Butela v. Midland Credit Mgmt.

JOSEPH BUTELA, Plaintiff, v. MIDLAND CREDIT MANAGEMENT INC., Defendant.

Civil Action No. 2:20-cv-1612

United States District Court, W.D. Pennsylvania

April 27, 2022

OPINION

WILLIAM S. STICKMAN IV, UNITED STATES DISTRICT JUDGE.

Plaintiff Joseph Butela (“Butela”) filed this putative class action under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692-1692p against Defendant Midland Credit Management, Inc. (“MCM”) in the Court of Common Pleas of Allegheny County, Pennsylvania. In the single-count Complaint, Butela asserts, on behalf of himself and others similarly situated that MCM violated the FDCPA by sending settlement offer letters that contained false, deceptive, or misleading representations in connection with the collection of debt see id. § 1692e, and that used unfair or unconscionable means to collect debt, see Id. § 1692f. (ECF No. 1-2, ¶¶ 38-41). MCM removed the case to this Court on the basis of federal-question jurisdiction. See 28 U.S.C. §§ 1331, 1441. After the close of discovery, Butela filed a Motion for Class Certification pursuant to Federal Rule of Civil Procedure 23(a) and 23(b)(3). (ECF No. 26). The Court will grant the motion for the reasons below.

I. BACKGROUND

Butela, a resident of Pennsylvania, opened a credit card account with Capital One Bank. (ECF No. 27-6, ¶¶ 4-5). He used that credit card primarily for personal (and not business) purposes. (Id. ¶ 6). After Butela failed to make payments, Capital One Bank sold the defaulted account to MCM, a California corporation that at times purchases and collects debt. (ECF No. 1-2, ¶¶ 6-7, 10; ECF No. 5, ¶¶6-7, 10). On August 15, 2020, MCM sent Butela a settlement offer letter. (ECF No. 27-6, p. 5). That letter stated: “Congratulations! You have been pre-approved for a discount program designed to save you money on your Legal Collections account without any further legal action. We encourage you to take advantage of these generous options: pay TODAY at MidlandCredit.com or call (866) 300-8750 now.” (Id.). The letter then listed two discounted payment options with due dates of “09/14/2020.” (Id.). Finally, the letter stated, in relevant part:

A judgment could be awarded by the court before the expiration of the discount offer listed in this letter. A judgment may include costs and postjudgment interest which may increase the balance owed. If you pay the discount offer in this letter by 09/14/2020, we will satisfy the judgment in full upon receipt of payment based on the balance stated in this letter. Please contact us if you have any questions.

(Id.) (emphasis added). At the time MCM sent this letter, it had not yet filed a debt collection lawsuit against Butela. (ECF No. 1-2, ¶ 19; ECF No. 5, ¶ 19). Rather, MCM only filed such a suit on September 14, 2020, in a Magisterial District Court in Allegheny County, Pennsylvania. (ECF No. 27-1).

Butela filed the present lawsuit against MCM one day later, on September 15, 2020. (ECF No. 1-2, p. 15). He alleges that MCM's representation in the settlement offer letter that “[a] judgment could be awarded by the court before the expiration of the discount offer, ” (ECF No. 27-6, p. 5) [hereinafter “the judgment clause”], was “false, deceptive, or misleading” and “unfair or unconscionable, ” in violation of the FDCPA. 15 U.S.C. §§ 1692e, 1692f.

II. ANALYSIS

Butela now moves to certify a class action. (ECF No. 26). In support of this motion, he argues that all of the requirements of Rule 23(a) and 23(b)(3) have been satisfied. (ECF No. 27, pp. 9-21). In response, MCM disputes that Butela has satisfied Rule 23. (ECF No. 28, pp. 11- 24). MCM further argues that certification should be denied because Butela has not shown that each putative class member has Article III standing. (ECF No. 28, pp. 24-25). As explained below, the Court holds that Butela, the putative class representative, has standing to sue, which is sufficient at the class certification stage. The Court further holds that the proposed class-as modified by the Court-satisfies the requirements of Rule 23. The Court will, therefore, grant Butela's class certification motion.

A. Article III Standing

The Court begins, as it must, with “the threshold jurisdictional question”: whether Butela and/or the putative class members have standing to sue. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 102 (1998). Article III standing is conferred when a plaintiff has (1) 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. See Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016); see also Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992). “The party invoking federal jurisdiction bears the burden of establishing these elements.” Lujan, 504 U.S. at 561. Moreover, “each element must be supported . . . with the manner and degree of evidence required at the successive stages of the litigation.” Id. At the class certification stage, the “standing inquiry focuses solely on the class representative(s).” Mielo v. Steak 'N Shake Operations, Inc., 897 F.3d 467, 478 (3d Cir. 2018); see also Neale v. Volvo Cars of N. Am., LLC, 794 F.3d 353, 362, 364 (3d Cir. 2015) (“[A] class action is permissible so long as at least one named plaintiff has standing.”).

