June 29, 2015

Should I Hire Ferry and Nicholas If I Am Sued In Alabama?

If you’re sued in Alabama, then almost certainly you will receive a letter from a company called Ferry and Nicholas. Normally this is sent to you the day after you are sued, so usually before you’re ever served with a lawsuit, you’ll get this letter in the mail that says, “By the way, you’ve been sued in this county by this company.”

It’ll say something like, “We are a professional mediation company, and you can hire us to mediate your case, so you don’t have to deal with court.”

The question is, is that a good idea to use those guys?

I’ll share with you a couple of thoughts.

First of all, they are not lawyers – at least, that’s what they claim, that they are not a law firm. So you would not get any legal advice from them. Now, I’m not sure. When there’s a lawsuit and they’re saying, “We’ll mediate this,” and then they also call you their client – a mediator doesn’t call one person his client – it’s an odd usage of words.

Anyway, their point is they’re representing you to try and negotiate with the collection law firm, but to me that seems like legal representation. If you’re going to have surgery, go to a real doctor. Don’t go to somebody who’s a fake doctor. I would think that if you’ve been sued, you would want to have an actual lawyer who’s licensed in the state of Alabama to represent you.

One of the problems we’ve seen with this place – at least what we’ve been told – is that they have told their clients, “You don’t have to file an answer. We’re taking care of this. We’ve got it worked out,” and then those people get judgments against them.

Then this “professional” mediation company says, “Whoa, we’re not lawyers! We can’t do anything in court. Sorry, that’s a shame.”

If you’re going to use them, make sure that you’re very, very careful to get your answer in to respond to the lawsuit within the time limit. That’s 14 days from when you were served if you are sued in small claims or district court. It’s 30 days in circuit court.

Now, my suggestion is if you’ve been sued, that you consider what we have laid out, which will be your five options (video and article discuss your five options when sued).

The first option is bankruptcy. We hardly ever think that’s appropriate, but occasionally it is, and if it’s necessary, then it’s very useful. But if we take bankruptcy off the table, then you have two do-it-yourself options and two options to hire a lawyer.

Here’s what I mean by that. You can fight it on your own, and we can give you some resources to help you do that; you can settle it on your own, and I’ll walk you through a way to do that on your own, or you can hire a lawyer to fight it – in other words, go to court and try the case for you – or hire a lawyer to help you settle it before it goes to court.

If you hire my law firm, we’ll tell you exactly what the cost will be and tell you exactly what we’re going to do. There are a lot of times I talk with people and I say, “You could hire me, but you really don’t need to. You would do better off with fighting it on your own or settling it on your own.”

Other times we say, “I think you hire a lawyer, and if you want to hire us, here’s the cost.”

It’s almost always a flat fee, so you know exactly what it will be. It’s not going to start here and then get higher and higher and higher. It’s just, “Here’s exactly what it is for your case.” We’ll tell you what we expect to happen, what the possibilities are, and exactly how that would work.

If we can help you in any way, feel free to give my firm a call at (205) 879-2447. My name is John Watts. You can contact us through AlabamaConsumer.com. You can also find other articles and videos there about lawsuits.

Going back to this question of hiring a non-law firm or mediation company to help you when you’re in the middle of a lawsuit, my recommendation is no. I think that’s very foolish to do. But I will say this. The good thing about this firm is they will notify you if you’ve been sued. That’s one thing.

Almost everybody that I’ve spoken with says, “I got this letter from this Ferry and Nicholas out of Tuscaloosa or Pennsylvania or wherever they’re from.” They do a good job of notifying people who are sued, so if you get one of these letters, don’t think this is a scam.

Don’t go, “What is this letter? I’m going to toss this away.” If you do that, then you’re setting yourself up, because the court may think that you’ve been served.

We see a lot of bad service out there. The people who are supposed to hand you the lawsuit paper, they just throw them in your yard, they put them in your door, they get blown away. Just be mindful. If you get a letter from this mediation firm, take it very seriously.

You can call the court and find out if you’ve been sued. You can call my firm, and we’ll tell you if you’ve been sued – we can look it up on the online court system.

Just give us a call if we can help you. (205) 879-2447.

Thanks for watching the video and reading this article.

John G. Watts

June 12, 2015

Scam debt collector at 1-866-332-6632

So I had an odd experience of speaking with a scam debt collector today -- this outfit (not sure what their name is) called my new home number. The phone call came from 1-866-332-6632.

They use the classic "scary message" about a file has been attached to your social security number and you need to call right away to discuss.

Complete garbage.

There is no such thing as a "file attached to your social security number" -- that's just an expression bogus debt collectors use.

So anyway I called them and the recording states they are a debt collector.

Told them I received a call from their number and didn't know what it was about.

They looked it up and said it was a call for someone I know.

Seeing as we are living in a new house that we built, and the person they are looking for has never lived with us, I explained the person does not live with us.

They asked "Can you get the person a message?"

This violates the FDCPA (Fair Debt Collection Practices Act) as a debt collector cannot ask a third party (anyone other than consumer or spouse) anything other than:

1. Home address of consumer
2. Home phone number of consumer
3. Place of employment of consumer.

These items are known as "location information" and you'll notice there is nothing in the above list about giving a message.

Since the collector obviously didn't mind breaking the law, I asked what it was about. At least I could figure out what's going on.

"It's a legal matter."

OK -- what legal matter?

"Sir, I can't tell you."

Well, you already told me you are a debt collector and who you are looking for.

"We are NOT debt collectors -- this is pre-legal. Giver her a message."

Hang up.

OK I guess she was done talking with me. :)

(I called back and surprisingly they would not talk to me -- sent me to voicemail so I explained that they were never to call my home or cell phone again. If they do, I'll sue them.)

The whole "Pre-legal" is another bogus term they use -- it means nothing. Either the collector is suing or they are not.

The concept with these kinds of dishonorable debt collectors (who are unfair to the legit debt collectors who play by the rules) is to say things such as:

**attached to your social security
**pre legal
**a file is on our desk against you
**bank fraud
**legal action

It is to paint a picture that you are about to be arrested so you need to pay. Then they want payments by western union and they won't give you a real physical address.

They won't send you proof in the mail -- they are terrified of using the mail to commit fraud as that takes it to a whole new level (mail fraud).

Best advice is normally to stay firm -- tell them you won't do anything until you get something in writing (not fax, not email) in the mail from them.

So that is my little adventure for today....

John G. Watts

ps -- if you are dealing with collectors -- even the first contact -- feel free to get with us and we can help you discover your rights as collectors often break the law. 205-879-2447.

June 7, 2015

Video: Consumer Protection Attorney John Watts Answers Your Questions

In this video we answer the following consumer protection questions:

The first question is "I have a judgment against me. What do I need to do if I want to pay that off?"

Now, our next question is similar. What if you have been sued, so you get a copy of the lawsuit, but there's no judgment yet. You say, "you know what, I just want to settle this. What do I do?"

Okay, our next question is, "Why should I send a dispute letter to a debt collector by certified mail?"

All right, so our next question is, "I got sued and then the debt collector or debt buyer or somebody like Midland, LV&V, Portfolio Recovery, Asset, Unified, all these types of companies. That company dismissed the lawsuit without prejudice. The question is, what does that mean for my credit report?"

I think this will be our last question at least on this video. "The question is, do I have any recourse if I pay a higher interest rate because of false credit reporting?"

Here's a transcription of the video:

Well, hello, my name is John Watts. I'm a consumer protection attorney in Alabama. I want to welcome you to our question and answer session where we will answer your consumer protection questions.

We have received a lot of really good questions. I've got a lot of those written down, probably more than we can cover in this session, so we may end up doing two sessions today so the videos won't be quite so long.

The first question is "I have a judgment against me. What do I need to do if I want to pay that off?"

The context of this is a debt collection judgment. Now, it could be from an original creditor like Chase or Capital One, but it could also be from a debt collector suit, and now this person has a judgment against them. They were properly served, so there is not basis to undo that judgment.

What do we do? You can pay it off.

Now, a couple of ways to do that. One could be through garnishment, so if they are already garnishing your wages, you might say, "Ah, I'm fine with that. Just keep taking out that 25% of my paycheck every week or every two weeks."

Or, you can try to negotiate a lower monthly payment. It's not really appealing to the company that has a judgment because if they can get $400 every two weeks, why would they agree to take 200 from you? But sometimes circumstances will allow that.

The most common way to pay these off is with a lump sum. Let's say you owe $5,000. That'll be our example. Maybe you can go to them with a $3,000 lump sum, and they'll agree to take it. There's a lot of factors. If you have been at your job 27 years, versus you have had 27 jobs in two years. They might be more likely to take a lump sum if your employment history is not real solid. How much are they getting out of the garnishments? If they are getting a whole bunch, they might say, "Ah, we'll just keep that coming." If it's a smaller amount, they may say, "Yes, we want the money right now."

Then just a lot of times, they do want the money. Money in-hand, versus maybe you'll get payments in the future. A lot of times money in-hand is very appealing. Here's a procedure I suggest.

We do something similar if we've been hired to do this, but if you do it on your own, this is what I would suggest. You want to get an agreement in writing. In other words, how much do I have to pay on this $5,000 judge to be done with this? Is that 3,000, 4,000, 2,000, what is that? That's what you want to do. Then make that payment and usually it's easier if you do it by certified check, cashier's check, some kind of official check rather than just a personal check. Now the collection lawyer has to wait seven days, 14 days, make sure that that's good if its done by personal check.

Once that is paid, then you want to make sure that the collection lawyer, and you get this agreement ahead of time, that when they get the money, they will file something in court, called a Satisfaction of Judgment. All that means is there is this judgment out there, and if somebody's looking that up, they go, "Ah, there's a judgment against you." Then they see this piece of paper and it says the judgment has been satisfied, or it's been paid off. You have satisfied your obligation. That lets the world know, yes there was a judgment, but now you owe zero on it. $5,000 judgment. You pay $3,000. Even though you didn't pay the full five, if the deal is $3,000 and you are done, then they should file that satisfaction of judgment.

Now here's the problem. Normally, judgments will be on your credit report. The credit bureaus are ... how can I say this? ... either very slow or not particularly interested in updating your report to show that you owe zero on this $5,000 judgment.

What we suggest is you get that satisfaction of judgment that's filed into court. There's a stamp across it. It says it was filed on July 15 at 2:33pm. Great, so you get a copy of that. You send that to the credit bureaus, and say, "look, guys, you are reporting on page one of my Equifax report," or TransUnion, Experian, whoever it is. Usually it's all three. "You are reporting that I owe $5,000. Please look at the document I have enclosed. You will see I owe zero now. Please update it." Usually if you take the effort to notify the credit bureaus, then they'll update it, but even then, sometimes they don't. They'll keep that on your credit report. They know that that damages you, it harms you. Here's a simple solution.

Assuming it's appropriate, and we have done this many, many times, you talk to a lawyer that does this type of work, so if you are in Alabama, we'll be happy to help you. We file in federal court a lawsuit against the credit bureaus and say, "You have false information on my credit report." They go, "But wait, you had a judgment for $5,000." We go, "that's true, but look here. Satisfaction of judgment. I owe zero. You are doing false credit reporting by telling the world I still owe $5,000." When we do that, the credit bureaus, they make all these excuses and arguments and all this stuff, but at the end of the day, they know if they have been caught, they have to delete that from your credit report. That's one of our requirements, not just that it be updated, but we want the whole thing off. They got to pay you money, and they got to pay us money. They know that's the deal when they lose these cases.

So if you are looking at paying off a judgment, that's my suggestion for what to do.

Now, our next question is similar. What if you have been sued, so you get a copy of the lawsuit, but there's no judgment yet. You say, "you know what, I just want to settle this. What do I do?"

Similar to what we just spoke about with the judgment, call the collection lawyer if you are handling this on your own, get an agreement in writing, so again, say they are suing you for $5,000 and the agreement is you pay three grand, get that in writing. That could be a letter. It could be an email, but you want to make sure it's very, very clear. We've had lots of cases where people pay the three thousand, the debt collector still comes after them for the $2,000, but there is no $2,000 owed. See, I owed five. I paid you three. That was the deal, so we owe zero now.

If you don't get it in writing, they will go, "Oh, I just thought that was a partial payment." No, let's make it very clear, in writing. $3,000 and we're done with this lawsuit.

Then you want to make sure that the collection lawyer dismisses that lawsuit with prejudice. With prejudice means they cannot sue you again. It's over. It's done.

Well, is that the end of it? No, because you want to look at your credit report because Capital One or Midland or LVNV, they are saying on your credit report you owe $5,000. If you settle with them for three, and it's done, then the case is over. Case is dismissed with prejudice, then your credit report should say you owe zero dollars. Now, it can say that at one time you owed five. That's fine, but now you owe zero. Just like we did with the judgment, usually what we want to do at that point is send a letter to the credit bureaus, and say, "Look, you are reporting inaccurate information."

Here's the reason why.

Capital One, Midland, whoever it is, they often won't update the credit bureau, Equifax, Experian, TransUnion. They won't tell them that you owe zero now. A lot of times in their mind, you still owe them two, and they may say, "Oh, you know what, we could sell this debt to somebody else."

You want to catch this very quickly, so you write the letter and you say, "My Midland account" ... or Capital One or whoever it is ... "you say I owe five. I owe zero. If you have any doubt, check with Midland or Capital One or whoever sued you."

Sometimes you include a copy of the order dismissing the lawsuit with prejudice. Then they'd say they are going to get it fixed, or if it doesn't get fixed, you sit down with a lawyer. Again, if you are in Alabama, we'll be happy to help you. We do this all the time. We file suit in federal court against the credit bureau, and the furnisher. The furnisher is the Capital One, the Midland, whoever it may be who's doing that false credit reporting.

Now, we'll say this. If it's a debt collector, sometimes you don't have to do that dispute. There are some different laws. I don't want to get bogged down in that, but the point is, you were sued for five grand. Now that's over. That's done. You want your credit report to reflect that, not to show that you still owe 5,000 or maybe you owe 2,000 because they just took five minus three, and they go, "Oh, you owe us two." "No, I don't owe you anything. Zero. Nothing." Make sure your credit report shows is accurate.

Okay, our next question is, "Why should I send a dispute letter to a debt collector by certified mail?"

This was somebody that had seen that on our websites and videos and books, we always talk about, if you are dealing with a debt collector, and if you send anything to a debt collector, do it by certified mail. If you are not going to do that, then you are just wasting your time.

The reason is, you can have the greatest whatever it is, letter, settlement proposal. I don't care what it is. Anything you are doing with a debt collector in writing. You could have the most perfect letter. That debt collector gets it, looks at the envelope, "Huh, not certified mail. Just throw it. Just chunk it. It's no good." Maybe that was a cease and desist letter. "Hey, do not communicate with me anymore." Once they get that, they can't call you again, but they'll keep calling you.

You go, "Wait a minute. I sent you a cease and desist letter." They go, "What cease and desist letter? We never got a letter from you." You go, "Yeah, I put it in the mail. It got to you. It never came back."

They go, "Well, we never got it."

Well, how do you prove that? You really can't. You do it by certified mail, because when they lie about not getting your cease and desist letter or your dispute letter, or whatever letter it is, when they lie about that, you pull out this green card and say, "right there. You signed for it."

Then it's funny to watch them squirm. They'll say, "somebody stole the certified mail."

"Really? Somebody stole the certified mail from you?"

They go, "Well, maybe they didn't steal it, but it got misplaced. That's not our fault."

"Actually it is, because you got the green card and you lost it. That's not my fault. It's your fault, debt collector."

It's interesting to watch, and they almost always have ... there is this progression, "We never got it. We never got it. Maybe we got it. We lost it. When you said 'don't ever call me again,' we didn't know what that meant, so that's why we kept calling ..." They just go through this progression of lies.

You have to do it by certified mail. Seven bucks, I think. It's worth the money. If it's important enough to contact a debt collector, it's important enough to do it by certified mail.

By the way, this applies to credit bureaus, really anybody that you are communicating with, we kind of joke about ... What is certified mail? Well, the expression we use around the office is, "no good news comes by certified mail."

What do we mean by that? It just means, certified mail is ... This is not always true, but it is true enough. When you are sending a letter to somebody and you think that they will lie about getting it, so you want to prove that they got it. That's when you do certified mail. Now, you could also do FedEx. You could do UPS, priority, just something that has a tracking mechanism in it, where somebody has to sign for it or somebody saying, "Hey, I delivered this," but the safest thing is certified mail.

All right, so our next question is, "I got sued and then the debt collector or debt buyer or somebody like Midland, LV&V, Portfolio Recovery, Asset, Unified, all these types of companies. That company dismissed the lawsuit without prejudice. The question is, what does that mean for my credit report?"

Let me back up and make sure we are on the same page. A dismissal with prejudice means the case is over. That could be because you settled, or it could be because they realize they can't prove their case and they just drop the case. With prejudice means they cannot sue you again. Now, we have a situation right now where a case was dismissed actually by a jury or a verdict, not a jury verdict, but the judge ruled in our client's favor, and then they sued us again on the same day.

It's like this completely outrageous thing that this debt buyer, Main Street Acquisitions, did. Let's put aside companies that will do things that absurd. Dismissal with prejudice means it's over. They can never sue you again, or at least they should never sue you again. Maybe companies like Main Street, they struggle with that concept, but most companies get it, that dismissal with prejudice, it's over.

Now, where they stumble is, they don't understand, and I'm taking this outside the settlement context, dismissal with prejudice, they got to get this thing off your credit report, under most circumstances. They can never call you, write you about it as the lawsuit is over and done with now....

