Weltman, Weinberg & Reis Co., L.P.A.
Documents in this case
- Complaint · · 10 p.
- Judgment · · 1 p.
- Opinion · · 23 p.
- Memorandum · · 5 p.
Case summary
On April 17, 2017, the Bureau
filed a complaint against the debt collection law firm Weltman, Weinberg &
Reis Co., L.P.A., alleging it sent collection letters that misrepresented that
attorneys were meaningfully involved in collecting the debt. A trial with an
advisory jury was held beginning May 1, 2018. The advisory jury found that the
Bureau had proved by a preponderance of the evidence that the law firm’s
collection letter contained false, deceptive, or misleading representations in
connection with the collection of a debt, but found that the Bureau had not
proved that the law firm’s lawyers were not meaningfully involved in the debt
collection process. The court declined to adopt the advisory jury’s first
finding, accepted the advisory jury’s second finding, and entered judgment in
favor of the law firm on July 25, 2018. On October 22, 2018, the court denied
the law firm’s motion for an award of attorney’s fees.
Complaint ()
PDF of this document (10 pages)
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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO EASTERN DIVISION
CONSUMER FINANCIAL PROTECTION BUREAU, Plaintiff v.
Weltman, Weinberg & Reis Co., L.P.A., Defendant.
Civil Action No.
COMPLAINT Electronically Filed
COMPLAINT Plaintiff, the Consumer Financial Protection Bureau (“Bureau”), alleges the following against Weltman, Weinberg & Reis Co., L.P.A. (“Weltman”). INTRODUCTION 1.
The Bureau brings this action under Sections 807(3), 807(10), and 814(b)(6) of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. §§ 1692e(3), (10), and 1692l(b)(6); and Sections 1031(a), 1036(a)(1), 1054, and 1055 of the Consumer Financial Protection Act of 2010 (“CFPA”), 12 U.S.C. §§ 5531(a), 5536(a)(1), 5564, and 5565.
2.
The Defendant engages in unlawful collection activities by misrepresenting the level of attorney involvement in demand letters and calls to consumers.
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JURISDICTION AND LEGAL AUTHORITY 3.
This Court has subject-matter jurisdiction over this action because it is “brought under Federal consumer financial law,” 12 U.S.C. § 5565(a)(1), presents a federal question, 28 U.S.C. § 1331, and is brought by an agency of the United States, 28 U.S.C. § 1345.
4.
Venue is proper in this District because the Defendant does business here and a substantial part of events or omissions giving rise to the claims occurred here. 12 U.S.C. § 5564(f); 28 U.S.C. § 1391(b).
PARTIES 5.
The Bureau is an independent agency of the United States that is authorized to take enforcement action to address violations of Federal consumer financial law, 12 U.S.C. §§ 5511(c)(4), 5512(a), 5563, 5564, including the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the CFPA, 12 U.S.C. §§ 5531, 5536(a)(1).
6.
Respondent Weltman, Weinberg & Reis Co., L.P.A. (“Weltman” or “the Firm”) is a law firm, organized under the laws of Ohio that has offices in this district. 7.
Weltman regularly collects or attempts to collect, directly or indirectly, consumer debts, including debts from credit cards, installment loan contracts, mortgage loan deficiencies, and student loans. Weltman collects such debts on behalf of original creditors and debt buyers who purchase portfolios of defaulted consumer debt. 8.
Weltman is therefore a “debt collector” under the FDCPA, 15 U.S.C. § 1692a(6), and it is a “covered person” under the CFPA, 12 U.S.C. § 5481(5), (6), (15)(A)(i), (15)(A)(x), because it collected debt related to credit extended to consumers.
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STATEMENT OF FACTS 9.
Since at least July 21, 2011, the Firm has regularly collected or attempted to collect debts on behalf of original creditors and debt buyers. 10.
These alleged debts included the following types of debt: credit card; installment loan contract; mortgage loan deficiency; and student loan. 11.
The alleged debts have been incurred by consumers primarily for personal, family, or household purposes.
12.
When Weltman acquires the rights to collect on a new debt portfolio, the Firm’s representatives (which may or may not include an attorney) discuss the portfolio’s attributes with the creditor, including prior collection efforts and the age of the debts in the portfolio.
13.
As part of the initial intake process, Weltman attorneys may review a sample of individual accounts within a portfolio of debts from the creditor for whom Weltman is collecting the debt. But non-attorneys may perform this review. 14.
As part of its debt collection efforts, Weltman sends letters to consumers requesting payment (“demand letters”).
15.
If a consumer does not respond to an initial demand letter, then Weltman frequently sends a follow-up demand letter reiterating its request for payment or offering to settle the debt for a reduced amount. 16.
The vast majority of the time, Weltman generates these demand letters through an automated process. Specifically, consumer account information provided by Weltman’s clients is populated into a form letter template and printed by a third-party vendor.
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17.
Weltman’s demand letters are printed on the Firm’s letterhead, which states “WELTMAN, WEINBERG & REIS Co., LPA” at the top of the first page, and directly underneath the Firm’s name, “ATTORNEYS AT LAW.” In almost all versions of this template, the name of the Firm and the phrase “ATTORNEYS AT LAW” are in bold type.
