Class Action

FDCPA Class Action Defense Cases–Hicks v. Client Services: Florida Federal Court Denies Motion To Decertify Class Action Holding De Minimis Recovery Does Not Defeat Rule 23(b)'s Superiority Requirement

By Michael J. Hassen

Class Action Alleging Violations of Fair Debt Collection Practices Act (FDCPA) Properly Certified as Class Action despite De Minimis Recovery for Class Members Florida Federal Court Holds

Plaintiff filed a class action against Client Services alleging violations of the federal Fair Debt Collection Practices Act (FDCPA); plaintiff moved to certify the litigation as a class action, and the district court agreed that class action treatment was warranted under Rule 23. Hicks v. Client Services, Inc., 257 F.R.D. 699, 700 (S.D.Fla. 2009). Defense attorneys moved to decertify the litigation as a class action, arguing that in light of the statutory cap on damages awardable under FDCPA class actions, the de minimis recovery awaiting class members defeated the “superiority” prong of class certification. Id. Specifically, the FDCPA caps damages in class actions to “the lesser of $500,000 or 1 per centum of the net worth of the debt collector.” 15 U.S.C. § 1692k(a)(2)(B). Defendant asserted that its net worth was only $15 million, and that the putative class contained more than 122,000 members: “Thus, should Plaintiff class prevail, the maximum recovery per class member would be $1.24.” Id. (footnote omitted). Plaintiff countered that “courts have not allowed the prospect of de minimis individual recovery to defeat certification of FDCPA classes.” Id. The district court denied the motion, determining that class action treatment was warranted.

The district court explained that, in analyzing the superiority requirement of Rule 23(b)(3), courts have recognized that [c]lass actions are particularly superior for cases where individual recovery would be small, because class actions ‘overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights.’” Hicks, at 700 (quoting Amchem Prods. v. Windsor, 521 U.S. 591, 617 (1997)). “A class action solves this problem by aggregating the relatively paltry potential recoveries into something worth someone's (usually an attorney's) labor.” Amchem, at 617. The court considered the cases cited by defendants for the proposition that a de minimis recovery may defeat class certification, see id., at 700-01. The court discussed also the cases cited by plaintiffs hold that de minims recovery does not defeat class certification of FDCPA claims. Id., at 701. The federal court observed, then, that “[t]here is authority supporting both Plaintiff's and Defendant's positions.” Id. It concluded, however, that the cases supporting plaintiff’s view were the more persuasive, id. The district court explained at page 701,

Full post as published by Class Action Defense Blog on September 22, 2009 (boomark / email).