A district court has dismissed a claim that the defendant bears the burden of proof if a plaintiff is attempting to determine the net worth of a defendant when determining statutory damages for a claim under the Fair Debt Collection Practices Act.
Under the FDCPA, as it pertains to class-actions suits brought against debt collectors, the limit on the amount that can be recovered is: not to exceed the lesser of $500,000 or 1% of the net worth of the debt collector.
The case, Tourgeman v. Collins Financial Services, was filed in the District Court for the Southern District of California.
Plaintiffs attorneys in the case made a host of arguments why it should be the defendant’s responsibility to prove its net worth. The plaintiffs argued that the statutory damages in the FDCPA were set so that they were punitive in nature, to act as a deterrent against future violations. But the plaintiffs can not make a undefined monetary demand to a jury; a plaintiff must provide evidence to support the claim.
The FDCPA makes the Defendant’s finances an element of the Plaintiff’s damage claim as any award must be related to the Defendant’s net worth. The Plaintiff proposes in this case to ask the jury to award damages “not to exceed one per cent of the Defendant’s net worth” and then leave it to the jury to speculate what the Defendant’s net worth is. Plaintiff is not, however, seeking a mere declaration by the jury that the class is entitled to damages from the Defendant in the abstract. He is asking the jury to award real money and determine a specific amount. Given the express language of the statute, absent evidence of the Defendant’s net worth, the amount would be purely speculative, so evidence of the Defendant’s net worth is an essential element of the Plaintiff’s claim.
The information required to obtain a net worth calculation is in the control of the defendants, argued the plaintiffs, and therefore should be the defendant’s responsibility. But, this is a case that is going on year eight since it was originally filed, and on a number of previous occasions, plaintiffs were allowed access to the defendant’s financial records.
Plaintiff had every opportunity to obtain the financial records needed by a certified accountant to do a proper audit in compliance with GAAP, to prepare evidence to introduce at trial of the Defendant’s net worth. If financial records were incomplete or not made available in response to discovery or the Court’s various orders, Plaintiff did not seek relief such as requesting the Court to order Defendant to produce a GAAP- compliant audited balance sheet. Plaintiff sought monetary sanctions and evidentiary sanctions with regard to other issues in this case, but left this element of his case to chance. Plaintiff is now without competent evidence of the Defendant’s net worth and can only speculate as to this element of his claim for class statutory damages.