18.
“Weltman, Weinberg & Reis Co., L.P.A.” appears in type-face in the signature line of nearly all of Weltman’s demand letter templates. 19.
Weltman’s form letters typically include a detachable payment remission slip indicating that payments should be sent to Weltman, Weinberg & Reis Co., L.P.A., and provide a mailing address.
20.
Since at least July 21, 2011, some of Weltman’s form letters have included the following language: “Failure to resolve this matter may result in continued collection efforts against you or possible legal action by the current creditor to reduce this claim to judgment.”
21.
Since at least July 21, 2011, Weltman’s form letters have also sometimes included the following language: “This law firm is a debt collector attempting to collect this debt for our client and any information obtained will be used for that purpose.” 22.
Since at least July 21, 2011, at times some form letters stated: “Please be advised that this law firm has been retained to collect the outstanding balance due and owing on this account.”
23.
When Weltman sends demand letters, Weltman attorneys generally have not reviewed a corresponding consumer’s individual account file to reach a professional judgment that sending the letter is appropriate because, for example, the information in the letter is accurate and the debt is due and owing. Case: 1:17-cv-00817 Doc #: 1 Filed: 04/17/17 4 of 10. PageID #: 4
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24.
In most cases, Weltman attorneys do not review any individual account information or any other aspects of a consumer’s file before Weltman sends a demand letter.
25.
None of the subject demand letters include any disclaimer notifying consumers that an attorney has not reviewed the consumer’s file or formed an independent professional judgment about the subject debt. 26.
Weltman’s demand letters misrepresent that attorneys at the firm have reviewed the consumer’s file and determined that the consumer owes the amount demanded, when in fact no such review has occurred. 27.
Rather, at the time a consumer receives a demand letter, Weltman is acting as a collection agency.
28.
Weltman has sent millions of demand letters to consumers since July 21, 2011. Consumers have paid millions of dollars after Weltman sent a given demand letter but before Weltman filed any related collection lawsuit. 29.
In addition to sending demand letters, Weltman also attempts to collect debts through outbound telephone calls to consumers. 30.
These calls are generally handled by non-attorney collectors who are part of Weltman’s “Pre-Legal” Department.
31.
In addition, consumers sometimes call Weltman after receiving a demand letter from Weltman, and are routed to these collectors. During these inbound calls, the collectors similarly request payment on the consumer’s alleged debt. 32.
From at least July 21, 2011 through as late as July 2013, it was Weltman’s practice and policy to identify Weltman as a law firm during these collection calls. Some training materials and collection scripts instructed Weltman collectors to tell Case: 1:17-cv-00817 Doc #: 1 Filed: 04/17/17 5 of 10. PageID #: 5
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consumers: “This law firm is a debt collector attempting to collect this debt for our client and any information will be used for that purpose.” 33.
Even after July 2013, at times collectors continued to refer to Weltman as a law firm during calls with consumers. Sample statements made to consumers by collection agents that referred to Weltman’s law firm status included that Weltman was the “largest collection law firm in the United States,” an account was forwarded to “the collections branch of our law firm,” and that the account has been “placed here with our law firm.”
34.
When such calls occurred, however, Weltman attorneys generally had not reviewed a corresponding consumer’s individual account file to reach a professional judgment regarding whether the consumer owed the debt. 35.
Consumers were typically not cautioned that an attorney had not reviewed their account information or formed an independent professional judgment about the subject debt.
36.
Weltman’s statements to consumers during collection calls implied that attorneys at the firm reviewed the consumer’s file and determined that the consumer owed the amount demanded, when in fact no such review had occurred. VIOLATIONS Count I
(FDCPA) - Letters
37.
The allegations in paragraphs 1-28 are incorporated by reference. 38.
As described above, Weltman’s demand letters were sent on its law firm letterhead, which prominently features the name of the firm and the phrase Case: 1:17-cv-00817 Doc #: 1 Filed: 04/17/17 6 of 10. PageID #: 6
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“ATTORNEYS AT LAW” at the top. The law firm was also the signatory of the letters. Furthermore, many demand letters have explicitly referred to Weltman as a “law firm.” 39.
The Firm thus misrepresented that the letters were from attorneys and that attorneys were meaningfully involved, when in most cases the attorneys were not meaningfully involved in preparing and sending the letters. 40.
This practice was material because it had the potential to influence consumers to pay an alleged debt when they would not have otherwise. 41.
The Firm’s acts and practices constituted violations of sections 807(3) and 807(10) of the FDCPA, 15 U.S.C. § 1692e(3), (10). Count II CFPA - Letters 42.
The allegations in paragraphs 1-28 are incorporated by reference. 43.
Defendant’s FDCPA violations, as described in Count I, constitute violations of section 1036(a)(1)(A) of the CFPA, 12 U.S.C. § 5536(a)(1)(A). Count III CFPA (Deception) - Letters 44.
The allegations in paragraphs 1-28 are incorporated by reference. 45.
