Justia Legal Ethics Opinion Summaries

The Orlans law firm, sent a letter on law-firm letterhead, stating that Wells Fargo had referred the Garland loan to Orlans for foreclosure but that “[w]hile the foreclosure process ha[d] begun,” “foreclosure prevention alternatives” might still be available if Garland contacted Wells Fargo. The letter explained how to contact Wells Fargo “to attempt to be reviewed for possible alternatives,” the signature was typed and said, “Orlans PC.”Garland says that the letter confused him because he was unsure if it was from an attorney and “raised [his] anxiety” by suggesting “that an attorney may have conducted an independent investigation and substantive legal review ... such that his prospects for avoiding foreclosure were diminished.” Garland alleges that Orlans sent a form of this letter to thousands of homeowners, without a meaningful review of the homeowners’ foreclosure files, so the communications deceptively implied they were from an attorney. The Fair Debt Collection Practices Act (FDCPA) prohibits misleading debt-collection communications that falsely imply they are from an attorney.The Sixth Circuit affirmed the dismissal of the purported class action for lack of jurisdiction. Garland lacks standing. That a statute purports to create a cause of action does not alone create standing. A plaintiff asserting a procedural claim must have suffered a concrete injury; bare allegations of confusion and anxiety do not qualify. Whether from an attorney or not, the letter said nothing implying Garland’s chance of avoiding foreclosure was “diminished.” View "Garland v. Orlans, PC" on Justia Law

Reck purchased a new car manufactured by FCA, experienced frequent issues with the vehicle, and unsuccessfully requested its repurchase. Reck sued under the Song-Beverly Consumer Warranty Act, Civ. Code, 1790 After discovery, FCA served Reck with a second Civil Code section 998 offer, proposing to settle the matter for $81,000 plus costs, expenses, and attorney fees. Their counsel, Knight, had incurred $15,000 in legal fees. The Recks rejected the offer. Two days after trial commenced, the case settled for $89,500 plus fees and costs to be determined separately.Counsel sought attorney fees under section 1794(d): $46,487.50 in services provided by Knight and $78,344 in legal services provided by Century Law. FCA objected, arguing that the Recks incurred approximately $100,000 in attorney fees between April 2018, when the $81,000 settlement offer was refused, and August 2018, when they agreed to settle; that adding a second law firm to try the case resulted in unnecessary duplication of effort; and that three of their motions had been denied or withdrawn. The trial court found the case “not particularly complex” and awarded $20,158 in attorney fees with a requested .5 multiplier, finding that the $8,500 difference did not justify an award of fees for any hours spent preparing for trial.The court of appeal reversed. The Song-Beverly Act mandates the recovery of reasonable attorney fees to a prevailing plaintiff based upon “actual time expended.” The trial court did not undertake a lodestar analysis of fees reasonably incurred following the rejection of the settlement offer. In the context of public interest litigation with a mandatory fee-shifting statute, it is an error of law for the court to categorically deny or reduce an attorney fee award on the basis of a plaintiff’s failure to settle when the ultimate recovery exceeds the section 998 settlement offer. View "Reck v. FCA US LLC" on Justia Law

The Fifth Circuit held that a private settlement does not constitute a "successful action to enforce . . . liability" under the fee-shifting provision of the Fair Debt Collection Practices Act (FDCPA). The court affirmed the district court's denial of attorney's fees in this case, concluding that the district court did not commit reversible error in refusing plaintiff's fee application under the FDCPA. The court explained that a "successful action to enforce the foregoing liability" means a lawsuit that generates a favorable end result compelling accountability and legal compliance with a formal command or decree under the FDCPA. In this case, plaintiff settled before his lawsuit reached any end result, let alone a favorable one. Furthermore, by settling, Portfolio Recovery avoided a formal legal command or decree from plaintiff's lawsuit. The court stated that plaintiff's alternative interpretation requires rewriting the FDCPA's fee-shifting provision.The court also concluded that, at most, plaintiff's FDCPA suit was the catalyst that spurred Portfolio Recovery to settle. Therefore, the catalyst theory does not make plaintiff's action a successful one under 15 U.S.C. 1692k(a)(3) and thus plaintiff is not entitled to fees. View "Tejero v. Portfolio Recovery Associates, LLC" on Justia Law

