Adkins, et al. v. Midland Credit Management, Inc.

Filing 119

MEMORANDUM OPINION AND ORDER granting as moulded the 105 MOTION by Midland Credit Management, Inc. to Exclude Individuals Whose Debts are not Time-Barred From the Class; denying without prejudice the 107 MOTION by Midland Credit Managemen t, Inc. to Compel Arbitration and Amend Class Definition pending the § 4 summary trial scheduled for 10/27/2020 at 9:00 AM in Beckley before Judge Frank W. Volk. Signed by Judge Frank W. Volk on 9/28/2020. (cc: attys; any unrepresented party) (slr)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT BECKLEY
STEPHANIE ADKINS and,
DOUGLAS SHORT, on behalf of themselves
and all others similarly situated,
Plaintiffs,
v.

CIVIL ACTION NO. 5:17-cv-04107

MIDLAND CREDIT MANAGEMENT, INC.,
Defendant.
MEMORANDUM OPINION AND ORDER
Pending are Defendant Midland Credit Management, Inc.’s (“MCM’s”) motions to
exclude individuals whose debts are not time-barred from the class [Doc. 105] and to compel
arbitration [Doc. 107].
I.
The West Virginia Consumer Credit Protection Act (“WVCCPA”) requires debt
collectors to include the following disclosure in certain correspondences with the debtor: “The law
limits how long you can be sued on a debt. Because of the age of your debt, [OWNER] cannot sue
you for it.” W. Va. Code § 46A-2-128(f) (emphasis added). This action concerns letters sent by
MCM that instead contained the following disclosure: “The law limits how long you can be sued
on a debt. Because of the age of your debt, we will not sue you for it.”
On December 7, 2018, Plaintiffs moved to certify a class with a definition
consisting of the following language:

All persons with West Virginia addresses to whom Midland sent a debt collection
letter on or after July 4, 2017 seeking to collect debt that Midland’s records
indicated had passed its statute of limitations, which letter failed to provide the
following disclosure: “The law limits how long you can be sued on a debt. Because
of the age of your debt, [Midland] cannot sue you for it.”
[Doc. 46]. MCM opposed certification on two grounds [See Doc. 59]. First, MCM contended that
the proposed class definition encompassed debts that had not, in fact, creeped past the statute of
limitations (“non time-barred accounts”) [Id. at 15]. For these accounts, MCM contended, the
statutory disclosure is unnecessary [See id.]. Second, MCM objected that certain class members
are bound by arbitration agreements and class action waivers [See id. at 18]. MCM contended that
determining which accounts fall within these respective categories requires a fact-intensive inquiry
to defeat class certification.
On April 9, 2019, Judge Berger certified the class as defined by Plaintiffs [See Doc.
89]. Judge Berger deferred ruling, however, on the scope of the class with respect to MCM’s
objections concerning non time-barred accounts and arbitration agreements/class action waivers
(“arbitration and waiver agreements”) [Doc. 89 at 7-8]. Judge Berger invited MCM to develop
each of these objections “with regard to specific accounts or groups of accounts” [Id. at 7, n.3; see
id. at 8]. MCM thereafter petitioned for leave to appeal class certification pursuant to Federal Rule
of Civil Procedure 23(f) [Doc. 93]. Our Court of Appeals denied the petition on May 22, 2019
[Doc. 98].
On June 7, 2019, Judge Berger entered a scheduling order directing the parties to
brief the matters of non-time-barred accounts and arbitration and waiver agreements within thirty
(30) days [Doc. 101]. Judge Berger further ordered discovery with respect to the arbitration and
waiver agreements at issue [Id.]. The action was subsequently reassigned to the undersigned judge
on October 29, 2019 [Doc. 113].

