Case 6:15-cv-00059-PGB-KRS Document 57 Filed 05/04/16 Page 1 of 23 PageID 323
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`UNITED STATES DISTRICT COURT
`MIDDLE DISTRICT OF FLORIDA
`ORLANDO DIVISION
`
`
`RAY PALMER, JR., on behalf of himself
`and all others similarly situated,
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`
`
`Plaintiff,
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`Case No: 6:15-cv-59-Orl-40KRS
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`
`v.
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`DYNAMIC RECOVERY SOLUTIONS,
`LLC and CASCADE CAPITAL, LLC,
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`Defendants.
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`
`
`ORDER
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`
`
`
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`Plaintiff, Ray Palmer, Jr., initiated this putative class action against Defendants,
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`Dynamic Recovery Solutions, LLC (“Dynamic”) and Cascade Capital, LLC (“Cascade”), to
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`vindicate his rights and the rights of other similarly situated consumers under the Fair Debt
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`Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692–1692p. Plaintiff claims that 1,181
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`consumers received dunning letters from Defendants which violate the FDCPA’s
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`proscriptions against false, misleading, and unfair debt collection practices. Both Dynamic
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`and Cascade deny any wrongdoing. The parties advise that they have resolved their dispute
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`and now move the Court to certify a settlement class and to preliminarily approve their
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`settlement agreement. For the following reasons, and with the benefit of a preliminary
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`fairness hearing, the Court finds that certification and preliminary approval are inappropriate
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`at this time.
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`I.
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`BACKGROUND
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`A.
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`The Allegations
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`Plaintiff alleges in his Complaint that he and the putative class members incurred and
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`subsequently defaulted on credit card obligations owed to Bank of America. After the statute
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`1
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`Case 6:15-cv-00059-PGB-KRS Document 57 Filed 05/04/16 Page 2 of 23 PageID 324
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`of limitations had passed to legally enforce these defaulted obligations, Bank of America
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`sold them to Cascade. Cascade then contracted with Dynamic to collect on the debts.
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`In furtherance of its collection efforts, Dynamic mailed dunning letters to Plaintiff and
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`the putative class members seeking payment of the defaulted credit card obligations. Each
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`letter informed the recipient that he or she owed a debt, that the original creditor was Bank
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`of America, and that Cascade currently owns the right to collect on the obligation. Each
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`letter further outlined a number of payment plans through which the recipient could “settle”
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`his or her account. Upon completion of a payment plan, each letter promised that the
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`account would be considered “satisfied and closed” and that “a settlement letter [would] be
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`issued.” The letters never disclosed that the underlying credit card obligations were no
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`longer legally enforceable.
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`By couching its collection efforts in terms of “settlement” and offering payment plans
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`without disclosing the fact that the underlying credit card obligations were no longer legally
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`enforceable, Plaintiff claims that the dunning letters misrepresent the character or legal
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`status of the obligations and, as a result, constitute a false, misleading, and unfair debt
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`collection practice. Both Dynamic and Cascade deny that the letters violate the FDCPA and
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`maintain that, even if they do, any violation was the result of a bona fide error. Cascade
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`additionally denies liability on the grounds that it cannot be held vicariously liable under the
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`FDCPA for any misconduct by Dynamic.
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`B.
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`The Proposed Settlement
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`The parties represent that, through their counsel, they have engaged in arms-length
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`negotiations which have resulted in settlement. The terms of that settlement include the
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`following:
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`2
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`Case 6:15-cv-00059-PGB-KRS Document 57 Filed 05/04/16 Page 3 of 23 PageID 325
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`• Dynamic will pay $12,000 to the class as statutory damages under the
`FDCPA, which will be distributed evenly among the 1,181 class
`members for a pro rata award of $10.16 per class member.
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`• Dynamic will pay Plaintiff $2,000 in recognition for his service as class
`representative and $1,000 in statutory damages as permitted by the
`FDCPA, for a total award to Plaintiff of $3,000, which shall be paid
`separately from the class settlement fund.
