant to challenge any potential differences between
the proposed class representatives and unnamed class members, such differences should be
considered within the rubric of the relevant Rule 23 requirements — such as adequacy,
typicality, commonality, or predominance.” Byrd, 784 F.3d at 168-69. Accordingly, we will
return to this problem when discussing the particular Rule 23 requirement.
4.

Entitlement to Injunctive Relief

Ocwen’s next set of issues raise preliminary challenges to class certification of Plaintiffs’
claims for injunctive relief. In support of their request to certify the proposed Pennsylvania and
New Jersey Classes under Rule 23(b)(2), Plaintiffs request prohibitory injunctive relief that
includes:

(1) a declaration that the balloon disclosure provision is unlawful; and (2) an

injunction prohibiting Ocwen from offering loan modification agreements with balloon
disclosure provisions that fail to state the estimated amount of the balloon payment. (See Pls.’
Mem. at 44.) Plaintiffs also request mandatory injunctive relief that would require Ocwen to:
(1) collect data, draft, and send separate disclosures to each individual putative class member
providing: (a) the minimum estimated amount of the balloon payment applicable to that putative
class member’s loan at the time he or she obtained the loan modification agreement; (b) the

71

manner in which the balloon payment is calculated for that putative class member’s loan; (c) the
sums that comprise the estimated amount of that putative class member’s balloon payment; and
(d) the estimated amount of that putative class member’s balloon payment at the time the
disclosure is made; (2) offer each putative class member the option to rescind his or her loan
modification agreement and return to pre-modification loan terms; and (3) provide each putative
class member the option to apply for a new loan modification. (See id.)
a.

The UTPCPL does not Provide for Injunctive or Declaratory Relief

Ocwen first argues that the UTPCPL does not provide for injunctive or declaratory relief;
rather ‘“the only remedy available to private litigants under the UTPCPL are monetary
damages.’” (Def. Mem. at 32 (quoting In re Soto, 221 B.R. 343, 357 (Bankr. E.D. Pa. 1998))).
The statute provides that a private plaintiff may “bring a private action to recover actual damages
or one hundred dollars ($100), whichever is greater.” 73 Pa. Stat. § 201-9.2. The UTPCPL also
allows for treble damages and, in the Court’s discretion, “such additional relief as it deems
necessary or proper,” as well as costs and attorney fees. Id. The plain statutory language
authorizes only the Pennsylvania Attorney General or a district attorney to seek injunctive or
declaratory relief. See 73 Pa. Stat. § 201-4 23; see also Goleman v. York Int’l Corp., Civ. A. No.
11-1328, 2011 WL 3330423, at *10 n.6 (E.D. Pa. Aug. 3, 2011) (J. Baylson) (“[T]he UTPCPL
authorizes only the Attorney General and District Attorney, not a private plaintiff, to seek . . .
injunctive relief . . . .”). Accordingly, Ocwen argues that neither Plaintiffs nor the Pennsylvania
Class are entitled to injunctive relief under the statute. We agree.

23

Section 201-4 provides: “Whenever the Attorney General or a District Attorney has
reason to believe that any person is using or is about to use any method, act or practice declared
by section 3 of this act to be unlawful, and that proceedings would be in the public interest, he
may bring an action in the name of the Commonwealth against such person to restrain by
temporary or permanent injunction the use of such method, act or practice.” 73 Pa. Stat. § 201-4.
72

Plaintiffs have failed to cite caselaw to support their assertion that injunctive relief is
available to private litigants under the UTPCPL. In Robinson v. Holiday Universal, Inc., Civ. A.
No. 05-5726, 2006 WL 2642323 (E.D. Pa. Sept. 11, 2006), Judge Pratter merely noted in that
decision that she could not find cases permitting or denying injunctive relief to private plaintiffs
under the UTPCPL and, therefore, determined that she would not dismiss the request for
injunctive relief at the pleadings stage. See id. at *8 (“The Court’s research has not uncovered
any federal court decisions where an injunction requested by a private plaintiff was granted or
denied pursuant to the UTPCPL”).
Plaintiffs also cite Schwartz v. Rockey, 932 A.2d 885, 894 (Pa. 2007), for the proposition
that the “Pennsylvania’s Supreme Court permitted plaintiffs to seek the equitable remedy of
rescission of their purchase of a property for defendants’ violation of the UTPCPL for failing to
disclose that the home had been damaged by water infiltration.” (Pls.’ Reply at 30.) This is a
misreading of the case. The issue in Schwartz was whether a prayer for relief seeking contractbased damages forecloses a subsequent amendment substituting an inconsistent, equitable
remedy. Schwartz at 894 (“This appeal does not require us to definitively determine whether
inconsistent remedies may be simultaneously pursued in a civil action in Pennsylvania, but
rather, only whether a complaint containing a prayer for relief seeking contract-based damages
forecloses a subsequent amendment substituting an inconsistent, equitable remedy.”) The lower
court had invoked “the requirement of prompt action which is a prerequisite to the remedy of
rescission . . . and determined that Buyers did not act promptly in light of several factors. . . .”
Id. (internal citation omitted). The Court determined only that the record made clear that remand
was not warranted to consider the availability of equitable relief. Id. at 895 (“On application of
this standard to the record before us, we conclude that the Superior Court should not have

73

disturbed the common pleas court’s holding that Buyers failed to pursue rescission with
sufficient promptitude to support an award of such remedy.”). The Court did not affirmatively
state that injunctive relief was available to a private party under the UTPCPL.
Plaintiffs’ citation to Agliori v. Metro. Life Ins. Co., 879 A.2d 315 (Pa. Super. Ct. 2005)
also fails to persuade. That case involved the issue of whether a life insurance policy holder
suffered an “ascertainable loss” within the meaning of the UTPCPL and was therefore entitled to
damages where he surrendered two whole life policies in exchange for a new universal life
policy. Id. at 320. Although the new policy was worth more at the time it was purchased, the
surrendered policies would have appreciated over time if retained. Thus, when the decedent
died, the surrendered policies were worth more than the extant policy. The Court held that
“[a]scertainable loss must be established from the factual circumstances surrounding each case,
and in [the insured’s] case the evidence presented indicates that his estate suffered an
ascertainable loss due to misrepresentations by [the agent] that induced [the insured] to change
his life insurance policy.” Id. at 321. While Plaintiffs cite Agliori for the proposition that the
UTPCPL, as an anti-fraud statute, should be liberally construed to aid its deterrence function,
nothing in that case supports a construction that would violate the express language of the statute
limiting the availability of equitable relief to the Attorney General and district attorneys. 24

24

The only other case cited by Plaintiffs, Slemmer v. McGlaughlin Spray Foam
Insulation, Inc., 955 F. Supp. 2d 452 (E.D. Pa. 2013), also does not support their contention.
While they assert that Judge Dubois “permitted plaintiffs to request injunctive relief for the
substantive claims, one of which was a claim under the UTPCPL’s ‘catch-all’ provision, alleging
that defendants engaged in “unconscionable, unfair and deceptive acts and practices,” (Pls.’
Reply Mem. at 31), there is no indication in the decision that equitable relief was even sought
under UTPCPL. Defendants moved to dismiss the UTPCPL claim on three grounds: (1)
plaintiffs had not alleged justifiable reliance, (2) plaintiffs had not alleged that they purchased
the product at issue from the Defendant, and (3) plaintiffs had not satisfied the particularity
requirements of Fed. R. Civ. P. 9(b). Slemmer, at 460. The bulk of the discussion of injunctive
relief concerned plaintiffs’ stand-alone claim for injunctive relief as a separate count of the
74

Accordingly, we cannot certify the proposed Pennsylvania Class under Rule 23(b)(2) to
the extent that Plaintiffs seek declaratory relief pursuant to the UTPCPL. The Motion to Certify
is denied in this respect.
b.

Standing to Obtain Declaratory Relief

Plaintiffs seek to enjoin Ocwen “from offering loan modifications with . . . balloon
disclosure provisions” that do not disclose the estimated amount of the balloon payment. (See
Pls.’ Mem. at 44.) Ocwen argues that Plaintiffs lack standing to seek such relief asserting that
the record shows that there is no immediate threat of actual future injury. We reject this
argument.
Ocwen asserts that, to have Article III standing to seek this injunctive relief, Plaintiffs
must establish an immediate threat of actual future injury. (Def. Mem. at 33-34 (citing ZF
Meritor, LLC, 696 F.3d at 301.) It argues that Plaintiffs cannot satisfy their burden to show that
the threatened injury is more than “possible future injury,” i.e., that it is ‘“certainly impending . .
. with a high degree of immediacy.’” (Id. (quoting McCray v. Fid. Nat’l Title Ins. Co., 682 F.3d
229, 243 (3d Cir. 2012) (internal quotation marks omitted)).) According to Ocwen, (1) Plaintiffs
acknowledge that its current practice is to include the estimated amount of the balloon payment
in its in-house loan modification agreements that contain a balloon feature (see Pls.’ Brief at 6, 7,
complaint. Judge Dubois stated that ‘“[a] request for injunctive relief by itself does not state a
cause of action . . . . An injunction is a remedy, not a separate claim or cause of action. A
pleading can . . . request injunctive relief in connection with a substantive claim, but a separately
pled claim or cause of action for injunctive relief is inappropriate.’” Id. at 465 (quoting Jensen v.
Quality Loan Serv. Corp., 702 F. Supp. 2d 1183, 1201 (E.D. Cal. 2010)). He granted the motion
to dismiss the stand-alone claim, noting that the dismissal did not affect plaintiffs’ “request for
injunctive relief in the prayer for relief at the end of the Complaint.” Id. The fact that Judge
Dubois permitted an undifferentiated request for injunctive relief for plaintiffs’ substantive
claims — one of which was a claim under the UTPCPL’s catch-all provision, in addition to
others for which injunctive relief was clearly available — is weak support for the proposition
that we should ignore the actual language of the statute limiting such relief to the Attorney
General.
75

39, 46); (2) it implemented its current practice in late 2013 and early 2014 by amending its
various template modification agreements; (3) it began including an estimated balloon payment
amount in certain of its template disclosures as early as December 2012 and January 2013, with
the vast majority of other templates updated or discontinued by January 2014; and (4) Plaintiffs
have not offered any evidence or argument that it is likely to revert to using balloon disclosure
templates that omit the estimated balloon payment amount. Ocwen argues that, under McCray,
682 F.3d at 243-44, there is no basis for Plaintiffs’ requested prohibitory injunction. Ocwen also
notes that the named Plaintiffs have not argued, testified, or suggested that they are likely to
apply for and enter new loan modification agreements from Ocwen that contain balloon payment
features and, even if they did, they have not shown that Ocwen is likely to provide them with a
balloon disclosure that does not contain the estimated balloon payment amount.

Thus, it

contends, Plaintiffs lack standing to seek the prohibitory injunctive relief requested in their
Motion, and cannot represent putative classes seeking such relief under Rule 23(b)(2).
Plaintiffs respond that Ocwen’s argument misreads the nature of the equitable relief that
they seek to certify for class treatment under Rule 23(b)(2). They note that Ocwen’s citations
involve prohibitory injunctions, whereas, in this case any prohibitory aspect of equitable relief is
incidental to the main relief Plaintiffs request, i.e., “an order that the court declare that the
modification agreements violate the UTPCPL, NJCFA and FDCPA. The primary equitable
relief sought here is a written disclosure of the balloon amount, which is not in the nature of a
prohibitory injunction.” (Pls.’ Reply at 37.)
Plaintiffs are correct that the equitable relief they seek is not primarily prohibitory.
While the SAC states only that Plaintiffs “seek [a] permanent or final injunction enjoining
Defendant’s agents and employees, affiliates and subsidiaries, from continuing to harm Plaintiffs

76

and the members of the Class” (SAC § VIIb), the pleading does not suggest that a prohibitory
injunction is the only equitable relief Plaintiffs seek. In their opening Memorandum, Plaintiffs
assert five types of injunctive relief and ask that the Court enter an order:
(1) declaring the balloon disclosure provision unlawful; (2) enjoining Defendant
from offering loan modification agreements with such balloon disclosure
provisions; (3) requiring Ocwen to provide disclosures to Plaintiffs and the
members of the Classes stating: (a) the minimum the balloon payment they were
obligated to pay at the inception of their loan modification agreements; (b) the
manner in which such balloon payment was determined (e.g., extending the
amortization term); (c) the sums that comprise the balloon payment (e.g.,
principal, interest, or default-related fees and charges); and (d) the present amount
of such balloon payment; (4) granting Plaintiffs and the members of the Classes
the right, at their option, to rescind the loan modification agreements containing
the Balloon Disclosure provision; and (5) notifying members of the Classes that
they may apply for new loan modifications under other programs offered by
Ocwen.
(Pls.’ Mem. at 44.)

