1

 The Court grants Defendants’ motion for leave to file notice of additional authority

[141], and considers that authority and McCormick’s response in the preparation of this

Order.

ORDER – PAGE 1

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

APRIL MCCORMICK, et al., §

§

Plaintiffs, §

§

v. § Civil Action No. 3:06-CV-0127-N

§

7-ELEVEN, INC., et al. §

§

Defendants. §

ORDER

This Order addresses Plaintiff April McCormick’s motion and amended motion to

certify class [122] [125]. For the following reasons, the Court grants the amended motion.1

I. FACTUAL BACKGROUND

On or about January 6, 2005, McCormick wrote a check to 7-Eleven, Inc. (“7-

Eleven”) in the amount of $11.91. At the point of sale, the 7-Eleven store had posted a sign

advising that dishonored checks returned for insufficient funds would be charged a service

fee of “$25 or the maximum allowed by law.” In addition to the sign, 7-Eleven’s check

acceptance policy mandates that each check be stamped or “franked” on the back with

language that the check writer must sign, authorizing the electronic debit of a service fee in

the event the check is returned unpaid. At the time of purchase, McCormick signed the

franking language on her check authorizing the service fee. Following McCormick’s

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ORDER – PAGE 2

purchase, her 7-Eleven check was returned for insufficient funds. On January 18, 2005,

McCormick received a standardized collection letter from Certegy Payment Recovery

Services (“CPRS”) notifying her that Certegy Check Services, Inc. (“CCS”) had purchased

McCormick’s check from 7-Eleven and that she owed a $30.00 service charge in addition

to the unpaid balance of the check. The letter also advised McCormick how to contact CPRS

in the event she disputed the amount to be collected. McCormick did not contact CPRS to

dispute the debt, and CPRS subsequently debited $11.91 and the $30 service charge from

McCormick’s account. McCormick now seeks to certify a class action against 7-Eleven,

Inc., CPRS, and CCS (collectively “Defendants”) for their collection practices on defaulted

checks.

McCormick moves the court for an order certifying a class consisting of all consumers

in the states of Texas, Hawaii, Montana, Oregon, Kentucky, Missouri, or Colorado who,

between January 14, 2004 and the date that the class is certified: (1) received a letter or

notice from Defendants or their agents collecting or attempting to collect a service charge or

processing fee in connection with a check returned for insufficient funds, and (2) paid a

service charge or processing fee to Defendants or their agents. McCormick alleges that

CPRS collected an illegal service charge in her case, and that it uses a standardized process

to obtain an illegal charge each time it collects on a defaulted check. She argues that CPRS’s

service charges are illegal with regard to each putative class member for violating the

reasonableness requirement that each of the seven states in the class definition impose on this

kind of service charge. 

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ORDER – PAGE 3

II. STANDARDS FOR CLASS CERTIFICATION

Under Federal Rule of Civil Procedure 23, the Court must “determine by order

whether to certify the action as a class action.” FED. R. CIV. P. 23(c). The Court has wide

discretion in determining whether to certify a class; however, that discretion must be

exercised within the bounds of Rule 23. See Castano v. Am. Tobacco Co., 84 F.3d 734, 740

(5th Cir. 1996). Furthermore, in making this determination, the Court must undertake a

rigorous analysis of Rule 23’s prerequisites by probing beyond the pleadings to understand

the claims, defenses, and relevant facts. See Unger v. Amedisys Inc., 401 F.3d 316, 321 (5th

Cir. 2005). Although the Court does not consider the merits of the plaintiffs’ claims in

determining whether to certify the proposed class, the Court must consider the “the nature

and range of proof necessary to establish the plaintiffs’ substantive allegations” if it is

adequately to conduct the rigorous analysis called for under Rule 23. Owner-Operator

Indep. Drivers Ass’n, Inc. v. Swift Transp. Co., 2006 WL 2521183, at *4 (D. Ariz. 2006);

see Castano, 84 F.3d at 741 (“In order to make the findings required to certify a class action

under Rule 23(b)(3) . . . one must initially identify the substantive law issues which will

control the outcome of the litigation.”) (quoting Alabama v. Blue Bird Body Co., 573 F.2d

309, 316 (5th Cir. 1978)).