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`
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`• Plaintiff will be deemed the prevailing party and Dynamic will pay
`Plaintiff’s reasonable attorney’s fees and costs.
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`• Dynamic will pay
`administration.
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`the costs of class notice, distribution, and
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`• The class will release Defendants from all known and unknown claims
`which could have been brought in this lawsuit.
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`• Defendants deny liability and retain the right to collect on the defaulted
`obligations.
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`• Class members may opt out of the class and the settlement or may
`enter an appearance to object to the settlement’s fairness.
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`• Any unclaimed amount from the $12,000 class settlement fund will be
`divided equally between the National Consumer Law Center and the
`National Association of Consumer Advocates as a cy pres remedy.
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`DISCUSSION
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`A.
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`Class Certification
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`II.
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`“For a district court to certify a class action, the named plaintiffs must have standing,
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`and the putative class must meet each of the [four] requirements specified in Federal Rule
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`of Civil Procedure 23(a), as well as at least one of the requirements set forth in Rule 23(b).”
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`Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1265 (11th Cir. 2009) (quoting Klay v. Humana,
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`Inc., 382 F.3d 1241, 1250 (11th Cir. 2004)). The Court assumes for the purposes of this
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`Order only that all class certification requirements are satisfied. But see note 6, infra. The
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`Court therefore turns directly to the question of whether the parties’ proposed settlement
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`should receive preliminary approval.
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`3
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`B.
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`Preliminary Approval of the Settlement
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`A class action may not be settled, dismissed, or otherwise compromised without the
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`district court’s approval. Fed. R. Civ. P. 23(e). A district court should only approve a class
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`action settlement if it is “fair, adequate and reasonable and is not the product of collusion
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`between the parties.” Saccoccio v. JP Morgan Chase Bank, N.A., 297 F.R.D. 683, 691 (S.D.
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`Fla. 2014) (quoting Bennett v. Behring Corp., 737 F.2d 982, 986 (11th Cir. 1984)). The
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`Eleventh Circuit has enumerated six factors a district court should consider in evaluating the
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`fairness, adequacy, and reasonableness of a class action settlement: (1) the plaintiff’s
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`likelihood of success on the merits, (2) the range of the plaintiff’s possible recovery, (3) the
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`point within the range of possible recovery at which settlement is fair, adequate, and
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`reasonable, (4) the expected complexity, cost, and duration of litigation, (5) any opposition
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`to the proposed settlement, and (6) the stage of the litigation at which settlement was
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`reached. Faught v. Am. Home Shield Corp., 668 F.3d 1233, 1240 (11th Cir. 2011). While
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`these six factors are helpful in answering the fairness inquiry, they are neither determinative
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`nor exhaustive, and the court may consider other relevant factors based on the particular
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`nuances of the case and the settlement proposed. Officers for Justice v. Civil Serv. Comm’n
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`of S.F., 688 F.2d 615, 625 (9th Cir. 1982), cert. denied, 459 U.S. 1217 (1983). Additional
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`factors warranting consideration may include (7) an unjustifiably burdensome claims
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`procedure, (8) unduly preferential treatment of the class representative, (9) the terms of
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`settlement in similar cases, (10) an unreasonably high award of attorney’s fees to prevailing
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`class counsel, and (11) impermissibly broad releases of liability. See In re Bluetooth
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`Headset Prods. Liab. Litig., 654 F.3d 935, 946–47 (9th Cir. 2011); In re Prudential Ins. Co.
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`4
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`Case 6:15-cv-00059-PGB-KRS Document 57 Filed 05/04/16 Page 5 of 23 PageID 327
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`Am. Sales Practice Litig. Agent Actions, 148 F.3d 283, 317, 323–24 (3d Cir. 1998), cert.