Only the second request, to enjoin Ocwen from offering balloon

modifications, is prohibitory since it arguably relates to future conduct. The remaining requests
for relief clearly relate to and seek to equitably redress past injuries arising from Ocwen’s failure
to disclose the pro forma amount of the named Plaintiffs’ balloon payments. Accordingly, there
is no basis to determine that the named Plaintiffs lack standing to seek equitable relief, except as
we specifically find elsewhere herein.
c.

Plaintiffs have not Demonstrated an Entitlement to a Mandatory
Injunction

Next Ocwen argues that Plaintiffs are not entitled to a mandatory injunction that would
require Ocwen to prepare and send loan-specific disclosures to each putative class member and
to offer each member the option to rescind his or her loan modification agreement and apply for

77

a new loan modification; thus the claim cannot be certified for class treatment. 25 A plaintiff
seeking a permanent injunction must demonstrate: (1) whether the moving party has shown
actual success on the merits; (2) whether denial of injunctive relief will result in irreparable harm
to the moving party; (3) whether granting of the permanent injunction will result in even greater
harm to the defendant; and (4) whether the injunction serves the public interest. See Ferring
Pharms., Inc. v. Watson Pharms., Inc., 765 F.3d 205, 210 (3d Cir. 2014); Shields v. Zuccarini,
254 F.3d 476, 482 (3d Cir. 2001). “Stated differently, the issuance of a permanent injunction is
appropriate where ‘(1) the plaintiff successfully proves the merits of the case, (2) no available
remedy at law exists, and (3) the balance of the equities favors granting such relief.’” Vizant
Techs., LLC v. Whitchurch, Civ. A. No. 15-431, 2016 WL 97923, at *25 (E.D. Pa. Jan. 8, 2016)
(quoting Subacz v. Sellars, Civ. A. No. 96-6411, 1998 WL 720822, at *2 (E.D. Pa. Sep. 21,
1998)). In preliminary stages of a litigation, before the merits are finally determined, the test is
essentially the same, except the first element — success on the merits — focuses on the
‘“likelihood of success on the merits.’” Ferring Pharms., Inc., 765 F.3d at 215 n.9 (quotation and
citation omitted).
Ocwen contends that Plaintiffs do not show compelling circumstances warranting
mandatory injunctive relief under the NJCFA since they have an adequate remedy at law in the

25

As we have already held, declaratory relief is not available to individual plaintiffs
pursuant to the UTPCPL. However, the NJCFA does permit equitable relief. See N.J.S.A. 56:819 (“Any person who suffers any ascertainable loss . . . may bring an action. . . . In any action
under this section the court shall, in addition to any other appropriate legal or equitable relief,
award threefold the damages sustained by any person in interest.” (emphasis added)); see also
McNair v. Synapse Grp., Inc., Civ. A. No. 06-5072, 2009 WL 3754183, at *4 (D.N.J. Nov. 5,
2009) (stating ‘“only the Attorney General [may] bring actions for purely injunctive relief.’ . . .
This ‘does not mean that only a plaintiff who successfully proves ascertainable loss may have
access to the [NJCFA’s] remedies of equitable relief and attorneys’ fees.” (internal citation
omitted, emphasis added)). Thus, we limit discussion here to the NJCFA claim even though all
parties raise argument about both statutes.
78

form of monetary damages, the primary relief available under the NJCFA is actual damages, and
the New Jersey Class seeks actual damages. It also argues that Plaintiffs cannot show that they
will suffer irreparable harm absent injunctive relief because (1) the named plaintiffs concede that
they have already been provided with the estimated amounts of the balloon payments due at the
maturity of their loans as well as the applicable amortization periods (see Ocwen Mem. at 35
(citing Pls.’ Mem. at 16-17 (stating the amount of the Kaminskis’ balloon payment))); (2) the
members of the putative classes can also request the information directly from Ocwen if they do
not have it already; and (3) beginning at the latest in March 2011, Ocwen’s online account
website identified loans as “balloon” loans and disclosed the applicable amortization periods.
Ocwen asserts that this information, combined with the terms set forth in a putative class
member’s modification agreement, would permit one to calculate the approximate amount of the
balloon payment.
We reject Ocwen’s arguments. The availability of monetary damages under the NJCFA
does not eliminate the availability of equitable relief. As noted, the statute and case law provide
that a private plaintiff may seek both money damages and equitable relief. Further, the class
certification record supports a showing of irreparable harm. Plaintiffs have shown that by not
receiving critical information concerning their loans, class members will be forced to refinance
the unpaid balloon payments in the future when many of them will be of advanced age.
Plaintiffs have also shown that members of the class had no easily apparent way of knowing the
amount of their balloon payments from the disclosure they received and that the only way to
remedy that harm is (1) to provide them with loan-specific disclosures, and (2) offer each
member the option to rescind his or her loan modification agreement and apply for a new loan
modification.

Ocwen argues that rescission of putative class members’ loan modification

79

agreements would result in negative consequences to class members, for example, a return to
pre-modification higher monthly payments and higher interest rates, the addition of previouslyforgiven amounts of principal back into their unpaid principal balances, and uncured defaults.
However, Plaintiffs do not seek court ordered rescission. Rather, they seek the option to rescind
the loan modification agreements once members receive proper disclosures. While rescissionary
relief presents other class certification obstacles that we address later, Ocwen presents no cogent
argument why this type of mandatory injunctive relief is improper under the NJCFA.
C.

Cohesiveness of the NJCFA Class 26

Rule 23(a) requires Plaintiffs meet four elements for class certification: (1) numerosity;
(2) commonality; (3) typicality; and (4) adequacy of representation. Fed. R. Civ. P. 23(a). If the
requirements of Rule 23(a) are met, Plaintiffs seeking to certify a damages class must satisfy
additional requirements of predominance and superiority required by Rule 23(b)(3). A class
seeking to be certified under Rule 23(b)(2) to receive injunctive relief must be sufficiently
cohesive. Barnes v. Am. Tobacco Co., 161 F.3d 127, 143 (3d. Cir. 1998) (“While 23(b)(2) class
actions have no predominance or superiority requirements, it is well established that the class
claims must be cohesive.”). An injunctive relief class must also be properly defined. “A
properly defined ‘class’ is one that: (1) meets the requirements of Rule 23(a); (2) is sufficiently
cohesive under Rule 23(b)(2) and [the Third Circuit’s] guidance in Barnes, 161 F.3d at 143; and
(3) is capable of the type of description by a ‘readily discernible, clear, and precise statement of
the parameters defining the class,’ as required by Rule 23(c)(l)(B) and [the Third Circuit’s]

26

The cohesiveness issue is limited to the New Jersey Class since private individuals
have no right to injunctive relief under the UTPCPL (eliminating the need to discuss the
Pennsylvania Class) and Plaintiffs do not seek injunctive relief under the FDCPA or to certify
the FDCPA Class under Rule 23(b)(2).
80

discussion in Wachtel [ex rel. Jesse v. Guardian Life Ins. Co. of Am., 453 F.3d 179, 187 (3d Cir.
2006)].” Shelton v. Bledsoe, 775 F.3d 554, 563 (3d Cir. 2015). The existence of disparate
factual circumstances of class members will prevent a class from being sufficiently cohesive for
Rule 23(b)(2) certification. Gates v. Rohm & Haas Co., 655 F.3d 255, 264 (3d Cir. 2011) (citing
Carter v. Butz, 479 F.2d 1084, 1089 (3d Cir. 1973)).
The cohesiveness requirement protects two interests. The first is protecting unnamed
class members, who “are bound by the action without the opportunity to withdraw and may be
prejudiced by a negative judgment in the class action.”

Barnes, 161 F.3d at 143.

The

cohesiveness requirement protects this interest by ensuring that “significant individual issues do
not pervade the entire action because it would be unjust to bind absent class members to a
negative decision where the class representatives’ claims present different individual issues than
the claims of the absent members.” Id. (citations and quotation marks omitted). The second
interest is to ensure that the litigation remains manageable. If a class is not sufficiently cohesive,
“the suit could become unmanageable and little value would be gained in proceeding as a class
action if significant individual issues were to arise consistently.” Id. (quotation marks, citations,
and alterations omitted).
To satisfy the cohesiveness test, we must find that the “class’s claims are common ones
and that adjudication of the case will not devolve into consideration of myriad individual issues.”
Newberg on Class Actions § 4:34. “In other words, Rule 23(b)(2) applies only when a single
injunction or declaratory judgment would provide relief to each member of the class. It does not
authorize class certification when each individual class member would be entitled to a different
injunction or declaratory judgment against the defendant.” Dukes, 564 U.S. at 360 (emphasis in
original).

The Third Circuit has held

that any ‘“disparate factual circumstances of class

81

members’ may prevent a class from being cohesive.” Gates, 655 F.3d at 264 (citing Carter, 479
F.2d at 1089). We have the discretion to deny certification in the presence of disparate factual
circumstances. Geraghty v. U.S. Parole Comm’n, 719 F.2d 1199, 1206 (3d Cir. 1983). “The key
to the (b)(2) class is ‘the indivisible nature of the injunctive or declaratory remedy warranted —
the notion that the conduct is such that it can be enjoined or declared unlawful only as to all of
the class members or as to none of them.’” Dukes, 564 U.S. at 360 (quoting Nagareda, Class
Certification in the Age of Aggregate Proof, 84 N.Y.U.L.Rev. 97, 132 (2009)).
Plaintiffs argue in their opening brief that the cohesiveness requirement is met since
every class member seeks the same injunctive relief from Ocwen, namely that the Court enter an
order: (1) declaring the balloon disclosure provision unlawful; (2) enjoining Defendant from
offering loan modification agreements with such balloon disclosure provisions; (3) requiring
Ocwen to provide disclosures; (4) granting Plaintiffs and the members of the Classes the right, at
their option, to rescind the loan modification agreements containing the Balloon Disclosure
provision; and (5) notifying members of the Classes that they may apply for new loan
modifications under other programs offered by Ocwen. (Pls.’ Mem. at 44.) They argue in their
Reply Brief that the definition of the New Jersey Class ensures that “each member entered into a
loan modification agreement with Ocwen that includes the misleading and deceptive Balloon
Disclosure provision, which failed to disclose any pertinent information concerning the amount
of the balloon and the method by which it would be calculated. Thus, at a minimum, every Class
member suffered an informational injury caused by this deceptive agreement.” (Pls.’ Reply at
22.) They add that Ocwen deprived every New Jersey Class member of the same type of
information required to make their modification agreements not misleading or deceptive and that
deprivation of such informational rights violates the NJCFA. (Id.)

82

Ocwen responds with numerous reasons why the cohesiveness element is lacking. We
will discuss each issue in turn.
1.

Issues Involving Ascertainable Loss and Damages

Ocwen asserts that its liability to each putative class member depends upon that person’s
ability to prove that he or she suffered an ascertainable loss, and that the loss was caused by the
alleged omission of the balloon payment amount. It argues that (1) these essential elements of
NJCFA cannot be established with class-wide evidence or on a class basis; (2) under “plaintiffs’
theory of loss, the determination of whether any given putative class member suffered
ascertainable loss caused by Ocwen requires a putative-class-member-specific analysis that,
among other things, would compare that borrower’s actual modification terms with the terms of
a hypothetical “but for” modification, which are unique to each borrower” (Def. Mem. at 39);
and (3) identification of putative class members that have an actual cause of action and are
entitled to share in a class recovery depends on the individual factual circumstances of each
putative class member. Plaintiffs respond that Ocwen’s assertions that there are individual
monetary damages issues is a nonsequitur; since the Rule 23(b)(2) Classes do not seek individual
monetary damages, “no further inquiry concerning the harm that resulted from the Balloon
Disclosures is required. Thus, there are no individual issues as to causation or injury.” (Pls.’
Reply at 22-23.) Plaintiffs are incorrect.
Ocwen’s arguments regarding cohesiveness with respect to class treatment of
ascertainable loss is a distinct question from whether the Class is entitled to money damages.
Ascertainable loss is an element of the NJCFA that the New Jersey Class must show through
common evidence. See Harnish, 833 F.3d at 305. As Harnish teaches,
when courts speak of “damages,” they are often referring to two distinct concepts:
the “fact of damage” and the measure/amount of damages. The fact of damage,
83

often synonymous with “injury” or “impact,” is frequently an element of liability
requiring plaintiffs to prove that they have suffered some harm traceable to the
defendant’s conduct — in other words, the “ascertainable loss” and “causal
relationship” requirements under the NJCFA. . . .
Id. 305 (citations omitted). We find that the existence of disparate factual circumstances of the
New Jersey Class members’ ascertainable loss — including whether members had principal
forgiven, fees waived, or interest rates reduced — renders the Plaintiffs unable to show how
common evidence can establish this element and makes the Class not cohesive. Accordingly, we
deny the certification Motion in this regard. For purposes of a complete decision record, we go
on to address Ocwen’s other cohesiveness issues.
2.

