Cliff v. Payco General American Credits, Inc., 02-12462.

CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)
Citation363 F.3d 1113
Docket NumberNo. 02-12462.,02-12462.
PartiesCary A. CLIFF, individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. PAYCO GENERAL AMERICAN CREDITS, INC., Defendant-Appellee.
Decision Date25 March 2004

Stephen Henry Gardner, Dallas, TX, Thomas Stephen Heidkamp, Fort Meyers, FL, for Plaintiff-Appellant.

F. Steven Herb, J. Neal Mobley, Nelson, Hesse, Cyril, Smith, Widman, Herb, Causey & Dooley, Sarasota, FL, for Defendant-Appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before DUBINA, HILL and COX, Circuit Judges.

COX, Circuit Judge:

Cary A. Cliff appeals the district court's denial of his motion for class certification. Cliff brought this class action against OSI Collection Services, Inc. (OSI), formerly Payco General American Credits, Inc., alleging violations of the federal Fair Debt Collection Practices Act ("the FDCPA"), 15 U.S.C. §§ 1692 et seq., and the Florida Consumer Collection Practices Act ("the Florida Act"), Fla. Stat. §§ 559.55 et seq. The district court concluded that Cliff could not satisfy the numerosity requirement for a class action. Cliff raises four issues on appeal that could affect the size of the class. Because we disagree with the district court's resolution of one issue that could affect the size of the class, we vacate the court's denial of class certification and remand for further proceedings.


Cliff, a Florida resident, graduated from law school in 1987 and has been a practicing attorney since 1988.1 He financed his college and law school education in part through student loans, and after he completed his education, he consolidated his federal student loans through a consolidation program administered by Sallie Mae Servicing Corporation (Sallie Mae). His consolidation loan was guaranteed by Great Lakes Higher Education Guaranty Corporation (Great Lakes).

In 1995, Cliff failed to make the required payments on his consolidation loan, and his loan formally entered default in November of 1995. Sallie Mae assigned his loan to Great Lakes, the guarantor, and the loan was serviced on Great Lakes' behalf by OSI Collection Services, Inc. Cliff contacted OSI and agreed to enter a repayment rehabilitation program, but he failed to make any payments on his loan from 1996 to 1998 because he believed that Sallie Mae had granted him a forbearance during a prior telephone conversation and because he objected to the assessment of collection fees. Cliff does not dispute the unpaid principal amount of the debt, which was approximately $27,000 at the time of default.

On October 22, 1997, OSI issued a "Notice Prior to Wage Withholding" to Cliff. The notice showed that Cliff owed $35,935.61 and stated that if Cliff did not enter into a new written repayment arrangement with OSI by November 21, 1997, OSI would issue a garnishment order requiring Cliff's employer to begin withholding and paying over his wages pursuant to the provisions of the Higher Education Act (HEA), 20 U.S.C. §§ 1001 et seq.

Under the wage garnishment provision of the HEA, a guaranty agency may garnish the disposable pay of a debtor to collect the amount owed if the debtor has failed to make payments required under a repayment agreement. 20 U.S.C. § 1095a(a). Debtors who are subject to garnishment are statutorily entitled to a hearing "concerning the existence or the amount of the debt" and, in certain cases, "concerning the terms of the repayment schedule." Id. § 1095a(a)(5). If the debtor requests a hearing on or before the 15th day following the mailing of the pre-garnishment notice, a hearing must be provided before a garnishment order is issued to the debtor's employer. Id. § 1095a(b). If the debtor requests a hearing more than 15 days after the pre-garnishment notice is mailed, however, the debtor is still entitled to a hearing but the hearing need not be conducted before garnishment begins. Id.

Cliff requested a hearing, but there is a dispute as to whether he requested a hearing within 15 days of receiving the pre-garnishment notice.2 On December 16, 1997, OSI sent a letter to Cliff stating that his request for a hearing was denied, though the HEA does not expressly authorize the denial of a hearing request. The letter stated that Cliff's wages would be garnished if he did not make other arrangements to make payments on the debt. He did not make any payments, and in January of 1998, OSI served a garnishment order on his employer. Cliff's employer began withholding $110 per week in February of 1998, and his employer continues to withhold and pay over his wages pursuant to the order of garnishment.


