IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

NACOLA MAGEE, and JAMES PETERSON, )

on behalf of plaintiffs and the classes defined )

below, )

)

Plaintiffs, ) 12-cv-1624

)

vs. ) Judge John W. Darrah

)

PORTFOLIO RECOVERY ASSOCIATES. LLC ) Magistrate Judge Martin

)

Defendant. )

REPLY IN SUPPORT OF PLAINTIFFS’ RENEWED

MOTION FOR CLASS CERTIFICATION

Plaintiffs seek to certify two classes in this Fair Debt Collection Practices Act ("FDCPA")

action against Defendant Portfolio Recovery Associates, LLC (“PRA”). In Class 1 (for Count IMisleading Settlement Offers on Time Barred Debts), class members were sent a letter during the

class period (March 6, 2011 to March 26, 2012) in the form of Appendix A, namely a collection

letter that offers to settle a debt, without disclosing that the debt was beyond the statute of

limitations, while misleadingly stating the date that PRA received the debt, in the cases of the

plaintiffs, some years after the statute of limitations expired.

In Class 2 (for Count II- Threat of Credit Reporting), class members were sent a letter during

the class period in the form of Appendix B, which purports to confirm a settlement agreement and

misleadingly states “If you complete this payment plan and our company is reporting our company’s

trade line for this account to the three major credit reporting agencies, our company will report this

account as settled” and “We are not obligated to renew this offer,” without revealing that the seven

year period for reporting to the credit bureaus had expired. 

Defendant asserts in its Response in Opposition to Plaintiff’s Motion for Class Certification

(“PRA Mem”) at 1, that plaintiff relies on a “false premise”, namely that PRA’s settlement letters

“‘trick’ consumers into believing there is a legally enforceable obligation to pay the debt.” The

Seventh Circuit in McMahon v. LVNV Funding, LLC, 744 F.3d 1010 (7th Cir. 2014), did not find

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this premise to be false. Indeed, in reviewing similar allegations to those raised by Plaintiffs here,

it held that “[t]he proposition that a debt collector violates the FDCPA when it misleads an

unsophisticated consumer to believe a time-barred debt is legally enforceable, regardless of whether

litigation is threatened, is straightforward under the statute” and “it is plausible that an

unsophisticated consumer would believe a letter that offers to ‘settle’ a debt implies that the debt

is legally enforceable.” McMahon, at 1020. 

The McMahon decision demonstrates that PRA’s assertion, that the issue here is “whether

an objectively reasonable consumer would perceive Defendant’s settlement letters as impliedly

threatening litigation,” is wrong. PRA Mem at 2. Ten times in its Memorandum, PRA ignores

McMahon and mischaracterizes plaintiffs’ claim to require a showing that the PRA correspondence

contained a threat of litigation. PRA Mem at 1,2,5, 8, 9.

Defendant also belittles plaintiff’s claims under Count II, implying that “one statement in

one letter” would not lead a debtor to believe that PRA would report them to a credit bureau. PRA

Mem at 1. However, on August 20, 2014, Judge Durkin held in Slick v. Portfolio Recovery

Associates, LLC, 2014 WL 4100416 (N.D. Ill.) that a collection letter which makes the exact same

credit reporting threat and is identical in form to the one complained of here, violated the FDCPA

by containing false and misleading statements and implied that PRA could take action it was legally

prohibited from doing. Id. at *5 -*9. (“It is evident from the letters’ face that they are plainly

deceptive....there was no circumstances here under which PRA could have legally reported Slick’s

obsolete debt to a credit bureau even though the letters implied the contrary.”)

Furthermore, as this Court noted in its denial of Defendant’s motion to dismiss, in Lox v.

CDA, Ltd.,689 F.3d 818 (7th Cir., 2012), the Seventh Circuit cited with approval the Ninth Circuit

case of Gonzalez v. Arrow Financial Services, LLC, 660 F.3d 1055 (9th Cir. 2011) which supports

Plaintiff’s claims. The Gonzalez court stated “To the least sophisticated debtor, the phrase ‘if we

are reporting the account, the appropriate credit bureaus will be notified that this account has been

settled’” when the account could no longer be legally reported, “suggests that, under some set of

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circumstances applicable to the recipient Arrow could and would report the account” and that “the

implication that Arrow could make a positive report in the event payment is misleading” and

“violates 15 U.S.C. §1692e(10).” Id. at1063.

