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Johnson v. Enhanced Recovery Company, LLC

United States District Court, N.D. Indiana, Hammond Division

May 3, 2018

ERIN JOHNSON, on behalf of plaintiff and a class, Plaintiff,



         Plaintiff Erin Johnson has brought this case alleging that debt collector Enhanced Recovery Company sent her a dunning letter that was false or misleading in violation of the Fair Debt Collection Practices Act, 15 U.S.C. §1692e. The form letter challenged by Johnson has been described and discussed at length in my previous order denying ERC's motion to dismiss. [DE 27.] Now before me is Johnson's renewed motion to certify a class of plaintiffs under Fed.R.Civ.P. 23(a) and (b)(3). Rule 23(a) prescribes requirements of numerosity, commonality, typicality and a representative that will fairly and adequately protect the interests of the class. Rule 23(b)(3) authorizes the type of class action in which “the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members” and that is “superior to other available methods for fairly and efficiently adjudicating the controversy.”

         Johnson proposes herself and her attorneys as class representative and class counsel. She proposes this definition for the class:

(a) all individuals in Indiana (b) who were sent a letter by defendant (c) offering a settlement (d) and stating that “your delinquent account may be reported to the national credit bureaus” (e) where the debt was reported to one or more national credit bureaus (Equifax, Trans Union, or Experian) on or before the date in the letter for receipt of the settlement, or first payment thereof (f) and the letter was sent at any time during a period beginning July 13, 2016 and ending August 3, 2017.

[DE 53 at 2.] The numerosity requirement of Rule 23(a)(1) appears to be easily satisfied. Johnson represents, without contradiction by ERC, that in discovery ERC has preliminarily identified 39, 196 individuals meeting Johnson's proposed class definition.

         Johnson contends that there are questions of law and fact common to the class as required by Rule 23(a)(2), and that those common questions predominate over questions affecting only individual members, as required for a class under Rule 23(b)(3). Johnson's class definition specifies the members' receipt of a particular type of “notice of debt” that (1) offered to settle a debt, (2) included particular language warning that “your delinquent account may be reported to the national credit bureaus, ” (3) was sent within a specified period of time, and (4) provided a date for receipt of settlement payment after the debt was reported to a credit bureau. [DE 53 at 2.] The class definition therefore prescribes a high level of factual commonality among the members of the class. There exists a “common nucleus of operative fact” for all class members because ERC “engaged in standardized conduct towards members of the proposed class by mailing to them allegedly illegal form letters.” Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998). The predominant legal question posed by the case is common to all members of the class, namely whether this notice violated the FDCPA by misrepresenting that no report would be made to a national credit bureau if the recipient timely availed herself of one of the settlement options offered.

         ERC challenges the commonality requirement, with reliance on the Supreme Court's decision in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011). Dukes presented Wal-Mart's appeal of the certification of a class of 1.5 million plaintiffs, female employees who alleged sex discrimination in pay and promotion in violation of Title VII. Id. at 342. In an effort to satisfy the commonality requirement of Rule 23, the class framed the theory of their case in a particular way, as described by Justice Scalia: “that a strong and uniform ‘corporate culture' permits bias against women to infect, perhaps subconsciously, the discretionary decisionmaking of each one of Wal-Mart's thousands of managers - thereby making every woman at the company the victim of one common discriminatory practice.” Id. at 345.

         As Dukes notes, the commonality requirement is “easy to misread, since ‘[a]ny competently crafted class complaint literally raises common “questions.”'” Id. at 349, quoting Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U.L.Rev. 97, 131-132 (2009). More particularly, commonality for purposes of Rule 23 requires that the class members have “‘suffered the same injury.'” Dukes, 564 U.S. at 350, quoting General Telephone Co. of Southwest v. Falcon, 457 U.S. 147, 157 (1982). Further, the class members' claims must “depend upon a common contention...of such a nature that it is capable of classwide resolution - which means that determination of it is truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke.” Id.

         The Supreme Court concluded that Dukes could not proceed as a class action because the plaintiffs lacked the requisite “significant proof” that Wal-Mart operated under a general policy of discrimination, and instead only offered evidence to the contrary, namely of a policy of “allowing discretion by local supervisors over employment matters.” Id. at 353, 355. Nothing in Dukes persuades me that the class in this case lacks commonality. The question of FDCPA compliance posed here by the same form letter sent to 39, 000 debtors is clearly not analogous to the “literally millions of employment decisions at once” involved in Dukes, 564 U.S. at 352, in which the challenged decisions were all discretionary and distinctly made.

