Know when to hold ‘ Em, Know when to Fold ‘ Em! How to be Winning Player in FDCPA Litigation Robbie Malone and Xerxes Martin of Malone Akerly Martin PLLC & Mike Frost of The CBE Companies, Inc.
Like All Games, There are Rules Poker is more than just cards and FDCPA Litigation is NO luck, you need strategy to win! different; Plan your approach! • Choosing your JURISDICTION • Choosing your GAME • Addressing your FACTS • Addressing your HAND • what’s at RisK/ STAKE • what’s in the Pot • Create EXPECTED OUTCOME • Create EXPECTED OUTCOME (parties, case law, (players, history, probability) 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 : - 2 nd 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. : - 6 th 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. : - 10 th 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 ). 10 th 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) - 5 th Circuit: - Ozmun v. Portfolio Recovery Associates, LLC
Good game Jurisdictions cont. : - 5 th Circuit: - Ozmun v. Portfolio Recovery Associates, LLC - Tejero v. Portfolio Recovery Associates , LLC
bad game Jurisdiction
Bad game Jurisdictions: 7 th Circuit: - COMPARE TO LAST SLIDE – Evans v. Portfolio Recovery Associates, LLC, 17-1773, et al (7 th - 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 3 rd Circuit where one call was sufficient Abante Rooter & Plumbing, Inc. v. Oh Insurance Agency , No. 15-CV-9025 (N.D. Ill. Feb. 20, 2018)
Bad game Jurisdictions Cont.: 3 rd 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) - 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 : 11 th 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: 9 th 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, 9 th 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 (9 th 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)
“winning hand” Facts cont. : • 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
“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?
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