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violation was innocuous will not thwart a judgment, it may be considered in mitigating liability. §
1692k(b)(1). The $1,000 in statutory damages permitted is per proceeding, not violation. The statutory
damages have sometimes been characterized as punitive (Veach v. Sheeks, 316 F.3d 690, 692 (7th
Cir. 2003)), although the $1,000-per-case rule diminishes the force of that characterization somewhat.

In class actions, the court may award the statutory damages to each named plaintiff and an amount
for all other class members, without regard to a minimum individual recovery, not to exceed the lesser
of $500,000 or 1% of the net worth of the debt collector. § 1692k(a)(2)(B). In Sanders v. Jackson, 209
F.3d 998 (7th Cir. 2000), our court of appeals determined that net worth for purposes of this
cap was book value net worth, excluding goodwill. Subject to such cap, in determining the
amount of an award in a class action the court is to consider, among other things, the
frequency and persistence of noncompliance by the debt collector, the nature of such
noncompliance, the resources of the debt collector, the number of persons adversely
affected, and the extent to which the debt collector’s noncompliance was intentional. §
1692k(b)(2). All class actions under the FDCPA are actions for money damages requiring notice to
(and an opportunity to opt-out by) absent class members. Crawford v. Equifax Payment Services, Inc.,
201 F.3d 877 (7th Cir. 2000).

“Bona Fide Error” Defense. FDCPA § 1692k(c) provides that a debt collector “may not be
held liable in any civil action brought under this subchapter if the debt collector shows by a
preponderance of evidence that the violation was not intentional and resulted from a
bona fide error notwithstanding the maintenance of procedures reasonably adapted to
avoid any such error.” Usually the successful defense involves a clerical-type error or a
lack of knowledge. See Ross v. RJM Acq. Funding LLC, 480 F.3d 493 (7th Cir. 2007).
The defense does not apply for mistakes of law as to the act’s requirements. Jerman v.
Carlisle, McNellie, Rini, Kramer & Ulrich, __ U.S. __, 130 S.Ct. 1605 (2010). Moreover,
our circuit is fairly strict in requiring significant preventative procedures. See Ruth v. Triumph P’ships,
577 F.3d 790 (7th Cir. 2009); Seeger v. AFNI, Inc., 548 F.3d 1107 (7th Cir. 2008); but see Ross v.
RJM, cited above.

Reliance on FTC. The act provides that no provision of its civil-liability section (§ 1692k) “shall
apply to any act done or omitted in good faith in conformity with any advisory opinion of the [FTC].” §
1692k(e). This provision has not been liberally applied. See Gulley v. Markoff & Krasny, 664 F.3d

1073 (7th Cir. 2011); Carter v. AMC, LLC, 645 F.3d 840 (7th Cir. 2011).

Attorney Fees For Defendants. Upon a finding that an action was brought in bad faith and
for harassment, the court may award the defendant attorney’s fees reasonable in relation to the work
expended and costs. § 1692k(a)(3). However, to recover under this provision defendant apparently
must show that the entire suit, and not just a part of it, was brought in bad faith. Horkey v. J.V.D.B. &
Assoc., 333 F.3d 769 (7th Cir. 2003). If the case was brought in federal court, sanctions may be
available under Federal Rule of Civil Procedure 11 even if § 1692k(a)(3) is not met. Similarly, they
presumably could be available under Illinois Supreme Court Rule 137 if a bad faith suit were brought in
state court.

-- John T. Hundley, 618-242-0246, Jhundley@lotsharp.com
John\SharpThinking\#64.doc

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