Spuhler et al v. State Collection Service Inc
Filing
74
DECISION AND ORDER signed by Magistrate Judge Nancy Joseph on 10/26/2017 granting 39 Motion to Certify Class. (cc: all counsel) (llc)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
KYLE SPUHLER AND NICHOLE SPUHLER,
on behalf of themselves and all others similarly situated,
Plaintiffs,
v.
Case No. 16-CV-1149
STATE COLLECTION SERVICES, INC.,
Defendant.
DECISION AND ORDER ON PLAINTIFFS’
MOTION FOR CLASS CERTIFICATION
Kyle and Nichole Spuhler filed a single count complaint against State Collection
Services, Inc. alleging that a debt collection letter sent to them violated the Fair Debt
Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. The Spuhlers have filed a
motion for class certification. The motion has been fully briefed and is ready for resolution.
For the reasons more fully explained below, the Spuhlers’ motion is granted.
FACTUAL BACKGROUND
The Spuhlers allege that prior to the filing of this case, they incurred a consumer debt
as that term is defined in 15 U.S.C. § 1692a(5) with certain medical providers. (Am. Compl.
¶ 8, Docket # 18.) State Collection is attempting to collect on those medical debts. (Id. ¶ 9.)
The Spuhlers contest the validity of the dollar amounts being sought by State Collection. (Id.
¶ 10.) The Spuhlers allege that in the year preceding the filing of this case, State Collection
sent them various collection letters. (Id. ¶ 11.) The Spuhlers allege that included in those
collection attempts were amounts for prejudgment interest; however, no state court had
awarded a judgment or prejudgment interest. (Id. ¶ 12.) The Spuhlers allege that the
collection letters they received did not disclose that interest was accruing at the rate of 5%,
that the dollar amount sought could be higher if not immediately paid, that the dollar
amount due would or could vary because of the accrual of interest, and what part of the
dollar amount sought was interest. (Id. ¶ 13.) The Spuhlers allege that the collection letters
violate the FDCPA in various ways, including, but not limited to, 15 U.S.C. §§ 1692e,
1692e(2)(a), and 1692f(1). (Id. ¶ 25.)
The Spuhlers seeks to certify a class in this action. They seek certification of three
sub-classes as follows:
Sub-Class A: All consumers in the State of Wisconsin who received letters from
defendant on medical debts owed to Prohealthcare Medical Associates, Waukesha
Memorial Center, or Waukesha Memorial Hospital, Inc. within one (1) year from
the date of the filing of this action: Attempting to collect an amount including
prejudgment interest when prejudgment interest has not yet been awarded by a court.
Sub-Class B: All consumers in the State of Wisconsin who received letters from
defendant on medical debts owed to Prohealthcare Medical Associates, Waukesha
Memorial Center, or Waukesha Memorial Hospital, Inc. within one (1) year from
the date of the filing of this action: Where such letters attempted to collect an amount
without disclosing that interest is accruing on the balance due and that the balance
may either increase or vary.
Sub-Class C: All consumers in the State of Wisconsin who received letters from
defendant on medical debts owed to Prohealthcare Medical Associates, Waukesha
Memorial Center, or Waukesha Memorial Hospital, Inc. within one (1) year from
the date of the filing of this action: Attempted to collect an amount that does not
disclose the balance due because undisclosed interest is accruing on the amount due.
(Pl.’s Br. at 1-2, Docket # 45.)
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ANALYSIS
There are four threshold requirements applicable to class certification: “(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).
Once numerosity, commonality, typicality, and adequacy of representation are
satisfied, “the potential class must also satisfy at least one provision of Rule 23(b).” Rosario
v. Livaditis, 963 F.2d 1013, 1017 (7th Cir. 1992). Here, the applicable provision is Rule
23(b)(3), which requires that “the court finds that the questions of law or fact common to
class members predominate over any questions affecting only individual members, and that
a class action is superior to other available methods for fairly and efficiently adjudicating the
controversy.” Fed. R. Civ. P. 23(b)(3). The party seeking class certification bears the burden
of showing that certification is appropriate. Retired Chicago Police Ass’n v. City of Chicago, 7
F.3d 584, 596 (7th Cir. 1993).
