ANNE Y. SHIELDS, Magistrate Judge.
This is an action commenced by Plaintiff Barbara Winslow ("Plaintiff" or "Winslow"), pursuant to the Fair Debt Collection Practices Act, 15 U.S.C.1692 et seq. (the "FDCPA") and Section 349 of the New York State General Business Law ("Section 349"). Plaintiff styles this action as a class action brought on behalf of herself, and others similarly situated against Defendants Forster & Garbus, LLP ("F&G"), Ronald Forster, Esq. ("Forster"), and Mark Garbus, Esq. ("Garbus") ("Foster" and "Garbus" collectively the "Individual Defendants").
In support of their motion for summary judgment, Defendants submit a memorandum of law ("Def. Mem. in Supp. of SJ"), DE 60, Exhibit ("Ex.") 1; a statement pursuant to Rule 56.1 of the Local Rules of this Court ("Def. Rule 56.1"); and the declarations of Bradley Luke ("Luke Declaration"), Docket Entry ("DE") 60, Ex. 3; and Michael Leinoff ("Leinoff Declaration"), Ex. 15. Attached to the Luke Declaration are the following exhibits:
Attached to the declaration of Leinoff Declaration, DE 60, Ex. 15, are the following exhibits:
In opposition to the summary judgment motion, Winslow submits a memorandum of law ("Pl. Mem. in Opp. of SJ"), DE 65; her statement pursuant to Rule 56.1 of the Local Rules of this Court ("Pl. Rule 56.1 Resp."), DE 65, Ex. 1; and the declaration of Plaintiff's attorney, Daniel Shlanger ("Shlanger Declaration"), DE 65, Ex. 2. The Schlanger Declaration is submitted pursuant to Rule 56(d) of the Federal Rules of Civil Procedure, and attests to the need for additional discovery before factual issues in this case are ripe for summary judgment. Annexed thereto are the following exhibits:
In further support of their motion for summary judgment, DE 61, Defendants submit a response to Plaintiff's Counter-Statement of Undisputed Material Facts. DE 61, Ex. 1.
The facts set forth below are drawn from the documents submitted, and are undisputed except as noted.
On or about August 11, 2004, Winslow executed a certain Bank of America Guaranteed Access to Education ("GATE") Education Promissory Note in connection with a $10,000 student loan (the "Loan"). Pl. Rule 56.1 Resp., DE 65, Ex. 1 ¶ 3. On or about September 28, 2004, the principal amount of $10,000.00 was disbursed to Plaintiff.
On May 30, 2014, F&G filed a lawsuit against Winslow in the Civil Court of the City of New York, County of Kings (Index No. 31934-2014) (the "State Court Action"). DE 60-25. The State Court Action was filed on behalf of F&G's client, which is stated on the face of the complaint in the State Court Action to be "National Collegiate Student Loan Trust 2005-3, a Delaware Statutory Trust" (the "Trust"). The State Court Action sought a judgment in the amount of $11,369.67, and named only the Trust as plaintiff.
The factual recitations in support of the complaint in the State Court Action state,
Winslow was personally served with the State Court Action at her Brooklyn address on June 14, 2014. Pl. Rule 56.1 Resp. ¶ 35, DE 65, Ex. 1. She interposed an answer through counsel on August 18, 2014.
The above mentioned facts are not in dispute. What is in dispute are the circumstances through which the Trust acquired the ability to collect on the Loan, as well as the particular facts as to what occurred with respect to re-payment of the Loan from the time it was disbursed by Bank of America, until the time Plaintiff was served with the complaint in the State Court Action. Defendants attempt to establish facts in connection with these events through the declarations and documents annexed to their summary judgment motion papers.
The documents Defendants rely upon (which have not been previously shared with Plaintiff in discovery), reference the transfer, sale and assignment of the Loan debt, and its securitization and incorporation into a trust formed for the purpose of holding similar student loan debt. Pl. Rule 56.1 Resp. ¶ 7-13. Defendants' documents also purport to establish Winslow's payment history, a now-expired grant of collection forbearance,
Defendants' documents also attempt to establish the precise steps taken by Defendants with respect to F&G's attempt to contact Winslow and collect payments alleged to be due with respect to the Loan. Thus, the documents refer to the sending of a debt validation notice and a telephone call during which Winslow is stated to have acknowledged receipt of certain documents. Defendants' submission goes on to detail its version of the 2014 activity of the F&G compliance department, and the sending of information that "was not returned as undeliverable."
