The FTC expressly stated when it granted Maine the exemption to create the Maine FDCPA that
the state was not exempted from section 813, See Notice of Maine Exemption from the Fair
Debt Collection Practices Act, 60 Fed. Reg. 66,972, 66,976 (Dec. 27, 1995) (“Section 813 of the
FDCPA is not included within the scope of the exemption granted by the Commission in
response to Maine’s request.”); 16 C.F.R. § 901.6(d) (“no exemption shall extend to the civil
liability provisions of Section 813 of the Act”).

Section 813 of the FDCPA provides the civil liability provisions for both the federal Act
and the Maine FDCPA because the FTC declined to grant the state an exemption on that
provision. We do not believe, however, that plaintiffs from Maine should be required to join in a
single national class action under the federal FDCPA. While Maine was not granted a civil
liability exemption from the federal Act, it was granted an exemption on the substantive cause of
action under which this claim was filed (MRSA § 11013(2)(E) and (J)). To limit Maine residents
to a national class action under the federal FDCPA would undermine the purpose of creating the
separate Maine FDCPA with enhanced consumer protections in some areas, See Notice of Maine
Exemption from the Fair Debt Collection Practices Act. 60 Fed. Reg. at 66,978.

Based on all of the reasons discussed above, this Court finds that the Rule 23
requirements for a class certification have been met in this case in their entirety, and we grant
Mr. Maxwell’s motion for class certification. We propose the following class definition:

All natural persons with Maine addresses who received a letter in the form

represented by Exhibit A from Arrow Financial Services, LLC with respect to a

debt charged off 7 years or more prior to the date of the letter, which letter was

sent on or after February 3, 2002, except those cases in which satisfaction of the

debt identified in the letter was reported in connection with either (1) a credit

transaction involving, or which may reasonably be expected to involve, a principal
amount of $150,000 or more, (2) the underwriting of life insurance involving, or

13


As previously stated, for purposes of a motion to certify a class, the allegations in the
complaint are presumed true. Johns, 145 F.R.D. at 482. The court does not reach the merits of
the complaint or weigh evidence. Eisen v. Carlisle & Jacquelin, 417 U.S. 156, 177-78 (1974);
Koch v, Stanard, 962 F.2d 605, 607 (7th Cir. 1992). The burden is on the party seeking class
certification to demonstrate that the requirements of Rule 23 are satisfied. Gen. Tel. Co. of
S.W. v, Falcon, 457 U.S. 147, 161 (1982); Trotter v. Klincar, 748 F.2d 1177, 1184 (7th Cir.
1984). Failure on part of the movant to satisfy any one of the requirements of Rule 23(a) or (b)
precludes class certification. Patterson v. Gen. Motors Corp., 631 F.2d 476, 480 (7th Cir. 1980).
The court has broad discretion in ruling on a motion for class certification, Retired Chicago
Police Ass’n v. Chicago, 7 F.3d 584, 596 (7th Cir. 1993). We now consider each element of the
Rule 23 requirements in turn.

A Requirements of Federal Rules of Civil Procedure 23(a)

1. Numerosity

Rule 23(a)(1) requires that the class must be “so numerous that joinder of all members is
impracticable.” Fed.R.Civ.P. 23(a)(1). Because there is no mystical number at which the
numerosity requirement is established, courts have found this element satisfied when the putative
class consists of as few as 10 to 40 members. See, e.g., Markham y. White, 171 F.R.D. 217, 221
(N.D. Ill. 1997) (35-40 class members); Hendricks-Robinson v. Excel Corp., 164 F.R.D. 667, 671
(C.D. Ill. 1996) (38 class members). Although a plaintiff need not allege the exact number or
identity of the class members, the plaintiff ordinarily “must show some evidence or reasonable
estimate of the number of class members.” Long v. Thorton Township High Sch, Dist., 82 F.R.D.

186, 189 (N.D. Ill. 1979). In determining whether the claimed class contains a sufficient number


This Court finds that Mr. Maxwell has demonstrated that he has a sufficient stake in the outcome
of the litigation to ensure that he will be a zealous advocate as the named representative on behalf
of the class.

