United States District Court, E.D. Pennsylvania
March 31, 2004.
CAROLYN THOMAS, Individually and on Behalf of All Persons Similarly Situated, Plaintiffs
NCO FINANCIAL SYSTEMS, INC., Defendant
The opinion of the court was delivered by: JAMES KNOLL GARDNER, District Judge
The matter is before the court on the Joint Motion Resubmitting Joint
Motion for Certification of Settlement Class and Preliminary Approval of
Settlement and Notice to the Class ("Joint Motion") filed November 21,
2003. Because we conclude that the method of communication with the
proposed class presented by the parties is the best practicable under
the circumstances, we grant the motion and certify the class for
The within civil action was initiated by a two-count Complaint filed
October 10, 2000. Count one claims a violation of the Fair Debt
Collection Practices Act,
15 U.S.C. § 1692-1692o. Count two avers a violation of the Fair Credit
Reporting Act, 15 U.S.C. § 1681-1681v. The action is before the court on
federal question jurisdiction. See 15 U.S.C. § 1681p; 28 U.S.C. § 1331.
Venue is appropriate because defendant resides in Montgomery County,
Pennsylvania. See 28 U.S.C. § 118, 1391. Plaintiff has made a jury
Plaintiff seeks class certification. See Fed.R.Civ.P. 23. For purposes
of settlement,*fn1 the parties agree that the proposed class may be
certified. The parties have previously sought court approval for class
certification and settlement.
The issues presented in the parties' motion were first presented to our
former colleague United States District Judge Jay C. Waldman as a Joint
Motion for Certification of Settlement Class and Preliminary Approval of
Settlement and Notice to Class filed March 21, 2002. On August 1, 2002
Judge Waldman denied the motion citing deficiencies in the evidence
supporting the appointment of class counsel and supporting the parties'
contention that publication notice was the best notice possible under the
In his August 1, 2002 Memorandum and Order, Judge
Waldman made a number of legal determinations pertinent to our
analysis. Initially, Judge Waldman concluded that the numerosity
requirement was satisfied because joinder of all the proposed class
members would be impracticable. Next, Judge Waldman held that the
commonality requirement was met because common issues of fact and law
within the putative class predominate over all other issues presented
In addition, Judge Waldman held that the typicality requirement was
satisfied because the claims of plaintiff, as class representative, arise
from facts and circumstances that typify the other putative class
members. Finally, Judge
Waldman evaluated the proposed settlement agreement and determined that
it was fair, acceptable, and within the range of settlements that the
court would approve. We conclude that Judge Waldman's findings and
conclusions are the law of the case and adopt his conclusions and
reasoning. See Hamilton v. Leavy, 322 F.3d 776, 786-787 (3d Cir. 2003).
However, in his Memorandum and Order, Judge Waldman reserved judgment
in three areas. Initially, the parties neglected to offer any evidence
concerning the qualifications of class counsel. Accordingly, Judge
Waldman found that he could not determine the adequacy of counsel. Next,
the parties neglected to offer any evidence of any pending overlapping
actions. Consequently, Judge Waldman concluded that he could not declare
that disposition of the facts and circumstances presented herein by a
class action was a superior method of resolving this case. Finally, Judge
Waldman found that the parties did not submit sufficient evidence to
support the conclusion that publication notice by two notices in a
two-week period in a single publication was the best possible method of
notifying the class.
Therefore, Judge Waldman denied the initial motion because a
determination regarding the manageability of the class action could not
be made at that time. Because of these
deficiencies, Judge Waldman denied the parties' motion without prejudice
for the parties to resubmit a motion with additional, appropriate
On August 30, 2002 the parties resubmitted their motion for class
certification. In that motion, the parties sought to cure the defects
identified by Judge Waldman. On August 11, 2003 the undersigned held oral
argument on the parties' motion. On August 13, 2003 the undersigned
permitted the parties to file supplemental memoranda in support of their
By Order and Opinion dated October 21, 2003,*fn3 the undersigned
denied the parties' renewed motion. Specifically, we concluded that class
counsel was adequate; that, if the class could be properly noticed, the
superiority requirement was met; and that individual notice was not the
best practicable notice under the circumstances. However, we denied the
parties' motion because were unable to determine whether the publication
notice proposed by the parties was the best possible notice to the
Thus, the only issue addressed herein is whether the method of
communicating with the proposed class presented by the parties is the
best practicable publication notice.
