7th Cir Reverses DWP of Putative FDCPA Class Action Claims

Kasalo-Harris& Harris

The U.S. Court of Appeals for the Seventh Circuit recently reversed a lower court's decision to dismiss a putative class action lawsuit against a debt collector for want of prosecution, because the mistakes made by the plaintiff's attorney were not sufficient to justify the dismissal. A copy of the opinion is attached.


A consumer sued a debt collection law firm, Harris & Harris, Ltd. ("Harris") for alleged violations of the federal Fair Debt Collection Practices Act ("FDCPA"). Both parties agreed that Harris violated the FDCPA with respect to the consumer, and that the consumer was entitled to modest statutory damages. However, the consumer's attorney also included in his complaint two putative class counts, which alleged that the envelopes and payment reminders used by Harris to collect debts violated the FDCPA on a classwide basis.

The lower court "expressed doubt that it would ever certify a class" in this matter, but nevertheless continued the matter several times to permit the consumer's attorney to expand on and amend the putative class claims.

On several occasions, the consumer's attorney failed to meet the lower court's deadlines, and arrived for a hearing after the court had already considered his case. Due to the consumer's attorney's failure to appear and repeated failure to meet other deadlines, the lower court dismissed the case for want of prosecution.

As you may recall, Federal Rule of Civil Procedure 41(b) provides that "[i]f a plaintiff fails to prosecute or to comply with.a court order, a defendant may move to dismiss the action or any claim against it." In addition, Federal Rule of Civil Procedure 23 provides that a court "must determine by order whether to certify the action as a class action" at an "early practicable time."

The Seventh Circuit held that the lower's court decision to dismiss the action for want of prosecution was an abuse of discretion. In reaching that conclusion, the Court first noted that dismissal for want of prosecution is an "extraordinarily harsh sanction." Gabriele v. Hamlin, 514 F.3d 734, 736 (7th Cir. 2008). In addition, dismissal for want of prosecution should be imposed based on a consideration of, among several other factors, whether the mistakes made are the responsibility of the plaintiff or the plaintiff's lawyer, and the prejudice to the defendant as a result of those mistakes. Aurora Lamp & Lighting Inc. v. International Trading Corp, 325 F.3d 752, 755 (7th Cir. 2003).

Here, the Court indicated that the attorney's fees Harris had to incur due to the repeated errors of the consumer's counsel were not sufficient prejudice, and noted that all of the mistakes made were attributable to the consumer's attorney, rather than to the consumer herself.

In addition, the Court noted that despite the questionable nature of the class action claims, the borrower's individual allegation against Harris appeared to have merit. It also observed that several less severe mechanisms were available to dismiss the class action claims: the lower court could have used Federal Rule of Civil Procedure 41(b) to dismiss only the class action claims, allowing the individual claim to survive, or it could have declined to certify the action as a class action under Federal Rule of Civil Procedure 23.

The Court placed emphasis on the fact that the borrower's attorney did not receive any warning from the lower court that he was on "thin ice."

Therefore, "[g]iven the nature of [the borrower's attorney's] mistakes, the court's ongoing approach to the case, and the lack of any explicit warning," the Court reversed and remanded the lower court's decision to dismiss the action for want of prosecution.