Compliance Digest – August 8

I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.

Every week, AccountsRecovery.net brings you the most important news in the industry. But, with compliance-related articles, context is king. That’s why the brightest and most knowledgable compliance experts are sought to offer their perspectives and insights into the most important news of the day. Read on to hear what the experts have to say this week.

Judge Partially Grants Defendant’s MSJ in FDCPA Case Over Location Information Calls

A District Court judge in New York has partially granted a defendant’s motion for summary judgment, denied the plaintiff’s motion for summary judgment in a Fair Debt Collection Practices Act case involving a pair of location information calls that were placed to the plaintiff’s mother. The ruling overturns a recommendation from a Magistrate Court judge that said the second location information call and a request from the defendant’s representative asking the mother to have the daughter call the defendant back were in violation of the FDCPA. More details here.

WHAT THIS MEANS, FROM LORAINE LYONS OF MALONE FROST MARTIN: This case provides a sensible approach to what is permitted under the FDCPA when seeking the consumer’s location information from a third party. Let’s break it down. The definition of a location information means where the consumer lives and their telephone number. Section 1692b of the FDCPA permits the acquisition of the consumer’s location information from third parties if certain steps are followed.

Can you leave a message with a third party when acquiring location information about the consumer? Here, the Court answered “yes” finding that the collection agent followed 1692b in seeking location information and asking for a call back was a reasonable request because the called party said that she could not give out the consumer’s contact information. Note, this is distinctive from where a collection agent leaves a message for the debtor after obtaining contact information. Under those circumstances, courts have found that the purpose of the call to obtain location information had been accomplished and that the calls did not comply with 1692b.

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Appeals Court Partially Overturns Ruling for Call Center Defendant in ADA, FMLA Case

The Court of Appeals for the Fourth Circuit has partially affirmed and partially overturned a lower court’s ruling in a disability discrimination case involving an employee at a call center who accused her former employer of violating the Americans with Disabilities Act and the Family and Medical Leave Act. More details here.

WHAT THIS MEANS, FROM CARLOS ORTIZ OF POLSINELLI: In a 2-to-1 decision, the Fourth Circuit reinstated a former call center employee’s disability discrimination claim after holding that genuine issues of material fact remained regarding whether the plaintiff’s employment was terminated due to her disability. Plaintiff had worked for a credit and debit card processing company for several years when she sustained injuries from an accident that was not job related. The plaintiff requested reduced work hours as an accommodation, and while the employer accepted her request, the plaintiff alleged she was warned by a supervisor a month later that her absences could result in dismissal. Although the warning was subsequently withdrawn, the plaintiff contended that a human-resources officer advised her to do what she needed to do keep her job. When the plaintiff requested to extend a reduced work schedule, she claimed that her supervisor responded with an example of how the plaintiff had violated a company policy. Ultimately, a material factor in the appellate court’s decision was evidence that the plaintiff had offered to the district court showing that other employees who were alleged to have also violated company policy, but were disciplined differently. Thus, the Fourth Circuit held that there was a genuine issue of material fact regarding whether the reason for the plaintiff’s termination was pretextual.

This case serves as an important reminder why employers should have a well-defined company policy on disability discrimination, and to ensure that individuals in management are well-trained in how to handle requests for job accommodations, including getting counsel involved early in the process.

Appeals Court Vacates Certification, Settlement in TCPA Case

The Court of Appeals for the Eleventh Circuit has vacated a lower court’s approval of class certification in a Telephone Consumer Protection Act case, ruling that some of the named plaintiffs in the class did not have standing to sue in federal court. More details here.

WHAT THIS MEANS, FROM DAVID SCHULTZ OF HINSHAW CULBERTSON: Drazen v GoDaddy has a bizarre procedural history. Three putative class action TCPA cases were consolidated and ultimately settled on a class basis. The court granted approval of the settlement but an objector complained about the coupon aspect of it and the amount of fees.  The court reduced the fees but allowed the settlement to proceed. The objectors appealed the certification ruling. Objections in class actions and appeals from them are rare.

The case took another turn on appeal. The 11th Circuit did not get to the objections. Instead, it turned to the Article III aspect of the case. There is relevant law that one text or call may not confer Article III standing. The 11th Circuit said that in light of the Ramirez v Transunion Supreme Court Article III ruling, each class member needs to have standing. It then remanded the case for the court to consider the impact of Ramirez v Transunion on the certified class. It thus undid, at least for now, the class settlement.

This is another example of the significant impact Ramirez v Transunion has on consumer and class action litigation. 

Judge Invokes Hunstein Rulings in Dismissing FCRA Case for Lack of Standing

A District Court judge in New York has dismissed a plaintiff’s Fair Credit Reporting Act case, ruling he lacks standing to sue because his claims that factually inaccurate information about his credit report were disseminated to a third party — a credit reporting agency, in this case — and that the failure to note an account as disputed lowered his credit scores, were not enough to meet the standing threshold. More details here.

