Superiority Not Defeated Just Because More Money Was Theoretically Available in Non-Class Proceedings

In Corvello v. Wells Fargo Bank, N.A., No. 10-cv-5072 (N.D. Cal.), the defendant contested class certification by arguing that class treatment would not be the superior form of adjudication.

Wells Fargo argued that whereas the FDCPA sets a $500,000 limit on statutory damages in class actions, class members could obtain up to $1,000 each in statutory damages if they proceeded individually.  In other words, absent class members would be better off without the class action device — they should file individual cases and claim their thousand dollars.

Judge Chhabria rejected the argument.  First, he noted that the statutory damages were not the sole source of damages available; class members may also be able to recover actual damages or restitution.  He went on to debunk the assumption that affected individuals would do better without the class device:

Moreover, even with respect to statutory damages, Wells Fargo appears to assume that every borrower who pursued [his or her] claim would be able to recover the maximum amount of statutory damages (namely, $1,000).  But the maximum statutory damages award of $1,000 is not automatic.  Instead, the amount of statutory damages (if any) depends on a court’s analysis of many factors.  Individual class members would not be sacrificing an automatic higher award of statutory damages, but the opportunity to argue for one on a case-by-case basis.

And that would be difficult to do, because the proposed class consists largely of financially distressed people — people who have been having trouble making their mortgage payments. It is likely that the large majority of these people would be unable to pursue a claim of any sort if required to proceed on their own. This itself is a factor weighing in favor of class treatment.

(emphasis added).