Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alnd-2_06-cv-00121/USCOURTS-alnd-2_06-cv-00121-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Contract Dispute

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

KATONIA HAIRE,

Plaintiff,

v.

FRANKLIN COLLECTION

SERVICE, INC., et al.,

Defendants.

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Case No.: 2:06-CV-121-VEH

MEMORANDUM OPINION

I. INTRODUCTION

Plaintiff Katonia Haire initiated this lawsuit in the Circuit Court of Jefferson

County on December 21, 2005. (Doc. #1 at Compl.). Defendant Franklin Collection

Service, Inc.’s (“FCS”) removed the case to this court on January 19, 2006, due to

the presence of federal question in the case under the Fair Debt Collection Practices

Act, 15 U.S.C. § 1601, et seq. (“FDCPA”) count asserted by Haire. (Doc. #1).

The court has before it FCS’s Motion for Summary Judgment (Doc. #28) filed

on October 30, 2006, Haire’s Motion for Partial Summary Judgment (Doc. #31) filed

on October 30, 2006, and Haire’s Motion to Stay Pending Report and

Recommendation of Magistrate Judge Harwell Davis (Doc. #32) (the “Stay Motion”)

filed on November 15, 2006. For the reasons explained below, the court concludes

FILED

 2006 Dec-14 PM 02:43

U.S. DISTRICT COURT

N.D. OF ALABAMA

Case 2:06-cv-00121-VEH Document 41 Filed 12/14/06 Page 1 of 13
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that Haire’s Stay Motion is due to be denied, FCS’s Motion for Summary Judgment

is due to be granted in part and denied in part, and Haire’s Motion for Partial

Summary Judgment is due to be denied. 

II. BURDEN ON SUMMARY JUDGMENT

As the Eleventh Circuit recently stated in International Stamp Art, Inc. v. U.S.

Postal Service, 456 F.3d 1270 (11th Cir. 2006), regarding the summary judgment

standard:

Summary judgment is appropriate “if the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material

fact and that the moving party is entitled to a judgment as a matter of

law.” Fed. R. Civ. P. 56(c). Once the moving party has properly

supported its motion for summary judgment, the burden shifts to the

nonmoving party to “come forward with specific facts showing that

there is a genuine issue for trial.” See Matsushita Elec. Indus. Co. v.

Zenith Radio Corp., 475 U.S. 574, 586-87, 106 S. Ct. 1348, 1356, 89 L.

Ed. 2d 538 (1986) (quotations and emphasis omitted). If the movant

bears the burden of proof on an issue, because, as a defendant, it is

asserting an affirmative defense, it must establish that there is no

genuine issue of material fact as to any element of that defense. See

Martin v. Alamo Community College Dist., 353 F.3d 409, 412 (5th Cir.

2003).

Stamp Art, 456 F.3d at 1273-74. 

Case 2:06-cv-00121-VEH Document 41 Filed 12/14/06 Page 2 of 13
The nature of the court’s decision on summary judgment requires only an 1

abbreviated statement of facts. Although there are cross-motions for summary

judgment, each side must still establish the lack of genuine issues of material fact and

that it is entitled to judgment as a matter of law. See Chambers & Co. v. Equitable

Life Assur. Soc. of the U.S., 224 F.2d 338, 345 (5th Cir. 1955); Matter of Lanting, 198

B.R. 817, 820 (Bankr. N.D. Ala. 1996). The court will consider each motion

independently, and in accordance with the Rule 56 standard. See Matsushita Elec.

Indus. Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986). “The fact that both

parties simultaneously are arguing that there is no genuine issue of fact, however,

does not establish that a trial is unnecessary thereby empowering the court to enter

judgment as it sees fit.” See WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND

PROCEDURE § 2720, at 327-28 (3d ed. 1998). 

The designation "AF" stands for admitted fact and indicates a fact offered by 2

FCS that Haire has admitted in her written submissions on summary judgment, in her

deposition testimony, or by virtue of any other evidence offered in support of her

case. Whenever Haire has adequately disputed a fact offered by the moving party, the

court has accepted the non-movant’s version. The court’s numbering of admitted facts

(e.g., AF No. 4) corresponds to the numbering of FCS’s Statement of Facts as set

forth in Doc. #29 and responded to by Haire in Doc. #36. A number following a

decimal point corresponds to the particular sentence within the numbered statement

of facts. For example, (AF No. 5.2) would indicate the second sentence of paragraph

3

III. STATEMENT OF FACTS1

A. Germany Graham v. Franklin Collection Service, Inc. 

On November 24, 2004, Germany Graham filed a class action complaint

against FCS and Jeffery Waldo in the United States District Court, Northern District

of Alabama (04-CV-03312-HGD) ("Graham"), alleging various FDCPA violations

based upon certain letters written by attorneys Jeffery Waldo and Melissa Harrison.

