Opinion
No. 05 C 1229.
November 14, 2005
Thomas J. Cunningham, J. Matthew Goodin, LORD BISSELL BROOK LLP, Chicago, Illinois, GMAC MORTGAGE CORPORATION, One of Its Attorneys.
DEFENDANT'S OPPOSITION TO PLAINTIFF'S MOTION TO RECONSIDER CLASS RULING
Plaintiff Nancy R. Murray seeks reconsideration of this Court's November 8, 2005 Memorandum Opinion and Order denying Murray's Motion for Class Certification (hereinafter "Mem. Op."). For the reasons discussed herein and in GMAC Mortgage Corporation's ("GMACM") Opposition to Murray's Motion for Class Certification, Murray's Motion to Reconsider should be denied.
GMACM hereby incorporate by reference each of the arguments raised and the authorities cited in its Opposition to Plaintiff's Motion for Class Certification.
This Court properly denied Plaintiff's motion for class certification due to her inadequacy as a class representative and the fact that a class action is not the superior method of adjudicating the claims in this case. Moreover, as argued in GMACM's opposition to plaintiff's motion for class certification, the determination of whether GMACM's offer was a "firm offer of credit" under the FCRA would require individualized determinations of the "value" the offer had to each class member and thus common issues of fact do not predominate. Finally, assessing the amount of statutory damages to award each class member would be unmanageable. The requirements of Rule 23 are not satisfied here, and this Court properly denied certification of the class asserted by Plaintiff.
ARGUMENT
I. THIS COURT PROPERLY CONCLUDED THAT PLAINTIFF IS NOT AN ADEQUATE CLASS REPRESENTATIVE.In its Memorandum Opinion and Order, this Court held that Plaintiff is not an adequate class representative because her interests are "antagonistic to those of the class." (Mem. Op. at 3 (citing Susman v. Lincoln American Corp., 561 F.2d 86, 90 (7th Cir. 1977)). The only claim asserted by Plaintiff in this action is one for a willful violation of the FCRA, under which she, and all of the alleged class members, could recover "any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000." 15 U.S.C. § 1681n(a)(1)(A). Plaintiff does not seek, and has expressly disavowed pursuing, any actual damages on behalf of herself or the class. (Plaintiff's Memorandum in Support of Motion for Class Certification at 8 ("In the present case, not even damages present an individual question, for plaintiff is only seeking statutory damages.")). Plaintiff chose to forego a claim for actual damages because, as she has admitted, she has not suffered any actual damages as a result of the conduct complained of. ( See Plaintiff's Response to Interrogatory No. 5, attached as Exhibit D to GMACM's Opposition to Plaintiff's Motion for Class Certification ("Opp. Brief")). For this same reason, the Plaintiff has not asserted any claim on her own behalf or on behalf of the alleged class for negligent violation of the FCRA under which she and the class could recover actual damages but would be required to establish such damages in order to realize any recovery whatsoever. 15 U.S.C. § 1681o(a)(1).
As this Court correctly noted in its Memorandum Opinion denying the motion for class certification, "there may be proposed class members who have suffered actual damages. . . ." (Mem. Op. at 5). Plaintiff's failure to pursue a claim for negligence against GMACM, however, means that the rights of persons who believe they have suffered actual damages "will not be vindicated in the proposed class action" and, in fact, may be prejudiced if this case were to proceed on a class basis. (Mem. Op. at 5). This shows, as the Court correctly recognized, that Plaintiff is placing her own interests above those of the class and has abdicated all decision-making authority to her counsel.
Plaintiff's decision to pursue only statutory damages for an alleged willful violation of the FCRA is in direct conflict with the interests of those class members that may have claims for actual damages. This is not a hypothetical issue — Plaintiff herself states that class members may have suffered actual damages "because the actions taken by the defendant were an invasion of [their] privacy . . . and that actions taken by defendant resulted in an increased risk of identity theft . . ." (Plaintiff's Response to Interrogatory No. 3, Ex. D to GMACM's Opp. Brief). Plaintiff now argues that she did not pursue these claims on behalf of the alleged class members because such "damages are not readily quantifiable." (Motion to Reconsider at ¶ 15). But a perceived difficulty in proof is not a valid reason for Plaintiff to abandon those claims and place her interests above those of the purported class. By seeking only statutory damages, Plaintiff has precluded all class members from seeking and being awarded any compensatory damages in excess of $1000. Thus, the Plaintiff's interest in obtaining only statutory penalties for herself, since she herself suffered no actual damages, is contrary to the interests of class members who have claims for actual damages greater than $1000.
