United States District Court, D. Nebraska
LEE A. JENKINS, on behalf of himself and all others similarly situated; Plaintiff,
CHRISTOPHER E. PECH, PECH, HUGHES, & McDONALD, P.C., d/b/a Litow & Pech, P.C., A Fictitious Name; Defendants.
MEMORANDUM AND ORDER
JOSEPH F. BATAILLON, Senior District Judge.
This matter is before the court on the defendants' objection, Filing No. 114, to the Findings and Recommendation ("F&R") of the magistrate judge, Filing No. 110, on the plaintiff's motion for class certification, Filing No. 41.
This is an action for violations of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. ("FDCPA") and the Nebraska Consumer Protection Act, Neb. Rev. Stat. §§ 59-1601-59-1623 ("NCPA"). The plaintiff alleges that the defendants' routine practice of sending a misleading debt-collection letter, attached to the amended complaint as Ex. A, violates these consumer protection statutes. See Filing No. 6, Amended Complaint, Exs. A, Letter and B, Envelope. Jenkins alleges defendants Christopher E. Pech, an attorney, and his law firm, Pech, Hughes, and McDonald, P.C. (hereinafter, collectively, PHM) violated the FDCPA and NCPA by (1) failing to state in the letter that the alleged debt would be considered valid by the debt collector; (2) stating a fictitious name on the envelope; and (3) failing to have meaningful involvement by an attorney in reviewing an account.
The plaintiff moved for certification of two classes: one that related to the letter and one that related to the envelope. PHM opposed the motion, generally arguing with respect to both classes that the class was not ascertainable. See Filing No. 48, Brief in Opposition at 4-13; Filing No. 110, F&R at 5. With respect to the letter class, PHM argued that the proposed class is not ascertainable because there is no evidence as to whether the debt was incurred primarily for personal or household purposes rather than business or commercial purposes so as to fall within the ambit of the FDCPA.
The magistrate judge found that the plaintiff met the numerosity, commonality, typicality, and adequacy of representation requirements with request to the letter class, but not with respect to the envelope class. Filing No. 110, F&R at 7-12. The magistrate judge also found that the letter class was ascertainable under Fed.R.Civ.P. 23(b)(3), but the envelope class was not. Id. at 6-7. Further, the magistrate judge determined that the plaintiff satisfied the Rule 23(b)(3) requirements of predominance and superiority with respect to the letter class. Id. at 12-15. The magistrate judge recommended granting class certification to the letter class, consisting of
all persons residing in Nebraska (ii) to whom Defendants Mr. Pech and/or Pech, Hughes sent, or caused to be sent, a letter in the form of Exhibit A, (iii) in an attempt to collect a purported obligation which, as shown by the nature of the alleged obligation, Defendants' records, or the records of the original creditors, was primarily for personal, family, or household purposes.
Filing No. 110, F&R at 15.
PHM challenges the magistrate's findings, again arguing that Jenkins has failed to identify an ascertainable class. Filing No. 114, Objection at 2. PHM argues Jenkins has not shown the debts at issue fall under the coverage of the FDCPA and also argues that Jenkins is not an adequate representative of the class because he used the credit card account for a commercial purpose.
In addition to the facts set out by the magistrate judge, the record shows that PHM sent out hundreds of letters in the form of Exhibit A to Nebraska residents. Filing No. 43-8, Index of Evid., Exhibit ("Ex.") 1, Reinbrecht Decl., Ex. 7, Defendant's Answers Plaintiff's Interrogatories, Set 1 at 6; Filing No. 43-2, Index of Evid., Ex. 1, Reinbrecht Decl., Ex.1A, Deposition of Christopher E. Pech, ("Pech Dep.") at 86, 110-11. The letter at issue is a standard template bearing the typewritten name, "Christopher E. Pech." Id. at 84, 89-90, 166-167. The letter states only that "the debt is assumed valid, " without the qualifier "by the debt collector" as required by the FDCPA. Filing No. 6, Amended Complaint, Ex. A. Pech did not review each account before the letter was sent. Filing No. 79-16, Index of Evid., Ex. 2, Defendant's Responses to Plaintiff's Requests for Admission, Set Two at 2. He did not review the letter sent to the plaintiff. Filing No. 43-2, Index of Evid., Ex. 1, Reinbrecht Decl., Ex. 1A, Pech Dep. at 126. Further, the only review his firm conducted is a brief review of the computer screen shots containing minimal information. Id. at 73-74, 119.
