A Win for the Consumer Defense Bar
We are pleased to inform you of an exciting development in the law that will impact certain claims arising under Michigan consumer statutes.
The Michigan Court of Appeals recently issued its opinion in a case in which my partner Kate Klaus and I represented the defendant debt buyer, Rodriguez v. Hirshberg Acceptance Corp., — N.W.2d – (Mich. App. April 21, 2022), holding that a plaintiff may not bring a class action under the Michigan Regulation of Collection Practices Act (“RCPA”) or similar consumer laws. The plaintiff in Rodriguez claimed that our client filed a writ of garnishment that misrepresented the amount she owed, and she sought to certify a class under the RCPA.
The RCPA’s federal counterpart, the Fair Debt Collection Practices Act, provides for class relief, although it has a one-year statute of limitations and a cap on damages. The RCPA, on the other hand, has a six-year statute of limitations and no damages cap, and class actions under the statute could therefore be utterly ruinous for defendants. In fact, we have previously defended cases where the trial court did not accept our argument against class relief under the RCPA, and our clients were forced to enter into excessive class settlements.
In Rodriguez, however, the trial court agreed with our argument, which is that the Michigan Court Rules preclude actions based on claimed violations of statutes, such as the RCPA, that permit recovery of statutory damages in lieu of actual damages and do not expressly provide for class relief. As an issue of first appellate impression, the Michigan Court of Appeals has now issued a published decision affirming the trial court’s decision. The opinion rejects the plaintiff’s argument that the applicable Court Rule violates the separation-of-powers doctrine by impermissibly infringing on the Legislature’s domain of deciding whether to cap statutory damages, and holds that the plaintiff “was barred from maintaining a class action” under the RCPA and similar consumer statutes.
We believe Rodriguez is a very favorable decision pursuant to which plaintiffs in Michigan will no longer be able to argue that courts should certify a six-year class with no cap on damages. This should help protect the Michigan business community from devastating outcomes in cases that more often than not feature mere technical violations of consumer statutes with no actual damages.
As always, if you have any questions or would like to discuss these issues further, please do not hesitate to contact us at any time.