Winslow disputes Defendants' version of all facts, predominantly because discovery has not yet been conducted as to the facts that Defendants' declarations and documents purport to establish. In addition to questioning facts establishing the transfer of the Loan, Winslow challenges facts alleged with respect to the extent of Trusts' business dealings in New York, as well as those purporting to document F&G's review of activity with respect to the Loan.
As noted, this lawsuit is a putative class action in which Plaintiff alleges federal and state causes of action against Defendants. The federal claims are alleged pursuant to the FDCPA, and the state claim alleges liability for the same facts pursuant to Section 349. In particular, Plaintiff alleges that Defendants engaged in unlawful conduct by falsely stating in the State Court Action: (1) that the Trust was the "original creditor" of Winslow's student loan and (2) that the Trust was "authorized to proceed" with the State Court Action. Both the statements as to the Trust's "original creditor" and its "authorized to proceed" status are alleged to have violated 15 USC §§ 1692e, 1692e(2)(A), 1692e(5), 1692e(9) and 1692(e)(10); 15 USC § 1692f and § 1692f(1) and Section 349.
As to the former claim, it is asserted that Bank of America is, in fact, Plaintiff's original creditor and the Trust is, "at best, a purported assignee pursuant to a complex, securitized Trust in which student loans held by [the Trust] must first pass through a complicated web of entities, making the chain of title and [the Trust's] standing a critical issue in any state court collection action." Compl. DE 1 at ¶ 30. The original creditor statement is alleged to hide this complex structure, and to thereby avoid consumer inquiry into issues of proper assignment and standing, as well as the correct identification of the actual creditor and servicer of the Loan.
As to the claim based upon the alleged misstatement regarding the Trust's authorization to do business in New York, Plaintiff alleges that the Trust is prohibited by statute from maintaining a lawsuit in New York because it has not properly registered as a foreign entity doing business in New York as required by Section 18 of the New York State General Associations Law.
Plaintiff's complaint also claims that the complaint in the State Court Action was deceptive and misleading under the FDCPA and state law because it was signed, but not meaningfully reviewed, by an attorney in violation of §§1692e, 1692e(3), 1692e(5), 1692e(10), and 1692f and Section 349. With regard to this claim, Plaintiff alleges that Defendants' "business plan" is "driven by the profitability of filing boilerplate complaints against consumers who either default, or attempt to proceed
Defendants' statements forming the basis of the complaint herein are alleged to meet the FDCPA standard for liability because they influence the least sophisticated consumer's ability to challenge a debt, and are stated to be material because they might "reasonably prompt" a defendant/consumer to "settle rather than litigate, or to settle on less favorable terms than he or she would otherwise accept."
Finally, Plaintiff's complaint includes particular class-based allegations which are discussed below in connection with this Court's disposition of the motion to certify a class.
Plaintiff filed this lawsuit on May 22, 2015. DE 1. On July 8, 2015, Defendants filed their answer. DE 11. The next day, this Court scheduled an initial conference for August 11, 2015.
On June 22, 2016, after receiving status letters from counsel, this Court held a telephone conference. During that conference, Plaintiff was directed to conduct depositions pursuant to Rule 30(b)(6) of the Federal Rules of Civil Procedure depositions, and Defendants were directed to produce witnesses with knowledge of documents, Defendants' financial net worth, and the relationship between certain Defendant entities. Counsel were further directed to submit a joint status letter by July 22, 2016. DE 36. On August 15, 2016, after being granted an extension of time to submit such letter, the parties filed their status letter and requested that discovery be extended. DE 39. The request was granted, and a new discovery schedule was entered, which extended the conclusion of all discovery to May 15, 2017.
On October 5, 2016, counsel submitted a joint status letter, which stated that there were disputes regarding (1) whether discovery should be extended to allow Defendants additional time in which to appraisal its property (presumably in connection with the issue of a net worth determination), and (2) the date when Plaintiff would move for class certification. DE 42. On October 31, 2016, this Court held a status conference regarding the discovery disputes. DE 44. During that conference, the Court directed Plaintiff to seek a pre-motion conference with the District Court regarding class certification, and advised Defendants to submit a letter to the District Court regarding any dispositive motions that it seeks to make. DE 44. The parties complied with this Court's directives and submitted requests for pre-motion conferences to the District Court.
