debt writing

Last week in Macy v. GC Services, the United States District Court for the Western District of Kentucky certified a class action involving the Fair Debt Collection Practices Act (“FDCPA”).  According to the plaintiffs, GC Services Limited Partnership violated the FDCPA by sending them debt collection notices which failed to specify that debt validation is only required if the customer disputes the debt in writing.

The Court rejected GC Services’s argument that a class is unascertainable. GC Services contended that the plaintiffs had not shown that every class member had “suffered an injury sufficient to confer standing.”  The Court noted that the “majority of courts” (not addressed in the Sixth Circuit) do not require the named plaintiffs in a class action to demonstrate that “each and every class member could satisfy an individualized standing inquiry” at the class certification stage.

After rejecting GC Services’s argument that the class was unascertainable, the Court found that the plaintiffs satisfied the following Rule 23(a) criteria: numerosity, commonality, typicality, and adequacy of representation.  The Court focused on the collective receipt of a similar allegedly deficient notices that put plaintiffs—and the putative class members—at risk of waiving the FDCPA’s protections.

The Court also concluded that the plaintiffs satisfied Rule 23(b)(3) because common questions of law and fact predominated over individual ones and a class action was the superior method for adjudicating the claims.  The Court declined to follow the United States District Court for the Middle District of Florida’s opinion which found that a class action was not the superior method for adjudicating the putative class’s claims in a case involving the same counsel and similar claims against GC Services.  The Florida court reasoned that the named plaintiff’s demand for statutory damages “gave rise to a potential conflict of interest because class members with actual damages would be precluded from recovering them in lieu of the nominal damages the court intended to award.”  The Macy court disagreed, noting that class actions are “designed to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action” and, therefore, the possibility that the class members might recover a “paltry” sum did not dissuade the court that a class action was the superior method of adjudication.  The Court also noted that any class members with larger actual damages could opt out of the class action and pursue their claims in an individual action.

Finally, the Court denied GC Services’s request that it certify a nationwide class in order to avoid piecemeal litigation.  The Court based its decision on the fact that the FDCPA does not limit the number of class actions that may be filed against a single defendant, and plaintiffs are masters of their own complaints.