Stark v. Sandberg, Phoenix & von Gontard, P.C.

[David A. Szwak]

Stark v. Sandberg, Phoenix & von Gontard, P.C.
381 F.3d 793
C.A.8 (Mo.),2004.
August 26, 2004

Background: Consumer debtors sued to confirm arbitrator's award on their Fair Debt Collection Practices Act (FDCPA) claims. The United States District Court for the Western District of Missouri, Ortrie D. Smith, J., entered order vacating in part the arbitrator's award, and debtors appealed.

Holdings: The Court of Appeals, Bye, Circuit Judge, held that:
(1) damages clause in arbitration agreement between lender and borrowers, providing that both parties waived right to punitive damages to fullest extent permitted by governing law, could not be utilized by lender's assignee in attempt to insulate itself from liability for punitive damages for its deliberate or reckless violation of borrowers' Fair Debt Collection Practices Act (FDCPA) rights; and
(2) arbitrator's decision to award $6 million in punitive damages, representing one-tenth of one percent of shareholder equity in corporate debt collector, to consumer debtors who succeeded in showing multiple violations of the Fair Debt Collection Practices Act (FDCPA) in debt collector's continued contacts with them after it had been notified of their having obtained legal representation was not in “manifest disregardâ€