Know when to hold Em, Know when to Fold Em! How to be Winning - - PowerPoint PPT Presentation

Know when to hold ‘Em, Know when to Fold ‘Em!

How to be Winning Player in FDCPA Litigation

Robbie Malone and Xerxes Martin

• f Malone Akerly Martin PLLC

& Mike Frost of The CBE Companies, Inc.

Like All Games, There are Rules

Poker is more than just cards and luck, you need strategy to win!

• Choosing your GAME
• Addressing your HAND
• what’s in the Pot
• Create EXPECTED OUTCOME

(players, history, probability)

FDCPA Litigation is NO different; Plan your approach!

• Choosing your JURISDICTION
• Addressing your FACTS
• what’s at RisK/STAKE
• Create EXPECTED OUTCOME

(parties, case law, probability)

The Name of the Game is

Jurisdiction

Picking your game is picking jurisdiction

• What game is being played?
• FDCPA?
• TCPA?
• Mixed?
• Is it a tough game or soft game:
• Have good rulings come out of this jurisdiction before?
• Are the attorneys on the other side competent or not?

What are the stakes:

• How much is it going to cost to play?
• What are the bet sizings such as cost of your counsel and what

fee rates have been awarded to opposing counsels there?

Good game Jurisdiction

Good game Jurisdictions:

• 2nd Circuit:
• Rulings favor “purpose of FDCPA” to ensure compliant debt

collectors are not “completely disadvantaged”

• Failure to disclose interest/fees that are NOT accruing (or that

debt is static) is NOT a violation

Taylor v. Fin. Recovery Servs., No. 17-1650-cv, 2018 U.S. App. LEXIS 7899 (2d Cir. 2018)

• Res judicata and Rooker Feldman doctrine barred P from re-

litigating in Fed. Court collection claims that failed in Conn. State Court

Peterson v. Wells Fargo, No. 16-3635-cv, 2018 U.S. App. LEXIS 593 (2d

• Cir. 2018)

Good game Jurisdictions cont.:

• 6th circuit:
• Recognizes Spokeo decision on injury-in-fact for art. III standing;

“not all procedural violations, not even all inaccuracies, cause real harm.”

• Discusses limit on congressional law-making power to “enact and

injury into existence”

• Provides protection for attorney communications – not all

require FDCPA disclosures because failure to include does not always lead to injury

Hagy v. Demers & Adams, 882 F.3d 616 (6th Cir. 2018).

Good game Jurisdictions cont.:

• 10th Circuit:
• Court attacked Yaakov Saks on why Plaintiff waited several

months to move for dismissal after obtaining discovery, then asserted case was ripe for summary judgment, then sought

• dismissal. Set hearing for Defendant to recover attorneys fees.
• Pittman v. Wakefield & Associates, Inc., Case No. 1:16-cv-02695).
• 10th Circuit
• Mortgage servicer is not collector under FDCPA even though

hired law firm to pursue non-judicial foreclosure (NJF) because already servicing loan before it went into default

• FDCPA only imposes liability when attempting to collect money;

enforcing security interest is NOT an attempt to collect money

Obduskey v. Fargo, 879 F.3d 1216 (10th Cir. 2018)

• 5th Circuit:
• Ozmun v. Portfolio Recovery Associates, LLC

Good game Jurisdictions cont.:

• 5th Circuit:
• Ozmun v. Portfolio Recovery Associates, LLC
• Tejero v. Portfolio Recovery Associates , LLC

bad game Jurisdiction

Bad game Jurisdictions:

7th Circuit:

• COMPARE TO LAST SLIDE –
• Evans v. Portfolio Recovery Associates, LLC, 17-1773, et al (7th
• Cir. May 2, 2018)
• Exact same letters at issue, different results
• Strict scrutiny on language in collection letters, “collectors cannot

immunize themselves from FDCPA liability by blindly copying and pasting the Miller safe harbor language”

• Required to tailor boilerplate language to avoid ambiguity

Boucher v. Fin. Sys. of Green Bay, 880 F.3d 362, 364 (7th Cir. 2018)

• Unsupportive of Spokeo’s “no harm caused, no federal case;”

Held that two unsolicited calls (one to voicemail) was sufficient concrete injury citing 3rd Circuit where one call was sufficient

Abante Rooter & Plumbing, Inc. v. Oh Insurance Agency, No. 15-CV-9025 (N.D. Ill. Feb. 20, 2018)

3rd Circuit:

• FDCPA does not imply a common law privilege.

Ogbin v. Fein, Such, Kahn & Shepard, P.C._, No. 09-2829, (3rd Cir. Feb. 22, 2011 unpublished),

• Debt collection law firms are subject to FDCPA in mortgage

foreclosure cases, “a debt collector cannot avoid FDCPA liability simply by proceeding in rem rather than in personam.”

