Suttell and Associates: How to deal with them?

What type of debt is it? Have you checked the SOL of your state?

This "Law office" is extreemly unprofessional!. They file garnishment for something they know nothing about. They are charging me fanominal fees because I have an on going dispute with a company called Stores On Line. There is a Class Action Law suit against them for a variety of issues. I am one of the plaintiffs. But instead of waiting until this action is settled they are charging me double what thoe orginal bill was. They are nothing more than legalized thieves. They are rude on the phone and place you on hole numerous times or tell you to 'Leave a number ". The profession I am in is not condusive to staying on terminal hold or having some one call back. Most businesses do not allow empolyees to have personal phone calls and employees can be fired. This collection agency makes it very clear they don't care about you or the situation by their tone of voice and snippy-ness. They just want to get their bonus checks for settlng an acct. They offer no explaination other than "pay up or we'll take it out of your income". They are no better than hungry vultuers searching for their nest pray.

First they serve you with a summons and its on official looking local court documents-but are fake.
Check with your local court.
They served me for a debt supposedly owed to a bank in Oregon-I live in North Western Washington.
Same crap-after demads to validate they produced a statement claiming I owed $600+ from many years ago and show the compounded fees , penalties,interest jacking the debt up 200%-but no record of any contract,no documents proving the debt was valid or with my signatures on any purchase!
I filed complaints with the US Attorney General in Washington DC for mail fraud and falsifying a court document-as well as my state attorney general,and US postal service for mail fraud.In fact I filed criminal complaints in every state they sent documents from against them.
I warned them if they pursued any action I would sue them for fraud and demand criminal charges for fraud against both collectors who claim to be attorneys at law.
My advice is to file suit as soon as you get a summons for conspiracy to commit fraud in your local court-and demand a hearing and validation.
In my case I pointed out that if I owed anything to the creditor it may have been prior to the statute of limitations limit and therefor was null and void as the 5 year period has already passed.To attempt to collect on it in Washington is fraud.A felony.
File complaints with your state bar association against their record and with your local state deptartment of licensing.
By law they must have a business license in the county they serve you with any document-like a summons.And if they have not actually filed the summons with your court-its fraud.
Since I filed complaints in 5 states against them and the US Attorneys office-they backed down.
Contact your state attorney general and local news media.

This is great information for me as I received a letter with a court date yesterday in the mail.

I too have a summons from S&A how did you answer their summons?

Hello, I was the topic starter.
I responded to their Summons, unfortunately after 20 days, with a settlement letter, but they didn't respond instead sending aNotice for hearing to me.
I just received a Notice for hearing from Suttel and Associate With two date on it, what does that mean?
One is 2/5/2010 with the word Without Oral Argument checked, while the other is Trial Date 7/11/2011
Does that mean I have to be at the court house on 2/5/2010 or 7/11/2011
Can I submit a written response, since I am going out of theo country on the 1/31/2010
And their proof of me oweing the debt is an billing statement with my name but the wrong PO BOX on it, and an customer agreement, with nothing with my signature on it.
What are my options?
The case is in the superior court of the state of washington King country and case Number is 10-2-03407-2

I was contacted by them a couple of years ago and finally got a letter in the mail last June, I requested validation sending the letter to them certified, return receipt. Recieved my reciept and have heard nothing from them. I am assuming they can't validate the claim!

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Who knows of any attorneys willing to go after these guys, or ANY attorneys who have been successful suing them?

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Ok, so I just got a letter from Suttell & Hammer P.S. (formally known as suttell & associates according to the letter). I'm assuming the name change is because of all the lawsuits against the former.


So the letter I have is Dated Feb 16th. Today is Feb 20th, so it's already 4 days into it (even though it shouldn't take more than 1 or 2 days to get to Vancouver from Bellvue)

Right now it's a just a demand letter to pay a debt from Citibank. It says at the bottom that no lawyers have personally reviewed my file.

It says I have 30 days to dispute it.

So where do I start? With a validation letter? Return receipt right?

Or do I do something with the courts even though it isn't an official summons?

I also received one Dated the Feb 17th. I am in Southern Oregon.
Do they have to have a license in Oregon or in the County in Oregon?

They have an "F" rating with the BBB

They might only have to be registered in your state but no license is required:

Exemption for out-of-state collectors: Contact state authorities. Out-of-state agencies may be exempt if [1] collecting for out-of-state client; [2] the debt was incurred by an Oregonian outside the state; and [3] the state where the collection agency is headquartered has a registration program comparable to Oregon's law.

They are inactive in Oregon from what I have seen, and it has been since 1997. Here is the information from the Oregon corporations division:

http://egov.sos.state.or.us/br/pkg_web_name_srch_inq.login[URL="http://egov.sos.state.or.us/br/pkg_web_name_srch_inq.show_detl?p_be_rsn=439440&p_srce=BR_INQ&p_print=FALSE"][/URL]

Type in the business name and select the sound-alike words in any word order. I would contact the corporations division and then find out who you need to contact, such as the attorney general, to see if they need to register and what you should do if they are not and are contacting you.

If it has only been since the 17th since they first contacted you, you should see in this letter you have 30 days to dispute it, DISPUTE IT!!! You can find a debt validation on here in the do it yourself section or by searching online for "sample debt validation letter"

DO NOT put a cease and desist in the DV letter. It is a big mistake that many people make. If it has it in a sample letter, take it out. Make sure you format the letter to your needs and send it certified mail return receipt requested.

Here's another S & H horror story. Several years ago I was sick and unable to work. Consequently, I was unable to pay my bills beyond basic expenses. I stopped making payments on a Capital One account, which soon grew to 2,100 bucks as a result of penalties. This debt was turned over to Suttell & Hammer (then known as Suttell & Asso.). They sent me a demand letter. Fortunately, by then my financial situation was back on track, so I contacted Suttell and agreed to pay 150 dollars per month. Since this was an automatic payment, I more or less forgot about it until recently, when I tallied up the total and realized that I had more than fulfilled this debt. I called Capital One, and they informed me that my debt was payed in full last June, yet Suttell has continued to withdraw the 150 dollars each month since then. This means I have paid them twelve hundred dollars above and beyond the amount of the original debt, apparently with no end in sight. During this period, I never received a statement or a receipt of payment from Suttell, that is, until December, when they began sending me a receipt for payment. However, there is no indication of the amount outstanding, which is not surprising, considering there is no outstanding balance. What a bunch of greedy sleazeballs! Not sure what to do. Can anybody help me?

I just got a summons from Suttel & Hammers last night (3-10-11), for a debt with Citibank. The guy who served me the summons did'nt ask me sign anything. It looked like court documents w/o case number.It says in the summons that a lawsuit has been started against me in the Superior Court of the State of Washington in and for the County of Thurston. It also states that I must respond to the complaint by stating my defense in writing, and serve a copy upon the undesigned attorneys for the plaintiff within 20 days. But the summons was dated March 1, 2011. It says that if I don't respond within 20 days, a default judgement may be entered against me without notice. I can also demand the plaintiff file this lawsuit with the court. What should I do? I don't have a job right now I am not even receiving unemployment checks. My wife is currently working. Please give some advice.

Respond to the summons: They WILL file that in court (even if you respond) then they will file a motion for default (if you don't respond) and a motion for summary judgement (if you do) but at least they will have to notify you. GET A LAWYER.
Show your lawyer the Dunning letter. The one that says: This account has NOT been reviewed by a Lawyer. It shows that they are a collection agency. They do not have a license. GET A LAWYER. Sue them for violation of the FDCPA and RCW 19.16 which will make them pay back every penny they sole from everyone in WA. They may want to settle that out of court ($$$$$$$$) GET A LAWYER and some money.

Turn them into the Attorney General, FTC, OCC, Procecuting attorney in Thurston county and anyone that will listen. But most of all CALL A LAWYER. Many of them will have the consult for free. Show them the Dunning Letter and docs this COLLECTION AGENCY sent you.

Respond to the summons: They WILL file that in court (even if you respond) then they will file a motion for default (if you don't respond) and a motion for summary judgement (if you do) but at least they will have to notify you. GET A LAWYER.
Show your lawyer the Dunning letter. The one that says: This account has NOT been reviewed by a Lawyer. It shows that they are a collection agency. They do not have a license. GET A LAWYER. Sue them for violation of the FDCPA and RCW 19.16 which will make them pay back every penny they sole from everyone in WA. They may want to settle that out of court ($$$$$$$$) GET A LAWYER and some money.

Turn them into the Attorney General, FTC, OCC, Procecuting attorney in Thurston county and anyone that will listen. But most of all CALL A LAWYER. Many of them will have the consult for free. Show them the Dunning Letter and docs this COLLECTION AGENCY sent you.

Who knows of a good reliable Washington Attorney that will handle a debt settlement
and has dealt with Suttell and ALL before?


Thanks

Go to NACA.net and you should be able to find one there.

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if anyone has the name of that Tacoma lawfirm let me know or another attorney let me know I have some good sh*t on these guys

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Good luck with that Leenandosullivan.
In other words look for a different firm as soon as possible.
Don't bother with Christopher Green either.

Very GOOD, VERY Expen$ive attorney that has experience dealing with these guys:

Jason Anderson
Anderson Law Offices
8015 - 15th Ave NW Ste 5
Seattle, W A 98117
(206) 706-2882

Hey I thought it might help if I told you what I found out. I talked to 2 attorneys -both of who told me this firm had done everything right in my case and that while they might make mistakes like everyone does they have a pretty good reputation.
I then talked to my Dad, who gave me probably the best advice which was to Man up and deal with my debt. He told me to treat these guys with the same respect I thought I deserved. So I called them up and we made a deal. They agreed to take payments and agreed to take a discount when my Dad has enough to loan me. They even sent me a letter confirming the deal (my Dad told me to get that) and I didn't even have to go to Court. I feel a lot better about where I'm at now and I started a second part time job so I can get all my debt paid. (again my Dad) Seems like my Dad's advice was better than those attorneys.
If you call ask for Nick Upshaw not Nick the attorney.

could you please give the names of 5 of the best attorneys in washington who
have been succussful at fighting them and countersuing them

Thank you

These slimbags came after me, but they didn't do their homework. I'm a merchant seaman and cannot be guanished by any court. They hid this fact from the court and did not file it in federal admirlty court as they should have. I'm asking for damages of $13K for them lying to the court, court costs, violation of federal stautes including 15 usc 1692 and emotional distress. I'm alos asking the court to bring sanctions against them. I may be just a pro se, but I've been in court in 6 other cases (state and federal) and have spoken in appeals court. Doom on them.

