Smith v. NCO Financial Systems, Inc.
Smith v. NCO Financial Systems, Inc.
Opinion of the Court
MEMORANDUM OPINION
Plaintiff Tamara Smith brings this action on behalf of herself and all others similarly situated against Defendants NCO Financial Systems, Inc. (“NCO”) and Genesis Financial Solutions, Inc. (“Genesis”) (collectively, “Defendants”), alleging violations of the Federal Debt Collection Practices Act (“FDCPA”).
Plaintiff filed an individual Complaint against Defendants on December 3, 2008.
1) The parties making the Offer of Judgment are Defendants;
2) The Offer of Judgment is being made to the individual Plaintiff, Tamara Smith;
3) Judgment shall be entered against Defendants for damages in the amount of $2,000 for Defendants’ alleged violations of the Fair Debt Collection Practices Act and any other violations Plaintiff alleged in this lawsuit against Defendants;
4) The Judgment entered shall also include an amount for reasonable costs and attorney’s fees accrued through the date of this Offer of Judgment for prosecution of Plaintiffs individual claim only and not for any costs or attorney’s fees related to any class claims in the lawsuit. Further by this Offer, Defendants are not attempting to negate Plaintiffs right to prosecute any of her class allegations. Reasonable costs and attorney’s fees are to be agreed upon by the parties, or, if the parties are unable to agree, to be determined by the Court on application by Plaintiffs counsel;
5) The Judgment entered in accordance with this Offer of Judgment is to be in total settlement of any and all claims by Plaintiff against Defendants, and said judgment shall have no effect whatsoever except in settlement of those claims;
6) This Offer of Judgment is made solely for the purposes specified in Rule 68, and is not to be construed either as an admission that Defendants are liable in this action, or that Plaintiff has suffered any damages; and [sic]
*431 7) If this Offer of Judgment is not accepted by Plaintiff within ten (10) days after service of the Offer, the Offer shall be deemed withdrawn. If this Offer of Judgment is not accepted by Plaintiff and the judgment finally obtained by Plaintiff is not more favorable than this Offer, the Plaintiff must pay her own costs incurred after the making of this Offer. Defendants stipulate and agree that they will not seek to shift their costs to Plaintiff if the judgment finally obtained by Plaintiff is not more favorable than this Offer.
8) Defendants do not seek to “moot” the proposed class action by serving this Offer of Judgment.12
Plaintiff moved to strike the amended offer of judgment on April 24, 2009.
Discussion
The Federal Rules of Civil Procedure were designed to be interdependent and should be harmonized whenever possible.
A. Class Action Cannot Be Mooted Through An Offer of Judgment
In Weiss v. Regal Collections, the Third Circuit held that absent undue delay, a putative class action would not be rendered moot by a Rule 68 offer of judgment, even if the plaintiff has yet to file a motion for class certification.
In reaching its decision, the Third Circuit relied on the policies and principles underlying both the Rule 23 class mechanism and the FDCPA. With regard to Rule 23, the Third Circuit analogized Weiss to a Supreme Court ease, Deposit Guaranty National Bank v. Roper,
It should also be noted that the Third Circuit was careful to distinguish the involuntary nature of the offer of judgment in Weiss from the voluntary settlement in Lusardi v. Xerox Corporation.
B. Costs Cannot Be Shifted Through An Offer of Judgment
In Zeigenfuse v. Apex Asset Management, L.L.C., plaintiff Rebecca S. Zeigenfuse brought a putative class action on behalf of herself and all others similarly situated for violations of the FDCPA.
C. Defendants’ Amended Offer of Judgment Still Risks “Picking Off” Named Plaintiffs
Defendants contend that their “amended offer of judgment merely presented a settlement offer to plaintiff’ and that “the sole purpose of the offer is to limit Defendants’ responsibility for paying plaintiffs attorney’s fees in the event plaintiff is unsuccessful in certifying her case as a class action.”
First, contrary to Defendants’ assertions, Plaintiff may not accept Defendants’ amended offer of judgment and still prosecute her class action against Defendants. The amended offer of judgement clearly states that it “is to be in total settlement of any and all claims by Plaintiff against Defendants.”
As a result, if Plaintiff does not accept the amended offer of judgment and class certification is not granted, then prosecution of her individual claim may become impracticable. In other words, Plaintiff must choose between a guaranteed individual recovery twice that allowed under the FDCPA and a risk that she may not recover anything at all should she pursue the class action. For this reason, the amended offer of judgment, contrary to Defendants’ stated intentions, has the effect of “picking off’ Plaintiff as a named representative. It pits Plaintiffs own interests against those of the class she seeks to represent, and it gives Plaintiff an incentive to not pursue her class claims. Defendants’ offer of twice the statutory limit bolsters this conclusion, as it can only tip the scales towards Plaintiffs own interests.
The purpose of Rule 68 is to “prompt[] both parties to a suit to evaluate the risks and costs of litigation, and to balance them against the likelihood of success upon trial on the merits.”
Defendants argue that Plaintiffs Motion is premature and procedurally defective, citing McDowall v. Cogan, which denied a motion to strike an offer of judgment because “there was nothing to strike ... as an offer of judgment is not filed with the court until accepted or until offered by a deferred party to prove costs.”
An appropriate order follows.
. 15 U.S.C. § 16921c.etseq.
