“I’m strong to the fin-ich. Cause I eats me spin-ach. I’m Popeye the . . . debt collector man?”

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

For lawyers, debt collection can be a trap for the unwary. The Fair Debt Collection Practices Act ("FDCPA") governs debt collection by both attorneys and non-attorneys. It generally prohibits debt collectors from using deceptive, abusive, or unfair practices to collect debts. While that sounds straightforward, it is often difficult to figure out whether you are even a debt collector governed by the FDCPA, much less whether what you are trying to collect is a debt under the FDCPA and whether what you are doing to collect that debt is deceptive. And the consequences for running afoul of the FDCPA — statutory damages and attorney's fees — can be significant.

A recent decision from the U.S. Court of Appeals for the Third Circuit, Tepper v. Amos Financial, LLC, offered a good primer on one of these tricky issues — whether a party that buys debt and seeks to collect that debt for its own account qualifies as a debt collector under the FDCPA — but the more interesting aspect of the opinion is the court's frequent references to Popeye (the sailor man, not the fast food restaurant).

The opinion began: "Many would gladly pay Tuesday for a hamburger today." This, of course, is a reference to Wimpy's famous tag-line in Popeye. The court then described the basic purpose of the FDCPA and introduced the issue in the case as follows:

The Act does not apply . . . to all entities who collect debts; only those whose principal purpose is the collection of any debts, and those who regularly collect debts owed another are subject to its proscriptions. Those entities whose principal place business is to collect the defaulted debts they purchase seek to avoid the Act's reach. We believe such an entity is what it is – a debt collector. [Emphasis added.] If so, the Act applies.

Understandably, the court was not willing to go so far as have the defendant declare "I yam what I yam, and that's all that i yam," but you get the point. Popeye references continued throughout the opinion, so keep reading.

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Game Over! Video Game Legend’s Lawsuit Against Cartoon Network Dismissed

When I was a kid, cartoons and video games were far simpler than they are now. We watched Tom and Jerry and played Donkey Kong. The cartoons my kids watch today are often bizarre and the video games they play are way too complicated. A recent lawsuit in federal court, Mitchell v. The Cartoon Network, brought the old and new together, however, as a man who once held world records in Pac Man and Donkey Kong sued because his likeness was allegedly misappropriated in one of those new cartoons my kids like, "The Regular Show." (Incidentally, before you think I am just turning into a curmudgeonly old man, check out "The Regular Show" some time. It is hardly "regular".)

Plaintiff in Mitchell was a "well-known figure in the video gaming community." In addition to holding world records in both Pac Man and Donkey Kong at various times, he also competed in international gaming competitions, and even had his own trading card. But, he is perhaps most famous for his role in a documentary called "The King of Kong: A Fistful of Quarters," which "chronicles another gamer's attempt to surpass Plaintiff's world record for the game Donkey Kong." The district court described plaintiff's appearance in that film as follows:

In the film, Plaintiff is portrayed as succesful but arrogant, beloved by fans, and at times, willing to do whatever it takes to maintain his world record. In particular, the film shows Plaintiff attempting to maintain his world record by questioning his opponent's equipment and the authenticity of his opponent's submission of a filmed high score.

Plaintiff claims that defendants misappropriated his image for use in several episodes of "The Regular Show," which the district court noted is a show that "revolves around the adventures of two anthropomorphic animals, a blue jay named Mordecai and a raccoon named Rigby." One episode in the series included a villain named Garrett Bobby Ferguson, who appeared as a "giant floating head from outer space, with long black hair and a black beard, but no body." In the episode, Mordecai and Rigby are trying to break Ferguson's world record in a game called Broken Bonez that they play at their local coffee shop. (Yes, kids, we used to have to leave the house to play our favorite video games.) After they break the world record, the disembodied Ferguson appears to brag that he still holds the "universe record." Mordecai and Rigby then challenge Ferguson to play for that record. They almost beat his record, but then "throw the match when [Ferguson] begs them to let him win, claiming that he [ ] devoted his entire life to the game, that he played so much his wife left him, and that the universe record is all he has." After Mordecai and Rigby lose, however, Ferguson reveals that he was lying about it all. Mordecai and Rigby then go back and beat Ferguson's "universe record," at which point, the "enraged [Ferguson] explodes into goo." (When asked at breakfast if they ever saw this episode, two of my kids said they had, and they loved it.)

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Bank Has No Duty To Report Suspected Scam Perpetrated On Customer

by: Peter J. Gallagher (@pjsgallagher)

Does a bank have a duty to tell authorities that it believes one of the bank's customers is the victim of a scam? In a recent decision — Lucca v. Wells Fargo Bank, N.A. — the Law Division held that banks can report suspected scams (and will generally be shielded from liability against the customer suspected of being scammed if they do) but are not required to do so.

