In an action alleging that the defendants violated the federal Fair Debt Collection Practices Act ("FDCPA") by sending a form letter attempting to collect on allegedly time-barred debts, the U.S. District Court for the Middle District of Florida recently denied the plaintiff's motion for class certification.

In so ruling, the Court held:

  • The plaintiff failed to demonstrate that the defendants' records contain sufficient information from which the Court could determine whether each class member's debt was obtained for "consumer" purposes; and
  •  Even if Plaintiff were able to establish on a class-wide basis that the defendants had a routine practice of attempting to collect on time-barred debts, significant issues of liability would still remain because the Court would still be required to conduct individualized inquiries as to whether each class member's debt was actually time-barred.

A copy of the opinion is attached.

The plaintiff defaulted on her credit card debt more than five years ago. A debt acquisition company purchased the account from the card issuer, and through its collection agent sent the plaintiff a letter stating the balance owed and offering to settle for 20% of the debt.

The plaintiff filed a putative class action alleging that the debt owner and debt collector violated the FDCPA by sending consumers the letter the plaintiff received trying to collect on a time-barred debt.

The plaintiff moved pursuant to Federal Rule of Civil Procedure 23(a) and (b)(3) to certify a class consisting of Florida residents who had, within 1 year prior to the filing the of lawsuit, received the subject letter in an attempt to collect a time-barred debt owed to the original card issuer where the consumer last made a payment five years or more before the date the letter was mailed.

The Court began with the legal standard applicable to class certification, noting that "a district court may only certify a class action if it is satisfied, after a rigorous analysis, that Plaintiff has met the implicit and explicit requirements of Rule 223 of the Federal Rules of Civil Procedure."

Plaintiff must first meet the implicit requirement that the proposed class be "adequately defined and clearly ascertainable." Once this "ascertainability" requirement is met, the plaintiff must establish the four elements contained in Rule 23(a): "(1) the class is so numerous that joinder of all members is impracticable ('numerosity'); (2) there are questions of law or fact common to the class ('commonality'); (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class ('typicality'); and (4) the representative parties will fairly and adequately protect the interests of the class ('adequacy of representation')."

If the plaintiff passes the 4-part test of Rule 23(a), she must still "satisfy at least one of the alternative requirements under Rule 23(b)." The one chosen by the plaintiff was 23(b)(3), "which requires her to establish '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.'"  This is known as the "predominance" prong.

The defendants argued that certification was not appropriate, because (1) the plaintiff did not satisfy the predominance prong of Rule 23(b)(3); and (2) the plaintiff failed to prove that an "ascertainable" class exists.  For purposed of the motion, the Court assumed that the other requirements of Rule 23(a) (numerosity, typicality, commonality, and adequacy of representation) were met.

Addressing ascertainability first, the Court agreed with the defendants that the plaintiff failed to demonstrate that the defendants' business records would contain information from which the Court could determine whether the debt was for "consumer" -- i.e., for "personal, family, or household purposes," a threshold requirement in order to assert a claim under the FDCPA.

The Court reasoned that "Rule 23 does not set forth a mere pleading standard under which the plaintiff can establish ascertainability simply by asserting that class members can be identified using the defendant's records; the plaintiff must also establish that the records are in fact useful for identification purposes, and that identification will be administratively feasible."

Because the plaintiff failed to provide proof of her allegations that original creditor's records would identify the class in an administratively feasible manner with any actual evidence, and in addition the defendants presented declarations to the effect that their records did not reveal the nature of the debt, the Court concluded that class certification would not be appropriate.

Noting that although denial would be appropriate solely on the basis of lack of ascertainability, the Court nonetheless discussed the predominance argument "for the parties' benefit."

"Under the predominance prong of Rule 23(b)(3), Plaintiff must demonstrate that 'the issues in the class action that are subject to generalized proof … predominate over those issues that are subject only to individualized proof."

Citing Eleventh Circuit precedent, the Court explained that "[c]ommon questions of fact and law predominate if they have a direct impact on every class member's effort to establish liability that is more substantial than the impact of individualized issues in resolving the claim or claims or each class member. If after adjudication of the classwide issues, plaintiffs must still introduce a great deal of individualized proof or argue a number of individualized legal points to establish most or all or the elements of their individual claims, their claims are not suitable for class certification under Rule 23(b)(3)."

Reasoning that the "predominance analysis' begins, or course, with the elements of the underlying cause of action,'" the Court reasoned that to "prevail on her FDCPA claim, Plaintiff must demonstrate that: (1) each putative class member was the object of collection activity arising from consumer debt; (2) Defendants are debt collectors as defined by the FDCPA; and (3) Defendants engaged in an act or omission prohibited by the FDCPA."

The Court ultimately agreed with the defendants that the plaintiff failed to establish the predominance prong because whether a class member's claim debt is time-barred "will require individualized inquiry." This is because "Plaintiff provides no evidence that the debts of persons meeting her proposed class definition are time-barred" but merely assumes so because the form letter in question was sent more than 5 or more years before the date of mailing" and "Plaintiff's assumption is flawed because many factors must be considered when determining the expiration of a limitations period, one in particular being the accrual date."

Because the plaintiff failed to provide any evidence from which the Court could "determine when the statute of limitations began to accrue on each class member's debt" and the defendants by declaration established they did not have possession, custody or control of the cardholder agreements between the debtors and the original creditor, "to determine whether each class member's debt is time-barred, the Court would first need to review the applicable cardholder agreements to determine when the limitations period began to accrue."

The Court held this would require individualized inquiries "to determine when the limitations period actually expired on each class member's debt."  Doing this "is not always a simple task. In fact, in making such a determination, the Court will be required to consider many factors, such as the charge-off date, tolling issues, revival issues, and any actions between the debtor and creditor that may have modified their original agreement." As the Court held, "[t]his is exactly the type of extensive factual inquiry that courts have held to be too administratively burdensome to warrant class certification."

Because even if the plaintiff established that the defendants sent to consumers the form letter in question "in an attempt to collect on time-barred debts, significant issues of liability would still remain … as to whether each class member's debt was actually time-barred, the Court found that "Plaintiff has failed to establish that common issues predominate over individual issues, and her motion for class certification must be denied."