What if it's without prejudice. Without prejudice means it's almost like the lawsuit never happened, so the next day, the next month, the next year, they can sue you again because they never really "lost" the last case.

That new lawsuit, they have to make sure it's within the statute of limitations, that it's a legitimate lawsuit, but the fact that back here they sued you and dismissed without prejudice doesn't prevent them from doing it again. They can sue you again. In and of itself, a dismissal without prejudice does nothing for your credit report.

With prejudice almost always means they have to get it off your credit report. But without prejudice doesn't mean that.

Here's what it does mean. If you were sued, so you get a copy of the lawsuit. You file an answer, and say, "I deny owing Midland, ..." Main Street, Unified, whoever it is ... "I deny owing you this debt."

Well, that's a dispute. Then if that company is credit reporting, and at least if they update your credit report ... I won't get into all the details about what if they don't update, but if they do update, and almost all the companies that credit report, they do it every single month because they want that fresh notation on your credit report, so it will be the most damaging possible to you, to motivate you to pay the money.

If it's without prejudice but you filed an answer denying it, and then they update your credit report, they have to show your account is being "disputed." We've had them in the past say, "Well, that wasn't a dispute letter."

We're like, "Seriously? A pleading in court filed in the court that's an answer, that's like the ultimate dispute letter."

We don't get those arguments, at least not very seriously. They will make them kind of on the front-end and they go, "Okay, yeah, yeah, I know you disputed it." If they don't mark your file as being disputed on your credit report, you may can sue the debt collector under the Fair Debt Collection Practices Act, the FDCPA. It's a subsection called e8 that has to do with credit reporting.

To answer this question, sued, dismissed without prejudice, what does that mean for my credit report, if and of itself, it doesn't mean anything, but probably you filed an answer, so we have to check your credit report, and if it's incorrect, then we look at suing these guys. I hope that that's helpful to you.

I think this will be our last question at least on this video. "The question is, do I have any recourse if I pay a higher interest rate because of false credit reporting?"

The answer is probably. Let me kind of walk you through it.

If we're talking about a debt collector doing false credit reporting, then the answer is yes. There are statutes of limitations; there are other issues, but normally you can sue under the FDCPA, the Fair Debt Collections Practices Act, for false credit reporting.

What if it's Capital One? What if it's the bank that you took out your mortgage with? What if it's one of those companies, and let's just assume they are not a debt collector, so they are not subject to that FDCPA, the Fair Debt Collections Practices Act? You can sue under the Fair Credit Reporting Act (FCRA), but generally, not always, but generally, you have to prepare a dispute, online, over the phone, or what we suggest, in writing.

You have to give that to the credit bureaus, that's Equifax, Experian, TransUnion. Then after that, they have 30 days to investigate. If they don't fix it, then at that point, you can sue. At that point, you have damages, okay? It can get a little complicated on when the damages start.

Can you go back in time and get damages? That's a legal issue that there's a lot of moving parts to that, that I don't want to get bogged down in this video, but I'll just say this. Any time you see false credit reporting, you want to take action. If it's a debt collector, maybe you just go ahead and sue them. That tends to get them to fix it right away. If it's not a debt collector, dispute it. Even if in the past, this cost you a higher interest rate, go ahead and dispute it. Get it fixed now.

If it gets fixed, then we can talk about it. If you live in Alabama, we can talk about can you still sue that company or the credit bureau. If you dispute it, and they don't fix it, then we can certainly look at suing them in federal court.

Then it's some legal issues about can we go back and sort of pick up those damages. I'll give you an example. Say you refinance your house, and because of errors on your credit report, you get 7% interest. If those weren't on there, you would have got 4% interest. Well, that's a pretty good spread. Well, but you don't realize this, and later you dispute through the credit bureaus, and they don't fix it. Then you sue. Can you go back and get damages for paying 7 instead of 4. Maybe, maybe not. But you can try to get a new loan now to "mitigate" your damages.

Here you are trying to get another loan. If that loan comes back at 7% or 8%, now you have your damages. Again, there's a lot that goes into that, but the point is, if you are paying more, higher interest rate than you should be paying, and the credit bureaus or Capital One, or debt collectors, whoever it may be, if these guys don't follow the law, then normally you have the ability to file suit. T

hen it's just a matter of well exactly what damages can you get out of that.

I hope that this is helpful and this whole series of questions on consumer-related subjects has been helpful. If you live in Alabama, and you want to chat with us, pick up your phone and call us at 205-879-2447, or you can contact us through www.AlabamaConsumer.com. That's our primary consumer website, and we'll be happy to set up a meeting or set up a phone call with you and go over some options with you. Thanks again for watching this, and if it was helpful, feel free to "like" it or share it or comment. That'll help us to spread the message. Thanks. Have a great day. Bye-bye.

John G. Watts

May 28, 2015

2015-05-27 Q&A webinar with financial protection attorney John G. Watts

Welcome to our blog post. In this webinar we covered only consumer protection questions including:

1. I got sued but the account is not on my credit report so is it too late to be sued?

2. Is it important to respond to a summary judgment motion in my ejectment case after a foreclosure?

3. If there is a default judgment against me from months ago what can I do since I was never served with the lawsuit?

4. I took out a loan and now a collector is saying my husband has to pay the debt. Is this legal?

5. I'm defending myself in a debt collection lawsuit -- do I need to know all the rules of evidence?

6. Is it too late to undo a foreclosure after I've been sued for ejectment?

7. When does the FDCPA apply to a mortgage company?

8. Why is it a big deal if a debt collector takes your money without permission -- does this really harm you?

Here is the transcription:

Well, hello. My name is John Watts and welcome to this webinar. I actually tried to do this a little bit earlier and had some technical glitches there, but hopefully this will work out. I'm a Consumer Protection and Financial Protection attorney in Alabama. On Fridays at 10:30 Central Time, we are going to be doing a regular webinar where we answer questions that are submitted. You can submit them ahead of time or do it actually during the webinar. We'll have the links and how you sign up for that webinar, and there's no charge for it, that'll be provided either in the description here, or you can go to one of our two main websites, www.AlabamaConsumer.com or www.AlabamaElderLawyer.com.

I do want to tell you this before we get into these questions. I've got a pretty good list of questions here. I'm not giving legal advice, this is general, educational information. I'm really trying to help you understand a base level of knowledge and then you can build on that to ask questions to meet with an attorney, whether that's me or somebody else, to actually get specific legal advice. We hope this will be helpful.

I think today all of our questions are consumer protection-related. We're talking about debt collectors, collection lawsuits, credit reports, foreclosures, things of that nature. On Friday, we'll have those, but then we'll also have some questions on what's known as elder law. How do we pay for long-term care without losing everything we own? How do we get Medicaid? How do we get the VA pension? What about a special needs trust? Do I need a will or do I need a trust? All these types of questions.

I appreciate you being here. Like I said, this was a completely unscheduled webinar that we're doing. I hadn't told anybody about it, I wasn't planning on doing it, but we had requested on our Facebook page (Alabama Consumer Protection Attorneys) to either publicly put a question up or privately send it to us and had great response. Actually, too many questions to cover on Friday, so let's go ahead and get started.

The first one is, "I got sued by Capital One. I looked on my credit reports, and it's not on there. Is it too late to sue?"

First of all, I want to say if you've been sued, that's very smart to pull your credit reports to see what is this account saying? Because it could be Capital One suing you, it could be a debt collector like Midland, Portfolio, LVNV, all these companies out there filing literally 100 lawsuits or more a week each. Tremendous amount of lawsuits in Alabama. It's smart to get your credit reports and check that out.

Just because it's not on your credit report does not mean that there's too much time that has gone by. Basically, when you have what's called a first major delinquency, that's kind of a trigger. Then we go forward about seven years. That's how long it can be on your credit report. What about the time period to sue? That's what we call the statute of limitations. A lot of controversy over it, I frankly don't think it's that complicated, but we say it's three years, the collection industry says, "No, no, it's six years to sue."

There's arguments about, "What if you go three, four, five, six, seven years, don't make a payment, and then you make a $5 payment? Does that restart the statute of limitations?" The collection lawyers say, "Oh, absolutely. No doubt." It's not quite that simple. Again, you meet with a lawyer to get more specific information. I'm just giving you a general, we're not covering every exception to every exception here. Basically, you look back and say, "When was my last payment?" Then you start going forward from there. Are you more than three years? Are you more than six years?

If you've got seven years for credit reporting and some smaller period of time for statute of limitations, if it's not on your credit report, then obviously it's beyond. Well, maybe not. Because it could be it's just not reporting. It could be it was mistakenly deleted. You definitely want to look at that long period of time for credit reports. Look at your credit reports. It'll have "date of last payment," "date of last activity," that's important to you. A lot of times we find what's on the credit report conflicts with what they're saying in these lawsuits. Very helpful to pull your credit reports, but just understand simply because it's not on your credit report, doesn't mean that it must have been more than seven years ago. Maybe it was, maybe it wasn't.

The last thing I'll say, and this is something we harp on a lot because the biggest danger when you've been sued is not answering the lawsuit. You get what's called a "default judgment." You lose. Regardless of anything else, you lose. Understand this. When you've been served, when you get a copy of the lawsuit, you have 14 days to answer. That's in Small Claims or District Court. You have 30 days to answer if you're in Circuit Court. Keep those dates in mind. If you have a statute of limitations defense, then you put that in your response.

Definitely get with a lawyer, find out what your options are. A lot of times you can handle this on your own, either to fight it, to settle it, or you can hire a lawyer to fight it or settle it. Occasionally, bankruptcy is appropriate. We do have a long webinar, I think it's an hour and 20 minutes or something, on your five options, and then we answer a whole bunch of questions that naturally come up. To answer this question specifically, just because it's off your credit reports does not mean it's too late to sue.

Our next question is, and this is in a foreclosure context, "Is it important to respond to a summary judgment motion in an ejectment case?"

The answer is absolutely. Definitely need to respond.

Let's define a few words. What is an ejectment case? Again, we have a long video on mistakes people make in an ejectment lawsuit. Basically, an ejectment lawsuit is you got foreclosed, the alleged new owner, usually the mortgage company, says, "You got to get out of the house." You don't get out. Then they sue you. Where are they trying to go to? They're trying to go to a court saying, "You are evicted from your house. You're ejected from your house," you might say. Then often, they want money damages against you for hanging out in the house after the foreclosure.

What's a summary judgment? That's a motion, and almost all motions are in writing. A motion is just where you ask the judge to do something. Here, the mortgage company, in writing, says to the court, "Judge, there's no reason to have a trial. No reasonable jury, no reasonable judge could ever find in favor of the homeowner. You need to grant us judgment." You might think of it as summarily granting judgment. We don't have to waste time with a trial, that's the argument.

You'll get those papers. Usually there's affidavits, documents, supposedly evidence that may or may not be admissible. Then the judge will normally set that for a hearing. If you don't show up at the hearing, you normally lose. If you don't file the right type of materials, the right type of response to that summary judgment motion and follow the rules, then you lose.

What does that mean if you lose? If you lose, that means they have an order that says you got to get out of your house. Now a sheriff will come, knock on your door, and say, "Get out." People will say, "That's unfair. I want my day in court. I'm going to skip this summary judgment. I'm just going to go have my trial." You can say that, but if a summary judgment is granted against you, there is no trial. That is your day in court. Very serious. You need to take it very serious. You need to treat it with the respect that it's due. If you're facing a summary judgment motion, that is somebody trying to kick you out of your house so that you don't get to a trial. Make sure that you handle that properly.

Again, we have a video and we'll try to link to that in the description under this video for that five mistakes when you've been sued in an ejectment action. Really, what we try to do at that webinar, like I said, I think it's maybe an hour and 20 minutes long, is say if we were having a face-to-face meeting and you didn't really know a whole lot about this type of law, you didn't know what your options were, then that would be us explaining that to you. Rather than doing that in person or over the phone, put it on video. That way when we do have a meeting, we can just focus on what we actually want to focus on, which is do you stay, do you fight, what are your odds, what's in your best interest to do?

Our next question is, "If there is a default judgment against me from months ago, what can I do if I was never served?"

When a lawsuit's filed against you, you have to be served the papers. If you're not served the papers, and we'll talk about what that means in just a second, but if you're not served the papers, then really that judgment's not going to be any good against you. You can get it what's called vacated or the judge will say it's void. It's like it never happened. Because you have a constitutional right to actually get the lawsuit so you can defend yourself.

Now, what does it mean for a default judgment? If you don't answer after you've been served, so you get served, you don't do anything, 14 days Small Claims, 14 days District Court, 30 days Circuit Court, then the judge will write in there, "All right, you lose." What if you find out about this when there's a lien on your house, or your bank account gets wiped out, your wages get garnished, you say, "I didn't know anything about this lawsuit." If you knew about it and you just made a mistake and didn't respond, you have a very limited amount of time to challenge that default judgment. If you never served, there really is no time limit.

Let me illustrate it this way. I sue Bank of America a lot. I sue Equifax, collection companies all the time. What if I sue Bank of America, I file it in court, and I say, "Okay court, I'll take care of serving Bank of America," but instead of actually serving them, I just put it on my bookshelf over here. Is Bank of America going to respond to that? No, because they don't know anything about it, so how would they respond to it? Then I go, "Well hey, I served them," the period of time goes by, "Now I want a default judgment." That would be unfair to Bank of America. It's unfair if Bank of America, Capital One, National Collegiate Student Loan Trust, Midland Funding, Portfolio Recovery, whoever it is, if they sue us and we have not been served, then that is unfair and it's unconstitutional.

Here's the trick is if they say, "Hey, you've been served." Sorry, I dropped my paper here. This will be our prop here. You've been served with a lawsuit, but you go, "I really haven't been served with it." Then you attack that service.

First, let's talk about, what does it mean to be served? It means you're physically handed the paper. That could be anywhere. In a plane, in a movie theater, at your house, at your work, on the beach, it doesn't matter. Physically handed it. You're served. What if you don't get it physically handed to you? It could come by certified mail. As long as the rules are followed, then you're served. You sign for the certified mail. Here's the more common thing. They say that they served you personally.

Let me give you an example. I had a guy that supposedly served, I want to say five years ago. It was in Birmingham. They said, "Hey, we served you in Birmingham." He goes, "John, I was never served in Birmingham." We look at the paper and we said, "Okay, it says," I forget the date, I'm just going to make this up, "April the 10th at 2:33 p.m." I'm like, "Where were you April the 10th, 2:33 p.m. in 2010?" We had him go through his emails, check with his wife, look at his pay records. He was working in Texas. He had pay stubs from Texas. It's kind of hard to be in Texas working and yet be here in Alabama being served. Arguably, he jumps on a plane, lands in Birmingham, they serve him in Birmingham, then he flies right back to his job. Kind of crazy, but okay, it's possible.

I said, "Go through your receipts, go through your credit card." We found where he had bought gas. I forget the exact details, but his shift was 6 a.m. to 3 p.m. They said he was served at 4 p.m. and he was buying gas in Dallas, Texas at 4:01 p.m. and he worked until 3. You can't really get to Birmingham and get back in time. You just show that you weren't really served. Maybe you were in ICU. Maybe you were traveling out of town. Maybe you were in court. Maybe you were in surgery. Whatever it is, show that that was not you.

Sometimes it's obvious. You look at the paper and it'll say, "I served John Watts. He's redhead, 5'2", 475 pounds." I'm 6', about 170, I don't have red hair, I think I have brown hair. My kids say I have gray hair, I don't know, maybe I do. I like to think it's brown. Anyway, it's not red. I can look at this and say, "Wait a minute, that wasn't me."

Here's the most common one though. It's they take it to your house and they leave it with somebody. They say, "A-ha, you've been served now." What does the law say? Generally, the law says if they give the paper to somebody that lives in my house, an adult who lives with me, then I have been served, even if that adult doesn't give it to me. What that means is your 16-year-old kid is not an adult, your cousin that's staying with you for a weekend doesn't live there, somebody doing work on your house doesn't live there. They might take the papers and the sheriff's deputy, or the process server, somebody like VanSlam, whoever it may be, they may think they're really giving it to somebody that lives there, but if they don't really live there and they're not an adult, it doesn't matter. It's bad service.

If you were never served, there is no time limit to undo that judgment. Remember my example. Let's say I supposedly serve Bank of America, but I really don't and I get a $500,000 or $1 million judgment against them. They challenge that at any time because they were not served. Same thing with you.

Going back to this question, if I get this default judgment, what do I do? You file a motion. Remember, a motion is just a written piece of paper where you're asking a court to do something. The motion, you can hand write, you can type it, if you go to a lawyer, we type our stuff. You'd say, "Hey, I want this judgment undone. I want it torn up because I was never served. Here's my proof." You might use medical records, travel, things, you'd use affidavits, all sorts of things you would use to prove you were really not served in this lawsuit. If you're successful, then the judgment gets thrown away.

It doesn't make the lawsuit go away because now they have to serve you. Normally by coming into court, the judge will say, "Okay, well now you're served." File your answer, 14 days Small Claims, 14 days District Court, 30 days Circuit Court. It gets rid of the judgment, it gets rid of the garnishment, keeps them from selling your house in a sheriff sale, putting a lien on your house, so very valuable to get rid of a default judgment.

The next question is, "I took out a loan, but now the debt collector's harassing my husband saying he has to pay it. Is this legal?"