1.
Standing
State Collection argues the Spuhlers lack standing to represent any putative class that
allegedly paid “improper charges or fees” to State Collection. (Def.’s Br. at 5, Docket # 54.)
State Collection argues because the Spuhlers do not allege that they actually paid any
improper sum to State Collection and allege only a statutory claim, they have not suffered
an “injury in fact” because they have failed to allege any concrete harm arising from State
Collection’s alleged conduct. (Id. at 7.) To satisfy Article III standing, a plaintiff must allege
that he or she “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged
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conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial
decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).
State Collection relies primarily on the Supreme Court’s more recent case on
standing, Spokeo, and the Seventh Circuit’s post-Spokeo case of Gubala v. Time Warner Cable,
Inc., 846 F.3d 909 (7th Cir. 2017) in support of its proposition that the Spuhlers lack
standing because they allege a mere statutory violation. In Spokeo, the plaintiff filed a classaction complaint against Spokeo, alleging that it willfully failed to comply with Fair Credit
Report Act (“FCRA”) requirements by publishing inaccurate information about him. 136 S.
Ct. at 1544. He asserted that his Spokeo profile improperly indicated “that he is married,
has children, is in his 50’s, has a job, is relatively affluent, and holds a graduate degree,”
though he did not allege that this false information was actually used to his detriment. Id. at
1544, 1546.
The Court began its analysis by reviewing the general principles of Article III
standing, specifically, the injury-in-fact requirement. It noted that while Congress has
identified and elevated certain intangible harms to constitute concrete injuries, “a bare
procedural violation, divorced from any concrete harm, [is insufficient to] satisfy the injuryin-fact requirement.” Id. at 1549. Applying these standards, the Court recognized that in
passing the FCRA, Congress “plainly sought to curb the dissemination of false information
by adopting procedures designed to decrease that risk.” Id. at 1550. Yet, the Court
concluded the plaintiff could not satisfy the demands of Article III by alleging a bare
procedural violation of the statute that did not result in harm or present any material risk of
harm. Id. The Court did not find, however, that the plaintiff lacked standing. Rather, the
Court remanded the case to the Ninth Circuit to determine whether the plaintiff’s
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allegations of a procedural violation “entails a degree of risk” sufficient to meet the
concreteness requirement. Id.
In Gubala, the plaintiff filed a class action lawsuit against a cable company, alleging
that the company violated the Cable Communications Policy Act (“CCPA”) when he
discovered the company had failed to destroy his personally identifiable information nearly
ten years after he cancelled his cable subscription. 846 F.3d at 910. He asserted that “the
retention of the information, on its own, has somehow violated a privacy right or entailed a
financial loss.” Id. The court recognized that there was a risk of harm but found that Gubala
had “failed to show . . . even a remote probability” that Time Warner’s conduct was
harmful to him. Id. at 912. The court held that Gubala lacked standing to bring his suit, due
to “the absence of allegation let alone evidence of any concrete injury inflicted or likely to be
inflicted on the plaintiff as a consequence of Time Warner’s continued retention of his
personal information.” Id. at 913.
Chief Judge William Griesbach recently addressed the issue of standing in the
context of the FDCPA. In Pogorzelski v. Patenaude & Felix APC, No. 16-CV-1330, 2017 WL
2539782, at *4 (E.D. Wis. June 12, 2017), the plaintiff brought suit against the defendants
for violations of the FDCPA. She alleged that she received a debt collection letter that
contained a statement “If you wish to avoid further collection activity, please contact us at
(866) 606–3290.” She alleged that this statement was false, deceptive, and misleading
because it suggests to an unsophisticated consumer that the only way to prevent further
collection activity was to call the defendant. The plaintiff alleged that the defendant denied
her the right to certain information due to her under the FDCPA. She sought statutory
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damages, attorneys’ fees, and costs on behalf of herself and a putative class pursuant to 15
U.S.C. § 1692k.
