Opinion
Civ. No. 99 C 999.
February 24, 2000.
MEMORANDUM OPINION
Before the Court are Plaintiff's motions for class certification and to file an amended complaint. For the reasons set forth below, we deny Plaintiff's motion for leave to file his proposed amended complaint, and grant Plaintiff's motion for certification in part, and deny it in part.
BACKGROUND
Plaintiff, Nashat W. Ibrahim ("Plaintiff"), a co-signer of a vehicle retail installment sales contract ("the Contract") for a financed vehicle, filed suit against Defendant Old Kent Bank ("Old Kent"), the holder of the loan, for Old Kent's allegedly improper actions in seeking to collect on the loan from Plaintiff.
Plaintiff's complaint contains the following factual allegations, which we must accept as true for the purposes of deciding a motion for class certification. See Hardin v. Harshbarger, 814 F. Supp. 703, 706 (N.D. Ill. 1993). On July 2, 1996, Plaintiff co-signed the Contract between his brother, Zeid W. Ibrahim, and Ed Napleton Honda, Inc. for a vehicle which Zeid Ibrahim already had in his possession. At the same time, Plaintiff signed a "Notice to Cosigner" form for Old Kent. The parties agree Plaintiff never took actual possession of the vehicle.
Old Kent believed Zeid Ibrahim failed to keep up with his payments, so on September 28, 1998, it sent a collection letter to Plaintiff, which stated in bold typeface "If you are a co-signer for this account, the borrower has defaulted on this obligation and you are responsible for payment of this obligation." On October 26, 1998, Old Kent sent Plaintiff a second, almost-identical letter informing him that he was personally liable for his brother's failure to pay $657.80, the allegedly past due amount. On December 28, 1998, Old Kent sent Plaintiff another letter to alert him that his brother had not yet paid $627.90 to Old Kent. Plaintiff contends that not only did Old Kent persist beyond this date in its efforts to collect the debt from Plaintiff, it also blemished Plaintiff's credit rating, by reporting the alleged late debt to various credit agencies. Plaintiff claims this turn of events compelled him to make payments to Old Kent to protect his credit rating.
Plaintiff filed suit in State Court against Old Kent. Count I alleged that Old Kent violated the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1, et seq. ("the ICFA"). Count II alleged a violation of the Illinois Motor Vehicle Retail Installment Sales Act, 815 ILCS 375, et seq. ("the MVRISA"). Count III alleged a violation of the Illinois Sales Finance Agency Act, 205 ILCS 660/1, et seq. ("the SFAA"). On February 16, 1999, Old Kent filed its notice of removal pursuant to 28 U.S.C. § 1441, based on diversity jurisdiction. On April 8, 1999, we denied Plaintiff's motion to remand.
Plaintiff subsequently filed these motions for class certification and for leave to file an amended complaint. Ibrahim seeks certification of two classes. Proposed Class A consists of:
In his reply brief, Plaintiff attempts to certify a third class. Seeking certification of a class in a reply brief, thereby precluding the opposing party from challenging its propriety, is patently improper pleading practice and we deny certification for the class without further comment.
All Illinois residents who: (a) co-signed a vehicle retail installment sales contract before January 1, 1997; (b) did not actually receive the vehicle; (c) the vehicle retail installment contract was assigned to Old Kent; (d) Old Kent sought to collect from them after November 21, 1996; and (e) they are not the parent or spouse of the co-applicant on the vehicle retail installment sales contract.
Putative Class B is made up of:
All United States residents who: (a) co-signed a vehicle retail installment sales contract; (b) the vehicle retail installment sales contract was assigned to Old Kent; and (c) signed a "Notice to Cosigner" (or substantially similar document), which represented that the creditor may not collect the debt from the co-signer without first trying to collect from the borrower through the use of the court system.
Old Kent challenges the propriety of certifying the proposed classes, arguing that they do not meet the requirements of Federal Rule of Civil Procedure 23. Old Kent also argues that the Court should not grant Plaintiff leave to amend his complaint. We will first address Plaintiff's motion for leave to amend.
