A District Court judge in Michigan has certifies a class in a Fair Debt Collection Practices Act case accusing a collection law firm of charging excessive post-judgment interest on dozens of debt collection lawsuits across the state.
The Background: The plaintiffs were each sued by the defendants for unpaid debts. In three of the cases, the judgments were awarded by default and in the other two, they were awarded by consent. The defendants then filed for writs of garnishment against the plaintiffs, and applied a post-judgment interest rate of 13% on the debt. But the 13% interest rate is only allowed on written instruments. For other judgments, the cap is 1% above the average interest rate on a 5-year Treasury bill.
- In this case, the writs were not based on a note or other written instrument so the 13% rate should not apply, the plaintiffs allege.
- A District Court judge had dismissed the case for lack of subject-matter jurisdiction, but the Court of Appeals for the Sixth Circuit overturned that dismissal back in 2020 and sent the case back to the District Court.
- In seeking certification, the plaintiffs identified two classes related to the two different collection law firms that were attempting to collect on the debts.
The Ruling: The defendant attempted to argue that the plaintiffs lacked standing because they did not suffer a concrete injury, but the plaintiffs countered that some of them had money that was garnished from them, and while it may not have been more than was allowed, that relates to damages, not standing, ruled Judge Paul L. Maloney of the District Court for the Western District of Michigan.
- The defendant also attempted to argue that certifying the class was not appropriate because plaintiffs would need to prove that the debts in question were consumer debts subject to the FDCPA, but Judge Maloney ruled this concern does not require individual determinations.
