ORDER GRANTING IN PART, DENYING IN PART MOTION FOR CLASS CERTIFICATION
[Re: EOF 58]
In this putative class action lawsuit, plaintiff Ellen Annete Gold alleges that defendants Midland Credit Management, Inc. and Midland Funding, LLC (collectively, “Defendants”) violated provisions of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692 et seq., and the California Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”), Cal. Civ. Code § 1788 et seq., by sending an allegedly false, deceptive, and misleading letter concerning Plaintiffs past-due balance with third party creditor HSBC Bank Nevada, N.A. Plaintiff now seeks to certify a class of California residents who received the same allegedly misleading letter.
On August 14, 2014, the Court heard oral argument on Plaintiffs motion and ordered supplemental letter briefs regarding the use of a claim form to identify class members, an identification method that Plaintiff raised for the first time in her reply brief. The supplemental briefing concluded on September 12, 2014.
I. BACKGROUND
Plaintiff owes a financial obligation, “namely a consumer credit account issued by
“We can help you reduce your past balance with HSBC Bank Nevada, N.A. and get your finances back on track.”
“Your credit report will be updated with each payment made, and once you’ve completed your agreed-upon payments to settle the account, your credit report will be updated as ‘Paid in Full’!”
“Having a good credit report is important ... We can help you get your finances back on track.”
Id. ¶¶ 19, 21, 23. It appears to be Plaintiffs theory that because Defendants are the “current owners” of the debt, these passages misleadingly imply either that any debt is still owed to HSBC Bank or that Defendants can affect the manner in which HSBC Bank reports the debt to credit bureaus. Id. ¶¶ 20, 22, 24. Based on this theory of alleged misrepresentation, Plaintiff contends that Defendants violated provisions of the federal Fair Debt Collection Practices Act (“FDPCA”), 15 U.S.C. § 1692 et seq., and of the California Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”), Cal. Civ. Code §§ 1788-1788.33, and seeks to certify a class under both acts.
II. LEGAL STANDARD
Federal Rule of Civil Procedure 23, which governs class certification, has two sets of distinct requirements that a plaintiff must meet before the Court may certify a class. As the Supreme Court has recently reiterated:
The class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only. To come within the exception, a party seeking to maintain a class action must affirmatively demonstrate his compliance with Rule 23. The Rule does not set forth a mere pleading standard. Rather, a party must not only be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, typicality of claims or defenses, and adequacy of representation, as required by Rule 23(a). The party must also satisfy through evidentiary proof at least one of the provisions of Rule 23(b).
Comcast Corp. v. Behrend, — U.S. -,
A court’s analysis of class certification “must be ‘rigorous’ and may ‘entail some overlap with the merits of the plaintiffs underlying claim.’ ” Amgen Inc. v. Conn. Ret. Plans & Trust Funds, — U.S. -,
III. DISCUSSION
Plaintiff seeks to certify a “hybrid” class under Rule 23(b)(2) and (b)(3) defined as:
“(i) all persons with addresses in California (ii) to whom Defendants sent, or caused to be sent, a notice in the form of Exhibit ‘1’ attached to the Class Action Complaint (iii) in an attempt to collect an alleged debt originally owed to HSBC Bank Nevada, N.A. (iv) which was primarily for personal, family, or household purposes (as shown by Defendants’ records or the records of the original creditor), (v) which were not returned undeliverable by the U.S. Post Office (vi) during the period one year prior to the date of filing this action.”
Pl.’s Mot. 1. As previously stated, Plaintiffs proposed class would encompass claims under both the FDCPA and the Rosenthal Act. The parties do not appear to dispute that the
A. Rule 23(a) Requirements
Under Rule 23(a), the Court may certify a class only where “(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). In addition to these explicit requirements of “numerosity, commonality, typicality and adequacy of representation,” Mazza v. Am. Honda Motor Co.,
Defendants contend that Plaintiff cannot satisfy the Rule 23(a) requirements of ascer-tainability, numerosity, commonality, and adequacy of representation. Def.’s Opp. 4-14. Because Defendants’ arguments are largely premised on the ascertainability of the class as defined by Plaintiff, the Court’s analysis begins with that prerequisite.
i. Ascertainability
A class is ascertainable if it is defined by objective criteria and “sufficiently definite so that it is administratively feasible” to determine whether a particular individual is a member of the class. Wolph v. Acer Am. Corp., No. C 09-01314 JSW,
Here, the dispute centers on the criterion in Plaintiffs proposed class definition that the underlying debt originally owed to HSBC Bank have been incurred “primarily for personal, family, or household purposes (as shown by Defendants’ records or the records of the original creditor).”
