Midland Dodges Class Certification Request in Illinois Letter Case

On Monday a federal judge in Illinois denied a request to certify a Fair Debt Collection Practices Act (FDCPA) case against Midland Credit Management, In. (Midland) as a class action. The case is Hernandez v. Midland Credit Management, Inc. (Case No 15-cv-11179, U.S.D.C. Northern District of Illinois, Eastern Division).

A copy of the court’s memorandum and order can be found here. 

Background

On September 30, 2015, Midland served Daniel Hernandez with a summons and a copy of a complaint filed in the Circuit Court of Cook County, Illinois. Six days later, on October 5, 2015, defendant sent him a letter (the October 5 letter), which began: 

"We have been notified that you have been served with a copy of a lawsuit commenced against you on the account referenced above. We are contacting you in an effort to resolve the matter voluntarily. If we are not able to resolve the matter voluntarily, we intend to seek a judgment against you, which may then be enforced in accordance with applicable state law.

 Charges may continue to accrue on this account until the account is satisfied, and we may have incurred additional costs in connection with the lawsuit. Thus, the amount we may be willing to accept in settlement of the lawsuit may be greater than the total present balance. We are not obligated to renew this or any other settlement offer. 

Please contact us today at toll-free (866) 300-8750 to obtain an exact payoff amount or to discuss resolution of your account. Depending on your circumstances, we can provide a reasonable payment plan or other accommodations as appropriate, but we need to hear from you or the lawsuit will proceed."

On December 11, 2015 plaintiff filed this putative class action lawsuit against Midland. The lawsuit alleged that that the October 5 letter ran afoul of several FDCPA prohibitions, including 15 U.S.C. 1692e, which declares that “[a] debt collector may not use any false, deceptive, or misleading representation or means in connection with the collection of any debt.” 

Plaintiff brought a motion for class certification.  In his motion, plaintiff emphasizes one of his FDCPA theories: under Illinois law, statutory court costs are not available before defendant obtains a judgment, so the October 5 letter falsely and misleadingly implied (or perhaps even more than implied, according to plaintiff) that defendant had a right to collect court costs when it sent the letter. 

Plaintiff asked the court to certify a single class defined as: 

All persons in the State of Illinois to whom, during the one year prior to the filing of Plaintiff’s Complaint and continuing through the resolution of this matter, Defendant sent one or more letters or other communications similarly [sic] in the form of the October 5th Letter in an attempt to collect a non-business debt, which letter was not returned as undeliverable by the Postal Service. 

As noted above, the court denied the motion to certify the class. The motion was heard and decided by the Honorable Joan B. Gottschall, United States District Court Judge. The memorandum and order is a mere 9 pages.

Judge Gottschall wrote (citations omitted): 

To certify a class, this court “must find that each requirement of Rule 23(a) (numerosity, commonality, typicality, and adequacy of representation) is satisfied as well as one subsection of Rule 23(b).” Because he is the party seeking certification, Plaintiff bears the burden to persuade the court by a preponderance of the evidence that his proposed class meets Rule 23’s certification requirements. 

Rule 23 has long been interpreted as implicitly requiring a class to be defined “clearly and based on objective criteria.” Courts sometimes use the shorthand term “ascertainability” to refer to this requirement. 

As written, the class definition includes an amorphous group of people who received communications “similarly in the form of the October 5th Letter,” including, potentially, phone communications. Indeed, as defendant points out, plaintiff adverts to the possibility of false and misleading telephone conversations in his motion for class certification. 

The class definition plaintiff proposes has an additional ascertainability problem: its only time limitation is the conclusion of this litigation.

Rule 23(c)(1) gives the court discretion to alter a class definition, but the court should not shift to itself the plaintiff’s burden to define the class objectively. The court therefore leaves to plaintiff the task, if he wishes, of attempting to redefine the class in an ascertainable fashion. 

Because plaintiff has failed to show that the proposed class’s composition is ascertainable using objective criteria, the court ends its Rule 23 analysis and denies plaintiff’s motion to certify. (Emphasis added by insideARM.) 

insideARM Perspective 

This case may be far from over. It appears that the court has left open the possibility that the plaintiff could suggest an alternative class definition. 

Going back to the letter sent by Midland that is the genesis of this litigation – insideARM is curious as to what purpose the October 5 letter served and why it was sent in the first place. A collection lawsuit was already filed (Judge Gottschall’s memorandum and order indicated that the collection litigation was filed on November 4, 2014 – 11 months prior to the October 5 letter). Clearly the lawsuit had already sent the message to the consumer that Midland would like the account resolved. In retrospect, it seems the letter only created exposure by including language that the plaintiff’s attorneys felt ran afoul of the FDCPA. In this instance, the old expression – “Less is More” might apply.