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Consumer Lawyer May Be Sanctioned For Omitting Controlling Authority

Link: Taylor v. Client Services, Case No. 17-cv-05704 (N.D. Ill., Sept. 9, 2018)

I previously posted about the case brought by Michael Wood and Community Lawyers Group, Ltd. (“CLG”) where Judge Wood dismissed an FDCPA claim based on two consecutive letters sent by a debt collector: Bass v. Portfolio Recovery Associates, LLC, (N.D. Ill., Aug. 22, 2018). In that case, the court declined to issue sanctions under 28 U.S.C § 1927 against the Plaintiff’s lawyer.

In Taylor, another case brought by the same law firm based on the same theories (1692e and f), judge John J. Tharp, Jr. ordered that Michael Wood and CLG show cause why they should not be sanctioned for a deliberate failure to disclose adverse controlling authority to the court.

The court noted that CLG must have realized in the Bass case during briefing that the case of  Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d 769, 776 (7th Cir. 2007) was controlling. In that case the Seventh Circuit crafted the the safe harbor language allowing the debt collector to say it is “not obligated to renew this offer.”

The court referenced Illinois Rule of Professional Conduct 3.3(a)2) which provides that “A lawyer shall not knowingly . . . fail to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of the client and not disclosed by opposing counsel,” and the implicit certification require by Rule 11 tha the claim is “warranted by existing law.”

To be clear, under Rule 11 a lawyer may argue that “claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law.” But the brief filed by CLG didn’t make any argument that Evory was wrongly decided or should be overturned: it didn’t even mention it.

We’ll see what happens after the parties respond to the court’s order.

Briefs on the motion to dismiss:

2017-09-21 Def’s M2D

2017-11-09 Plaintiff’s Response to D’s M2D

 

Posted in FDCPA

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