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Snyder v. Ocwen Loan Servicing, LLC

United States District Court, N.D. Illinois, Eastern Division

June 28, 2017

KEITH SNYDER and SUSAN MANSANAREZ, individually and on behalf of all others similarly situated, Plaintiffs,
v.
OCWEN LOAN SERVICING, LLC, Defendant. TRACEE A. BEECROFT, individually and on behalf of all others similarly situated, Plaintiff,
v.
OCWEN LOAN SERVICING, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          MATTHEW F. KENNELLY United States District Judge

         Keith Snyder and Susan Mansanarez filed suit against Ocwen Loan Servicing, LLC, alleging that Ocwen made debt-collection phone calls using an autodialer in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, and the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1642. Snyder and Mansanarez sued on behalf of a class of similarly situated plaintiffs. They have moved for a preliminary injunction to prevent Ocwen from continuing practices that allegedly violate the TCPA and certification of a limited class for this purpose. Plaintiffs are separately moving for certification of a class on all their claims, including their claims for damages, but due to the need for discovery that motion was only recently filed.

         For the reasons stated below, the Court concludes that plaintiffs have established the basis for certification of a limited class under Federal Rule of Civil Procedure 23(b)(2) and an entitlement to at least some of the preliminary injunctive relief they seek. But the Court defers entry of a class certification order or a preliminary injunction pending further submissions, as described at the end of this opinion.

         Background

         Ocwen is a mortgage servicing company that is licensed in all fifty states. It is hired to service loans by, typically, the original lender's assignee. The job of servicing includes collecting payment from the mortgagor. To this end, Ocwen maintains call centers from which its employees contact mortgagors about their outstanding loans.

         In 2001, Snyder purchased a home in Las Vegas, Nevada. He refinanced his mortgage in 2006 and took out two loans, one with Countrywide Home Loans and a junior-position home equity line of credit with Greenpoint Mortgage Funding. The junior-position loan had a principal balance of approximately $100, 000. According to Snyder, he initially made timely loan payments but eventually was unable to do so and stopped payment around April 2007. At this time, Snyder's senior creditor began the process of non-judicial foreclosure under Nevada law.

         Pursuant to this procedure, Snyder's home was sold at a trustee's sale in January 2008 for $625, 727.34. Snyder alleges that this price fully satisfied the senior mortgage obligation of $585, 504.56 and left at least $40, 000 to pay towards the junior creditor. At the time of foreclosure, Snyder still owed the junior creditor $99, 968.08. In August 2009, Snyder received notice from a new servicer informing him that it had received the rights to the loan from Greenpoint and that the outstanding balance of the loan was $126, 049.08. In July 2014, Snyder was again notified that his loan had been transferred-this time, to Ocwen. Ocwen sent Snyder a letter that indicated that the principal loan balance was $99, 968.08 but that the total owed after interest and fees amounted to $181, 673.67.

         Snyder alleges that immediately following this letter, he began to receive calls from Ocwen on his cellphone number ending in 7690. Snyder says that he did not acquire this cellphone number until 2012 and therefore could not possibly have provided it on any loan applications he made in 2006. He contends that Ocwen obtained his cellphone number by a method known as skip tracing, whereby companies search credit histories and other public databases to obtain contact information for debtors listed on loan applications. Snyder also states that many of the calls used an artificial or pre-recorded voice. Snyder says that he never consented to being contacted by Ocwen at the 7690 number and that he e-mailed Ocwen in September 2014 to ask it to stop calling his cellphone. He says that he received at least three more calls to his cellphone following that e-mail.

         In 1995, Mansanarez began renting a home in Washington, D.C., which she purchased in 2006. Around early 2014, Mansanarez received a letter from Ocwen informing her that it now possessed the servicing rights for her loan. She then began receiving phone calls from Ocwen on her cellphone, a number ending in 7110. Mansanarez alleges that Ocwen made many of these phone calls using an artificial or pre-recorded voice. She further alleges that she repeatedly asked Ocwen to stop calling her cellphone. Mansanarez says that despite this request, Ocwen continued to call her cellphone and that she received hundreds of calls in 2014 and 2015. She also says that she asked an Ocwen employee during one of these calls why Ocwen continued to call her, and the employee replied that Mansanarez's phone number had been placed in Ocwen's automated calling system.