Issues Involving the Crafting of Injunctive Relief

Ocwen argues that Plaintiffs’ request for injunctive relief is far too individualized to
satisfy Rule 23(b)(2)’s standards because Plaintiffs do not seek a single injunction that is
applicable to all putative class members; rather they seek a common generalized form of
injunction, but one that must be applied separately to each putative class member. This includes
their demand that Ocwen provide each putative class member with a disclosure that identifies a
number of loan-specific data points regarding that member’s loan, including the estimated
amount of the putative class member’s balloon payment for different periods of time, the manner
of calculation of the balloon payment, and the makeup of the balloon payment — none of which
are uniform. (Def. Mem. at 40.) It asserts that it would need to (1) identify every putative class
member by name, address, and loan; (2) collect the relevant data for each putative class
member’s loan, which would require it to conduct separate searches through multiple databases
that contain current and historical information for each loan; and (3) conduct a manual search of
multiple Ocwen systems and individual borrower records, before recording that information and
entering it into a template disclosure form. Plaintiffs refute the assertion that they do not seek a
84

single injunction and argue that Ocwen’s argument “attempts to impose an ascertainability
requirement upon the Rule 23(b)(2) Classes by complaining that Ocwen would need to identify
the members of the Classes in order to provide the requested disclosures.” (Pls.’ Reply at 25.)
They argue that Ocwen’s obligation to identify the homeowners who should receive the curative
disclosures cannot defeat certification. We agree.
The assertion that Ocwen might have to provide each putative class member with a loanspecific disclosure does not mean that each individual class member would be entitled to a
different injunction or declaratory judgment. The declaration of rights would be the same for all
members of the class, i.e., that the balloon disclosure in Ocwen’s loan template was insufficient.
The injunction that might result from that finding is also the same, irrespective of the loanspecific data Ocwen would have to consult and use to satisfy it. The class certification record
also shows that this information can be readily obtained from Ocwen’s databases.
3.

Rescission is an Inherently Individualized Form of Relief

Ocwen argues that the New Jersey Class lacks cohesion because rescission is an
inherently individualized form of relief, the implementation and consequences of which would
be fact-specific and unique for each putative class member. It asserts that Plaintiffs offer no
explanation as to how Ocwen would implement the rescission option on a class-wide basis. It
notes also that courts have held that claims seeking rescission are inappropriate for class
treatment.

See, e.g. Andrews v. Chevy Chase Bank, 545 F.3d 570, 574 (7th Cir. 2008)

(“Rescission is a highly individualized remedy as a general matter. . . . The variations in the
transactional ‘unwinding’ process that may arise from one rescission to the next make it an
extremely poor fit for the class-action mechanism.”); McKenna v. First Horizon Home Loan
Corp., 475 F.3d 418, 427 (1st Cir. 2007) (a declaration of a right to seek rescission “work[s]

85

against [the] judicial economy and disserves efficiency concerns” at the heart of the class action
mechanism by requiring post-relief implementation on an individual basis). Plaintiffs respond
that this assertion “is a red herring, as Plaintiffs do not seek actual rescission of any Class
member’s modification.

Plaintiffs merely propose providing notice to Class members that

because Ocwen gave them modification agreements that contain deceptive provisions that violate
consumer protection laws, they may have a right to rescind, which they may pursue individually
if they so choose.” (Pls.’ Reply at 27.)
We find that the New Jersey Class lacks cohesion to seek a rescissionary remedy. This
type of relief has been held to create serious class certification issues. As the Andrews court
stated,
certification of a class of persons entitled to seek rescission would be just the
beginning. Each class member individually would have the option of exercising
his or her right to rescind, and not all class members will want to do so because it
requires returning the loan principle in exchange for the release of the lien and
any interest or other payments. Individual controversies would erupt and likely
continue because “the equitable nature of rescission generally entitles the affected
creditor to judicial consideration of the individual circumstances of the particular
transaction.” McKenna, 475 F.3d at 427 n. 6. Accordingly, a host of individual
proceedings would almost certainly follow in the wake of the certification of a
class whose loan transactions are referable to rescission.
Andrews, 545 F.3d at 574. We reject Plaintiffs’ attempt to dismiss this problem as a red herring
by attempting to distinguish direct rescissionary relief from an indirect injunction declaring that
class members have a right to seek rescissionary relief. We see no distinction — other than
semantics — between Plaintiffs describing the New Jersey Class as one “seeking an option to
rescind” and the class in Andrews described as “entitled to seek rescission” or whose
transactions are referable to rescission.

While Plaintiffs correctly state that Andrews and

McKenna both involved the Truth in Lending Act, and those decisions were concerned in large
part with that Act’s specific provisions, the Andrews court noted more generally that certifying a
86

class seeking a declaration to “initiate a process of individual rescission” creates both a
prudential jurisdictional problem and practical Rule 23 problem:
Rather than settling the legal relations at issue, a judicial declaration in this
situation would be essentially advisory. . . . The rescission remedy is so
inherently personal that a court cannot venture further while addressing the
plaintiffs as a class; it can do no more than simply declare that a certain group of
plaintiffs have the right to initiate rescission, and that is not a form of “final”
declaratory relief under Rule 23(b)(2).
Id. at 577. The McKenna court added that certifying a class to seek a declaration of a right to
rescissionary relief negates the primary rationales behind the class action mechanism, namely
judicial economy and efficiency. Id., 475 F.3d at 427 (“should the need arise for an absent class
member to resort to the courts for enforcement of his or her right to rescind, the declaratory
judgment would serve that end no more effectively than would a non-class-action suit brought by
named plaintiffs alleging identical TILA violations”) (citing 1 Alba Conte & Herbert B.
Newberg, Newberg on Class Actions § 1:1, at 3 (2002)).
Accordingly, because of cohesion issues the New Jersey Class cannot be certified to seek
a declaration under the NJCFA that Plaintiffs and the members of the Class have the right, at
their option, to rescind the loan modification agreements containing the Balloon Disclosure
provision. 27 The Motion to Certify is denied in this respect.

27

To the extent that Ocwen also argues in this section of its Brief that declaratory relief
in the form of requiring notification of class members’ ability to apply for a new loan
modification is not cohesive because it would involve “an application process — i.e., submission
of the application, submission of financial information, eligibility review, application related
communications, and post-denial dispute resolution — that is unique for each putative class
member,” (Def. Mem. at 41), we find that the problems regarding rescissionary relief are not
applicable. As Ocwen itself notes, applying for a new modification is available to class members
as it is to any other borrower. Rather than “rewinding” an existing agreement, a new
modification, by definition, constitutes a new agreement and Plaintiffs seek only an injunction
mandating notice, and not one mandating that Ocwen grant new loan modifications under other
programs that it offers.
87

4.

Disparate Factual Circumstances

Ocwen next asserts that disparate factual circumstances among putative class members
defeats cohesiveness. It notes that, while the New Jersey Class is defined to include those
borrowers who “entered into” balloon mortgages, there is no requirement in the definition that
borrowers currently be subject to those mortgages. Ocwen further notes that of the 8,454 balloon
modifications it can identify as having been entered into by New Jersey borrowers,
approximately 1,928 of those mortgages no longer have a balloon feature, or have already been
terminated, rendering it impossible to offer much of the requested injunctive relief to all
members of the putative class. (Forbes Decl. Ex. JJ, Ocwen Chart of Loan Modifications with
Balloon Features.) It points out that at least one court has denied certification of a class under
the NJCFA because “disparate factual circumstances demonstrate[d]” a lack of cohesiveness, in
part, because the relief sought would not benefit the entire class. McNair v. Synapse Grp., Inc.,
Civ. A. No. 06-5072, 2010 WL 4777483, at *7 (D.N.J. Nov. 15, 2010); see also Glover v. Udren,
Civ. A. No. 08-990, 2013 WL 6237990, at *7 (W.D. Pa. Dec. 3, 2013) (“Rule 23(b)(2)
certification is inappropriate where many putative class members have nothing to gain from an
injunction, and the declaratory relief they seek serves only to facilitate the award of damages.”
(internal quotation marks omitted)); Kostur v. Goodman Global, Inc., Civ. A. No. 14-1147, 2016
WL 4430609, at *9 (E.D. Pa. Aug. 22, 2016) (rejecting Rule 23(b)(2) class because requested
injunctive relief was “a disguised request for individualized monetary damages”).
Plaintiffs respond that, while Ocwen identifies New Jersey loans that are no longer active
due to transactions such as the sale of the property, refinancing, deed-in-lieu of foreclosure,
completed foreclosure, and short sale, contrary to Ocwen’s assertion, those loans “would not be
part of the Classes, since the definitions of the Class require that such loans have balloon

88

payments that ‘the borrower will owe at the end of the term of the loan.’ In the case of
terminated loans, there is no balloon payment that ‘the borrower will owe’ in the future. Thus,
such loans are not in the injunctive relief Classes.” (Pls.’ Reply at 29-30.) They add that, in the
event that we disagree and rule that such terminated loans are part of the Class as currently
defined, Ocwen’s evidence demonstrates that such loans may easily be excluded.
We find that the New Jersey Class’s assertion that terminated loans are not part of the
class definition is wrong. Membership is based on entry into a balloon loan. The “borrower will
owe at the end of the term of the loan” clause highlighted by Plaintiffs describes the nature of the
disclosure each member received, not who is a member. As written, if a borrower received the
loan the borrower is a member of the class without regard to whether the borrower will actually
have to make a balloon payment. Plaintiffs’ suggestion that terminated loans be excluded from
the class definition as a solution to the cohesiveness issue is ultimately futile, given both the
aforementioned reasons and forthcoming discussion addressing the reasons the New Jersey Class
cannot be certified. 28
D.

Ascertainability of a Rule 23(b)(3) Class

“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, 306-7 (3d Cir. 2013)
(quoting Marcus v. BMW of No. Am., LLC, 687 F.3d 583, 592-93 (3d Cir. 2012)); see also
Byrd, 784 F.3d at 162 (stating “the ascertainability requirement as to a Rule 23(b)(3) class is

28

We reject Ocwen’s other cohesion arguments because they do not speak to whether
the class’s claims are common and there is no assertion that they will cause the litigation to
devolve into consideration of myriad individual issues. These include its assertions that
Plaintiffs improperly request an injunction on one of the elements of its claim, and that the
mandatory injunction, if granted, would not provide actual relief because Ocwen has already
stopped using the balloon disclosure.
89

grounded in the nature of the class-action device itself”). The ascertainability element “functions
as a necessary prerequisite (or implicit requirement) because it allows a trial court effectively to
evaluate the explicit requirements of Rule 23.” Byrd, 784 F.3d at 162. It is an independent
inquiry which, in addition to the Rule 23 requirements, “ensures that a proposed class will
actually function as a class.” Id.
To satisfy the ascertainability prerequisite, a plaintiff must show, by a preponderance of
the evidence, that the class is “currently and readily ascertainable based on objective criteria,”
Marcus, 687 F.3d at 593, and we “must undertake a rigorous analysis of the evidence to
determine if the standard is met.” Carrera, 727 F.3d at 306. “[A]scertainability 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 the parties can identify class members in a manner consistent with the
efficiencies of a class action.” Id. Accordingly, we must “ensure that class members can be
identified ‘without extensive and individualized fact-finding or “mini-trials.”’” Id. (quoting
Marcus, 687 F.3d at 594).

