Fair Debt Collection: 11.11.2.3.3 Rule 23(b)(2)
Actions for declaratory or injunctive relief must meet the requirements of Rule 23(b)(2), including the requirement that any money damages must be merely incidental to the injunctive relief.953
Actions for declaratory or injunctive relief must meet the requirements of Rule 23(b)(2), including the requirement that any money damages must be merely incidental to the injunctive relief.953
Predominance and manageability issues may be particularly challenging when the goal is an award of actual damages, where there may need to be individual proof of actual damages to class members caused by a common violation. Many FDCPA violations produce different kinds and amounts of actual damages, depending upon the circumstances and susceptibility of each victim.
The FDCPA does not define “net worth” so there is some uncertainty in computing one percent of the debt collector’s net worth as a cap on statutory damages.1008 Nevertheless, it is important to determine a defendant’s net worth as soon as possible. Failure to obtain information regarding the defendant’s net worth may eventually result in dismissal of the class claims.1009
The consequences of the class action statutory damages cap on each class member’s recovery can be diminished by limiting the size of the class, for example by defining it to include only those residing in a particular state.
Once a court considers the debt collector’s net worth and determines the maximum amount of class statutory damages, it must consider the six factors listed in the FDCPA to decide whether the maximum recovery or some lesser amount is appropriate. The statutory factors are:
Prior to a 2016 Supreme Court decision, debt collectors used to make what is known as a “pickoff” attempt by submitting an offer of judgment to the named individual plaintiff pursuant to Federal Rule of Civil Procedure 68, or by making an offer of settlement, and then move to dismiss the individual and class action as moot even if the offer was not accepted.1040 At least when the offer is not accepted, this tactic was completely undermined by Campbell-Ewald Co. v.
Another defense tactic is to file counterclaims for the balance of the underlying debt against the named plaintiffs and the other members of the class.1052 This tactic generally fails to defeat class certification as it conflicts with the purposes of the FDCPA.1053 The court may also reject supplementary jurisdiction over the state law cause of action.1054
Defendant may be required to spend an extensive amount of time responding to a request for documents, so long as the burden of doing so does not exceed the benefit of production of the data.1057 Pre-certification discovery seeking evidence necessary to meet the prerequisites of Rule 23, such as numerosity, is generally permissible.1058 If defendant would have to review an extensive set of documents to comply with the production request, sampling may be ordered.
If a class has not yet been certified on contested motion, but a class wide settlement is presented to the court for approval, the court must first determine whether the prerequisites for certification have been met, even though defendant has agreed that certification will not be contested.
The FDCPA is silent as to the availability of declaratory relief.
The FDCPA is silent as to the availability of injunctive relief.
Instead of seeking injunctive relief under the FDCPA, consumers may be able to bring state law claims supplementary to the FDCPA cause of action seeking damages or declaratory relief, and then seek injunctive relief under the state law claim.1093 The Ninth Circuit affirmed a judgment of contempt against a check collection agency for violating an injunction entered under a state statute.1094
Consumer attorneys should, and in most states must, in the written retainer agreement with the client, provide for the specific manner of determination of their fee.1095 In FDCPA cases, the fee is usually related to the Act’s fee-shifting provision, 15 U.S.C. § 1692k:
Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this subchapter with respect to any person is liable to such person in an amount equal to the sum of—
According to the Third Circuit: “Given the structure of the section, . . .
Many settlements set aside a specified amount for attorney fees or state that the settlement amount includes attorney fees, and the consumer will not seek such fees from the court. But where the settlement does not fully resolve the question of attorney fees, the consumer’s attorney must consider the Supreme Court decision in Buckhannon Board and Care Home v.
Difficult problems arise when defendants seek to negotiate settlement of the substantive claims and attorney fees simultaneously.1146 While simultaneous negotiation enables the defendant to know its total liability, it may place the consumer’s attorney in an untenable ethical position. Defendants may attempt to divide the award between fees and damages in a way which disfavors either the consumer or the consumer’s attorney.
The FDCPA provides that any debt collector who fails to comply with the Act “with respect to any person is liable to such person” for reasonable attorney fees.1155 This language suggests that the attorney fee in a successful FDCPA case belongs to the consumer, and is payable directly to them and not the attorney.1156 Thus, the FDCPA falls within the general rule that unless the statute specifically provides for payment to the attorney, and in the absence of an alternative contractual arrange
To establish and maximize attorney fee awards, counsel for a consumer should keep accurate records of time spent on a debt collection case. Counsel should indicate the purpose or activity to which the time was devoted—for example, research, discovery, motion appearance, trial—since federal courts may review the time for reasonableness or assign a different rate of compensation for different types of work.
The lodestar approach is universally used to determine FDCPA attorney fees in individual actions. The lodestar is the number of allowable hours times a reasonable hourly rate or rates. There is a strong presumption that the lodestar amount represents an adequate and proper fee award.1177
The Supreme Court has noted that the FDCPA is a “a comprehensive and complex federal statute.”1185 The complexity of the FDCPA may justify more time for preparation of an FDCPA case.
Courts have found expending the following number of hours to be allowable:1208
The total number of hours spent on the case will be reduced where the consumer failed to prevail on claims that were unrelated to the successful FDCPA claim and these claims are based on different facts and legal theories, so that work on one claim does not help the attorney prepare for the other.1231 Conversely, where there is a common core of facts or where the legal theories are related, it is impractical to separate the attorney’s time for each claim.1232 At least when a case is settled,
Attorney fees are generally awarded for time spent recovering fees through a fee application and related proceedings.1242 An estimated amount of time for work on a fee hearing should be included in the application or this portion of the request may be rejected for that reason.1243 The consumer should also recover attorney fees for attorney time spent collecting the FDCPA judgment, if necessary.1244 Similarly, courts sometimes grant attorney f
In Tolentino v. Friedman,1253 the Seventh Circuit observed:
In order to encourage able counsel to undertake FDCPA cases, as Congress intended, it is necessary that counsel be awarded fees commensurate with those which they could obtain by taking other types of cases. . . . Paying counsel in FDCPA cases at rates lower than those they can obtain in the marketplace is inconsistent with the congressional desire to enforce the FDCPA through private actions, and therefore misapplies the law.
The lodestar figure is presumed reasonable unless the defendant carries the burden of showing why the figure should be adjusted downward.1277 The plaintiff, though, should first provide specific evidence that the hourly rate and costs were reasonable.1278 Reductions for excessive hours or inflated hourly rates is discussed at §§ 11.9.6.2 and 11.13.6.3, supra.