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Erickson v. Elliott Bay Adjustment Co., Inc.

United States District Court, W.D. Washington, Seattle

March 30, 2017

KELLY ERICKSON, Plaintiff,
v.
ELLIOT BAY ADJUSTMENT COMPANY, INC. and JOHN DOES 1-25, Defendants.

          ORDER GRANTING MOTION TO CERTIFY CLASS

          JAMES L. ROBART United States District Judge

         I. INTRODUCTION

         Before the court is Plaintiff's Motion for Class Certification. (Mot. (Dkt. # 11).) The court has reviewed Mr. Erickson's motion, Defendant's (“Elliot Bay”) response to the motion (Resp. (Dkt. # 13)), Mr. Erickson's reply memorandum (Reply (Dkt. # 16)), Mr. Erickson's response to the court's Order to Show Cause Regarding Standing under Spokeo[1] (Show Cause Order (Dkt. # 17); (Erickson Supp. Br. (Dkt. # 19)), Elliot Bay's response to the Order to Show Cause (Elliot Bay Supp. Br. (Dkt. # 18)), the relevant portions of the record, and the applicable law. Considering itself fully advised, [2] the court GRANTS Mr. Erickson's motion for class certification.

         II. BACKGROUND

         Defendant Elliot Bay is a “collection agency” and “debt collector” as defined by the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692a(6). In 2015, Elliot Bay attempted to collect a debt from Plaintiff (and putative class representative), Mr. Erickson on behalf of Family Health Care (“FHC”), one of Elliot Bay's clients. (Compl. (Dkt. # 1), ¶¶ 15, 16; Resp. at 2.) Mr. Erickson alleges that many of Elliot Bay's attempts to collect the debt violated the FDCPA and two Washington consumer protection statutes. (See generally Compl.)

         On March 17, 2015, in its first attempt to collect the debt, Elliot Bay delivered a letter to Mr. Erickson:

NOT HAVING HEARD FROM YOU ON THIS ACCOUNT, LEGAL ACTION IS NOW BEING CONSIDERED. TO AVOID PAYING ADDITIONAL COURT CHARGES AS WELL AS THIS AMOUNT, IMMEDIATELY SEND THE BALANCE IN FULL BY RETURN MAIL TO THE ABOVE ADDRESS.

(Id. ¶ 21, Ex. A (emphasis in original).) Elliot Bay admits that at least forty customers in addition to Mr. Erickson received collection letters with identical language. (Mot. Ex. B at 6 (attaching Mr. Erickson's requests for admission and responses thereto).) In fact, the collection letter contains standard language included in letters to all of Elliot Bay's costumers “on all types of accounts and on all types of amounts owed.” (Id.) Although Mr. Erickson's two claims on behalf of the class-Counts II and III-allege many other FDCPA violations, Mr. Erickson seeks class certification solely on the basis of the March 17, 2015, collection letter. (See Mot. at 1, 7.) Mr. Erickson claims that the collection letter violates the FDCPA by threatening “additional court charges . . . [f]alsely representing that if payment [is] not made in full that court charges would automatically be added to the balance of the alleged debt.” (Id. ¶¶ 26, 52, 53(e).)

         On May 12, 2015, Elliot Bay sent a second letter to Mr. Erickson listing Mr. Erickson's alleged debt in the categories of “Principal, ” “Interest, ” and “Misc./CC.” (Id. ¶¶ 27-28; Answer ¶¶ 27-28.) When Mr. Erickson's counsel contacted Elliot Bay about the “Misc./CC” charge, Mr. Erickson claims that Elliot Bay explained that the charge, totaling $283.00, represented $200.00 in attorney's fees and $83.00 in filing fees. (Id. ¶ 30.) According to Mr. Erickson, Elliot Bay had no legal or contractual right to attorney's fees. (Id. ¶ 31.)

