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Adams v. Devos

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

August 23, 2017

KAREN ADAMS, individually and on behalf of all others similarly situated, Plaintiff,
BETSY DEVOS, [1] in her capacity as Secretary of the United States Department of Education, Defendant.



         Pending is Plaintiff Karen Adams' Motion for Class Certification. ECF No. 29. For the following reasons the Court DENIES the Motion.

         I. Background

         A detailed discussion of the background of Adams' claims and the statutory structure on which they are based can be found in the Court's Memorandum Opinion and Order denying Defendant, Betsy DeVos's Motion to Dismiss. Adams v. Duncan, 179 F.Supp.3d 632, 634-39 (S.D. W.Va. 2016). For the purposes of this Memorandum Opinion and Order only a brief summary is due. In 1986 Adams obtained a guaranteed student loan in the amount of $2, 500 from Florida Federal Savings and Loan to attend the for-profit trade school PTC Institute in Florida. Both institutions are now defunct. Florida Federal met its demise in 1987 when an employee notified the Federal Bureau of Investigation that the bank was falsifying documents to comply with federal student loan regulations. See United States v. Harmas, 974 F.2d 1262, 1264-66 (11th Cir. 1992). A criminal investigation ensued and a number of Florida Federal's executives were convicted of, among other things, conspiracy to defraud the government and stealing government money. Id. PTC ceased to operate when in 1995 the Department of Education (“DoE”) determined that PTC had falsely certified its students' eligibility for guaranteed student loans and issued group discharge to all borrowers who used their guaranteed student loans to attend the institution from January 1, 1986 through June 30, 1987. Borrowers could have their loans discharged by submitting certain forms to DoE.

         Adams, awarded a Social Security Supplemental Income of around $700 in 1992, defaulted on her loan. Adams was apparently unaware of the discharge, but, all the same, she attempted to have her loan discharged in 2006. DoE denied the request because she wrote the wrong educational institution on the forms. In 2007, DoE convinced Adams to rehabilitate her loan, and in 2008 it sold her rehabilitated loan to SunTrust, a private financial institution. Neither DoE nor SunTrust realized that the loan was subject to discharge. In 2012, the loan guaranty agency, Educational Credit Management Corporation, informed Adams that her loan was eligible for discharge based on DoE's 1995 group discharge. Adams applied and was granted the discharge. She was refunded all payments made on the loan beginning in 2007, totaling $2, 572.96. She did not receive interest.

         Adams then brought suit claiming that DoE had violated the Administrative Procedures Act when it (1) rehabilitated her loan subject to discharge; (2) sold it to SunTrust; and (3) denied her claim for interest on the money paid on the discharged loan.

         Adams now moves the Court to certify a class of plaintiffs whose eligibility for a guaranteed student loan disbursed in whole or in part on or after January 1, 1986 was falsely certified by PTC “and/or” whose loans were secured through Florida Federal and are allegedly subject to restitution. Pl.'s Mot. for Class Certification 9, ECF No. 30. Adams believes the class composed of students whose eligibility was fraudulently certified numbers 10, 000, while those whose loans were the basis for the criminal convictions of the Florida Federal executives numbers 17, 000. It is not entirely clear to the Court whether Adams seeks to certify one or two classes. Nevertheless, DoE forcefully urges the Court to reject Adams' Motion entirely because Adams has provided no evidence supporting the number of potential class members.

         II. Legal Standard

         Rule 23(a) of the Federal Rules of Civil Procedure establishes four class certification requirements: (1) a class so numerous that joinder of all members is impracticable; (2) questions of law or fact common to the class; (3) a representative party whose claims and defenses are typical of the class' claims and defenses; and (4) a representative party that will fairly and adequately protect the class' interests. Fed.R.Civ.P. 23(a); Monroe v. City of Charlottesville, 579 F.3d 380, 384 (4th Cir. 2009). “A plaintiff bears the burden of proving these requirements.” Id. (citing Thorn v. Jefferson Pilot Life Ins. Co., 445 F.3d 311, 317 (4th Cir. 2006)). In addition to these four requirements, a plaintiff must also demonstrate that the proposed class action fits into one of three forms permitted by Rule 23(b). Fed R. Civ. P. 23(b) (1-3).

         III. Discussion

         Adams characterizes her proposed class action as one seeking injunctive relief and therefore in the form described by Rule 23(b)(2): “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.”

         Notwithstanding, Adams has not been able to prove that her proposed class or classes meet the “numerosity” requirement of Rule 23(a)(1). There is no hard and fast rule that courts follow to determine whether a plaintiff has met the numerosity requirement. There are, however, some generally applicable principles that courts have used to define the contours of this requirement. Consideration of class size is by far the most obvious sign of impracticality, but its not the only one. 7A Charles Alan Wright, et al., Federal Practice and Procedure § 1762 (3d ed. 2017); Colo. Cross Disability Coal. v. Abercrombie & Fitch Co., 765 F.3d 1205, 1215 (10th Cir. 2014) (citing “several factors” that inform the impracticability inquiry, including the nature of the action, the size of the individual claims, and the location of the class members).

         While there is no threshold number of class members that would guarantee numerosity is met, very small classes consisting of two members up to twenty-six typically do not meet the requirement. See, e.g., Ackerman v. Bd. of Educ. of New York, 372 F.Supp. 274 (S.D.N.Y. 1974) (finding a class of two insufficient to meet numerosity); Sandoval v. M1 Auto Collison Ctrs., 309 F.R.D. 549 (N.D. Cal. 2015); but see Philadelphia Elec. Co. v. Anaconda Am. Brass Co., 43 F.R.D. 452, 463 (E.D. Pa. 1968) (finding class of twenty-five met the numerosity requirement). Likewise, very large classes are more likely to meet the numerosity requirement, as joinder of any number of class members in excess of a few hundred would be decidedly impractical. See, e.g., Borowski v. City of Burbank, 101 F.R.D. 59, 62 (N.D. Ill. 1984) (finding two hundred potential claimants impractical to join); Collins v. Olin Corp., 248 F.R.D. 95, 101 (D. Conn. 2008) (finding 300 claimants impractical to join).

         A plaintiff is not required to prove with specificity the exact number of possible class members. In re Zyprexa Prods. Liab. Litig., 253 F.R.D. 69, 197 (E.D.N.Y. 2008). Instead, “[p]laintiffs must offer ‘some evidence of established, ascertainable numbers constituting the class.'” Colo. Cross, 765 F.3d at 1215 (quoting Rex v. Owens ex rel. Okla., 585 F.2d 432, 436 (10th Cir. 1978)). A court is permitted to accept “common-sense” assumptions about the size of the class in lieu of precise calculation of the class. De Lage Landen Fin. Servs., Inc. v. Rasa Floors, LP, 269 F.R.D. 445, 460 (E.D. Pa. 2010) (quoting Alberton v. Commw. Land Title Ins. Co., 247 F.R.D. 469, 476 (E.D. Pa. 2008)). Some courts, however, have gone as far as to assume that “[w]here ‘the only relief sought for the class is injunctive and declaratory in nature' even ‘speculative and conclusory representations' as to the size of the class suffice as to the requirement of ...

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