“[T]o satisfy ascertainability as it relates to proof of class

membership, the plaintiff must demonstrate his purported method for ascertaining class members
is reliable and administratively feasible, and permits a defendant to challenge the evidence used
to prove class membership.” Id.
The Third Circuit recently reiterated the ascertainability inquiry stating:
The ascertainability inquiry is two-fold, requiring a plaintiff to show that: (1) the
class is “defined with reference to objective criteria”; and (2) there is “a reliable
and administratively feasible mechanism for determining whether putative class
members fall within the class definition.” [Hayes, 725 F.3d at] 355 (citing
Marcus [at] 593-94). . . . The ascertainability requirement consists of nothing
more than these two inquiries. And it does not mean that a plaintiff must be able
to identify all class members at class certification — instead, a plaintiff need only
show that “class members can be identified.” Carrera, 727 F.3d at 308 n. 2
90

(emphasis added). This preliminary analysis dovetails with, but is separate from,
Rule 23(c)(1)(B)’s requirement that the class-certification order include “(1) a
readily discernible, clear, and precise statement of the parameters defining the
class or classes to be certified, and (2) a readily discernible, clear, and complete
list of the claims, issues or defenses to be treated on a class basis.” Wachtel [at]
187-88. . . .
Byrd, 784 F.3d at 163 (emphasis in original). The Court added that “a party cannot merely
provide assurances to the district court that it will later meet Rule 23’s requirements. . . . Nor
may a party ‘merely propose a method of ascertaining a class without any evidentiary support
that the method will be successful.’” Id. at 164 (quoting Carrera, 727 F.3d at 306, 307, 311,
(internal citation omitted)).
Plaintiffs argue that the proposed Classes are ascertainable. First, Plaintiffs assert that
they have defined these Classes with reference to objective criteria because they have limited
each Class to a precise geographic area, a defined category of persons, and provided an
identifying template, namely the requirement that a class member have a Loan Modification
Agreement with a specific Balloon Disclosure provision. Second, relying on Dr. Becker’s
report, they assert that the Classes can be identified using Ocwen’s own data, which will provide
a reliable and administratively feasible mechanism for determining whether putative class
members fall within the class definition.
Ocwen raises challenges only to the ascertainability of the FDCPA Class, which includes
two defining elements that are distinct from the Pennsylvania and New Jersey Classes. First, the
FDCPA Class includes homeowners “for whom servicing of their mortgage loans was
transferred to Ocwen at a time when such homeowners were in default on their loans”; second,
it includes such persons “to whom Ocwen sent a standard form template Loan Modification
Agreement. . . .” (Pls.’ Mem. at 2 (emphasis added).) Ocwen argues that Plaintiffs have
provided no method or evidence by which it may be ascertained which borrowers’ loans “were in
91

default” when the loans were transferred. It argues, and Plaintiffs concede, 29 that the default
issue is significant because the FDCPA applies only to loans that were in default when Ocwen
began servicing them. 30 In addition, it asserts that Plaintiffs provide no evidentiary basis to
ascertain those borrowers to whom Ocwen “sent” modification agreements — as opposed to
borrowers who actually signed modification agreements. 31

29

See N.T. 5/16/17 at 25.

30

The substantive provisions of FDCPA apply to “debt collectors.” See, e.g., 15 U.S.C.
§ 1692c(a) (governing how “a debt collector” may communicate with a consumer); § 1692e
(providing that “a debt collector” may not use any false, deceptive, or misleading representation).
Under the statute, the term “debt collector” does not include:
(F) any person collecting or attempting to collect any debt owed or due or
asserted to be owed or due another to the extent such activity (i) is incidental to
a bona fide fiduciary obligation or a bona fide escrow arrangement; (ii) concerns a
debt which was originated by such person; (iii) concerns a debt which was not
in default at the time it was obtained by such person; or (iv) concerns a debt
obtained by such person as a secured party in a commercial credit transaction
involving the creditor.
15 U.S.C. § 1692a(6)(F) (emphasis added).
31

Ocwen has presented evidence that it does not record the borrowers to whom
modification offers were merely “sent.” Its Rule 30(b)(6) witness Max Nieves testified:
Q. If there is a mortgage modification ultimately, do the terms of that
modification end up in RealServicing?
A. In certain cases, yes.
Q. In what cases would it not?
A. If we — we don’t track offers. We track — again, if a customer is
engaging with us, that mod, those mod terms, would autodocument to
RealServicing. In certain scenarios, again, it is an unsolicited offer, we don’t
know if the customer is going to accept or not, so we will just autodocument
every offer that we provide. When the customer accepts, there’s certain data
points that should be in the system of record, but it wouldn’t be as defined as our
normal process.
(Nieves Tr. at 32-33 (emphasis added).) This evidence supports Ocwen’s assertion that its
system cannot be used to ascertain borrowers who were “sent” a modification offer, rather than
those who actually entered into a modification agreement. Nieves’ testimony asserts that Ocwen
92

Plaintiffs respond that
Ocwen maintains electronic records that can be readily queried to identify those
borrowers to whom Ocwen sent a modification agreement with the Balloon
Disclosure provision and its electronic records can be readily queried to determine
whether those borrowers’ loans were in default when they were acquired. The
Becker Report explains how Ocwen obtains and saves detailed information about
each and every borrower and concludes that “[b]y applying common and
generally-accepted methods to Ocwen’s electronic records, it is possible to
identify each individual borrower who meet the criteria of the class allegations
raised by Plaintiffs.” Lechtzin Decl. Ex. 1 at ¶¶ 18, 26-28. Defendant’s
argument that it does not know which loans were in default when it acquired
the servicing rights is preposterous. There is no way for Ocwen to service a
loan if it does not have a record of how much is owed at any given time.
Ocwen’s 30(b)(6) witness Paul Myers testified that Ocwen’s RealServicing
system records borrower and loan information and payment history. Lechtzin
Decl. Ex. 19 [Myers Tr. at 18-19, 52]. Ocwen does not dispute that it has all the
electronic records necessary to identify members of the FDCPA Class, but only
that Plaintiffs have not cited “specific evidence.” Plaintiffs have provided the
Court with a class definition that uses objective criteria and have also provided a
method of identifying individuals in the proposed class by electronically querying
Ocwen’s records. That is all that is necessary.
(Pls.’ Reply at 49-50. 32) Plaintiffs also argue that the fact that Ocwen knows that the Kaminskis
and Abraham are not members of the FDCPA Class, because their loans were not in default
when acquired, shows that its records are capable of identifying those who are.

only autodocuments “every offer that we provide” in certain scenarios, such as following
Ocwen’s receipt of the borrower’s own request for mortgage assistance.
32

We note that the deposition designations cited by Plaintiffs in the quoted excerpt do not
support their assertion that Ocwen had to have known based on data in its RealServicing system
which loans were in default when it acquired the servicing rights. In the first designated pages,
Ocwen witness Paul Myers was asked about documents he reviewed about the Caves. He
testified that Ocwen’s RealServicing system records borrower “[p]ayment history, comments
regarding the Cave’s loan. . . . Q. And can you tell me what documents you saw on the CIS
system? A. Copy of the note, copy of the mortgage, some of the submitted documents by the
Caves for their modification review.” (Myers Tr. at 18-19.) At the second designated page, he
testified to reviewing a transaction history and comments on RealServicing for the Caves. (Id. at
52.) Nothing in this designation describes how Ocwen would generally “have known which
loans were in default.”
93

We find that Plaintiffs’ arguments are meritless and that they have not demonstrated that
the FDCPA Class is ascertainable. First, their assertion that they can rely on Dr. Becker’s report
to ascertain this Class using Ocwen’s own data is wrong. Dr. Becker never offered a specific
mechanism for determining membership in the FDCPA Class or opined that Ocwen’s data can
show that a loan was in default when it was acquired by Ocwen. He only opined on whether the
data could be used to identify borrowers in the correct states, whether a loan featured a balloon
payment, and whether the amount of a balloon payment was disclosed. (See Becker Report at
13-18.)
Second, Plaintiffs’ contention that it is “preposterous” that Ocwen does not know which
loans were in default when it acquired the servicing rights is completely inapposite. The burden
to show ascertainability falls to the Plaintiffs, not Ocwen. Merely asserting that “Ocwen must
know the information” does not satisfy Plaintiffs’ burden to show by a preponderance of the
evidence that the class is “currently and readily ascertainable based on objective criteria.”
Marcus, 687 F.3d at 593 (citations omitted). Plaintiffs cannot shift this burden and a rigorous
analysis of the evidence shows they have failed to meet their burden of demonstrating the
ascertainability of the “in default” element of the FDCPA Class definition.
The same is true of the “sent” element of the definition. Dr. Becker’s opinion on this
aspect of the FDCPA definition is not supported by the record testimony he cites and Plaintiffs
present no evidence or method by which they can ascertain every borrower to whom a
modification agreement was sent. To circumvent this problem, Plaintiffs argue that we should
reject Ocwen’s assertion that it “does not record or track borrowers to whom it sends in-house
loan modification agreements.” (Pls.’ Reply at 61 (quoting Def. Mem. at 48).) They argue that
“Ocwen is not off the hook because it failed to keep records that are critical to identify class

94

members.” (Id. (citing Tyson Foods, Inc., 136 S. Ct. at 1050 (“[I]t bears emphasis that this
problem [lack of records] appears to be one of [defendant’s] own making.”)).) Plaintiffs also
argue that Ocwen “appears to conflate standing with ascertainability.” (Id. at 62.) We find that
none of these counterarguments are meritorious. First, Plaintiffs provide no evidentiary basis
from which we may reject Ocwen’s assertion that it does not record or track borrowers to whom
it sends in-house balloon loan modification agreements. Second, Plaintiffs’ reliance on Tyson is
inapt because, as noted earlier, that case involved a collective action under the FLSA, not a Rule
23 class. Third, Ocwen is not raising a standing argument, and Plaintiffs’ attempt to recast
Ocwen’s ascertainability argument as one challenging standing attempts to refute it on grounds
that are inapplicable. 33

33

Plaintiffs appear to recast Ocwen’s argument to shoehorn it into the holding of
Nepomuceno v. Midland Credit Mgmt., Inc., Civ. A. No. 14-5719, 2016 WL 3392299, at *4 (D.
N.J. June 13, 2016). The defendant in Nepomuceno had argued that plaintiff’s proposed class
definition was not ascertainable because it included individuals to whom defendant “sent” a
collection letter, rather than limiting the class to those who actually received a statement. 2016
WL 3392299, at *4. Defendant argued that the court would have to first determine whether
each proposed member actually received the letter. Id. The court rejected defendant’s argument,
stating:
[A]s the Third Circuit explained in Byrd v. Aaron’s Inc., this sort of argument
“conflates the issues of ascertainability, overbreadth (or predominance), and
Article III standing.” Plaintiff has provided this Court with a proposed class
definition that uses objective criteria and has also provided a method of
identifying individuals in the proposed class (review of Defendant’s records).
Whether the proposed definition includes individuals who did not receive
Defendant’s letter does not prevent the individuals in the definition from being
identified and, therefore, does not affect whether Plaintiff has satisfied the
ascertainability requirement. Accordingly, this Court finds that Plaintiff has met
its burden under the ascertainability requirement.
Id. (citing Byrd, 784 F. 3d at 168-69). Unlike the plaintiff in Nepomuceno, Plaintiffs here have
not provided a method of identifying individuals in the proposed class since they merely
speculate without presenting actual evidence that Ocwen’s records can identify borrowers who
were sent a loan modification but did not actually enter into one. In addition, the defendant in
Byrd actually argued that the proposed class was overbroad because it included putative class
95

Because Plaintiffs present no evidence as to how to identify putative members of the
FDCPA Class, we conclude that this Class cannot be certified and deny the certification Motion
is this regard. We will, however, discuss the other certification arguments concerning the class
in order to create a complete decisional record.
E.

Rule 23(a) Requirements
1.

