Nancy R. Murray v. Gmac Mortgage Corporation , doing business as Ditech.com

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 05-8035
N ANCY R. M URRAY ,
Plaintiff-Petitioner,
v.
GMAC M ORTGAGE C ORPORATION ,
doing business as Ditech.com,
Defendant-Respondent.
____________
Petition for Permission to Appeal from the
United States District Court for the
Northern District of Illinois, Eastern Division.
No. 05 C 1229—Samuel Der-Yeghiayan, Judge.
____________
S UBMITTED D ECEMBER 12, 2005—D ECIDED J ANUARY 17, 2006
____________
Before E ASTERBROOK , R OVNER , and W ILLIAMS , Circuit
Judges.
E ASTERBROOK , Circuit Judge. Shortly after her debts had
been discharged in bankruptcy, Nancy Murray received a
credit solicitation from GMAC Mortgage, which had learned
her name and address by asking credit bureaus to forward
information about potential borrowers who met specified
criteria. GMACM offered Murray a loan to be secured by a
mortgage on her home. Deluged by offers, Murray showed
them to a lawyer, who concluded that GMACM had vio-
lated the Fair Credit Reporting Act in two ways: first,
GMACM had not made the “firm offer of credit” that

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2 No. 05-8035
is essential when a potential lender accesses someone’s
credit history without that person’s consent, see 15 U.S.C.
§1681b(c)(1)(B)(i); second, GMACM’s offer did not include a
“clear and conspicuous” notice of the recipient’s right to
close her credit information to all who lacked her prior
consent, see 15 U.S.C. §1681m(d)(1)(D). Murray filed suit,
proposing to represent a class of about 1.2 million recipients
of similar offers from GMACM and demanding statutory
damages, which range from $100 to $1,000 per person. See
15 U.S.C. §1681n(a)(1)(A). A recent amendment to the Act
abolishes private remedies for violations of the clear-disclo-
sure requirement, which in the future will be enforced
administratively, but that change does not apply to
offers made before its effective date and thus does not affect
this litigation. See 117 Stat. 1952, adding 15 U.S.C.
§1681m(h)(8).
While waiting for the judge to decide whether the suit
could proceed as a class action, the parties reached a
tentative settlement—which the district judge refused to
read, stating that this would be a waste of time because
he had decided that Murray could not represent a class. See
2005 U.S. Dist. L EXIS 27254 (N.D. Ill. Nov. 8, 2005),
reconsideration denied, 2005 U.S. Dist. L EXIS 28249 (Nov.
11, 2005). In an effort to save the availability of class-wide
relief, Murray proposes an interlocutory appeal, which
we have discretion to allow. See Fed. R. Civ. P. 23(f).
GMACM, seeing an opportunity to avoid liability (at least
until another recipient of its offer files suit), opposes her
petition. Meanwhile another district judge has certified
a class in an essentially identical action. See Murray v. New
Cingular Wireless Services, Inc., 2005 U.S. Dist. L EXIS
29162 (N.D. Ill. Nov. 17, 2005). We accept the appeal, which
presents some fundamental questions about the manage-
ment of consumer class actions, in light of this conflict and
the fact that about two score more of these suits are
pending in the Northern District of Illinois. Because the