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`denied, 525 U.S. 1114 (1999); MANUAL FOR COMPLEX LITIGATION (FOURTH) § 21.62 (2004).1
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`Although class action settlements should be reviewed with deference to the strong
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`judicial policy favoring settlement, the court must not approve a settlement merely because
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`the parties agree to its terms. Redman v. RadioShack Corp., 768 F.3d 622, 629 (7th Cir.
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`2014), cert. denied, 135 S. Ct. 1429 (2015); Holmes v. Cont’l Can Co., 706 F.2d 1144, 1150
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`(11th Cir. 1983) (finding that reliance on the recommendations of the parties and their
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`counsel “fosters rubber stamping by the court rather than the careful scrutiny which is
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`essential in judicial approval of class action settlements”). This maxim particularly holds true
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`in the context of precertification settlement, where the parties’ speedy and seamless
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`resolution of their dispute should prompt the court to consider whether the proposed
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`settlement represents a bona fide end to the adversarial process or the collusive exploitation
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`of the class action mechanism to the detriment of absent class members. See Lane v.
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`1 The list of potential factors to consider could go on. On this point, two astute
`commentators observe:
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`
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`[F]actor tests . . . suffer from shortcomings. These tests grow by
`accretion. They are commodious closets into which the residues
`of past cases can be deposited—closets that never need to be
`reorganized or cleaned out because the tests are suggestive
`only. Appeals courts never need to consider whether a factor test
`should be overruled. Over time, despite the good intentions that
`motivated
`their creation,
`they become unwieldy and
`disorganized . . . .
`
`The sheer number of factors is a problem. A trial judge could
`hardly be blamed for feeling a sense of foreboding when
`contemplating the nineteen items on the Third Circuit’s checklist
`[in Prudential]. Running through them all seems a dreary task.
`Courts applying these tests often recite the litany and engage in
`pro forma analyses, but their hearts are not in it.
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`Jonathan R. Macey & Geoffrey P. Miller, Judicial Review of Class Action Settlements,
`1 J. LEGAL ANALYSIS 167, 172 (2009) (footnotes omitted).
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`5
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`Facebook, Inc., 696 F.3d 811, 819 (9th Cir. 2012), cert. denied, 134 S. Ct. 8 (2013). In these
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`circumstances, the court must employ “a higher degree of scrutiny in assessing [a
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`settlement’s] fairness.” D’Amato v. Deutsche Bank, 236 F.3d 78, 85 (2d Cir. 2001).
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`Ultimately, the proponents of a settlement bear the burden of proving its fairness, adequacy,
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`and reasonableness. Faught, 668 F.3d at 1239.
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`After reviewing the proposed settlement in this case through the prism of the above-
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`listed factors, three reasons counsel against its approval:
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`1.
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`The Proposed Settlement Does Not Fairly and Adequately
`Account for Plaintiff’s Likelihood of Success Against
`Defendants
`
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`In describing why they believe their proposed settlement is fair, the parties rely heavily
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`on what they perceive to be the uncertainty of Plaintiff’s case when weighed against
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`Defendants’ defenses. However, upon review of those defenses and the relevant case law,
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`the Court finds that the most significant deficiency in the parties’ proposed settlement arises
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`out of the settlement’s low value despite Plaintiff’s high likelihood of succeeding against
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`Defendants on the merits.
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`a.
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`Strength of Plaintiff’s Case
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`In order to prevail under the FDCPA, Plaintiff will need to prove that (1) he was the
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`object of collection activity arising out of consumer debt, (2) that Defendants are debt
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`collectors under the FDCPA, and (3) that Defendants committed an act or omission
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`proscribed by the FDCPA. Pescatrice v. Orovitz, 539 F. Supp. 2d 1375, 1378 (S.D. Fla.
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`2008). Defendants do not dispute that they are debt collectors and that Plaintiff was the
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`object of collection activity arising out of consumer debt. Instead, Defendants take the
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`position that the dunning letter in this case does not violate the FDCPA.