Here's the deal. A debt collector can try to collect the debt against somebody who owes the debt, not somebody who doesn't owe the debt. If I owe the debt, they cannot go to my neighbor, my brother, my mother, my kids, my wife, they can't go to any of those people to collect the debt. I don't want to get bogged down with this, but they can talk to my spouse and says, "You know John owes this debt. What's John going to do about paying it?" That's okay. If they talk to my kid, if they talk to my neighbor, or my mother, the preacher at church, that's going to be a big problem for them under what's called the Fair Debt Collection Practices Act.

They can talk to your spouse. What they can't do is say your spouse owes the debt if your spouse does not owe the debt. If I owe a debt, then I'm the one that owes it. My spouse doesn't owe it. My children, they don't owe it. My neighbor doesn't owe it. They can only collect it against me.

In the question we have, it says, so this is a wife who wrote this in, "I took out the loan, but now a collector is harassing my husband saying he has to pay it." No, that's illegal. Now, a lot of times, collectors will say, "Wait a minute, are you married?" "Yeah, I'm married." "Did you know your wife had this debt?" "Yeah, I knew she had the debt." "Then you're responsible for it." That's not the law. At least not the law in Alabama.

If you have a collector that's trying to collect a debt against somebody who does not owe it, for example, your wife, your husband, your children, whoever it may be, then that is normally going to be illegal under the Fair Debt Collection Practices Act, the FDCPA. Either you or the person they're trying to collect it against, sometimes both, need to look very seriously at suing the debt collector in federal court under the FDCPA.

Because here's the deal. When you sue these abusive debt collectors that break the law, it does a couple things. One, you tend to get money if you're successful. Your lawyer's paid for. They tend to leave you alone. Even more than that, what you do is you protect the community. Because these debt collectors are used to just abusing people on the phone and there's no worry about being sued. Then somebody sues them, they go, "Whoa, wait a minute. Maybe we should start following the law."

What does that do to the community? It makes the community safer. Because you standing up for your rights and suing a debt collector is going to make it more likely that debt collector will follow the law, less likely the debt collector will break the law, and it helps the honorable debt collector. The debt collectors that read the law and say, "Okay, I'll do what I'm supposed to do." They now can be profitable. They can make money, keep people employed. If you got some debt collector over here that reads the law and goes, "I'll just do whatever I want. I don't care what the law says. I'm going to break the law because I'll make more money." That's unfair to the debt collector that's trying to follow the law.

If you have a debt collector breaking the law, my very simple approach is we sue them in federal court. We don't talk to them. We don't write them. We don't email them. We sue them in federal court. Then when we've got them in court, now if they want to talk, we can talk about settling, or we can go to trial. It's amazing. When they get caught, they tend to want to write you a check, they write me a check, and they leave you alone. That's the typical way this works because they say, "Oh my goodness. You are somebody that's going to stand up for your rights and we cannot abuse you." It might have been a $300 amount they were trying to collect, but that may cost them $10,000, $100,000, $200,000 depending on how bad their conduct is, so they tend to go, "Whoa, we don't want anymore of that." I hope that that's helpful to you.

Let's see, our next question is, "Do I need to focus on the rules of evidence if I'm trying a case by myself?"

Here's the deal. This is talking about a debt collection case, so Midland Funding, Portfolio Recovery, Calvary, LVNV, Asset Acceptance, all these debt collectors out there that sue. Some of these guys file 100 lawsuits a week in Alabama. It's amazing. If you've been sued in District Court or Small Claims Court, so we're normally talking about below $10,000, then it may be a good option to represent yourself.

We have a long webinar on the five options you have to know about when you've been sued. I think it's maybe an hour and 10 minutes long. We also go through a bunch of questions that just over and over and over were asked. Those five options are file bankruptcy, fight it on your own, settle it on your own, hire a lawyer to fight it, and hire a lawyer to settle it. Bankruptcy is very rarely appropriate. Fighting it on your own can be very helpful.

This question is saying, "If I'm going to go in there and fight it on my own, do I need to know all the rules of evidence, and all this case law, and basically be a lawyer?" The answer is no. Would you be better off to have a lawyer? Probably. If you had the right lawyer, you would expect your chances of success are going to go way up. In Small Claims or District Court, if you will be focused on the key issue, and I'll get to that in a second, then you have a chance of being successful. That way you're not paying any lawyer fees.

If you're successful, we want to look at what did that collector do in that lawsuit? What did they do on your credit report? What did they do, other collection activities against you? Because maybe we can sue them in federal court. If you remember the last question we answered, when you sue them in federal court, they tend to pay you money, pay your lawyer money, and they go away. There are some advantages to doing this on your own.

I may not get this quote exactly right, but it was something like Bruce Lee said, "I don't fear the man who knows 1000 kicks that he's practiced one time each," he said, "I fear the man that knows one kick that he's practiced 1000 times." The idea is be competent, be skilled in something, something you're really good rather than just a whole bunch of things that you're not very good at. When you're representing yourself at trial against these debt collectors, the fundamental issue, and when we teach lawyers this, this is what we harp on all the time, the fundamental issue is ownership.

If you go to our blog, it's Alabama Consumer Law Blog, I want to say it's 2007, March 2007, we wrote an article and it went viral, or blog post, I guess. It was saying when you get sued by a debt collector, they have to prove not only that you owe the debt, kind of makes sense, they're suing you for a MasterCard, a Discover Card, they got to prove you owe it. If you don't owe it, they lose. That's where the analyses stop for so many people, even for courts. What we said is, "No, no, no, that's not enough. Yes, you must prove I owe it, but you must prove that you own it." It's those two things. Prove I owe it and prove that you, debt collector, own the debt.

Take Bob Smith. He gets sued by Midland Funding for a Chase card and they want to go into trial and say, "You took out this Chase card." "Yeah." "Here are some statements." "Okay, those look like the statements." "You had a $3,000 balance." "Yeah, I think so." "You didn't pay that." "That's right." "You admit that you owe the $3,000 on the Chase card." "Yeah, I owe Chase $3,000." "You admit that you owe my client the money."

Whoa, no, no, no. That's a different question. Whether I owe Chase has nothing to do with whether I owe Midland, or Portfolio, LVNV, Asset Acceptance, whoever we're talking about, unless LVNV, or whoever the debt buyer is, can prove they own the debt. The debt is like this piece of paper. If they own it and they can prove it, then fine. If they show I owe the debt and they own it, yeah, then they're going to win unless statute of limitations, or some other defense.

What they want to do is come into court and go, "See, the defendant owes the debt. The consumer owes the debt, and so just assume that we own it." We don't do that in court. If you sue somebody, you got to prove it. You can't just go in there and say, "I sued, I probably own the debt."

I've used this example before, it's kind of a silly example. Let's say you owe Bank of America $1,000 a month for your mortgage and I sue you. John Watts sued you. I get you on the stand and I say, "Isn't it true that you live in a house?" You go, "Yeah, I live in a house." I go, "Isn't it true that you have a mortgage on that house." "Yeah." "You owe a debt on that house." "Yeah, I owe $100,000." I go, "Isn't it true that it's $1,000 a month?" You go, "Yeah." I go, "Here are all these statements, $1,000, $1,000, $1,000." "Yeah, those are statements." I go, "You admit that you're behind right now." "Yeah, I'm behind." I go, "Judge, I think I've proved my case. I get the money."

The judge will say, "Hold on. You proved that he owes money to Bank of America. What does that have to do with owing money to John Watts? That's crazy." I go, "Judge, do you think I would come into this court if I didn't own that debt?" The judge will say, "Prove it. Prove that you own the debt." If you think about it, if I own the debt, how hard could that possibly be to prove that I own it? If I'm driving a car and somebody says, "Is that your car?" I go, "Yeah, that's my car." They go, "Prove it." I go, "Whoa, whoa, now that's too hard to do. It's not like I have a title for it or a bill of sale. Oh wait, I do have all that." Debt is the same way. They have to prove that they own the debt.

In my opinion, these are the two most important things you can do. It's not trying to figure out all these rules of evidence, you're staying up until 4 in the morning trying to research what somebody in Florida says they do in lawsuits. You're in Alabama, you've been sued in Alabama. Here's my suggestion. Your obligation as a witness is to tell the truth. It's not to speculate, it's not to guess, it's not to go, "I don't know, I'll just make something up." No, you raise your hand, promise to tell the truth, you need to do that.

When they ask you these questions, "You know that we own the debt." How would you know that? How would you possibly know that? You have no earthly way of knowing that. This is a secret deal between Chase and Midland Funding. Sometimes it's Chase and Portfolio Recovery, who then sells it to Midland Funding, who then sells it to LVNV. How would you know whether those people really bought it? You'd think it's pretty easy right? If they bought it, there would be a bill of sale. You have that with a car. If we buy property, we have that.

They'll come in with one piece of paper and it says, "The accounts listed in the purchase agreement have been sold, pursuant to the rights listed in the purchase agreement," and it has a signature. They go, "See, this proves we bought it." Really? One piece of paper, you bought $500 million worth of defaulted debt? It doesn't even say how much you paid for it. It references a purchase agreement. They go, "Whoa. You cannot get the purchase agreement. That is the formula to Coke or something. You can't get that." If I'm suing somebody and claiming ownership of a house and that's the issue, do I own the house, I can't say, "I'm not going to give you my deed. I'm not going to show you the mortgage." If you sue, you got to bring proof.

Keep in mind, do not speculate, do not guess, do not make stuff up. They'll bring in an affidavit. First of all, in most courts, affidavits are inappropriate because you can't cross-examine a piece of paper. You can't go, "Mr. Piece of Paper, let me ask you a question." You can't do that. An affidavit is somebody that's saying, "I swear this is the truth and we sold the account to Midland." First of all, we have no idea if that person's telling the truth. Even if they're telling the truth, that person doesn't know if Midland still owns the debt. Maybe I've sold it to Midland and the next day Midland may have sold it to somebody else. Now Midland is suing you.

We've had situations where multiple debt collectors are trying to collect the same debt at the same time. They each say, "I own the debt." You both don't own it. One of you is lying, or maybe both of you are lying. They'll bring these things in and say, "See, this affidavit proves it." I don't know. All it says is somebody claims to have sold the debt to somebody. Where's the purchase agreement? Where's the live witness testifying to them? If you don't speculate, that'll take you really far in this process. If you're in this situation and you want more information, we have some resources that we can make available to you. I'm also happy to talk with you before your trial.

The second thing, and then I'm going to move on, is you've got to look at this and say, "I'm walking into court. That's an unusual situation. How do I handle myself? What will happen?" Here's the simple solution. Go to court. If you've got Judge Amari, or Judge Lowther, or Judge [Alls-berg 00:33:06], or whoever your judge is, call the judge's office and say, "I'm John Watts, I have a small claims trial, I have a district court trial set three weeks from today. I'd like to come watch when you have court." They'll love to have you. It's all open to the public, there's no secret here. You can walk in, you sit there.

It does a couple things. Makes sure you find the courthouse, know where to park, know how to get through security, know which courtroom your judge is in. Because if you skip this step, and then it's your Monday morning at trial or your Thursday afternoon, or whenever your judge does it, and you can't find the courthouse and you're running late. You can't find a parking spot. You're like, "Oh my goodness. I forgot about having to get through security." Then you finally get through there, and you're late, and you go, "Which courtroom is my judge in?" You're going in and out of courtrooms trying to find the right one. That is not a good feeling. Then you walk in late, and the judge is not happy with you, and you're embarrassed, and all your intentions crumble at that point.

Go ahead of time, watch what happens. What you'll notice is the judge will do something called a call of the docket. He'll say, "Midland versus Smith, LVNV versus Jones." Most people that defend themselves don't even show up. The ones that do, they'll go out in the hallway and agree to a judgment with the collection lawyer. You can do that if you want, but I just want you to see this because you'll feel more comfortable having experienced it, and there's no pressure on you when you're just there watching. Make notes so that you'll know what to expect.

Don't go to another judge's courtroom. Go to your judge's courtroom. Every judge is a little different. Some are very formal and some are kind of laid back. Just figure out what's exactly going to happen with your judge in these types of cases. I hope that's helpful to you.

I think we probably have time for maybe one or two more questions.

"Is it too late to undo a foreclosure when I'm sued for an ejectment or an eviction?" I think we talked about what an ejectment case is. You get foreclosed, they tell you to get out of your house. You don't get out. Then they sue you to eject you, or kick you out, or evict you.

The question is, is it too late once I've been sued? The answer is no. You're in a bad spot, but it's not too late. There is hope, there are options for you at least to explore. I can't tell you that you can be successful, but I can tell you that over many, many years, we've represented just dozens, and dozens, and dozens of people who've been foreclosed, they've been sued, we've been able to go through that process, undo that foreclosure, get them back to where they were before the foreclosure, a lot of times with a better deal, and then they go on with their life. Is that easy? No, it's not easy. It's difficult to do. It is possible to do, however.

I would recommend, if you're in that situation, check out our video, our webinar on the five mistakes people make when they're sued in an ejectment action. I think that'll be very helpful to you. Just keep this in mind. Yes, it is possible to undo the foreclosure, even after you've been sued.

Next one we have is, "When does the FDCPA," that's Fair Debt Collection Practices Act, "apply to mortgages?"

This is the law that deals with debt collectors. You have a medical bill, an old credit card debt, you get debt collectors. We don't normally think about mortgage companies as debt collectors.

I was invited to do some training for a nationwide group of foreclosure defense lawyers. My topic was how do we use the Fair Debt Collection Practices Act to help our clients who are either facing foreclosure, or maybe they've already been foreclosed. I got up and I announced it. People were looking at me funny, and somebody raised their hand, and they go, "What are you talking about? That applies to debt collectors, that doesn't apply to mortgage companies." These were really good lawyers, very skilled lawyers from all over the nation, and they had not made the connection that the FDCPA does. I'm not saying nobody has made that connection, but just by and large, even lawyers that defend consumers don't think about the FDCPA.

Let me just tell you when the FDCPA applies -- it is when the debt goes into default and then it gets transferred to the mortgage company.

Imagine this is the note, this is the debt. What we look at is we say when that mortgage company, I don't care if we're talking about somebody buying the debt or servicing the debt, when they first put their hands on it, is the debt in default? If the answer is no, then they're not going to be a debt collector. What if the answer is yes? Then normally, they will be a debt collector.

Courts have struggled with this and defendants are always saying, "Yeah, you were three months late, but you were not in default." It's kind of funny because they're arguing, "You're not in default," because they don't want the FDCPA to apply. Because it gives you tremendous tools if the FDCPA applies, especially if you're dealing with Alabama state law, which has really been cut back in a way that harms consumers, just the way the law is. Under the FDCPA, you have a lot more options.

Here's the definition. If it's in default when that mortgage company gets it, they're a debt collector. What's default? If here is when your payment was due and here is when you sue them, they want to say, "It was somewhere over here that you actually would have been in default." Here's a very simple way to do it. You look at the note and it says default. It says if you do not make your payment by the due date, you're in default.

Mortgage companies and their lawyers go crazy over this. They're like, "That can't be the law," because if you're payment is due on the 1st, and it gets transferred to Wells Fargo on the 6th, and you pay it on the 7th, that can't be default. You know what, it is default. That's what the contract says. We didn't write the contract, the mortgage company wrote the contract. Fannie Mae or Freddie Mac, they wrote the contract. We're just following the contract.

It's funny because these mortgage companies will say ... Let's say you're coming up on a foreclosure, and this is your foreclosure, and you're going to file bankruptcy, and you miss it by one day. You file bankruptcy one day late. They go, "You can't stop the foreclosure, it already happened. You are one day late." You go, "But it was only one day." Or you make your payment one day after the grace period. They go, "Boom, there's a $50 charge." You go, "But it was one day." They go, "Oh no, no. Follow the contract. You agreed to this."

That's all we do with them, is we say, "Hey, mortgage company, you now have this contract and you or your supposed predecessor wrote this contract. It says if you don't pay on the due date, you're in default." Then that's what we're going to do. If we're one day late, we're in default, and then it gets transferred to Bank of America, Wells Fargo, Ocwen, whoever. They're a debt collector now. Almost all of them now, you look at any letters down at the bottom, it'll say, "Please be advised this is an attempt to collect a debt and we are a debt collector."

Very powerful law. You want to notice, if you're dealing with, say, Bank of America, and then it changed over to Cenlar, SPS, Chase, whoever it was, look at when it transferred, were you current or were you behind? Then look at your note. Almost all the notes will say if you're one day late, you're in default. Then the FDCPA is going to apply. They'll fight you like the devil on this because they hate this law, but it's a very powerful law and it's worth that battle.

I think this will be the last one we'll do. This is a case we filed where a debt collector had called our client and said, "I want to make arrangements to settle this." Our client said, "I don't have the money." They said, "We'll pull," I forget what it was, "a hundred bucks out of your account. Then the next month, we want to talk about pulling more money." Our client said, "You can pull it out this month, but come next month, you need to ask me first. Don't just pull it out. I don't know that I can do that." They explained their financial situation.

The debt collector pulled the money out this month, next month our client starts bouncing checks. Why are we bouncing checks? Has the rest of the money gotten pulled out? What in the world? I called the collector, "What is going on?" The collector says, "We had authority to do that." "I didn't give you authority to do it." They say, "We did anyway." I won't get into all the allegations and we'll see how the lawsuit unfolds once we get people swear in under oath, but this is what I wanted to talk to you about.

I get a lawyer that calls me about this. This is not unique to this case. We've had this in other cases. They said, "Look, what's the big deal? We reached into the bank account, we pulled some money out. We had authority to do it." I go, "That's the whole issue. If you did, then fine, but if you had no authority, then that's a really, really big problem for your client," the debt collector.