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No. 05-8035 3
papers already filed cover the issues fully, we proceed
directly to decision.
The district court gave four reasons for declining to certify
a class: (1) Counsel did not try to cut a deal for Murray
personally. (2) The complaint seeks statutory but not
compensatory damages. (3) Statutory damages, if awarded
to a class, would be ruinously high. (4) Nancy Murray is a
“professional plaintiff” unfit to represent a class. All but #4
evince hostility to all class litigation; if any one were
adopted, consumer class actions under the Fair Credit
Reporting Act would be impossible. None is a proper ground
on which to deny class certification, however.
1. Let us start with the first. The district judge wrote:
“Murray’s interests are antagonistic to other class members’
interests because Murray may desire to settle her claim
alone. Murray might be able to recover more funds individ-
ually with fewer complications if she settled individually.”
Yet every plaintiff “may desire” to settle alone; if this were
enough to preclude class treatment, there could be no class
actions for damages under Rule 23(b)(3). The district judge
did not point to any evidence suggesting that Murray does
want to settle privately; if she did (and her lawyers say,
without contradiction from the record, that she doesn’t),
why launch the suit as a class action? The only answer
would be that she wanted to use the class as bait to attract
a better offer, then cash in by withdrawing the class claim.
If that were her goal (or her lawyer’s), it would be unethical,
see Shelton v. Pargo, Inc., 582 F.2d 1298, 1306 (4th Cir.
1978), as well as unrealistic. For unless the statute of
limitations had run (which it hasn’t), why would GMACM
pay Murray to go away when any of a million other recipi-
ents could take her place?
Unfortunately, the terms of the tentative settlement
suggest that Murray or her lawyers may have tried some-
thing worse, negotiating for payment while giving GMACM
the benefit of a judgment that leaves the class empty-

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4 No. 05-8035
handed. GMACM agreed to put up a fund of $950,000 that
would be divided between the class members and their
lawyer. Murray would get the first $3,000; the remaining
class members (some 380,000 of whom would receive mailed
notice) and counsel would divide the rest. That works out to
less than $1 per recipient of GMACM’s mailing. Money not
claimed from the fund—and, given the tiny sum per person,
who would bother to mail a claim?— would be distributed
to charity and Murray’s lawyers.
This looks like the sort of settlement that we con-
demned in Blair v. Equifax Check Services, Inc., 181 F.3d
832 (7th Cir. 1999), and Crawford v. Equifax Payment
Services, 201 F.3d 877 (7th Cir. 2000), two appeals arising
from the same litigation. That suit had been settled for
$2,000 to the named plaintiff, $5,500 to a legal-aid society
that had not been injured by the defendant’s conduct, and
$78,000 in legal fees. We treated the disproportion—$2,000
for one class member, nothing for the rest—as proof that
the class device had been used to obtain leverage for one
person’s benefit. See also, e.g., Young v. Higbee Co., 324
U.S. 204, 211-14 (1945); Weiss v. Regal Collections, 385 F.3d
337, 343-45 (3d Cir. 2004); Chauteau de Ville Products, Inc.
v. Tams-Witmark Music Library, Inc., 586 F.2d 962, 965-67
(2d Cir. 1978). Here the proposed award is $3,000 to the
representative while other class members are frozen out.
The payment of $3,000 to Murray is three times the
statutory maximum, while others don’t get even the $100
that the Act specifies as the minimum. Oddly, this is the
sort of tactic that the district judge chastised counsel for not
employing on Murray’s behalf.
Such a settlement is untenable. We don’t mean by this
that all class members must receive $100; risk that the
class will lose should the suit go to judgment on the
merits justifies a compromise that affords a lower award
with certainty. See In re Mexico Money Transfer Litigation,
267 F.3d 743 (7th Cir. 2001). But if the reason other class