The defendants moved to dismiss the complaint, arguing that the plaintiff lacked
standing to sue because she failed to allege that she suffered a concrete injury. Citing to
Spokeo, Judge Griesbach found that the plaintiff alleged a concrete injury-in-fact. Judge
Griesbach began by recounting the history of the FDCPA, which was intended by Congress
to eliminate abusive debt collection practices by debt collectors and to protect consumers
against debt collection abuses. 2017 WL 2539782, at *3. He noted that the FDCPA creates a
private right of action for consumers who receive communications that violate the Act so
that they may vindicate their rights and stated that the FDCPA, “in essence ‘enlists the
efforts of sophisticated consumers . . . as ‘private attorneys general’ to aid their less
sophisticated counterparts, who are unlikely themselves to bring suit under the Act, but who
are assumed by the Act to benefit from the deterrent effect of civil actions brought by
others.’” Id. (quoting Jacobson v. Healthcare Fin. Servs., Inc., 516 F.3d 85, 91 (2d Cir. 2008)).
Judge Griesbach found that the FDCPA was intended to deter debt collectors, like
the defendants, from making false representations to unsophisticated consumers, like the
plaintiff. Id. He found that the defendants’ alleged violation of the plaintiff’s right to receive
certain required information under the FDCPA was not hypothetical or uncertain and
although her alleged injury may not have resulted in tangible economic or physical harm,
the “informational injury” the plaintiff alleged was “more than a mere procedural
violation.” Id.
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As in this case, the defendants relied on Spokeo and Gubala for support that the
plaintiff lacked standing. Judge Griesbach noted that “an argument can be made that the
Supreme Court’s decision in Spokeo redefined the injury-in-fact requirement by requiring a
complaint to allege that a statutory violation caused a ‘material risk of harm’ before a
plaintiff may bring a suit.” Id. at *4. However, Judge Griesbach also noted that numerous
other courts, both from this circuit and from around the country, have rejected Spokeo-based
standing challenges in the context of FDCPA violations. See id. (collecting cases). He found
that the Spokeo Court “did not categorically preclude individuals from asserting that a
defendant violated statutorily-mandated procedures. Instead, it clarified that only certain
violations may create a concrete injury necessary for standing.” Id. He found that there was
“a meaningful distinction between a violation of a specific statutory interest recognized by
Congress, such as the right to truthful information in debt collection communications, and
in a procedural infraction that may not materially harm that interest, such as an incorrect
zip code.” Id
Judge Griesbach further found that while the provisions at issue in Gubala imposed a
“host of technical, procedural requirements,” the FDCPA’s purpose is to “protect
consumers from certain harmful debt collection practices and create a private right of action
for consumers, namely, the right to be free from ‘false, deceptive or misleading’
information.” Id. at *5. He found that the collection letter at issue that allegedly contained
false information was precisely the type of harm Congress “sought to curb” in enacting the
FDCPA. Id. (citing Spokeo, 136 S. Ct. at 1550). Thus, Judge Griesbach found the plaintiff
need not allege any additional harm beyond the statutory violation identified by Congress
and thus she pled a concrete injury-in-fact and had standing to sue. Id.
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I find Judge Griesbach’s reasoning persuasive and adopt it in this case. The Spuhlers
allege that State Collection violated their rights under the FDCPA by failing to properly
disclose: (1) the balance due on collection letters sent, (2) the accrual of prejudgment
interest, and (3) that the amount due would vary based on prejudgment interest. (Am.