On January 11, 2017, the District Court held a pre-motion conference, at which time the Court stayed Tier 2 discovery and directed parties to submit fully briefed motions by April 21, 2017. DE 50. On that same day, the parties filed a consent to this Court's jurisdiction, and the case was referred to this Court for all purposes. DE 51. On March 21, April 4, and May 2, 2017, counsel requested, and were granted, one week extensions to the briefing schedule set by the District Court. DE 55, 56, 59. On May 12, 2017 Plaintiff filed her motion for class certification, and Defendants filed their motion for summary judgment. DE 60, 66.
On July 23, 2017, Plaintiff filed a notice of supplemental authority, containing a Bronx County Civil Court decision, which she states had only recently been discovered, which concluded that NCSLT had failed to demonstrate that it had taken assignment of and owned a student loan it sought to collect. DE 69. Winslow sought to supplement her opposition to Defendants' motion for summary judgment, to further support its argument that NCSLT "has been bedeviled by rulings around the country dismissing its cases against purported student borrowers" for failure to prove up its standing as an assignee.
Upon review, this Court agrees with Defendants' position that neither supplement authority submitted by Plaintiff is relevant to the presently pending motions. Therefore, the Court will not consider that authority and will proceed to consider the merits of this matter based upon the earlier submissions of the parties. As both motions are now fully briefed and ripe for decision, the Court turns to the disposition thereof.
Courts in this district have recognized "`that a decision on the merits may hold implications for class members' claims and influence the ultimate composition of the class. However, `[t]here is nothing in Rule 23 to preclude the Court from examining the merits of plaintiffs' claims on a proper ... Rule 56 motion simply because such a motion is returnable contemporaneously with a class motion.'"
Although consideration of the merits may be necessary where a merits analysis is factually or legally interwoven with a determination as to Rule 23's requirements,
Winslow does not object to consideration of Defendants' legal summary judgment arguments prior to consideration of her motion for class certification. Indeed, she agrees that the motion schedule and discovery stay were established in anticipation of determination of Defendants' potentially dispositive legal arguments, to be followed by determination of her cross-motion for class certification. Plaintiff's Reply Memorandum of Law in Support of Class Certification ("Pl. Reply Mem. in Supp. of Class Cert.") at 1, DE 67. Plaintiff does, however, object to consideration of any factual argument, or foregoing a ruling on class certification pending the outcome of fact-based defenses. Pl. Reply Mem. in Supp. of Class Cert. at 7.
As to these threshold procedural issues, the Court agrees with Plaintiff. This case was commenced in 2015, and Tier II discovery has yet to be complete. The reason for the delay is in large part due to Defendants' request for a stay. The District Court granted the stay — and Plaintiff agreed — based upon Defendants' statement that only legal arguments would be raised on their summary judgment motion. This Court will decide the legal questions on Defendants' motion for summary judgment, and then turn to Plaintiff's motion for class certification.
Upon review of the parties' submissions the Court notes that Defendants rely on several documents, previously undisclosed to Plaintiff, that are purported to establish facts that entitle them to summary judgment. In particular, Defendants' documents address and seek judgment as a matter of law as to: (1) the adequacy of F&G's attorney review of Plaintiff's file prior to institution of the State Court Action; (2) acts taken with respect to collection and charge off of the Loan; (3) the extent of the individual Defendants' involvement in collection efforts with respect to the Loan, and (4) the extent of the Trust's New York business activities.
Defendants' submission of documents purported to establish facts is in direct contravention of their argument that the present summary judgment motion would be amenable to disposition without reference to documents outside of the pleadings that have not been previously disclosed in discovery, or subject to review by Plaintiff. This Court has reviewed the transcript of the January 11, 2017 conference before District Judge Azrack. DE 65, Ex. 3. That transcript supports clearly the agreement among the parties and with the District Court that no further discovery was required prior to consideration of Defendants' summary judgment motion, and that the motion would argue for judgment on the basis of discreet legal issues.
