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REDD v. ARROW FINANCIAL SERVICES LLC.

March 31, 2004.

GEORGIA REDD, Plaintiff;
v.
ARROW FINANCIAL SERVICES, LLC., Defendant



The opinion of the court was delivered by: WAYNE ANDERSEN, District Judge

MEMORANDUM. OPINION AND ORDER

Plaintiff Georgia Redd brings a class action lawsuit against defendant Arrow Financial Services, LLC ("Arrow") for violations of the Fair Debt Collection Practices Act, 15 U.S.C. § I692e, 1692e(2), 1692e(8), and 1692e(10), relating to its alleged illegal practices in connection with the collection of certain debts that are more than seven years old. This matter is before the Court on Ms. Redd's motion for class certification. For the reasons stated below, the motion for class certification is granted.

Factual Background

  For the purposes of a motion to certify a class, the allegations in the complaint are presumed to be true. Johns v. DeLeonardis, 145 F.R.D. 480, 482 (N.D. Ill. 1992). According to Ms. Redd's amended complaint, she is a consumer who defaulted on a retail installment contract for the purchase of a car in 1990. Sometime after the purchase of the car, Ms. Redd failed to make the scheduled payments, the car was repossessed and the debt was charged off. Defendant Arrow is a limited liability company that acts as a collection agency and purchases consumer debts at a portion of the face value for the opportunity to enforce the debts against the consumers. Page 2

  On approximately October 18, 2002, Arrow sent Ms. Redd a letter informing her that her debt had been sent to a debt collection agency. The outstanding balance on the account was $9,887.41. The letter offered to settle the past due account for 45 percent of the full balance if the repayment was made in one payment by November 20, 2002. Relevant to the claim at issue here, the letter stated: "Upon receipt of the settlement amount and clearance of funds, the appropriate credit bureaus will be notified that this account has been settled." Ms. Redd alleges, and defendant Arrow admitted in response to requests for admission, that the letter she received was a standard form letter and that there are "more than 500(a) natural persons (except those with addresses in Maine), (b) who were sent a letter in the form represented by exhibit A to the Amended Complaint by Arrow Financial Services, LLC, (c) with respect to a debt charged off? years or more prior to the date of the letter, (d) which was sent on or after a date one year prior to the filing of this action." (Def.'s Resp. to Pl.'s Req. for Admis., ¶ 16).

  Based on the statement cited above, Ms. Redd claims that Arrow has violated the FDCPA, 15 U.S.C. § 1692e, which prohibits debt collectors from making false or misleading representations to consumers, because pursuant to the Fair Credit Reporting Act ("FCRA"), "no consumer reporting agency may make any consumer report containing., accounts placed for collection or charged to profit and loss which antedate the report by more than seven years." 15 U.S.C. § 1681c(a)(4). Given that the age of the debt was greater than seven years old, Ms. Redd claims that Arrow's reference to a consumer's credit report in the letter it sent is misleading because it tells an unsophisticated consumer that, absent a payment, Arrow could have the debt appear on the consumer's credit report as an unpaid delinquent debt. Ms. Redd proposes a class consisting of "(a) all natural persons (except those with Maine addresses), (b) who were sent a Page 3 letter in the form represented by Exhibit A by Arrow Financial Services, LLC, (c) with respect to a debt charged off? years or more prior to the date of the letter, (d) which letter was sent on or after February 21, 2002 (one year prior to the filing of this action)." (pl.'s Mot. for Cl. Cert., at 1). We have a companion case Stewart Maxwell v. Arrow Financial Services, LLC, Case No. 03 C 1995, in which a Maine plaintiff is pursuing similar claims under the Maine Fair Debt Collection Practices Act.

  Discussion

  Motions for class certification must meet the requirements set under Rule 23 of the Federal Rules of Civil Procedure. Rule 23 establishes two main requirements for class certification. First, the action must satisfy all four elements of Rule 23(a): numerosiry, commonality, typicality and adequacy of representation. Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997); Harriston v. Chicago Tribune Co., 992 F.2d 697, 703 (7th Cir. 1993). Second, the proposed class must satisfy at least one of the three provisions under Rule 23(b). Ms. Redd seeks certification under Rule 23(b)(3), which requires a plaintiff to demonstrate that common questions of law or fact predominate over any questions affecting only individual class members and that a class action is a superior method of adjudicating the controversy.

