Justia Legal Ethics Opinion Summaries

The Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, targets “independent debt collectors,” but excludes in-house collectors, including “any officer or employee of . . . any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties.” In Ohio, consumer debts that remain uncollected by a state entity are “certified” to the Attorney General (OAG), which enlists “special counsel” as independent contractors for collections. Actions taken by special counsel are dictated by an agreement, which requires special counsel to comply with FDCPA standards. All collections must be endorsed to the OAG before special counsel is entitled to a fee. Special counsel were orally directed to use OAG letterhead for all collections (including consumer debts, although contrary to Ohio’s code). Plaintiffs filed suit, alleging violation of the FDCPA by use of OAG letterhead. The district court entered summary judgment, holding that special counsel are not “debt collectors” under the FDCPA, and that, even if they were, use of OAG letterhead was not a “false, deceptive or misleading” communication. The Sixth Circuit vacated. A jury could reasonably find that the use of the OAG letterhead by the “special counsel,” in the manner and under the circumstances present here, resulted in letters that were actually confusing to the least sophisticated consumer. View "Gillie v. Law Office of Eric A. Jones, LLC" on Justia Law

Kaymark defaulted on a mortgage held by Bank of America (BOA). On behalf of BOA, Udren Law Offices initiated foreclosure proceedings. The body of the Foreclosure Complaint listed not-yet-incurred fees as due and owing, which, Kaymark alleged, violated state and federal fair debt collection laws and breached the mortgage contract. The Third Circuit reversed dismissal of claims that the disputed fees constituted actionable misrepresentation under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, but affirmed dismissal of all other claims. By attempting to collect fees for legal services not yet performed in the mortgage foreclosure, Udren violated FDCPA section 1692e(2)(A), (5), and (10), which imposes strict liability on debt collectors who “use any false, deceptive, or misleading representation or means in connection with the collection of any debt,” and section 1692f(1) by attempting to collect “an[] amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” The court analogized to similar claims in a debt collection demand letter. View "Kaymark v. Bank of America NA" on Justia Law

Defendants manufacture vitamins and nutritional supplements, including glucosamine pills, designed to help people with joint disorders, such as osteoarthritis. Several class action suits were filed under the Class Action Fairness Act, 28 U.S.C. 1332(d)(2), claiming violations of states’ consumer protection laws by making false claims. Eight months later, class counsel negotiated a nationwide settlement that was approved with significant modifications. The settlement requires Rexall to pay $1.93 million in fees to class counsel, plus $179,676 in expenses, $1.5 million in notice and administration costs, $1.13 million to the Orthopedic Research and Education Foundation, $865,284 to the 30,245 class members who submitted claims, and $30,000 to the six named plaintiffs ($5,000 apiece) Class members, led by the Center for Class Action Fairness, objected. The Seventh Circuit reversed, characterizing the settlement as “a selfish deal between class counsel and the defendant.” While most consumers of glucosamine pills are elderly and bought the product in containers with labels that recite the misrepresentations, only one-fourth of one percent of them will receive even modest compensation; for a limited period the labels will be changed, in trivial respects. The court questioned: “for conferring these meager benefits class counsel should receive almost $2 million?” View "Pearson v. NBTY, Inc." on Justia Law

Haddad bought his condominium in 1991 and lived in the unit until 2005, when he began renting it out. In 2008, a law firm, representing the association, sent Haddad a notice of delinquency, stating that Haddad owed $803 in unpaid condominium assessments, $40 in late charges, and $55 in legal fees and costs. Haddad notified the firm that he disputed the amount demanded, that he had never missed a monthly dues payment, but that he had been “singled out and charged with various violations” by the management company. Correspondence continued for several months, with the amount owed increasing each month and Haddad contesting the charges. The law firm ultimately recorded a Notice of Lien, which was discharged about six months later. Haddad sued under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, and the Michigan Collection Practices Act, alleging use of a false, deceptive or misleading representation in the collection of a debt, and continuing collection of a disputed debt before verification of the debt. The district court rejected the claims on the ground that the debt was commercial because the unit was rented when collection began. The Sixth Circuit court reversed, holding that an obligation to pay assessments arose from the original purchase and constituted a “debt” under the FDCPA. On remand, the district court granted summary judgment, finding that the firm had properly verified the debt and that the collection efforts were not deceptive or misleading. The Sixth Circuit reversed and remanded, based on failure to properly verify the debt.View "Haddad v. Alexander, Zelmanski, Danner & Fioritto, PLLC" on Justia Law

McLaughlin had a mortgage. As a result of an error, the mortgage company believed that he was in default and referred the matter to a law firm, PHS, which sent McLaughlin a letter about the debt that he claims violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692 by referring to attorneys’ fees and costs that McLauglin claims had not yet been incurred. The district court dismissed certain claims because McLaughlin did not ask PHS to validate the debt before he filed suit. The Third Circuit reversed, concluding that he was not required to request validation. The court affirmed imposition of sanctions against PHS for its failure to produce certain documents during discovery. View "McLaughlin v. Phelan Hallinan & Schmieg, LLP" on Justia Law

