A federal judge’s rejection of a class action settlement Monday shows why it can be a bad idea to have too large a class, at least when suing under the Fair Debt Collection Practices Act.

What scotched the deal in Zimmerman v. Zwicker & Associates, 09-cv-3905, was an FDCPA provision that limits the recovery of class plaintiffs to $500,000 or 1 percent of the debt collector’s net worth, whichever is less.

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