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Zimmerman v. Portfolio Recovery Associates, LLC

United States District Court, Second Circuit

December 11, 2013

JASON ZIMMERMAN, Plaintiff,
v.
PORTFOLIO RECOVERY ASSOCIATES, LLC, Defendant.

MEMORANDUM OPINION & ORDER

PAUL G. GARDEPHE, District Judge.

In this action, Plaintiff Jason Zimmerman claims that Defendant Portfolio Recovery Associates, LLC ("PRA") violated the Fair Debt Collection Practices Act ("FDCPA"). On September 15, 2011, this Court granted Plaintiff's motion for summary judgment and class certification, Zimmerman v. Portfolio Recovery Assocs., LLC , 276 F.R.D. 174 (S.D.N.Y. 2011), and on March 27, 2013, this Court granted Plaintiff's motion for statutory damages and authorized a class award of $350, 000. Zimmerman v. Portfolio Recovery Assocs., LLC, No. 09 Civ. 4602 (PGG), 2013 WL 1245552, at *7 (S.D.N.Y. Mar. 27, 2013). In its March 27, 2013 memorandum opinion and order, this Court directed the parties to submit (1) supplemental briefing to address whether thirteen individuals who submitted vague or incomplete claim forms should be granted a share of the award, and (2) a joint list of organizations that would be appropriate recipients of the cy pres portion of the award. Id. at *7-8.

After considering the parties' supplemental submissions, and for the reasons stated below, seven of the thirteen individuals at issue will be granted a share of the class award, and the cy pres portion of the award will be distributed to the seven organizations proposed by Plaintiff.

This opinion also addresses Plaintiff's motion for an award of attorneys' fees and costs.

BACKGROUND[1]

On September 15, 2011, this Court granted Plaintiff's motion for summary judgment and class certification, holding that PRA had violated the FDCPA by sending a "Pre-Suit Package" - debt collection documents simulating official court papers - to Zimmerman and other debtors. Zimmerman , 276 F.R.D. 174. The Court also granted Zimmerman's motion for certification of a class of approximately 990 people, comprised of

all consumers to whom the Defendant sent, within one year of the commencement of this action, a demand for payment letter on Portfolio Recovery Associates, LLC letterhead - signed by Catherine M. Hedgeman, Esq. - and enclosing a draft summons and complaint in a form materially identical or substantially similar to the "Pre-Suit Package" sent to Jason P. Zimmerman, and which was not returned as undeliverable by the Postal Service.

Id. at 180-81.

A class action administrator subsequently sent all class members a Class Notice with an attached Claim Form. Zimmerman 2013 WL 1245552, at *1. The Class Notice instructed recipients: "If you wish to participate in class recovery complete and return the attached Claim Form' to remain a member of the Class." (Apr. 23, 2012 Lemberg Decl. (Dkt. No. 57), Ex. F) The Claim Form further directed those recipients who wished to participate in the class recovery to attach documentation or include a brief explanation of the type of debt PRA had attempted to collect from them.[2] Zimmerman, 2013 WL 1245552, at *1. Those recipients who wished to be excluded from the class were instructed to complete and return the "Request to be Excluded as a Class Member" portion of the Claim Form. Id.

On March 27, 2013, this Court granted a class award of $350, 000, to be distributed in $500 payments to class members who completed and submitted a Claim Form. Id. at *7. The Court further ruled that the remainder of the class award, as well as any payments not cashed by claimants within 90 days, would be distributed as a cy pres award to a non-profit organization working to curb abusive debt collection practices or to increase consumer awareness of such practices. Id. at *7-8.

Thirty-three individuals returned claim forms. Id. at *1. Four individuals returned only the "Request to be Excluded as a Class Member" portion of the form. Id . These four individuals have been excluded from the class and are not eligible to receive a share of the class award. Id. at *4-5.

Fourteen claimants timely returned the portion of the form requesting information about their debts and provided sufficient information for the Court to determine that the debts were incurred for personal, family, or household purposes.[3] Id. at *1; (see also Apr. 11, 2013 Taylor Decl. (Dkt. No. 82), Ex. A) Two individuals timely returned both portions of the claim form, but provided sufficient information for the Court to determine that they wished to remain in the class and that their debts were non-commercial in nature.[4] Zimmerman, 2013 WL 1245552, at * 1; (see also Apr. 11, 2013 Taylor Decl. (Dkt. No. 82), Ex. A) As provided in the March 27, 2013 memorandum opinion and order, these sixteen individuals are entitled to a $500 share of the class award. Zimmerman, 2013 WL 1245552, at *7.