Compl. ¶ 25.) They further allege that State Collection failed to properly break out what part
of the balance due was principle versus interest, failed to use any form of the “safe harbor”
language approved by the Seventh Circuit related to collection letters with balances that are
accruing interest, and improperly charged pre-judgment interest when no court had yet
awarded prejudgment interest under state law. (Id.) As in Pogorzelski, the Spuhlers’
allegations that the debt collection letters sent by State Collection contained false
representations of the character, amount, or legal status of a debt in violation of their rights
under the FDCPA sufficiently pleads a concrete injury-in-fact for purposes of standing.
Thus, I find that the Spuhlers have standing to sue in this case.
2.
Class Certification
2.1
Numerosity
In general, for classes numbering at least 40, joinder is considered impracticable.
Swanson v. American Consumer Industries, 415 F.2d 1326, 1333 (7th Cir. 1969). State
Collection does not contest that there are approximately 36,834 individuals that fall within
the putative class definitions set forth in the Spuhlers’ brief. (Defs.’ Br. at 10.) Thus, State
Collection concedes that the numerosity predicate is satisfied. (Id.) Accordingly, the
Spuhlers have satisfied the numerosity requirement.
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2.2
Commonality
The commonality requirement of Rule 23(a)(2) is usually satisfied when there exists
“[a] common nucleus of operative fact.” Rosario, 963 F.2d at 1018 (citation omitted). State
Collection argues that the Spuhlers cannot meet the commonality requirement as to SubClass A because resolution of the allegedly common legal question (whether interest was
properly assessed to the putative Sub-Class A members’ accounts) will require
individualized inquiry for each class member. (Defs.’ Br. at 12-17.) As to Sub-Class B and
C, State Collection argues that there is no commonality because the Spuhlers did not pay
any illegal charges or fees, whereas they allege that the putative class members did. (Id. at
17.)
State Collection’s argument against both commonality and typicality as to Sub-Class
A goes to the heart of its legal defense—that interest was properly assessed on the Spuhlers’
debt pursuant to Wisconsin law and nothing in the FDCPA requires a debt collector to
disclose that interest has accrued, might accrue, or to break out what part of the balance due
was principle versus interest. (Defs.’ Br. in Supp. of Summ. Judg. at 23, Docket # 60.) This
argument, however, goes to the merits of the Spuhlers’ claims, not to the commonality or
typicality of the claims. The Spuhlers’ complaint alleges that State Collection engaged in
standardized conduct by mailing to the proposed class members illegal form letters. The
Seventh Circuit has found that a “[c]ommon nuclei of fact are typically manifest where . . .
the defendants have engaged in standardized conduct towards members of the proposed
class by mailing to them allegedly illegal form letters or documents.” Keele v. Wexler, 149
F.3d 589, 594 (7th Cir. 1998) (citations omitted). Whether the form letters or documents
were truly illegal under the FDCPA is a matter for another day. As to Sub-Class B and Sub9
Class C, again, the common nucleus of operative facts is the receipt of the allegedly illegal
form letters, not whether the Spuhlers actually paid the fees or charges. Thus at this stage,
the commonality requirement is satisfied.
2.3
Typicality
The Rule 23(a)(3) typicality requirement “primarily directs the district court to focus
on whether the named representatives’ claims have the same essential characteristics as the
claims of the class at large. ‘A plaintiff's claim is typical if it arises from the same event or
practice or course of conduct that gives rise to the claims of other class members and his or
her claims are based on the same legal theory.’” De La Fuente v. Stokely-Van Camp, Inc., 713
F.2d 225, 232 (7th Cir. 1983) (citation omitted). Moreover, “[t]he typicality requirement
may be satisfied even if there are factual distinctions between the claims of the named
plaintiffs and those of other class members. Thus, similarity of legal theory may control
even in the face of differences of fact.” Id.
State Collection raises the same argument on the merits of the Spuhlers’ claim to
argue against typicality. Again, whether the Spuhlers will ultimately prevail under the legal
theory put forth is not at issue at this stage. The Spuhlers’ claims arise from the same course
of conduct which gives rise to the other class members’ claims; namely, that each received a
form letter from State Collection that violated the FDCPA by failing to disclose the balance
due, by failing to disclose the accrual of prejudgment interest, and by failing to disclose that
the amount due would vary due to prejudgment interest. Each class members’ claim relies
on the same legal theory under the FDCPA—that State Collection falsely represented the
character, amount, or legal status of the debt. Again, even if the Spuhlers’ legal theory
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ultimately fails, both the Spuhlers and members of the putative class are raising the same
legal theory. Thus, I find the typicality requirement is satisfied.
