434 F.3d 948 (7th Cir. 2006), 05-8035, Murray v. GMAC Mortg. Corp.

Docket Nº:05-8035.
Citation:434 F.3d 948
Party Name:Nancy R. MURRAY, Plaintiff-Petitioner, v. GMAC MORTGAGE CORPORATION, doing business as Ditech. com, Defendant-Respondent.
Case Date:January 17, 2006
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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434 F.3d 948 (7th Cir. 2006)

Nancy R. MURRAY, Plaintiff-Petitioner,

v.

GMAC MORTGAGE CORPORATION, doing business as Ditech. com, Defendant-Respondent.

No. 05-8035.

United States Court of Appeals, Seventh Circuit

January 17, 2006

Submitted Dec. 12, 2005.

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[Copyrighted Material Omitted]

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Daniel A. Edelman, Edelman, Combs & Latturner, Chicago, IL, for Plaintiff-Petitioner.

Thomas J. Cunningham, Lord Bissell & Brook, Chicago, IL, for Defendant-Respondent.

Before EASTERBROOK, ROVNER, and WILLIAMS, Circuit Judges.

EASTERBROOK, Circuit Judge.

Shortly after her debts had been discharged in bankruptcy, Nancy Murray received a credit solicitation from GMAC Mortgage, which had learned her name and address by asking credit bureaus to forward information about potential borrowers who met specified criteria. GMACM offered Murray a loan to be secured by a mortgage on her home. Deluged by offers, Murray showed them to a lawyer, who concluded that GMACM had

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violated the Fair Credit Reporting Act in two ways: first, GMACM had not made the "firm offer of credit" that is essential when a potential lender accesses someone's credit history without that person's consent, see 15 U.S.C. §1681b(c)(1)(B)(i); second, GMACM's offer did not include a "clear and conspicuous" notice of the recipient's right to close her credit information to all who lacked her prior consent, see 15 U.S.C. §1681m(d)(1)(D). Murray filed suit, proposing to represent a class of about 1.2 million recipients of similar offers from GMACM and demanding statutory damages, which range from $100 to $1,000 per person. See 15 U.S.C. §1681n(a)(1)(A). A recent amendment to the Act abolishes private remedies for violations of the clear-disclosure requirement, which in the future will be enforced administratively, but that change does not apply to offers made before its effective date and thus does not affect this litigation. See 117 Stat. 1952, adding 15 U.S.C. §1681m(h)(8).

While waiting for the judge to decide whether the suit could proceed as a class action, the parties reached a tentative settlement--which the district judge refused to read, stating that this would be a waste of time because he had decided that Murray could not represent a class. See 2005 WL 3019412, 2005 U.S. Dist. LEXIS 27254 (N.D.Ill. Nov. 8, 2005), reconsideration denied, 2005 WL 3088435, 2005 U.S. Dist. LEXIS 28249 (Nov. 11, 2005). In an effort to save the availability of class-wide relief, Murray proposes an interlocutory appeal, which we have discretion to allow. See Fed.R.Civ.P. 23(f). GMACM, seeing an opportunity to avoid liability (at least until another recipient of its offer files suit), opposes her petition. Meanwhile another district judge has certified a class in an essentially identical action. See Murray v. New Cingular Wireless Services, Inc., 232 F.R.D. 295 (N.D.Ill.2005). We accept the appeal, which presents some fundamental questions about the management of consumer class actions, in light of this conflict and the fact that about two score more of these suits are pending in the Northern District of Illinois. Because the papers already filed cover the issues fully, we proceed directly to decision.

The district court gave four reasons for declining to certify a class: (1) Counsel did not try to cut a deal for Murray personally. (2) The complaint seeks statutory but not compensatory damages. (3) Statutory damages, if awarded to a class, would be ruinously high. (4) Nancy Murray is a "professional plaintiff" unfit to represent a class. All but #4 evince hostility to all class litigation; if any one were adopted, consumer class actions under the Fair Credit Reporting Act would be impossible. None is a proper ground on which to deny class certification, however.

1. Let us start with the first. The district judge wrote: "Murray's interests are antagonistic to other class members' interests because Murray may desire to settle her claim alone. Murray might be able to recover more funds individually with fewer complications if she settled individually." Yet every plaintiff "may desire" to settle alone; if this were enough to preclude class treatment, there could be no class actions for damages under Rule 23(b)(3). The district judge did not point to any evidence suggesting that Murray does want to settle privately; if she did (and her lawyers say, without contradiction from the record, that she doesn't), why launch the suit as a class action? The only answer would be that she wanted to use the class as bait to attract a better offer, then cash in by withdrawing the class claim. If that were her goal (or her lawyer's), it would be unethical, see Shelton v. Pargo, Inc., 582 F.2d 1298, 1306 (4th Cir. 1978), as well as unrealistic. For unless the statute of limitations had run (which it

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hasn't), why would GMACM pay Murray to go away when any of a million other recipients could take her place?

Unfortunately, the terms of the tentative settlement suggest that Murray or her lawyers may have tried something worse, negotiating for payment while giving GMACM the...

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