This just pertains to this law firm-- not a specific answer to anyone.

Are people actually suing this firm and winning? I looked them up and they are licensed in the state of Washington as attorneys. I know someone who received summons notices from them and they never filed them with the court like the summons stated. So, it was, in fact a violation, as the summons had no date or address of the Superior Court on it. The server never filed paperwork with the court stating that the summons had been served, and when questioned about that he said his wife takes care of that for him. So, it seems, that it is a scare tactic they use, but if you do not respond they can go ahead and file it with the court and get a default judgement, which is something you don't want. My friend talked to an attorney, was advised to respond asking for validation, and they were unable to provide this to him.

I answered the summons, hired a lawyer to represent me. I had done everything that I suppose to do and still lost the case and end up having to paid my lawyer for a fees almost $5000.00. Suttell & ass are the most nasty people to deal with. All they want is money and money.
The debt that I owed is $8000.00+ interest + court fees + lawyer fees = $17,000.00
I’m thinking about quit my job, file bankruptcy so that Suttell & ass can’t collect a penny from me.

I answered the summons, hired a lawyer to represent me. I had done everything that I suppose to do and still lost the case and end up having to paid my lawyer for a fees almost $5000.00. Suttell & ass are the most nasty people to deal with. All they want is money and money.
The debt that I owed is $8000.00+ interest + court fees + lawyer fees = $17,000.00
I???m thinking about quit my job, file bankruptcy so that Suttell & ass can???t collect a penny from me.

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[QUOTE=Anonymous;707039]What is your case number? I'd be interested in looking it up.
Pickles[/QUO

Can't give you the case number. How do I know that you are not from Sutell ass?
You can go to the Snohomish or King county Court House to find all the cases under Suttel ass.

Your debt is your debt, the judge will make you pay back unless your income source is from social security disability.

Court cases are public record, and the lawyers already have the case number. The way your posting is written, you sound like someone who works for Suttell and its Associates who is just trying to get consumer to settle with you instead of hiring a competent consumer lawyer. If you are legit, you have nothing to fear by sharing the case number. If you are working for the collection lawyers, get a life.
Also, judges don't make you pay anything, they either sign a judgment order saying you owe, or they don't.

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What should I do if they either never served me a summons, or they served my parents with it, which was not my current address? This debt is DEFINITELY past the SOL, I got the summons about 2 months after they gave it to my parents when I visited them. IF that was a summons from them (it was 3 years ago), they didn't serve ME. Secondly, they just started garnishing my wages a month ago. So basically my 2 questions are:

How do I inform the courts I never got served with a summons now that I'm already being garnished?

How do show the courts that the debt is past the SOL now that I'm already being garnished?

I hopefully have an appointment with the Northwest Justice Project coming up, perhaps get some representation.

And last but not least, they're suing on behalf of Midland Credit Management. I called Midland Credit Management to find out what the debt was, and they said call Suttel and Associates. They gave me a number, and the line was disconnected. I called back and they said to call Suttel and Associates again. I told them the line was disconnected and they hung up on me. Sleeeeezy. I'm going to call them back and record the hangup and send the recording to the BBB or something. Any suggestions on where I should send that?

Thanks for the help,

Ryan

I had a random judgement appear on my credit report, apparently from these guys (Suttell in Bellevue, WA). No summons whatsoever was ever served to me. These guys are crooks!

They tried to "sue" us for a $200 bill which of course went to almost $800 with their "fees". So, I had my aunt who's a lawyer give them a call and wouldn't you know they were magically able to work it all out with me! They're nothing but low life scum.

I'm an attorney in Washington which primarily handles consumer debt negotiation, Washington Consumer Protection cases and Bankruptcy. I see 50 lawsuits a month filed by S&H. They are predictable and fairly easy to negotiate with.

Bottom line, if you owe the debt they will obtain a default judgment against you, drag you into court for a debtors exam and garnish your wages or bank account if it gets to that. Call them up, strike a deal and move on with your life. In my experience, most debts can settled for approximately 40% of the balance with S&H. Cash is king when it's time to settle. Payment plans cost more than lump sum settlements.

A couple of misnomers I saw repeated on this site. First, S&H will respond to a DV letter and know what they do and don't have to provide, after all, they may be bottom feeders but they are attorneys. Second, most of their lawsuits are served without a case number. Washington law allows a lawsuit to be commenced in Superior Court to without filing it. They can personally serve you and file it later (up to 60 days later). You have the right to demand that they file it within 14 days but nobody wants a judgment to come down any sooner than it needs. Third, attorneys are subject to the FDCPA if they are a debt collector, however, they are exempt from the requirement of obtaining a collection agency license under Washington law.

There are many procedural and substantive defenses that can be pursued if you have a legitimate beef. I lost my job and am unemployed and couldn't pay isn't a legitimate beef. However, you should be happy to know that S&H can't under Washington law garnish your unemployment or social security payments. If you have a job they can only take 25% each pay period and must leave you a minimum amount to live on.

Finally, if you're married and living in the state of Washington, and incurred the debt during your marriage, the debt will be presumed to be a communal debt and YES they can garnish your spouse even if they weren't on the card. Even if they didn't use the card, they can still be held liable.

I practice in Vancouver, WA but can assist folks state wide who have legitimate beefs, have additional questions, or need further assistance. I charge $40 for a 15 minute phone consult and can represent you in negotiating the debt or settling the matter for as low as $500.00. More services are available and can be discussed.

Feel free to contact me if you'd like to obtain my services.
Solicitation removed: Please read TERMS OF SERVICE for a more detailed description regarding advertising. Shazzers

dude I think you work for them

Looks like these crooks have changed names and moved shop once again. This is the 3rd or 4th time they've restructured and moved recently. They now seem to be in the old Seattle Tower downtown operating as 'Suttell Collection Services".

And this is somewhat old news but some dude bashed in their front door of their Bellevue location with an axe.

http://creditboards.com/forums/index.php?showtopic=440289

Too bad the guy was stupid and told people about it, and got himself caught. I don't advocate violence but these scumbags really have it coming to them.

Don't be foolish (like the dude who smashed the office windows). People makes mistakes and get into financial binds. Keep a cool head, there are legal ways to deal with these guys. These lawyers do this for a living. They are slick and will through the book at you. We have rights, go about it the smart way.Hire a lawyer who can through the book at them, if no lawyer do some research on the internet or read a few books on the subject. There are many options out there. If worst comes to worst, do a little research on bankruptcy as it can be a lifeline, then start over again and this time do it right. We live in a country where we as consumers are well protected in a court of law. Please no violence, no one wins with violence.

File complaint with Washington State Bar Assoc

Also there is a Class Action against this company
from Spokane attorney, google it

file complaint with Washington State Bar

everyone needs to do it, to shut them down

This was written by the firm.

Sub #76 was written by the law firm.

I just wanted to let people know what scum bags Suttell & Hammer really are. I used to work for the law firm for a total of three years and I think it is safe to say they have no idea what they are doing. First, the attorneys will continue to contact the wrong people over and over and harrass them until they agree to pay. They will harass people who have sick and dying family members or are sick themselves and cannot make payments.They also have entered the wrong amount on the Judgments and made this mistake on about a hundred people. The law firm has such a high turnover rate because no one wants to work for such scandelous people. I overheard the new partners Karen and Isaac Hammer say that they only look for single mothers to hire because they will work really hard for less money. They take money out of your check for every minute you are late on your 10 minute breaks and Bill Suttell has said that the emloyees are lucky to get to use the bathroom when they want. Bill Suttell, Karen and Isaac Hammer are evil people who only care about money and treat everyone else like crap. Since I was with them for three years I met a lot of co-workers that left the company saying they are very corrupt. If I had a debt with them I would contact the creditor to set up a payment plan and say you will pay the creditor but will not pay Suttell a dime or file bankruptcy. Take it from someone that was on the inside, these people are horrible people with very ugly hearts.

I received my summons, soldiers and sailors act and complaint April 21. It was drawn up March 29. No matter it states 20 days AFTER receipt of summons. That being said I filed bankruptcy pro se 8 years ago, Citibank among them. I received a call about a month ago from Midland asking blah, blah, blah, I told her it was discharged in the bankruptcy. She asked for my attorneys name, ' your speaking to her' giving her no time to talk I told her that this matter is public information, go find it I am not doing to do your job for you, and hung up. So I get my summons, no case # and not only was it not *filed* in the Superior Court on their summons it is not even the proper court for this kind of action. Answer the complaint, give them as little information about your situation as possible. Site the Fair Debt Collection Protection Act (FDCPA) U.S.C. 15 subsection 801-819, pick the one that pertains to you. Next another document, very handy its called Motion for Discovery.Which you ask them for EVERY single minute thing you can think of list them all. End with...If such Discovery is not received within the 20 day period, there will be no other attempts to contact or collect this debt. And any further action taken on defendant will be extinguished. They have been legally warned not to contact you. I will make them jump through rings of fire. Even though I hold the Discharge trump card. Preying on any and all people who they think are dim witted cave dwellers. They are scum bag bottom feeders. Do some research people....these dregs of society should be brought to their knees. REMEMBER THE INTERNET IS YOUR FRIEND.