Numerosity

Under Rule 23(a), a plaintiff bears the burden of establishing numerosity by a
preponderance of the evidence. Marcus, 687 F.3d at 594-95. Plaintiff must prove that the
putative class is “so numerous that joinder of all members is impracticable.” Fed. R. Civ. P.
23(a)(1). “No minimum number of plaintiffs is required to maintain a suit as a class action, but
generally if the named plaintiff demonstrates that the potential number of plaintiffs exceeds 40,
the first prong of Rule 23(a) has been met.” Stewart v. Abraham, 275 F.3d 220, 226-27 (3d Cir.
2001) (citing 5 James Wm. Moore et al., Moore’s Federal Practice § 23.22[3][a] (Matthew
Bender 3d ed. 1999)). We cannot “assume,” “speculate,” or defer to “common sense” with
respect to how many class members exist without evidence. Marcus, 687 F.3d at 595-97. The
members who lacked standing to sue. Id. at 168-69. It was in this context that the Third Circuit
held that “Defendants’ argument conflates the issues of ascertainability, overbreadth (or
predominance), and Article III standing.” Byrd, 784 F.3d at 168. Ocwen is not making this type
of argument; it argues that Plaintiffs “do not mention how they intend to ascertain this element of
the class definition, let alone present specific evidence of an administrativly feasible and reliable
process to do so.” (Def. Mem. at 48.)
Plaintiffs’ reliance on the holding of Blandina v. Midland Funding, LLC, 303 F.R.D. 245
(E.D. Pa. 2014), is also misplaced. Defendants argued in that case that the proposed class
definition was overly broad because it included consumers who were “sent,” but did not receive
the collection letter at issue. The court rejected the argument stating that, “[u]nder the applicable
provisions of the FDCPA, a debt collector violates the FDCPA if, inter alia, it “attempt[s] to
collect any debt” through the use of any false representation or deceptive means. . . . The statute
does not require the receipt of the misleading letter for the conduct to be actionable.” Id. at 250
(internal citation omitted; second alteration in original). However, the court also found that,
unlike here, discovery “demonstrated [defendants’] ability to identify those consumers in
Pennsylvania to whom the collection letter at issue was sent.” Id.
96

plaintiff must produce evidence, direct or circumstantial, specific to the products, problems,
parties, and geographic areas actually covered by the proposed class definitions to allow us to
make a factual finding on this requirement. Id. at 596.
Plaintiffs contend that they satisfy this requirement since Dr. Becker has opined that
Ocwen’s own analysis of its data on its loan modifications in its propriety databases evidences
that there were 11,157 non-HAMP modifications between January 2009 and September 2015
that featured balloon payments in Pennsylvania, and 8,454 in New Jersey. (Pls.’ Mem. at 32
(citing Becker Report at ¶¶ 26, 32, Nieves Tr. Ex. 31).) Ocwen objects to numerosity only with
regard to the FDCPA Class. It argues that Plaintiffs have failed to identify any evidence that
anyone other than the Caves fall within the proposed FDCPA Class because, while the proposed
FDCPA Class shares some characteristics with the Pennsylvania and New Jersey Classes, it
differs in its “in default” and “sent” elements and Plaintiffs have offered no evidence to suggest
the number of borrowers who would fall within the FDCPA Class. (Def. Mem. at 61.)
In response, Plaintiffs argue that
As shown in Plaintiffs’ opening brief, Courts are permitted to “accept common
sense assumptions” about the numerosity requirement. In re Linerboard Antitrust
Litig., 203 F.R.D. 197, 205 (E.D. Pa. 2001), aff’d, 305 F.3d 145 (3d Cir. 2002)
(quoting In re Cephalon Sec. Litig., No. 96-cv-0633, 1998 WL 470160, at *2
(E.D. Pa. Aug. 12, 1998)). Here, such common sense assumptions strongly
support the conclusion that, in addition to Lisa and Scott Cave, there are at least
38 other borrowers in Pennsylvania and New Jersey whose loans were in default
at the time they were transferred to Ocwen for servicing.
(Pls.’ Reply at 45.) Plaintiffs go on to assert that Ocwen has identified more than 19,000
borrowers in Pennsylvania and New Jersey who entered into loan modification agreements with
the deceptive Balloon Disclosure provision at issue here, Ocwen does not dispute that its
electronically stored records indicate that the Caves’ loan was in default at the time it was
acquired from Saxon Mortgage Services, Inc., and Ocwen reported in public filings that it
97

acquired 38,000 other mortgage loans from Saxon Mortgage Services, Inc. in 2010, 82,000 nonprime loans from J.P. Morgan Chase, N.A., in 2011, as well as 245,000 other non-prime loans
from Barclays Bank PLC. (Id. at 46.) They argue that
Given the hundreds of thousands of sub-prime loans’ servicing rights that Ocwen
acquired in the class period, many of which were past due at the time they were
acquired by Ocwen, there is abundant circumstantial evidence from which to
conclude that there are at least 38 other borrowers in Pennsylvania and New
Jersey who were in default when Ocwen acquired the servicing rights to their
loans and who were sent a modification agreement with a Balloon Disclosure
provision like the Caves.
(Id.)
Under Hydrogen Peroxide, we “must make a factual determination, based on the
preponderance of the evidence, that Rule 23’s requirements have been met. Marcus, 687 F.3d at
596 (citing Hydrogen Peroxide, 552 F.3d at 307). Marcus teaches that to determine numerosity
we can accept “circumstantial evidence specific to the products, problems, parties, and
geographic areas actually covered by the class definition” and, if presented, “rely on ‘common
sense’ to forgo precise calculations and exact numbers.” Id. But where there is a “complete lack
of evidence specific to” the number of persons possibly within the class, a finding that plaintiffs
satisfy numerosity “crosse[s] the line separating inference and speculation.” Id. at 597 (also
stating “[i]t is tempting to assume that the New Jersey class meets the numerosity requirement
based on the defendant companies’ nationwide presence. But the only fact with respect to
numerosity proven by a preponderance of the evidence is that [the plaintiff] himself is a member
of the proposed class.”).
We find that under Marcus, Plaintiffs have failed to prove numerosity of the FDCPA
Class by a preponderance of the evidence. They ask us to accept circumstantial evidence about
the number of loans Ocwen acquired nationally from other loan servicers to support a common

98

sense argument that there “must be” sufficiently large numbers of class members based on the
premise that “many” sub-prime loans are past due.

But they offer no evidence, direct or

circumstantial, to support this underlying premise as it relates to Pennsylvania and New Jersey
borrowers that may be members of the FDCPA Class.

To accept Plaintiffs’ numerosity

argument would impermissibly cross the line from inference to speculation. See Marcus, 687
F.3d at 597. Their assertion that there are at least 38 other borrowers in Pennsylvania and New
Jersey whose loans were in default at the time they were transferred to Ocwen for servicing and
who were sent balloon modifications is noticeably unsupported by any record citation. 34 The
certification Motion is denied in this regard.
2.

Commonality

“A putative class satisfies Rule 23(a)’s commonality requirement if ‘the named plaintiffs
share at least one question of fact or law with the grievances of the prospective class.’” Reyes v.
Netdeposit, LLC, 802 F.3d 469, 486 (3d Cir. 2015) (quoting Rodriguez v. Nat’l City Bank, 726
F.3d 372, 382 (3d Cir. 2013)). “Commonality does not require perfect identity of questions of
law or fact among all class members. Rather, ‘even a single common question will do.’” Id.,
(quoting Dukes, 564 U.S. at 359). The commonality inquiry turns on whether “determining the
truth or falsity of a common contention . . . will resolve an issue that is central to the validity of
each one of the claims in one stroke.” Id. at 487 (citations omitted). “What matters to class
certification . . . is not the raising of common questions — even in droves — but, rather the
capacity of a classwide proceeding to generate common answers apt to drive the resolution of the

34

We assume Plaintiffs chose the number 38 because it is close to the cutoff suggested by
the Third Circuit in Stewart, 275 F.3d at 226-27. At oral argument we asked Counsel whether
the number 38 was supported by evidence in the record. Counsel repeated the speculative
assertions contained in the Reply Brief and added “[d]o we have direct evidence of that, no, we
do not.” (N.T. 5/16/17 at 28.)
99

litigation.” Dukes, 564 U.S. 350 (emphasis and ellipsis in the original). The bar for establishing
commonality is “not high” and is “easily met.” In re Cmty. Bank of N. Va. Mortg. Lending
Practices Litig., 795 F.3d 380, 397 (3d Cir. 2015) (“Cmty. Bank III”); Reyes, 802 F.3d at 486
(citing Baby Neal v. Casey, 43 F.3d 48, 56 (3d Cir. 1994)). Commonality must be established
before the predominance element of Rule 23(b)(3) can be considered. Reyes at 486.
Plaintiffs argue that commonality is satisfied because every member of the Classes was
sent or entered into a substantially identical template in-house loan modification agreement that
included a Balloon Disclosure provision that failed to disclose the amount of the balloon
payment, the method by which Ocwen would calculate the balloon amount, and/or changes in the
amortization terms. They assert that these standardized template loan modification agreements
give rise to questions of law and fact that are common to all members of the Classes, including:
(1) whether Ocwen engaged in the course of conduct alleged by Plaintiffs; and (2) whether
Plaintiffs and the Classes have sustained damages, and if so, what is the proper measure of those
damages. For the Pennsylvania Class, they assert as common questions: (1) whether the
uniform terms of the Balloon Disclosure provision constitute fraudulent or deceptive conduct
which creates a likelihood of confusion or of misunderstanding in the conduct of trade or
commerce, in violation of the UTPCPL; (2) whether the Court may infer justifiable reliance upon
the balloon modification agreements on the basis of material omissions concerning the amount of
the balloon payment and how it would be calculated; (3) whether Plaintiffs and members of the
Pennsylvania Class sustained ascertainable losses as defined under the UTPCPL; (4) whether
the court can award statutory damages to members of the Pennsylvania Class pursuant to
the UTPCPL; and (5) whether the Court can enter injunctive relief pursuant to the UTPCPL. For
the New Jersey Class, Plaintiffs assert as common questions: (1) whether the uniform terms of

100

the Balloon Disclosure provision constitute an “unlawful practice” in violation of the
NJCFA; (2) whether Ocwen’s conduct constitutes “deception . . . or the knowing concealment,
suppression, or omission of any material fact with intent that [members of the New Jersey Class]
rely upon such concealment, suppression, or omission” in violation of the NJCFA, N.J.S.A. §
56:8-2; (3) whether the Court may award treble damages to members of the New Jersey Class
pursuant to the NJCFA; and (4) whether the Court can enter injunctive relief pursuant to the
NJCFA. Finally, for the FDCPA Class Plaintiffs assert as common questions: (1) whether the
uniform terms of the Balloon Disclosure provision constitute actionable communications under
15 U.S.C. § 1692e; (2) whether the uniform terms of the Balloon Disclosure provision constitute
a “false, deceptive, or misleading representation” in violation of the FDCPA, 15 U.S.C. §
1692e(2)(A); (3) whether the uniform terms of the Balloon Disclosure provision would deceive
or mislead the “least sophisticated debtor”; and (4) whether the court may award statutory
damages to the FDCPA Class pursuant to the FDCPA. Thus, Plaintiffs conclude that the Classes
satisfy Rule 23(a)’s commonality requirement. (Pls.’ Mem. at 40-41.)
We find that Plaintiffs satisfy the commonality requirement. Although Ocwen argues
that there are no common questions (see Def. Mem. at 62-63), its assertions are more
appropriately concerned with whether common questions predominate.
3.

Typicality

The typicality requirement aids a court in determining whether ‘“maintenance of a class
action is economical and whether the named plaintiff’s claim and the class claims are so
interrelated that the interests of the class members will be fairly and adequately protected in their
absence.’” Marcus, 687 F.3d at 597-98 (quoting Gen. Tel. Co. of the Sw., 457 U.S. at 158 n.13).
Typicality ‘“screen [s] out class actions in which the legal or factual position of the
101

representatives is markedly different from that of other members of the class even though
common issues of law or fact are present.’” Id. at 598 (quoting 7A Charles Alan Wright et al.,
Federal Practice and Procedure § 1762 (3d ed. 2005).

To determine whether a plaintiff’s

position is markedly different from the class as a whole, we compare three distinct, though
related, concerns: (1) the claims of the class representative must be generally the same as those
of the class in terms of both (a) the legal theory advanced and (b) the factual circumstances
underlying that theory; (2) the class representative must not be subject to a defense that is both
inapplicable to many members of the class and likely to become a major focus of the litigation;
and (3) the interests and incentives of the representative must be sufficiently aligned with those
of the class. Marcus, 687 F.3d at 599.
Plaintiffs assert that the typicality requirement is satisfied because
[a]ll proposed representatives for the Pennsylvania, New Jersey and FDCPA
Classes allege that they were harmed by the same unlawful conduct by Ocwen. . .
. Their claims are based on standardized form contracts (the Balloon
Modification Agreements) that failed to disclose the amount of the balloon
payment due at the end of the loan, the method by which such balloon payments
would be calculated, and/or changes to the amortization term.”
(Pls.’ Mem. at 34.) They assert that Abraham and the Caves are typical of the Pennsylvania
Class because they had loans serviced by Ocwen and entered into loan modification agreements
that contained the same deceptive Balloon Disclosure provision as every other member of the
Pennsylvania Class, and thus assert the same legal claims for violations of the UTPCPL as all
other members of the Pennsylvania class. (Id. at 35.) The Caves, like all other members of the
FDCPA Class, were sent communications from Ocwen which would be confusing and
misleading to the “least sophisticated debtor.” The Kaminskis, like every other member of the
New Jersey Class, had their mortgage serviced by Ocwen and entered into a loan modification

102

agreement that contained the same deceptive Balloon Disclosure provision as every other
member of the New Jersey Class. (Id.)
Ocwen responds that the typicality requirement has not been satisfied because Plaintiffs’
assertion that they and the absent class members were harmed by the same unlawful conduct is
incorrect. It argues that not all putative class members, or even all of the named plaintiffs, have
suffered actual harm.

