Defendants in Fair Debt Collection Practices Act (FDCPA) cases rarely get relief for their legal defense costs even if they succeed on the merits. The Eastern District of New York (E.D.N.Y.), however, has drawn the line. In Cameau v. National Recovery Agency, Inc., Case No. 15-cv-2861 (E.D.N.Y Sep. 28, 2018), the court sanctioned plaintiff and his counsel for not dismissing or amending a complaint when it became clear that it was no longer supported by the evidence.
Factual and Procedural Background
At some point, plaintiff incurred a debt that was later assigned to National Recovery Agency, Inc. for collection. Plaintiff returned a telephone call where, according to the complaint, the National Recovery representative refused to identify the company he was calling from.
During plaintiff's deposition, plaintiff admitted that he had little to no recollection about the allegations made in the complaint. Based on the deposition testimony, National Recovery's defense counsel sent a safe harbor letter to plaintiff's counsel requesting dismissal of the complaint. Since plaintiff's counsel did not respond to this letter, National Recovery moved for summary judgment, for attorneys' fees, and for sanction.
The magistrate judge reviewing the matter recommended that the court deny the motion for attorneys fees but grant the motion for summary judgment and motion for sanctions.
Plaintiff's counsel filed an objection to the magistrate judge's report and recommendation. With his objection, plaintiff's counsel included a recording of the call that took place between plaintiff and National Recovery. The call recording clearly shows that (1) defendant never asked who was calling and (2) that the representative stated he was calling from National Recovery immediately after identifying his name.
The court adopted the magistrate judge's recommendations and granted National Recovery's motion for summary judgment and motion for sanctions. At the time the magistrate reviewed the motions, the call recording was not yet submitted. However, the magistrate found that the deposition testimony contradicts the allegations made in the complaint. Due to this contradiction, plaintiff's counsel "had a duty to... either withdraw certain claims or amend his allegations to conform to the newly discovered evidence (or lack thereof)." Plaintiff's counsel did neither.
Reviewing the call recording, the court determined that the magistrate judge's recommendations hold even more weight. The call recording itself shows that the key factual allegations in the complaint were contradictory to what occured in the call. The court found that plaintiff's counsel failed to comply with Rule 11 of the Federal Rules of Civil Procedure that requires attorneys to verify that the allegations in their complaints have or will have evidentiary support.
Further, the court found that sanctions are appopriate due to plaintiff's counsel's failure to respond to the safe harbor letter sent by National Recovery's defense counsel. By failing to respond and acting "objectively unreasonably" in response to the letter, National Recovery was forced to file a motion for summary judgment on the issue.
Ultimately, the court sanctioned plaintiff and platinff's counsel jointly and severally for National Recovery's legal fees associated with the motion for summary judgment.
The court here showed that even plaintiffs and their counsel have consequences for their actions. Interestingly, the court did not just sanction plaintiff's counsel, but instead also sanctioned the plaintiff. When parties are jointly and severally liable, it means the party entitled to relief may seek the full amount from either of the other parties.
While it is good to see E.D.N.Y. draw the line, it could be argued that the court did not go far enough. Plaintiff's counsel was in possession of the call recording, as shown by him presenting the recording to the court. The court should have inquired into how long ago platintiff's counsel had the call in his possession. Let's say for argument's sake that plaintiff's counsel had possession of the call recording prior to filing the complaint, wouldn't it mean that he filed a complaint not supported by the evidence? If that is the case, wouldn't it make sense then that the sanctions cover any litigation procedure that stemmed from this complaint, including responding to the complaint and taking plaintiff's deposition?