Barenbaum v. Hayt, Hayt & Landau, LLC

DANIEL BARENBAUM, on behalf of himself and all others similarly situated, Plaintiff, v. HAYT, HAYT & LANDAU, LLC, Defendant.

CIVIL ACTION No. 18-4120

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

September 10, 2019

MEMORANDUM

Schiller, J.

Lawyers and laymen alike know that a "deposition" is not the same as just any conversation. A deposition is recorded testimony given under oath. There are thus consequences for failing to appear at a properly noticed deposition; in fact, one can be held in contempt of court for ignoring a notice of deposition. Nevertheless, Hayt, Hayt, & Landau, LLC, ("HHL" or "the firm"), the defendant law firm in this case, maintains that these features are just incidental to—rather than defining features of—a "deposition." This case turns on whether HHL's decision to issue thousands of deposition notices to judgment debtors without ever intending to take a deposition as it is traditionally understood amounts to a violation of the Fair Debt Collections Practices Act ("FDCPA").

Before the Court are several motions: HHL's motion to dismiss for lack of subject matter jurisdiction; cross-motions for summary judgment; and Daniel Barenbaum's motion for class certification. For the reasons set forth below, the Court will deny HHL's motion to dismiss, grant Barenbaum's motion for summary judgment with respect to Count II of the Complaint, grant HHL's motion for summary judgment with respect to Counts I and III, and grant Barenbaum's motion for class certification.

I. BACKGROUND

A. Judgment against Barenbaum and Notice of Deposition

In 2014, Barenbaum failed to make payments on his Credit One credit card, and after several months, Credit One charged off his account with a balance of $1,011.39. (Def.'s St. of Undisputed Facts in Supp. of Mot. for Summ. J. [Def.'s SUF] ¶¶ 5, 7-8.) Credit One then sold the charged off account to Sherman Originator III, LLC ("Sherman"); Sherman, in turn, sold the account to Midland Funding, LLC ("Midland"). (Id. ¶¶ 10-11.) Midland retained the law firm HHL to help collect Barenbaum's debt. (Id. ¶ 13.) HHL obtained a default judgment against Barenbaum on behalf of Midland in the Court of Common Pleas in Bucks County, Pennsylvania. (Id. ¶¶ 16-17.) Seeking to recover the judgment, HHL mailed post-judgment interrogatories to Barenbaum in June of 2016 which included an offer to resolve the judgment through installment payments in lieu of responding to the questions. (Id. ¶ 18.)

In June of 2018, after Barenbaum failed to respond to the written discovery request, HHL sent Barenbaum a "Notice of Deposition in Aid of Execution" ("the Notice"). (Id. ¶¶ 19, 21.) At the top of the Notice was the name and address of the "Law Offices of Hayt, Hayt, & Landau, LLC" and the caption "Midland Funding LLC, Plaintiff vs. Daniel Barenbaum, Defendant(s)." (Pl.'s St. of Undisputed Facts in Supp. of Mot. for Summ. J. [Pl.'s SUF], Ex. B, Notice of Deposition in Aid of Execution.) The Notice directed Barenbaum to "appear and testify at a deposition" on July 6, 2018 at the Bucks County Bar Association and to produce documents to assist in the discovery of his income, assets, and property that could satisfy Midland's judgment. (Id.) Specifically, the Notice stated that:

YOU ARE HEREBY NOTIFIED TO APPEAR AND TESTIFY AT A DEPOSITION IN AID OF EXEUCTION concerning all of your income,assets and property, including personal property, which may be subject to execution in satisfaction of the judgment obtained by Plaintiff against you in the above-captioned case, and to remain at the Deposition until excused.

(Id.)

On a separate page, which included the letterhead of HHL in lieu of the caption of the debt collection lawsuit, HHL stated that there was a judgment against Barenbaum and reiterated that a Notice of Deposition was enclosed. (Id.) Finally, on the fourth page of the Notice package, HHL provided an "Alternative to Deposition": "As an alternative to appearing at the Deposition, under the enclosed Notice of Deposition in Aid of Execution, you can settle the balance you owe under the judgment at a 20% balance reduction." (Id.)

B. Barenbaum's Deposition Appearance

After receiving the Notice, Barenbaum contacted HHL and asked if he was required to attend the deposition. (Pl.'s SUF ¶ 8.) HHL told him that his attendance was required, so Barenbaum appeared in person at the designated location on July 6, along with his brother who is an attorney. (Def.'s SUF ¶ 30.) An attorney for HHL, Robert Cusick, appeared at the designated location on behalf of Midland. (Id. ¶ 32.) No court reporter or other individual permitted to administer an oath under the Pennsylvania Rules of Civil Procedure was present. (Id.)

