iGovernor Tomblin recently signed into law S.B. 542 that amends several debt servicing and collection provisions of the West Virginia Consumer Credit and Protection Act (“WVCCPA”). The amendments, which variously take effect in June and September, significantly affect how consumer claims against creditors and debt collectors will be litigated in West Virginia.
Beginning in September, successful WVCCPA debtor plaintiffs may recover $1,000 per violation in addition to actual damages. The flat $1,000 per violation amount replaces a previous range of $100 to $1,000 that was subject to the discretion of the trial judge. The previous range actually was anywhere from $100 to approximately $4,800 per violation because of a separate statutory adjustment for inflation that also was subject to the discretion of the trial judge.
The separate statutory adjustment for inflation had been in effect since 1974, which led to an upper end of the range nearly five times the original maximum of $1,000. Now that the inflation adjustment has been reset to begin September 1, 2015, the $1,000 amount should not increase appreciably for a while. The decrease in the maximum per-violation amount from $4,800 to $1,000 should help WVCCPA defendants, but the loss of the $100 per penalty minimum could hurt.
Also, beginning in September, WVCCPA damages are capped at the greater of $175,000 or the amount of indebtedness. Previously, damages had not been capped, so a debt collection case with hundreds of call violations, for example, had potential damages in excess of $1 million. Now, WVCCPA defendants have greater certainty about their maximum exposure, but the $175,000 maximum still is a fairly large amount.
Overall, the changes to WVCCPA damages appear to be a mixed bag for creditor and debt collector defendants that warrant further analysis.
In a debt servicing/collection case alleging multiple telephone calls in violation of the WVCCPA, each violative call entitles the plaintiff debtor to a separate damages award. Under the previous scheme, some courts applied a sliding scale to award damages in multiple call cases. The earliest-in-time calls resulted in $100 per call penalties, the next calls were worth $200 per call, even later calls might be worth $500 per call, and so on. Now, each call that violates a WVCCPA debt collection provision is automatically worth $1,000.
The effect of that change on how debt collection plaintiffs plead and litigate their claims is not entirely clear. Previously, debt collection plaintiffs frequently sued in state court, alleged only WVCCPA violations, and stipulated that they would accept no more than $75,000 in damages, including attorney’s fees. Limiting the claims to state-law violations prevents removal to federal court based on federal question jurisdiction, and the $75,000 stipulation prevents a geographically diverse defendant from removing to federal court, because diversity removal requires that more than $75,000 be in controversy. In most cases, plaintiffs filed in state court and pursued settlements close to $75,000, rather than pursuing larger amounts in federal court.
With statutory damages now set at $1,000 per violation and with statutory fee-shifting to successful plaintiffs remaining, debt collection cases with only 40 or so violative calls are worth much closer to $75,000 than they previously were. Plaintiffs seeking to game the system may still file in state court, however. Now, WVCCPA plaintiffs may bring a series of cases on the same credit account, each for a discrete set of calls and each stipulating to no more than $75,000 in damages.
On the other hand, the $1,000 per violation amount coupled with the $175,000 cap on damages may lead WVCCPA plaintiffs to bring cases in federal court in the first place. A WVCCPA plaintiff may seek to increase her potential damages by including claims under federal statutes, such as the Fair Debt Collection Practices Act (FDCPA), the Fair Credit Reporting Act (FCRA), and the Telephone Consumer Protection Act (TCPA).
