United States District Court, N.D. Illinois
February 25, 2004.
ONETA S. SAMPSON and LISA STROUD, Plaintiffs,
WESTERN SIERRA ACCEPTANCE CORP., RIDGE CHRYSLER/PLYMOUTH, LLC doing business as MARQUETTE CHRYSLER JEEP, Defendants
The opinion of the court was delivered by: JAMES ZAGEL, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Oneta Sampson brought this action seeking redress against
Defendants Western Sierra Acceptance Corporation ("Western Sierra") and
Ridge Chrysler Plymouth, LLC ("Ridge Chrysler") for accessing her credit
report without her consent or any lawful reason, in violation of the Fair
Credit Reporting Act (FCRA). Plaintiff now seeks class certification
pursuant to Federal Rule of Civil Procedure 23. The proposed class would
consist of all persons whose credit reports were accessed or caused to be
accessed by Western Sierra for the purpose of transmitting the
"Pre-Approved Notices" (See Plaintiffs. Mem. Exhibit A) on or after Feb.
In considering Plaintiff's motion for class certification, I may not
conduct a preliminary inquiry into the merits of the underlying claims.
Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-178 (1974).
However, I may look beyond the pleadings to determine whether the
requirements of Rule 23 are met. Szabo v. Bridgeport Machs.,
Inc., 249 F.3d 672, 677 (7th Cir. 2001). In order to proceed as a
class action, plaintiffs must prove their action meets the four
requirements of Rule 23(a): numerosity, commonality, typicality,
and adequacy as well as the requirements of at least one subsection of
Rule 23(b).*fn1 Eisen, 417 U.S. at 163.
A. Rule 23(a)(1) Numerosity
The potential class of approximately 65,000 members easily meets the
numerosity requirements of Rule 23(a)(1). This estimate is based on the
number of persons who received the "Pre-Approved Notice."*fn2 A
potential class of this size would certainly make joinder impracticable.
Riordan v. Smith Barney, 113 F.R.D. 60, 62 (N.D. Ill. 1986).
B. Rule 23(a)(2) Commonality & Rule 23(a)(3) Typicality
Plaintiff's factual and legal issues are sufficiently similar to those
of the potential class to satisfy both the commonality and typicality
requirements of Rule 23(a)(2) and Rule 23(a)(3) respectively. The issues
of commonality and typicality are closely related, Keele v.
Wexler, 149 F.3d 589, 595 (7th Cir. 1998), and as such can be dealt
with together here. Defendants' alleged wrongful accessing of credit
reports and sending of mailers constitutes standardized conduct and
creates commonality. Keele, 149 F.3d at 594 (citation omitted).
This single course of action by Defendants leads to the central legal
question of this case, whether obtaining a credit report for the purpose
of transmission of the "Pre-Approved Notice" violated the FCRA, and
creates typicality. De La Fuente v. Stokely-Van Camp, Inc.,
713 F.2d 225, 232 (7th Cir. 1983).
C. Rule 23(a)(4) Adequacy
The named Plaintiff, Oneta Sampson, adequately represents the class as
a whole. Sampson has retained competent counsel, has a sufficient
interest in the outcome of the case, and does not have interests
antagonistic to those of the class. In re VMS P'ship Se. Litig.,
1992 U.S. Dist. LEXIS 14445 at *13 (N.D. Ill. Sept. 23, 1992); See
Also Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir. 1992).
D. Rule 23(b)(3) Predominance and Superiority
Rule 23(b)(3) requires that common questions of law or fact predominate
and that the class action is the superior form of adjudication. Defendant
Ridge Chrysler claims that Plaintiff is not entitled to punitive damages
set by the FCRA and will instead have to prove actual damages for each
individual case. These individual damages, Ridge Chysler argues, will
predominate over the common issues of the class.
Even assuming that Plaintiff is not able to make a showing for punitive
damages, I would still find that common issues of law and fact
predominate. Generally, considerable overlap exists between the court's
determination of commonality and a finding of predominance. Mejdreck
v. Lockformer, No. 01-C6107, 2002 U.S. Dist. LEXIS 14785 at *17-18
(N.D. Ill. Aug. 9, 2002)(citing Demitropoulos v. Bank One Milwaukee,
N.A., 915 F. Supp. 1399, 1419 (N.D. Ill. 1996). Much like
commonality, predominance is found where there exists a common nucleus of
operative facts. Id. (citation omitted).
