California

MS Obtains Unanimous Jury Verdict in Favor of Clients in FDCPA Case

Nicole-230x159.jpg

On April 8, 2015, a jury of seven sitting in the Southern District of California determined that a law firm and its asset purchaser client did not violate the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. (“FDCPA”) by including a request for 10% interest in the prayer for relief of a state court collection complaint.  In Hadsell v. Mandarich Law Group, LLP and CACH, LLC, a consumer filed an FDCPA claim against the two companies alleging a myriad of false claims, including that the companies had disclosed the debt to third parties and failed to abide by a request to cease and desist. After success on motions to dismiss and summary judgment, the case proceeded to a jury trial on one sole issue: whether a request for 10% statutory interest in the prayer for relief of a state court complaint violates the FDCPA where the credit card contract in question provided for an 8.9% interest rate. Like many consumer law claims against law firms, this complaint was spurred from a state court collection action on the debt. In late 2011, Mandarich Law Group, LLP filed a state court complaint on behalf of CACH, LLC to collect on a defaulted Bank of America account.  The state court complaint had two counts, breach of contract and account stated.  In the prayer for relief, the complaint requested that the court find that a 10% interest apply under the account stated theory.

Approximately 30 days after the state court suit was filed, the consumer filed suit in the U.S. District Court for the Southern District of California, claiming that the collection action, among other activity, violated the FDCPA. Plaintiff was represented by the San Diego law firms of Hyde & Swigart and Kazerouni Law Group.

The Plaintiff’s focal point during the jury trial was that the defendants intentionally violated FDCPA § 1692(f) and (f)(1) by requesting 10% interest when they were aware of the 8.9% interest rate that was set by the initial contract between the consumer and creditor.  Defendants argued, in contrast, that there was a valid factual basis to pursue the account stated claim and for the Court to assess 10% interest--- the default rate under the California Code---- based on the final charge-off statement on the account.  Further, Defendants’ argued that asking the state court to decide the question of interest was not an attempt to collect an authorized amount as the court had the legal ability to award it under the facts.  The jury unanimously agreed and found that no violation of the FDCPA occurred.

Lead trial counsel for Defendants was Nicole M. Strickler of MS&S. For more information on this case or any other FDCPA related issues, contact her at nstrickler@messerstrickler.com or at 312-334-3442.

PAID SICK LEAVE POLICIES SPREADING AROUND THE U.S.

As a follow up to prior blogs, I wanted to provide a list of those states and cities that have enacted legislation compelling employers to provide their employees with paid sick leave.   We had previously discussed the new laws in California and Philadelphia.  Now Pittsburgh is following suit, and so have other states and cities. Under the new Pittsburgh law, effective January 11, 2016, all full-time and part-time employees working in the city of Pittsburgh, excluding independent contractors, state and federal employees, any members of construction unions subject to collective bargaining agreements, and seasonal employees notified in writing when hired that they will not work more more than 16 weeks during the year, will accrue one hour of paid sick leave for every 35 hours worked (including overtime hours).

Pittsburgh employers with 15 or more employees must permit employees to accrue 40 hours of paid sick leave per year while employers with less than 15 must permit employees to accrue 24 hours of paid sick leave per year.  Those employees must be allowed to carry over accrued sick leave from year to year but employers need not allow them to use more than 40 hours (or 24 for smaller employers) of that paid sick leave in a given year.  In lieu of the carryover, employers can choose to provide all of the required sick leave at the beginning of the year, to avoid that carryover of unused leave.   For those smaller employers, they are only required to provide unpaid sick leave (accrued at the same rate state above) for the first year after the law is enacted.  The Pittsburgh law also has stated terms and regulationsfor permitted use and increments of using the leave, notice, documentation and posting requirements, recordkeeping and prohibited conduct, to name a few.

As far as the rest of the country, California, Connecticut, and Massachusetts are the only states that have enacted legislation to allow statewide paid sick leave.  It is expected that other states and cities will attempt to follow the trend– specifically Oregon, who recently adopted a paid sick leave and safe[1] leave law that will be effective next year.  Tacoma, WA and Montgomery County, MD (the first county to do so) also passed sick and safe leave laws also to be effective in 2016.  In some jurisdictions, such as San Diego, proposed laws such as these have been met with opposition.

As far as cities go, Eugene, OR, Newark, Jersey City, Irvington, Passaic, East Orange, Paterson, Trenton, Montclair, Bloomfield, New York City, Oakland, Philadelphia, Pittsburgh (discussed above, effective 1/1/16), Portland, OR, San Francisco, Seattle, and Washington, D.C., already have laws on the books that allow workers to earn paid sick leave, or in a few of those cities, also allows workers to earn paid safe days as well.

