District Court (Ga.) Says FDCPA Class is Impermissible “Fail-Safe” Class

“A fail-safe class is a class whose membership can only be ascertained by a determination of the merits of the case because the class is defined in terms of the ultimate question of liability.” In re Rodriguez, 695 F.3d 360, 369-70 (5th Cir. 2012). A fail-safe class is improper because it “shields the putative class members from receiving an adverse judgment. Either the class members win or, by virtue of losing, they are not in the class and, therefore, not bound by the judgment.” Randleman v. Fidelity Nat. Title Ins. Co., 646 F.3d 347, 352 (6th Cir. 2011). “A proposed ‘fail-safe’ class should not be certified because it is unfair to defendants, it prevents an adverse judgment being entered against plaintiffs, and it is unmanageable because the members of the class could only be known after a determination of liability.” Mazell v. Money Store, 288 F.R.D. 45, 55 (S.D.N.Y. 2012) (citations omitted). The Court finds that all but one of Plaintiffs’ proposed class definitions are “fail-safe” because “eligibility as a class member” is “dependent upon a legal conclusion.” Alberton v. Commonwealth Land Title. Ins. Co., 264 F.R.D. 203, 207 (E.D. Pa. 2010). Membership in Plaintiffs’ General Class depends upon whether Defendant asserted claims for delinquent assessments, interest, or fees “in violation of the FDCPA and the Georgia usury statute.” (Doc. 77, at 3 (emphasis added).) Membership in Plaintiffs’ Illegal Interest Class depends upon whether Defendant sought “to collect illegal interest or other sums not owed.” (Id. (emphasis added).) And membership in Plaintiffs’ Unjust Enrichment Class depends upon whether Defendant “received any payment [from the class member] arising from collection efforts of assessments by Equity Experts which included usurious interest charged in violation of the Georgia usury statutes and illegal fees charged in violation of the FDCPA while residing in the State of Georgia.” (Id. at 4 (emphasis added).) The Court, therefore, cannot certify Plaintiffs’ class using the proposed class definitions. See Randleman, 646 F.3d at 352.  The Court recognizes that it may use its discretion to “revise a proposed class definition to avoid the problem of a fail-safe class.” Campbell v. First Am. Title Ins. Co., 269 F.R.D. 68, 74 (E.D. Me. 2010). The Court, however, declines to exercise this discretion and instead grants Plaintiffs the opportunity to propose class definition(s) that avoid the fail-safe problem. Accordingly, the Court DENIES WITHOUT PREJUDICE Plaintiffs’ motion to certify the proposed class. See In re ConAgra Foods, Inc., 302 F.R.D. 537, 581 (C.D. Cal. 2014) (denying motion to certify class without prejudice and granting plaintiffs thirty days to “address the decencies noted” in the court’s order).