As described above, the demand letters sent to consumers by Weltman before a suit was filed represented, directly or indirectly, expressly or by implication, that attorneys were meaningfully involved in preparing and deciding to send the demand letters.
46.
In fact, this was misleading to a reasonable consumer because demand letters sent by Weltman were prepared and sent without meaningful attorney involvement.
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47.
This practice was material because it had the potential to influence consumers to pay an alleged debt when they would have not otherwise. 48.
The Firm’s representations as set forth in paragraphs 17-22 therefore constituted deceptive acts and practices, in violation of sections 1031(a) and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531(a)(1), 5536(a)(1)(B). Count IV FDCPA – Telephone Communications 49.
The allegations in paragraphs 1-13 and 29-36 are incorporated by reference.
50.
Weltman routinely placed phone calls to consumers in an attempt to collect alleged debts from them, and also responded to phone inquiries from consumers regarding its debt collection efforts.
51.
Weltman’s collection agents frequently referred to Weltman as a law firm during these calls. But in most instances, attorneys had not actually reviewed the consumer’s file and formed an independent professional judgment that making the collection call was warranted or about whether the consumer owed the amount requested.
52.
The Firm thus misrepresented by implication that attorneys were meaningfully involved in the assessment of an alleged debt’s validity before a collection call took place.
53.
The Firm’s acts and practices constituted violations of sections 807(3) and 807(10) of the FDCPA, 15 U.S.C. § 1692e(3), (10).
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Count V CFPA - Telephone Communications 54.
The allegations in paragraphs 1-13 and 29-36 are incorporated by reference.
55.
Defendant’s FDCPA violations, as described in Count IV, constitute violations of section 1036(a)(1)(A) of the CFPA, 12 U.S.C. § 5536(a)(1)(A). Count VI CFPA (Deception) – Telephone Communications 56.
The allegations in paragraphs 1-13 and 29-36 are incorporated by reference.
57.
By referring to Weltman as a “law firm” during collection calls, Weltman collection agents implied that attorneys had formed an independent professional judgment that making the collection call was warranted or that the individual consumer owed the alleged debt.
58.
This was misleading to a reasonable consumer because Weltman attorneys generally had not evaluated individual accounts at the time of the collection calls. 59.
This practice was material because it had the potential to influence consumers to pay an alleged debt when they would have not otherwise. 60.
The Firm’s representations as set forth in paragraphs 29-36 constituted deceptive acts and practices, in violation of sections 1031(a) and 1036(a)(1)(B) of the CFPA, 12 U.S.C. §§ 5531(a), 5536(a)(1)(B).
PRAYER FOR RELIEF Wherefore, as permitted by 12 U.S.C. § 5565 et seq., the Bureau requests an Order granting:
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A. an injunction that permanently prohibits Weltman from committing future violations of the FDCPA and CFPA;
B. restitution against Weltman to compensate consumers harmed by Weltman’s unlawful practices;
C. disgorgement of ill-gotten revenue against Weltman, in an amount to be determined at trial;
D. civil money penalties against Weltman;
E. recovery of costs in connection with prosecuting the instant action; and F. any other legal or equitable relief deemed just and proper. Dated: April 17, 2017
Respectfully submitted, Attorneys for Plaintiff Consumer Financial Protection Bureau
ANTHONY ALEXIS Enforcement Director
DEBORAH MORRIS Deputy Enforcement Director
MICHAEL G. SALEMI Assistant Litigation Deputy
/s/ Sarah Preis Sarah Preis 1700 G Street NW Washington, DC 20552 Phone: (202) 435-9318 Facsimile: (202) 435-7722 Email: [email protected] Rebeccah Watson Phone: (202) 435-7895 Email: [email protected]
Enforcement Counsel
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Judgment ()
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Case: 1:17-cv-00817-DCN Doc #: 88 Filed: 07/25/18 1 of1. PagelD #: 3387
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OHIO
EASTERN DIVISION ) CONSUMER FINANCIAL ) ;
PROTECTION BUREAU, ) CASENO. 1:17 CV 817 ) Plaintiff, ) ) v. } JUDGE DONALD C. NUGENT ) WELTMAN, WEINBERG & REIS CO., ) L.P.A., ) JUDGMENT ORDER ) Defendant. )
Pursuant to a Memorandum Opinion of this Court, Judgment is entered in favor of Defendants, Weltman, Weinberg & Reis Co., L.P.A., and against Plaintiff, the Consumer Financial Protection Bureau, on Counts One through Three of the Complaint, all other counts having been previously dismissed by the Plaintiff. Plaintiff has failed to prove any violation of the Fair Debt Collection Practices Act or the Consumer Financial Protection Act by a
preponderance of the evidence. Costs are assessed to the Plaintiffs. IT IS SO ORDERED.
(null Magat?
Judge Donald C. Nugent United States District Judge
{
DATED: lade LS, LOlg (jd
Opinion ()
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 1 of 23. PageID #: 3364 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRJCT OF OHIO EASTERN DIVISION CONSUMER FINANCIAL PROTECTION BUREAU, ) ) ) CASENO. l:17CV817 Plaintiff, V.
\VELTMAN, WEINBERG & REIS CO., L.P.A., Defendant.