The parties disagree about precisely what occurred thereafter. According to Barenbaum, when he arrived for his deposition, Cusick told him "this is very informal" and Barenbaum's brother stated that there should be a court reporter present. (Barenbaum Dep. at 47.) Cusick then indicated that he would "write off" the debt and Barenbaum would no longer owe any money. (Id. at 48.) Barenbaum contends that neither he nor his brother ever discussed Barenbaum's ability to satisfy the debt, and Barenbaum contends that Cusick never asked about his ability to do so. (Id. at 50-51.)

HHL contends that Barenbaum's brother represented to Cusick that Barenbahum did not have any assets to satisfy the judgment against him. (Decl. of Shannon Miller in Supp. of Def.'s Mot. for Summ. J., Ex. 6, Dep. of Robert Cusick [Cuisck Dep.], at 52-53.) Regardless, both parties agree that Cusick did not ask any questions about Barenbaum's assets but that Cusick ultimately reported back to HHL that Barenbaum did not have any assets to satisfy the judgment. (Id. ¶¶ 38-39.)

C. HHL's Policies and Procedures for Post-Judgment Depositions

As part of its efforts to recover debts owed to its clients, HHL regularly conducted post-judgment "depositions" in aid of execution. The instructions provided to HHL attorneys and other attorneys appearing for HHL at these depositions, indicated that the purpose of an appearance for a post-judgment deposition was "to obtain payment for balance in full or enter a voluntary settlement with the Defendant." (Pl.'s SUF, Ex. D, Appearance Counsel Instructions.) Counsel were instructed to direct a judgment debtor appearing for a deposition to first call HHL "for the purpose of discussing payment/settlement" before taking his or her deposition. (Id.) The instructions gave these attorneys settlement authority and included an attachment of questions to ask the judgment debtor. (Id.) HHL also explicitly directed counsel to "NOT administer an oath to the Defendant" but to "provide clear notes in regard to what occurred during the appearance," as HHL had "not retained the services of a court reporter." (Id.)

HHL typically scheduled numerous depositions at one time. Per HHL's "Post-Judgment Depositions Process and Procedure," HHL employees were instructed to schedule 30-90 depositions within a given 2.5 hour time slot. (Pl.'s SUF ¶ 16.) According to HHL, this is because approximately four to six percent of individuals who received the Notice of deposition would actually appear as required. (Def.'s Resp. to Pl.'s SUF ¶ 29.) Of those who appeared, only a smallfraction—just two percent—actually had a deposition taken. (Id. ¶ 30.) On the day that Barenbaum's deposition was scheduled, for instance, HHL scheduled 80 other post-judgment depositions, all of which were to be handled by a single attorney in one location between 9:00 and 11:30 a.m. (Pl.'s SUF ¶ 17.) Only three individuals appeared for their deposition on that date. (Def.'s Resp. to Pl.'s SUF ¶ 21.)

II. STANDARDS OF REVIEW

A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

When considering a motion to dismiss based on lack of subject matter jurisdiction, a court must determine whether the motion presents a "facial" or "factual" attack on subject matter jurisdiction. Constitution Party of Pa. v. Aichele, 757 F.3d 347, 357 (3d Cir. 2014). Where, as here, the moving party argues that the complaint, on its face, fails to establish subject matter jurisdiction, a court must accept the factual allegations in the complaint as true. Mortenson v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). "[T]he standard for surviving a Rule 12(b)(1) motion is lower than that for a Rule 12(b)(6) motion". Gould Elecs. Inc. v. United States, 220 F.3d 169, 178 (3d Cir. 2000). Here HHL alleges that Barenbaum's claim is moot, which is a question of subject matter jurisdiction. Mollett v. Leicth, 511 F. App'x 172, 173 (3d Cir. 2013). The burden of demonstrating mootness "is a heavy one". Los Angeles Cty. v. Davis, 440 U.S. 625, 631 (1979).

B. Motions for Summary Judgment

Summary judgment is appropriate when the admissible evidence fails to demonstrate a genuine dispute of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). When the movant does not bear the burden of persuasion at trial, it may meet its burden on summaryjudgment by showing that the nonmoving party's evidence is insufficient to carry its burden of persuasion. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986).

Thereafter, the nonmoving party can demonstrate a genuine issue of material fact if it provides evidence sufficient to allow a reasonable finder of fact to decide in its favor at trial. Anderson, 477 U.S. at 248. In reviewing the record, "a court must view the facts in the light most favorable to the nonmoving party and draw all inferences in that party's favor." Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir. 1994). The court may not, however, make credibility determinations or weigh the evidence in considering motions for summary judgment. See Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 150 (2000); see also Goodman v. Pa. Tpk. Comm'n, 293 F.3d 655,...