Background
George Badeen and Midwest Recovery and Adjustment, Inc. brought a putative class action against forwarding companies, lenders, and other entities involved in automobile repossessions and debt collection. Plaintiffs alleged that the defendants’ business practices violated Michigan’s Occupational Code and Regulation of Collection Practices Act, among other asserted grounds for relief. Both statutes provide for actual damages or $50, whichever is greater, with enhanced recovery available for willful violations.
Relying on the Michigan Court of Appeals’ decision in Rodriguez v. Hirshberg Acceptance Corp., the Wayne Circuit Court dismissed the entire case under MCR 2.116(C)(8). Although the Michigan Supreme Court later vacated Rodriguez as moot, plaintiffs appealed the dismissal and argued that MCR 3.501(A)(5) did not bar class claims seeking actual damages and, in any event, did not justify dismissing their individual or other potential claims.
The Court’s Holding
The Court of Appeals held that MCR 3.501(A)(5) bars class actions seeking recovery under statutes that mandate a minimum recovery without regard to actual damages unless the statutes specifically authorize class recovery. Because the Occupational Code and the Regulation of Collection Practices Act require recovery of actual damages or $50, whichever is greater, and neither statute specifically authorizes class actions, the rule precluded plaintiffs’ class claims for damages under those statutes. Characterizing the requested relief as actual damages did not avoid the rule because the statutory minimum applies automatically whenever actual damages are less than $50.
The court nevertheless held that MCR 3.501(A)(5) applies only to class actions and therefore did not authorize dismissal of plaintiffs’ individual claims. It also vacated the dismissal of any other class claims not based on the two statutes, without deciding whether such claims existed or were otherwise viable. The court affirmed in part, vacated in part, reversed in part, and remanded for further proceedings.
Key Takeaways
- MCR 3.501(A)(5) bars class recovery under a statute that mandates minimum damages regardless of actual loss unless the statute specifically authorizes class actions.
- A plaintiff cannot avoid the rule by requesting only actual damages when the governing statute makes a higher statutory minimum mandatory.
- The rule does not bar individual claims, and the trial court erred by dismissing plaintiffs’ entire case on that basis.
Why It Matters
The decision restricts the use of Michigan class actions to pursue damages under the Occupational Code and the Regulation of Collection Practices Act, even though the prior appellate precedent reaching the same interpretation had been vacated. The court independently adopted that interpretation from the text of MCR 3.501(A)(5).
At the same time, the ruling confirms that the class-action limitation does not eliminate an individual claimant’s statutory causes of action. It also leaves the trial court to determine whether plaintiffs pleaded other class claims not premised on the two statutes and, if so, whether those claims may proceed.