Judge Grants MTD in FDCPA Case Against Alleged Scammers

A District Court judge in Michigan has dismissed a Fair Debt Collection Practices Act class-action against a collection law firm and three attorneys — who have been charged separately with multiple felonies for allegedly forging proofs of service in collection lawsuits — ruling that the plaintiffs lacked standing to sue because they did not suffer any harm from the claims made by the plaintiffs.

A copy of the ruling in the case of Kline v. Fishman Group can be accessed by clicking here.

In April 2021, the three attorneys working for the firm were accused of operating a scheme through which they allegedly forged documents that were filed in state court for at least 30 cases seeking to collect on debts that the individuals being sued did not owe. The lawyers submitted documents claiming that individuals had been properly served with summonses and complaints, but none of the debtors were able to be located.

In this case, a married couple and an individual filed suit, alleging that they were never served with documents related to collection lawsuits that were filed against them. In both cases, default judgments were entered against the plaintiffs, garnishments were issued, and the garnishees withheld money to be paid toward the debts in question.

The issue, for Judge Nancy G. Edmunds of the District Court for the Eastern District of Michigan, were the allegations and claims made by the plaintiffs in their complaint. For example, the plaintiffs claimed that the defendants conveyed false information regarding their financial information to third parties, but did not include “any allegations regarding harm to their reputations or emotional distress,” Judge Edmunds noted. For those looking for Hunstein connections, Judge Edmunds also noted that the fact that default judgments are public record was not enough to confer standing for the plaintiffs because the plaintiffs “do not allege that the underlying debts are not owed or otherwise explain how the default judgments are defamatory or harmful to their reputations.”

The plaintiffs also claimed they were deprived their right to be heard as a result of the fraudulent proofs of service, but failed to allege this in their complaint as well, Judge Edmunds wrote.

Even incurring monetary loss as a result of the garnishments was not enough because the plaintiffs did not meet their “burden of clearly alleging facts demonstrating concrete harm,” Judge Edmunds wrote.