Crawford v. Equifax Payment Services

• Decision Date: 03 January 2000
• Docket Number: Nos. 99-1973,s. 99-1973
• Citation: 201 F.3d 877
• Parties: (7th Cir. 2000) Lawrence Crawford, on behalf of himself and a class of others similarly situated, Plaintiff-Appellee, v. Equifax Payment Services, Inc., and Equifax Check Services, Inc., Defendants-Appellees. Appeals of: Beverly Blair and Latressa Wilbon, Proposed Intervenors. & 99-2122
• Court: U.S. Court of Appeals — Seventh Circuit

Page 877

201 F.3d 877 (7th Cir. 2000)

Lawrence Crawford, on behalf of himself and a class of others similarly situated, Plaintiff-Appellee, v. Equifax Payment Services, Inc., and Equifax Check Services, Inc., Defendants-Appellees.

Appeals of: Beverly Blair and Latressa Wilbon, Proposed Intervenors.

Nos. 99-1973 & 99-2122

In the United States Court of Appeals For the Seventh Circuit

Submitted December 7, 1999

Decided January 3, 2000

Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 97 C 4240--Sidney I. Schenkier, Magistrate Judge.

Before Posner, Chief Judge, and Easterbrook and Rovner, Circuit Judges.

Easterbrook, Circuit Judge.

These appeals are successive to Blair v. Equifax Check Services, Inc., 181 F.3d 832 (7th Cir. 1999). Plaintiffs in three class actions contend that Equifax Check Services mailed debt-collection letters that violate 15 U.S.C. sec.sec. 1692e and 1692g, parts of the Fair Debt Collection Practices Act. Details of the claims are not important. Lawrence Crawford filed suit first, in June 1997. Beverly Blair filed a similar suit in December 1997, and Latressa Wilbon filed the third suit in August 1998. All three plaintiffs sought to represent a class of debtors who had received letters from Equifax. Blair and Wilbon were consolidated before District Judge Plunkett, who certified both as class actions on February 25, 1999. Crawford was handled separately. On March 3, 1999, Magistrate Judge Schenkier, presiding by consent under 28 U.S.C. sec.636(c), simultaneously certified Crawford as a class action and tentatively approved a settlement. The class certified in Crawford is much more comprehensive than the classes certified in Blair and Wilbon; all members of the Blair and Wilbon classes are members of the Crawford class. One feature of the Crawford settlement is that members of the class lose their right to class handling of claims for damages. On this basis Equifax asked Judge Plunkett to decertify Blair and Wilbon. He declined, and we affirmed. Our opinion in Blair holds that unless the Crawford settlement is finally approved, Blair and Wilbon are entitled to pursue their own actions. Blair and Wilbon attempted to intervene in Crawford to oppose the settlement, but Magistrate Judge Schenkier denied their motions and then finally approved the settlement. We have for decision two appeals: the first contests the denial of the motions to intervene, and the second--whose propriety is contingent on the success of the first, see Marino v. Ortiz, 484 U.S. 301, 304 (1988); Felzen v. Andreas, 134 F.3d 873 (7th Cir. 1998), affirmed by an equally divided Court under the name California Public Employees' Retirement System v. Felzen, 525 U.S. 315 (1999)--challenges the settlement's approval.

Debt-collection letters that violate sec.1692g expose the debt collector to actual damages plus a penalty up to $1,000. In a class action the total damages cannot exceed $500,000 or 1% of the debt collector's net worth, whichever is less. 15 U.S.C. sec.1692k(a). All three of the class actions sought these financial penalties. Magistrate Judge Schenkier's order certifying the Crawford class and tentatively approving a settlement nonetheless provided that the class would proceed under Fed. R. Civ. P. 23(b)(2), which applies when "the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole", rather than under Rule 23(b)(3), which is designed for cases seeking money damages. The plan was that none of the Crawford class members would receive personal notice or be allowed to opt out, rights they would have enjoyed if the class had been certified under Rule 23(b)(3) (as Blair and Wilbon were). The substantive terms of the settlement are these:

* Equifax will never again use the form letters that plaintiffs say violate sec.1692g.

* Crawford will receive $500 as damages, plus a $1,500 "incentive award" for serving as the class representative.

* Equifax will donate $5,500 to the Legal Clinic of Northwestern University Law School for use in protecting consumers' rights.

* Equifax will pay reasonable attorneys' fees (later fixed at $78,000) for the services of Crawford's attorney.

* Rights of all class members other than Crawford to seek damages are unaffected--they receive nothing in this case but are free to file their own suits, provided, however, that no other suit may proceed as a class action.

Blair and Wilbon deem these terms inadequate. Members of the class other than Crawford receive no relief for harms that may already have been done. They gain nothing (the settlement does not include a concession of liability that would facilitate individual suits), but lose something: the possibility of any collective proceeding for damages. Because these are small-stakes cases, a class suit is the best, and perhaps the only, way to proceed. Mace v. Van Ru Credit Corp., 109 F.3d 338, 344 (7th Cir. 1997); In re General Motors Corp. Pick-Up Truck Fuel Tank Products Liability Litigation, 55 F.3d 768, 809 (3d Cir. 1995). Unsurprisingly, Blair and Wilbon opposed this settlement, which did them (and other members of the classes they represent) no favors. Whether it caused them injury depends on the merits, a subject on which we express no view. Perhaps Crawford settled for a pittance because plaintiffs' claim is weak, or because Equifax would be entitled to a setoff or counterclaim, on account of the bad debts, exceeding any recovery. See Channell v. Citicorp National Services, Inc., 89 F.3d 379 (7th Cir. 1996).

To have recourse to this court if the settlement should be approved over their objections, Blair and Wilbon had to become parties, which they sought to do on March 26, 1999, by filing motions to intervene. Although these motions were filed only 23 days after the class had been certified, and before the deadline for objecting to the terms of the settlement, Magistrate Judge Schenkier denied them, ruling that Blair and Wilbon should have acted sooner-- indeed, that they should have moved to intervene in August 1998, as soon as their lawyer learned of the suits' overlap. Although the parties debate when counsel first learned that the Crawford class could be a superset of the Blair and Wilbon classes, we need not address that issue. Let us assume that Blair and Wilbon knew from the get-go about the relation among the classes. Why should that have prompted intervention? The class device is designed to avoid the need for class members to become parties.

A representative plaintiff acts as fiduciary for the others. Only when the class members suspect that the representative is not acting in their best interests is there a need to intervene. This means that delay must be measured from the time the would-be intervenors learned (or should have known) of the representative's shortcomings. United Airlines, Inc. v. McDonald, 432 U.S. 385, 394 (1977) (intervention by a member of the class is timely when the intervenor acts "as soon as it [becomes] clear . . . that the interests of the unnamed class members would no longer be represented by the named class representatives"). Unnamed members of the class rarely will suspect a shortfall in the adequacy of representation before learning of the terms of a (potentially inadequate) settlement or problems in the class definition--and given the possibility of opt-out, even that may not occasion intervention. Until March 1999 Blair and Wilbon had every reason to suppose that they would be entitled to opt out as of right; Crawford's pleadings sought certification under Rule 23(b)(3), and the switch to Rule 23(b)(2) was a last-minute change.

As a rule the time for unnamed members of the class to intervene can not commence until notice under Rule 23; but in this case the class members never received personal notice, either of the class certification or of the settlement. The district court violated Rule 23(c)(1): "As soon as practicable after the commencement of an action brought as a class action, ...