Consumer Finance Litigation

The Fifth Circuit Court of Appeals may now have to decide where it stands on the ATDS issue.  On May 20, 2020, Judge Lee Yeakel of the United States District Court for the Western District of Texas issued an opinion in Suttles v. Facebook, Inc., Case No. 1:18-cv-01004 (W.D. Tex. May 20, 2020), where he concluded that a dialing system is not an Automatic Telephone Dialing System (“ATDS”) under the Telephone Consumer Protection Act (“TCPA”) if it does not produce numbers.  A copy of the opinion can be read here.

Three circuit courts have previously held that the definition of an ATDS ...

Those of us who have been litigating the Telephone Consumer Protection Act (“TCPA”) have spent the better part of the last decade trying to determine what constitutes an automated telephone dialing system (“ATDS”).  The answer seemed clear to many when the statute was enacted in 1991 because telemarketers were the focus, cell phones were expensive and uncommon and the plain language of the statute defined an ATDS as “equipment which has the capacity—(A) to store or produce telephone numbers to be called using a random or sequential number generator; and (B) to dial such ...

In Gonzalez v. Ocwen Loan Servicing, LLC, No. 5:18-cv-340-Oc-30PRL, 2018 WL 4217065 (M.D. Fla. Sept. 5, 2018), the Middle District of Florida determined that the D.C. Circuit's opinion in ACA International v. FCC, 885 F.3d 687 (D.C. Cir. 2018) [hereinafter "ACA"], vacated the Federal Communications Commission's ("FCC") 2003, 2008, and 2015 Orders interpreting the definition of an automatic telephone dialing system ("ATDS").

The plaintiff, Wilfredo Gonzalez ("Plaintiff"), alleged that Ocwen Loan Servicing, LLC ("Ocwen") used an ATDS to place approximately 500 calls to his ...

In Washington v. Six Continents Hotels, Inc., No. 2:16-CV-03719-ODW-JEM, 2018 WL 4092024 (C.D. Cal. Aug. 24, 2018), the Central District of California found that ACA International v. FCC, 885 F.3d 687 (D.C. Cir. 2018) [hereinafter ACA], set aside all prior FCC guidance regarding the definition of an autodialer.

The plaintiff, Eric Washington ("Plaintiff"), alleged that Six Continents Hotels, Inc. ("Six Continents") sent him numerous unsolicited text messages using an automatic telephone dialing system ("ATDS") in violation of the Telephone Consumer Protection Act ...

In Keyes v. Ocwen Loan Servicing, LLC, No. 17-cv-11492, 2018 WL 3914707 (E.D. Mich. Aug. 16, 2018), the Eastern District of Michigan determined that the system Ocwen Loan Servicing, LLC ("Ocwen") used to place calls, the Aspect Unified IP ("Aspect System"), was not an automatic telephone dialing system ("ATDS") within the meaning of the Telephone Consumer Protection Act ("TCPA").

Plaintiff Darcel Keyes ("Plaintiff") claimed Ocwen violated the TCPA by using its Aspect System to call her, despite her objections. See id. at *1. To support her claims, Plaintiff relied on an expert ...

In the wake of the D.C. Circuit's ruling in ACA International v. Federal Communications Commission, 885 F.3d 687 (D.C. Cir. 2018), which struck down the FCC's interpretations of "automatic telephone dialing system" ("ATDS") under the TCPA as "unreasonably, and impermissibly, expansive," courts are reevaluating what it takes to qualify as an ATDS under the statute. In Maddox v. CBE Group, Inc., No. 1:17-cv-1909-SCJ (N.D. Ga. May 22, 2018), the Northern District of Georgia found the defendant's calling equipment required human intervention to place calls, and thus did not qualify ...

In Barton v. Credit One Financial d/b/a Credit One Bank, No. 16CV2652, 2018 WL 2012876, (N.D. Ohio April 30, 2018), the Northern District of Ohio followed the Second Circuit's decision in Reyes v. Lincoln Automotive Financial Services, 861 F.3d 51 (2d Cir. 2017), and held that a plaintiff who consented to receiving telephone calls as part of a credit card application could not unilaterally revoke that consent.

