Articles Posted in FDCPA Class Actions

Published on:

District Court Concludes that Validation Notice in Debt Collection Letter was Presumptively Valid because it Tracked Section 1692g of the Fair Debt Collection Practices Act (FDCPA), but Concluded that Least Sophisticated Consumer could have been Confused by “Subject To” Language in Letter and so Denies Defense Motion to Dismiss Class Action Complaint

Plaintiffs filed a putative class action against debt collection law firm alleging that a debt collection letter sent in August 2005 violated the federal Fair Debt Collection Practices Act (FDCPA). Meselsohn v. Lerman, 485 F.Supp.2d 215, 216 (E.D.N.Y. 2007). Defense attorneys moved to dismiss the class action complaint for failure to state a claim on the ground that the letter was presumptively valid. Surprisingly, plaintiff admitted that the letter “properly informs the consumer of his rights to dispute the debt, request verification of the debt and request creditor information within thirty (30) days of the initial communication from the debt collector.” Id., at 217. The class action complaint was premised on the theory that the letter violated the FDCPA because the 30-day validation period required by Section 1692g is “improperly overshadowed by the demand for payment of the debt within the same thirty days.” Id. According to plaintiff, it was unclear that he had the right “to either pay the debt or request validation,” id. (italics added). Defense attorneys argued that dismissal of the class action was warranted because the letter “tracks the statutory language of the FDCPA and is presumptively valid,” and argued further that the demand for payment “is specifically made ‘subject to’ the thirty day notice provisions” and so the validation notice is not “overshadowed” by the payment demand. Id. Plaintiff countered that the letters should have included “transitional language explaining to the consumer that the demand for payment does not override the consumer’s right to seek validation of the debt” and that it is deficient because it is not clear that the consumer may either pay the debt or dispute it. Id. The district court agreed with plaintiff.

Continue reading

Published on:

FDCPA Class Action Certified Over Defense Objection that Range of 100-500 Class Members does not Satisfy Numerosity and that Allegation that Debt Collection Letters Violate Federal Fair Debt Collection Practices Act (FDCPA) Presented Common Questions of Law and Fact Illinois Federal Court Holds

Plaintiff filed a putative class action against Check Brokerage Corp. alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) based on debt collection letters sent by the company. Day v. Check Brokerage Corp., 240 F.R.D. 414, 415 (N.D. Ill. 2007). The class action alleged that defendant’s letters violate the FDCPA in that they are “false, deceptive, or misleading as determined by the unsophisticated consumer standard and therefore in violation of 15 U.S.C. § 1692(e), (e)(2)(A), (e)(5), and (e)(10).” Id., at 416. The class action complaint also alleged that defendant “used unfair or unconscionable means to collect or attempt to collect a debt in violation of 15 U.S.C. § 1692(f) and (f)(1)” and that the notice concerning a consumer’s right to dispute a debt failed to comply with 15 U.S.C. § 1692(g)(a), id. Plaintiff moved the court to certify the litigation as a class action; defense attorneys argued that class action treatment was inappropriate because neither numerosity nor commonality had been met. Id., at 415. The district court disagreed.

The class action complaint was premised upon four debt collection letters defendant sent to plaintiff concerning a $20 debt. Day, at 416. The first letter advised Day that his $20 check had not cleared, that he now owed $65 (which included a “return check charge” of $25 and a “bank charge to merchant” of $20), and that additional fees may be imposed if payment is not made promptly and it was in his “‘best interests to clear this check immediately,’ despite the notification at the end of the letter that Day had thirty days to dispute the validity of the debt.” Id. The second letter “suggest[ed] you give this matter your immediate attention” and quoted Illinois Commercial Code § 3-806 about liability for dishonored checks. Id. The third letter “demand[ed] the $65.40 and stat[ed], ‘WE MUST HAVE YOUR PAYMENT NOW!!’” The letter also warned plaintiff that he could be liable for additional amounts. Id. Finally, the fourth letter stated, “THIS CHECK REMAINS UNPAID! WE ARE, THEREFORE, GOING TO SHOW YOU HOW MUCH IT COULD COST SHOULD IT GO TO LITIGATION.” This letter included reference to warrants for arrest and adverse credit reports, and ended, “Common sense would dictate that this check be paid at this point. THE AMOUNT DUE, INCLUDING THE CHECK AND SERVICE CHARGES TO THIS POINT, IS $65.40.” Id.

