Stewart v. Cheek & Zeehandelar, LLP

252 F.R.D. 387, 2008 U.S. Dist. LEXIS 88886, 2008 WL 4097411
CourtDistrict Court, S.D. Ohio
DecidedSeptember 5, 2008
DocketNos. 2:06-CV-0736, 2:07-CV-153
StatusPublished
Cited by6 cases

This text of 252 F.R.D. 387 (Stewart v. Cheek & Zeehandelar, LLP) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stewart v. Cheek & Zeehandelar, LLP, 252 F.R.D. 387, 2008 U.S. Dist. LEXIS 88886, 2008 WL 4097411 (S.D. Ohio 2008).

Opinion

OPINION AND ORDER

ALGENON L. MARBLEY, District Judge.

I. INTRODUCTION

Plaintiffs Darla Stewart and George Lexington filed this class-action lawsuit against Defendants Cheek & Zeehandelar, LLP, a law firm; Emerson Cheek, a principal at the firm; and Krishna Velayudhan, an attorney associated with the firm (collectively, “Cheek & Zeehandelar”). Plaintiffs claim that Cheek & Zeehandelar has engaged in misleading and deceptive business practices in violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (“FDCPA”), and Ohio’s Consumer Sales Practices Act, Ohio Revised Code (“O.R.C.”) § 1345.01 (“CSPA”). In particular, Plaintiffs allege that Cheek & Zeehandelar seeks to garnish or attach the property of Ohio consumers who have defaulted on credit and loan agreements, without having first investigated the nature of the debtors’ property to determine if it is legally exempt from garnishment or attachment.

[389]*389Plaintiffs now move to certify a declaratory and injunctive-relief class pursuant to Federal Rule of Civil Procedure 23(b)(2) and a money damages sub-class pursuant to Rule 23(b)(3). For the reasons set forth below, the Court modifies Plaintiffs’ proposed (b)(2) class and GRANTS Plaintiffs’ motion to certify this class, but DENIES Plaintiffs’ motion to certify its proposed (b)(3) sub-class.

II. BACKGROUND

A. Plaintiffs’ Allegations

Cheek & Zeehandelar is a Columbus, Ohio based law firm that primarily litigates collection actions, meaning that it works to collect on consumers’ unpaid debts. Cheek & Zeehandelar does this in part by petitioning the courts to issue writs of attachment over the bank accounts of consumers who have allegedly defaulted on consumer payment obligations owed to Cheek & Zeehandelar’s clients. Plaintiffs allege that through the use of standardized and uniform policies and practices, Cheek & Zeehandelar seeks writs of attachment by representing to Ohio courts that it has “good reason to'believe and does believe [that the debtor’s bank account] has property other than [the debtor’s] personal earnings.” In fact, plead Plaintiffs, Cheek & Zeehandelar makes these representations without regard to their truth or falsity because, pursuant to its standard business practices, Cheek & Zeehandelar routinely fails to investigate the nature of the property it seeks to attach.

Under Ohio law, a judgment creditor may institute a proceeding for garnishment of property by filing an affidavit identifying the judgment debtor and stating that the affiant “has a reasonable basis to believe that the person named in the affidavit as the garnishee may have property, other than personal earnings, of the judgment debtor that is not exempt under” either Ohio or federal law.1 Funds exempt from attachment under Ohio law include, among others, a significant portion of wage earnings, workers’ compensation benefits, unemployment compensation benefits, disability benefits, pension plans and retirement accounts, and spousal and child support. O.R.C. § 2329.66. Funds exempt under federal law include social-security and veterans’ benefits, among others. See e.g., 42 U.S.C. § 407 (exempting social-security benefits); 15 U.S.C. § 1673 (governing exemptions from garnishment on personal earnings); 38 U.S.C. § 5301 (exempting veterans’ benefits).

B. The Defendants

Defendant Cheek oversees his firm’s consumer collections department. Defendant Velayudhan is one of the attorneys in this department who, along with Cheek, regularly executes affidavits to attach the property of purported debtors, and in doing so, affirms that he has a reasonable basis to believe that the property is not exempt from attachment. The consumer-collections department primarily collects on credit-card debts and defaulted promissory notes. It has filed cases in all of Ohio’s eighty-eight counties.

Velayudhan testified that the firm had a standard protocol in place for processing the garnishment affidavits he signed. Administrative staff at Cheek & Zeehandelar prepared the affidavits for his review and signature. Velayudhan reviewed the files of each debtor with an eye towards spotting any red flags suggesting that filing the affidavit would be improper. These red flags included such things as whether the debtor was deceased, had filed for bankruptcy, or had funds exempt from attachment under Ohio or federal law. To identify exempt property or funds, Velayudhan looked through the file for evidence that the debtor was employed, owned property, or contacted the firm to explain that the property or funds were exempt. Velayudhan testified that he never personally contacted the debtors to deter[390]*390mine whether their property or funds were exempt, nor did he contact the debtors’ banks, or conduct debtors’ examinations. Velayudhan further testified that the firm did not send any written discovery to debtors to ascertain the status of their property or funds, but that it began doing so sometime within the year prior to his January 2008 deposition, after Plaintiffs had initiated this suit. Finally, Velayudhan testified that he reviewed and signed thirty to forty garnishment affidavits each business day.

C. The Plaintiffs

Plaintiff Stewart is a kindergarten teaching assistant. Cheek & Zeehandelar initiated a collection action against her in Ohio state court. Although the court had served Stewart with notice of the suit, she did not realize its importance, and set the notice aside. Cheek & Zeehandelar obtained a default judgment against her on May 10, 2006.

On May 16, 2006, Velayudhan signed an affidavit affirming that he had “good reason to believe and d[id] believe that [Century National Bank] may have property other than personal earnings of [Darla J. Stewart] that is not exempt under the laws of the State of Ohio or the United States.” In reliance on Velayudhan’s affidavit, the state court issued a writ of attachment for Stewart’s checking and savings accounts on May 23, 2006. Stewart and her husband learned what had happened when they were prevented from withdrawing money from their checking account. Stewart responded by hiring an attorney to contest the attachment of her accounts. On June 9, 2006, the state court issued an order finding that $555.15 of the $681.30 in her checking account constituted exempt personal earnings that had to be restored to her.

Plaintiff George Lexington served in the United States military, from which he was honorably discharged. Beginning in 2002 or 2003, he began receiving disability benefits from the Department of Veterans’ Affairs. When Cheek & Zeehandelar contacted him about paying off his defaulted debt, Lexington told the firm that his only source of income was his VA benefits.

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Cite This Page — Counsel Stack

Bluebook (online)
252 F.R.D. 387, 2008 U.S. Dist. LEXIS 88886, 2008 WL 4097411, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stewart-v-cheek-zeehandelar-llp-ohsd-2008.