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Perez v. Figi's Companies, Inc.

United States District Court, S.D. West Virginia, Beckley Division

December 28, 2016

SANDRA PEREZ, Plaintiff,
v.
FIGI'S COMPANIES, INC. and CHARMING SALES CO. ONE, INC., Defendants. CONTESSA HAMLET, et al., Plaintiffs,
v.
CREDIT BUREAU OF NAPA COUNTY, INC., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          IRENE C. BERGER UNITED STATES DISTRICT JUDGE.

         The Court has reviewed Defendant Alliance Collection Agencies, Inc.'s Motion to Consolidate (Document 40 in Civil Action No. 5:16-cv-4851), the Memorandum of Law in Support (Document 41), the Notice of Non-Opposition to Motion to Consolidate (Document 53) filed by Defendants I.C. System, Inc., and Credit Management, LP, the Plaintiffs' Notice of Non-Opposition to Motion to Consolidate (Document 59), Third-Party Defendant Charming Sales Co. One Inc.'s Opposition to Alliance Collection Agencies, Inc.'s Motion to Consolidate (Document 70), Figi's Companies, Inc.'s Memorandum in Opposition to Alliance Collection Agencies, Inc.'s Motion to Consolidate (Document 71), and the Reply of Alliance Collection Agencies, Inc. in Support of Its Motion to Consolidate (Document 73), as well as all attached exhibits.

         The Court has also reviewed Defendant Alliance Collection Agencies, Inc.'s Request for Expedited Consideration of the Motion to Consolidate or, in the Alternative, Motion for a Hearing (Document 123), Charming Sales Co. One, Inc.'s Memorandum in Opposition to Alliance Collection Agencies, Inc.'s Motion to Expedite (Document 125), the Plaintiffs' Response to Defendant Alliance Collection Agencies, Inc.'s Request for Expedited Consideration of the Motion to Consolidate or in the Alternative Motion for a Hearing (Document 126), and Figi's Companies, Inc.'s Response to Alliance Collection Agencies, Inc.'s Request for Expedited Consideration of the Motion to Consolidate or in the Alternative Motion for a Hearing (Document 127)

         For the reasons stated herein, the Court finds that Alliance's motion to consolidate should be granted.

         FACTUAL BACKGROUND AND PROCEDURAL HISTORY

         The named Plaintiffs in this matter, Contessa Hamlet, Sandra Perez, and Dorothy Thompson, initiated this class action suit in the Circuit Court of Raleigh County, West Virginia, on April 22, 2016. They named the following debt collection agencies as Defendants: Credit Bureau of Napa County, d/b/a Chase Receivables, Alliance Collection Agencies, Inc., Credit Management, LP, Bonded Collection Corporation, I.C. System Inc., Omni Credit Services, Inc., Plaza Associates, Professional Recovery Consultants, Inc., and Van Ru Credit Corporation. Given the nature of the pleadings now before the Court, an overview of the allegations in both this matter and in Perez v. Figi's Companies, Inc., Civil Action No. 5:15-cv-13559, is necessary.

         The Hamlet Plaintiffs allege that they incurred debts owed to Figi's Inc. (now known as Charming) and/or Figi's Companies, Inc. (Figi's).[1] The Hamlet Defendants contracted with Figi's, Charming, or both, to collect the debts. Figi's and/or Charming added a collection fee to the Plaintiffs' accounts prior to contracting with the Defendants to collect the debts, which the Plaintiffs assert is in violation of West Virginia law. The Defendants sent the Plaintiffs (and all proposed class members) letters seeking to collect the debts, including the collection fees. The Perez Plaintiff, meanwhile, contends that, prior to transferring the accounts to the collection agencies, Charming and/or Figi's mailed letters to a substantially similar class of debtors, advising that, absent prompt payment, the allegedly unlawful collection fee would be added to their accounts and the accounts would be referred to collection agencies.

         On June 30, 2016, the same day it filed its motion for consolidation, Alliance filed Defendant Alliance Collection Agencies, Inc.'s Answer to Plaintiffs' Class Action Complaint and Third-Party Complaint Against Figi's Companies, Inc. and Charming Sales Co. One, Inc. (Document 42) (third-party complaint). Therein, Alliance alleges that it entered into a Debt Collector Vendor Agreement (Agreement) with Charming on May 29, 2013, and continued to collect on accounts for Figi's after the asset sale until May 11, 2015. The Agreement contains indemnification agreements specifying each party's liability, as well as a forum selection clause stating that conflicts should be resolved in Wisconsin state court. Alliance seeks indemnification, and Charming and Figi's have taken the position that they are entitled to indemnification under the terms of the agreement. Charming and Figi's have also moved to dismiss or transfer the third-party complaint based on the forum selection clause.

         Shortly after this matter was removed to federal court, the Plaintiffs filed a motion to remand. The Court ordered limited jurisdictional discovery, and the Plaintiffs ultimately withdrew the motion to remand based on evidence regarding the total class size and amount in controversy. In the meantime, Alliance's motion to consolidate was fully briefed and is now ripe for ruling.

         DISCUSSION

         Alliance moves for consolidation, arguing that both Perez and Hamlet “arise out of the same set of core operative facts and law.” (Alliance Mem. in Supp. of Consolidation, at 1.) Alliance further asserts that the proposed class members will likely be largely the same. In addition, Alliance stresses the risk of double recovery and inconsistent adjudications absent consolidation. Briefing is now complete on a motion for summary judgment and a motion for class certification in Perez, and mediation in that matter took place on November 29, 2016.[2] In its motion to expedite, Alliance notes that one of the issues in Figi's motion for summary judgment involves Alliance's conduct in placing collection calls to Ms. Perez, generating concerns that the Court could issue rulings regarding Alliance's conduct in Perez, which would then impede Alliance's defense in Hamlet. Finally, Alliance is concerned that it could be prejudiced by its exclusion from the Perez mediation. The Plaintiffs do not oppose consolidation, [3] and Defendants I.C. System, Inc., and Credit Management, LP, the only other Hamlet Defendants to file any response to the motion for consolidation, noted their lack of opposition.

         Figi's and Charming, however, vigorously oppose consolidation. They argue that the two matters involve different letters, which should be evaluated independently, and that Perez would likely be delayed by consolidation, in view of its more advanced stage in litigation. Because the collection letters are not identical, Figi's and Charming assert that there will be little overlap in discovery, no potential for double recovery, and few efficiencies would result from consolidation. Instead, they argue, a jury could be confused and blame Charming or Figi's for the alleged unlawful actions of the debt collectors. Charming and Figi's further argue that the parties do not overlap, except due to Alliance's third-party complaint, which they have separately moved to dismiss. In their oppositions to the motion to expedite, both reiterate their previous arguments against consolidation, particularly the different stages of litigation, and stress that consolidation could hamper attempts to settle Perez.

         Rule 42(a) of the Federal Rules of Civil Procedure governs the consolidation of related civil actions. Rule 42(a) states that “[w]hen actions involving a common question of law or fact are pending before the court, it may order . . . all the actions consolidated.” Fed. R. Civ. Proc. 42(a). The Fourth Circuit Court of Appeals has given district courts the following guidelines to apply when considering a motion to consolidate actions:

The critical question for the district court . . . was whether [1] the specific risks of prejudice and possible confusion were overborne by the risk of inconsistent adjudications of common factual and legal issues, [2] the burden on the parties, witnesses and available judicial resources posed by multiple lawsuits, [3] the length of time required to conclude multiple suits as against a single one, ...

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