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 Grants Summary Judgment for Defense in FDCPA Case Over Local Phone Numbers
In a case that was defended by Rick Perr and the team at Kaufman Dolowich, a District Court judge in Illinois — on his own motion — has granted summary judgment in favor of a defendant on the remaining two counts in a Fair Debt Collection Practices Act case, ruling that using a local number to contact the plaintiff was not illegal, nor was it to place 17 calls to the plaintiff in a six-week span, because the plaintiff never informed the defendant it had the wrong number. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: This case highlights a couple of general concepts. First, the line between creative thinking and silliness is not consistent in the minds of our fellow attorneys. And second, it is , in fact, possible to win a motion for reconsideration; and what’s more, sometimes judges will reconsider rulings without even being asked to do so. The plaintiff claimed the defendant’s use of a Chicago area code — the same area code attached to her phone number — violated the FDCPA’s “meaningful disclosure” obligation and its bar on “false, deceptive, or misleading representations” because the defendant wasn’t calling from Chicago. The court initially denied the defendant’s motion for summary but apparently, had some sort of epiphany that led to a change of heart. In the end, the court held that because the number used by the defendant was actually owned by the defendant there was no false representation, thereby distinguishing the situation from cases in which the debt collector displayed a false name. And also, from the court’s perspective, the defendant ‘s ownership of the number also meant that the defendant hadn’t failed to “meaningfully disclose” its identity. Not much to see here, but it does provide further insight to the vivid imaginations some of our colleagues in the consumer bar possess.
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Judge Denies Defendant’s MSJ, Certifies Class in Case Over Info Visible Through Envelope Window
A District Court judge in New Jersey has denied a defendant’s motion for summary judgment, determined that a plaintiff had standing to sue because of a barcode that was visible through the window of an envelope, and certified a class in a Fair Debt Collection Practices Act lawsuit. More details here.
WHAT THIS MEANS, FROM DAVID SHAVER OF SURDYK DOWD & TURNER: The original Complaint in Morales v. Healthcare Revenue Recovery Group was filed in the United States District Court for the District of New Jersey on December 2, 2015. Undoubtedly, Morales sought to press his claim, alleging a 1692f(8) violation based on information embedded in a barcode visible through the window of an envelope, in the wake of the Third Circuit’s decision in Douglass v. Convergent Outsourcing, 765 F.3d 299 (3rd Cir. 2014). In Douglass, the Third Circuit rejected the Eastern District of Pennsylvania’s grant of summary judgment to Convergent and found that an account number that was visible through the envelope’s window was not benign and was a violation of 1692f(8) because it “implicate[d] a core concern animating the FDCPA—the invasion of privacy.”
In Morales, an account number was not visible through the envelope’s window. But a barcode with embedded information was. Relying on Douglass and, inter alia, the Third Circuit’s prior determination, on Morales’ earlier appeal of an order granting HRRG summary judgment on standing grounds, that Morales had Article III standing, the District of New Jersey determined that Morales (still) had Article III standing because the embedded information, including an internal reference number and part of Morales’ street address, could be used to identify him as a debtor. The District of New Jersey determined that someone other than Morales, armed with the embedded information, could potentially gain access to Morales’ account if they possessed another piece of identifying information. That possibility was sufficient to support the conclusion that the “publication” of Morales’ information (via the barcode that was visible to anyone who might handle the mail) was akin to an actionable common law privacy tort. And, these same justifications were relied upon by the District of New Jersey to support its decision that Morales’ putative class should be certified as well.
The takeaway from Morales is to continue to be vigilant about the information that is visible to anyone who might handle an envelope containing a collection letter. In this regard, the Third Circuit has been, I believe, consistently unfriendly on this issue. Additionally, continue to take care in developing your litigation strategy if you find yourself being hauled into court. Be strategic about when and where you make your arguments. Though it is apparent that HRRG’s standing arguments hit home earlier in the case, those arguments, which were rejected by the Third Circuit in 2021 in connection with the earlier appeal, had lost their momentum by the time this motion for summary judgment was filed with the District Court.
As an aside, I have never agreed with the notion that information embedded within a QR code or a barcode is “visible” to someone who might see it through an envelope’s window. The fact that affirmative steps are needed to obtain the embedded information – i.e., possessing a device with a program capable of reading the embedded information and then scanning the code at issue – distinguishes such situations from numbers or information visible to the naked eye, in my opinion. Unfortunately, my opinion on this issue is not, and has never been, dispositive.
Judge Denies MTD in FDCPA Case Over Creditor Name, Dispute Disclosure
A District Court judge in Puerto Rico has denied a defendant’s motion to dismiss after it was sued because a collection agency it acquired sent a collection letter to the plaintiff that used some form of gobbledygook to identify the creditor to whom a debt was owed in a collection letter. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: It is always a good idea to have letters reviewed by a compliance attorney, but a review that is limited to letter templates will not uncover issues with how fields are populated. When you are onboarding a new client or setting up files for a different creditor, that is a good time to print and review some test letters to ensure that the name of the creditor is reflected correctly. If the proper name will not fit within the field, or if you are not sure which name to use, a brief consultation with a compliance attorney is generally much less expensive than defending or settling lawsuits.
Judge Dismisses Most Claims in FDCPA, FCRA Suit, Denies MTD on 1692g Claim
A District Court judge in New York has granted a defendant’s motion to dismiss on most of the claims that it violated the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, and the Truth-in-Lending Act, but denied it on one FDCPA because the defendant purportedly did not properly respond to a verification request from the plaintiff. More details here.
WHAT THIS MEANS, FROM PATRICK NEWMAN OF BASSFORD REMELE: Folks, welcome to Patrick Newman’s Civil Procedure Lessons 101: Anyone Can Write Anything In A Complaint (And Typically That’s All A Court Can Consider On A Motion To Dismiss). WARNING: this may raise your blood pressure.
A motion to dismiss challenges the sufficiency of the complaint allegations. Or, in normal human language, if we pretend that everything the plaintiff has said in the complaint is true (not always the case!), would they have a viable claim? If the answer is “yes,” your motion to dismiss is getting denied. If “no,” then the complaint is dismissed for “failure to state a claim.”
The motion to dismiss standard heavily favors plaintiffs (and their lawyers), to the great dismay and consternation of defendants across the land who would like to end the litigation now, before the very expensive process of discovery begins. And that’s the whole game on the plaintiff’s side of the ball in these cases — plead enough to survive a motion to dismiss and get into discovery, which often will force the defendant to at least consider a “cost of defense” settlement. Upsetting? Yes. Likely to change? No.
This order runs through some interesting variants on the typical motion to dismiss standard. For instance, the plaintiff submitted documents in connection with the complaint. Sometimes, courts will consider documents “outside the four corners” of the complaint on a motion to dismiss—generally only when they are attached to the complaint, referenced in the complaint, or otherwise “embraced” by the complaint. But usually arguments about documents and evidence are reserved for summary judgment (after discovery). Again, to the perennial and enduring frustration of defendants, particularly those who are sitting on “smoking gun” evidence of their compliance with the law that conveniently did not make it into the plaintiff’s complaint.
Bottom line: unless the plaintiff has thoughtfully attached all of the documents at issue in the case (and there is no dispute about their authenticity or any attendant facts), or has “plead themself out of court” by making allegations that demonstrate their claim fails on the law, your arguments are better suited for summary judgment. In the meantime, if the plaintiff has made … “creative” allegations in the complaint, consider whether a Rule 11 safe harbor notice (the subject of Patrick Newman’s Civil Procedure Lessons 302: The Lofty Expectations And Unfortunate Reality Of Motions For Sanctions) makes sense.
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.