In Lucca, plaintiff made approximately 27 wire transfers totaling roughly $330,000, most of which were sent to Costa Rica to recipients that plaintiff did not know and never met. She did so at the direction of an individual who called her, identified himself as a lawyer, told her that he had a way for her to win some money, and provided her with information about the wire transfers that were part of the alleged money winning proposition. Plaintiff sued her bank and the individual at the bank with whom she interacted in connection with the wire transfers, claiming, among other things, that the bank acted in bad faith when it failed to "disclose the wire transfers to the appropriate authorities." The trial court held a two-day bench trial on this claim and dismissed this claim.

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A Rare Narrowing Of The Consumer Fraud Act’s Scope: Medical Malpractice Insurance Not Covered

by: Peter J. Gallagher (@pjsgallagher)

It is not every day that a New Jersey court limits the scope of the New Jersey Consumer Fraud Act (“CFA”), so when one does, it is worth writing about. Anyone who litigates in New Jersey knows about the CFA and, depending on whether you are on the plaintiff’s side or the defendant’s side, either loves it or hates it. (I am mostly on the defendant’s side, but occasionally find myself representing a plaintiff, so my relationship with the CFA is “complicated.”) Because it is remedial legislation, the CFA is liberally construed to afford the greatest protection to consumers. This philosophy has led courts to apply the CFA (and its treble damages and prevailing party’s attorney fees) to a seemingly ever growing, and very rarely contracting, variety of disputes. In fact, many years ago, the New Jersey Supreme Court observed that: “The history of the Act is one of constant expansion of consumer protection.”

With this in mind, we turn to the Law Division’s published decision in Khan v. Conventus Inter-Insurance Exchange. That case was a putative class action in which plaintiff, a doctor, alleged that defendant violated the CFA in connection with the sale of medical malpractice insurance and the administration of the policy after it was purchased. Plaintiff purchased a policy from defendant and, as part of her initial membership, was required to make a one-time contribution, equal to the first year’s premium, to defendant’s surplus fund. (Defendant is not a traditional insurance carrier, but is instead a “non-profit physician member-owned risk sharing exchange.”) Plaintiff elected to make this contribution in installments over a ten-month period, with the understanding that if she cancelled her policy before the final payment was made, she would still be responsible for the full surplus fund contribution. Plaintiff eventually cancelled her policy before the ten-month period passed and defendant demanded that she immediately pay her entire surplus fund contribution rather than allowing her to pay it off in installments as originally agreed upon by the parties. Plaintiff sued alleging that this attempt to accelerate the surplus fund payment was a breach of contract and a violation of the CFA. She sought to bring her claims as a class action.

Before addressing whether plaintiff could sustain a class action and be appointed class representative, the court first had to decide whether the CFA applied to “transactions involving the purchase and sale of medical malpractice insurance.” Because the court held that it did not, it never had to reach the class certification issues.

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Appellate Division to Foreclosing Lenders: “Do Less” Because If You Do More You Might Make Yourself Liable For Damages

by: Peter J. Gallagher (@pjsgallagher)

There is a scene in the movie "Forgetting Sarah Marshall" where the main character goes to a surf instructor to teach him how to surf. The lesson is not that helpful because, among other things, the instructor gives the main character advice that is impossible to follow, like: "Don't do anything. Don't try to surf. Don't do it. The less you do the more you do." And, then later: "try less" and "do less."

I was reminded of this decision when I read the Appellate Division's recent opinion in McRoy v. Eskander. In that case, the Appellate Division held that a lender was not a mortgagee in possession and therefore could not be liable for injuries sustained by someone who slipped and fell on the sidewalk in front of the property. The reason the lender could not be deemed a mortgagee in possession was because it had done almost nothing to maintain the property in the 18 months after it obtained a final judgment of foreclosure.

In McRoy, plaintiff slipped and fell on snow and ice in front of a four-unit apartment building that was owned by Defendant Eskander. At the time of plaintiff's fall, however, the building had been vacant for approximately 18 months. Eskander had defaulted on his loan with Bank of America ("BofA"), which led BofA to foreclose on its mortgage on the property. BofA obtained final judgment of foreclosure but had not proceeded to a sheriff's sale at the time of plaintiff's fall. Once final judgment of foreclosure was entered, Eskander stopped maintaining the property. Except for performing yard work once, BofA did not maintain the property either. It did periodically inspect the property to ensure it was vacant and, to protect its collateral, it paid the real estate taxes and a water bill.

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