Defense Strategies in Fair Debt Collection Practices Act Litigation








Presented by:

Therese G. Franz??n
Franz??n and Salzano, P.C.

and

Michael Benoit
Hudson Cook, LLP








Defense Strategies in Fair Debt
Collection Practices Act Litigation

By: Therese G. Franz??n and Robert S. Carlson


The Fair Debt Collection Practices Act ("FDCPA") is undeniably a plaintiff's statute. The Act's imposition of strict liability, the "least sophisticated consumer" standard and statutory award of damages, without a requisite showing of actual harm suffered, clearly provides a strong incentive for plaintiffs to initiate suit, even when predicated upon a mere technical violation. Although the Act is arguably drafted so loosely that its effects exceed the scope of eliminating abusive collection practices as well as offering plaintiffs a virtually unobstructed cause of action based upon minor and inadvertent violations, there still exist several grounds upon which a viable defense may be assembled. The success of these defenses, however, often rests on the procedures instituted prior to consumer contact, a good faith effort to comply with the Act, and the conduct of the plaintiff throughout the litigation process.


I. COVERAGE OF THE ACT

As basic as it may seem, the imminent threat of adverse action by a creditor often lures the ill-informed debtor/plaintiff to assert a claim against a person, entity or transaction which is not covered under the FDCPA. In short, the Act applies to "debt collectors" regularly engaged in the collection of "debt" owed by "consumers." At first these terms may appear relatively unambiguous, however, a careful reading of the statute will reveal that the definitional limitations on the persons and transactions covered under the Act are not always so clear cut. Keeping in mind that this first line of inquiry may invariably raise some of the most complex issues arising under the FDCPA, a basic understanding of the Act's coverage may prevent the potential for needlessly wasting resources investigating a claim for which the plaintiff has no basis.

A. Debt Collector

The term "debt collector" means:

[A]ny person who uses any instrumentality of interstate commerce or the mails in any business the principle purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or to be asserted to be owed another.

Although the breadth of this definition should not be understated, the language quoted, by requiring a person to collect debts "regularly," excludes collection in only isolated instances. However, the term does include those whose "principle business purpose" or "regular course of business" involves collection of debt for others. These words of limitation are quite obviously designed to exclude persons who only rarely collect debt, but ultimately the requisite quantity of collection activities covered will by and large rest on the discretion of the court. To this end, reliance solely on these exceptions by anyone engaged in collection activities, even minimally, is not advised.

Perhaps the most overlooked exception to coverage under the Act are creditor's employees collecting debts directly owed their employer, i.e., creditor's collecting on their own accounts. In addition to the definitional limitation placed on those who collect "debts owed or due or asserted to be owed or due another," the FDCPA specifically exempts:

[A]ny officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor.

The Act further exempts:

Any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts.

Although these exclusions are directed toward creditors' in-house collectors and their affiliates, these exemptions are not absolute. Creditors lose their exemption if they use a false name that indicates a separate debt collector is involved, or those that do not clearly indicate that the creditor is, in fact, collecting the debt. Thus, a defendant must carefully examine the nature of the communications to the consumer to ensure that a viable argument could not be presented that a "least sophisticated consumer" would be lead to believe that the person collecting is not truly employed by or affiliated with the creditor.

Though the "creditor" exemption of the FDCPA will extend to those debts which were not originated by the creditor, one must ensure that such debt was not obtained while such loan was in default. Debts acquired after default are statutorily included within the coverage of the FDCPA.

B. Consumer Debts

In addition to the creditor exemption, perhaps the single greatest source of confusion for improper suits are those which relate to commercial as opposed to consumer debts. More specifically, section 1692a(5) of the Act provides that:

the term "debt" means any obligation or alleged obligation of the consumer to pay money arising out of a transaction in which money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment. (Emphasis added.)

This definition of "debt" covers only the collection of debts with the purpose of "personal, family or household" use. Accordingly, commercial debts are not within the definition. The term "primarily for personal, family, or household use" was borrowed from the Truth in Lending Act, and such debt that was originally incurred primarily for consumer purposes remains a consumer debt even if those purposes change and even if there were non-consumer aspects to the original transaction. The term is broad enough to include dishonored checks, rent, medical bills, utility bills, insurance bills and claims, student loans, campground memberships, credit cards, condominium fees, and judgments.
Further, if any portion of a debt (such as credit card debt) is for personal, family or household use, then the entire debt must be treated as a consumer debt for purposes of 15 U.S.C. ??1692i.

As previously mentioned, the Act's definition of "debt collector" often involves a complex determination of fact. It will often be necessary to consult case law to ascertain the scope of coverage. One should be aware that useful analogies will also exist with regard to the same definitional limitations placed on the federal Truth in Lending Act. Finally, Senate Report 382 describes with particularity the persons who must comply with the FDCPA and may provide a rough guide for a determination as to the Act's coverage.


II. AFFIRMATIVE DEFENSE

The FDCPA is a strict liability statute with extraordinarily broad provisions designed to encourage suits by "private attorneys general." In an effort to further the Act's remedial objectives and carry out the findings and purposes specified in 15 U.S.C. ??1692, courts adhere to the strict "plain meaning" rule of statutory interpretation in the absence of unclear or ambiguous language. As a result, the only defenses available to FDCPA claims are provided by the Act. Any purported defense not expressly provided by the FDCPA is not available to defeat an FDCPA claim.

A. Maintenance of Procedures Reasonably Adapted to Avoid Bona Fide Error Resulting in Unintentional Violations

15 U.S.C. ??1692k(c) provides that:

A debt collector may not be held liable in any action brought under this title if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such error.

Similar to a provision found in the Truth in Lending Act, the bona fide error exception provides a complete defense to a debt collector's violation of any substantive provision of the FDCPA. At first blush this provision appears to provide a shield to those suits which are based upon only minor or technical violations of the Act. However, the bona fide error defense has rarely been invoked successfully. In general, courts have rigorously scrutinized the elements of this defense and have been quite unwilling to accept arguments that minor or technical violations in and of themselves present a valid defense under the bona fide error exception.

1. The Error Was Unintentional

In Smith v. Transworld Airlines, Inc., the Sixth Circuit upheld the bona fide error defense finding that Transworld had not acted intentionally in violating the Act. After having been initially contacted by Transworld, the plaintiff issued a cease and desist letter to the address indicated on the original dunning letter, Transworld's Columbus, Ohio office. Approximately one day later, Transworld's California headquarters, unaware of the cease and desist letter, issued another dunning letter. The Court held that Transworld had not intended to violate the Act and maintained procedures designed to prevent such errors. Despite this finding, Circuit Judge Krupansky sharply dissented concluding that:

"???Transworld has intentionally structured and implemented a system that defies compliance with the absolute duty mandated by section 1692c(c)???and [Transworld] is liable under section 1692c(c) for communicating with Smith after it had received his cease and desist letter."

Despite Transworld's successful assertion of the bona fide error defense, Judge Krupansky's dissent indicates the potential for judicial expansion of the concept of "intent" beyond the mere desire that an action occur which ultimately results in a violation of the Act.

Further, it should be noted that (as with each element of the bona fide error defense) intentional conduct is not "unintentional" simply because the defendant did not believe that his conduct violated the law. Lack of intent to violate the FDCPA is not enough; the error itself must be inadvertent to be unintentional.

2. Was The Result Of A Bona Fide Error

With few exceptions, the bona fide error defense will only apply to clerical mistakes and not mistaken advice of counsel or mistakes in law, even when made in good faith. Generally, innocent error of fact, scrivener's error or mechanical malfunction leading to inaccuracy in communication will suffice. Because vigilance is implicitly required under the Act, such errors must be presented as an isolated occurrence which necessarily arise in the operation of a business and one relatively unpreventable.

Although easily avoidable mistakes of fact are rarely forgiven by the Courts, a Ninth Circuit decision upheld the bona fide error exception when a pro se debtor claimed that a collector had improperly contacted him at an inconvenient time. The testimony of the collector revealed that he had in fact contacted the debtor at 8:00 A.M., but that this was a result of his failure to take into account the difference in time zones between California and South Dakota. The Court noted that:

"The [Plaintiff] admitted that the timing of the calls occasioned 'no actual damages.' He presented no persuasive evidence the contents of the calls were harassing, abusive or misleading??? The [Defendant] also testified that he called [plaintiff] in response to [plaintiff's] request for a transcript."


Undoubtedly, the Court was persuaded by the lack of actual damages to the plaintiff and the fact that it was the plaintiff who requested the communication in the first place.

In the controversial case of Jenkins v. Heintz, the Seventh Circuit in a split decision found that the bona fide error defense applied to a law firm that attempted to collect thousands of dollars of unauthorized force placed insurance premiums. The defendant asserted that it was unaware that such premiums were not authorized under the law and that under the Act there exists no duty to investigate the legality of every charge submitted by a creditor to a collection firm. Ruling in favor of the defendant, the Court stated that:

"[The Act] does not say that the collector's status as an attorney should add a requirement of independent legal analysis for each aspect of the creditor's claim, including a potential defense arising out of a somewhat arcane subject matter like force placed insurance. To require an attorney debt collector to conduct an independent investigation into the legal intricacies of the client's contract with the consumer would create a double standard for the bona fide error doctrine based upon the identity of the collector???"

With the Jenkins decision in mind, one should be careful not to confuse mistake of law with mistake of fact in asserting the bona fide error defense. The decision most certainly stands for the proposition that absent a showing of actual knowledge, a collector should be able to reasonably rely on the statement of charges submitted by a creditor. This ultimately amounts to a justifiable mistake in fact in reliance on the client's statements as opposed to an erroneous assumption of legality.

3. Procedures Reasonably Adapted To Prevent Such Errors

As a final element of the bona fide error defense, the defendant must not only demonstrate that there are procedures in place designed to ensure compliance with the Act, but also that there is in place a system of checks and reviews to guard against errors that can result in violation. An empty headed approach to collection efforts will not serve as a basis for asserting inadvertence or a good faith effort to comply with the Act. This requirement will allow the plaintiff to compare the procedures of other collectors and evaluate such procedures with the clarity of hindsight.

Although the adequacy of the preventative measures are not articulated with particularity by the statute or applicable case law, the courts have been quite unwilling to accept the argument that an attorney's "approval" of a mass mailed form letter and review of procedures will adequately ensure compliance with the FDCPA. In short, a defendant must make a showing of at least minimal direct and personal involvement in the client file and issuance of dunning letters. In the case of Colomon v. Jackson, the Second Circuit ruled against the defendant because he had not reviewed the debtor's file, did not determine when particular letters should be sent, did not approve the sending of particular letters and did not know the identities of the parties to whom the letters were sent. In short, the Court held that:

"[T]here will be few, if any, cases in which a mass produced collection letter bearing a facsimile of an attorney's signature will comply with the restrictions of [the Act]."

