Source: http://updates.mwbllp.com/2020/
Timestamp: 2020-01-26 13:07:18
Document Index: 120592532

Matched Legal Cases: ['§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692', '§ 1692']

Financial Services Law Developments: 2020
FYI: 6th Cir Holds Consumer Lacks Standing to Assert 'Meaningful Involvement' Claim, Not Every Technical Violation is Redressable
The U.S. Court of Appeals for the Sixth Circuit recently affirmed a trial court's ruling that a consumer lacked standing to pursue a lawsuit alleging that collection notices sent by a law firm violated the FDCPA because no attorney with the firm conducted a meaningful review of his debts.
The court's opinion is available at: Link to Opinion
The consumer received two collection letters that were printed on the law firm's letterhead and signed by one of the firm's attorneys. The consumer alleged that those letters were sent to him without any meaningful attorney review. In an effort to support this conclusion, the consumer asserted that the law firm sends so many letters that no attorney could possibly review all of them. He also alleged that the signatures on the two letters were identical and appeared to be "stock signatures."
'Meaningful Involvement' Claim Requires Standing
As you may recall, the FDCPA (15 U.S.C. § 1692e(3)) prohibits debt collectors from falsely representing or implying "that any individual is an attorney or that any communication is from an attorney." The statute itself makes no mention of "meaningful involvement" or "meaningful review." Instead, courts created the meaningful-involvement doctrine to evaluate claims asserted under § 1692e(3) with respect to communications that bear an attorney's name or signature, but that are (in the words of one court) "not 'from' the attorney in any meaningful sense of the word." Avila v. Rubin, 84 F.3d 222, 229 (7th Cir. 1996).
The trial court dismissed the consumer's case, finding that the consumer lacked standing and that he failed to state a claim under the FDCPA. On appeal, the Sixth Circuit limited its review to the issue of standing, and affirmed the trial court's dismissal.
A Bare Allegation of Anxiety is Insufficient to Allege an Injury in Fact
To pursue a case in federal court, a plaintiff must demonstrate that he has standing, and an essential element of standing is a showing that the plaintiff suffered an "injury in fact" as the result of the defendant's alleged conduct. In this case, the consumer alleged that he suffered an injury in fact because the firm's letters made him feel anxious and caused him to fear that the firm would sue him if he did not pay.
The Sixth Circuit held that although a plaintiff might sometimes recover damages for emotional distress in an FDCPA action, a bare allegation of anxiety is insufficient to allege an injury in fact.
The Court also found that the consumer's alleged anxiety was insufficient to confer standing because it was self-inflicted and thus not traceable to the law firm's alleged conduct. That is, the Court determined that any anxiety suffered by the consumer was the result of his decision not to pay his undisputed debts, rather than the content of the law firm's letters.
Consumer's Procedural Violation Claim Also Insufficient
The consumer also argued that the alleged violation of § 1692e(3) was sufficient, on its own, to confer standing. The Sixth Circuit agreed that a plaintiff need not allege any additional harm when alleging that the defendant has violated a procedural right that was created by Congress to protect a "concrete interest." However, while it is clear that Congress enacted the FDCPA to protect consumers from abusive debt-collection practices, the consumer could not show that the law firm's letters caused him any harm that the FDCPA was intended to prevent.
The Court distinguished the procedural violation alleged by the consumer from procedural violations found to be sufficient to confer standing in other cases, such as violations that subjected the consumer to attempts to collect debts that the consumer did not owe and violations that placed consumers at risk of waiving rights protected by the FDCPA.
Standing is Subjective, Not Every Technical Violation is Redressable
Not every technical violation of the FDCPA is redressable in federal court, and some cases are subject to dismissal due to the plaintiff's lack of standing. But the Supreme Court has noted that it is often difficult to determine when a plaintiff has sufficiently alleged an injury in fact resulting from the violation of a procedural right created by Congress.
Posted by Ralph T. Wutscher at 8:27 AM
FYI: CFPB Increases Maximum Amount of Civil Monetary Penalties
Effective January 15, 2020, the federal Consumer Financial Protection Bureau increased the maximum civil monetary penalty it can impose within its jurisdiction. The increases are required by federal law, which requires agencies to adjust for inflation each civil monetary penalty within an agency's jurisdiction by Jan. 15 of each year.