         On June 5, 2015, Mr. Erickson notified Elliot Bay that he had retained counsel and directed Elliot Bay not to contact him and to address all future communications regarding the debt to his attorney. (Id., ¶¶ 33-34 (citing Exs. C, D).) Nevertheless, Mr. Erickson received a third collection letter on September 10, 2015. (Compl. ¶ 37; Answer ¶ 37.) This time, the collection letter listed Mr. Erickson's debts as $120.00 in “Principal, ” $61.32 in “Interest, ” and $323.00 in “Misc./CC.” (Compl. ¶ 39; Answer ¶ 39.) Mr. Erickson believes Elliot Bay did not have a legal or contractual right to charge $323.00 in “Misc./CC” fees. (Compl. ¶ 40.) The third collection letter also stated:

IF YOU PAY THE ACCOUNT IN FULL AND ASK FOR DELETION FROM YOUR CREDIT FILE(S), WE WILL REQUEST DELETION ON YOUR BEHALF.

         (Compl. ¶ 41; id. Ex. E (emphasis in original); Answer ¶ 41.) Mr. Erickson claims that the third collection letter misleads by implying that Mr. Erickson could only clear his credit report by asking Elliot Bay for deletion, when there are other avenues for removing the debt from his report. (Compl. ¶ 42.)

         On September 3, 2015, and January 19, 2016, Elliot Bay reported Mr. Erickson's debt to a credit bureau. (Id. ¶ 35; Answer ¶ 35.) Mr. Erickson alleges that Elliot Bay did not notify the credit bureau that his debt was disputed, as required under the FDCPA. (Compl. ¶ 36.)

         On April 28, 2015, after six weeks of failed attempts to recover payment, Elliot Bay filed a collection lawsuit against Mr. Erickson in Snohomish County District Court. (Berggren Decl. (Dkt. # 15) ¶ 6, Ex. A.) The collection lawsuit was eventually dismissed after Elliot Bay made seven unsuccessful attempts to serve Mr. Erickson. (Id. ¶¶ 10, 12.)

         On March 16, 2016, Mr. Erickson filed a putative class action complaint alleging that Elliot Bay violated certain provisions of the FDCPA as well as two Washington statutes-the Washington Collection Agency Act (WCAA), RCW ch. 19.16, and the Washington Consumer Protection Act (CPA), RCW ch. 19.86. (See generally Compl.)

         Mr. Erickson asserts that the court has federal question jurisdiction over the FDCPA claims and pendent jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367(a). (Compl. ¶ 2.)

         On March 3, 2017, the court ordered Mr. Erickson to show cause why this action should not be dismissed for lack of subject matter jurisdiction. (Show Cause Order.) The court was concerned that Mr. Erickson failed to plead concrete harm, in support of the injury-in-fact requirement of Article III standing. (See id.) see also Spokeo, 136 S.Ct. 1540; Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Mr. Erickson submitted a memorandum in response to the court's order arguing that federal subject matter jurisdiction exists under Spokeo. (See Erickson Supp. Br.) Elliot Bay also submitted a memorandum, which contends there is no federal jurisdiction because Mr. Erickson has solely alleged statutory violations, without alleging concrete harm. (See Elliot Bay Supp. Br.)

         III. ANALYSIS

         A. Standing

         Before deciding Mr. Erickson's motion for class certification, the court first must be satisfied that Mr. Erickson has standing to bring his claims. Nelsen v. King Cty., 895 F.2d 1248, 1249-50 (9th Cir. 1990 (“Standing ‘is a jurisdictional element that must be satisfied prior to class certification.'”) (quoting LaDuke v. Nelson, 762 F.2d 1318, 1322 (9th Cir. 1985)). Accordingly, the court initially addresses standing and then turns to the question of class certification.