2.4
Adequacy
Rule 23(a) requires the class representatives to “fairly and adequately protect the
interests of the class.” Fed. R. Civ. P. 23(a)(4). The adequacy requirement is composed of
two parts: “‘the adequacy of the named plaintiff’s counsel, and the adequacy of
representation provided in protecting the different, separate, and distinct interest’ of the class
members.” Retired Chicago Police Ass’n, 7 F.3d at 598 (quoting Secretary of Labor v.
Fitzsimmons, 805 F.2d 682, 697 (7th Cir.1986) (en banc)). Moreover, “[a] class is not fairly
and adequately represented if class members have antagonistic or conflicting claims.” Id. “A
class may not satisfy the requirements of Rule 23(a)(4) if the class representative does not
‘possess the same interest and suffer the same injury as the class members.’” Uhl v.
Thoroughbred Tech. & Telecomms., Inc., 309 F.3d 978, 985 (7th Cir. 2002) (citation omitted).
Thus, the court must ensure that “there is no inconsistency between the named parties and
the class they represent.” Id.
Finally, a class representative must be a “conscientious representative plaintiff.”
Rand v. Monsanto Co., 926 F.2d 596, 599 (7th Cir. 1991). In order to meet this standard, “a
class representative need only possess general knowledge of the case and participate in
discovery.” Thompson v. City of Chicago, No. 01 C 6916, 2002 WL 1303138, at *6 (N.D. Ill.
June 12, 2002). “There is no requirement that the representative plaintiff be knowledgeable
of either the allegations or the legal theories on which the lawsuit rests.” Paper Sys., Inc. v.
Mitsubishi Corp., 193 F.R.D. 601, 609 (E.D. Wis. 2000).
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State Collection does not object to the adequacy of the Spuhlers’ counsel. Rather,
State Collection argues the Spuhlers are inadequate class representatives because they lack
credibility and lack understanding of the basis of their claims. (Defs.’ Br. at 22-23.) But the
“burden of establishing [adequacy] is not heavy.” Thompson, 2002 WL 1303138, at *6.
Again, the class representative need only possess general knowledge of the case and
participate in discovery. Id. The Spuhlers were deposed in this matter and although I agree
that Kyle Spuhler showed very little knowledge about the facts of his own case, including
stating that he had not seen the collection letter at issue prior to his deposition (Declaration
of Patrick D. Newman (“Newman Decl.”) ¶ 2, Exh. A, Deposition of Kyle Spuhler at 62,
Docket # 56-1), he did understand the basic premise of the case—that he was seeking to
represent “[s]imilar people to myself” and testified that they were similar because they
“[i]ncurred a debt through State Collection.” (Id. at 15.) Similarly, Nichole Spuhler testified
about the basic facts of the case, including receiving the collection letters from State
Collection and attempting to verify the debts. (Newman Decl. ¶ 3, Exh. B, Deposition of
Nichole Spuhler at 61-63, Docket # 56-2.) Thus, I find the Spuhlers meet the adequacy
requirement.
3.
Rule 23(b)
After satisfying the prerequisites to class certification, “the potential class must also
satisfy at least one provision of Rule 23(b).” Rosario, 963 F.2d at 1017. The plaintiffs rely on
Rule 23(b)(3). In order to qualify for certification under Rule 23(b)(3), the court must be
satisfied that “the questions of law or fact common to the members of the class predominate
over any questions affecting only individual members, and that a class action is superior to
other available methods for the fair and efficient adjudication of the controversy.” Fed. R.
