Judge Denies Competing Summary Judgment Motions in Class-Action FDCPA Case

Was it a perfect storm of mistakes or was it something that could have been avoided? A judge in the Eastern District of Pennsylvania can’t seem to make a determination so he’s leaving it for a jury to decide.

The judge, Edward Smith, has denied motions for summary judgment from both the plaintiff and the defendant in a class-action lawsuit alleging violations of the Fair Debt Collection Practices Act when a collection agency accidentally aged accounts following an inputting error, even though the agency removed or subsequently updated all of the tradelines in the affected individuals’ credit reports.

AccountsRecovery.net has written about this case before, back in March, when Judge Smith “reluctantly” granted class-action certification in the case. A copy of the most recent ruling in Corinne O’Dell v. National Recovery Agency can be viewed by clicking here.

Judge Smith lays out his reasoning why the competing motions for summary judgment are being denied in the footnotes of his order, saying it is possible that a jury could decide that the defendant had policies and procedures “reasonably adapted to avoid any such error,” in using the bona fide error defense within the FDCPA, or that the defendant did not have the policies and procedures in place and that’s why the violation occurred.

The plaintiff had eight debts with a healthcare organizations. The debts were subsequently placed with the defendant, a collection agency, which reported the debts to the credit bureaus. The healthcare organization then recalled all of the accounts as part of an upgrade to its computer systems. Once the upgrades were completed, the accounts were placed back with the defendant. The defendant, when it received the debts a second time, listed them as new on the plaintiff’s credit report, instead of returned. The defendant also issued new account numbers, reported the ‘date placed for collection’ as the date the accounts were returned and inputted, and also reported the ‘date of first delinquency’ as the date the accounts were returned and inputted.

The plaintiff sued, saying that the new dates meant that the debts would now stay on her credit report longer. The defendant, which had removed or updated the tradelines, argued that the plaintiff had not suffered an injury in fact under the Article III requirement for standing.

Judge Smith said a jury could see it either way.

Here, a reasonable jury could find that NRA had implemented and maintained procedures reasonably adapted to avoid this error. The error — improperly aged trade lines placed on O’Dell’s and the class members’ credit reports — occurred when NRA received accounts from Lancaster General Health that Lancaster General Health had previously pulled from NRA due to Lancaster General Health’s computer system upgrade. At the same time, NRA happened to also be upgrading its computer systems. Needless to say, a combination of nearly unforeseeable circumstances caused this error. Moreover, as NRA appears to have removed the trade lines before they did any real damage, the error resulted in a minute, borderline de minimis injury. Given the unlikelihood of the harm and its seemingly inconsequential nature, a reasonable jury could conclude that NRA’s generalized compliance measures were reasonably adapted to avoid this error.
But a reasonable jury could also find that NRA did not have procedures reasonably adapted to avoid this error. As O’Dell points out, dates of first delinquency and placement on trade lines should always be different. When NRA re-listed the accounts at issue, the dates of first delinquency and placement were the same. Thousands of accounts placed with NRA had this error, yet NRA did not catch it for months. O’Dell contends that — despite the unlikely circumstances giving rise to the error — reasonably adapted compliance procedures should have caught it. A reasonable jury could agree.


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