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No Fees Awarded for Second or Third Fee Petition

Link: Nevins v. MED-1 SOLUTIONS, LLC, Dist. Court, (S.D. Ind. Oct. 22, 2018).

Plaintiff, represented by John Thomas Steinkamp, accepted an offer of judgment on an FDCPA claim under Rule 68 and filed a fee petition. Defendant failed to file a response and the court didn’t enter an order on the motion, so Plaintiff filed a second and then third petition for fees, increasing the amount requested each time (to include the fees for each additional motion filed).

The district court, judge Jane Magnus-Stinson, found the second and third motions were unnecessary and denied those additional fees.

The Court first turns to Ms. Nevins’ argument that Med-1 was obligated to respond to her first fee Motion in accordance with Local Rule 7-1. [Filing No. 17-2].[4] Local Rule 7-1(a)(3)(A) states: “Any response is due within 14 days after service of the motion.” S.D. Ind. LR 7-1(a)(3)(A). The Seventh Circuit empowers District Courts to interpret and enforce their local rules. Elustra v. Mineo, 595 F.3d 699, 710 (7th Cir. 2010). The meaning of Rule 7-1(a)(3)(A) is plain: it does not create an independent obligation to respond; it merely provides a timetable for response. Therefore, Ms. Nevins’ argument that the “failure to file a response in a timely fashion constitutes a violation of local rules and this court may issue a finding against Defendant as a result of its conduct” [Filing No. 17-2], mischaracterizes Local Rule 7-1.

7th Circuit Denies Debt Collector’s Bid For Arbitration

Link: Smith v. GC Services Limited Partnership, No. 18-1361 (7th Cir. 2018).

In an FDCPA case filed by Philipps & Philipps, Ltd., in July 2016, the defendants waited to demand arbitration until March of 2017—but filed nothing with the court. It wasn’t until August of 2017, once the class had been certified and another motion to dismiss denied, that the defendants brought their motion to compel arbitration.

The District Court for Southern District of Indiana held that the arbitration clause could not be invoked by GC Services based on an agency theory or equitable estoppel, and that in any event GC Services had waived its right to invoke the clause by waiting so long to bring it to the court’s attention.

The Seventh Circuit affirmed:

Smith does not contend that GC Services expressly waived any right to arbitrate. The question is whether we should infer that forfeiture occurred, which requires us to “determine that, considering the totality of the circumstances, a party acted inconsistently with the right to arbitrate.”

The panel went on to find that GC Services did not act diligently because the company did not mention the arbitration agreement in its answer, provided an inadequate explanation for the five-month delay in seeking arbitration after learning of the agreement, and prejudiced Smith by (unsuccessfully) engaging in motions practice.

The panel also found that this would prejudice the Plaintiff since he had already obtained victory on legal points and that allowing arbitration would undo those victories:

“GC Services’ motion to dismiss framed an integral—perhaps dispositive—issue: whether 15 U.S.C. § 1692g(a)(3) requires that debts be disputed in writing. The Third Circuit has held that a written dispute is required; the Second, Fourth, and Ninth Circuits have held that no writing requirement exists. Compare Graziano v. Harrison, 950 F.2d 107, 112 (3d Cir. 1991), with Clark, 741 F.3d at 490-91Hooks v. Forman, Holt, Eliades & Ravin, LLC, 717 F.3d 282, 285-87 (2d Cir. 2013)Camacho v. Bridgeport Fin., Inc., 430 F.3d 1078, 1080-82 (9th Cir. 2005). District courts within the Seventh Circuit have decided the issue both ways. See, e.g., Jolly v. Shapiro, 237 F. Supp. 2d 888, 895 (N.D. Ill. 2002) (finding a writing requirement); Campbell v. Hall, 624 F. Supp. 2d 991, 1000 (N.D. Ind. 2009) (finding no writing requirement) . . .

