Compliance Digest – December 12

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, email John H. Bedard, Jr., or call (678) 253-1871.

Every week, 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 Denies MTD in FDCPA Case Over Misreported Debt

Every time inaccurate information is furnished to a credit reporting agency constitutes a separate and discrete violation, ruled a District Court judge in Ohio, who denied a defendant’s partial motion to dismiss a Fair Debt Collection Practices Act case that it argued was time-barred because the one-year statute of limitations to bring the suit had expired. More details here.

WHAT THIS MEANS, FROM XERXES MARTIN OF MALONE LYONS WATTS MORGAN: This opinion in Radford v. Equifax Information Services, LLC, et al  exemplifies the general risks of a 12(b)6 motion- the court finds there is enough in the Complaint to state a claim, or the court affords the plaintiff an opportunity to amend and possibly get there the second time around. As the court only looks to allegations while viewing them favorably to the plaintiff, they can be hard to win. Turning to the opinion, it is not surprising that the Court followed Purnell v. Arrow Financial Services, LLC. The facts in Purnell were very similar to the facts alleged in Radford, so Radford’s response to the motion gave the court an easy road map to analyze and follow. However, there could be more than meets the eye. Specifically, when was the debt continuously reported within the statute of limitations, or was it reported prior to and not reported again? Without any evidence at this stage, neither the judge nor the readers know. We may find out if this case progresses.


Supreme Court Agrees to Hear Arguments in Student Loan Debt Cancellation Plan While Another Appeals Court Upholds Block

The Supreme Court yesterday agreed to hear arguments this term in a lawsuit over the Biden administrations plan to cancel up to $20,000 of student loan debt, while another appeals court issued a ruling upheld a lower court’s decision to temporarily halt the program, after 26 million individuals had applied for loan forgiveness. More details here.

WHAT THIS MEANS, FROM JOHN REDDING OF ALSTON & BIRD: As has been the case with a number of initiatives proposed by the Biden administration, a number of Republican states are challenging the administration’s student loan forgiveness program and the matter is now pending before the Supreme Court. The case challenges the plan to forgive up to $20,000 in student loan debt, depending on the type of loan or gran, for people making below $125,000. The Supreme Court has expedited the matter, with hearing to be held in February and a decision by the end of the current session. In the meantime, student loan repayment obligations remain on hold  At the same time, the 5th Circuit upheld a lower court decision blocking the program. 

So what does this all mean? First, whether the forgiveness program will be upheld is an open question.  In the interim, the repayment pause remains in effect, placing borrowers, lenders and those charged with addressing defaulted student loans in limbo. Ultimately, the question should be resolved by mid-2023 and, with luck (depending on your point of view), we should see repayment activity resume in summer 2023.

Judge Grants MSJ For Plaintiff in FDCPA Case Over Disputed Debt Not Being Reported Soon Enough

If you are furnishing information to credit reporting agencies — especially within the Seventh Circuit — you better make sure that you haven’t received any disputes in the day or two prior to submitting updates to the CRAs. A District Court judge in Illinois has denied a defendant’s motion for summary judgment and granted a plaintiff’s motion for summary judgment — as to liability only — in a Fair Debt Collection Practices Act case because the defendant failed to note that an account was disputed when it furnished information to the credit reporting agencies, even though it had received the dispute two days before the information was furnished. More details here.

WHAT THIS MEANS, FROM MIKE FROST OF FROST ECHOLS: Timing is very important when it comes to cases involving the fair and accurate reporting or consumer data to any one or more of the three national credit bureau repositories. In this case, on January 21, 2021, the consumers attorney sent a letter indicating, among other things: “the amount reported is not accurate.” That letter was received by the debt collector on February 1, 2021. On February 3, 2021, the debt collector reported the consumers debt to one of the three national credit bureau repositories without coding the account as disputed. The debt collector did update the report with the dispute code on its next scheduled reporting cycle on March 3, 2021. 

The debt collector did have well crafted written policies and procedures which provided that consumer disputes would be reviewed and properly updated, but that process could take up to seven business days from the date of receipt. The policies and procedures did not include any update requirements for information learned closely after the initial reporting date and instead updated the report with new information at the next scheduled reporting period.

The Court ultimately concluded that the process was not “reasonably adapted to avoid” the error that occurred in this case. What we can learn from this ruling is that timing is critical when processing consumer disputes. In those situations where there is not enough time to update a report from the time of the debt collector’s receipt, then the policy could contain a means to update the report prior to the next cycle and within a limited amount of time of receipt in order to be considered “reasonably adapted to avoid” such errors.

