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Court Dismisses Class Privacy Suit Against Southwest Airlines

Link: Miller v. Southwest Airlines Co., 18-cv-86 (N.D. Ill., Aug. 23, 2018)

Plaintiffs, through counsel Hart McLaughlin & Eldridge, LLC, filed a class action against Southwest Airlines alleging they violated the Illinois Biometric Information Privacy Act, 740 ILCS 14/1, et seq., by requiring employees to scan their fingerprint but (1) did not provide notice to employees regarding the biometric timekeeping program; (2) did not obtain written informed consent from the employees who are required to use the biometric timekeeping program; and (3) failed to publish data retention and deletion policies for its employees. Defendant removed the state case to federal court, then filed a motion to dismiss for failure to state a claim under rule 12(b)(6) and that Plaintiff’s claims are preempted by the Railway Labor Act, 45 U.S.C. § 181. The RLA governs collective bargaining agreements in the railroad and airline industries.

Judge Marvin E. Aspen agreed that Plaintiff met its burden under Article III standing under Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016), and thus did not dismiss the case under 12(b)(6). However the court granted Southwest’s motion to dismiss for improper venue under Federal Rule of Civil Procedure 12(b)(3) because Plaintiff’s claims are subject to mandatory arbitration or collective bargaining negotiations under their collective bargaining agreements and the RLA.

FDCPA Letter Claim Dismissed in Part under 1692e(5)

 

Link: Cadiz, v. CREDENCE RESOURCE MANAGEMENT, LLC, 17-cv-1949 (N.D. Ill., Aug. 24, 2018)

Judge Andrea R. Wood granted in part and denied in part a debt-collector’s motion to dismiss a claim under the Fair Debt Collection Practices Act alleging that the following language violated 15 U.S.C. 1692(e):

The above listed account owing to AT&T Mobility has been assigned to Credence Resource Management, LLC for collections. This account is currently delinquent and due in full. We would like to resolve this matter amicably, therefore please send your payment for the above amount. . . .

Plaintiff alleged the above language violated § 1692e of the FDCPA by threatening the possibility of a lawsuit when Credence did not actually intend to take any legal action.

The court allowed the general e and (e)10 claim to proceed, but dismissed the e(5) claim.

Credence’s statements are not clearly misleading. But the Court cannot say that they in no way could be interpreted as misleading to the unsophisticated consumer. Rather, the letter is properly categorized as the second type of claim—for it is plausible that the use of the word “amicably” could mislead the unsophisticated consumer into believing that litigation was a possibility if the debt were left unresolved. See McMahon v. LVNV Funding, LLC, 744 F.3d 1010, 1022 (7th Cir. 2014) (finding that the use of the phrase “offer to settle” in a collection letter seeking payment of a time-barred debt could mislead the unsophisticated consumer to believe that the debt was legally enforceable, even though the possibility of legal action was not mentioned in the letter.)

The court drew a strong distinction between the letter’s language above and the language in the letter in the case of  Clark v. Retrieval Masters Creditors Bureau, Inc., 185 F.R.D. 247, 251 (N.D. Ill. 1999), where the letter said:

The [American Medical Collection Agency] has been authorized to take appropriate legal measures to obtain payment.” and “[T]his is your final opportunity to settle your account without incurring additional problems.

 

FCRA Claim May Proceed Against Mortgage Servicers Based on Trial Loan Modification

 

Link: Pittman v. EXPERIAN INFORMATION SOLUTIONS, INC., (6th Cir. 2018)

This is a Sixth Circuit case worth reading because it contains an interesting discussion of how a trial loan modification of a mortgage can constitute an enforceable agreement and change the way a furnisher should be reporting the trade line to credit reporting agencies. The court reversed the entry of summary judgment in favor of defendants and remanded the case.

 If Pittman can show that there was indeed an enforceable agreement to modify his loan and that the Servicers were supposed to send him a permanent loan modification but instead reported him to the CRAs as being behind on his loan, then Pittman could make the threshold showing of inaccuracy required for a FCRA claim.

Plaintiffs through Edward A. Mahl of Michigan Consumer Credit Lawyers are alleging mortgage servicers BSI Financial Services and iServe Servicing, Inc. violated 15 U.S.C. § 1681s-2(b), which imposes certain duties on furnishers of information upon notice of a dispute sent to a consumer reporting agency. And of course the court refers to the seminal case on loan modifications and the Home Affordable Modification Program: Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 554 (7th Cir. 2012).