Based upon the allegations contained in plaintiff's Complaint, the
following are the pertinent facts. Carolyn Thomas is representative of a
class of individuals within the United States who accrued and failed to
repay debts for personal or household purposes. These debts of the class
members were listed on their credit report for seven years and deleted
prior to defendant NCO Financial Systems, Inc. ("NCO") reporting the debt
to Trans Union, LLC; Experian Information Solutions, Inc.; and Equifax,
Inc., the three credit reporting agencies.
NCO is a provider of accounts receivable collections services. NCO's
focus is on recovery of delinquent and bad debt accounts.
At some point during or after 1998, NCO attempted to collect debts that
it had purchased from Commercial Financial Services ("CFS").(We refer to
the names and addresses that NCO purchased from CFS as the "List".) Some
of the debts that NCO sought to collect had already been deleted from
credit reports pursuant to 15 U.S.C. § 1681c because seven years had
passed since the debts were first placed on the debtors' credit reports.
Nevertheless, NCO reported to the credit bureaus that the debts were
valid and had the debts put back onto the debtors' credit reports.
In our Order and Opinion dated October 21, 2003, we agreed that
individualized notice was impractical under the circumstances and that
publication notice was appropriate. Specifically, we concluded that the
defendant's List of 2.2 million people who could be in the class was
over-inclusive and outdated.*fn5 However, we were unable to determine
the proposed publication notice-whereby the putative class would be
notified by publications in the USA Today and through PR Newswire's
National Newsline (US1)-was sufficient notice. For the following reasons,
we conclude that the proposed notification is sufficient.
District courts have a "fiduciary responsibility [to be] the guardian
of the rights of the absentee class members." Girsh v. Jepson,
521 F.2d 153, 157 (3d Cir. 1975). When, as in this case, the class is to
be notified of the certification of a class and the settlement of the
action, the notice to the putative class must satisfy the requirements of
Rules 23(c)(2) and 23(e) of the Federal Rules of Civil Procedure.
Carlough v. Amchem Products Inc., 158 F.R.D. 314, 324 (E.D. Pa. 1993).
The requirements of Rule 23(c)(2) include those in Rule 23(e) and are, in
fact, stricter than those of Rule 23(e). Id. at 324-325. Thus, our
analysis continues under Rule 23(c)(2).
In the execution of the court's fiduciary duty the court must ensure
that "members of the class [receive] the best notice practicable under
the circumstances, including individual notice to all members who can be
reasonable effort." Fed.R.Civ.P. 23(c)(2). "Individual notice must be
sent to all class members whose names and addresses may be ascertained
through reasonable effort." Eisen v. Carlisle & Jacquelin, 417 U.S. 156,
172, 94 S.Ct. 2140, 2150, 40 L.Ed.2d 732, 746 (1974).
"The Advisory Committee's Note to Rule 23 . . .[states] that the
`mandatory notice pursuant to subdivision (c)(2) . . . is designed to
fulfill requirements of due process to which the class action procedure
is of course subject.'" Eisen, 417 U.S. at 173-174, 94 S.Ct. at 2150, 40
L.Ed.2d at 746 (citing 28 U.S.C. App., p. 7768); see Mullane v. Central
Hanover Bank & Trust, 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed.
865, 873 (1950)
"An elementary and fundamental requirement of due process in any
proceeding which is to be accorded finality is notice reasonably
calculated, under all the circumstances, to apprise interested parties of
the pendency of the action and afford them an opportunity to present
their objections." Mullane, 339 U.S. at 314, 70 S.Ct. at 657, 94 L.Ed. at
However, the absence of individual notice is not fatal to class
certification or settlement. If the members of a putative class may not
be determined by reasonable means, then constructive notice by
publication may satisfy the
requirements of Rule 23(c)(2). Carlough, 158 F.R.D. at 325.