Abraham is atypical of the Pennsylvania Class since her Loan

Modification Agreement forgave a significant portion of her principal balance, which Ocwen
argues, subjects her to the unique defense that she did not suffered actual harm or an
ascertainable loss sufficient to satisfy required elements of her claims or establish Article III
standing. (Def. Mem. at 66.) This conclusion is buttressed by Plaintiffs’ concession that, under
Dr. Becker’s damages model, Abraham suffered no additional cost from her loan modification.
Ocwen also contends that the Caves’ UTPCPL claim is deficient because they suffered no
ascertainable loss of money or property. The Kaminskis are also alleged to be atypical of the
New Jersey Class because they have suffered no actual harm from the conduct they allege.
Plaintiffs respond that they, like every member of the Pennsylvania and New Jersey
Classes have suffered the same “informational injury” from Ocwen’s Balloon Disclosure
provision. They rely on Ocwen’s admissions that its Modification Agreements and Balloon
Disclosure provisions did not disclose the amount of the balloon payment due at the loan’s
maturity date or the method by which such balloon payments would be calculated (such as by
extending the amortization term of the loan from 360 months to 480 months, as Ocwen did in the
case of the Kaminski modification).

They argue that “Ocwen’s failure to disclose these

important terms of the Modification Agreements is an ‘informational injury,’ which is sufficient
to confer Article III standing.”

(Pls.’ Reply at 13 (citing Church, 654 F. App’x at 995

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(recognizing that where plaintiff “did not receive information to which she alleges she was
entitled,” she sufficiently alleged a “concrete” injury); Quinn, 2016 WL 4264967, at *5 (holding
that failure to provide borrower with information required under the FDCPA “constitutes a
sufficiently concrete harm for purposes of Article III standing”); Prindle, 2016 WL 4369424, at
*11 (holding that plaintiff who alleged misrepresentations in violation of the FDCPA, without
any claim of economic loss, had alleged a “concrete” injury sufficient to confer Article III
standing)).) Because Plaintiffs assert that “every member of the Pennsylvania and New Jersey
Classes had the right under the UTPCPL and the NJCFA, respectively, to all the information
necessary to make their modification agreements not misleading or deceptive,” they conclude
that Ocwen’s omission of such information results in identical concrete injuries to themselves
and the classes they seek to represent so that they may be certified for injunctive relief even if
not every member suffered an ascertainable monetary loss. 35 Additionally, Plaintiffs point out

35

For example, Plaintiffs contend that a class member similar to Abraham, who, under
Dr. Becker’s analysis, has not sustained a quantifiable monetary loss,
has an informational injury because when she entered into her modification
agreement Ocwen failed to disclose the minimum balloon payment amount she
will be expected to pay when she is 77 years old. Accordingly, Ms. Abraham,
like all other members of the Pennsylvania Class, is entitled to injunctive relief
under the UTPCPL. Indeed, Ms. Abraham testified that if the amount of the
balloon payment had been disclosed in the modification agreement, she would not
have agreed to it because she would need to take out a new mortgage to pay the
$114,236.82 balloon. She stated: “No one is going to give a 77-year-old woman,
with rheumatoid arthritis, on disability, even a $100,000 mortgage at that age. It’s
an impossibility.” Lechtzin Decl. Ex. 34 [Abraham Tr. at 350-351].
(Pl. Reply Mem. at 14.) Plaintiffs add that Ocwen’s contention that the Caves and the Kaminskis
are examples of the overbreadth of the class definitions “is even farther off the mark [since] Dr.
Becker has conclusively established that they have already suffered compensable monetary
losses in the form of increased interest payments.” (Id.) Plaintiffs maintain that because the
definitions of the Pennsylvania and New Jersey Classes “include only borrowers who Ocwen
deceived by omitting critical information about their loan modification agreements, ascertainable
loss is an integral component of the class definitions.” (Id. at 15.)
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that there is no need for them to rely on individual damages calculations to prove typicality since
the Pennsylvania and FDCPA Classes seek statutory damages under the UTPCPL and FDCPA.
Since statutory damages are available under the UTPCPL and FDCPA, see 12 P.S. § 2019.2, 15 U.S.C. § 1692k, we find that an informational injury is sufficient to permit a finding of
typicality for the Caves for the Pennsylvania and FDCPA Classes and for Abraham for the
Pennsylvania Class. 36

As all members of the class would be entitled to receive statutory

damages by default if they cannot demonstrate monetary loss, whether or not each named
Plaintiffs suffered monetary loss is immaterial to the typicality analysis.

The class

representatives’ lack of individual losses do not subject them to a defense that is both
inapplicable to many members of the class and likely to become a major focus of the litigation,
and their interests and incentives do not fail to align with those of the class. 37
However, we find that Plaintiffs’ informational injury theory does not apply to the
question of whether the Kaminskis are typical of the New Jersey Class. The NJCFA does not
provide for statutory damages and the Third Circuit has recognized that establishing an injury-infact for Article III standing is not the same as establishing the elements of a statutory claim under
the NJCFA:
Whatever the contours of Article III, the [NJCFA] only permits a private plaintiff
to sue when that plaintiff has suffered an “ascertainable loss of moneys or
property.” N.J. Stat. Ann. § 56:8–19. Although we do not reach the merits of
[plaintiff’s] claims, we nonetheless observe that [plaintiff] nowhere explains how,
36

Abraham is not typical of the FDCPA Class because, as noted earlier, Plaintiffs have
not provided evidence that her loan was in default when Ocwen acquired it.
37

The only assertion Ocwen makes regarding the Caves’ typicality is that they have not
made a payment on their loan in over four years and are severely delinquent. It argues that they
“have inherently different interests and incentives,” (Def. Mem. at 67), but Ocwen does not
elaborate on these differences. More importantly, the fact that the Caves are currently
delinquent does not speak to how they are atypical since Plaintiffs’ claims focus on information
omitted when the modified loans were originated.
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even if constitutional standing can rest on a bare statutory violation, he would
have statutory standing absent the kind of injury that New Jersey law requires.
Finkelman v. Nat’l Football League, 810 F.3d 187, 196 n.65 (3d Cir. 2016). Because the NJCFA
does not allow for statutory damages, Plaintiffs must show by a preponderance of the evidence
that the Kaminskis’ loan modification caused them to suffer an ascertainable loss of money or
property.
Plaintiffs have failed to meet this burden and the Kaminskis are thus barred from
representing the New Jersey Class.

We credit the unrebutted evidence that Dr. Becker

incorrectly calculated that they suffered a $3.58 loss. Floyd has demonstrated that they actually
received an aggregate monetary benefit of $11.92, even without counting (1) any monetary
benefit based on the disputed evidence of error in Becker’s too low alternate investment value, or
(2) the intangible benefits Floyd asserts that they received from (a) the ability to benefit from the
home’s future appreciation, (b) avoiding the adverse consequences of foreclosure and loss of
their home, and (c) avoiding the adverse consequences of potential bankruptcy filings. Since the
Kaminskis suffered no ascertainable loss, they have no claim for money damages under the
NJCFA, making them atypical of the class they seek to represent. Further, because the case law
construing the NJCFA holds that a claim for purely equitable relief is reserved to the Attorney
General, the Kaminskis cannot represent a class seeking purely injunctive relief either.
Accordingly, the Motion to certify the New Jersey class is also denied because the Kaminskis are
not proper class representatives.
4.

Adequacy

The fourth Rule 23(a) requirement is that the representative plaintiffs must “fairly and
adequately protect the interests of the class.” Fed. R. Civ. P. 23(a)(4). Adequacy concerns both
“the experience and performance of class counsel” and “the interests and incentives of the
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representative plaintiffs.” Dewey v. Volkswagen Aktiengesellschaft, 681 F.3d 170, 181 (3d Cir.
2012) (citing In re Cmty. Bank of N. Va., 418 F.3d 277, 303 (3d Cir. 2005) (“Cmty. Bank I”).
“The principal purpose of the adequacy requirement is to determine whether the named plaintiffs
have the ability and the incentive to vigorously represent the claims of the class.” Cmty. Bank
III, 795 F.3d at 393 (quoting In re Cmty. Bank of N. Va., 622 F.3d 275, 291 (3d Cir. 2010)
(“Cmty. Bank II”)). In fact, ‘“the linchpin of the adequacy requirement is the alignment of
interests and incentives between the representative plaintiffs and the rest of the class.”’ Cmty.
Bank III, 795 F.3d at 393 (quoting Dewey, 681 F.3d at 183). This inquiry is closely tethered to
the typicality inquiry, see Danvers, 543 F.3d at 149, and ensures that the named plaintiff’s claims
“are not antagonistic to the class.” Id. at 150 (citing Beck v. Maximus, Inc., 457 F.3d 291, 296
(3d Cir. 2006)).
Plaintiffs assert that both adequacy prongs are met here since their interests are aligned
with those of the Classes they seek to represent, and Class Counsel have the experience, skill and
qualifications necessary to conduct complex class action litigation, have pursued the action
vigorously, and have no actual or potential conflicts with the Classes.

Ocwen makes no

argument regarding Class Counsel; its only adequacy arguments mirror its typicality arguments.
We find that Plaintiffs satisfy the adequacy element for the Pennsylvania and FDCPA classes,
but fail the test for the New Jersey class because the Kaminskis are not proper class
representatives.
F.

Rule 23(b)(3) Predominance and Superiority Requirements

A class action can be certified under Rule 23(b)(3) where the court finds that the (1)
questions of law or fact common to class members predominate over any questions affecting
only individual members, and (2) that a class action is superior to other available methods for
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fairly and efficiently adjudicating the controversy. Fed. R. Civ. P. 23(b)(3). The Rule provides
that the following matters are pertinent to these findings: (1) the class members’ interests in
individually controlling the prosecution or defense of separate actions; (2) the extent and nature
of any litigation concerning the controversy already begun by or against class members; (3) the
desirability or undesirability of concentrating the litigation of the claims in the particular forum;
and (4) the likely difficulties in managing a class action. Id.
“Considering whether ‘questions of law or fact common to class members predominate’
begins, of course, with the elements of the underlying cause of action.” Erica P. John Fund, Inc.
v. Halliburton Co., 563 U.S. 804, 809 (2011). We “must examine each element of a legal claim
‘through the prism’ of Rule 23(b)(3).” Marcus, 687 F.3d at 600 (quoting In re DVI, Inc. Sec.
Litig., 639 F.3d 623, 630 (3d Cir. 2011)). To obtain class certification, “[a] plaintiff must
‘demonstrate that the element of [the legal claim] is capable of proof at trial through evidence
that is common to the class rather than individual to its members.’” Id. (citation omitted). If
proof of an element of the legal claim “‘requires individual treatment, then class certification is
unsuitable.’” In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d at 311 (quoting Newton v.
Merrill Lynch, Pierce, Fenner & Smith, Inc., 259 F.3d 154, 172 (3d Cir. 2001)). Plaintiffs also
must show “that the damages resulting from that injury were measurable on a class-wide basis
through use of a common methodology.” Comcast Corp., 133 S. Ct. at 1430 (citation omitted).
A model purporting to serve as evidence of damages in a class action must measure only those
damages attributable to the theory upon which liability is premised. Id. Where the damages
evidence does not translate the relevant “‘legal theory of the harmful event into an analysis of the
economic impact of that event,’” the Comcast Court determined that common questions could
not predominate over individual ones. Id. at 1435 (quoting Federal Judicial Center, Reference

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Manual on Scientific Evidence 432 (3d ed. 2011)). The superiority requirement “asks the court
to balance, in terms of fairness and efficiency, the merits of a class action against those of
alternative available methods of adjudication.’” In re Processed Egg Prods. Antitrust Litig., 284
F.R.D. 278, 293-94 (E.D. Pa. 2012) (quoting In re Prudential, 148 F.3d at 316.
Plaintiffs argue that the proposed Classes meet the predominance and superiority
requirements of Rule 23(b)(3) because each of the Classes asserts a single claim under a state or
federal consumer protection statute concerning uniform Balloon Disclosure provisions in
standard Ocwen in-house Modification Agreements. They assert that we can determine by
reference to evidence that is common to each member of the Classes whether the Balloon
Disclosure provision violates each of these consumer protection laws. 38
Regarding the FDCPA claims, Plaintiffs assert that courts have found that such claims
based upon a defendant’s deceptive or misleading letter or other standardized form are suited for
class treatment. See (Pls.’ Mem. at 44 (citing Weiss v. Regal Collections, 385 F.3d 337, 345 (3d
Cir. 2004) (“[r]epresentative actions . . . appear to be fundamental to the statutory structure of the
FDCPA. Lacking this procedural mechanism, meritorious FDCAP claims might go unredressed
because the awards in an individual case may to too small to prosecute an individual action.”)

