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Elliott v. LVNV Funding, LLC

United States District Court, W.D. Kentucky, Louisville Division

August 23, 2019



          Rebecca Grady Jennings, Judge

         Plaintiff Anthony Elliott, individually and on behalf of all others similarly situated (“Plaintiff”), brings this action against Defendant LVNV Funding, LLC (“LVNV”) seeking relief for alleged violations of the Fair Debt Collection Practices Act (the “FDCPA”). [DE 1]. Plaintiff and LVNV (the “Settling Parties”) now file a Renewed Joint Motion for Certification of Settlement Class and Preliminary Approval of Class Action Settlement Agreement (the “Renewed Motion”). [DE 30]. The matter is ripe. For the reasons below, the Renewed Motion is GRANTED.

         I. BACKGROUND

         A. Factual and Procedural History

         LVNV is “engaged in the business of purchasing debts from creditors and collecting these debts.” [DE 1 at 2]. Mr. Elliott filed a Class Action Complaint on behalf of himself and two classes, arguing that LVNV has a “pattern and practice” of collecting “court costs, processing fees, and other collection expenses pursuant to judgments it obtained against . . . Kentucky consumers . . . that it ha[s] no right to collect under Kentucky law.” Id. at 5. Mr. Elliott seeks relief related to LVNV's alleged violations of the FDCPA as they apply to two classes of people: (1) those people against whom LVNV had illegally sought to collect court costs, and (2) those people against whom LVNV had illegally tried to collect garnishment fees. Id. at 5-6.

         After negotiating at arm's length for more than five months, Mr. Elliott and LVNV filed a Joint Motion for Certification of Settlement Class and Preliminary Approval of Class Action Settlement Agreement (the “Joint Motion”), requesting that the Court certify a “Prejudgment Court Costs Class” and a “Judgment Lien Filing Fee and Garnishment Fee Class.” [DE 22-2 at 107]; [DE 22 at 67-69]. As an exhibit, the Settling Parties attached a proposed class action settlement agreement. [DE 22-1]. The Settling Parties also attached a proposed notice of class action Lawsuit and Proposed Settlement. [DE 22-5]. The Court denied the Joint Motion without prejudice, finding that the proposed settlement agreement was not fair, reasonable, and adequate and that the proposed notice was inadequate. [DE 29 at 143-45].

         The Settling Parties filed the Renewed Motion, [DE 30], attaching a Revised Class Action Settlement Agreement (the “Revised Settlement Agreement”), [DE 30-1], and Revised Notice of Class Action Lawsuit and Proposed Settlement (the “Revised Notice”), [DE 30-2].

         B. The Revised Settlement Agreement

         1. Class Membership

         The Revised Settlement Agreement would create two classes: “Class I: Prejudgment Court Costs Class” and “Class II: Judgment Lien Filing Fee and Garnishment Fee Class” (the “Prejudgment Class” and “Post-Judgment Class, ” respectively). [DE 30-1 at 153-55]. Class I encompasses those against whom LVNV sought to collect “prejudgment court costs . . . without filing a bill of costs itemizing the prejudgment court costs.” [Id. at 154]. Class II encompasses those against whom LVNV tried to collect a “post-judgment filing fee paid by LVNV to file a ‘Notice of Judgment Lien Upon Real Estate'” and/or a “post-judgment garnishment fee.” [Id. at 154-55].

         2. Class Benefits

         The settlement is calculated to refund class members for the amount sought by LVNV:

The settlement agreement refunds all allegedly improper amounts that LVNV sought or collected from the class members. Additionally, LVNV will provide class members an additional account credit.
Thus, pursuant to the Settlement Agreement, no class member will have paid more than Plaintiff alleges they should have paid, and all class members will receive cash or credit against their judgments. The settlement essentially removes the amounts Plaintiff claims were improperly added to the judgment balances and makes the class members whole.

[DE 22 at 78].

         More specifically, members of both classes would both receive an amount equal to the “prejudgment court costs and/or post-judgment fees” LVNV has collected, or sought to collect, from them, either in the form of a credit to their account with LVNV, or, if they no longer have an account with LVNV, in cash. [DE 30-1 at 158-59]. Both classes would also receive $75.00 in statutory damages. Id.

         3. Waiver

         In a section entitled “Release, ” the Revised Settlement Agreement provides that in exchange for the above-detailed benefits, members of both Classes would “forever release . . . LVNV and its Related Parties[1] from any and all claims and causes of action, whether known or unknown, that were made or could have been made in the Action arising out of or related in any way to LVNV's efforts to collect on the Judgments, including but not limited to those claims arising under the FDCPA or any state statute or rule of procedure (‘Released Claims').” [Id. at 164-65].

