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Summary Judgment Awarded Against Comcast for Impermissible Pull Claim

Link: Santangelo v. Comcast Corporation, Case No. 15-cv-0293 (N.D. Ill., Sept. 17, 2018).

Plaintiff, represented by Keith Keogh of Keogh Law, Ltd., sued Comcast under the Fair Credit Reporting Act and the Illinois Consumer Fraud Act alleging they impermissibly pulled a credit check on him despite the fact he paid a $50 deposit to forgo a credit check when applying for internet services. As a result, his credit score dropped by six points. Comcast refunded Plaintiff the money he paid with interest and caused the hard pull to be masked. The parties filed cross motions for summary judgment which were both granted and denied in part.

FCRA Claim

Comcast argued that Plaintiff’s lowered credit score could not satisfy Article III’s injury-in-fact requirement with respect to his FCRA claim, because he has not shown that he was denied a loan, a purchase, or a credit application. Judge John Z. Lee disagreed, citing Evans v. Portfolio Recovery Assocs., LLC, 889 F.3d 337, 344-46 (7th Cir. 2018) for the proposition that “it is ‘very easy’ to envision a lowered credit score creating a real risk of financial or other harm that satisfies the injury-in-fact requirement.” The court also rejected the challenge to causation since the score dropped the same day as Comcast’s pull and that the case was not moot due to the refund or subsequent masking.

As to the merits, the parties disputed whether Comcast had a “legitimate business need” under § 1681b(a)(3)(F)(i), and the court found in favor of Plaintff:

There is no dispute that Comcast offered to provide Santangelo internet service without obtaining his TELCO information, if he paid a $50 deposit. And no reasonable jury could conclude that Comcast needed Santangelo’s credit score to determine his eligibility for service when Comcast’s own policies and representations to Santangelo indicated otherwise.

The court also ruled in favor of Plaintiff in regards to Comcast’s argument that Plaintiff agreed to the credit pull under § 1681b(a)(2), finding that it’s a strained argument and that Comcast failed to develop the record to support it. So liability as to the the FCRA claim was decided in favor of Plaintiff.

Whether Comcast violated the FCRA willingly or negligently (and thus whether Plaintiff may be awarded punitive damages or not) under § 1681n will be a fact for the jury:

There is evidence in the record from which a jury could reasonably conclude that the Comcast representative who initiated the credit check did so in error. But, there is other evidence from which a reasonable jury could conclude that Comcast knew or should have known that it would likely happen based upon prior experiences with similar incidents.

State Law Claims

The court found that as to the state law claims under the Illinois Consumer Fraud Act, breach of contract, and unjust enrichment, Plaintiff failed to adduce sufficient evidence of actual damages. As a result Comcast was awarded summary judgment on those counts. The court noted, however, that for purposes of Article III standing analysis, “actual damages and injury in fact ‘are not the same thing.’ Abbott v. Lockheed Martin Corp., 725 F.3d 803, 808 (7th Cir. 2013).”

Judge Dismisses RESPA Claim Under Rooker-Feldman

Link: Adler v. Bayview Loan Servicing, LLC, Case No. 17-c-6735 (N.D. Ill., Sept. 18, 2018).

Plaintiffs Ronald and Lisa Adler, represented by attorney Daniel Brown of Main Street Attorney, LLC, brought claims under the Real Estate Settlement Procedures Act (“RESPA”) and the Illinois Consumer Fraud Act (“ICFA”) against their mortgage servicing company Bayview (and against the investor Bank of New York Mellon based on vicarious liability) relating to their attempts to modify the mortgage loan on their primary residence. They alleged that after successfully completing two trial period plans under the Home Affordable Modification Program in 2013 and 2014, the Plaintiffs received a proposed loan modification that did not account for the fact they discharged the debt in bankruptcy and should not be personally liable for it. After sending in qualified written requests under RESPA seeking clarification, Bayview sent them false, confusing and vexatious responses then told them they were going to sell their home at a foreclosure sale.

The Plaintiffs sought to file counterclaims in the state court proceeding and stay the sale, but the state court judge denied that relief. The home was sold at auction and Plaintiffs were subsequently evicted.

Defendants sought to dismiss the amended complaint under 12(b)(6) for failure to state a claim, and the judge granted the motion based on the Rooker-Feldman doctrine. The Rooker-Feldman doctrine, derived from Rooker v. Fidelity Trust Company, 263 U.S. 413 (1923) and District of Columbia Court of Appeals v. Feldman, 460 U.S. 462 (1983), “precludes lower federal court jurisdiction over claims seeking review of state court judgments . . . [because] no matter how erroneous or unconstitutional the state court judgment may be, the Supreme Court of the United States is the only federal court that could have jurisdiction to review a state court judgment.”

