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.
Supreme Court Rules Federal Gov’t Subject to FCRA Claims
The Supreme Court last week unanimously ruled that the federal government is not immune from lawsuits accusing it of violating the Fair Credit Reporting Act when it incorrectly furnishes information to the credit reporting agencies. The Court held there is no sovereign immunity when it comes to the FCRA’s private right of action. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER: In reaching this decision, the Court continued the textualist approach to statutory interpretation that we have come to expect. In addition, the Courtis not inclined towards expanding governmental protections, immunity, or deference. It will be interesting to see how this plays out in several cases pending this term, including the CFSA and Loper/Relentless appeals.
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Judge Denies Plaintiff’s MSJ in FDCPA Case Over Communications with Mom
A District Court judge in New York has denied a plaintiff’s motion for summary judgment in a Fair Debt Collection Practices Act case, ruling there is no written requirement to communicating information about a debt with a third party. More details here.
WHAT THIS MEANS, FROM COOPER WALKER OF FROST ECHOLS: While the facts of this case are a bit unique, the ruling by the Court is directly in line with the plain language of the FDCPA. (and in this industry, you can’t take for granted when a judge makes the right decision). Plaintiff claimed the Defendant violated section 1692c(b) of the FDCPA—which governs third-party communication—because Defendant spoke with Plaintiff’s mom. However, Defendant was able to provide evidence to the Court that Plaintiff explicitly asked Defendant to contact his mom. As such, the Court correctly found that Plaintiff was not entitled to summary judgment. What a world we live in when you can get sued for doing exactly what a person asks you to do.
Another thing I find noteworthy here is the fact that this case was filed over two (2) years ago. The last thing you want is to have to pay someone like me for two (2) years on a case with little-to-no merit. Make sure you are putting together an efficient plan of attack early on regardless of whether you want to fight or settle. There are certainly instances where its unavoidable for a case to drag on for longer than normal. However, in the event you are going to fight a case, it’s almost always in your best interest to attack the case in such a way to get it resolved in the shortest amount of time possible. The harsh reality is that even if you prevail, you will never be happy with a case that stuck around for over two (2) years.
Judge Grants MSJ for Defendant in FDCPA Jurisdiction Case
A District Court judge in Kentucky has granted a defendant’s motion for summary judgment in an “inside baseball” type of case involving the plaintiff moving from one state to another and then the judge having to determine which state’s statute of limitations applied when the defendant filed a collection lawsuit to recover the unpaid debt. More details here.
WHAT THIS MEANS, FROM AYLIX JENSEN OF MOSS & BARNETT: This case highlights how the statute of limitations is case-dependent and can be determined by several factors, such as the laws of the jurisdiction in which the consumer resides, any choice of law provisions in an agreement, and relevant case law. It also serves as a reminder for collection agencies to assess potential exposure when collecting on accounts in which there isn’t a cut and dry answer for which statute of limitations might apply. As we’ve seen recently, miscalculating the statute of limitations on even a small number of accounts is enough to catch a regulator’s attention.
Judge Grants MTD in FDCPA Case Over Allegations of Collecting, Furnishing Without Consent
A District Court judge in Mississippi has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act case after it was sued by a plaintiff representing himself, claiming the defendant violated the statute because it was attempting to collect a debt that was not owed to that company and because it was allegedly illegal to furnish information about the account to the credit reporting agencies without the plaintiff’s consent. More details here.
WHAT THIS MEANS, FROM XERXES MARTIN OF MARTIN GOLDEN LYONS WATTS MORGAN: This is a good, straightforward opinion on straightforward garbage from a pro se plaintiff. Thanks to Security Credit Services LLC for taking out the trash. The claims brought were general allegations that Security Credit Services had no authority to collect and needed Plaintiff’s consent to credit report. As we know, these are not valid FDCPA or FCRA claims. This was a good case to file a motion to dismiss on, and the court came to the correct decision.
Judge Grants MTD in FDCPA Case Over Improperly Served Writ of Execution
In what appears to be yet another in the line of cautionary tales about plaintiffs representing themselves, a District Court judge in New Jersey has granted a defendant’s motion to dismiss after it was sued for violating the Fair Debt Collection Practices Act because it served a writ of execution to the plaintiff’s mother and not to the plaintiff. More details here.
WHAT THIS MEANS, FROM BRENT YARBOROUGH OF MAURICE WUTSCHER: The plaintiff alleged that the defendants violated the FDCPA by filing a collection action that was time barred and sought impermissible fees. However, the plaintiff filed her FDCPA claims more than one year after the collection action was filed, thus her claims were barred by the FDCPA’s statute of limitations. In an effort to save her claims from dismissal, the plaintiff argued that the defendants also violated the FDCPA by filing a motion for default judgment. The court rejected that argument in a prior decision, finding that the plaintiff failed to show that the motion for default judgment constituted an independent violation of the FDCPA. After amending her complaint, the plaintiff attempted to base her claims on the service of a writ of execution, but she was again unable to convince the court that subsequent action taken within the collection litigation supported an independent violation.
Judge Grants MTD in FDCPA Case Over Potentially Incorrect Balance in Underlying Collection Suit
A District Court judge in New York has granted a defendant’s motion to dismiss a Fair Debt Collection Practices Act class-action lawsuit on the grounds the plaintiff did not suffer a concrete injury and thus does not have standing to sue, after she was sued in state court for an unpaid debt that she claimed was the incorrect balance. More details here.
WHAT THIS MEANS, FROM DAVID SCHULTZ OF HINSHAW & CULBERTSON: Collection lawsuits are fertile grounds for FDCPA claims. We often see the FDCPA claim brought in the state court collection action as a counter claim and/or third-party action. Perhaps or more common is for the debtor to file a parallel action in federal court that asserts the FDCPA claims. This is often done if there is a challenge to some alleged error in the collection case, such as the debt amount is not right, there is a chain of title defect, an affidavit is erroneous, or some other procedural error. That is what happened in Bristol v Forster & Garbus; plaintiff claimed the debt amount in the collection case was wrong.
However, the court in Bristol put an end to the parallel FDCPA case based on Article III standing grounds. It reasoned that plaintiff at most alleged a threat of future harm that the state court judgment will be in the wrong amount, which the court said seems unlikely. This is another example of the benefits from the recent wave of favorable Article III cases – it ended the rush to federal court based on an alleged error in state court.
The parallel federal FDCPA case can cause problems for the defendant. It results in increased fees, which will likely be much more significant than what it would cost to just prosecute a collection case. It also allows the debtor’s counsel to increase fees that the defendant may have to pay. It provides the debtor with leverage to avoid the state court judgment. Of course, the claims could still be brought in state court as a counter claim. But the costs to litigate that will be less, it creates less leverage, and the state court judge may not be impressed with a claim that it does not know what should be a proper judgment.
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.