The remaining thirteen individuals completed either both portions of the form, or only the portion of the form asking for a description of the debts, without providing sufficient information for the Court to determine that their debts were non-commercial.[5] Id. at * 1; (see also Apr. 11, 2013 Taylor Decl. (Dkt. No. 82), Exs. B, C) Eight of these 13 individuals submitted supplemental letters to clarify that they wished to be included in the class and/or to clarify that their debts were non-commercial, but those letters were submitted after the due date stated on the Claim Form.[6] Zimmerman, 2013 WL 1245552, at *1; (see also Apr. 11, 2013 Taylor Decl. (Dkt. No. 82), Ex. B) According to Plaintiff, these eight individuals submitted the supplemental letters after they were contacted and advised of the deficiencies in their claim forms. (Apr. 11, 2013 Pltf. Br. (Dkt. No. 82) at 3 n.4) Plaintiff asserts that all claimants who submitted vague or incomplete claim forms, and who provided their phone numbers on the form, were contacted. (Id.)

As noted above, the March 27, 2013 memorandum opinion and order directs the parties to submit (1) supplemental briefing addressing the thirteen claim submissions that are vague or incomplete, and (2) a list of organizations that would be appropriate recipients of a cy pres award. Zimmerman, 2013 WL 1245552, at *7-8. In his supplemental briefing, Plaintiff argues that all thirteen individuals should participate in class recovery, and requests that the cy pres award be distributed among five New York area organizations and two national organizations. (Apr. 11, 2013 Pltf. Br. (Dkt. No. 82) at 2-5) PRA submitted a supplemental memorandum stating that it "takes no position on [the] issue [of whether the thirteen individuals should participate in class recovery] and leaves distribution to these individuals to the discretion of the court." (Def. Supp. Br. (Dkt. No. 83) at 1) PRA opposes distributions to the two national organizations and one of the New York area organizations proposed by Plaintiff, however. ( Id. at 1-2)

On May 3, 2013, Plaintiff moved for an award of attorneys' fees and costs pursuant to the FDCPA, 15 U.S.C. ยง 1692k(a)(3). (Dkt. No. 86) Plaintiff seeks $433, 541.60 in fees and $4, 742.69 in costs. (Id.)

DISCUSSION

I. INDIVIDUAL CLAIMANTS

A. The Supplemental Letters Submitted by Claimants Will be Considered

A district court overseeing the distribution of a class action award has "inherent power" to accept a late-submitted claim and should consider the equities in determining whether to allow the claim. Zients v. LaMorte , 459 F.2d 628, 628-31 (2d Cir. 1972).

In determining whether to accept a late claim, courts consider whether the untimeliness was the result of excusable neglect weighing the following pertinent factors enunciated by the Supreme Court in Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship , 507 U.S. 380 (1993): 1) the danger of prejudice; 2) the length of the delay and its impact on the proceedings; 3) the reason for the delay, including whether it was within the control of the movant; and 4) whether the movant acted in good faith.

In re Nigeria Charter Flights Litig., No. MDL XXXX-XXXX (RJD) (MDG), 2013 WL 1788530, at *2 (E.D.N.Y. Apr. 26, 2013); see also Fed.R.Civ.P. 6(b)(1)(B) ("When an act may or must be done within a specified time, the court may, for good cause, extend the time[ ]... on [a] motion made after the time has expired if the party failed to act because of excusable neglect.").

Here, the Pioneer factors weigh in favor of considering the eight late-submitted supplemental letters. First, PRA will not be prejudiced if these eight individuals are permitted to share in the class award, because the total amount of the class award is fixed at $350, 000. Zimmerman, 2013 WL 1245552, at *7" Second, the supplemental letters were submitted within six weeks of the claim submission deadline, and long before Plaintiffs motion for statutory damages was decided. (See Apr. 11, 2013 Taylor Decl. (Dkt. No. 82), Ex. B)

As to the reason for the delay, Plaintiff asserts that it reflects claimants' initial misunderstanding of the claim form. (Apr. 11, 2013 Pltf. Br. (Dkt. No. 82) at 3) Statements in the claimants' supplemental letters support this argument. (See Apr. 11, 2013 Taylor Decl. (Dkt. No. 82), Ex. B (Jones Ltr. ("I'm sending this respon[se] [b]ecause I mistak[en]ly sign[ed] the wrong [b]ox on my class action [form]..."); Apr. 18, 2012 Morrison Ltr. ("This is a supplement[al] letter to the Zimmerman class action, in which I signed both sides by mistake."); Panarella Ltr. ("I am writing to let you know that I did not intend to sign a document excluding myself from the Zimmerman class action. I did not realize I signed a document to exclude myself.")))

