On January 28th, the Federal Trade Commission (“FTC”) updated identitytheft.com with personalized information and tools for consumers to report and recover from identity theft. This change comes after consumers submitted 47% more identity fraud complaints to the FTC in 2015 than in 2014. As a result, the FTC has made a form letter available for victims to better communicate with debt collectors about debts incurred due to theft. Additionally, the FTC has recommended victims contact credit bureaus to block information on their credit reports in regards to any fraudulent debts. For more information about the FTC’s new identity theft tools, please contact Joseph Messer at 312-334-3440 or at firstname.lastname@example.org.
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 Messer Strickler, Ltd. For more information on this case or any other FDCPA related issues, contact her at email@example.com or at 312-334-3442.
The Eastern District of New York recently held that a plaintiff’s TCPA claims were not precluded by the Southern District of Texas’ ruling that the same claims against the same defendants were mooted by a Rule 68 offer of judgment. See Bank v. Spark Energy Holdings, No. 13-6130, 2014 U.S. Dist. LEXIS 84493 (E.D.N.Y. June 20, 2014).
The plaintiff alleged that he received telemarketing calls from defendants “using an artificial or prerecorded voice” without his prior express consent in violation of the Telephone Consumer Protection Act (“TCPA”). He initially filed a class action suit in the Southern District of Texas, where after nearly two years of defending the case and prior to plaintiff moving for class certification, defendants made a Rule 68 offer of judgment offering plaintiff complete relief. Although the plaintiff rejected the offer, the Texas court found that the offer rendered plaintiff’s claims moot because he no longer had a personal stake in the outcome of the litigation. Accordingly, the Texas court dismissed the plaintiff’s claims for lack of subject matter jurisdiction.
Shortly thereafter, the plaintiff filed suit in the Eastern District of New York and asserted the same TCPA claims against the same defendants. The defendants moved to dismiss the claims based on the preclusive effect of the Texas court’s ruling. The New York court denied the motion to dismiss, reasoning that neither claim nor issue preclusion applied. The New York court held that claim preclusion only applied if there was a final judgment on the merits in the prior action and that dismissal for lack of subject matter jurisdiction is generally not considered a final judgment on the merits. The New York court further held that issue preclusion did not apply because an identical issue was not adjudicated in the prior action:
"I find that the identical issue is not presented here because the prior’ court’s determination of mootness relied on particular factual circumstances that are not the same as the facts presented in this suit. In the Texas case, the court decided that plaintiff’s individual TCPA claim was moot because plaintiff had rejected a Rule 68 offer that would have provided complete relief on his claim. In this suit, defendants have not made any Rule 68 offer, so the court is not presented with the same factual scenario. Since the first requirement to establish issue preclusion is not satisfied, the Texas court’s prior finding of mootness does not require the dismissal of plaintiff’s claims as moot in this action."
While the New York judge did express sympathy for defendants’ position (having litigated plaintiff’s TCPA claim for almost two years in Texas, successfully moving to have the suit dismissed, and now facing the same TCPA claims in New York), she nevertheless found in favor of the plaintiff, stating: “[a] finding that a claim is moot in one case simply does not mean that claim is moot in all subsequent cases.”
While the opinion appears to undermine the goals that the mootness and preclusion doctrines were meant to serve, if this tactic gains traction, defendants should consider immediately making the same offer of judgment upon notice of the second lawsuit. Defendants should also consider filing a motion to transfer venue to the first court rather than relitigating the mootness issue in the second court.
For more information on the aforementioned case and the TCPA generally, contact Katherine Olson at (312) 334-3444 or firstname.lastname@example.org.
In June 2013, ACA International, the Association of Credit and Collection Professionals, established a formal program to implement initiatives designed to protect the long term viability of the credit and collection industry. As a part of this program, ACA created a panel of experienced consumer law defense counsel coined the “Sanctions Panel Attorney Review Program”. The Panel will be charged with counseling, representing and assisting members of the industry in pursuing appropriate and available sanctions against both consumers and attorneys engaging in misconduct or unlawful litigation practices against ACA members.
Joseph Messer and Nicole Strickler of Messer Strickler, Ltd. were recently honored with appointment to this panel. Ms. Strickler and Mr. Messer have earned national reputation for defending individual and class action lawsuits brought under the FDCPA, FCRA, TCPA and other federal and state consumer protection laws. Mr. Messer and Ms. Strickler have been active members of the ACA for years, presenting at conferences and seminars, and participating in discussion panels.
You may contact Joseph Messer (email@example.com or (312) 334-3440) or Nicole Strickler (firstname.lastname@example.org or (312) 334-3442) with any questions relating to this new ACA initiative.