Settlement Proposals can be Tricky

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Feb 09

A Plaintiff sued a collector under the Fair Debt Collection Practices Act for sending him a letter in an effort to collect a debt he claimed he did not owe. The envelope containing the letter revealed a bar code which contained some of the Plaintiff’s personal information. He sued, arguing that the mailing violated the FDCPA in several ways.

The Defendant made an offer of settlement for $1,101 plus costs to be awarded by the Court. The Plaintiff accepted.

Then in attempting to collect those costs to be awarded, the Plaintiff requested over $25,000 in costs and over $47,000 in punitive damages. The Court found that none of these were recoverable as costs.

The Plaintiff appealed to the 7th Circuit, and that Court affirmed the lower Court’s finding that the Plaintiff’s claims were not includable as “costs.” The 7th Circuit found that “costs” are enumerated under the statute 28 U.S.C. 1920, and do not include any kind of damages.

We try always to reduce any settlement proposal to writing, to avoid misunderstandings like this. They can be costly.

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