Law Firm Sends Collection Letters Without Conducting An "Adequate Attorney Review".

[hannah]

Class Settlement Proposed in Debt Collection Case Against Law Firm
Michael Scholl
New York Law Journal
September 8, 2006

A Brooklyn federal magistrate judge has granted preliminary approval to a proposed class action settlement in a case involving alleged violations of the Fair Debt Collection Practices Act by a California law firm.

Eastern District Magistrate Judge Viktor V. Pohorelsky last week in Athina Bourlas v. Davis Law Associates, CV 05-4548 (VVP), preliminarily approved the settlement of a lawsuit that accuses Davis Law Associates of Solana Beach, Calif., of sending collection letters that violated the act.

Specifically, the suit alleges the law firm sent debt collection letters without first conducting an "adequate attorney review" to confirm that the people receiving the letters actually owed the money the firm claimed they owed.

The suit also alleges the letters did not include a proper "validation notice" informing recipients that complaints challenging the validity of the letters would have to be made in writing.

The suit was filed by Athina Bourlas on behalf of herself and 2,834 other New York state residents who received collection letters from Davis Law between Sept. 23, 2004, and Sept. 22, 2005.

The proposed settlement calls for the defendants to establish a fund of $21,759. That amount is equal to 1 percent of Davis Law's net worth, which is the maximum recovery allowed for Fair Debt Collection Practices Act class actions.

Bourlas, who had been the victim of identity theft and did not owe any of the money Davis Law said she did, would receive $1,000 from the fund. The remainder would be divided among the other class members on a pro rata basis.

Any uncollected funds would be distributed to the Neighborhood Economic Development Advocacy Project in New York City and the Empire Justice Center in Albany.

The proposed settlement also calls for the defendants to pay the plaintiff's counsel a $15,000 fee.

In determining whether he should approve the settlement, Magistrate Judge Pohorelsky first had to determine whether the 2,834 people cited by the plaintiff should be certified as a class.

In his ruling, he noted that the party seeking class certification bears the burden of establishing that the class meets the Federal Rules of Civil Procedure Rule 23(a) requirements of "numerosity, commonality, typicality and adequacy." He found that the burden had been met.

Pohorelsky said the 2,834 people were sufficiently numerous to warrant class certification, that members had a commonality of interests, and that the representative, Bourlas, was a typical class member.

He found that Bourlas and her legal counsel, led by Brian Bromberg of the Bromberg Law Office in Manhattan, are adequate representatives of the class.

The magistrate judge wrote that Bromberg has pursued other Fair Debt Collection Practices Act class actions and should be considered "qualified, experienced, and generally able to conduct the present action."

After concluding his Rule 23(a) analysis, Pohorelsky had to determine whether the class action was maintainable under subsection (3) of Rule 23(b). That subsection requires a showing "that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fair and efficient adjudication of the controversy." He ruled that the class action was maintainable under Rule 23(b)(3).

MERITS EXAMINED

Magistrate Judge Pohorelsky then assessed the merits of the proposed settlement.

He wrote that the proposal was "fair" and that there was no indication it was the product of collusion. He also said it had no "obvious deficiencies" and did not give Bourlas improper preferential treatment.

"Accordingly, the proposed settlement is preliminarily approved," he wrote.

The magistrate judge directed that notice of the proposed settlement be sent by first-class mail to all class members. The form and content of the notice are to be finalized during a hearing scheduled for Sept. 12 at the Brooklyn federal courthouse.

The proposed settlement will not receive final approval until after the notice is mailed and a final fairness hearing is held.

Bromberg said Wednesday, "The judge really recognized the importance of class action remedies in consumer cases." He added that class action lawsuits are one of the most effective tools available to curb corporate misbehavior.

In addition to Bromberg, Bourlas is represented by Lance A. Raphael and Stacy M. Bardo of the Consumer Advocacy Center in Chicago.

Davis Law Associates is represented by Douglas Garrett Tischler of Rivkin Radler in Uniondale. Tischler could not be reached for comment.

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What I found interesting was this part and I quote from the above news article... "The proposed settlement calls for the defendants to establish a fund of $21,759. That amount is equal to 1 percent of Davis Law's net worth, which is the maximum recovery allowed for Fair Debt Collection Practices Act class actions."

When was this maximum set and where in the FDCPA is it?? Or was it set by caselaw? Perhaps I am partly blind today, but I cannot find it.

Sorry, Roybean for putting this in General, but was also not sure where to put it as we don't have a section for class actions. <hint hint>

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Attached please find the complaint, answer, motion for class action, and the opinion.

[roybean]

Great find Hannah!

[jlynn]

At the risk of hijacking...marking time. I will say no more.

Good find Hannah!

[hannah]

Quote:

Originally Posted by roybean Great find Hannah!

I get the email newsletter from law.com which is where I found it and then went to Lexis and pulled the case plus pleadings.

[VexatiousLitigant]

1692(k)(a)(2)(B)

That's where the 1% comes from.

[hannah]

Quote:

Originally Posted by VexatiousLitigant 1692(k)(a)(2)(B) That's where the 1% comes from.

Thanks, VL...I must have just been blind earlier...

Quote:

§ 813. Civil liability [15 USC 1692k] (a) Except as otherwise provided by this section, any debt collector who fails to comply with any provision of this title with respect to any person is liable to such person in an amount equal to the sum of -- (1) any actual damage sustained by such person as a result of such failure; (2) (A) in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000; or (B) in the case of a class action, (i) such amount for each named plaintiff as could be recovered under subparagraph (A), and (ii) such amount as the court may allow for all other class members, without regard to a minimum individual recovery, not to exceed the lesser of $500,000 or 1 per centum of the net worth of the debt collector; and

Not much money with a class that size though...

[VexatiousLitigant]

One person gets $1,000.
Attorney gets $15,000.
Everyone else gets about $7 a piece.

[roybean]

Attorneys are the only ones who make money on class actions. All Pro Se'res need to hark on some sort of fee for being able to defend yourself. Especially if they can sanction a pro se.

[VexatiousLitigant]

Quote:

Originally Posted by roybean Attorneys are the only ones who make money on class actions. All Pro Se'res need to hark on some sort of fee for being able to defend yourself. Especially if they can sanction a pro se.

Class actions have their benefit to the consumer, just not a monetary one.

[roybean]

Quote:

Originally Posted by VexatiousLitigant Class actions have their benefit to the consumer, just not a monetary one.

I guess that's one way to look at it; I just know how much work and research and studying that I have put into my cases and lawyers use attorney fees against you.
It's the first thing they do; threaten you with attorney fees and what you'll be liable for, blah, blah, blah. I guess maybe it is good that I recently hooked up with an attorney because I see where it has become sort of personal for me. To the point where I want to curse some of em out for the stupid mess they do, although it could be because of that botch I am dealing with because I didn't start feeling this way till I had to deal with him. Which reminds me....