Plaintiffs filed suit against Lexington Law and its vendor, Progrexion, for purportedly perpetrating a fraud in which the firm failed to disclose that it was sending letters to the companies in its clients' names and on their behalves. After a jury agreed that defendants violated Texas law in committing fraud and fraud by non-disclosure, the district court set aside the verdict and issued judgment in favor of defendants as a matter of law.The Fifth Circuit affirmed, concluding that plaintiffs have not shown that defendants committed fraud. In this case, the district court concluded that defendants did not make any false representations (material or otherwise) when signing and sending the dispute letters because Lexington Law had the legal right to sign its clients' names on the correspondence it sent on their behalf to data furnishers who reported inaccurate information about the clients' credit. Furthermore, Progrexion cannot be liable for fraud since it, like Lexington Law, did not make any material misrepresentations. The court also concluded that plaintiffs' fraud by non-disclosure claim must be dismissed because they did not justifiably rely on any failure of defendants to disclose material facts, and plaintiffs have not shown that defendants had a duty to disclose that they were the ones actually sending the dispute letters. Additionally, plaintiffs have not shown that Progrexion disclosed any facts—material or otherwise—and so cannot be liable for fraud by nondisclosure. The court explained that the fact that Lexington Law had the legal right to send dispute letters on their clients behalves and in their names suggests that the firm did not make any false representations, and thus the firm did not create any false impressions requiring disclosure. Finally, plaintiffs waived their conspiracy claim by failing to move for judgment as a matter of law on the claim before and after the case was submitted to the jury or for a new trial. View "The CBE Group, Inc. v. Lexington Law Firm" on Justia Law

Birmingham law firm Campbell Law, P.C., represented consumers in legal proceedings against pest-control companies, including The Terminix International Co., LP, and Terminix International, Inc. (collectively referred to as "Terminix"). After Campbell Law initiated arbitration proceedings against Terminix and Matthew Cunningham, a Terminix branch manager, on behalf of owners in the Bay Forest condominium complex ("Bay Forest") in Daphne, Terminix and Cunningham asked the circuit court to disqualify Campbell Law from the proceedings because it had retained a former manager of Terminix's Baldwin County office as an investigator and consultant. The trial court denied the motion to disqualify. Terminix and Cunningham petitioned the Alabama Supreme Court for a writ of mandamus, arguing that the Alabama Rules of Professional Conduct required Campbell Law's disqualification. In support of their petition, Terminix argued the investigator/consultant possessed privileged and confidential information related to disputes between Terminix and parties represented by the law firm, and that Campbell Law violated the Rules of Professional Conduct. The Supreme Court concluded the petitioners did not demonstrate Campbell Law violated the Rules, thus did not establish they had a clear legal right to mandamus relief. The petition was denied. View "Ex parte The Terminix International Co., LP, et al." on Justia Law

The underlying lawsuit arose from plaintiffs' claim that Ken's salad dressing labels were deceptive. In June 2017, plaintiffs served Ken's with their prelawsuit notice and demand to remove claims about olive oil from the labels on its salad dressings. In October 2017, a neutral case evaluator concluded that plaintiffs' claims likely had merit and that the False Advertising Law and Unfair Competition Law claims would likely be certified as a class. In November 2017, Ken's drafted a PowerPoint presentation that described plaintiff's claims, proposed label changes, and thereafter revised its salad dressing labels and finalized the changes in 2018.The Court of Appeal affirmed the trial court's order granting plaintiffs' motion for attorney fees. The court held that the trial court did not err by concluding that plaintiffs were "successful parties" where the sequence of events provides a reasonable basis for the trial court's conclusion that plaintiffs' lawsuit was a catalyst motivating Ken's to change the labels on its salad dressings. Furthermore, there was a reasonable basis for the trial court to conclude that injunctive relief was the primary relief sought. The court also held that the lawsuit was meritorious and that plaintiffs reasonably attempted to settle the matter short of litigation. Finally, the court rejected Ken's public policy argument. View "Skinner v. Ken's Foods, Inc." on Justia Law

Spikener purchased a car under a credit sales contract; the seller did not inform Spikener that the car had been in a major collision. Before Spikener learned about the collision, the contract was assigned to Ally. The Contract complied with the Holder Rule, 16 CFR 433.2, which requires consumer credit contracts to include a notice: “ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER.” Plaintiff sued Ally under the California Consumers Legal Remedies Act (CLRA).Ally agreed to rescind the contract and refund the amount Spikener had paid: $3,500. Spikener unsuccessfully sought $13,000 in attorney fees under CLRA’s fee-shifting provision. The court cited “Lafferty,” which held a debtor cannot recover damages and attorney fees for a Holder Rule claim that exceed the amount the debtor paid under the contract. The FTC construes the Holder Rule in the same manner. In response to Lafferty, Civil Code 1459.5, was enacted, providing that the Holder Rule’s limitation on recovery does not apply to attorney fees.The court of appeal affirmed. The FTC’s construction of the Rule is entitled to deference; to the extent section 1459.5 authorizes recovery of attorney fees on a Holder Rule claim even if that results in a total recovery greater than the amount the plaintiff paid under the contract, it conflicts with, and is preempted by, the Holder Rule. View "Spikener v. Ally Financial, Inc." on Justia Law