Continue reading

Published on:

FDCPA Class Action Claim Belonged to Bankruptcy Estate and Settlement of Individual Claim Appropriate because Trustee could not Prosecute Class Action Ohio Federal Court Holds

After a law firm filed an action to collect a debt from her, plaintiff filed a putative class action against the law firm alleging violations of the federal Fair Debt Collection Practices Act (FDCPA). Griffith v. Javitch, Block & Rathbone, LLP, 358 B.R. 338, 340 (S.D. Ohio 2007). Shortly thereafter, plaintiff and her husband filed a Chapter 7 bankruptcy petition in the federal court for the Southern District of Ohio, staying the underlying action, and plaintiff listed the class action as a contingent claim her creditor, Great Seneca Financial Corporation, but did not separately list her class action against the law firm. Id. The bankruptcy trustee determined that it was a no-asset case, and plaintiff and her husband received a bankruptcy discharge in October 2004; less than a month later, the underlying lawsuit was reopened. Id. The parties jointly requested a stay pending a decision by the federal Court of Appeals for the Sixth Circuit in a case concerning “several defenses to an FDCPA suit that are raised by [the law firm] here on essentially identical factual allegations,” id. (citing Todd v. Weltman, Weinberg & Reis, 434 F.3d 432 (6th Cir. 2006). The underlying class action again became active in June 2006.

Defense attorneys moved for dismissal or summary judgment, arguing that the class action claim belonged to the bankruptcy trustee because it was not properly listed on the bankruptcy petition schedules; accordingly, the defense argued, plaintiff lacked standing to prosecute the class action. Griffith, at 340. Plaintiff countered that a “class action claim” had been listed on the petition, and advised the court that the bankruptcy trustee would be filing a formal abandonment of the claim so that her class action could proceed; instead, the trustee advised plaintiff’s lawyer that it would not be in the best interests of the bankruptcy estate to abandon the claim. Id. The court issued an order to show cause why the complaint should not be dismissed for lack of standing, but the defense motions were held in abeyance pending further bankruptcy court proceedings. Id. The trustee moved to reopen the bankruptcy case, and to hire plaintiff’s lawyer to prosecute the class action on behalf of the estate. Id.

Continue reading

Published on:

Federal Fair Debt Collection Practices Act (FDCPA) does not Authorize Injunctive Relief Against Debt Collectors, FDCPA One-Year Statute of Limitations Begins to Run no later than Date Debt Collector Files Suit Against Debtor, and Debt Collector need only Establish that Notice Required by § 1692g was Sent, not Received, California Federal Court

Plaintiff filed a putative class action against debt collector and its attorneys in California state court for alleged violations of the Fair Debt Collection Practices Act (FDCPA) and California’s equivalent statute known as the Rosenthal Fair Debt Collection Practices Act (California’s FDCPA). Defense attorneys removed the class action to federal court and moved to dismiss the California state-law claims arguing that they were barred by California’s litigation privilege; the district court agreed with the defense and dismissed those portions of the class action complaint. Taylor v. Quall, 471 F.Supp.2d 1053, 1056-57 (C.D. Cal. 2007). Defense attorneys then filed a motion to strike certain portions of the class action complaint, as well as a motion for summary judgment. Id., at 1055-56. The district court granted these motions in part, and granted the request of plaintiff’s lawyer for additional time to conduct discovery as to the FDCPA § 1692e claim in the class action complaint.

The class action arose from the following facts: a Plaintiff obtained a credit card from Citibank but stopped making payments on the card in early 2002. Citibank transferred the debt to defendant Unifund CCR Partners, and Unifund retained California attorney Matthew Quall to collect the debt. Taylor, at 1056. Quall sent plaintiff a collection letter in May 2005, and filed suit against plaintiff in June 2005; that lawsuit eventually settled, and Quall filed a request for dismissal without prejudice. Id. Plaintiff’s class action complaint was filed in July 2006 (mistakenly identified as 2005 in the court order), the claims of which the district court summarized at page 1056: “Plaintiff asserts that Quall (1) failed to provide the proper notice of debt required by 15 U.S.C. § 1692g when he began his collection efforts; (2) made false or misleading representations while negotiating the settlement in violation of § 1692e; (3) failed to fulfill the FDCPA’s standard for “meaningful” attorney involvement; and (4) violated the FDCPA by filing the Unifund Action without complying with California statutes governing suits brought on behalf of entities with fictitious business names.”