. PL's Mot. to Strike Defs.' Am. Offer of J. [Document No. 27] (“PL’s Mot.”).
. Compl. [Document No. 1].
. Am. Compl. [Document No. 2],
. Def. Genesis Answer [Document No. 6]; Def. NCO Answer [Document No. 8],
. Order, February 20, 2009 [Document No. 11],
. Order, March 6, 2009 [Document No. 15] ¶ 3.
. PL's Mot. Ex. B (“Offer of J.").
. PL's Mot. to Strike Defs.’ Offer of J. [Document No. 24],
. Order, May 11, 2009 [Document No. 33].
. PL’s Mot. Ex. A ("Am. Offer of J.”).
. Id.
. Pl.'s Mot.
. Mem. in Opp’n to Pl.'s Mot. to Strike Defs.’ Offer of J. [Document No. 32] (“Defs.’ Resp.”).
. Weiss v. Regal Collections, 385 F.3d 337, 342 (3d Cir. 2004).
. Defendants contend that they have a fundamental right to serve a Rule 68 offer of judgment simply because it is provided for by one of the Federal Rules of Civil Procedure, which "govern and apply to every action in federal court.” (Defs.' Resp. at *5 (citing Fed.R.Civ.P. 1).) As explained infra, the Court is unpersuaded by this assertion, as it oversimplifies the application of the Federal Rules of Civil Procedure to the present case.
. Weiss, 385 F.3d at 342.
. Id. at 344.
. See Fed. R. Civ. P. 23, 68.
. Weiss, 385 F.3d at 348.
. Strausser v. ACB Receivables, 2007 WL 512789 at *2 (E.D.Pa. Feb. 12, 2007); Zeigenfuse v. Apex Asset Mgmt., L.L.C., 239 F.R.D. 400, 402-03 (E.D.Pa. 2006).
. Weiss, 385 F.3d at 348. The Court assumes that Defendants are not arguing that Plaintiff has unduly delayed filing a class certification motion. The Court approved the parties' joint proposal that Plaintiff would file her class certification motion on or before July 6, 2009. (Order, March 6, 2009 [Document No. 15].) As that date is still months away, such a contention would be disingenuous at the very least.
. Weiss, 385 F.3d at 339.
. Id.
. Id. at 340 n. 3 (citing 15 U.S.C. § 1692k(a)).
. Weiss, 385 F.3d at 340 (citing 15 U.S.C. § 1692k(a)(l), (2)(A), (3)).
. Weiss, 385 F.3d at 342.
. Id. at 340.
. Id. at 350.
. 445 U.S. 326, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980).
. Weiss, 385 F.3d at 344.
. Id. at 345 (quoting Roper, 445 U.S. at 339, 100 S.Ct. 1166).
. Weiss, 385 F.3d at 345.
. Id.
. Id. al 348 n. 19 (quoting Liles v. Am. Corrective Counseling Servs., 201 F.R.D. 452, 455 (S.D.Iowa 2001)).
. Weiss, 385 F.3d at 349 (citing Lusardi v. Xerox Corporation, 975 F.2d 964 (3d Cir. 1992)).
. Weiss, 385 F.3d at 349 (citing Lusardi, 975 F.2d at 979-80).
. Weiss, 385 F.3d at 349 (quoting Lusardi, 975 F.2d at 983).
. Id.
. Id. at 402.
. Id. at 403.
. Id.
. Id.
. Strausser, 2007 WL 512789 at *2.
. Defs.’ Resp. at *6.
. Am. Offer of J. ¶ 5.
. Lusardi, 975 F.2d at 974.
. Id.
. Id. at 975 (quoting Zeidman v. J. Ray McDer-mott & Co., 651 F.2d 1030, 1041 (5th Cir. 1981)).
. Am. Offer of J. ¶ 4.
. See Lusardi, 975 F.2d at 975 n. 16 (noting that "neither the named plaintiffs’ articulated intent to continue seeking class certification after settlement of their individual claims, nor language in the MOU to the effect that 'Xerox will not oppose my standing [to continue to act as a putative class representative] on the basis of this Release’ ... can avoid a mootness problem.”).
. See 15 U.S.C. § 1692k(a)(l), (2)(A), (3).
. Am. Offer of J. ¶ 7.
. See 15 U.S.C. § 1692k(a)(2)(B).
. Weiss, 385 F.3d at 345.
. See U.S.C. § 1692k(a)(3); Gmziano v. Harrison, 950 F.2d 107, 113 (3d Cir. 1991) (holding that the FDCPA "mandates an award of attorney’s fees as a means of fulfilling Congress’s intent that the Act should be enforced by debtors acting as private attorneys general.”). The Court notes that neither party disputes that the award of attorney's fees to a prevailing plaintiff under the FDCPA can be prevented by a Rule 68 offer of judgment See Marek v. Chesny, 473 U.S. 1, 9, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985).
. Marek, 473 U.S. at 5, 105 S.Ct. 3012 (emphasis added).
. 216 F.R.D. 46, 52 (E.D.N.Y. 2003).
. Zeigenfuse, 239 F.R.D. at 403.
. Id.
Reference
- Full Case Name
- Tamara SMITH, on behalf of herself and all others similarly situated v. NCO FINANCIAL SYSTEMS, INC.
- Cited By
- 3 cases
- Status
- Published