The court, judge Charles P. Kocoras, explained:

The state court entered an order of foreclosure and sale on February 27, 2012, and an order of possession on November 2, 2015. Now, the Adlers are attempting to collaterally attack the state court’s judgment by arguing that the foreclosure sale was improper under RESPA and ICFA violations. The Adlers’ request for relief is inextricably intertwined with the Defendants’ prior foreclosure proceedings … In the foreclosure proceeding on September 16, 2015, the Adlers argued that the sale of the subject property should be stayed because of the Defendants’ breach of contract in the loan modification process. In this Amended Complaint, the Adlers outright assert that “[a]s a direct and proximate result of Defendant’s misconduct, Plaintiffs lost their family home.” However, a district court cannot vacate the foreclosure judgment, and the Adlers’ request for relief is putting this Court in a position of appellate review, which Rooker-Feldman prohibits.

The court dismissed the ICFA claim finding that 28 U.S.C. § 1367 of the allows a federal district court to exercise supplemental jurisdiction over state law claims only if the court has original jurisdiction.

TCPA Case Against Uber Subject to Arbitration

Link: Johnson v. UBER TECHNOLOGIES, INC., Case No. 16 C 5468 (N.D. Ill., Sept. 20, 2018).

Plaintiff sued on the basis that he installed the Uber app once, never used it, uninstalled it, then received an unsolicited text message asking him if he wanted to drive for Uber. Judge John Z. Lee found that despite Plaintiff’s arguments to the contrary, his TCPA claim was subject to the arbitration agreement found within Uber’s  click-wrap terms of service that were available via hyperlink when the Plaintiff installed the app on his phone.

[T]he Uber app contained a clear and conspicuous statement that, by creating an Uber account, a user agreed to the Terms of Service & Privacy Policy and prompted the user to click the hyperlink by displaying it prominently in an outlined box.

Plaintiff also argued that his TCPA action is not within the scope of the clause. The court rejected this:

Undeterred, Johnson further argues that, even if he did enter into an arbitration agreement, his TCPA claim does not fall within its scope. “Once it is clear, however, that the parties have a contract that provides for arbitration of some issues between them, any doubt concerning the scope of the arbitration clause is resolved in favor of arbitration as a matter of federal law.” Gore v. Alltel Commc’ns, LLC, 666 F.3d 1027, 1032 (7th Cir. 2012). “To this end, a court may not deny a party’s request to arbitrate an issue `unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.'” Kiefer Specialty Flooring, Inc. v. Tarkett, Inc., 174 F.3d 907, 909 (7th Cir. 1999).

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

 

U.S. Public Interest Research Group Releases Report: One Year Post Equifax Breach

Link: EQUIFAX BREACH: ONE YEAR LATER How to Protect Yourself Against ID Theft & Hold Equifax Accountable

“Ultimately, we are not the customers of Equifax or the other credit bureaus; we are their product. We did not ask or give them permission to collect or sell our personal information. Congressional action, state and federal agency enforcement and private rights of action are needed to provide both the necessary financial consequences and oversight that will help prevent anything like last year’s Equifax breach from happening again. Additionally, breached companies should be required to provide consumers with clear, complete, and concise information about what can be done to prevent, detect, and resolve most kinds of identity theft and fraud.”

 

No FDCPA Liability for Allegedly Invalid State Warrant

Link: Chatman v. Weltman, Case No. 17-cv-06032 (N.D. Ill., Sept. 10, 2018).

Plaintiff, represented by Michael Jacob Wood of the Community Lawyers Group, Ltd., filed an action under the Fair Debt Colletion Practices Act. First, Plaintiff alleged Defendant used unfair and unconscionable means to collect a debt in violation of 15 U.S.C. § 1692f when he obtained an invalid warrant to arrest a consumer for the purposes of collecting a debt. Second, she claims that Defendant used false, deceptive, or misleading representations in violation of 15 U.S.C. § 1692e by represented an invalid warrant as valid for the purposes of collecting on an alleged debt.

