Consumer Finance Litigation

In Echlin v. Columbia Collectors, Inc., NO. C12-5878 RBL, 2013 WL 858206 ( W.D. Wash. Mar. 7, 2013), the Western District of Washington held that an Offer of Judgment of $1,500 plus costs and attorneys' fees mooted the debtor's claim under the Fair Debt Collection Practices Act ("FDCPA"), where the debtor sought statutory damages, actual damages, costs, and attorneys' fees in her complaint yet failed to allege that she in fact suffered actual damages. The plaintiff-debtor in Echlin, who alleged that various notices sent by the defendant-debt collector were defective under the FDCPA's "least sophisticated consumer" standard, sought statutory damages, actual damages, costs, and attorneys' fees in her complaint. The debt collector sent the debtor an Offer of Judgment under Fed. R. Civ. P. 68 for $1,500 plus reasonable fees and costs. Although Rule 68 states that a plaintiff has 14 days to accept an Offer of Judgment, the debt collector's Offer of Judgment stated that it would be "automatically withdrawn if it is not accepted within ten (10) days of service." The debtor soon filed an amended complaint, asserting class action claims. The debt collector filed a motion to dismiss, arguing that the Offer, which exceeded the amount of relief sought in the complaint, mooted her claim. The debtor argued in opposition that the Offer was ineffective to moot her claim because it erroneously stated that it would expire in 10 days. She also asserted that the Offer did not exceed the relief sought because the complaint sought an award of actual damages. Granting the debt collector's motion to dismiss, the court first held that the technical error in the Offer did not render it ineffective, for the debtor's counsel was well aware of the fourteen-day allotment in Rule 68 yet chose to reject the Offer in only seven days. The court also rejected the debtor's argument that the Offer did not exceed the relief sought in the complaint. Although the debtor's complaint purported to seek actual damages, it did not allege that the debtor actually suffered actual damages. Moreover, the debtor's Initial Disclosures confirmed that she was not seeking actual monetary damages. Therefore, the only relief the debtor actually sought was statutory damages, costs, and attorneys' fees. Because the FDCPA provides for a maximum statutory damages award of $1,000 per action, the Offer of $1,500 plus costs and attorneys' fees exceeded the relief sought and, therefore, mooted the debtor's claim. Under the reasoning of Echlin, an FDCPA plaintiff cannot attempt to leverage a vague, unsupported claim of actual damages into a windfall settlement. Where a debtor purports to seek actual damages, yet offers no supporting factual allegations, an Offer of Judgment for statutory damages, costs, and attorneys' fees may be an expedient, cost effective alternative to litigating an FDCPA claim to judgment. For more information on consumer finance litigation topics, please contact one of the Burr & Forman team members for assistance. We are happy to answer any questions or concerns you may have.