In determining the reasonableness of the effort
required, the court must look to the "anticipated
results, costs, and amount involved." [In re Nissan,
552 F.2d 1088, 1099 (5th Cir. 1977).] For example,
"[a] burdensome search through records that may prove
not to contain any of the information sought" is not
required. Id. Rule 23 does not require the parties to
exhaust every conceivable method of identifying the
individual class members. See, e.g., Burns v. Elrod,
757 F.2d 151, 154 (7th Cir. 1985).
Carlough, 158 F.R.D. at 325.
Thus, we must balance the potential for finding information that may
permit individual notice against the possibility that the information in
the parties' possession will not yield the names and contact information
of those in the putative class and the expense or burden incurred to
determine into which of the two categories the reality falls.
Instead of using the list in NCO's possession, the parties propose a
two-pronged approach to class notification. First, the parties agree that
NCO will publish, at its own expense, an 1/8 page-size advertisement in
the national edition of the USA Today newspaper, Monday through Thursday
edition, for two consecutive weeks in substantially the form set forth in
Exhibit B to the Agreement of Settlement. The parties propose that this
notice be accomplished within 21 days of the entry an Order granting
their joint motion.
Second, NCO will publish, at its own expense, an advertisement in
substantially the form set forth in Exhibit B to the Agreement of
Settlement in PR Newswire's National Newsline (US1), once within 21 days
of an Order.
The parties jointly assert that this combination of publication notices
yields the best possible notice under the circumstances. We note that USA
Today is the nation's largest selling daily newspaper with a circulation
of approximately 5.6 million.*fn6 We further observe that the US1
distribution network of the PR Newswire Service reaches over 3,000
newspapers, magazines, national wire services, and broadcast networks
that are located in all 50 states and the District of Columbia.*fn7 In
addition, PR Newswire US1 distributes notices to 3,600 computer on-line
databases, where the notices are automatically displayed on websites.*fn8
The cost of publishing an 1/8 page, black and white advertisement in
the Monday through Thursday editions of USA Today is $16,900. Because the
advertisement would run twice, the cost of this publication is $33,800.
The cost of publishing notice by PR Newswire US1 would be less than
$1000.00.*fn10 This raises the total cost of the parties' proposed
publication to less than $34,800.
Not only is the proposed publication notice practical, but it also
conforms to due process requirements. The proposed publication will
distribute notice throughout the country in a variety of media. At the
very least, notice will be published by USA Today and over 3,600 computer
websites. At most, notice will be published by multiple newspapers,
magazines, radio stations, television stations, and over the internet.
Thus, we conclude that this notice is calculated to have a ubiquitous
reach. Such a pervasive notice satisfies the requirements of the Due
Process Clause. See Fed.R.Civ.P.
23; Carlough, 158 F.R.D. at 325.
On the opposing side of the scale, the bulk rate for the United States
Postal Service is 27.8 cents per item mailed.*fn11 With 2.2 million
addresses on the List, the cost of a direct mailing would be $611,600.00.
This does not include the costs associated with printing the notices, and
for purchasing envelopes and stationery.
In addition, because the information is outdated, a "skip-search" would
have to be performed on the List for individual notice to be effective. A
"skip-search" is a process for finding missing persons. The term comes
from the debt-collection industry and refers to those who "skip-out" on
their debts by moving and not leaving a forwarding address.*fn12
Skip-searches can cost from $10.00 to several hundred dollars per
name. Thus, at a minimum, a skip-search for the list would cost at least
$22,000,000.00. This is grossly out of proportion with the less than
$34,800 for publication notice or the amount in controvery. When we
further consider that a skip-search will neither remedy the
over-inclusiveness of the List, nor guarantee individualized
notice, we conclude that this method is impractical and unlikely to
produce as effective notice as the method proposed by the parties.
Accordingly, we reject this method of class notification.
For the foregoing reasons, we find that the publication of notice to
the class of the proposed class action settlement, which has been jointly
proposed by the parties, satisfies the due process requirements of the
Fifth Amendment to the United States Constitution and is the best
practicable notice under the circumstances. Accordingly, we grant the
parties' motion and certify this action as a class action for the
purposes of settlement.