38

Plaintiffs assert that several fact common issues predominate including that (1) every
member of the Classes received and accepted an in-house loan modification agreement that was
based upon a standardized electronic template; (2) prior to 2014, Ocwen’s template Balloon
Disclosures did not disclose the dollar amount of any balloon payment due at the loan’s maturity
date; (3) Ocwen admits that the Modification Agreements do not include instructions as to how
Plaintiffs could have calculated the amount of the balloon they will owe at their loan’s maturity
date; (4) Ocwen further admits that the Balloon Disclosure does not state the method by which
the balloon payment that would be due at the loan’s maturity date will be calculated; and (5)
Ocwen admits that it did not include amortization schedules with the loan modification
agreements. (Pls.’ Mem. at 46-47.) Plaintiffs contend that common facts concerning Ocwen’s
loan modification agreements can be established by evidence that is common to the Classes, in
satisfaction of Rule 23(b)(3)’s predominance requirement, and obviates the need for loan-by-loan
inquiries.
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(abrogated on other grounds, Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), as revised
(Feb. 9, 2016); see also Jacobson v. Persolve, LLC, Civ. A. No. 14-735, 2015 WL 3523696, at
*7 (N.D. Cal. June 4, 2015) (holding that class treatment would be “the most efficient manner”
to adjudicate whether the allegedly defective form collection letter violated the FDCPA – a
question that could be answered for the entire class “in one fell swoop.”).) Plaintiffs assert that
the FDCPA Class satisfies the predominance requirement because of the following common
questions of law and fact: (1) whether the uniform terms of the Balloon Disclosure provision
constitute actionable communications under 15 U.S.C. § 1692e; (2) whether the uniform terms of
the Balloon Disclosure provision constitute a “false, deceptive, or misleading representation” in
violation of the FDCPA, 15 U.S.C. § 1692e(2)(A); (3) whether the uniform terms of the Balloon
Disclosure provision would deceive or mislead the “least sophisticated debtor”; and (4) whether
the court may award “actual damages sustained” and/or statutory damages to the FDCPA Class
pursuant to the FDCPA. (See Pls.’ Mem. at 48.)
Regarding the UTPCPL claim, Plaintiffs allege that common questions predominate
because the claim focuses on Ocwen’s uniform conduct, as opposed to personal characteristics of
the individual Pennsylvania Class members.

Plaintiffs contend that Ocwen violated the

UTPCPL when it failed to disclose the amount of the balloon payment in the loan modification
agreements, the method by which the balloon amount would be calculated, or how Plaintiffs and
the Pennsylvania Class could calculate the amount. Thus, they assert, if Plaintiffs can prove that
Ocwen had duties to make these disclosures but failed to do so, then Ocwen’s liability for
violating the UTPCPL will be established as to the entire Pennsylvania Class.
Regarding the NJCFA claims, Plaintiffs argue that the New Jersey Class satisfies the
predominance requirement because of the following common questions of law and fact

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predominate: (1) whether the uniform terms of the Balloon Disclosure provision constitute an
“unlawful practice” in violation of the NJCFA; (2) whether Ocwen’s conduct constitutes
“deception . . . or the knowing concealment, suppression, or omission of any material fact with
intent that [member of the New Jersey Class] rely upon such concealment, suppression, or
omission” in violation of the NJCFA, N.J.S.A. § 56:8-2; and (3) whether the Court may award
treble damages to members of the New Jersey Class pursuant to the NJCFA.
Finally, Plaintiffs assert that common questions as to damages predominate because Dr.
Becker has opined that a common formula may be used to determine damages for the Classes
utilizing data maintained by Ocwen based on his but-for methodology that quantifies the harm
that resulted from Ocwen’s failure to disclose the balloon payment amount and extension of
amortization terms.
1.

Ascertainable loss

Ocwen raises several arguments to refute a finding of predominance. 39 First, it asserts
that whether borrowers suffered ascertainable losses or actual harm is an individual question
defeating predominance. (Def. Mem. at 51 (citing Harnish, 833 F.3d at 305).) It argues that
Plaintiffs’ insistence that they can calculate the amount of damages on a class-wide basis does
not relieve their burden to show the existence of ascertainable loss on a class-wide basis. (Id.)
Ocwen argues that individualized inquiries into class member-specific evidence are unavoidable
in determining the “fact of damage” for each putative class member, defeating certification
whether the “fact of damage” is analyzed under plaintiffs’ damages theory or Ocwen’s
countervailing methodology. It notes that plaintiffs concede that Abraham has not suffered any

39

Ocwen’s superiority arguments repeat its predominance arguments. We discuss them

together.
111

ascertainable loss of money or property under their own theory. (See Becker Report at 25, 3031; Pls.’ Mem. at 11.)
We reject this argument. As discussed in the context of typicality, Plaintiffs’ assertions
that they have suffered a class-wide informational injury permits a finding of ascertainable loss
for the Pennsylvania and FDCPA Classes, even though it is not sufficient for the New Jersey
Class because the NJCFA does not allow for statutory damages. Whether or not each member of
the Pennsylvania and FDCPA Classes suffered a monetary loss is immaterial since the
informational injury provides the “fact of damage.” We agree with those post-Spokeo decisions
that have held that, since an informational injury is sufficient to create Article III standing, it is
also sufficient to establish the predominance element. See Miller v. Trans Union, LLC, Civ. A.
No. 12-1715, 2017 WL 412641, at *9 (M.D. Pa. Jan. 18, 2017) (holding that informational injury
stemming from allegedly inadequate statutorily-mandated disclosures was a predominating
common issue, since it eliminated specter of numerous mini-trials with respect to which class
members read the disclosures and who, among that set, “was concretely injured by them.”);
Torres v. Mercer Canyons Inc., 835 F.3d 1125, 1136 (9th Cir. 2016) (holding that predominance
element was satisfied where plaintiffs alleged an informational injury theory, since a class
member’s individual eligibility for employment under an H-2A visa was irrelevant at the liability
phase, so long as the plaintiff was denied the opportunity to apply for a job as a result of the
defendant’s omission; presence of individualized damages calculations did not defeat
predominance); Larson v. Trans Union, LLC, 201 F. Supp. 3d 1103, 1109 (N.D. Cal. 2016)
(holding that, where information injury sufficiently created Article III standing under Spokeo for
the named plaintiff, predominance was satisfied since “the concreteness of each absent class

112

member’s injury, just like the question of liability, could still be resolved without individualized
inquiries into how each class member responded to his or her credit report”).
2.

Causation

Causation is an element of both the UTPCPL and NJCFA claims. See Abraham v.
Ocwen Loan Servicing, LLC, No. 14-4977, 2016 WL 2866537, at *10 n.3 (E.D. Pa. May 17,
2016) (UTPCPL); Bosland v. Warnock Dodge, Inc., 964 A.2d 741, 749 (N.J. 2009) (NJCFA).
Ocwen asserts that common issues cannot predominate because each member of the
Pennsylvania and New Jersey Classes must prove the existence of a causal nexus between the
alleged omission of the balloon payment amount and the member’s ascertainable loss.
Irrespective of the relative similarity of Ocwen’s balloon disclosures, it contends that Plaintiffs
must still show that their ascertainable loss, if any, was actually caused by the absence of the
estimated balloon amount before they can recover damages. It argues that Plaintiffs cannot make
this showing with common evidence since the individual facts and circumstances of each
putative class member must be examined. Ocwen urges that we reject the assumptions employed
by Plaintiffs to avoid individual scrutiny since such assumptions cannot be unilaterally applied to
each putative class member. Those assumptions include: (1) that every putative class member
did not know the estimated balloon amount or the applicable amortization period when they
entered into their modification agreements; (2) that if Ocwen had disclosed the estimated balloon
payment amount and amortization period, each putative class member would have rejected the
modification; and (3) that if the putative class members were provided with the estimated amount
of the balloon payment and they rejected that modification, they nevertheless would have been
eligible for, could have afforded, and would have accepted a hypothetical “but-for loan.” (Def.
Mem. at 56.) While Plaintiffs rely on language in an Ocwen training manual that instructs
113

representatives to tell borrowers that Ocwen “cannot provide a balloon amount which will be due
at maturity as the remaining balance becomes the balloon amount,” Ocwen points out that the
next three sentences of that manual expressly state that if an “estimated balloon payment” is
reflected in the system for the borrower, the representative should “advise [the borrower] of the
same,” with the caveat that the representative should “disclose [that] it is only an estimate [and]
[t]he balloon amount depends on how the customer makes the payments.” (Lechtzin Decl. Ex. 9
at Ocwen010223.) Ocwen also relies on its own Rule 30(b)(6) witnesses, each of whom testified
that the estimated balloon payment amounts are available and that Ocwen employees are trained
to provide the information.

(Nieves Tr. at 82-83, 87, 126, 198; Myers Tr. at 72, 80-81;

Blanchard Tr. at 120.)
The Third Circuit extensively discussed in Marcus how the causation element of the
NJCFA impacts the predominance element of Rule 23(b)(3), and when causation may be
presumed.

Marcus involved alleged misrepresentations about the defects of run flat tires

(“RFTs”). The district court found that the plaintiff could prove these alleged defects at trial
with common, class-wide evidence.

On appeal, defendants argued that “causation, i.e.,

determining why each class member’s tires ‘have gone [flat] and been replaced’ — will require
individualized inquiries that will predominate over any common ones.” Marcus, 687 F.3d at
601. The Third Circuit held that the district court abused its discretion when it found that the
plaintiff could show, without resort to individual proofs, that the alleged defect caused the class
members’ damages. Id. at 603.
The plaintiff had defined the class in terms of certain owners and lessees of vehicles with
the tires that “have gone flat and been replaced.” The plaintiff claimed that all class members
were damaged when their RFTs suffered a flat and they were forced to pay for a new tire and

114

asserted that “[e]ach Class member’s damages can be measured by the cost of a replacement
Tire.” Id. at 603. The Court held that merely showing damages was not sufficient:
These damages allegations beg the question of what caused class members’ tires
to go flat and need replacement. Causation is pivotal to each of Marcus’s claims.
. . . Here the District Court should have addressed an undisputed, fundamental
point: any tire can “go flat” for myriad reasons. . . . Even “defective” tires can go
flat for reasons completely unrelated to their defects. Critically, to determine why
a particular class member’s Bridgestone RFT has “gone flat and been replaced”
requires an individual examination of that class member’s tire. . . . These
individual inquiries are incompatible with Rule 23(b)(3)’s predominance
requirement.
Id. at 604 (internal citations omitted).
Turning to certification of the NJCFA claim, the Third Circuit noted there were two
questions at the core of the analysis: “(1) Under New Jersey law, what must a plaintiff prove to
succeed on an NJCFA claim and what evidence can a defendant put forth to rebut and defeat that
claim?; and (2) When a plaintiff seeks to certify an NJCFA claim for class treatment under Rule
23(b)(3), when might common questions of fact fail to predominate over individual ones?” Id. at
605. On the first question, while noting that the NJCFA does not require proof of reliance, it
nonetheless ‘“requires a consumer to prove that [his or her] loss is attributable to the conduct that
the CFA seeks to punish by including a limitation expressed as a causal link.’” 40 Id. at 606
(alteration in original) (quoting Bosland, 964 A.2d at 748. On the second question, the Third
Circuit held that the district court erred when it concluded that a “presumption of causation”
should apply to the plaintiff’s NJCFA claims, and therefore that common issues of fact would
predominate.

