The facts of the case were simple. Plaintiff received a collection letter offering to “settle” her time-bared debt for a reduction in the balance. She filed sued alleging 15 U.S.C. §1692 et seq. (“FDCPA”) violations as the letter did not disclose the debt’s time-barred nature. Plaintiff moved for class certification seeking to represent a class of similarly situated letter recipients. However, despite the simple nature of the alleged violation, complexities nevertheless prevented class certification.
The court first discussed the class action ascertainability prong that must be satisfied as part of Federal Rule of Civil Procedure (“FRCP”) 23(a). The court noted that only letters seeking to collect “consumer” debts (i.e. those incurred for personal, family, or household purposes) could be included in a class seeking relief under the FDCPA. As such, an initial question that must be answered is whether plaintiff could ascertain whether the debts at issue were “consumer debts.” The court explained that a plaintiff could not establish ascertainability, a necessary requirement for a class action, simply by asserting that class members could be identified using defendant’s records. Plaintiff must actually establish that the records are in fact useful for identification purposes and that identification would be administratively feasible.
The issue for plaintiff was that she relied on her bare assertion that certain records would reveal the nature of the proposed class members’ debts without actually explaining those records. In contrast, defendants provided actual evidence to controvert this conclusion in the form of declarations attesting to the fact that defendant’s records did not show the reasons for which each proposed class member’s debt was incurred. Moreover, Plaintiff introduced no evidence that demonstrated how the original creditor’s records showed the nature of the debt or even whether the original creditor still possessed transactional information for the accounts.
The second barrier to class certification was in establishing the predominance prong of FRCP 23(b)(3). The court agreed that the debts of persons meeting the proposed class definition were not necessarily time-barred and such a determination would require an individualized inquiry into the statute of limitations on each debt. The court explained that many factors must be considered when determining the expiration of a limitations period, such as the char-off date, tolling issues, revival issues, and any actions between the debtor and creditor that may have modified their original agreement. In short, the court found these inquiries too individualized and detailed to meet the predominance prong.
Recently, time-barred debt has been a “hot topic” with not only the consumer bar but also with federal and state agencies tasked with consumer financial regulation. For more information on this topic, and other consumer financial issues, contact Nicole Strickler at firstname.lastname@example.org or direct at 312-334-3442.