As is apparent from the documents that PRA attached to its Response in Opposition to

Plaintiffs’ Motion for Class Certification, membership in each of the classes is easily ascertainable. 

Indeed defendant does not contest numerosity because it has counted the number of class members.

Instead, defendant argues that the classes should not be certified because:

1) Individual issues predominate because plaintiffs only received one settlement letter, 

while some class members received more.

2) Individual issues predominate because plaintiffs must show subjectively why class

members paid money to defendant; 

3) Plaintiffs claims are not typical because they each received fewer letters and

telephone calls from defendant and because they did not pay in response to the misrepresentations

in the letters; and 

4) A class action is not a superior method of adjudication because the statutory recovery

would be de minimis.

As discussed below, defendant’s positions are without merit and both classes are

appropriately certified as to statutory damages and, for those class members who paid after they were

sent the misleading communications after the expiration of both the statute of limitations and credit

reporting period, for actual damages.

I. COMMON ISSUES PREDOMINATE

This is an FDCPA letter case. Class members are part of the putative classes because they

received one (or both) of two letters. Whether the dunning letter was deceptive or misleading in

violation of § 1693e is an objective test, based on what an “unsophisticated consumer” would

understand. Lox v. CDA, Ltd., 689 F.3d 818, 826 (7th Cir. 2012).

The commonality requirement is met where “a common nucleus of operative facts” is alleged

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and there is at least one question of law or fact common to the class. Keele v. Wexler, 149 F.3d 589,

594 (7th Cir. 1998). Where, as here, the defendant is alleged to have “engaged in standardized

conduct towards members of the proposed class by mailing to them allegedly illegal form letters,”

commonality is satisfied. Id.

This case involves two standard form letters. The common question as to Count I is whether

the Settlement Letter (Appendix A) violates §§1692e or f of the FDCPA. The common question as

to Count II is whether the Threat of Credit Reporting letter (Appendix B) violates §§1692e or f of

the FDCPA. Therefore, each proposed class meets the commonality requirement of Rule 23(a)(2).

Day v. Check Brokerage Corp., 240 F.R.D. 414, 419 (N.D. Ill. 2007) (finding predominance where

common issue was “whether the debt collection letters that Defendant sent to [Plaintiff] and the class

members violate the FDCPA.”) ; Quiroz v. Revenue Production Management, Inc., 252 F.R.D. 438,

442 (N.D. Ill. 2008); Hale v. AFNI, Inc., 264 F.R.D. 402, 407 (N.D.Ill. 2009)(“Rule 23(b)(3)’s

predominance requirement is typically satisfied where the central, common issue is whether the

defendant’s form letter violates the FDCPA.”) 

In an attempt to make individual issues where there are none, PRA argues that the Court

must consider “ the circumstances under which each letter was sent, including how many letters

were sent to such consumer over the life of the loan as well as the history of the account.” PRA

Mem at 2.

The subjective response of each class member to the receipt of the letter is not 

a necessary inquiry under the unsophisticated consumer standard. The “unsophisticated

consumer standard does not require inquiry into any individual’s response to or reliance on a

letter,” but rather it is an objective test of whether “an unsophisticated consumer could reasonably

interpret” the letter in a manner that violates the FDCPA.” Jackson v. National Action Financial

Services, Inc., 227 F.R.D. 284, 289 (N.D. Ill. 2005); quoting, Gammon v. GC Serv. Ltd.,

Partnership, 27 F. 3d 1254, 1257 (7th Cir. 1994); see also Sledge, 182 F.R.D. at 258. The

Seventh Circuit has held that the recipient need not even have read the letter in order to bring an

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FDCPA action. Bartlett v. Heibl, 128 F. 3d 497, 499 (7th Cir. 1997).

PRA argues that the common questions do not predominate because, although the

plaintiffs only received one settlement letter and Magee received a validation letter before the

settlement letter, some class members received multiple settlement letters and debt collection

calls. PRA Mem at 7-8. 