Debt Collector Can’t Undo Stipulated Judgment

 

 Currier v. PDL RECOVERY GROUP, LLC, 2014-12179 (E.D. Mich., Aug. 23, 2018)

Plaintiff Ryan Currier, through counsel Ian Lyngklip of Lyngklip & Associates Consumer Law Center, PLC, defeated a defendant debt collector’s motion for relief from judgment under Federal Rule of Civil Procedure 60. The court roundly rejected defendant’s motion, since it was stipulated to with the advice of counsel. The court noted that such a challenge  “faces a steep uphill climb.” Cummings v. Greater Cleveland Regional Transit Authority, 865 F.3d 844, 846 (6th Cir. 2017).

Court Grants Plaintiff’s Remand to State Court Based on Spokeo

 

link: Soto v. Great America, LLC, 2017-cv-6902 (N.D. Ill., May 24, 2018)

Plaintiff Hugo Soto, represented by Edelman, Combs, Latturner & Goodwin LLC, filed a class action in Lake County, Illinois state court against Great America under 15 U.S.C. § 1681c(g)(1) of the Fair Credit Reporting Act as Amended by the Fair and Accurate Transactions Act of 2003, which prohibits printing more than the last five digits of a credit or debit card number on an electronically printed receipt.

Defendant removed the case to federal court and then Plaintiffs moved for a remand to state court on the basis that the court lacked jurisdiction because the damages alleged do not meet the federal standing requirements imposed by Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).

Judge Robert M. Dow agreed with Plaintiff’s reliance on Meyers v. Nicolet Restaurant of De Pere, LLC, 843 F.3d 724 (7th Cir. 2016), where the Seventh Circuit addressed the application of these standing principles to FACTA claims. The Seventh Circuit in Meyers held that plaintiffs alleging only bare procedural violations of FACTA lack Article III standing because they have not suffered an injury-in-fact. 843 F.3d at 727-28 (plaintiff lacked standing because his claim that restaurant failed to truncate a payment card’s expiration date did not allege actual harm and thus was insufficient to satisfy Article III’s injury-in-fact requirement).

Defendant argued the remand would be futile because the state court would lack jurisdiction to hear the case for the very same reason, relying on Porch-Clark v. Engelhart, 930 F. Supp. 2d 928, 936 (N.D. Ill. 2013). The court rejected this argument and found that remand was still warranted because the issue of Plaintiffs’ standing to pursue their FACTA claim in state court depends on an interpretation of state standing law, and that “it is not clear that the Illinois injury-in-fact requirement is identical to its federal analogue.”

Plaintiffs’ motion also requested attorneys’ fees pursuant to 28 U.S.C. § 1447(c), but the court denied that request and found that the defendant could have reasonably believed it would be able to distinguish Meyers given the damages alleged in the complaint.

TCPA Class Against Heska Corp. is Certified

link: Fauley v. Heska Corpoartion, 2015-cv-2171 (N.D. Ill, Aug. 24, 2018)

Shaun Fauley, through counsel Anderson + Wanca, filed a motion to certify a class alleging that defendant Heska contacted over 10,850 customers via fax in violation of the Telephone Consumer Protection Act. After rehashing issues with Heska contacting class members in a “reconfirmation” effort to retroactively obtain customers’ consent, the court certified the following class:

All persons or entities who were successfully sent one or more facsimiles regarding Heska Corporation’s goods or services from March 12, 2011, through July 21, 2014, that either (1) contain no “opt-out notice” explaining how to stop future faxes or (2) contain an opt-out notice stating, “To unsubscribe from Heska’s promotional faxes, please call 800-464-3752, ext. 4565 or fax (970) 619-3008, and indicate your clinic name and fax number.”

The Court applied the standard used by the D.C. Circuit in the case of Bais Yaakov, agreeing that the TCPA does not impost an opt-out requirement on solicited faxes. The court also noted Heska timely obtained an FCC waiver of the opt-out rule for solicited fax advertisements.