In addition to the adequacy of representation of the class representative, the class counsel
must also meet requirements for adequacy of representation. Counsel for the named plaintiff
must be experienced and qualified and generally be able to conduct the litigation. Jd. at 598;
Gammon vy. GC Servs. Lid. P'ship, 162 F.R.D. 313, 317 (N.D. Ill. 1995). Counsel for the named
plaintiff in this case are experienced in handling class action lawsuits and have competently
handled many cases before this Court in the past. This Court finds that the adequacy of
representation requirement under Rule 23(a) has been met.

B. Requirements of Federal Rules of Civil Procedure 23(b)(3)

We now turn to the requirements for class certification under Rule 23(b). In addition to
meeting class certification requirements under Rule 23(a), the plaintiff's proposed class must
satisfy the requirements of one of the three subsections of Rule 23(b). Fed. R. Civ. P. 23(b).
Certification under Rule 23(b)(3) is appropriate if (1) questions of law or fact common to the
members of the class predominate over any questions affecting only individual members and (2)
a class action is superior to other available methods for the fair and efficient adjudication of the
controversy. Fed. R. Civ. P. 23(b)(3); Szabo v. Bridgeport Machs., Inc., 249 F.3d 672, 676 (7th
Cir. 2001); Kremnitzer v. Cabera & Rephen, P.C., 202 F.R.D. 239, 242 (N.D. Ill. 2001).

1. Predominance of class issues over individual issues

Under the predominance requirement of Rule 23(b), common questions of law or fact

must predominate, but they need not be exclusive. Scholes v. Moore, 150 F.R.D. 133, 138 (N.D.



in its responses to Mr. Maxwell’s requests for admissions that it sent the letter to at least 500
individuals with Maine addresses seeking to collect a debt charged off more than seven years
before the letter was sent. (Def.’s Resp. to P].’s Req. for Admis. { 12). This admission creates a
strong basis to find that the numerosity requirement has been met. In addition, when identifying
the potential class, the class definition can take into account any potential exceptions to the seven
year reporting limitation, Thus, this Court finds that the numerosity requirement is satisfied in
this case.
2. Commonality

Under Rule 23(a)(2), “questions of law or fact common to the class” must be present
before a class may be certified. The existence of a common nucleus of operative facts is usually
enough to establish commonality. Rosario v. Livaditis, 963 F.2d 1013, 1018 (7th Cir. 1992).
Courts consistently have found a common nucleus of operative facts if a defendant has allegedly
directed standardized conduct toward the putative class members or if the class claims arise out
of standardized documents. Rosario, 963 F.2d at 1018; Johnson v. Aronson Furniture Co., 1998
WL 641342, at *3 (N.D. Ill. Sept. 11, 1998); Peterson v. H & R Block Tax Serv. Inc., 174 F.R.D.
78, 81 (N.D. Ill. 1997).

A plaintiff normally is only required to show that there is “at least one question of law or
fact common to the class.” Arenson v. Whitehall Convalescent & Nursing Home, Inc., 164
F.R.D. 659, 663 (N.D. Ill. 1996). When a “question of law refers to a standardized conduct by
defendants toward members of the class, a common nucleus of operative facts is typically
presented, and the commonality requirement is usually met.” Moore v. Simpson, 1997 WL

570769, at *3 (N.D. Ill. Sept. 10, 1997) (internal quotations omitted); see also Rosario, 963 F.2d


of members, the court is permitted to “make common sense assumptions in order to find support
for numerosity.” Cannon v. Nationwide Acceptance Corp., 1997 WL 139472, at *2 (N.D. Ill.
March 25, 1997), quoting Evans v. U.S. Pipe & Foundry, 696 F.2d 295, 930 (11th Cir. 1983).

