On Appeal from the United States District Court for the Eastern District of Pennsylvania D.C. Civil Action No. 04-cv-02199 (Honorable Edmund V. Ludwig).
The opinion of the court was delivered by: Scirica, Chief Judge
Before: SCIRICA, Chief Judge, NYGAARD and ALARCÓN*fn1, Circuit Judges.
In this consumer class action against a debt collector, the issue on appeal is whether the District Court erred in certifying a class when defendant asserted a defense unique to the claims of the class representative. We will vacate and remand.
Maximus, Inc. has a contract with the U.S. Department of Education to collect overdue student loans. Between May 20, 2003, and May 20, 2004, Maximus sent a form collection letter entitled "Employment Verification Request" to the employers of 776 Pennsylvania individuals. The Employment Verification Request displayed "MAXIMUS Collection Center" in boldface type at the top and bottom of the page and requested information about the individual's location and employment. On May 28, 2003, Maximus sent an Employment Verification Request to appellee Donna M. Beck's employer, Inolex Chemical Company.
Beck did not have an outstanding loan with the Department of Education. Maximus had confused her with another woman, with the same name, who lived in the same Philadelphia neighborhood. The two women had a history of being mistaken for one another. They had been confused on voter registration rolls, and their credit histories had been mixed up by the credit information service that provided Maximus with employment information.
Before sending the Employment Verification Request, a Maximus representative telephoned Inolex at least twice, attempting to reach Beck. On one call, Inolex's human-resources department informed the Maximus representative that, based on the social security number he provided, the debtor "Donna M. Beck" did not work there. The Maximus representative responded by contending Beck must be using two different social security numbers. Notified of the inquiries, Beck called Maximus to clarify she was not the debtor in question. She also contacted the other Donna M. Beck, met her in person, and established she had an outstanding debt with the Department of Education. After this meeting, neither woman contacted Maximus to clarify the situation. Beck testified that when she saw the Employment Verification Request, she knew it was intended for the other Donna M. Beck and was sent to Inolex in error.
On May 20, 2004, Beck filed a complaint in the District Court, alleging Maximus violated the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692b, 1692c, 1692d, 1692e, and 1692f. The Fair Debt Collection Practices Act is intended to protect both debtors and non-debtors from misleading and abusive debt-collection practices. See § 1692(e). Among other things, the Act expressly prohibits "[a]ny debt collector communicating with any person other than the consumer" from "stat[ing] that such consumer owes any debt," § 1692b(2), and from "indicat[ing] that the debt collector is in the debt collection business or that the communication relates to the collection of a debt," § 1692b(5). The complaint alleged Maximus violated the Act by sending Beck's employer a form collection letter, which improperly identified the sender as a collection agency and implied the existence of a debt.
Section 1692k(c) of the Act offers a defense to a debt collector whose violation results from a bona fide error. It provides:
A debt collector may not be liable in any action under this subchapter if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such error.
Beck filed a motion for class certification of 776 consumers in Pennsylvania whose employers received an Employment Verification Request from Maximus. Maximus responded it had a defense to Beck's claims under § 1692k(c) because it made a bona fide error on the identity of the debtor "Donna M. Beck." Maximus contended this defense, unique to Beck's claims, precluded Beck from being an adequate representative with claims typical of the class. After the District Court denied Maximus's motion to dismiss the class allegations, Maximus filed an answer to the complaint, again contending it had a defense to Beck's claims under § 1692k(c).
Maximus designated two corporate witnesses under Fed. R. Civ. P. 30(b)(6)-the project manager who oversaw student loan collection, and the collection supervisor in charge of assuring compliance with the Fair Debt Collection Practices Act. At depositions prior to class certification, these witnesses explained the Employment Verification Request was a standard form letter, drafted by Maximus. It was used to verify whether a given debtor worked for the employer Maximus had listed in its records. The witnesses testified Maximus had no specific procedures governing use of Employment Verification Requests. They also testified that sending the Employment Verification Request to Beck's employer did not violate any established policy, and that it was not uncommon to send Employment Verification Requests to the wrong employer.
Following oral arguments, the District Court certified a class consisting of all individuals in Pennsylvania to whose employer Maximus had sent an Employment Verification Request on or after May 20, 2003. The District Court designated Beck as class representative and the law firms of Francis & Mailman, P.C., and Donavan and Searles, LLC, as class co-counsel.
In its "findings of facts" supporting class certification under Fed. R. Civ. P. 23(a),*fn2 the District Court noted neither numerosity nor commonality was in dispute. Numerosity was shown by the existence of 776 class members, and commonality was satisfied because "[t]he principal question is whether defendant violated the Fair Debt Collection Practices Act by sending an 'Employment Verification Request' or a substantially same form to the person's employer(s) on or after the applicable date." (App. 4a.) The court concluded typicality was satisfied because "[t]he claims of plaintiff Donna M. Beck are typical of the claims of the ...