A District Court judge in Michigan has partially granted a defendant’s motion for sanctions against the counsel representing the plaintiff in a Fair Debt Collection Practices Act case for refusing to dismiss the complaint after being supplied with enough information to show that the claims were meritless.
The background: The case began after the plaintiff accused the defendant of violating section 1692e(8) of the FDCPA by failing to report a disputed debt as disputed. The plaintiff said he had reviewed his credit report and saw no dispute notation.
- The defendant quickly produced documentation showing the account had been coded as disputed (using the “XB” dispute code) shortly after receiving the plaintiff’s letter. Defense counsel sent the information to plaintiff’s counsel, but the plaintiff’s attorney refused to dismiss the lawsuit.
- The defendant then filed for summary judgment. Only then did the plaintiff seek to dismiss the case, more than two months after the evidence had been provided.
The ruling: Judge David M, Lawson of the District Court for the Eastern District of Michigan declined to impose Rule 11 sanctions, finding that the complaint was not frivolous when filed. Judge Lawson noted it was “plausible” both that the defendant updated its reporting swiftly and that the plaintiff still received a report with outdated data days later. The court also rejected fee shifting under the FDCPA, finding no evidence the suit was brought in bad faith or for harassment.
- But the court found that section 1927 sanctions were warranted because the plaintiff’s counsel unreasonably multiplied the proceedings by refusing to dismiss the case after being supplied with what the judge described as “incontestable evidence” that the claim lacked merit.
- In a pointed critique, the judge wrote that the safe-harbor Rule 11 service “should have been reason enough for the plaintiff and his lawyer to realize that his lawsuit had no future.”
- The defendant is now permitted to seek reimbursement for the costs of preparing its summary judgment motion.