) ) ) ) JUDGE DONALD C. NUGENT ) ) ) MEMORANDUM OPINION ) ANDORDER ) This matter is before the Court subsequent to a four-day trial to the Comi, with an advisory jury duly empaneled and sworn pursuant to Fed. R. Civ. Pro. 39(c)(l). Following trial, the parties each submitted proposed findings of fact and conclusions oflaw. The issues have now been fully presented and are ready for the Comi's consideration. PROCEDURAL HISTORY Plaintiff, the Consumer Financial Protection Bureau ("the Bureau"), filed this action on April 17, 2017, alleging that Defendant Weitman, Weinberg & Reis Co., L.P.A. ("Weitman")
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 2 of 23. PageID #: 3365 violated Sections 807(3), 807(10 and 814(6 )(6) for the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. §§ 1692e(3), (10), and 16921(6)(6); and, Sections 1031(a), 1036(a)(I), I 054, and J 055 of the Consumer Financial Protection Act of 2010 ("CFPA"), 12 U.S.C. §§553J(a), 5536((a)(l), 5564, and 5565, by "misrepresenting the level of attorney involvement in demand letters and calls to consumers. (ECF #1, 1 1, 2). Following discovery both parties moved for summary judgment. (ECF # 44, 45). Both of these motions were denied. (ECF #61 ). Trial of this matter'commenced on May 1, 2018, before an advisory jury, pursuant to Fed. R. Civ. Pro. 39(c)(I ). Prior to the jury's empanelment, the Plaintiff voluntarily dismissed Counts 4, 5 and 6, with prejudice, and withdrew its request for disgorgement. (ECF #79). This left Counts One through Three for trial. Count One alleged that Weltman's demand letters "misrepresented that the letters were from attorneys and that attorneys were meaningfully involved, when in most cases the attorneys were not meaningfully involved in preparing and sending the letters" in violation of Sections 807(3) and 807 (1) of the FDCPA, 15 U.S.C. § 1692e(3), (10). Count Two alleged that the same letters violated Section 1036(a)(l)(A) of the CFPA, 12 U.S.C. § 5536(a)(l )(A), for the same reason. Count Three alleges that this also constituted deceptive acts and practices in violation of Sections 103 J (a) and I 036(a)(l)(B) of the CFPA, 12 U.S.C. §§553l(a)(I) and 5536(a)(l)(B).
At trial, the Plaintiff called three witnesses: (1) Ms. Eileen Bitterman; (2) lvlr. David Tommer; and, (3) Dr. Ronald Goodstein, and submitted exhibits. Defendant called two additional witnesses: (I) Chuck Pona; and, (2) Scott Weitman. On May 4, 2018, after four days of trial, the jury submitted their answers to the following interrogatories: -2-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 3 of 23. PageID #: 3366 1. Do you find that the Plaintiff proved by a preponderance of the evidence that the initial demand letter sent by Weitman contained any false, deceptive, or misleading representations or means in connection with the collection of a debt? YES (Enter "yes" or "no").
If your answer to Inteuogatory Number 1 is yes, continue to Inteuogatory Number 2. If your answer is no, your deliberations are finished and you should not answer any further questions.
2. Do you find that the Plaintiff proved by a preponderance of the evidence that Wellman's lawyers were not meaningfully involved in the debt collection process.
NO (Enter "yes" or "no").
If your answer to Interrogatory Number 2 is yes, continue to Inteuogatory 3. IF your answer is no, your deliberations are finished and you should not answer any further questions.
After the advisory jury returned these findings, the parties were given a final opportunity to present their proposed findings of fact and conclusions of law. The Court is not bound by the advisory jury's determination, but finds that their answer to Inteuogatory Number 2 comports fully with the weight of the evidence presented at trial. The jury's answer to Inteuogatory Number!, however, does not correctly reconcile the evidence presented with the Court's instructions or the standard of proof required of the Plaintiff in this case. Although there was some evidence presented in suppmt of the idea that the letters could be misleading to certain consumers, that evidence came exclusively from an expert that the Comi does not find credible. Further, the Complaint relies solely on the asse1tion that the demand letters were misleading because they were sent from a law firm, and lawyers were not meaningfully involved in the debt collection process. The jury's finding, adopted by this Court, -3-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 4 of 23. PageID #: 3367 that lawyers were meaningfully involved disproves the Plaintiffs sole theory of liability, and precludes recovery under the Complaint.
ANALYSIS 1. Applicable law Neither party disputes that \Veltman is a debt collector to whom the FDCPA and the CFPA apply, or that Weltman's demand letters were sent in connection with the collection or attempt to collect debts. The question at issue in this case is whether Weltman's debt collection demand letters violated the FDCP A or the CFP A. The FDCP A and the CFP A were violated if the letters used "any false, deceptive, or misleading representation or means in com1ection with the collection of any debt," or if they falsely represent or imply that communication is "from an attorney." 15 U.S.C. §1692e and 1692e(3). A demand letter is not false or misleading for using letterhead that "accurately describes the relevant legal entities," had an accurate and truthful signature block, and includes a "conspicuous notation that the letter is sent by a debt collector." Sher/[fv. Gillie, 136 S. Ct. 1594 (2016).