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II.
Federal Rule of Civil Procedure 23 provides, in relevant part, as follows:
One or more members of a class may sue or be sued as representative parties on
behalf of all members only if:
(1) the class is so numerous that joinder of all members is impracticable;
(2) there are questions of law or fact common to the class;
(3) the claims or defenses of the representative parties are typical of the
claims or defenses of the class; and
(4) the representative parties will fairly and adequately protect the interests
of the class.
Fed. R. Civ. P. 23(a). “Although the rule speaks in terms of common questions, ‘what matters to
class certification . . . [is] the capacity of a classwide proceeding to generate common answers apt
to drive the resolution of the litigation.” EQT Prod. Co. v. Adair, 764 F.3d 347, 360 (4th Cir. 2014)
(quoting Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 350 (2011)).
Rule 23 also “contains an implicit threshold requirement that the members of a
proposed class be ‘readily identifiable’” – i.e., “ascertainable.” Krakauer v. Dish Network, LLC,
925 F.3d 643, 654-55 (4th Cir. 2019) (quoting Adair, 764 F.3d at 358). “A class cannot be certified
unless a court can readily identify the class members in reference to objective criteria.” Id. (quoting
Adair, 764 F.3d at 358). “The goal is not to ‘identify every class member at the time of
certification,’ but to define a class in such a way as to ensure that there will be some
administratively feasible [way] for the court to determine whether a particular individual is a
member’ at some point.” Id. (quoting Adair, 764 F.3d at 358) (internal citation omitted).
A district court retains discretion “to modify [the class] in light of subsequent
developments in the litigation.” City of Cape Coral Mun. Firefighters’ Ret. Plan v. Emergent

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Biosolutions, Inc., 322 F. Supp. 3d 676, 682 (D. Md. 2018) (quoting Gen. Tel. Co. of the Sw. v.
Falcon, 457 U.S. 147, 160 (1982)); see Richardson v. Byrd, 709 F.2d 1016, 1019 (5th Cir. 1983)
(“Under Rule 23 . . . the district judge must define, redefine, subclass, and decertify as appropriate
in response to the progression of the case from assertion to facts.”).
III.
In the first pending motion, MCM requests that the Court exclude non-time-barred
accounts from the class or, in the alternative, decertify the class [See Doc. 106]. 1
In certifying the class, Judge Berger concluded the predominant issue common to
the class was the “alleged per-se violations of [§] 128(f) of the WVCCPA” [Doc. Doc. 89 at 10].
Section 128(f) specifically proscribes the following as a prohibited “unfair or unconscionable
means” to collect a debt:
When the debt is beyond the statute of limitations for filing a legal action for
collection, failing to provide the following disclosure informing the consumer in all
written communication with such consumer that:
(1) When collecting on a debt that is not past the date for obsolescence
provided for in Section 605(a) of the Fair Credit Reporting Act, 15 U. S. C. 1681c:
“The law limits how long you can be sued on a debt. Because of the age of your
debt, (INSERT OWNER NAME) cannot sue you for it. If you do not pay the debt,
(INSERT OWNER NAME) may report or continue to report it to the credit
reporting agencies as unpaid”; and
(2) When collecting on debt that is past the date for obsolescence provided
for in Section 605(a) of the Fair Credit Reporting Act, 15 U. S. C. 1681c: “The law
limits how long you can be sued on a debt. Because of the age of your debt,
(INSERT OWNER NAME) cannot sue you for it and (INSERT OWNER NAME)
cannot report it to any credit reporting agencies.”
W. Va. Code § 46A-2-128(f). MCM contends that class members whose debts were not actually

1

MCM identifies 219 non time-barred accounts but represents that it has not yet conducted
a full review [Id.].
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time-barred should be excluded from the class inasmuch as the disclosure contained in § 46A-2128(f) does not apply to non-time-barred debts.
The argument aligns neatly with the plain language of the statute. See W. Va. Code
§ 46A-2-128(f) (requiring the disclosure “when the debt is beyond the statute of limitations”). A
contrary reading would require a debt collector to represent to the consumer that it “cannot sue”
for a debt that is, in fact, within the limitations period.
Plaintiffs nevertheless contend that “it is appropriate to use a defendant’s own
internal statute of limitation calculation” -- which includes non-time-barred debts 2 -- to define the
scope of the class [Doc. 109 at 5]. Absent the predicate claim under § 46A-2-128(f), however, the
non-time-barred class members do not share the predominant questions of law and fact common
to the remainder of the class [See Doc. 89 at 10 (“Plaintiffs have narrowed their claims to alleged
per-se violations of Section 128(f) of the WVCCPA . . . That core issue predominates over any
issues subject to resolution on a less than class-wide basis.”)].
Based upon the foregoing discussion, the Court excludes non-time-barred accounts
from the class [See Doc. 106].
IV.
In the second pending motion, MCM seeks to compel arbitration and enforce class
action waivers [Doc. 107].3
“[C]ourts must ‘rigorously enforce’ arbitration agreements according to their