Pech also testified that the firm "reviews" 500 new files each week using only a couple of attorneys to do the job. Id. at 69-70. Each of these "reviewing attorneys" also maintains a full schedule in addition to reviewing new files. Id. at 70-71. PHM's debt collection practice is highly automated. Id. at 51-54, 93-96, 165-67. In his deposition, Pech identifies information available on PHM's computer system, including a wide variety of electronic documentation contained in specific fields or compartments. Id. at 53-54.
The creditor of the account about which PHM sent a communication to Jenkins is FIA Card Services, N.A., ("FIA") which is part of Bank of America. Id. at 171; Filing No. 79-7, Ex. 1A, Pech Dep. Ex. 7, Collection Notes at 1. PHM does not purchase debts for collection on its own. Filing No. 43-2, Index of Evid., Ex. 1, Reinbrecht Decl., Ex. 1A, Pech Dep. at 170. PHM's only relationship with FIA is as counsel in collection cases for that entity. Id. at 171.
Pech testified the Jenkins file came to the firm electronically in a batch from another law firm. Id. at 93. The record also shows the PHM's standard automated "review" process includes a computerized "filtering" of new files. Filing No. 55-2, Index of Evid., Ex. 3, Reinbrecht Supp. Decl., Ex. 3A, Pech Dep. at 51-52; Filing No. 79-18, Index of Evid., Ex. 1, Reinbrecht Decl., Ex. 3A, Deposition of Tyler Grimm ("Grimm Dep.") at 27-28: Filing No. 80, Index of Evid. (sealed), Pech Dep. Ex. 3, New Account Review Computer Manual. Files are filtered as they come in by a "software script or something automated." Filing No. 79-18, Index of Evid. Ex. 1, Reinbrecht Decl., Ex. 3A, Grimm Dep. at 29-30. Tyler Grimm, an attorney and former PHM employee, testified he would open files that were on the exceptions list generated by the automated process. Id. at 30-31. Pech stated that a "judgment file, " would not ordinarily include monthly billing statements from the creditor. Filing No. 55-2, Index of Evid., Ex. 3, Reinbrecht Decl., Ex. 3A, Pech Dep. at 49-50. The record shows that the initial data file that comes with the placement of a collection account contains information-client identifier, agency identifier, total balance, principal balance, cost balance, interest balance, and fee balance-as lines of data that are imported into the PHM system. Id. at 51-52; see Filing No. 79-3, EX. 1, Reinbrecht Decl., Ex. 1A, Pech Dep. Ex. 2. Tyler Grimm testified that his review consisted of a quick look at a computer screen to make sure there were no obvious problems with an account that were detected by the computer. Filing No. 79-18, Index of Evid., Ex.3A, Grimm Dep. at 30-31, 42-43. Only when something looks "odd" does an attorney actually open the file and look quickly at the computer screen shot. Id. at 30-31, 38. He testified that, by number of cases, he worked mostly on consumer credit cases. Id. at 33-34. Grimm worked remotely out of his attic office in Des Moines. Id. at 42-44; Filing No. 79-11, Index of Evid., Ex.1E, Deposition of Elizabeth Levi ("Levi Dep.") at 23-24.
Both Grimm and PHM employee Linda Hamilton testified that PHM's computer system has the ability to record the time an attorney spent reviewing the computer record. Filing No. 79-18, Index of Evid., Ex. 1, Reinbrecht Decl., Ex. 3A, Grimm Dep. at 44; Filing No. 79-8, Index of Evid., Ex. 1, Reinbrecht Decl., Ex. 1B, Deposition of Linda Hamilton ("Hamilton Dep.") at 45-46. Further, the evidence shows the reviewing attorneys do not see the letters sent to debtors-they are produced overnight and sent to the mailroom in bulk. Filing No. 103-2, Index of Evid., Ex. 1, Reinbrecht Decl., Filing No. 103-7, Ex. 2E, Deposition of Julie Thomas at 9-10; Ex. 2F, Deposition of Michelle Daley at 14-16. Although Pech's ...