The reaction over the years has been, "Who cares? How could that possibly hurt your client? Maybe we'll pay for an NSF charge, thirty bucks or whatever. But we're not paying for anything else. Your client can't possibly be hurt." It got me thinking about this.

This wasn't a question submitted for the webinar, but this is something I've heard over and over from collection lawyers and lawyers who defend collection agencies, and it's possible you could be thinking this, if maybe a debt collector's reached in and grabbed your money out without permission, and that is ... This is the illustration I use. What would it be worth in damages, and emotional distress, and punitive damages ... We don't get punitive under the FDCPA, but we get punitive damages, and FDCPA is Fair Debt Collection Practices Act, we get it under state law ... If the debt collector walks up, picks the lock on the door, walks into my client's house, goes to my client's purse, or wallet, or whatever, pulls the money, physically pulls the money out, and leaves?

He's like, "That would be bad." No, that would be horrible. That would be terrible for a debt collector to do that. Think about, what would a jury think, what would a federal judge think if a debt collector went and stole money? Pretty bad, right? It's real bad. There would be a whole lot of damages when somebody reaches in and steals money from you.

Is it any different if instead of walking into my house and doing it, they walk into a bank and do it? If they lie to the bank, and say, "We had permission." What if they walk into the house, and maybe your spouse is there, and they go, "John told me I could come in here." They lie about that and they steal my money. They got a big problem. That's a crime.

Is it any different when they present something electronically to a bank and they lie on that and say, "We had permission to pull this money," and they really don't? Then they reach in and pull that money out. That's some bad, bad stuff. You think about, what's that danger to the community, when you have collectors that can just start reaching in, and grabbing bank accounts, pulling money out, and checks are bounding, and people don't have money. They've been violated, their privacy's been violated. These collectors are like, "What's the big deal? So we took your money. You owed it anyway." I don't really care if I owe it, you can't come into my house and steal my money. You can't reach into my wallet, steal my money, and you can't reach into my bank account and steal my money. There are serious, serious consequences to that.

I just wanted to share that because if you've been in that situation, and you call the collector, and they're like, "What's the big deal? You can't do anything about it." Oh yeah, you can do something about it. It's called a federal court lawsuit, and then let's let a judge, let's let a jury decide, is that bad? Maybe a judge and jury say, "I don't have a problem with it." Okay, but my hunch is most jurors, if they believe that you did not give permission for that debt collector to reach in and take your money, they're going to view that as, "Your money got stolen and that is real, real bad." When they decide, "How do I compensate this consumer? If somebody went in and stole money, violated them, what kind of emotional distress does that cause?" I suggest it's a big number.

Then, from a punitive damages standpoint, two purposes of punitive damages. One, to punish the wrong-doer, and number two, to deter the wrong-doer, the debt collector here, from ever doing this again, and from any other debt collector from doing this. I think, if we got people reaching in there and stealing money, that's a pretty big number. We got to punish people. If I walk into somebody's house and steal their money, I can go to prison for that. I think there's going to be a pretty high damage award on that.

Then, we want all the other debt collectors who watch these trials, because when we try one of these cases, the debt collectors are watching it because very few of these get tried, and if they see this big punitive damage award, they go, "Whoa, whoa. Okay, let's do a quick memo to all the collectors. Stop stealing money. Don't do that. We have to treat people fairly. We can't go steal their money because I don't want to get sued like that." That's the effect of a big punitive damage award.

I hope that this is helpful to you. I hope this whole webinar, again, completely unplanned and may have gone longer than I thought. Still have some questions. We have plenty of questions for Friday, but definitely give us your question. If we start getting a lot more questions, then we'll probably start doing these a couple times a week, or if we have enough, we'll do them every day. Because we're trying to get the message out to consumers, whether you're dealing with long-term care, or debt collectors, or a credit report problem, here's the fundamental philosophy of our firm. You have to know your rights. If you don't know your rights, you can't do anything. That's like getting in a car and going, "I'm just driving. My eyes are closed, I'm just driving. I hope I'll show up at the right place." It's unlikely.

Even if you know your rights, you have to take action. If you know everything in the world to do and you don't do it, it doesn't do you any good to know it. It's like getting in your car and you go, "I know how to get from Birmingham to Chicago," and you never press the gas. You're just sitting there. Nothing's going to happen. You don't want to just step on the gas and have no idea of where you're going. You want both. Know your rights, take action.

The whole point of these webinars is to help you understand what your rights are and at least to raise questions. As you watch this and you go, "I'm going to write down a question. Then when I go meet with a lawyer, I'll have some questions and I'll have a base level of knowledge, or at least I'll know what to ask about in my particular situation."

Again, thanks for being with us and hope this was helpful. If you want to get in touch with us, you can leave a comment below. Don't put anything personal in there. If you have a legal question that you want to ask us, sit down and have a consultation, we do a lot of those by phone, or by video, or in person anywhere in the state, 205-879-2447, or www.AlabamaConsumer.com, or www.AlabamaElderLawyer.com. We'll be more than happy to help any way we can. Hope you have a great day. Thanks for watching this. If you like it, there should be a button to like it or share it, or leave us a comment, and that way we'll know we're doing some good stuff here. Thanks a lot and have a great day. Bye bye.

John G. Watts

May 16, 2015

FDCPA decision: cease communications letter against IC System debt collector

Here is the link to the case Bishop v. IC System, Inc. and the full text of it below from Google Scholar.

This case is interesting as it shows the mindset of the debt collection industry in arguing that they can still collect without any penalty even though you send a letter plainly telling them to go away.

We've sued IC System several times and have not detected any change in their attitude.

By the way, if you don't know about Google Scholar, you should check it out. Great free search tool. We use a paid service as we need more details but to just find a case quickly it is hard to beat Google Scholar.....

Enjoy the video above and/or the case text below....

John Watts


SUSAN C. BUCKLEW, District Judge.

The Court now considers the Motion for Partial Summary Judgment filed by Plaintiffs Jeff Bishop and Heidi Bishop. (Doc. 28.) The Bishops seek summary judgment on one of five claims in Count I of the Amended Complaint against Defendant I.C. System, Inc. for a violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692c(c). I.C. System opposes the motion. (Doc. 32.)

With exceptions, § 1692c(c) prohibits a debt collector from contacting a consumer after being notified in writing that the consumer wishes the debt collector to stop communicating with him. Plaintiff Jeff Bishop argues that I.C. System violated § 1692c(c) because it contacted him after he wrote I.C. System a letter that said: "Any further correspondence from your organization or any other collection agency will be discarded or returned to you unopened." I.C. System contends that a genuine jury issue remains whether Bishop's letter triggered § 1692c(c)'s protection. Because the Court finds that any jury would conclude that the letter demanded that I.C. System stop contacting the Bishops, the Court enters partial summary judgment for the Bishops on this single claim.


In September 2008, Jeff Bishop and his wife Heidi received a telephone call and a letter from I.C. System, a debt collection agency, at their North Carolina home about a debt they allegedly owed to a dentist, Richard Salvatore, in upstate New York. (Doc. 28-1; Doc. 34 at 13-16.) Jeff Bishop said he told the representative from I.C. System that the company had made a mistake. Id. The Bishops had never been to a dentist in upstate New York. They did not know a dentist named Richard Salvatore. And it was impossible for a dentist to work on their son's teeth because at the time of the alleged work, their son was an infant, who had no teeth. Id.

1363*1363 About a month later, I.C. System contacted the Bishops again. (Doc. 28-1; Doc. 34 at 16-24.) This time, I.C. System called the Bishops at home and sent them a letter about a $84 medical bill that the Bishops allegedly owed to doctors at Associates In Pediatrics in Virginia, where the Bishops had previously lived. Id. Jeff Bishop said he told the I.C. System representative that the staff at Associates In Pediatrics had improperly billed their health insurance carrier for flu vaccines for the Bishops' two sons. Once the doctor's office corrected their error, the Bishops' insurance carrier would pay the bill. Id.

Despite this explanation, I.C. System sent Heidi Bishop a collection letter on October 20, 2008 and again on November 24, 2008. (Docs. 28-2, 28-3). Jeff Bishop said he also received more phone calls from I.C. System representatives. During one of those calls, Jeff Bishop said he asked the I.C. System representative to stop calling him. (Doc. 34 at 23.) According to Bishop, the representative told him that I.C. System would continue to call until he placed his request to cease communication in writing. Id. On November 28, 2008, Bishop wrote a manager at I.C. System's headquarters in St. Paul, Minneapolis this letter:

I am returning your September 30, 2008, October 20, 2008 and November 24, 2008 letters for you to recycle. As we have repeatedly pointed out to Associates in Pediatrics, Heidi long ago paid them every penny that she legitimately owes, which is nothing. Copayments were paid at the time services were rendered, and all other charges were covered by not one but two health insurance companies, which Associates's staff has still failed to appropriately bill despite having the issue repeatedly explained to them over the phone. Their continuing failure to perform such a basic function of their job as to properly bill insurance companies reflects a level of incompetence matched only by your own in attempting to collect another nonexistent debt on behalf of a certain Richard Salvatore, a dentist none of us have ever seen, in a state where none of us have ever resided, for dental services rendered to a then-infant who didn't even have teeth at the time.
In the highly unlikely event that Associates believes they have a non-frivolous claim for $84 or any other amount, it is up to them to contact us directly and explain why. Any further correspondence from your organization or any other collection agency will be discarded or returned to you unopened.
(Doc. 28-4) (emphasis in original).

On January 2, 2009, Heidi Bishop received another letter from I.C. System about the same $84 bill. (Doc. 28-6.) According to Jeff Bishop, representatives from I.C. System continued to call the Bishops at home. (Doc. 28-1.) The calls came on January 26, February 4, February 5, February 9, and other unspecified dates in 2009.[2] Id. On January 9, 2009, Jeff Bishop said he called I.C. System to find out whether they had received his November 28 letter. They had, Bishop said. But Bishop said the I.C. System representative told him that the company would continue to call him until the Bishops provided proof that they did not owe the $84 debt. Id.

On March 25, 2009, the Bishops sued I.C. System in the 13th Judicial Circuit of 1364*1364 Florida. The Complaint was removed to federal court and then amended. (Docs. 1, 17.) The Amended Complaint alleges that I.C. System violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., (Count One), the Florida Consumer Collection Practices Act ("FCCPA"), Fla. Stat. § 559.72, (Count Two), and committed the common law tort of invasion of privacy by intruding upon the Bishops' seclusion (Count Three). Within Count One, the Bishops make four claims that I.C. System violated four separate provisions of the FDCPA: § 1692c(c), § 1692e(10), § 1692e(2)(a), and § 1692d(6).

In the § 1692c(c) claim, the Bishops allege that I.C. System continued to communicate with the Bishops after Jeff Bishop notified the debt collector in writing that the Bishops refused to pay the debt or wished I.C. System to cease further communication with them. The Bishops seek the maximum statutory damages of $1,000, actual compensatory damages, damages for emotional and mental anguish, and attorney's fees and costs.

The Bishops now move for partial summary judgment on the § 1692c(c) claim in Count One. I.C. System opposes the motion, and, in its response, urges the Court to enter partial summary judgment in its favor on this claim. I.C. System, however, did not move for summary judgment, and therefore, as the Court instructed I.C. System recently in another FDCPA case,[3] the Court cannot grant summary judgment to I.C. System on any claim when it does not file a separate motion for summary judgment.


Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The Court must draw all inferences from the evidence in the light most favorable to the non-movant and resolve all reasonable doubts in that party's favor.[4] Therefore, the moving party bears the initial burden of showing the Court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial. Id. When the moving party has discharged its burden, the non-movant must then go beyond the pleadings, and by her own affidavits, or by depositions, answers to interrogatories, and admissions on file, designate specific facts showing there is a genuine issue of material fact for trial. Id.

"Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment."[5] In determining whether there is a "genuine" issue, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law."[6] In addition, a dispute 1365*1365 about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.[7] "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted."[8] However, "[t]he mere existence of a scintilla of evidence in support of the Plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party]."[9]


A. No Genuine Issue of Material Fact Remains on the § 1692c(c) Claim

Section 1692c(c) of the Federal Debt Collection Practices Act says: "If a consumer notifies a debt collector in writing that the consumer refuses to pay a debt or that the consumer wishes the debt collector to cease further communication with the consumer, the debt collector shall not communicate further with the consumer with respect to such debt. . . ." The statute then provides three exceptions, none of which are relevant here.

1. Undisputed Material Facts

The following facts are undisputed:

The parties do not dispute that both Plaintiffs are "consumers," as defined by 15 U.S.C. § 1692a(3).[10] While it may be unclear whether only Heidi Bishop—as opposed to her husband, Jeff—was the "consumer" allegedly obligated to pay the $84 debt, any dispute about this issue is not material. Section 15 U.S.C. § 1692c(d) defines "consumer" broadly to include the consumer's spouse. While the Bishops later filed for divorce, it is undisputed that they were married at the time of I.C. System's alleged violations. (Doc. 34 at 6-7.)

Second, the parties do not dispute that the Bishops allegedly owed a "debt," as defined by 15 U.S.C. § 1692a(5).[11] I.C. System contacted the Bishops to get them to pay a doctor's bill for services rendered by Associates In Pediatrics. Payment to a doctor's office for a flu vaccine for children is an obligation arising out of a transaction for services for personal, family, or household purposes, and therefore, is a "debt" under § 1692a(5).

Third, the parties do not dispute that I.C. System is a "debt collector," as defined by 15 U.S.C. § 1692a(6).[12] Although I.C. System denied in its Answer to the Amended Complaint that it was a "debt collector,"[13] it does not dispute this material fact in its response to the partial summary judgment motion. Therefore, I.C. System has waived this defense.

Fourth, the parties do not dispute that Jeff Bishop sent I.C. System the November 28, 2008 letter, in which he wrote, 1366*1366 "Any further correspondence from your organization or any other collection agency will be discarded or returned to you unopened." The parties also do not dispute that I.C. System received this letter. Under § 1692c(c), notification to the debt collector is "complete upon receipt."[14] Aside from the fact that I.C. System does not dispute that it received the letter, the Bishops also offer evidence from I.C. System's internal records that show that the company received the letter. (Doc. 28-5.)

Fifth, the parties do not dispute the fact that I.C. System contacted the Bishops by mail and by phone on more than one occasion about the $84 debt after it received Jeff Bishop's November 28 letter. While the parties may dispute the exact number of telephone calls made, this dispute is not material to the Bishops' § 1692c(c) claim as long as more than one contact occurred. Even after a debt collector receives a consumer's cease-and-desist letter, the FDCPA allows the debt collector to contact the consumer one more time for specific purposes.[15] Because the parties do not dispute that I.C. System contacted the Bishops at least twice, any dispute about the exact number of calls is not material to the § 1692c(c) claim. I.C. System also does claim that its communications fall within the statute's exceptions.

Sixth, the parties do not dispute that I.C. System's calls and its letter to the Bishops after November 28 concerned the $84 debt described in Bishop's letter. Even after a debt collector receives a consumer's cease-and-desist letter, the FDCPA allows the debt collector to contact the consumer about other debts or future debts.[16] In addition, a debt collector may contact a consumer if the contacts do not constitute "communications" about a debt as defined by § 1692a(2).[17] I.C. System does not dispute that its calls constituted "communications." Nor does it contend that its calls were about some other matter besides the $84 debt.

I.C. System also failed to raise other defenses that would create a genuine issue of material fact for a jury to resolve. For instance, while I.C. System raised the bona fide error defense in its Answer, it did not assert this defense in its response to the partial summary judgment motion. I.C. System also makes no argument that Jeff Bishop waived the protections of § 1692c(c) by calling I.C. System on January 9 after he had sent his November 28 letter.[18]

2. Sufficiency of Bishop's November 28 Letter

Instead, I.C. System's argument focuses on one issue. It argues that Bishop's November 1367*1367 28 letter did not satisfy the statute's requirement that the consumer notify the debt collector that he wishes "the debt collector to cease further communication." I.C. System argues that because Bishop did not ask I.C. System to stop contacting his family, I.C. System was free to keep communicating with them.

I.C. System's argument rests on the fact that Bishop's letter did not include the actual words of the statute and did not literally say, "Cease further communication." But while Bishop did not use those precise words, his words expressed the same message—just with more bite. In the last paragraph, Bishop wrote that Associates In Pediatrics could contact them directly about a non-frivolous claim. By informing I.C. System that only Associates In Pediatric could contact them, Bishop was also telling I.C. System not to communicate with them. The letter also ends with Bishop writing that future correspondence from I.C. System would be discarded or returned unopened. This sentence would indicate to any reader that Bishop did not want to receive any more mail from I.C. System.

The fact that the letter does not literally ask I.C. System to cease communication does not deprive the letter of its plain meaning. As Judge Learned Hand famously said, "There is no surer way to misread any document than to read it literally."[19] The context of Bishop's letter makes it clear that he and his wife did not want to be disturbed by I.C. System any more. In addition, the sarcastic and insulting tone of the letter makes Bishop's request more clear-not less clear, as I.C. System contends.

Generally, when parties disagree about the inferences to be drawn from a material document, a jury should decide what inferences to make. But to send a matter to a jury, the disagreement must be reasonable.[20] A dispute is not "genuine" if it rests merely on a "metaphysical doubt" about the meaning of a word.[21] In this case, no reasonable disagreement exists about the inferences to be drawn from Bishop's letter. While lawyers may parse the meaning of any word into bits, no reasonable jury would stumble over what Bishop communicated in his letter. Context and common sense make the message clear. Bishop wanted I.C. System to leave him and his wife alone.

