MARK A. KEARNEY, District Judge.
A debt collector's letter demanding payment must be capable of being understood by the least sophisticated debtor under the Fair Debt Collection Practices Act as interpreted by our Court of Appeals. When the debt collector sends the same language to thousands of debtors in Philadelphia County, it runs the risk the identical language may allow us to certify her case as a class action under the Fair Debt Collection Practices Act. After discovery and guided by our Court of Appeals' findings of ambiguity in this same collection language, we today grant the debtor's motion for partial summary judgment on liability for violating the Fair Debt Collection Practices Act. We also grant the debtor's narrowed motion for class certification. We now proceed into discovery on the amount of damages available to the certified class of Philadelphia County debtors who received the identical language from the debt collector.
Reneisha Knight used her Capital One Bank credit card to purchase groceries and home items.
Midland Credit offered three options for resolving the debt: (1) Option 1 of "40% Off, Payment Due Date: 8-19-2016"; (2) Option 2, "20% OFF, Over 6 months"; (3) Option 3 of "Monthly Payments As Low As: $50 per month."
Ms. Knight alleges this language would confuse, deceive, or mislead the least sophisticated debtor. She sues Midland Credit for violating Sections 1692e and 1692f of the Fair Debt Collection Practices Act. Ms. Knight alleges Midland Credit sent standardized letters with the same violating language to approximately 3,489 consumers in Philadelphia County owing a debt to Capital One Bank. She sues on behalf of herself and a class of similarly situated consumers who received Midland Credit's standardized letter.
The parties proceeded through discovery and now move for summary judgment on Ms. Knight's Section 1692e claims. Ms. Knight moves for class certification under Federal Rule of Civil Procedure 23.
Ms. Knight moves for summary judgment arguing three elements of Midland Credit's letter violate Section 1692e of the Act: (1) Midland Credit's offer to "report" payment of her debt, (2) when Midland Credit will report her account as "Paid in Full" and "Paid in Full for less than the full balance," and (3) the difference between "Paid in Full" and "Paid in Full for less than the full balance."
Midland Credit moves for summary judgment arguing Ms. Knight fails to establish its letter violates Section 1692e. Midland Credit argues (1) its offer to "report" payment is not false, deceptive or misleading; (2) Option 3 in Midland Credit's letter is not false, deceptive, or misleading; (3) when Midland Credit reports an account as "Paid in Full" and "Paid in Full for less than the full balance" is not false, deceptive, or confusing; and (4) Midland Credit does not offer credit reporting benefits in its letter with the language "We can't change the past, but we can help with your future."
In accompanying Orders, we grant Ms. Knight's motion for summary judgment, deny Midland Credit's motion for summary judgment, and grant Ms. Knight's motion for class certification.
Ms. Knight moves for summary judgment arguing portions of Midland Credit's July 20, 2016 letter violate the Fair Debt Collection Practices Act. Midland Credit also moves for summary judgment arguing the letter does not violate the Act.
To establish a claim under the Act, Ms. Knight must prove "(1) she is a consumer, (2) the defendant is a debt collector, (3) the defendant's challenged practice involves an attempt to collect a `debt' as the [the Act] defines it, and (4) the defendant has violated a provision of the [the Act] in attempting to collect the debt."
Ms. Knight argues she establishes Midland Credit attempted to collect as "debt" as defined in the Act. Midland Credit argues we should grant it summary judgment since Ms. Knight fails to establish she owed a debt. Congress defines "debt" in the Act as "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment."
Midland Credit argues the evidence Ms. Knight cites in her Statement of Undisputed Material Facts does not establish she owed a "debt" as defined in the Act. In her Statement of Facts, Ms. Knight states she "is a consumer as defined by 15 U.S.C. 1692a and the debts at issue in this case were credit card debt from Capital One Bank, N.A., which were incurred for a personal basis."
Ms. Knight cites her October 30, 2017 responses to Midland Credit's interrogatories to establish she owed a "debt" as defined in the Act. Midland Credit served interrogatories on Ms. Knight: "Please state all facts supporting your allegation in paragraph 7 of the Amended Complaint that the `personal bill was a debt incurred for personal, family or household purposes and not for business purposes.'"