A case may proceed as a class action only if the party moving for certification

demonstrates that it has met all four requirements of Rule 23(a) as well as at least one of the

three requirements of Rule 23(b). See Feder v. Electronic Data Sys., 429 F.3d 125, 128 (5th

Cir. 2005). Under Rule 23(a), the moving party must demonstrate that: (1) the class is so

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ORDER – PAGE 4

numerous that joinder of all members is impracticable (numerosity); (2) there are questions

of law or fact common to the class (commonality); (3) the claims or defenses of the

representative parties are typical of the claims or defenses of the class (typicality); and (4)

the representative parties will fairly and adequately protect the interests of the class

(adequacy). FED. R. CIV. P. 23(a).

In this case, McCormick relies on Rule 23(b)(1)(A),(b)(2) and (b)(3), in the

alternative, in support of class certification. Under Rule 23(b)(2), a class action is

appropriate when the party opposing the class has acted or refused to act on grounds

generally applicable to the class, thereby making appropriate final injunctive or

corresponding declaratory relief with respect to the class as a whole. FED. R. CIV. P.

23(b)(2). The Court already dismissed McCormick’s claim for declaratory relief, see Order

of Sept. 29, 2008, finding that her other claims would afford her full relief, and that a remedy

other than a declaratory judgment would be more effective or appropriate under the

circumstances. See Dresser Indus., Inc. v. Ins. Co. of N. America, 358 F. Supp. 327, 330

(N.D. Tex. 1973). Monetary relief predominates unless it is incidental to injunctive or

declaratory relief. Allison v. Citgo Petroleum Corp., 151 F.3d 402, 414 (5th Cir. 1998), and

in this case, because McCormick’s request for monetary relief clearly predominates over her

request for injunctive or declaratory relief, certification under Rule 23(b)(2) would be

improper. Id. at 411. 

 Accordingly, in order to certify the class, the Court must find that certification is

proper under Rule 23(b)(1)(A) or Rule 23(b)(3). Under Rule 23(b)(1)(A), class certification

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ORDER – PAGE 5

is appropriate if the plaintiff can demonstrate that the prosecution of separate actions by

individual members of the class would establish incompatible standards of conduct for the

party opposing the class. See FED. R. CIV. P. 23(b)(1)(A). Alternatively, the Court may

certify the class if it finds that, under Rule 23(b)(3), the 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 available methods for the fair and efficient

adjudication of the controversy. See FED. R. CIV. P. 23(b)(3). 

III. MCCORMICK WAIVES CLASS CERTIFICATION OF HER 

TDCA, DTPA, AND BREACH OF CONTRACT CLAIMS

The Court, though not reaching the merits, must consider how plaintiffs’ claims will

be tried, individually or on a class basis, Castano, 84 F.3d at 744, in order to determine the

appropriateness of class certification. The party seeking class certification bears the burden

of establishing that all requirements of Rule 23 have been satisfied. Berger v. Compaq

Computer Corp., 257 F.3d 475, 479-80 (5th Cir. 2001). McCormick’s Brief in Support of

Class Certification makes only passing reference to possible class Texas Debt Collection

Practices Act (TDCA), TEX. FIN. CODE ANN. § 392 (Vernon 2006), Deceptive Trade

Practices Act (DTPA), TEX. BUS. & COM. CODE ANN. § 17 (Vernon 2006), and breach of

contract claims (though she presents arguments relating to a breach of contract claim in her

Reply Brief). McCormick presents no discussion arguing for the class-wide resolution of

these claims in her certification brief, and therefore does not come close to meeting the

burden of a party seeking class certification with regard to those claims. For this Court to

speculate as to the viability of those claims in a class action, notwithstanding the lacunae in

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ORDER – PAGE 6

McCormick’s class certification brief, would come close to reversing the proper burden of

proof by essentially requiring Defendants to show cause why the court should not certify the

class. See In re American Medical Sys., 75 F.3d 1069, 1086 (6th Cir.1996). Therefore, the

Court finds that McCormick has waived inclusion of any DTPA, TDCA, and breach of

contract claims in her proposed class action. This leaves her claim under the Federal Debt

Collection Practices Act (FDCPA) Section 808, 15 U.S.C. § 1692(f), as the only possible

class claim. Furthermore, because the Court dismissed any FDCPA claims against the 7-

Eleven and CCS by Order dated October 30, 2006, this leaves CPRS as the sole defendant

in a possible class action.

