Kasalo v. Harris & Harris, Ltd.

Kasalo v. Harris & Harris, Ltd.

Opinion

 [*558]  Wood, Circuit Judge. Mariana Kasalo sued Harris & Harris, Ltd., a collection agency, for violations of the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. The parties agree that Harris attempted to collect an overdue hospital bill from Kasalo in a way that  [*559]  violated the Act and that Kasalo is entitled at least to statutory damages of $1,000. See 15 U.S.C. § 1692k(a)(2)(A). A modest sum, to be sure, but one that Congress has deemed necessary to deter abusive collection practices and to compensate victims. Given the  [**2] parties' agreement, one might expect that the case would have been resolved long ago; and, indeed, the parties made clear to the district court at the very start of the litigation that they intended to settle Kasalo's individual claim. Yet here we are with an appeal from the district court's decision to dismiss the case for want of prosecution. We have reached this point because Kasalo's lawyer endeavored to transform the case into a class action, and the district court, frustrated by this effort, grew impatient and dismissed the whole action. The district court chose this course without considering its other options for whittling down claims or resolving the case outright. We are sympathetic to its view of the proposed class action, but we conclude that its decision to dismiss for want of prosecution was an abuse of discretion.

Kasalo's lawyer, J. Nicolas Albukerk, saw the potential for a class action in Kasalo's assertion that Harris had engaged in unlawful debt collection. He included in Kasalo's complaint two class counts, which charged that various materials used by Harris to collect debts—specifically the company's envelopes and payment reminders—violated the harassment, false  [**3] representation, and unfair practices provisions of the Act. See 15 U.S.C. §§ 1692d, 1692e, and 1692f. We have no way of knowing whether Albukerk included these class counts based on a genuine belief that they had merit or because he hoped for a more substantial settlement from Harris. What we do know is that the district court and Albukerk disagreed from the start about the possibility of moving the class claims forward.

After granting Harris an extension to answer the complaint, the district court held an initial status hearing. At that hearing the parties announced that they intended to settle Kasalo's individual claim; the district judge expressed doubt that it would ever certify a class; and Albukerk was granted a month to take depositions to explore whether either proposed class allegation was worth pursuing. After the hearing, Harris decided that rather than submit to depositions, it would provide Albukerk with affidavits and exhibits that it hoped would convince him that the unlawful effort to collect money from Kasalo was an aberration and that Harris's usual practices conformed to the Act.

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