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No. 05-8035 5
members get relief worth about 1% of the minimum statu-
tory award is that the suit has only a 1% chance of success,
then how could Murray personally accept 300% of the
statutory maximum? And, if the chance of success really is
only 1%, shouldn’t the suit be dismissed as frivolous and no
one receive a penny? If, however, the chance of success is
materially greater than 1%, as the proposed payment to
Murray implies, then the failure to afford effectual relief to
any other class member makes the deal look like a sellout.
Thus it may well be that Murray is not a good champion,
that her law firm (Edelman, Combs, Latturner & Goodwin,
LLC) is not an appropriate counsel, or both. But this is the
opposite of the district judge’s reason (recall that the judge
wanted Murray to jettison the class for personal benefit), so
this consideration cannot sustain the decision.
2. The district court’s second reason—that Murray should
have sought compensatory damages for herself and all class
members rather than relying on the statutory-damages
remedy—would make consumer class actions impossible.
What each person’s injury may be is a question that must
be resolved one consumer at a time. Although compensatory
damages may be awarded to redress negligence, while
statutory damages require wilful conduct, introducing the
“easier” negligence theory would preclude class treatment.
Common questions no longer would predominate, and an
effort to determine a million consumers’ individual losses
would make the suit unmanageable. Yet individual losses,
if any, are likely to be small—a modest concern about
privacy, a slight chance that information would leak out
and lead to identity theft. That actual loss is small and hard
to quantify is why statutes such as the Fair Credit Report-
ing Act provide for modest damages without proof of injury.
Rule 23(b)(3) was designed for situations such as this, in
which the potential recovery is too slight to support in-
dividual suits, but injury is substantial in the aggregate.
See, e.g., Mace v. Van Ru Credit Corp., 109 F.3d 338, 344-45

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6 No. 05-8035
(7th Cir. 1997). Reliance on federal law avoids the complica-
tions that can plague multi-state classes under state law,
see In re Bridgestone/Firestone, Inc., Tires Products
Liability Litigation, 288 F.3d 1012 (7th Cir. 2002), and
society may gain from the deterrent effect of financial
awards. The practical alternative to class litigation is
punitive damages, not a fusillade of small-stakes claims.
See Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672
(7th Cir. 2003).
Refusing to certify a class because the plaintiff decides
not to make the sort of person-specific arguments that
render class treatment infeasible would throw away the
benefits of consolidated treatment. Unless a district
court finds that personal injuries are large in relation to
statutory damages, a representative plaintiff must be
allowed to forego claims for compensatory damages in order
to achieve class certification. When a few class members’
injuries prove to be substantial, they may opt out and
litigate independently. See Jefferson v. Ingersoll Interna-
tional, Inc., 195 F.3d 894 (7th Cir. 1999). Only when all or
almost all of the claims are likely to be large enough to
justify individual litigation is it wise to reject class treat-
ment altogether. Cf. In re Rhone-Poulenc Rorer Inc., 51 F.3d
1293 (7th Cir. 1995).
3. Having upbraided Murray for abandoning compensa-
tory damages and thus seeking too little, the district
judge also rebuked her for seeking too much. He wrote:
“If Murray and the proposed class members were to pre-
vail at trial, GMAC would face a potential liability in the
billions of dollars for purely technical violations of the
FCRA . . . Rule 23 is not intended to encourage such abuses
of the class action mechanism.”
The reason that damages can be substantial, however,
does not lie in an “abuse” of Rule 23; it lies in the legislative
decision to authorize awards as high as $1,000 per person,
15 U.S.C. §1681n(a)(1)(A), combined with GMACM’s

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No. 05-8035 7
decision to obtain the credit scores of more than a million
persons.
Many laws that authorize statutory damages also
limit the aggregate award to any class. For example, the
Fair Debt Collection Practices Act says that total recovery
may not exceed “the lesser of $500,000 or 1 per centum
of the net worth of the debt collector”. 15 U.S.C.
§1692k(a)(2)(B)(ii). The Truth in Lending Act has an
identical cap. 15 U.S.C. §1640(a)(2)(B) (substituting “credi-
tor” for “debt collector”). See also 15 U.S.C. §1693m(a)(1)(B),
12 U.S.C. §4010(a)(2)(B), and 12 U.S.C. §4907(a)(2)(B).
Other laws, however, lack such upper bounds. See 15 U.S.C.
§1679g(a) (Credit Repair Organizations Act); 15 U.S.C.
§1667d (Consumer Leasing Act). The Fair Credit Reporting
Act is in the cap-free group.
The district judge sought to curtail the aggregate dam-
ages for violations he deemed trivial. Yet it is not appropri-
ate to use procedural devices to undermine laws of which a
judge disapproves. See Alaska Airlines, Inc. v. Brock, 480
U.S. 678, 686 (1987); United States v. Albertini, 472 U.S.
675, 680 (1985); Jaskolski v. Daniels, 427 F.3d 456, 461-64
(7th Cir. 2005). Maybe suits such as this will lead Congress
to amend the Fair Credit Reporting Act; maybe not. While
a statute remains on the books, however, it must be en-
forced rather than subverted. An award that would be
unconstitutionally excessive may be reduced, see State
Farm Mutual Automobile Insurance Co. v. Campbell, 538
U.S. 408 (2003), but constitutional limits are best applied
after a class has been certified. Then a judge may evaluate
the defendant’s overall conduct and control its total expo-
sure. Reducing recoveries by forcing everyone to litigate
independently—so that constitutional bounds are not
tested, because the statute cannot be enforced by more than
a handful of victims—has little to recommend it.