A copy of the announcement is available at: Link to Announcement
The adjusted penalties are as follows:
Penalty amounts established under 2019 final rule
Consumer Financial Protection Act, 12 U.S.C. 5565(c)(2)(A)
Tier 1 penalty
Consumer Financial Protection Act, 12 U.S.C. 5565(c)(2)(B)
Tier 2 penalty
Consumer Financial Protection Act, 12 U.S.C. 5565(c)(2)(C)
Tier 3 penalty
Interstate Land Sales Full Disclosure Act, 15 U.S.C. 1717a(a)(2)
2,013,399
2,048,915
Real Estate Settlement Procedures Act, 12 U.S.C. 2609(d)(1)
Real Estate Settlement Procedures Act, 12 U.S.C. 2609(d)(2)(A)
Per failure, where intentional
SAFE Act, 12 U.S.C. 5113(d)(2)
Truth in Lending Act, 15 U.S.C. 1639e(k)(1)
Truth in Lending Act, 15 U.S.C. 1639e(k)(2)
Posted by Ralph T. Wutscher at 1:13 PM
FYI: 9th Cir Affirms 25% Reduction in Plaintiff's Attorneys Fee Award
The U.S. Court of Appeals for the Ninth Circuit recently affirmed a trial court's order reducing the amount of attorneys' fees requested by class counsel by cutting the number of hours expended by class counsel by 25%.
In so ruling, the Ninth Circuit concluded that the trial court's order explanation of the lodestar calculation it conducted and application of the percentage-of-recovery analysis as a cross-check for reasonableness adequately explained its reasoning and did not abuse its discretion.
A plaintiff consumer ("Plaintiff") filed a putative class action lawsuit against an entertainment studio and distributor ("Defendants") who marketed James Bond DVD and Blu-ray boxsets purportedly containing "all the Bond films," but did not include two such films. The suit alleged violations of Washington's Consumer Protection Act, breach of express warranties, and breach of the implied warranty of merchantability on behalf of a nationwide class of consumers.
The parties settled, and as part of the settlement, Defendants agreed to pay attorneys' fees and costs to class counsel ("Class Counsel") as determined by the trial court and in an amount not exceeding $350,000 an incentive award to $5,000 to the named class plaintiff.
Plaintiff moved, unopposed, for fees and costs and an incentive award consistent with the agreement. However, the trial court awarded only $184,655 in attorneys' fees after conducting its own lodestar calculation, and applying a 25% across the board cut to class counsel's requested hours to "reflect a more reasonable representation of the work required." Class counsel appealed.
Reviewing an award of attorney's fees, an appellate court's abuse of discretion standard affirms a trial court's award unless the trial court "applied the wrong legal standard or its findings were illogical, implausible, or without support in the record." Gonzalez v. City of Maywood, 729 F.3d 1196, 1201–02 (9th Cir. 2013) (quoting TrafficSchool.com v. Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011)).
To determine the reasonableness of the award at issue, the Ninth Circuit cited its ruling In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935 (9th Cir. 2011), which reversed and remanded the fee award where the trial court provided "(1) no explicit calculation of a reasonable lodestar amount; (2) no comparison between the settlement's attorneys' fees award and the benefit to the class or degree of success in the litigation; and (3) no comparison between the lodestar amount and a reasonable percentage award." In re Bluetooth, 654 F.3d at 943.
On appeal, Plaintiff argued that the entire award was arbitrary because the trial court failed to provide an explanation as to why it chose a 25% cut, primarily relying on the Ninth Circuit's opinion in Gonzalez v. City of Maywood, 729 F.3d 1196 (9th Cir. 2013) which reversed and remanded the trial court's reduced fee award in a civil rights case, where the lodestar method is typically used.
Following the procedures it established in In re Bluetooth, the Ninth Circuit observed that in this case, the trial court provided an explicit lodestar calculation in determining the reasonable hourly rate and number of reasonable hours expended by class counsel and six reasons why a 25% reduction was appropriate.
In addition, the Ninth Circuit noted, the trial court performed a percentage-of-recovery analysis as a cross-check, and observed that its lodestar calculation ($184,665) exceeded its 25% benchmark for percentage-of-recovery awards of the benefit achieved for the class ($138,600). See In re Bluetooth, 654 F.3d at 945 quoting In re Gen. Motors Corp. Pick-up Truck Fuel Tank Prods. Liab. Litig., 55 F.3d 768, 821 n.40 (3d Cir. 1995) (percentage-of-recovery method can be used to ensure that "counsel's fee does not dwarf class recovery.").
Because the trial provided a clear explanation for its lodestar calculation and reasonableness cross-check allowing the appellate court to determine that the fee award was reasonable based on the record before it, its case law required nothing more. See, e.g., McCown v. City of Fontana, 565 F.3d 1097, 1102 (9th Cir. 2009)( ("[The district court] must explain how it arrived at its determination with sufficient specificity to permit an appellate court to determine whether the district court abused its discretion in the way the analysis was undertaken.").
The Ninth Circuit further distinguished the case at bar with its opinion in Gonzalez, noting that the trial court in that case provided an explanation that seemed arbitrary and "irreconcilable" with some of its conclusions, Gonzalez, 729 F.3d 1196 at 1204-1205 (9th Cir. 2013). By contrast here, the trial court provided a detailed explanation of the lodestar calculation and a percentage cross-check that demonstrated that even with the 25% cut to class counsel's hours, the fee award was higher than the percentage-of-recovery benchmark amount of 25% of the recovery to the class.