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`6
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`Plaintiff alleges that attempting to collect a time-barred debt without disclosing the
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`fact that it is time-barred constitutes the false or misleading representation of the debt’s
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`character or legal status in violation of 15 U.S.C. § 1692e(2)(A). Defendants disagree,
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`claiming that the letters are not misleading because they do not misrepresent the character
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`or legal status of the debts to be collected and do not threaten legal action. In determining
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`whether a collection practice is false or misleading under § 1692e, the Eleventh Circuit looks
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`to the “least sophisticated consumer.” Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1175
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`(11th Cir. 1985). “This unsavvy consumer is charged with a basic level of understanding
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`and willingness to read with care, but is of below average sophistication or intelligence, and
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`is uninformed or naïve.” Alborzian v. JPMorgan Chase Bank, N.A., 185 Cal. Rptr. 3d 84, 91
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`(Cal. Ct. App. 2015) (quoting Gonzalez v. Arrow Fin. Servs., LLC, 660 F.3d 1055, 1062 (9th
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`Cir. 2011)) (citations and internal quotation marks omitted); see also LeBlanc v. Unifund
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`CCR Partners, 601 F.3d 1185, 1194 (11th Cir. 2010) (per curiam). A debt collection practice
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`which tends to mislead the least sophisticated consumer violates the FDCPA. Jeter,
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`760 F.2d at 1175. Therefore, Plaintiff can only prevail under § 1692e(2)(A) if the dunning
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`letters sent by Dynamic would tend to mislead the least sophisticated consumer as to the
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`character or legal status of the debt to be collected.
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`The Eleventh Circuit has not yet had the occasion to answer the question of whether
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`a debt collector’s failure to disclose that a debt is time-barred constitutes a false or
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`misleading debt collection practice in violation of § 1692e(2)(A). Nevertheless, a plain
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`reading of the statute indicates that it is and that the threat of litigation need not accompany
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`the misrepresentation to impose liability on a debt collector. The Eleventh Circuit has
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`reiterated many times that the FDCPA must be construed “to give full effect to each of its
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`provisions,” must be interpreted with regard to its “entire statutory context,” must be
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`understood using the plain and ordinary meaning of the words chosen by Congress, and
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`must be applied so as to achieve its purpose of “eliminate[ing] abusive debt collection
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`practices.” Davidson v. Capital One Bank (USA), N.A., 797 F.3d 1309, 1312, 1315–16 (11th
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`Cir. 2015) (quoting 15 U.S.C. § 1692(e) and United States v. DBB, Inc., 180 F.3d 1277, 1281
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`(11th Cir. 1999)).
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`The provision through which Plaintiff premises liability proscribes “[t]he false
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`representation of the character, amount, or legal status of any debt.” 15 U.S.C.
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`§ 1692e(2)(A). The conduct prohibited by the plain meaning of this language is the false
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`representation of a debt’s character, amount, or legal status. Moreover, § 1692e(2)(A) does
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`not contemplate that the threat of litigation must accompany a misrepresentation to be
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`actionable as Defendants suggest. Indeed, had Congress intended to forbid threatening
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`litigation in connection with the false representation of the character or legal status of a debt,
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`it would have narrowed § 1692e(2)(A) accordingly; Congress’s omission on this point
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`indicates that it held no such intent. See Animal Legal Def. Fund v. U.S. Dep’t of Agric.,
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`789 F.3d 1206, 1217 (11th Cir. 2015) (“Where Congress knows how to say something but
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`chooses not to, its silence is controlling.”) (quoting In re Haas, 48 F.3d 1153, 1156 (11th Cir.
