Last month, the Eleventh Circuit affirmed the dismissal of a putative class action suit alleging violations of the Fair Credit Reporting Act thereby delivering an important victory to lenders and other entities that provide consumer information to credit reporting agencies. Under the FCRA, “furnishers” of consumer information are prohibited from providing inaccurate information to credit reporting agencies (“CRAs”) and must investigate when a consumer disputes such information. In Hunt v. JP Morgan Chase Bank, Nat’l Ass’n, Case No. 18-11306, 2019 WL 1873419 (11th Cir. Apr. 25, 2019) (unpublished), a united panel held (in an unpublished opinion) that JP Morgan Chase had not violated its duties as a furnisher under the FCRA when it reported that a customer’s account was past due. Not only was such information accurate when it was provided, but the bank was never even required to investigate its accuracy because the plaintiff’s complaint did not allege that JP Morgan received notice that he disputed the information with the CRAs. The Court did not decide, however, whether JP Morgan had an obligation to “refresh” information it had previously provided.
According to the Eleventh Circuit, a municipalities’ lawsuit alleging lost tax revenue and increased costs for services case proceed against several large lenders. In City of Miami v. Wells Fargo & Co., 2019 WL 1966943 (11th Cir. 2019), Miami alleged that several large banks violated the Fair Housing Act by engaging in predatory lending that targeted racial minorities. These practices allegedly led to a higher rate of home foreclosures, which directly caused lost tax revenue and increased costs for services.
Last October, we reported here how the Eleventh Circuit in Muransky v. Godiva had broken with other circuits regarding the application of the Supreme Court’s opinion in Spokeo v. Robins. Last week, the Eleventh Circuit sua sponte vacated its October 2018 opinion and issued a new opinion.
When attempting to collect time-barred debts, law firms often send standard letters which merely omit an express threat to sue. Earlier this month, the Eleventh Circuit held a least sophisticated consumer might view such a letter as an implicit threat to sue and, therefore, the letter might violate the FDCPA. The Court reasoned it would be easy to include language to the effect, “Because of the age of your debt, . . . we will not sue you for it,” and noted that the debt collector had actually started using that exact language in its own letters. Balch’s Austin Alexander and Jason Tompkins provide an in-depth analysis of the Eleventh Circuit’s holding on the Past Due blog.
In Obduskey v. McCarthy & Holthus, LLP, the United States Supreme Court unanimously held the Fair Debt Collection Practices Act does not apply to a law firm conducting a nonjudicial foreclosure.
While the law firm prevailed in Obduskey, the Court’s opinion suggested several circumstances in which the law firm might have been subject to the FDCPA. Practically speaking, many firms instituting nonjudicial foreclosures will likely remain subject to the FDCPA.
According to Obduskey, a law firm conducting nonjudicial foreclosures might still be subject to the FDCPA if:
- The law firm has a regular debt collection practice above and beyond nonjudicial foreclosures, or if the firm otherwise engages in debt collection;
- The law firm sends an unnecessary letter (or engages in other communications) that is not required by state law;
- The foreclosure is a judicial foreclosure;
- The law firm engages in unfair practices related to the nonjudicial foreclosure.
In September 2018, the Alabama Supreme Court issued an opinion in GHB Constr. and Dev. Co., Inc. v. West Alabama Bank and Trust, No. 1170484, that caused considerable concern for Alabama lenders. The Court held that future-advance mortgages do not come into existence until funds are actually advanced regardless of when the mortgage was recorded. Last Friday, the Alabama Supreme Court reversed its September 2018 opinion and held that the priority of a future-advance mortgage is based on the date of recording, not when the lender advances funds. A link to the March 2019 decision can be located here. This decision should ease the uncertainty created by the Court’s September 2018 decision.
Last week, the U.S. District Court for the Middle District of Alabama denied Southern Independent Bank’s (“Southern Independent’s”) motion for class certification following a data breach which allegedly affected over 2,000 financial institutions across the country. Southern Independent, a community bank located in south Alabama, brought a class action complaint against Fred’s in response to a data breach in which hackers, using malware installed on servers, harvested payment data from consumer debit cards used at Fred’s stores.
In In re Dukes, No. 16-16513 (11th Cir. Dec. 6, 2018), the Eleventh Circuit held that a debtor’s mortgage obligation was not discharged, despite a proof of claim not being filed, because the mortgage was not provided for by the debtor’s plan and because of the anti-modification provision of Section 1322(b)(2).
Last month, the Eleventh Circuit revisited the U.S. Supreme Court’s controversial decision in Spokeo, Inc. v. Robins, and appears to have set a low bar for plaintiffs to clear in establishing standing.
The case, Muransky v. Godiva Chocolatier, Inc., Case No. 16-16486 (11th Cir. October 3, 2018) came before the Eleventh Circuit on appeal from the United States District Court for the Southern District of Florida after the district court approved a settlement plan between the class of plaintiffs and Godiva. The named plaintiff in the underlying suit, Dr. David Muransky, filed a class action lawsuit against Godiva, which had given Muransky a receipt showing the first six and last four digits of his credit card number. The complaint alleged violations of the Fair and Accurate Credit Transactions Act (“FACTA”), which prohibits merchants from including “more than the last 5 digits of the card number . . . upon any receipt provided to the cardholder at the point of the sale or transaction.” 15 U.S.C. § 1681c(g)(1). The District Court approved a class action settlement in the underlying case, over objections from appellants James Price and Eric Isaacson.
Earlier this month, the United States Court of Appeals for the Eleventh Circuit issued a decision that could make it easier for manufacturers to force consumers into arbitration via “shrinkwrap” agreements—packaged contracts which bind consumers by merely opening and keeping a product. In Dye v. Tamko Building Products, Inc., Case No. 17-14052 (11th Cir. Nov. 2, 2018), the Eleventh Circuit considered an appeal of a district court’s order compelling arbitration and dismissing a lawsuit by Florida homeowners against the manufacturer of allegedly defective roofing shingles. The packaging of the shingles displayed the manufacturer’s entire product-purchase agreement, including a mandatory arbitration provision. In taking up the case, the Eleventh Circuit considered not only whether this shrinkwrap agreement was enforceable under Florida law, but also whether the homeowners were bound to arbitration because their hired roofers ordered, opened, and installed the shingles.