## Facts

- Elizabeth Greisz filed a proposed consumer class action against Household Bank (Illinois), N.A., asserting a federal claim under the Truth in Lending Act (TILA) and supplemental Illinois deceptive-practices claims against Household Bank and Golden Seal Heating & Air Conditioning, Inc.
- The case involved small-value consumer financing claims that would be economically difficult to litigate individually.
- Greisz sought class certification with attorney Joseph A. Longo as proposed class counsel.
- The district court found substantial evidence that Longo was not competent to litigate a class action, citing prior sanctions and judicial findings in other matters.
- Based on Rule 23(a)(4), the district court denied class certification for failure of adequate representation.
- After denial of class treatment, most claims were resolved against Greisz; on the remaining TILA claim, Household Bank made an offer of judgment that Greisz rejected on counsel’s advice.
- The district court ultimately dismissed the action, and Greisz appealed both the denial of certification and the dismissal.

## Issues

1. Whether a court may deny class certification under Federal Rule of Civil Procedure 23(a)(4) based on inadequacy and incompetence of proposed class counsel, even if the named plaintiff is otherwise adequate.
2. Whether the case was properly dismissed after class certification was denied and the plaintiff rejected an offer of judgment on the remaining TILA claim.

## Decision

- The Seventh Circuit affirmed the denial of class certification.
- The court held the district court did not abuse its discretion in concluding that proposed class counsel’s demonstrated incompetence defeated Rule 23(a)(4)’s adequacy requirement.
- The court upheld the dismissal of the action, reasoning that once class treatment was denied, the remaining litigation posture and the plaintiff’s rejection of the offer of judgment left no basis to continue the suit as filed.

## Legal Principles

- Rule 23(a)(4) requires adequate representation, which includes both an adequate named plaintiff and competent class counsel.
- Courts have a duty, before certifying a class, to assess whether class counsel can fairly and adequately protect absent class members’ interests.
- Small-claim class actions raise heightened agency risks because absent class members have little incentive to monitor counsel; incompetent counsel can harm defendants through litigation costs and harm absent class members through the preclusive effect of an adverse judgment.
- Serious, documented deficiencies in proposed class counsel’s competence and conduct can justify denying certification regardless of the underlying claims’ potential merit.
- A court is not required to secure substitute counsel as a prerequisite to denying class certification when the proposed representation is inadequate.

## Conclusion

The Seventh Circuit affirmed denial of class certification because Rule 23(a)(4) demands competent class counsel, and the record supported the finding that proposed counsel was inadequate; the court also upheld dismissal after class treatment failed and the plaintiff declined an offer of judgment on the surviving claim.


Greisz v. Household Bank (Ill.), N.A., 176 F.3d 1012 (7th Cir. 1999)