Statutory Award for Class Action Lawsuits Brought Against Multiple Defendants under the Fair Debt Collection Practices Act Limited to Per Action Basis

VIOLET P. BLANDINA, on behalf of herself and all others similarly situated, Plaintiff v. MIDLAND FUNDING, LLC, et al.

On February 2, 2015, the U.S. District Court for the Eastern District of Pennsylvania, located in the Third Circuit, issued a decision as to whether the proper award of statutory damages in a class action lawsuit brought against multiple defendants via § 1692k(a)(2)(B) of the Fair Debt Collection Practices Act (FDCPA) should be determined under a “per named defendant” basis or under a “per action” basis. Under the FDCPA, the statutory award for a class action lawsuit is limited to the lesser of $500,000 or 1% of the net worth of the debt collector. The Plaintiff in this case, Ms. Violet P. Blandina, argued on behalf of herself and one other Plaintiff member of the class action suit, that the statutory award amount should be granted on a per named defendant basis, thus allowing the Plaintiffs to recover $500,000 from each of the two named Defendants for a maximum recovery of $1,000,000. The named Defendants, Midland Funding, LLC and Midland Credit Management, Inc., argued that the statutory award should be limited to a per action basis, thus limiting the maximum recovery in this case to $500,000 for the single action brought by the Plaintiff members of the class.

In this case, Plaintiff, Ms. Violet P. Blandina brought a class action suit alleging that the Defendants, Midland Funding LLC and Midland Credit Management Inc. had violated the FDCPA by sending to the Plaintiff and one other similarly situated class member a false, deceptive and misleading debt collection letter. The collection letter sent to the Plaintiffs stated that, if the Plaintiffs agreed to pay a reduced amount to satisfy the debt they owed, the Defendants would stop applying interest on that debt. In fact however, the Defendants were not then, or at any time, applying interest to the debt owed by the Plaintiffs, thus giving rise to an FDCPA violation claim. Plaintiffs’ class action sought recovery under FDCPA § 1692k(a)(2)(B) of the aforementioned $500,000 statutory amount to be applied on a per named defendant basis, for a total recovery of $1,000,000. Defendants filed a motion for determination as to whether the statutory award amount should be applied on a per named defendant basis or on a per action basis.

The District Court deciding the issue looked to prior Third Circuit Court decisions which had examined the wording of § 1692k(a)(2)(A) of the FDCPA, a provision granting $1,000 statutory damages to individual, rather than class action, plaintiffs who brought suit against multiple defendants. Those prior court decisions held that, due to the wording and plain meaning of that provision, the statutory award sought by an individual plaintiff against multiple defendants should be awarded on a per action basis. The District Court, examining the case at hand, stated that because the wording of § 1692k(a)(2)(A), pertaining to individual plaintiff claims, is substantially similar to the wording of § 1692k(a)(2)(B), pertaining to class action plaintiff claims, the court is directed to reach an outcome similar to those court decisions prior. Thus, the court ruled that due to the plain meaning of § 1692k(a)(2)(B), class action claims brought against multiple defendants under the FDCPA must, too, award statutory damages on a per action basis. The Plaintiff class was therefore permitted to only recover a maximum of $500,000 from the named Defendants in this single action case.