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Civ. P. 23(b)(3). In making predominance and superiority determinations, the court should
assess “(A) the class members’ interests in individually controlling the prosecution or
defense of separate actions; (B) the extent and nature of any litigation concerning the
controversy already begun by or against class members; (C) the desirability or undesirability
of concentrating the litigation of the claims in the particular forum; (D) the likely difficulties
in managing a class action.” Id.
The proposed class in this case meets the requirements of Rule 23(b)(3). As to
predominance, common questions of law and fact predominate over any individual
questions. As explained above, each member of the class received a form letter from State
Collection that allegedly violated the FDCPA by failing to disclose the balance due, by
failing to disclose the accrual of prejudgment interest, and by failing to disclose that the
amount due would vary because of prejudgment interest. Again, each class members’ claim
relies on the same legal theory under the FDCPA—that State Collection falsely represented
the character, amount, or legal status of the debt. This is a common question, regardless of
individual experiences.
As to superiority, State Collection argues that a class action is not the superior
method of litigating the issues because the Spuhlers limited the purported classes to people
who received the collection letter on medical debts owed to Prohealthcare Medical
Associates, Waukesha Memorial Center, or Waukesha Memorial Hospital, Inc. State
Collection argues that because the Spuhlers did not include all potential consumers who
received the allegedly offending letter, even if State Collection wins on the merits, it will be
open to lawsuits from individuals with debts to creditors other than the three listed ones.
State Collection further argues that the putative class members stand to receive
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approximately $0.37 in damages (as opposed to a maximum recovery of $1,000 apiece if
they litigated their claims individually) and this de minimis recovery illustrates the inferiority
of proceeding as a class action. (Defs.’ Br. at 26-30.)
As an initial matter, “a de minimis recovery (in monetary terms) should not
automatically bar a class action.” Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir.
1997). As the Mace court noted, the “policy at the very core of the class action mechanism is
to overcome the problem that small recoveries do not provide the incentive for any
individual to bring a solo action prosecuting his or her rights. A class action solves this
problem by aggregating the relatively paltry potential recoveries into something worth
someone’s (usually an attorney’s) labor.” Id. The Mace court further noted that in an
FDCPA case, while the statute allows for individual recoveries of up to $1,000, this
“assumes that the plaintiff will be aware of her rights, willing to subject herself to all the
burdens of suing and able to find an attorney willing to take her case. These are
considerations that cannot be dismissed lightly in assessing whether a class action or a series
of individual lawsuits would be more appropriate for pursuing the FDCPA’s objectives.” Id.
Further, as the Spuhlers acknowledge, it is unclear at this point the exact number of
consumers that will comprise the class because they do not know how many duplicate
letters were received. (Pls.’ Reply Br. at 12, Docket # 67.) Thus, State Collection’s
calculation of a $0.37 per person recovery will likely change.
State Collection’s first argument, however, warrants more consideration. In its class
action complaint, the Spuhlers allege a class that included all consumers who received the
allegedly violative letter. In its class certification briefing, however, the Spuhlers limited the
class to include only those consumers who owed debts to Prohealthcare Medical Associates,
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Waukesha Memorial Center, or Waukesha Memorial Hospital. (Pl.’s Br. at 2.) Amending
the class at the class certification stage, in and of itself, is not problematic. See Drinkman v.
Encore Receivable Mgmt., No. 07-CV-363, 2007 U.S. Dist. LEXIS 89514, *7 (W.D. Wis. Dec.
3, 2007) (the court amended the class definition in order to remedy the definiteness issue
without denying class certification).
