A District Court judge in Delaware has denied a motion to certify a class in a lawsuit that alleged a collector violated the Fair Debt Collection Practices Act by falsely representing the legal status of a debt when it sent settlement offers on time-barred debts without disclosing that the statute of limitations had expired.
A copy of the ruling in the case of Hatcher v. Collecto can be accessed by clicking here.
The plaintiff incurred a student loan debt in 2014 that she did not make any payments on. In 2019, the defendant sent the plaintiff a collection letter, offering to accept about $700 less than what was owed to settle the debt “in full.” The letter said nothing about the age of the debt. The plaintiff, a resident of Delaware, filed suit, alleging the letter violated Section 1692e(2)(a) because she claimed that the three-year statute of limitations in Delaware was the governing law, and sought to include anyone else from the state who received a collection letter from the defendant where the statute of limitations had expired.
The defendant first attempted to argue that the governing law in question should be from Arizona, which has a six-year statute of limitations, because the choice-of-law provision in the contract the plaintiff signed with the university said so. But Judge Stephanos Bibas, a judge in the Third Circuit sitting by designation in this case, ruled that Delaware law should apply because if a debt collection lawsuit were to be filed against the plaintiff, it would be filed in Delaware.
But when it came to meeting the conditions of having the class certified, Judge Bibas ruled the plaintiff’s class was not ascertainable because, as the defendant pointed out, the plaintiff did not provide a mechanism to identify which debts were time-barred when the individuals were sent collection letters.
While the plaintiff asked for a list of individuals who were sent collection letters for which the last payment was made more than four years ago and in which the collection letters do not include a disclosure about the debt being outside the statute of limitations, Judge Bibas said it was impossible to know under which state’s statute of limitations that governed each debt.
