Keele v. Wexler

• Decision Date: 06 July 1998
• Docket Number: No. 97-2799,97-2799
• Citation: 149 F.3d 589
• Parties: Karen L. KEELE, on behalf of herself and all others similarly situated, Plaintiff-Appellee, v. Norman Paul WEXLER, Mitchell Wexler and Wexler and Wexler, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 589

149 F.3d 589

Karen L. KEELE, on behalf of herself and all others similarly situated, Plaintiff-Appellee, v. Norman Paul WEXLER, Mitchell Wexler and Wexler and Wexler Defendants-Appellants.

No. 97-2799.

United States Court of Appeals Seventh Circuit.

Argued Feb. 10, 1998.

Decided July 6, 1998.

O. Randolph Bragg, Horwitz, Horwitz & Associates, Chicago, IL; Daniel A. Edelman, Adam B. Goodman (argued), Edelman & Combs, Chicago, IL, for Karen L. Keele.

Michael P. Connelly, Mary Lisa Sullivan Kamins, Connelly & Schroeder, Chicago, IL; Daniel F. Konicek (argued), Connelly & Schroder, Geneva, IL, for Norman P. Wexler.

Michael P. Connelly, Mary Lisa Sullivan Kamins, Connelly & Schroeder, Chicago, IL Before CUMMINGS, COFFEY and MANION, Circuit Judges.

Daniel F. Konicek, Connelly & Schroder, Geneva, IL, for Wexler and Wexler.

COFFEY, Circuit Judge.

The defendants-appellants, Norman Wexler and Wexler & Wexler (collectively, "the Wexlers"), appeal from the order of the district court granting class certification to the plaintiff-appellee, Karen Keele, in an action arising out of the Wexlers' debt collection practices, allegedly violative of the federal Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., and the Colorado Fair Debt Collection Practices Act ("CFDCPA"), Colo.Rev.Stat. § 12-14-101 et seq. More specifically, they claim that Keele did not suffer the same injury as the class members she seeks to represent and, in the alternative, that certain transactions at issue herein were "non-consensual," and thus not covered by the FDCPA. We affirm.

I. BACKGROUND

On July 30, 1994, Keele, a Colorado resident, wrote a $85.26 personal check to a Wal-Mart discount store in Littleton, Colorado, as payment for her purchases. Her bank subsequently declined to honor the check for want of sufficient funds. Wal-Mart retained the Wexler & Wexler law firm of Chicago, Illinois, to contact Keele and seek collection of the alleged $85.26 in outstanding debt.

Acting on behalf of Wal-Mart, Wexler & Wexler sent Keele several threatening "debt collection" letters in late 1994. The first of these correspondences, dated November 2, 1994, informed Keele that she would have to pay $117.76--the sum of the $85.26 dishonored check, a $20.00 service charge, and a $12.50 collection fee--"at once" in order to avoid being sued by Wal-Mart. It read further, in pertinent part:

Your conduct to date has been outrageous. Not only have you unlawfully caused our client to be damaged by passing a worthless check(s), but you have also refused and still persist in your refusal to make restitution.

YOU ARE ABOUT TO BE TREATED IN A MANNER THAT WILL CAUSE YOU TO THINK TWICE BEFORE YOU WRITE ANOTHER WORTHLESS CHECK. OUR CLIENT HAS INSTRUCTED THAT WE NOTIFY YOU THAT YOU ARE GOING TO BE SUED UNLESS REPAYMENT IS FORTHCOMING AT ONCE....

Wexler & Wexler's second letter, sent approximately one month later, December 1, 1994, was even more scathing. Keele was notified that she had only five days in which to remit payment of the $117.76; if she failed to do so, legal action would be taken against her forthwith. "You have exhausted our patience and we do not intend to be put off any longer," Wexler & Wexler wrote. The letter went on to warn her:

THIS IS A FIVE DAY NOTICE

Unless payment in full is made to this office at once or suitable substitute arrangements are agreed upon, we intend to place this matter in the hands of a local attorney's office. Furthermore, we will instruct them to:

1. Notify all local credit reporting agencies that you are a hopelessly delinquent debtor so that others may be protected from dealing with you.

* * *

You must act at once while this matter is still in our hands; once we institute these proceedings, you will be required to pay all of the costs and fees involved with litigation. This letter is an attempt to collect a debt and any information obtained may be used for that purpose.

Wexler & Wexler's threats apparently were effective. Keele promptly sent a check to the firm in the amount of $105.26--the $117.76 demanded less the $12.50 "collection fee."