         Snyder filed a class action complaint based on these phone calls in October 2014 and simultaneously filed motions to certify two classes, one based on claims under the TCPA and one based on claims under the FDCPA. Mansanarez later joined the suit as a named plaintiff, and the two filed a joint amended complaint in April 2015. Plaintiffs allege that Ocwen uses an automatic telephone dialing system at its call centers, as well as computerized account information to track, record, and maintain the debts that Ocwen services. Plaintiffs further allege that Ocwen uses skip tracing and ANI capture-a technique where Ocwen captures and stores the numbers of consumers who call the company-to gather borrowers' phone numbers (including cellphone numbers) and subsequently call them using the autodialer without the borrowers' prior express consent. Plaintiffs claim that Ocwen used this system along with artificial or pre-recorded voices to call them in violation of the TCPA. Plaintiffs also claim that Ocwen has used this practice with numerous other debtors and that it continues to engage in similar practices. Plaintiffs seek to represent a class defined as:

All persons in the United States to whom: (a) Defendant and/or a third party acting on Defendant's behalf, made one or more non-emergency telephone calls; (b) to their cellular telephone number; (c) through the use of an automatic telephone dialing system or an artificial or prerecorded voice; and (d) at any time in the period that begins four years before the date of filing this Complaint to trial.

         Plaintiffs also allege that this same conduct violates the FDCPA and seek to represent a separate class based on this claim. The FDCPA claims are not at issue in the present motion.

         In December 2014, the parties stipulated to remove the motions for class certification from the Court's docket to allow for discovery on class issues, based on the understanding that Ocwen agreed "not to undertake any effort to 'pick off the named plaintiff or plaintiffs." Dkt. no. 19 at 1. In September 2016, the Court granted Ocwen's motion to consolidate this case with one brought by another debtor, Tracee Beecroft, who alleges similar claims under the TCPA and the FDCPA.

         In October 2016, plaintiffs filed the present motion requesting a preliminary injunction and certification of a limited class. In the motion, plaintiffs allege that Ocwen continues to use its autodialer-Aspect software-to make calls to consumers' cellphones without their consent. Pls.' Mem. in Supp. of Mot. for Prelim. Inj. and Ltd. Class Certif. (Pis.1 Mem.) at 1. Plaintiffs ask the Court to preliminarily enjoin Ocwen from using Aspect software to place calls to "(1) cellular telephone numbers obtained via skip-tracing; (2) cellular telephone numbers obtained via ANI capture; and (3) cellular telephone numbers after verbal or written requests that calls to that number, account, or consumer stop, including but not limited to payment reminder calls." Id. Plaintiffs further ask the Court to order Ocwen to suspend its reminder call program. Id. at 2. Finally, they ask the Court to appoint a special master, at Ocwen's expense, to monitor the company's compliance with the order. Id. at 2. In order to effectuate this injunction, plaintiffs ask the Court to certify, under Federal Rule of Civil Procedure 23(b)(2), an injunctive relief class including:

All persons called on a cellular telephone number by Ocwen, or a third party on its behalf, through the use of an autodialer, that Ocwen obtained via skip tracing or AN I capture, and / or after having provided a verbal or written request that calls to that number, account, or consumer stop, and / or who received a reminder call.

Id.

         On April 3, 2017, the Court held an evidentiary hearing primarily focused on the issue of balance of harms, one of the factors considered when a party requests a preliminary injunction. The evidence garnered at that hearing also has implications regarding the other factors relevant to issuance of a preliminary injunction. The Court will discuss this evidence in greater detail later in this opinion.

         Discussion

         A court may order injunctive relief under the TCPA when a plaintiff can show that the defendant made a call to plaintiff's cellphone using either an automatic telephone dialing system or an artificial or pre-recorded voice. 47 U.S.C. § 227(b)(1)(A)(iii) & (b)(3). In general, a preliminary injunction is an equitable remedy that is available "only when the movant shows clear need." Turnell v. CentiMark Corp., 796 F.3d 656, 661 (7th Cir. 2015). In order to award relief-such as a preliminary injunction-to an entire class of potential plaintiffs, a court must determine whether the class meets the requirements for certification under Federal Rule of Civil Procedure 23. See Davis v. Hutchins, 321 F.3d 641, 648 (7th Cir. 2003).

         Ocwen raises a number of arguments in opposition to plaintiffs' request for limited class certification and a preliminary injunction. Ocwen first argues that the plaintiffs do not have standing to request an injunction. Ocwen then contends that the Court should not certify the proposed limited class because plaintiffs have failed to meet the requirements of Federal Rule of Civil Procedure 23(b)(2). Next, Ocwen disputes plaintiffs' contention that this Court should apply a test that does not require a showing of irreparable harm in determining whether to grant an injunction. Finally, Ocwen argues that plaintiffs have failed to meet the standard-whatever it is-for granting injunctive relief. I. Standing "In order to invoke Article III jurisdiction a plaintiff in search of prospective equitable relief must show a significant likelihood and immediacy of sustaining some direct injury." Sierakowski v. Ryan, 223 F.3d 440, 443 (7th Cir. 2000). Past exposure to the defendant's allegedly illegal conduct is insufficient. Id. Instead, plaintiff must demonstrate "a real and immediate threat of repeated injury." Palmer v. City of Chicago, 755 F.2d 560, 571 (7th Cir. 1985). In other words, the plaintiff must show that the defendant's violation as to the particular plaintiff is likely to recur. This showing "must be premised upon more than hypothetical speculation and conjecture that harm will occur in the future." Id.