         The Revised Notice contains a section entitled “What rights are you giving up in this settlement?” [DE 30-2 at 177]. This section states that unless the recipient excludes himself from the settlement, he will “give up [his] right to sue or continue a lawsuit against LVNV over the released claims.” [Id.]. The Revised Notice defines the phrase “released claims” in the same manner as the Revised Settlement Agreement.[2] [Id.].


         Plaintiff and LVNV have filed a Renewed Motion. Before the Court can preliminarily approve the Revised Settlement Agreement, it must preliminarily certify the class under 23(a) and (b) of the Federal Rules of Civil Procedure, appoint class counsel, and approve the class representative. Afterward, it must determine whether the Revised Settlement Agreement is fair, adequate, and reasonable. UAW v. GMC, 497 F.3d 615, 631 (6th Cir. 2007).

         A. Class Certification

         1. Standard

         District courts have “broad discretion in certifying class actions, ” but “must exercise that discretion within the framework of Rule 23.” Coleman v. General Motors Acceptance Corp., 296 F.3d 443, 446 (6th Cir. 2002) (citing Cross v. Nat'l Trust Life Ins. Co., 553 F.2d 1026, 1029 (6th Cir. 1977)). “The party seeking the class certification bears the burden of proof.” In re Am. Med. Sys., Inc., 75 F.3d 1069, 1079 (6th Cir. 1996). Rule 23(a) imposes requirements of numerosity, commonality, typicality, and adequacy of representation, and a district court must conduct “a rigorous analysis” to ensure that “the prerequisites of Rule23(a) have been satisfied.” Fed.R.Civ.P. 23(a); Gen. Tel. Co. v. Falcon, 457 U.S. 147, 161 (1982). Certification is inappropriate if a class fails to satisfy any of the four Rule 23(a) prerequisites. Ball v. Union Carbide Corp., 385 F.3d 713, 727 (6th Cir. 2004). The Rule 23 prerequisites are not relaxed in the settlement context, and courts should apply the Rule 23 analysis independent of a “fairness” analysis. Amchem Products, Inc. v. Windsor, 521 U.S. 591, 620-22 (1997). Together with the Rule 23(a) prerequisites, the moving parties “must demonstrate that the class fits under one of the three subdivisions of Rule 23(b).” Fed.R.Civ.P. 23(b); Coleman, 296 F.3d at 446.

         In ruling on a motion for class certification, courts do not examine the merits of the plaintiffs' underlying claims. See Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177 (1974). “A Rule 23 determination is wholly procedural and has nothing to do with whether a plaintiff will ultimately prevail on the substantive merits of its claim.” Little Caesar Enter., Inc. v. Smith, 172 F.R.D. 236, 241 (E.D. Mich. 1997). Courts also assume that the substantive allegations of the complaint are true and that cognizable claims are stated. See Eisen, 417 U.S. at 178. “Nonetheless, the Court must undertake an analysis of the issues and the nature of required proof at trial to determine whether the matters in dispute and the nature of plaintiffs' proofs are principally individual in nature or are susceptible of common proof equally applicable to all class members.” Little Caesar, 172 F.R.D. at 241. “[W]hen a court is in doubt as to whether to certify a class action, it should err in favor of allowing a class.” Id. (citing Eisenberg v. Gagnon, 766 F.2d 770, 785 (3d Cir. 1985); Horton v. Goose Creek Independent School Dist., 690 F.2d 470, 487 (5th Cir. 1982); Esplin v. Hirschi, 402 F.2d 94, 101 (10th Cir. 1968)).

         2. Analysis

         a. Numerosity

         The first requirement for class certification is that “the class be so numerous that joinder of all members is impracticable.” Fed.R.Civ.P. 23(a)(1). “There is no strict numerical test for determining impracticability of joinder.” In re Am. Med. Sys. Inc., 75 F.3d at 1079. “There is no automatic cut-off point at which the No. of plaintiffs makes joinder impractical, thereby making a class-action suit the only viable alternative. However, sheer No. of potential litigants in a class, especially if it is more than several hundred, can be the only factor needed to satisfy Rule 23(a)(1).” Bacon v. Honda of Am. Mfg., Inc., 370 F.3d 565, 570 (6th Cir. 2004) (internal citations omitted).