Here, MCM invoked federal jurisdiction by removing the case from state court. It is therefore MCM-and not Butela-that has the burden of establishing Article III standing. See Collier v. SP Plus Corp., 889 F.3d 894, 896 (7th Cir. 2018) (per curiam) (“As the party invoking federal jurisdiction, [the defendant] had to establish that all elements of jurisdiction-including Article III standing-existed at the time of removal.”); see also Johnson v. Patenaude & Felix, A.P.C., 2021 WL 3260064, at *3 (M.D. Pa. July 29, 2021). MCM has satisfied that burden by showing that Butela, the putative class representative, has standing. (ECF No. 32, p. 5). First, Butela has alleged that he suffered an injury in fact from MCM's materially false, misleading, and deceptive communication. (ECF No. 1-2, ¶¶ 17, 25-26). This informational injury, though intangible, satisfies the first requirement of Article III standing because it constitutes an invasion of a debtor's legally protected interest in truthful information under the FDCPA and is sufficiently actual, concrete, and particularized. See, e.g., Bordeaux v. LTD Fin. Servs., L.P., 2021 WL 4438127, at *4 (D.N.J. Sept. 28, 2021); Johnson, 2021 WL 3260064, at *4; Balon v. Enhanced Recovery Co., Lnc., 264 F.Supp.3d 597, 608-10 (M.D. Pa. 2017); Bockv. Pressler & Pressler, LLP, 254 F.Supp.3d 724, 734-37 (D.N.J. 2017). Second, Butela's injury is fairly traceable to MCM's representation in the settlement offer letter. Third, and finally, his injury is likely to be redressed by a judicial decision awarding statutory damages. See 15 U.S.C. § 1692k(a)(2) (providing for statutory damages for violations of the FDCPA).

Notwithstanding Butela's standing to sue, MCM argues that certification should be denied because Butela has not shown that each putative class member has standing. (ECF No. 28, pp. 24-25). MCM cites to the Supreme Court's decision in TransUnion LLC v. Ramirez, 141 S.Ct. 2190 (2021), for the proposition that “all class members must have Article III standing for a class action to be proper.” (ECF No. 28, p. 24). However, contrary to MCM's assertion that TransUnion “raised the bar” (ECF No. 32, p. 5), that case considered the question of Article III standing at a very different stage of the litigation-namely, after trial. See TransUnion, 141 S.Ct. at 2208. The Supreme Court thus held that “[e]very class member must have Article III standing in order to recover individual damages” and stated that evidence of such must be adduced at trial. Id. But the Supreme Court expressly declined to address “the distinct question whether every class member must demonstrate standing before a court certifies a class.” Id. at 2208 n.4. As such, TransUnion did not abrogate the Court of Appeals for the Third Circuit's prior decisions in Neale and Mielo. Those cases, which are binding on this Court, provide that “unnamed, putative class members need not establish Article III standing” at the class certification stage. Neale, 794 F.3d at 362; see also Mielo, 897 F.3d at 478. Rather, at that early stage, the case-or-controversy requirement of Article III is satisfied “so long as a class representative has standing.” Neale, 794 F.3d at 362. Accordingly, since Butela has standing, the Court need not consider the standing of each putative class member at this time.

B. Rule 23 Analysis

A class may be certified where the moving party satisfies the four requirements of Rule 23(a), and, depending on the avenue, the requirements of Rule 23(b)(1), (b)(2), or (b)(3). See Ferreras v. Am. Airlines, Inc., 946 F.3d 178, 182 (3d Cir. 2019). Under Rule 23(a):

(1) the class must be so numerous that joinder of all members is impracticable (numerosity); (2) there must be questions of law or fact common to the class (commonality); (3) the claims or defenses of the representative parties must be typical of the claims or defenses of the class (typicality); and (4) the named plaintiffs must fairly and adequately protect the interests of the class (adequacy of representation, or simply adequacy).

Id. at 182-83 (citation omitted). If the moving party satisfies these requirements, the analysis turns to Rule 23(b). See id. at 183. Under Rule 23(b)(3)-the chosen avenue in this case-“the questions of law or fact common to class members [must] predominate over any questions affecting only individual members” (predominance), and “a class action [must be] superior to other available methods for fairly and...