The plaintiff, Carlton Barton, Jr. ("Plaintiff"), filed a lawsuit claiming that Credit One Financial d/b/a Credit One Bank ("Credit One") violated the Telephone Consumer ...

In the consolidated cases Espejo v. Santander Consumer USA Inc., No. 11 C 8987, 2016 WL 6037625 (N.D. Ill. Oct. 14, 2016) and Levins v. Santander Consumer USA Inc., No. 12 C 9431, 2016 WL 6037 (N.D. Ill. Oct. 14, 2016), the U.S. District Court for the Northern District of Illinois denied Plaintiff Faye Levins' motion to certify a class pursuant Fed. R. Civ. P. 23(b)(3), finding that Levins failed to meet the prerequisites for class certification. While the court denied Levins' motion for class certification, it granted in part and denied in part Santander Consumer USA Inc.'s ...

On Tuesday the D.C. Circuit Court of Appeals issued what is already being touted as a landmark ruling in PHH Corp. v. Consumer Financial Protection Bureau, No. 15-1177, 2016 WL 5898801 (D.C. Cir. Oct. 11, 2016), holding in a 2-1 decision that the structure of the Consumer Financial Protection Bureau (the "CFPB"), and specifically its organization as a "single-Director independent agency" with no meaningful Presidential oversight, violates Article II of the United States Constitution, which in relevant part vests the authority to "take Care that the Laws be faithfully executed" in ...

In the wake of the Supreme Court's ruling in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (U.S. May 16, 2016), a growing trend is emerging with respect to cases involving claims under the Telephone Consumer Protection Act, 47 U.S.C. § 227 ("TCPA"). Indeed, while many early decisions held that "a violation of the TCPA is a concrete injury," see, e.g., Rogers v. Capital One Bank (USA), N.A., No. 1:15-cv-4016, 2016 WL 3162592, at *2 (N.D. Ga. June 7, 2016), more recently, some courts are requiring more. In fact, in Ewing v. SQM US, Inc. et al., Judge Cathy Ann Bencivengo of the Southern District of ...

Early in the morning on July 28, 2016, in coordination with the Consumer Financial Protection Bureau's (the "Bureau") field hearing on debt collection being held the same day in Sacramento, California, the Bureau released a detailed outline of proposals under consideration for debt collection rulemaking. While the proposals only cover third-party debt collection issues, the Bureau indicated that they plan to address first-party collectors and creditors with similar proposals at a later date. We expect that many of the same principles outlined in the third-party proposals will ...

In Hernandez v. Williams, Zinman & Parham PC, No. 14-15672, -- F.3d --, 2016 WL 3913445 (9th Cir. July 20, 2016), the Ninth Circuit Court of Appeals held that each subsequent debt collector is required to send a § 1692g(a) validation notice within five days of its initial communication with a consumer, even if the validation notice has been previously provided to the debtor by another debt collector for the subject debt. The Ninth Circuit's ruling is the first published opinion by a federal court of appeals addressing this issue.[1]

The ruling interpreted section 1692g(a) of the Fair ...

Following the Supreme Court's ruling in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (U.S. May 16, 2016), it is clear that "Article III standing requires a concrete injury even in the context of a statutory violation," such that a plaintiff cannot "allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III." Id. at 1549. Yet, the Court did not go so far as to rule that "the risk of real harm cannot satisfy the requirement of concreteness," and instead recognized that "the violation of a procedural right granted by statute can ...

In a much-anticipated decision, the United States Supreme Court ruled on Monday in Spokeo, Inc. v. Robins, No. 13-1339, 2016 WL 2842447 (May 16, 2016), that a consumer cannot bring a lawsuit in federal court based only on a "bare procedural violation" of the Fair Credit Reporting Act, 15 U.S.C. § § 1681-1681y ("FCRA"), vacating the Ninth Circuit's earlier decision for failing to fully consider whether the plaintiff had adequately alleged an "injury in fact." See 2016 WL 2842447, at 2-3. Yet, while defendants had been arguing for months in district courts that the Supreme Court's ...