  As previously stated, for purposes of a motion to certify a class, the allegations in the complaint are presumed true. Johns, 145 F.R.D. at 482. The court does not reach die merits of the complaint or weigh evidence. Risen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78 (1974); Koch v. Stanard, 962 F.2d 605, 607 (7th Cir. 1992). The burden is on the party seeking class certification to demonstrate that the requirements of Rule 23 are satisfied. Gen. Tel. Co. of S.W. v. Falcon, 457U.S. 147, 161 (1982); Trotter v. Klincar, 748 F.2d 1177, 1184 (7th Cir. Page 4 1984). Failure on the part of the movant to satisfy any one of the requirements of Rule 23(a) or (b) precludes class certification. Patterson v. Gen. Motors Corp., 631 F.2d 476, 480 (7th Cir. 1980). The court has broad discretion in ruling on a motion for class certification. Retired Chicago Police Ass'n v. Chicago, 7 F.3d 584, 596 (7th Cir. 1993). We now consider each element of the Rule 23 requirements in turn.

  A. Requirements of Federal Rules of Civil Procedure 23(a)

  1. Numerosity

  Rule 23(a)(1) requires that the class must be "so numerous that joinder of all members is impracticable." Fed.R.Civ.P. 23(a)(1). Because there is no mystical number at which the numerosity requirement is established, courts have found this element satisfied when the putative class consists of as few as 10 to 40 members. See, e.g., Markham v. White, 171 F.R.D. 217, 221 (N.D. Ill. 1997) (35 — 40 class members); Hendricks — Robinson v. Excel Corp., 164 F.R.D. 667, 671 (C.D. Ill. 1996) (38 class members). Although the plaintiff need not allege the exact number or identity of the class members, the plaintiff ordinarily "must show some evidence or reasonable estimate of the number of class members." Long v. Thorton Township High Sch. Dist., 82 F.R.D. 186, 189 (N.D. Ill. 1979). In determining whether the claimed class contains a sufficient number of members, the court is permitted to "make common sense assumptions in order to find support for numerosity." Cannon v. Nationwide Acceptance Corp., 1997 WL 139472, at *2 (N.D. Ill. March 25, 1997) (quoting Evans v. U.S. Pipe & Foundry, 696 F.2d 295, 930 (11th Cir. 1983)).

  This Court previously has found that it is reasonable to assume the number of potential class members satisfies the numerosity requirement when the defendant allegedly used "preprinted, standardized debt collection letters in attempting to collect on the [allegedly Page 5 delinquent] debt." Hamid v. Blatt, Hasenmilkr, Leibsker, Moore & Pellettieri, et al., 2001 WL 1543516, at *3 (N.D. Ill., Nov. 30, 2001), citmg Peters v. AT& T, 179 F.R.D, 564, 567-68 (N.D. Ill. 1998) ("Based on these facts it is reasonable to infer that many individuals received the form collection letter and that joinder of all the individuals would be impracticable."). Whether the numerosity requirement is met in this case is complicated, however, by certain exceptions to the seven year reporting limitation under specific sections of the FCRA, 15 U.S.C. § 1681c(b)(1)-(3). Pursuant to the FCRA, "no consumer reporting agency may make any consumer report containing . . . accounts placed for collection or charged to profit and loss which antedate the report by more than seven years." 15 U.S.C. § 1681 c(a)(4). However, creditors may report the satisfaction of a debt when it is more than seven years old if: (1) the debtor applied for credit in an amount exceeding $150,000; (2) the debtor applied for life insurance in an amount exceeding $150,000; or (3) the debtor applied for employment for a job with a salary exceeding $75,000. 15 U.S.C. § 1681c(b)(1)-(3).

  Arrow argues that class certification is not merited in part because Ms. Redd has prematurely moved to certify a class without knowing how many potential members would be subject to these exceptions to the seven year reporting limitation. However, in response to a request for admission, Arrow admitted that it sent the standard letter to more than 500 individuals outside of the state of Maine regarding a debt that was more than seven years old. This admission creates a strong basis to find that the numerosity requirement has been met by Ms. Redd. In addition, when identifying the potential class, the class definition can take ...


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