McDonald v. Asset Acceptance LLC
296 F.R.D. 513
E.D. Mich.2013Background
- Asset Acceptance, LLC purchased large portfolios of charged-off credit card accounts (including Plaintiffs’ accounts) and then filed state-court collection actions asserting balances that included post-charge-off interest.
- The original creditors (e.g., Chase; World Financial Network National Bank) charged off the accounts and, as a stated business practice and in purchase agreements, did not add post-charge-off interest prior to sale.
- Purchase agreements between Asset and several sellers expressly excluded post-charge-off interest from the definition of the unpaid balance.
- Plaintiffs (Guimond and Petrilli) sued Asset under the FDCPA, alleging Asset deceptively attempted to collect interest that the original creditors had waived and that Asset, as assignee, could not lawfully impose.
- The court considered Plaintiffs’ renewed motion for class certification and cross-motions for summary judgment on liability under the FDCPA.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether class is ascertainable and satisfies Rule 23(a)/(b)(3) | Class consists of persons from whom Asset tried to collect interest that original creditors had not imposed; business practices and purchase agreements allow class-wide proof | Class membership depends on individualized waiver determinations making class unascertainable and predominance fails | Class certified under Rule 23(b)(3); numerosity, commonality, typicality, adequacy, predominance, and superiority satisfied |
| Whether original creditors impliedly waived post-charge-off interest | Charging off and expressly excluding post-charge-off interest in purchase agreements manifested an unequivocal intent to waive interest | No waiver; any waiver requires individualized proof and some claims are time-barred | Court found undisputed evidence that original creditors intended to waive post-charge-off interest; waiver established as a matter of law for these accounts |
| Whether Asset, as assignee, could retroactively impose interest waived by assignors | Asset stepped into sellers’ shoes and could not impose interest that sellers had waived | Asset could reimpose interest or retract waiver; statute-of-frauds bars unwritten waivers under Michigan law | Under applicable state-law waiver principles and Michigan assignment rules, Asset could not lawfully impose post-charge-off interest it did not acquire the right to collect |
| Whether Asset is protected by the FDCPA bona fide error defense | Plaintiffs: Asset bought accounts aware unpaid balance excluded post-charge-off interest; defense inapplicable | Asset: error was unintentional and resulted from procedures reasonably adapted to avoid errors | Bona fide error defense not established; Asset failed to show it reasonably could have imposed interest or to carry its burden on defense |
Key Cases Cited
- Sprague v. Gen. Motors Corp., 133 F.3d 388 (6th Cir. 1998) (only one common question needed for class commonality)
- Gen. Tel. Co. v. Falcon, 457 U.S. 147 (U.S. 1982) (rigorous analysis required for class certification)
- Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (U.S. 2011) (commonality/typicality principles in class certification)
- Beattie v. CenturyTel, Inc., 511 F.3d 554 (6th Cir. 2007) (predominance analysis and generalized proof standard)
- In re Visa Check/MasterMoney Antitrust Litig., 280 F.3d 124 (2d Cir. 2001) (predominance and generalized proof over individualized issues)
- Duffy v. Landberg, 215 F.3d 871 (8th Cir. 2000) (overstating amounts, even slightly, can violate FDCPA § 1692f(1))
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (summary judgment standard)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment burdens)
- Miller v. Javitch, Block & Rathbone, 561 F.3d 588 (6th Cir. 2009) (materiality under FDCPA)
- La Quinta Corp. v. Heartland Props. LLC, 603 F.3d 327 (6th Cir. 2010) (separate-evaluation principle for cross-motions for summary judgment)