         The Settling Parties have represented that “the proposed settlement classes collectively includes [sic] over 400 distinct class members. [DE 22 at 74]. Given this, the Court finds that the numerosity requirement of Rule 23(a)(1) is met. See e.g., Taber v. McCracken Cty., No. 5:06-CV-144-R, 2008 WL 5101684, at *3 (W.D. Ky. Nov. 26, 2008) (finding the numerosity prerequisite met when the putative class numbered 54).

         b. Commonality

         The second Rule 23(a) prerequisite for class certification is that “there are questions of law or fact common to the class.” Fed.R.Civ.P. 23(a)(2). “Although Rule 23(a)(2) speaks of ‘questions' in the plural . . . there need only be one question common to the class.” Sprague v. Gen. Motors Corp., 133 F.3d 388, 397 (6th Cir. 1998). “It is not every common question that will suffice, however; at a sufficiently abstract level of generalization, almost any set of claims can be said to display commonality.” Id. What the Court must look for “is a common issue the resolution of which will advance the litigation.” Id.

         Both putative classes share a common question of law: LVNV's liability to the members of Class I would turn on whether seeking to collect prejudgment court costs without filing a bill of costs itemizing the prejudgment court costs in Kentucky violates the FDCPA, while LVNV's liability to the members of Class II would turn on whether collecting a post-judgment filing fee to file a Notice of Judgment Lien Upon Real Estate or a post-judgment garnishment fee in Kentucky violates the FDCPA. The commonality requirement set forth in Rule 23(a)(2) is therefore met.

         c. Typicality

         Rule 23(a)(3) requires that “the claims or defenses of the representative parties are typical of the claims or defenses of the class.” This typicality prerequisite “determines whether a sufficient relationship exists between the injury to the named plaintiff and the conduct affecting the class, so that the court may properly attribute a collective nature to the challenged conduct.” Sprague, 133 F.3d at 399 (citing In re Am. Med. Sys., 75 F.3d at 1082). “A claim is typical if ‘it arises from the same event or practice or course of conduct that gives rise to the claims of other class members, and if his or her claims are based on the same legal theory.'” Beattie v. CenturyTel, Inc., 511 F.3d 554, 561 (6th Cir. 2007) (quoting In re Am. Med. Sys., 75 F.3d at 1082). “[F]or the district court to conclude that the typicality requirement is satisfied, ‘a representative's claim need not always involve the same facts or law, provided there is a common element of fact or law.'” Id. (quoting Senter v. Gen. Motors Corp., 532 F.2d 511, 525 n.31 (6th Cir. 1976)). On the other hand, a claim, if proven, is not typical if it would only prove the named plaintiff's claim. See Sprague, 133 F.3d at 399.

         The claims and injuries alleged by Mr. Elliott typify those experienced by the settlement classes. If LVNV illegally sought prejudgment court costs and post-judgment lien filing fees and garnishment fees, Mr. Elliott and the members of the settlement classes suffered nearly identical injuries-the only substantial difference would be the difference in amounts sought by LVNV, if any. The typicality requirement set forth in Rule 23(a)(3) is therefore met.

         d. Adequacy of Representation

         The fourth requirement for class certification is that “the representative parties will fairly and adequately protect the interests of the class.” Fed.R.Civ.P. 23(a)(4). “There are two criteria for determining whether the representation of the class will be adequate: 1) The representative must have common interests with unnamed members of the class, and 2) it must appear that the representatives will vigorously prosecute the interests of the class through qualified counsel.” Senter, 532 F.2d at 524-25. “The adequacy inquiry under Rule 23(a)(4) serves to uncover conflicts of interest between the named parties and the class they seek to represent. A class representative must be part of the class and possess the same interest and suffer the same injury as the class members.” Amchem, 521 U.S. at 625-26; see also Cross, 553 F.2d at 1031 (Rule 23(a)(4) tests “the experience and ability of counsel for the plaintiffs and whether there is any antagonism between the interests of the plaintiffs and other members of the class they seek to represent.”).

         The injuries alleged by Mr. Elliott are substantially the same as the injuries accruing to the classes-Mr. Elliott alleges that LVNV sought to collect prejudgment court costs from him without filing a bill of costs itemizing the prejudgment court costs, making him a member of Class I, and that LVNV tried to collect a post-judgment garnishment fee from him, making him a member of Class II. [DE 1 at 3-4]. For these reasons, Mr. Elliott, as the named representative, shares common interests with the unnamed members of the settlement classes and can be appointed as class representative.