DISCUSSION
I. Motion for Leave to Amend Complaint
Federal Rule of Civil Procedure 15(a) provides that a party must obtain leave of court or written consent of the opposing party to amend a pleading. See Garner v. Kinnear Mfg. Co., 37 F.3d 263, 269 (7th Cir. 1994) (citing Perrian v. O'Grady, 958 F.2d 192, 194 (7th Cir. 1992)). Under Rule 15(a) of the Federal Rules of Civil Procedure, district courts may grant leave to amend a pleading and such leave "shall be freely given when justice so requires," so long as there is no harm to the other party. Fed.R.Civ.P. 15. Leave to amend is "inappropriate where there is undue delay, bad faith, dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment or futility of the amendment." Perrian, 958 F.2d at 194; see also General Electric Capital Corp. v. Lease Resolution Corp., 128 F.3d 1074, 1085 (7th Cir. 1997) (citing inter alia Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227 (1962)); Orix Credit Alliance, Inc. v. Taylor Mach. Works, Inc., 125 F.3d 468, 480 (7th Cir. 1997) (citing Ferguson v. Roberts, 11 F.3d 696, 706 (7th Cir. 1993)).
This is not our first ruling on this issue. On July 7, 1999, we granted Plaintiff's request for leave to file an amended complaint, which was to have been accomplished by August 4, 1999. Plaintiff did not file his amended complaint before the cut-off, and failed to appear in Court for a status conference on that date.
On August 25, 1999, Plaintiff again sought leave to file his amended complaint, which would assert a cause of action based on Old Kent Bank's "Notice to Cosigner" form. Plaintiff claimed he was previously unable to file an amended complaint because Old Kent had failed to comply with its discovery obligations, thus keeping information from Plaintiff that he needed to file his amended complaint. Old Kent pointed out that its discovery responses were not due until August 18th, that it had assembled the documents and made them available to Plaintiff, and thus Plaintiff's argument failed. On September 16, 1999, we denied Plaintiff's motion for leave to amend.
Plaintiff filed this motion on November 2, 1999, again seeking leave to amend based on the "Notice to Cosigner" form. Old Kent opposes the motion, arguing that in May of 1999, it produced the document upon which Plaintiff bases his proposed amendment. Plaintiff claims his counsel has only been in the case since September of 1999, and that his six month delay in seeking to amend his complaint does not constitute an undue delay, nor does it prejudice Old Kent.
The docket does show that the law firm of Freed Weiss Flaum filed an appearance as Plaintiff's counsel in September of 1999. However, the appearance filed was for additional counsel, not a replacement of counsel. Further, Plaintiff continues to be represented by Thomas G. Macey, who has been in the case from the start, and who filed the September of 1999 motion for leave to file an amended complaint, which we previously denied. Plaintiff cites no authority to support his argument that retaining new counsel gives him free reign to file an amended complaint after the Court had previously denied the very same proposed amendment. Accordingly, we deny Plaintiff's motion for leave to amend his complaint.
II. Motion for Class Certification
Plaintiff next moves to certify the two classes, whose parameters were previously set forth. Class B is based on the "Notice to Cosigner" form. In Plaintiff's motion to amend his complaint, he sought to assert a cause of action based on the same form. Because we have denied Plaintiff's motion to amend, there is no underlying cause of action for Class B. Accordingly, we deny Plaintiff's motion to certify Class B, and will turn our analysis to the merits of certifying Class A.
Our analysis of a motion for class certification is based on the requirements of Federal Rule of Civil Procedure 23(a). In doing so we are not rendering an opinion on the relative merits of plaintiff's underlying claim, but merely deciding the issue squarely before us. As the party seeking class certification Swift bears the burden of establishing that each of the requirements has been satisfied, as well as the criterion of one of the three parts of Rule 23(b). See Retired Chicago Police Ass'n v. City of Chicago, 7 F.3d 584, 596 (7th Cir. 1993);Spencer v. Central States Southeast Southwest Areas Pension Fund, 778 F. Supp. 985, 989 (N.D. Ill. 1991). We have broad discretion to determine whether class certification is proper.See Retired Chicago Police, 7 F.3d at 596.