IV. MCCORMICK MEETS THE THRESHOLD REQUIREMENTS OF RULE 23(A)

While the numerosity of the proposed class is undisputed, Defendants challenge class

certification on commonality, typicality, and adequacy grounds. The test for commonality

and typicality under Rule 23(a) are not demanding. See James v. City of Dallas, 254 F.3d

551, 571 (5th. Cir. 2001). All that is required to satisfy the commonality requirement is “one

common question of law or fact.” Id. A common question of fact central to the case is

whether CPRS’s service charge is reasonable, thereby establishing commonality. 

Defendants contend that McCormick is not a typical member of the class because her

individual claim is subject to a unique defense, namely that she had already paid a $30 CPRS

service charge on a defaulted check within weeks of the 7-Eleven transaction. Accordingly,

the Defendants state, McCormick knew or should have known about the fee, making the

argument that she authorized it particularly forceful in her case. They also point to potential

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ORDER – PAGE 7

differences in the ways that each member of the class may have agreed to the fee in an effort

to show that there is no possible typicality of claims in this case. However, the test for

typicality is not demanding, and focuses on the similarity between the named plaintiff’s legal

and remedial theories and the theories of those whom they purport to represent. Id.

McCormick’s claim does not turn on the specifics of authorization. She argues that the

amount charged was unreasonable regardless of any purported agreement. Insofar as that is

her complaint, she is a typical member of the class she seeks to certify.

Defendants attack McCormick’s adequacy as a class representative based on her

refusal to answer questions pertaining to the defaulted check to GameStop which she had

written prior to the 7-Eleven transaction. At the time, the Court had ruled provisionally that

McCormick’s prior history of being charged collection fees was not pertinent. Additionally,

McCormick had entered a filed stipulation regarding the GameStop check. Accordingly,

McCormick’s refusal to answer certain questions during deposition do not indicate her

unsuitability as a class representative. Since Defendants have previously stipulated to the

competency of the proposed class counsel and there is no conflict of interest between

McCormick and the class she seeks to represent, see id., the Court finds that McCormick

meets the adequacy requirement of Rule 23(a). 

V. CERTIFICATION UNDER RULE 23(B)(1)(A) IS NOT PROPER 

McCormick argues that class certification is warranted under Rule 23(b)(1)(A)

because separate actions might result in inconsistent or varying adjudications that would

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ORDER – PAGE 8

establish incompatible standards of conduct for CPRS. While certification under this

provision most often involves injunctive relief, which this Court has already denied, Rule

23(b)(1)(A) also allows certification in certain suits for money damages, where a party is

obliged by law to treat the members of the class alike or where the party must treat all alike

as a practical necessity. See Whittington v. United States, 240 F.R.D. 344, 354-55 (S.D. Tex

2006). 

CPRS is not required to treat all members of the proposed class alike as a matter of

law. McCormick also fails to show that CPRS would have to treat all the class members

alike as a matter of practical necessity. McCormick states that, were the claims to proceed

individually instead of as a class, the same service charge dollar amount might be held

unreasonable in one case while being found permissible in another. These different rulings

on what constitutes a reasonable charge would create unintelligible standards of conduct for

CPRS, according to McCormick. However, varying adjudications on what exceeds the dollar

limit of a reasonable service charge in different cases would not thereby establish

incompatible or unintelligible standards for what would fall well within the bounds of

reasonable. For instance, even if two fact finders were to decide differently regarding the

reasonableness of a $30 dollar service charge in separate cases brought by two individuals

against CPRS, this would not create an unintelligible standard of conduct for CPRS insofar

as it could set its service charges well below $30 dollars at, for instance, $5 dollars, to

possibly avoid being found unreasonable in the future. 

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ORDER – PAGE 9

Thus, the mere possibility of inconsistent findings in two different cases regarding the

reasonableness of the same dollar amount charge is not enough to meet Rule 23(b)(1)(A)

requirements, because CPRS would be able to comply with the judgments in all such cases.

While inconsistent judgments could “cast a pall of uncertainty over the merits of unlitigated

claims for refunds [,] . . . these inconsistencies and uncertainties would not place defendants

in the dilemma of the sort contemplated by (b)(1)(A), for the varying adjudications would

not preclude compliance with the judgment in each case.” Walker v. City of Houston, 341

F. Supp. 1124, 1131 (S.D. Tex. 1971). Accordingly, certification is not warranted under

Rule 23(b)(1)(A). 

