7th Circuit Overturns and Remands Denial of Class Certification in Fair Debt Collection Practices Act Case


When class actions are filed, courts need to consider all aspects of the class before determining whether or not it can be certified. This includes whether class members from other states have claims similar enough to the class members of one state, particularly in cases where the lawsuit is filed under a state law. The Seventh Circuit Court of Appeals recently handled a case in which the status of the class was disputed for this reason.

Gwendolyn Phillips was sued by Asset Acceptance, LLC for some outstanding debt that she still had with the company. However, Phillips argued that the lawsuit was invalid because the statute of limitations on the debt had already passed.

Few debtors are aware that a statute of limitations on their debt exists. Even those who do know frequently find that it is cheaper and easier to simply settle the debt rather than try to fight it in court. To try and mitigate these effects, Phillips moved to certify a class action of plaintiffs consisting of debtors who have been sued by Asset Acceptance for debts resulting from the sale of natural gas who have been sued after the statute of limitations has expired. According to the records currently available, the class that Phillips is proposing can consist of as many as 793 members if they all choose to participate. 343 of which are eligible to file claims in the state of Illinois.

Which Illinois statute of limitations applies to this was case disputed between the parties. One statute gives four years as the limitation while the other statute gives five. Phillips claims that the applicable statute is the one that lasts for four years while Asset insists that the five-year statute is the proper one. Regardless, Asset sued Phillips more than five years after her debt had accrued.

The district court ruled that, because Phillips had been sued by Asset after five years, she was an inadequate representative for members of the class who had been sued after only four years. The court therefore shrunk the eligible class members down to less than thirty members, which the judge ruled was too small to justify the numerosity requirement of a class action. The judge therefore dismissed Phillips’s motion for class certification.

Phillips appealed the decision and the case went to the Seventh Circuit Court of Appeals. The appellate court rejected the lower court’s reasoning that the difference of one year was sufficient to disqualify Phillips as an adequate representative. Rather, the appellate court found that Phillips had no ulterior motive for insisting that the relevant statute lasted for only four years, as she had been sued after five. Therefore, the court found no reason that she should not be an adequate representative for the class.

Further, even if the court had found a significant difference between class members who had been sued after four years as opposed to members who had been sued after five, the court found that certifying a subclass with a second representative made more sense than decertifying the entire class.

In examining the case, the appellate court found that the relevant statute was for only four years, and as a result, Phillips is eligible to represent the entire class of 343 Illinois plaintiffs. Whether or not plaintiffs in other states can be included in the class or subclasses will need further evidence to determine. In the mean time, the appellate court remanded the case back to the district court.

You can view the entire decision here.

The Chicago class action attorneys at Lubin Austermuehle located in Chicago and Oak Brook near Naperville and Aurora have decades of experience representing consumers throughout the greater Chicago area and the Mid-West region, including Illinois, Indiana, Wisconsin and Iowa. Class action lawsuits give consumers a way to assert their rights in cases of consumer fraud, even if they lack the resources individually to fight a much larger opponent. Please contact us today online, at (630) 333-0333, or at 630-333-0333 to schedule a confidential consultation with one of our attorneys.

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