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Tag: 28 U.S.C § 1927

Consumer Lawyer May Be Sanctioned For Omitting Controlling Authority

Steven Uhrich

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

 

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

Steven Uhrich

 

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.