For more detailed information on the new Pittsburgh law, or any employer vacation/sick/PTO policies around the country, please contact Dana Perminas at 312-334-3474 or dperminas@messerstrickler.com for more information.

[1] Safe Day laws involve allowing an employee paid days off in the event care or treatment is needed for domestic violence, sexual assault or stalking.

 

Related Articles:

EFFECTIVE MAY 13, 2015: UPDATE TO PHILADELPHIA SICK LEAVE REQUIREMENTS

EFFECTIVE JULY 1, 2015: UPDATE TO CALIFORNIA SICK LEAVE REQUIREMENTS

EFFECTIVE JULY 1, 2015: UPDATE TO CALIFORNIA SICK LEAVE REQUIREMENTS

Effective July 1, 2015, employers in California will be required to provide all employees (full-time, part-time and temporary) who, on or after July 1, 2015, work in California for 30 or more days within a year from the beginning of employment, paid sick leave. Employees will earn at least one hour of paid leave for every 30 hours worked, or in other words 3 days of paid sick leave per year.  Employees can use the leave for themselves or a family member.  “Family member” is defined by the law to include children, parents, grandparents, grandchildren, siblings, spouse and registered domestic partner. Accrual begins on the first day of employment or July 1, 2015, whichever is later.  An employer has two options in terms of accrual and provision of leave; 1) If the employer’s policy is to provide sick leave only as it accrues, employers must allow the employee to carry over any unused sick leave to the next year if unused.  Employer can limit accrual to a total of 6 days.  Employers can still (regardless of their policy when sick leave is awarded) limit use of paid sick leave to 3 days in a year.; or 2) If the employer provides the sick leave upfront at the beginning of the year before it accrues, the employer does not have to allow the employee to carry over unused time to the next year.

If the employer’s policy already provides for sick leave or contains a PTO policy that provides for an amount of paid leave (no less than 3 days) that may be used for the same purposes and under the same conditions (including accrual, carry over and use requirements) of the new law, an employer need not provide additional paid sick leave.

Employees must be paid at their standard rate of pay for sick leave used.  If the employee earns commissions or bonuses, those items must be factored into the sick leave payment.

There are several things employers must do to comply with the new law including:

1) Separately track sick leave accrual and use.  This must be on a pay stub or a document issued the same day as a paycheck.  Also, employers must keep records showing how many hours have been earned and used for a period of three years.

2) Display poster on paid sick leave where employees can easily read it. -

3) Provide written notice to employees with sick leave rights at the time of hire.  A new form of the notice required by Labor Code Section 2810.5 (the “Wage Theft Protection Act”) needs to be given to employees, advising them of their rights under the new law.

As a best practice, all employers should allow eligible employees to use accrued paid sick leave upon reasonable request.  Also, employers need not do not pay an employee at termination for sick leave pay that was not used, but keep in mind if an employer’s policy grants vacation time, or PTO, that accrued time most likely will be subject to payout under California law.

For more information on the new California law, employer vacation/sick/PTO policies or any other employment law related matters, please contact Dana Perminas at 312-334-3474 or dperminas@messerstrickler.com for more information.

Court Rules Collection Law Firms May Use “Account Stated” Cause of Action in California Without Running Afoul of the FDCPA

The use of alternative causes of action, even if such causes of action are inconsistent, is routine in litigation. Legal collection firms are no different. Prudent collection lawyers may assert more than one legal theory as a basis to collect on a defaulted debt in order to ensure their client’s collection of a validly owed amount. Recently, this area of practice has been the subject of attack by consumer attorneys, who allege that the use of alternative causes of action is misleading or deceptive to unsophisticated debtors. In a case filed in the Southern District of California, two clients of MS recently faced such an attack. MS clients, an asset purchaser and law firm, were sued in a federal action alleging that the use of an “account stated” cause of action as an alternative legal theory to collect a defaulted credit card debt was misleading, deceptive, and otherwise unconscionable under the Fair Debt Collection Practices Act, 15 U.S. C. §1692 et seq. Plaintiff argued that Defendants conduct was deceptive because an account stated cause of action requires the creation of a new contract, which never existed in the case.

MS took the offensive in filing an early motion for judgement on the pleadings and arguing that Plaintiff had failed to plead facts stating a plausible cause of action. The Court granted MS’ motion agreeing that the law “embraces the use of common counts to recover unpaid credit card debt.” The Court further found that Plaintiff’s allegations in his complaint relevant to the purpose and merits of the state court suit were nothing more “than conclusory allegations not entitled to the assumption of the truth.” In adopting MS’ arguments as to the frivolous nature of Plaintiff’s claims, the Court noted that it would entertain a defense request for sanctions in the even Plaintiff attempted to file a similarly deficient amended complaint.

To view or download a copy of the opinion click here. Please contact Nicole M. Strickler, (312) 334-3442, with any questions regarding the opinion.