Suffice it to say that with regards to mass communications, there must be some form of personal review (admittedly quite minimal) and assessment of the particular circumstances of each case.

B. Good Faith Conformity With FTC Advisory Opinion

In 1995 the Federal Trade Commission ("FTC") repealed the informal "Guides Against Debt Collection Deception" due to the enactment of the FDCPA. In fact, many of the provisions contained in the FTC "Guide" ultimately formed the basis for many provisions under the FDCPA. Although the "Guide" has been superceded by the FDCPA, the FTC is the primary enforcement agency under the Act. Despite this, the FTC has not issued an advisory opinion in many years since the enactment of the FDCPA.

15 U.S.C. ??1692k(e) states that:

No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the [FTC], notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.


Although this exception to the Act is virtually untouched due to the absence of formal FTC advisory opinions, one should be aware of what constitutes a formal advisory opinion, or more appropriately, what does not constitute a formal advisory opinion. Formal advisory opinions for purposes of this provision are not:

1. informal staff letters;
2. FTC commentary to the FDCPA; or
3. an FTC formal advisory opinion on issues addressed in staff commentary when the staff commentary was incomplete.

Again, it should be noted that the Truth in Lending Act contains a similar exemption and may provide useful analogous case law.

C. Statute of Limitations and Venue

In pertinent part, 15 U.S.C. ??1692k(d) provides:

An action to enforce any liability created by this subchapter may be brought??? within one year from the date on which the violation occurs.

Because most debtors claiming a violation under the FDCPA seek the advice of legal counsel shortly after the alleged violation has occurred (i.e., following an abusive phone call or receipt of dunning letter), the Act's one year statute of limitations is rarely an issue. Other violations (i.e., the false threat of suit, the inappropriate reporting to a credit agency or not being provided a validation notice, etc.) may raise the issue as to whether the period begins when the violation occurred or when the debtor should have discovered the violation occurred. Almost unanimously, the courts have applied the "discovery rule" determining that the date the debtor "should have known" the violation occurred begins the running of the clock, however, one court has held that the one-year limitation is a jurisdictional limitation and begins running on the date the violation occurred.

In the cases of Mattson v. U.S. West Communications, Inc. and Maloy v. Phillips, both the Eighth and Eleventh Circuits, having addressed the issue as to when the violation occurred in the mailing of dunning letters, determined that the date of mailing as opposed to the date of receipt began the running of the statute. These courts reasoned that "the date on which the [debt collector] mailed the letter was the last opportunity for the collector to comply with the statute." Further, the Maloy Court held that an additional five days would be added to the one-year statute for violations under ??1692g because the collector had five days after the initial communication to deliver the validation notice.

The Mattson and Maloy Courts split as to whether an action may be filed on the anniversary date of the violation or the day before the anniversary. These decisions rested on the application of the Federal Rule of Civil Procedure Rule 6(a) and the modern doctrine of using the anniversary of the "trigger" date as opposed to the 365-day rule. In addition, the statute of limitations may be tolled by the filing of a subsequently dismissed class action, especially when the defendant induced the plaintiff to refrain from filing suit, or when the violation was fraudulently concealed.

Finally, ??1692i(a) requires that venue for any action brought on a debt secured by land be brought where the real property is located, and for debts not secured by an interest in land: (1) where the consumer signed the contract sued upon; or, (2) where the consumer resides at the time of filing suit. Because venue for most civil actions is typically brought in the county where the defendant resides, improper venue is frequently encountered in FDCPA actions.


III. COUNTERCLAIMS

Section 1692k(a)'s provisions allowing recovery of actual damage (including mental distress, pain and suffering and harm from adverse credit reporting, where appropriate), statutory damages (not to exceed $1,000) and attorneys fees, are clearly designed to provide incentive to bring suit by "private attorneys general." Because the award of attorneys fees are mandated by the Act and the imposition of statutory damages may be predicated on minor violations (although tempered in light of section 1692k(b)), the Act has enabled plaintiffs to settle large numbers of cases based upon the defendant's fears of taking a matter to trial and risking increased attorney's fee awards because the plaintiff was "successful."

The courts, however, may become increasingly reluctant to award attorney's fees on minor violations in the absence of actual and statutory damages by deeming such actions "unsuccessful." Although the intent of the courts should be to create a deterrent to actions predicated on mere harmless technical violations, the dictates of the FDCPA will necessarily require a complete absence of both actual "and" statutory damages, a very unlikely outcome. This does not mean, however, that defendants do not hold some weapons in their arsenal for marginal plaintiff claims.

A. Attorney Fees May be Recovered When Suit Brought To Harass Collector


15 U.S.C. ??1692k(a)(3) provides that:

???On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorneys fees reasonable in relation to the work expended and costs.

The awarding of attorney's fees to the defendant for "harassment" and "bad faith" under this provision is far more stringent than the federal common law rule permitting such fees when "the losing party has acted in bad faith, vexatiously, wantonly or for oppressive reasons." The heavy burden of proving the plaintiff acted in bad faith and with the purpose to harass first requires that the defendant prevail against the debtor on the underlying claim and that the court not award the plaintiff fees under ??1692k(a)(3).

To prove the requisite malice, the defendant must show that the plaintiff: (1) had no basis for the subjective belief that the defendant violated the Act; (2) the plaintiff did not entertain a subjective belief that such act occurred; and, (3) suit was brought to harass the creditor. This rigorous standard is applied narrowly by the courts to avoid discouraging private litigation which is the primary enforcement mechanism of the FDCPA. It should be noted, however, that malicious prosecution claims and Rule 11 sanctions provide a far more lenient standard and much higher probability of success than the ??1692k(a)(3) provision.

Characterizing a cause of action under this provision as a "counterclaim" has been met with some hostility by the courts. Some courts hold that the award or attorney's fees under this provision amount to "relief" as opposed to a cause of action. In these jurisdictions, a defendant's claim for attorney's fees should properly be raised by motion after defendant wins the underlying suit, rather than by counterclaim.

B. Malicious Prosecution

In addition to the relief for bad faith harassment provided under ??1692k(a)(3), the opportunity to assert a common law action for malicious prosecution still provides a method to recover attorney's fees, costs and damages. Because this remedy does not require the defendant to carry the heavy burden of proving "bad faith" litigation brought for the "purposes of harassment," it presents an alternative deterrent to suits having the primary objective of recovering attorneys fees.

In the case of Ziobron v. Crawford, the Indiana Court of Appeals found that an action for malicious prosecution was not preempted by the FDCPA's ??1692k(a)(3). In addressing whether the FDCPA's preemption clause ??1692n properly excluded state law claims which conflict with federal statutory law, the Court held that ??1692n:

"??? does not purport to preempt state law malicious prosecution claims. Instead, it is specifically addressed to the 'laws of any state with respect to debt collection practices' and provides that states laws are not preempted by the FDCPA if the 'protection that the [laws afford] any consumer is greater than the protection provided by the [Act]??? the provisions of the [Act] which provide a remedy for persons harmed by bad faith litigation??? are merely collateral to the intent and purpose of the Act."

In so holding, the Court in Ziobron remanded the case to the trial court for adjudication on the malicious prosecution claim.

Similar to ??1692k(a)(3)'s "bad faith" requirement, the tort of malicious prosecution rests on the notion that the plaintiff has been improperly subject to the legal

process. Unlike ??1692k(a)(3), however, the defendant need merely prove that: (1) the debtor instituted a prosecution against the defendant; (2) the debtor acted maliciously in doing so; (3) the prosecution was instituted without probable cause; and, (4) the prosecution terminated in defendant's favor. Noticeably absent from these requirements is the "purpose to harass" element found in ??1692k(a)(3).

C. Rule 11 Sanctions

Rule 11(b) of the Federal Rules of Civil Procedure requires that in all representations to the court an attorney conduct "an inquiry reasonable under the circumstance." With this in mind, plaintiffs' attorneys seeking to bring a claim under the FDCPA in which there is no evidence to support a claim, particularly alleging a technical violation, may subject themselves to Rule 11 sanctions.

In the case of Terran v. Kaplan, the Ninth Circuit noted that the plaintiff used a general form pleading that had not been properly revised to reflect the facts of the case, and that despite the allegations contained in the complaint:

"There [was] no evidence that the defendant 'engaged in a campaign of deception, unfair and abusive debt collection practices???that there was no evidence that the plaintiff in fact suffered mental or emotional distress??? there was nothing in the record to support a claim for punitive damages."

The Terran court then awarded attorney fees and costs to the defendant creditor for the plaintiff's failure to adequately investigate the claim prior to filing suit.

Again, the award of statutory damages and attorney's fees often lures "hopeful" plaintiffs into filing suit without adequately preparing their case. Keeping in mind the extremely low threshold required of plaintiffs to find a violation, courts will be more likely to award fees and costs under Rule 11 when an attorney is motivated by the desire to recoup fees in the absence of actual damages.

D. Res Judicata and Compulsory Counterclaim

The two rules of judicial economy, res judicata and compulsory counterclaim, determine whether an earlier judgment on the underlying debt may bar a FDCPA action. The doctrine of res judicata, in general, prevents a party from relitigating a matter that should have been adjudicated in a prior proceeding. The doctrine of compulsory counterclaim found in F.R.C.P. 13(a), requires joinder of counterclaims bearing close logical or evidentiary relationship to the main claim which "arise out of the same transaction or occurrence." The combination of these two rules of judicial economy may provide a procedural basis for denial of a claim under the FDCPA.

The foundation for collateral estoppel of a plaintiff's FDCPA claim is, for the most part, dependent on state law. If the law of the original jurisdiction (usually state court) requires that in an action for collection of a debt the defendant must raise all claims by defense or counterclaim, then the second court (usually federal court) may bar the action. This, of course, necessarily requires that the debt collector have brought suit "in his own name." A creditor's suit and judgment against a consumer would not provide a res judicata defense to a collection agency subsequently hired by the creditor.

