Irwin v. Mascott

• Decision Date: 24 March 1999
• Docket Number: No. C 97-4737 JL.,C 97-4737 JL.
• Citation: 96 F.Supp.2d 968
• Parties: Kathleen R. IRWIN, et al., Plaintiffs, v. Owen T. MASCOTT, et al., Defendants.
• Court: U.S. District Court — Northern District of California

Page 968

96 F.Supp.2d 968

Kathleen R. IRWIN, et al., Plaintiffs, v. Owen T. MASCOTT, et al., Defendants.

No. C 97-4737 JL.

United States District Court, N.D. California.

March 24, 1999.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Paul Arons, Law Offices of Paul Arons, Redding, CA, O. Randolph Bragg, Horowitz Horowitz & Associates, Chicago, IL, Lorraine Ellen Baur, Ukiah, CA, for plaintiffs.

Mark E. Ellis, Gregory W. McCracken, William C. Reeves, Murphy Pearson Bradley & Feeney, Sacramento, CA, for defendants.

MEMORANDUM AND ORDER

LARSON, United States Magistrate Judge.

INTRODUCTION

Plaintiffs filed their Motion for Class Certification, Defendants filed their Opposition, Plaintiffs filed a Reply, and the matter was submitted without oral argument on November 4, 1998. Supplemental pleadings were also submitted.

NATURE OF THE CASE

Plaintiffs Kathleen R. Irwin, Nancy Heth, and Lorraine L. Castaneda have moved for class certification in this action against defendants Owen T. Mascott, Commonwealth Equity Adjustments, Inc. ("CEA"), and Eric W. Browning, for alleged violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. [FDCPA], and the California Unfair Business Practices Act, Cal. Business & Professions Code §§ 17200, et seq. [CUBPA.].

Plaintiffs seek certification of all issues, including liability, damages and injunctive relief.

A. The Class Definition

Plaintiffs seek certification of the following class:

Umbrella Class

1. (i) all persons with addresses in California; (ii) to whom any defendant has sent or will send or has caused or will cause to be sent a letter containing demands or representation which are identical or similar to the demands or representations contained in any of the letters attached as Exhibits 1-10 to the Complaint; (iii) in connection with attempts to collect debts arising from dishonored checks (iv) which checks were not returned as undeliverable by the Post Office.

B. Sub-Classes

Sub-class A: Those members of the umbrella class whose checks were written for personal, family or household purposes at any time on or after January 1, 1997 [the FDCPA class];

Sub-class B: Those members of the umbrella class whose checks were written for any purpose at any time on or after January 1, 1994 [the CUBPA class].

REQUIREMENTS FOR CLASS CERTIFICATION GENERALLY

Pursuant to Fed.R.Civ.Proc., Rule 23, plaintiff's burden of establishing a factual basis for class certification is not a heavy one. It is generally accepted that Rule 23 should be liberally construed.¹

Except where underlying class facts and circumstances are sheer speculation, the initial burden on the party invoking the class action to show class facts is light. A well-pleaded complaint usually constitutes a prima facie showing of these facts sufficient to shift immediately the burden of disproving them to the party opposing the class. Ibid.

The prerequisites to a class action are that (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

APPLICABILITY OF FAIR DEBT COLLECTION PRACTICES ACT

Congressional intent allowing for FDPCA class actions is expressed in 15 U.S.C. § 1692k. Definitions are provided in prior sections, e.g.,

15 U.S.C. § 1692a(3) provides:

The term "consumer" means any natural person obligated or allegedly obligated to pay any debt.

15 U.S.C. § 1692a(5) provides:

The term "debt" means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment.

In the complaint, Plaintiffs have alleged a class of FDCPA consumers. Complaint, Section VII. For purposes of class certification, the plaintiffs' allegations must be accepted as true, except where contradicted by the evidence.² Each of the three named plaintiffs incurred consumer debts. The defendants collect on checks written to major retail outlets, such as Wal-Mart, K-Mart and J.C. Penney, where the typical customer makes purchases for personal, family or household purposes. The defendants have not proffered any evidence that non-consumers constitute any part of the class.