“[T]he district court’s determination that Smith was prejudiced when GC Services sought arbitration after Smith had defeated a motion to dismiss, obtained class certification, and litigated several discovery issues was not erroneous. In essence, GC Services sought to erase Smith’s successes—including her victory on the pivotal legal issue of whether § 1692g(a)(3) contains a writing requirement . . . “

The Court concluded with an apt warning to defense counsel in other cases:

This attempt to “play heads I win, tails you lose” is “the worst possible reason for delay.” Cabinetree, 50 F.3d at 391

Potential For MDL Not Reason to Delay Certifying FDCPA Class

Link: Rhodes v. ENHANCED RECOVERY COMPANY, LLC, Dist. Court, SD Indiana 2018 (Oct. 19, 2018)

A class was certified in an FDCPA case brought by Philipps and Philipps, Ltd. despite Defendant’s assertions that a heightened ascertainability standard should apply and that a potential consolidation into MDL on a bona fide error defense issue should warrant a stay of that decision.

“Defendant has indicated in its response in opposition to Plaintiff’s class certification motion that it intends to apply to the Multi District Litigation Panel to have this case and four other unidentified cases joined for purposes of conducting discovery regarding a potential bona fide error defense and argues without further explanation that “it would be more appropriate to consider the issue of class certification after Defendant makes its application to the MDL Panel.” Def.’s Resp. at 2. We are not persuaded that Defendant’s potential application to the MDL Panel is an adequate basis on which to delay a ruling on Plaintiff’s motion for class certification.”

The opinion was issued by judge Sarah Barker.

No TCPA Claim for Student Loan Debt Backed by U.S.

Link: Sanford v. NAVIENT SOLUTIONS, LLC, Dist. Court, Case No. 1:17-cv-4356-WTL-DLP (S.D. Ind. Oct. 1, 2018).

Judge William T. Lawrence dismissed a complaint on the pleadings alleging that Navient violated the Telephone Consumer Protection Act when it placed calls to the plaintiff’s cell phone. The court found that contrary to Plaintiff’s position, an  August 11, 2016, Report and Order from the FCC that would have placed restrictions on the collection of debts had not yet gone into effect. Thus the language in the TCPA that “a cellular telephone service . . . unless such call is made solely to collect a debt owed to or guaranteed by the United States” is controlling. 47 U.S.C. § 227(b)(1)(A)(iii).

 

 

 

Demanding “Pre-Purchase” Interest Not Valid Under FDCPA

Link: Gomez V. Cavalry Portfolio Services, LLC, Case No. 14-cv-09420 (N.D. Ill Sept. 24, 2018).

Plaintiffs had Bank of America (“BOA”) credit cards that were delinquent and charged off in 2009. BOA did not compute or track interest on an account after it was charged off. BOA also did not send regular billing statements to holders of charged-off accounts. Two years after BOA charged off Plaintiffs’ account, BOA sold the account to Cavalry SPV, which immediately assigned it to Cavalry Portfolio Services, LLC for servicing and collection.

Plaintiffs, through his counsel Edelman, Combs, Latturner & Goodwin LLC, filed a class action lawsuit under the Fair Debt Collection Practices Act alleging that defendants computed and added post-charge-off, pre-purchase interest to the account—basically, that it added two years’ worth of interest that BOA had not computed or tracked while it held the debt.  Plaintiffs alleged that Defendants violated the FDCPA by adding interest to credit card debts after the assignor bank had waived that interest. Both parties filed cross motions for summary judgment.

Plaintiffs argued that (1) BOA waived its right to collect post-charge-off, pre-sale interest, (2) this waiver barred Defendants from imposing post-charge-off, pre-sale interest, and (3) Cavalry violated the FDCPA by adding post-charge-off, pre-sale interest, thereby misrepresenting the amount Plaintiff owed.

Defendants argued that (1) Cavalry SPV is not a debt collector, (2) Plaintiffs’ claim is barred by the statute of limitations, and (3) the response letter is not a collection communication.

