Advanta’s concern, although legitimate, does not preclude class certification.’ As long as
the class is fashioned narrowly so as to include only those members who borrowed for consumer
purpose as defined by TILA, the class may be preserved. The loan application on file with
Advanta will indicate the purpose of the loan.” As noted in Romaker, questionnaires may be
appropriate to determine the purpose of the loan. In the alternative, borrowers could be required
to submit documentation showing the purpose of their loan as a prerequisite to sharing in any
recovery. These protections will ensure that the class is comprised of those whose loans are
subject to TILA. Accordingly, Plaintiffs are directed to submit an elaborated definition of the
class so as to limit it to only those putative members whose credit extensions are governed by
TILA as consumer transactions. With those limitations in place, the court finds that such a
proposed class’ satisfies the criteria for class certification as set forth in Fed. R. Civ. P. 23.

First of all, joinder of all members of the class would be impracticable. Counsel for

Powell estimates that the class contains 500-600 members.’ Advanta is a national lender which

makes hundreds of loans each year in the Chicago area. The 1-4 Family Rider, the form that

' Advanta also seeks to cross-examine each putative class member prior to certification
to determine whether the loan is for consumer purposes, but the court rejects such a proposition
as too burdensome and intrusive upon absent class members.

? For example, the Uniform Residential Loan Application requires each borrower to state
the purpose of the loan and whether the property will serve as the borrower’s “primary
residence.” By law, these documents are required to be preserved and should be contained in
each loan file.

> Plaintiffs are directed to submit to the court an elaborated definition of the proposed
class so as to limit it to those whose claims will be governed by TILA.

* In fact, in their Response In Opposition to Sims’s Motion for Class Certification,
Advanta concedes that the numerosity requirement has been met. See Def. Resp. at 4.

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satisfies all of the requirements of Rule 23. Trotter v. Klincar, 748 F.2d 1177, 1184 (7" Cri.
1984).

Advanta’s sole objection is that individual issues preclude the certification of a class, thus
defeating the requirements of commonality, typicality, and predominance. Advanta correctly
points out that business transactions are not subject to TILA. See 15 U.S.C. § 1603(1)
(exempting “credit transactions involving extensions of credit primarily for business,
commercial, or agricultural purposes”). Thus, Advanta’s argument goes, each putative class
member must demonstrate that her loan qualifies as a consumer transaction, defined in TILA as a
transaction:

in which the party to whom credit is offered or extended is a natural person, and the...

property... which [is] the subject of the transaction [is] primarily for personal, family,

or household purpose.
15 U.S.C. § 1602(h). Advanta insists that the putative class members must make individual
showings that the primary purpose of the loan was personal and not commercial. This court
disagrees. This court adopts the position taken by court in Romaker, which rejected an identical
argument:

Defendant argues that individual issues predominate because defendant was not required
to make TILA disclosures to those who were borrowing to purchase multiple units for a
business purpose. Since some class members whose loans contained the 1-4 Family
Rider were borrowing for a business purpose, so the argument goes, defendant would be
entitled to examine each class member on the question. However, this problem can be
resolved simply by defining the class so as not to include those who were borrowing for a
business purpose. To determine who should be excluded from the class on this basis,
which would be shown by facts such as the number of days they intended to occupy the
property per year, the parties can create a questionnaire to be sent to potential class
members along with the class notification materials.

1996 WL 254299 at *2.

3.


Plaintiffs take issue with, is a standard document used throughout the mortgage industry for
refinancing of multi-unit properties. Given Advanta’s large volume of business, it may be

reasonably inferred that the proposed class is sufficiently numerous. See In re VMS Securities

Litigation, 136 F.R.D. 466, 473 (N.D. Ill. 1991) (noting that courts may make “common sense
assumptions” in considering the numerosity requirement); Cox v. Joe Rizza Ford, Inc., No. 94 C
5688, 1996 WL 65994, at *7 (N.D. Ill. Feb. 9, 1996) (concluding from defendant’s volume of
business and use of standardized forms that numerosity requirement was satisfied).

Second, Plaintiffs’ claims are typical of the claims of the class. A claim is typical if “it
arises from the same event or practice or course of conduct that gives rise to the claims of other
class members and [the] claims are based on the same legal theory.” Rosario v. Livaditis, 963
F.2d 1013, 1018 (7" Cir. 1992). By definition, the class members obtained a residential
mortgage loan with an attached 1-4 Family Rider from Advanta and received a TILA Disclosure
Statement that failed to disclose the security interest in the personal property. In other words, the
class members allege that they were subject to the same wrongful practice and advance the same
legal theory.

Third, Plaintiffs have demonstrated that they will fairly and adequately represent the
class. Powell’s and Sims’s interests, which are identical to those of the class, are not antagonistic
to those of the class, and they appear to be ligating vigorously on behalf of the class. Plaintiffs
have appointed experienced and qualified counselors whose resumes reflect extensive trial
experience, especially in the area of class action and consumer litigation.