VI. CERTIFICATION IS WARRANTED UNDER RULE 23(B)(3) BECAUSE THE PROPOSED

CLASS MEETS THE PREDOMINANCE AND SUPERIORITY REQUIREMENTS

McCormick alternatively seeks certification under Rule 23(b)(3). Since the FDCPA

Section 808 claim is the only one remaining in McCormick’s proposed class action, under

Rule 23(b)(3) this Court must now determine whether common questions of law and fact

would predominate over questions affecting individual class members in the resolution of

that claim. FDCPA Section 808 prohibits, in the context of debt collection, the collection

of any amount (including any interest, fee, charge, or expense incidental to the principal

obligation) unless such amount is expressly authorized by the agreement creating the debt

or permitted by law. See 15 U.S.C. § 1692(f). Thus, under the FDCPA, CPRS may impose

a service charge (i) if the customer expressly agrees to the charge in the contract creating the

debt or (ii) the charge is permitted by law. Tuttle v. Equifax Check, 190 F.3d 9, 13 (2d Cir.

1999). Under prong (i), the charge must be expressly provided for in the contract creating

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ORDER – PAGE 10

the debt and also not be prohibited by state law. See Staff Commentary on the FDCPA, 53

Fed.Reg. 50,097, 50,108 (Fed. Trade Comm’n 1988); see also Tuttle, 190 F.3d at 13 (“If

state law expressly prohibits service charges, a service charge cannot be imposed even if the

contract allows it . . . .”) 

CPRS uses a standardized electronic or manual process to collect on dishonored

checks, and both types of collection cost CPRS less than one dollar per check in all cases.

Akins Depo. 116:6-13, McCormick’s Appx. 12. McCormick contends that CPRS’s service

charge violates the reasonableness standard of all the state laws in question for being grossly

disproportionate to the cost of re-presentment. Given that the cost of re-presentment is

always less than one dollar, whether CPRS’s service charges – set at the statutory maximum

of each state – are unreasonable in relation to this cost is a common question of fact. 

McCormick uses the premise that the service charge is uniformly unreasonable to

make two slightly different arguments for why the service charge violates the FDCPA: the

imposition of an allegedly unreasonable service charge is not only not expressly permitted

by state law, but (1) cannot be authorized by a contract because it would be prohibited by the

same state law or (2) violates the contracts between customers and CPRS, which only

authorize charges “allowed by law,” since the service charge is unreasonable and therefore

not “allowed by law.” According to McCormick, CPRS’s service charge is either

unauthorizable or unauthorized, and also not otherwise permitted by state law, therefore

violating FDCPA Section 808. 

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ORDER – PAGE 11

Defendants contend that class certification is improper because individual questions

of fact predominate in this case. According to Defendants, determining CPRS’ liability

under the FDCPA to any member of the proposed class would require determining whether

that individual agreed to the service charge, which would make a class wide resolution of the

FDCPA claim impossible. Defendants cite to Harrell in which a plaintiff brought class

claims under FDCPA Section 808 and in which the court denied certification of a proposed

statewide class consisting of individuals from whose accounts the defendant had debited

service charges without the account owner’s prior authorization or permission. Harrell v.

CheckAgain, LLC, 248 F.R.D. 199, 207 (S.D. Miss. 2006). The court in Harrell found that

before an individual could be added to the class, one would have to determine whether that

individual entered an agreement authorizing the charge or whether the charge was permitted

due to a point-of-sale notice. 

In this case, however, McCormick is making a different argument for why CPRS’

collection practice violates FDCPA Section 808. Unlike the class considered for certification

in Harrell, her proposed class does not include as a criteria for membership the fact that an

individual did not authorize fee collection. She is not claiming that the charges were

improper because no charge was authorized, but rather, that the charges were unreasonable

and thus incapable of being authorized, or exceeded what was authorized. Thus, Harrell and

BioPay, which Defendant files as supplementary authority, are inapposite. See Gene and

Gene LLC v. Biopay LLC, 541 F.3d 318 (5th Cir. 2008) (in which the Court decertifies a

class action on the grounds that the possibility of individual consent to a common, automated

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2

 “On return of a payment device to the holder following dishonor of the payment

device . . . [any person] retained . . . to seek collection of the face value of the dishonored

payment device may charge the drawer or endorser a reasonable processing fee of not more

than $30.” TEX. BUS. & COM. CODE § 3.506(b) (Vernon 2006).

