Debt Collector Unsuccessful In Bid To Force Georgia FDCPA Class Action Brought By K&S Into Individual Arbitration
Attempts to strip consumers of their ability to bring and participate in class actions by means of forced arbitration clauses have been in the headlines this week. (For a great editorial on the issue, click here.
I am pleased to report that we recently beat back one such attempt in Thomas et al. v. Sherwin P. Robin & Associates, P.C., et al (16-cv-2529)(N. Ga 2016), an FDCPA class action pending in federal court in Georgia in which we represent Plaintiffs and the putative class. A U.S. Magistrate Judge found that the debt collection law firm failed to show that our clients had ever agreed to arbitrate.
The Complaint alleges that Defendants regularly overstate the amount of post-judgment interest they are entitled to collect from consumers. We are proud to co-counsel the case with Georgia consumer attorney, E. Talley Gray.
K&S Files Class Action Against Transworld Systems, Inc. Regarding Unfair Student Loan Collection Practices
Continuing our work on behalf of consumers facing collection on time barred debt, Kakalec & Schlanger, LLP recently filed an FDCPA class action class action along in U.S. District Court, Northern District of New York, against Transworld Systems, Inc. The lawsuit, Jurs v. Transworld Systems, Inc. (17-cv-1030), is brought with co-counsel Anthony J. Pietrafesa of Syracuse, NY, and alleges that Transworld attempts to collect alleged student loan debt that is time barred (i.e. outside the statute of limitations) without providing the detailed notice required by New York’s Department of Financial Services in such scenarios, and that these collection attempts violate both the Fair Debt Collection Practices Act (FDCPA) and section 349 of New York’s General Business Law. The statutorily required notice includes, inter alia, a warning that by making a partial payment the consumer risks re-tolling the statute of limitations.
This case is the second class action our firm has filed in the past two years involving collection attempts on student loan accounts alleged to be owned by the National Collegiate Student Loan Trust. The first, Winslow v. Forster & Garbus, LLP et al (2:15-cv-02996-AYS) is pending in U.S. District Court in the Eastern District of New York.
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 final approval for the 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, which we filed in 2015, 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.
As we previously reported, the settlement class numbers just over 200 New York consumers, each of whom will receive $250 under the Court-approved settlement. The named plaintiff will receive a total of $3,500 ($1000 in FDCPA damages and $2500 as a service payment for his efforts on behalf of the class). The settlement also provides for attorney’s fees and costs.
For more information regarding the settlement, go to www.klippelfdcpasettlement.com
Kakalec & Schlanger represents plaintiffs in re Midland Funding, LLC Interest Rate Litigation, 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.
Second Circuit Addresses Standing In Statutory Damages Class Actions: Finds Standing Where Procedural Rights Protect Consumer’s Concrete Interests
The Second Circuit issued an interesting and significant decision on standing in statutory damages class actions just before Thanksgiving. The case, Strubel v. Comenity Bank, 2016 U.S. App. LEXIS 21032 (2nd Cir. November 23, 2016) contains a lengthy discussion of the Supreme Court’s decision in Spokeo, Inc., v. Robins, 136 S.Ct. 1540 (2016). The District Court in Strubel dismissed Plaintiff’s claims on summary judgment without addressing Article III standing. On appeal, the bank argued that the District Court was correct on the merits and that, in addition, Plaintiff lacked standing under Spokeo.
Addressing standing, the Second Circuit found that two of the four statutory claims alleged a sufficiently concrete injury and that two others did not. The Second Circuit that upheld the District Court’s decision on the merits with regard to the two claims for which there was standing.
So, the Defendants won. Nonetheless, on the way to finding for Defendants, the Second Circuit’s discussion contains good news for consumers, as the standard the Court articulated for determining Article III standing was largely consumer-friendly. Specifically, the Second Circuit affirmed that violations of a purely procedural right (e.g. the right to receive a given disclosure or notice) are sufficient to confer standing “where Congress confers a procedural right in order to protect a plaintiff’s concrete interests and where the procedural violation represents a ‘risk of real harm’ to that concrete interest.”
Applying this standard, Court found that two of the alleged violations were sufficient because the disclosures in question “each serve[d] to protect a consumer’s concrete interest in ‘avoiding the uninformed use of credit,’ a core object of the” Truth in Lending Act. Thus, the connection between the procedural right that was violated and the purpose of the statute is critical. Where consumers can tie the two together, they should be on solid ground. This is good news for consumer advocates.
The Court’s discussion also emphasized that “risk of harm” was sufficient to confer standing, and noted that a showing of risk of harm did not mean that the “consumer must have occasion to use challenged procedures to demonstrate concrete injury from defective notice”. Again, this is good news, as shuts the door to reliance or actual damages based arguments.
The violations that were found insufficient are telling with regard to the sorts of situations that do not meet the “risk of harm” standard. To wit, the Court found failure to provide a disclosure regarding procedures relating to stopping automatic payment of disputed credit card charges insuffient and immaterial because it was “undisputed that [the bank] did not offer an automatic payment plan at the time Strubel held the credit card at issue.” The Court concluded that, in light of this, there was no risk of injury that could be tied to the purpose of the statute. Likewise, an alleged defect regarding disclosure of the bank’s obligation to correct a billing error was immaterial where it was undisputed that the bank had already corrected the error at the time it sent the notice. These sorts of facts point to something more akin to impossibility or mootness than reliance or actual damages,
Bottom line: Although dismissal of the particular allegations set forth by plaintiff in Strubel was upheld, consumer advocates should generally be happy with how Spokeo was applied here.
U.S. Supreme Court Denies Certiorari In re Midland Funding, LLC Interest Rate Litigation: Consumer’s Victory Before Second Circuit Stands
The U.S. Supreme Court recently denied certiorari in re Midland Funding, LLC Interest Rate Litigation, in which Kakalec & Schlanger, LLP represents a putative class of approximately 50,000 consumers seeking to hold debt buyer Midland Funding, LLC liable for attempting to collect interest in excess of New York’s criminal usury rate of 25 percent.
The Second Circuit held in May 2015 that National Bank Act preemption does not apply to third party debt buyers in situations where there is no continuing national bank involvement post-assignment, reversing the District Court’s ruling on this issue. Following the Second Circuit’s opinion, Midland sought re-hearing, with several major banking and financial industry organizations filing amicus briefs in support. After rehearing was denied, Midland petitioned the Supreme Court to review the case, again with the support of numerous industry amici. The Supreme Court denied Midland’s petition without discussion.
Dan Schlanger, who heads Kakalec & Schlanger’s consumer practice, handled Plaintiff’s Second Circuit appeal. Before the Supreme Court, Plaintiff was represented by Dan Schlanger, Tejinder Singh of Goldstein & Russell, and Professor Sam Bagenstos of University of Michigan Law School. The case is currently pending before the District Court, with cross motions for class certification and summary judgment pending.