This Court previously has found that it is reasonable to assume the number of potential
class members satisfies the numerosity requirement when the defendant allegedly used
“preprinted, standardized debt collection letters in attempting to collect on the [allegedly
delinquent] debt.” Hamid v. Blatt, Hasenmiller, Leibsker, Moore & Pellettieri, et al., 2001 WL
1543516, at *3 (N.D. Ill. Nov. 30, 2001), citing Peters v. AT & T, 179 F.R.D. 564, 567-68 (N.D.
Ill. 1998) (“Based on these facts it is reasonable to infer that many individuals received the form
collection letter and that joinder of all the individuals would be impracticable.”). Whether the
numerosity requirement is met in this case is complicated, however, by certain exceptions to the
seven year reporting limitation under specific sections of the FCRA, 15 U.S.C. § 1681c¢(b)(1)-(3).
Pursuant to the FCRA, “no consumer reporting agency may make any consumer report
containing ... accounts placed for collection or charged to profit and loss which antedate the
report by more than seven years.” 15 U.S.C. 1681c(a)(4). However, creditors may report the
satisfaction of a debt when it is more than seven years old if: (1) the debtor applied for credit in
an amount exceeding $150,000; (2) the debtor applied for life insurance in an amount exceeding
$150,000; or (3) the debtor applied for employment for a job with a salary exceeding $75,000.
15 U.S.C. § 1681c(b)(1)-(3).

Arrow argues that class certification is not merited in part because Mr. Maxwell has
prematurely moved to certify a class without knowing how many potential members would be

subject to these exceptions to the seven year reporting limitation. However, Arrow has admitted


from the same event or practice or course of conduct that gives rise to the claims of other class
members and his or her claims are based on the same {egal theory.” Johnson y. Aronson
Furniture Co., 1998 WL 641342, at * 3, quoting De La Fuente v. Stokely-Van Camp, Inc., 713
F.2d 225, 232 (7th Cir. 1983) (internal quotation omitted). The typicality requirement is closely
related to the commonality requirement under Rule 23(a). Rosario, 963 F.2d at 1918. Arrow
argues that Mr. Maxwell cannot meet the typicality requirements under Rule 23(a)(3) because
“whether the act of satisfaction of an outstanding debt by any particular putative class member is
reportable by Arrow under the FCRA depends in the individual circumstances of the recipient.”
(Def. Resp. to Mot. for Cl. Cert., at 12). We disagree with Arrow and find that this is not a
problem because the class can be defined to include only those individuals who received the
letter and who had a debt that was more than seven years old which was not reportable under the
FCRA. Thus, we conclude that Mr. Maxwell’s claims are typical of the class because they arise
from the same course of conduct and are based on the same general legal theory.
4. Adequacy

Under Rule 23a), the adequacy of representation requirement mandates that both the
class representative and counsel for the named plaintiff must be able to zealously represent and
advocate on behalf of the class as a whole. Retired Chicago Police Ass'n, 7 F.3d at 598. As the
class representative, Mr. Maxwell must not have “antagonistic or conflicting claims with other
members of the class,” and he must have a “sufficient interest in the outcome of the case to
ensure vigorous advocacy.” Sebo v. Rubenstein, 188 F.R.D. 310, 316 (N.D. Ill. 1999) (citation
omitted). We have found no evidence in any of the filings in this case indicating that Mr.

Maxwell’s claims conflict with or are antagonistic to the claims of the proposed class members.


Minute Order Form (06197)

United States District Court, Northern District of Illinois

Name of Assigned Judge Sitting Judge if Other
or Magistrate Judge Wayne R. Andersen than Assigned Judge
CASE NUMBER 3. C 1995 DATE 3/31/2004
CASE Steward W. Maxwell vs. Arrow Financial Services, LLC.
{ 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.)
LL
DOCKET ENTRY:
qd) a Filed motion of [ use listing in “Motion” box above.]
(2) Q Brief in support of motion due
(3) Q Answer brief to motion due, . Reply to answer brief due.
(4) oO Ruling/Hearing on set for at
(5) Qo Status hearing[held/continued to] [set for/re-set for} on set for at
(6) o Pretrial conference[held/continued to] [set for/re-set for] on set for at
(7) Qo Trial[set for/re-set for} on at
(8) Oo (Bench/Jury trial] [Hearing] held/continued to at
(9) im This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OFRCP4(m) Local Rule 41.1 OO FRCP41(a)(1) [OFRCP41(a)(2).
qo) [Other docket entry) | Enter MEMORANDUM, OPINION AND ORDER: For all of the
foregoing reasons, we grant [6-1] the plaintiff’s motion for class certification. This matter is set for
status on 4/15/2004 @ 9:00 a.m. at 9:00 a.m. at which we can discuss the proposed definition and/or
the parties may submit a modified class definition.
(1) [For further detail see order attached to the original minute order.]
No notices required, advised in open court.
No notices required.
Notices mailed by judge's staff,
Notified counsel by telephone,
wv | Docketing to mail notices,
Mail AO 450 form. LUND ASINLSIa ‘sp
Copy to judge/magistrate judge. W839
courtroom PEso id 1e YH 00g ate mailed notice
TSA deputy’s
initials - Oa Tani
4 \ fy Fa a ime received in
LE 28 centr ldk's Office naiting deputy initiats



members of the class, and class certification is more efficient than multiple individual suits at
dealing with these common questions. Tatz, 2003 WL 21372471, at *9,