“The payee or holder . . . of any check . . . that has been dishonored . . . shall be allowed to

assess the maker a reasonable service charge of not more than $30.” HAW. REV. STAT. §

ORDER – PAGE 12

process defeats predominance). If McCormick’s theory is correct, differences in how or

whether a check writer may have authorized a charge, through express or implied agreement,

through check franking or by a sign at the point of sale or prior knowledge, are irrelevant.

The Court does not weigh the merits of McCormick’s claim at this stage; regardless whether

McCormick is correct that one cannot authorize a supposedly unreasonable service charge

in states which have a reasonableness requirement, the legal question itself is capable of

class-wide determination. 

Defendants also argue that variations in the applicable state statutes would render this

class action unmanageable. Determining whether McCormick has borne her burden on class

certification requires this Court to consider variations in state law, since this action involves

multiple jurisdictions. See Castano, 84 F.3d at 741. Variations in state law may swamp any

common issues and defeat predominance. Id. Furthermore, given the plaintiff’s burden, a

court cannot rely on assurances of counsel that any problems with predominance or

superiority in this regard can be overcome. Id. (internal citation omitted). 

McCormick argues that any differences in the relevant statutes of the seven class

member states are insignificant to the determination of CPRS’ liability. The state laws all

require that a service charge be reasonable.2

 The fact that the states have different dollar

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490:3-506:5 (2008).

“[In case of a dishonored check] the person who issues the check . . . is liable to the payee

or the payee’s assignee for a service charge in a reasonable amount, not greater than $30.”

MONT. CODE ANN. § 27-1-7171(2) (2007). 

“If a check is dishonored, the payee may collect from the maker a reasonable fee representing

the cost of handling and collecting on the check. The total fee for any single check may not

exceed $25.” OR. REV. STAT. ANN. § 30.701(5) (2008).

“A maker makes good on a check . . . by paying to the holder the face amount of the

instrument, together with any merchant’s posted reasonable bad check handling fee not to

exceed fifty dollars.” KY. REV. STAT. ANN. § 514.040(4)(b) (2008). 

“If a check that is dishonored . . . is not referred to the prosecuting attorney . . . the party to

whom the check was issued, or his agent or assignee, or a holder, may collect from the issuer,

in addition to the face amount of the check, a reasonable service charge, not to exceed

twenty-five dollars, plus an amount equal to the actual charge by the depository institution

for the return of each . . . dishonored instrument.” MO. STAT. ANN. § 570.120 (2008).

“Any person who . . . makes any payment of obligation other than an obligation on a

consumer credit transaction . . . by means of making any check . . . which is not paid upon

its presentment is liable to the holder of such check . . . for one of the following amounts, at

the option of the holder or such assignee: (a) the face amount of the check . . . plus actual

damages . . .; or (b) an amount equal to the face amount of the check . . . and (I) the amount

of any reasonable posted or contractual charge not exceeding twenty dollars and (II) if the

check . . . has been assigned for collection to a person licensed as a collection agency . . .

twenty percent of the face amount of the check . . . but not less than twenty dollars . . .”

COLO. REV. STAT. ANN. § 13-21-109 (2008).

ORDER – PAGE 13

amount ceilings for service charges is irrelevant because McCormick is not claiming that

CPRS’s service charge exceeded the dollar amount ceiling, but rather exceeded what is

reasonable. As the Court understands it, McCormick is alleging that the cost to CPRS in

check representment is always less than one dollar, that this minimal cost is disproportionate

to CPRS’s fixed service charge in any of the jurisdictions because it falls far short of even

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ORDER – PAGE 14

the lowest amount ceiling of $20, and that the service charges in question are therefore

unreasonable under any of the state statutes. 

Two of the states, Colorado and Missouri, authorize the imposition of fees above a

reasonable service charge in certain instances, but McCormick argues that neither of those

provisions are relevant in this case. Colorado permits additional recovery if the check has

been assigned for collection to a person licensed as a collection agency in the amount of

twenty percent of the face amount of the check, but not less than twenty dollars. See COLO.

REV. STAT. ANN. § 13-21-109(b)(II) (2008). Missouri permits the recovery of an additional

amount equal to the actual charge by the depository institution for the return of each unpaid

or dishonored instrument. See MO. REV. STAT. § 570.120(6)(2) (2008).

