Court reinstates class action lawsuit over debt collector’s unfair debt collection practices

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by Michael Heygood

Gwendolyn Phillips, a consumer, was sued by Asset Acceptance, a debt collector, for a debt arising from her purchase of natural gas for household use. Claiming that the debt collector sued her after the statute of limitations on the creditor’s claim had run, Phillips responded by filing a proposed class action lawsuit on behalf of all persons the debt collector sued after limitations had run, alleging claims under state law and the Fair Debt Collection Practices Act.

Phillips requested the district court to certify a plaintiff class consisting of debtors sued by Asset Acceptance for debts arising from the sale of natural gas to consumers sued, as Phillips had been sued, after the statute of limitations had run. The district court refused to certify the class and Phillips appealed. The Seventh Circuit Court of Appeals had now reversed the district court. See Phillips v. Asset Acceptance, LLC, No. 13–2251 (7th Cir. December 02, 2013).

The parties disagreed whether the statute of limitations under Illinois law applicable to the creditor’s claims against the consumers was four or five years. Because Ms. Phillips had been sued more than five years after claims against her had accrued, the district court felt that Phillips was not adequately motivated to represent consumers who were sued more than four but less than five years after accrual and whose claims thus depended on application of a four year statute. The court of appeals disagreed for several reasons. Most importantly, the court of appeals found that whether the statute of limitations was four or five years was a “a pure question of law” and “the district judge could answer it without requiring additional discovery or resolving factual disputes.” Id. Further, because “[a]ppellate courts decide pure questions of law,” the Seventh Circuit addressed the question and held that the claims were governed by Illinois’ four-year statute of limitations for suits on sale contracts. “All the class members, therefore, are in the same boat, having been sued more than four years after their debts accrued.” Id.

The court of appeals also ruled that differences in the amount of damages as to individual class members was not in itself a sufficient reason to deny certification:

If the issues of liability are genuinely common issues, and the damages of individual class members can be readily determined in individual hearings, in settlement negotiations, or by creation of subclasses, the fact that damages are not identical across all class members should not preclude class certification. Otherwise defendants would be able to escape liability for tortious harms of enormous aggregate magnitude but so widely distributed as not to be remediable in individual suits.

Id.

The district court’s denial of class certification was reversed and the case returned to the district court for further proceedings. The court of appeals left it to the district court to determine to the proper scope of the class to be certified.

Victim of unfair debt collection practices?

The Fair Debt Collection Practices Act prohibits debt collectors from using abusive, unfair, or deceptive practices to collect from you. Debt collectors include collection agencies, lawyers who collect debts on a regular basis, and companies that buy delinquent debts and then try to collect them.

The Fair Debt Collection Practices Act applies to personal, family, and household debts. Examples of debts covered by the Act include money you owe on a personal credit card account, an auto loan, a medical bill, and your mortgage.

Consumers have the right to sue a debt collector in state or federal court within one year from the date the law was violated. The court can require the collector to pay the consumer for any damages suffered because of the illegal collection practices like lost wages and medical bills. The court can also require the debt collector to pay up to $1,000 for a violation, even if the consumer cannot prove that he or she suffered actual damages. Consumers can also be reimbursed for their attorney’s fees and court costs

A group of people also may sue a debt collector as part of a class action lawsuit and recover money for damages up to $500,000 or one percent of the collector’s net worth, whichever amount is lower. To be successful in a political and legal climate that has become increasingly hostile toward class action lawsuits, class action clients need educated, experienced attorneys like those at Heygood, Orr & Pearson.

We have the experience and knowledge to guide our clients through class action litigation from beginning to end. And we have the financial resources to help them stand toe-to-toe with some of the biggest corporations in the world through what is often a lengthy, complicated and expensive process. Heygood, Orr & Pearson has represented individuals in class actions involving securities fraud, consumer protection law violations and unfair wage claims

If you think a debt collector has violated the law, please contact us today for a free consultation to learn more about your legal rights and options. You can reach us by calling toll-free at 1-877-446-9001 or by filling out our free online contact form.