The writing was on the wall following Justice Elena Kagan's dissent in Genesis Healthcare Corp. v. v. Symczyk, 133 S. Ct. 1523 (2013), wherein Justice Kagan blasted the view that an unaccepted offer of complete relief made to a named plaintiff pursuant to Fed. R. Civ. P. 68 is capable of mooting the plaintiff's individual (and putative class) claims as "wrong, wrong, and wrong again," id. at 1533 (Kagan, J., dissenting) - a position that every Court of Appeals to rule on the issue after Genesis Healthcare had adopted - and on January 20, 2016, the Supreme Court made it official. In a 6-3 ...

In Danehy v. Time Warner Cable Enterprise LLC, No. 5:14-cv-133, 2015 WL 5534285 (E.D.N.C. Sep. 18, 2015), the United States District Court for the Eastern District of North Carolina adopted the magistrate's findings that a caller's good-faith belief of consent is a complete defense under the Telephone Consumer Protection Act ("TCPA"). The defendant in Danehy, a cable company, had been asked by one of its customers to perform a service visit. The customer had provided a cell phone number to the defendant as one of his contact numbers. Unbeknownst to the defendant, the cell phone ...

In Davidson v. Capital One Bank (USA), N.A., a case closely followed by the financial services industry and handled by Burr & Forman, LLP, the Eleventh Circuit held that an entity collecting a debt that was acquired after default, and which the entity now owns, is not a "debt collector" under the Fair Debt Collection Practices Act ("FDCPA") unless the principal purpose of the entity's business is the collection of debts or the entity regularly collects debts owed to others. In so holding, the Eleventh Circuit broke from the large majority of courts (including the Third, Seventh, and ...

Beginning August 31, 2015, the CFPB will begin supervising nonbank auto finance companies pursuant to 12 C.F.R. 1090.108. The Final Rule provides that auto finance companies that qualify as "larger participants of a market for automobile financing" will be subject to the new regulation. The Dodd-Frank Act gave the CFPB supervisory authority over "larger participants" of certain markets for consumer financial products or services, as defined by the CFPB. See 12 U.S.C. 5514(a)(1)(B). In June 2015, the CFPB finalized its larger participant regulation as it relates to the ...

Following the Supreme Court's ruling in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573 (2010), it is clear that the bona fide error defense set forth in section 1692k(c) of the Fair Debt Collection Practices Act, 15 U.S.C. § § 1692 to 1692p (the "FDCPA"), "does not apply to a violation of the FDCPA resulting from a debt collector's incorrect interpretation of the requirements of th[e FDCPA]." Id. at 604-05. But as the district court recently recognized in Gray v. Suttell & Associates et al., a putative FDCPA class action filed in the Eastern District of ...

Burr & Forman LLP recently secured an important holding on an issue of first impression regarding the running of the statute of limitations in the FDCPA and FCCPA context. More specifically, in Gregory Crossman v. Asset Acceptance, LLC, 5:14-cv-00115-WTH-PRL, Judge Hodges, sitting in a Middle District of Florida trial court, held that inaction cannot form the basis of a continuing violations theory under the FDCPA or FCCPA, the delayed discovery doctrine does not apply to same, and the recording of a satisfaction of judgment, albeit untimely, renders a § 701.04, Florida Statutes ...

The United States District Court for the Eastern District of Kentucky recently held that an assignee of a debt may request prejudgment interest in a collection complaint dating from the time the debt was charged off by the original creditor, even where the original creditor had stopped charging interest on the account post charge-off. In Stratton v. Portfolio Recovery Associates, LLC, Case no. 5:13-cv-147-DCR (E.D. Ky. Nov. 26, 2013), the plaintiff filed a putative class action complaint alleging that the debt collector, who had been assigned a debt owed by the plaintiff, violated ...