2

MCM represents that the calculation yields “conservative estimates . . . that often lead to
MCM not pursuing the full extent of its legal rights” [Doc. 106 at 3].
3

MCM identifies 5,353 accounts potentially bound by arbitration and/or waiver agreements,
with more subject to identification with additional time [Doc. 108 at 12-13].
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terms.” American Exp. Co. v. Italian Colors Restaurant, 570 U.S. 228, 233 (2013) (quoting Dean
Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221 (1985)). Class actions are no exception. See id.
at 234 (deeming it “likely” that invalidating arbitration agreements in the context of a class action
“would be an ‘abridge[ment]’ or ‘modif[ication]’ of a ‘substantive right’ forbidden to the Rules
[of Civil Procedure]” (citing 28 U.S.C. § 2072(b))). Nonetheless, “before referring a dispute to an
arbitrator,” a court is tasked with “whether a valid arbitration agreement exists.” Henry Schein,
Inc. v. Archer & White Sales, Inc., 139 S. Ct. 524, 530 (2019).
Plaintiffs do not object, “in principle, to the removal of class members . . . for
whom MCM has demonstrated” binding arbitration and/or waiver agreements [Doc. 111 at 2].
Accordingly, Plaintiffs do not object to the exclusion from the class of eight (8) class members
bound by agreements specifically set forth in the record. The balance of arbitration and/or waiver
agreements identified by MCM, however, are not set forth in the record; they are instead identified
in the affidavit of Sean Mulcahy, Manager, Media of MCM [Doc. 107-2 at ¶ 1].
Mr. Mulcahy explains that the agreements arise from financial institutions and
original creditors that subsequently assigned the agreements to MCM [Doc. 107-2 at ¶¶ 5-6]. Mr.
Mulcahy identifies seventy-six (76) such original creditors [Id. at ¶ 7], with eleven (11) creditors
originating the bulk of the accounts (8,517 of 11,774) [Id. at ¶ 45]. Of these 8,517 class members,
MCM “ha[s] located 4,793 accounts” that are purportedly bound by arbitration and/or waiver
agreements [See Doc. 107 at 7]. To document these agreements, MCM submitted the
aforementioned eight (8) exemplar agreements. Beyond the eleven primary creditors, MCM
identifies an additional 560 accounts subject to arbitration and/or waiver agreements [Doc. 107-2
at ¶ 46].

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The agreements here are not missing or lost; they are simply multitudinous and
burdensome to produce. At the same time, MCM encounters strong headwinds in attempting to
essentially bypass production of the actual agreements. As noted by our Court of Appeals, a party
seeking to compel arbitration must prove the following:
(1) the existence of a dispute between the parties, (2) a written agreement that
includes an arbitration provision which purports to cover the dispute, (3) the
relationship of the transaction, which is evidenced by the agreement, to interstate
or foreign commerce, and[,] (4) the failure, neglect or refusal of the [opposing
party] to arbitrate the dispute.
Galloway v. Santander Consumer USA, Inc., 819 F.3d 79, 84 (4th Cir. 2016) (quoting RotaMcLarty v. Santander Consumer USA, Inc., 700 F.3d 690, 696 n.6 (4th Cir. 2012)). But see Hill v.
Emp’ee Res. Group, LLC, 2020 WL 3055936, *3 (4th Cir. June 9, 2020) (allowing substantiation
of arbitration agreement by “clear and conclusive evidence” where an arbitration agreement is
missing or lost). The Court of Appeals in Galloway additionally observed as follows:
The “written arbitration agreement” that is necessary to bring an agreement within
the FAA's scope is an “actual document—the physical embodiment of the
underlying legal obligations” . . . .
Galloway v. Santander Consumer USA, Inc., 819 F.3d 79, 89 (4th Cir. 2016).
When, as is apparently the case here, a party denies the existence of an agreement
to arbitrate, the Federal Arbitration Act directs the Court to “proceed summarily to the trial
thereof.” 9 U.S.C. § 4; see also Berkeley Cty. Sch. Dist. v. Hub Int'l Ltd., 944 F.3d 225, 241 (4th
Cir. 2019); Dillon v. BMO Harris Bank, N.A., 787 F.3d 707, 713 (4th Cir. 2015) (emphasizing that
district court must conduct trial on motion to compel arbitration where material factual dispute
exists).