40

Violation of the Pennsylvania UTPCPL alleged by the Pennsylvania Class requires
both reliance and causation. See Weinberg v. Sun Co., 777 A.2d 442, 446 (Pa. 2001). Thus, the
discussion of causation in Marcus applies to both the Pennsylvania Class and the New Jersey
Class.
115

The district court held that “a causal relationship between an alleged unlawful practice
and a consumer’s ascertainable loss may be presumed under the NJCFA when a defendant is
alleged to have omitted (rather than affirmatively misrepresented) material information in written
representations and when a defendant’s marketing statements do not differ from one consumer to
another;” thus “Marcus would be able to prove his NJCFA claims with nothing more than
evidence of [defendants’] ‘unlawful practices.’” Id. at 607 (citation omitted). The Third Circuit
rejected this presumption stating:
What a consumer knew about Bridgestone RFTs prior to purchasing or leasing his
or her car is highly relevant to whether that consumer can succeed on an NJCFA
claim. The District Court correctly noted that “[t]he relevant issue . . . is whether
the class members got less than what they expected.” . . . But what a class
member “expected” of Bridgestone RFTs and BMWs depends on what
information, if any, about the alleged defects was available during the class period
and whether that class member knew about it. If a consumer did know about the
“defects” but, despite that knowledge, still decided to purchase or lease a BMW at
the same price anyway — because, for example, he or she decided that the other
safety and convenience benefits RFTs and BMWs offer outweigh the costs of
their defects — then the consumer would not have received something less than
expected. If the evidence indicates that this could be true for a significant number
of class members, then common questions of fact will not predominate. Instead,
individual issues about what each class member expected when purchasing or
leasing his or her car would swamp the inquiry, making the NJCFA claims
inappropriate for class treatment.
Id. at 607-08 (internal citations omitted). Reviewing decisions from the New Jersey Supreme
Court, the Third Circuit found that, “before applying a ‘presumption of causation’ to an NJCFA
claim, a court must consider not only the defendants’ course of conduct, but also that of the
plaintiffs.

Specifically, it must consider whether plaintiffs could have known the truth

underlying the defendant’s fraud.” Id. at 610. The Court concluded that the district court erred
in granting class certification stating that:
Before certifying a class, the Court needed to have found (among other things)
either (1) that the alleged defects were not knowable to a significant number of
potential class members before they purchased or leased their BMWs, or (2) that,
116

even if the defects were knowable, that class members were nonetheless relatively
uniform in their decisionmaking, which would indicate that, at most, only an
insignificant number of class members actually knew of the alleged defects and
purchased or leased their cars at the price they did anyway. These findings cannot
be side-stepped. They are necessary to determine whether the predominance
requirement is met in this case. See Hydrogen Peroxide, 552 F.3d at 316-18. If
class members could have known of the alleged defects and the evidence shows
that they do not react to information about the cars and tires they purchased or
leased in a sufficiently uniform manner, then individual questions related to
causation will predominate.
Id. at 611 (citations omitted). Thus, under Marcus, because causation is an element of the
Pennsylvania and New Jersey Class’s causes of action, it cannot be presumed. Plaintiffs must
demonstrate by a preponderance of the evidence that the amount of the balloon payment was
“not knowable to a significant number of potential class members” before they executed the loan
modification, or, that if it was knowable, the borrowers’ behavior would nonetheless have been
uniform.
The record evidence favorable to Plaintiffs demonstrating that the amount of the balloon
payment was not “knowable” includes: (1) the fact that the amount or a method to calculate the
amount was not provided in the balloon disclosure, and (2) the statement in Ocwen’s training
manual instructing its representatives to tell borrowers that Ocwen “cannot provide a balloon
amount which will be due at maturity as the remaining balance becomes the balloon amount.”
(Lechtzin Decl. Ex. 8 at Ocwen011487; id. Ex. 9 at Ocwen010223.) The evidence favorable to
Ocwen showing that the amount was “knowable” includes the next several sentences in the same
manual also instructing representatives to tell borrowers that if an “estimated balloon payment”
is reflected in the system for the borrower, the representative should “advise [the borrower] of
the same, as long as you disclose it is only an estimate [and] [t]he balloon amount depends on
how the customer makes the payments.” (Id.) In addition, Ocwen’s Rule 30(b)(6) witnesses

117

each testified that the estimated balloon payment amounts are available and that Ocwen
employees are trained to provide the information. Specifically, Max Nieves testified that
“we get training on — let me just clarify. If the customer requests an
amortization schedule, we don’t necessarily create it. We know what the conduit
is to get it to the customer. . . . [T]ypically the terms are in RealServicing and the
agent doesn’t even need an Amp schedule since they can provide that data
telephonically. If for some reason the terms of the modification or balloon data
are not in RealServicing, the agent can’t find them . . . the research team would
pull that data . . . and provide a writ-up to the customer detailing exactly what the
balloon is, the amount, and anything that they inquired about.
(Nieves Tr. at 82-83.) He also testified that if, the Kaminskis called, the balloon payment
amount “would be sent to them.” (Id. at 87.) Paul Myers testified that “[a]ny borrower could
call in and we can easily advise them what the balloon number is. That’s a moving number
depending whether they make their payments on time, whether they pay them early, late, what
have you.” (Myers Tr. at 72.) Rashad Blanchard testified that “the borrower doesn’t need to
make any calculations. They can call and an HRC rep will give it to them.” (Blanchard Tr. at
120.)
We find that the evidence preponderates in favor of a finding that the balloon payment
amount was knowable. Marcus makes clear that the issue is not “did they know,” but rather
“could they have known.” Id. at 611. Ocwen has shown that any borrower could have learned
the amount of the pro forma balloon payment merely by asking. Since the information was
knowable, the next question is whether the borrowers’ behavior would nonetheless have been
uniform. We hold that the evidence preponderates in favor of a finding that borrower behavior
would not have been uniform since Ocwen has shown that significant numbers of borrowers
benefited from their loan modifications because of lowered interest rates, lowered monthly
payments, relief from default and foreclosure to permit waiting for a positive change in the
market, and having principal forgiven.
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Accordingly, we conclude that individual issues about what each putative class member
knew and how they would have acted “swamp the inquiry” on causation, making the UTPCPL
and NJCFA claims inappropriate for class treatment because common issues do not predominate.
3.

Reliance

Plaintiffs concede that the UTPCPL contains a requirement for establishing justifiable
reliance. (Pls.’ Mem. at 49 (citing Hunt v. U.S. Tobacco Co., 538 F.3d 217, 227 (3d Cir. 2008).)
They assert that the reliance element is not incompatible with Rule 23(b)(3) predominance
where, as here, the alleged deceptive conduct relates to material omissions. They note that we
have already held in this case that a “plaintiff who asserts a UTPCPL claim that is based on a
defendant’s material omission may be entitled to a reasonable inference of reliance.” Cave v.
Saxon Mortg. Servs., Inc., Civ. A. No. 11-4586, 2013 WL 460082, at *1 (E.D. Pa. Feb. 6, 2013)
(citing Drayton v. Pilgrim’s Pride Corp., Civ. A. No. 03-2334, 2004 WL 765123, at *7 (E.D. Pa.
Mar. 31, 2004)); see also Grimes v. Enter. Leasing Co. of Phila., LLC, 66 A.3d 330, 337 n.4 (Pa.
Super. Ct. 2013), rev’d on other grounds, 105 A.3d 1188 (Pa. 2014) (“when a plaintiff alleges a
claim under the UTPCPL catchall provision under the theory of deceptive conduct, the plaintiff
need not prove the elements of common law fraud, including ‘induce[ment of] justifiable
reliance. . . .’” (quoting Bennett v. A.T. Masterpiece Homes at Broadsprings, LLC, 40 A.3d 145,
152 n.5, 154-55 (Pa. Super. Ct. 2012))).
Ocwen argues that that the Pennsylvania Class cannot show reliance through common
evidence. Noting that the Third Circuit has stated that class-wide proof of reliance for a fraudbased claim is problematic because “reliance is nearly always an individualized question,
requiring case-by-case determinations of what effect, if any, the misrepresentation had on
plaintiffs’ decision-making,” Harnish, 833 F.3d at 309-10, Ocwen argues that Plaintiffs’ failure
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to explain how they can prove, or how the Court can find, justifiable reliance for each member of
the class using common evidence is fatal. (Def. Mem. at 57.) Contrary to Plaintiffs’ assertion,
Ocwen argues that courts in Pennsylvania have rejected any presumption of reliance under the
UTPCPL because a plaintiff “must prove justifiable reliance affirmatively.” Hunt, 538 F.3d at
227; see also Debbs v. Chrysler Corp., 810 A.2d 137, 158 (Pa. Super. Ct. 2002) (rejecting
presumption of reliance and denying class certification because common law fraud and fraud
under UTPCPL require an individualized showing of reliance on a fraudulent statement).
We find that reliance may not be presumed under the UTPCPL. Plaintiffs’ citation to our
earlier discussion on reliance at the pleading stage is inapposite. That discussion involved
whether Plaintiffs’ allegations were plausible, not whether reliance may be presumed as part of a
predominance inquiry.

Second, substantive Pennsylvania case law suggests that such a

presumption is not appropriate for establishing the Rule 23(b)(3) predominance requirement.
See Klemow v. Time, Inc., 352 A.2d 12, 16 n.17 (Pa. 1976) (“[t]he successful maintenance of a
cause of action for fraud includes, inter alia, a showing that the plaintiff acted in reliance on the
defendant’s misrepresentations. Because such a showing would normally vary from person to
person, this cause of action is not generally appropriate for resolution in a plaintiff-class action.”)
(citations omitted); Weinberg v. Sun Co., 777 A.2d 442, 446 (Pa. 2001) (“The UTPCPL’s
‘underlying foundation is fraud prevention.’ . . . Nothing in the legislative history suggests that
the legislature ever intended statutory language directed against consumer fraud to do away with
the traditional common law elements of reliance and causation.”) (citation omitted); Basile v. H
& R Block, Inc., 729 A.2d 574, 585 (Pa. Super. Ct. 1999) (excusing proof of individual
detrimental reliance against defendant who was a fiduciary, but requiring plaintiffs to “establish
reliance as a matter of fact on the basis of the testimony of individual class members” against

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non-fiduciary defendant) (reversed on other grounds, 761 A.2d 1115 (Pa. 2000); see also Debbs,
810 A.2d at 157-58 (“It is also quite clear that Pennsylvania state courts have, thus far, not
adopted [a presumption of reliance]. . . . We decline to do so in light of our precedent. Thus, we
conclude that the critical inquiry respecting reliance in [plaintiff’s] case is not amenable to class
treatment.” (citing Klemow, Weinberg, and Basile)).
Because reliance is an element of the UTPCPL claim and cannot be presumed, we find
that Plaintiffs cannot show that common questions predominate for that claim.

Plaintiffs’

insistence that the proposed Classes meet the predominance and superiority requirements of Rule
23(b)(3) “because each of the Classes asserts a single consumer protection claim concerning
uniform Balloon Disclosure provisions” (Pls.’ Reply at 60-61), must be rejected.

The

predominance inquiry focuses on the elements of the underlying claims, not whether each
member of the class asserts the same claim. Erica P. John Fund, Inc., 131 S.Ct. at 2184; Marcus,
687 F.3d at 598. Accordingly, we conclude that the UTPCPL claim cannot be certified for this
additional predominance reason.

VII.

CONCLUSION
After rigorous analysis of the class action issues, we conclude that Plaintiffs’ Motion

must be denied in its entirety as we find that there are no named Plaintiffs for whom, or proposed
Class for which, each and every part of Rule 23 has been satisfied for any claim. In sum, under
Rule 23(a), the New Jersey Class fails the typicality requirement and the FDCPA Class fails the
numerosity requirement. Under Rule 23(b)(2), the Pennsylvania and FDCPA Classes cannot be
certified for injunctive relief because the statutes Plaintiffs allege were violated do not allow for
injunctive relief; the New Jersey Class cannot be certified because part of the injunctive relief
that Class seeks is not appropriate for class treatment (and the part of the claim that is proper
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cannot be certified because of other Rule 23 issues). Under Rule 23(b)(3), the New Jersey and
Pennsylvania Classes fail the predominance and superiority requirements.
An appropriate order will be entered denying Ocwen’s Motion to Strike and denying
Plaintiffs’ Motion for Class Certification.

BY THE COURT:
/s/ John R. Padova
John R. Padova, J.

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