The letters are alleged to have violated the FDCP A and the CFP A not because they contain false statements, but because they allegedly falsely imply that an attorney was meaningfully involved in the collection of the debts to which the letters relate. According to case law from various circuits, a demand letter indicating that it comes "from an attorney" can be found to be deceptive even iflilerally true, if the letter is not the product ofan attorney's professional judgment, or if the attorney was not sufficiently involved in the collection of the debt or the drafting of the letter. See, e.g .. Nielsen v. Dickerson, 307 F.3d 623 (7th Cir. 2002); -4-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 5 of 23. PageID #: 3368 Lesher v. Law Offices of Mitchell N Kay, P.C., 650 F.3d 993, 1003 (3d Cir. 201 l); Greco v. Trauner, Cohen & Thomas, LLP, 412 F.3d 360,364 (2d Cir. 2005); Consumer Fin. Prof. Bureau v. Frederick J Hanna & Assoc., P.C., 114 F. Supp. 3d 1342, 1363 (N.D. Ga. 2015). In order to establish any of the violations alleged in the Complaint, the Plaintiff must show, by a preponderance of the evidence, that:
1. The least sophisticated debtor would believe, based on the initial demand letter, that \Veltman was acting as an attorney in the debt collection process;1 and, 2. Weltman's lawyers were not meaningfully involved in the debt collection process; and, 3. The representation that Weltman was acting as an attorney in the debt collection process was material.
The least sophisticated debtor is to be considered uninformed, naive, and trusting, but also possessing reasonable intelligence, and capable of making basic logical deductions and inferences. Sanford v. Portfolio Recover)' Assocs., LLC, NO. 12-11526, 2013 WL 3798285, at .
.
.
*12 (E.D. Mich. July 22, 2013)(citations omitted). It is not a requirement that the Defendant intended to mislead or deceive a consumer. This standard is "lower than simply examining whether patticular language would deceive or mislead a reasonable debtor," Smith v. Computer Credit, Inc., 167 F.3d 1052, 1054 (6th Cir. 1999), but does not give credence to "frivolous 1 A violation ofCFPA's prohibition against using deceptive acts or practices uses a "reasonable person" standard rather than a "least sophisticated consumer" standard. The elements otherwise mirror those in the FDCP A. Therefore, if an act or omission does not violate the FDCPA 's provisions, it will not violate the less stringent standard under the CFP A. See, e.g., Consumer Fin. Prof. Bureau v. Gordon, 819 F.3d 1179, 1192 (9th Cir. 2016); FTC v. E.lvf.A. Nationwide, Inc., 767 F.3d 611 (6th Cir. 2014).
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 6 of 23. PageID #: 3369 misinterpretations or nonsensical interpretations .... " Jvfiller v. Javitch, Block & Rathbone, 561 F.3d 588, 592 (6th Cir. 2009).
There is no specific test for what constitutes "meaningfully involved." Cases have held that an attorney has sufficient personal involvement in the process if one reviews the file of the individual consumer to whom the letter was sent and/or exercises some "professional judgment as to the delinquency and validity of any individual debt" before the letter is issued. See. e.g. Consumer Financial Protection Bureau v. Frederick J. Hanna & Assoc., P.C., 114 F.Supp. 3d 1342, 1363 (N.D. Ga. 2015); Avila v. Rubin, 84 F.3d 222, 229 (7th Cir. 1996); Lesher v. Law Offices of Mitchell N. Kay, P. C., 650 F.3d 993, 999 (3d Cir. 2011 ). This is not necessarily a set requirement for meaningful involvement, however, as this is a question that must be dete1mined based on the individual facts and totality of the circumstances in each case. See, Miller v. Wolpoff & Abramson, LLP, 321 F.3d 292, 304 (2d cir. 2003). In order for a representation to be material, it must be likely to influence the least sophisticated debtor's decision on whether or not to pay a debt. See, Wallace v. Washington J.1ut. Bank, F.A., 683 F.3d 323, 326-27 (6th Cir. 2012). Creating a legitimate fear of the actual consequences of owing a valid debt is not misleading or deceptive under the act. 2. Stipulated Facts2 The parties stipulated to the following facts:
1. The Bureau (Plaintiff) is an independent agency of the United States that enforces and 2 The stipulated facts were taken from the Paities' Stipulation of Facts (ECF #66), and from stipulations agreed to by the parties at trial, which were communicated to the Jury through the Comt'sjury instructions. (ECF #77 at 80-81).
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 7 of 23. PageID #: 3370 issues regulations pursuant to federal consumer financial law, including the Fair Debt Collection Practices Act and the Consumer Financial Protection Act of 20 I 0. 2. \Veltman (Defendant) is an Ohio professional corporation organized under the laws of Ohio that operates as a law firm.
3. \Veltman has maintained a website, www.weltman.com. from at least July 21 st , 201l, to date.
