The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge
ORDER: DENYING PLAINTIFF'S MOTION FOR CLASS CERTIFICATION
Presently before the Court is Plaintiff David Tourgeman's motion for class certification. (ECF No. 183.) Plaintiff seeks to certify four subclasses variously alleging claims for negligence, invasion of privacy, violation of California Business and Professions Code section 17200, violation of California's Rosenthal Act, and Violation of the Fair Debt Collection Practices Act against all or some of Defendants Collins Financial Services, Inc.; Collins Financial Services USA, Inc.; Paragon Way, Inc.; Nelson & Kennard; and Dell Financial Services, L.P.. (See Mem. ISO Class Cert. Mot. 21--22, ECF No. 183-1.) The claims arise from Dell Financial Services' sale of certain charged-off debts to Collins Financial Services, and Collins Financial Services, Collins Financial Services USA, Paragon Way, and Nelson & Kennard's efforts to collect those debts. (See generally TAC ¶¶ 16--43, ECF No. 157.) Having considered the parties' arguments and the law, the Court DENIES Plaintiff's motion.
1. Debt Sale and Portfolio
Defendant Dell Financial Services (DFS) is a Delaware limited liability corporation with its principal place of business in Texas. (Towns Decl. ISO DFS' Opp'n ¶ 3, ECF No. 201.) DFS arranges for and services the financing for customers who wish to purchase Dell-branded computers on credit. (Id.)
In July 2006, DFS sold a portfolio of 85,292 charged-off debts-including Plaintiff's purported debt-to debt-collection firm Collins Financial Services (Collins) for pennies on the dollar. (Pl.'s Notice of Lodgment (NOL) Ex. 7, at 7.2, ECF No. 183-11; id. Ex. 8, at 8.29, ECF No. 183-12.) As part of the sale, DFS electronically provided Collins with demographic information regarding the accounts in the portfolio. (Collins Dep. 26--27, ECF No. 183-37; Towns Dep. 160--61, Feb. 16, 2011, ECF No. 183-43; see Pl.'s NOL Ex. 10.) However, the electronic media did not identify the original creditor for any account in the portfolio. (Collins Dep. 26--27; Towns Dep. 160--61, Feb. 16, 2011.)
Various people involved in the debt sale had various understandings regarding the identity-or identities-of the original creditor-or creditors-for the accounts in the portfolio. As part of the sales process, DFS advertised that DFS "with CIT Bank" (CIT) originated the accounts in the portfolio. (Pl.'s NOL Ex. 9, at 9.2.) Collins's current general counsel, Patricia Baxter, testified that she understood that American Investment Bank, N.A. (AIB) was the original creditor for every account in the portfolio because DFS provided Collins Services with a blank exemplar loan agreement listing AIB as the issuing bank. (Baxter Dep. 64--65, ECF No. 183-44.) Walt Collins testified that he understood that DFS originated every account in the portfolio. (Collins Dep. 27--28.) And Erin Towns, DFS' senior recovery manager (Towns Decl. ISO DFS' Opp'n ¶ 2), testified that the portfolio contained accounts originated by DFS, CIT, and AIB (Towns Dep. 156, Feb. 16, 2011).
The account purchase agreement between Collins and DFS allowed Collins to request limited account media-applications, agreements, terms and conditions, and the like-for a limited period of time. (Pl.'s NOL Ex. 8, at 8.12 to .13.) As Collins received media, it noticed "major red flags" in the portfolio. (Collins Dep. 57.) These red flags included (1) inclusion of accounts in the portfolio that were part of a class action, (2) DFS' reporting of inaccurate information to credit bureaus,
(3) DFS' mailing of letters stating incorrect balances, (4) "an inordinate amount of debtor discontent," and (5) incorrectly identified originators." (Id. at 65.) DFS also provided Collins with inaccurate media, including loan agreements misidentifying AIB as the originator of numerous debts.*fn2 (Towns Dep. 106--08, Sept. 8, 2010, ECF No. 183-41; Towns Dep. 179, Feb. 16, 2011; Pl.'s NOL Exs. 12--13, ECF Nos. 183-16 to -17.) Paragon Way was told that DFS misidentified the originator of some 3200 accounts. (Pl.'s NOL Ex. 11, at 11.2, ECF No. 183-15.)
