MARK J. DINSMORE, United States Magistrate Judge.
This matter is before the Court on Plaintiff Eva Green's Motion to Compel Defendants to Answer Discovery as to Net Worth [Dkt. 63]. A hearing was held telephonically on December 20, 2013 in which the paities appeared by counsel. The Court, being duly advised,
Plaintiff filed a Complaint on March 13, 2013 against Monarch Recovery Management, Inc. ("Monarch") and DHC Consulting Sendees, LLC ("DHC") alleging violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"). [Dkt. 1.] In her initial complaint, Plaintiff
There are two issues governing this motion: (1) is Plaintiff entitled to discovery on net worth, and (2) if so, whose net worth is Plaintiff entitled to discover?
The FDCPA outlines statutory damages for which debt collectors are liable if they fail to comply with the Act. 15 U.S.C. § 1692k. For an individual, a debt collector would be liable for any actual damage plus "such additional damages as the court may allow, but not exceeding $1,000." 15 U.S.C. § 1692k(a)(1), (a)(2)(A). In the case of a class action, a debt collector is liable for:
15 U.S.C. § 1692k(a)(2)(B). Liability is imposed on "any debt collector who fails to comply with any provision of this subchapter." 15 U.S.C. § 1692k(a) (emphasis added).
Defendants concede that each Defendant is a "debt collector" as defined by the FDCPA. Hearing on Motion to Compel, Green v. Monarch Recovery Management, 1:13-cv-00418-SEBMJD (S.D.Ind. Dec. 20, 2013) [hereinafter "Rearing on Motion to Compel"]. However, Defendants object to the inquiry on net worth on the basis of relevance, arguing that net worth is not relevant prior to class certification. In support of that argument, Defendants cite to Marshall v. Bonded Adjustment Co., No. CV-11-22-RMP, 2011 WL 3882284 (E.D.Wash. Sept. 2, 2011). Plaintiff argues that the information is relevant because it is "necessary to determine whether and what class should be certified." [Dkt. 63 at 2.] Plaintiff further argues that the FDCPA makes net worth a direct issue for class actions and thus a relevant inquiry of discovery.
The cases cited by Plaintiff, along with other case law, persuade the Court that net worth is a relevant area of discovery at this juncture despite the fact that the class has not yet been certified. See Bode v. Encore Receivable Management Inc., No. 05-CV-1013, 2006 WL 801017, at *2 (E.D.Wisc. March 29, 2006) ("[A] party need not have a class certified to justify
The Court finds that information regarding net worth is helpful in deciding class certification. Courts have determined that such information is relevant in evaluating class superiority. Bode, 2006 WL 801017, at *1 ("[I]nformation concerning the defendant's net worth is relevant and potentially useful in determining whether a class action is superior to other methods of adjudication."); see Barkouras v. Hecker, Civ. No. 06-0366(AET), 2006 WL 3544585 (D.N.J. Dec. 8, 2006) (using net worth to evaluate superiority of a class); Mund v. EMCC, Inc., 259 F.R.D. 180 (D.Minn.2009) (same); Kohlenbrener v. Dickinson, No. 94 C 4696, 1996 WL 131736 (March 15, 1996) (using net worth to deny class certification). Defendants argue that Plaintiff has fully briefed the issue of class certification and therefore that the information is no longer relevant with regard to class certification. However, as demonstrated by Defendants' recent filing of a response to Plaintiff's amended motion for class certification [Dkt. 73], the issue has not yet been fully briefed. Further, there is nothing to indicate that Plaintiff would not be able to file (or seek leave to file) a second amended motion to certify the class.
The Court also finds that such information is relevant to have meaningful settlement negotiations. See Esparza v. Randall S. Miller & Assoc., P.C., 1:08-cv-05940 (N.D.Ill. March 3, 2009), ECF No. 51 (holding that "[a] class cannot evaluate the reasonableness of any proposed settlement without [knowing a defendant's net worth]").