Judge Andrea R. Wood entered summary judgment in favor of defendant because it was not filed within the one-year statute of limitations period for FDCPA claims. The court also held, somewhat ironically, that Defendant waived its argument regarding choice-of-law analysis as to the waiver issue (Defendant didn’t want Illinois law to apply). Under that analysis, judge Wood found that:

the fact that BOA chose not to charge interest for two years (and it consciously made that decision as part of a broader policy) indicates that it intended to waive its right to collect this post-charge-off interest retroactively. BOA’s implied waiver of the right to charge interest on Plaintiffs’ account retroactively is further evidenced by the fact that BOA did not send periodic account statements to Plaintiffs.

It thus appears the merits of the suit would likely have supported summary judgment had the statute of limitations been met.

 

FDCPA Claim for Failure to ID “Current Creditor” Tossed Out

Link: Smith v. Simm Associates, Inc., Case No. 17-C-769 (E.D. Wisc., Sept. 30, 2018).

A class action case brought by Edelman Combs Latturner & Goodwin LLC was thrown at at summary judgment by judge William C. Griesbach. The plaintiff alleged that the collection letters sent out by the defendant violated  § 1692g(a) by:

Smith alleges that Simm violated §§ 1692g(a)(2) and 1692e of the FDCPA by failing to identify Comenity as the “current creditor” in its letter, instead of as the “original creditor.” Although Comenity was both the original and the current creditor, Smith claims that the letter nevertheless violated § 1692g(a)(2) by failing to also expressly identify Comenity as the “current creditor.”

The court found that:

There was nothing abusive, unfair, or deceptive about Simm’s notice to Smith about her outstanding debt. The letter contained the name of the creditor to whom the debt was owed, and offered payment arrangements authorized by PayPal Credit, the name Smith was most likely to recognize as the source of the debt. I therefore conclude that Simm did not violate § 1692g.

Failure to ID Creditor Suffices Spokeo Standard

Link: Heisler v. Convergent Healthcare Recoveries, Inc., Case No. 16-CV-1344 (E.D. Wisc., Sept. 27, 2018).

Plaintiff filed suit alleging that the dunning letters sent by CHRI did not identify the original creditor in violation of the Fair Debt Collection Practices Act, 15 U.S.C. 1692g.

The court provides a great analysis of the FDCPA for purposes of Article III standing analysis post-Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016).

Heisler alleges that CHRI violated his rights under the FDCPA by failing to identify the creditor to whom the debt was owed and by using false, deceptive, and misleading representations or means in connection with the collection of the debt. (Compl. ¶ 46.) As in Pogorzelski, Heisler’s allegations that the debt collection letter sent by CHRI failed to identify the creditor of the debt in violation of his rights under the FDCPA sufficiently pleads a concrete injury-in-fact for purposes of standing. As to CHRI’s allegation that Heisler never opened the letter, this fact is irrelevant as Heisler seeks statutory damages, “a penalty that does not depend on proof that the recipient of the letter was misled.” See Bartlett v. Heibl, 128 F.3d 497, 499 (7th Cir. 1997). Thus, I find that Heisler has standing to sue in this case.

Unfortunately for Plaintiffs represented by Edelman, Combs, Latturner & Goodwin, judge Nancy Joseph also denied class certification because there is a unique defense that Plaintiff’s cause of action should be barred by judicial estoppel based on actions taken during the course of Plaintiff’s bankruptcy proceedings.

TCPA Class Against CPA, LP Certified in Part: Issues With Rep Agreement

Link: Lanteri V. Credit Protection Association LP, 1:13-cv-1501-WTL-MJD (S.D. Ind., Sept. 26, 2018).

Plaintiff, represented by Philipps & Philipps Ltd., Keogh Law, Ltd., and Macey and Aleman, P.C., sought to certify two classes in their Telephone Consumer Protection Act lawsuit against CPA. The suit alleges CPA continued to send texts to the class after they sent a “stop” text message in response or while the debt was subject to an automatic stay order of a bankruptcy court.

The court affirmed the “stop” class after dealing with the following language in the Plaintiff’s representation/retainer agreement:

If Client abandons the class and settles on an individual basis against the advice of Attorneys, Client shall be obligated to pay Attorneys their normal hourly rates for the time they expended in the case, and shall be obligated to reimburse the Attorneys for all expenses incurred.