         Under the second prong of Rule 23(a)(4), the Court must also look to the adequacy of the representative plaintiff's representation “to determine whether class counsel are qualified, experienced and generally able to conduct the litigation.” Stout v. J.D. Byrider, 228 F.3d 709, 717 (6th Cir. 2000). A plaintiff's choice of counsel “should negatively impact our determination of adequacy at this early stage only if the proposed lead counsel is ‘so deficient as to demonstrate that it will not fairly and adequately represent the interests of the class.'” In re Vicuron Pharms., Inc. Sec. Litig., 225 F.R.D. 508, 511-12 (E.D. Pa. 2004), (quoting In re Cendant Corp. Litig., 264 F.3d 201, 266 (3d Cir. 2001)). And while experience prosecuting class action suits is a factor to be weighed when determining the adequacy of class counsel, it is not dispositive. See Wells v. Allstate Ins. Co., 210 F.R.D. 1, 11 (D.D.C. 2002) (finding that class counsel “meet the basic standard for adequacy of counsel” despite having “no prior experience in prosecuting class action lawsuits”).

         Counsel for Mr. Elliott have litigated over three-hundred consumer-rights cases, many which have involved the FDCPA, including nine cases involving the alleged violations of the FDCPA at issue here. [DE 22-2 at 107, 109]. While counsel for Mr. Elliot do not appear to be experienced with class-action suits specifically, [3] they appear qualified to represent the interests adequately of the settlement classes. The adequacy requirement set forth in Rule 23(a)(4) is therefore met.

         e. Rule 23(b)(3)

         Along with satisfying the requirements of Rule 23(a), “parties seeking class certification must show that the action is maintainable under Rule 23(b)(1), (2), or (3).” Amchem, 521 U.S. at 614. The Settling Parties assert that the proposed class satisfies the requirements of Rule 23(b)(3).

         After satisfying Rule 23(a), a class action may be maintained if “the court finds that questions of law or fact common to the class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3). The Rule 23(b)(3) predominance requirement parallels the Rule 23(a)(2) commonality requirement in “that both require that common questions exist, but subdivision (b)(3) contains the more stringent requirement that common issues ‘predominate' over individual issues.” In re Am. Med. Sys., Inc., 75 F.3d at 1084. A district court must determine whether the questions common to the class are “at the heart of the litigation.” Powers v. Hamilton Cty. Pub. Def. Com'n, 501 F.3d 592, 619 (6th Cir. 2007). “The predominance requirement is satisfied unless it is clear that individual issues will overwhelm the common questions and render the class action valueless.” In re Cardizem CD Antitrust Litig., 200 F.R.D. 297, 307 (E.D. Mich. 2001). “Common questions need only predominate: they need not be dispositive of the litigation.” Id.

         Here, a class action is the superior method of adjudicating the controversy. Common questions of law and fact predominate over any potential individual issues. The issues here turn on whether LVNV violated Kentucky consumer-protection laws, and thereby violated the FDCPA. Whether LVNV violated these laws by seeking to collect prejudgment court costs and post- judgment fees is a question that is common to all class members. The proof that Mr. Elliott would have to produce in order to substantiate his allegations would be similar in kind to the proof required of the other class members-that LVNV sought to collect the costs and fees in question.

         Additionally, class action represents a superior means of fairly and efficiently adjudicating this case. The amount of damages incurred by individual class members likely cannot justify pursuing individual actions, making a class action a valuable tool for all class members. See Pfaff v. Whole Foods Mkt. Grp. Inc., No. 1:09-CV-02954, 2010 WL 3834240, at *7 (N.D. Ohio Sept. 29, 2010) (“[T]he most compelling rationale for finding superiority in a class action is the existence of a ‘negative value suit,' . . . one in which the costs of enforcement in an individual action would exceed the expected individual recovery.”). The Court thus finds that the common questions in this case are not overshadowed by the individual issues, and that certification of a settlement class is appropriate. The commonality and superiority requirements of Rule 23(b)(3) are satisfied.

         Having considered the requirements of Rule 23(a) and Rule 23(b)(3) and finding them to be satisfied, the proposed class defined in the settlement agreement is certified for settlement purposes.

         B. Appointment of Class Counsel

         1. Standard “[A] court that certifies a class must appoint class counsel.” Fed.R.Civ.P. 23(g). In making that determination, the Court must consider:

(i) the work counsel has done in identifying or investigating potential claims in the action; (ii) counsel's experience in handling class actions, other complex litigation, and the types of claims asserted in the action; (iii) counsel's knowledge of the applicable law; and (iv) the resources that counsel will commit to representing the class.

Fed. R. Civ. P. 23(g)(a).

         2. ...

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