In a decision issued last Friday, chastising both the plaintiff’s lawyer and the district court, the Seventh Circuit rolled back the dismissal, for want of prosecution,  of a Fair Debt Collection Practices Act (FDCPA) case. It was abuse of discretion to dismiss plaintiff’s entire case – which included a meritorious FDCPA claim – just because the alleged class action claims were unsupported.

In Kasalo v. Harris & Harris, Ltd., Case No. 10-2755 (7th Cir. August 26, 2011), Kasalo sued Harris & Harris, Ltd., a collections agency, for violations of the FDCPA in connection with the attempted collection of an overdue hospital bill. While Harris & Harris admitted that at least one of Kasalo’s claims was meritorious, and that they intended to settle it, Kasalo’s lawyer undertook to transform the case into a class action (likely to increase the potential damages from the modest $1,000 amount allowed under the Act). Plaintiff’s lawyer included in the original complaint, two class counts, and then during the course of discovery, endeavored to add a third.

Despite the district court’s skepticism toward the class claims, it granted multiple extensions during which Kasalo’s lawyer was to develop a record which would support, at least preliminarily, the certification of a class. Months went by, and not only did the lawyer fail to provide a record, he repeatedly missed the district court’s briefing deadlines.

Finally, just before the lawyer’s late appearance to a status conference, the district court dismissed Kasalo’s entire case for want of prosecution, explaining that Kasalo’s lawyer had inexcusably failed to advance the case or develop the record with respect to the class claims. Kasalo’s lawyer immediately filed a motion to reconsider, but that motion was curtly denied.

In an opinion by Judge Wood, the Seventh Circuit reversed. Dismissal for want of prosecution – especially when there was no explicit warning of such possibility – was a far too harsh sanction. And, importantly, the district court completely ignored the fact that Kasalo’s non-class claim had merit, as was admitted by defendants. Indeed, Kasalo’s lawyer was “guilty of poor lawyering,” and the class claims were dubious at best, but both Fed. R. Civ. P. 41(b) and 23(c)(1)(A) provided the district court mechanisms to dismiss the class claims only. Had the district court considered its options, it could have saved the baby, and thrown out only the bathwater.