Ms. Knight establishes Midland Credit attempted to collect a "debt" as defined in the Act. We acknowledge "[t]here is cause for concern where a movant presents new arguments or evidence for the first time in a summary judgment reply brief, particularly if the District Court intends to rely upon that new information in granting summary judgment to the movant."
Having established the first three elements of her claim, Ms. Knight argues she satisfies the final element because portions of Midland Credit's July 20, 2016 letter violate Section 1692e of the Act. Midland Credit argues Ms. Knight fails to establish it violated the Act.
Under Section 1692e, Congress prohibits the use of "any false, deceptive, or misleading representation or means in connection with the collection of any debt."
We apply the "least sophisticated debtor" standard to Ms. Knight's claims under Section 1692e of the Act. The "least sophisticated debtor" standard is "lower than simply examining whether particular language would deceive or mislead a reasonable debtor."
Our Court of Appeals held the "least sophisticated debtor" standard requires an objective test: "The standard is an objective one, meaning that the specific plaintiff need not prove that she was actually confused or misled, only that the objective least sophisticated debtor would be."
We ask "whether the objective least sophisticated debtor would be deceived or misled by a debt collector's statement in a communication."
In applying the "least sophisticated debtor" standard, the plaintiff must also show a false statement is "material" to be actionable under the Act. A statement is "material" if "it is capable of influencing the decision of the least sophisticated debtor."
Before addressing language in the letter, Midland Credit argues the record shows the July 20, 2016 letter did not confuse Ms. Knight. But she need not show the letter confused her. The "least sophisticated debtor" standard is an objective standard, meaning "the specific plaintiff need not prove that she was actually confused or misled, only that the objective least sophisticated debtor would be."
Even if Ms. Knight knew the meaning of the letter—which she seemingly did, as she sought the advice of a credit counselor—she need only prove the least sophisticated debtor would be confused. "[T]he [the Act] enlists the efforts of sophisticated consumers . . . as `private attorneys general' to aid their less sophisticated counterparts, who are unlikely themselves to bring suit under the Act, but who are assumed by the Act to benefit from the deterrent effect of civil actions brought by others."
Ms. Knight argues the use of the word "report" is deceptive under Section 1692e since Midland Credit does not state to whom it will "report," whether it will report to credit reporting agencies, the original creditor, or both.
In its July 20, 2016 letter, Midland Credit represents "[i]f you pay your full balance, we will report your account as Paid in Full. If you pay less than your full balance, we will report your account as Paid in Full for less than the full balance."
Our Court of Appeals explained Ms. Knight's interpretation of the word "report"—report the payment to credit reporting agencies, the original creditor, or both—is "not bizarre or idiosyncratic" and "the least sophisticated debtor could reasonably believe that Midland would report the payment to the debtor's original creditor, the credit reporting agencies, or both."
While we acknowledge it may not be the most appropriate reading of the letter, the least sophisticated debtor would be confused as to whether Midland Credit would report the account to the original creditor, a credit reporting agency, or both. Midland Credit admits it only reports a debtor's account to credit reporting agencies, not the original creditor.
Midland Credit argues the least sophisticated debtor could only interpret "report" as referring to a credit reporting agency. Midland Credit cites the Stipulated Facts section of the parties' Rule 26 Report: "The terms `Paid in Full' and `Paid in Full for less than full balance' are terms of art in the credit reporting industry."
Midland Credit's corporate designee testified it does not report to the original creditor, but we are not concerned with Midland Credit's actual practices. We ask what the least sophisticated debtor would believe. Midland Credit concedes Ms. Knight "is correct that the letter does not specify to whom [Midland Credit] will `report' the account."
Midland Credit argues Ms. Knight fails to adduce evidence establishing the July 20, 2016 letter would confuse the least sophisticated debtor as to whom Midland Credit would report the account. Midland Credit cites the court of appeals' decision in Pettit v. Retrieval Masters Creditor Bureau, Inc.
