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E*Trade Class Action Defense Case-Murray v. E*Trade: Illinois Federal Court Rejects Defense Objections To Motion For Certification Of Class Action Alleging Violations Of Federal Fair Credit Reporting Act (FCRA)

Rule 23 Requirements Met in Class Action Alleging FCRA (Fair Credit Reporting Act) Violations Against E*Trade Illinois Federal Court Holds

Plaintiff filed a class action against E*Trade alleging violations of the federal Fair Credit Reporting Act (FCRA) arising out of a solicitation mailer he received stating that he was pre-approved for a home equity loan and stating that “[i]nformation from a consumer credit report was used in connection with this offer.” Murray v. E*Trade Fin, Corp., 240 F.R.D. 392, 2006 WL 3354039, *1 (N.D. Ill. November 20, 2006). Defense attorneys filed a motion for judgment on the pleadings as to the claim for relief in the class action complaint that E*Trade violated the FCRA’s disclosure requirements; the district court granted the motion agreeing with the defense that no private right of action exists for such violations under 15 U.S.C. § 1681m(d). Id. The court denied defense efforts to obtain dismissal of the balance of the class action complaint. Plaintiff’s lawyer then moved the court to certify the lawsuit as a class action; the court rejected defense arguments in opposition to the motion and granted class action certification, finding that the requirements of Rule 23(a) were met and that the class action satisfied also the requirements of Rule 23(b)(3).

The district court analyzed each of the Rule 23 requirements for certification of a class action, but ” E*Trade refutes only the adequacy of Murray as class representative,” Murray, at *2, so we do not here discuss the court’s analysis supporting its finding that numerosity, commonality and typicality were met. See id., at *2-*4. With respect to the adequacy requirement of Rule 23(a)(4), a district court must examine the adequacy of both the proposed class representative and the proposed class counsel, and determine whether “the representative parties will fairly and adequately protect the interest of the class.” Id., at *5. The court readily concluded that proposed class counsel would adequately represent the class based on the firm’s class action experience, and noted that even E*Trade “praised” its experience. Id.

E*Trade’s only challenge was to Murray as class representative. In this regard, E*Trade essentially challenged Murray’s knowledge of legal matters (such as the meaning of a “firm offer of credit” under the FCRA) and understanding of what the district court referred to as “the intricacies of the suit.” Murray, at *6. The district court summarized Murray’s deposition testimony and found that he would be an adequate representative for the class based on his “involvement in the litigation”; the court found also that Murray “possesses a sufficient understanding of the legal basis for his suit to adequately represent the class.” Id. The Court was concerned about Murray’s “cavalier attitude” to his duty to “protect the class against an award of excessive attorney’s fees,” id., at *7, but believed that he “if apprised of his duty to protect against excessive attorney’s fees, Murray will protect the class’s interest,” id. In any event, the court reasoned that it could prevent the parties “from reaching a resolution that subverts the interests of the class members to those of class counsel.” Id. On the other hand, the district court was wholly unconcerned with Murray’s alleged status of professional plaintiff based on the fact that he has filed numerous prior FCRA lawsuits, including a prior FCRA class action. Id., at *8. The court held that “Murray’s status as a repeat litigant actually makes him more capable as a class representative.” Id. (citation omitted).

Finally, Rule 23(b)(3) requires that the lawsuit involve common questions of law and fact that predominate over individual issues affecting the members of the class, and that a class action be the superior method for resolving the dispute. The federal court held that this requirement was met, explaining that “The parties agree that the suit hinges on whether the mailer constitutes a firm offer of credit” and that “This question is common to all class members and predominates over any other issue in the suit.” Murray, at *8. It further found that a class action was superior to individual lawsuits given the number of class members and the “relatively small amount of their possible individual recoveries.” Id. (citations omitted).

NOTE: The class is defined as “(a) all persons with an address in Illinois (b) to whom [E*Trade] sent or caused to be sent material in the form represented in [the mailer] (c) on or after September 21, 2003 and before October 11, 2006 and (d) who did not obtain credit in response to the material. A response to [the mailer] is not a prerequisite for class membership.” Murray, at *2.

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