Plaintiff replies that Defendants should not be permitted to escape class certification through shoddy recordkeeping. Pl.’s Reply 2-4, 9. For the first time on reply, Plaintiff also suggested ways in which class members could be identified, including consulting “the creditor’s records or information” to determine whether the credit card was issued to an individual or business name, id. at 5, and by asking purported class members “a single question to determine whether they are entitled to relief,” id. In sum, Plaintiff proposes that “a review of Defendants’ and/or HSBC’s records, e.g., seeing if the account is in the name or an individual or business, a review of HSBC’s records for the nature of the
In the context of the FDCPA, the Court must be mindful that the Act is a “broad remedial statute,” Gonzales v. Arrow Fin. Servs., LLC,
The question thus boils down to one of administrative feasibility Plaintiffs class definition is not inherently unascertainable, but the information upon which she initially intended to rely (and included in her definition) may not show what she thinks it will show. In this regard, the Court is troubled by the uncontradicted assertion that Plaintiff has not conducted any discovery to determine whether HSBC’s records include the information that she suggests would be useful to identifying class members. See Def.’s Opp. 6. However, and in spite of Plaintiffs failure to obtain discovery from HSBC, the Court finds that identifying the class is sufficiently administratively feasible such that Plaintiff has met her burden of demonstrating that the class is ascertainable.
Plaintiff has demonstrated through her own declaration that her financial obligation was incurred on a credit card issued by HSBC Bank, with which she purchased goods and services primarily for personal or household use. See Deck of Ellen Annette Gold ¶ 4, ECF 2. That a portion of her debt was also incurred through cash advances for which she cannot recall the purpose does not detract from the evidence that the primary amount came from credit card purchases. See id.; see also Deck of Tomio B. Narita Exh. A (Gold Dep.) 49:5-51:2, ECF 61-1. As such, it would be reasonable to infer that there are other individuals among the recipients of the letter that are similarly situated to Plaintiff.
Further, Plaintiffs suggestion that the name on each debt аccount can be used to identify whether the financial obligation was incurred by an individual or business is a reasonable one and can be easily applied to whittle down the number of potential class members.
Defendants in their supplemental letter brief urge that Plaintiffs solution is unwork
Certainly, Defendants are entitled to assurance through reasonable proof that only qualified individuals with debt related to personal, family, or household purposes are confirmed as class members. However, as many other courts have determined in considering class certification under the FDCPA, the mere fact that the debt collection agency does not segregate business and consumer debt accounts is not enough to thwart class certification. Moreover, acceptance of Defendants’ arguments would effectively eliminate class action litigation under the FDCPA because in all cases, separating out the business debt from the consumer debt would pose a bar to class certification. Numerous federal courts throughout the country have rejected similar arguments and certified consumer class action cases under the FDCPA. This Court finds those cases persuasive. See Butto v. Collecto Inc.,
Due to the already discussed difficulties in applying a class definition that relies on documents that Plaintiff does not and has not had access to, the Court revises the class definition as follows:
“(i) all persons with addresses in California (ii) to whom Defendants sent, or caused to be sent, a notice in the form of Exhibit ‘1’ attached to the Class Action Complaint (iii) in an attempt to collect an alleged debt originally owed to HSBC Bank Nevada, N.A. (iv) which was primarily for personal, family, or household purposes, (v) which were not returned undeliverable by the U.S. Post Office (vi) during the period one year prior to the date of filing this action.”
