On November 22, 2016, a district judge in the Eastern District of Texas in the case State of Nevada v. U.S. Department of Labor (16-CV-731) issued an injunction against the implementation of U.S. Department of Labor (“DOL”) regulations related to eligibility for overtime pay for those who might be subject to the executive, administrative, and professional exemptions under the Fair Labor Standards Act. Then new regulations, which were to go into effect on December 1, 2016, would have increased the salary threshold for exemption from overtime from $23,665 to $47,476, and also provided for automatic future increases.
In issuing its injunction, the district court held that the DOL “exceed[ed] its delegated authority and ignor[ed] Congress’s intent” by creating a “de-factor salary only test” for overtime eligibility. The injunction means that the rule did not go into effect, and the salaries of employees around the country were effected.
Workers’ rights groups and others argue that the decision was both wrongly decided and problematic as a matter of public policy. Christine Owen, the Executive Director of the National Employment Labor Project says that “[s]upporters of the rule are considering a range of legal strategies, and it’s premature to speculate about the course they’ll pursue if an appeal is filed. We believe the judge’s analysis and decision are deeply flawed and should be reversed on appeal.” The DOL, which says it “strongly disagrees with the decision,” has filed a notice of appeal, although it is not clear that the incoming administration will continue with the appeal.
Despite this decision, some employers have gone ahead and implemented planned changes and salary increases. For example, Pennsylvania-based, Sheetz, Inc. – which operates gas stations and convenience stores/quick service restaurants – announced its plans to continue with planned wage increases, stating that its decision “represents our constant efforts toward attracting and retaining the best talent and being a great place to work. It is a commitment that reaches beyond compensation, to the offering of excellent benefits and a great balance between work and family.”
UPDATE: On January 3, 2017, the Texas court denied the USDOL’s motion to stay the decision pending appeal.
Stay tuned for further developments on the case.
Although auto loan deficiencies are not the most common form of debt we see in our office, we do regularly see (and represent) folks who are being sued (after their vehicles have been repossessed or “voluntarily returned”) for alleged deficiencies between their outstanding balance and the price at which the vehicle was purportedly sold for.
Although many of the defenses in these types of action are common to collection cases more generally (assignment, statute of limitations, service of process, etc.), others are specific to this particular type of debt.
Over the next couple of months, I will be reviewing various substantive defenses specific to vehicle repossession deficiency cases. Many of these defenses are less well-known but nonetheless powerful and worth considering. Today, we start with defenses rooted in Article 9 of New York’s Uniform Commercial Code
The New York Uniform Commercial Code Provides Significant Protections. For example,
- NYUCC 9-614 provides for detailed notice prior to sale of a consumer’s vehicle. These notice requirements are in addition to the notice required in commercial cases, and include, e.g. a description of any liability for a deficiency, a telephone number to call in order to redeem the collateral and a telephone number or mailing address to obtain more details regarding the disposition of the vehicle; the time and place of any public sale, etc.
- NYUCC 9-615 requires a detailed written explanation of any deficiency to be sent to the consumer following the sale of the vehicle.
- NYUCC 9-610 provides that every aspect of the sale of the collateral must be commercially reasonable, including the method, manner, time, place and other terms of the sale.
- NYUCC 9-623 provides the debtor with a right to redeem the collateral prior its disposition.
All of this would be interesting but academic were it not for powerful but underutilized remedies with regard to consumer UCC deficiency cases:
Some Courts, including those in New York’s Second Department, have held that there is an absolute bar against recovery of a deficiency where the repossessing party has failed to meet its Article 9 UCC obligations in a consumer transaction. Most other Courts have held that non-compliance in consumer and non-consumer cases triggers a rebuttable presumption against recovery of the deficiency. See Coxall v. Clover Commer. Corp., 781 N.Y.S.2d 567, 574, 4 Misc. 3d 654, 661, 2004 N.Y. Misc. LEXIS 714, *15-16 (N.Y. Civ. Ct. 2004) (collecting cases)
Statutory damages, fees and costs may also be available. For example, NYUCC 9-625 entitles a consumer to statutory damages for non-compliance to the interest on the loan plus 10 percent of the principal amount of the loan, as well as actual damages.
Bottom line: If the debt the consumer is being sued on stems from an auto loan or other secured transaction, be sure to go over the facts, including all correspondence, carefully for potential UCC related defenses and counterclaims. A repo notice violation or other UCC non-compliance can completely change the dynamics of the case.
I am excited to report that I will be presenting a Lawline CLE this coming February titled “Using the Truth in Lending Act to Challenge Predatory Auto Lending”. The webinar will be presented live on February 8, 2016 at 2:30 PM EST, and should be available as part of Lawline’s catalog after that.
For more information about the presentation, and to sign up, click here.