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Dawson v. Great Lakes Educational Loan Services, Inc.

United States District Court, W.D. Wisconsin

December 5, 2019

MEREDITH D. DAWSON, individually and on behalf of all others similarly situated, Plaintiff,
v.
GREAT LAKES EDUCATIONAL LOAN SERVICES, INC., GREAT LAKES HIGHER EDUCATION CORPORATION, JILL LEITL, DAVID LENTZ, and MICHAEL WALKER, Defendants.

          OPINION AND ORDER

          JAMES D. PETERSON, DISTRICT JUDGE

         Plaintiff Meredith Dawson is proceeding on behalf of a class on claims that two affiliated student loan servicing companies and three company officials fraudulently and negligently inflated the amount owed on student loans, in violation of both the Racketeer Influenced and Corrupt Organizations Act and state law. Defendants' motion for summary judgment is fully briefed, but Dawson has more recently filed a motion that complicates the resolution of the merits of her claims. Specifically, Dawson alleges that defendants failed to disclose the identities and contact information of thousands of class members, who haven't received notice of this case. Dawson asks the court to compel defendants to provide the requested information, find defendants in civil contempt, and award sanctions under Federal Rule of Civil Procedure 37. See Dkt. 280.

         In their opposition brief, defendants represent that they have now provided Dawson's class administrator with the names and contact information of all the individuals in dispute. Dkt. 285, at 19. Dawson doesn't dispute that representation in her reply brief, so I will assume that Dawson's motion to compel is moot. The remaining questions are whether defendants should be sanctioned and what implications the delay in identifying these class members has on the case schedule.

         The court concludes that Dawson is entitled to sanctions because defendants violated a clear court order to provide contact information for all class members and because defendants don't have a good reason for later denying a request for admission aimed at determining whether defendants had provided that information. And because of the significant delay caused by the need to conduct another round of class notice, the current schedule is no longer feasible. The court will strike the deadlines and set new ones if necessary, after resolving the motion for summary judgment.

         There is one other motion before the court, which is Dawson's unopposed motion to appoint additional class counsel. Dkt. 269. Because the court is persuaded that appointment is appropriate under Federal Rule of Civil Procedure 23(g)(1), the court will grant the motion.

         ANALYSIS

         Dawson is seeking sanctions against defendants on two grounds. First, Dawson says that the court should find defendants in civil contempt because they failed to comply with the court's order to provide contact information for all the class members in this case. Second, Dawson says that sanctions are appropriate under Rule 37(c)(2) because defendants had no basis for denying a request for admission about who received class notice. For relief, Dawson asks for: (1) the cost of providing notice to the recently identified class members; and (2) attorney fees and expenses incurred in disproving defendants' denial to the request for admission.

         A. Civil contempt

         Dawson must show the following things by clear and convincing evidence to obtain a finding of civil contempt against defendants: (1) defendants violated an “unambiguous command” in a court order; (2) defendants' violation was significant, meaning that defendants did not substantially comply with the order; and (3) defendants failed to make a reasonable and diligent effort to comply. Ohr ex rel. Nat'l Labor Relations Bd. v. Latino Exp., Inc., 776 F.3d 469, 474 (7th Cir. 2015).

         Dawson contends that defendants violated the court's orders granting class certification and directing defendants to provide contact information for the class. In the certification order, the court certified a class of individuals who received student loans from defendants and then received what is called “B-9 forbearance” status, which means that the borrower's payment obligations were suspended while they were in that status.[1] The class claims rest on the view that defendants violated the law when they capitalized interest on the loans at the end of the forbearance period. After certifying the class, the court ordered defendants to produce contact information for all the class members. Dkt. 197, at 5.

         Dawson contends that defendants violated the court's orders by failing to provide the class administrator with the contact information of more than 7, 000 individuals who fall within the class. Specifically, Dawson points to individuals whose interest was capitalized as the result of “procedural and programming” errors. The class certification order includes three subclasses, one of which was individuals whose interest was capitalized as a result of procedural or programming errors. Dkt. 171, at 24.[2]

         Defendants don't deny that they failed to provide the class administrator with contact information for the individuals described above, which the court will refer to as the omitted borrowers. But defendants contend that it wasn't clear whether such individuals were included in the class, for two reasons. Defendants' first argument relies on the last requirement of the class definition, which limits the class to those who “had any amount of accrued interest capitalized at the end of the administrative forbearance period.” Defendants argue that the omitted borrowers do not meet that requirement because, at the time the court issued the class definition, defendants had “fix[ed]” the programming errors, so the omitted borrowers “did not have ‘any amount of accrued interest capitalized' on their student-loan accounts.” Dkt. 285, at 14.

         This argument has no merit. As an initial matter, the class included “[a]ll persons who, between January 1, 2006 and the present . . . had any amount of accrued interest capitalized at the end of the administrative forbearance period.” Dkt, 171, at 24 (emphasis added). The certification order didn't grant defendants permission to exclude individuals from the class if, in defendants' own judgment, defendants had remedied the harm at some later time. And if the broad class definition left any room for doubt, the subclasses described in the order-which included individuals subjected to programming errors-made it clear that the omitted borrowers were part of the class. In fact, the court expressly considered and rejected defendants' arguments that a class shouldn't be certified because defendants had “already granted borrowers account credits to correct programming errors.” Dkt. 171, at 16. The court reasoned that, even if defendants had remedied the programming errors, that would not moot these borrowers' RICO claims (which allow for treble damages), and any arguments about the merits of a RICO claim belonged in a dispositive motion, not a motion for class certification. Id. at 18. Thus, there is simply no basis for reading the class certification order as excluding the omitted borrowers from the class.

         Defendants' second argument relies on Judge Crabb's order that denied Dawson's first motion for class certification. Dkt. 85. Specifically, defendants point out that Judge Crabb declined to certify a class of borrowers who had been subjected to programming errors because their claims were “too far removed from the claims plaintiff alleged.” Id. at 9. But defendants have failed to explain why they believe the order denying Dawson's first motion for class certification has any bearing on the scope of the case. Judge Crabb denied the class certification motion without prejudice and gave Dawson an opportunity to try again. Shortly thereafter, the case was reassigned to this court, which held an oral argument on Dawson's renewed motion for class certification. Dkt. 147. Ultimately, the court concluded that certification of the class and subclasses described above was appropriate. And the court considered and expressly rejected defendants' arguments about excluding the omitted borrowers from the class. Defendants haven't cited any principle regarding the law of the case that would have required this court to adopt Judge Crabb's previous conclusion or that would have incorporated preliminary rulings into a court's later order on class certification. And even if there were such a rule, defendants don't explain why, if they believed the court's order was inconsistent with a previous order, they didn't ask for reconsideration, instead of simply disregarding the order certifying a subclass related to the programming errors. Even now, defendants don't ask for reconsideration; instead, they have raised the white flag by providing plaintiffs with the contact information of the omitted borrowers.

         So the court concludes that defendants clearly violated an unambiguous court order when they failed to provide contact information for the omitted borrowers. That violation was significant because it prevented thousands of class members from receiving notice.

         Defendants offer two reasons why they believe they made “a reasonable and diligent effort to comply” the court's order: (1) they provided contact information for 129, 000 other class members; and (2) they provided the contact information of the ...


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