Using FOIA requests directed to the South Carolina DMV, attorneys obtained names and addresses, then sent letters to more than 34,000 individuals, seeking clients for a lawsuit against car dealerships for violation of a state law. The letters were headed “ADVERTISING MATERIAL,” explained the lawsuit, and asked recipients to return an enclosed card to participate in the case. Recipients sued the attorneys, alleging violation of the Driver’s Privacy Protection Act of 1994 (DPPA), 18 U.S.C. 2721(b)(4), by obtaining, disclosing, and using personal information from motor vehicle records for bulk solicitation without express consent. The district court dismissed, based on a DPPA exception permitting disclosure of personal information "for use in connection with any civil, criminal, administrative, or arbitral proceeding," including "investigation in anticipation of litigation." The Fourth Circuit affirmed. The Supreme Court vacated and remanded. An attorney’s solicitation of clients is not a permissible purpose under the (b)(4) litigation exception. DPPA’s purpose of protecting privacy in motor vehicle records would be substantially undermined by application of the (b)(4) exception to the general ban on disclosure of personal information and ban on release of highly restricted personal information in cases there is any connection between protected information and a potential legal dispute. The Court noted examples of permissible litigation uses: service of process, investigation in anticipation of litigation, and execution or enforcement of judgments and orders. All involve an attorney’s conduct as an officer of the court, not a commercial actor, seeking a business transaction. A contrary reading of (b)(4) could affect interpretation of the (b)(6) exception, which allows an insurer and certain others to obtain DMV information for use in connection with underwriting, and the (b)(10) exception, which permits disclosure and use of personal information in connection with operation of private tollroads. View "Maracich v. Spears" on Justia Law

Plaintiff filed suit against defendant, an attorney, for an alleged violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692. At issue on appeal was whether a defendant remained liable for plaintiff's attorney's fees accrued after defendant offered a settlement that included the maximum available damages and, as mandated by statute, plaintiff's fees and costs, but that did not include an offer of judgment. The court concluded that because defendant's initial offer to settle did not include an offer of judgment, it did not fully resolve the dispute between the parties, and thus further litigation by plaintiff was not per se unreasonable; the district court did not abuse its discretion in awarding full attorney's fees to plaintiff; and, therefore, the court affirmed the judgment. View "Cabala v. Crowley" on Justia Law

The Thomas M. Cooley Law School, accredited by the ABA, enrolls more students than any other U.S. law school and plans to expand. Cooley charges full-time students tuition of $36,750 per year, exclusive of other costs, and, according to U.S. News & World Report, has the lowest admission standards of any accredited law school. The school has a very low retention rate. In a 66-page complaint, 12 graduates claimed that the school disseminated false employment statistics, upon which they relied as assurances that they would obtain full-time attorney jobs after graduating. The graduates did not obtain the kind of employment the statistics advertised; some found employment at all. They claimed that, had they known the truth, they would not have attended Cooley or would have paid less tuition, and sought, among other relief, partial tuition reimbursement, which they estimated for the class would be $300,000,000. The district court dismissed. The Sixth Circuit affirmed, reasoning that the Michigan Consumer Protection Act does not apply to the facts. The complaint shows that one of the statistics on which they relied was objectively true and reliance on the statistics, without further inquiry, was unreasonable. View "MacDonald v. Thomas M. Cooley Law School" on Justia Law

Using FOIA requests directed to the South Carolina DMV, attorneys obtained names and addresses, then sent letters to more than 34,000 individuals, seeking clients for a lawsuit against car dealerships for violation of a state law. The letters were headed “ADVERTISING MATERIAL,” explained the lawsuit, and asked recipients to return an enclosed card to participate in the case. Recipients sued the attorneys, alleging violation of the Driver’s Privacy Protection Act of 1994 (DPPA), 18 U.S.C. 2721(b)(4), by obtaining, disclosing, and using personal information from motor vehicle records for bulk solicitation without express consent. The district court dismissed, based on a DPPA exception permitting disclosure of personal information "for use in connection with any civil, criminal, administrative, or arbitral proceeding," including "investigation in anticipation of litigation." The Fourth Circuit affirmed. The Supreme Court vacated and remanded. An attorney’s solicitation of clients is not a permissible purpose under the (b)(4) litigation exception. DPPA’s purpose of protecting privacy in motor vehicle records would be substantially undermined by application of the (b)(4) exception to the general ban on disclosure of personal information and ban on release of highly restricted personal information in cases there is any connection between protected information and a potential legal dispute. The Court noted examples of permissible litigation uses: service of process, investigation in anticipation of litigation, and execution or enforcement of judgments and orders. All involve an attorney’s conduct as an officer of the court, not a commercial actor, seeking a business transaction. A contrary reading of (b)(4) could affect interpretation of the (b)(6) exception, which allows an insurer and certain others to obtain DMV information for use in connection with underwriting, and the (b)(10) exception, which permits disclosure and use of personal information in connection with operation of private tollroads. View "Maracich v. Spears" on Justia Law

Universal successfully defended a lawsuit brought by a group of cotton farmers in Arkansas state court for damages arising from off-target aerial application of the herbicide known as 2,4-D Amine. Universal then sued several aerial herbicide applicators (collectively, Crop Dusters) who were not parties to the cotton farmers' litigation, seeking to recover its attorney's fees incurred during the cotton farmers' litigation. Because the Crop Dusters owed no duty to Universal, the court affirmed the district court's dismissal of Universal's negligence claim. The court affirmed the dismissal of Universal's Arkansas Deceptive Trade Practices Act (ADTPA), Ark. Code Ann. 4-88-107(a), claim where the alleged conduct failed to fit within the scope of the unconscionable trade practices prohibited by the ADTPA. Because the Arkansas Supreme Court most recently has rejected any cause of action against a third party for attorney's fees incurred in earlier litigation against another party, and in this case there was no duty running from the third party to the plaintiff that would support such a cause of action in any event, the court affirmed the dismissal of Universal's claims based on the third-party-litigation exception to the American Rule and Restatement (Second) of Torts section 914(2). Accordingly, the court affirmed the district court's dismissal of Universal's complaint for failure to state a claim. View "Universal Cooperatives, Inc., et al v. AAC Flying Service, Inc., et al" on Justia Law