         Neither Snyder nor Mansanarez faces a current threat of receiving calls from Ocwen that violate the TCPA. The company ceased calling Snyder immediately after he filed his initial complaint in October 2014, and Snyder does not contend that he is likely to receive calls in the future. Further, Mansanarez last received phone calls from Ocwen in May 2015. Pls.' Reply in Supp. of Mot. for Prelim. Inj. and Ltd. Class Certif. (Pis.1 Reply), Ex. 2. Ocwen contends-and plaintiffs do not dispute-that it has updated its business records to reflect that Snyder and Mansanarez do not consent to receiving autodialed phone calls and therefore that they are not at risk of future harm by any calls alleged to violate the TCPA.

         Plaintiffs have sufficiently shown, however, that other members of the proposed class continued to receive phone calls from the company even after Ocwen stopped making calls to Snyder and Mansanarez. Steve Bartolone states that he and his wife have been receiving calls to their cellphones from Ocwen since 2011, that he has repeatedly asked Ocwen to stop, and that he has received more than one call in the last twelve months. Pls.' Mem., Ex. 5 (Bartolone Affid.) ¶¶ 3-5, 12. Jonathan Cody likewise states that he never provided his cellphone number to Ocwen and yet has continuously received harassing phone calls. Id., Ex. 6 (Cody Affid.) ¶¶ 2-3. Cody has repeatedly asked the company to stop making these phone calls but has continued to receive them over the last eighteen months, including as recently as September 21, 2016. Id. ¶¶ 3, 8-9. These contentions are disputed, but the Court need not resolve the disputes to determine the issue of standing. Plaintiffs have sufficiently shown that members of the proposed class face a real and immediate threat of receiving calls from Ocwen that allegedly violate the TCPA.

         Ocwen argues that the threat of injury to members of the proposed class is irrelevant because courts must consider only whether the named plaintiffs have standing to sue. Def.'s Mem. in Opp'n to Pls.' Mot. for a Prelim. Inj. and Class Certif. (Def.'s Resp.) at 9. Ocwen essentially contends that the named plaintiffs' claim for a preliminary injunction are moot and this prevents them from pursuing injunctive relief on behalf of a class that has not yet been certified.

         For the reasons discussed earlier, Ocwen is correct in arguing that the named plaintiffs' individual claims for prospective injunctive relief are moot. The Supreme Court has, however, recognized an exception to the mootness doctrine in the context of class actions where it is "by no means certain that any given individual, would be [subject to the unlawful conduct] long enough for a district judge to certify the class." Robinson v. City of Chicago, 868 F.2d 959, 968 (7th Cir. 1989) (citing Gerstein v. Pugh, 420 U.S. 103, 110 n. 11 (1975)). The Supreme Court has recognized that when the time frame for the alleged injury is by nature temporary, a named plaintiff can continue to pursue the interests of the class even after his own claim has been rendered moot. Gerstein, 420 U.S. at 110 n.11. Otherwise, a defendant could evade prospective injunctive relief simply by inflicting harms that are too transitory to last the length of an entire lawsuit or, in this case, by ceasing the alleged violations with respect to plaintiffs who step forward. In order for this exception to apply, a court still requires the named plaintiff to have a live claim at the time that the complaint was filed. See Sosna v. Iowa, 419 U.S. 393, 402 (1975); Robinson, 868 F.2d at 968 ("[A] representative's claim must at least be live when he files the case.").

         Plaintiffs here have met this exception to the mootness doctrine. At the time that Mansanarez joined this lawsuit, she possessed a live claim for prospective injunctive relief. Snyder filed the first complaint in this suit in October 2014, a time during which Mansanarez was still receiving phone calls from Ocwen. Pls.' Reply, Ex. 2. Mansanarez continued to receive phone calls even after she joined this suit as a named plaintiff and filed an amended complaint in April 2015. Id. Further, Marc Trees, the director of dialer and workforce management at Ocwen, says the company's records did not reflect plaintiffs' lack of consent to the phone calls until September 2016. Def.'s Resp., Ex. 1 (Trees Affid.) at ¶ 29. Prior to that date, Mansanarez faced an immediate threat of injury and continued to receive phone calls from Ocwen even after she joined this lawsuit. Further, Ocwen's primary contention that plaintiffs lack standing to obtain injunctive relief is that the company has stopped calling them since the lawsuit has been filed. If this were sufficient to defeat standing, Ocwen would be able to cease calls to any individual the instant he joined the case as a named plaintiff and thereby indefinitely avoid injunctive relief, while keeping the allegedly unlawful practices in effect. A defendant's choice to end the challenged behavior-where he remains free to resume the unlawful conduct at any time-is insufficient to render plaintiff's claim moot. See Ragsdale v. Turnock, 841 F.2d 1358, 1364-65 (7th Cir. 1988) (noting that voluntary cessation of putatively illegal conduct ordinarily will not moot a controversy and that defendant bears a "heavy burden of persuading the court that a controversy is moot"). The Court concludes that plaintiffs may pursue claims for injunctive relief on behalf of a class.