4. Weitman is a debt collector under the Fair Debt Collection Practices Act and a covered person under the Consumer Financial Protection Act of 2010. 3. Evidence at Trial Eileen Bitterman, the compliance officer and a shareholder ofWeltman, is a lawyer licensed to practice law in Ohio. She is responsible for creating policies and overseeing training. (ECF #75 at 44). She testified as follows.
\Veltman is owned by shareholders, all of whom are attorneys. (ECF #75 at l30). \Veltman is hired by creditors to collect a variety of types of consumer debt. (ECF #75 at 44-45). During the relevant time period, \Veltman had up to 7,000 creditor clients. (ECF #75 at 98). Weitman has a consumer collection unit that is staffed by non-attorneys but is overseen by an attorney who is the business unit leader, and collections support attorneys. (ECF #75 at 48). They are paid on a contingency fee basis, based on the amonnt of money they are able to collect from consumers. (ECF #76 at 94, I 07).
In an attempt to collect on consumer debts, Weitman sends out letters that are generated from attorney-approved templates. (ECF #75 at 50-51). One of these templates is an initial -7-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 8 of 23. PageID #: 3371 demand letter that includes the name of Weitman, Weinberg & Reis Co., L.P.A. and the words "Attorneys at Law," at the top of the letter. (ECF #75 at 57, 86). These letters are signed by Weitman, and are on Weitman letterhead. (ECF #75 at 57-58, 80, 86). Ms. Bitte1man testified that 4.2 million demand letters, from these templates, were sent to consumers between July 2 I, 2011 and October 31, 20 I 7. (ECF #7 5 at 91 ). She also testified that some templates for followup letters also state that "this law firm is a debt collector attempting to collect this debt for our client," or other references indicating that Weitman is a law finn, which are a truthful statements. (ECF #75 at 64-66).
Weitman does not contend that they are practicing law when they send demand letters. (ECF #76 at 96). They do not require an attorney to review every individual consumer account before a demand letter is sent. (ECF #75 at 98-99). Weitman attorneys do not fmm a professional judgment about the validity of a debt or the appropriateness of sending a demand letter before the letters are sent. (ECF #75 at 99). Weitman receives infonnation from creditor clients about consumer accounts and data is loaded into Weltman's computer system. (ECF #75 at 73-74). The data is then "scrubbed." Scrubbing is a process by which outside vendors use criteria established by Weltman's lawyers to flag consumers who should not be sent collection letters. (ECF #75 at I 02-103).
Some of Weitman' s training manuals indicate that "because WWR is a law firm, a consumer may have the incorrect assumption that a legal action will be automatically filed against them" and that "certain consumers may have prioritized paying the debt because the law firm is in a better position to file suit than a collection agency." (ECF #75 at 108,112). Ifa client wants advice on whether to pursue litigation, Weitman has non-attorney audit employees -8-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 9 of 23. PageID #: 3372 review the consumer's information to see if the account is eligible. These employees follow policies and procedures provided to them by Weitman attorneys. (ECF #75 at 114). If an account is flagged as not eligible for litigation, an attorney could then review the file, and before a lawsuit can be filed, an attorney must review the consumer's account. (ECF #75 at 114). Weitman has attorneys licensed in only seven states, but does nationwide debt collection. If an account is elevated to litigation in a state where no Weitman attorney is licensed, Weitman may refer the case to a different law firm, who would then have to send another demand letter info1ming the consumer that the fom is acting as a debt collector. (ECF #75 at 115-116). Weitman has a formal compliance program that is developed and approved by attorneys, including the shareholders and the Board. (ECF #130-131). It has hundreds of policies and procedures for delegating, educating, and supervising staff, for auditing compliance across the business units and ensuring compliance with client processes and procedures as well as Weltman's processes and procedures. (ECF #75 at 127-129, 132-134, 180; ECF #76 at 10-36). These are drafted by attorney shareholders, go through several layers of attorney review, and are eventually approved by attorney Board members. (ECF #75 at 128-130, 132, 182-183; ECF #76 at 10-36). They are also enforced by attorneys. (ECF #76 at 11-35). Attorneys are involved in bringing clients to the firm, drafting client contracts, checking their reputation, interacting with the client, and discussing the available data and documentation, the history of their portfolio and types of accounts, which consumers are represented by attorneys, any asset reviews that have occmTed, and arbitration or bankruptcy information, reviewing the clients procedures and policies, and evaluating whether the client is a trustworthy and legally compliant creditor. (ECF #75 at 149-150, 167-169; ECF #76 at 72-73). Attorneys assess issues that may arise with -9-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 10 of 23. PageID #: 3373 statutes oflimitations, arbitration clauses, choice oflaw issues, how interest is calculated, last date of payment, deceased debtors and other legal questions. (ECF # 153-54; ECF #76 at 8-9)). Many of these issues must be addressed by an attorney before a demand letter ever goes out. (ECF #75 at 157). Using their legal knowledge the attorneys create procedures for analysis that can be taught to non-attorney employees or programmed for automated implementation or programming of the "scrubbing" criteria. (ECF #75 at 157-159). Ms. Bitte1man also testified that these same procedures used in the processes complained of in this lawsuit, including electronic communication and automated scrubbing processes were previously approved by the Ohio Attorney General and used by the firn1 when working as special counsel for the collection of debts owed to the State of Ohio. (ECF #76 at 43- 44, 58-59). The evidence showed that Richard Cordray, who was the head of Plaintiff, CFPB when this lawsuit was filed, was the Ohio Attorney General