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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.
District Court Judge Grants Motion to Compel Arbitration in FDCPA Case
On remand from the Court of Appeals for the Third Circuit, a District Court judge in New Jersey has granted a defendant’s motion to compel arbitration after it was accused of violating the Fair Debt Collection Practices Act, More details here.
WHAT THIS MEANS, FROM MONICA LITTMAN OF KAUFMAN DOLOWICH: There are a few takeaways from this case. Arbitration agreements often contain language stating that a consumer agrees to waive the right to participate in a class action. If there is an applicable arbitration agreement, it is essential that an agency assert that a dispute should have been brought by the consumer in arbitration (where a class action is not permitted) instead of in court at the very earliest opportunity in a case. Courts in the Third Circuit used to look at whether there was prejudice to the party opposing arbitration (which is usually the consumer) by an agency waiting too long to invoke the right to go to arbitration. In this case, the court applied a new standard from the U.S. Supreme Court, which held that the test for determining if a party had waived the right to arbitrate is now the same as whether the party waived any other contractual right. This means that the factor of prejudice to the party opposing arbitration (usually the consumer) was no longer considered. The court will now consider whether the party seeking to arbitrate the case acted in any way to waive the right to invoke arbitration, which is determined by looking at the facts of each case.
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Supreme Court Overturns Chevron Doctrine; Limits Authority of Federal Regulators Like CFPB, FTC
In a 6-3 decision, the Supreme Court today overturned the Chevron doctrine, a precedent that has allowed federal agencies significant authority to interpret ambiguous laws. This ruling, decided along ideological lines, fundamentally changes how regulations will be implemented and challenged moving forward. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER: The Loper Bright and Relentless decisions were not unexpected, given the make up of the current Court and their known positions on the legitimacy of Chevron. But what next? We anticipate industry will challenge CFPB rulemakings that industry believes exceeding the CFPB’s authority as delegated by Congress and under the APA. But it also is entirely possible that consumer advocates will do the same and attack regulations they think did not go as far as permitted to avoid consumer harm. It should be interesting over the next few years as we see where litigants take these arguments. In my mind, a potentially concerning area for attack would be on established FCC TCPA rulemakings, such as being allowed to assume the provision of a telephone number by a consumer in an application constitutes consent to contact about that account at that number.
Florida Appeals Court Overturns Dismissal of Debt Collection Lawsuit
A Florida state Appeals Court has reversed a lower court’s dismissal of a collection lawsuit filed by a debt buyer against an individual, ruling the lower court applied the incorrect law when the plaintiff was unable to serve the defendant with a summons and complaint. More details here.
WHAT THIS MEANS, FROM LAUREN BURNETTE OF MESSER STRICKLER BURNETTE: This opinion is proof that every lawyer should read their state and local procedural rules at least once a year to stay up to date. Familiarity with those rules pays off, as APLS showed here. The firm’s ability to successfully show that the trial court applied the wrong rule, and neglected to satisfy the conditions of the correct rule, was basis alone to reverse the trial court’s dismissal of this case. The cherry on top is the 3d DCA’s affirmation that dismissal with prejudice of a lawsuit due to missed deadlines is a sanction, not merely a procedural exercise. And since imposition of such a drastic sanction required the trial court to take certain steps first — steps it obviously didn’t take — the only appropriate remedy was to send the case back to the trial court.
Judge Dismisses FDCPA Unpaid Rent Suit for Lack of Standing
A District Court judge in Maryland has dismissed a Fair Debt Collection Practices Act claim against a collection law firm, finding the plaintiff lacked standing to sue because he failed to allege any concrete injury from the firm’s actions, even though the firm filed two collection lawsuits seeking to collect on unpaid rent. More details here.
WHAT THIS MEANS, FROM MIKE FROST OF FROST ECHOLS: This is yet another case regarding a Plaintiff’s failure to allege an injury or damages in a collection action. Here, the law firm filed collection litigation actions against plaintiff and ultimately dismissed those cases at or prior to trial. The plaintiff then files a claim against the law firm for filing the lawsuits while understanding that the landlord was improperly licensed at the time of the action. The Court found that plaintiff failed to allege an injury sufficient to create Article III standing and dismissed the case. Standing continues to warrant consideration in defense of cases under federal or state collection actions.