The court found this objectionable but allowed the class to be certified if Plaintiff files an amended agreement without that language.

As the Defendants concede, the fee arrangement does not explicitly prohibit the Plaintiff from settling, and the Court notes that the arrangement does not impose any fees, costs, or expenses on the Plaintiff were she to agree to a class settlement against her attorneys’ advice. Nonetheless, as the Defendants also indicate, the arrangement creates the appearance of a possible conflict with respect to the Plaintiff’s ability to freely withdraw her claim or settle her claim against her attorneys’ advice.

The court, judge William T. Lawrence, also found that the bankruptcy class was not ascertainable:

The problem with this proposed class is that the Plaintiff has not provided a mechanism for how it will identify its members. The Plaintiff suggests that it can start from the list of persons who were called during the relevant time period and whose accounts were given a certain code by the Defendants, and then perform a “ministerial act” of reviewing bankruptcy court dockets to determine which of those persons filed for bankruptcy. This suggestion ignores the fact that this method would not identify the Plaintiff herself or others like her who filed for bankruptcy but whose account was not coded as doing so by the Defendants. It also equates filing for bankruptcy with the imposition of an automatic stay, when there are circumstances in which a bankruptcy filing does not result in a stay. See 11 U.S.C. § 362. The determination of whether there was an automatic stay in a particular case and, if so, until what date, is not necessarily a ministerial act. The Plaintiff offers no explanation of how “compar[ing] bankruptcy filing dates to call dates,” Dkt. No. 183 at 14, will be sufficient to determine whether the call dates were made during the pendency of an automatic stay; she does not address the need to determine (1) if an automatic stay did, in fact, take effect; and (2) if so, when the stay was lifted. In addition, if the class member filed under Chapter 13, any claim that accrued during the pendency of the bankruptcy proceeding was property of the estate, and if it was not disclosed as an asset during the pendency of the bankruptcy case, it cannot be pursued without reopening that case. Rainey v. United Parcel Serv., Inc., 466 Fed. Appx. 542 (7th Cir. 2012).

 

 

TCPA Class Case Against Citigroup Fails Certification

Link: Tomeo v. Citigroup, Inc., Case No. 13-cv-4046 (N.D. Ill., Sept. 27, 2018).

Judge Sara L. Ellis denied a motion brought by Plaintiff’s attorneys (DiCello Levitt & Casey LLC) to certify two Rule 23(b)(3) classes under the Telephone Consumer Protection Act for calling their telephones using an automatic telephone dialing system (“ATDS”) without their express consent.  The court found that Plaintiff did not satisfy his burden of establishing that common issues of fact or law predominate.

The court reminds us of the import of Rule 26: Citi attempted to attach a previously undisclosed expert declaration to its motion to strike Plaintiff’s expert reports. The court found that was procedurally improper because Citi submitted it after the close of expert discovery and further, Citi did not move to extend the deadline or for permission to submit a sur-rebuttal.

Regarding expert testimony, Rule 26 provides that “[a] party must make disclosures at the times and in the sequence that the court orders.” Fed R. Civ. Pro. 26(a)(2)(D). Unless Citi can show that the failure to provide Taylor’s report in a timely manner was justified or harmless, the Court should exclude it. Finwall v. City of Chicago, 239 F.R.D. 494, 500 (N.D. Ill. 2006)(citing Keach v. U.S. Trust Co., 419 F.3d 626, 639 (7th Cir. 2005)).

However, Plaintiff’s expert report is still stricken because they did not inspect Citi’s ATDS system itself:

 it is Tomeo’s burden to demonstrate that his expert reports and testimony are admissible, and he has not provided that support. Just as in Legg, Hansen cannot even credibly state that Citi’s equipment conforms to the specifications discussed in the manual. Because the Court finds that Tomeo has not shown that Hansen’s opinions regarding Citi’s dialers are based on sufficient facts and data, the Court excludes the portions of Hansen’s reports that make findings regarding the function of Citi’s dialers.

