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.
Appeals Court Side-Steps Chance to Create Bright-Line Rule on FCRA Claims, But Still Affirms Ruling for Defendant
The Court of Appeals for the Eleventh Circuit yesterday issued a ruling in a long-awaited Fair Credit Reporting Act reasonable investigation case, but side-stepped the issue that everyone was hoping it would decide, instead affirming the District Court’s ruling in favor of the defendant, but for an entirely different reason. More details here.
WHAT THIS MEANS, FROM STEFANIE JACKMAN OF TROUTMAN PEPPER: While sidestepping addressing the legal vs. factual question directly, the Eleventh Circuit’s decision actually may be more useful and workable. Developing a principled test to define when an issue is one of fact or one of law has caused a great deal of divergence in many courts. It also can be a difficult line to draw in some cases. The Eleventh Circuit’s “objective and readily identifiable” test may present a more reliable path to parties seeking to litigate this argument without having to delve into legal nuansances and precedents.
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Appeals Court Affirms Summary Judgment Ruling for Defendant in FDCPA Case
The Court of Appeals for the Second Circuit has affirmed a lower court’s ruling in favor of a defendant that was sued for violating the Fair Debt Collection Practices Act, agreeing that the defendant’s conduct did not violate the statute and that that plaintiff’s claims were partially time-barred. More details here.
WHAT THIS MEANS, FROM DALE GOLDEN OF MARTIN GOLDEN LYONS WATTS MORGAN: This case involved two of my favorite things: 1) pro se plaintiffs; and 2) condo associations. Plus, the added treat of the a daughter of the debtor, who had been give power of attorney by the debtor. The lawyer for the condo association successfully sued the soon-to-be-Plaintiff and was awarded attorneys’ fees. While the state court case was pending, the debtor sued the lawyer in federal court alleging FDCPA violations. Those claims were dispatched on SOL grounds or because they were meritless. The debtor appealed to the Second Circuit Court. She apparently claimed that she didn’t receive the allegedly violative letter until more than a year and a half after it was mailed by the attorney. But the appellate court ruled there was no evidence to support this claim. Her other two arguments were quickly dispatched as well because the debtor failed to overcome the presumption she was served the summons and complaint, and the court ruled the allegedly unlawful third-party contacts were “inherent in an ordinary lawsuit” and therefore not prohibited by the FDCPA. The court considered two additional arguments, but neither merits mentioning here since they, too, were nonsense.
This case, once again, requires me to salute all collection attorneys for having the wherewithal to tolerate crazy pro se debtors (and sometimes their children). While we defense attorneys encounter pro se plaintiffs on occasion, it’s not nearly as often as my collection attorney clients find themselves facing these foes, many of whom seem to believe they were just one bad break away from being lawyers themselves.
Judge Denies Class Certification Motion in FDCPA Case
A District Court judge in New Jersey has denied a plaintiff’s motion to certify a class in a Fair Debt Collection Practices Act lawsuit, ruling the choice of law provisions in the underlying agreement make it impossible to determine on a class-wide basis which statute of limitations apply to the underlying debt. More details here.
Judge Denies Class Certification in FDCPA Case Over Lack of Standing
Judge Esther Salas of the District Court for the District of New Jersey was on a roll last Thursday, denying class certification in two separate Fair Debt Collection Practices Act cases against the same defendant, largely for the same reasons. I wrote about one yesterday, and today I write about the other one, in which the plaintiff claimed the defendant violated the statute by not disclosing that a letter containing a settlement offer was sent after the statute of limitations had expired. More details here.
WHAT THIS MEANS, FROM DAVID SHAVER OF SURDYK DOWD & TURNER: Though it may be easy for consumers and their counsel to make class action allegations related to claims that are based on the collection of allegedly time-barred debts, it should be difficult for them to prove entitlement to class certification in such cases. Indeed, the question of what statute of limitations applies to a particular debt, and the related question of whether that time period has expired, can sometimes be difficult to answer. Accordingly, when defending such a putative class case and facing a motion for class certification, ARM defendants should work closely with their counsel to identify and raise every (legitimate) challenge to certification they can.
In both Filgueiras v. Midland and Stromberg v. Midland, Judge Esther Salas of the United States District Court of the District of New Jersey was presented with motions for class certification (related to claims based on the collection of allegedly time-barred debts) and challenges to those motions from Midland. Midland’s challenges rightly focused on issues connected to the applicable statute of limitations because, as Judge Salas noted in Stromberg, “[i]ndividual issues predominate with respect to the statute of limitations.”
As most ARM defendants and their counsel know, state laws vary (sometimes wildly) and the law of the state where the consumer lives may not be the law applicable to the debt at issue. Is there a choice of law provision in the contract or agreement creating the debt? What does the contract or agreement actually say? Does the forum state honor choice of law provisions? Did the consumer take any action to toll the applicable statute of limitations? What is the consumer’s relationship to the forum state? These kinds of questions were all on the table in Filgueiras and Stromberg and Judge Salas reached, in this writer’s mind, the only reasonable conclusion she could: the potential variances in the answers to these questions required a finding that individual issues predominated and rendered class treatment inappropriate.
FTC Enacts Ban on Noncompete Clauses
The Federal Trade Commission yesterday announced the issuance of a final rule that bans noncompete clauses nationwide, although the regulator did soften its stance on the usage of noncompetes for senior executives. More details here.
WHAT THIS MEANS, FROM JOHN REDDING OF ALSTON & BIRD: The FTC, claiming non-competes negatively impact the economy in terms of innovation, new startups, and artificially suppressing wages, recently issued a final rule declaring entry into non-compete provisions an unfair method of competition in most employment situations (including independent contractor arrangements). The rule, which goes into effect 120-days after publication in the Federal Register, excludes “senior executives” and selling business owners from the prohibition. In response to the rule, multiple lawsuits have been filed alleging the rule risks allowing employees with sensitive business information, the FTC lacks authority for the rule, such agreements are not categorically illegal, and safeguard specialized training. Interestingly, the rule may ban requirements to reimburse an employer for training expenses if an employee seeks to leave employment early, a practice that has become common in a number of industries, including healthcare. The case filed by the U.S. Chamber of Commerce will have a combined trial on the merits and injunction hearing shortly after briefing is complete, currently scheduled for June 19, 2024. In the meantime, companies are well advised to review existing non-competes, determine which ones may no longer be enforceable and have a plan in place to quickly provide the notice regarding non-enforceability required under the new rule.
Appeals Court Affirms Ruling in FCRA Case Over Dispute Investigation
If two consumers dispute a debt and the furnisher submits corrections to how the debt is being furnished, how can the consumers claim the investigation that was conducted was unreasonable? They can’t, the Court of Appeals for the Ninth Circuit has ruled, affirming a lower court’s ruling. More details here.
WHAT THIS MEANS, FROM RICK PERR OF KAUFMAN DOLOWICH: Unlike the FDCPA, which imposes strict liability, the FCRA requires both a culpability (negligence or willfulness) requirement and a causation requirement. Additionally, as a data furnished, one cannot be liable unless one fails to correct a mistake by not conducting a reasonable investigation following a dispute. The mere inclusion of an erroneous tradeline is not enough for liability. Here, the Ninth Circuit correctly upheld the decision of the trial court holding that correcting the tradeline’s inaccuracies insulated the data furnisher from liability even if the correction went beyond the specific nature of the dispute. A correction (for whatever reason) by definition means that the investigation was reasonable as a matter of law. It is the result, not the process, that counts.
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.