State Collection is correct, however, that there is authority for denying class
certification when the plaintiff chooses to limit the class by creditor. In Guevarra v. Progressive
Financial Services, Inc., No. C-05-3466, 2006 U.S. Dist. LEXIS 89193 (N.D. Cal. Nov. 30,
2006), the plaintiff initially sought class-wide relief on behalf of all debtors who received a
letter allegedly violating the FDCPA. However, the plaintiff subsequently amended her
complaint to seek relief on behalf of a class of recipients of the offending letter indebted to
IKEA, only one of the creditors. In evaluating the superiority prong of Rule 23(b)(3), the
court found that the “creditor-specific class” of “IKEA only” would “encourage piecemeal
litigation” because it failed to include all potential customers who received the allegedly
illegal letters. The court further found that the IKEA-only class exposed the defendants to
the risk of “one-way intervention,” meaning the inability to bind all of the absent class
members. The court concluded that the plaintiff’s distinction between IKEA and non-IKEA
creditors was arbitrary and she offered no justification for limiting the case to a specific
creditor. The court stated that the case hinged on claims under the FDCPA arising out of
the form of the letters, not the nature of the underlying debts. The court denied the plaintiff’s
motion for class certification.
Similarly, in Wenig v. Messerli & Kramer P.A., No. 11-CV-3547, 2013 U.S. Dist.
LEXIS 39013 (D. Minn. Mar. 21, 2013), the plaintiff failed to pay a debt owed to Capital
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One Bank. The defendant sent the plaintiff collection letters allegedly violating the FDCPA,
and sent substantially identical letters to thousands of other consumers in Minnesota. The
plaintiff’s proposed class included consumers in Hennepin County who received the letter
and owed a debt to Capital One Bank. In denying plaintiff’s motion for class certification,
the court noted that the plaintiff’s limitations of the proposed class based on geography and
creditor made “little sense” because all consumers who received the allegedly offending
letter suffered the same violation. The court noted, citing the Seventh Circuit’s decision in
Mace, that a proposed class need not always include all possible class members, however,
the court found that the “highly artificial limitations . . . deprive the class-action device of
much of its utility.” Id. at *18.
There is also authority, however, to support limiting the proposed class. In McCurdy
v. Professional Credit Service, No. 15-CV-1498, 2016 WL 5853721 (D. Or. Oct. 3, 2016), the
plaintiff sought to certify a class that was limited to consumers who received an allegedly
violative letter under the FDCPA between April 1, 2015 and April 30, 2015. The defendant
argued that the proposed class did not meet the superiority requirement because the
limitation to individuals who received letters in April 2015 created an arbitrary sub-class and
opened the door to serial class action lawsuits. The McCurdy court noted that debt collectors
had made the same policy argument before in a “handful” of district court cases, “with
mixed results.” Id. at *5. The court specifically noted the Guevarra case. In rejecting the
defendant’s superiority argument, the McCurdy court was persuaded by dicta from the
Seventh Circuit’s decision in Mace.
In Mace, the Seventh Circuit was presented with the question of whether the FDCPA
authorized state-wide (as opposed to nation-wide) class actions. 109 F.3d at 341. The
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FDCPA provides statutory damages caps in class actions of the lesser of one percent of a
debtor collector’s net worth or $500,000. 15 U.S.C. 1692k(a)(2)(B). Thus, the larger the
class, the smaller each individual class member’s potential recovery. The district court had
declined to certify a statewide class on the grounds that allowing state-by-state suits to
proceed would nullify the FDCPA’s statutory damages cap. Mace, 109 F.3d at 344. The
Seventh Circuit rejected that argument, noting that other statutes, including the Truth in
Lending Act (“TILA”), expressly apply the statutory damages cap to “any class action or
series of class actions arising out of the same failure to comply by the same creditor.” Id. at
342. The Mace court noted that TILA’s reference to a “series of class actions” was absent
from the FDCPA; thus, the plain text of the FDCPA did not preclude multiple class actions.
Id. at 344.
