District Court (Kan.) Says FDCPA’s $500,000 Cap Does Not Prevent Class Certification

In Tripp v. Berman & Rabin, P.A., 2015 WL 5704075, at *7-10 (D.Kan. 2015), Judge Crabtree rejected the argument that the FDCPA’s $500,000 cap prevents certification of an FDCPA class action.

Defendants contend that plaintiff cannot carry her burden on this requirement. Defendants argue that the statutory damage cap that applies to a FDCPA class action combined with the large number of potential class members limits each member to a de minimis recovery. Specifically, because the putative class members could recover more if they filed individual actions against defendants, defendants contend that a class action is an inferior method of adjudication.  Plaintiff counters that defendants’ contention is contrary to the standards for superiority and federal courts consistently have rejected this argument.. . . Here, both defendants have disclosed evidence indicating, they contend, that 1% of their combined net worth is less than the FDCPA’s $500,000 statutory damage ceiling.  Defendants also estimate that Class A may contain over 190,000 members, including over 13,000 members of Class B. Thus, defendants contend that if the Court certifies a class action and the class prevails, each class member would recover less than $2.63. Defendants argue that it “makes no sense for a putative class member to relinquish a potential recovery of actual damages plus statutory damages up to $1,000” in favor of a de minimis class recovery. . . . But defendants concede, as they must, that other federal courts have held that a FDCPA class action is a superior method for adjudication, even where class members stand to recover a de minimis amount. See Weber v. Goodman, 9 F.Supp.2d 163, 170–71 (E.D.N.Y.1998) (holding superiority requirement met because “[h]inging the appropriateness of the class action form to the number of improper letters sent is inappropriate….”); Kalish v. Karp & Kalamotousakis, LLP, 246 F.R.D. 461, 464–65 (S.D.N.Y.2007) (finding class action was superior method of adjudication because “litigating as a class retains substantial value because it encourages the prosecution of claims en masse that would not be prosecuted individually.”). Indeed, even the Minnesota court has reached this conclusion in some cases. See, e.g., Egge v. Healthspan Servs. Co., 208 F.R.D. 265 (D.Minn.2002) (FDCPA class action was superior despite a de minimis class recovery) (cited in Jones, 215 F.R.D. at 570).  Plaintiff also contends that federal courts around the country have rejected defendants’ argument that a debt collector’s low net worth and a large putative class precludes class certification under Rule 23(b)(3). She cites, for example, Mace v. Van Ru Credit Corp., 109 F.3d 338 (7th Cir.1997). There, the Seventh Circuit held that a de minimis recovery alone does not make a FDCPA class action inferior to individual actions. Id. at 344–45. In reaching this conclusion, the Seventh Circuit noted that an argument advocating for individual FDCPA suits may ignore other important considerations, such as whether “the plaintiff will be aware of her rights, willing to subject herself to all the burdens of suing[,] and able to find an attorney willing to take her case.” Id. at 344.  Plaintiff also cites a number of district court opinions concluding that a FDCPA class action is a superior method for adjudication. See Lemire v. Wolpoff & Abramson, LLP, 256 F.R.D. 321, 331 (D.Conn.2009) (“[E]ven if [defendant’s] net worth turns out to be negative, a class action will still be superior to individual litigation.”); Quiroz v. Revenue Prod. Mgmt., Inc., 252 F.R.D. 438, 444 (N.D.Ill.2008) (“Defendant engaged in standardized conduct by sending form letters to many consumers, and each individual consumer’s claim would likely be too small to vindicate through an individual suit. Therefore, a class action is the superior method to resolve these claims.”); Kalish, 246 F.R.D. at 464 (holding that a FDCPA class action is the superior method despite a potential de minimis recovery for class members); Barkouras v. Hecker, No. 06–0366, 2006 WL 3544585, at *4 (D.N.J. Dec. 8, 2006) (finding that an insolvent defendant did not preclude certification of a FDCPA class action); Levin v. Kluever & Platt, LLC, No. 03–C–2160, 2003 WL 22757763, at *3 (N.D.Ill. Nov. 19, 2003) (concluding a FDCPA class action was superior even in light of a de minimis class recovery).  The Court finds no guidance in this FDCPA context from the Tenth Circuit and no earlier decision by our Court on this issue. After reviewing the various decisions cited by plaintiff and defendants, the Court is persuaded by the reasoning advanced by those courts that have permitted FDCPA class actions where class recovery, in the end, may be de minimis. The potential recovery of class members is but one factor that guides the evaluation of a putative class action’s superiority. Other considerations include whether class members are aware of the alleged FDCPA violation, whether those members would be willing to pursue individual actions, and whether those members have the means or ability to retain legal counsel. See Mace, 109 F.3d at 344. The Court cannot presume that the putative class members know that defendants’ form collection letters may violate § 1692g(a)(1) and § 1692e(2). See Ferree v. Marianos, 129 F.3d 130, 1997 WL 687693, at *1 (10th Cir. Nov. 3, 1997) (unpublished table opinion) (recognizing that courts analyze FDCPA claims “by how the ‘least sophisticated consumer’ would interpret the notice received from the debt collector”). Nor can the Court presume that class members would choose to initiate and prosecute individual lawsuits to recover only $1,000 in statutory damages. See Jackson v. Nat’l Action Fin. Servs., Inc., 227 F.R.D. 284, 290 (N.D.Ill.2005) (“FDCPA affords recovery of up to $1,000 in statutory damages for individual plaintiffs; as such, the potential recovery here is not likely to provide sufficient incentive for members … to bring their own claims.”).  Likewise, the Court is not persuaded by defendants’ belief that class members should be free to maximize their individual recoveries under § 1692k(a)(2). . . .  Under Rule 23(c)(2)(B), the Court must notify all putative class members about a class action and “exclude from the class any member who requests exclusion.” Fed.R.Civ.P. 23(c)(2)(B)(v). Thus, a potential class member may opt-out of the class and pursue an individual FDCPA suit against defendants after the Court grants certification.