Continue reading

Published on:

Debtor need not Pay Debt to have Standing to Prosecute Federal Fair Debt Collection Practices Class Action and Debtor Entitled to Summary Judgment on § 1692g Claim because Collection Letter did not Track Statute but Triable Issues of Fact Existed as to Alleged Violations of § 1692e(5) and (10) as the Language in Collection Letters was Subject to Reasonable and Different Interpretations Florida Court Holds

Plaintiff filed a putative class action against a debt collector, Amalgamated Debt Collection Services, for violations of the federal Fair Debt Collection Practices Act (FDCPA) and various state laws arising out of its efforts to collect $39.32. Rivera v. Amalgamated Debt Collection Services, Inc., 462 F.Supp.2d 1223, 1225-26 (S.D. Fla. 2006). Plaintiff moved for partial summary judgment as to defendant’s liability for violating the FDCPA, id., at 1225; defense attorneys argued that triable issues of fact exist, and that plaintiff lacked standing, id., at 1227. The district court granted the motion in part, but agreed with defense attorneys that triable issues of fact existed as to interpretation of certain language in debt collection letters.

The facts are straight-forward: In an effort to collect a debt, Amalgamated sent plaintiff two letters, each of which stated in pertinent part, “unless this matter can be resolved within 30 days of the above date, it will be necessary to consider the institution of legal procedures against you” and that she had 30 days from the date of the letters to dispute the validity of the debt, Rivera, at 1225-26; it was undisputed, however, that Amalgamated had never commenced legal proceedings in an effort to collect a debt, id., at 1226. Amalgamated also sent plaintiff a letter stating “that her failure to remit payment within 15 days would result in the ‘nationwide reporting’ of her debt as a ‘bad debt.'” Id. Plaintiff moved for partial summary judgment.

Continue reading

Published on:

California’s Litigation Privilege Bars Claims of Unfair Debt Collection Practices California Federal Court Holds

Plaintiff filed a putative class action in California state court alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) and California’s equivalent statute, the Rosenthal Fair Debt Collection Practices Act (RFDCPA), and for violations of California’s unfair competition law (UCL), California Business & Professions Code section 17200 et seq. The lawsuit was premised on acts committed by defendants’ efforts to collect a debt Defense attorneys removed the class action to federal court, and filed a motion to dismiss two claims for relief. Taylor v. Quall, 458 F.Supp.2d 1065, 1065-66 (C.D. Cal. 2006). Defendants argued that their conduct was absolutely privileged because it was part of the lawsuit aimed at collecting the debt. Id., at 1066. The district court agreed with the defense and granted the motion.

Plaintiff’s class action complaint alleged the following. After plaintiff lost his job, he received several calls from people attempting to collect monies owed on his Citibank credit card account. Plaintiff advised these people that he was unemployed and would not pay the debt. Eventually, these collection efforts ended. However, defendants thereafter acquired the Citibank debt and filed a lawsuit against plaintiff seeking to collect the amounts owed. Plaintiff claims the lawsuit was time-barred and that defendants lacked standing. Plaintiffs further alleges that “Defendants improperly sought attorney’s fees and costs, and made multiple misrepresentations to Plaintiff until he ultimately settled the action.” Taylor, at 1066. As noted above, defense attorneys argued that any statements made during the course of the lawsuit fell within the scope of the litigation privilege, thus warranting dismissal under Rule 12(b)(6). The district court agreed.

Continue reading

Published on:

Class Action Alleging FDCPA (Fair Debt Collection Practices Act) Violations Based on Form Letters Sent to Debtors Warranted Class Certification Montana Federal Court Holds, Rejecting Defense Argument that Plaintiff’s Statute of Limitations Defense to Debt Collection Defeated Predominance Requirement of Rule 23(b)(3)

Plaintiff filed a putative class action against a debt collector seeking to collect on dishonored checks for alleged violations of the Fair Debt Collection Practices Act (FDCPA) based on letters sent to debtors that demanded fees not authorized by state or federal law. Alexander v. JBC Legal Group, P.C., 237 F.R.D. 628, 629 (D. Mont. 2006). Plaintiff’s lawyer moved for certification of the class action; defense attorneys opposed the motion arguing that the numerosity requirement of Rule 23(a) is not met and that plaintiff’s statute of limitations defense defeats certification under Rule 23(b)(3).

In 2004, defendant JBC Legal Group sent a letter to plaintiff seeking to collect $6.07 for a dishonored check that had been written more then 12 years earlier. Alexander, at 629. “The letter demanded that Alexander remit to Defendants $46.07 and stated that he would be subject to a penalty of triple the amount of the check, or $100.00, whichever was greater, if he failed to make payment within thirty days.” Id. A month later, defendant sent plaintiff a letter demanding $146.07. Id. Several months later, defendant sent plaintiff another letter demanding $146.07. Id.

