FDCPA Defense trick – Offer of Judgment

Many years ago, I heard attorney Manny Neuburger talk about the power of using an offer of judgment in the defense of a Fair Debt Collection Practices Act claim. Manny is a Texas attorney and a giant when it comes to the defense of FDCPA cases. He said that one of the best defense techniques that a defendant can interpose in litigation is an offer of judgment.
Under an offer of judgment under FRCP 68, the defendant offers to give the Plaintiff a judgment for a certain amount. There are great tactical advantages to this. First, if the offer of judgment is accepted, the Defendant is able to cap its damages. Secondly, if the offer is accepted, the Defendant is also able to effectively end the litigation and curb further attorneys’ fees in its defense. Thirdly, if the offer is NOT accepted, then the Plaintiff runs the risk of having to pay the Defendant’s attorneys’ fees if the Plaintiff does not get a judgment that is greater than the offer made in the offer of judgment. But wait…now there is more.
The United States District Court for Western District of Kentucky recently held in Tallon v Lloyd and McDaniel et al, (3:06CV-314-H) that when a defendant makes a good enough offer of judgment, that it can actually get a case dismissed on the grounds of mootness. That is great news for defense counsel in FDCPA litigation. In a nutshell, one of the defendants was a law firm that was accused of violating the FDCPA by sending garnishments to several banks in an area local to the Plaintiff/Debtor. The debtor sued stating that the blind garnishments violated the FDCPA. The court held that inasmuch as the Defendant offered to pay the Plaintiff the maximum that the Plaintiff could recover in this litigation, that the case should be dismissed on the basis of mootness. The court reasoned that the defendants have offered to satisfy all of the Plaintiff’s monetary claims and the Plaintiff’s claims are now moot. Even though the Plaintiff did not accept the Defendant’s offer of judgment, the court appears to have made that acceptance on behalf of the Plaintiff anyway.
The court granted the Defendant’s Motion to Dismiss the case by entering a judgment in favor of the Plaintiff for the $1,055; the amount of the offer of judgment. The court stated that it would enter the judgment pursuant to FRCP 68 which is the Offer of Judgment Rule. But, one question not answered by the court is whether it will now assess costs against the Plaintiff for failing to timely accept the offer. After all, the Plaintiff did not better its position in the litigation after failing to accept the offer. I suspect that there will be a subsequent motion to determine these costs.

This entry was posted on Thursday, August 2nd, 2007 and is filed under Debt Collection Tricks and Traps . You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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