The determination as to whether a counterclaim is "compulsory" or "permissive" depends on the court's application of the flexible "same transaction or occurrence" standard and will be subject to differing interpretation. Although this inquiry has rarely been addressed in the context of the FDCPA, there are several cases interpreting this standard in relation to claims under the federal Truth in Lending Statute. It must be noted, however, that of the few federal courts addressing the collateral estoppel doctrine under the FDCPA, none have found the underlying debt collection action (generally based upon state contract or equitable grounds) to bear a substantial enough relationship to bar subsequent litigation. Despite this, the case law is scarce and the issue of collateral estoppel should still be considered for suits brought under the FDCPA following final judgment on an action to collect. Of course, if the FDCPA claim was actually litigated in the prior proceeding, the doctrine of res judicata would most certainly apply.

In many states, unauthorized practice of law statutes prevent collection agencies from filing counterclaims for the underlying debt in an FDCPA action. Some states, however, do permit suits by collection agencies, and a "permissive" counterclaim can be maintained if the court is persuaded that the issues involve the same controversy, evidence or law and policy. Although federal courts usually will not take supplemental jurisdiction because the claim is not closely enough related to the main claim, state courts do not have the same jurisdictional limitations and the collector who has properly received assignment of the debt may allege the debt in a counterclaim.


IV. CLASS ACTIONS

Because a large number of claims arising under the FDCPA involve alleged defects in collection letters, often disseminated through mass mailings, the opportunity for plaintiffs to seek class certification for technical violations under the Act presents itself as a very attractive alternative. As a result, defense attorneys representing collectors generating statewide or nationwide communications would be well advised to bear in mind class certification requirements and procedures while tailoring a strategy on any given case. While merely alleging a class action is not enough, class certification is within the discretion of the trial court and can be initiated well into the prosecution of an otherwise individual matter. Needless to say, the ability to avoid class certification severely undermines the value of a plaintiff's claim.

A. Prerequisites to Class Certification

Federal Rule of Civil Procedure 23(a) provides that:

One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interest of the class.

Prior to certification, the plaintiff "must demonstrate, under a strict burden of proof, that all of the requirements of Rule 23(a) are clearly met." A plaintiff who requests that the court make "common sense assumptions" as to the facts supporting his claim, yet does not present competent proof that all elements of Rule 23(a) have been met, will not meet the burden of proof required at the certification stage. Moreover, the court will not likely certify a class in which the plaintiff is completely at the mercy of his attorney for knowledge of the facts and circumstances of the case.

In addition to the requirements of Rule 23(a), standing to sue is "an essential threshold which must be crossed before any determination as to class representation under Rule 23 can be made." Although "actual damages" need not be alleged for FDCPA class certification, the availability of statutory damages will provide the requisite "injury" to obtain standing. Logically, one could argue that a technical violation in which the court may not award statutory damages (or perhaps even nominal statutory damages) based upon ??1692k(b), will not amount to the requisite "injury" to obtain standing.

1. Numerosity

In making the determination that the number of plaintiffs makes the possibility of joinder too unwieldy, the court is entitled to make "common sense assumptions" as to the potential size of the class. Though the trial court is vested with the discretion to make such an assumption, the plaintiff is still required to provide at least a modicum of proof and facts upon which the court may estimate the size of the class. Despite this, there is not a hard and fast rule as to the actual number of class members which are required, only that the "joinder of all parties is impracticable."

2. Commonality

Rule 23(a) also requires that there be "questions of law or fact common to the class." This does not mean that there cannot be diverse factual circumstances among the class members, only that there exist a common nucleus of "operative" facts and that common issues predominate. The debtors' receipt of pre-printed form letters in violation of the Act will suffice. In a recent case, the commonality requirement was met despite the fact that there was no proof each class member even received at least one of five form collection letters sent out by the defendant. The court held that "there [was] a the common issue of whether [the Defendant] violated the FDCPA by sending the letters."

Generally, cases involving multiple defendants or where there is the application of different state laws will not meet the commonality requirement. This is also true when the assertion of various cross and counterclaims may create so many differing issues that a class action would become unmanageable and "common questions no longer predominate."

3. Typicality

The typicality requirement is designed to ensure that the class representative will be motivated to protect the interests of the class as a whole. Typicality can be found when: (1) the claim arises from the same event or course of conduct that gave rise to the claims of other class members, and (2) the claim is based on the same legal theory as their claims. Factual distinctions between putative class members does not undermine the typicality requirement, however, certification may be denied when the injury did not arise under the same "event or course of conduct." As previously mentioned, the thrust of the typicality requirement is that the plaintiff have a personal stake in the litigation such that the court may presume that the plaintiff will adequately protect the interest of the class.

Lastly, the court will need to find that the representative's injury is of the same "type" as those of the class as a whole. This does not mean the injury must be suffered at the same time or to the same degree. Moreover, minimal class recovery does not negate typicality. However, the injury must be representative of the class. In Sandlin v. Shapiro & Fishman, the court held that despite the imposition of an unauthorized fee among all putative class members, the plaintiffs:

"failed to differentiate between those members of the class who actually paid the imposed pay-off fees and those who did not. Therefore this court cannot establish which members' claims are typical of plaintiff's claims."

As with commonality, should the class representative be subject to unique defenses or counterclaims to which not all proposed members are subject, typicality will generally not be found.

4. Fair and Adequate Representation of The Class

In determining whether the representative plaintiff "fairly and adequately" represents the class, a court will in essence examine: (1) quality and competency of plaintiff's counsel; (2) the plaintiff's quality as a litigant and witness (i.e. knowledge of facts and circumstances leading to their claim); and (3) whether the class counsel is facing any conflicts of interest which may impair his ability to represent the class as a whole.

a. Adequacy of Counsel

In determining the qualifications and competency of the proposed class counsel, the court will examine: (1) the attorney's professional qualifications and skills; (2) the attorney's performance in the suit itself; and (3) the attorney's ethical handling of the matter in terms of manner of solicitation and conflicts of interest.


b. Representative's Knowledge of the Claim

Courts are split on the significance of the representative's knowledge of the claim and quality as a litigant with regard to their ability to adequately represent the class. In the case of Mace v. Van Ru Credit Corp., the Court noted with some hostility that:

"a plaintiff whose knowledge of the lawsuit is so wanting that she appears to be no more than a pawn of attorneys who seek a large fee award may be inadequate as a representative."

The Court in Mace, however, did determine that a representative who understood the purpose of the lawsuit and [his] role as a class representative had sufficient knowledge and was therefore adequate. Accordingly, opposition to class certification should always include an investigation of the plaintiff as a witness and knowledge of the claim.

B. Class Actions Maintainable

To maintain a class action in an FDCPA action, a representative class member must also meet the requirements of F.R.C.P. Rule 23(b). In pertinent part, Rule 23(b) requires that a class certification will not be maintained unless the elements of Rule 23(a) are satisfied and three conditions are met: (1) if separate actions would create the risk of inconsistent standards for the defendant or of impairing the right the rights of non-party class members, (2) if the defendant has already acted with respect to the class as a whole, making injunctive or declaratory relief appropriate, or (3) that the plaintiff demonstrate that common legal or factual issues predominate and a class action is "superior" to other available methods for the fair and efficient adjudication of the controversy. In sum, is the class action more desirable and convenient than pursuit of individual claims.

1. Superiority

In the context of an FDCPA claim, the "superiority" prong of Rule 23(b) has been met with inconsistent rulings. In the case of Labbate-D'Alauro v. GC Services Limited Partnership, the Court found that:

"It is appropriate for the court to consider the inability of the poor or uninformed to enforce their rights and the improbability that large numbers of class members would posses the initiative to litigate individually."

The Labbate-D'Alauro Court further noted that class actions are a superior method of enforcing consumer protection laws when awards are often too small to encourage individual litigation. This line of reasoning most certainly lends itself to FDCPA litigation and demonstrates the likelihood that class certification will be granted.

However, in the Mace decision the Court held that:

"where, as here, the potential recovery for each class member is de minimus, .28 cents, and defendants will incur large administrative costs, it would defy logic to hold that a class action is superior to an individual action."

Although the Labbate-D'Alauro and Mace decisions are somewhat difficult to rectify, it appears that the Mace "de minimus" award revealed some hostility in what would amount to a recovery for the attorneys only. The inability to bring statutory or actual damages to a plaintiff quite arguable undermines that "consumer protection" purpose articulated in Labbate-D'Alauro, insofar as the

extremely small award provides no incentive to participate as a class member, let alone pursue a cause of action individually.

2. Predominance

Identical to the requisite element of Rule 23(a)(2), Rule 23(b)(3)'s requirement that "question of law or fact common to members of the class predominate" is, in most cases, interchangeable with the notion of "superiority." However, this element becomes frustrated when counterclaims require the court to engage in multiple separate factual determinations. Despite this, a trial court is vested with the discretion to subdivide the class sua sponte. A recent Eleventh Circuit case held that:

"We do not intend to suggest that compulsory counterclaims should preclude the maintenance of class actions??? we only rule that it is a proper exercise of discretion for the district court to evaluate the nature of the counterclaims and the difficulties they present and to consider the usefulness of breaking the proposed class into subclasses to avoid those difficulties."

Because FDCPA claims are particularly susceptible to collection counterclaims, or are counterclaims to collection actions, the ability to subdivide a class and allow counterclaims on the collection proceed may impair the value of the statutory damages under the FDCPA.


V. CONCLUSION

While the purpose of the FDCPA and its limited statutory defenses present a challenge in defending an action, careful analysis of the facts and application of the available defenses may allow formulation of a winning defense strategy.