         1. Legal Standard

         Article III of the United States Constitution limits federal jurisdiction to the resolution of cases and controversies. See U.S. Const. art. III, § 2. “[S]tanding is an essential and unchanging part of the case-or-controversy requirement of Article III.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992). In the absence of standing, the court lacks subject matter jurisdiction and the suit must be dismissed under Federal Rule of Civil Procedure 12(b)(1). Cetacean Cmty. v. Bush, 386 F.3d 1169, 1174 (9th Cir. 2004); Fed.R.Civ.P. 12(b)(1). The “irreducible constitutional minimum” of standing consists of three elements: (1) the plaintiff must have suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. Id. at 560-61; Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000). With respect to the first element, an injury in fact must be “(a) concrete and particularized . . .; and (b) actual or imminent, not conjectural or hypothetical.” Lujan, 504 U.S. at 560 (internal citations and quotations omitted). The party invoking federal jurisdiction bears the burden of establishing standing. Id. at 561. Plaintiffs must plead or prove, with the requisite “degree of evidence required at the successive stages of the litigation, ” each element of standing. Id. at 561.

         The Supreme Court recently revisited the principles of standing and the injury-in-fact element in Spokeo, 136 S.Ct. 1540. Spokeo involved a class action lawsuit under the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681e, in which the plaintiff sued a company for violating the FCRA's procedural requirements by allegedly providing incorrect information about the plaintiff to the company's users. Id. at 1545-46. The Ninth Circuit held that the plaintiff's injury “satisfied the injury-in-fact requirement of Article III” because the defendant “violated [the plaintiff's] statutory rights, not just the statutory rights of other people.” Id. The Supreme Court reversed, finding that the Ninth Circuit erred by focusing the injury-in-fact inquiry solely on whether the plaintiff's injury was particularized while omitting any analysis of concreteness. Id. at 1550.

         The Supreme Court emphasized that to be concrete, an injury “must be ‘de facto'; that is, it must actually exist.” Id. at 1548. However, “concrete” does not necessarily mean “tangible.” Id. at 1549. An intangible harm, such as the loss of one's right to free speech or to religious practice, can constitute a concrete injury. Id. (citing Pleasant Grove City v. Summum, 555 U.S. 460 (2009) (free speech); Church of Lukumi Babalu Aye, Inc. v. Hialeah, 508 U.S. 520 (1993) (free exercise)). Indeed, “Congress may ‘elevat[e] to the status of legally cognizable injuries, de facto injuries that were previously inadequate in law.'” Id. (alteration in original) (quoting Lujan, 504 U.S. at 578). Nevertheless, a plaintiff does not “automatically satisf[y] the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Id. “Article III standing requires a concrete injury even in the context of a statutory violation.” Id. A plaintiff may not “allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.” Id.

         In certain circumstances, “the risk of real harm” can also be enough to satisfy the concreteness requirement. Spokeo, 136 S.Ct. at 1543-44. For example, the Supreme Court noted that harms associated with certain torts can be difficult to prove or measure. Id. (citing libel and slander as examples). Thus, the Court acknowledged that in some circumstances the violation of a statutory procedural right could constitute an injury in fact, and in such cases, the plaintiff need not allege any additional harm beyond the harm Congress had identified. Id. at 1549-50. In so ruling, the Supreme Court cited two prior cases involving informational injuries. Id. (citing Fed. Election Comm'n v. Akins, 524 U.S. 11, 20-25 (1998) (confirming that a group of voters' “inability to obtain information” that Congress had decided to make public was a sufficient injury in fact to satisfy Article III); Pub. Citizen v. Dep't of Justice, 491 U.S. 440, 449 (1989) (holding that two advocacy organizations' failure to obtain information subject to disclosure under the Federal Advisory Committee Act “constitutes a sufficiently distinct injury to provide standing to sue”)).