McCormick summarily dismisses the applicability of these Colorado and Missouri

provisions to the class claim, arguing that these provisions deal with “variable charges” and

are not implicated because CPRS does not base its service charge in individual cases on the

actual costs of check re-presentment nor the face amount of the check. While McCormick

may be correct that such provisions apply only in the case of a collection agency which

makes variable charges in individual cases, this contention is not self-evident and she does

not cite any authority in her favor. Her perfunctory discussion on this point does not meet

her burden of demonstrating to this Court that the Colorado and Missouri provisions would

not raise individual factual issues that could undermine the possibility of class-wide

adjudication. The Court thus acts within its discretion to narrow the definition of the

proposed class, striking the inclusion of individuals from Colorado and Missouri. See In re

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ORDER – PAGE 15

Monumental Life Ins. Co., 365 F.3d 408, 414 (5th Cir. 2004). Because none of the other

states’ statutes allows for the imposition of additional fees that could impede a class-wide

inquiry into the reasonableness of CPRS’s service charge, the Court finds the question of

whether CPRS’s service charge is unreasonable under Texas, Montana, Hawaii, Oregon, or

Kentucky law to be a common question of fact.

Defendants also dispute predominance of common questions of fact on the grounds

that it is necessary first to determine whether each class member qualifies as a consumer

under the FDCPA. Under the FDCPA, the term “consumer” means any natural person

obligated or allegedly obligated to pay any debt, 15 U.S.C. § 1692a(2), and “debt” means any

obligation or alleged obligation to pay money arising out of a transaction in which the

money, property, insurance, or services which are the subject of the transaction are primarily

for personal, family, or household purposes. 15 U.S.C. § 1692a(5). Thus, CPRS can be liable

under the FDCPA to individuals who incurred debt for only certain kinds of purchases.

According to Defendants, in order to ascertain whether a person qualified for class

membership, individualized inquiries would be required into whether that person’s purchase

was for “personal, family, or household purposes,” as opposed to commercial purposes. 

In Ballard, a court in the Ninth Circuit rejected an identical argument made by a check

collection service against class certification. In that case, based on evidence that the

defendant provided check guarantee services primarily for retail stores and categorized all

checks as either “personal” or “business” in its computerized database, the court held that

proof that the dishonored check was personal created a rebuttable presumption that the

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ORDER – PAGE 16

transaction was consumer in nature, for the purposes of the FDCPA. See Ballard v. Equifax

Check Servs., Inc., 158 F. Supp. 2d 1163, 1172 (E.D. Cal. 2001) (citing Ditty v. Checkrite,

Ltd., 1998 WL 663357 *2 (D. Ut. 1998)) (holding that “the use of a personal check, as

identified on the defendants’ computer system, creates a rebuttable presumption that the debt

was consumer in nature and is sufficient to make out plaintiffs’ prima facie case” as required

for class certification). The Ballard court went on to hold that the defendant could rebut this

presumption on an individual basis in the damages phase of the action. Id. at 1173. 

 In this case as well, CPRS’s computer system sorts checks into personal or business,

Hobart Dep. 11: 1-17, Plaintiffs’ Reply Appx. 76. Unlike in Ballard, though, Plaintiffs have

not presented adequate evidence that CPRS provides services only or even primarily for

retail stores. Additionally, though the class is defined as limited to “consumers” who

received a collection letter from CPRS and paid a processing fee on a defaulted check, it is

unclear if “consumers” simply means all writers of defaulted checks, or, if it is to mean those

check writers falling within the FDCPA definition of consumer, how that sorting is to

happen. 

However, given that CPRS’s computer system sorts checks into personal and

business, the Court will exercise its discretion to certify a class limited to those persons

whose defaulted check was classified as personal by CPRS’s computer system. With regard

to this class of “personal check writers,” the Court will presume that the transaction in

question was consumer within the meaning of the FDCPA. At the damages phase, CPRS

can rebut that presumption with regards to any individual class member. Thus, the

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ORDER – PAGE 17

distinction between personal and commercial debt for the purposes of the FDCPA does not

impede certification of the class. The modified class is, in relevant part, accordingly limited

to those who received a letter or notice from CPRS collecting or attempting to collect a

service charge or processing fee in connection with a personal check returned for insufficient

funds. 

After modifying the class to exclude persons from Missouri and Colorado and

limiting it to persons from whom CPRS collected or attempted to collect on a personal check,

the Court finds that common questions predominate over issues affecting individual class

members and that a class action would be manageable, thereby meeting the predominance

requirement of Rule 23(b)(3).