I.C. System does not address whether or not Bishop's letter notified it that the Bishops refused to pay the $84 bill. This is an important oversight. Section 1692c(c) can be triggered if the consumer notifies the debt collector either that they refuse to pay the debt or that they wish the debt collector to cease communication about the debt. In his November 28 letter, Bishop clearly refused to pay the $84 bill. He wrote that his wife "long ago paid [Associates In Pediatrics] every penny that she legitimately owes, which is nothing." (Doc. 28-4.) Later in the letter, Bishop left open the possibility that he might reconsider his refusal to pay the debt if Associates In Pediatrics contacted him directly with a non-frivolous claim. But possible reconsideration does not make his refusal any less clear.[22]

1368*1368 The parties also argue over whether the Court should apply the "least sophisticated consumer" standard to this dispute.[23] We do not need to reach this issue, however, because we find that under any standard, a consumer who wrote a letter like Bishop's would have effectively communicated their wish that the debt collector stop contacting them, triggering § 1692c(c).

Neither party argues that the statute imposes a heightened standard on the consumer who seeks to stop a debt collector's calls and letters. The statute does not require that the consumer use any specific language or "magic words" to tell a debt collector to cease communication. A rigid requirement would not make sense given the statute's remedial nature and its purpose to protect the public.[24]

B. The Court will Defer Ruling on Damages

The Bishops seek statutory damages, actual compensatory damages, damages for emotional and mental anguish, and attorney's fees and costs.

Section § 1692k allows a court to award a maximum of $1,000 in statutory damages per lawsuit, regardless of how many times a defendant violates the FDCPA.[25] When setting the amount of statutory damages, § 1692k(b) requires a district court to consider (1) the frequency and persistence of the debt collector's non-compliance with the law, (2) the nature of the non-compliance, and (3) the extent to which the collector intentionally did not comply with the law.[26] Because the Court cannot consider these factors on this record, it will defer ruling on damages, including the amount of statutory damages.

The Court will either submit this issue to the jury if this case proceeds to trial in July,[27] or it will conduct a hearing on damages if the parties dispose of the remaining claims without settling this issue.

For similar reasons, the Court will defer ruling on the Bishops' request for other damages and for attorney's fees and costs.


Therefore, Plaintiffs' Motion for Partial Summary Judgment (Doc. 28) is GRANTED.

Because other claims remain, the parties must submit a joint pretrial statement to the Court by May 27, 2010. The Pretrial Conference is set at 8:30 a.m. on June 2, 2010 in Courtroom 14A of the Sam M. 1369*1369 Gibbons U.S. Courthouse in Tampa, Florida.


[1] The Court includes this background only to provide context for its Order. By laying out this summary, the Court makes no findings of fact. Summary judgment requires that the Court view all facts and draw all reasonable inferences in the light most favorable to the non-moving party, in this case I.C. System.

[2] In a deposition, Jeff Bishop estimated that he spoke to an I.C. System representative on the phone about a dozen times. But he could not state the number of times with certainty, except to state that there were more than five phone conversations. "If I were to pick a wild number, I'd probably say about a dozen," Bishop testified. (Doc. 34 at 25.)

[3] See Casey v. I.C. System, Inc., No. 8:09-cv-210-T-24-TBM, 2010 WL 415310, at *1 n. 2 (M.D.Fla. Jan. 29, 2010). In an endorsed order in this case, the Court also instructed I.C. System that if it wished to file a cross motion for summary judgment, it should seek leave under Rule 6(b) of the Federal Rules of Civil Procedure to do so. (Doc. 33.) The Court also notes, as it did in Casey, that because I.C. System did not move for summary judgment on the invasion of privacy claim, that claim remains before the Court. Casey, 2010 WL 415310, at *1 n. 1.

[4] Porter v. Ray, 461 F.3d 1315, 1320 (11th Cir.2006).

[5] Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

[6] Id. at 251-52, 106 S.Ct. 2505.

[7] Id. at 248, 106 S.Ct. 2505.

[8] Id. at 249-50, 106 S.Ct. 2505.

[9] Id. at 252, 106 S.Ct. 2505.

[10] "The term `consumer' means any natural person obligated or allegedly obligated to pay any debt." 15 U.S.C. § 1692a(3).

[11] "The term `debt' means any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes, whether or not such obligation has been reduced to judgment." 15 U.S.C. 1692a(5).

[12] "The term `debt collector' means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another." 15 U.S.C. § 1692a(6) (exclusions omitted).

[13] Doc. 20.

[14] In addition, "there is a presumption that `every letter, properly addressed and stamped, is duly transported and delivered to the addressee.'" McGrady v. Nissan Motor Acceptance Corp., 40 F.Supp.2d 1323, 1337 (M.D.Ala.1998) (internal citations omitted).

[15] See § 1692c(c)(1)-(3).

[16] Udell v. Kansas Counselors, Inc., 313 F.Supp.2d 1135, 1140-41 (D.Kan.2004.)

[17] "The term `communication' means the conveying of information regarding a debt directly or indirectly to any person through any medium." 15 U.S.C. § 1692a(2). See also Ramirez v. Apex Fin. Mgmt., LLC, 567 F.Supp.2d 1035, 1040-42 (N.D.Ill.2008).

[18] While the Eleventh Circuit has not spoken on whether a consumer can waive his rights under § 1692c(c), the Ninth Circuit has found that a consumer who asks the debt collector in writing to cease communication, but then later contacts the debt collector anyway, can waive under certain circumstances the protection of § 1692c(c). Clark v. Capital Credit & Collection Servs., Inc., 460 F.3d 1162, 1170-71 (9th Cir.2006) (applying the "least sophisticated debtor standard" to evaluate whether debtor would have understood she was waiving her rights).

[19] Guiseppi v. Walling, 144 F.2d 608, 624 (2d Cir.1944) (Hand, J., concurring).

[20] Jeter v. Credit Bureau, Inc., 760 F.2d 1168, 1176 (11th Cir.1985).

[21] Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

[22] The FDCPA does not define "refuse," but its ordinary meaning does not encompass an unalterable rejection. Refuse means "to decline to do, accept, give, or allow." Webster's II New Riverside University Dictionary 989 (1988).

[23] Although the Ninth Circuit in Clark v. Capital Credit and Collection Services, Inc., 460 F.3d 1162, 1170-71 (9th Cir.2006), applied the "least sophisticated consumer" standard to a consumer's conduct under § 1692c(c), the Eleventh Circuit has not done so. The Eleventh Circuit has applied the standard in § 1692e(10), § 1692(d), and § 1692(f) cases. See Jeter, 760 F.2d at 1176; LeBlanc v. Unifund CCR Partners, ZB, 601 F.3d 1185 (11th Cir.2010) (decided March 30, 2010). Given the gap in the case law, it is not clear that the "least sophisticated consumer" should apply in this context. Normally, courts apply this standard to determine whether the "least sophisticated consumer" would be deceived by a debt collector's actions. Here, we are evaluating the consumer's—not the debt collector's—actions.

[24] LeBlanc, 601 F.3d at 1194-95 (11th Cir. 2010) (discussing Congress' purpose to protect consumers in enacting the FDCPA).

[25] 15 U.S.C. § 1692k(a). See also Harper v. Better Business Services, Inc., 961 F.2d 1561, 1563 (11th Cir.1992) ("The FDCPA does not on its face authorize additional statutory damages of $1,000 per violation of the statute, of $1,000 per improper communication, or of $1,000 per alleged debt. If Congress had intended such limitations, it could have used that terminology. . . . Congress instead chose to write that additional damages would be limited to $1,000 per [`action.']").

[26] 15 U.S.C. § 1692k(b).

[27] See Sibley v. Fulton DeKalb Collection Serv., 677 F.2d 830, 832-33 (11th Cir.1982).

May 15, 2015

2015-05-15 Q&A webinar with financial protection attorney John G. Watts

This is the first one of our weekly question and answer webinars.

Here's the transcription with some of my sloppy words cleaned up. :)

Well, hello and welcome to our first question and answer webinar. We're going to do these about every Friday or so. The purpose of these webinars will be so that you can ask questions. If you're on this live, of course, you can ask them. If you are not live on this or you want to submit questions at a time that's convenient to you, you can always email me: john@wattsherring.com. We have a number of those questions that have been submitted already. Probably, unless we have somebody that has a question right now, we'll just go through these previous questions.

The idea is you can ask about consumer protection issues. That can be things like credit reports, debt collectors, mortgages, foreclosures, being sued by a debt collector, also, elder law or estate planning issues. What's a will? What's a trust? What's a special needs trust? How do I qualify for Medicaid in Alabama. Things of that nature. We'll go ahead and get started. I'm not sure exactly how long these will last. Maybe 30 minutes, maybe longer. We'll just start going through some questions.

First question I have is, somebody had written in, "What's the process of a short sale?" This is when you're facing a foreclosure and you're wanting to avoid that foreclosure. There's something called a "short sale." A short sale is where you agree with the bank to sell your house for less than what you owe. Let's say you owe $200,000, you get an offer for $180,000.

That's $20,000 short. You either have to come to the closing table with 20 grand or you get your mortgage company to agree to allow this short sale to occur.
The advantage of this is it prevents a foreclosure because you've actually sold your house.

The downside is, you have to get your mortgage company to agree to do this and sometimes that's a little difficult to do. You also have to wonder, are they going to come after me for that deficiency or that shortness, if you will? That 20,000 in my example. If they will do that, then you've got to decide, is this worth it?

A lot of times, you can get them to agree to waive that or just not come after you for that. You also need know, how will this be reflected on your credit report? A number of issues to look at but a short sale can be a very valuable alternative to foreclosure.

This is what, broadly speaking, is called, "loss-mitigation." That can be a loan modification, a deed in lieu of foreclosure, or a short sale. There's other things but for our purposes, just talking about a short sale right now.

Typically, the process will be that you have to try to sell your house with a licensed realtor and then when that's not successful, then they'll let you lower the price so that it'll be a short sale. Then, once you get an offer, then you've got to get the servicer to approve it and oftentimes, the investor. That could be Freddie Mac, Fannie Mae, it could be some trust that's out there. You've got to get those guys to approve it and then, ultimately, there's paperwork. A lot involved in it, but if you are facing a foreclosure and you're trying to avoid it, then a short sale's certainly an option to look into.

Next question we have is: “Can a debt collector be accountable for causing your credit score to drop by reporting inaccurate information?” The answer to that is absolutely.

There's really two laws at play. One is the Fair Debt Collection Practices Act and the other is Fair Credit Reporting Act. If a debt collector is reporting false information and they know it or they should know it, that's going to violate the FDCPA (Fair Debt Collection Practices Act).

This is assuming the debt collector is subject to that law. It's a consumer debt, so not a business type debt. You're dealing with an actual debt collector, so not the original creditor. Then they violate the law, which if they're reporting false information and they know it or they should know it, then that's going to be a violation of the law.

Then, there's also this thing called the Fair Credit Reporting Act (FCRA). You get your credit report, you look at it. You say, "Wait a minute, I don't owe this debt collector $5,000. I settled with them two years ago for $3,000. I own them zero, but they're reporting I owe two or maybe they're reporting I owe the whole $5,000.”
That's going to be false credit reporting. It violates the Fair Debt Collection Practices Act, but under the Fair Credit Reporting Act, you can dispute that through the credit bureaus. You give them the proper proof and they have an obligation to investigate. That includes going to the debt collector, if they need to.

You may send them enough information that the credit bureau says, "We're fine. We don't have to talk to the debt collector." If they do talk to the debt collector and the debt collector says, "Oh no, keep that on their credit report," then that's a violation of the Fair Credit Reporting Act. If you've given enough information to the credit bureau and they keep it, then that will violate the FCRA on behalf of the credit bureau as well. Those are places like Equifax, Experian, and TransUnion. If there is a violation of the law, typically the best approach is to sue in federal court and you get money damages if you're successful. That tends to prompt these guys quickly to fix your credit when they realize that you've sued them in federal court.

Our next question is, “Will an inheritance to my disabled daughter on SSI and Medicaid jeopardize her benefits?” What this is talking about is, let's say your daughter has a disability and she's drawing SSI, not Social Security Disability Income but the Supplemental Security Income. That is what is called a means-based or means-tested benefit. You have to meet certain requirements on income and assets to qualify. Same thing with Medicaid.

What do you do though if you're daughter is set to receive an inheritance? Maybe a grandparent, an aunt, and uncle, somebody is leaving money to your daughter who's on SSI and on Medicaid, is that going to jeopardize her benefits?

The answer is, probably it will. Normally, on those benefits, your daughter can only have $2,000 in assets. Unless it's a very small inheritance, that's going to push her over that $2,000 limit. That's going to be a problem as far as staying qualified for SSI, staying qualified for Medicaid. That might be incredibly important to keep those benefits. So, what do we do?

Typically, what we do is we set up what's called, "The Special Needs Trust." Imagine a box and we put that inheritance into the box. That way, it's not considered your daughter's money. It's owned by that Special Needs Trust or that box. There are very specific rules for how we reach into that box and pull out money to benefit your daughter. Normally, we cannot replace benefits that are already provided by SSI or Medicaid, but we can do things to supplement. For example, maybe eyeglasses are not covered or maybe certain dental work is not covered by these government benefits. We may be able to then, reach into that box, pull out money to take care of that. Again, very specific rules on this but just to answer this, hopefully quickly here, yes, an inheritance or other money going to your daughter who's on SSI, Medicaid can very well jeopardize those benefits. You want to sit down with a lawyer. Find out, does it make sense to do a Special Needs Trust? If it does, how do we do that process?

Our next question is related to this. “Will an inheritance to someone on SSDI, that's the Social Security Disability Income, and Medicare, so not Medicaid, but Medicare, will that jeopardize their benefits?” The answer to that is typically no.

If we have someone that's receiving Social Security Disability Income. They've worked, they've now become disabled and they're getting this money in from Social Security, then that is not means-based or means-tested. It's just a matter of, did you have enough work quarters or credits or whatever Social Security calls it? Do you meet the definition of disability? Okay, you get this money.
Whether you get an inheritance or not, doesn't have anything to do with that.

This question is on Medicare, which again, is typically not means-tested. You qualify for Medicare based on your age or certain health issues and doesn't really have anything to do with the amount of money that you make or the amount of assets that you have.

Another question we have is, “What is the change that the VA is trying to make on the VA pension or what is know as Aid & Attendance?”

This is a benefit that, for a married veteran, what's called a war-time veteran, can mean up to $25,000 a year tax free. You use that money to pay for long-term care. That can be care at home, in an assisted living facility, or even in a nursing home. Right now, there is no what's called, "Look-Back Period," where if we apply right now, does the VA look back in time and say, "Did you give away any assets?" Right now, there is no such period, but the VA is trying to create that look-back period.

Earlier this year, they said, "This is what we're doing. We're changing the rules." Whether they can do that or not is for a different video. They gave an open period until March to comment on that. In our experience, even though it's now May, we're not seeing them apply these rules. I think that's because there are so many problems with these rules where, I think the VA maybe didn't think it through clearly what they were saying.

I'll give you just one example. They say, "If you give anything to a trust, then we're going to penalize you." We apply now, we look back in time and their proposal is three years. If we gave anything away, they're going to penalize us or punish us going forward. They say, "If you give anything away to a trust, we'll penalize you."

Very simple example. Say a veteran, married veteran, they meet the military requirements, the disability requirements, the financial requirements, income and assets, they have $40,000 in assets. Two and a half years ago, they set up for estate planning purposes, a Revocable Living Trust. That's a trust, a box, we put stuff in. It's still considered ours for all intents and purposes. A veteran does that, they're in perfect health, and now they've had a stroke and they need this VA pension. The VA would say, "Aha, you gave away assets. That's a problem. We're going to penalize you." Well, that still would be considered our assets and maybe it's a house we put in plus $40,000. Normally, the house doesn't count as an asset but now, since we transferred into this Revocable Living Trust which really does nothing in terms of ownership, the VA's going to say, "Now we're going to penalize you."

That just wasn't well-thought out. That's not what the VA means, but that's what they wrote. But the VA is trying to change the rules. Anyway, here's the bottom line. If you think you might qualify for this benefit, you need to get with a lawyer right away because you may need to take action now before the new Look-Back Period and other changes to the law come into play.

On any of these, if we can help you, if you live in Alabama or this is about a family member in Alabama, you can always reach us at 205-879-2447 or you can go to www.AlabamaConsumer.com. That's our website for consumer issues. Or www.AlabamaElderLawyer.com and that's estate planning or elder law issues.

I think we've got time for maybe one more question. This has to do with being sued by a debt collector. Our courts, particularly what's called Small Claims & District Court, they are just dominated by these lawsuits. Some of these debt buyers, debt collectors file a hundred lawsuits in Alabama a week. Just one debt collector files a hundred a week. Another debt collector files a hundred a week.

The question is, “What should I do when a debt collector sues me and they leave the summons, that's the legal document that says, ‘All right, you've been sued and here's your time period to respond, Small Claims Court, 14 days, District Court, 14 days, Circuit Court, 30 days.’ The question is, if I've been sued and I get the summons, but they leave it on my door or they just throw it on my porch, throw it in my yard, am I considered served?”

I'll tell you this, I think from a technical, legal standpoint, if they simply leave it on your porch, then I don't think that's being served. What the rules talk about is leaving it with a person who lives in your house, an adult who lives in your house. That could be a spouse, a child, a roommate, as long as they live in your house. The rules don't talk about throwing it in the bushes or taping it to your door.

