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White v. Financial Credit Corporation – Other Consumer Issues

ROY L. WHITE, Plaintiff






Case No. 99 C 4023, Case No. 99 C 5001


2000 U.S. Dist. LEXIS 8963

June 21, 2000, Decided June 21, 2000, Filed; June 22, 2000, Docketed

DISPOSITION: [*1] Plaintiffs’ motion for class certification granted.

COUNSEL: For ROY L WHITE, plaintiff (99-CV-4023): Cathleen M. Combs, Daniel A. Edelman, James O. Latturner, Nicole Renee Connors, Edelman, Combs & Latturner, Chicago, IL.

For FINANCIAL CREDIT CORPORATION, defendant (99-CV-4023): David Matthew Schultz, James Constantine Vlahakis, Hinshaw & Culbertson, Chicago, IL.

For FINANCIAL CREDIT CORPORATION, defendant (99-CV-4023): Murdoch J. Hertzog, Attorney, St. Clair Shores, MI.

JUDGES: Harry D. Leinenweber, Judge, United States District Court. Magistrate Judge Denlow. Judge Elaine E. Bucklo. Magistrate Judge Levin.

OPINIONBY: Harry D. Leinenweber


The plaintiff seeks to represent a class of Illinois residents who were mailed collection letters that stated in substance that settlement of the debt sought to be collected will improve the debtor’s credit rating. The gist of plaintiff’s complaint is that such a promise is false because, if the debt had been reported by the creditor to a credit rating agency, the original delinquency will continue adversely to affect the debtor’s credit rating. This false promise, according to plaintiff, violates the Fair [*2] Debt Collection Practices Act, 15 U.S.C. @ 1692 et seq., and the Credit Repair Organizations Act, 15 U.S.C. @ 1679 et seq.


Defendants’ first request is for the court to delay its ruling on class certification in order to permit defendants to file motions for summary judgment. However Rule 23(c) admonishes courts to decide the certification issue “as soon as practicable.” See, Nagel v. ADM Investor Services, Nos. 99-3236 to 99-3240, 99-3513 to 99-3517, 2000 WL 726934, *11 (7th Cir. (Ill.) June 7, 2000). While the parties often agree to consider the merits before class certification, here the issue is fully briefed and there appears to be no good reason not to consider this class issue at this time.

2000 U.S. Dist. LEXIS 8963, *

Defendants next take issue with typicality and commonality. The basic thrust of their arguments is that the court would have to look into each class member’s credit history to see if it was in fact improved because he paid off the debt. They contend that this would involve a determination whether the particular debtor was able to obtain credit that he might not have gotten but for the loan repayment. [*3] Defendants also argue that this lack of commonality and typicality prevents the plaintiffs from complying with Rule 23(b)(3) because individual defenses predominate.

Plaintiffs take issue with defendants’ challenge to typicality, commonality and predominance. They argue that, once a debt has been reported to a credit reporting agency, payment to a debt collector will not meaningfully improve the debtor’s credit rating; the fact that the debt was turned over to a debt collector, even if subsequently settled, will remain on the credit report. In support they attach a report of an “expert” who states that the only way meaningfully to improve one’s credit rating is to reestablish credit with a bank and develop a new credit history.

Since the court is not able to evaluate the merits of the case on a motion for class certification, the court believes that the plaintiffs have in fact established for the purpose of class certification typicality, commonality and predominance with one modification to their purposed class definition. If the original creditor did not report the debt to a credit rating agency it seems hard for the court to see how payment would not improve the debtor’s credit [*4] rating. Presumably, if the debtor does not settle with the collection agency, the agency itself will report the debt which would impair the debtor’s credit rating by making it worse. So the court will certify a class as follows: (1) all persons with Illinois addresses; (2) who were mailed a letter, in the form represented by Appendix A of plaintiffs motion; (3) on or after January 1, 1999; (4) in an attempt to collect a debt which can be determined to be a nonbusiness debt; (5) which had been reported to a credit rating agency prior to the mailing of the letter; and (6) which letter was not returned by the Postal Service.

The defendant, Financial Credit Corp., makes an additional argument against class certification in the White case. It contends, based on its small net worth and large class size, that any recovery would be de minimus. A de minimus recovery does not automatically bar a class action. Mace v. Van Ru Credit Corp., 109 F.3d 338 (7th Cir. 1997). Also at this point there are questions of fact as to the class size and the defendant’s net worth. Therefore the court certifies the class in the White case also. The court can, at a later date, [*5] if the evidence is clear that only a de minimus recovery is possible, reconsider the issue and perhaps decertify the class in that case.


Accordingly, the motion for class certification is granted. A class as defined above is certified.


Harry D. Leinenweber, Judge

United States District Court

2000 U.S. Dist. LEXIS 8963, *

Date: June 21, 2000