Plaintiff’s Motion for Class Action Certification of FDCPA (Fair Debt Collection Practices Act) Class Action Against Law Firm Granted by New York Federal Court because the “Win-Loss” Record of Plaintiff’s Counsel did not Defeat his Adequacy to Serve as Class Counsel and because a De Minimis Recovery of $2.50 per Class Member did not Defeat Superiority
Plaintiff filed a class action lawsuit against the law firm of Karp & Kalamotousakis, LLP alleging that it violated the federal Fair Debt Collection Practices Act (FDCPA). Kalish v. Karp & Kalamotousakis, LLP, ___ F.R.D. ___, 2007 WL 4048559, *1 (S.D.N.Y. November 13, 2007). The class action complaint alleged that the law firm violated the FDCPA “by sending a form letter that incorrectly informed her that she could only dispute a debt owed to Defendant in writing.” Id. Plaintiff’s counsel sought class action certification; defense attorneys did not dispute liability on the FDCPA claim but challenged both the adequacy of counsel and the superiority of class action treatment. Id. The district court rejected the defense arguments and certified the litigation as a class action.
With respect to the adequacy of plaintiff’s lawyer to serve as class counsel, the district court explained that while prior Second Circuit authority directed district courts to consider whether proposed class counsel was “qualified, experienced and generally able” to handle the class action, Kalish, at *1, under the 2003 Amendments to Rule 23, and specifically Rule 23(g), “the court must consider: (a) the work counsel has done in identifying or investigating potential claims in the action, (b) counsel’s experience in handling class actions, other complex litigation, and claims of the type asserted in the action, © counsel’s knowledge of the applicable law, and (d) the resources counsel will commit to representing the class,” and may consider as well “any other matter pertinent to counsel’s ability to fairly and adequately represent the interests of the class,” id. n.4. So viewed, the federal court found the defense argument against plaintiff’s counsel wanting because it “mistakenly conflates ‘qualified’ with ‘successful’ and thereupon undertakes a detailed description of some of [counsel’s] losses in court.” Id., at *2. The court found counsel’s “win-loss” record immaterial to a determination of his qualifications because “Rule 23 requires only that class counsel have experience in the particular type of law at issue or that she have demonstrated her competence in other ways, such as through the quality of her submissions to the court.” Id. (citation omitted). The court concluded that counsel was adequate to represent the class, id.
With respect to the superiority requirement of Rule 23(b)(3), defense attorneys argued that individual class members would recover greater amounts if they sued individually then if class action treatment were granted. Weber, at *2. Specifically, because the FDCPA caps class action damages at $500,000 or 1% of the debt collector’s net worth, see 15 U.S.C. § 1692k(a)(2)(B), and because defendant’s net worth was only $175,000, the class could not recover more than $1750, which would be the equivalent of $2.50 per class member. Weber, at *2. The district court rejected this argument, adopting the reasoning of other courts that have held that “notwithstanding the possibility of higher individual recoveries, litigating as a class retains substantial value because it encourages the prosecution of claims en masse that would not be prosecuted individually.” Id., at *3. Specifically, defendant’s argument assumes that individuals are aware of their legal rights and will accept the “burden of suing” and be “able to find an attorney willing to take her case.” Id. (citation omitted). The concluded at page *3,
This is not a situation where claimants, waiting at the courthouse door to assert their FDCPA rights, will be denied justice by class certification. The unfortunate reality of this situation is that most of Defendant’s approximately 700 FDCPA violations would probably go unnoticed absent this lawsuit. Of course, that is the very reason Defendant now opposes class certification: not out of any ‘feigned concern’ for claimants…, but because it will allow Defendant effectively to avoid liability for its conceded violations of federal law. This is precisely the kind of situation that class action litigation was meant to address.
Moreover, if any individual claimant objected to the limited recovery available through class action treatment, then they could exclude themselves from the class. Weber, at *3. Accordingly, the district court concluded that the superiority requirement was satisfied and granted plaintiff’s motion for certification. Id., at *4.
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