I'll give you the practical side. If you know you've been sued, then there's really no benefit in my opinion to just waiting around saying, "Well, you technically didn't serve me. I'm just going to wait until you serve me." My approach is to say, "When these debt collectors sue us, instead of backing up and we're scared and we're going to wait -- No, let's go forward instead. Let's charge these guys. Let's get in there, let's respond to the lawsuit. Let's get a trial date and let's win the case because the sooner we win the case, the sooner we have options against these debt collectors. “

Right now, as I'm recording this, it's May 15 and we have, I think ten Federal Court lawsuits against Midland Funding (a prominent debt buyer) that are pending, active cases right now. I've got another one we're filing. We've got, I think two Federal Court lawsuits against Asset Acceptance and then we have some other cases out there. These all arise out of when consumers were sued by Midland, sued by Asset Acceptance, Portfolio, whoever it may be and the consumer won that case. We want to get to that trial to win that case.

You do have five options when you're sued by a debt collector:
**fight the lawsuit on your own,
**settle the lawsuit on your own,
**hire a lawyer to fight the lawsuit,
**hire a lawyer to settle the lawsuit.

We have an entire video webinar on these 5 options when sued. I think it's like an hour and twenty minutes long. We go over these options. Then we answer a bunch of questions that come up over and over and over, so we went ahead and put those in there.

Just in terms of service of process, if it's just stuck on your door, thrown in the bushes, thrown in the front yard, the front porch and we see that all the time, that's normally not considered good service. I would just be very careful about saying, "What, hey, you didn't serve me. I'm not going to even pay attention to this," because the court might mistakenly believe that you've been served and then those days start counting. When you run out of days, 14 for Small Claims or District Court, 30 for Circuit Court, then the debt collector says, "Hey Judge, we served him. He didn't answer. Give us a default judgment." That's signed and now you have a judgment against you.

If you weren't properly served, you can undo that and we have had situations where clients have hire us and they find out they had a judgment from 14, 15 years ago and we've been able to get those set aside because if you're not properly served, the lawsuit's no good against you. You can do that, but there's expense in it, there's time and the judge may say, "No." My thought is, if you know you've been sued, then go ahead and figure out your options.

We'll make this the last question for today.

Again, if you would like to get in touch with us, my name is John Watts. You can call my office, 205-879-2447. Or you can go to AlabamaConsumer.com or AlabamaElderLawyer.com.

If you call the office, typically you want to ask for Carolyn and tell her what's happening and what your situation is. Then, she'll either get back with me and see what we can do or if it's certain types of cases, and she knows, she's been working with us a long time, when to go ahead and set up an appointment. It can be in person, it can be by phone, it can be by video, whatever is most convenient. We'll be happy to help you anyway we can.

I appreciate you watching this and if you have questions, we'll do this again next Friday and we'll get the exact time that we're going to do this and send that out to you. If you're interested, just contact us through one of our websites or you can email me john@wattsherring.com. Thanks a lot. Have a great day. Bye-bye.


John G. Watts

Watts & Herring, LLC
Birmingham and Madison Alabama offices (we represent folks all over Alabama)


March 12, 2015

Sued in Circuit Court? Summary Judgment Is The Danger To You

Many Alabama consumers are sued by debt collectors in Circuit Court and the biggest danger they face is the collector's "Motion for Summary Judgment."

Well, actually this is true after they avoid a default judgment. That's the biggest danger -- simply not responding to the lawsuit at all. But once you respond to a collection lawsuit in circuit court your biggest danger is receiving a motion for summary judgment.

Let's talk about:

1. What is a motion for summary judgment?
2. What is the danger?
3. How do you fight back against the summary judgment motion?

1. What is a motion for summary judgment?

This is where the debt collector (Asset Acceptance, LVNV Funding, Midland Funding, Portfolio Recovery, Unifund, etc) asks the court to enter judgment against you.

You see, a "motion" is simply a request of a judge. We normally don't do these verbally -- instead we file these in writing.

So a motion is a written request.

Well, what is a "summary judgment?" It is where the court is told by the debt buyer that there is no way any reasonable judge or jury could find in your favor. So the judge should "summarily" enter judgment.

The debt collector will say that there is no dispute that you owe the debt. So the judge should go ahead and rule against you.

So what is the big deal about this?

2. What is the danger?

If the judge rules against you, then you will not have a trial.

You won't have your day in court.

It is over.

The debt collector has won.

This is why the motion for summary judgment is so dangerous -- if you lose, then your entire case is lost.

"But that's not fair -- I want my day in court!"

It doesn't matter.

If you lose the motion for summary judgment, then the collector will have all of the powers that come with a judgment. The collector can garnish your wages -- up to 25%.

Garnish your bank accounts -- that is to drain every dollar in your bank account.

Even though you are confident that you could win your case at trial -- there is no trial.

So, should you take a motion for summary judgment seriously?


This can make or break your case.

3. How do you fight back against the summary judgment motion?

First, don't ignore it. Take it very seriously.

Second, you have to follow the rules. If you have an experienced lawyer representing you then he or she will know what to do. If you are representing yourself, then you have to learn the rules around summary judgment.

It does no good to complain about it is unfair you have to learn the rules -- if you are acting as your own lawyer then the judge will expect you to be your own lawyer and follow the rules of civil procedure.

Third, keep in mind the critical factor of the debt buyer must prove it owns the debt. Carefully examine the evidence to see if the debt collector has proved -- not suggested but proved with valid evidence -- that it owns the debt.

Normally this is done with affidavits -- sworn statements by someone.

Fourth, when considering affidavits, any documents referred to must normally be attached to the affidavit. So if the affidavit says "We bought this debt" then the purchase agreement must be attached. Not a partial copy but the whole thing.

Fifth, if you are sued for breach of contract, is the contract or the "terms and conditions" of the credit card attached? Is it the right date? The right version in force during the time you had the credit card?

Sixth, is there "hearsay" which is any statement offered to prove the truth of the matter asserted that has occurred outside of court.

Seventh, does the person offering the affidavit have personal knowledge of what they are testifying to? Here's an example from a trial my partner Stan Herring tried with Portfolio Recovery Associates. While this was a trial, you'll see the relevance.

Witness: I know how Chase keeps its records -- they keep accurate records.

Stan: What's the basis of you saying you know Chase keeps accurate records? [Stan asked the question in this manner because he knew the witness would either admit the truth or look foolish in lying].

Witness: Well, I have a Chase card and it seems accurate to me.

The judge just shook his head. Not much to say to that silly answer.

So in an affidavit if the witness from Midland Funding claims to know how Citibank keeps its records, the question is "How does he or she know this?"

Eighth, move to strike anything that is improper or violates the rules of evidence.

Finally, if there is opposing evidence you can offer, make sure you offer it on time and in the right manner and form.

You can beat summary judgment motions. We routinely have the other side voluntarily withdraw their motion. We have had judges chastise lawyers for filing such poor quality motions.

Why does low quality work get filed?

Because the collectors assume that you, as a non lawyer, will not know the time and manner to oppose the summary judgment motion and therefore you will lose.

Now you have some knowledge -- make sure you complete your knowledge so you know all of the rules of civil procedure and the rules of evidence OR hire a lawyer who does so that you can fight back against the motion for summary judgment.

We wish you the best and if we can help you then call us in you have a case in Alabama (and don't have a lawyer representing you) at 205-879-2447 or you can contact us through our website Alabama Consumer. You can also read more about collection suits on our website.

Let us know if we can help you and best wishes!

John Watts

December 2, 2014

TCPA Decision: No need to "stay" case while waiting on FCC to rule on who is a "called party"

On November 3, 2014, one of our newer judges -- Judge John H. England, III, in the Northern District of Alabama, issued a very well reasoned decision explaining why a lawsuit against Wells Fargo does not need to be "stayed" or "frozen" while the FCC considers how to interpret the Telephone Consumer Protection Act (TCPA).

The Plaintiff sued Wells Fargo claiming that Wells Fargo had auto dialed his cell phone. Wells did not dispute this but claims it was trying to reach someone else who used to have the cell phone number and gave permission for Wells to call it.

As an aside, this has been an area we have argued with defendants on for years. They tend to think once they had permission, they can call that number for all eternity. See if that works if you get permission to walk in someone's house and then years later the house is sold. I don't think that former permission of the former homeowner does you much good when you stroll in the new owner's house!

Anyway, back to this case -- here is the argument by Wells:

Wells Fargo now seeks to stay this action based on the doctrine of primary jurisdiction pending the resolution of two petitions recently submitted to the FCC for consideration. (Doc. 17). The first petition was filed by United Healthcare Services, Inc. on January 16, 2014 ("UHS Petition") and asks the FCC to clarify the applicability of the TCPA as to calls "to wireless numbers for which valid prior express consent has been obtained but which, unbeknownst to the calling party, have subsequently been reassigned from one wireless subscriber to another." (Doc. 17-1 at 1). The second petition, brought by ACA International, seeks formal rulemaking by the FCC ("ACA Petition"). (Doc. 17-2). The ACA requests the FCC, among other things, establish a "safe harbor for non-telemarketing calls when the debt collector had previously obtained appropriate consent and had no intent to call any person other than the person who had previously provided consent to be called." (Doc. 17-2 at 15).

Judge England analyzes as follows:

The primary jurisdiction doctrine is concerned with protecting the administrative process from judicial interference. See Boyes v. Shell Oil Prods. Co., 199 F.3d 1260, 1265 (11th Cir. 2000) (citing United States v. W. Pac. R.R. Co., 352 U.S. 59, 63 (1956)). Primary jurisdiction "is a doctrine specifically applicable to claims properly cognizable in court that contain some issue within the special competence of an administrative agency. It requires the court to enable a `referral' to the agency, staying further proceedings so as to give the parties reasonable opportunity to seek an administrative ruling." Reiter v. Cooper, 507 U.S. 258, 268 (1993). "[T]he main justifications for the rule of primary jurisdiction are the expertise of the agency deferred to and the need for a uniform interpretation of a statute or regulation." Boyes, 199 F.3d at 1265 (quoting Cnty. of Suffolk v. Long Island Lighting Co., 907 F.2d 1295, 1310 (2d Cir. 1990)); see also W. Pac. R.R. Co., 352 U.S. at 64 (internal quotation marks omitted). Primary jurisdiction "is a discretionary tool, [it is] a flexible concept to integrate the regulatory functions of agencies into the judicial decision making process by having agencies pass in the first instance on technical questions of fact uniquely within the agency's expertise and experience, or in cases where referral is necessary to secure uniformity and consistency in the regulation of business, such as issues requiring the exercise of administrative discretion." Columbia Gas Transmission Corp. v. Allied Chemical Corp., 652 F.2d 502, 520 n.14 (5th Cir. 1981) (citations omitted).[2]

So, what should be done in this situation?

The primary factors a court considers when determining whether to stay an action based on primary jurisdiction grounds are (1) whether the specialized knowledge of the FCC is needed to answer the questions before the court and (2) whether referral is necessary for a uniform interpretation of the statute at issue. W. Pac. R.R. Co., 352 U.S. at 64. As to the first factor, the issues raised by the UHS and ACA Petitions do not implicate the FCC's specialized expertise or fact-finding abilities. The "called party" issue is purely a matter of statutory construction (of a non-technical term), which courts are well-equipped to undertake, not a matter requiring administrative expertise. It is not a technical question or factual inquiry uniquely within the agency's expertise. See e.g., Loggerhead Turtle v. County Council of Volusia Cnty., Fla., 148 F.3d 1231, 1259-60 (11th Cir. 1998) (discussing, in dicta, the question of whether artificial beachfront lighting "takes" sea turtles as being within the special competence of the U.S. Fish and Wildlife Service); Columbia Gas Transmission Corp., 652 F.2d at 520 n.14 (explaining the court's determination regarding enforcement of a payback obligation for diversions prior to a certain date would be materially facilitated by FERC's informed evaluation of a Representative's enforcement caution and how the facts of the case fit within that caution).

The meaning of "called party" is pretty simple -- who owned the phone number or used the phone that you made ring? Not sure why this is so "complicated" for defendants. Especially here in the Eleventh Circuit (Alabama, Florida and Georgia) as we have a decision on this:

The Eleventh Circuit answered this question in Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242, 1251-52 (11th Cir. 2014), rejecting the argument the "intended recipient" is the "called party" for purpose of § 227 and explaining a "called party" means "the subscriber to the cell phone service." Breslow v. Wells Fargo Bank, N.A., ___ F.3d ___, 2014 WL 2565984, *1 (11th Cir. June 9, 2014) (quoting id.). Likewise, while Wells Fargo submits the ACA Petition "asks the FCC to . . . establish a `safe harbor for non-telemarketing calls when the debt collector had previously obtained appropriate consent and had no intent to call any person other than the person who had previously provided consent to be called,'" (doc. 17-2 at 2), the Eleventh Circuit foreclosed such a defense in Osorio. 746 F.3d at 1242, 1253.

Therefore, the following is the death blow to the "stay" argument:

As to the second factor, the Eleventh Circuit has spoken directly to this issue,[3] providing direct guidance for a uniform interpretation of the statute throughout the Circuit. Wells Fargo has not provided, and the undersigned has not found, any other circuit court that has interpreted "called party" differently or that has created an exception to the rule. It appears the only other circuit court to have addressed the issue follows the same interpretation as the Eleventh Circuit. See Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637, 640 (7th Cir. 2012). Furthermore, the interpretation of the statutory term "called party" is not an issue requiring the exercise of administrative discretion. See Columbia Gas Transmission Corp., 652 F.2d at 520 n.14 (explaining referral is necessary to secure uniformity and consistency in the regulation of business when the issue requires the exercise of administration discretion).

So we have two appellate courts that have ruled on this and say the one who has the number now is the called party. Wells Fargo called the Plaintiff's cell phone without permission. Pretty straightforward.

We'll see what the FCC does and whether it matters and this is the point made by the court:

Wells Fargo contends the FCC is "likely to rule on the petitions shortly" because it expects "concrete movement on both [petitions] . . . within the next six months," (doc. 27 at 1 (citing doc. 20 at ¶ 11)). Although Wells Fargo expects the FCC to "move on the petition," there is no indication the FCC will make any kind of ruling in the near future or at all. If the FCC does issue a ruling providing a different interpretation of "called party" or creating an exception applicable to this case, the court will address whether that ruling has retroactive application and what level of deference is due. See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 476 U.S. 837 (1984) (discussing the appropriate level of deference); Heimmermann v. First Union Mort. Corp., 305 F.3d 1257, 1260 (11th Cir. 2002) (discussing when retroactivity applies to agency interpretation and rules).

Bottom line is in the Eleventh (and Seventh) Circuits at a minimum this issue has been resolved in favor of the consumer by applying the plain language of the rule -- you make a telephone ring with an autodialer then make sure you have permission from the owner of that phone.

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.

November 29, 2014

TCPA Decision: Does offer of judgment "moot" Plaintiff's claims?

Ever get those annoying political calls to your cell phone? Not a human but robo (computer) dialed calls? Lori Shamblin did and decided to sue multiple defendants for doing this in federal court in Tampa, Florida.

Here's what one defendant did to try to show the court that the case should be dismissed as Plaintiff allegedly got everything she was entitled to receive:

New Partners Consulting, Inc. seeks dismissal of the Second Amended Complaint under Rule 12(b)(1) alleging that its Rule 68 Offer of Judgment to Shamblin was an offer of complete relief and thus no case or controversy remains between the parties. (Doc. #122 at 3).

Here's the basis of this argument:

The doctrine of mootness springs directly from the case or controversy limitation because an action that is moot cannot be characterized as an active case or controversy. Id. Mootness can occur due to a change in circumstances or a change in the law. Coral Springs St. Sys., Inc. v. City of Sunrise, 371 F.3d 1320, 1328 (11th Cir. 2004). A case is also moot when the issue presented is no longer live, the parties lack a legally cognizable interest in the outcome, or a decision could no longer provide meaningful relief to the parties. Troiano v. Supervisor of Elections in Palm Beach Cnty., Fla., 382 F.3d 1276, 1282 (11th Cir. 2004).

The details of the defendant's argument are the following:

Regardless of whether the plaintiff accepts the offer, "an offer of judgment providing the plaintiff with the maximum allowable relief [will] moot the plaintiff's claim." Moore v. Hecker, 250 F.R.D. 682, 684 (S.D. Fla. 2008). Therefore, "Rule 68 offers can be used to show that the court lacks subject-matter jurisdiction." Pollack v. Bay Area Credit Serv., LLC, No. 08-61101-Civ, 2009 WL 2475167, at *5 (S.D. Fla. Aug. 13, 2009). "Once the defendant offers to satisfy the plaintiff's entire demand, there is no dispute over which to litigate .. . and a plaintiff who refuses to acknowledge this loses outright, under Fed. R. Civ. P. 12(b)(1), because he has no remaining stake." Rand v. Monsanto Co., 926 F.2d 596, 598 (7th Cir. 1991).

So did the defendant provide all the relief Plaintiff sought?

Here, unlike Delgado, New Partners Consulting, Inc.'s Offer of Judgment did not comport with the standard set forth in Rule 68 allowing Shamblin to recover the "maximum relief available under the law." Id. There are multiple defendants in this action, whereas in Delgado, there was only one. Shamblin's maximum recovery includes relief from all Defendants and not solely from New Partners Consulting, Inc. Therefore, the Offer of Judgment, which was not a mirror image of the prayer for relief, did not moot Shamblin's claim and deprive this Court of jurisdiction.