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8 No. 05-8035
4. The district judge regarded “Murray, her spouse, and
their children [as] . . . professional plaintiffs. GMAC claims
that Murray, her spouse, and their children are participants
in more than fifty assorted suits seeking compensation for
technical violations of the FCRA which are all being
handled by the same law firm. Murray does not deny this
fact in her reply. This is . . . an indication that Murray and
her counsel are merely seeking the ‘quick buck’ from a class
settlement and are not truly interested in vindicating any
of the rights of the proposed class members.” Murray tells
us that she has filed “only” nine suits; her husband and four
children filed the rest. Still, the Murrays are in this big
time. What the district judge did not explain, though, is
why “professional” is a dirty word. It implies experience, if
not expertise. The district judge did not cite a single
decision supporting the proposition that someone whose
rights have been violated by 50 different persons may sue
only a subset of the offenders. Neither does GMACM.
A person who seeks out opportunities to sue could do so
in ways that injure other class members. Consider the
investor who buys one share in each of a thousand corpora-
tions, hoping that the price of one will plummet and lead to
securities litigation. Such a person could be tempted to file
suits designed to extract payoffs from the corporation even
if the average investor will lose in the process. Congress has
responded by insisting that the investors with the largest
stakes be allowed to control securities litigation. 15 U.S.C.
§78u-4(a)(2)(A). The Fair Credit Reporting Act lacks any
restrictions along these lines.
Murray did not accept compensation to put herself in
the way of injury—though “testers,” who do this in hous-
ing and employment litigation, usually are praised
rather than vilified. See Havens Realty Corp. v. Coleman,
455 U.S. 363, 374-75 (1982); Arlington Heights v. Metro-
politan Housing Development Corp., 429 U.S. 252 (1977).
Murray just opened the mail as it arrived. She did not

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No. 05-8035 9
invite any of the offers or entrap any potential creditor into
accessing her credit history. Her decision to sue everyone
who accessed that credit history without her consent, rather
than just a few, does not injure any other potential bor-
rower. Nothing about the frequency of Murray’s litigation
implies that she is less suited to represent others than is a
person who received and sued on but a single offer. Repeat
litigants may be better able to monitor the conduct of
counsel, who as a practical matter are the class’s real
champions.
5. GMACM asks us to affirm the district judge’s order
on an alternative ground. One of the contested questions is
whether GMACM used credit information to make a “firm
offer of credit,” which is one of the few permissible purposes
for which this information may be secured without the
consumer’s consent. The statute defines “firm offer of credit”
as “any offer of credit or insurance to a consumer that will
be honored if the consumer is determined, based on infor-
mation in a [credit] report on the consumer, to meet the
specific criteria used to select the consumer for the offer.” 15
U.S.C. §1681a(l). In other words, if a potential lender asks
for the name and address of every consumer who, since
discharge in bankruptcy, has not defaulted on an auto loan
or credit-card payment, then an offer of credit to this
consumer is “firm” if it enables every non-defaulting
recipient to accept; if, however, the credit agency erred and
a given person has indeed defaulted on a loan since the
discharge, then credit need not be extended. 15 U.S.C.
§1681a(l)(2).
According to GMACM, a court cannot know whether
a “firm offer of credit” has been made without examin-
ing every recipient’s circumstances, and the need to do
this for 1.2 million people would make class treatment
impractical. The statutory definition of “firm offer” does not
ask about how consumers react, however; it asks what the

