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 Artfully Dismisses FDCPA Suit Over Receipt of Verification Letter
Reading as many rulings from judges as I do, you tend to appreciate those with some style and Judge Michael T. Liburdi of the District Court for the District of Arizona definitely has some style. In dismissing a Fair Debt Collection Practices Act case for lack of standing while also chiding the defendant for a lack of “self-awareness” in seeking attorney’s fees and costs, Judge Liburdi goes to great lengths to detail why the receipt of a letter — one which the plaintiff requested — is not enough for the plaintiff to have suffered a concrete injury. More details here.
WHAT THIS MEANS, FROM MIKE FROST OF FROST ECHOLS: The Plaintiff in this case alleged in his motion for summary judgment that the debt collection letter made him angry, frustrated, and stressed. Furthermore, in this deposition he stated that he “even lost a few nights’ sleep over the debt” but in that same deposition, Plaintiff admitted that he did not know when the letter came to his mailbox. Judge Liburdi wrote “It is difficult to see how a letter delivered to a mailbox, unbeknownst to Six, and to be retrieved at his leisure, in a mailbox where he receives countless articles of correspondence, some desired and some not, results in harms similar in kind to the irritating intrusion into the peace and quiet and personal realm caused by phone calls and text messages.” The Court ruled in favor of the defendant finding no Article III standing (no injury). However, the Court denied the Rule 11 sanctions motion and one would ask why when this is clearly a frivolous case? The Court denied the sanction motion indicating bad faith by the defendant because defendant denied requests for extensions and misrepresented its reasoning for requesting a modification of the Scheduling Order to the Court.
THE COMPLIANCE DIGEST IS SPONSORED BY:
Judge Denies Competing Summary Judgment Motions in FDCPA Case
A District Court judge in Oklahoma has denied a defendant’s motion for summary judgment and a plaintiff’s motion for partial summary judgment in a Fair Debt Collection Practices Act case, ruling that, among other reasons, the migraines suffered by the plaintiff are sufficient for her to have standing to sue, and that there is a genuine issue of material fact whether the defendant had policies and procedures in place to avoid the alleged violation thus preventing it from invoking the Bona Fide Error defense. More details here.
WHAT THIS MEANS, FROM PATRICK NEWMAN OF BASSFORD REMELE: Tough to square these self-serving allegations of “harm” with traditional tort principles. Namely, that self-described emotional injuries are not legally cognizable. (How’s that for a lawyerly sentence?) So, Friendly Reminder Number One: that FDCPA Land just ain’t like the rest of the Civil Litigation Universe.
Also worth noting that the Tenth Circuit takes a pretty narrow view of the bona fide error defense compared to other jurisdictions. Hence, Friendly Reminder Number Two: not all defenses cut the same amount of ice in all courts. (Bonus Fun Fact: I tried my first jury trial in an Oklahoma federal court. They denied our dispositive motion, too.)
Overall, this one is being well defended by competent defense counsel, but a jury trial looms nonetheless. There you have it: two Friendly Reminders, a Bonus Fun Fact, and a recitation of the procedural posture of the case already set out in the primary article—all for the low, low price of $0. Don’t ever say we didn’t ever give you anything, Dear Readers.
Judge Grants MTD in FDCPA Case Over Multiple Addresses in Letter
In a case that was defended by the teams at Martin Lyons Watts Morgan and Lippes Mathias, a District Court judge in New Jersey has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case, ruling that including two different addresses on a debt collection letter would not confuse a least sophisticated consumer about where to send a dispute or verification request. More details here.
WHAT THIS MEANS, FROM CAREN ENLOE OF SMITH DEBNAM: Article 3 standing cases continue to permeate the federal litigation landscape with or without the encouragement of litigants. While the Third Circuit has not yet addressed Article 3 in the FDCPA context, its district courts continue to be split as to what is sufficient to create an injury in fact. Because of this split, the court in Pistone v. Client Services viewed the pending motion to dismiss under both the Article 3 leans as well as a substantive lens. The result is a win for the industry. In Pistone, the collection letter contained two addresses: one which appeared twice, both times with the debt collector’s name above it, and a second PO Box which appeared without the name of the creditor and was positioned in the return address position for the envelope. A couple of points jump out:
Allegations Matter. The Article 3 analysis honed in on the hypothetical nature of the allegations of the Complaint. The district court noted that the Complaint failed to allege an actual injury and concluded that the plaintiff had not alleged a “concretized” harm where the plaintiff only alleged that “the least sophisticated consumer may be dissuaded from disputing [a debt] since he or she may not know which of the two addresses the debt dispute should be sent.” Importantly, the Complaint did not contain any allegations which suggested that the plaintiff had attempted to dispute the debt and could not do so because she couldn’t ascertain the correct address. Because the Circuit’s district courts were split as to whether confusion can constitute a “concretized” injury, however, the district court, out of an abundance of caution, proceeded to a substantive analysis of the 1692g and 1692e claims.
