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Adkins v. Midland Credit Management, Inc.

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

April 9, 2019

STEPHANIE ADKINS and DOUGLAS SHORT, Plaintiffs,
v.
MIDLAND CREDIT MANAGEMENT, INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          IRENE C. BERGER UNITED STATES DISTRICT JUDGE.

         The Court has reviewed the Plaintiffs' Motion for Class Certification (Document 46), the Memorandum of Law in Support of Plaintiffs' Motion for Class Certification (Document 47), the Defendant's Memorandum in Opposition to Plaintiffs' Motion for Class Certification (Document 75), and the Plaintiffs' Reply in Further Support of Plaintiffs' Motion for Class Certification (Document 72).[1] In addition, the Court has reviewed all attached exhibits. For the reasons stated herein, the Court finds that the motion should be granted.

         FACTS

         The named Plaintiffs, Stephanie Adkins and Douglas Short, brought this action on behalf of themselves and a purported class of West Virginia consumers. They named as Defendant Midland Credit Management (MCM). The Plaintiffs allege that MCM mailed collection letters seeking to collect debt which was beyond the statute of limitations for filing a legal action for collection without including disclosures required by the West Virginia Consumer Credit and Protection Act (WVCCPA).

         The Plaintiffs seek to certify the following class:

All persons with West Virginia addresses to whom Midland sent a debt collection letter on or after July 4, 2017 seeking to collect debt that Midland's records indicated had passed its statute of limitations, which letter failed to provide the following disclosure: “The law limits how long you can be sued on a debt. Because of the age of your debt, [Midland] cannot sue you for it.”

(Mot. to Cert. Class at 1.) The Plaintiffs assert that those letters violate W.Va. Code §46A-2-128(f), which was amended effective July 4, 2017. That provision requires that the following language be included in written communications seeking to collect debt beyond the statute of limitations: “The law limits how long you can be sued on a debt. Because of the age of your debt, (INSERT OWNER NAME) cannot sue you for it.” W.Va. Code § 46A-2-128(f). MCM sent 14, 313 letters to West Virginia consumers with debt its software identified as being outside the statute of limitations that did not include the required disclosure.[2]Those letters relate to 11, 774 separate accounts.

         MCM sent a letter dated July 19, 2017, to Mr. Short's attorney's office. The letter was addressed to Mr. Short, but mailed to his attorney's office. The letter lists a current balance of $992.30. It references a dispute, indicates that MCM concluded that its “information is accurate” and verified the amount of Mr. Short's outstanding balance. (Short Letter, att'd as Pl.'s Ex. B) (Document 72-2.) The letter contains the following language: “The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, we may continue to report it to the credit reporting agencies as unpaid.” (Id.) The same language appears in a letter dated July 12, 2017, that MCM sent to Ms. Adkins. Ms. Adkins' letter lists a balance of $849.73 and offers “payment options” with a 40% discount for paying the reduced amount due in full by August 11, 2017, a 20% discount for paying the reduced amount due in six monthly payments, with the first payment due by August 11, 2017, or “Monthly Payments As Low As: $50 per month.” (Adkins Letter, att'd as Pl.'s Ex. C) (Document 72-3.)

         MCM operates as a debt collector, servicing charged-off accounts acquired by Midland Funding, LLC. MCM and Midland Funding share a parent corporation, Encore Capital Group, Inc. The accounts that are part of the proposed class originated with approximately 57 creditors, each with different account agreements, [before being sold to Midland Funding]. Some of those account agreements contain arbitration clauses and/or choice of law or venue provisions.

         MCM identifies accounts that are beyond the statute of limitations by using software to establish an estimated statute of limitations expiration date.

First, the system calculates the date on which the statute of limitations accrues by using available date related to last payment, date of occurrence, and/or date the account was opened. Notably, when calculating date of occurrence, the calculation is made by subtracting 180 days from the date of charge-off, plus an additional buffer of 30 extra days. In this way, the date of occurrence calculation is intentionally conservative, potentially shortening the effective estimated statute of limitations by 30 days.
Once the accrual date is determined, the system estimates which statute of limitations applies, or in other words how many years the applicable statute of limitations should be. This step is an automated calculation that relies on relevant data points, including information provided by the original creditor, the state of the consumer's last known/best address, certain information included in applicable account agreements, whether and when the consumer has made payments on the debt, the type of debt, whether the account is subject to the Uniform Commercial Code, etc.

(Declaration of Jared McClure, att'd as Ex. 1 to Def.'s Resp., at ¶¶ 15-16) (Document 75-1.) The system does not account for facts that might toll the statute of limitations. As a policy, MCM does not revive debt if a debtor makes a payment after the statute of limitations had expired, and so it continues to treat such accounts as though they are beyond the applicable statute of limitations, regardless of state laws that may restart the statute of limitations upon payment. Where it is not clear which state's laws govern an account, MCM's system is designed to apply the shorter possible applicable statute of limitations. Thus, MCM contends that its estimated statute of limitations is intentionally over-inclusive.

         MCM monitors changes in federal and state laws and regulations related to debt collection. Between January and April 2017, MCM implemented a new system for requesting changes in its debt collection correspondence. Previously, the department or individual suggesting a change would email Marketing, and Marketing held follow-up meetings. Under the new system, the department or individual suggesting a change emails Marketing with a uniform request form, and Marketing holds follow up meetings. On April 28, 2017, shortly after the implementation of the procedure requiring use of the uniform request form, MCM's Legal/Compliance Department emailed the Director of Marketing with a description of the amendments to the WVCCPA, requesting that letter templates be changed as of July 4, 2017, to include the required language for debt outside the statute of limitations, but did not use the uniform request form. Marketing did not implement the change, and no follow up occurred until the Legal/Compliance ...


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