§ 1692e: Bass v. Portfolio Recovery Associates, LLC, Dist. Court, N.D. Ill. 2018

 

Link: Bass v. Portfolio Recovery Associates, LLC, (N.D. Ill., Aug. 22, 2018)

PRA, a debt collector, sent two letters to the debtor offering to settle the debt at a discounted amount that stated “[w]e are not obligated to renew this offer.” PRA’s second letter contained essentially the same settlement offer as its first letter but with a later deadline. The debtor claimed this language violated 15 U.S.C. § 1692e of the Fair Debt Collection Practices Act which forbids debt collectors from threatening to take any action that cannot legally be taken or that is not intended to be taken or using of any false representation or deceptive means to attempt to collect any debt.

Judge Andrea R. Wood rejected this argument, finding that a debt collector repeating the same settlement offer while also clearly indicating that it is not obligated to renew the offer does not remove it from the safe harbor language the Seventh Circuit espoused in Evory v. RJM Acquisitions Funding L.L.C., 505 F.3d 769, 776 (7th Cir. 2007). There, the court reasoned that “[t]he word `obligated’ [was] strong and even the unsophisticated consumer [would] realize that there [was] a renewal possibility but that it [was] not assured.” Id.

As for the § 1692f claim, the court held that to allow his claim under § 1692f to proceed based on the same conduct that falls within the § 1692e safe harbor would undermine the Seventh Circuit’s solution in Evory. The court briefly addressed PRA’s motion for the Plaintiff to pay its fees under 28 U.S.C § 1927 and concluded the conduct by Bass’s counsel did not reach the level of being unreasonable and vexatious to justify a sanction of fees.

 

§ 1692a(6): Hughes v. United Debt Holding, LLC, Dist. Court, ND Illinois 2018

 

Link: Hughes v. United Debt Holding, LLC (N.D. Ill., Aug. 20, 2018)

Magistrate Judge Maria Valdez rejected a motion to dismiss and found that a debt purchaser and a payment processor  can both qualify as a debt collector under the Fair Debt Collection Practices Act. As to UDH, which argued it was only a “debt buyer,” the court looked to the standard set forth in McMahon v. LVNV Funding, LLC, 301 F.Supp.3d 866, 884 (N.D. Ill. Mar. 14, 2018):

UDH qualifies as a debt collector under the “principal purpose” definition because it “uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts.”

“[e]ven if the second prong [of the FDCPA’s definition of debt collector] . . . require[s] interaction with debtors, the plain language of the first prong does not.”

As to Payment Management Services USA, LLC, which argued it was merely a payment processor, the court found that the confusing letter allowed suit:

While UDH is listed as the current creditor, the letter is unclear on whose behalf the payment was being collected. Id. (stating “Pursuant to our . . . client’s approval we are authorized to offer you a settlement . . .” without identifying the client by name). Without more, Plaintiff may have reasonably believed that PMS was collecting the outstanding debt, not simply processing it. Construing all reasonable inferences in Plaintiff’s favor, the letter does not completely foreclose the possibility that PMS could satisfy the definition of “debt collector” under the FDCPA.

§ 1692c(a)(2): Holcomb v. Freedman Anselmo Lindberg, LLC (7th Cir. 2018)

 

Link: Holcomb v. Freedman Anselmo Lindberg, LLC (7th Cir., 2018)

In Holcomb, the Seventh Circuit held that where a debtor’s attorney does not file an appearance with the court, the debt collector attorney does not run afoul of the FDCPA where it serves a court paper upon a debtor directly as required by Illinois Supreme Court Rule 11. The court discounted the fact that the debtor’s attorney had physically appeared at two court dates and that the orders from those dates indicated that the attorney was present on behalf of the debtor. This narrow decision is explicitly restricted to the Rule 11 context.

§ 1692c(a)(2) of the Fair Debt Collection Practices Act (“FDCPA” or “the Act”), which prohibits a debt collector from directly contacting a debtor who is represented by counsel absent “express permission” from “a court of competent jurisdiction.” 15 U.S.C. § 1692c(a)(2).

In sum, because Finko had not filed a written appearance in the collection action, he was not Holcomb’s attorney of record for purposes of Rule 11’s service requirements. So Rule 11 expressly permitted—indeed required—Freedman to send the default motion directly to Holcomb. The law firm’s compliance with that rule did not violate § 1692c(a)(2). Accordingly, we REVERSE and REMAND for entry of judgment in Freedman’s favor.