In the Complaint Shamblin seeks the following relief:

a. Certify this action as a class action under Federal Rule of Civil Procedure 23, appointing Plaintiff as the class representative and her counsel as class counsel;
b. Enjoin Defendants from violating the TCPA in the future by placing auto-dialed or pre-recorded calls to cellular telephone numbers;
c. Award statutory damages to Plaintiff and the class pursuant to 47 U.S.C. § 227(b)(3).
d. Award reasonable attorney fees and costs to compensate Plaintiff's counsel for the time and litigation expenses incurred on behalf of the class; and
e. Issue such other relief as the Court deems equitable and just.
(Doc. #131 at 5).

New Partners Consulting, Inc.'s Offer of Judgment, offered Shamblin the following:

(1) Judgment shall be entered against Defendant and in favor of SHAMBLIN in the amount of $7,500.00, arising from Plaintiff's TCPA claims against the Defendant as alleged in Plaintiff's Second Amended Class Action Complaint, (2) Judgment shall include an additional amount for taxable costs incurred by Plaintiff in prosecuting the case, in an amount to be determined by the Court if the parties are unable to come to an agreement, (3) Judgment shall enjoin Defendant from violating the TCPA in the future by placing auto-dialed or prerecorded calls to SHAMBLIN's cellular telephone number(s), and (4) Should Plaintiff accept this Offer, Plaintiff agrees that acceptance of this Offer resolves Plaintiff's TCPA claims against Defendant.
(Doc. #122-1).

An Offer of Judgment cannot be evaluated solely by its dollar amount. Lynch v. First Nat. Collection Bureau, Inc., No. 11-60798-CIV, 2011 WL 2457903 (S.D. Fla. 2011). In the instant action, Shamblin seeks to enjoin all Defendants[1] from committing future violations of the TCPA. (Doc. #131 at 5). The TCPA provides in relevant part that,

A person or entity may, if otherwise permitted by the laws or rules of court of a State, bring in an appropriate court of that State—
(A) an action based on a violation of this subsection or the regulations prescribed under this subsection to enjoin such violation,
(B) an action to recover for actual monetary loss from such a violation, or to receive $500 in damages for each such violation, whichever is greater, or
(C) both such actions.
If the court finds that the defendant willfully or knowingly violated this subsection or the regulations prescribed under this subsection, the court may, in its discretion, increase the amount of the award to an amount equal to not more than 3 times the amount available under subparagraph (B) of this paragraph.
47 U.S.C. § 227(b)(3)(emphasis added).

Accordingly, as the TCPA provides that an injunction is an appropriate remedy sought under the statute, and because Shamblin did in fact seek to enjoin all the Defendants in this action, an Offer of Judgment without full injunctive relief diminishes the value of the judgment Shamblin seeks. Thus, the Offer of Judgment, which included injunctive relief only against New Partners Consulting, Inc., even if for the full monetary amount, does not encompass the entire value of relief Shamblin seeks because it does not include an injunction against the other Defendants in this action. Lynch, 2011 WL 2457903.

Although Defendants, Obama for America and DNC Services Corporation, are willing to be enjoined from "violating the TCPA in the future by placing auto-dialed or pre-recorded calls to cellular telephone numbers" at this juncture, that offer does not appear on the face of New Partners Consulting, Inc.'s Offer of Judgment. (Doc. #136). This Court finds that New Partners Consulting, Inc.'s Offer of Judgment failed to provide "maximum allowable relief" to Shamblin and therefore did not moot Shamblin's claim and deprive this Court of subject matter jurisdiction.

So what is the take home message?

For defendants, if you are going to use an offer of judgment to try to "moot" a Plaintiff's claims, you have to provide the full relief requested. This is not a buffet where you can pick and choose which items you want and those you don't want.

For Plaintiffs, make sure you are asking for all the relief you can receive and carefully evaluate offers of judgment to see how the compare with what you asked for. Additionally, I find that hardly any defendants understand the law (or if they do they don't follow the law) on what makes a valid offer of judgment. They will do things such as:

*Ask that the claims be dismissed -- uh, no, it is a judgment!
*Demand that the Plaintiff sign a settlement release -- nope -- we don't sign releases when we have a judgment against you.
*Limit attorney fees to 14 days after serving the offer of judgment -- nope -- when we get a judgment we can get fees when you make us fight on fees.

The list goes on and on.

If it is not a valid offer of judgment, it cannot "moot" your case.

Hope you enjoyed this discussion of this case and have a great day!

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.

November 28, 2014

TCPA Decision: Not responding to a motion for summary judgment

There is an odd decision -- or I should say the Plaintiff acted oddly -- and the result was the defendants (LVNV Funding, Northland Group, and Citibank) were dismissed from the case.

You can read this decision of Schweitzer v. Northland Group, LVNV Funding and Citibank which was released by the Southern District of Florida court on November 6, 2014.

Here are the basic facts:

Schweitzer alleges that Defendants have sought to collect on his credit-card debt since around November 11, 2011. DE 7 (Amended Complaint) ¶ 12. Schweitzer contends that Defendants' communications during their collection efforts have been harassing, inaccurate, and otherwise wrongful. On this basis, Schweitzer asserts the following claims: (1) violation of the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692, et seq., against Northland; (2) violation of the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227, against all Defendants; and (3) violation of the Florida Consumer Collection Practice Act ("FCCPA"), Fla. Stat. § 559.55, et seq., against all Defendants. Am. Compl. ¶¶ 30-46. Defendants have now moved for summary judgment on Schweitzer's claims against them. See DE 40-42.

Pretty standard stuff. Credit card debt is often sold and a company like LVNV will claim to buy the debt. LVNV normally doesn't collect directly but instead outsources the collection to a debt collector such as Northland. Collection is much more efficient if an auto-dialer (computer dialer) is used rather than a human being dialing the numbers.

But here is where the conduct of the Plaintiff gets odd:

The Court begins by noting that Schweitzer has failed to file a timely response to Defendants' Motions. Defendants filed the Motions on September 2, 2014. See DE 40-42. Any opposition to the Motions was due by September 19, 2014. See S.D. Fla. L.R. 7.1(c). However, Schweitzer did not respond by that deadline. Instead, on September 26, 2014, he requested additional time to file his opposition papers. DE 57-59.

The Court granted Schweitzer's request for an extension of time, and allowed him until October 3, 2014, to respond. DE 60. However, October 3 came and went, and Schweitzer still had not filed any response. On October 7, 2014, the Court directed Schweitzer to file his opposition papers no later than October 10, 2014. DE 61. The Court also informed Schweitzer that if he continued to disregard the Court's deadlines, the Court would not consider his subsequent filings in resolving the Motions. Id. at 1. But Schweitzer again failed to file a timely response. See DE 63-65. Because Schweitzer's papers in opposition to the Motions were untimely, despite substantial accommodations by the Court, the Court will not consider those materials in resolving the Motions.

What to say? You have to show up to the game if you want to play. If you file a lawsuit, you have to follow the deadlines. The federal judge seems to have been very accommodating to changing the deadlines, extending the deadlines, etc. but at some point the patience is exhausted.

Turning to the substance, the court points out that in a Fair Debt Collection Practices Act (FDCPA) case, the Plaintiff must prove the debt is a consumer debt:

To prevail on a FDCPA claim, a plaintiff must prove that: (1) he has been the target of collection activity arising from consumer debt; (2) the defendant is a debt collector as defined under the FDCPA; and (3) the defendant has engaged in an act or omission prohibited by the FDCPA. Battle v. Gladstone Law Group, P.A., 951 F. Supp. 2d 1310, 1313 (S.D. Fla. 2013); see also 15 U.S.C. §§ 1692a(5), 1692d, 1692e.

A consumer debt is "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes." 15 U.S.C. § 1692a(5); see also Abby v. Paige, 903 F. Supp. 2d 1330, 1334 (S.D. Fla. 2012). Northland argues that Schweitzer has provided no evidence that the debt at issue was a consumer debt, or in other words that the debt was incurred in connection with personal, family, or household purposes. DE 42-1 at 12; DE 42-2 ¶ 9; see also DE 40-2 ¶ 7. Schweitzer has conceded this point both by failing to timely or properly respond to Northland's Statement of Material Facts, and also by failing to timely respond to Northland's Requests for Admissions, which included a request to admit that Schweitzer had no evidence that the debt was a consumer debt. DE 42-4 at 4; see also Fed. R. Civ. P. 36(a)(3) ("A matter is admitted unless, within 30 days after being served, the party ... serves ... a written answer or objection. ..."). Because the FDCPA requires that a plaintiff prove that he was the target of collection activity arising from a consumer debt (see 15 U.S.C. § 1692a(5)), and Schweitzer has failed to provide any record evidence whatsoever that Northland called him in connection with a consumer debt, Northland is entitled to summary judgment on Schweitzer's FDCPA claim against it. See Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115-16 (11th Cir. 1993).

Turning to the auto dialed calls (TCPA), the court said Plaintiff gave permission to Citibank (the original creditor) and the debt collection calls to the Plaintiff's residential line are not covered by the residential line portion of the TCPA. I think the Plaintiff argues this but failed to do so in time so the court held all of this was admitted.

Schweitzer provided his telephone number to Citibank when he applied for a credit card. DE 40-2 ¶¶ 2-4. Schweitzer thus consented to receive calls from Citibank about the resulting credit-card debt. See 2008 FCC Ruling, 23 F.C.C.R. at 564. Because Schweitzer consented to receive these calls from Citibank, his TCPA claim based upon the alleged debt-collection calls fails as to Citibank as a matter of law. See 47 U.S.C. § 227(b)(1)(B).

Schweitzer's TCPA claim also fails with respect to all Defendants because their debt-collection calls do not fall within the scope of the TCPA's prohibitions. Section 227(b)(1)(B) prohibits certain calls to residential telephone lines. However, some types of calls are excluded from the coverage of Section 227(b)(1)(B) by FCC rules or orders. See id. § 227(b)(2)(B). Among those excluded calls are debt-collection calls. 47 C.F.R. § 64.1200(a)(3)(iii); Meadows v. Franklin Collection Serv., Inc., 414 F. App'x 230, 235 (11th Cir. 2011) (per curiam). Because the telephone calls at issue in this case were debt-collection calls placed to Schweitzer's residential telephone number,[1] they are excluded from the scope of the TCPA by the FCC, and cannot support a TCPA claim.

The biggest take home lesson from this is you must respond to deadlines in federal court or you lose.

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.

November 23, 2014

TCPA Decision: What is the Purpose of Damages Per Call/Text/Fax?

Often defendants who are sued under the TCPA (Telephone Consumer Protection Act) argue that the damages are unfair and they represent a "windfall" to the plaintiff who "wasn't really hurt."

While it has no basis in law, the emotional and financial reasons for making this argument are plain. A defendant can face $1500 per call -- per text -- per fax. At a minimum it is $500 per call/fax/text.

We have had cases involving hundreds of calls -- the damages can add up to a very high amount (high six figures) so the defendants make any argument possible to try to get judges to throw these cases out.

The Eleventh Circuit, on October 30, 2014, issued a very important decision that guts this argument. The case is Palm Beach Golf v. Sarris.

We'll keep the discussion focused on the interesting way the Eleventh Circuit dismisses this argument but a few facts are necessary first.

On December 13, 2005, Plaintiff Palm Beach Golf Center-Boca, Inc. received an unsolicited one-page fax advertisement, promoting dental services provided by Defendant John G. Sarris, D.D.S., P.A., a Florida dental practice.


Among these was the December 13, 2005 transmission to Plaintiff Palm Beach Golf, a golf equipment store. Despite its successful transmission to Plaintiff, no employee of Palm Beach Golf could recall actually seeing or printing the fax advertisement. Rather, the evidence that the advertisement was transmitted by B2B, and received by Palm Beach Golf, is the Expert Report, which confirms the successful fax transmission, taking one minute of connection time, made to Plaintiff's fax machine.

So the fax was made but the Plaintiff didn't even know it. The equivalent is a text message (considered a "call" under the TCPA) was sent but you did not see it. Or a call was made that you missed.

Notice the argument by the violator of the law that the district court accepted:

Despite reaching the merits of Palm Beach Golf's TCPA claim, the District Court further held that Palm Beach Golf lacked Article III standing, because it was unable to demonstrate that it had suffered an injury in fact. The District Court concluded that "nowhere in the statute does Congress express an intent to circumvent the requirement that a plaintiff have Article III case-or-controversy standing to bring a claim, which requires that the plaintiff demonstrate a distinct and palpable injury to himself." Because there was no evidence that any employee of Plaintiff's saw or printed the transmitted fax, the District Court concluded that Palm Beach Golf was unable to demonstrate that it had suffered a sufficiently concrete injury to establish standing under Article III.

Standing is the idea that you must have an actual injury before you go into a federal court and seek damages or other relief.

Palm Beach Golf insists that it was error for the District Court to hold that, because it failed to prove that the fax was printed or seen, it lacked Article III standing. For Plaintiff, the specific injury targeted by the TCPA is the sending of the fax and resulting occupation of the recipient's telephone line and fax machine, not that the fax was actually printed or read. We agree.

"Article III of the Constitution confines the reach of federal jurisdiction to `Cases' and `Controversies.'" Alabama-Tombigbee Rivers Coal. v. Norton, 338 F.3d 1244, 1252 (11th Cir. 2003) (quoting U.S. CONST. art. III, § 2). In order "[t]o establish Article III standing, an injury must be `concrete, particularized, and actual or imminent; fairly traceable to the challenged action; and redressable by a favorable ruling.'" Clapper v. Amnesty Int'l USA, 133 S. Ct. 1138, 1147 (2013) (quoting Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 149, 130 S. Ct. 2743, 2752 (2010)). Although Congress may not convert a generalized grievance "into an `individual right' vindicable in the courts," Lujan v. Defenders of Wildlife, 504 U.S. 555, 576-77, 112 S. Ct. 2130, 2144-45 (1992), "Congress may create a statutory right or entitlement[,] the alleged deprivation of which can confer standing to sue even where the plaintiff would have suffered no judicially cognizable injury in the absence of statute." Warth v. Seldin, 422 U.S. 490, 514, 95 S. Ct. 2197, 2213 (1975) (citing Linda R. S. v. Richard D., 410 U.S. 614, 617 n.3, 93 S. Ct. 1146, 1148 n.3 (1973)). In other words, "[t]he actual or threatened injury required by Art[icle] III may exist solely by virtue of `statutes creating legal rights, the invasion of which creates standing.'" Id. at 500, 95 S. Ct. at 2206 (citation omitted) (quoting Linda R. S., 410 U.S. at 617 n.3, 93 S. Ct. at 1148 n.3).

The question now is whether the TCPA is one of these statutes that the violation of it creates the right to sue, even if there are no "real damages."

The TCPA, in this instance, creates such a cognizable right. It is clear from the legislative history of the statute that the TCPA's prohibition of unsolicited fax advertisements was intended to protect citizens from the loss of the use of their fax machine during the transmission of the fax data. See H.R. REP. NO. 102-317, at 10 (1991) ("FACSIMILE ADVERTISING[:] . . . This type of telemarketing is problematic for two reasons. First, it shifts some of the costs of advertising from the sender to the recipient. Second, it occupies the recipient's facsimile machine so that it is unavailable for legitimate business messages while processing and printing the junk fax." (emphasis added)).

Further, Congress created a private right of action for enforcement of violations of the statute in section 227(b)(3) and provided statutory damages[4] for a "junk" fax recipient. TCPA, 47 U.S.C. § 227(b)(3) (2006). Notably, a prevailing plaintiff need not have suffered any monetary loss in order to recover statutory damages. Chapman v. Wagener Equities, Inc., 747 F.3d 489, 491 (7th Cir. 2014) ("[N]o monetary loss need be shown to entitle the junk-fax recipient to statutory damages.").

The court goes on to discuss this issue in the context of a "bounty hunter":

Second, Palm Beach Golf possesses standing because the TCPA functions as a congressionally created "bounty," permitting private individuals to sue based on a statutory violation. See Chapman, 747 F.3d at 491. In the ordinary case, mere statutory authorization of a citizen suit alone is not sufficient to create standing under Article III. See Lujan, 504 U.S. at 571-74, 112 S. Ct. at 2142-43. The Supreme Court, however, has carved out an exception to this rule for instances where Congress has created a statutory scheme by which it assigns an injury, inflicted upon the federal government, to private citizens. Specifically, Congress can assign an injury to the government's sovereignty to private citizens for purposes of bringing suit. Where this has occurred, these private citizens possess Article III standing. See Vt. Agency, 529 U.S. at 774, 120 S. Ct. at 1863 ("[T]he United States' injury in fact suffices to confer standing on respondent."). Put another way, where a federal statute prohibits conduct, Congress may expressly permit individual citizens to bring suit against those who engage in the prohibited conduct. Such laws are not unlike qui tam statutes,[5] which have been expressly recognized by the Supreme Court as sufficient for Article III standing purposes. See Alea London Ltd. v. Am. Home Servs., Inc., 638 F.3d 768, 778-79 (11th Cir. 2011) (citing Cook Cnty., Ill. v. United States ex rel. Chandler, 538 U.S. 119, 131, 123 S. Ct. 1239, 1247 (2003)).