After dispensing with whether the Plaintiff sufficiently listed her claim on her Chapter 7 Bankruptcy petition (she did), the court, judge Ruben Castillo, found the Rooker-Feldman doctrine divests the court of the ability to review the claim:

It is true that Plaintiff does not explicitly seek to vacate the warrant issued by the state court or otherwise set aside the state court’s default judgment, but both of her claims rest on a presumption that the warrant issued by the state court was “invalid” under state law … under Rooker-Feldman, the Court cannot make such a presumption, either explicitly or implicitly.

The Rooker-Feldman doctrine arises from Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923), and D.C. Court of Appeals v. Feldman, 460 U.S. 462 (1983), which “hold that the Supreme Court of the United States is the only federal court that may review judgments entered by state courts in civil litigation.” Harold v. Steel, 773 F.3d 884, 885 (7th Cir. 2014).

 

“Time Sensitive” Warning Not Violative of FDCPA

Link: Preston v. Midland Credit Management, Inc., No. 18 C 1532 (N.D. Ill., Sept. 4, 2018)

Plaintiff, through the firm Sulaiman Law Group, Ltd., filed a putative class action claiming that the “TIME SENSITIVE” stamped on the outside of a debt collector’s letter violated § 1692e(2)(A), e(10), and § 1692f of the Fair Debt Collection Practices Act because it implied a false sense of urgency. MCM was represented by Hinshaw & Culbertson LLP.

§ 1692f(8) specifically prohibits:

using any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by the use of the mails or by telegram, except that a debt collector may use his business name if such name does not indicate that he is in the debt collection business.

§ 1692(e)(2)(a) prohibits the “false representation of [ ] the character, amount or legal status of any debt;” and § 1692(e)(1), prohibits the “use of any false representation or deceptive means to collect or attempt to collect any debt.”

Preston claimed that the phrase “TIME SENSITIVE DOCUMENT,” on its own and when considered in combination with MCM’s discount offer urging him to “act now” plus the phrase “we are not obligated to renew any offers provided” violated these sections by creating a false sense of urgency.

The court, judge Sara L. Ellis, disagreed:

MCM’s use of language on the outside of the envelope falls within the benign language exception to § 1692f(8) and so Preston’s § 1692f(8) claim fails. The Court also finds that this language, alone or in combination with the discount offer, does not violate § 1692e(2)(A) or e(10) because MCM properly employed safe harbor language approved by the Seventh Circuit in connection with its discount offer.

Judge Ellis dismissed the FDCPA claims with prejudice but allowed Plaintiff to try to plead the Illinois Consumer Fraud and Deceptive Business Practices Act claim in state court.

 

$2.8 Million Fee Request Reduced to $450,000 in TCPA Class Case

Link: Douglas v. Western Union Company, No. 14 C 1741 (N.D. Ill., Aug. 31, 2018)

Judge Gary Feinerman issued a memorandum opinion approving a class settlement against Western Union Company under the Telephone Consumer Protection Act, but awarding attorney Joseph Siprut only $450,000 of the $2,804,850.27 he requested in fees and costs.

After discussing the case law applicable to attorney-fee awards in class cases, the court went another direction:

Were this an ordinary case, the court would proceed to address, among other things, whether to adopt the lodestar method or the percentage method, whether to adopt a sliding scale or a straight percentage approach if the percentage method were adopted, and whether to employ a lodestar cross-check on the amount derived from the percentage method. See generally In re Akorn, Inc. Sec. Litig., 2018 WL 2688877, at *1-4 (N.D. Ill. June 5, 2018); Gehrich, 316 F.R.D. at 234-39. But due to Siprut’s conduct in this matter, this is not an ordinary case.

The court noted that because of the detailed hourly counts submitted by counsel in support of his fees, “[t]he message conveyed by Siprut’s affidavit and chart was unmistakable: By reporting total hours in six-minute increments, and by further dividing those hours into fifteen finely-honed categories, Siprut plainly intended to convey the impression that he and his team had kept reasonably close track of their time.”

However, the court then explained that counsel actually had reconstructed his hours at the end of the case, and that “[t]he reconstructed time records here lack support and are highly suspect.”

Given all this, the court would be well within its rights to deny Siprut’s fee request in its entirety…Instead, given the good result he obtained for the class and the fact that he is responsible for covering additional administrative expenses, the court will award Siprut $425,000 in attorney fees and costs, which is five percent of the settlement fund.