AF No. 4. Class eligibility was determined by identifying all debtors who were sent 2

Case 2:06-cv-00121-VEH Document 41 Filed 12/14/06 Page 3 of 13
5 of FCS's Statement of Facts is the subject of the court’s citation to the record. Any

other facts referenced by the parties that require further clarification are dealt with

later in the court’s opinion. 

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one of the letters anytime from November 1, 2003, to January 1, 2005. AF No. 5.1.

FCS reviewed its file and determined each and every person who was sent one of

these letters. AF No. 5.2. From May 2 through May 6, 2005, FCS contacted all

320,000 members of the class and provided them notice of the settlement first by an

automated telephone call approved by the Court and then by giving reference to a

website designed specifically for this class action. AF No. 5.3.

On June 16, 2005, the court issued a final order approving the class action

settlement (the “Class Settlement Order”). AF No. 6.1. The court's determinations

were set forth as "conclusions." AF No. 6.2. 

In paragraph 1, the Court defines the settlement class as "all persons residing

in the United States who were sent a letter by [FCS] reporting to be from Jeffery

Waldo, Melissa Harrison, their law firms, any other lawyers or law firms for the

purpose of collecting a debt being serviced by [FCS]." AF No. 6.3. 

In paragraph 3, the Court ordered, "Defendants (including, but not limited to

[FCS], Jeffery Waldo, Melissa Harrison, their law firms, any other lawyers or law

firms collecting a debt being serviced by [FCS]), are forever discharged from any and

Case 2:06-cv-00121-VEH Document 41 Filed 12/14/06 Page 4 of 13
Including Haire. See infra, Section III. B. 3

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all claims, actions, liens, demands, causes of action, obligations, damages, and

liabilities of any nature whatsoever, known or unknown, of any kind or nature

whatsoever, direct or consequential, foreseen or unforeseen, developed or

undeveloped, arising under the FDCPA, including but not limited to those related to

any collection activity engaged in by Franklin, Jeffery Waldo, Melissa Harrison." AF

No. 6.4. 

Paragraph 3 also forever bars any class members from prosecuting FCS for 3

any cause of action arising under or related to the FDCPA. AF No. 6.5. Finally, class

members who were not located, did not return a claim form, or did not receive notice

of the stipulation of settlement, forfeited all rights to payment and are barred by the

releases and other provisions of the stipulation of settlement and order. AF No. 6.6.

Only 22 persons opted out of the settlement class. AF No. 7.1. Haire was not

one of those opt outs. AF No. 7.2. Haire denies knowledge or notice of the Graham

class action settlement. AF No. 8.

B. Timeline of events applicable to Haire’s lawsuit 

Haire received treatment with UAB Medical West ("UAB") and Alabama ENT

Associates ("ENT") in 2004. AF No. 1. FCS was retained by UAB and ENT to

collect debts Haire incurred for treatment in 2004. AF No. 3. 

Case 2:06-cv-00121-VEH Document 41 Filed 12/14/06 Page 5 of 13
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As noted above, Haire filed this lawsuit in the Circuit Court of Jefferson

County on December 21, 2005. (Doc. #1 at Compl.). Haire averred in her complaint

and testified in her deposition thatshe received a letter from Melissa Harrison during

the defined time period and would therefore be a member of this class. AF No. 9. At

least one of Haire’s claims under the FDCPA post-dates Judge Davis’s entry of the

Class Settlement Order in Graham on June 16, 2005. (See Doc. #1 at Compl. at Ex.

E (letter to Haire from FCS dated December 7, 2005)). 

FCS filed its answer to Haire’s complaint on January 26, 2006. AF No. 10.1.

FCS specifically pled the Graham class action settlement as an affirmative defense

barring Haire’s FDCPA count. AF No. 10.2. 

IV. ANALYSIS

A. Haire’s Stay Motion is due to be denied. 

Because it involves the procedural question of whether the court should stay

any ruling on summary judgment “until such time as an interpretation may be given

to this Court through a ‘Report and Recommendation’ from Judge Davis”, see Doc.

#32 ¶ 10, the court addresses Haire’s Stay Motion before dealing with the other

pending motions. In her Stay Motion, Haire primarily argues that in lieu of the

undersigned making a determination as to the res judicata effect, if any, that the Class

Settlement Order entered by Judge Davis has on this case, the court should defer to

Case 2:06-cv-00121-VEH Document 41 Filed 12/14/06 Page 6 of 13
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Judge Davis’s interpretation of the same.

