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Court Strikes Class Action Allegations Citing Individualized Causation Issues

by Jacob R. Hathorn

A Pennsylvania federal district court granted defendant CitiMortgage’s motion to strike class allegations under Rule 23(d)(1)(D), because it was clear from the complaint that plaintiffs could not meet the requirements for maintaining a class action and were unlikely to be able to substantiate their class allegations through discovery.

Plaintiffs were homeowners who, after defaulting on their mortgage, commenced a class action against three defendants related to the collection of payments due under plaintiffs’ mortgage and associated note alleging violations of state and federal debt collection and consumer protections laws.  To prevail on the one count that remained against Citi, a claim under Pennsylvania’s unfair trade practices statute, plaintiffs had to allege and prove that they sustained an ascertainable loss of money or property as a result of Citi’s deceptive conduct.  The complaint alleged that Citi had misrepresented the amount needed to reinstate the named plaintiffs’ loan and that the named plaintiffs suffered an ascertainable loss when they made a payment after receiving Citi’s alleged misrepresentation.  However, the complaint also included allegations demonstrating that the named plaintiffs’ payment, rather than being caused by Citi, was actually made in response to a demand letter from a second servicer to which Citi had transferred all servicing rights more than a month prior the date plaintiffs made their payment.

Citi successfully moved to strike the class allegations under Rule 23(d)(1)(D), which permits a court to order amendment of the pleadings to eliminate allegations about representation of absent persons.  The Court concluded that plaintiffs could not satisfy Rule 23(a)(3)’s typicality requirement because of causation issues unique to the plaintiffs’ claim—in particular, plaintiffs failed to allege facts to suggest that they had sustained the requisite “ascertainable loss of money or property . . . as a result of” Citi’s alleged misconduct.  The Court also concluded that the named plaintiffs were not adequate representatives of the putative class under Rule 23(a)(4), because they might devote time and effort to litigating the causation issues unique to their own claim and neglect issues common to the class.  Although unnecessary to its decision, the Court also concluded that, even if the typicality and adequacy requirements of Rule 23(a) could be satisfied, plaintiffs’ class allegations would still fail to meet the predominance requirement of Rule 23(b)(3), once again because causation issues unique to the named plaintiffs’ claim raised individualized issues, demonstrating that a class action was not superior to other available methods for fairly and efficiently adjudicating the controversy.

Trunzo v. CitiMortgage, No. 2:11-cv-01124, slip op. (W.D. Penn. Mar. 31, 2014).

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About Jacob R. Hathorn

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