EDNY sanctions plaintiff’s lawyer under FDCPA, awards approximately $ 37,000 in fees / costs to debt collector
In the not too distant past, the FDCPA litigation was a lossless game for the plaintiff’s lawyer. This is no longer the case, thanks to a pioneering collection agency–ERC – which has taken a stand against the hypertechnical and baseless claims of the FDCPA, and lashed out at plaintiff lawyers who engage in such litigation schemes. Back in March, ERC won a sanctions motion against the plaintiff and her attorney in Connecticut for a whopping $ 41,871.95. Yesterday, ERC won a claim for attorney’s fees and costs, recovering nearly $ 37,000 in legal fees and costs.
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A call baiting claim we’ve all seen before
If your agency has witnessed FDCPA lawsuits and threats of lawsuits in New York City, you are probably no stranger to the facts set out here. The plaintiff hired a “credit specialist” named Tawanda Fraizer, who called ERC on behalf of the plaintiff. On the call, the credit specialist said the plaintiff wanted to challenge and asked if he should submit the dispute in writing. The ERC accepted the oral challenge, but advised the complainant that it would also have to submit the challenge in writing.
The plaintiff then filed a complaint – which, according to the court, “[cited] statutes of questionable enforceability “- with two FDCPA claims. First, that ERC did not” formally notify “the credit bureaus of its dispute. Second, that asking the complainant to send her dispute in writing was false statement since she had the right to challenge orally.
Stonewalling during litigation
During the litigation process, the plaintiff’s side blocked the discovery. The credit specialist refused to comply with a subpoena and the plaintiff’s lawyer refused to allow ERC to file the plaintiff. After the ERC decided to extend the discovery period for filing the claimant, the claimant’s lawyer offered to voluntarily dismiss the case, which the ERC rejected.
The judge ordered the complainant and her lawyer to appear at a status conference to find out what was going on. According to the court:
Upon hearing the evidence, the plaintiff was surprised to learn that a federal case in her name was currently pending before this Court. Her testimony revealed that she had no role in furthering the case other than signing an initial warrant of which she did not understand the real purpose. She was not aware of any requests for discovery, nor of any interrogations he had answered on her behalf. The plaintiff also admitted that she had no reason to dispute her debt settlement . She just fell behind on payments and wanted her credit repaired.
The credit specialist was removed by ERC in another case, and the court determined the nature of the scheme:
The testimony of Eisner de Frazier, which this Court accepts in accordance with Fed. R. Evid. 804 (b) (1), reveals his close working relationship with the Rephen law firm. Following a script, Frazier would call the debt collectors and ask leading questions to elicit violations of the FDCPA. She would challenge the account in any event, regardless of any justification for doing so. Conversations containing alleged violations were then forwarded to Rephen’s law firm.
The parties agreed to dismiss the case with prejudice if ERC was allowed to travel for attorney fees. And this is the basis of instant ordering.
Court awards legal fees to ERC
While the court noted that the FDCPA sanctions are generally applied to the complainant’s bad behavior, this case justifies “the application of the law in accordance with reality” by sanctioning the complainant’s lawyer.
According to the court, it was the plaintiff’s lawyer, and not the plaintiff, who brought this case. The plaintiff had no idea that a lawsuit was being filed. The court declares: “[plaintiff’s] lawyers brought it in without her participation, and despite the fact that she was not subjected to abusive debt collection practices by debt collectors that the FDCPA was supposed to eradicate. ”
The court went on to find that in a situation like this – where a lawyer brings an action without the client’s knowledge or involvement – penalties under the FDCPA can be imposed against the lawyers involved.
Below are a few more quotes from the court ruling that show the Eastern District of New York is preparing for these types of schemes:
[The Rephen Firm brought this case] in order to obtain financial compensation from the defendant, for damage that his client has not suffered. Such behavior is not simply “harassment”. It is, without making it a “fortress of the dictionary”, more than embarrassment or unwelcome conduct. It is nothing less than an attempt to turn a consumer protection statute into an ATM.
(Internal citation omitted.)
The strategy of the Rephen firm was to resort to heavy litigation to induce a rapid settlement. When the defendant refused to settle and instead pushed for discovery, the Rephen firm offered to drop the case rather than produce its client for deposition. At no time has he shown any interest – or indeed had no interest – in pursuing this matter to assert the plaintiff’s rights.
As if that weren’t enough, the tribunal also found that the claims in the complaint were “entirely without legal backing.”
InsideARM Perspective
All of you, the tide is changing. The response is working.
Shelly Gensmer, vice president of legal and compliance at ERC, says: “It has been a long battle against the plaintiff’s lawyer and his firm. The team spent long hours of research trying to piece together this one so that we could effectively illustrate the behavior of this company and bring it to the attention of the court. The ERC is not at all surprised with the award given the facts of the case. Of course, we are very happy and hope that this victory is just one more to help tip the scales in the right direction for our industry.
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Want to know which other plaintiff’s lawyers / firms have been subpoenaed by the courts for questionable behavior? The iA Case Law Tracker can help you do that in less time than it takes to pour your morning cup of coffee.