In view of the foregoing, this Court holds that while certain issues are ripe for summary judgment, the disposition of others in the context of summary judgment is inappropriate because such disposition would necessarily rely on many of the documents submitted in support of Defendants' motion. Accordingly, upon review of the issues raised, and the parties' submissions this Court holds that at this juncture it may appropriately consider, and will address only the following issues, which may be decided as a matter of law at this time:
These questions are legal in nature, and therefore appropriate to address at this point in the proceedings. However, the Court will not decide the extent of the Trust's New York activities, or issues that turn on whether Defendants conducted a meaningful attorney review prior to commencement of the State Court Action. While the Court will decide whether the Individual Defendants are entitled to summary judgment, it will not decide whether these Defendants are, in fact, individually liable in this lawsuit. Such matters must await disposition until discovery is complete.
Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The burden is on the moving party to establish the lack of any factual issues.
When considering a motion for summary judgment, the district court "must also be `mindful of the underlying standards and burdens of proof' ... because the evidentiary burdens that the respective parties will bear at trial guide district courts in their determination of summary judgment motions."
The FDCPA prohibits debt collectors from the use of "any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C.A. § 1692e.
Congress enacted the FDCPA to protect consumers.
Section 349 makes it unlawful to commit "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service...." N.Y. Gen. Bus. Law § 349. Section 349 allows for enforcement by the New York State Attorney General, as well as for private rights of action. Such actions may seek injunctive relief, damages and attorneys' fees.
The "consumer oriented" prong is satisfied by showing that the acts forming the basis of the complaint are not private disputes but instead could have a broad impact on "consumers at large."
As to materiality, Section 349 requires a showing that the allegedly deceptive conduct is "likely to mislead a reasonable consumer acting reasonably under the circumstances.'"
Plaintiff's FDCPA claims allege that Defendants made false representations as to the Trust's status as an "original creditor," and as to its "authorization" to proceed with the State Court Action. With respect to the "original creditor" claim, Winslow asserts that because her debt was originated by Bank of America, Defendants' designation of the Trust as the original creditor is simply false. As to the "authorization" claim, Plaintiff relies on the Trust's failure to file a designation certificate and pay fees owed to the New York State Secretary of State prior to commencing litigation in New York State.
As noted, Plaintiff claims that reference to the Trust as the original creditor is false because the entity that extended the Loan to Plaintiff was Bank of America, and not the Trust. Defendants contend that the statement is not false because the Trust became the "original creditor" and owner of Plaintiff's debt when it was "charged off." In support of their motion, Defendants rely on the definition of the term "original creditor" as it appears in the New York State Uniform Rules for New York Trial Courts ("Uniform Rules"). Def. Mem. in Supp. of SJ at 4.
The Uniform Rule upon which Defendants rely states that "original creditor" means: "the financial institution that owned the consumer credit account at the time the account was charged off, even if that financial institution did not originate the account." It defines "charged off" consumer debt as "a consumer debt that has been removed from an original creditor's books as an asset and treated as a loss or expense." 22 N.Y.C.R.R. § 202.27-a.
While this language may at first appear to support Defendants' position, a full reading of the statute makes clear that the statute does not apply here, and in no way requires dismissal of Plaintiff's claims of falsity. First, the Uniform Rule relied upon appears under the heading of "Defaults" (§ 202.27), and the subheading "Proof of default judgement in consumer credit matters (Uniform Civil Rules for the Supreme Court and the County Court)" (§ 202.27a). The State Court Action was a first attempt to collect a debt, and was not an action seeking enforcement of a previously entered default judgment. Moreover, the same section that defines "original creditor," states that in actions where an original creditor is seeking a default judgment, the original creditor must submit an affidavit of facts and supporting documentation, including credit agreements and charge-off information. 22 N.Y.C.R.R. § 202.27(c), (d). Furthermore, even if the Uniform Rule definition of "original creditor" applied to the State Court Action, it would not require summary dismissal of Plaintiff's FDCPA claim because the state court action was filed by Defendants in May of 2014, and the definitional provisions relied upon did not take effect until October 1, 2014.
