The Michigan Court of Appeals has upheld the dismissal of a post-judgment interest class-action on the grounds that state law in Michigan that precludes “actions” based on claimed violations of statutes that permitted recovery of statutory damages in lieu of actual damages means the plaintiff lacks standing to sue.
A copy of the ruling in the case of Rodriguez v. Hirshberg Acceptance Corp. can be accessed by clicking here.
The plaintiff defaulted on a $900 credit card debt. The debt was subsequently sold, and with post-judgment interest, increased to more than $6,200. The plaintiff was sued and did not respond to the complaint. After obtaining a default judgment, the defendant began attempting to collect by filing writs of garnishment. The plaintiff filed suit in federal court, alleging violations of the Fair Debt Collection Practices Act case, but the case was dismissed as a result of a procedural error. The plaintiff then filed suit in state court in Michigan, but the defendants removed the case to federal court and the FDCPA claim was dismissed, leaving only the state law claim, which meant the case was remanded back to state court. The state court judge dismissed the suit, ruling the plaintiff lacked standing, which the plaintiff appealed.
Ultimately, state law in Michigan requires that “An action for a penalty or minimum amount of recovery without regard to actual damages imposed or authorized by statute may not be maintained as a class action unless the statute specifically authorizes its recovery in a class action.” In this case, the law in question — Michigan Regulation of Collection Practices Act — does not contain a provision permitting class actions and permits the recovery of statutory damages.
The Appeals Court ruled that the lower court was correct in determining that the plaintiff was “barred from maintaining a class action.”
Even if she attempted the plead individual claims, the case would also not be allowed to proceed, the Appeals Court noted, because the actual damages in this case are not high enough to meet the jurisdictional threshold in Michigan.