In Hunt v. 21st Mortgage Corp., No. 2:12-CV-2697-WMA, 2013 WL 5230061 (N.D. Ala. Sept. 17, 2013), the Northern District of Alabama rendered an important decision regarding what constitutes an "automatic telephone dialing system" ("ATDS") under the Telephone Consumer Protection Act ("TCPA") in the digital age, holding that a system constitutes an ATDS only if it has the present capacity, at the time the calls were being made, to randomly dial phone numbers. The plaintiff, who had brought claims under the TCPA, sought to compel inspection of the defendant's telephone system. The ...

In Royal Fin. Grp., LLC v. Perkins, ED98991, 2013 WL 4419343 (Mo. Ct. App. Aug. 20, 2013), the Missouri Court of Appeals, Eastern District held, as a matter of first impression in Missouri state court, that a debt collector violates the Fair Debt Collection Practices Act ("FDCPA") by filing a debt collection lawsuit without the intention of ever obtaining evidence to prove the plaintiff's indebtedness. The debt collector in Royal had purchased a portfolio of charged-off debt, for which its assignor had expressly disclaimed any representations or warranties. Under the assignment ...

In Nichols v. Niagara Credit Recovery, Inc., No. 5:12-cv-1068, 2013 WL 1899947 (N.D.N.Y. May 7, 2013), the Northern District of New York held that the plaintiffs' Fair Debt Collection Practices Act ("FDCPA") claims were barred by the FDCPA's one-year statute of limitations, where the plaintiffs attempted to raise an equitable tolling argument for the first time in their response to the defendants' motion to dismiss. The wife in Nichols had defaulted on a loan from the original creditor, who assigned the debt to a debt collection company for collection. The debt collector, in turn ...

In Zaborowski v. MHN Gov't Services, Inc., 2013 WL 1363568 (N.D. Cal. April 3, 2013), the Northern District of California held that an employment contract arbitration agreement, which incorporated the filing fee schedule set forth in the rules of the American Arbitration Association ("AAA"), was unconscionable. The Zaborowski plaintiffs brought a class action lawsuit against their employer seeking damages in excess of $75,000, alleging that the employer had deprived them of overtime compensation by misclassifying them as independent contractors rather than employees. The ...

In Suzanne Hill, et al. v. Midland Funding, LLC, et al., No. 1:12-cv-02397-CCB (D.MD. Apr. 16, 2013), Plaintiffs brought a putative class action against Midland Funding LLC (Midland) alleging violations of the Fair Debt Collection Practices Act (FDCPA), the Maryland Consumer Debt Collection Act (MCDCA) and the Maryland Consumer Protection Act (MCPA). In support of their claims, Plaintiffs contend that Midland violated the FDCPA when it filed collection law suits against them listing the address of its parent company, an address at which the stated plaintiff in each lawsuit was ...

Two recent federal court decisions involving claims under the Fair Debt Collection Practices Act ("FDCPA") highlight why FDCPA defendants should not overlook the most basic elements of an FDCPA claim in forming their defense. In both of these cases, the courts dismissed the plaintiffs' claims for failure to allege that the defendants were "debt collectors." See Hunt v. U.S. Bank, N.A., et al., 2013 WL 1398964 (C.D. Cal. Apr. 3, 2013); Izmirligil v. Bank of New York Mellon, et al., 2013 WL 1345370 (E.D.N.Y. Apr. 2, 2013). Both the Hunts and Izmirligil brought FDCPA claims against a ...

Judge Donald Middlebrooks recently dismissed a plaintiff's "permissible purpose" claim under the Fair Credit Reporting Act ("FCRA") where the alleged facts showed that the defendant/creditor was attempting to collect a debt and had a good faith belief that the account belonged to the plaintiff. In Little v. Asset Acceptance, Case No. 9:12-cv-81116 (S.D. Fla.), Carole Little filed suit against Asset Acceptance, LLC, claiming that Asset had no permission to access her credit report, that she had never applied to Asset for credit, and that she does not maintain a credit account with ...