         II. Limited class certification

         Plaintiffs ask the Court to certify a limited class for the purposes of granting a preliminary injunction. Plaintiffs define the proposed class as:

All persons called on a cellular telephone number by Ocwen, or a third party on its behalf, through the use of an autodialer, that Ocwen obtained via skip tracing or AN I capture, and / or after having provided a verbal or written request that calls to that number, account, or consumer stop, and / or who received a reminder call.

Pls.' Mem. at 2. Ocwen primarily contends that plaintiffs cannot meet the requirements for certification under Federal Rule of Civil Procedure 23(b)(2). Ocwen also makes two brief arguments that appear to address the way plaintiffs have defined the class. The Court addresses the latter arguments first before turning to the standards for class certification.

         A. Class definition

         Ocwen first argues that plaintiffs are actually attempting to certify not a single class but four distinct subclasses: (1) those whose numbers were found using skip-tracing; (2) those whose numbers were found using ANI capture; (3) those who gave their numbers to Ocwen but then withdrew consent for phone calls; and (4) those who have received a reminder call from Ocwen. Def.'s Resp. at 3-4. Ocwen argues that the Court must evaluate plaintiffs' request as one for four subclasses and that doing so will demonstrate that plaintiffs cannot meet the class requirements for each one. See Fed. R. Civ. P. 23(c)(5) (subclasses are each treated as a class for Rule 23 purposes).

         District courts have broad discretion in class certification, and there is no mandate to automatically subdivide classes. Bridgeview Health Care Ctr., Ltd. v. Clark, 816 F.3d 935, 940 (7th Cir. 2016). The appropriate inquiry is "whether the class representative adequately represents class members' interests." Id.

         The Court finds that plaintiffs meet this standard for a single class and thus there is no need to certify subclasses. Although plaintiffs' proposed class may include individuals whose numbers Ocwen discovered using different methods, all class members ultimately seek the same relief: an injunction that prevents Ocwen from using an autodialer to call cellphone numbers without consumer consent. Further, Ocwen's argument that the Court should consider certification of four distinct subclasses relies on its contention that the phone calls it made are easily grouped based on the method the company used to obtain the number (skip tracing, ANI capture, etc.). But Ocwen has previously represented to the Court that the way it maintains its records makes it extraordinarily difficult and time-consuming to determine how the company obtained each debtor's cellphone number. If one takes Ocwen at its word, then its argument for creating subclasses effectively would immunize it from certification of a class and, thus, from an injunction, thereby enabling it to continue any ongoing unlawful practices. Under the circumstances, Ocwen cannot appropriately argue that the Court should divide the class up in this way. Because all potential class members-including plaintiffs-have a similar interest against Ocwen, and Ocwen has not presented any evidence suggesting plaintiffs would be unable to adequately protect this interest, the Court declines to divide the class into subclasses. See id.

         Ocwen also argues that part of plaintiffs' proposed class definition creates an impermissible "fail-safe" class and therefore that the Court should deny plaintiffs' request for certification. Def.'s Resp. at 25. A fail-safe class is "one that is defined so that whether a person qualifies as a member depends on whether the person has a valid claim." Messnerv. Northshore Univ. Health Sys., 669 F.3d 802, 825 (7th Cir. 2012). Courts are concerned with class definitions that are written so that potential class members either fit the definition and therefore win their claim or, by virtue of losing, are defined out of the class and are not bound by the judgment. See Id. Ocwen argues that plaintiffs have created such a class by defining the class in part as those consumers who have provided a verbal or written request that calls to their cellphones stop-i.e., those consumers who withdrew consent for autodialed phone calls. But as the Seventh Circuit has pointed out, defining a class to avoid the fail-safe pitfall is more of an art than a science, and problems that arise should most often be dealt with "by refining the class definition rather than by flatly denying class certification on that basis." Id. Given that the Court is considering certification for the limited purpose of granting a preliminary injunction-and the potential difficulty of certifying any TCPA class if this definition is deemed a fail-safe class-the Court finds that plaintiffs' class definition does not so clearly present a fail-safe class as to justify denying certification or rewriting the limited class definition. Ocwen is free to renew this challenge when the Court considers class certification for the purposes of liability.

         B. Class certification

         A court deciding whether to certify a class must first determine whether the class meets the requirements of Federal Rule of Civil Procedure 23(a). Phillips v. Sheriff of Cook Cty.,828 ...


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