         2. Mr. Erickson's Article III Standing

         To analyze whether the harm Mr. Erickson alleged is sufficiently concrete, the court begins with the nature of the rights conferred by the various provisions of Sections 1692 of the FDCPA.[3] “To determine whether an intangible harm constitutes injury in fact, both history and the judgment of Congress are instructive.” Spokeo, 136 S.Ct. at 1543. Congress enacted the FDCPA in order “to eliminate abusive debt collection practices by debt collectors.” 15 U.S.C. § 1692(e). “‘The statute seeks ‘to protect consumers from a host of unfair, harassing, and deceptive debt collection practices.'” Jackson, 2016 WL 4942074, at *9 (quoting S. Rep. No. 95-382, at 1 (1977), as reprinted in 1977 U.S.C.C.A.N. 1695). “[T]he harms resulting from abusive debt collection practices are closely related to harms that traditionally provided a basis for relief in American and English courts, such as fraud.” Id. (citing S. Dev. Co. v. Silva, 125 U.S. 247, 250 (1888) (defining the legal elements of a civil fraud); Pasley v. Freeman (1789) 100 Eng. Rep. 450 (K.B.) 450 (“A false affirmation, made by the defendant with the intent to defraud the plaintiff, whereby the plaintiff receives damage, is the ground of an action upon the case in the nature of deceit.”); Restatement (Second) of Torts § 525 (1977) (discussing fraudulent misrepresentation)).

         Thus, under the FDCPA, consumers have a right to be free from debt collector abuse, and the statute mandates various procedures to accomplish this goal and decrease the risk of harm related to these practices. In general, each of these procedures helps to prevent abusive practices, but “this does not mean their violation automatically amounts to the injury identified by Congress in the statute.” Id.; Spokeo, 136 S.Ct. at 1550 (“A violation of one of [a federal statute's] procedural requirements may result in no harm.”).

         Mr. Erickson's federal claims are based on allegations that Elliot Bay violated three provisions of the FDCPA, Sections 1692c, e-f. The court reviews each of Mr. Erickson's FDCPA claims in turn.[4]

         a. Count I, Section 1692c

         In count one of his complaint, Mr. Erickson asserts a claim under Section 1692c(a)(2) of the FDCPA, alleging that Elliot Bay sent him a collection letter after he informed the company that he was represented by an attorney. (Compl. ¶¶ 37-38.) Section 1692c(a)(2) “states that a debt collector may not communicate with a consumer, in connection with the collection of any debt, if the debt collector knows that the consumer is represented by counsel.” Bravo v. Midland Credit Mgmt., Inc., 812 F.3d 599, 602 (7th Cir. 2016); 15 U.S.C. § 1692c(a)(2). “The rationale behind this rule is clear. Unsophisticated consumers are easily bullied and misled. Trained attorneys are not.” Guerrero v. RJM Acquisitions LLC, 499 F.3d 926, 935 (9th Cir. 2007). Mr. Erickson alleges that he received and read the collection letter Elliot Bay sent after the company allegedly knew that Mr. Erickson was represented. (Compl. ¶¶ 37-38.) Consequently, Mr. Erickson encountered the very risk of harm Congress sought to prevent with the enactment of Section 1692c. (Id.) As Mr. Erickson correctly notes, violation of Section 1692c “harms the consumer by interfering with the client-attorney relationship[, ] undermining the attorney's authority as the consumer's representative . . . and can result in the inadvertent and uncounseled disclosure of information, to the debtor's detriment.” (Erickson Supp. Br. at 7.) Accordingly, the court finds that Mr. Erickson has plausibly alleged a concrete injury under count one of his Complaint.

         b. Counts II and III, Section 1692e-f

         In counts two and three, Mr. Erickson contends that Elliot Bay violated Sections 1692e-f of the FDCPA by (1) making false representations as to the amount of debt Mr. Erickson owed (Compl. ¶¶ 53(a-b)), (2) communicating credit information to credit bureaus while failing to communicate that Mr. Erickson's debt was disputed (id. ¶ 53(d)), (3) falsely representing that if Mr. Erickson did not pay in full, charges would automatically be added to the balance of the alleged debt (id. ¶ 53(e)), (4) falsely representing that Mr. Erickson could not request deletion of the items on his credit card until he paid the account in full (id. ¶ 53(f)), and (5) charging $200.00 in attorney's fees and $323.00 in other fees that “were not expressly permitted by the agreement creating the debt or permitted by law” (id. ΒΆΒΆ 58-59). With the exception of the second ...


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