Context Matters. Turning to the substantive analysis of whether the inclusion of two addresses violated sections 1692g or 1692e, the district court looked at the location of the two addresses and context clues which surrounded those addresses. The former address was set forth both times with the debt collector’s name. The first time just above the debt validation notice and the second time with remittance information. The latter address, on the other hand, did not include the debt collector’s name and “appears to have only served as a return address on the envelope face. The district court found that dispositive. In doing so, the district court noted that the debt collector appeared to have made a conscious decision to not confuse the consumer and “[w]ere the Court to conclude that the inclusion of Address Two in this context violated § 1692g, such decision would run counter to the purpose of the FDCPA to deter abusive and unfair debt collection practices because such finding would essentially punish Defendant for seeking to avoid confusing the consumer.”
Final Thoughts. It’s important to note that this case is limited to its specific facts and arose prior to Reg F’s effective date. As everyone is aware, the Bureau declined to “affirmatively permit the use of one mailing address as validation information;” however, case law is only now developing as to the import of the regulation in a litigation context and is sparse at best. See, e.g., Rogers v. GC Servs., 2023 U.S. Dist. LEXIS 22279, *12 (S.D. Fla. Feb. 9, 2023) (use of the Model Form may only speak to regulatory compliance). Simply put, it remains to be seen how much deference a court would give Regulation F and its safe harbor form if faced with these same facts.
Appeals Court Upholds RFDCPA Ruling for Plaintiff
A California appeals court has upheld a lower court’s ruling in favor of a plaintiff in a Rosenthal Fair Debt Collection Practices Act case, agreeing that the collection operation had enough “knowledge” to know that the plaintiff could not have been properly served with a complaint in an underlying debt collection lawsuit and that the notice of assignment that the defendant sent went to an address that the plaintiff was not living at. More details here.
WHAT THIS MEANS, FROM HEATH MORGAN OF MARTIN LYONS WATTS MORGAN: This is a classic example of bad facts making mad law that our industry should be cautious about. The facts in this case depend on state law, the California Rosenthal Act, and specifically the language that “a collector may not collect or attempt to collect a consumer debt by means of judicial proceedings when the debt collector knows that service of process, where essential to jurisdiction over the debtor or his property, has not been legally effected.”
Here the court found that upon notification of a write of execution on an old judgment, the plaintiff consumer responded and submitted a declaration claiming he had not been served with the original complaint and only learned of the judgment 2 weeks ago. Plaintiff, through his attorney, also sent the debt collector additional information, as well as a declaration from the plaintiff’s mother about her health condition as to the plaintiff not residing at the place of service during the original service date. Lastly, the plaintiff further provided utility bills indicating a different residence than the place of service.
The debt collector continued to reassert on its reliance on the original service records, and plaintiff’s credit report, but did not investigate plaintiff or plaintiff’s attorney’s claims.
The trial court found in favor of the plaintiff and the appellate court determined that the information provided by plaintiff and their attorney was sufficient to trigger actual or constructive knowledge that service of process had not been legally effected.
The court seems to be relying on the Rosenthal Act to suggest that more steps need to be taken to survive the standard of legal effective process in the face of consumer dispute and evidence. We have seen the CFPB take a similar stance on similar matters, specifically with fraud and ID theft, so the industry can take this case as a lesson to take more proactive steps to investigate a consumer’s claims, especially when they are providing documentation and evidence to support their dispute. Treating this and resolving this as a dispute, and finding a possible alternative resolution between the parties would have avoided this consumer lawsuit.
FCC to Vote on NPRM Blocking More Robocalls, Robotexts
The Federal Communications Commission is poised to expand its rules for blocking robocalls and junk texts at its June meeting, giving consumers more choice in deciding which types of calls and texts they receive, while also closing “loopholes” that allow callers to make robocalls and send robotexts without consent and without giving consumers the ability to opt out. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER: A number of the items in the FCC’s NPRM could provide some helpful clarity if enacted as proposed. For instance, confirming that an entity has a specific period of time to honor a do-not-call or do-not-text request could help provide some tangible, measurable guardrails and guidance – although industry may want to request a bit more than the 24 hours currently proposed, given some existing systems and limitations. Similarly, codifying that the sending of a text acknowledging the consumer’s stop text message, as well as the sending of a single text requesting consent to communicate by text, does not violate the TCPA also could reduce current claims. But there are some potential challenges presented as well. For instance, while robocalls and robotexts really relate to the sending of unsolicited marketing communications, the NPRM as currently written continues the recent trend of using such terms synonymously for both marketing and servicing message. Additionally, some of the proposed requirements, such as not requiring certain language or “magic words” to stop texts runs contrary to Regulation F’s command to tell a consumer to respond to a text with a certain word – STOP – to stop texts. This makes it likely that we will continue to see TCPA-related outcomes influencing collections-related matters and vice versa.
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.