While the Court is mindful of the ruling in Marshall denying discovery on net worth, this case appears to be an anomaly on the issue of relevancy of net worth. That court reasoned that financial information is sensitive, and parties have a strong interest in protecting their financial information. Marshall, 2011 WL 3882284. However, Defendants may move for a protective order during the pendency of class certification, thereby protecting any truly sensitive information. See Perez v. Monarch Recovery Management, Inc., 1:13-cv-05694 (N.D.Ill. Nov. 5, 2013), ECF No. 17. In fact, the Defendants in this case have already obtained such a protective order. [Dkt. 62.] Accordingly, the Court finds that net worth is relevant, and Plaintiff is entitled to this discovery.
Defendants next argue that if Plaintiff is entitled to discovery on net worth, then the discovery should be limited to the net worth of Monarch only. Defendants argue that Monarch is alleged to be the actor who committed the violations and that the Court has already found that Plaintiff is limited to allegations that DHC
First, this Court did not establish that DHC or Interim could only be held to be vicariously liable. The Order Defendants reference, [Dkt. 51], established that Plaintiff has one indivisible injury and is thus only entitled to one award which for which each defendant may be jointly responsible. [Dkt. 51 at 3-4.] This does not mean that each defendant could not be found directly liable for its role in Plaintiff's injury. In other words, Plaintiff could have brought a suit against any of the three defendants individually; instead she brought a suit against all three Defendants. Second, the Complaint does not allege that either DHC or Interim is vicariously liable for the actions of Monarch, as Defendants argue. The Complaint alleges that all Defendants acted in violating the FDCPA [Dkt. 22], even though the letterwas sent by Monarch. As Plaintiff explains, Plaintiff believes that discovery will reveal that DHC and Interim took some action or maintained control over the action taken. Hearing on Motion to Compel.
Supposing that Plaintiff could only demonstrate vicarious liability as to DHC and/or Interim, based on the pleadings or otherwise, "the FDCPA has utilized the principle of vicarious liability." Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1059 (7th Cir.2000) (finding that the theory of respondeat superior can apply to an FDCPA claim when the superior is also a "debt collector" under the FDCPA). However, Defendants maintain that under the doctrine of vicarious liability the principal should only be required to pay what its agent would have been required to pay. Defendants (not so subtly) insinuate that Monarch has the lowest net worth of all the defendants and thus raising the cap based on DHC and/or Interim's net worth would expose Monarch to greater liability. Defendants argue that the damages cap was designed to protect companies like Monarch. Defendants' argument is, in part, supported by the Seventh Circuit. See Sanders v. Jackson, 209 F.3d 998 (7th Cir.2000). In Sanders, the Seventh Circuit determined how to calculate net worth, but did not address whose net worth to use when there are multiple defendants. Id. The Seventh Circuit recognized that "the primary purpose of the net worth provision is a protective one ... ensuring] that defendants are not forced to liquidate their companies in order to satisfy an award of punitive damages." Id. at 1002. The Court also pointed out that "the net worth clause is designed to address a problem often associated with fixed monetary penalties: they sometimes penalize smaller companies too harshly but are insufficiently punitive for larger businesses." Id. Thus, while the Court is mindful that the statute is not meant to bankrupt defendants, it also was not meant for larger companies to hide behind smaller ones to avoid larger payouts, or avoid liability altogether if the smaller company has a negative net worth for
This decision is consistent with other courts that have required all defendants to produce evidence of their net worth. See, e.g., Perez v. Monarch Recovery Management, Inc., 1:13-cv05694 (N.D.Ill. Nov. 5, 2013), ECF No. 17 (ordering all defendants to supply information regarding net worth under seal even though based on one form letter); Trevino, 232 F.R.D. 612 (ordering all defendants to comply with discovery for net worth); Barkouras, 2006 WL 3544585 (same); Evon, 2010 WL 455476 (same); Kohlenbrener 1996 WL 131736 (considering all defendants' net worth to determine class superiority). Accordingly, all Defendants are required to answer discovery regarding net worth.
For the reasons set forth above, Plaintiff's Motion to Compel [Dkt. 63] is