GMACM of course denies violating the FCRA and denies causing any harm to anyone.
Moreover, Plaintiff's decision to forego any claim for negligent violation of the FCRA is contrary to the interests of all class members who may have a claim for actual damages regardless of the amount. To establish a willful violation of the FCRA, Plaintiff must prove that GMACM "knowingly and intentionally" violated the FCRA — a far higher burden than that required to establish a claim for negligent violation. See Ruffin-Thompkins v. Experian Info. Solutions, 422 F.3d 603, 610 (7th Cir. 2005), quoting Wantz v. Experian Info. Solutions, 386 F.3d 829, 832 (7th Cir. 2004). If a class is certified and Plaintiff subsequently fails to carry her burden, she will have precluded every class member from seeking in subsequent proceedings their actual damages for an alleged negligent violation. Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) (res judicata may bar a member of a losing class from later filing suit on the claim); Licari v. City of Chicago, 298 F.3d 664, 667 (7th Cir. 2002) ("the rule of res judicata applies to those issues actually litigated as well as those that could have been but were not litigated") (italics in original). By placing all class members' claims for actual damages in jeopardy and by proceeding with a claim which, win or lose, could prejudice certain class members, she has demonstrated her inadequacy as their representative (as well as the impropriety of these claims for class treatment).
See also, Thompson v. American Tobacco Company, Inc., et al., 189 F.R.D. 544, 550 (D. Minn. 1999) (denying class certification in suit against tobacco industry where plaintiff sought to reserve individual damage claims of class members, court observed that "res judicata principles apply to `not only every matter which was actually litigated, but also as to every matter which might have been litigated, therein.'").
This Court also recognized that Plaintiff has demonstrated that she is primarily motivated by self-interest, rather than the interest of the class. In her Motion for Reconsideration, Murray indicates that she and her husband are plaintiffs in only 16 cases, not the 50 referred to in GMACM's opposition and this Court's Memorandum Opinion. Murray suggests that this is a "mistranscription or misstatement for "15," which was the correct number at one point." (Motion to Reconsider at ¶ 18). As accurately stated in GMACM's opposition brief, the transcript from Murray's deposition in Griffin v. First Premier Bank clearly reflects her testimony that she and her family are plaintiffs in 50 cases. ( See Exhibit E to GMACM's Opp. Brief at 11-12). Counsel for the defendant in the Griffin case confirms that Murray never submitted any errata sheet indicating an error in the transcription of her testimony, even though she reserved signature and her right to make such corrections. In her Motion for Reconsideration, Murray refers only to the cases filed by herself and her husband. At her deposition in the Griffin case, however, Murray referred to cases not only filed by herself and her husband, but also by her four children, each of whom she testified either had filed or intended to file more than 5 cases. ( See Nancy Murray Dep. in Griffin v. First Premier Bank at 8-13; attached hereto as Exhibit 1). At the deposition of Thomas Murray (Nancy Murray's husband) in the same case, he did not dispute Nancy Murray's testimony that she, her husband, and their four children had filed or intended to file as many as 50 cases. ( See Thomas Murray Dep. in Griffin v. First Premier Bank at 34; attached hereto as Exhibit 2).
Murray argues that it is not her fault that she received so many offers of credit and has filed lawsuits against each of the companies that made those offers. She argues she did nothing to invite those offers. (Motion to Reconsider at ¶ 21). But, she also did nothing to prevent them from coming despite knowing and understanding her right to opt out and prevent future prescreening of her credit information. ( See Nancy Murray Dep. in Murray v. Sunrise Chevrolet, at 92-94, attached to GMACM's Opp. Brief as Exhibit F and in Griffin v. First Premier Bank at 17, 93, attached to GMACM's Opp. Brief as Exhibit E). Instead, she lay in wait for offers so that she could send them to her counsel, who could then bring class action lawsuits, earning her thousands of dollars for each such case filed. As the Court properly recognized, Murray is merely seeking the "quick buck." (Mem. Op. at 5). She is "not truly interested in vindicating any of the rights of the proposed class members." (Mem. Op. at 5). Her motion for class certification was thus properly denied.