 However, there has been no evidence offered by PRA or produced in discovery that

shows that PRA at any time, orally or in writing, informed any debtor that the debt was beyond

the statute of limitations and no longer legally enforceable. There was no evidence offered or

produced in discovery that PRA collectors ever told any class member, orally or in writing, that if

the debtor made a payment, under Illinois and Indiana law, the statute was revived and PRA

could seek payment through litigation. 735 ILCS 5/13-206. Nor was there any evidence offered

or produced in discovery that PRA collectors told any debtor, orally or in writing, that it could not

report a debt to the credit bureaus after seven years. The fact that PRA sent Appendices A and B

and made collection calls repeatedly over time, without explaining the misleading representations

in its letters, merely enhances the nature of the misrepresentations. It does not diminish the

claims of either of the plaintiffs that they were sent misleading letters only once in violation of

the FDCPA. They have a claim for statutory damages.

II. ACTUAL DAMAGES CAN BE HANDLED ON A CLASS BASIS

PRA argues the claim for actual damages raises individual issues that predominate over

common questions and thus certification of an actual damages class is not appropriate. PRA

Mem at 2, 6-11. It is wrong.

Plaintiffs only seek actual damages for those class members who paid money to PRA

when they were sent the misleading communications after the expiration of the statute of

limitations and the credit reporting time period. Once both the statute of limitations and the credit

reporting period have expired, the consumer does not benefit at all from making a payment on the

debt. The consumer can no longer be sued and the debt is no longer impacting the consumers

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credit reports. Any payment in fact can only have a negative impact on the consumer because it

may renew the statute of limitations and allow the debtor to be sued for any remaining balance. 

Those persons would benefit from merely receiving a notice from the Court informing them of

the limitations on PRA’s collection activity.

There is substantial likelihood people who paid money to PRA beyond both the SOL and

the credit reporting period were deceived. There was no other reason to pay. They are entitled to

get their money back. Alonso v. Blackstone Financial Group, 1:11cv1693, 2013 WL 3992122

(E.D.Cal., Aug. 2, 2013), Hamid v. Stock & Grimes, LLP, 876 F.Supp.2d 500 (E.D.Pa. 2012), and

Abby v. Page, 1:10cv23589, 2013 WL 141145 (S.D.Fla., Jan. 11, 2013). If the debt is time-barred

or there is another defense, payment is actual damages. Gervais v. O’Connell, Harris & Assoc.,

297 F.Supp.2d 435 (D.Conn. 2003).

PRA speculates that people may have paid only to stop PRA from bothering them with

phone calls and messages. PRA Mem at 10. However, any debtor can stop debt collector contact

by demanding that the debt collector “cease and desist”. 15 U.S.C. §1692c. If the debt is beyond

the statute of limitation and credit reporting time period, PRA cannot do anything else. 

PRA also argues that a debtor may pay a debt so he can get credit in the future. However,

once the reporting period has passed, the fact that a debt remains unpaid will not appear on the

credit report.

Furthermore, the specific collection details of each account do not create individual issues. 

Any payment received after Defendant failed to inform the debtor in a written correspondence

that the statute of limitations and credit reporting periods have expired, is tainted. The consumer

does not know that the debt is no longer legally enforceable, that it can no longer negatively

impact her credit report, and that the payment will likely subject her to future litigation and a

possible judgment for the balance. That Defendant made ten calls after failing to make this

disclosure, is an aggregating factor, not a mitigating one. Plaintiffs claim is that the failure to

make these very important disclosures deceives and has a very real and negative consequence for

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debtors. If a consumer is convinced to make a payment which will have a negative impact on an

otherwise unenforceable debt, the debtor should be informed of that fact. The abusive tactics

used in combination with the failure to disclose those facts are of no consequence. The debtor is

entitled to the option of a return of the money which was collected through deception. 