Moreover, there is no evidence of bad faith. The eight claimants submitted their original claim forms before the deadline and only submitted supplemental materials to clarify confusing entries in those original forms. (See id., Exs. A-B) In any event, PRA does not dispute that the eight late-submitted letters should be considered. (Def. Supp. Br. (Dkt. No. 83) at 1) The Court concludes that - as to the eight individuals who submitted supplemental claim letters - their untimeliness was the result of excusable neglect, and the Court will consider their supplemental letters in determining whether they will share in the class award.

B. Seven of the Thirteen Claimants at Issue Have Sufficiently Demonstrated the Nature of Their Debt

As the Court stated in its March 27, 2013 memorandum opinion and order, because the FDCPA only addresses efforts to collect non-commercial debts, "it is appropriate to require class members to provide information demonstrating the nature of their debts at the damages phase of the case as a condition to sharing in any class recovery." Zimmerman, 2013 WL 1245552, at *4 (internal quotations and citations omitted). Seven of the eight supplemental letters provide sufficient information for the Court to determine that the debts were incurred for personal, family, or household purposes. (See Apr. 11, 2013 Taylor Decl. (Dkt. No. 82), Ex. B) Accordingly, the seven claimants who submitted these letters will share in the class recovery.[7]

In the eighth supplemental letter, the claimant states: "I'm sending this respon[se] [b]ecause I mistak[en]ly sign[ed] the wrong [b]ox on my class action [form] against... Portfolio[.] Be [a]dvised to change my answer to yes[.] I'm engaging in the class suit[.] Also the debt for for [sic] is loan credit card." ( Id., Ex. B (Jones Claim)) While this letter makes clear that the claimant wishes to participate in the class recovery, and that the claimant had "credit card" debts, it does not demonstrate that the claimant's debts were incurred for personal, family, or household purposes. Accordingly, the claim will be disallowed.[8]

The remaining five claimants did not submit supplemental letters asserting that their debts were incurred for personal, as opposed to business, purposes.[9] (Apr. 11, 2013 Taylor Decl. (Dkt. No. 82), Ex. C) Four of the claimants state that their debts were incurred in connection with credit card usage.[10] (See id.) However, because credit cards can be used for business as well as personal, family or household purposes, these claimants have not submitted proper documentation showing that their debts were for personal purposes.[11]

Plaintiff argues, however, that the five claimants who did not submit supplemental letters should nonetheless be allowed to share in the class recovery, because PRA admitted that it sent the Pre-Suit Packages to "consumers." (Apr. 11, 2013 Pltf. Br. (Dkt. No. 82) at 4) While PRA's admission supports the Court's conclusion that class certification is appropriate, see Zimmerman, 2013 WL 1245552, at *4 n.13, claimants are a distinct sub-group of class members who submit a claim form, and only claimants who do so with the proper documentation are eligible to share in the class recovery. See id. at *4. Accordingly, the five claimants who did not submit sufficient documentation to show that their debts were for personal purposes will not be permitted to share in the class recovery.[12]

II CY PRES AWARD

In the March 27, 2013 memorandum opinion and order, this Court found that a cy pres award is appropriate in order to ensure that successful claimants do not receive a windfall inconsistent with the nature of the injury they suffered. Id. at *7-8. The Court ruled that the cy pres award will be distributed to a non-profit organization working to curb abusive debt collection practices or to increase consumer awareness of such practices, and ordered the parties to submit a joint list of organizations that would be appropriate recipients. Id. at *8.

Plaintiff submitted a list of seven potential recipients - five organizations based in New York and two national organizations.[13] (Apr. 11, 2013 Pltf. Br. (Dkt. No. 82) at 5) Plaintiff argues that a distribution granting one-sixth of the cy pres award to each of the five New York organizations and one-twelfth to each of the national organizations "strikes the correct balance to aid New York consumers locally while at the same time furthering their interests and protections through national advocacy of consumer rights." (Id.)

Defendant "vehemently opposes" distributions to the two national organizations, because "[t]he class consists solely of New York residents and there is no indication... that [the two national organizations]... would... utilize[] [the cy pres award] to assist New York residents including members of the class." (Def. Supp. Br. (Dkt. No. 83) at 1-2) Defendant also opposes a distribution to CAMBA Legal Services, arguing that "the proposals ...


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