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`1995)). Further belying Defendants’ position is a subsequent provision which proscribes
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`“[t]he threat to take any action that cannot legally be taken or that is not intended to be
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`taken.” 15 U.S.C. § 1692e(5). This category seems more apt to include the threats of
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`litigation which Defendants contend are tacitly included in § 1692e(2)(A). It would be strange
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`indeed for Congress to forbid certain conduct in one provision of a statute through words
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`and then forbid the exact same conduct in another provision of the same statute through
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`silence. A plain reading of § 1692e(2)(A) therefore leads to the inescapable conclusion that
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`8
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`Case 6:15-cv-00059-PGB-KRS Document 57 Filed 05/04/16 Page 9 of 23 PageID 331
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`it prohibits the false representation of a debt’s character or legal status regardless of whether
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`litigation is threatened.
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`Applying the plain language of § 1692e(2)(A) to the dunning letter in this case,
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`Plaintiff’s prospects of prevailing against Defendants appear strong. The letter sent by
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`Dynamic seeks repayment of an unenforceable debt without disclosing that fact. Whether
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`a debt is barred by an applicable statute of limitations is fundamental to the debt’s character
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`and legal status. See Crawford v. LVNV Funding, LLC, 758 F.3d 1254, 1260 (11th Cir.
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`2014) (explaining the significance to debtors of statutes of limitations in determining a debt’s
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`legal status), cert. denied, 135 S. Ct. 1844 (2015). The failure to disclose that a debt is
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`barred by the statute of limitations would likely mislead the least sophisticated consumer as
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`to the character or legal status of his or her debt, thus violating § 1692e(2)(A). Although this
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`nondisclosure is itself sufficient to violate the FDCPA, the letters go one step further by
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`asking the consumer to “settle” his or her account. Such settlement offers serve only to
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`compound confusion over the debt’s true character or legal status, as a consumer
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`researching what “settlement” means would reasonably find the dictionary’s definition of the
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`term: “an act of bestowing or giving possession under legal sanction.” Settlement, MERRIAM-
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`WEBSTER, http://www.merriam-webster.com/dictionary/settlement (last visited May 4, 2016);
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`see also Settlement, BLACK’S LAW DICTIONARY (10th ed. 2014) (defining the term to mean
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`“[a]n agreement ending a dispute or lawsuit”). Consequently, the dunning letter in this case
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`is doubly misleading by failing to disclose that the debt it seeks to collect is time-barred and
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`by giving the false impression that Cascade could sue to enforce the debt.
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`Other circuit courts have reached the same conclusion. In McMahon v. LVNV
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`Funding, LLC, 744 F.3d 1010 (7th Cir. 2014), the Seventh Circuit faced a situation factually
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`identical to what the parties present here. The plaintiff in McMahon incurred and defaulted
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`9
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`on a consumer debt which eventually ended up in the hands of a third party debt collector.
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`Id. at 1013. After the statute of limitations had passed to sue on the debt, the debt collector
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`mailed the plaintiff a dunning letter which offered to “settle [his] account in full.” Id. Like the
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`dunning letter in this case, the letter in McMahon failed to disclose that the debt was barred
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`by the applicable statute of limitations. Id.
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`In concluding that failing to disclose that a debt is legally unenforceable constitutes a
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`false or misleading debt collection practice, the Seventh Circuit relied on the plain meaning
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`of the pertinent statutory language:
`
` The proposition that a debt collector violates the FDCPA
`when it misleads an unsophisticated consumer to believe a time-
`barred debt is legally enforceable . . . is straightforward under
`the statute. Section 1692e(2)(A) specifically prohibits the false
`representation of the character or legal status of any debt.
`Whether a debt is legally enforceable is a central fact about the
`character and legal status of that debt. A misrepresentation
`about that fact thus violates the FDCPA.