On December 16, 1998, Cliff filed suit against OSI.3 Cliff alleges that OSI garnished his wages in a manner that violates the wage garnishment provision of the HEA, 20 U.S.C. §§ 1095a(a)(5), (b). Based on the alleged HEA violations, Cliff sought damages and injunctive relief from OSI under both the federal Fair Debt Collection Practices Act and the Florida Consumer Collection Practices Act.4

From the genesis of this lawsuit, Cliff sought to proceed as a class action plaintiff under Fed.R.Civ.P. 23. But the definition of the class which Cliff sought to represent changed three times during the litigation. In his original complaint of December 16, 1998, Cliff limited his class to Florida residents.5 But almost seven months later, on July 6, 1999, Cliff filed an Amended Complaint which defined two distinct classes: a class of Florida consumers alleging violations of the Florida Act and a separate class of nationwide consumers alleging violations of the FDCPA and the Constitution. These class definitions also reflected the difference between the one-year statute of limitations under the FDCPA and the more generous four-year statute of limitations under Florida law.6 On March 1, 2000, Cliff filed a motion for class certification asking the court to certify a Florida class and a nationwide class.

While Cliff's motion for class certification was pending, OSI filed a motion for summary judgment on the FDCPA claims and the Florida Act claim. The court granted summary judgment in OSI's favor on Cliff's Florida Act claim. The court concluded that Congress's enactment of the HEA expressly preempted state law, and thus precluded Cliff and any class members from seeking relief under the Florida Act. Based on this grant of partial summary judgment, the court denied Cliff's motion to certify a nationwide class and a separate Florida class and invited Cliff to file an amended motion for class certification.

Shortly thereafter, Cliff filed another motion for class certification which defined only a nationwide class. He amended the class definition to include:

• All student loan debtors

• to whom OSI sent [a garnishment order] or otherwise caused wage garnishment to begin

• and who are shown by OSI's records to have timely requested a hearing before garnishment

• but who neither received nor waived a hearing,

• from December 16, 1997 to the date of certification.

(R.4-132 ¶ 17.) Cliff estimated that at least 286 debtors fell within the defined class. In his motion, Cliff requested an evidentiary hearing to resolve any factual disputes.

A dispute ensued between Cliff and OSI regarding the number of individuals who satisfied the criteria for class membership. This dispute revolved around two issues. The first issue was "relation back." Cliff does not allege that OSI violated the wage garnishment provision of the HEA after June 1, 1998.7 But Cliff did not purport to represent consumers outside Florida until he filed his Amended Complaint on July 6, 1999. If Cliff's representation of consumers outside Florida does not relate back to the original complaint, all of the FDCPA claims of consumers outside Florida are barred by the one-year statute of limitations.

The second issue focused on the term "timely" in Cliff's class definition. OSI argued that a "timely" request referred to only those requests made within 15 days of the mailing of the pre-garnishment notice. Cliff, by contrast, argued that "timely" requests would include those requests made within 15 days (which entitled the debtor to a pre-garnishment hearing) as well as those requests made after the 15-day period but before garnishment began (which entitled the debtor to a hearing, but not before garnishment).

After OSI filed its response to Cliff's class certification motion, Cliff requested an evidentiary hearing or, in the alternative, leave of the court to file a reply brief. The court granted Cliff's request to file a reply brief (in which he again requested an evidentiary hearing). Upon reading Cliff's reply, the court instructed OSI to answer an interrogatory about the number of debtors who satisfied the criteria for class membership to enable the court to determine if class certification was appropriate. Based on OSI's interrogatory answer, Cliff contended that 107 debtors fell within the class, while OSI contended that only five or, at most, nine debtors fell within the class. Cliff also requested either an evidentiary hearing or additional discovery and briefing time.

The court denied Cliff's request and denied his motion for class certification. The court concluded that the Amended Complaint did not relate back because the original complaint did not give adequate notice to OSI that Cliff would be representing a nationwide class and because the relation back would unfairly prejudice OSI. As a result, the statute of limitations barred Cliff from pursuing any claims on behalf of consumers outside Florida. The court also held, based on the Complaint and his motion for class certification, that Cliff's use of "timely" in the class definition limited the class to persons who requested a hearing within the 15-day period. Because Cliff could not pursue any...

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