17 Cent Recovery to Members Sinks Class Deal

Class Action Litigation Report® is a one-stop resource for tracking the most important class-action and multi-party litigation across the nation, and across all subjects with particular focus on...

By Perry Cooper

Feb. 22 — A deal resolving unfair debt collection allegations that would have netted class members a “meaningless” 16.5 cents each was properly denied class certification, the Second Circuit ruled.

Jeffrey Gallego reached a settlement with Northland Group Inc., which he alleged violated the Fair Debt Collection Practices Act by sending him and other would-be class members a debt collection letter that didn't give contact information required under New York law.

The district court refused to certify the class for settlement purposes. It held that a class action wasn't a superior method for resolving the suit where the cost of getting notice to the class members would far exceed the payout to each class member. It also dismissed the suit for lack of subject-matter jurisdiction, finding Gallego failed to state a claim under the FDCPA.

The U.S. Court of Appeals for the Second Circuit affirmed the class certification denial in a Feb. 22 opinion by Judge Gerard E. Lynch.

But it found that “Gallego's FDCPA claims meet the very low threshold required to support federal-question jurisdiction, despite their ultimate lack of merit,” and remanded for further proceedings.

Joseph K. Jones in New York represented the plaintiff.

Blank Rome LLP represented the defendant.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Nicholas Datlowe at ndatlowe@bna.com