N.Y. Governor Signs Medical Debt Anti-Garnishment Bill Into Law

Last Wednesday, New York Governor Kathy Hochul signed a bill into law — which went into effect immediately — that prohibits healthcare providers from placing lines on the primary residences of individuals with unpaid medical debts or garnishing wages to collect on unpaid bills. More details here.

WHAT THIS MEANS, FROM JACQUELYN DICICCO OF J. ROBBIN LAW: A newly enacted New York law makes it more difficult for nonprofit hospitals and healthcare providers to collect on past due medical bills.  Prior to the enactment of bill S.6522A/A.7363A, hospitals and healthcare providers could secure and enforce a lien on the patient’s primary residence for judgments resulting from unpaid and past due medical bills. But the new law, recently signed by New York Governor Kathy Hochul, makes it so hospitals and healthcare providers are now restricted from securing or otherwise enforcing medical liens on the debtor’s primary residence to satisfy judgments obtained due to past due medical bills. In addition, the law further prohibits wage garnishments utilized to satisfy those same judgments. The Civil Practice Law and Rules Section 5201 governs property against which a money judgment may be enforced and this new law amends Section 5201(b), which now mandates, “[n]o property lien shall be entered or enforced against a debtor’s primary residence in an action arising from a medical debt and brought by a hospital licensed under twenty-eight of the public health law or a health care professional authorized under title eight of the education law.” This law further evidences the steps that New York has taken to ensure that those facing financial struggles and seeking medical care are not faced with the looming possibility of losing their homes. 

Appeals Court Vacates Dismissal of TCPA Class Action, Remands Case to Determine Standing

The Court of Appeals for the Eleventh Circuit has vacated the dismissal of a Telephone Consumer Protection Act case and remanded it back to the District Court because half of the plaintiffs in the class action did not state in the complaint how many calls they received, and the court first needs to establish whether those plaintiffs have standing to sue. More details here.

WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW: In late November the Eleventh Circuit Court of Appeals vacated the Southern District of Florida’s prior dismissal of a TCPA case without ever addressing the merits of the appeal. See Evans v. Ocwen Loan Servicing, LLC, Case No. 21-14045 (11th Cir. Nov. 29, 2022). The Court “discovered” during its own review a jurisdictional issue, not raised in any of the appellate briefs, created by certain of the plaintiffs’ failure to allege facts sufficient to demonstrate Article III standing.

As with many TCPA cases, the dismissal arguments in the district court focused on whether the allegations were sufficient to plausibly allege that an automatic telephone dialing system (ATDS) had been used to call the plaintiffs. Judge Robin Rosenberg dismissed the lawsuit with prejudice, holding that the ATDS allegations were not sufficient to invoke the TCPA consent requirements pursuant to the Supreme Court’s ruling in Facebook, Inc. v. Duguid, 141 S. Ct. 1163. The sixteen plaintiffs (whose claims had been consolidated) appealed and the parties fully briefed the ATDS issues. Just prior the scheduled oral argument, however, the Eleventh Circuit vacated the dismissal order and remanded the case “for a ruling on the issue of Article III standing in the first instance” because they “cannot ascertain from the allegations … how many calls … eight [of the sixteen] plaintiffs received” and that number “could be zero, one, or many.” This is important because the Eleventh Circuit has established that “more than one unwanted” call establishes a concrete injury for standing purposes. 

This case demonstrates the importance of assessing and addressing any potential standing issues early on. You can be the Eleventh Circuit always will when they first start to assess a case in depth. Here, the parties spent a little over a full year litigating and briefing ATDS issues in the Eleventh Circuit (not an inexpensive endeavor), only to be forced to start over without making any progress. The district court now has to address the threshold standing issue and then, for all plaintiffs that can in good faith allege receipt of more than one call, the district court will need to “reissue its decision (or rule otherwise as its seems fit), and an appeal may again follow.”

Judge Grants MTD in FDCPA Case Over Creditor ID in Letter, Volume of Calls That Were Allegedly Harassing

A District Court judge in New Jersey has granted a defendant’s motion to dismiss, ruling that a collector saying it “was willing to accept” an amount to settle a debt is not confusing to a least sophisticated debtor regarding the identity of the creditor to whom the debt was owed, and that the plaintiff did not sufficiently allege why receiving calls on a Saturday and Sunday was harassing, oppressive, or abusive. More details here.