More importantly, New York State procedural and definitional rules for seeking enforcement of a default judgment are vastly different than the definitions that Congress chose to use in the FDCPA. Indeed, as Justice Gorsuch noted in a recent FDCPA decision, the statutory definitions are precise. Thus, Justice Gorsuch stated:
As the FDCPA draws distinctions between the party who offers credit, and a person to whom a debt is owed, and a line between original and current creditor, there can be no question but that pursuant to the FDCPA, the original creditor with respect to the Loan is Bank of America. Here, it is undisputed that the complaint in the State Court Action falsely identifies the Trust as the original creditor. It also confusingly states that "Defendant [Winslow] borrowed money from Plaintiff or Plaintiff's Assignor pursuant to a promissory note.
Further, the Court holds that this false statement as to the Trust's status as the "original creditor" is material as a matter of law. As noted in
In support of the claim that the statement as to the Trust's "authorization" to proceed is false, Winslow relies on Section 18 of the New York State General Association Law ("Section 18"). That statute requires trusts doing business in New York to file a certificate of designation with the New York State Secretary of State before they are permitted to commence a lawsuit in New York State Court. Plaintiff notes, and Defendants concede for the purpose of this motion, that the Trust did not file a certificate under Section 18. Plaintiff argues that in light of this fact, the statement in the complaint in the State Court Action that the Trust was "authorized" to proceed is materially false in violation of the FDCPA. Defendants argue that it did not violate the FDCPA because: (1) Plaintiff does not plead facts sufficient to state a claim of doing business in New York (2) even if properly pled, the Trust is nonetheless entitled to summary judgment because its minimal contacts with New York do not constitute "doing business" sufficient to require Section 18 registration and (3) that even if the Trust were required to register under Section 18, any failure to do so is immaterial under the FCPA as a matter of law.
Section 18 states, in relevant part, that associations doing business in New York State "shall not maintain any action. . . unless and until such association has filed the certificate of designation prescribed by [Section 18] and it has paid to the state all fees, penalties and franchise taxes for the years or parts thereof during which it did business in this state without having filed" the required designation. N.Y. Gen. Ass'ns. L. §18(4).
A foreign corporation is deemed to be doing business in the State of New York, if it engages "in continuous, systematic and regular activity in the state."
As an initial matter, the Court notes that in addition to seeking summary judgment, Defendants appear to argue that Plaintiff's pleading as to the Trust doing business in New York are insufficient to survive a Rule 12 motion to dismiss.
The Court turns next to the issue of whether Defendants are entitled to summary judgment as to their argument that the Trust does not, as a matter of fact, conduct enough business to be deemed to be doing business in New York. As to this argument, Defendants argue that the Trust conducts business in Delaware, and not in New York where its contacts are characterized as merely incidental. The problem with Defendants' argument, as Plaintiff points out, is that it is premature. In view of the adequacy of Plaintiff's pleading, and the factual nature of the doing business argument, this Court holds that summary judgment as to the necessity of registering with the New York registering with the New York State Secretary of State must be denied. Any such argument may be renewed at the conclusion of discovery.
Defendants' final summary argument contends that the statement as to the Trust's authorization to proceed with the State Court Action is immaterial as a matter of law, and therefore cannot violate the FDCPA. Specifically, Defendants argue that a failure to comply with Section 18 cannot be deemed material because it has no effect on Plaintiff's debt obligation, and is curable. In support of their argument, Defendants reason that if the State Court Action were challenged on the failure to register ground, the complaint in that action could be amended, or dismissed without prejudice. Plaintiff, on the other hand, and in reliance on the materiality standard set forth above, contends that a deceptive statement as to whether the Trust was authorized to proceed with the action is material. According to Winslow, Defendants "miss the mark by observing that it may be possible for a debt collector to avoid dismissal if the designation certificate is promptly filed." DE 65 at 11. She reasons that the appropriate inquiry here is not whether an action barred by Section 18 would definitely be dismissed, but instead whether the possibility of dismissal is capable of influencing a consumer's decision.
Applying the FDCPA materiality standard set forth above, this Court holds that if the Trust was required to register under Section 18, and falsely stated that it was authorized to sue Plaintiff in a New York State court, that misstatement was a material misstatement because it may prevent a debtor from asserting a valid defense.