Second, a class action is superior to individual action in this case because litigation costs
are high, the likely recovery is limited. Thus, recipients of the letter are unlikely to prosecute
individual claims without the availability of cost-sharing efficiencies through a class action.
Taiz, 2003 WL 21372471, at *10, citing Haynes v. Logan Furniture Mart, Inc., 503 F.2d 1161,
1164-65 (7th Cir. 1974). A class action is superior under Rule 23(b) when class members would
be overwhelmed by the defendant’s resources if they attempted to bring individual claims. Tatz,
2003 WL 21372471, at *10, citing Chandler v. S.W. Jeep-Eagle, Inc., 162 F.R.D. 302, 310 (N.D.
Iil. 1995); Alexander v. Centrafarm Group, N.V., 124 F.R.D. 178, 185 (N.D. Ill, 1988). Here, the
defendant is a large collection agency and purchaser of bad debts that is likely to have extensive
resources that could far outpace those of the potential class of plaintiffs.

Third, a class action is the superior method to resolve this case because it is a more
efficient use of judicial resources than trying individual cases. Tatz, 2003 WL 21372471, at *10,
citing Scholes, 143 F.R.D. at 189 (“Under these circumstances, class certification is the best way
to manage this situation which could otherwise disintegrate into piecemeal adjudication of many
individual actions involving essentially identical questions of law and fact.”). Denial of the
motion for class certification would potentially result in courts becoming consumed with many
individual cases that seek to litigate an essential core of the same legal and factual issues.

Arrow, however, argues that the class action mechanism is not superior to individual
Maine FDCPA causes of action or federal FDCPA causes of action on two theories, F irst, Arrow

argues that certifying a two separate classes in this case of all Maine residents who received the

11



Ill. 1993). In determining whether common questions predominate, the court looks to whether
there is a “common nucleus of operative facts.” Ziemack vy. Centel Corp., 163 F.R.D. 530, 535
(N.D. Ill. 1995). Arrow’s alleged misleading statement in a debt collection letter sent to
members of the class is at the core of Mr. Maxwell’s complaint. The issues of law and fact that
flow from Arrow’s alleged misleading statement predominates over any individual issue or
potential exception and forms the core of this complaint. Because the common issues of fact and
law previously identified are likely to dominate this Court’s attention, common questions of law
and fact predominate. Tatz v. Nanophase Tech. Corp., 2003 WL 21372471, at *9 (N.D. Ill. June
13, 2003).

Arrow also argues that class certification is premature because additional discovery is
needed to determine whether class or individual issues predominate. We find that Arrow’s
arguments are not sufficient to merit a finding that Mr. Maxwell has failed to establish that class
issues predominate over individual issues. The only issues currently before the Court is whether
Mr. Maxwell has pled in his motion the required elements of Rule 23, and we decline to
speculate about additional facts that may be developed during discovery. Therefore, we conclude
based on the pleadings that the class issues predominate over any perceived individual issues.

2. Superiority of class action to other available methods for fair and efficient
adjudication of the controversy

Under Rule 23(b)(3), a class action must also be superior to other available methods for
the fair and efficient adjudication of the controversy. Szabo, 249 F.3d at 676. We find that a
class action in this case is superior to other means of adjudication for three reasons. First, as

discussed previously, this conflict contains a set of legal and factual issues that are shared by the

10


at 1018 (“A common nucleus of operative fact is usually enough to satisfy the commonality
requirement of Rule 23(a)(2).”). Further, some factual variations among class members’ claims
alone is normally not enough to defeat a motion for class certification. Hamid, 2001 WL
1543516, at *4, citing Keele v. Wexler, 149 F.3d 589, 594 (7th Cir. 1998); Patterson, 631 F.2d
476, 481 (7th Cir. 1980).