Plaintiffs understand, as noted by McMahon, 744 F.3d at 1020, that some people may feel

a moral obligation to repay their debts.1 But why to PRA? PRA’s SEC filing shows that it paid 4

cents on the dollar for the debts it purchased. See Report on SEC Form 10-K filed by PRA’s

parent, Portfolio Recovery Associates, Inc.,

https://www.sec.gov/Archives/edgar/data/1185348/000118534814000002/praa-20131231x10k.ht

m, original page 5. (“From our 1996 inception through December 31, 2013, we acquired 3, 098

portfolios...with a face value of $78.6 billion for a total purchase price of $3.3 billion.”). The

moral obligation is owed to the original creditor that extended the credit that has not been repaid,

not a scavenger that pays 4 cents on the dollar. However, if someone REALLY felt they had a

moral obligation to pay the debt buyer (rather than the original creditor), he can return or reject

the money.

In the context of a class action, this issue can easily be resolved through notice. Class

members may be asked a single question on the class notice as to their position on payment of 

the debt to determine whether they are entitled to relief. The class notice can explain that the

tainted payment will be undone, because it was induced through deception, but that if the debtor

feels a moral obligation to repay the debt or otherwise wishes to go forward with a clean slate, he

may decline to receive his payments back or otherwise return the money to PRA or the original

creditor, or both send 4% of the money to PRA and 96% to the original creditor. The answer only

affects who will receive actual damages, not PRA’s liability. Wilkerson v. Bowman, 200 F.R.D.

 1 The Langbein law review article, cited by PRA at page 10 of its memorandum, sheds no

light on the subject. It addresses the moral obligations felt by heirs to pay decedents’ debt, to the

person that extended the credit. It does not address whether a debtor has a moral obligation to

pay a scavenger who paid 4¢ on the dollar even though the debtor cannot be sued and the

creditor cannot report him to the credit bureau.

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605, 610 (N.D. Ill. 2001) (finding the “fact that class certification . . . may require the parties to

ask the individual class members one question does not automatically establish that individual

issues ‘predominate’”), citing Wells v. McDonough, 1888 F.R.D. 277, 279 (N.D. Ill. 1999). 

III. PLAINTIFFS’ CLAIMS ARE TYPICAL

PRA argues that Plaintiffs’ claims are not typical because they only received one letter

and did not pay. PRA Mem at 4-6. 

The typicality argument under F.R.Civ.P. 23(a)(3) is related to the question of

commonality under F.R.Civ.P. 23(a)(3). “It is unimportant whether the individual that actually

received a violative letter was misled or deceived.” Keele v. Wexler, 149 F.3d 589, 594 (7th Cir.

1998). The typicality of plaintiff’s claim does not turn on whether he subjectively understood the

letter in the same manner as the proposed class members. The letters are evaluated on an

objective standard based upon how an unsophisticated consumer would read the letter. Id. It is

not important to the claim whether plaintiffs received one, two or five letters. Plaintiffs’ claims

here “have the same essential characteristics as the claims of the class[es] at large,” De La

Fuente, 713 F.2d at 232, and are therefore typical.

Further plaintiffs can represent the classes as to the question of actual damages, even if

they have not paid in response to the misleading communications. In Keele v. Wexler, 149 F.3d

589 (7th Cir. 1998), the Seventh Circuit found the type of argument made by PRA to be meritless:

The defendants' argument on appeal is really quite simple. They contend that,

insofar as Keele admits she did not pay the $12.50, her injuries differ from the

those sustained by the members of classes A and B. Ergo, she has no standing to

represent these individuals in a class-action suit. . . . The district judge felt it

unnecessary to decide whether a benefit to the Wexlers was tantamount to actual

damage to Keele because the injuries she and the class members alleged were the

receipt of the debt collection letters, not the payment of the $12.50 collection fee.

We likewise will not consider this question, as it has no bearing upon Keele's

standing to represent classes A and B. She, like the members of those classes,

received the Wexlers' letters, both purported to be in violation of the FDCPA and

CFDCPA. It is thus irrelevant whether or not she paid the collection fee.

As noted above, to satisfy the standing requirement in a class action lawsuit, the

class representative must possess the "same interest and suffer the same injury" as

the individuals he or she seeks to represent. The injury common to classes A and B

was the receipt of the Wexlers' collection letters . . . . The damages recoverable for

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the class members' injuries may differ--some may be eligible for both actual and

statutory damages, others actual damages only, and still others just statutory relief-

-but the fact remains that their injuries are the same.

Keele, 149 F.3d at 593 (citations omitted).