In this case, the facts concerning individual class members are very
similar. Each potential class member's credit report was accessed by
Defendants, and each potential class member received the "Pre-Approved
Notice." The underlying questions of law, such as whether
the mailer violated the FCRA and whether the violation was willful,
will also be the same and must be decided before the issue of damages can
be reached. Although some individualized questions may exist, they should
not defeat class certification. Mejdreck, 2002 U.S. Dist. LEXIS
14785, at *20 (quoting Sterling v. Velsicol Chem. Corp.,
855 F.2d 1188, 1197 (6th Cir. 1988)). Accordingly, I find that common issues
of law and fact predominate over the other issues involved in this case.
Finally, both Defendants argue that because the potential statutory
award under the FCRA is disproportionate to the harm caused, a class
action is not the superior method of adjudication. The FCRA provides for
minimum and maximum damages of $100 and $1,000 respectively. If I
certified the narrower class suggested by Plaintiff (those people who
received the actual "Pre-Approval Notice"), the class would consist of
65,000 potential members. Assuming statutory damages are appropriate,
this could lead to a damage award between $6.5 and $65 million.
Defendants argue that this situation is similar to those involving the
Truth In Lending Act (TILA) in which many courts found class actions to
be inferior to individual adjudication. In the seminal case on that
issue, Ratner v. Chemical Bank New York Trust Co., 54 F.R.D. 412
(S.D. N.Y. 1972), the plaintiffs alleged that the defendant bank had
failed to display the annual percentage rate on his credit card statement
and in so doing had violated TILA. Id. This violation carried
with it the same statutory minimum damage award as the FCRA, a minimum of
$100 and a maximum of $1,000 regardless of actual harm sustained by the
plaintiffs. In that case, plaintiffs sought to certify a class consisting
of 130,000 cardholders, which could have led to a minimum damage award of
$13 million. Id. The Ratner Court found that class
actions were not superior because the aggregate potential liability
"would be a horrendous, possibly
annihilating punishment, unrelated to any damage to the purported
class or to any benefit to defendant, for what is at most a technical and
debatable violation." Id. at 416.*fn3
In Haynes v. Logan Furniture Mart, Inc., 503 F.2d 1161 (7th
Cir. 1974), the Seventh Circuit found that Ratner's complete bar
against class actions was unnecessary. The Seventh Circuit adopted
instead a policy of case-by-case determination under which the
possibility of "crushing damages" predicated on statutory minimums is
weighed against the benefits of class actions. Id. at
1164-1165*fn4 In making its determination to certify the class in
Haynes, the Court found two factors to be significant: the size
of the potential class and the actual damages pled by or caused to the
In Haynes, the potential class consisted of approximately
2,500 members, which the Court noted was significantly less than the
classes proposed in Ratner (130,000) and in other similar cases.
In the instant case, there are 65,000 potential class members, a number
much larger than Haynes's relatively small class.*fn5 A
class of this size will certainly have manageability and notice issues
that were lacking in Haynes.
In Haynes, the defendant had imposed a finance charge and had
charged its customers an interest rate, creating actual damages caused to
and pled by plaintiffs, which, in most cases, were likely to be greater
than the statutory minimum. Id. at 1165. Because of these actual
damages, the Court found that the defendant was not unduly prejudiced by
the statutory minimum. Unlike the plaintiffs in Haynes, the
Plaintiff here has not alleged any actual damages. Plaintiff alleges only
that Defendants improperly accessed her credit reports and that she is
entitled to the statutorily prescribed damages. While it is difficult to
put a monetary value on the actual damage caused by this alleged improper
viewing, that value is not likely to approach the statutory minimum.
Although certification should not be denied solely because of the
possible financial impact on defendant, its consideration is proper when
the damage award is grossly disproportionate to the actual harm caused.
In re Trans Union Corp. Privacy Litig., 211 F.R.D. 328, 354
(N.D. Ill. 2002). Here, the application of statutory damages, which are
unrelated to any actual harm suffered by Plaintiff, would serve an
unwarranted and crushing blow to thes particular Defendants.*fn6
I am mindful that without class certification the vast majority of
potential class members will remain unaware their credit rights were
violated. However, the negative effect of this is somewhat tempered by
the financial condition of the two defendants. Ridge Chrysler has gone
out of business and will not be sending out such notices in the future.
Western Sierra is a small company, without insurance to cover these
claims, that could be greatly impacted by even a small number of
individual plaintiffs seeking redress. For these reasons, I find the
possibility of a large and grossly disproportionate damage award
outweighs the benefits of a class action, making individual adjudication
the superior method to proceed with this case.
Plaintiffs' Motion for Class Certification is DENIED.