I WORK FOR FREE.
That’s not something Philadelphia attorneys say all that often, but I represent consumers under a fee-shifting statute which means that the Defendant Debt Collector must pay my legal fees, not the consumer as a result of violating the Fair Debt Collection Practices Act (FDCPA).
FEE SHIFTING STATUTE.
One of the advantages of suing debt collectors under the Fair Debt Collection Practices Act (FDCPA) is that the debt collector can be required to pay your attorney fees. This has a tremendous motivating impact on the debt collector to settle the case with you when it knows it has been caught violating the law.
ESCALATING COST OF LITIGATION.
Given the fee-shifting statute, the debt collection agency has to honestly answer the question “Did we do anything wrong?” It could be an illegal collection letter that the debt collector sent. The collector has to look in the mirror and honestly assess whether it broke the FDCPA.
If so, then it faces:
- Statutory damages of up to $1000;
- Compensatory (actual) damages for mental anguish, credit reporting damage, etc that might be on the lower end $5000 or $10,000, or could be on the higher end in the six figures;
- Costs of the lawsuit that it pays and that the consumer incurs — deposition expenses, travel expenses, etc. that can range on the low end in the hundreds of dollars to tens of thousands of dollars on the high end;
- Its own attorney fees — just filing an Answer to the lawsuit and setting up the file will be thousands of dollars and taking a case to trial will be tens of thousands of dollars; and
- The consumer’s attorneys’ fees — in a simple case that we file we have thousands of dollars at the beginning and to take a case to trial we will normally have well over $100,000 in fees.
DEBT COLLECTOR SETTLES QUICKLY TO MINIMIZE EXPOSURE.
The most economical decision is to settle quickly. A recent decision by Judge Joel H. Slomsky illustrates the savings in settling quickly – Plaintiff Sara Williams sued NCO Financial Systems Inc. in Horsham, PA for violating the Fair Debt Collection Practices Act (FDCPA) and Judge Slomsky approved a 12.5 hour fee petition and awarded attorneys fees in the amount of $5,427.50. See Williams v. NCO Financial Systems, Inc., 2011 WL 1791099 (E.D. Pa. May 11, 2011) (attorneys fees of $5,427.50).
ARBITRATION RESULTS IN INCREASED EXPENSES.
Occasionally, a debt collector will defend an FDCPA case even though this decision makes no rational sense as doing so exacerbates the debt collectors’ monetary exposure. Judge Juan Sanchez penned an interesting decision in Moyer v. Turnbrook (E.D. Oct. 17, 2005) refuting baseless arguments from a debt collector such as “the consumer attorney should have made her claim for attorney’s fees during arbitration,” and awarded the consumer attorney $6,461.67 in attorneys fees along with a statutory award of damages of $1,000 for violation of the FDCPA.
LITIGATION IS A FOUL’S ERRAND
Fool’s errand definition, a completely absurd, pointless, or useless errand. A decade old decision by Judge Steward Dalzell reveals the pointless nature of litigation when liability is crystal clear. See Nelson v. Select Fin. Servs., Inc. (E.D. Pa. June 9, 2006). The Plaintiff, Aliya Nelson received a letter from Select Financial Services, Inc. violating the Fair Debt Collection Practices Act (“FDCPA”). The matter could have easily settled after the complaint was filed but the Defendant debt collector was on a foul’s errand. The Defendant litigated the matter and Judge Dalzell awarded the consumer attorney $24,693.80 in attorneys fees along with a statutory award of damages of $1,000 for violation of the FDCPA.
Lastly, a final example of the absurdity of litigation took place a few years ago in Morris v. I.C. Sys., Inc., (E.D. Pa. May 15, 2009). Plaintiff Donald Morris filed a complaint against I.C. Systems, Inc. for excessive phone calls in connection with an alleged debt that was actually owed by another individual. This case could have easily settled shortly after the filing of the complaint but the Defendant decided to engage in costly protracted litigation.
District Judge Thomas N. O’Neil pointed out in his decision that: “There were no dispositive motions filed and the other motions merely included joint motions for extensions of time, an uncontested motion to remand to arbitration and a demand for a trial de novo. There were 7 depositions, settlement conferences and an arbitration hearing.” Plaintiffs did prepare points of charge and a pre-trial memorandum but the case did not go to trial.
Defendant I.C. System, Inc. failed to take settlement seriously and engaged in gamesmanship by forcing the plaintiffs to file a motion to compel depositions by refusing to produce witnesses. Although the case never went to trial, Judge O’Neil awarded the consumer attorney $64,684.03 in attorneys fees along with a statutory award of damages of $1,000 for violation of the FDCPA.