This Court's recognition of the antagonism between the case Plaintiff actually brought and the potential claims of class members was correct. Plaintiff's Motion for Reconsideration should therefore be denied.
II. A CLASS ACTION IS NOT A SUPERIOR METHOD OF ADJUDICATING THIS CONTROVERSY.
This Court also correctly held that under the circumstances presented here, "a class action is not `superior to other available methods for the fair and efficient adjudication of the controversy.'" (Mem. Op. at 6 ( citing Fed.R.Civ.P. 23(b)(3)). This Court properly recognized that certification would result in exposure to penalties that are grossly disproportionate to any harm supposedly suffered by the proposed class members, in violation of GMACM's due process rights. This is not a fair method of adjudicating this controversy and further justifies the Court's decision to deny class certification.
Plaintiff sought to certify a class consisting of all persons with Illinois addresses to whom GMACM sent the firm offer of credit attached to her Complaint as Exhibit A between March 1, 2003, and March 21, 2005. GMACM's best estimate of the size of this requested class is about 1,230,000 class members. (Knauft Dep. Ex. 2, p. GMACM 0003, Ex. A to GMACM's Opp. Brief). Since the Plaintiff is seeking an award of statutory penalties between $100 and $1000 per class member pursuant to 15 U.S.C. § 1681n, the total amount of penalties sought against GMACM ranges from $123 million to $1.23 billion. These penalties are grossly disproportionate to the harm of which the Plaintiff complains, especially considering that the Plaintiff does not allege that she, or any purported class member, suffered any actual harm.
In her Motion for Reconsideration, Plaintiff implies that the actual risk is much lower because only 380,000 class members can be identified by name and address, and the Illinois portion of the class is only 10% of that total. (Motion to Reconsider at ¶ 23). It is not clear how Murray is suggesting this would reduce GMACM's exposure in this case. The 380,000 class members who can be identified by name and address are relevant for notice purposes, but the distinction between those 380,000 individuals and the entire class is irrelevant for purposes of the total exposure GMACM faces in this case. The facts as stated by GMACM and in the Court's Memorandum Opinion are correct — there are approximately 1.2 million individuals in the proposed class, each of whom is potentially entitled to between $100 and $1000 depending on the amount and nature of harm suffered. (Mem. Op. at 7).
This Court also correctly noted in its Memorandum Opinion that GMACM's potential liability is "for purely technical violations of the FCRA that did not cause any actual damages." (Mem. Op. at 7). Federal courts have not hesitated to deny class certification in cases where the plaintiff seeks certification of a large class and seeks only statutory penalties for alleged technical violations where no actual harm is alleged. See Sampson v. Western Sierra Acceptance Corp., 2004 WL 406992 at *2 (N.D. Ill. 2004); London v. Wal-Mart Stores, Inc., 340 F.3d 1246, 1255 n. 5 (11th Cir. 2003); Anderson v. Capital One Bank, 224 F.R.D. 444, 452-53 (W.D. Wisc. 2004); Wilson v. American Cablevision 133 F.R.D. 573, 575-80 (W.D. Mo. 1990); Ratner v. Chemical Bank New York Trust Co., 54 F.R.D. 412, 416 (S.D.N.Y. 1972). Due process concerns are the primary reason courts refuse to certify classes that result in an award of statutory penalties that are completely out of proportion to any actual harm suffered. In re Trans Union Corp. Privacy Litigation, 211 F.R.D. 328, 351 (N.D. Ill. 2002) ("consideration of the financial impact is proper when based on the disproportionality of a damage award that has little relation to the harm actually suffered by the class, and on the due process concerns attended upon such an impact."). An individual action seeking an award of $100 to $1000 in statutory penalties does not implicate the same due process concerns.
