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Spuhler v. State Collection Service Inc.

United States District Court, E.D. Wisconsin

October 26, 2017

KYLE SPUHLER AND NICHOLE SPUHLER, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
STATE COLLECTION SERVICES, INC., Defendant.

          DECISION AND ORDER ON PLAINTIFFS' MOTION FOR CLASS CERTIFICATION

          NANCY JOSEPH UNITED STATES MAGISTRATE JUDGE

         Kyle and Nichole Spuhler filed a single count complaint against State Collection Services, Inc. alleging that a debt collection letter sent to them violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq. The Spuhlers have filed a motion for class certification. The motion has been fully briefed and is ready for resolution. For the reasons more fully explained below, the Spuhlers' motion is granted.

         FACTUAL BACKGROUND

         The Spuhlers allege that prior to the filing of this case, they incurred a consumer debt as that term is defined in 15 U.S.C. § 1692a(5) with certain medical providers. (Am. Compl. ¶ 8, Docket # 18.) State Collection is attempting to collect on those medical debts. (Id. ¶ 9.) The Spuhlers contest the validity of the dollar amounts being sought by State Collection. (Id. ¶ 10.) The Spuhlers allege that in the year preceding the filing of this case, State Collection sent them various collection letters. (Id. ¶ 11.) The Spuhlers allege that included in those collection attempts were amounts for prejudgment interest; however, no state court had awarded a judgment or prejudgment interest. (Id. ¶ 12.) The Spuhlers allege that the collection letters they received did not disclose that interest was accruing at the rate of 5%, that the dollar amount sought could be higher if not immediately paid, that the dollar amount due would or could vary because of the accrual of interest, and what part of the dollar amount sought was interest. (Id. ¶ 13.) The Spuhlers allege that the collection letters violate the FDCPA in various ways, including, but not limited to, 15 U.S.C. §§ 1692e, 1692e(2)(a), and 1692f(1). (Id. ¶ 25.)

         The Spuhlers seeks to certify a class in this action. They seek certification of three sub-classes as follows:

Sub-Class A: All consumers in the State of Wisconsin who received letters from defendant on medical debts owed to Prohealthcare Medical Associates, Waukesha Memorial Center, or Waukesha Memorial Hospital, Inc. within one (1) year from the date of the filing of this action: Attempting to collect an amount including prejudgment interest when prejudgment interest has not yet been awarded by a court.
Sub-Class B: All consumers in the State of Wisconsin who received letters from defendant on medical debts owed to Prohealthcare Medical Associates, Waukesha Memorial Center, or Waukesha Memorial Hospital, Inc. within one (1) year from the date of the filing of this action: Where such letters attempted to collect an amount without disclosing that interest is accruing on the balance due and that the balance may either increase or vary.
Sub-Class C: All consumers in the State of Wisconsin who received letters from defendant on medical debts owed to Prohealthcare Medical Associates, Waukesha Memorial Center, or Waukesha Memorial Hospital, Inc. within one (1) year from the date of the filing of this action: Attempted to collect an amount that does not disclose the balance due because undisclosed interest is accruing on the amount due.

(Pl.'s Br. at 1-2, Docket # 45.)

         ANALYSIS

         There are four threshold requirements applicable to class certification: “(1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.” Fed.R.Civ.P. 23(a).

         Once numerosity, commonality, typicality, and adequacy of representation are satisfied, “the potential class must also satisfy at least one provision of Rule 23(b).” Rosario v. Livaditis, 963 F.2d 1013, 1017 (7th Cir. 1992). Here, the applicable provision is Rule 23(b)(3), which requires that “the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy.” Fed.R.Civ.P. 23(b)(3). The party seeking class certification bears the burden of showing that certification is appropriate. Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993).

         1. Standing

         State Collection argues the Spuhlers lack standing to represent any putative class that allegedly paid “improper charges or fees” to State Collection. (Def.'s Br. at 5, Docket # 54.) State Collection argues because the Spuhlers do not allege that they actually paid any improper sum to State Collection and allege only a statutory claim, they have not suffered an “injury in fact” because they have failed to allege any concrete harm arising from State Collection's alleged conduct. (Id. at 7.) To satisfy Article III standing, a plaintiff must allege that he or she “(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.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016).

         State Collection relies primarily on the Supreme Court's more recent case on standing, Spokeo, and the Seventh Circuit's post-Spokeo case of Gubala v. Time Warner Cable, Inc., 846 F.3d 909 (7th Cir. 2017) in support of its proposition that the Spuhlers lack standing because they allege a mere statutory violation. In Spokeo, the plaintiff filed a class-action complaint against Spokeo, alleging that it willfully failed to comply with Fair Credit Report Act (“FCRA”) requirements by publishing inaccurate information about him. 136 S.Ct. at 1544. He asserted that his Spokeo profile improperly indicated “that he is married, has children, is in his 50's, has a job, is relatively affluent, and holds a graduate degree, ” though he did not allege that this false information was actually used to his detriment. Id. at 1544, 1546.

         The Court began its analysis by reviewing the general principles of Article III standing, specifically, the injury-in-fact requirement. It noted that while Congress has identified and elevated certain intangible harms to constitute concrete injuries, “a bare procedural violation, divorced from any concrete harm, [is insufficient to] satisfy the injury-in-fact requirement.” Id. at 1549. Applying these standards, the Court recognized that in passing the FCRA, Congress “plainly sought to curb the dissemination of false information by adopting procedures designed to decrease that risk.” Id. at 1550. Yet, the Court concluded the plaintiff could not satisfy the demands of Article III by alleging a bare procedural violation of the statute that did not result in harm or present any material risk of harm. Id. The Court did not find, however, that the plaintiff lacked standing. Rather, the Court remanded the case to the Ninth Circuit to determine whether the plaintiff's allegations of a procedural violation “entails a degree of risk” sufficient to meet the concreteness requirement. Id.

         In Gubala, the plaintiff filed a class action lawsuit against a cable company, alleging that the company violated the Cable Communications Policy Act (“CCPA”) when he discovered the company had failed to destroy his personally identifiable information nearly ten years after he cancelled his cable subscription. 846 F.3d at 910. He asserted that “the retention of the information, on its own, has somehow violated a privacy right or entailed a financial loss.” Id. The court recognized that there was a risk of harm but found that Gubala had “failed to show . . . even a remote probability” that Time Warner's conduct was harmful to him. Id. at 912. The court held that Gubala lacked standing to bring his suit, due to “the absence of ...


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