We conclude that Mr. Maxwell satisfies the requirements of Rule 23(a)(2). Specifically,
we find that this case presents the following two questions that all arise from Arrow’s
standardized conduct in sending the form letter to all of the individuals against whom it
attempted to collect: (1) whether Arrow regularly sends the letter at issue in this case to
individuals with debts more than seven years old who do not meet any of the exceptions allowing
their credit to be reported under 15 U.S.C. § 1681c(b)(1)-(3); and (2) if so, whether Arrow
violated the Maine FDCPA by misrepresenting to debtors that it would report settlement and
repayment of debts more than seven years old. The first question is a common question of fact
and the second is a common question of law shared by the potential class of plaintiffs and
defendant Arrow. These common questions both derive from Arrow’s standardized conduct in
attempting to collect on purported past due debts. Accordingly, we conclude that because the
claims arise from Arrow’s standardized collection notices, the claims are appropriate for
treatment as a class action. Keele v. Wexler, 1996 WL 124452, at *4 (N.D. Ill. March 19, 1996),
citing Haroco, Inc. y. Am. Nat'l Bank & Trust, 121 F.R.D. 664, 669 (N.D. Ill. 1988).

3. Typicality
Under Rule 23(a)(3), the claims or defenses of the party representative must be typical of

those of the class as a whole. The claim of a named plaintiff is typical of the class if “it arises


66,972 (Dec. 27, 1995). The damages portion of one of plaintiff's claims is supplied by the
federal FDCPA, 15 U.S.C. § 1692(k).

Given that the age of the debt was greater than seven years old, Mr. Maxwell claims that
Arrow’s reference to a consumer’s credit report in the letter it sent is misleading because it tells
an unsophisticated consumer that, absent a payment, Arrow could have the debt appear on the
consumer’s credit report as an unpaid delinquent debt. Mr. Maxwell proposes a class consisting
of “ail natural persons with Maine addresses who meet the following criteria: a. Defendant sent
them a letter in the form represented by Exhibit A; b. On or after a date one year prior to the
original filing of this action in state court; c. Seeking to collect a debt charged off more than 7
years previous to the date of the letter; d. Which was not returned by the Postal Service.” (PI.
Mo. for Cl. Cert., at 1).

Discussion

Motions for class certification must meet the requirements set under Rule 23 of the
Federal Rules of Civil Procedure, Rule 23 establishes two main requirements for class
certification. First, the action must satisfy all four elements of Rule 23(a): numerosity,
commonality, typicality and adequacy of representation. Amchem Prods, Inc. v. Windsor, 521
U.S. 591, 613 (1997); Harriston v. Chicago Tribune Co., 992 F.2d 697, 703 (7th Cir. 1993).
Second, the proposed class must satisfy at least one of the three provisions under Rule 23(b).
Mr. Maxwell seeks certification under Rule 23(b)(3), which requires a plaintiff to demonstrate
that common questions of law or fact predominate over any questions affecting only individual

class members and that a class action is a superior method of adjudicating the controversy.


which may reasonably be expected to involve, a face amount of $150,000 or more
or (3) the employment of any individual at an annual salary which equals, or
which may reasonably be expected to equal $75,000 or more.
Conclusion
For all the foregoing reasons, we grant the plaintiffs motion for class certification. This

matter is set for status on April 15, 2004 at 9:00 a.m. at which we can discuss the proposed

definition and/or the parties may submit a modified class definition.

t),. Cha

Wayne R. Andersen
United States District Judge

It is so ordered.

14


On approximately October 21, 2002, Arrow sent Mr. Maxwell a letter informing him that
his debt had been sent to a debt collection agency. The alleged outstanding balance on the
account was $6,707.24. The letter offered to settle the past due account for 40 percent of the full
balance if the repayment was made in one payment by November 13, 2002. Relevant to the
claims at issue here, the letter stated: “Upon receipt of the settlement amount and clearance of
funds the appropriate credit bureaus will be notified that this account has been settled.” Mr.
Maxwell alleges, and Arrow admitted in response to requests for admission, that the letter Mr.
Maxwell received was a standard form letter and that there are “more than 500 persons with
Maine addresses who meet the following criteria: (2) Defendant sent them a letter in the form
represented by Exhibit A; (b) on or after February 3, 2002; (c) seeking to collect a debt charged
off more than seven years previous to the date of the letter; (d) which was not returned by the
Postal Service.” (Def.’s Resp. to Pl.’s Req. for Admis. § 12).