This reduction reflects in part that Siprut failed to keep contemporaneous time records and, compounding the problem, failed to provide any support (other than his own say-so) for his reconstructed time calculations … The reduction also reflects in part the undeniable fact that Siprut, having failed to either maintain reasonably contemporaneous time records or provide support for his reconstructed records, proceeded to greatly inflate the hours he reported, just as he did in the Southwest Airlines Voucher case. 2018 WL 3651028, at *4. Finally, the reduction reflects in part that Siprut’s reporting his and his colleagues’ hours in six-minute increments, and his allocation of those hours across fifteen categories, was designed to create the impression of precision and reasonableness, when in fact the hours reported were wholly imprecise and unreasonable.

 

TCPA Action Against Hertz Surives Summary Judgment

Link: Tillman v. Hertz Corporation, Case No. 16 C 4242 (N.D. Ill., Aug. 29 2018)

A TCPA case brought by SmithMarco, P.C. against Hertz for unsolicited automated calls to plaintiff’s cell phone withstood a motion for summary judgment brought by Hertz. The court (Robert W. Gettleman) found that—because defendant could not produce the contract that plaintiff signed—there was a material issue of fact of whether the contract plaintiff signed contained a provision granting consent to unsolicited automated calls. Plaintiff also alleged they revoked any consent they had given over the phone.

The court also rejected defendant’s arguments that such consent couldn’t be effective:

Reyes holds that under the TCPA a consumer cannot “unilaterally revoke his or her consent to be contacted by telephone when that consent is given, not gratuitously, but as bargained-for consideration in a bilateral contract.” Id. at 56. The Reyes court explains that this holding is consistent with other cases and FCC orders holding that consumers can revoke consent through any reasonable means because that precedent considers consumers who have given their consent “feely and unilaterally.” Id. (citing Gager v. Dell Fin. Servs., LLC, 727 F.3d 265 (3d Cir. 2013)Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242 (11th Cir. 2014); the 2015 FCC Order, 30 F.C.C. Rcd. 7961). Regardless of how well-reasoned Reyes may be, it is not the law of this circuit. The Seventh Circuit’s precedent holds that “consent [can] be revoked `at any time and through any reasonable means.'” Blow, 855 F.3d at 803 (quoting the 2015 FCC Order, 30 F.C.C. Rcd. at 7989-90). Although the Seventh Circuit has not made the distinction that Reyes relies on, it is binding on this court and must therefore be followed.

Third Circuit Follows Seventh to Uphold FCRA b(b)(3) Claim

Link: Long et al. v. Septa (3d. Cir. 2018)

I recently posted about the Seventh Circuit’s opinion in Robertson v. Allied Solutions, LLC.

In Long, The Third Circuit issued a similar opinion on standing where the plaintiff alleged that the Southeastern Pennsylvania Transportation Authority failed to (1) give job applicants a copy of the credit report they relied upon in taking an adverse action against them and (2) send them the appropriate notices required under § 1681b(b)(3) of the Fair Credit Reporting Act. The case was argued by Deepak Gupta and an amicus brief was filed by Francis & Mailman.

The court found that plaintiffs met Article III standing requirements espoused in Spokeo in regards to the credit reports, but not for the notices. The court applied the two-part test from Spokeo, asking whether Congress intended to grant redress for the particular injury alleged and whether the injury in question has a close relationship to a harm traditionally recognized under common law.

As to the claim for failing to give a copy of the report, the court pointed out the unambiguous language in the FCRA creating a right of action and said this about the historical analysis:

Common-law privacy rights were historically understood as being invaded by “(a) unreasonable intrusion upon the seclusion of another, . . . (b) appropriation of the other’s name or likeness, . . . (c) unreasonable publicity given to the other’s private life, . . . or (d) publicity that unreasonably places the other in a false light before the public . . . .” Restatement (Second) of Torts § 652A(2)(a)-(d) (1977). These latter three types of privacy torts represent interference with an individual’s ability to control his personal information. That is analogous to the injury here, which is the use of Plaintiffs’ personal information—their consumer reports—without Plaintiffs being able to see or respond to it.

The Third Circuit called out the Robertson case, saying “[t]he Seventh Circuit concluded, as do we, that a plaintiff has standing to sue based on allegations that she did not receive the pre-adverse action notice required by § 1681b(b)(3).”

As to the claim regarding the notice requirements, the court found it was a bare procedural violation, divorced from any concrete harm, that cannot satisfy the injury-in-fact requirement of Article III. “Plaintiffs became aware of their FCRA rights and were able to file this lawsuit within the prescribed limitations period, so they were not injured … Plaintiffs are similar to Groshek, and like him, they lack standing, because although they did not receive FCRA rights disclosures, they understood their rights sufficiently to be able to bring this lawsuit.”