IMC mailed Peck, regarding a debt that Peck allegedly owed. The envelope's clear pane revealed a barcode containing Peck’s personal information. Peck sued IMC for violating the Fair Debt Collection Practices Act by revealing his personal information on the envelope and by failing to verify that Peck owed the debt after he disputed it. IMC made an offer of judgment of “$1,101, plus costs under Rule 68. Peck accepted. By email, Peck indicated he believed “costs” included damages under the Act. IMC explained that its offer accounted for $1,101 in statutory damages with interest, plus the costs typically recoverable by the prevailing party. The court ultimately entered judgment consistent with the Rule 68 offer and instructed Peck to file a bill of costs, limited to those contemplated by Federal Rule 54(d). Peck demanded $24,137.50 (reimbursement for the hundreds of hours he spent litigating) and $47,425.02 in punitive damages. Citing 28 U.S.C. 1920, the court denied his bill of costs and awarded $1,101.00.The Seventh Circuit affirmed, rejecting an argument that it lacked jurisdiction because the district court had not sufficiently articulated a rationale. The “costs” recoverable under Rule 54(d) include clerk and marshal fees; printed or electronically recorded transcripts; disbursements for printing and witnesses; fees for exemplification and making copies; docket fees; and compensation of court-appointed experts, interpreters, and for special interpretation services They do not include damages, nor the compensation Peck sought for his time and mailing expenses. View "Peck v. IMC Credit Services" on Justia Law

Mikhaeilpoor sued BMW and an auto dealership, asserting claims under the Song-Beverly Act (Civ. Code, 1790) stemming from her lease of a 2013 BMW. Mikhaeilpoor alleged that the defendants: failed to promptly replace her car or make restitution; failed to commence repairs aimed at conforming the car to its warranty; failed to make available adequate service and repair facilities; and breached express and implied warranties. A jury awarded $17,902.54 in compensatory damages and $17,902.54 in civil penalties. Mikhaeilpoor sought attorney fees of $344,639 under section 1794(d): $226,426, plus a 0.5 multiplier enhancement and $5,000 for the fee resolution process. Her motion was opposed as vastly overstating the work performed with excessive hourly rates and an unwarranted adjustment.The judge “went through all the bills” and was “aghast” that counsel sought $343,000 in fees for “a very simple case.” The court did not consider whether Mikhaeilpoor should have accepted a Code of Civil Procedure section 998 offer, but calculated 225 hours at a $350 hourly rate and found that $95,900 was the reasonable amount of attorney fees. The court of appeal affirmed. The trial court was in the best position to evaluate the professional services rendered before it; its decision is supported by substantial evidence. View "Mikhaeilpoor v. BMW of North America, LLC" on Justia Law

Reynolds purchased a Ford truck. Over the next six years, Reynolds had the truck repaired 15 times but it continued to malfunction. Ford denied Reynolds’s request that it buy back or replace the truck under the Song-Beverly Act. Reynolds filed suit, raising several claims, including one under the Song-Beverly Act. The parties settled for $277,500.00. Ford agreed to “pay [Reynolds’s ] attorney’s fees, costs, and expenses pursuant to Civil Code section 1794(d) in an amount determined by the Court ... to have been reasonably incurred by [Reynolds].” Reynolds sought fees of $308,696.25. Reynolds had retained counsel on a contingency fee basis.The court conducted a lodestar analysis and awarded $201,891--compensation for 457.85 hours at reasonable hourly rates ($225-500/hour), plus a lodestar multiplier of 1.2, “reasonable and appropriate" to the objectives of the Act. The court ruled Reynolds had no obligation to disclose the terms of the retainer agreement: “Many statutory fee-award provisions begin with the lodestar method but are governed by the specific statutory requirement that the final fee award be ‘reasonable’ in nature. No such requirement is found in the Song-Beverly Act. The fee award must be based on the court’s calculation of the ‘actual time expended ... determined by the court to have been reasonabl[y] incurred. ... The court does not have the discretion to consider whether plaintiff’s attorney received additional compensation by ... a separate retaine[r] agreement.The court of appeal affirmed. Ford's concern that it is improper for a court to disregard a potential contingency fee award in determining the statutory fee under section 1794 is a question “more appropriately directed to the Legislature.” View "Reynolds v. Ford Motor Co." on Justia Law