17.5.2.1 Relief Sought

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The relief the consumer seeks is central to any follow-up action suing the collector or the collector’s attorney. Americans’ sense of justice and the proper operation of the court system are often deeply offended by collector litigation misconduct. Collectors bring suits when they have no legal right to recover, when they have insufficient evidence that the consumer is liable, or when they seek attorney fees and other charges beyond all reason. The collectors are using the court system as a rubber stamp for default judgments, taking advantage of consumers’ lack of legal sophistication and inability to afford legal representation.

No matter how offensive these practices are, they may not justify an individual action for litigation misconduct if the litigation is unlikely to lead to meaningful relief. The first consideration in bringing follow-up litigation should be what damages the consumer has suffered from having to defend an abusive and unsuccessful collection action. If the consumer recovered attorney fees by prevailing in the collection action,¹²⁸ then the collector’s lawsuit might cause the consumer only minimal out-of-pocket damages.

On the other hand, consumers who have paid lawyers money to successfully defend them in collection actions—and have not been reimbursed for those attorney fees—will incur significant damages.¹²⁹ There may be other out-of-pocket damages in addition to attorney fees, such as lost time from work and transportation costs. Other consumer damages from the collector’s unsuccessful collection action are likely to involve emotional injury, which is compensable as actual damages under the FDCPA.¹³⁰

The FDCPA provides for statutory damages up to $1000 in addition to actual damages and attorney fees to prosecute the FDCPA claim.¹³¹ Other than their salutary deterrent effect, these statutory damages on their own might not be sufficiently large to justify an FDCPA action when actual damages are not proven, particularly considering the complexity of an FDCPA claim for collection litigation misconduct. A class action seeking actual and statutory damages may be more practical, unless there are individualized facts that preclude class treatment.

In cases of egregious litigation misconduct, punitive damages are possible under a tort theory, such as malicious prosecution¹³² and, in a few states, under the UDAP statute.¹³³ In one extreme case of litigation abuse, the consumer brought counterclaims against a debt buyer for malicious prosecution and FDCPA violations. The court approved of the jury’s award of $250,000 in compensatory damages, FDCPA statutory damages, and over $82 million in punitive damages. The court also added over $300,000 in attorney fees and expenses.¹³⁴

In another case, allegations of widespread sewer service and false affidavits of service resulted in a far-reaching class settlement expected to benefit more than 353,000 consumer defendants, provide monetary relief of about $59 million, and vacate almost 200,000 court judgments.¹³⁵

Footnotes

128 See § 17.1, supra.
129 See Midland Funding, L.L.C. v. Giraldo, 961 N.Y.S.2d 743 (N.Y. Dist. Ct. 2013) (attorney fees to defend collection case could be actual damages).
130 See National Consumer Law Center, Fair Debt Collection § 2.5.2.2 (9th ed. 2018), updated at www.nclc.org/library.
131 See National Consumer Law Center, Fair Debt Collection §§ 11.5, 11.9 (9th ed. 2018), updated at www.nclc.org/library.
132 See National Consumer Law Center, Fair Debt Collection § 15.6 (9th ed. 2018), updated at www.nclc.org/library.
133 See National Consumer Law Center, Unfair and Deceptive Acts and Practices Appx. A (9th ed. 2016), updated at www.nclc.org/library.
134 Portfolio Recovery Assocs., L.L.C. v. Mejia, No. 1216-CV-34184 (Mo. Cir. Ct. Nov. 4, 2015), available at www.nclc.org/unreported.
135 Sykes v. Mel S. Harris & Assocs., L.L.C., No. 09-CV-8486 (S.D.N.Y. Nov. 12, 2015), available at www.neweconomynyc.org.