Supreme Court: Party That Buys Defaulted Debt Not A “Debt Collector” Under The Fair Debt Collection Practices Act

by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Debt collection (pd)In Henson v. Santander Consumer USA Inc., Justice Gorsuch delivered his first opinion for the Supreme Court, and in doing so, provided an interesting opinion on a relatively boring issue, and subconsciously (I assume) invoked the movie Repo Man, a classic (?) mid-1980's movie starring Emilio Estevez and Harry Dean Stanton, which the website, imdb.com, summarized as follows: "Young punk Otto [Estevez] becomes a repo man after helping to steal a car, and stumbles into a world of wackiness as a result."

Neither the facts nor the law in Henson were wacky. Plaintiffs took out loans from CitiFinancial Auto to buy cars, but later defaulted on those loans. Defendant purchased the defaulted loans and sought to collect the debt from plaintiffs in ways that plaintiffs claimed violated the Fair Debt Collection Practices Act. The Act, which was designed to curtail "[d]isruptive dinnertime calls, downright deceit and more besides" authorizes private lawsuits and "weighty fines" for anyone who engages in "wayward collection practices." But, it only applies to "debt collectors," a term that is defined to include anyone who "regularly collects or attempts to collect . . . debts owed or due . . . another." The question in Henson was whether a party who purchases debts originated by someone else and then seeks to collect those debts for its own account qualifies as a debt collector." Justice Gorsuch framed the issue as follows:

Everyone agrees that the term ["debt collector"] embraces the repo man – someone hired by a creditor to collect an outstanding debt. What if you purchase a debt and then try to collect it for yourself – does that make you a "debt collector" too? That 's the nub of the dispute now before us.  

The district court and the U.S. Court of Appeals for the Fourth Circuit sided with defendant, holding that a party that buys defaulted debt and collects it for its own account is not a "debt collector." In doing so, however, the Fourth Circuit acknowledged that other circuit courts had come to the opposite conclusion. The U.S. Supreme Court took the case to clear up this split. 

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Party Cannot Lose Its Right To Jury Trial For Violating Procedural Rules

by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Jury (pd)It is not often that a case that starts in the Special Civil Part — New Jersey's small-claims court — ends up before the New Jersey Supreme Court. But this is exactly what happened in Williams v. American Auto Logistics. It could not have been cost effective for the plaintiff to see this case through two separate bench trials, two separate appeals to the Appellate Division, and finally an appeal to the Supreme Court. But the issue in the case was so important that, notwithstanding the costs, the effort was likely worthwhile.

In Williams, plaintiff had his car shipped from Alaska to New Jersey by defendant. After he picked up the car, he discovered water damage in the trunk. Plaintiff sued in the Special Civil Part after efforts to amicably resolve the dispute failed. Plaintiff did not demand a jury trial in his complaint, but defendant did in its answer. At the pretrial conference, the trial court referred the parties to mediation, which was unsuccessful. Upon returning from mediation, defendant waived its jury demand. Plaintiff objected, but the trial court granted defendant's request. In support of its decision, the trial court noted that plaintiff had violated Rule 4:25-7 by failing to make the requisite pretrial submissions. (Among other things, Rule 4:25-7 requires parties to submit proposed voir dire questions, jury instructions, and jury verdict forms.) The trial court held that it could deny plaintiff's request for a jury trial as a sanction for this failure. Therefore, the case proceeded to a bench trial, where the trial court found no merit to plaintiff's claims.

Plaintiff appealed and the Appellate Division reversed and remanded. It held that a jury demand can only be withdrawn by consent, even when only one party demanded a jury trial and that party seeks to withdraw the demand. It further explained that "a trial judge may impose sanctions, including striking the jury demand, on a party that fails to submit the requisite pretrial information," but that the trial court in Williams erred by "allowing a single party to unilaterally waive the jury demand."

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As If You Needed Reminding: Don’t Violate Protective Orders!

by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Gavel (pd)The Appellate Division recently reminded all lawyers of the importance of complying with protective orders. In Rotondi v. Dibre Auto Group, LLC, the Appellate Division affirmed a trial court's decision to disqualify plaintiff's counsel from continuing to represent plaintiff because she violated such an order.

In Rotondi, plaintiff purchased a new car from defendant car dealership. One year later, she attempted to refinance the car with the dealer, but ended up filing a class action lawsuit against the dealer and various other entities involved in the refinancing for alleged improprieties in the refinancing process. She alleged violations of the New Jersey Consumer Fraud Act and various other statutory and common law causes of action. Although filed as a putative class action, plaintiff's attempt to certify the class were eventually denied and the case, in the words of the trial court, "ultimately became simply a claim by [plaintiff] against the dealer."

As part of that lawsuit, the trial court entered a protective order that allowed the parties to designate materials as "Confidential" or "Attorneys' Eyes Only." Under the order, documents designated as "Confidential" could only be used by the "receiving party for purposes of the prosecution or defense of [the] action," and could not be used "by the receiving party for any business, commercial, competitive, or other purpose." Documents designated as "Attorneys' Eyes Only" could only be "disclosed [ ] to outside counsel for the receiving party and to such other persons as counsel for the producing party agrees in advance or as ordered by the court."

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“Warriors . . . come out to playyyyyy” (or “What Are The Insurance Implications Of Driving Your Mom’s Car To A Street Fight?”)

 by:  Peter J. Gallagher (@pjsgallagher)

 

One of the most ridiculously entertaining movies of the late-1970’s/early-1980’s was “The Warriors.” You need to watch it to fully appreciate how ridiculous and entertaining it was but it involves a running battle between street gangs through a post-apocalyptic-looking New York City. (To give just a glimpse of how ridiculous it was, the members of one of the gangs, the “Hi Hats,” were dressed like mimes.) The quote in the title of this post is one of the two most well-known lines from the movie (bonus points if you know the other one, answer below).

I was reminded of “The Warriors” when I read the opening sentences of the Appellate Division’s recent decision in Cannon v. Palisades Insurance Company:

“This case involves a street fight between two groups of combatants, some of whom were employed as telemarketers with two local companies. Not surprisingly, the challenge to fight, the acceptance of that challenge, and negotiations over the combat site were all done telephonically.”

A gang of telemarketers could have easily fit into “The Warriors.” Regardless, with an opening sentence like that, I had to read the rest of the opinion. Ultimately, the facts of Cannon are unique and not likely to be useful to you in any future matter. But, that doesn't mean you should not read on, and read the decision yourself if you have the time.

 

Continue reading ““Warriors . . . come out to playyyyyy” (or “What Are The Insurance Implications Of Driving Your Mom’s Car To A Street Fight?”)”