The court of appeals' decision in Pettit is not applicable. First, the Court of Appeals for the Seventh Circuit applied the "unsophisticated debtor" standard and rejected the "least sophisticated debtor" standard, explaining a court should not place the hypothetical debtor used to determine violations on "the very last rung on the sophistication ladder."
We resolve this question as a matter of law. Midland Credit's use of the word "report" would confuse the least sophisticated debtor, who would be confused as to whether Midland Credit would report the account to the original creditor, the credit reporting agency, or both. Midland Credit only reports a debtor's account to credit reporting agencies, not the original creditor.
Midland Credit violates Section 1692e of the Act with its use of the word "report" in its letter.
Ms. Knight argues Midland Credit's letter would deceive the "least sophisticated debtor" as to when Midland Credit would report her account as "Paid in Full" and "Paid in Full for less than the full balance." Since Midland Credit offers Ms. Knight "one of these discounts" and lists three "Options," the least sophisticated debtor would conclude Midland Credit presents a settlement offer in Option 3. Midland Credit admits Option 3 provides payment of the debt in full by way of monthly payments of fifty dollars.
Our Court of Appeals held Midland Credit's July 20, 2016 letter could mislead the least sophisticated debtor as to when Midland Credit would report the account as "Paid in Full" and "Paid in Full for less than the full amount":
Our Court of Appeals also found this ambiguity material, explaining it "may affect whether a debtor makes a payment and which option he or she chooses."
Midland Credit argues Ms. Knight's argument fails because she posits the least sophisticated debtor would read portions of the letter in isolation. For example, Ms. Knight argues because Option 3 is ambiguous, the least sophisticated debtor might assume Midland Credit would report "Paid in Full" if the debtor accepts Option 1, and would report "Paid in Full for less than the full balance" for Options 2 and 3. Midland Credit argues this interpretation makes no sense. It argues she cannot read Option 1 and then jump to the footnote without reading the sentence preceding the footnote reference: "After receiving your final payment, we will consider the account paid
We agree with our Court of Appeals' assessment. Since Midland Credit invites Ms. Knight to accept one of "these discounts" without explaining Option 3 invites full payment, the least sophisticated debtor could reasonably read Option 3 as a settlement offer. The least sophisticated debtor then, assuming Midland Credit offers settlements with Options 1, 2, and 3, would be confused as to when Midland Credit would report the account as "Paid in Full." The least sophisticated debtor could reasonably conclude it would report the account as "Paid in Full" if she accepted Option 1 since in the body of the letter, Midland Credit offers a forty-percent discount to "eliminate" her debt.
Midland Credit argues ambiguity as to when it would report as "Paid in Full" and "Paid in Full for less than the full balance" is not material since Ms. Knight testified "no matter what the letter said, she was not making a payment on this account on the advice of her credit counselor."
Ms. Knight establishes Midland Credit violates Section 1692e as its letter would confuse the least sophisticated debtor as to when it will report the account as "Paid in Full" or "Paid in Full for less than the full balance."
Ms. Knight argues the phrases "Paid in Full" and "Paid in Full for less than the full balance" are confusing because it is not clear to the least sophisticated debtor whether one status is better or more detrimental than the other. Midland Credit argues (1) the letter does not emphasize one statement over the other but simply identifies two statuses, (2) the Act does not require Midland Credit to educate a debtor about what each status means, (3) the difference between "Paid in Full" and "Paid in Full for less than the full balance" meant nothing to Ms. Knight.
Our Court of Appeals explained the phrase "Paid in Full for less than the full balance" could mislead the least sophisticated debtor:
Our Court of Appeals further explained the language could be material as the distinction between each status could induce the least sophisticated debtor to make a particular payment.
We agree with Ms. Knight the least sophisticated debtor would be confused as to the difference between the two statuses. Since Midland Credit uses the capitalized phrase "Paid in Full" for both statuses, the least sophisticated debtor would not understand the reporting distinction between "Paid in Full" and "Paid in Full for less than the full balance." The phrase "Paid in Full for less than the full balance" is confusing and the least sophisticated debtor could read the phrase as self-contradictory. We believe the language would confuse the least sophisticated debtor as to the difference between "Paid in Full" and "Paid in Full for less than the full balance." We agree with our Court of Appeals' assessment the least sophisticated debtor could reasonably read these two statuses as having no meaningful difference.