Rule 23(a) recites four threshold requirements applicable to all federal class actions: (1) numerosity (the class must be so large "that joinder of all members is impracticable"); (2) commonality (there must exist "questions of law or fact common to the class"); (3) typicality (named party's claims or defenses "are typical of the claims . . . of the class"); (4) adequacy of representation (the representative must be able to "fairly and adequately protect the interest of the class"). Fed.R.Civ.P. 23(a); see also Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998). In addition, Rule 23(b)(3) requires that questions of law or fact common to all class members "predominate over any questions affecting only individual members and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." Fed.R.Civ.P. 23(b)(3); see also Frahm v. Equitable Life Assur. Soc. of United States, 137 F.3d 955, 957 (7th Cir. 1998). Failure to meet any one of the threshold requirements precludes the court from certifying the class. See Retired Chicago Police, 7 F.3d at 596.
A. Numerosity
Old Kent challenges Class A, claiming that the number of potential class members is too meager to properly be certified as a class. Rule 23(a)(1) requires that the class be "so numerous that joinder of all members is impracticable." Fed.R.Civ.P. 23(a)(1). Plaintiff need not specify the exact number of class members so long as he provides a good faith estimate. See Long v. Thornton Twnsp. High Sch. Dist. 205, 82 F.R.D. 186, 189 (N.D. Ill. 1979). However, Plaintiff's good faith estimate cannot be pure speculation. See Marcial v. Coronet Ins. Co., 880 F.2d 954, 957 (7th Cir. 1989).
The numerosity requirement has been satisfied by a potential class numbering in the thousands, see Jaroslawicz v. Safety Klenn Corp., 151 F.R.D. 324, 327 (N.D. Ill. 1993), and hundreds. See United States ex rel. Green v. Peters, 153 F.R.D. 615, 618 (N.D. Ill. 1994). But, in Hicks v. City of Chicago, 1999 WL 199613 (N.D. Ill. 1999), while plaintiff estimated the class size to be 65, this Court found that a pertinent number of similarly-situated potential class members had filed individual suits, resulting in a class size smaller than 65 individuals. Thus, we ruled Plaintiff failed to satisfy the numerosity requirement. See Hicks, at *2.
Based on Old Kent's responses to Plaintiff's Interrogatories, Plaintiff claims Class A has 166 potential members. Old Kent, however, points to the Affidavit of Donald W. Snide, a legal specialist for Old Kent, wherein he states that Old Kent has changed that estimate to 87 based on a more thorough review of its files. In his deposition, however, Snide backed off his calculation when challenged by Plaintiff's counsel. In addition, in Snide's deposition Old Kent's counsel, Richard A. Chesley, admitted that there is "a large group" of potential class members, who Old Kent could not determine whether they fell within Class A. Chesley also admitted a "possibility" existed that clerical errors resulted in a lower estimated class size. At a minimum these admissions demonstrate that Class A will probably only increase in size, not decrease. Given that the uncertainty over class size has been created by Old Kent, it would be inequitable to hold Plaintiff to the lower number asserted by Old Kent, especially in light of Old Kent's inability to justify its claim that the actual class size will be 87 individuals or lower. We will hold Old Kent to its initial estimate that 166 individuals potentially fulfill the parameters of Class A, and thus find that Plaintiff has fulfilled the numerosity requirement.
E. Rule 23(b)(6)
Old Kent does not challenge Class A's commonality, typicality, or adequacy of representation, and thus we will not discuss them further. Instead, Old Kent argues that Class A cannot meet one of the criteria of Rule 23(b); specifically Rule 23(b)(3), which Plaintiff claims is fulfilled. Rule 23(b)(3) requires that:
questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other methods for the fair and efficient adjudication of the controversy. The matters pertinent to the findings include: (A) the interest of members in individually controlling the prosecution or defense of separate actions; (B) the extent or nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.
Fed.R.Civ.P. 23(b)(3). Plaintiff argues that common questions predominate in this case. Old Kent contends that the common questions do not predominate because under Plaintiff's causes of action, each class member must prove that Old Kent proximately caused them to incur damages.
To determine whether common issues predominate over individual ones, we first must identify which issues are common to the class and which are not. See Lindsey v. Ed Johnson Oldsmobile, 1997 WL 269627 at *4 (N.D. Ill. May 14, 1997). Initially, Old Kent creates a rather unique situation by stipulating to liability on Page 2 of its memorandum of law in opposition to Plaintiff's motion for class certification:
Old Kent readily acknowledges that it erroneously sought to collect on defaulted loans from the plaintiff and perhaps other individuals (though none has ever come forward) and inadvertently received payments from perhaps some of these individuals. Having acknowledged that it is responsible to refund any monies improperly collected — and having halted any such future collection efforts — all that remains is for any individual who paid such funds to substantiate the amounts they paid and have that money refunded.
