Monday, February 9, 2015

FYI: ED Pa Holds FDCPA's Class Action Recovery Limit Applies Per Action, Not Per Defendant

The U.S. District Court for the Eastern District of Pennsylvania recently held that the class action statutory damages provision under the federal Fair Debt Collections Practices Act, 15 U.S.C. 1692, et seq. (“FDCPA”) allowed a maximum recovery per action as opposed to per defendant.  A copy of the opinion is attached.


On March 6, 2013, the debtor (“Debtor”) filed an amended complaint-class action on her own behalf and on behalf of a purported class of similarly-situated debtors, alleging that the defendants (“Defendants”) violated various provisions of the FDCPA by sending a collection letter that was “a false, deceptive, and misleading representation or means in connection with the collection of a debt, and an unfair or unconscionable means to collect or attempt to collect a debt.” 


Specifically, Debtor’s contention was premised upon the representation made in Defendants’ collection letter that, if the consumer recipient agreed to pay a reduced amount to satisfy the debt, Defendants would stop applying interest to the debt, when Defendants were not actually applying interest to the debt.


By order dated December 23, 2014, the Court granted Debtor’s motion for class certification.  The class included all consumers in Pennsylvania to whom, from March 5, 2012, a continuing through the resolution of the action, Defendants sent a letter substantially corresponding to the collection letter attached to the amended complaint.


Debtor, on behalf of the certified-class, sought recovery in the maximum statutory damages award amount of $500,000 for class actions from each of the two Defendants, for a total of $1,000,000 in statutory damages.  Defendants filed a motion seeking a legal determination as to the statutory amount of damages available.


The District Court noted that the parties disagreed as to the correct interpretation of the FDCPA provision providing the maximum amount of statutory damages recoverable in a class action suit.  Defendants argued that the FDCPA limited the recovery of a class to a maximum of $500,000 per action, regardless of the number of named defendants.  Debtor argued that the statue permitted recovery on behalf of a class in the amount of $500,000 per defendant.


As you may recall, the FDCPA’s damages provision states:


(A) In the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or

(B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector.


See 15 U.S.C. § 1692k(a)(2).


The Court recognized that, although the Third Circuit Court of Appeals had not addressed whether the FDCPA’s statutory limit for class actions provided a maximum amount of recovery per action as opposed to per defendant, the Third Circuit, along with numerous other courts, had found that the $1,000 statutory limit for individual plaintiff claims provided a maximum recovery per action in actions involving multiple defendants.  See e.g., Goodman v. People’s Bank, 209 F. App’x 111, 114 (3d Cir. 2006); Weiss v. Regal Collections, 385 F.3d 337, 340 (3d Cir. 2004). 


The District Court concluded that the Third Circuit’s interpretation of the similarly worded limit per action in individual FDCPA claims dictated a similar outcome with regard to the FDCPA class actions damages provision.


Further, the Court held that the plain meaning of the provision limiting individual actions suggested that Congress intended that there be a statutory maximum per “action” as opposed to per violation or per defendant. 


Thus, the Court concluded that the inclusion of the term “action” preceding the statutory maximum of $500,000 for class actions clearly denoted Congress’s intent that the $500,000 statutory maximum was per class action, not per defendant.


Accordingly, the Court granted Defendants’ motion in limine and ordered that the certified class would be limited to a total maximum statutory damages award of $500,000.


Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874


Admitted to practice law in Illinois




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