The Court expects that class identification will proceed according to Plaintiffs proposal and begin with identification, using Defendants’ records, of accounts held in individual as opposed to business names. Further identification of class members may be carried out through use of a court-approved notice and claim form. As modified, the Court finds that the proposed class is reasonably ascertainable.
ii. Numerosity
The requirement of numerosity is satisfied if the class is so large that joinder of all members is impracticable. Fed. R. Civ. P. 23(a)(1). A plaintiff need not state the exact number of class members, and there is no threshold number above which impracticability is presumed. O’Donovan v. CashCall, Inc.,
To demonstrate numerosity, Plaintiff supplied Defendants’ response to Interrogatory No. 1, which indicates that Defendants sent “43,942 letters in the form of [the letter at issue] to persons with California addresses regarding a financial obligation originally
The Court does not find Defendants’ argument persuasive, as Plaintiff has demonstrated through her own declaration and deposition testimony that her debt was incurred on a credit card issued by HSBC Bank that she primarily used to purchase personal and household goods and services. See Gold Deel. ¶ 4; Gold Dep. 49:5-51:2. That portions of her debt include cash advances for which she could not recall the purpose does not detract from a common sense inference, based on the knоwn nature of Plaintiffs financial obligation, that at least a portion of the 43,942 letters were likely directed to debtors who incurred financial obligations on credit cards used primarily for personal, family, or household purposes. See Butto,
iii. Commonality
The requirement of commonality is met if there are “questions of law and fact common to the class.” Fed. R. Civ. P. 23(a)(2). “What matters to class certification ... is not the raising of common ‘questions’ even in droves but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation.” Dukes,
Defendants argue that Plaintiff cannot establish commonality because she cannot establish that all class members have “debts” as they are defined by the FDCPA. Def.’s Opp. 13-14. That argument presumes an unascertainable class, which this Court has rejected. Moreover, contrary to Defendants’ assertion that Plaintiff is alleging that class members have merely “all suffered a violation of the same provision of law,” Def.’s Opp. 14 (quoting Dukes,
Ultimately, because “a debt collector’s liability under § 1692e of the FDCPA is an issue of law,” the Court’s resolution of the issue of liability will generate a dispositive common answer in this action. Gonzales,
iv. Typicality
In certifying a class, the claims of the class representative must be typical of the claims of the class. Fed. R. Civ. P. 23(a)(3). This ensures that “the named plaintiffs claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.” Gen. Tel. Co. of Sw. v. Falcon,
In this case, Plaintiff alleges that she and each class member were sent an identical and unlawful form collection letter and therefore subjected to the same violations of the FDCPA Pl.’s Mot. 5. As such, the Court concludes, and Defendants do not argue to the contrary, that the claims of the class representative are typical of the claims of the class. See Abels v. JBC Legal Grp., P.C.,
v. Adequacy of Representation
The named plaintiff in a class action must fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a)(4). In assessing the named plaintiffs adequacy, а court considers two questions: “(1) do the named plaintiffs and their counsel have any conflicts of interest with other class members and (2) will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?” Evon,
Plaintiff is represented by Fred W. Schwinn and Raeon R. Roulston of Consumer Law Center, Inc, and O. Randolph Bragg of Horwitz, Horwitz and Associates, Ltd. Each of these attorneys has submitted a declaration outlining his education and pertinent experience, and Defendants do not challenge the qualifications of Plaintiffs counsel.