As in Keele, plaintiffs can represent class members who paid after receiving the letters at

issue here even though they themselves did not pay.

IV. POTENTIAL DE MINIMIS RECOVERY FOR CLASS MEMBERS DOES NOT

WARRANT DENIAL OF PLAINTIFF’S MOTION

PRA argues that it has sent so many letters containing misrepresentations in violation of

the the FDCPA that a class cannot be certified since relief to class members would be de

minimis. The damage cap of the Act limits PRA’s exposure on a class basis to 1% of its net

worth, thus limiting the pot that the class can share. However, here, notice to the class alone is

substantial relief. The benefit is that the class member is notified that the debt is past the statute

of limitations or credit reporting period, or both. In addition, as discussed above, plaintiffs here

seek actual damages for the class.

Further, in Mace v. Van Ru Credit Corp., 109 F.3d 338 (7th Cir. 1997), the Seventh Circuit

held that the potential for “de minimis recovery (in monetary terms) should not automatically bar

a class action.” Mace, 109 F.3d at 344. The Court explained:

The policy at the very core of the class action mechanism is to

overcome the problem that small recoveries do not provide the

incentive for any individual to bring a solo action prosecuting his or

her rights. A class action solves this problem by aggregating the

relatively paltry potential recoveries into something worth

someone’s (usually an attorney’s) labor.

True, the FDCPA allows for individual recoveries of up to $1,000.

But this assumes that the plaintiff will be aware of her rights,

willing to subject herself to all the burdens of suing and able to find

an attorney willing to take her case. These are considerations that

cannot be dismissed lightly in assessing whether a class action or a

series of individual lawsuits would be more appropriate for

pursuing the FDCPA’s objectives.

Id. See also, Amchem Prods. v. Windsor, 521 U.S. 591, 617 (1997) (“While the text of Rule

23(b)(3) does not exclude from certification cases in which individual damages run high, the

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Advisory Committee had dominantly in mind vindication of ‘the rights of groups of people who

individually would be without effective strength to bring their opponents into court at all’.”);

Murray v. GMAC Mort. Corp., 434 F.3d 948, 953 (7th Cir. 2006) (“Rule 23(b)(3) was designed

for situations such as this, in which the potential recovery is too slight to support individual suits,

but injury is substantial in the aggregate.”); Carbajal v. Capital One, F.S.B., 219 F.R.D. 437

(N.D. Ill. 2004). 

Carbajal, like this case, was a FDCPA case and, like this case, no settlement had been

reached among the parties. The defendants argued that a class should not be certified because

each individual class member’s recovery would be de minimis especially in comparison to that

class member bringing his or her own individual lawsuit. In rejecting this argument and granting

the plaintiffs’ motion to certify, the Carbajal court stated:

[T]he reality is that the choice is not between a class action and a

multitude of individual actions, but rather between a class action

and this particular individual action and maybe a handful more.

The class members who might be inclined to shoot for the bigger

amount will be clearly advised in the Court’s notice to prospective

class members that they can forego membership in the class and

take on the risks and somewhat larger rewards of individual

litigation if they so choose. But to disallow a class action because of

the hypothetical possibility of multiple individual actions would

effectively sound the death knell to use of the class action in the

consumer law context.

Carbajal, 219 F.R.D. at 443 (emphasis in the original). See also Barkouras v. Hecker, No. 06-

366, 2006 U.S. Dist. LEXIS 88998 at *9 (D.N.J. Dec. 8, 2006) (rejecting defendants’ “attempt to

use their net worth as a sword and a shield: a sword to pierce Plaintiff’s attempt to certify a class,

and a shield from individual suits that offer very limited or no recovery at all.”)

Defendant cites a number of cases for the proposition that courts should not certify a class

if the class members’ recovery was likely to be de minimis. However, all of the cases defendant

cites were decided either pre-Mace and/or outside of the Seventh Circuit.2

 2 One case cited by PRA, at page 13 of its Memorandum, Sonmore v. Checkrite Recovery

Services, Inc. 206 F.R.D 257 (D.Minn. August 2001) is not even followed in its District. Hartley

v. Suburban Radiologic Consultants, LTD., 295 F.R.D. 357, 369 (D.Minn. Sept. 30, 2013).

