David Tourgeman v. Nelson & Kennard
900 F.3d 1105
| 9th Cir. | 2018Background
- Tourgeman purchased a computer on credit; the debt was serviced/sold and ultimately collected by Collins/Paragon and the law firm Nelson & Kennard, which sent collection letters and filed a state-court complaint that misidentified the original creditor.
- Tourgeman sued under the FDCPA for false, deceptive, or misleading representations (15 U.S.C. § 1692e); a class was certified.
- On remand from this Court (which found the misidentifications material as a matter of law), the district court dismissed most claims and reserved a complaint-based class statutory-damages claim for trial.
- The FDCPA caps class statutory damages at the lesser of $500,000 or 1% of the debt collector’s net worth (15 U.S.C. § 1692k(a)(2)(B)); the statute is silent on which party must introduce net-worth evidence.
- The district court held that the plaintiff (Tourgeman) bore the burden to produce evidence of the defendant’s net worth; because Tourgeman offered no competent net-worth evidence, the court dismissed the class statutory-damages claim.
- Tourgeman appealed the burden-allocation ruling; the Ninth Circuit affirmed, holding that the plaintiff must introduce evidence of the defendant’s net worth to establish entitlement to class statutory damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which party bears the burden to produce evidence of a debt collector’s net worth for calculating the FDCPA class statutory-damages cap? | Tourgeman: Defendant (Nelson & Kennard) should bear the burden because it has superior access to its financial records. | Nelson & Kennard: Plaintiff should bear the burden; statute does not reallocate the default plaintiff burden. | Held: Plaintiff bears the burden of producing net-worth evidence; net worth is essential to establishing the statutory cap under § 1692k(a)(2)(B). |
| Whether net worth is an affirmative defense that shifts production burden to defendant | Tourgeman: Net worth should functionally be treated like a defendant-controlled fact/defense. | Nelson & Kennard: Net worth is not an affirmative defense; Congress made it part of plaintiffs’ entitlement calculation. | Held: Net worth is not an affirmative defense; Congress required net-worth evidence as part of plaintiffs’ case. |
| Whether statutory structure permits skipping cap and using § 1692k(b) factors before net-worth showing | Tourgeman: The factfinder can award damages under § 1692k(b) and defendant later limits award by proving net worth. | Nelson & Kennard: § 1692k(a)(2)(B) requires determining net worth (the cap) before applying § 1692k(b) factors. | Held: Court must determine the statutory cap (net worth) first; plaintiffs must present net-worth evidence before § 1692k(b) factors are applied. |
| Whether superior access to financial records requires shifting burden to defendant | Tourgeman: Defendant has superior access; fairness requires defendant produce net-worth evidence. | Nelson & Kennard: Discovery tools and protective orders mitigate access concerns; statute controls burden. | Held: Superior access is not a statutory basis to shift the production burden; plaintiffs had discovery opportunities and the default rule applies. |
Key Cases Cited
- Schaffer ex rel. Schaffer v. Weast, 546 U.S. 49 (2005) (default rule: plaintiff bears burden of proof absent statutory indication otherwise)
- Sanders v. Jackson, 209 F.3d 998 (7th Cir. 2000) (FDCPA makes class damages dependent on defendant’s net worth)
- Evankavitch v. Green Tree Servicing, LLC, 793 F.3d 355 (3d Cir. 2015) (discusses burden on defendant when statute uses "unless" language and distinguishes affirmative defenses under FDCPA)
- Hernandez-Miranda v. Empresas Diaz Masso, Inc., 651 F.3d 167 (1st Cir. 2011) (Title VII damages-caps applied after verdict; defendant must move to impose cap and present evidence)
- Thomas v. George, Hartz, Lundeen, Fulmer, Johnstone, King, & Stevens, P.A., 525 F.3d 1107 (11th Cir. 2008) (plaintiffs not at unique disadvantage in discovery of defendant’s financials)
- Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573 (2010) (context on FDCPA structure and exceptions)
- Meacham v. Knolls Atomic Power Lab., 554 U.S. 84 (2008) (statutory placement of exceptions can indicate affirmative defenses)
- Kemezy v. Peters, 79 F.3d 33 (7th Cir. 1996) (contrasting treatment where punitive damages do not require wealth evidence)