Continue reading

Published on:

Federal Court Rejects Class Action Claim that Offer to Settle Debt for 50% of Current Balance Due Violates Fair Debt Collection Practices Act (FDCPA)

Plaintiffs filed a consolidated class action complaint against Midland Credit Management, a debt collector that purchases debts from third-party creditors, alleging violations of the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. §§ 1692 et seq. Midland sent letters attempting to collect outstanding debts; the class action complaint alleged that the letters violated the FDCPA because they contain false and misleading information. Defense attorneys filed a motion for summary, and plaintiffs followed with a cross-motion for summary judgment. The federal district court agreed with defense attorneys that the collection letters did not violate the FDCPA and granted summary judgment in favor of Midland and against the class action plaintiffs. Jackson v. Midland Credit Management, Inc., 445 F.Supp.2d 1015, 1017 (N.D. Ill. 2006).

Preliminarily, the district court noted that the Seventh Circuit “evaluates FDCPA claims through the eyes of an ‘unsophisticated debtor’” – it does not employ the “least sophisticated debtor” test adopted by some sister circuits. Jackson, at 1018-19. The court explained at page 1018 that, under this test,

“The unsophisticated debtor is regarded as ‘uninformed, naive, or trusting,’ but nonetheless is considered to have a ‘rudimentary knowledge about the financial world and is capable of making basic logical deductions and inferences.’” (Citations omitted.)

Because the court’s analysis requires an understanding of the specific language used in Midland’s letters, we provide the quoted language, including the emphasis in the original letters, as set forth by the district court at page 1017:

Continue reading

Published on:

In Case of First Impression Florida District Court Holds that Collection Letter Sent by Law Firm Violated Federal Fair Debt Collection Practices Act (FDCPA) Because it Told Debtor that Validity of Debt could be Disputed Only in Writing

Plaintiff opened an American Express Centurion credit card account. American Express retained a law firm to collect amounts owed on the account. The law firm sent a “Dunning letter” that stated, in pertinent part, that the debtor had to “notify this office in writing within thirty days after receiving this notice that you dispute the validity of the debt.” Baez v. Wagner & Hunt, P.A., 442 F.Supp.2d 1273, 1274 (S.D. Fla. 2006) (italics added by court). Plaintiff filed a class action against the law firm alleging that the collection letter violated Section 1692g of the federal Fair Debt Collection Practices Act (FDCPA) by requiring that the validity of the debt be disputed in writing, and defense attorneys moved to dismiss the complaint. Id., at 1274-75. The basis of the lawsuit is that Section 1692g(a)(3) requires that a debt collection letter notify the debtor that the debt will be assumed valid unless the debtor disputes the validity of the debt within 30 days. Sections 1692g(a)(4) and (a)(5), however, reference written notifications from the debtor disputing the debt. Defendant argued that its Dunning letter simply “provided [plaintiff] with additional guidance for disputing the debt and avoided confusion by reconciling the notification requirement in subsection (a)(3) with the writing requirement contained in subsections (a)(4) and (a)(5).” Baez, at 1275-76. The district court disagreed.

Continue reading

Published on:

California Federal Court Reaffirms that Scope of Precertification Discovery in Class Action Lawsuits is Within the Discretion of the Court

A putative class action alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) was filed against a county district attorney and a private company (ACCS) under contract to administer the county’s Bad Check Restitution Program. Del Campo v. Kennedy, 236 F.R.D. 454 (N.D. Cal. 2006). After plaintiff learned that the check she had given a store merchant (Fry’s Electronics) did not clear, she called the store and offered to make full payment: “The store declined her offer because the check had not been entered yet into the computer system.” Id., at 456. Plaintiff later received a letter from the district attorney concerning the crime of writing a bad check, and advising her that she owed not only the amount of the check ($95.02), but a returned item fee ($10), administrative fee ($35), and bad check restitution program fee ($125); plaintiff tendered only the amount of the delinquent check. Id. Upon receiving a demand threatening criminal action if she failed to pay the $170 in additional fees, plaintiff filed the FDCPA class action. Id. Eventually, the class action was consolidated with another lawsuit. Plaintiff then filed subpoenas on two stores (Safeway and Target), and defense attorneys filed a motion to quash the subpoenas or for a protective order.

Continue reading