Plaintiff's claim here is analogous to the claim raised, and sustained as material in
The Court notes that both parties rely on
Defendants rely on depositions and allegedly "undisputed facts" in support of its position that they are entitled to summary judgment on the claim that they failed to conduct a meaningful review of Plaintiff's case prior to filing the State Court Action. In reality, the facts Defendants rely upon are in dispute and therefore, this issue is not ripe for summary judgment. The motion is denied without prejudice to renewal after the completion of discovery.
Plaintiff's Section 349 claims rely on the same facts alleged in support of her FDCPA claims. Apart from arguing that Plaintiff fails to show the elements of a Section 349 claim, Defendant argues that this claim must be dismissed on the ground that it is barred by Section 601 of the New York State General Business Law, a statute addressing the legality of certain debt collection practices ("Section 601"). Specifically, Defendants argue that Plaintiff's Section 349 claim is an attempt to circumvent the fact that there is no private right of action under Section 601. Defendants also argue that Plaintiff lacks standing to pursue a Section 349 claim because she is not a consumer of F&G's product or service. Finally, Defendants argue that even if Plaintiff's Section 349 claim is not barred by Section 601 or a lack of standing, Defendants are nonetheless entitled to summary judgment because Plaintiff cannot satisfy the "consumeroriented" or damages prongs of her claim.
Defendants correctly assert that where a Section 349 complaint alleges no more than a violation of Section 601, the Section 349 claim is barred.
At the outset, this Court notes that Section 349 has routinely been employed to obtain redress for victims of deceptive statements made in connection with the collection of a debt, and that such a claim states a cause of action separate from a claim under Section 601.
Defendants next argue that Plaintiff lacks standing to pursue a Section 349 claim because she is not a consumer of F&G's product or service.
Here, it is undisputed that Defendants have filed numerous complaints stating that they "are the original creditor" and that the Trust "is authorized to proceed with the action." Claims arising under Section 349 need not allege "a repetition or pattern of deceptive behavior" so long as the conduct alleged "potentially affect[s] similarly situated consumers."
The Court also holds that the statement as to the Trust's original creditor status is not only material within the "least sophisticated consumer" standard of the FDCPA, but also materially misleading under Section 349. Thus, the Courts holds, as a matter of law, that this statement, viewed objectively, might lead a debtor to be confused as to the nature of the debt sought to be collected and is therefore misleading within the meaning of Section 349. As to F&G's "authorization" to proceed with its lawsuit, summary judgment is not warranted on the ground that any such statement is not misleading as a matter of law. As held above with respect to the FDCPA claim, the motion as to this statement is denied without prejudice to renewal at the close of discovery. Finally, the Court holds that Defendants are not entitled to summary judgment on the ground that Plaintiff cannot show damages. Claims under Section 349 do not require a showing of pecuniary harm, and the argument that Plaintiff was subject to unnecessary litigation is sufficient to support her claim of damages.
For the foregoing reasons the Court denies summary judgment as to Plaintiff's claims pursuant to Section 349.
Abstention is "an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it."
Defendants assert that Plaintiff's FDCPA claim against F&G goes to the very heart of the State Court Action, as the instant action specially alleges that Trust does not have capacity to bring suit. Defendants, therefore, aver that the only proper forum to raise this defense is in the state court and not before this Court on an FDCPA claim. Winslow claims that the two actions are not parallel because, other than Winslow, the named parties are different, and the cases allege different claims, and seek different relief. She further argues that resolution of one case does not necessarily resolve the other.
Upon consideration of the above-referenced principles, this Court holds that this action is distinct from the State Court Action and that therefore abstention is not required. The present action involves Defendants' use of allegedly false and misleading debt-collection methods, while the State Court Action concerns the validity of an underlying debt. The two actions seek different relief, apply different bodies of law, and, other than Winslow, name different parties.
In apparent recognition of these facts, Defendants, assert, in a footnote, assert that "New York law and court procedures are more than adequate to protect Plaintiff's rights." Def. Mem. Reply in Supp. of SJ at 7, n. 2, DE 61. Although, that may be true, there is no indication that Plaintiff has filed a counterclaim in the state court action alleging the same claims. In view of this fact and those set forth above, the two actions are not parallel. Summary judgment is denied on this ground.