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10 No. 05-8035
offeror has done—what terms have been extended, whether
they are honored if a consumer accepts.
GMACM maintains that Cole v. U.S. Capital, Inc., 389
F.3d 719 (7th Cir. 2004), changed the focus from the offeror
to the recipient and in the process foreclosed any possibility
of class litigation under the Fair Credit Reporting Act. We
held in Cole that a sham offer used to pitch a product rather
than extend credit does not meet the statutory definition. A
business that obtains consumer credit information and then
offers a $1 loan (at 100% daily interest) toward the pur-
chase of a car has not made a “firm offer of credit” but has
instead used credit histories to identify potential auto
buyers. That objective is not allowed under the Fair Credit
Reporting Act, we concluded in Cole.
To separate the use of credit data to sell products (forbid-
den) from the use of credit data to make firm offers of credit
(allowed), we held, a court must determine whether the
offer has value as an extension of credit alone. “A definition
of ‘firm offer of credit’ that does not incorporate the concept
of value to the consumer upsets the balance Congress
carefully struck between a consumer’s interest in privacy
and the benefit of a firm offer of credit for all those chosen
through the pre-screening process. From the consumer’s
perspective, an offer of credit without value is the equiva-
lent of an advertisement or solicitation.” Id. at 726-27. To
understand “the consumer’s perspective,” however, a court
must hold 1.2 million hearings—or so GMACM contends.
GMACM offered the recipients first-mortgage loans, so
that they could draw cash against the equity in their homes.
Because the loan could not exceed the unencumbered
portion of the property’s market price, however, not all
consumers would find the opportunity valuable. Some
would not have enough equity to justify acceptance;
others could conclude that the costs of refinancing (required
so that GMACM could hold the senior mortgage) exceed the
benefit from drawing additional credit.

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No. 05-8035 11
We do not read Cole, however, to require a consumer-by-
consumer evaluation. An offer has value to “the consumer”
if it is useful to the normal consumer. Cole’s objective
was to separate bona fide offers of credit from advertise-
ments for products and services, determining from “all
the material conditions that comprise the credit product
in question . . . [whether it] was a guise for solicitation
rather than a legitimate credit product”. Id. at 728 (empha-
sis in original). That depends on the terms of the offer, not
on recipients’ idiosyncratic circumstances. How else could
someone in GMACM’s position know whether it was lawful
to obtain credit information in the first place?
In order to avoid class certification, GMACM has adopted
a position that would make it impossible for any potential
lender to know ex ante whether it is entitled to obtain credit
information. Any recipient could appear, assert that the
offer was worthless given his financial circumstances, and
obtain damages if not an injunction. Such a rule would
cripple the statutory regime by making offers of credit so
risky that any prudent, law-abiding firm would have to
withdraw from the business. To escape one suit, GMACM
would hobble its own operations and those of all others who
rely on the firm-offer proviso to the Fair Credit Reporting
Act. That would disserve the interests of both lenders and
consumers. Nothing in Cole requires an offer’s value to be
assessed ex post, and recipient by recipient. To decide
whether GMACM has adhered to the statute, a court need
only determine whether the four corners of the offer satisfy
the statutory definition (as elaborated in Cole), and whether
the terms are honored when consumers accept. These
questions readily may be resolved for a class as a whole.
The decision of the district court is vacated, and the
case is remanded for proceedings consistent with this
opinion. Circuit Rule 36 will apply on remand. We strongly
suggest that the Executive Committee of the Northern
District assign all of the Murray family’s suits under the

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12 No. 05-8035
Fair Credit Reporting Act to a single judge, to ensure
consistent handling.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—1-17-06

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