Judge Remands FDCPA Class Back to State Court, Orders Defendant to Pay Fees

Trying to convince a federal judge that a plaintiff has standing to pursue a lawsuit is a tightrope walk for companies in the accounts receivable management industry. The company doesn’t want to admit to making a mistake, yet also needs to convince a judge that the plaintiff was harmed by whatever action he or she is alleging the defendant engaged in that led to the lawsuit being filed. A District Court judge in Illinois was not impressed with a defendant’s attempt to move a class action Fair Debt Collection Practices Act case from state court to federal court and has granted the plaintiff’s motion to remand the case back to state court, while also ruling that the defendant has to cover the plaintiff’s attorney fees for fighting the removal.

A copy of the ruling in the case of Keller v. Client Services can be accessed by clicking here.

The plaintiff received a collection letter from the defendant attempting to collect on an unpaid debt. The plaintiff’s attorney sent the defendant a letter seeking to verify the debt and notifying it that the plaintiff was represented by counsel. The defendant allegedly sent the plaintiff two additional collection letters. These new letters had a different reference number than the first one, but the amount and description of the debt matched what was in the first letter. The plaintiff filed a class-action lawsuit in state court, alleging the different reference numbers were misleading and that the letters were not sent to his attorney.

The demand moved the case to federal court, but the defendant moved to remand the case back to state court because he believed he lacked standing to sue in federal court.

The defendant attempted to use the ruling in Hunstein v. Preferred Collection & Management Services as proof that the plaintiff had suffered a concrete injury and thus had standing to sue in federal court.

But Judge Iain D. Johnston of the District Court for the Northern District of Illinois was not swayed by the defendant’s arguments, especially sitting in the Seventh Circuit, the epicenter of cases where plaintiffs have been found not to have standing unless they really suffered some form of concrete injury. On top of that, Judge Johnston noted that the Hunstein ruling out of the Eleventh Circuit was recently vacated and no longer has any precedential value.

Judge Johnston also noted that the defendant knew the plaintiff lacked standing on two of the three claims that were made, and should have known better than to try to remove the case to federal court. “…the practice of removing an action to federal court and then arguing against standing later is not reasonable,” Judge Johnston wrote. “Indeed, this practice violates the fundamental tenant of Rule 1. Client Services tried to have it both ways. It tried to overcome Keller’s choice of forum by removing to this Court, only to challenge the jurisdiction it had the burden of establishing and save for another day the argument that it fought against here. That is not reasonable; it serves no purpose but to delay litigation, unnecessarily increase the cost of litigation, and consume judicial resources that could be spent on the resolution of other matters before the Court.”

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