Defendants seek summary judgment as to all claims against the Individual Defendants. In support of this branch of their motion, Defendants note that the only allegations against these defendants is that they are principals and owners of F&G who had "final, supervisory authority over all form documents... used by [F&G]," and that such allegations are insufficient to state a claim of individual liability. The Court disagrees with Defendants' position and holds that Plaintiff's allegations are sufficient to state a claims for individual FDCPA liability as well as individual liability under Section 349.
Before turning to the merits of the class certification motion the Court notes a dispute that has arisen regarding the size of the classes that Plaintiff proposes to represent. This dispute has arisen as a result of conflicting numbers regarding class size that were provided to Plaintiff by Defendants as described below.
Specifically, on April 8, 2017, defense counsel provided its "supplemental response to outstanding Tier 1 discovery," which stated the class size for NCSLT T2005-1, 2005-2 and 2005-3 FDCPA and Section 349. Shlanger Decl. ¶ 27, DE 65-2;
Plaintiff argues that the Luke Declaration should not be considered by the Court because Mr. Luke was never disclosed as a potential witness, and Plaintiff has never had an opportunity to question him about the authenticity or reliability of the exhibits attached to his declaration, many of which were never before shared with Plaintiff. As Tier I discovery is now closed, Plaintiff contends that Mr. Luke's testimony cannot be considered on summary judgment pursuant to Rule 37(c) of the Federal Rules of Civil Procedure ("Rule 37(c)").
The Court agrees with Plaintiff. Rule 37(c) prohibits a party who "fails to provide information or identify a witness as required by Rule 26(a) or (e)" from using "that information or witness to supply evidence on a motion . . . unless the failure was substantially justified or is harmless." Fed. R. Civ. P. 37(c)(1). There is no question but that the information in the Luke Declaration was not provided to Plaintiff prior to this motion. As such, it will not be considered by the Court in the context of its decision. The Court turns to the merits of Plaintiff's motion for class certification.
Winslow seeks to represent the following class and two subclasses:
Pursuant to Rule 23(a), a party seeking certification of a class must establish that: (1) the class is sufficiently numerous, (2) there are common class questions of law or fact, (3) class plaintiff's claims are typical of those of the class, and (4) the proposed class representative will adequately represent the interests of the class.
Upon a showing that the Rule 23(a) requirements have been satisfied, Rule 23(b)(3) requires that the party seeking certification to show that common questions of law or fact "predominate over any questions affecting only individual members' and that class treatment would be superior to individual litigation."
Arguing that all of the factors set forth above are met, Winslow seeks class certification of the class and subclasses described above. Defendants' motion argues primarily that the motion for class certification must be denied because summary judgment must be granted. Indeed, Defendants do not make any arguments with regard to the Rule 23 factors. DE 62 at 1. Since summary judgment has been denied in all aspects, the motion for class certification is largely unopposed, but not moot. Accordingly, the Court now turns to consider the relevant factors to determine whether class certification is appropriate.
The Second Circuit has stated that "numerosity is presumed at a level of 40 members."
Defendants argue, in a footnote, that the "numerosity" figure of 3,370 suggested by Plaintiff is entirely fictional and derived from the improper inclusion of suits filed by NCSLT 2005-1 and NCSLT 2005-2 in the suit count. NCSLT 2005-1 and NCSLT 2005-2 have neither ownership interest in Ms. Winslow's loan, nor any relationship to NCSLT 2005-3, and that the "bottom line is that there are one-hundred and eight (108) lawsuits in the one-year FDCPA class and four-hundred and thirteen (413) in the three year GBL § 349 class period." Def. Mem. in Opp. to Class Cert. at 4 n.2.
Regardless of whether Defendants' pre-motion representations to Plaintiff, or its representations in its opposition papers are correct, it is clear there are certainly over forty potential class members in Plaintiff's proposed class. As such, the numerosity factor is satisfied.
Pursuant to Rule 23(a), a plaintiff must share "questions of law or fact common to the class." Rule 23(a)(2). To satisfy the commonality requirement, "the class members [must] have suffered the same injury."
Here, all of the class members received the same, or similar, form complaints from Defendants (which were also filed in New York state court), seeking to collect consumer debts. Each of these claims contains allegedly deceptive representations as to the identity of the original creditor and/or the Trust's authorization to sue. As such, the resolution as to each of the claims "`will resolve an issue that is central to the validity of each one of the claims...'"
