Everyone agrees that a consumer plaintiff who prevails in a Fair Debt Collection Practices Act lawsuit is entitled to get his or her attorney fees and costs paid by the debt collector defendant. But in Marx v. General Revenue Corporation, the question is whether, under the Federal Rules of Civil Procedure, a debt collector can collect costs from an unsuccessful plaintiff. In other words, does the FDCPA apply, or do the rules of civil procedure?
This is a Really Big Deal, because if debt collectors can collect costs from unsuccessful plaintiffs, it will make it riskier to sue debt collectors. Quite apart from the law, the whole point of the FDCPA is to provide a formidable check on debt collection abuses. Damages in these cases are small, so if they cannot recover attorney fees and costs — or if they risk having to pay substantial costs — they will not sue.
If you want people to be able to stop debt collection abuses, then you cannot increase the risk. Doing so will render the FDCPA far less effective as a check on debt collection abuses. If you think consumers and consumer lawyers are running amok, then I suppose you favor the debt collector’s position.
Read Argument preview: Court considers litigation expenses in debt-collection disputes on SCOTUSblog. (Thanks, Graham!)
Tomorrow, the Minnesota House of Representatives will consider two “tort reform” bills that would eviscerate Minnesota’s consumer protection statutes and set up road blocks to discourage class actions. The first bill is former Senator Linda Scheid’s stupid, anti-consumer bill, sponsored in the House by representatives Pat Mazorol (R), Denise Dittrich (D), Bev Scalze (D), Keith Downey (R), and Sandra Peterson (D). The bill will effectively remove attorney fees from consumer protection statutes—i.e., the main reason why consumer lawyers are able to take such cases in the first place.
The second grants defendants an interlocutory appeal from any class certification decision. This would add approximately two years to every class action, giving defendants a powerful new way to delay the proceedings and lose more paperwork.
If you are in Minnesota, please call your representative and ask him or her to oppose these bills.
This past week, Minnesota Senator Linda Scheid resurrected a stupid, anti-consumer bill she also co-sponsored two years ago. I had hoped we saw the last of the bill when Representative Thissen pulled his support two years ago, but Senator Scheid seems determined to see it done.
Keep Reading »
Last week I wrote about the various ways that consumers can afford a foreclosure defense attorney. New York has passed a law allowing consumers to recoup attorney fees and at least one attorney in Florida is allowing clients, under certain conditions, to take a mortgage with his firm.
That practice might be short lived—he is now under investigation by the Florida bar.
Even before a number of big banks stopped foreclosure proceedings because of issues with robo-signers, consumers with money were fighting foreclosures across the nation. New York recently passed a law (effective next year) that allows consumers to recoup their attorney fees if they fight a foreclosure and win.
Not every state has a similar law, however. As a result, some consumers are agreeing to a new mortgages with their foreclosure attorneys.
North Star Capital Acquisition, a Minnesota debt buyer, threatened one of my clients, called him repeatedly, and used profanity in several of the phone calls. For example: “You can do anything you f**cking want, but we are going to get this money from you one way or another.”
Shortly after we filed the Fair Debt Collection Practices Act lawsuit, North Star offered to settle for statutory damages, plus attorney fees and costs. Interestingly, North Star offered $500 as a “default” for attorney fees and costs. I find this amusing, since North Star’s law firm, Messerli & Kramer, regularly demands well over $1,000 in attorney fees for collection lawsuits it drafts by the hundreds. (North Star paid our actual fees in the end.)
Here are some of the key allegations from the lawsuit:
Minnesota debt buyer and collector Debt Equities, LLC, must pay nearly $32,000 to resolve a Fair Debt Collection Practices Act lawsuit in Minnesota. Earlier this year, Debt Equities offered judgment for $15,000 (PDF). Just today, Magistrate Judge Keyes ordered Debt Equities to pay an additional $16,700.42 as attorney fees and costs (PDF).
Judge Keyes also said some very nice things about me:
Mr. Glover is obviously a skilled practitioner in the field of consumer law and has developed an excellent reputation in his field . . . .
Debt Equities, LLC, ordered to pay nearly $32,000 under the FDCPA | consumerlawyer.mn
Michelle Lore at Minnesota Lawyer picked up on my post about Minnesota DFL’ers out to eviscerate consumer protection laws. She included quotes from several Minnesota attorneys, who point out that in addition to being a dumb idea, the bill attacks the idea of a “private attorney general.”
These statutes further the “private attorney general principle,” according to Cummins. “The attorney general … can’t bring all the cases that need to be brought to ensure that the law is completely and comprehensively respected. So the private bar needs to be involved in helping with law enforcement.”
An example, according to consumer law attorney Samuel Glover, is a tenant who is unlawfully locked out of his or her home. While the landlord is liable for $500 under Minn. Stat. sec. 504B.231, many tenants can’t afford to pay a lawyer to recover the money, and lawyers can’t afford to work on a contingency fee in such a case.
The Legislature, wanting to ensure that tenants could actually sue their landlords for locking them out, decided to make the landlord pay the tenant’s lawyer, Glover explained.
“This makes a small damages award into a meaningful consumer protection law,” he wrote on caveatemptorblog.com shortly after the bills were introduced. “The tenant can bring the case with a lawyer’s help, and the landlord has a strong incentive to pay up for clear violations.”
Attorney fees under fire | Minnesota Lawyer
I met with Paul Thissen last Sunday, and he assured me that after doing further research into the bill he sponsored, he changed his mind and withdrew the bill. It is dead.
Minnesota DFL’ers are inexplicably out to eviscerate Minnesota consumer protection laws. Representative Paul Thissen (DFL), Representative Dave Olin (DFL), and Senator Linda Scheid (DFL) have teamed up on HR 1410, a bill that would require judges to “take into consideration the reasonableness of the attorney fees sought in relation to the amount of damages awarded to the prevailing party.”
Maybe that sounds innocent, or even logical, on its face. If the damages awarded to the prevailing party are small, shouldn’t the attorney fees be small, as well?
Sure, if you want all laws with small damages provisions (i.e., most consumer protection laws on the books) to be virtually meaningless.
If enacted, HR 1410 would result in a drastic increase in wasted court time, attorney resources, and dissuade Minnesota citizens from seeking redress when their rights are violated. And hey, what better time to water down consumer protection laws than during an economic recession caused, in part, by lax enforcement of weak consumer protection laws?
I was in court this morning, and showed up early, as usual. The hearing before mine was for attorney fees incurred in collecting a debt. The debt collection law firm was Messerli & Kramer, famous for its “unlawful and bad faith tactics.” The debtor represented himself, and actually did a fair job, although he kept wandering off the point. The judge actually grilled the Messerli & Kramer attorney on the fees generated, which was nice to see. Apparently, they only billed about .3 hours of attorney time. The other three hours or so were all billed by paralegals, including one hour for drafting the complaint. Now, there are complaints and then there are complaints. Messerli & Kramer’s debt collection complaint is a form that requires only the debtor’s name, the amount of the debt, and an account number to complete. The judge was–properly, I think–surprised at the billing time.
I was happy to see Messerli & Kramer getting grilled on their time. Debt collection law firms usually throw attorney fees into their complaints, but that doesn’t mean they are entitled to the full amount.