Eventually, senior management at Collins and DFS met to discuss the problems with the portfolio. (Collins Dep. 36--38.) After the meeting, on January 25, 2007, DFS provided Collins with the criteria that it used to determine the originators of the accounts in the portfolio. (Pl.'s NOL Ex. 15.) And the parties ultimately entered into a settlement and release agreement whereby DFS agreed to pay Collins $200,000 and increase the amount of free account media available to Collins. (Pl.'s NOL Ex. 17, at 17.1 , 17.66 to .67, ECF No. 183-21.)
Before the debt sale closed, Collins transferred the account information it received from DFS to Paragon Way (Knauer Dep. 23-24, ECF No. 183-45), Collins's debt collection arm (Collins Dep.
35). Paragon Way sent 256,458 letters to 49,939 account holders, all stating that AIB was the original creditor on the accounts. (Levy Dep. 19, 25--26, ECF No. 183-46; see, e.g., Alsdorf Decl. ISO DFS' Opp'n Exs. C--E, ECF Nos. 202-3 to -5 (Paragon Way's letters to Plaintiff).)
Paragon Way spent between six months and a year trying to collect the accounts in the portfolio, after which Paragon Way referred the uncollectible accounts to law firms. (Knauer Dep. 74--75.) Paragon Way then referred "slightly over" 2000 accounts to Nelson & Kennard. (Kennard Dep. 53, Sept. 17, 2010, ECF No. 183-38.) Nelson & Kennard attempted to collect the accounts for Collins by sending letters to account holders and filing collection lawsuits. (See Pl.'s NOL Exs. 5,22--26, ECF Nos. 11, 26--30.)
On July 31, 2008, Plaintiff filed the present action against, inter alia, Collins, Nelson & Kennard, and DFS alleging violations of the FDCPA and the California Rosenthal Act, invasion of privacy, and negligence. (Compl., ECF No. 1.) After multiple rounds of motions and extensive discovery, the Court granted Plaintiff's contested motion for leave to file the operative third amended complaint. (Order, Nov. 22, 2010, ECF No. 156.) In addition to the original complaint's claims, the TAC accuses Defendants of violating California Business and Professions Code section 17200 (the UCL) and contains class allegations. (TAC ¶¶ 44--53, 61--68, ECF No. 157.) The TAC also adds Collins Financial Services USA (Collins USA) and Paragon Way as defendants. (See id.)
Soon after Plaintiff filed the TAC, the Collins, Collins USA, Paragon Way, and Nelson & Kennad (collectively, the Debt Collectors) moved to dismiss the TAC.*fn3 (ECF Nos. 165, 166.) Before the hearing on the instant motion, the Court issued a written order granting the motions to dismiss in part and denying them in part. (Order, July 26, 2011.) Specifically, the Court dismissed Plaintiff's negligence and UCL claims to the extent that they were based on Nelson & Kennard's filing of the state court complaint; dismissed Plaintiff's FDCPA and Rosenthal Act claims to the extent that they were based on 15 U.S.C. §§ 1692b and 1692g; dismissed Plaintiff's meaningful involvement claim against Collins, Collins USA, and Paragon Way; and dismissed Plaintiff's invasion of privacy claim in its entirety. (Id. at 17.)
Class actions are governed by Federal Rule of Civil Procedure 23. A party seeking to certify a class bears the burden of demonstrating that each of the four requirements of Rule 23(a) and at least one of the requirements of Rule 23(b) are met. Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir. 2001). Rule 23(a) allows a class to be certified only if:
(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.