We also find the ambiguity material. A debtor would be concerned about how a creditor would report its account. Understanding the distinction between these two statuses would likely influence how the debtor chooses to pay.
Midland Credit argues it does not emphasize one status over the other. But as our Court of Appeals explained, after "Paid in Full," Midland Credit does not include any capitalized words in the phrase "for less than the full balance." Because of the emphasis on "Paid in Full," the least sophisticated debtor would be confused as to the distinction between the two statuses.
Midland Credit argues it need not educate debtors as to the distinction between the statuses. We agree Congress does not affirmatively mandate a debt collector educate a debtor on the terms in a collection letter. But if a debt collector uses language which could confuse, mislead, or deceive the least sophisticated debtor, it may be liable under the Act. In such case, the debt collector may explain the language to prevent confusion.
Midland Credit also argues the difference between "Paid in Full" and "Paid in Full for less than the full balance" did not matter to Ms. Knight. But under the "least sophisticated debtor" standard, Ms. Knight need not prove materiality to her. She need only prove the least sophisticated debtor would find the language material.
Midland Credit violates Section 1692e as its use of the terms "Paid in Full" and "Paid in Full for less than the full balance" would confuse the least sophisticated debtor.
Midland Credit moves for summary judgment arguing the sentence "We can't change the past, but we can help with the future" does not violate Section 1692e. Ms. Knight does not move for summary judgment on this language but opposes Midland Credit's Motion. She argues the least sophisticated debtor would interpret this language in multiple ways: (1) paying the debt would improve her relationship with the creditor and (2) paying the debt would improve her credit score.
Our Court of Appeals explained "[i]t is not `bizarre or idiosyncratic' for the least sophisticated debtor to read the language [Ms.] Knight identifies to mean that payment would not hurt a debtor's credit score and might even actually improve it."
Midland Credit argues it makes no promise to improve Ms. Knight's credit score, the letter does not mention "credit," and Ms. Knight's credit counselor testified the difference between "Paid in Full" and "Paid in Full for less than the full balance" has no impact on Ms. Knight's credit score. While this may be true, we believe the least sophisticated debtor could believe the sentence "We can't change the past, but we can help with the future" implies she could improve her credit score. As explained, Midland Credit discusses reporting in the July 20, 2016 letter. The least sophisticated debtor could believe since Midland Credit reports the account, its reporting would have a positive effect on her credit score. Midland Credit admits the sentence "We can't change the past, but we can help with the future" applies only to the discounts it offers in the letter and makes no promise of an improved credit score.
Midland Credit argues the least sophisticated debtor would not believe Midland Credit offers to improve her credit score because Ms. Knight's credit counselor testified the difference between "Paid in Full" and "Paid in Full for less than the full balance" has no impact on her credit score. But while a professional credit counselor knows this, we cannot say the least sophisticated debtor would understand this merely from reading the letter.
We deny Midland Credit's motion for summary judgment concerning the statement "We can't change the past, but we can help with the future."
In conclusion, we grant Ms. Knight's motion for summary judgment three elements of Midland Credit's letter violate Section 1692e of the Act: (1) the offer to "report" payment of her debt, (2) when Midland Credit will report her account as "Paid in Full" and "Paid in Full for less than the full balance," and (3) the difference between "Paid in Full" and "Paid in Full for less than the full balance." We deny Midland Credit's motion for summary judgment on the same elements and the additional element regarding the language "We can't change the past, but we can help with your future."
The grant of summary judgment to Ms. Knight on liability does not end the litigation. We must still determine damages under the Act.
Ms. Knight moves for class certification under Federal Rule of Civil Procedure 23. She alleges Midland Credit sent a standardized form letter containing the violating language to approximately 3,489 consumers in Philadelphia County with debts originating from Capital One Bank. She argues because the letters sent to the potential class members contain the same violative language, common questions of law and fact dominate over questions pertaining only to individual class members.