As to class certification generally, the court said that there would need to be too many individualized inquiries as to whether there was a wrong number or consent given for the calls.

Simply put, neither Tomeo nor his experts adequately identify a common way to address the individual variations of consent and revocation that occurred in this case … And in the cases where the Seventh Circuit held that class certification could be appropriate even though causation or damages required individual proof, the issues requiring individual proof did not directly affect whether the defendant was liable for some violation of the law. See, e.g., McMahon v. LVNV Funding, LLC,807 F.3d 872, 875 (7th Cir. 2015) (finding that the predominate issue was whether the defendant’s actions violated the FDCPA, not whether that violation damages the class members); Pella Corp. v. Saltzman, 606 F.3d 391, 394 (7th Cir. 2010)(holding that the central question in the case was whether the product at issue was defective when it left the factory, not whether that defect proximately caused the class members’ damages). The individualized issues in those cases could be separated from the primary issue of liability. Here, on the other hand, consent is inextricably intertwined with primary issue of liability to the point where it predominates over the other common issues in the case.

Class Settlement Denied in TCPA and FDCPA Case Against Ocwen

Link: Snyder v. Ocwen Loan Servicing, LLC, Case No. 16-cv-8677 (N.D. Ill., Sept. 28, 2018).

In this large TCPA / FDCPA case against mortgage servicing company Ocwen, judge Matthew F. Kennelly denied the parties’ motion for final approval of a class which was potentially enormous: Ocwen’s records showed that it had made, during the period covered by the limited class proposed for preliminary injunctive relief, over 146 million calls to 1.45 million unique telephone numbers.

Once Plaintiffs (represented by Burke Law Offices and others) realized Ocwen’s insurer would not be covering them (Ocwen failed to give its insurer notice), there was a question whether Ocwen would be able to cover any settlement or if it would need to fold, leaving the class with nothing. Plaintiffs responded by trying to add in the banks and trusts Ocwen was working for, but the court in an earlier ruling denied that request as not timely. Plaintiffs then filed suit against the banks and trusts themselves.

The judge rejected the final $17,500,000 settlement on two grounds: One, that there was nothing in the record that showed Ocwen would not be able to pay, which might account for the relatively low amount of money given the number of calls. Two, the settlement called for the dismissal of the second case filed against the banks and trusts, but there did not appear to be any consideration given by the banks in the settlement agreement.

As a refresher on getting a class settlement approved, here’s the standard the court used:

A district court may approve a proposed settlement of a class action only after it directs notice in a reasonable manner to all class members who would be bound and finds, after a hearing (which the Court has already held), that the proposed settlement is “fair, reasonable and adequate.” Fed. R. Civ. P. 23(e)(2). In making the latter determination, courts in this circuit typically consider the following factors:

(1) the strength of the case for plaintiffs on the merits, balanced against the extent of settlement offer; (2) the complexity, length, and expense of further litigation; (3) the amount of opposition to the settlement; (4) the reaction of members of the class to the settlement; (5) the opinion of competent counsel; and (6) the stage of the proceedings and the amount of discovery completed. . . . The most important factor relevant to the fairness of a class action settlement is the strength of plaintiff’s case on the merits balanced against the amount offered in the settlement.

Wong v. Accretive Health, Inc., 773 F.3d 859, 863-64 (7th Cir. 2014) (internal quotation marks and citations omitted). The Court notes that as of December 1, 2018, absent contrary Congressional action, an amendment to Rule 23(e)(2) setting forth a list of points a court must consider in determining whether a proposed class action settlement is fair, reasonable, and adequate. The Court will address these points as well. They include whether:

• the class representatives and class counsel have adequately represented the class;

• the proposal was negotiated at arm’s length;

• it treats class members equitably relative to each other; and

• the relief provided by the settlement is adequate, taking into consideration the costs, risks, and delay of trial and appeal; the effectiveness of the proposed method of distributing relief; the terms of any proposed award of attorney’s fees; any agreements made in connection with the proposed settlement.

Proposed Fed. R. Civ. P. 23(e)(2) (eff. Dec. 1, 2018).