Defense Strategies in Fair Debt Collection Practices Act Litigation








Presented by:

Therese G. Franz??n
Franz??n and Salzano, P.C.

and

Michael Benoit
Hudson Cook, LLP








Defense Strategies in Fair Debt
Collection Practices Act Litigation

By: Therese G. Franz??n and Robert S. Carlson


The Fair Debt Collection Practices Act ("FDCPA") is undeniably a plaintiff's statute. The Act's imposition of strict liability, the "least sophisticated consumer" standard and statutory award of damages, without a requisite showing of actual harm suffered, clearly provides a strong incentive for plaintiffs to initiate suit, even when predicated upon a mere technical violation. Although the Act is arguably drafted so loosely that its effects exceed the scope of eliminating abusive collection practices as well as offering plaintiffs a virtually unobstructed cause of action based upon minor and inadvertent violations, there still exist several grounds upon which a viable defense may be assembled. The success of these defenses, however, often rests on the procedures instituted prior to consumer contact, a good faith effort to comply with the Act, and the conduct of the plaintiff throughout the litigation process.


I. COVERAGE OF THE ACT

As basic as it may seem, the imminent threat of adverse action by a creditor often lures the ill-informed debtor/plaintiff to assert a claim against a person, entity or transaction which is not covered under the FDCPA. In short, the Act applies to "debt collectors" regularly engaged in the collection of "debt" owed by "consumers." At first these terms may appear relatively unambiguous, however, a careful reading of the statute will reveal that the definitional limitations on the persons and transactions covered under the Act are not always so clear cut. Keeping in mind that this first line of inquiry may invariably raise some of the most complex issues arising under the FDCPA, a basic understanding of the Act's coverage may prevent the potential for needlessly wasting resources investigating a claim for which the plaintiff has no basis.

A. Debt Collector

The term "debt collector" means:

[A]ny person who uses any instrumentality of interstate commerce or the mails in any business the principle purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or to be asserted to be owed another.

Although the breadth of this definition should not be understated, the language quoted, by requiring a person to collect debts "regularly," excludes collection in only isolated instances. However, the term does include those whose "principle business purpose" or "regular course of business" involves collection of debt for others. These words of limitation are quite obviously designed to exclude persons who only rarely collect debt, but ultimately the requisite quantity of collection activities covered will by and large rest on the discretion of the court. To this end, reliance solely on these exceptions by anyone engaged in collection activities, even minimally, is not advised.

Perhaps the most overlooked exception to coverage under the Act are creditor's employees collecting debts directly owed their employer, i.e., creditor's collecting on their own accounts. In addition to the definitional limitation placed on those who collect "debts owed or due or asserted to be owed or due another," the FDCPA specifically exempts:

[A]ny officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor.

The Act further exempts:

Any person while acting as a debt collector for another person, both of whom are related by common ownership or affiliated by corporate control, if the person acting as a debt collector does so only for persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts.

Although these exclusions are directed toward creditors' in-house collectors and their affiliates, these exemptions are not absolute. Creditors lose their exemption if they use a false name that indicates a separate debt collector is involved, or those that do not clearly indicate that the creditor is, in fact, collecting the debt. Thus, a defendant must carefully examine the nature of the communications to the consumer to ensure that a viable argument could not be presented that a "least sophisticated consumer" would be lead to believe that the person collecting is not truly employed by or affiliated with the creditor.

Though the "creditor" exemption of the FDCPA will extend to those debts which were not originated by the creditor, one must ensure that such debt was not obtained while such loan was in default. Debts acquired after default are statutorily included within the coverage of the FDCPA.

B. Consumer Debts

In addition to the creditor exemption, perhaps the single greatest source of confusion for improper suits are those which relate to commercial as opposed to consumer debts. More specifically, section 1692a(5) of the Act provides that:

the term "debt" means any obligation or alleged obligation of the consumer to pay money arising out of a transaction in which money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment. (Emphasis added.)

This definition of "debt" covers only the collection of debts with the purpose of "personal, family or household" use. Accordingly, commercial debts are not within the definition. The term "primarily for personal, family, or household use" was borrowed from the Truth in Lending Act, and such debt that was originally incurred primarily for consumer purposes remains a consumer debt even if those purposes change and even if there were non-consumer aspects to the original transaction. The term is broad enough to include dishonored checks, rent, medical bills, utility bills, insurance bills and claims, student loans, campground memberships, credit cards, condominium fees, and judgments.
Further, if any portion of a debt (such as credit card debt) is for personal, family or household use, then the entire debt must be treated as a consumer debt for purposes of 15 U.S.C. ??1692i.

As previously mentioned, the Act's definition of "debt collector" often involves a complex determination of fact. It will often be necessary to consult case law to ascertain the scope of coverage. One should be aware that useful analogies will also exist with regard to the same definitional limitations placed on the federal Truth in Lending Act. Finally, Senate Report 382 describes with particularity the persons who must comply with the FDCPA and may provide a rough guide for a determination as to the Act's coverage.


II. AFFIRMATIVE DEFENSE

The FDCPA is a strict liability statute with extraordinarily broad provisions designed to encourage suits by "private attorneys general." In an effort to further the Act's remedial objectives and carry out the findings and purposes specified in 15 U.S.C. ??1692, courts adhere to the strict "plain meaning" rule of statutory interpretation in the absence of unclear or ambiguous language. As a result, the only defenses available to FDCPA claims are provided by the Act. Any purported defense not expressly provided by the FDCPA is not available to defeat an FDCPA claim.

A. Maintenance of Procedures Reasonably Adapted to Avoid Bona Fide Error Resulting in Unintentional Violations

15 U.S.C. ??1692k(c) provides that:

A debt collector may not be held liable in any action brought under this title if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid such error.

Similar to a provision found in the Truth in Lending Act, the bona fide error exception provides a complete defense to a debt collector's violation of any substantive provision of the FDCPA. At first blush this provision appears to provide a shield to those suits which are based upon only minor or technical violations of the Act. However, the bona fide error defense has rarely been invoked successfully. In general, courts have rigorously scrutinized the elements of this defense and have been quite unwilling to accept arguments that minor or technical violations in and of themselves present a valid defense under the bona fide error exception.

1. The Error Was Unintentional

In Smith v. Transworld Airlines, Inc., the Sixth Circuit upheld the bona fide error defense finding that Transworld had not acted intentionally in violating the Act. After having been initially contacted by Transworld, the plaintiff issued a cease and desist letter to the address indicated on the original dunning letter, Transworld's Columbus, Ohio office. Approximately one day later, Transworld's California headquarters, unaware of the cease and desist letter, issued another dunning letter. The Court held that Transworld had not intended to violate the Act and maintained procedures designed to prevent such errors. Despite this finding, Circuit Judge Krupansky sharply dissented concluding that:

"???Transworld has intentionally structured and implemented a system that defies compliance with the absolute duty mandated by section 1692c(c)???and [Transworld] is liable under section 1692c(c) for communicating with Smith after it had received his cease and desist letter."

Despite Transworld's successful assertion of the bona fide error defense, Judge Krupansky's dissent indicates the potential for judicial expansion of the concept of "intent" beyond the mere desire that an action occur which ultimately results in a violation of the Act.

Further, it should be noted that (as with each element of the bona fide error defense) intentional conduct is not "unintentional" simply because the defendant did not believe that his conduct violated the law. Lack of intent to violate the FDCPA is not enough; the error itself must be inadvertent to be unintentional.

2. Was The Result Of A Bona Fide Error

With few exceptions, the bona fide error defense will only apply to clerical mistakes and not mistaken advice of counsel or mistakes in law, even when made in good faith. Generally, innocent error of fact, scrivener's error or mechanical malfunction leading to inaccuracy in communication will suffice. Because vigilance is implicitly required under the Act, such errors must be presented as an isolated occurrence which necessarily arise in the operation of a business and one relatively unpreventable.

Although easily avoidable mistakes of fact are rarely forgiven by the Courts, a Ninth Circuit decision upheld the bona fide error exception when a pro se debtor claimed that a collector had improperly contacted him at an inconvenient time. The testimony of the collector revealed that he had in fact contacted the debtor at 8:00 A.M., but that this was a result of his failure to take into account the difference in time zones between California and South Dakota. The Court noted that:

"The [Plaintiff] admitted that the timing of the calls occasioned 'no actual damages.' He presented no persuasive evidence the contents of the calls were harassing, abusive or misleading??? The [Defendant] also testified that he called [plaintiff] in response to [plaintiff's] request for a transcript."


Undoubtedly, the Court was persuaded by the lack of actual damages to the plaintiff and the fact that it was the plaintiff who requested the communication in the first place.

In the controversial case of Jenkins v. Heintz, the Seventh Circuit in a split decision found that the bona fide error defense applied to a law firm that attempted to collect thousands of dollars of unauthorized force placed insurance premiums. The defendant asserted that it was unaware that such premiums were not authorized under the law and that under the Act there exists no duty to investigate the legality of every charge submitted by a creditor to a collection firm. Ruling in favor of the defendant, the Court stated that:

"[The Act] does not say that the collector's status as an attorney should add a requirement of independent legal analysis for each aspect of the creditor's claim, including a potential defense arising out of a somewhat arcane subject matter like force placed insurance. To require an attorney debt collector to conduct an independent investigation into the legal intricacies of the client's contract with the consumer would create a double standard for the bona fide error doctrine based upon the identity of the collector???"

With the Jenkins decision in mind, one should be careful not to confuse mistake of law with mistake of fact in asserting the bona fide error defense. The decision most certainly stands for the proposition that absent a showing of actual knowledge, a collector should be able to reasonably rely on the statement of charges submitted by a creditor. This ultimately amounts to a justifiable mistake in fact in reliance on the client's statements as opposed to an erroneous assumption of legality.

3. Procedures Reasonably Adapted To Prevent Such Errors

As a final element of the bona fide error defense, the defendant must not only demonstrate that there are procedures in place designed to ensure compliance with the Act, but also that there is in place a system of checks and reviews to guard against errors that can result in violation. An empty headed approach to collection efforts will not serve as a basis for asserting inadvertence or a good faith effort to comply with the Act. This requirement will allow the plaintiff to compare the procedures of other collectors and evaluate such procedures with the clarity of hindsight.