Thus, Old Kent argues that "individual [causation and damage] determinations are all that remain in this action," and in support cites this Court's decision in Lindsey.
However, in its admission Old Kent has not stipulated to liability for every potential class member; only plaintiff. It states that perhaps it is liable to other individuals. In addition, its "admission" is couched in vague terms of having "erroneously sought to collect on defaulted loans," and having "inadvertently received payments from perhaps some of these individuals." These hardly constitute iron-clad admissions. At a minimum, the liability issue is not entirely settled, and the common issues involving Old Kent's actions towards putative Class A should proceed as a class action.
Next, Old Kent argues that even though there are predominating issues of liability, any causation and damages issues are individual to each plaintiff and should be bifurcated from the liability issues to proceed as individual actions. We note the Illinois Supreme Court has held that proximate cause is a requirement under the ICFA, resulting in actual damages being limited to situations where the misrepresentation "proximately caused plaintiffs to pay a fee they would not have paid had they known the truth." Martin v. Heinold Commodities, Inc., 643 N.E.2d 734, 747 (Ill. 1994). In light of this, many of our colleagues in the Northern District of Illinois, and this Court, have held that actual damages under the ICFA are limited to those that proximately resulted from defendant's alleged misrepresentation and have certified similar claims for liability, while declining to certify causation and damages issues. See Tarnoff v. American Honda Fin. Corp., 1999 WL 98331 (N.D. Ill. Feb. 19, 1999);Hoffman v. Grossinger Motor Corp., 1999 WL 184179 (N.D. Ill. Mar. 39, 1999); Balderos v. Ill. Vehicle Premium Finance Co., 1997 WL 627580 (N.D. Ill. (Oct. 2, 1997); Lindsey, 1997 WL 269627. InLindsey, we certified a class for liability issues on the ICFA and the Truth in Lending Act, 15 U.S.C. § 1601 ("TILA"), but denied certification for causation and damage issues. See Lindsey, 1997 WL 269627 at *5 In doing so, we recognized that bifurcation of the issues was appropriate because causation and damage issues are individual questions in contradiction to Rule 23(b)(3), and are better served as individual suits. See id.
We conclude that as a prerequisite to recovering under the ICFA each class member will have to make an individual showing that Old Kent proximately caused his or her damages. See Hoffman, 1999 WL 184179 at *3. Plaintiff cites no basis to sway the Court to retreat from this procedure, and its repeated use by our colleagues reaffirms our belief in its validity. ApplyingLindsey, we conclude that the causation and damages portions of the ICFA claims are better adjudicated as individual actions.
Finally, Plaintiff claims Old Kent violated the MVRISA, which is actionable under the SFAA. See Lee v. Nationwide Cassel, 675 N.E.2d 599, 604 (Ill. 1996); 205 ILCS 660/8.5. The MVRISA requires every motor vehicle retail installment contract to disclose sixteen enumerated items. See 815 ILCS § 375/5. The Act also provides that "[a] retail installment contract which complies with the federal Truth in Lending Act, amendments thereto, and any regulations issued or which may be issued thereunder, shall be deemed to be in compliance with the provisions of this Section." Id. Thus, determining the merits of the MVRISA claim, including damages, requires an analysis of whether Old Kent complied with the TILA. Because we have previously held that TILA causation and damages issues are better adjudicated as individual matters, see Lindsey, 1997 WL 269627 at *4.5; Romaker v. Crossland Mort. Corp., 1996 WL 254299 at *2 (N.D. Ill. May 10, 1996), we likewise believe that causation and damages issues of MVRISA claims, made actionable under the SFAA, are not susceptible to class wide resolution because of their individual nature. Accordingly, as with the ICFA claim, the liability aspects of the MVRISA/SFAA claim may proceed as a class action, but the causation and damages issues may not.
CONCLUSION
For the foregoing reasons, we deny Plaintiff's motion for leave to amend, and grant Plaintiff's motion for class certification in part, and deny it in part.