In Webb et al. v. Midland Credit Management, Inc. et al., 2013 WL 1285570 (N.D. Ill. Mar. 27, 2013), the Northern District of Illinois held that a plaintiff cannot state a claim under the Fair Debt Collection Practices Act ("FDCPA") merely by alleging that a debt collector sought to collect a greater amount in a settlement letter than it sought to collect in a subsequent collection lawsuit. Rather, a plaintiff must specifically allege a factual basis for why the "inflated" amount is false, deceptive, or misleading. The plaintiffs in Webb brought a class action lawsuit under the FDCPA ...

Frank Springfield and Zachary Miller have written an article for the Business Law Section of the American Bar Association that was published in the Business Law Today. The article addresses the Consumer Financial Protection Bureau's ("CFPB") rule defining "larger participants" in the consumer debt collection market and the impact that the CFPB will have on the collection industry. The article also highlights changes that can be expected for attorneys practicing in this industry and recent decisions released by federal courts addressing the scope of the Fair Debt Collection ...

In Echlin v. Columbia Collectors, Inc., NO. C12-5878 RBL, 2013 WL 858206 ( W.D. Wash. Mar. 7, 2013), the Western District of Washington held that an Offer of Judgment of $1,500 plus costs and attorneys' fees mooted the debtor's claim under the Fair Debt Collection Practices Act ("FDCPA"), where the debtor sought statutory damages, actual damages, costs, and attorneys' fees in her complaint yet failed to allege that she in fact suffered actual damages. The plaintiff-debtor in Echlin, who alleged that various notices sent by the defendant-debt collector were defective under the ...

A federal court in Washington last week declined to grant summary judgment in favor of OneWest Bank on a Fair Credit Reporting Act ("FCRA") claim where OneWest did not fully investigate account disputes received directly from the consumer and not from a consumer reporting agency. In McDonald v. OneWest Bank, FSB, Case No. C-10-1952RSL, 2013 WL 858187 (W.D. Wash. Mar. 7, 2013), the plaintiff/consumer notified three consumer reporting agencies ("CRAs") he disputed a debt OneWest was reporting on his credit report. He also sent letters directly to OneWest outlining the specific ...

The United States District Court for the Southern District of California gave its preliminary approval to a $17.1 million settlement fund in a class action brought under the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § § 227 et seq. in Malta v. Federal Home Loan Mortgage Corporation, et al., No. 10-CV-1290 BEN (NLS), 2013 WL 444619 (S.D. Cal. Feb. 5, 2013). In Malta, the plaintiffs alleged that one of the defendants, a loan servicer, violated the TCPA by calling the cellular phones of account-holders "without 'prior express consent,' using an 'automatic telephone dialing ...

In Tye v. LJ Ross Associates, No. 11-15195, 2013 WL 424765 (E.D. Mich. Feb. 4, 2013), the U.S. District Court for the Eastern District of Michigan held that a high frequency of phone calls cannot alone prove a debt collector's intent to harass under 15 U.S.C. § 1692d, a provision of the Fair Debt Collection Practices Act ("FDCPA"). In Tye, the plaintiff-debtor brought multiple claims against the defendant debt-collector under the FDCPA, including a claim under section 1692d, which prohibits a debt collector from "engag[ing] in any conduct the natural consequence of which is to harass ...

In Bandy v. Midland Funding, LLC, No. 12-00491-KD-C, 2013 WL 210730 (S.D. Ala. Jan. 18, 2013), the U.S. District Court for the Southern District of Alabama held that filing a collection lawsuit without first obtaining evidence to prove the claims is not a violation of the Fair Debt Collection Practices Act ("FDCPA"). The Bandy defendant, a debt collection agency, filed suit in state court seeking to collect on a debt allegedly owed by the plaintiff. However, the debt collector's complaint allegedly did not contain any allegations supporting the validity of the debt, but only stated ...