In the case of In re MDL 926 Settlement Fund, 2:06-CV-1188-VEH, the

undersigned dealt with a very similar issue. In that case, the plaintiff opposed a

motion to transfer venue to the United States District Court for the District of

Columbia by arguing that the parties’ forum selection clause was unenforceable due

to a provision contained in a preexisting settlement order, captioned “Approval of

Revised Settlement Programand Injunction,” which stated, in the last paragraph that:

5. . . .[T]his court retains exclusive, general, and continuing jurisdiction

as needed or appropriate in order to administer, supervise, implement,

interpret, or enforce the settlement, including the investment,

conservation, protection, allocation, and distribution of the settlement

funds under the revised settlement program.

(See id., Doc. 11 at 3). This is nearly equivalent to the language from Judge Davis’s

Class Settlement Order that Haire relies upon:

The Court reserves, retains, and maintains continuing jurisdiction over

all matters relating to the Stipulation of Settlement and this Final Order,

including but not limited to the consummation, validity, interpretation,

effectuation, implementation and enforcement of the Stipulation of

Settlement and this Final Order, and any other orders entered pursuant thereto.

(See Doc. #32 ¶ 9). Similar to In re MDL 926 Settlement Fund, “[t]his court finds that

it is neither necessary nor appropriate for [Judge Davis to assert jurisdiction and

determine whether res judicata applies concerning] the [] dispute between these

parties [under the terms of his Class Settlement Order.]” (In re MDL 926 Settlement

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Fund, Doc. #11 at 5). Accordingly, Haire’s Stay Motion is due to denied.

B. Haire’s FDCPA claims that arose on or before June 16, 2005,

are barred by the Class Settlement Order but not as to any

that arose after June 16, 2005.

FCS has asserted that it is entitled to summary judgment on Haire’s FDCPA

cause of action based upon the doctrine of res judicata and the express language of

the Class Settlement Order entered in the Graham case. “There is of course no

dispute that under elementary principles of prior adjudication a judgment in a

properly entertained class action is binding on class members in any subsequent

litigation.” Matsushita Elec. Indus. Co., Ltd. v. Epstein, 516 U.S. 367, 379 (1996)

(citing Cooper v. Federal Reserve Bank of Richmond, 467 U.S. 867, 874 (1984)).

Similarly, “[b]asic principles of res judicata (merger and bar or claim preclusion) and

collateral estoppel (issue preclusion) apply. A judgment in favor ofthe plaintiff class

extinguishes their claim, which merges into the judgment granting relief.” Cooper,

467 U.S. at 874. 

It is appropriate for federal courts to apply state law to questions of res

judicata. NAACP v. Hunt, 891 F. 2d 1555, 1560 (11th Cir. 1990). In Alabama, four

elements are necessary to establish the doctrine of res judicata: “(1) a final judgment

on the merits, (2) rendered by a court of competent jurisdiction, (3) with substantial

identity of parties, and (4) with the same cause of action presented in both suits.” Id.

Case 2:06-cv-00121-VEH Document 41 Filed 12/14/06 Page 8 of 13
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(quoting Hughes v. Allenstein, 514 So. 2d 858 (Ala. 1987)).

Concerning the effect that a release has on the ability to subsequently pursue

a related claim, the Supreme Court of Alabama has stated:

New York Life and Stephens maintain that the trial court erred in

denying their motions for summary judgment, arguing that, because the

plaintiffs failed to opt out of the Willson class action, the claims asserted

by the plaintiffs are barred by the Willson class-action settlement. 

The New York court entered a valid judgment, and this Court

must give effect to that judgment. See Martin v. Drummond Co., 663

So.2d 937, 947 (Ala.1995) (recognizing that the settlement of a prior

class action bars the relitigation of claims settled in that class action).

In its interpretation of a release, this Court has stated, “‘The construction

of a written document is a function of the court. If the document is

unambiguous, its construction and legal effect are [questions] of law

which may be decided, under appropriate circumstances, by summary

judgment.’”

New York Life Ins. Co. v. Robinson, 735 So.2d 463, 466 (Ala. 1999) (footnotes and

citations omitted). 

Applying the above law to this case establishes that some of Haire's FDCPA

claims are barred by the Class Settlement Order and principles of res judicata while

others are not. The Class Settlement Order in Graham is a judgment on the merits in

context of a class-wide settlement, and was entered by a court of competent

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Haire does not challenge the validity of the Class Settlement Order, but rather 4

the unfairness of its application to her. In particular,she notes that she never received

any notice concerning the settlement. Concerning this issue, the court adopts the

reasoning of Chief Judge Sam C. Pointer, Jr., formerly of this court, in Hallman v.

Pennsylvania Life Ins. Co., 536 F. Supp. 745 (N.D. Ala. 1982) in which he

determined that Rule 23 does not require actual notice so long as “the notice ordered

is reasonably calculated to reach the absent class members[:]”

In reaching its conclusion that the defendant's motion for summary

judgment should be granted-that the plaintiff is at this time barred by res

judicata from maintaining the present action-the court must

acknowledge that Rule 23 has worked to the disadvantage of the

plaintiff in what appears to be an unfair manner. While this court cannot

relieve the plaintiff from the consequences of being a member of a class

whose rights were constitutionally resolved in the California action,

there is a possible avenue for relief in the California court-through a

Rule 60(b)(6) motion. 

