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MAXWELL v. ARROW FINANCIAL SERVICES

March 31, 2004.

STEWART W. MAXWELL, Plaintiff,
v.
ARROW FINANCIAL SERVICES, Defendant



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

MEMORANDUM, OPINION AND ORDER

Plaintiff Stewart W. Maxwell ("Mr. Maxwell") brings a class action lawsuit against defendant Arrow Financial Services, LLC ("Arrow") for violations of the Maine Fair Debt Collection Practices Act ("Maine FDCPA"), 32 MRSA § 11001 et seq., 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 Mr. Maxwell'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 Mr. Maxwell's motion for class certification, he is a resident of Maine whose debt on a Citibank credit card was charged off in approximately April 1991 after he failed to make the payments. 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 21, 2002, Arrow sent Mr. Maxwell a letter informing him that his debt had been sent to a debt collection agency. The alleged outstanding balance on the account was $6,707.24. The letter offered to settle the past due account for 40 percent of the full balance if the repayment was made in one payment by November 13, 2002. Relevant to the claims 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." Mr. Maxwell alleges, and Arrow admitted in response to requests for admission, that the letter Mr. Maxwell received was a standard form letter and that there are "more than 500 persons with Maine addresses who meet the following criteria: (a) Defendant sent them a letter in the form represented by Exhibit A; (b) on or after February 3, 2002; (c) seeking to collect a debt charged off more than seven years previous to the date of the letter; (d) which was not returned by the Postal Service." (Def.'s Resp. to pl.'s Req. for Admis. ¶ 12).

  Based on the statement cited above, Mr. Maxwell filed an amended complaint claiming that Arrow has violated the Maine FDCPA, 32 MRSA §§ 11013(2)(E) and (J), which prohibits debt collectors from making false or misleading representations, 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." 15U.S.C. § 1681c(a)(4). The Maine FDCPA relevant to the claims at issue prohibits the same false, deceptive, or misleading representations as the corresponding section of the federal Fair Debt Collection Practices Act (the "federal FDCPA"). See Notice of Maine Exemption from the Fair Debt Collection Practices Act, 60 Fed. Reg. Page 3 66,972 (Dec. 27, 1995). The damages portion of one of plaintiff s claims is supplied by the federal FDCPA, 15 U.S.C. § 1692(k).

  Given that the age of the debt was greater than seven years old, Mr. Maxwell 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. Mr. Maxwell proposes a class consisting of "all natural persons with Maine addresses who meet the following criteria: a. Defendant sent them a letter in the form represented by Exhibit A; b. On or after a date one year prior to the original filing of this action in state court; c. Seeking to collect a debt charged off more than 7 years previous to the date of the letter; d. Which was not returned by the Postal Service." (pl Mo. ford. Cert., at 1).

  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): numerosity, 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). Mr. Maxwell 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. Page 4

  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 the merits of the complaint or weigh evidence. Eisen 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, 457 U.S. 147, 161 (1982); Trotter v. Klincar, 748 F.2d 1177, 1184 (7th Cir. 1984). Failure on 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 a 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 Page 5 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 delinquent] debt." Hamid v. Blatt, Hasenmitter, Leibsker, Moore & Pellettieri, et al, 2001 WL 1543516, at *3 (N.D. Ill. Nov. 30, 2001), citing 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. § 1681c(a)(4). However, creditors may report the satisfaction of a debt when it is ...


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