Defendants have previously argued, but have failed to raise in their opposition papers, that insufficient discovery has been completed to allow a determination as to whether there are common facts with respect to whether the complaints were subject to meaningful review, DE 47 at 2-3. The Court finds this argument unpersuasive. Plaintiff has based her claims on standardized conduct by Defendants — the filing and mailing of boilerplate complaints in consumer collections actions containing the same deceptive and false statements. Additionally, Defendants have indicated that over 2,400 nearly identical complaints (containing allegedly false identification as to the original creditor and/or the assertion that the Trust is authorized to sue) were served on others similarly situated. Schlanger Decl., Ex. 8, 65-3-160. As such, there is sufficient evidence at this time to support an inference that Defendants failed to verify meaningful information, and, thereby, failed to meaningfully reviewing all of the pleadings.
The Court further holds that even if there are differences relevant to the review of each complaint, such differences do not destroy commonality. That is because Winslow's claims and the proposed class members' claims stem "from the same course of conduct, [] raise common issues of law and fact, [] and are based on the same legal theories...."
Rule 23(a)(3) requires that "the claims or defenses of the representative parties are typical of the claims or defenses of the class." The requirements for typicality are "satisfied when each class member's claim arises from the same course of events and each class member makes similar legal arguments to prove the defendants liability."
Under some circumstances, "`[t]he commonality and typicality requirements of Rule 23(a) tend to merge. Both serve as guideposts for determining whether under the particular circumstances maintenance of a class action is economical and whether the named plaintiff's claim and the class claims are so interrelated that the interests of the class members will be fairly and adequately protected in their absence.'"
In this case, the claims arise from the common question of whether Defendants' alleged misrepresentations violated the FDCPA and Section 349. Both statutes are judged according to an objective standard. The Court concludes that the claims and defenses of Winslow are typical of those of the class and this requirement is satisfied
"Adequacy of representation is evaluated in two ways: (1) by looking to the qualifications of plaintiffs' counsel; and (2) by examining the interests of the named plaintiffs."
The implied ascertainability requirement of Rule 23 is satisfied if "[a]n identifiable class exists if its members can be ascertained by reference to objective criteria."
Plaintiff seeks class certification as a hybrid under Rule 23(b)(2) and Rule 23(b)(3). "As such, plaintiffs must meet both the requirements for the particular relief, injunctive or monetary, sought under those two rules...."
Plaintiff seeks declaratory and injunctive relief that would declare Defendants' attempts to collect debts by filing and sending deceptive complaints a violation of the FDCPA and Section 349, and enjoin Defendants from engaging in this conduct in the future. As the Supreme Court has made clear, "certification of a class for injunctive relief is only appropriate where `a single injunction ... would provide relief to each member of the class.'"
Under Rule 23(b)(3), a court must find "that the 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. Rule 23(b) additionally requires 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 Court finds that there are common questions regarding 1) Defendants' practices in bringing collection actions in New York State, 2) the validity of Defendants' statements made on state court actions concerning whether it is the original owner of debt and whether it is authorized to bring New York State court actions, and 3) whether the Trust is authorized to bring a state court action. Due to the standardized nature of Defendants' conduct in the case, such as boilerplate language and deceptive complaints, common questions predominate over individualized claims. Further, in this District courts have found that "common questions of law and fact surrounding the contents and mailing of [standardized form collection] letters predominate over individual issues."
The Court additionally finds that the superiority requirement of Rule 23(b)(3) is satisfied. In cases such as this, not all potential class members have knowledge of the claims. Additionally, as only a limited amount of damages are likely available, individual class members may not have interest in litigating the matter. Moreover, it is more efficient to decide a single set of facts and single theory for liability in one case, rather than having multiple litigants bring individual actions on the same — or substantially similar — causes of action. Thus, the Court finds that that the superiority requirement of Rule 23(b)(3) is satisfied.
Defendants' motion for summary judgment is denied in all respects. As set forth above and to summarize:
Plaintiff's motion for class certification under Rules 23(b)(2) and (3) is granted. Counsel shall appear before this Court for an in person status conference at 10:30 am on January 18, 2018.
SO ORDERED.
