Year: 2017

April 24, 2017 Posted By Daniel Schlanger

Court Grants Preliminary Approval For Class Action Settlement in Klippel v. Portfolio Recovery Associates, LLC, et al.

We are pleased to announce that the Court has granted preliminary approval for a class action settlement in Klippel v. Portfolio Recovery Associates, LLC, et al., an FDCPA case filed by Kakalec & Schlanger, LLP along with co-counsel Anthony Pietrafesa in U.S. District Court, Northern District of New York.  The case was filed in August 2015.   The case involved a claim for statutory damages based on allegedly false information relating to state court venue that was provided by P.R.A. in state court summonses filed in certain collection actions.   There are just over 200 settlement class members, each of whom will receive $250 under the settlement agreement.  The agreement provides that the named plaintiff will receive a total of $3,500 ($1000 in damages and $2500 as a service payment), and also provides for attorney’s fees and costs. Class notice will be going out shortly.

March 15, 2017 Posted By Daniel Schlanger

Kakalec & Schlanger, LLP Files Suit Against Carsbuck, Inc. and Westlake Financial Services, Deceptive Auto Financing Practices

Kakalec & Schlanger, LLP recently filed suit in U.S. District Court, Eastern District of New York, against auto dealer Carsbuck, Inc. and Westlake Financial Services on behalf of consumer Carlos Guerrero-Roa.  The suit, brought under the Truth In Lending Act, the Equal Credit Opportunity Act, New York’s Motor Vehicle Retail Installment Sales Act and New York’s deceptive practices and usury statutes, alleges that the dealership refused to accept cash for the vehicle and then engaged in a variety of misconduct in order to inflate the price of the vehicle and the cost of financing.  The lawsuit addresses the increasingly frequent dealership practice of having consumers provide their signature via use of a digital “pad”, and alleges that despite instructing the consumer to provide his signature in this manner, the dealership failed to provide the consumer with the relevant loan documents, including statutorily required disclosures regarding the cost of borrowing.

Posted By Daniel Schlanger

District Court Certifies Class In Madden v. Midland Funding, LLC

Kakalec & Schlanger represents plaintiff in Madden v. Midland Funding, LLC, et al.,  a case that addresses attempts by one of the nation’s largest debt collectors to collect interest in excess of New York’s criminal usury limit of 25% from approximately 50,000 New Yorkers. The case originally made news in 2015, when the Second Circuit found that the National Bank Act’s preemption of New York’s usury statutes did not apply. Click here to read the Second Circuit’s decision.

More recently, on February 27, 2017, the District Court issued a detailed Opinion & Order, holding that (1) New York’s criminal usury limit applied to defaulted debts and (2) choice of law clauses that select the law of a state without any usury limit violate New York’s fundamental public policy and are therefore unenforceable under New York law. The Court granted class certification and permitted Plaintiff’s claims under the Fair Debt Collection Practices Act and New York General Business Law 349 to proceed. Click here to read the District Court’s Opinion and Order regarding summary judgment and class certification.

January 26, 2017 Posted By Daniel Schlanger

Collection Defense Settlements: Don’t Ignore The Non-Money Terms!

For understandable reasons, many consumer and business debtors that come to us with collection issues are focused overwhelmingly on the monetary terms of any potential settlement with the creditor or debt collector.  Particularly for those pressed for cash, there are hard-to-ignore bottom line issues such as:  Will they have to pay?  How much?  Lump sum or over time?

Without detracting from the obvious importance of these questions, it is important to note that the non-money terms can often be critical and failure to adequately address non-money terms can leave the debtor at a severe disadvantage.

Here are just a few examples:

Example #1:   Where a judgment has been taken against the client, the creditor typically does not care whether payment results in vacatur and dismissal vs. satisfaction of judgment.  But the difference can be hugely important to the consumer in terms of credit reporting.  Vacatur and dismissal cleans up the person’s credit, removing the judgment from the public record that is reflected in the credit report.  Satisfaction of judgment, in contrast, memorializes the lawsuit as one in which the consumer was sued for non-payment, lost the suit and then paid the judgment.  There is typically no reason not to condition settlement with the creditor on the parties entering into a stipulation of vacatur and dismissal.

Example #2:  Where appropriate, does the settlement agreement characterize the debt as disputed and/or specifically address the fact that this is not a case of “forgiveness of debt”?  Creditors are big on boilerplate and that boilerplate is rarely if ever favorable to the consumer.  Where the debt is legitimately disputed, there is no reason (in fact, every reason not to) agree to boilerplate language that has the defendant acknowledging indebtedness and/or that characterizes a reduction or elimination of the purported balance as “forgiveness of debt”.   By leaving this language in, the defendant/alleged debtor is virtually assuring that he or she will be issued a 1099-MISC characterizing the reduction in principle as income on which taxes are to be paid while simultaneously limiting his or her ability to effectively challenge that characterization.  It is an avoidable and common mistake.  (The appropriate alternative language will, of course, depend on the facts of the case.)

Example #3:  Does the settlement provide for a reasonable “right to cure” procedure?  It seems basic, but many standard creditor agreements contain no or only very limited right to cure language.  The result is that the debtor can find themselves arguably in breach and owing the full amount originally sought based upon a purported one-day delay in payment.  One common trap is to provide for a very short cure window plus notification by USPS regular mail.  By the time the notice arrives, the window to fix any alleged deficiency may have closed!    Our practice is to insist on at least 7 days, with notice by multiple, fast communication channels (e.g. fax plus email) and notice to both the debtor and his or her attorney.  That way, we and our clients have a meaningfully window to address any purported delay in payment without adverse consequence.

I could keep going (and don’t even get me started with regard to overly broad confidentiality provisions), but you get the idea:  to paraphrase the old Smokey The Bear public service announcements:  Only You Can Stop Anti-Debtor Boilerplate.

January 4, 2017 Posted By Patricia Kakalec

Minimum wage increases in New York State

The new year brings a higher minimum wage rate for New York State workers, as the minimum wage increased for workers statewide on December 31, 2016.    One big change is that the generally-applicable minimum wage rate now varies depending upon an employer’s size and an employee’s work location.   In addition, the higher minimum wage rate for workers at fast food chains with 30 or more locations (which could include locations outside of New York State) increased again on December 31st.

The new rates are as follows:

Fast food:

  • Fast food workers in New York City: $12 per hour
  • Fast food workers in other parts of the state: $10.50

Other industries:

  • Employees of New York City large employers (11 or more employees): $11 per hour
  • Employees of New York City small employers (10 or fewer employees): $10.50 per hour
  • Employees in Westchester & on Long Island: $10 per hour
  • Employees in the rest of New York State (“upstate”): $9.70 per hour

A few things to note:

  • For determining the size of a New York City employer, employees both inside and outside of New York City (during the prior or current calendar year) are counted.  But the New York City wage rate only applies to employees working in New York City.
  • All of the wage rates above depend on where an employee works, not where an employer is located.
  • If an employee works in multiple regions (say, New York City and Rockland County), an employer will comply with the law by either paying the higher rate for all work (in this example, New York City), or by paying the applicable minimum wage rate for each region for all work done in that region (for example, New York City rate for all hours worked in New York City, and the upstate rate for work done upstate).

Have questions about the new minimum wage law?   Give us a call at (212) 500-6114, or email Tricia Kakalec at pkakalec@kakalec-schlanger.com.