State Appeals Court Overturns Dismissal of FDCPA Class-Action Involving 11k Class Members
The Superior Court of New Jersey Appellate Division has reversed a previous dismissal of a class-action Fair Debt Collections Practices Act claim that accused the defendant used misleading debt-collection form letters, which threatened negative credit reporting despite the debts already being reported. More details here.
WHAT THIS MEANS, FROM MICHAEL PONCIN OF MOSS & BARNETT: The history of this case is a bit complex. Plaintiff filed a class action complaint in U.S. District Court – NJ, on May 17, 2018, the last day before the SOL would expire. After defeating class certification, and in light of the then recent TransUnion v. Ramirez Supreme Court decision, the defendant moved for summary judgment, asserting that Plaintiff lacked standing. Defendant prevailed on its standing-based motion and after Plaintiff’s subsequent motion for reconsideration, the federal court dismissed the lawsuit on September 1, 2022, for lack of standing. Plaintiff immediately filed the lawsuit in NJ state court and the lower court dismissed the class claims, but not Plaintiff’s individual claim, finding that the individual claim was subject to equitable tolling (but not the class claims). The NJ Appellate Division reversed, finding the lower court had abused its discretion by not applying wrong-forum tolling to the class claims.
While it’s undoubtedly important to review any lawsuit to determine if the SOL has run, this case shows the extent to which courts will go to apply equitable tolling, especially to a putative class.
Judge Grants MSJ for Defendant in FDCPA Case Over Postage Stamp Standing
A District Court judge in Missouri has granted a defendant’s motion for summary judgment in a Fair Debt Collection Practices Act case, ruling that the plaintiff lacked standing and that the defendant did not violate the FDCPA. The case revolved around disputes and cease communication requests and the plaintiff’s claim that the cost of a postage stamp was enough to confer standing to pursue this lawsuit. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: While this case ultimately resulted in a favorable ruling for the defendant, it also highlights the continued failure of some federal judges to understand the significance of Article III jurisdiction. The plaintiff claimed the defendant violated the FDCPA by sending her letters after receiving a cease comm request. She testified to having suffered various emotional injuries and having paid postage for a letter sent to the defendant. The district court first determined that the plaintiff lacked Article III finding that the cost associated with the stamped letter was insufficient because it “was merely an attempt to manufacture standing.” Fair enough, but that should have been the end of the case. Instead of dismissing the case as required by Supreme Court precedent, the judge proceeded to grant the defendant summary judgment on the merits finding that the plaintiff’s dispute letter was an “invitation’ to further communication, namely a verification letter from the Defendant that the court determined was not an attempt to collect a debt. While the defendant wasn’t harmed by the court’s failure to simply dismiss the case, these are the types of rulings other judges sometimes rely on to improperly grant consumers relief e.g., leave to amend the complaint, after determining no Article III jurisdiction exists based on the allegations in the pending complaint.
Appeals Court Affirms Ruling for Defendants in FCRA Reasonable Investigation Suit
The Court of Appeals for the Eighth Circuit has affirmed the summary judgment ruling in favor of the defendants that were sued for violating the Fair Credit Reporting Act, ruling that the reasonable investigation conducted by one of the defendants — a credit reporting agency — was not proven to be insufficient and because the plaintiff failed to provide enough evidence to prove the other defendant — a student loan servicer — to support her claim. More details here.
WHAT THIS MEANS, FROM NABIL FOSTER OF BARRON & NEWBURGER: “Back to basics” is what you should remember about this case and how, despite the common perception that a Plaintiff’s burden of proof is overlooked, this case is a very good reminderthat the failure of a Plaintiff to meet that burden of proof is fatal to the case. Essentially, the appellate court held that the plaintiff failed to provide sufficient evidentiary support for her “suspicion” that the alleged incorrect credit reporting caused Plaintiff to be denied credit because “the [credit denial] letters Lloyd submitted are simply too vague to demonstrate actual damages” and “Lloyd had other history of loan delinquencies.”When it comes to alleged credit injuries, this case reminds you that there are some courts that will require clear and convincing proof (not suspicions or inferences) that a specific credit reporting inaccuracy is the proximate cause of the claimed credit injury. This Eighth Circuit opinion will help the ARM industry defend against rising litigation threats based upon the Fair Credit Reporting Act (“FCRA”), 15 USC § 1681 et seq.
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.