Id. at 749 (footnotes and citation omitted); see also Reppert v. Marvin Lumber &

Cedar Co., Inc., 359 F.3d 53, 56-57 (1st Cir. 2004) (“After such appropriate notice

is given, if the absent class members fail to opt out of the class action, such members

will be bound by the court's actions, including settlement and judgment, even though

those individuals never actually receive notice.”) (citing Cooper, 467 U.S. at 874).

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jurisdiction.4

Moreover, the Class Settlement Order which encompassed the parties’

settlement agreement, released claims against FCS, and others, by class members.

Haire, who was included in the definition class members, failed to opt out of the

settlement. Therefore, there is a substantial identity of the parties. Finally, as the

Graham suit sought redress for alleged violations of the FDCPA, the same cause of

Case 2:06-cv-00121-VEH Document 41 Filed 12/14/06 Page 10 of 13
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action has been presented in both actions. 

The scope of the release clearly and unambiguously states in relevant part that

“Defendants . . . are forever discharged from any and all claims, actions, liens,

demands, causes of action, obligations, damages, and liabilities of any nature

whatsoever, . . . arising under the FDCPA.” (Doc. #30 at Ex. E at 24-25 ¶ 3).

Additionally, the Graham Class Settlement Order "prohibit[s]" and "enjoin[s]" all

members of the settlement class from commencing, prosecuting or asserting "any

claims that are released under the Stipulation of Settlement and this Final Order." Id.

The Class Settlement Order also states that efforts to locate and give notice to class

members “are deemed and determined to be fair and reasonable[,]” and that any class

members not located or not receiving notice “shall be barred by the releases and other

provisions of the Stipulation of Settlement.” (Doc. #30 at Ex. E at 25-26 ¶ 4).

Therefore, the critical inquiry for this court is which of Haire’s FDCPA claims are

appropriately released ones for the purposes of this case. 

Consistent with Stephens v. Alabama State Docks Terminal Ry., 723 So. 2d 83

(Ala. Civ. App. 1998), cited by Haire, see Doc. #36 at 19, the court concludes that

any of Haire's FDCPA claims that arose on or before June 16, 2005, are barred from

relitigation under the language of the Class Settlement Order as released claims but

those that arose after June 16, 2005, are not so barred. Stephens, 723 So. 2d at 87

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(“We find that the release applies to injuries suffered by [the plaintiff] before he

signed the release, but not to new injuries which occurred after it was signed.”); see

also Tropp v. Western-Southern Life Ins. Co., 381 F. 3d 591, 596 (7th Cir. 2004)

("[A] release incorporated into an order approving a class action settlement bars

subsequent litigation based on the released claims."). 

Accordingly, FCS’s Motion for Summary Judgment is due to be granted in part

and denied in part. For those of Haire’s FDCPA claims that are not barred by the

Class Settlement Order, the presence of material factual disputes pertaining to them

counters against any ruling as a matter of law on liability in favor of Haire, and as a

result, Haire’s Motion for Partial Summary Judgment is due to be denied. 

C. Material issues of disputed fact preclude the entry of

summary judgment as to Haire’s state law claims.

The record on summary judgment is replete with material factual disputes

connected to Haire’s state law claims. Put differently, the court is persuaded that

Haire has adduced sufficient evidence from which a reasonable jury could return a

verdict in her favor on the pending state claims. Moreover, the court concludes that

the development of the record at the pretrial stage and trial will help to better refine

the evidentiary context applicable to the pending claims. Therefore, FCS has not

carried its burden on summary judgment of demonstrating the absence of material

Case 2:06-cv-00121-VEH Document 41 Filed 12/14/06 Page 12 of 13
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disputed issues and entitlement to judgment as a matter of law. Accordingly, that

portion of its Motion for Summary Judgment is due to be denied. 

V. CONCLUSION

As analyzed above, Haire’s Stay Motion is due to be denied. Summary

judgment in favor of FCS is due to be granted on any of Haire’s FDCPA claims that

arose on or before June 16, 2005, but is due to be denied on any FDCPA claims that

post-date June 16, 2005. Due to the presence of material factual disputes, FCS’s

Motion for Summary Judgment is due to be denied on Haire’s state law claims, as is

Haire’s Motion for Partial Summary Judgment on any of her FDCPA claims that are

not otherwise barred by the terms of the Class Settlement Order. 

DONE and ORDERED this 14th day of December, 2006.

 

 VIRGINIA EMERSON HOPKINS

United States District Judge

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