The Wisconsin Supreme Court has reversed a state appeals court certification of a class in a Fair Debt Collection Practices Act suit, ruling that a defendant may prevent a damages class action under the Wisconsin Consumer Act by offering an appropriate remedy to the individual plaintiff who brought the case, rather than to the entire proposed class. The court concluded that the lower courts relied on an incorrect interpretation of the statute governing consumer class actions.
The decision reverses both the circuit court and the Wisconsin Court of Appeals, which had previously allowed the case to proceed as a class action.
The background: The dispute began after the defendant sent the plaintiff a collection letter attempting to collect a debt owed to a third party. The letter advised the consumer that if she did not plan to pay the account, she should “contact your attorney regarding our potential remedies, and your defenses,” while also stating in smaller print that no attorney had personally reviewed the account at the time the letter was mailed.
- The plaintiff alleged that the language was confusing and misleading, claiming it created the impression that legal action might be imminent. After consulting with counsel, she filed a class-action lawsuit asserting violations of both the FDCPA and the Wisconsin Consumer Act.
- Before the class certification motion was decided, the defendant offered the plaintiff individual relief, including her actual damages, the maximum statutory penalty available under the Wisconsin Consumer Act, and a stipulation that it would stop using the contested language in future letters. The plaintiff rejected the offer and pursued class certification.
- Both the circuit court and the Wisconsin Court of Appeals sided with the plaintiff, reasoning that allowing defendants to resolve only the named plaintiff’s claims would undermine the purpose of consumer class actions.
The ruling: The Wisconsin Supreme Court disagreed, focusing on the language of the specific statute in question. The court explained that the statute establishes a pre-lawsuit mechanism allowing a potential defendant to resolve claims before a class action begins.
- Specifically, the statute states that “no action for damages may be maintained” if “an appropriate remedy” is provided within 30 days after receiving notice of the claim. The key question was whether the phrase “such party” referred to the entire class or only the individual bringing the lawsuit.
- The court concluded the statute clearly refers to the individual plaintiff. “The statutory text is quite clear who ‘such party’ is,” the court wrote. “The party sending the notice starts the 30-day clock … and the defendant must give or agree to give an appropriate remedy to such party.”
- Because the lower court’s class certification relied on a contrary interpretation of the statute, the Supreme Court held that the circuit court applied the wrong legal standard and improperly exercised its discretion. The case was remanded for further proceedings.
- Notably, the court declined to decide several additional issues raised by the parties, including whether the defendant’s proposed remedy was actually sufficient under the statute or whether the plaintiff’s federal FDCPA claims could still proceed.