To obtain class certification for her claims under the Act, Ms. Knight must show: (1) numerosity, "the class is so numerous that joinder of all members is impracticable;" (2) commonality, "there are questions of law or fact common to the class;" (3) typicality, "the claims or defenses of the representative parties are typical of the claims or defenses of the class;" and, (4) adequacy, "the representative parties will fairly and adequately protect the interests of the class."
In addition to the four factors under Federal Rule of Civil Procedure 23(a), Ms. Knight must also show (1) the common questions of law and fact predominate over any questions affecting only individual members and (2) "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy."
"The party seeking certification bears the burden of establishing each element of Rule 23 by a preponderance of the evidence."
Ms. Knight must define the class and prove she is a member of the class. In her Second Amended Complaint, Ms. Knight defined the class:
When moving for summary judgment, Ms. Knight narrowed the class to those in Philadelphia County:
Ms. Knight argues she limited the class definition to Philadelphia county to prevent a de minimis recovery for class members. She alleges there are tens of thousands of potential class members throughout Pennsylvania. Since Congress limited class action damages under the Act, Ms. Knight argues she can obtain a greater recovery for potential class members by limiting the class definition to consumers in Philadelphia County. We see no problem with Ms. Knight's class definition limited to consumers in Philadelphia County.
Ms. Knight satisfies numerosity when "the class is so numerous that joinder of all members is impracticable."
Midland Credit admits it "sent a letter substantially similar to the [July 20, 2016] Letter to approximately 3,489 debtors for collection purposes within Philadelphia County, Pennsylvania, concerning debts originating with Capital One Bank."
Ms. Knight satisfies the numerosity requirement.
To satisfy commonality, Ms. Knight must show she "share[s] at least one question of fact or law with the grievances of the prospective class."
Knight claims Midland Credit sent the same standardized form letter to all class members. She cites testimony from Midland Credit's corporate designee Jared McClure:
Midland Credit does not contest commonality. Since Midland Credit sent the same standardized letter to all potential class members, the class members received letters with the same allegedly violating language under the Act. Our determination as a matter of law the language would confuse the least sophisticated debtor applies equally to the potential class members. Ms. Knight satisfies the commonality requirement.
To satisfy the typicality requirement, Ms. Knight must show her claims and defenses are "typical of the claims or defenses of the class."
As explained, Ms. Knight established Midland Credit sent a standardized letter with the same violating language to the putative class members. Midland Credit does not contest typicality. Ms. Knight satisfies the typicality requirement.
Ms. Knight argues she satisfies the adequacy requirement because she and the potential class members seek compensation for Midland Credit's violation of the Act. We look at two elements to determine adequacy: (1) "the experience and performance of class counsel" and (2) "the interests and incentives of the representative plaintiffs."
Ms. Knight argues she is willing to "vigorously pursue" claims under the Act on behalf of the potential class members.
Midland Credit argues Ms. Knight fails to satisfy the adequacy requirement because (1) she and her counsel arbitrarily limited the class definition to Philadelphia County debtors with Capital One accounts and (2) she did not suffer the same injury as the class members because the debt collection letter did not confuse her personally and she had no intention of paying the debt. We disagree with Midland Credit.
Midland Credit argues Ms. Knight and her counsel fail to satisfy the adequacy requirement because they arbitrarily gerrymandered the class definition to "circumvent the [the Act]'s cap on statutory damages."
Ms. Knight is aware the individual recoveries will be less with a larger class under a damages cap. Congress set a cap for both individual and class action damages under the Fair Debt Collection Practices Act:
With "copycat" lawsuits in other Pennsylvania counties complaining of the same standardized letter, Ms. Knight's counsel could effectively extract more than "$500,000 or 1 per centum of [Midland Credit's] net worth" for the same violation. Midland Credit also argues in the absence of "copycat" lawsuits in other Pennsylvania counties, Ms. Knight abandons consumers outside Philadelphia who received the same template letter and leave them without recourse against Midland Credit.
