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Class Action Defense Cases-McCall v. Drive Financial: Class Action Statutory Damages Under Federal Fair Debt Collection Practices Act (FDCPA) Can Exceed $500,000 Pennsylvania Court Holds

Pennsylvania Federal District Court Holds that Named Class Action Plaintiffs may Recover Damages Under the FDCPA (Fair Debt Collection Practices Act) Both Individually and as a Member of the Class

A class action was filed in federal court against Drive Financial Services and Drive G.P. alleging violations of the Fair Debt Collection Practices Act (FDCPA) in that defendants allegedly sent letters “on the ostensible letterhead” of an attorney for the purpose of collecting a debt. McCall v. Drive Fin. Serv., L.P., 440 F.Supp.2d 388, 388-89 (E.D. Pa. 2006). Plaintiff’s lawyer filed a motion in limine to determine the amount of statutory damages that would be available under 15 U.S.C. § 1692k(a)(2)(B). Id. The district court rejected the argument by defense attorneys that the named class action plaintiff could not also recover as a member of the class, and held the maximum amount of statutory damages available at trial to be $501,000. Id., at 391.

Section 1692k(a) provides in pertinent part:

(a) Amount of Damages. 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–

(1) any actual damage sustained by such person as a result of such failure;

(2)(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; and

(3) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney’s fee as determined by the court….

As the class representative, plaintiff’s statutory damages were limited to $1,000. However, because the class certified by the district court consisted of “roughly 204 persons,” McCall, at 389, the pro rata distribution of the maximum statutory damages available to the class would be approximately $2,450. Essentially, defense attorneys argued that plaintiff could recover no more than $1,000 and, so, the total amount of statutory damages awardable would be about $497,550. Id., at 391. The federal court disagreed: “under a plain reading of the test, the maximum potential liability of a defendant is $1,000 multiplied by the number of named plaintiffs plus $500,000,” Id., at 390.

NOTE: It does not appear that defense attorneys argued that the 1% net worth limitation applied; presumably, then, $500,000 was “the lesser of” the amounts at issue.

Download PDF file of McCall v. Drive Financial