Mace v. Van Ru Credit Corp.

• Decision Date: 17 March 1997
• Docket Number: No. 96-1206,96-1206
• Citation: 109 F.3d 338
• Parties: Stella B. MACE f/k/a Stella B. Servera, on behalf of herself and all others similarly situated, Plaintiff-Appellant, v. VAN RU CREDIT CORPORATION, Roger J. Rubin, and Albert G. Rubin, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 338

109 F.3d 338

65 USLW 2618

Stella B. MACE f/k/a Stella B. Servera, on behalf of herself and all others similarly situated, Plaintiff-Appellant, v. VAN RU CREDIT CORPORATION, Roger J. Rubin, and Albert G.

Rubin, Defendants-Appellees.

No. 96-1206.

United States Court of Appeals,

Seventh Circuit.

Argued Sept. 13, 1996.

Decided March 17, 1997.

Daniel A. Edelman, Cathleen M. Combs, Michelle A. Weinberg (argued), Edelman & Combs, Chicago, IL, for plaintiff-appellant.

George W. Spellmire, Bruce L. Carmen (argued), D. Kendall Griffith, David M. Schultz, Hinshaw & Culbertson, Daniel P. Shapiro, Michael J. Small, Steven A. Levy (argued), Goldberg, Kohn, Bell, Black, Rosenbloom & Moritz, Chicago, IL, for defendants-appellees.

Before CUDAHY, KANNE, and ROVNER, Circuit Judges.

CUDAHY, Circuit Judge.

The question before us is whether the existence of a damage limitation or cap in the Fair Debt Collection Practices Act (FDCPA) has a bearing on the sort of class action that may be brought under that statute. Specifically at issue is whether the district court correctly found an implicit qualification to the statute's plain language, requiring the class to be nation-wide.

We review the district court's denial of class action certification under the FDCPA and under the Wisconsin Consumer Act. 15 U.S.C. § 1692 et seq.; Wis. Stat. § 427.104(l ). The district court had jurisdiction under 15 U.S.C. § 1692k(d), 28 U.S.C. § 1331 and 28 U.S.C. § 1367. Although denials of class certification are generally not independently appealable, Coopers & Lybrand v. Livesay, 437 U.S. 463, 470, 98 S.Ct. 2454, 2458, 57 L.Ed.2d 351 (1978) ("orders relating to class certification are not independently appealable under [28 U.S.C.] § 1291 prior to judgment"), the district court has certified an interlocutory appeal pursuant to 28 U.S.C. § 1292(b), to which we have assented. See Hewitt v. Joyce Beverages, 721 F.2d 625 (7th Cir.1983); Susman v. Lincoln Am. Corp., 561 F.2d 86, 87 n. 1 (7th Cir.1977).

Ordinarily a denial of class certification is reviewable for abuse of discretion. 28 U.S.C. § 1292(b); Hewitt, 721 F.2d at 627; Susman, 561 F.2d at 90. But here the district court has determined that the FDCPA bars serial class action suits. This determination is purely legal, and we review de novo.

Because we have not yet been presented with a series of class actions and the central determination of the district court is therefore at best premature, we find no reason to go beyond the plain language of the statute. We therefore vacate and remand.

I. Factual Background

Stella B. Mace brought this action on behalf of herself and all others residing in Wisconsin who received certain collection letters from Van Ru Credit Corporation, Roger J. Rubin or Albert G. Rubin (collectively "Van Ru"). Van Ru is one of several business entities owned in whole or in major part by Roger Rubin. The intertwined nature of these debt collection businesses and attorney Roger Rubin's law firm is fully described in Avila v. Rubin, 84 F.3d 222 (7th Cir.1996).

Mace alleges that Van Ru mailed eleven different collection letters that violated the FDCPA. 15 U.S.C. § 1692. The alleged violations include (1) collection letters mailed over the printed signature of an attorney when no attorney was involved in sending the letters or in verifying the creditor's claim; (2) collection letters demanding payment within the thirty day validation period upon the threat of "additional proceedings" or a "civil suit"; (3) collection letters containing language that overshadowed and contradicted the statutorily required thirty day notice of the consumer's right to verification of the debt; and (4) collection letters that threatened action that Van Ru and Rubin did not intend to take and could not have taken legally.