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`Id. at 1020. In further support of its conclusion, the Seventh Circuit pointed to the fact that
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`unsophisticated consumers2 would be misled by the inclusion of a “settlement offer” in a
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`dunning letter because “a settlement offer on a timebarred debt implies that the creditor
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`could successfully sue on the debt,” thus misrepresenting the debt’s character and legal
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`2 The Seventh Circuit utilizes the “unsophisticated consumer” standard instead of the
`“least sophisticated consumer” standard in determining whether a debt collector’s
`conduct is misleading. Many commentators have attempted to differentiate between the
`two types of consumers, with most concluding either that there is no meaningful
`distinction or that the unsophisticated consumer standard is marginally more demanding
`for plaintiffs to satisfy. See, e.g., Jeffrey S. Peters, Note, Meaningful Involvement in
`Collections: Should Ethics or the FDCPA Govern?, 34 PACE L. REV. 1240, 1247–51
`(2014) (finding any variation between the two standards “to be more an issue of
`semantics than of an actual difference in the law”); Christian Stueben, Note, Judge or
`Jury? Determining Deception or Misrepresentation Under the Fair Debt Collection
`Practices Act, 78 FORDHAM L. REV. 3107, 3127–32 (2010) (finding the unsophisticated
`consumer standard “slightly more stringent”). In any event, whatever subtleties may exist
`are unimportant for the purposes of this Order.
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`10
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`status. Id. at 1021–22. The McMahon Court additionally found that “[m]atters may be even
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`worse if the debt collector adds a threat of litigation, but such a threat is not a necessary
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`element of a claim [under § 1692e(2)(A)].” Id. at 1020 (citation omitted). The Seventh Circuit
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`therefore flatly rejected the argument Defendants make in this case that the nondisclosure
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`of a debt’s character or legal status must be accompanied by the threat of litigation to be
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`false or misleading; nondisclosure alone violates the FDCPA. Id.
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`The Sixth Circuit agreed in Buchanan v. Northland Group, Inc., 776 F.3d 393 (6th Cir.
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`2015). There, the plaintiff also incurred and defaulted on a consumer debt which was sold
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`to a third party debt collector after the statute of limitations to legally enforce the debt had
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`lapsed. Id. at 395. The debt collector mailed the plaintiff a dunning letter which offered to
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`“settle” the debt, but did not divulge that the debt was no longer legally enforceable. Id. at
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`395–96. Citing McMahon, the Sixth Circuit found that the enforceability of a debt is crucial
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`to its character and legal status and that a debt collector violates the FDCPA when it fails to
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`disclose in a dunning letter that the debt it seeks to collect is no longer enforceable. Id. at
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`398–99. Also like McMahon, the Sixth Circuit found that framing a dunning letter in terms of
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`“settlement” exacerbates its violative effect because “a ‘settlement offer’ falsely implies that
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`the underlying debt is enforceable in court.” Id. at 399. See also, e.g., Carter v. First Nat’l
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`Collection Bureau, Inc., No. 4:15-CV-1695, 2015 WL 5695273, at *5 (S.D. Tex. Sept. 11,
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`2015) (finding that a debt collector misleads a consumer in violation of § 1692e(2)(A) when
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`it uses the terms “settle” or “settlement” in connection with the recovery of a debt, but fails
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`to disclose that the debt is barred by the statute of limitations); Finley v. Dynamic Recovery
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`Sols., LLC, No. 14-cv-04028-TEH, 2015 WL 3750140, at *5 (N.D. Cal. June 15, 2015) (“[T]he
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`least sophisticated consumer could view an offer to settle as a veiled threat of litigation, or,
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`at the least, as a misrepresentation that a debt is still enforceable.”).
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`11
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`Based on the plain meaning of § 1692e(2)(A) and after considering the relevant case
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`law, it appears that Plaintiff has a strong likelihood of proving that the dunning letter mailed
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`by Dynamic violates the FDCPA by misleading the least sophisticated consumer as to the
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`character or legal status of his or her debt.
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`b.
