The Court Cases That Shaped the ARM Industry in 2020

Twenty-twenty will easily be remembered as the year of the pandemic and will also easily be remembered as the year the Consumer Financial Protection Bureau released the long-awaited debt collection rule, but there were a lot of other important events that occurred this year that will shape the accounts receivable management industry for years to come. asked some of the leading legal and compliance experts to share the lawsuits they thought had the biggest impact on the ARM industry in 2020. Here is what they cited:

Brit Suttell, Barron & Newburger

While the term “biggest impact” is very broad and can be interpreted many ways, I would choose the group of cases regarding standing. In 2020, the Seventh, Eleventh, and D.C. Circuit Courts of Appeals all issued important decisions regarding standing in FDCPA cases.

  • Nettles v. Midland Funding, LLC, _ F.3d _, 2020 U.S. App. LEXIS 40012, 2020 WL 7488610 (7th Cir. Dec. 21, 2020). Article here.
  • Larkin v. Fin. Sys. of Green Bay, Inc., _ F.3d_, 2020 U.S. App. LEXIS 39058, 2020 WL 7332483 (7th Cir. Dec. 14, 2020). Article here.
  • Gunn v. Thrasher, Buschmann & Voelkel, P.C., _ F.3d _, 2020 U.S. App. LEXIS 39267, 2020 WL 7350278 (7th Cir. Dec. 15, 2020). Article here.
  • Brunett v. Convergent Outsourcing, Inc., _ F.3d _, 2020 U.S. App. LEXIS 39270, 2020 WL 7350277 (7th Cir. Dec. 15, 2020). Article here.
  • Spuhler v. State Collection Service, Inc., _ F.3d , 2020 U.S. App. LEXIS 39424, 2020 WL 7351098 (7th Cir. Dec. 15, 2020). Article here.
  • Bazile v. Fin. Sys. of Green Bay, Inc., _ F.3d _, 2020 U.S. App. LEXIS 39433, 2020 WL 7351092 (7th Cir. Dec. 15, 2020). Article here.
  • Trichell v. Midland Credit Mgmt., 964 F.3d 990 (11th Cir. Jul. 6, 2020). Article here.
  • Frank v. Autovest, 961 F.3d 1185 (D.C. Cir. June 9, 2020). Article here.

The Seventh Circuit takes the prize for the most decisions on the issue (they issued six in the week leading up to Christmas), but this is clearly an issue that has been picking up steam. One of the more important lessons from all these cases is that even though a consumer may have pled a sufficient cause of action to establish at the pleading stage, if they cannot continue to support their standing at the summary judgment their case may be subject to another standing challenge. It will be interesting to see how circuits opine on standing (if at all) in 2021.

Lauren Burnette, Messer Strickler

For me, the combination of Trichell v. Midland Credit Management, Inc. (article here) from the Eleventh Circuit and Mittenthal v. Florida Panthers Hockey Club, Ltd. is the perfect illustration of the double-edged sword that is Article III standing. Trichell really cemented (pun intended) the need for consumers to have concrete harm, making it much more difficult for cases like letter classes to survive in federal court. But Mittenthal, which came out days after Trichell, reinforces that an absence of Article III standing doesn’t necessarily mean the end of the case — in Mittenthal, the plaintiffs voluntarily dismissed their claims and re-filed them in state court, then challenged the defendants’ removal claiming they hadn’t pled and didn’t seek actual damages and thus had no Article III standing. We expect to see more of this in 2021 as more consumers test the industry’s willingness to litigate in state court.

Caren Enloe, Smith Debnam

I’m going to cheat a little bit here and point to an opinion that has not been rendered. In November, the United States Supreme Court heard arguments in Facebook v. Duguid, (article here) which marked the second time in six months that the Supreme Court turned its attention to the TCPA. In Facebook v. Duguid, the Supreme Court will address the definition of an automated telephone dialing system (“ATDS”) and whether it includes devices that can “store” or “automatically dial” telephone numbers irrespective of its capacity to use a random or sequential number generator.

A decision is expected in the first half of 2021 and regardless of where the court lands on the issue, its implications for the ARM industry are significant. A significant number of TCPA cases turn on the question of whether the technology used constitutes an ATDS. The Court’s decision may settle this question once and for all or further muddy the waters. Either way, it’s impact on the industry is significant as is the fact the Court seems willing to address the question.

Heath Morgan, Malone Frost Martin

2020 certainly saw its share of high profile cases that touch the industry including Justice Ginsberg’s last impression on the CFPB in the Supreme Court’s decision in CFPB v. Selia Law (article here) and Justice Amy Barrett’s decision in Gadelhak v. AT&T (article here) in February while she was still on the 7th Circuit. The Gadelhak decision has given the industry a possible preview of her approach to cases moving forward now that she is at the Supreme Court. We have also had a number of important decisions and cases such as Degroot v. Client Services (article here), that have helped shut down frivolous lawsuits, and even featured the first ever CFPB amicus brief on behalf of the industry.

But for me, the most impactful case on the industry was the Northern District of California’s decision in Greene v. TrueAccord (article here) which essentially has opened the door and provided a legal framework for email communications. Prior to Greene, the industry was stuck with a lot of questions and what not to do in regards to email communications in the aftermath of Med-1 v. Lavallee, and Greene provided that much welcome clarity from an unlikely source in California. The Greene decision has helped email communications gain more widespread industry adoption that consumers are asking and should help continue that adoption in the near future.

Rick Perr, Kaufman, Dolowich & Voluck

On March 30, the United States Court of Appeals for the Third Circuit, sitting en banc, decided Riccio v. Sentry Credit, Inc. (article here). This decision reversed an opinion on the books for close to three decades and brought symmetry throughout the United States Courts. It also ended hundreds of predatory lawsuits brought by plaintiffs’ lawyers throughout the years.

Previously, with tortured reasoning, the Court of Appeals had held in Graziano v. Harrison that only a written dispute triggered a collection agency’s obligation to mark a debt as disputed. This led collection agencies to implement specific practices within the initial validation period for Pennsylvania, New Jersey and Delaware.

Riccio restored some measure of sanity to nationwide debt collection, allowed agencies to accept verbal disputes and permanently stopped frivolous litigation that had been plaguing the industry for thirty years.

Stefanie Jackman, Ballard Spahr

There have been a number of important development in the accounts receivables industry this year. But, in light of Reg. F and the likely litigation to come seeking to define and scope the regulations new prohibitions, litigants may find the series of recent decisions refining and narrowing what is sufficient for Article III standing provide useful fodder for effective defensive litigation strategies. Decisions like Trichell v. Midland Credit Management, Inc., 4:18-cv-14144 (11th Cir. Jul. 6, 2020), Adams v. Skagit Bonded Collectors, LLC d/b/a SB&C Ltd., 2:19-cv-1005-TSZ (9th Cir. Dec. 2, 2020) (article here), Truckenbrodt v. CBE Grp., Inc., No. 2:19-cv-2870 (ERK) (SMG), (E.D.N.Y. Oct. 21, 2020) (article here) and many others over the past few years indicate a consistent focus by courts to ensuring Article III standing requirements are met and requiring plaintiffs to meet their burden in that regard. In defending against claims asserting violations of the FDCPA, debt collectors should consider raising lack of Article III standing as a defense when plaintiffs fail to assert concrete injuries caused by alleged FDCPA violations. Even when plaintiffs manage to allege prima facie concrete injuries in their complaints, do not forget that plaintiffs still will need to establish concrete injury to prevail on the merits and defendant should ensure courts require them to do so or else have their claims dismissed.

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