Sykes v. Mel S. Harris & Associates LLC
780 F.3d 70
| 2d Cir. | 2015Background
- Plaintiffs (Sykes, Veerabadren, Perez, Armoogam) were sued in NYC Civil Court in debt-collection actions; each denies being served but default judgments were entered.
- Plaintiffs allege a coordinated scheme: Leucadia bought charged-off debts; Mel Harris generated batch affidavits of merit via a software process run by employee Todd Fabacher; Samserv (a process-server) often performed alleged "sewer service" and produced affidavits of service.
- Evidence at certification: hundreds of thousands of cases filed by Leucadia entities (2006–2009), tens of thousands of default judgments; many service affidavits contain impossible or implausible entries; Samserv produced massive volumes of service reports and did not produce required logbooks.
- Plaintiffs asserted federal and state claims: RICO, FDCPA, N.Y. Gen. Bus. Law § 349, and N.Y. Judiciary Law § 487; theory is that false affidavits (service and merit) enabled fraudulently obtained defaults.
- District court certified two classes: (1) a Rule 23(b)(2) injunctive class (all persons sued where a default judgment has been or will be sought) and (2) a Rule 23(b)(3) damages class (all persons sued where a default judgment has been obtained).
- Second Circuit affirmed certification, holding the district court did not abuse its discretion on commonality, predominance, superiority, or certification of the (b)(2) injunctional class; several merits questions (e.g., scope of FDCPA, RICO injunctive relief) were left for the district court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Commonality/typicality under Rule 23(a) | Common question: whether uniform, form affidavits of merit (and in many instances affidavits of service) were false and produced fraudulently — resolves central issues classwide | Plaintiffs’ claims are heterogenous; affidavits-of-service issues are individualized and plaintiffs rewrote claims to fit class treatment | Affirmed: commonality and typicality satisfied; false affidavits of merit present a common question capable of classwide resolution |
| Predominance of common issues for Rule 23(b)(3) | Common liability issues (FDCPA, RICO, GBL, Judiciary Law) predominate; individualized damages/timeliness/causation issues are manageable and do not defeat predominance | Individual issues (service, accrual/statute limitations, damages causation) predominate and make class unmanageable; state forum and remedies would be superior | Affirmed: district court did a sufficient predominance analysis; common issues predominate and individualized issues do not outweigh common ones |
| Superiority / forum choice under Rule 23(b)(3) | Class action is superior because individual suits are impracticable, many class members lack incentive/resources to sue, and centralization is efficient | State Civil Court (including CPLR § 5015(c) en masse vacatur) is a superior, available forum; federal class action duplicates/undermines state process | Affirmed: district court did not abuse discretion; federal class action may proceed despite state procedures; court declined to give state remedies controlling weight at certification stage |
| Rule 23(b)(2) injunctive certification & availability of injunctive relief (including under RICO/FDCPA) | Injunction (stop practices, notify class, require lawful service and truthful affidavits) would benefit all members | Named plaintiffs already had vacatur; injunction would not provide uniform benefit; availability of private injunctive relief under RICO/FDCPA is uncertain | Affirmed certification under (b)(2): injunction would benefit class members generally; Court declined to decide on FDCPA/RICO injunctive- relief availability at certification stage |
Key Cases Cited
- Sykes v. Mel Harris & Assocs., LLC, 285 F.R.D. 279 (S.D.N.Y. 2012) (district-court class-certification opinion affirmed on appeal)
- Sykes v. Mel Harris & Assocs., LLC, 757 F. Supp. 2d 413 (S.D.N.Y. 2010) (motion-to-dismiss opinion describing alleged scheme and tolling/FDCPA issues)
- Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011) (commonality requirement and classwide issues standard)
- Amgen Inc. v. Connecticut Ret. Plans & Tr. Funds, 133 S. Ct. 1184 (2013) (limits on merits inquiries at certification; predominance standard guidance)
- Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013) (class damages must be tied to the common liability theory)
- In re U.S. Foodservice Inc. Pricing Litig., 729 F.3d 108 (2d Cir. 2013) (abuse-of-discretion standard for certification and review of factual findings)
- Hoblock v. Albany County Bd. of Elections, 422 F.3d 77 (2d Cir. 2005) (Rooker–Feldman doctrine framework)
- Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997) (Rule 23(b)(3) predominance and superiority principles)