Accordingly, the trial court's substantially reduced attorneys' fee award was affirmed.
Posted by Ralph T. Wutscher at 12:09 PM
FYI: 7th Cir Holds Collection Letter Properly Identified "Original" and "Current" Creditors Under FDCPA
The U.S. Court of Appeals for the Seventh Circuit recently affirmed judgment in favor of a debt buyer and debt collector against a consumer debtor alleging that the collector's debt collection letter violated the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 ("FDCPA").
In so ruling, the Seventh Circuit rejected the debtor's argument that the letter's identification of both the "original creditor" and "current creditor" was likely to confuse consumers, and held that the letter accurately and clearly identified the creditor to whom the debt was owed, in compliance with subsection 1692g(a)(2) of the FDCPA.
A consumer ("Debtor") defaulted on debt owed to a bank. The debt was sold to a subsequent creditor (the "Debt Buyer"), who retained a debt collector (the "Debt Collector") to send a form collection letter (the "Collection Letter").
The Collection Letter advised that the Debtor's account had been "placed with our collection agency on 9-14-17," and that the Debt Collector's "client" had authorized it to offer a payment plan or a settlement of the debt in full. The Collection Letter further identified the bank as the 'original creditor,' and the Debt Buyer as the 'current creditor,' along with the last four digits of the Debtor's account number and principal and interest balances due on the debt.
The Debtor filed a putative class action complaint against the Debt Buyer and Debt Collector alleging that the Collection Letter violated § 1692g(a)(2) of the FDCPA by "fail[ing] to identify clearly and effectively the name of the creditor to whom the debt was owed."
The trial court entered judgment on the pleadings in the Debt Buyer and Debt Collector's favor, holding that the Collection Letter adequately identified the current creditor. The instant appeal ensued.
The Seventh Circuit referenced prior rulings that "[t]o satisfy § 1692g(a), the debt collector's notice must state the required information 'clearly enough that the recipient is likely to understand it.'" Janetos v. Fulton Friedman & Gullace, LLP, 825 F.3d 317, 321 (7th Cir. 2016) (quoting Chuway v. Nat'l Action Fin. Servs., Inc., 362 F.3d 944, 948 (7th Cir. 2004)).
In addition, potential FDCPA violations are viewed "through the objective lens of an unsophisticated consumer who, while 'uninformed, naïve, or trusting,' possesses at least 'reasonable intelligence, and is capable of making basic logical deductions and inferences.'" Smith v. Simm Assocs., Inc., 926 F.3d 377, 380 (7th Cir. 2019) (quoting Pettit v. Retrieval Masters Creditor Bureau, Inc., 211 F.3d 1057, 1060 (7th Cir. 2000)).
On appeal, the Debtor argued that listing two separate entities as "creditor" without explaining the difference between the two, and stating that the Debt Collector was authorized to make settlement offers on behalf of the Debt Buyer (an entity that was previously unlikely known to the customer) could confuse its recipients as to whom the debt was actually owed.
Citing the Seventh Circuit's ruling in Smith v. Simm Assocs., Inc., the Debtor argued that in that case, dismissal was affirmed because the letters in question did "not identify any creditor other than Comenity Capital Bank, which might have led to consumer confusion," and that here the Debt Collection's identification of an original and current creditor violated Smith.
The Seventh Circuit disagreed. It held that the Collection Letter clearly identified the Debt Buyer as the current creditor, thus meeting the requirement under 1692g(a) that the written notice contain "the name of the creditor to whom the debt is owed." 15 U.S.C. § 1692g(a)(2).
Moreover, the Debtor's argument under Smith was soundly rejected, as the original and current creditors in Smith were the same. Here, the Collection Letter's identification of the original creditor (who the consumer is likely to recognize based on their past business relationship) and the current creditor (the Debt Buyer, which the consumer may not recognize and is required to be identified under the FDCPA) "provide[d] clarity for consumers" and an unsophisticated consumer would understand that his debt has been purchased by the creditor. Smith, 926 F.3d at 381.
Acknowledging the trial court's suggestion that the letter could have better clarified the parties' relationship by spelling out that the Debt Buyer purchased the debt from the original creditor, and that the Debt Buyer was the Debt Collector's client, the Seventh Circuit held that section 1692g(a)(2) only requires clear identification of the current creditor -— not a detailed explanation of transactions leading to the Debt Collector's notice.
Accordingly, the trial court's judgment in favor of the Debt Buyer and Debt Collector was affirmed.
Posted by Ralph T. Wutscher at 4:13 PM
FYI: 6th Cir Holds Consumer Lacks Standing to Asse...
FYI: CFPB Increases Maximum Amount of Civil Moneta...
FYI: 9th Cir Affirms 25% Reduction in Plaintiff's ...
FYI: 7th Cir Holds Collection Letter Properly Iden...