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`Strength of Defendants’ Defenses
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`Defendants argue that should the dunning letter in this case violate the FDCPA, they
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`will nevertheless prevail against Plaintiff. First, Cascade asserts that it cannot be held
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`vicariously liable under the FDCPA for any misconduct attributable to Dynamic. Cascade’s
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`position, however, is unfounded. “[W]hen Congress creates a tort action, it legislates against
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`a legal background of ordinary tort-related vicarious liability rules . . . .” Meyer v. Holley,
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`537 U.S. 280, 285 (2003). Among these rules is the well-established tenet that principals
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`are vicariously liable for the misconduct of their agents when committed within their scope
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`of authority, regardless of whether the principal authorized or even knew about the agent’s
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`misconduct. Id. at 285–86; see also LeBlanc, 601 F.3d at 1201–02 (applying vicarious
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`liability principles to FDCPA claim). In order to impose vicarious liability on a principal for its
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`agent’s violation of the FDCPA, the plaintiff must show (1) that the principal controls or has
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`the right to control the agent, and (2) the agent consents to act on the principal’s behalf. See
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`Meyer, 537 U.S. at 286.
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`Cascade bases its vicarious liability defense solely on the grounds that it does not
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`exercise sufficient control over Dynamic to warrant imposing vicarious liability. Cascade
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`contends that Dynamic is merely an independent contractor which collects debts for
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`Cascade without Cascade’s input or direction. While courts continue to grapple with whether
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`a non-debt collector principal can be held vicariously liable for its debt collector agent and,
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`12
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`Case 6:15-cv-00059-PGB-KRS Document 57 Filed 05/04/16 Page 13 of 23 PageID 335
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`if so, what level of control is needed,3 there is no doubt that a principal exercises the requisite
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`level of control when it is itself a debt collector. See, e.g., Janetos v. Fulton Friedman &
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`Gullace, LLP, No. 15-1859, 2016 WL 1382174, at *7 (7th Cir. Apr. 7, 2016); Pollice v. Nat’l
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`Tax Funding, L.P., 225 F.3d 379, 404–05 (3d Cir. 2000). This approach makes sense, as
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`the entire purpose of the FDCPA would be defeated if debt collectors were permitted to
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`insulate themselves from liability by farming out their collection efforts to smaller debt
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`collectors who face only nominal monetary judgments due to the FDCPA’s net worth caps.4
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`Cascade does not dispute that it is a debt collector under the FDCPA. By virtue of its status
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`as a debt collector, Cascade therefore exercises the requisite control over Dynamic to
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`impose vicarious liability for Dynamic’s violation of the statute.
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`Both Dynamic and Cascade also assert the FDCPA’s bona fide error defense as a
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`means for escaping liability in this case. In order to avail themselves of the defense,
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`Defendants will need to prove that their violation (1) was not intentional, (2) was the result
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`of a bona fide error, and (3) occurred despite the maintenance of procedures reasonably
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`adapted to avoid such an error. 15 U.S.C. § 1692k(c); Edwards v. Niagra Credit Sols., Inc.,
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`3 Although it is unclear what level of control would be necessary, it at least appears that
`the Eleventh Circuit would take the position that a non-debt collector principal may be
`held vicariously liable for the actions of its debt collector agent. See LeBlanc v. Unifund
`CCR Partners, 601 F.3d 1185, 1201–02 (11th Cir. 2010) (per curiam) (focusing on the
`relationships among the parties and stating as dicta that it is “immaterial” for purposes of
`imposing vicarious liability whether a defendant is a debt collector under the FDCPA).
`4 As discussed in more detail below, the FDCPA limits a debt collector’s liability in a class
`action lawsuit in proportion to the debt collector’s net worth. See 15 U.S.C.
`§ 1692k(a)(2)(B). If debt collectors were not exposed to vicarious liability for the activities
`of their agents, debt collectors with high net worths would simply retain debt collectors
`with low net worths to collect on their behalf. These debt collectors could then engage
`in collection activities without regard to the FDCPA’s prohibitions and with relative
`impunity, as the possibility of facing a small monetary judgment based on their modest
`net worth would likely pale in comparison to the prospect of recovering delinquent debts
`the value of which would satisfy such a judgment many times over. Likewise, the higher
`valued debt collector would be indifferent to the lower valued debt collector’s compliance
`(or lack thereof) with the FDCPA because it would be shielded from liability entirely.