Although the adequacy of the preventative measures are not articulated with particularity by the statute or applicable case law, the courts have been quite unwilling to accept the argument that an attorney's "approval" of a mass mailed form letter and review of procedures will adequately ensure compliance with the FDCPA. In short, a defendant must make a showing of at least minimal direct and personal involvement in the client file and issuance of dunning letters. In the case of Colomon v. Jackson, the Second Circuit ruled against the defendant because he had not reviewed the debtor's file, did not determine when particular letters should be sent, did not approve the sending of particular letters and did not know the identities of the parties to whom the letters were sent. In short, the Court held that:

"[T]here will be few, if any, cases in which a mass produced collection letter bearing a facsimile of an attorney's signature will comply with the restrictions of [the Act]."

Suffice it to say that with regards to mass communications, there must be some form of personal review (admittedly quite minimal) and assessment of the particular circumstances of each case.

B. Good Faith Conformity With FTC Advisory Opinion

In 1995 the Federal Trade Commission ("FTC") repealed the informal "Guides Against Debt Collection Deception" due to the enactment of the FDCPA. In fact, many of the provisions contained in the FTC "Guide" ultimately formed the basis for many provisions under the FDCPA. Although the "Guide" has been superceded by the FDCPA, the FTC is the primary enforcement agency under the Act. Despite this, the FTC has not issued an advisory opinion in many years since the enactment of the FDCPA.

15 U.S.C. ??1692k(e) states that:

No provision of this section imposing any liability shall apply to any act done or omitted in good faith in conformity with any advisory opinion of the [FTC], notwithstanding that after such act or omission has occurred, such opinion is amended, rescinded, or determined by judicial or other authority to be invalid for any reason.


Although this exception to the Act is virtually untouched due to the absence of formal FTC advisory opinions, one should be aware of what constitutes a formal advisory opinion, or more appropriately, what does not constitute a formal advisory opinion. Formal advisory opinions for purposes of this provision are not:

1. informal staff letters;
2. FTC commentary to the FDCPA; or
3. an FTC formal advisory opinion on issues addressed in staff commentary when the staff commentary was incomplete.

Again, it should be noted that the Truth in Lending Act contains a similar exemption and may provide useful analogous case law.

C. Statute of Limitations and Venue

In pertinent part, 15 U.S.C. ??1692k(d) provides:

An action to enforce any liability created by this subchapter may be brought??? within one year from the date on which the violation occurs.

Because most debtors claiming a violation under the FDCPA seek the advice of legal counsel shortly after the alleged violation has occurred (i.e., following an abusive phone call or receipt of dunning letter), the Act's one year statute of limitations is rarely an issue. Other violations (i.e., the false threat of suit, the inappropriate reporting to a credit agency or not being provided a validation notice, etc.) may raise the issue as to whether the period begins when the violation occurred or when the debtor should have discovered the violation occurred. Almost unanimously, the courts have applied the "discovery rule" determining that the date the debtor "should have known" the violation occurred begins the running of the clock, however, one court has held that the one-year limitation is a jurisdictional limitation and begins running on the date the violation occurred.

In the cases of Mattson v. U.S. West Communications, Inc. and Maloy v. Phillips, both the Eighth and Eleventh Circuits, having addressed the issue as to when the violation occurred in the mailing of dunning letters, determined that the date of mailing as opposed to the date of receipt began the running of the statute. These courts reasoned that "the date on which the [debt collector] mailed the letter was the last opportunity for the collector to comply with the statute." Further, the Maloy Court held that an additional five days would be added to the one-year statute for violations under ??1692g because the collector had five days after the initial communication to deliver the validation notice.

The Mattson and Maloy Courts split as to whether an action may be filed on the anniversary date of the violation or the day before the anniversary. These decisions rested on the application of the Federal Rule of Civil Procedure Rule 6(a) and the modern doctrine of using the anniversary of the "trigger" date as opposed to the 365-day rule. In addition, the statute of limitations may be tolled by the filing of a subsequently dismissed class action, especially when the defendant induced the plaintiff to refrain from filing suit, or when the violation was fraudulently concealed.

Finally, ??1692i(a) requires that venue for any action brought on a debt secured by land be brought where the real property is located, and for debts not secured by an interest in land: (1) where the consumer signed the contract sued upon; or, (2) where the consumer resides at the time of filing suit. Because venue for most civil actions is typically brought in the county where the defendant resides, improper venue is frequently encountered in FDCPA actions.


III. COUNTERCLAIMS

Section 1692k(a)'s provisions allowing recovery of actual damage (including mental distress, pain and suffering and harm from adverse credit reporting, where appropriate), statutory damages (not to exceed $1,000) and attorneys fees, are clearly designed to provide incentive to bring suit by "private attorneys general." Because the award of attorneys fees are mandated by the Act and the imposition of statutory damages may be predicated on minor violations (although tempered in light of section 1692k(b)), the Act has enabled plaintiffs to settle large numbers of cases based upon the defendant's fears of taking a matter to trial and risking increased attorney's fee awards because the plaintiff was "successful."

The courts, however, may become increasingly reluctant to award attorney's fees on minor violations in the absence of actual and statutory damages by deeming such actions "unsuccessful." Although the intent of the courts should be to create a deterrent to actions predicated on mere harmless technical violations, the dictates of the FDCPA will necessarily require a complete absence of both actual "and" statutory damages, a very unlikely outcome. This does not mean, however, that defendants do not hold some weapons in their arsenal for marginal plaintiff claims.

A. Attorney Fees May be Recovered When Suit Brought To Harass Collector


15 U.S.C. ??1692k(a)(3) provides that:

???On a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorneys fees reasonable in relation to the work expended and costs.

The awarding of attorney's fees to the defendant for "harassment" and "bad faith" under this provision is far more stringent than the federal common law rule permitting such fees when "the losing party has acted in bad faith, vexatiously, wantonly or for oppressive reasons." The heavy burden of proving the plaintiff acted in bad faith and with the purpose to harass first requires that the defendant prevail against the debtor on the underlying claim and that the court not award the plaintiff fees under ??1692k(a)(3).

To prove the requisite malice, the defendant must show that the plaintiff: (1) had no basis for the subjective belief that the defendant violated the Act; (2) the plaintiff did not entertain a subjective belief that such act occurred; and, (3) suit was brought to harass the creditor. This rigorous standard is applied narrowly by the courts to avoid discouraging private litigation which is the primary enforcement mechanism of the FDCPA. It should be noted, however, that malicious prosecution claims and Rule 11 sanctions provide a far more lenient standard and much higher probability of success than the ??1692k(a)(3) provision.

Characterizing a cause of action under this provision as a "counterclaim" has been met with some hostility by the courts. Some courts hold that the award or attorney's fees under this provision amount to "relief" as opposed to a cause of action. In these jurisdictions, a defendant's claim for attorney's fees should properly be raised by motion after defendant wins the underlying suit, rather than by counterclaim.

B. Malicious Prosecution

In addition to the relief for bad faith harassment provided under ??1692k(a)(3), the opportunity to assert a common law action for malicious prosecution still provides a method to recover attorney's fees, costs and damages. Because this remedy does not require the defendant to carry the heavy burden of proving "bad faith" litigation brought for the "purposes of harassment," it presents an alternative deterrent to suits having the primary objective of recovering attorneys fees.

In the case of Ziobron v. Crawford, the Indiana Court of Appeals found that an action for malicious prosecution was not preempted by the FDCPA's ??1692k(a)(3). In addressing whether the FDCPA's preemption clause ??1692n properly excluded state law claims which conflict with federal statutory law, the Court held that ??1692n:

"??? does not purport to preempt state law malicious prosecution claims. Instead, it is specifically addressed to the 'laws of any state with respect to debt collection practices' and provides that states laws are not preempted by the FDCPA if the 'protection that the [laws afford] any consumer is greater than the protection provided by the [Act]??? the provisions of the [Act] which provide a remedy for persons harmed by bad faith litigation??? are merely collateral to the intent and purpose of the Act."

In so holding, the Court in Ziobron remanded the case to the trial court for adjudication on the malicious prosecution claim.

Similar to ??1692k(a)(3)'s "bad faith" requirement, the tort of malicious prosecution rests on the notion that the plaintiff has been improperly subject to the legal

process. Unlike ??1692k(a)(3), however, the defendant need merely prove that: (1) the debtor instituted a prosecution against the defendant; (2) the debtor acted maliciously in doing so; (3) the prosecution was instituted without probable cause; and, (4) the prosecution terminated in defendant's favor. Noticeably absent from these requirements is the "purpose to harass" element found in ??1692k(a)(3).

C. Rule 11 Sanctions

Rule 11(b) of the Federal Rules of Civil Procedure requires that in all representations to the court an attorney conduct "an inquiry reasonable under the circumstance." With this in mind, plaintiffs' attorneys seeking to bring a claim under the FDCPA in which there is no evidence to support a claim, particularly alleging a technical violation, may subject themselves to Rule 11 sanctions.

In the case of Terran v. Kaplan, the Ninth Circuit noted that the plaintiff used a general form pleading that had not been properly revised to reflect the facts of the case, and that despite the allegations contained in the complaint:

"There [was] no evidence that the defendant 'engaged in a campaign of deception, unfair and abusive debt collection practices???that there was no evidence that the plaintiff in fact suffered mental or emotional distress??? there was nothing in the record to support a claim for punitive damages."

The Terran court then awarded attorney fees and costs to the defendant creditor for the plaintiff's failure to adequately investigate the claim prior to filing suit.

Again, the award of statutory damages and attorney's fees often lures "hopeful" plaintiffs into filing suit without adequately preparing their case. Keeping in mind the extremely low threshold required of plaintiffs to find a violation, courts will be more likely to award fees and costs under Rule 11 when an attorney is motivated by the desire to recoup fees in the absence of actual damages.

D. Res Judicata and Compulsory Counterclaim

The two rules of judicial economy, res judicata and compulsory counterclaim, determine whether an earlier judgment on the underlying debt may bar a FDCPA action. The doctrine of res judicata, in general, prevents a party from relitigating a matter that should have been adjudicated in a prior proceeding. The doctrine of compulsory counterclaim found in F.R.C.P. 13(a), requires joinder of counterclaims bearing close logical or evidentiary relationship to the main claim which "arise out of the same transaction or occurrence." The combination of these two rules of judicial economy may provide a procedural basis for denial of a claim under the FDCPA.