• Conflicts with newly approved Bill H.R. 5082

Collins v. Phelan Hallinan Diamond & Jones, LLP, No. 17-3727, 2018 U.S. Dist. LEXIS 33837 (E.D. Pa. 2018)

Bad game Jurisdictions Cont.:

• Tolling statute only applies to abrogate an otherwise applicable statute of limitations

when the out of state D cannot be reached for service

Panico v. Portfolio Recovery Assocs., LLC, 879 F.3d 56 (3d Cir. 2018).

• Offer to settle a time-barred debt despite truth of statement could plausibly mislead the

least sophisticated debtor, ergo misleading and a violations

Tatis v. Allied Interstate, LLC, 882 F.3d 422 (3d Cir. 2018)

Try your luck Jurisdiction

Try your luck Jurisdictions:

• 11th Circuit:
• Use of Mini-Miranda alone does not hold a service provider as

“debt collector”

• Debt must be in default at acquisition
• Favors Litigation privilege: absolute immunity from civil actions

based on atty’s conduct

• Favorable Damages Causation analysis (consequences of Defaulting

are not damages)

• BUT, Circuit Split: held Bankruptcy preempts FDCPA which

increased liability for creditors; SC overruled holding debt collectors have a right to file proofs of claim in bankruptcy courts for the FDCPA time barred debts

Midland Funding, LLC v. Johnson, 137 S. Ct. 1407 (2017)

TRY YOUR LUCK Jurisdictions:

• 9th Circuit
• A letter from debt collector containing false statement is sufficient for

standing despite a secondary apology and correction letter; still “might confuse the least sophisticated consumer.”

Watkins v. Inv. Retrievers, Inc., No. 2:17-cv-01348-KJM-CKD, 2018 U.S. Dist. LEXIS 11717 (E.D. Cal. 2018)

• District court dismissed putative class action of on grounds that

defendant was not a “debt collector” under FDCPA;

• Overturned on grounds that debtors CAN pursue remedies under CA’s

Rosenthal Act because language is “sufficiently broad to include mortgage lenders and/or mortgage servicers within its purview”

Davidson v. Seterus, Inc., 21 Cal. App. 5th 283 (2018).

• BUT WAIT, 9th Circuit affirms District Court ruling that creditor was sufficiently

identified by “AT&T” when actual name was “Pacific Bell Telephone Company dba AT&T” and that a request for payment does not limit a consumer’s right to challenge a debt within 30 days.

Stuppiello v. Southwest Credit Systems, LP, Case 17-55061 (9th Cir. Apr. 9, 2018)

What are the Facts at Hand?

“winning hand” Facts:

• Plaintiff suffered only annoyances, No injury-in-fact; theoretical injuries are insufficient

Spokeo, Inc. v. Robbins, 136 S. CT. 1540 (2016)

• Collector is a “repossessor” and debt was in default at time of repossession; not subject to FDCPA
• “Passive Debt Buyers” i.e. entities who regularly purchase debt and are not collecting on behalf of

another are NOT debt collectors subject to FDCPA regulation;

• Likely to be addressed by statute soon;
• Some states adopting rule into State laws (e.g. NY. MA)

• Debt is a commercial/business debt
• Personal credit cars used solely for business, debts incurred in “flipping houses” is NOT

consumer debt

• Determined by use of loan proceeds, not motive/intent of lender

Henson v. Santander Consumer USA Inc., 137 S. Ct. 1718 (2017)

• Debtor attempts to use an unsuccessful state collection case as a derivative FDCPA violation
• Res judicata, Rooker-Feldman Doctrine

“winning hand” Facts cont.:

“deal a new hand Please” Facts :

• Where a misrepresentation of collector’s entitlement to interest and fees are violative of state law;

whether intentional or not, bona fide error defense hard to rely on because duty to have procedures in place to avoid such errors; i.e. should’ve verified state laws before proceeding

• Evidence of “duping;” unwittingly tricked into reviving time-barred debts by making partial

payments, acknowledging the debts in writing, or any other means sufficient under applicable state law.

• If/where limitations rules applicable to duping is not established under state law, bona fide error may

prevail

“deal a new hand Please” Facts cont. :

• For one of a plethora of reasons, Debtor is not authorized to sue or appear in state court
• Only option left to litigate in federal court
• Public debt shaming; new trends of using social media and “lunch” shaming (publicly stigmatizing

students because their parents hadn’t paid their school lunch plan payment)

• If in a state collection action, collector provides sworn declarations that the documents have been

reviewed and they have in fact not done so and/or such documents misrepresent specific contents

• As opposed to “on information and belief” allegations

Can we Risk the Pot?