While Rule 23(a) is silent as to whether the class must be ascertainable, courts have held that the rule implies this requirement. In re TFT-LCD (Flat Panel) Antitrust Litig., 267 F.R.D. 291, 299 (N.D. Cal. 2010). Additionally, a proposed class must satisfy one of the three subdivisions of Rule 23(b). Relevant here, Rule 23(b)(3) permits certification if "questions of law or fact common to class members predominate over any questions affecting only individual class members," and "a class action is superior to other available methods for fairly and efficiently adjudicating the controversy."
"Rule 23 does not set forth a mere pleading standard. A party seeking class certification must affirmatively demonstrate his compliance with the Rule-that is, he must be prepared to prove that there are in fact sufficiently numerous parties, common questions of law or fact, etc." Wal-Mart Stores, Inc. v. Dukes, - U.S. -, 131 S. Ct. 2541, 2551 (2011). Although these inquiries "might properly call for some substantive inquiry," the court may not go so far as to judge the validity of the moving party's claims. United Steel, Paper & Forestry, Rubber Mfg. Energy, Allied Indus. & Service Workers Union, AFL-CIO v. ConocoPhillips Co., 593 F.3d 802, 808 (9th Cir. 2010). "However, although the [c]court may not require preliminary proof of the claim[s], it need not blindly rely on conclusory allegations which parrot Rule 23 requirements." In re TFT-LCD, 267 F.R.D. at 299 (internal quotation marks omitted). If the court concludes that the moving party has carried its burden, then the court has "broad discretion" to certify the class. Zinser, 253 F.3d at 1186.
1. Rule 23(a) Requirements
Although it is not explicitly spelled out in Rule 23, an adequate class definition is a prerequisite to class certification. In re TFT-LCD, 267 F.R.D. at 299. "A class definition is sufficient if the description of the class is 'definite enough so that it is administratively feasible for the court to ascertain whether an individual is a member.'" Id. (quoting O'Connor v. Boeing N. Am., Inc., 184 F.R.D. 311, 319 (C.D. Cal. 1998)). This ascertainability requirement is met "if [the class's] members can be determined by reference to objective criteria." Id. (quoting Zapka v. Coca-Cola Co., 2000 WL 1644539, at *2 (N.D. Ill. Oct. 27, 2000)) (internal quotation marks omitted). However, if the court must make a determination of the merits of individual claims to determine a class's membership, the class definition is inadequate. Herrera v. LCS Fin. Servs. Corp., - F.R.D. -, 2011 WL 2149084, at *3 (N.D. Cal. June 1, 2011).
As noted above, Plaintiff seeks to certify four subclasses. (Mem. ISO Class Cert. Mot. 21--22.) The proposed subclasses and their definitions are as follows:
1. Negligence class (against all Defendants):*fn4 All consumers residing in the United States and abroad who financed a Dell computer through DFS where CIT Online Bank provided the funds and, during the period of two years of the date of the filing of this lawsuit, paid money or incurred expenses in response to a collection letter or lawsuit stating that American Investment Bank was the original creditor for the loan.
2. The UCL class (against all Defendants): All consumers residing in the United States and abroad who financed a Dell computer through DFS where CIT Online Bank provided the funds and, during the period of four years of the date of the filing of this lawsuit, paid money or incurred expenses in response to a collection letter or lawsuit stating that American Investment Bank was the original creditor for the loan.
3. The FDCPA/Rosenthal Act I Class (against Collins, Collins USA, and Paragon Way): All consumers residing in the United States and abroad who financed a Dell computer through DFS where CIT Online Bank provided the funds and, during the period of one year of the date of the filing of this lawsuit, received a collection letter or were named in a lawsuit stating that American Investment Bank was the original creditor for the loan.
4. The FDCPA III Class (against Nelson & Kennard): All consumers residing in the United States and abroad who financed a Dell computer through DFS where CIT Online Bank provided the funds and, during the period of one year of the date of the filing of this lawsuit, received a collection letter from Nelson & Kennard or were named in a lawsuit filed by ...