ACA member company reflects on this win for the industry as federal FDCPA lawsuits continue to trend downward.
04/14/2023 1:30 P.M.
4 minute read
After nearly two years, Superlative RM (SRM), an ACA International member company with locations in Phoenix and Elk Grove, California, is celebrating a recent victory in the U.S. District Court for the Northern District of Illinois Eastern Division, which ACA International previously covered in a Daily Decision.
On June 16, 2021, the plaintiff, through her counsel, filed a class-action lawsuit against Superlative RM and an investment group for a Hunstein-style copycat case. The case was then filed in the Circuit Court of Cook County, Illinois, Chancery Division.
The case was based on the claim that SRM violated the Fair Debt Collection Practices Act by communicating information about a debt to a third-party letter vendor without permission from the consumer.
SRM retained a well-known creditors’ rights firm to defend the case. The defendants argued that letter vendors are mediums used to transmit information and that modern mailing vendors’ systems are largely automated.
The defendants cited subsections within the FDCPA that allow debt collectors to serve legal processes on consumers and use telephones and telegrams to communicate with consumers, further noting that the communication in question was not an attempt to collect a debt (dunning letter).
The co-defendant requested that the case be moved to federal court.
In June 2022, the federal court denied the request and moved the case back to Illinois, filing an order remanding the case back to Cook County. Within this order, the federal judge noted that the type of communication in question fell under the scope of “ministerial duties” associated with debt collection, which is not what the FDCPA aimed to cover in its statements on third-party disclosures.
The plaintiff also stipulated that she had not suffered any actual damages. Judge Leinenweber noted on the June 1, 2022, document:
“In summary, we have a debt collector who utilizes a third party to mail [d]unning letters. Thus, the only individual having access to the debt information is the individual who created and mailed the [d]unning letter. This ministerial activity is no different from what a lawyer’s secretary normally performs. The fact that a secretary is an employee rather than a contractual worker appears wholly irrelevant. In fact, many lawyers hire contract secretarial services, as well as court reporters. Suppose an attorney who is employed to collect a large debt is forced to file suit against the debtor and in course of the proceeding takes a deposition of the debtor before a court reporter, who is virtually always, like the third-party vendor in this case, a third-party vendor. Court reporters, like the third-party vendor in this case, are not covered by the permissible list of persons to whom the debt information may be disclosed.”
Once back in Illinois state court, SRM filed a motion to dismiss on the basis that the plaintiff could not establish an injury-in-fact and that no proof of communication could be made between SRM and its vendor. On March 15, 2023, the district judge published an order granting SRM’s motion to dismiss with prejudice.
“For 30 years, I have tried to view our industry in its entirety, eyeing issues that concern 99%, and there are many. When Superlative RM was unfortunately—or fortunately, depending on how you view it—sued on this matter, I knew we were finally in a good position to make a stand for something larger than ourselves and our partners, so I immediately made my intentions to Nabil Foster with Barron & Newburger, PC, [the firm that represented SRM] extremely clear that we had no intention of retreating,” Jerry Terrill, president and CEO of Superlative RM, said. “The accounts receivable management industry and our partners we service were shocked to see the initial verdict and the incredible lack of common sense behind it. I am extremely proud of the outcome for all concerned—that is ‘the Superlative way!’ I hope to see others make a stand and rulings come down across the country that benefit every member of our industry because when no one will take up our cause, we have to do it ourselves. We are all in this together!”
ACA’s Take
This opinion demonstrates that by educating state court judges on the FDCPA (and specifically the congressional intent and legislative history behind the act), and by highlighting the highly technical and often frivolous (read: no-injury) claims that certain members of the plaintiffs’ bar concoct (many of which were never contemplated by the FDCPA), the ARM industry can obtain positive outcomes in state court.
IAF Support
Legal battles like these are time-consuming, expensive and an unfortunate distraction to the operations of ACA’s members. To stay ready for challenges like Hunstein going forward, it is vital to keep the IAF funding robust. After the last couple of years of heavy action on both the state and federal level—heavy action that will continue—your help in the form of voluntary contributions to the IAF will make a needed difference. Log in to ACA’s website here to learn more about how to contribute today.
Remember, subscribe to ACA Daily and Member Alerts under your My ACA profile when logged in to acainternational.org to receive updates on the ACA Huddle.
Is this what the case says? Sounds odd the way it is phrased but maybe it’s a legal thing?