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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 Grants MTD in FDCPA Case Over Text Messages
A lesson to plaintiffs everywhere – make sure to mind your P’s and Q’s. A District Court judge in Georgia has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case, ruling that the statute of limitations on the alleged violation had expired because the plaintiff first filed the suit in a different jurisdiction and left off a letter in the defendant’s name, thereby rendering it impossible to know it had been sued. More details here.
WHAT THIS MEANS, FROM VIRGINIA BELL FLYNN OF TROUTMAN PEPPER: Details matter. For the plaintiff in Strange v. SPP, Inc., getting the defendant’s name wrong cost him his Fair Debt Collection Practices Act (“FDCPA”) claim. The plaintiff originally filed suit against “SP Processing, LLC” in the federal district court for the District of Arizona. After obtaining a default judgment, the plaintiff realized that he should have sued SPP, Inc., not “SP Processing,” and that the correct venue was the Northern District of Georgia. The court granted the plaintiff’s motion to transfer. In the Northern District of Georgia, the court then permitted the plaintiff to substitute the correct defendant, based on the apparent lack of prejudice at that time, but ordered him to file an amended complaint in the correct jurisdiction and serve it on the correct defendant. By the time the plaintiff filed the amended complaint, which asserted claims under Georgia law as well as the FDCPA claim, the FDCPA’s one-year statute of limitations had run, and the now-served SPP, Inc. moved to dismiss on that basis.
The court granted SPP’s motion to dismiss the FDCPA claim and declined supplemental jurisdiction over the related state law claims. The court ruled that the amended complaint did not relate back to the original filing in the District of Arizona because the defendant was not put on notice of the claim by the first complaint, and certainly not within the 90 days permitted for service. As a result, the plaintiff may still try his luck on the state law claims in state court, but will not be able to pursue his central FDCPA claim. Both plaintiffs’ and defense counsel nationwide should treat this case as a reminder to focus on the technical details of a complaint as well as on the legal theory on the merits – sloppiness on either side comes at a cost.
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Judge Grants MTD in FDCPA Case Over Notice Sent to Represented Plaintiff
Given a second chance to do more than just allege that a collection agency should have known that he was represented by an attorney, a plaintiff’s amended complaint has fallen just as short as the original one, and a District Court judge in New York has granted the defendant’s motion to dismiss, ruling that there is nothing in the complaint that indicates how the agency should have known the plaintiff was represented by an attorney. More details here.
WHAT THIS MEANS, FROM JACOB BACH OF MALONE FROST MARTIN: In Raymond v Arcadia Recovery Bureau, LLC, et al., United States District Judge Ronnie Abrams confirmed the majority view that a debt collector must have actual knowledge, prior to contacting the plaintiff, that the plaintiff was represented by counsel in order to seek relief under Section 1692c(a)(2) of the FDCPA. Judge Abrams also refused to allow Plaintiff to slide on an amended complaint based on conclusory statements of a debt collector’s knowledge. Companies should make clear that there records accurately reflect the information relayed to them by a client, including knowledge of whether there are any notices of attorney representation related to the debt, to ensure compliance with Section 1692c(a)(2) of the FDCPA.
Judge Rules in Favor of Plaintiffs in Suit Against Hospital Placing Accounts with State for Collection
A state court judge in Kentucky has ruled in favor of plaintiffs who sued the University of Kentucky for allegedly violating their right to due process by using the state’s Department of Revenue to collect on unpaid medical debts. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH & VOLUCK: This is a fascinating case emanating from Kentucky state law that allowed the University of Kentucky to directly tap into the state’s Department of Revenue to collect obligations owed to the University. In this situation, the University’s healthcare arm used the procedure to refer delinquent medical debt in lieu of filing suit in court against the patient. This had the effect of foregoing civil process, and, instead, allowing the Department of Revenue to directly garnish wages and tax refunds without any notice to the patient or providing any substantive way to prevent the collection. The court declared that this using this procedure for medical debt collection (even though it was a state entity) was a violation of the patients’ due process rights and prevented the University from proceeding in this manner in the future.
Judge Grants MSJ for Defendant in FDCPA Case Over Dual Collection Letters
A District Court judge in Indiana has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case, ruling the plaintiff did not suffer a concrete injury after receiving two collection letters from the defendant on the same day — each signed by a different attorney. More details here.
WHAT THIS MEANS, FROM BRIT SUTTELL OF BARRON & NEWBURGER: The Seventh Circuit has made clear that, at least in that circuit, emotional distress or confusion are not sufficient to constitute standing and the court relied heavily on those opinions in coming to this decision. However, I think the debt collection agency dodged a bullet on this one because having two different attorneys send collection letters so close in proximity to each other that the consumer receives them on the same day is not a good practice. This is a good opportunity to for agencies and law firms alike to review their processes to determine when letters are sent and why two different attorneys would be involved. Just because this district court followed the circuit precedent to grant the debt collector a judgment, doesn’t mean that another debt collector in a different circuit would be so lucky under similar circumstances in a different circuit.
Judge Sanctions Plaintiff’s Attorney For Prolonging Litigation
A District Court judge in Minnesota has called out a plaintiff’s attorney for engaging “in conduct designed to prolong this litigation and augment” a plaintiff’s recovery after an offer of judgment had been accepted, and limited the amount of attorney’s fees to be awarded to the plaintiff to what was incurred when the offer was accepted, while also granting the defense’s motion for attorneys’ fees and costs. More details here.
WHAT THIS MEANS, FROM JASON TOMPKINS OF BALCH & BINGHAM: As with any fee-shifting statute, FDCPA cases with little or no damages to the plaintiff are often driven by the attorney fees for plaintiff’s counsel. As a result, an offer of judgment can be a powerful tool. In this case, the offer of judgment worked, but plaintiff’s counsel’s attempt to grab a fee windfall backfired. Rather than negotiate a fee that approximated his actual time in the case, this attorney requested more than four times his actual lodestar and refused to back up his demands with documentary support. As a result, he not only wasted his own time that would never be compensated, but also has to pay defense costs that will likely exceed his own fee award.
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.