As this Court correctly held, to certify a class under the circumstances of this case would be an "abuse" of the "class action mechanism." (Mem. Op. at 7). Again, the Motion for Reconsideration should be denied.
III. ADDITIONAL REASONS SUPPORT THE COURT'S DECISION TO DENY CLASS CERTIFICATION.
In addition to Plaintiff's inadequacy and the fact that a class action is not a superior method of adjudicating this controversy, there are other reasons that a class was not and should not be certified in this case. Although not mentioned in the Court's Memorandum Opinion, these reasons further support the Court's denial of the motion for class certification.
A Determining Each Class Member's Award Would Be Unmanageable.
Even if the Court were inclined to award statutory damages for any technical violation of the FCRA the Plaintiff might prove at trial, the individualized nature of determining the amount of each class member's statutory award within the $100 to $1000 range would be unmanageable. That burden would outweigh any perceived benefits of allowing this case to proceed on a class basis. Doe v. Guardian Life Ins. Co. of America, 145 F.R.D. 466, 476 (N.D. Ill. 1992) (class certification denied because "difficulties likely to be encountered in managing the proposed class action substantially outweigh any benefits derived from consolidating the plaintiffs' claims."); Hylaszek v. Aetna Life Ins. Co., 1998 WL 381064 at *4 (N.D. Ill. 2004) ("The need to address numerous individual issues also prevents this court from concluding that a class action provides the most superior way of resolving the claims in this case.").
Under Section 1681n of the FCRA, the statutory penalty for willful violation ranges from $100 to $1000. 15 U.S.C. § 1681n(a)(1)(A). Although referred to as a statutory "penalty," this "provision acts as compensation" to the plaintiff. In re Trans Union Corp. Privacy Litigation, 211 F.R.D. at 342. The FCRA separately provides for the possibility of punitive damages, which focuses on the defendant's conduct (as opposed to the plaintiff's injury). 15 U.S.C. § 1681n(a)(2). Since the statutory award is compensatory in nature, the determination to award the $100 minimum, the $1000 maximum, or some amount in between, depends upon the impact the alleged violation had on the plaintiff and each of the individual class members. However, no two class members will have been impacted in the same way. These determinations will turn on the particular facts and circumstances of each individual and will require individualized determinations through innumerable mini-trials. Doing so will render the requested class action unmanageable.
B. Class Certification Should Also Be Denied Because Individual Issues Predominate.
Murray's claim that the only issue presented in this case is whether the document attached to her complaint as Exhibit A "qualifies under the `firm offer of credit' exception in the FCRA" (Motion for Class Certification, ¶ 12; Memorandum in Support of Motion for Class Certification, p. 7) is overly simplistic. In order to answer that question, this Court would be required to first address two other questions: (i) does GMACM's offer make a firm offer of credit to the plaintiff; and (ii) were the FCRA's disclosure requirements satisfied. (Motion for Class Certification, ¶ 12). The first question is not a common question of law or fact because it cannot be answered on a class-wide basis. Determining whether a firm offer of credit was made is a fact-intensive determination of whether the offer is "valuable" to each individual class member. ( See GMACM Opp. Brief at 2-5). These individualized factual determinations would predominate over any possible common issues and thus preclude class certification. Osbana v. The Coca-Cola Co., 225 F.R.D. 575, 584 (N.D. Ill. 2005) ("Where liability determinations are both individual and fact-intensive, class certification under Rule 23(b)(3) is improper."); Williams, 192 F.R.D. at 584. The other question — whether GMACM met the FCRA's disclosure requirements — is moot because neither the plaintiff nor the class can assert a claim against GMACM with respect to those disclosures. ( See GMACM Opp. Brief at 5-6). Since there are no common questions of law or fact that predominate over individual issues, this is an additional reason supporting the Court's denial of Class Certification.
CONCLUSION
For the foregoing reasons, and for all the reasons set forth in Defendant's Opposition to Plaintiff's Motion for Class Certification, this Court should deny the Plaintiff's Motion to Reconsider Class Ruling and affirm its November 8, 2005 memorandum opinion and order denying Plaintiff's Motion for Class Certification.