Midland Credit cites several district court cases outside our circuit to support its argument Ms. Knight cannot narrow her class to a single county. In Wenig v. Messerli & Kramer P.A., the plaintiff sued a debt collector alleging the form collection letter violated Section 1692g of the Act.
The United States District Court for the District of Minnesota denied class certification, finding the plaintiff's class definition made "little sense."
Midland Credit also cites Fariasantos v. Rosenberg & Associates, LLC, where the plaintiff sued a debt collector alleging the form collection letter violated Section 1692g.
The United States District Court for the Eastern District of Virginia certified the debt collector defendant's proposed statewide class, rejecting the plaintiff's single-county class definition. The court, citing Wenig, explained if it certified the single-county class, affected consumers outside the county would have to bring county-by-county actions or simply not prosecute their claims. Thus, the county class would defeat the class action purpose of "avoiding multiple lawsuits."
Midland Credit also cites Guevarra v. Progressive Financial Services, Inc.
Ms. Knight argues because the statute of limitations for the template letter in this case expired, we should not concern ourselves with any "copycat" class actions filed outside Philadelphia County concerning this particular letter.
Ms. Knight primarily argues no binding authority mandates she draw her class as broadly as possible. She cites Mace v. Van Ru Credit Corp. to support her argument.
The Court of Appeals for the Seventh Circuit reversed the district court's denial of class certification. The court explained it found "no authority requiring the participation of the broadest possible class."
The court explained the Fair Debt Collections Practices Act, while containing a nearly identical statutory damages cap provision, did not contain the "series of class actions" language. The court explained while the statutes are related, Congress enacted the Fair Debt Collection Practices Act with the unique purpose to "curb[] abusive debt collection practices."
The court of appeals also explained requiring a nationwide class would result in a smaller recovery for the individual class members. The court calculated the debt collector's net worth as $11 million, limiting class recovery under the damages cap to approximately $100,000. While approximately 8,340 Wisconsin consumers received the violating collections letters, the district court estimated a nationwide class of 400,000 consumers. Thus, with a Wisconsin class, each consumer would receive a maximum twelve dollars, while consumers for a nationwide class would each receive twenty-eight cents.
Ms. Knight also cites O'Dell v. National Recovery Agency, where Judge Smith in our District agreed with the Court of Appeals for the Seventh Circuit.
Ms. Knight also cites Dinaples v. MRS BPO, LLC. In Dinaples, the plaintiff sued under the Act and limited her class to a single county in Pennsylvania.
We find no binding authority requiring Ms. Knight define her class in the broadest terms. Doing so would limit the recovery of the potential class members. While Midland Credit argues we should concern ourselves with potential "copycat" lawsuits, its corporate designee testified Midland Credit stopped using the template letter at issue here in November 2016.
We understand since she limits her class to a single county, Ms. Knight seemingly abandons the interests of consumers outside Philadelphia who received Midland Credit's template letter. But such a concern does not negate a finding of adequacy. Ms. Knight proves she vigorously pursues the claims of the class she defined. We do not ask whether she advances the interests of consumers outside her class.
While we acknowledge the district courts in Wenig, Fariasantos, and Gueverra denied similar attempts by a plaintiff to limit a Fair Debt Collection Practices Act class to a single county, we do not similarly read the Act or Rule 23 as requiring Ms. Knight define her class as broadly as possible. As shown in the Lending Act, Congress could have prevented possible copycat class actions by adding the "series of class actions arising out of the same failure to comply by the same creditor" language to the Debt Collection Act's damage cap provision. But it did not. In fact, because Ms. Knight limited the size of the class to maximize the potential individual recovery for class members, we find her adequate to represent the class. We also note although Congress provided a damage cap, the mere existence of a class action does not guarantee the plaintiff the statutory maximum. Midland Credit speculates because Ms. Knight brings a class action on behalf of Philadelphia County residents, she will attain the statutory maximum for her class and subsequent "copycat" classes will also attain the statutory maximum, thus circumventing the statutory cap. We will not deny Ms. Knight class certification based on this speculation.