A dishonored check written on a personal checking account is prima facie evidence that the check was written for personal purposes.³ In another case involving a volume check collector, Ditty v. CheckRite, Ltd., Civ. No. 2:95-CV-430C (D. Utah, 8/13/98 Order)⁴ the court held that:

[T]he use of a personal check, as identified on the defendant's computer system, creates a rebuttable presumption that the debt was consumer in nature and is sufficient to make out plaintiffs' prima face case. Id., citing Berrios v. Sprint Corp., 1998 WL 199842 at 10 (E.D.N.Y.1998). Ditty v. Checkrite, Ltd., 1998 WL 663357, *3.

See also, Wells v. McDonough, 1998 WL 160876, *5 (N.D.Ill.1998),⁵ which also involved check collection, in which class certification was granted because the personal nature of the transaction could be determined by looking at either the check or at defendant's records. Similarly in TILA (Truth in Lending Act, 15 U.S.C. §§ 1601 et seq.) cases, arguments such as the defendants' here have been rejected.⁶ The fact that defendants do not maintain information that allows a precise determination of the nature of each purchase should not be a bar to proceeding under the FDCPA. See, e.g., Gladstone v. The Master Collectors, Inc. (N.D.Ga. Civ. No. 1:94-cv-0143-FMH), 2/1/95 Order Certifying Class, pp. 15-17.⁷

It would be possible to identify checks written for commercial purchases and distinguish them from those written for consumer purchases. In the context of a proposed class under 15 U.S.C. §§ 1601 et seq. ("TILA"), the Seventh Circuit stated: "Such commercial purchases would frequently be readily identified by the listing of the name of the business as the purchaser in the contract."⁸ It is likely that a commercial purchase by check would be on the business's checking account. Thus, all that may be required to identify consumers as members of the FDCPA class is to separate personal checks from business checks, or to look at the predominant customer base of the merchant.

NUMEROSITY

The parties agree that the class consists of between 191,000 and 300,000 California residents, so numerosity is not at issue.

COMMONALITY

There must be "questions of law or fact common to the class." Fed.R.Civ.P. 23(a)(2). "The fact that there is some factual variation among the class grievances will not defeat a class action.... A common nucleus of operative fact is usually enough to satisfy the commonality requirement of Rule 23(a)(2)."⁹

Preemption Claims

Some of the putative class members have state law claims which fall outside the one year statute of limitations for FDCPA claims. This would affect the temporal scope of the class, not whether a class should be certified.

Defendants argue that the FDCPA preempts state action.

There are three circumstances in which state law is preempted under the Supremacy Clause, U.S. Const. Art. VI, cl. 2, by federal law: (1) express preemption, where Congress explicitly defines the extent to which its enactments preempt state law; (2) field preemption, where state law attempts to regulate conduct in a field that Congress intended the federal law exclusively to occupy; and (3) conflict preemption, where it is impossible to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purpose and objectives of Congress.¹⁰ The overriding consideration is whether Congress intended to preempt state law.¹¹

Congressional intent to preempt state law must be clear and manifest.¹² The mere existence of a detailed regulatory scheme does not by itself imply preemption of state remedies.¹³ Moreover "preemption of state law by federal statute or regulation is not favored in the absence of persuasive reasons either that the nature of the regulated subject matter permits no other conclusion, or that the Congress has unmistakably so ordained."¹⁴

Express or Implied Preemption

In the present case, defendants rely upon the doctrine of implied preemption. Citing cases that hold that the FDCPA does not provide for a private right of injunctive relief, defendants argue that the FDCPA preempts injunctive relief under state law. Defendants briefly refer to 15 U.S.C. § 1692n, but omit any reference to its last sentence. That provision of the FDCPA provides, in its entirety:

This title does not annul, alter, or affect, or exempt any person subject to the provisions of this title from complying with the laws of any State with respect to debt collection practices, except to the extent that those laws are inconsistent with any provision of this title, and then only to the extent of the inconsistency. For purposes of this section, a State law is not inconsistent with this title if the protection such law affords any consumer is greater than the protection provided by this title.

15 U.S.C. § 1692n, emphasis added.

Thus, there is an express statement of Congressional intent not to preempt state laws, such as Cal.Bus. & Prof.Code §§ 17200 et seq., which may provide for greater protection, in the form of injunctive relief, than does the FDCPA. In any case, this Court has jurisdiction over a sub-class B [the CUBPA class], for the full four year period provided by California law.¹⁵

Pendent Party Jurisdiction

In Finley v. United States,¹⁶ the Supreme Court held that pendent party jurisdiction could be exercised only with statutory authorization. Specifically, the...