The TCPA provides standing under this theory because it is a "bounty" statute, specifically providing a prevailing plaintiff $500 in statutory damages for each unlawful fax sent, as well as treble damages under certain circumstances for intentional violations of the statute. Chapman, 747 F.3d at 491 ("Nor does entitlement to statutory damages [under the TCPA] require any showing of injury of any sort, for such damages not only serve to compensate for injuries difficult to estimate in dollar terms, but also, like statutory compensation for whistleblowers, operate as bounties, increasing the incentives for private enforcement of law."); Schlueter v. Latek, 683 F.3d 350, 356 (7th Cir. 2012) ("There are plenty of bounty-hunter statutes, see, e.g., . . . 47 U.S.C. § 227(b)(3) (Telephone Consumer Protection Act) (unsolicited text messages or fax advertisements)."); Critchfield Physical Therapy v. Taranto Grp., Inc., 293 Kan. 285, 298, 263 P.3d 767, 778-79 (2011) (relying on the U.S. Court of Appeals for the Seventh Circuit's holding that the TCPA's statutory damages scheme operates as a bounty). Through the TCPA, Congress intended to curb specific conduct, expressly prohibiting, among other things, the "use of any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement," conduct alleged here of Defendant. TCPA, 47 U.S.C. § 227(b)(1)(C) (2006).[6] Thus, under this theory, Palm Beach Golf has Article III standing as a result of Congress's assignment to Plaintiff of the United States' injury resulting from Sarris, D.D.S.'s alleged violation of the TCPA's fax ban.

This, at least in the Eleventh Circuit (Alabama, Georgia, Florida) does away with the argument that it is unfair or improper for a plaintiff to get damages of $500-$1500 per call when, as the defendants like to say, "the plaintiff wasn't even hurt!"

Doesn't matter.

The TCPA is a bounty hunter statute and the whole purpose is to encourage consumers to file suit to enforce this law. Think of the old west movies where the bounty hunter is paid to bring in the criminal. No crime was committed against the bounty hunter but the government has an interest in the wrongdoer captured. Same here.

Stop the illegal calls/texts/faxes by incentivizing consumers to sue. The damages paid will incentivize businesses to stop violating the law.

(There is discussion of vicarious liability that you can read but the focus of this blog post is on the bounty hunter nature of the statute.)

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.

November 21, 2014

TCPA Decision: Wife Gave Cell Phone Number To ER -- Consent For Calls?

A big issue in the TCPA is whether consent, and the proper type of consent, was given that would allow a company to auto dial a consumer's cell phone without being subject to damages of $500-1500 per call.

Helping us as lawyers fill in the picture is a recent decision from the Eleventh Circuit on September 29, 2014, in Mais v. Gulf Coas Collection Bureau.

As usual, we will include the relevant parts from the decision with our analysis below it.

Plaintiff Mark Mais filed a claim in federal district court against a hospital-based radiology provider and its debt collection agent for making autodialed or prerecorded calls in violation of the Telephone Consumer Protection Act of 1991 (TCPA), Pub. L. No. 102-243, 105 Stat. 2394 (codified at 47 U.S.C. § 227). Defendant Gulf Coast Collection Bureau, Inc. ("Gulf Coast") argued that the calls fell within a statutory exception for "prior express consent," as interpreted in a 2008 declaratory ruling from the Federal Communications Commission (the "FCC" or "Commission"). See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 (2008 FCC Ruling), 23 FCC Rcd. 559, 564. The district court granted Mais partial summary judgment against Gulf Coast for alternative reasons: the FCC's interpretation was inconsistent with the language of the TCPA and, regardless, the 2008 FCC Ruling did not apply on the facts of this case.

Nothing particularly noteworthy except the district court judge threw out the FCC interpretation and ruling. This was surprising when the decision came out.

I think the Eleventh Circuit was surprised also....

As we see it, the district court lacked the power to consider in any way the validity of the 2008 FCC Ruling and also erred in concluding that the FCC's interpretation did not control the disposition of the case. In the Hobbs Act, 28 U.S.C. § 2342, Congress unambiguously deprived the federal district courts of jurisdiction to invalidate FCC orders by giving exclusive power of review to the courts of appeals. See Self v. Bellsouth Mobility, Inc., 700 F.3d 453, 461 (11th Cir. 2012). And Mais's claim falls squarely within the scope of the FCC order, which covers medical debts. The 2008 FCC Ruling "conclude[d] that the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent to be contacted at that number regarding the debt." 23 FCC Rcd. at 564. There is no dispute that Mais's wife listed his cell phone number on a hospital admissions form and agreed to the hospital's privacy practices, which allowed the hospital to release his health information for billing to the creditor. As a result, the TCPA exception for prior express consent — as interpreted in the 2008 FCC Ruling — entitles Gulf Coast to judgment as a matter of law. Accordingly, we reverse the district court's grant of partial summary judgment to Mais and remand with instructions to enter final summary judgment for Gulf Coast.

This is a nice summary of what the court held -- some of the details of this lengthy opinion will come below.

Before the district court considered the question of class certification, the Defendants moved for summary judgment on the affirmative defense that the calls could not and did not violate the TCPA because Mais provided "prior express consent" to receive them when his wife completed in writing the Hospital admissions forms. See 47 U.S.C. § 227(b)(1)(A)(iii). The Defendants relied on a 2008 FCC Ruling, which concluded that "the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt." 23 FCC Rcd. at 564. Defendants further argued that, because the Hospital had consent to use and disclose Mais's cell phone number under the Health Insurance Portability and Accountability Act (HIPAA), Pub. L. No. 104-191, 110 Stat. 1936 (1996), the TCPA prior express consent exception was satisfied. Florida United and Sheridan also separately argued that they could not be held vicariously liable for Gulf Coast's calls because § 227(b)(1)(A) of the TCPA only reaches those who "make any call" to a cell phone using automatic dialing or a recorded voice. Mais likewise moved for partial summary judgment, arguing that he had not given prior express consent for the calls because the 2008 FCC Ruling did not apply to medical debt and because his cell phone number had been given to the Hospital, not the creditor, Florida United.

All I can say it is creative to argue medical debt is not subject to the 2008 FCC Ruling.

The district court found that Mais, not the Defendants, was entitled to summary judgment on the prior express consent defense mounted by Gulf Coast, Florida United, and Sheridan. The court began by explaining that satisfaction of HIPAA did not automatically ensure compliance with the TCPA, "a separate statute that imposes separate requirements." Mais, 944 F. Supp. 2d at 1234. The district court also determined that Defendants could not prevail on the basis of the 2008 FCC Ruling. While acknowledging that the Hobbs Act gave the federal courts of appeals exclusive jurisdiction to review final FCC orders, the district court determined that it had jurisdiction to examine the FCC's interpretation of the TCPA because the central purpose of Mais's suit was to obtain damages for violations of the statute, not to collaterally attack or invalidate the 2008 FCC Ruling. The court concluded that the Federal Communication Commission's interpretation of "prior express consent" embodied in its 2008 rule was not entitled to any deference because it conflicted with the clear meaning of the TCPA. See Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 n.9 (1984) ("The judiciary is the final authority on issues of statutory construction and must reject administrative constructions which are contrary to clear congressional intent."). According to the district court, implying consent from the provision of a cell phone number to a creditor impermissibly expanded the statutory exception to cover "prior express or implied consent." Mais, 944 F. Supp. 2d at 1239. Compare Black's Law Dictionary 346 (9th ed. 2004) (defining "express consent" as "[c]onsent that is clearly and unmistakably stated"), with id. (defining "implied consent" as "[c]onsent inferred from one's conduct rather than from one's direct expression"). Cut loose from any FCC rulemaking concerning the meaning of prior express consent, and thus interpreting the language found in the Act afresh, the district court concluded that listing Mais's cell phone number on the Hospital admissions documents alone did not evince prior express consent to receive autodialed or prerecorded calls. In the alternative, the district court also ruled that, even if the FCC's interpretation of the meaning of prior express consent found in the 2008 FCC Ruling was valid and binding, the rule would not apply under the facts of this case because it was designed to cover consumer and commercial contexts and did not reach medical settings. Moreover, the district court determined, the FCC's 2008 rulemaking would not apply here because Mais's wife gave his number only to the Hospital and not to the creditor, Florida United.

On the issue of the FCC, we won't include anymore on this. The Court found the FCC rules matter. We'll now turn to the consent issue as this is a more common issue in these cases. But first a bit of history on the regulations from the FCC.

In 2008, in response to a Petition for Expedited Clarification and Declaratory Ruling filed by ACA International, a trade organization of credit and collection companies,[3] the FCC after notice and comment issued a Declaratory Ruling "clarify[ing] that autodialed and prerecorded message calls to wireless numbers that are provided by the called party to a creditor in connection with an existing debt are permissible as calls made with the `prior express consent' of the called party." 2008 FCC Ruling, 23 FCC Rcd. at 559. Specifically, the FCC "conclude[d] that the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt." Id. at 564. The FCC "emphasize[d] that prior express consent is deemed to be granted only if the wireless number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed." Id. at 564-65. The Commission concluded that "the burden will be on the creditor to show it obtained the necessary prior express consent" because "creditors are in the best position to have records kept in the usual course of business showing such consent." Id. at 565. As in the 1992 FCC Order, the Commission found support for its interpretation of prior express consent from the legislative history of the TCPA, including the House Report, which stated that "[t]he restriction on calls to emergency lines, pagers, and the like does not apply when the called party has provided the telephone number of such a line to the caller for use in normal business communications." Id. at 564 (quoting H.R. Rep. No. 102-317, at 17).

In 2012, the FCC issued still another Report and Order that further interpreted the meaning of the prior express consent exception embodied in § 227(b)(1)(A) of the statute, though the Commission did not change the standard for debt collection calls made to cell phone numbers. See In re Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991 (2012 FCC Order), 27 FCC Rcd. 1830. The 2012 FCC Order required written prior express consent for autodialed or prerecorded calls to wireless or residential numbers that deliver a telemarketing message. Id. at 1838. It "eliminate[d] the established business relationship exemption for prerecorded telemarketing calls to residential lines" created by the FCC in 1992. Id. at 1845. And the Commission added an exemption for "all prerecorded health care-related calls to residential lines that are subject to HIPAA." Id. at 1852.

The FCC is concerned about consent. In essence, consent is an affirmative defense that the defendant bears the burden of proving after the plaintiff shows auto dialed/computer calls were made to plaintiff's cell phone.

While the 2008 FCC Ruling listed the completion of "a credit application" as an example of the provision of a cell phone number to a creditor, the Commission did so illustratively, not exclusively. 23 FCC Rcd. at 564. Similarly, the fact that the FCC's interpretation often is invoked in the context of consumer or commercial creditors does not lessen its application to medical debt collection. See Mitchem v. Ill. Collection Serv., Inc., No. 09 C 7274, 2012 WL 170968, at *1-2 (N.D. Ill. Jan. 20, 2012) (unpublished); Moise v. Credit Control Servs., Inc., 950 F. Supp. 2d 1251, 1253 (S.D. Fla. 2011) ("Based on the plain language of the TCPA and the [2008] FCC order, it is clear that if Plaintiff gave his cell phone number directly to [a medical laboratory], that would constitute express consent."); Pollock v. Bay Area Credit Serv., LLC, No. 08-61101-CIV, 2009 WL 2475167, at *1 (S.D. Fla. Aug. 13, 2009) (unpublished) (applying the 2008 FCC Ruling to calls made by a defendant "attempting to collect a debt . . . that arose from personal medical care").

When it comes to expectations for receiving calls, we see no evidence that the FCC drew a meaningful distinction between retail purchasers who complete credit applications and medical patients who fill out admissions forms like the Hospital's. A patient filling out a form from a healthcare provider may very well expect to be contacted about his health and treatment. But if the form explicitly states that the provided information will be used for payment and billing, the patient has the same reason to expect collection calls as a retail consumer. Though Mais might prefer a different rule, the FCC in no way indicated that its 2008 order distinguishes medical debtors. Florida United, which sought payment for medical services performed for Mais, qualifies as creditor under the 2008 FCC Ruling.

The lesson here is the type of debt does not matter under the 2008 FCC Ruling -- credit card, auto, medical, etc. The Ruling, just like in most case law contexts, gives us concepts that are then adapted to a specific situation. The plaintiff made another argument that the court dealt with as follows:

Mais also suggests that the 2008 FCC Ruling does not affect his claim because he did not "provide" his number to "the creditor" — neither he nor his wife personally transferred his cell phone number to Florida United or its collection agent, Gulf Coast. After all, his wife submitted the admissions forms and the cell phone number to a representative of the Hospital, an entity separate from Florida United and Gulf Coast, and the 2008 FCC Ruling "emphasize[d] that prior express consent is deemed to be granted only if the wireless number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed." 23 FCC Rcd. at 564-65 (emphasis added). Boiled down, Mois's argument turns on whether, under the FCC's interpretation of prior express consent, a called party "provides" his cell phone number to a creditor when (during the transaction creating the debt) he authorizes an intermediary to disclose his number to the creditor for debt collection.

This is interesting and it is not something that is explained in the 2008 Ruling. Notice how the court handles this:

The 2008 FCC Ruling does not offer an explicit answer to this question because it does not spell out in detail the meaning of "provide." Based on the regulatory and statutory context, however, we reject Mais's argument that the 2008 FCC Ruling only applies when a cell phone number is given directly to the creditor. Mais's narrow reading of the 2008 FCC Ruling would find prior express consent when a debtor personally delivered a form with his cell phone number to a creditor in connection with a debt, but not when the debtor filled out a nearly identical form that authorized another party to give the number to the creditor. Mais offers no functional distinction between these two scenarios, and we see no sign that the FCC thought a cell phone number could be "provided to the creditor" only through direct delivery. To the contrary, the 2008 FCC Ruling indicated that prior express consent existed when a cell phone subscriber "made the number available to the creditor regarding the debt." 23 FCC Rcd. at 567. Plainly, Mais's wife made his number available to Florida United by granting the Hospital permission to disclose it in connection with billing and payment.

In addition, the FCC recently ruled "that the TCPA does not prohibit a caller from obtaining consent through an intermediary." In re GroupMe, Inc./Skype Commc'ns S.A.R.L. Petition, 29 FCC Rcd. 3442, 3447 (2014). A provider of text messaging services asked the Commission to "clarify that for non-telemarketing voice calls or text messages to wireless numbers . . . the caller can rely on a representation from an intermediary that they have obtained the requisite consent from the consumer." Id. at 3444. The FCC after notice and comment issued a Declaratory Ruling that found "the TCPA is ambiguous as to how a consumer's consent to receive an autodialed or prerecorded non-emergency call should be obtained." Id. Exercising its interpretive discretion, the FCC explained that "allowing consent to be obtained and conveyed via intermediaries in this context facilitates these normal, expected, and desired business communications in a manner that preserves the intended protections of the TCPA." Id. at 3445. Of particular note here, the FCC said that, though the 2008 FCC Ruling "did not formally address the legal question of whether consent can be obtained and conveyed via an intermediary," the earlier order "did make clear that consent to be called at a number in conjunction with a transaction extends to a wide range of calls `regarding' that transaction, even in at least some cases where the calls were made by a third party." Id. at 3446. The FCC's recognition of "consent obtained and conveyed by an intermediary," id., strongly supports our conclusion that Mais's wife "provided" the cell phone number to the creditor through the Hospital.

Other FCC explications of the prior express consent exception also show that the appropriate analysis turns on whether the called party granted permission or authorization, not on whether the creditor received the number directly. See 2012 FCC Order, 27 FCC Rcd. at 1839 ("[R]equiring prior written consent will better protect consumer privacy because such consent requires conspicuous action by the consumer — providing permission in writing — to authorize autodialed or prerecorded telemarketing calls . . . ."); 1992 FCC Order, 7 FCC Rcd. at 8769 ("[P]ersons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary."). This conclusion is consistent with the legislative history: the House and Senate Reports explain that the TCPA imposes liability for calls made without the called party's "prior express invitation or permission." H.R. Rep. No. 102-317, at 2, 3, 13; S. Rep. No. 102-177, at 16 (1991). Thus, under the 2008 FCC Ruling a cell phone subscriber like Mais could provide his number to a creditor like Florida United — and grant prior express consent to receive autodialed or prerecorded calls — by affirmatively giving an intermediary like the Hospital permission to transfer the number to Florida United for use in billing.

This is a common sense approach. Sometimes we see companies try to make "consent" so broad that it loses all meaning. "Any number you have now or will in the future can be given to any company that we choose and you agree to never revoke consent."

Things like this are absurd. But in the Mais case the court found the "intermediary" was a reasonable business practice -- no evidence it was any company trying to get "too cute" to shield unrelated companies from TCPA liability.

Mais points out that the FCC concluded in its 2008 Ruling that "prior express consent provided to a particular creditor will not entitle that creditor (or third party collector) to call a consumer's wireless number on behalf of other creditors, including on behalf of affiliated entities." 23 FCC Rcd. at 565 n.38. Here, however, the Hospital did not call Mais on behalf of Florida United. Nor did the Hospital give Mais's number to a debt collector to make unauthorized calls on behalf of other creditors. Instead, with explicit permission from Mais's wife, the Hospital passed his cell phone number to Florida United, the creditor who provided radiology services to Mais during his hospitalization. Because Mais's wife specifically authorized that transfer of health information for billing purposes, "the wireless number was provided by the consumer to the creditor" in satisfaction of the prior express consent exception. Id. at 564.

Bottom line is consent can be passed to other companies if it is done in a reasonable way that is fully disclosed.

Also, while it is not expressly discussed in detail, the wife gave the husband's cell phone number when he presumably could not as he was admitted to the ER. No evidence he disapproved of this or revoked consent. This was not a spouse stealing an identity to get a cell phone, credit card, etc. This was one spouse taking another into an emergency room. It is unclear from Mais what the result would be if the wife, for example, for her own treatment listed her husband's cell phone number.

But at least in this situation, it was proper consent.

If you have questions about the TCPA and you live in Alabama, give us a call at 205-879-2447 or you can learn more about the TCPA on this blog or on our main consumer protection website.