         ERC contends that Johnson's stated intention not to rely on extrinsic evidence (an expert witness or consumer survey evidence) in support of her claims suggests that the case is not capable of presentation on a classwide basis. [DE 54 at 6.] The adequacy of Johnson's evidence to ultimately support the merits of the FDCCPA claim is an issue separate from considerations of class certification. Although it may be an issue for summary judgment, the sufficiency of Johnson's evidentiary support does not enter into the determination of the appropriateness of class certification.

         ERC also argues that the FDCPA claim here depends on a material misrepresentation, and that “[w]hether any statements resulted in a material misstatement that actually affected the recipient's decision-making is an issue that cannot be proved on a classwide basis.” [DE 54 at 4.] But claims under §1692e use an objective “unsophisticated consumer” standard, under which “it is unimportant whether the individual that actually received a violative letter was misled or deceived.” Lox v. CDA, Ltd., 689 F.3d 818, 826 (7th Cir. 2012). “[O]ur test for determining whether a debt collector violated §1692e is objective, turning not on the question of what the debt collector knew but on whether the debt collector's communication would deceive or mislead an unsophisticated, but reasonable, consumer.” Turner v. JV.D.B. & Assoc., 300 F.3d 991, 995 (7th Cir. 2003).

         This objective analysis applies to the issue of materiality as well as to the deceptive character of the communication. Lox, 689 F.3d at 826 (materiality means the ability to influence a consumer's decision); Afewerki v. Anaya Law Group, 868 F.3d 771, 776 (9th Cir. 2017); Jensen v. Pressler & Pressler, 791 F.3d 413, 421 (3rd Cir. 2015); Elyazidi v. SunTrust Bank, 780 F.3d 227, 234 (4th Cir. 2015); Mikolajczyk v Universal Fidelity, LP, Case No. 16-CV-1382, 2017 WL 706301 at *4 (E.D.Wisc. Feb. 22, 2017); Bowse v. Portfolio Recovery Associates, LLC, 218 F.Supp.3d 745, 753 (N.D.Ill. 2016). The question will be not whether any particular plaintiff's decision-making was influenced by the challenged text of the notice, but whether “a significant fraction of the population would be.” Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir. 2000). Further, as Johnson points out, I have already held, in ruling on ERC's motion to dismiss, that “[i]f Johnson is correct about how the unsophisticated consumer would interpret ERC's letter, the statements are certainly material.” [DE 17 at 14.]

         ERC also raises issues of standing, which of course is constitutionally necessary for the maintenance of any action. The minimum requirements of standing to pursue a claim are that: (1) the plaintiff must have suffered an “injury in fact” (2) that is “fairly traceable to the challenged conduct of the defendant” and (3) that a favorable judicial result is likely to redress. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016), citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). ERC argues that class certification is inappropriate because “detailed and individualized inquiry” would be required to determine each class member's injury in fact supporting standing to sue. [DE 54 at 8.] Johnson cites Kohen v. Pac. Inv. Mgmt. Co. LLC, 571 F.3d 672, 676 (7th Cir. 2009), for the proposition that, “[f]or class certification, only the Plaintiff needs to establish standing.” [DE 57 at 7.] In Kohen, the Seventh Circuit held that although “injury is a prerequisite to standing[, ] as long as one member of a certified class has a plausible claim to have suffered damages, the requirement of standing is satisfied.” Id. at 676.

         That returns the focus to Johnson herself, who ERC contends lacks standing because she suffered no injury in fact, citing Meyers v. Nicolet Restaurant of De Pere, LLC, 843 F.3d 724, 727-28 (7th Cir. 2016), and Hahn v. Triumph Partnerships, LLC, 557 F.3d 755, 757-58 (7th Cir. 2009). In Meyers, the Seventh Circuit affirmed the denial of class certification in an action under the Fair and Accurate Credit Transactions Act after finding that the named plaintiff had no injury in fact from the alleged violation of the statute by a credit card receipt that did not truncate the expiration date of his card, but which no one else ever saw. Citing Spokeo, the Seventh Circuit held that “[m]ore than a ‘bare ...

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