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.
Third Circuit Again Affirms Lower Court Ruling in FDCPA Case About BK Discharge of Debt
For the second time, the Court of Appeals for the Third Circuit has affirmed a lower court’s ruling in favor of a defendant that was sued for violating the FDCPA because it continued to attempt to collect on a student loan debt after the plaintiff had filed for bankruptcy protection which he claimed was sufficient to have the loan discharged. More details here.
WHAT THIS MEANS, FROM BRENDAN LITTLE OF LIPPES MATHIAS: In 2022, the Third Circuit affirmed the District Court’s dismissal of the pro se Plaintiff’s claims pursuant to the FDCPA because Plaintiff’s student loan was not discharged in his bankruptcy. The Third Circuit rejected Plaintiff’s argument that because he was previously found to be indigent, he was relieved of the obligation to file an adversary proceeding to demonstrate his undue hardship to discharge the student loan stating: “a finding of indigence is not the same as an undue hardship determination under Section 538(a)(8).” Most recently, Plaintiff attempted to set aside the prior judgment of dismissal arguing that counsel for Defendant committed a fraud on the Court by relying on dicta in Supreme Court case law. Plaintiff’s position was rejected by the District Court and Plaintiff’s motion for reconsideration was denied. In affirming the District Court, the Third Circuit determined that Plaintiff did not establish a fraud on the court based on legal arguments advanced by counsel.
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California DFPI Makes Changes to Licensing Assessments, Report
In a development that was first reported by ACA International, the California Department of Financial Protection and Innovation is proposing an amendment that would define the “net proceeds” use to determine how much licensees pay the department annually. More details here.
WHAT THIS MEANS, FROM SARAH DOERR OF MOSS & BARNETT: California debt collection licensees should pay close attention to these proposed amendments. Assuming they become law, collectors’ compliance teams will need to carefully review the new requirements and work with counsel to educate their operations and accounting personnel accordingly.
Judge Dismisses FDCPA Suit Seeking Millions in Damages, Suspension of Lawyers’ Licenses
A District Court judge in Arizona has granted a motion to dismiss filed by the defendants in a Fair Debt Collection Practices Act case, ruling that the plaintiff already had one kick at the can in a nearly identical lawsuit against the defendants and thus can’t be allowed a second kick. More details here.
WHAT THIS MEANS, FROM XERXES MARTIN OF MARTIN GOLDEN LYONS WATTS MORGAN: Pro se go away. Come again another day. Agency wants to play. Pro se go away. Through counsel, Absolute Resolutions Investments LLC (“ARI”) filed a collection suit to collect a SoFi private student loan from one of the plaintiffs. While the collection suit was pending, Plaintiffs filed their first FDCPA suit against ARI and its counsel alleging false representations were made in the collection suit, and sought an ambitious recovery — disbarment of ARI’s counsel, $2,500,000 plus punitive damages from ARI, $2,000,000 from the State of Arizona for allowing the state court judge to be a judge, and for that judge to be disciplined. The judge presiding over that lawsuit sua sponte dismissed Plaintiffs’ lawsuit without leave to amend. Five days later, the Plaintiffs refiled the suit and drew a different district judge.
This time, additional claims were added like RICO, and now only sought $500,000 from ARI’s counsel, said counsel to be suspended for five months, $2,500,000 plus treble and punitive damages from ARI, and the collection case dismissed. Much more reasonable. ARI filed a Rule 12(b)(6) motion to dismiss for failure to state a claim based on res judicata, meaning the claims have already been ruled upon in a final judgment, therefore they cannot be brought again. Judge Humetewa walked through each of the required elements to preclude a claim by res judicata, found each element was met, and dismissed the claims. ARI implemented the most efficient strategy to send Plaintiffs packing.
Experian Sues Plaintiff’s Attorney Firm, Alleging Fraud and Racketeering
Experian Information Solutions — one of the three major credit reporting agencies — has filed a lawsuit against the law firm Stein Saks, PLLC, and its partners, alleging a wide-ranging fraud and racketeering scheme designed to extort settlements through fabricated lawsuits. The complaint, filed in the District Court for the Central District of California, outlines a complex operation involving fake credit denial letters and sham lawsuits under the Fair Credit Reporting Act (FCRA). More details here.
WHAT THIS MEANS, FROM JAY TILLMAN OF FROST ECHOLS: This is worth an adult’s time, all 118 pages, for an overview of how an alleged settlement mill operates in defrauding credit reporting agencies, collection agents, creditors, and consumers.