What to consider:

• Class action v. individual
• Reputations
• CONS: A loss could reflect poorly on reputation of attorney and company;

appearance of anti-consumer, pro-big business could be damaging

• PROS: Despite win or loss, could potentially reflect on competency of

attorney; open up to new clients and bigger litigation; big payday if win

The Balancing act:

• CONS: Plaintiffs have strength in numbers (resources, attorneys, publicity);

extended statute of limitations; much larger pay out (av. at $56.5M); significant increases in time, effort, and complexity

• PROS: Litigating one case, albeit a large one, is more efficient on company

that many little ones; trial is very rare; based on length and complexity, Forbes says attorneys are “frequently the only real beneficiaries of the class actions;”

Developing the Expected Outcome

Parties:

Where does debtor fall on “sophistication” scale? Is he pro se? What is his attorneys’ success rate? Is it a class action? How many claimants have joined? What’s the strength of the named Plaintiff’s claim? How is your client/company viewed in community? Heartless Goliath v. Big but local

Precedent:

Consumer or Collector friendly Jurisdiction? Are precedent judges still sitting? How strongly/often has the precedent been distinguished/countered?

let’s Play!!!

Playing Pre-Flop: Pre-Litigation

Avoid Filing:

• Denouncing Standing/Class Certification
• Plaintiff's claims do not amount to a cause of action
• Assert that Plaintiffs do not qualify under requirements of Fed. R. Civ. P 23(b); claims not typical of

class, class action not superior method

• Settlement offers
• Fraction of what judgement could be, but high enough to be enticing bait
• “Coupon settlements:” awarding Plaintiffs discounts/offers on products or services held by offending

company

Playing the Flop: Early Litigation

Take the Win Early :

• Depositions: easily weaken debtors claims, urge Plaintiff’s attorney toward

settlement, may not be able to find debtor for deposition

• Motion to Dismiss: Particularly in favorable jurisdictions; do so early attempt to

avoid amendments to claims

Discovery :

• Recordings/Letters: to be highly scrutinized to ensure compliance
• Debtor’s Actions: highlight failures to mitigate, instances of own

culpability, statute of limitations, whether a repeat player

Playing the TURN: Litigation

Make them Work:

• Additional Discovery: If you can’t dismiss, additional discovery requests places heavy workload on

Plaintiff (the longer the case goes, the less it is worth it for Plainitff’s attorney); may provide a basis for Summary Judgment

• MSJ’s : But seriously, after review of more facts, no genuine issue of material facts
• ADR: Involving an impartial third party gives great insight on direction of case even if doesn’t lead

to resolution

the River: Trial Bound

Where the win happens:

• Possibility of a Bluff: Plaintiff’s attorney could have worked case up behind the scenes, but trial means

showing of hands

• Important to keep the bases covered, arguments consistent
• Let judge do dissecting of Plaintiff’s arguments,
• Play into jury as calm, controlled company within compliance; any violation was in error and
• ffered to remedy but Plaintiff is insatiable

the River: Trial Bound Cont.

• What the Win means:
• For company/client: individual win could deter future action; class action victory would be huge

win to company’s investors but could leave option of individual review of cases

• For Court: Depending on Circuits current position, could set binding precedent for future

creditors

• For Counsel:

Other Developments

• Bona Fide Error Defense
• Information relayed to a debt collector by a creditor is irrelevant to

the determination of whether the collector can rely on a bona fide error defense

• “Try your luck” 7th circuit case, but noteworthy as other curcuits

may follow suit Garcia v. Miramed Revenue Group, LLC, 2018 U.S. Dist. LEXIS 17818 (N.D. Ill. Jan. 30, 2018)

• Repeat Player Plaintiffs
• About 33% of all plaintiffs alleging FCRA, TCPA, or FDCPA

violations in February 2018 had filed at least one similar suit before

• Over 4k lawsuits since 2001 by repeat players
• FDCPA still outpaces other statutes, but plaintiffs’ bar have set their

sights on the FCRA for individual and ever increasingly class action suits

FINAL THOUGHTS

• PLAY THE RIGHT GAME / JURISDICTION
• Play where you have the greatest odds and advantages
• FOCUS ON A WINNING HAND / FACTS
• Lower odds of winning with a bad hand
• Play Each Street Correctly
• Motion to dismiss or no? depositions? MSJ?
• Ready to go to trial?
• Be a Long Term Winner!
• Pick the right games and right hands, play optimally
• Use all information you can to make the best decisions
• Know when to hold’em and know when to fold’em.