Based on the statement cited above, Mr. Maxwell filed an amended complaint claiming
that Arrow has violated the Maine FDCPA, 32 MRSA §§ 11013(2)(E) and (J), which prohibits
debt collectors from making false or misleading representations, because pursuant to the Fair
Credit Reporting Act (“FCRA”), “no consumer reporting agency may make any consumer report
containing ... accounts placed for collection or charged to profit and loss which antedate the
report by more than seven years.” 15 U.S.C. 1681c(a)(4). The Maine FDCPA relevant to the
claims at issue prohibits the same false, deceptive, or misleading representations as the
corresponding section of the federal Fair Debt Collection Practices Act (the “federal FDCPA”).

See Notice of Maine Exemption from the Fair Debt Collection Practices Act, 60 Fed. Reg.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
STEWART W. MAXWELL, )
)
Plaintiff, )
)
y. ) No. 03 C 1995
)
ARROW FINANCIAL SERVICES, ) Wayne R. Andersen v4)
LLC,, ) District Judge ed .,
) Ma % 77
Defendant. ) Vo “
) Gg

MEMORANDUM, OPINION AND ORDER

Plaintiff Stewart W. Maxwell (“Mr. Maxwell”) brings a class action lawsuit against
defendant Arrow Financial Services, LLC (“Arrow”) for violations of the Maine Fair Debt
Collection Practices Act (“Maine FDCPA”), 32 MRSA §11001 ef seq., relating to its alleged
illegal practices in connection with the collection of certain debts that are more than seven years
old. This matter is before the Court on Mr. Maxwell’s motion for class certification. For the
reasons stated below, the motion for class certification is granted.

Factual Background

For the purposes of a motion to certify a class, the allegations in the complaint are
presumed to be true. Johns v. DeLeonardis, 145 F.R.D. 480, 482 (N.D. Ill. 1992). According to
Mr. Maxwell’s motion for class certification, he is a resident of Maine whose debt on a Citibank
credit card was charged off in approximately April 1991 after he failed to make the payments.
Defendant Arrow is a limited liability company that acts as a collection agency and purchases
consumer debts at a portion of the face value for the opportunity to enforce the debts against the

consumers,


letter and met the other class requirements, and all other United States citizens who received the
letter and met the other class requirements is “duplicative and a waste of both the Court’s and the
parties’ resources.” (Def. Resp. to Motion for Class Certif. at p.14). Arrow also claims that the
pursuit of two parallel classes contradicts the primary purpose of class actions to reduce
administrative and litigation costs. However, we have concluded that Maine’s decision to
establish its own standards under the Maine FDCPA as authorized under the federal FDCPA
necessitates the establishment of two separate classes. In addition, we have taken steps to reduce
duplicative costs by finding these matters related under Local Rule 40.4 and streamlining
discovery, and we will continue to be mindful of these costs issues as the case progresses. Thus,
we conclude that a class action is superior to other available methods for the fair and efficient
adjudication of this controversy.

Cc. The Maine FDCPA Creates an Alternate Cause of Action for Maine
Residents

Arrow also challenges the motion for class certification on the basis that the Maine
version of the FDCPA does not preclude a national class action. (Def.’s Sur-Reply in Opposition
to Mot. of Pls. for Cl. Certif. at 1-2). We agree with the defendant that a national class action is
not precluded under all sections of the FDCPA when a state receives a statutory “exemption”
from the Federal Trade Commission (“FTC”). In Shapiro v, Haenn, 176 F. Supp. 2d. (D.Me.
2002), the court found Maine’s exemption from the federal FDCPA did not eliminate the
plaintiff's federal private right of action under the statute. In Haenn, the plaintiff brought his
claim under section 813 of the FDCPA, which creates a private right of action in federal courts

against debt collectors who violate the provisions of the FDCPA. Jd. at 44; 15 U.S.C. § 1692k.

12