Lastly, class certification is appropriate under Fed. R. Civ. P. 23(b)(3). Common

questions of law and fact predominate over any questions affecting only individual class

-5-


— = Lae ss
Minute Onder Form (0697
sO United States District Court, Northern District of Illinois
Name of Assigned Judge ‘ Sitting Judge if Other
or Magistrate Judge David H. Coar than Assigned Judge
CASE NUMBER 00 C7234 pATE| SEP 4 2001
CASE Powell v. Advanta
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
qd) Oo Filed motion of [ use listing in “Motion” box above.]
(2) o Brief in support of motion due
(3) Oo Answer brief to motion due . Reply to answer brief due.
(4) o Ruling/Hearing on set for at
(5) 0 Status hearing{held/continued to] [set for/re-set for] on set for at
(6) im Pretrial conference[held/continued to] [set for/re-set for] on__set for at :
ie) o Trial[set for/re-set for] on __ at
(8) 0 [Bench/Jury trial] [Hearing] held/continued to at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) CGeneral Rule 21 CIFRCP41(a)(1) [4 FRCP41(a)(2).
ao [Other docket entry] For the reasons stated in the attached Memorandum Opinion and Order,
Powell’s motion for class certification [Doc. 10-1] is granted pending this court’s approval of an
elaborated definition of the class that limits the transactions at issue to consumer loans as defined by
~ Dp cud | Nee
dal) oa (For further detail see order (on reverse side offattached to) the original minute order.]
No riotices required, advised in open court,
No notices required, number of notices
Notices mailed by judge’s staff. sep i 0 2001
Notified counsel by telephone. ate dooketed
X_ | Docketing to mail notices.
Mail AO 450 form. soe Desi
Copy to judge/magistrate judge.
courtroom
de(te) deputy’s
initials -
Date/time received in 7
central Clerk’s Office rnaitng deputy initials



members. The alleged TILA violation is the same for each class member, as they all allege that
Advanta’s standard practice of issuing 1-4 Family Riders and taking a security interest in
property without proper disclosure violated TILA. Moreover, a class action is the best method
for litigating this claim. The recovery available to each class member is not so significant,
making it cost-prohibitive to initiate individual actions. In view of the hundreds of potential
class members, too, a class action offers the most efficient method in terms of conserving the

resources of the court.

Conclusion
For the foregoing reasons, Sims’s and Powell’s motions for class certification are granted
pending this court’s approval of an elaborated definition of the class that limits the transactions at

issue to consumer loans as defined by TILA.

Enter:

David H. Coar

United States District Judge

Dated: SEP 4 2001

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS RGREETER
EASTERN DIVISION °
SEP +0 2001
ROSIE LEE POWELL, )
)
Plaintiff, ) oma wk
) N& 0007234}
v. )
) HONORABLE DAVID H. COAR
ADVANTA NATIONAL BANK, and )
ADVANTA MORTGAGE CORP., USA, )
)
Defendants. ) SEP 10 291
EDWARD SIMS, )
)
Plaintiff, )
) No. 00C 5942
v. )
) HONORABLE DAVID H. COAR
ADVANTA NATIONAL BANK, and )
ADVANTA MORTGAGE CORP., USA, )
)
Defendants. )

MEMORANDUM OPINION AND ORDER

Rosie Lee Powell (“Powell”) and Edward Sims (“Sims”) (collectively, “Plaintiffs”) bring

class action suits against Advanta National Bank and Advanta Mortgage Corp., USA

(collectively, “Advanta”). Although Powell and Sims bring separate suits, they are related, and

both cases were assigned to this Court based on relatedness. Because both parties advance


identical claims and the issues presented in their respective motions for class certification are
also the same, this court addresses the two motions together.

Powell and Sims challenge Advanta’s practice of failing to disclose that the lender is
taking a security interest in personal property through a mortgage with a “1-4 Family Rider.”
Plaintiffs’ complaint alleges that the Truth in Lending Disclosure Statements issued by Advanta
violate the Truth in Lending Act (“TILA”), 15 U.S.C. § 1638, and its accompanying Regulation
Z,12 CER. § 226.18. Plaintiffs seek statutory damages pursuant to 15 U.S.C. § 1640.

Federal Rule of Civil Procedure 23 permits a class action to be maintained if (1) the class
is so numerous that joinder of all class members is impracticable; (2) there are questions of law
or fact common to the class; (3) the claims or defenses of the representative parties are typical of
the claims or defenses of the class; and (4) the representative parties wil! fairly or adequate
protect the interests of the class. Fed. R. Civ. P. 23(a); Romaker v. Crossland, No. 94 C 3328,
1996 WL 254299 at *1 (N.D. IIL. May 10, 1996). In addition, the court must also find: (1) that
the prosecution of separate actions by the individual class members would create a risk of
inconsistent adjudications or substantially impair the abilities of other class members to protect
their interests; (2) that the party opposing the class has acted or failed to act on grounds generally
applicable to the class, thereby making injunctive or declaratory relief appropriate for the class;
or (3) that common questions of law or fact predominate over questions affecting only individual
members and the class action is the best method for fairly and efficiently adjudicating the
controversy. Fed. R. Civ. P. 23(b); Romaker, 1996 WL 254299 at *1. The party seeking

certification bears the burden of proving that its action is appropriate as a class action and that it

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