Accordingly, MCM’s motion to compel arbitration is DENIED WITHOUT

PREJUDICE pending the aforementioned summary trial.

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It is further ORDERED that the summary trial be, and hereby is, SCHEDULED
for Tuesday, October 27, 2020, at 9:00 a.m. at the Robert C. Byrd Courthouse in Beckley,
West Virginia.
V.
Having determined that MCM’s internal calculations alone cannot sustain the scope
of the class, the Court must determine whether the class is “readily identifiable” otherwise. Our
Court of Appeals held that “[a] class cannot be certified unless a court can readily identify the class
members in reference to objective criteria.” Adair, 764 F.3d at 358. “If class members are
impossible to identify without extensive and individualized fact-finding or mini-trials, then a class
action is inappropriate.” Id. (quoting Marcus, 687 F.3d at 592–94). On remand, the Court gave the
district court specific instruction to “give greater consideration to the administrative challenges”
posed by identifying class members. Id. at 360.
MCM contends that the class is not “readily identifiable,” [Doc. 106 at 13–16], and
that it faces numerous challenges in identifying which of the 11,774 class members (1) are, in fact,
time-barred at the time they received the letters in dispute and (2) are not subject to arbitration
and/or waiver agreements [See Doc. 105-1; Doc. 107-2]. MCM avers that the data points necessary
to identify this class include the age of the debt, choice of law and conflict of law matters, any
specific circumstances that might reset or toll the limitations period (such as recent payments,
bankruptcies, etc.), and specific contract terms between the original creditors and the consumer
[Id.]. Such inquiries, MCM contends, are the kind of “extensive and individualized fact-finding”
that the “readily identifiable” requirement deems inappropriate in class action. EQT Prod. Co.,
764 F.3d at 358.

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Opposing the request, Plaintiffs contend that the pertinent data for determining the
time bar status is, or should be, in MCM’s control [See Doc. 109 (citing Hayes v. Convergent
Healthcare Recoveries, Inc., No. 14-1467, 2016 WL 5867818 at *6 (C.D. Ill. Oct. 7, 2016)
(granting certification notwithstanding a similar objection because “such information should be
readily available to those in the business of collecting debts”))]. Moreover, calculating the
limitations period and determining the existence of an arbitration agreement falls within the
ordinary business practices of debt collectors [Id.].
The Court deems it advisable to adjudicate this issue following the aforementioned
summary trial. The ruling therein may radically affect the scope of the class and the administrative
burdens posed by identifying the remaining class members. Accordingly, MCM’s request to
decertify the class is DENIED WITHOUT PREJUDICE.
VI.
Accordingly, the Court GRANTS, as moulded, Defendant’s Motion to Exclude
Individuals Whose Debts are Not Time-Barred From the Class [Doc. 105] and DENIES
WITHOUT PREJUDICE Defendant’s Motion to Compel Arbitration and Amend Class
Definition [Doc. 107] pending the § 4 summary trial.
The Clerk is ordered to send a copy of this Memorandum Opinion and Order to all
counsel of record and any unrepresented parties.
ENTERED: September 28, 2020

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