when Defendant \Veltman was hired to collect those state debts. When collecting for the State of Ohio, Attorney General Cordray, the same person ultimately responsible for the filing of this lawsuit, directed Weitman to use the Ohio Attorney General's letterhead on Weltman's demand letters for the state. He also required Weitman to state in the letter that they were "special counsel," and to use the words "Attorney at Law" and "collections enforcement special counsel" on the demand letter. (ECF #76 at 52-54). Ms. Bitterman testified that as a Weitman attorney, in charge of compliance, having talked to debtors and having access to the complaint log, she is not aware of any complaints given directly to the firm stating that their letters were confusing due to their identification as a law fom. (ECF #76 at 62-64). She also stated that she is not aware of any holding from any court finding that Weitman had misled a consumer. (ECF #76 at 89, I 05). She acknowledged, -10-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 11 of 23. PageID #: 3374 however, being aware of multiple lawsuits, in both state and federal courts, filed against the firm alleging that their demand letters were misleading for implying that there is meaningful attorney involvement in the demand letters. (ECF #76 at 86-89). She testified she is also unaware of any person who prioritized payment, or paid a debt not owed, because the demand letters came from a law firm, rather than identif'.ying simply as a debt collector. (ECF #76 at 63-64). Weitman provided "over a million recorded consumer phone calls," none of which were cited by the Plaintiff as evidence of confusion, materiality, or harm stemming from the alleged misrepresentation in this case. (ECF #76 at 67-68).
Mr. Tommer, the director of consumer collections and a non-attorney, also testified at trial. He testified that he works with law firm attorneys to develop workflow strategies for the collection of consumer debts. (ECF #76 at 114-115). He testified that the supervisors in the "agency unit," which falls under the consumer collection business unit, are not attorneys. (ECF #76 at 117-119).
He reports to Chuck Pona, who is an attorney, and who oversees the consumer collection unit. (ECF #76 at 139). He also testified that no attorneys work "directly under" the agency collections group. (ECF # 76 at 120). W'hen accounts are taken in by Weitman, Weitman load the data, scrnb the electronic data, and then if the files survive the scrnb, and there is a valid address, a demand letter is generated and sent within two to three days from intake. (ECF #76 at 129-130). This entire process is automated. (ECF #76 at 130). Attorneys develop the scrnb process, but Mr. Tommer was unaware of any other role attorneys would have in the scrnb process. (ECF #76 at 130).
\\lben initial demand letters don't result in payment, clients may reclaim the files or the files may go to the audit department to be assessed for additional actions, including the filing of a -11-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 12 of 23. PageID #: 3375 suit. (ECF #76 at 133). The suit audit depaitment gathers information to give to the attorneys to make this determination. (ECF #76 at 133-134).
Mr. Tommer testified that attorneys are meaningfully involved in a debt collection before the consumer is mailed an initial demand letter. (ECF #76 at 141 ). They run the firm, and every day he and his team interact with or take direction from an attorney while doing their jobs. (ECF #76 at 141-142). The demand letters were written by Eileen Bitterman, an attorney, and her teain. (ECF #76 at 142). Attorneys make the decision whether to take on a client, and perforn1 the reviews of potential clients' documents, legal terms and conditions relating to the debt. (ECF #76 at 143-144). Attorneys are involved at the onset of the scrubbing process for the high volume clients. (ECF #76 at 144). Attorneys also look at and oversee any alterations and changes in internal processes, implementation of any new letter, and procedures and policies utilized on a day to day basis, scripting for collectors, and training materials. (ECF #76 at 146- 147).
The Plaintiff also called Dr. Ronald Goldstein, an associate marketing professor at the McDonough School of Business at Georgetown University, who was asked to assess whether consumers believe a lawyer is involved in reviewing an account, and the decision to send demand letters. (ECF #76 at 154-155). He was offered and accepted as an expert witness. (ECF #76 at 162).
Dr. Goldstein testified that he gave a field study survey to 634 people from the "relevant population," defined as "people who had used their credit card in the last five years for personal or household reasons" or "had borrowed money in the last five years for personal, household reasons," but not from a friend or family. (ECF #76 at 177-180). He stated that he did not want -12-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 13 of 23. PageID #: 3376 to survey anyone who actually received Weltman's d.emand letter, any lav-,yers, or any marketing researchers because they would be biased, but he did not take any action to detennine if anyone in the survey group had actually ever received a Weitman letter. (ECF #76 at 178-180, 195-196). He used three groups. One was shown the Weitman demand letter, and one was given a letter that purpmted to be from Weitman, Weinberg & Reis Ltd. , used the phrase "collection services" rather than "attorneys at law." The third group used the name WW&R, rather than "Weitman, Weinberg & Reis, Ltd. (ECF #76 at 182 -183). Dr. Goldstein then asked a series of questions which led him to the finding that 40% of the first group believed a lm\,yer reviewed the account, 20% of the second group believed a lawyer reviewed the account, and 13% of the third group believed that a lawyer reviewed the account. (ECF #76 at 191-192). No definition was provided for what it means to "review the account." (ECF #76 at 202). He also tested the question "who sent the letter" and found that 50% of the people with the original letter believed it was sent by a law fom or lawyer. He himself testified that simply the use of the name Weitman, Weinberg & Reis, without any reference to a legal indicator, such as L.P .A. or "attorney at law," was perceived as sounding like a law fom. (ECF #76 at 195).