On June 13, 1995, Keele filed a class action complaint against Norman Wexler, Mitchell Wexler and Wexler & Wexler, on behalf of all Colorado residents who received debt collection letters like the ones she was sent on November 2 and December 1, 1994. ¹ She alleged that the threatening and abusive language contained within these correspondences violated various provisions of the FDCPA, 15 U.S.C. § 1692 et seq., and the CFDCPA, Colo.Rev.Stat. § 12-14-101 et seq. Keele also claimed that Colo.Rev.Stat. § 13-21-109 prohibited Wexler & Wexler from seeking the $12.50 "collection fee" from Wal-Mart debtors residing in Colorado. ² The complaint requested statutory damages as provided for under § 1692k of the FDCPA, as well as actual damages, attorney's fees, litigation expenses and costs.

On July 19, 1995, Keele filed a motion for class certification. Then, in August of 1995, Mitchell Wexler moved for, and was granted, summary judgment. ³ This left only two defendants remaining in the action, Norman Wexler and his law firm, Wexler & Wexler. The district court eventually issued an order on March 18, 1996, granting Keele's motion to certify the class consisting "of all Colorado residents who have received collection letters from defendants within the relevant time period." ⁴ Several months later, the parties agreed to the entry of a consent decree and final judgment in the case. The defendants, while denying any liability of wrongdoing, changed the language of their debt collection letters. They also expressly retained the right to appeal the court's order granting class certification. The trial judge awarded Keele $1,000 in statutory damages, the Colorado Legal Aid Foundation $4,000 in statutory damages as a cy pres remedy for the settlement class, $14,250 of actual damages to the class, and $17,500 to Keele's attorneys for fees and costs.

II. ISSUES

The defendants-appellants advance three issues for our review. Initially, they contend that Keele, who did not pay the $12.50 collection fee, does not have standing to represent a class of persons seeking actual damages under the FDCPA arising out of their (the defendants') alleged illicit demand for such collection fees. For the same reason, the Wexlers claim that Keele does not satisfy the "commonality" and "typicality" requirements for class certification under Fed.R.Civ.P. 23. And lastly, the appellants contend that the district court erroneously certified the class because the FDCPA covers only "consensual" transactions, and transactions involving individuals who write checks, knowing they will be dishonored, are by their nature not consensual.

III. DISCUSSION

The Federal Rules of Civil Procedure provide the federal district courts with "broad discretion" to determine whether certification of a class-action lawsuit is appropriate. See Mira v. Nuclear Measurements Corp., 107 F.3d 466, 474 (7th Cir.1997) (citing Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir.1993)). "Our review is 'circumscribed' and we will reverse the grant ... of class certification only for an abuse of discretion." Id. We have likened appellants attempting to hurdle this high standard of review to "rich men who wish to enter the Kingdom; their prospects compare with those of camels who wish to pass through the eye of a needle." United States v. Glecier, 923 F.2d 496, 503 (7th Cir.), cert. denied, 502 U.S. 810, 112 S.Ct. 54, 116 L.Ed.2d 31 (1991) (citing Matthew 19:24).

A. Standing

"To have standing to sue as a class representative it is essential that a plaintiff must be a part of that class, that is, he must possess the same interest and suffer the same injury shared by all members of the class he represents." Schlesinger v. Reservists Committee to Stop the War, 418 U.S. 208, 216, 94 S.Ct. 2925, 2930, 41 L.Ed.2d 706 (1974) (citations omitted). Keele purports to represent four classes of individuals, two of which, classes A and B, are comprised of individuals who claim to have been damaged by the Wexlers' demand for the alleged illegal and unauthorized $12.50 collection fee. ⁵ The defendants' argument on appeal is really quite simple. They contend that, insofar as Keele admits she did not pay the $12.50, her injuries differ from the those sustained by the members of classes A and B. Ergo, she has no standing to represent these individuals in a class-action suit. In reality, however, the issue is not as cut and dry as the Wexlers make it out to be.

From a factual standpoint, it is far from clear whether the defendants are correct in asserting that Keele did not pay the collection fee. There is no doubt that Keele sent the Wexlers a payment in the amount of $105.26, equal to the sum total of the $85.26 dishonored check plus Wal-Mart's $20.00 service charge. This $105.26 is all Keele owed Wal-Mart, and she does not contest that figure. She contends, however, that the Wexlers retained $12.50 of her $105.26 payment, and as such, according to Wal-Mart's records, she still owes Wal-Mart $12.50. In other words, Keele argues that every member of class A or B who paid an amount exceeding the value of their dishonored check contributed, albeit unknowingly, to the defendants' illegal collection fee. The district judge felt it unnecessary to decide whether a benefit to the Wexlers was tantamount to actual damage to Keele because the injuries she and the class members alleged were the receipt of the debt collection letters, not the payment of the $12.50 collection fee. We likewise will not consider this question, as it has no bearing upon Keele's standing to represent classes A and B. She, like the members of those classes, received the Wexlers' letters, both purported to be in violation of the FDCPA and CFDCPA. It is thus irrelevant whether or not she paid the collection fee.

As noted above, to satisfy the standing...