A summary of recent top cases. Editor’s note: This article is available for members only.
9/4/2020 8:30
Each week, ACA International’s Compliance Analysts Betsy Clarke, Laura Dadd and Andrew Pavlik compile relevant case summaries for ACA members. Here is a recap of the cases this week. Members may also submit cases for consideration to our compliance team at [email protected].
Disclosure of Consumer’s Social Security Number Potentially Violates the FDCPA
In this case, the debt collector attempted to collect allegedly unpaid debts from the consumer by filing actions in state court. The consumer claimed that the debt collector included the consumer’s unredacted Social Security number in state court filings in violation of § 1692e of the Fair Debt Collection Practices Act. The debt collector argued that this type of disclosure does not constitute an FDCPA violation and cited cases that addressed this issue considering § 1692d.
The court found that disclosing the consumer’s Social Security number in public documents filed with the court did not violate § 1692d. However, the alleged representation to the court by the debt collector that it set the documents containing the consumer’s Social Security number as confidential was a potential violation of the FDCPA under § 1692e.
Federal Judge Agrees to Abstain, Granting Rare, “Extraordinary” Stay of Action
After a consumer incurred a debt related to student loans, a debt collector filed a collection action in Kentucky state court and the consumer answered and filed counterclaims alleging violations of federal and state law. Several months later, the consumer requested leave to file amended counterclaims and to add additional defendants as third-party defendants.
One month later, while the motion to amend was pending, the consumer filed a second lawsuit in the same state court claiming she had to do so to protect her claims under the Fair Debt Collection Practices Act, which has a one-year statute of limitations. The debt collectors, defendants of the second state court action, removed the action to federal court in the Eastern District of Kentucky. The consumer moved to stay the second action, seeking to persuade the federal court to abstain from exercising its jurisdiction so she could proceed with the first action already pending in state court. The debt collector objected to the motion to abstain, preferring to proceed in federal court.
In assessing the consumer’s motion seeking a stay of action, the court began its analysis by noting that federal courts have a “virtually unflagging obligation … to exercise the jurisdiction given them.” A federal court will abstain from exercising its jurisdiction and defer to the concurrent jurisdiction of a state court only in limited circumstances because abstention is regarded as an “extraordinary step” taken only in “extraordinary cases.”
Consumers Asserting “Confusing and Convoluted Allegations” Cannot Create a Claim Based on the FDCPA Where None Exists
A consumer and his wife purchased a property and executed a Deed of Trust with a creditor in 2017. The Deed of Trust was assigned to another entity, and a Notice of Default and Election to Sell was filed in early 2019. Four days later, the consumers filed their first lawsuit in state court against numerous different entities involved in holding the mortgage, seeking a temporary restraining order, preliminary injunction, a notice of lis pendens, a request for a “writ of discovery,” and an application to proceed in forma pauperis (“IFP.”) The court provided instructions to the consumers who were attempting to handle their case without aid of legal counsel, representing themselves, but the court eventually dismissed their case without prejudice to refile because the consumers failed either to pay the filing fee or to request to proceed as indigent “in forma pauperis” litigants.
The consumers refiled their case and the court granted the defendants’ motion for judgment on the pleadings with respect to the majority of the consumers’ claims. The court dismissed some of the claims with leave to amend because the consumers “may be able to sharpen and better explain their theories once they have absorbed defendants’ motion and the judicially noticed documents.”
The consumers then removed the case to federal court. Although the court could have remanded the suit on the basis that only the defendant may remove a case from state to federal court, one of the defendants signaled its intent to remove the action, so the federal court permitted it to proceed.
Visit the Industry Advancement Fund webpage for more case summaries and news. ACA’s Daily Decision is powered by ACA’s Litigation Advocacy and Compliance Teams.
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