Judge Stays FDCPA Case Against Law Firm Pending SCOTUS Ruling on CFPB

A District Court judge in New York has stayed a case against a collection law firm that was being sued by the Consumer Financial Protection Bureau for allegedly violating the Fair Debt Collection Practices Act by misrepresenting that attorneys were meaningfully involved in lawsuits.

The stay in the case of Bureau of Consumer Financial Protection v. Forster & Garbus is related to the Supreme Court’s decision to hear arguments in the case of Seila Law v. CFPB over the constitutionality of the agency’s leadership structure. The defendants had requested the stay, pending the Supreme Court’s decision to hear arguments in the case.

Judge Sandra Jeanne Feuerstein of the District Court for the Eastern District of New York agreed to close the case with leave to restore on 10 days notice in no event later than April 22, 2020.

“We asked for a stay immediately after Director Kraninger changed the Bureau’s position and sided with the Department of Justice,” said Joann Needleman, partner with Clark Hill PLC, who is representing Forster & Garbus. “We could not see how it would be prudent and to proceed with extensive discovery under the circumstances. The court agreed over the very vocal objections of the Bureau, who argued that our request was based on an ‘exaggerated hypothetical’. The court found that the status of the Bureau’s structure was extremely relevant to the determination of whether they could proceed forward with their case against our client.”

Forster & Garbus were sued by the CFPB in May after the agency accused the firm of using non-attorney support staff and a “cursory and deficient review” of accounts to collect on 99,000 debts during the past five years. The firm allegedly collected “substantial sums of money from consumers who may not actually owe debts or may not owe debts in the amounts claimed in the collection suits,” according to the complaint.

Forster & Garbus responded to the suit, denying all of the allegations made by the CFPB.

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