In this case, the Court finds that class adjudication is also superior to other available

methods for the fair and efficient adjudication of the controversy. See FED. R. CIV. P.

23(b)(3). The case authorities that the parties cite regarding superiority in FDCPA claims,

all from outside this jurisdiction, are divided over whether the FDCPA’s cap on additional

damages in a class action, the lesser of $500,000 or one percent of the net worth of the debt

collector, see 15 U.S.C. § 1692k(a)(2)(B), should weigh against class certification, because

class members stand to recover more if they file individual actions. Compare Gradisher v.

Check Enforcement Unit, Inc., 209 F.R.D. 392, 394 (W.D. Mich. 2002) (decertifying class

because the FDCPA damages cap meant that recovery for each class member would be

minimal) with Weber v. Goodman, 9 F.Supp.2d 163 (E.D.N.Y.1998) (holding that

certification was proper, even though the class plaintiffs stood to recover no more than two

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ORDER – PAGE 18

dollars per member, because it was unlikely that the class members would file individual

suits). 

In addition to what are likely to be minimum actual damages, given the amount of the

service charge in each case, the statutory damages for an individual FDCPA claim are $1000

dollars at a maximum. See 15 U.S.C. § 1692k(a)(2)(A). In determining statutory damages

up to this amount, the Court weighs the frequency and persistence of noncompliance by the

debt collector, the nature of such noncompliance, and the extent to which such

noncompliance was intentional. See 15 U.S.C. § 1692k(b)(1). Accordingly, a damages

award close to $1000 is not necessarily the amount that the vast majority of claimants would

win in individual actions, and is therefore not the amount that such individuals are

realistically foregoing in pursuing a class claim instead. The fact that the FDCPA allows

plaintiffs to recover reasonable attorney’s fees and court costs, see 15 U.S.C. § 1692k(a)(3),

thereby facilitating the prosecution of individual claims, is not determinative either. After

all, the FDCPA specifically mentions the possibility of class actions in the previous

provision. See 15 U.S.C. § 1692k(a)(2)(B). 

Castano speaks of the existence of a “negative-value” suit, in which any recovery in

an individual case would be outweighed by litigation costs, as being the most compelling

rationale for finding superiority of a class action, Castano 84 F.3d at 748. While individual

suits against CPRS would not be of “negative-value,” given that an individual plaintiff could

recover his attorney’s fees in addition to damages, the small damages award at stake in any

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ORDER – PAGE 19

single case of excessive service charges would nonetheless be likely strongly to deter the

prosecution of individual claims. 

 In Castano, the court was weighing class certification of a suit by smokers against

tobacco companies. In finding that a class action was not superior to the prosecution of

individual suits, it noted that individual damages were high and punitive damages were

available in most states. Id. The Castano decision cites extensively to Judge Posner’s

analysis in Rhone-Poulenc, which was addressed a situation in which “each [individual]

plaintiff if successful [was] apt to receive a judgment in the millions.” Id. (quoting In re

Rhone-Poulenc Rorer, Inc., 51 F.3d 1293, 1300 (7th Cir.)). Thus, the broad statements about

the dispensability of class actions made in those contexts, where the damages at stake even

in individual cases were in the thousands, tens of thousands, or millions, are not applicable

to this case. 

Despite the fact that attorney’s fees and court costs are recoverable under the FDCPA,

given the minimal damages likely at stake for the vast majority of individual claimants, they

are unlikely to pursue individual claims. In this context, a class action is the only viable

remedy for most members of the proposed class. The Court finds that a class action is the

superior method of adjudication. Class certification is thus warranted under the requirements

of Rule 23(b)(3). 

VII. CONCLUSION

Because the proposed class, as modified in this Order to relate exclusively to CPRS

and also to exclude members from Missouri and Colorado, meets the threshold requirements

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ORDER – PAGE 20

of Rule 23(a) as well as the predominance and superiority requirements of Rule 23(b)(3), the

Court grants the motion to certify the modified class. The certified class is: all consumers

in the states of Texas, Hawaii, Montana, Oregon, or Kentucky who, between January 14,

2004 and the date of this Order, (1) received a letter or notice from CPRS collecting or

attempting to collect a service charge or processing fee in connection with a personal check

returned for insufficient funds, and (2) paid a service charge or processing fee to CPRS. 

Signed March 12, 2009.

_________________________________

David C. Godbey

United States District Judge

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