Using the Racketeer Influenced and Corrupt Organization Act, passed by Congress for the express purpose of seeking to eradicate organized crime in the United States, Experian attempts to bring sunlight to an alleged scheme to recruit Plaintiffs and set up cases by manufacturing fake denial letters to fabricate claims of injury and actual damages.
Experian alleges Stein Saks commenced the most class action lawsuits in the country, filing 1,668 cases in 51 federal districts between 2021 and 2023.
The allegations regarding the interplay between the consumer attorneys, plaintiffs, credit repair companies, and their agents, is instructive as to what to look out for in evaluating claims of violation of the FCRA.
Ask, does the timeline of events leading to the claim of violation make sense? Is there correct documentation? Do the documents and communications match your records and timeline? Stay vigilant.
Judge Grants MSJ For Defense in FDCPA Case Over Different Debt That Was Disputed
When you are being sought after for a number of unpaid debts, it can be difficult to keep track of your activities. That seems to be the case in this Fair Debt Collection Practices Act lawsuit, in which a District Court judge in Washington has granted a defendant’s motion for summary judgment because it appears the plaintiff disputed a different debt but not the one involved in this particular situation. More details here.
WHAT THIS MEANS, FROM STACY RODRIGUEZ OF ACTUATE LAW: A Judge in the Eastern District of Washington recently granted an FDCPA defense summary judgment, noting that any “appeal of th[e] Order would not be taken in good faith.” Why? The plaintiff sued for failure to respond to a purported dispute and request for debt validation that she sent for a completely different debt. When I first read the highlights of this case and looked at the Complaint, I got angry, wondering how the plaintiff’s attorney could allow a case so lacking in merit to continue being litigated for over a year and proceed to summary judgment briefing? While we probably all have a story about how this has actually happened in the past, as it turns out, the plaintiff was proceeding pro se.
Considering that, and after reviewing the case activity, the case was well handled by the defense. They answered, served discovery (much of which the plaintiff did not answer) waited out the discovery period established in the scheduling order, and filed a concise and professional motion for summary judgment. With a bit of patience and straightforward legal work, the defense prevailed.
It can be frustrating and challenging to litigate against pro se plaintiffs. So, here are a few reminders for the next time you find yourself in this position: (1) Do not underestimate a pro se plaintiff, who may be personally sophisticated, have legal knowledge, or have excellent behind the scenes assistance. (2) Pursue your defense and zealously advocate for your positions just as you would in any legal dispute, but exercise patience, caution, and professionalism. It is not your job to educate the pro se litigant, and you cannot provide them with legal advice. However, you should not attempt to take any unfair advantage of their lack of representation or take any cheap shots in your filings if the plaintiff misses a deadline or misunderstands a process – state the facts plainly and let the Court address it. (3) While it is typically fine to communicate directly with a pro se litigant to attempt to resolve a case or as may be necessary to satisfy court-ordered obligations, it may be better to engage in written communications instead of a phone call, and it is best to avoid merits communications. Feel free to make a clear and brief statement of your ultimate position, but save detailed and nuanced legal arguments for the Court to avoid a heated exchange or inadvertently crossing the line into providing legal advice.
State Court Judge Dismisses Hunstein Class Action
In a case that was defended by Jonathan Robbin of J. Robbin Law, a state court judge in New Jersey has dismiss a Fair Debt Collection Practices Act class-action Hunstein case, ruling the plaintiffs failed to state a claim for which relief could be granted because transmitting information to a letter vendor for the purposes of printing and mailing a letter is not what Congress intended when it prohibited collectors from “communicating” information about a debt to third parties. More details here.
WHAT THIS MEANS, FROM CHUCK DODGE OF HUDSON COOK: This Hustein case is a keeper. It features all of the arguments on both sides that thoughtful lawyers have developed since the original Hunstein case three years ago. The state court in New Jersey dismissed the consumer’s claims under the FDCPA and New Jersey’s Consumer Fraud Act, correctly deciding that Resurgent’s electronic transmittal of information to a letter vendor’s computers to prepare and send a letter was not a “communication” attempting to collect a debt. The court said there was no indication that in sending the information to the letter vendor Resurgent intended to harass, embarrass or humiliate the consumer – and that the simple conveyance of that information for the purpose of preparing and mailing the letter could have had any of those impacts. The court agreed with Resurgent’s argument that likened the use of a letter vendor to the use of the US Postal Service or a telegram or telephone service, who are just part of the medium through which information is conveyed. This is a good result on a tired subject – Hunstein cases should continue to trail off as Plaintiffs continue to lose them.
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.