WHAT THIS MEANS, FROM MITCH WILLIAMSON OF BARRON & NEWBURGER: Those damn collectors, they’re at it again. Imagine offering to accept less than the full amount due – why that’s simply insulting, it implies that the debtor, I mean “consumer” can’t afford to pay the full amount that he owes. And as we know this is a slippery slope. Next thing you know they be offering favorable payment plans. And I quote:

“Well, either you’re closing your eyes To a situation you do now wish to acknowledge Or you are not aware of the caliber of disaster indicated.”

While the above refers to the ludicrous claims that offering settlement for less than the full amount is somehow deceptive dismissed out of hand by the Court, there is a section of the decision that bears review. In addition to the claims regarding correspondence, the complaint alleged that there were phones calls made “repeatedly or continuously with intent to annoy, abuse or harass.” The Court pointed out that this allegation did not provide any factual context and unlike the letter claims which were dismissed with prejudice, dismissed the phone call claims without prejudice with an explanation of how the claim needed to be pled providing Plaintiff an opportunity to amend. 

This decision raises a basic question of strategy. Would it have been better to move to dismiss only the letter claims which were limited to the form and language of the letter and therefore needed no investigation. The next step would be to proceed with discovery limited to the phone calls and create a record to then move for summary judgment? 

Judge Grants MSJ for Defendant in FDCPA Case Over Cease Communications Request

In a case that was defended by Cooper Walker at Frost Echols, a District Court judge in Texas has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case after the plaintiff admitted during a deposition that he never asked the defendant to stop calling him — even though that’s what he alleged in his complaint — while also admonishing the plaintiff’s attorney “to do better” after the plaintiff’s testimony came to light. More details here.

WHAT THIS MEANS, FROM LAURIE NELSON OF AUTOSCRIBE: The Judges ruling to grant the Defendant’s motion for summary judgment to deny the Plantiff’s FDCPA claim in Ramirez v. Sequium Asset Solutions cannot be questioned nor surprising for anyone. In this case, a claim was made against Defendant based on Plaintiff’s assertion that Defendant continued to call after Plaintiff asked Defendant to stop calling. However, during a deposition, Plaintiff testified he had never spoken with Defendant, which contradicts the claim that he asked Defendant to cease calling. If the basis of the claim was Plaintiff’s request to stop communication, but no such request was made, summary judgment should be granted in favor of Defendant. Nothing complicated about that. What intrigues me, however, is the second part of the Judge’s ruling, where the Judge denies the Defendant’s motion for sanctions.

While it is known that Courts do not grant these motions often as it does not want to discourage parties from taking legal action in fear of such penalties, this is a case where one might think it could be considered. However, some might argue that the facts warrant sanctions in this case. After the Plaintiff’s attorney knew that the basis of the claim, the Plaintiff’s claim that he told the Defendant to cease communication, was false, he continued his litigation. He continued despite several attempts by the Defendant’s attorney to plead with the attorney to dismiss the action, the last of which occurred before the filing and costs of the summary judgment denying the claim. Many could argue that these actions meet the standard needed to find sanctions and that the continued litigation was unreasonably and vexatiously done. The Court, in this case, however, decided it was not. Instead, the Court defined the attorney’s behavior as one of an “overzealous advocate” but asked the attorney to do better in the future. I don’t believe the attorney would have been as lucky in other courts and hope that the warning given by the Court to do better serves as guidance for all Plaintiff’s counsel. 

Alleged Impermissible Pull of Credit Report Enough for Standing as Judge Denies Motion to Remand FCRA Case Back to State Court

A District Court judge in North Carolina has denied a plaintiff’s motion to remand a Fair Credit Reporting Act case back to state court where it was originally filed, ruling that accessing the plaintiff’s credit report without a permissible purpose to do so constitutes a concrete injury and gives the plaintiff standing to sue in federal court. The judge also denied a motion from the plaintiff for costs, expenses, and fees that were incurred as a result of the removal. More details here.

WHAT THIS MEANS, FROM DALE GOLDEN OF GOLDEN SCAZ GAGAIN: In our practice, we are seeing a rise in the number of FCRA cases being filed. Most of these are filed in federal court, which is our preferred forum for litigating consumer cases. The good news from this case is that it continues the line of cases holding that “impermissible purpose” FCRA cases can be removed to federal court if filed in state court. The court’s reasoning here, consistent with the precedent it cites, is that the agency’s pull of the credit report was analogous to the tort of invasion of privacy, thereby creating an alleged “concrete injury” for Article III purposes. This case provides more ammunition for defense counsel looking to get FCRA cases out of state court and into the hands of more experienced federal judges.

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, email John H. Bedard, Jr., or call (678) 253-1871.

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