Collection Advisor Magazine
Login RSS
A+ A A-

Game Changer of the Year Sends FDCPA Cases to State Courts

  • Written by Steel Rose

Game Changer of the Year – TransUnion LLC v. Ramirez  Simply put, this June 25 Supreme Court decision held that just because Congress prohibits a particular conduct, it does not mean that if that conduct were to occur a plaintiff can file a federal lawsuit. Rather, a plaintiff must demonstrate that he himself suffered a real, concrete injury. A risk that an injury might occur is not enough. On the heels of the decision, federal courts are now routinely dismissing FDCPA lawsuits that were welcome in the past. A positive outcome for the credit and collections industry is that claims arising from federal statutory violations are far more difficult to pursue. So many FDCPA cases were premised on the theory that the “least sophisticated consumer” would be confused by the content of the letter, while the plaintiff herself was not. After Ramirez, this type of claim has a short life in any federal court. The references to a “federal court” are intentional because state courts are not constrained by the same issues that drove Ramirez.

In 2015, I discussed this potential outcome if federal courts were to take this path. And so, we now see a significant rise in state court filings in our offices in Illinois, New York, New Jersey, Pennsylvania, and Florida.

Ultimately, some states may align themselves with Ramirez, but in the meantime the transition to state court filings alters existing litigation strategies.

In the past, federal litigation by both plaintiff and defense counsel relied on federal rules of evidence and procedure no matter where the case was filed and admissions to these federal courts is often permitted without admission to the state bar.

But with filings moving to state courts, the rules of evidence and procedure are diverse and sometimes conflicting. Even filing a pleading can have remarkably different requirements not only between the states, but between different court divisions within the states.

Crowded state court dockets mean more time spent for routine conferences and longer time frames to dispose of cases. Cases may be venued in far-flung, remote locations and telephonic or remote appearances may not be freely granted. And finally, state courts often have less familiarity with the FDCPA, Fair Credit Reporting Act and similar federal consumer credit laws, furthering the time needed to dispose of a case. To read more, click here.