However, the Mace court also stated as follows:
The defendants, however, advance a policy argument, from which the district
court constructed a requirement for a nation-wide class. The district court
reasoned that, if the damage cap of $500,000 can be applied anew to a series
of state-wide (or otherwise limited) class actions, the damage limitation would
become meaningless. This contention may be correct as far as it goes,
although there is, of course, no way of telling whether such repeated class
actions are possible or likely, here or generally. The other side of the coin is
that to require a nation-wide class as the district court did here brings with it
other problems that will be discussed later. There are other possible problems
with the district court's reasoning. The FDCPA has a short, one-year statute
of limitations making multiple lawsuits more difficult. Further, if a debt
collector is sued in one state, but continues to violate the statute in another, it
ought to be possible to challenge such continuing violations. Given the
uncertainty of those policy considerations, there is no compelling reason to
ignore the plain words of the statute. In any event, the case before us does not
now present multiple or serial class actions to recover for the same
misconduct. Hence, it would be premature to require a nation-wide class at
this juncture. If and when multiple serial class actions are presented, it will be
time enough to rule on such a pattern. At this point, there is no persuasive
reason to require a nation-wide class.
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Id. at 343-44. Following the Mace court’s reasoning, the McCurdy court found that the
plaintiff’s limitation of the class did not cut against the superiority of a class action. The
court found that if there truly were multiple lawsuits based on the same underlying conduct,
this would be an appropriate factor to consider in evaluating superiority. See Fed. R. Civ. P.
23(b)(3)(B) (expressly directing the consideration of any related, ongoing litigation). Further,
the McCurdy court found that Rule 23(b) asks the court to consider whether a class action is
superior to other available methods for adjudicating the controversy; thus, the relevant
comparison is between the proposed class action and other methods of litigation, not
between the proposed class action and other, hypothetical class actions. 2016 WL 5853721,
at *5. Thus, the McCurdy court stated that it need not deny class certification “based on the
mere possibility another class action will be filed.” Id.; see also Whitten v. ARS National
Services, Inc., No. 00 C 6080, 2001 WL 1143238 (N.D. Ill. Sept. 27, 2001) (granting motion
for class certification where class was limited to persons who allegedly owed debts to
Citibank, where the original complaint was not creditor-specific).
I find that a class action is the superior method for litigating this case given the
considerations listed in Rule 23(b)(3). This case is based on the text of form letters, in which
individual damages for any given class member would be low, making the cost of litigation
difficult for class members to address individually. The parties have identified no ongoing,
related litigation and the case presents no apparent manageability problems. Thus, the
Spuhlers have shown the class satisfies Rule 23(b)(3).
18
CONCLUSION
For the reasons explained in this decision, the Spuhlers have satisfied the
requirements of Rule 23(a) and 23(b)(3). Thus, the plaintiffs’ motion to certify a class is
granted.
ORDER
NOW, THEREFORE, IT IS HEREBY ORDERED that the plaintiff’s motion to
certify class (Docket # 39) is GRANTED.
IT IS FURTHER ORDERED that the following class be and hereby is certified:
Sub-Class A: All consumers in the State of Wisconsin who received letters from
defendant on medical debts owed to Prohealthcare Medical Associates, Waukesha
Memorial Center, or Waukesha Memorial Hospital, Inc. within one (1) year from
the date of the filing of this action: Attempting to collect an amount including
prejudgment interest when prejudgment interest has not yet been awarded by a court.
Sub-Class B: All consumers in the State of Wisconsin who received letters from
defendant on medical debts owed to Prohealthcare Medical Associates, Waukesha
Memorial Center, or Waukesha Memorial Hospital, Inc. within one (1) year from
the date of the filing of this action: Where such letters attempted to collect an amount
without disclosing that interest is accruing on the balance due and that the balance
may either increase or vary.
Sub-Class C: All consumers in the State of Wisconsin who received letters from
defendant on medical debts owed to Prohealthcare Medical Associates, Waukesha
Memorial Center, or Waukesha Memorial Hospital, Inc. within one (1) year from
the date of the filing of this action: Attempted to collect an amount that does not
disclose the balance due because undisclosed interest is accruing on the amount due.
Dated at Milwaukee, Wisconsin this 26th day of October, 2017.
BY THE COURT:
s/Nancy Joseph
NANCY JOSEPH
United States Magistrate Judge
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