Defendants do challenge Plaintiffs adequacy as a class representative because she is subject to a unique defеnse and because her poor memory undermines her credibility. Specifically, Defendants contend that Plaintiffs retention of attorney Fred W. Schwinn as her “ ‘regular lawyer’ to handle all of her collection-related matters”—of which there are several—subjects her to the unique defense that the objectionable letter was “effectively” sent to her counsel, and the FDCPA does not extend to communications sent to debtor’s counsel. Def.’s Mot. 14-15 (citing Guerrero v. RJM Acquisitions LLC,
As to Plaintiffs credibility, the Court does not find her inability to recall the specific nature of her debts sufficient to defeat her otherwise apparent adequacy as a class representative. The ultimate question of liability is a legal one for which this Court looks to the face of the letter to conduct an “an objective analysis that takes into account whether the ‘least sophisticated debtor would likely be misled by [the] communication.’ ” Gonzales,
B. Rule 23(b) Requirements
In addition to meeting the requirements of Rule 23(a), Plaintiff must also satisfy “through evidentiary proof’ one of the three subsections of Rule 23(b). Comcast,
i. Rule 23(b)(3) Class
A class may be certified under Rule 23(b)(3) if the Court finds that “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 (b)(3) class, an “adventuresome innovation” added in the 1960’s, adds these requirements of “predomi-
a. Predominance
“The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation.” Id. at 623,
Plaintiff contends that predominance is satisfied where, as here, the question of liability focuses on the legality of a standardized document or practice. PL’s Mot. 6-7. Defendants argue, relying on Dukes, that individual issues relating to the nature of each class member’s financial obligation to HSBC Bank defeat predominance. Def.’s Opp. 17-18. Defendants point to recent post-Dukes cases in which the court has denied class certification where individual inquiries overwhelmed common class questions.
In Soto, the Court denied certification of an FDCPA сlass on predominance grounds because liability hinged on the applicability of a California law to class members, which, in turn, depended on whether class members obtained purchase money loans secured by primary owner-occupied residences. Soto,
Soto is distinguishable from the instant case. First, the Court does not understand Soto to indicate that the applicability of the FDCPA is subject to class wide proof. The Soto court focused on the applicability of a California law to establish an element of liability, which naturally must be proven across the class. Here, the Court has already determined that the legality of the underlying letter sent by Defendants is a question of law that is subject to class wide disposition. Moreover, although Defendants do not possess the information that Plaintiff believes will assist in identifying class members, the other documents and methods discussed above are not demonstrably unreliable. To be sure, memories fade, and many class members are likely similarly situated to Plaintiff in that they have generalized recollections of purchases. This problem can be mitigated, for example, by requiring documentary proof of the nature of the financial obligations to determine whether, at a minimum, they are primarily credit card purchases as opposed to cash advances. Finally, unlike the Soto class, which sought actual damages, see id., the proposed class here seeks only statutory damages, which will involve less stringent individualized inquiry.
At bottom, the broad remedial purpose of the FDCPA compels this Court to conclude that the Rule 23(b)(3) requirement of predo
b. Superiority of Class Action
Rule 23(b)(3) sets forth a nonexhaustive list of factors a court should consider, including the interests of the individual members in controlling their own litigation, the desirability of concentrating the litigation in the particular forum, and the manageability of the class action. Fed. R. Civ. P. 23(b)(3)(A)-(D). “The superiority inquiry undеr Rule 23(b)(3) requires determination of whether the objectives of the particular class action procedure will be achieved in the particular case. This determination necessarily involves a comparative evaluation of alternative mechanisms of dispute resolution.” Hanlon,
Plaintiff argues that a class action is the superior vehicle for adjudicating consumer rights relating to Defendants’ collection letter because individual recovery is small, and resorting to alternative mechanisms would be unduly inefficient. PL’s Mot. 8-9. Defendants do not dispute this point. The Court agrees with Plaintiff that a class action is superior in this context and that this action is therefore approрriate for certification under Rule 23(b)(3). See Hunt v. Check Recovery Sys., Inc.,
Plaintiffs Motion to Certify is accordingly GRANTED as to the Rule 23(b)(3) class.
i. Rule 23(b)(2) Class
A class may be certified pursuant to Rule 23(b)(2) if “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” Fed. R. Civ. P. 23(b)(2). “The key to the (b)(2) class is the indivisible nature of the injunctive or declaratory remedy warranted—the notion that the conduct is such that it can be enjoined or declared unlawful only as to all of the class members or as to none of them.” Dukes,
Here, there are no actual damages alleged in this action, and Plaintiff repeatedly indicates that she only intends to pursue statutory damages. See PL’s Reply 9-11. Plaintiff argues that these dаmages are “incidental” to declaratory relief and do not predominate over the requested equitable remedy. Id. Defendants contend that Plaintiffs request for damages is in fact her primary claim and, as such, she cannot pursue a Rule 23(b)(2). Def.’s Opp. 18-19 (citing Molski v. Gleich,
Plaintiffs own definition of the class applies only to Defendants’ past conduct. See Conapl. ¶ 30 (defining class to extend to persons “to whom Defendants sent, or caused to be sent” the offending letter “during the period one year prior to the date of filing this action through the date of class certification” (emрhasis added)). Furthermore, Defendant has discontinued use of the offending letter. Def.’s Opp. 21. Thus, declaratory relief, insofar as it could have applied to future recipients of the letter, does not predominate over the monetary relief sought by the class which, by definition, has already received the offending letter.