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Defendant also argues that class members would stand to recover no more than $1.16

each. PRA Mem at 12. These figures assume that the two classes must share one $500,000

recovery. Plaintiffs would contend that PRA’s exposure is $500,000 per class. That figures to

$1.85 per class member for Class I and $3.13 per class member for Count II. Defendants well

know, of course, that there is no likelihood that every single class member will respond to the

notice and send in a claim form. A 20% response rate is a generous estimate; a 10% response rate

is a more realistic one. This would result in $18.50 being paid to members of Class I and $31.30

being paid to members of Class II.

PRA also argues that the cost of notice and administration is prohibitive. PRA Mem at

12. Those costs do not figure into the class action calculus. PRA is liable for this because it does 

debt collections on such a massive scale.

Finally PRA argues that class members could collect $1000, plus attorneys fees, by filing 

individual lawsuits. They point out that plaintiffs’ counsel files individual cases. This presumes

that any class members will find their way into counsel’s office, which Mace questioned as

quoted above. Further, it is not likely that plaintiff’s counsel (or all of the attorneys filing

FDCPA actions across the country) could handle 270,000 cases. But as Judge Bucklo mentioned

in a recent opinion certifying a class: 

I conclude that a class action is the superior method for adjudicating these claims

regardless of whose coffers are at stake. Even assuming that class members could expect

no more than a de minimis recovery, other interests are at stake. As I have noted in the

past, “if class actions can be said to have a main point, it is to allow the aggregation of

many small claims that would otherwise not be worth bringing, and thus to help deter

lawless defendants from committing piecemeal highway robbery, a nickel here and a

nickel there, that adds up to real money, but which would not be worth the while of an

individual plaintiff to sue on.” Miller v. McCalla, 198 F.R.D. 503, 506 (N.D. Ill. 2001). 

While it is true that the statute allows for individual recoveries of up to $1000, “this

assumes that the plaintiff will be aware of her rights, willing to subject herself to all the

burdens of suing and able to find an attorney willing to take her case. These are

considerations that cannot be dismissed lightly in assessing whether a class action or a

series of individual lawsuits would be more appropriate for pursuing the FDCPA’s

objectives.” Mace v. Van Ru Credit Corp., 109 F.3d 338, 344-45 (7th Cir. 1997) (“we

believe that a de minimis recovery (in monetary terms) should not automatically bar a

class action”). 

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And of course, judicial efficiency is served by aggregating claims into one lawsuit,

rather than resolving the same issue in multiple, individual suits. 

In short, even if I assume that the putative class could expect, at best, a de minimis

monetary recovery, I am nevertheless convinced that a class action is the superior method

of adjudicating plaintiff’s claims. (Emphasis added)

Rawson v. Source Receivables Management LLC, 289 F.R.D. 267 (N.D. Ill. Feb. 13, 2013).

WHEREFORE, plaintiffs respectfully request that this Court enter an order determining that

this action may proceed as a class action.

Respectfully submitted,

s/ Cassandra P. Miller

Cassandra P. Miller

Daniel A. Edelman

Cathleen M. Combs

James O. Latturner

Cassandra P. Miller

EDELMAN, COMBS, LATTURNER

& GOODWIN, LLC

20 South Clark Street, Suite 1500

Chicago, Illinois 60603

(312) 739-4200

(312) 419-0379 (FAX)

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CERTIFICATE OF SERVICE

I, Cassandra P. Miller, hereby certify that on October 22, 2014, a true and accurate copy of

the foregoing document wasfiled via the Court’s CM/ECF system, which sent notice via email to the

following: 

David M. Schultz

dschultz@hinshawlaw.com

Avanti D. Bakane

abakane@hinshawlaw.com

Jennifer Weller

jweller@hinshawlaw.com

Katherine H. Tresley

ktresley@hinshawlaw.com

s/ Cassandra P. Miller

Cassandra P. Miller

Daniel A. Edelman

Cathleen M. Combs

James O. Latturner

Cassandra P. Miller

EDELMAN, COMBS, LATTURNER

& GOODWIN, LLC

20 South Clark Street, Suite 1500

Chicago, Illinois 60603

(312) 739-4200

(312) 419-0379 (FAX)

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