These cases, on a consolidated appeal, involved three defendants: a company that purchased consumer debts, a debt collection law firm, and a process server. Plaintiffs had each been sued in various debt collection actions by defendants. Plaintiffs alleged that defendants obtained default judgments against them fraudulently by using a “default judgment mill,” whereby defendants would purchase the debt, issue summonses and complaints en masse, and automatically generate affidavits of service and merit. Plaintiffs alleged that the affidavits of merit were fraudulent since they were not based on personal knowledge, and that the affidavits of service were fraudulent since service of process was frequently never effectuated. The district court certified classes for violations of RICO, the FDCPA, and state laws.
On appeal, the Second Circuit found that the classes satisfied the commonality and typicality requirements. The court disagreed with defendants that the analysis must focus on the affidavits of service, which, they argued, were not susceptible to class-wide proof. The court instead viewed the procurement of a default judgment as a unitary course of conduct, for which the affidavits were but one component. Further, the court found the affidavits of service non-essential to a finding of commonality since there were other facts showing that defendants were engaged in fraudulent service of process. The court also found that the question of whether the affidavits of merit were in fact based on personal knowledge would resolve the validity of plaintiffs’ substantive claims.
Defendants argued that the classes failed the predominance test owing to individualized damages and causation issues, but the court disagreed. The court reasoned that the only individualized damages inquiries that might exist were those based on the money extracted from each plaintiff as a result of fraudulent judgments, but found these would not overwhelm the litigation since the dollar amounts were easily accessible from defendants’ files. The court distinguished Comcast Corp. v. Behrend because the theory of liability in the case at bar, a fraudulent course of conduct, was uniquely tied to the damages available under the FDCPA, RICO, and state statutes.
Sykes v. Mel S. Harris & Assocs. LLC, Nos. 13–2742, 13-2747, 13–2748 (2d Cir. Feb. 10, 2015).