As a practical matter, should the Court award statutory damages, it would inherently require a finding that Defendants’ letter violated the FDCPA and Rosenthal Act. Plaintiff has not articulated any benefit from maintaining a separate (b)(2) class, and the Court does not find there to be any benefit to class members from declaratory relief that is not already provided for in a(b)(3) damages class. Given the serious possibility that money damages predominate over declaratory relief, the Court declines to certify a(b)(2) class that affords no notice and opportunity to opt out. Plaintiffs Motion to Certify is accordingly DENIED as to the Rule 23(b)(2) class.
IV. ORDER
For the foregoing reasons, Plaintiffs Motion to Certify Class is GRANTED as to Plaintiffs Rule 23(b)(3) class, which shall be defined as follows:
(i) all persons with addresses in California
(ii) to whom Defendants sent, or caused to be sent, a notice in the form of Exhibit ‘1’ attached to the Class Action Complaint (iii) in an attempt to collect an alleged debt originally owed to HSBC Bank Nevada, N.A. (iv) which was primarily for personal, family, or household purposes, (v) which were not returned undeliverable by the U.S. Post Office (vi) during the period one year prior to the date of filing this action.
Plaintiff Ellen Annette Gold is appointed as class representative to proceed on behalf of this class for violations of the FDCPA and Rosenthal Act in connection with Defendants’ mailing of the letter attached to the Complaint as Exhibit 1. This class is subject to alteration or amendment prior to the entry of final judgment. Fed. R. Civ. P. 23(e)(1)(C).
IT IS SO ORDERED.
Notes
. Defendant submitted a brief response to Plaintiff’s submission on September 14, 2014 in order to correct a misstatement made in Plaintiff's letter brief. ECF 79.
. Although the Rosenthal Act applies only to “credit transactions" as defined by that statute, the parties do not appear to dispute that in this context, Plaintiff’s definition of the class would suffice under both statutes so long as the primary purpose for incurring the monetary obligation was for personal, family, or household use. See Def.’s Opp. 1, n.l. The Court concurs.
. It is unclear how Plaintiff proposes to obtain these records from HSBC Bank, a third party to this action. As Defendants pointed out, and this Court confirmed at the August 14, 2014 hearing, fact discovery is closed in this case and Plaintiff has not identified any authority permitting her to obtain the records of a third party after the close of discovery.
. Plaintiff in her supplemental letter brief asserted that "Defendants have already disclosed to Plaintiff the names and addresses of the class members.” Pl.’s Ltr. 1. Defendants deny this assertion. See Def.’s Resp. Ltr., ECF 79.
. Plaintiff interprets this to indicate that the letter was sent to 43,942 recipients with California addresses. See Pl.'s Mot. 3. Though Defendants do not challenge this interpretation, the Court observes that Defendants’ interrogatory response states that 43,942 letters were sent. Presumably, all 43,942 letters were not sent to the same person, but the number of recipients could potentially be fewer than the number of letters sent.
. The Court notes that the Dukes court focused primarily on the Rule 23(a) requirements. The Court understands Defendants’ argument to be that the individualized inquiry into class membership in this case permeates all of the Rule 23 requirements, thus affecting ascertainability, commonality, and predominance.
. Although not critical to the reasoning in this order, Defendants also argue—and the Court takes note—that other courts have declined to certify (b)(2) classes on the ground that the FDCPA does not authorize equitable relief. Def.'s Opp. 19-20; See Harris v. D. Scott Carruth-ers & Assoc.,