The foundation for collateral estoppel of a plaintiff's FDCPA claim is, for the most part, dependent on state law. If the law of the original jurisdiction (usually state court) requires that in an action for collection of a debt the defendant must raise all claims by defense or counterclaim, then the second court (usually federal court) may bar the action. This, of course, necessarily requires that the debt collector have brought suit "in his own name." A creditor's suit and judgment against a consumer would not provide a res judicata defense to a collection agency subsequently hired by the creditor.

The determination as to whether a counterclaim is "compulsory" or "permissive" depends on the court's application of the flexible "same transaction or occurrence" standard and will be subject to differing interpretation. Although this inquiry has rarely been addressed in the context of the FDCPA, there are several cases interpreting this standard in relation to claims under the federal Truth in Lending Statute. It must be noted, however, that of the few federal courts addressing the collateral estoppel doctrine under the FDCPA, none have found the underlying debt collection action (generally based upon state contract or equitable grounds) to bear a substantial enough relationship to bar subsequent litigation. Despite this, the case law is scarce and the issue of collateral estoppel should still be considered for suits brought under the FDCPA following final judgment on an action to collect. Of course, if the FDCPA claim was actually litigated in the prior proceeding, the doctrine of res judicata would most certainly apply.

In many states, unauthorized practice of law statutes prevent collection agencies from filing counterclaims for the underlying debt in an FDCPA action. Some states, however, do permit suits by collection agencies, and a "permissive" counterclaim can be maintained if the court is persuaded that the issues involve the same controversy, evidence or law and policy. Although federal courts usually will not take supplemental jurisdiction because the claim is not closely enough related to the main claim, state courts do not have the same jurisdictional limitations and the collector who has properly received assignment of the debt may allege the debt in a counterclaim.


IV. CLASS ACTIONS

Because a large number of claims arising under the FDCPA involve alleged defects in collection letters, often disseminated through mass mailings, the opportunity for plaintiffs to seek class certification for technical violations under the Act presents itself as a very attractive alternative. As a result, defense attorneys representing collectors generating statewide or nationwide communications would be well advised to bear in mind class certification requirements and procedures while tailoring a strategy on any given case. While merely alleging a class action is not enough, class certification is within the discretion of the trial court and can be initiated well into the prosecution of an otherwise individual matter. Needless to say, the ability to avoid class certification severely undermines the value of a plaintiff's claim.

A. Prerequisites to Class Certification

Federal Rule of Civil Procedure 23(a) provides that:

One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interest of the class.

Prior to certification, the plaintiff "must demonstrate, under a strict burden of proof, that all of the requirements of Rule 23(a) are clearly met." A plaintiff who requests that the court make "common sense assumptions" as to the facts supporting his claim, yet does not present competent proof that all elements of Rule 23(a) have been met, will not meet the burden of proof required at the certification stage. Moreover, the court will not likely certify a class in which the plaintiff is completely at the mercy of his attorney for knowledge of the facts and circumstances of the case.

In addition to the requirements of Rule 23(a), standing to sue is "an essential threshold which must be crossed before any determination as to class representation under Rule 23 can be made." Although "actual damages" need not be alleged for FDCPA class certification, the availability of statutory damages will provide the requisite "injury" to obtain standing. Logically, one could argue that a technical violation in which the court may not award statutory damages (or perhaps even nominal statutory damages) based upon ??1692k(b), will not amount to the requisite "injury" to obtain standing.

1. Numerosity

In making the determination that the number of plaintiffs makes the possibility of joinder too unwieldy, the court is entitled to make "common sense assumptions" as to the potential size of the class. Though the trial court is vested with the discretion to make such an assumption, the plaintiff is still required to provide at least a modicum of proof and facts upon which the court may estimate the size of the class. Despite this, there is not a hard and fast rule as to the actual number of class members which are required, only that the "joinder of all parties is impracticable."

2. Commonality

Rule 23(a) also requires that there be "questions of law or fact common to the class." This does not mean that there cannot be diverse factual circumstances among the class members, only that there exist a common nucleus of "operative" facts and that common issues predominate. The debtors' receipt of pre-printed form letters in violation of the Act will suffice. In a recent case, the commonality requirement was met despite the fact that there was no proof each class member even received at least one of five form collection letters sent out by the defendant. The court held that "there [was] a the common issue of whether [the Defendant] violated the FDCPA by sending the letters."

Generally, cases involving multiple defendants or where there is the application of different state laws will not meet the commonality requirement. This is also true when the assertion of various cross and counterclaims may create so many differing issues that a class action would become unmanageable and "common questions no longer predominate."

3. Typicality

The typicality requirement is designed to ensure that the class representative will be motivated to protect the interests of the class as a whole. Typicality can be found when: (1) the claim arises from the same event or course of conduct that gave rise to the claims of other class members, and (2) the claim is based on the same legal theory as their claims. Factual distinctions between putative class members does not undermine the typicality requirement, however, certification may be denied when the injury did not arise under the same "event or course of conduct." As previously mentioned, the thrust of the typicality requirement is that the plaintiff have a personal stake in the litigation such that the court may presume that the plaintiff will adequately protect the interest of the class.

Lastly, the court will need to find that the representative's injury is of the same "type" as those of the class as a whole. This does not mean the injury must be suffered at the same time or to the same degree. Moreover, minimal class recovery does not negate typicality. However, the injury must be representative of the class. In Sandlin v. Shapiro & Fishman, the court held that despite the imposition of an unauthorized fee among all putative class members, the plaintiffs:

"failed to differentiate between those members of the class who actually paid the imposed pay-off fees and those who did not. Therefore this court cannot establish which members' claims are typical of plaintiff's claims."

As with commonality, should the class representative be subject to unique defenses or counterclaims to which not all proposed members are subject, typicality will generally not be found.

4. Fair and Adequate Representation of The Class

In determining whether the representative plaintiff "fairly and adequately" represents the class, a court will in essence examine: (1) quality and competency of plaintiff's counsel; (2) the plaintiff's quality as a litigant and witness (i.e. knowledge of facts and circumstances leading to their claim); and (3) whether the class counsel is facing any conflicts of interest which may impair his ability to represent the class as a whole.

a. Adequacy of Counsel

In determining the qualifications and competency of the proposed class counsel, the court will examine: (1) the attorney's professional qualifications and skills; (2) the attorney's performance in the suit itself; and (3) the attorney's ethical handling of the matter in terms of manner of solicitation and conflicts of interest.


b. Representative's Knowledge of the Claim

Courts are split on the significance of the representative's knowledge of the claim and quality as a litigant with regard to their ability to adequately represent the class. In the case of Mace v. Van Ru Credit Corp., the Court noted with some hostility that:

"a plaintiff whose knowledge of the lawsuit is so wanting that she appears to be no more than a pawn of attorneys who seek a large fee award may be inadequate as a representative."

The Court in Mace, however, did determine that a representative who understood the purpose of the lawsuit and [his] role as a class representative had sufficient knowledge and was therefore adequate. Accordingly, opposition to class certification should always include an investigation of the plaintiff as a witness and knowledge of the claim.

B. Class Actions Maintainable

To maintain a class action in an FDCPA action, a representative class member must also meet the requirements of F.R.C.P. Rule 23(b). In pertinent part, Rule 23(b) requires that a class certification will not be maintained unless the elements of Rule 23(a) are satisfied and three conditions are met: (1) if separate actions would create the risk of inconsistent standards for the defendant or of impairing the right the rights of non-party class members, (2) if the defendant has already acted with respect to the class as a whole, making injunctive or declaratory relief appropriate, or (3) that the plaintiff demonstrate that common legal or factual issues predominate and a class action is "superior" to other available methods for the fair and efficient adjudication of the controversy. In sum, is the class action more desirable and convenient than pursuit of individual claims.

1. Superiority

In the context of an FDCPA claim, the "superiority" prong of Rule 23(b) has been met with inconsistent rulings. In the case of Labbate-D'Alauro v. GC Services Limited Partnership, the Court found that:

"It is appropriate for the court to consider the inability of the poor or uninformed to enforce their rights and the improbability that large numbers of class members would posses the initiative to litigate individually."

The Labbate-D'Alauro Court further noted that class actions are a superior method of enforcing consumer protection laws when awards are often too small to encourage individual litigation. This line of reasoning most certainly lends itself to FDCPA litigation and demonstrates the likelihood that class certification will be granted.

However, in the Mace decision the Court held that:

"where, as here, the potential recovery for each class member is de minimus, .28 cents, and defendants will incur large administrative costs, it would defy logic to hold that a class action is superior to an individual action."

Although the Labbate-D'Alauro and Mace decisions are somewhat difficult to rectify, it appears that the Mace "de minimus" award revealed some hostility in what would amount to a recovery for the attorneys only. The inability to bring statutory or actual damages to a plaintiff quite arguable undermines that "consumer protection" purpose articulated in Labbate-D'Alauro, insofar as the

extremely small award provides no incentive to participate as a class member, let alone pursue a cause of action individually.

2. Predominance

Identical to the requisite element of Rule 23(a)(2), Rule 23(b)(3)'s requirement that "question of law or fact common to members of the class predominate" is, in most cases, interchangeable with the notion of "superiority." However, this element becomes frustrated when counterclaims require the court to engage in multiple separate factual determinations. Despite this, a trial court is vested with the discretion to subdivide the class sua sponte. A recent Eleventh Circuit case held that:

"We do not intend to suggest that compulsory counterclaims should preclude the maintenance of class actions??? we only rule that it is a proper exercise of discretion for the district court to evaluate the nature of the counterclaims and the difficulties they present and to consider the usefulness of breaking the proposed class into subclasses to avoid those difficulties."

Because FDCPA claims are particularly susceptible to collection counterclaims, or are counterclaims to collection actions, the ability to subdivide a class and allow counterclaims on the collection proceed may impair the value of the statutory damages under the FDCPA.


V. CONCLUSION

While the purpose of the FDCPA and its limited statutory defenses present a challenge in defending an action, careful analysis of the facts and application of the available defenses may allow formulation of a winning defense strategy.