The Court of Appeals for the Sixth Circuit has revived a Fair Debt Collection Practices Act case against a collection law firm, finding that its efforts to garnish a consumer’s wages across state lines may have been deliberately aimed at the consumer’s home state, creating enough connection to allow the case to proceed there.
The background: The case stems from a default judgment obtained in Oklahoma after the plaintiff and his former spouse fell behind on payments for a vehicle purchased while they lived in that state. After the plaintiff relocated to Michigan following a divorce, the creditor retained the defendant law firm to pursue collection.
- Despite indications that the plaintiff had moved out of Oklahoma, including returned service attempts and address information pointing to Michigan, the firm proceeded with litigation in Oklahoma and ultimately secured a default judgment. The firm later initiated wage garnishment efforts by sending a garnishment summons to a registered agent associated with the plaintiff’s employer’s parent company.
- That process ultimately resulted in a Michigan-based employer withholding wages earned by the plaintiff in Michigan. According to the complaint, more than $2,500 had been garnished, with collections ongoing.
- The plaintiff then filed suit in Michigan, alleging violations of the FDCPA and state law, arguing that the defendant failed to properly domesticate the Oklahoma judgment before garnishing wages in Michigan as required under state law.
- The district court initially dismissed the case, finding that the defendant lacked sufficient contacts with Michigan.
The ruling: The Sixth Circuit disagreed, emphasizing that the proper focus is not just where actions originated, but where they were intentionally directed and where the harm occurred.
- The appellate court pointed to multiple facts suggesting the defendant knew the plaintiff lived and worked in Michigan and nonetheless pursued collection activity that targeted wages earned there. The court noted that the garnishment had “real world consequences” in Michigan, including financial harm to the plaintiff and administrative burdens on a Michigan employer.
- The court also rejected the argument that routing the garnishment through entities outside Michigan insulated the defendant from jurisdiction, finding that using intermediaries does not negate intentional targeting of a forum state.
- Importantly for the industry, the court did not rule on whether the garnishment itself violated state law, only that the plaintiff’s claims can proceed in Michigan.
- The case now returns to the lower court for further proceedings, where those substantive issues will be addressed.