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`
`
`13
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`

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`Case 6:15-cv-00059-PGB-KRS Document 57 Filed 05/04/16 Page 14 of 23 PageID 336
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`584 F.3d 1350, 1352–53 (11th Cir. 2009). However, the U.S. Supreme Court has limited
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`the defense solely to clerical and factual mistakes made in the collection of debts. Jerman
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`v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 587 (2010). Such mistakes
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`include typographical errors, miscalculations of amounts owed, and other inadvertent
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`missteps in the debt collection process. See, e.g., Newman v. Ormond, 396 F. App’x 636,
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`642–43 (11th Cir. 2010) (per curiam) (finding that bona fide error defense covered debt
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`collector’s typographical error in deposition notice sent to consumer where the notice
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`scheduled the consumer’s deposition at a time prohibited by the FDCPA); McGhee v.
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`Weinerman & Assocs., No. 13-C-958, 2015 WL 2401928, at *5 (E.D. Wis. May 20, 2015)
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`(granting bona fide error defense where computer software malfunction caused consumer’s
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`account to be incorrectly designated as subject to collection); Puglisi v. Debt Recovery Sols.,
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`LLC, 822 F. Supp. 2d 218, 227–30 (E.D.N.Y. 2011) (granting bona fide error defense where
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`debt collector inadvertently attempted to process consumer’s payment before the date
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`scheduled). A debt collector therefore cannot prevail on a bona fide error defense where its
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`violation of the FDCPA stems from a mistaken interpretation of the statute’s legal
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`requirements. Jerman, 559 U.S. at 587; see also, e.g., Bassett v. I.C. Sys., Inc., 715 F.
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`Supp. 2d 803, 813 (N.D. Ill. 2010) (denying bona fide error defense where debt collector
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`mistakenly believed that calling consumer thirty-one times over twelve days did not amount
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`to harassment prohibited by the FDCPA). Because Defendants’ alleged violation in this
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`case revolves around their misinterpretation of the law—that is, Defendants’ mistaken belief
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`that the failure to disclose to a consumer that they cannot legally enforce a debt does not
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`misrepresent the character or legal status of that debt—the violation would not be covered
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`by the bona fide error defense.
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`14
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`

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`Case 6:15-cv-00059-PGB-KRS Document 57 Filed 05/04/16 Page 15 of 23 PageID 337
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`In light of the above, it is not difficult to see that Plaintiff enjoys a high likelihood of
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`prevailing on the merits against Defendants. The dunning letter mailed by Dynamic seeks
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`recovery of a debt rendered legally unenforceable by the applicable statute of limitations
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`without disclosing that fact. The plain meaning of § 1692e(2)(A) prohibits such a practice.
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`Moreover, Cascade’s theory that it cannot be held vicariously liable for Dynamic’s violation
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`of the FDCPA is legally unsupportable and Defendants’ bona fide error defense appears to
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`be unavailable.
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`c.
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`The Range of Recovery and Whether the Proposed
`Settlement Falls at a Fair, Reasonable, and Adequate
`Point Within that Range
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`After this weighing of the parties’ respective cases, the Court next considers the range
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`of Plaintiff’s possible recovery and whether the proposed settlement falls at a fair, adequate,
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`and reasonable point on that range. In a class action lawsuit, the FDCPA permits an award
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`of statutory damages up to $1,000 to each named plaintiff and up to the lesser of $500,000
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`or 1% of the violating debt collector’s net worth, which is to be shared among the remaining
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`class members. 15 U.S.C. § 1692k(a)(2)(B). The value of statutory damages is ultimately
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`decided by the trier of fact after considering the frequency and persistence of the debt
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`collector’s violation, the nature of the violation, the debt collector’s resources, the number of
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`persons adversely affected by the debt collector’s misconduct, and the extent to which the
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`debt collector intentionally violated the FDCPA. Id. § 1692k(b)(2).5
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`