In Boucher v. Fin. Sys. of Green Bay, No. 17-C-132, 2019 U.S. Dist. LEXIS 61026 (E.D. Wis. Apr. 9, 2019), Judge Griesbach denied class certification in FDCPA dunning letter case because of de minimum recovery that the putative class members would receive. The settlement would have resulted in about $1 per class member.
Still, the Seventh Circuit has never said that the fact that each member of a class would likely receive only a de minimus amount should never be taken into consideration. While not finding it an automatic basis for denying class certification, other courts have found it a proper basis for doing so under certain circumstances. In addition to Campos, Guevarra, and Wenig, cited above, Fainburn v. Southwest Credit Systems, L.P., held that where the distribution would amount to only 1¢ per class member and the costs of mailing notices could itself exceed $100,000, the motion to decertify the class would be granted. No. CV-05-4364, 2008 WL 750550, (E.D.N.Y. Mar. 18, 2008); see also Jones v. CBE Grp., Inc., 215 F.R.D. 558, 570 (D. Minn. 2003) (“Having reviewed evidence of defendant’s net worth in camera, the court has determined that the potential recovery for unnamed class members is, at most, de minimis.”); Sonmore v. CheckRite Recovery Servs., Inc., 206 F.R.D. 257, 265-66 (D. Minn. 2001) (“By certifying the class, the court would ensure a de minimis monetary recovery for class members, which constitutes a substantial reduction in what class members may otherwise be entitled by pursuing their claims individually. Because plaintiffs pursing an action individually are eligible to recover a maximum of $1,000, while absent class members in this case are eligible for a maximum of merely twenty-five dollars, the Court finds that the interest of class members in individually controlling the prosecution of their claims prevails over any efficiency objectives that may be achieved through management of the litigation as a class action.”). 10 This case significantly differs from Mace in that liability has already been established as a matter of law. This means that the difficulty for a class member to pursue a claim individually is significantly reduced. This fact, when combined with the limited recovery available under the FLSA to members of the class, means that there is virtually no incentive for anyone to remain a member of the class. Any reasonable person, if told that the maximum recovery if he or she remained in the class was a dollar, but that he or she could recover up to $1,000 if he or she was not a member and that liability had already been conceded, would opt out. Thus, instead of reducing the number of individual lawsuits FSGB will be required to defend and the courts to hear, granting Rule 23 class certification will more likely increase the number of individual lawsuits. Plaintiffs contend that with a maximum individual award of $1,000, and the maximum class award of $500,000, FSGB’s argument, if accepted, would mean that a “debt collector would only need to identify 500 class members to avoid class liability and frustrate the deterrent effect of class actions under the FDCPA as envisioned by Congress.” Pls.’ Reply Br., Dkt. No. 70 at 7. But FSGB is not saying that whenever the possibility of a higher recovery is present, class certification should be denied. In this case, there is a certainty, given the cap on the class recovery and the number of class members, that each member will recover more by opting out since the recovery per class member is only a dollar. The additional deterrent value of paying an extra $1,700 on top of the up to $1,000 FSGB must pay on each individual claim, along with attorneys’ fees, and the threat of future liability if it does not change the language in its letter, is negligible. In any event, the need for deterrence would seem more limited where, as here, the violation is almost identical to an alleged violation the Seventh Circuit had previously rejected as “downright frivolous.” See Taylor v. Cavalry Inv., L.L.C., 365 F.3d 572, 575 (7th Cir. 2004) (“The plaintiffs have an alternative claim 11 that is downright frivolous-that the statement we quoted from the dunning letter is false, and so violated 15 U.S.C. § 1692e, because two of the creditors did not add interest. The letter didn’t say they would, only that they might.”); see also Dunbar v. Kohn Law Firm, S.C., 896 F.3d 762, 765-66 (7th Cir. 2018) (“Similarly here, it is not misleading to say that a debtor who settles a debt may incur a tax liability. The use of the word ‘may’ signals only that tax consequences are possible in the case of some debtors, not that tax consequences are possible or likely (much less certain) in this particular debtor’s circumstances.”). It is true that without a class notice, many of those who received an offending letter from FSGB may never know they have a claim. But this is really a consequence of the fact that they sustained no actual damages. They would gain nothing of any significance from a de minimus recovery. The only way they would truly benefit is by bringing an individual lawsuit, which flies in the face of the primary purpose underlying Rule 23. When one adds the additional expense of mailing notices and the costs of administration (estimated at $12,500), along with the additional attorneys’ fees that would be incurred, it seems clear that class treatment is not a superior method of adjudicating Plaintiffs’ claims unless the purpose is simply to punish FSGB. In their reply, Plaintiffs contend that FSGB waived all defenses, including its de minimis defense to class certification. Pls.’ Reply Br., Dkt. No. 70 at 6. A full reading of the transcript of the hearing before the court, however, reveals that FSGB waived only its defenses to liability, not to class certification. Dkt. No. 71-1 at 12:24-14:02. Class certification was the only issue that remained. FSGB did not waive its de minimis defense to class certification. Plaintiffs also note that they dispute FSGB’s assertion that one percent of its net worth is less than $1,700. Pls.’ Reply Br., Dkt. No. 70 at 7 n.2. But any dispute over FSGB’s net worth was 12 waived when Plaintiffs elected to table its motion to compel further discovery on the issue and proceed on class certification without resolving it. Dkt. No. 67 at 18:6-23, 19:18-20:20. See United States v. Jaimes-Jaimes, 406 F.3d 845, 848 (7th Cir. 2005) (explaining that defendant forfeits an argument not raised as a result of an accidental or negligent omission but waives an argument that he selects not to assert as a matter of strategy). Having concluded that further discovery on the issue was unnecessary because it was not relevant to the issue of class certification, Plaintiffs have waived any objection to the financial disclosures FSGB provided for purposes of deciding the motion seeking such certification.