WHAT THIS MEANS, FROM JESSICA KLANDER OF BASSFORD REMELE: The plaintiff’s claim was based on the allegation that his debt was “falsely” reported as “charged off” despite containing a $0 balance which apparently negatively impacted his credit score. The defendant moved to dismiss, arguing that this allegation failed to state a claim because it was factually accurate (and consistent) to report the debt as both “charged off” and with a $0 balance – both were true statements. The court, acting sua sponte, instead analyzed the claims for lack of standing and ultimately concluded that the plaintiff had failed to allege a concrete harm. Without standing, the federal court lacked jurisdiction to decide the merits of the claim and dismissed the claim without prejudice. And that is the critical issue in these standing cases. A dismissal for lack of standing in the federal court results in a dismissal without prejudice. The effect of a dismissal without prejudice is that it provides the plaintiff with an opportunity to re-file the claim – either in federal court (assuming the plaintiff can remedy the standing issue and isn’t past the statute of limitations) or in state court, where the outcome can be unpredictable and inconsistent from court to court. Of course, a dismissal without prejudice is still a win, but it isn’t a complete win.  To be sure, it does create another obstacle for plaintiffs filing technical and nuanced claims but it doesn’t dispose of them entirely. The impact of these incomplete wins is that it raises the incentive to settle – to avoid the money and expense of a partial win based on lack of standing – which, in turns, emboldens the plaintiff’s bar to continue filing such claims. Fighting these claims (both in federal and state courts) is important because it creates supporting state law (to dispose of such future claims in state courts) and acts as a barrier to meritless claims based on ticky-tacky technical violations in federal courts. 

Judge Grants MTD in FDCPA Case over Calls Made Post-BK Filing

A District Court judge in Illinois has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case, ruling that the plaintiff lacked standing to sue after being called three times by the defendant following the plaintiff filing for bankruptcy protection. More details here.

WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: Here is another case – but not a Hunstein case – decided largely on standing grounds. The consumer plaintiff alleged that the debt collector violated the FDCPA by attempting to call her three times to try and collect her debt after she had filed a Chapter 13 Bankruptcy petition. The federal District Court judge dismissed the FDCPA claims without prejudice in this short opinion, saying that the consumer lacked standing because she could not demonstrate any actual harm or injury from the alleged phone calls, because the consumer did not allege that she had taken any action to her detriment as a result of the phone calls. The court also cited U.S. Supreme Court precedent to hold that a civil court should not interpret FDCPA claims in a bankruptcy context. It will be interesting to see if the Plaintiff files her claims again as an adversary proceeding in her Bankruptcy case. If she does, it appears (appropriately) that her success there will depend on whether she can demonstrate actual harm resulting from the alleged calls.

CFPB Publishes More Reg F FAQs, Addressing Electronic Communications and Inconvenient Times & Places

Even though Regulation F has been in effect for nearly eight months, the Consumer Financial Protection Bureau is still publishing guidance to help companies in the accounts receivable management industry comply with the rule. Yesterday, the Bureau published a new set of Frequently Asked Questions related to electronic communications and communicating during unusual or inconvenient times or places. More details here.

WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER: The CFPB’s recent additions to its existing Reg. F FAQs relating to electronic communications do not contain much in the way of any surprises. In light of one of the main thrusts of Reg. F: putting consumers in the driver’s seat regarding when and how they are contacted about their debts,  the interpretations in the FAQs are really self-evident. The rule made no secret of this goal and the FAQs reveal a straightforward. common sense approach to understanding what is and is not acceptable when it comes to using electronic communications and respecting consumer preferences in connection with collecting debt.

Judge Denies MTD in FDCPA Case Over Collection Fee

A District Court judge in New Jersey has denied a defendant’s motion to dismiss and a motion for sanctions against the plaintiff in a Fair Debt Collection Practices Act case that is accusing a law firm of improperly adding a collection fee in an itemization table included in a summons that was attempting to recover an unpaid medical debt. More details here.

WHAT THIS MEANS, FROM CAREN ENLOE OF SMITH DEBNAM: This case is notable for two reasons. First, it reflects the divergent views in the Third Circuit in the district courts with respect to Article III standing and informational injuries. Similar to the courts in Ozturk v. Amsher Collection Services, 2022 U.S. Dist. LEXIS 91078 (D.N.J. May 20, 2022)and Velez-Aguilar v. Sequium Asset Solutions, 2022 U.S. Dist. LEXIS 8842 (D.N.J. Jan. 18, 2022), the district court in Louis held that an informational injury was enough to establish Article III standing absent actual damages, relying upon the Circuit’s pre-TransUnion case law. It should be noted that other courts in the Third Circuit have held otherwise. See, e.g., Rodriguez v. Awar Holding, Inc., 2022 U.S. Dist. LEXIS 28313 (D.N.J. Feb. 15, 2022); Oh v. Collecto, Inc., 2021 U.S. Dist. LEXIS 159187 (D.N.J. Aug. 23, 2021). These divergent view points should be kept in mind by those defending FDCPA actions in federal courts in the Third Circuit.

Secondly, the case is notable because it serves as a reminder that the formal pleading exemption set forth in the FDCPA is narrow and that only 15 U.S.C. §1692e(11) and §1692g(d) (both of which refer to initial communications) contain exemptions for formal pleadings. In Louis, the plaintiff alleged that the amounts set forth in the summons and complaint included a collection fee which was neither authorized by the agreement with the creditor nor permitted by law. Because the consumer focused on the amounts claimed rather than the timing of the communication (specifically, its timing vis-à-vis the initial communication), the pleadings were not exempt from coverage and thus, not subject to dismissal.

I’m thrilled to announce that Bedard Law Group is the new sponsor for the Compliance Digest. Bedard Law Group, P.C. – Compliance Support – Defense Litigation – Nationwide Complaint Management – Turnkey Speech Analytics. And Our New BLG360 Program – Your Low Monthly Retainer Compliance Solution. Visit www.bedardlawgroup.com, email John H. Bedard, Jr., or call (678) 253-1871.

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