Midland Credit also argues Ms. Knight fails to satisfy the adequacy requirement because she, unlike the putative class members, had no intention of paying her debt. Thus, Midland Credit argues she fails to prove she "possess[es] the same interest" and "suffer[s] the same injury as the class members."
In Pollak v. Portfolio Recovery Associates, LLC, the plaintiff sued a debt collector alleging its collection letter threatened suit in violation of the Act. In some instances, the debt collector filed suit against putative class members. Judge Martinotti in the District of New Jersey explained the adequacy requirement "serves to uncover conflicts of interest between named parties and the class they seek to represent."
Ms. Knight satisfies the adequacy requirement. She received the same language in her July 20, 2016 letter sent to the putative class members. We ask whether Ms. Knight's interests conflict with the Class she hopes to represent. Ms. Knight, like the putative class members, seeks to recover damages for Midland Credit's letter under the Act. Her interests do not conflict with the Class members. We do not disqualify Ms. Knight because she did not intend to pay her debt.
Midland Credit argues because Ms. Knight consulted with a credit counselor who told her not to pay her debt, the allegedly defective elements of Midland Credit's letter were "completely inconsequential to [Ms. Knight]'s decision-making process" and "did not even pose a risk that [Ms. Knight] may be materially deceived or misled."
Ms. Knight argues she satisfies the superiority requirement because a class action is superior to nearly 3,500 separate individual actions against Midland Credit for the defective letter. She argues because Congress caps individual recovery under the Act at $1,000, consumers are unlikely to bring private actions.
Under Rule 23(b)(3), we ask whether "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy."
Midland Credit's argument against superiority is the same as its adequacy argument: Ms. Knight arbitrarily gerrymandered the class definition and such class is inferior to a statewide class. Ms. Knight argues to determine superiority, we ask whether a class action is superior to individual actions, not whether a larger class definition is superior to a smaller class. We agree with Ms. Knight.
As explained, neither the Fair Debt Collection Practices Act nor Rule 23 require Ms. Knight to broaden the size of her class. Under the superiority requirement, we ask whether the class action mechanism is superior to individual claims, not whether the broadest class definition is superior to a more limited definition. As explained, district courts in our circuit rejected the argument a plaintiff must define the class as broadly as possible. In O'Dell, the defendant debt collector argued a class limited to one zip code is inferior to a state-wide class. Judge Smith in our district rejected the argument a decision to limit the class to one zip code cuts against a finding of superiority.
We believe a class action is superior to other available methods of adjudicating the controversy. Our colleague Judge Pratter explained Congress considers the class action mechanism a desirable and efficient means of enforcing the Fair Debt Collection Practices Act. She explained since Congress capped damages for individual actions at $1,000, "it is unlikely that, absent the class action mechanism, any one individual would pursue his claim, or even be able to retain an attorney willing to bring the action."
Midland Credit admits it sent a version of the form template letter to over three thousand consumers in Philadelphia County, Pennsylvania. It is unlikely consumers will bring individual actions seeking a remedy for Midland Credit's allegedly defective letter. A class action is superior to individual claims. Neither the text of the statute nor any binding authority in our circuit requires Ms. Knight define her class as broadly as possible.
Ms. Knight satisfies the superiority requirement.
Ms. Knight argues she satisfies the predominance requirement because the common legal question of whether Midland Credit's letter violates the Act predominates in this lawsuit.
To determine predominance, we ask whether "questions of law or fact common to class members predominate over any questions affecting only individual members[.]"
One legal question dominates: whether the common elements of Midland Credit's form template letter violates Section 1692(e) of the Fair Debt Collection Practices Act. Class members need only prove they received the allegedly violating letter from Midland Credit and owed a "debt" as defined in the Act. Midland Credit does not contest predominance.
Ms. Knight satisfies the predominance requirement.
In an accompanying Order, we grant Ms. Knight's partial Motion for summary judgment on liability under the Act. We deny Midland Credit's Motion for summary judgment. The parties shall now proceed into evaluating the damages available for this claim.
In a separate Order, we grant Ms. Knight's Motion for class certification.
