Dismissal of Class Action Alleging Violations of Federal Fair Debt Collection Practices Act (FDCPA) did not Warrant Notice to Absent Members of Putative Class because no Evidence of Reasonable Reliance on Prosecution of Class Action Ohio Federal Court Holds
Plaintiff/debtor filed a putative class action against attorneys for a creditor alleging that the law firm’s collection efforts violated the federal Fair Debt Collection Practices Act (FDCPA). Defense attorneys successfully moved to dismiss plaintiff’s claims in her class action complaint on the ground that she lacked standing to prosecute claims that now belonged to the bankruptcy trustee, and the federal court rejected plaintiff’s effort to bar the bankruptcy trustee from settling with the defense. Thereafter, the bankruptcy trustee “acting in good faith on behalf of the estate’s creditors, negotiated a settlement with Defendants”; however, the district court agreed with plaintiff/debtor that “notice of the involuntary dismissal should be given to the putative class members, because some risk existed that those class members would be prejudiced by the expiration of the statute of limitations later this year.” Griffith v. Javitch, Block & Rathbone, LLP, 241 F.R.D. 600, 601 (S.D. Ohio 2007). Plaintiff filed her proposed notices and requested that defendant be ordered to pay for the notice; defense attorneys moved the court to reconsider its order requiring notice to putative class members, id. The court granted the defense motion, holding that notice need not be provided to putative class members.
Preliminarily, the federal court found that the proposed notices prepared by plaintiff’s counsel were “clearly inadequate” and that they “simply invite contact with Plaintiff’s counsel.” Griffith, at 601. The court further stated that it would not order defendant to pay the costs of the notice, noting that as a general rule in class actions the plaintiff is responsible for the costs associated with notices to the class, especially when the court has not yet ruled on the merits of any claim alleged in the class action complaint id.
Turning to the defense motion for reconsideration, the district court explained that determinations on pre-certification notice generally turn on a consideration of whether there has been collusion or bad faith, and whether absent members of the putative class may have reasonably relied on the filing of the action in deciding whether to pursue individual claims. Griffith, at 602 (citing Doe v. Lexington-Fayette Urban County Gov’t, 407 F.3d 755, 762-764 (6th Cir.2005)). In this regard, the court found that there was no evidence of collusion or bad faith, so the “only question” was one of “potential reliance” by absent class members. Id. In light of the fact that the putative class action did not garner much media attention (if any), the absence of the requests to intervene, and the short period of time from the filing of the class action to dismissal of plaintiff’s individual claims for lack of standing, the district court concluded that “the potential prejudice caused to any putative class member by not giving notice of dismissal of [plaintiff’s] claims is very likely to be minimal or non-existent.” Id. Accordingly, the district court granted the defense motion for reconsideration and held that notice to the putative class was not required. Id., at 603.
NOTE: The district court noted that the cost of notice to the class was estimated to be $87,600 – $132,000, and that in light of the fact that there was “no actual plaintiff remaining” in the putative class action, it would not impose that cost on either plaintiff or defendant. Griffith, at 602.