This is not Van Ru's first encounter with the FDCPA. See Avila, 84 F.3d 222; Drennan v. Van Ru Credit Corp., 950 F.Supp. 858 (N.D.Ill.1996); Sower v. Van Ru Fin. Servs., Inc., 1995 WL 870853 (D.Minn.1995); Woolfolk v. Van Ru Credit Corp., 783 F.Supp. 724 (D.Conn.1990); Bitume v. Van Ru Credit Corp., 1990 WL 129580 (N.D.Ill.1990). We recently upheld a state-limited (to Connecticut) class action under the FDCPA against Van Ru and Roger Rubin (Van Ru's principal owner). Avila, 84 F.3d 222. In the Avila proceedings, we affirmed a district court finding that Rubin and Van Ru had violated the FDCPA by using certain form collection letters. Id. at 229. Despite losing the Avila litigation, Rubin and Van Ru allegedly maintained their debt collection practices unchanged for at least some period of time, giving rise to some of the claims at issue in this lawsuit. Other claims in the present suit derive from letters mailed at about the same time as in Avila, but in Wisconsin rather than in Connecticut. ¹

II. Availability of a Class Action Under the FDCPA

The FDCPA was enacted in part "to eliminate abusive debt collection practices by debt collectors...." 15 U.S.C. § 1692(e). The statute is designed to protect consumers from unscrupulous collectors, regardless of the validity of the debt. Baker v. G.C. Servs. Corp., 677 F.2d 775, 777 (9th Cir.1982). The FDCPA defines a debt collector as "any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6). "Any person" includes attorneys who regularly collect debts. Jenkins v. Heintz, 25 F.3d 536 (7th Cir.1994), aff'd. 514 U.S. 291, 115 S.Ct. 1489, 131 L.Ed.2d 395 (1995). If Mace's allegations are correct, Van Ru has violated the FDCPA.

Given that proposition, our only task on appeal is to determine whether the FDCPA authorizes state-wide (in contrast to nation-wide) class actions. We note first that we know of no authority requiring the participation of the broadest possible class. On the contrary, the class requirements found in the Federal Rules of Civil Procedure encourage rather specific and limited classes. Fed.R.Civ.P. 23. The typicality and commonality requirements of the Federal Rules ensure that only those plaintiffs or defendants who can advance the same factual and legal arguments may be grouped together as a class.

Class certification, involving as it does a variety of factors, is ordinarily a matter for the discretion of the district court. Here, however, the district court decided to deny certification, not based on a factual problem raised by the class definition, ² but on the legal ground that the FDCPA's limitation of damages impliedly precludes certification limited to a state. The court reasoned that the damage cap was intended to place a limit on total liability, and that allowing state-by-state suits to proceed would nullify the damage cap. Thus, to make the damage limitation meaningful a nation-wide class was required. In addition, because the cap amount was relatively small the members of a large nation-wide class would receive only a de minimis recovery. The de minimis nature of the recovery, in turn, indicated that the class action mechanism was "not a superior method of adjudication." This conclusion depended on a finding that the recovery of the "individual class members would be smaller than the amount recoverable in individual actions and the administrative costs of a class action would be significant." Memo. Or. at 28.

A. Damage Caps in the Fair Debt Collection Practices Act and in the Truth In Lending Act

The FDCPA provides that:

(a) Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of--

(1) any actual damage sustained by such person as a result of such failure;

(2)(A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

(3) ... the costs of the action, together with a reasonable attorney's fee ...

15 U.S.C. § 1692k (emphasis added).

Statutes like the Truth In Lending Act (TILA) include similar language, but with one crucial difference. TILA provides that "the total recovery ... in any class action or series of class actions arising out of the same failure to comply by the same creditor shall not be more than the lesser of $500,000 or 1 per centum of the net worth of the creditor." Truth in Lending Act, 15 U.S.C. § 1640(a)(2)(B) (emphasis added); see also Electronic Fund Transfer Act, 15 U.S.C. § 1693m(a)(2)(B) (substituting "person" for "creditor"); Consumer Leasing Act, 15 U.S.C. § 1667d (incorporating 15 U.S.C. § 1640). TILA's reference to a "series of class actions" is conspicuously absent from the FDCPA.

The defendants argue that we should read the FDCPA as if the "series of class actions" language were part of the statute. This contention is based first on the circumstance that, prior to the Truth in Lending Simplification and Reform Act of 1980 (Reform Act), the damage cap provisions of TILA and the FDCPA contained identical language; neither included the "series of class actions" language. Pub.L. No. 96-221, tit. VI, Mar. 31, 1980, 94 Stat. 168. The Reform Act added the "series of class actions" language to TILA but not to the FDCPA. The defendants then argue that this amendment to TILA did not change the law; rather it clarified it. The amendment made explicit what was formerly implied. Citing Herrera v. First N. Sav. & Loan Ass'n, 805 F.2d 896, 901 (10th Cir.1986), the defendants point to...