Dr. Goldstein also testified that while he designed the survey, he did not conduct the initial interviews; did not recrnit the people who were surveyed; did not design the technological programming; delegated work to a research team; and, hired graphic designers to make changes to the letters. Nonetheless he testified that he was "meaningfully involved" in conducting the survey because all of the other people were working under his guidance and supervision. (ECF #76 at 199).
Defendant called Charles Pona to testify. He is an attorney who is cmTently managing the -13-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 14 of 23. PageID #: 3377 consumer collections department at Weitman, is a shareholder in the firm, and is on the management committee. (ECF #76 at 216-217). There are cmrnntly 20-25 attorneys in the consumer collections department. (ECF #76 at 222). The attorneys are continuously available to any non-attorney members of the unit to answer questions and give advice. They hold weekly meetings with the managers, and invite people from the client services area, human resources and IT staff to participate. (ECF #76 at 224). All attorneys are involved in compliance issues, but about 8-10 years ago a full time compliance department was started to focus on compliance with state and federal laws. (ECF #76 at 224 ). All written procedures and policies are sent to the attorneys on the management committee by a steering committee which includes compliance members. (ECF #76 at 225). l\1r. Pona also testified that the fom has never been found to have violated any law related to debt collection practices, and that he is not aware of any ethical violations that have ever been found against the finn in any state. (ECF #76 at 227). Mr. Pona testified that attorneys are involved in client acquisition and due diligence; IT requirements; contracting, including obtaining wa1Tanties as to the validity of the debts put forth for collection; sampling documentation and tern1s from collection accounts, including calculation of interest rates, analyzing default provisions, reviewing statutes of limitations, and determining when arbitration is required; reviewing for responsible parties; debtor asset review; permissible fees; develop criteria for scrubs that weed out non-collectible accounts; and, drafting the demand letters. (ECF #76 at 230-256).
Mr. Scott Weitman was also called by the defense. He is also an attorney who is cu1Tently the managing shareholder of the Weitman fom. (ECF #77 at 28). There are cunently 25 attorney shareholders in the firm, and approximately 60 attorneys overall. (ECF #77 at 34). -14-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 15 of 23. PageID #: 3378 At times the firm has had up to 120-140 attorneys at a time. (ECF #77 at 34). Mr. Weitman testified that the firm has never been found to have violated any law, and that none of the firm's lawyers have ever been found to have committed ethical violations. (ECF #77 at 39). When working for the Ohio Attorney General the firm was chosen and continuously audited and the state never had a complaint with how they managed their debt collection practices. (ECF #77 at 40). He also testified that Ms. Bitterman and Mr. Pana con-ectly testified as to the involvement that attorneys have in the debt collection processes at Weitman. (ECF #77 at 41-42). Mr. Weitman testified that everything in the demand letter is trnthful. (ECF #77 at 62). FINDINGS OF FACT/CONCLUSIONS OF LA \V The Couri makes the following findings of fact and conclusions of law based upon the evidence presented at trial:
1. This Court has subject-matter jurisdiction over this matter under 12 U.S.C. §5565(a)(l), 28 U.S.C. § 1331, and 28 U.S.C. § 1345.
2. Weitman regularly collects or attempts to collect consumer debts and, therefore, is a "debt collector" as defined under the FDCP A.
3. Weitman collects debt related to consumer credit, and is, therefore, a "covered person" as defined under the CFP A.
4. W eltman is a legal professional association operating as a law film, with a fully integrated collection agency. The film is owned exclusively by attorney shareholders and the Board of Directors consists of five such shareholders. 5. Weitman also employs non-attorneys in the debt collection units. -15-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 16 of 23. PageID #: 3379 6. Weitman sends out letters that are generated from attorney created and attorney approved templates. One of these templates is an initial demand letter printed on law finn letterhead, with the name of the firn1 appearing in all caps and in bold at the top with "ATTORNEYS AT LAW" printed directly beneath. "Weitman, Weinberg & Reis Co., LP.A." is listed as the signatory on these letters.
7. The demand letters accurately describe the identity and legal description of the entity sending the letter. As such, it cannot be fairly described as false or misleading simply for correctly identifying Weitman as a Jaw fom, and as the signatory. 8. The initial demand letter advises the putative debtor (I) that the debt has been placed with Weitman for collection and (2) that the consumer has specific rights under the FDCPA. These representations are both truthful.
9. The demand letter is sent on Weitman' s letterhead, and accurately conveys the fact that 1Veltman is a law fim1 that has been retained to collect the putative debt. The letter does not state that an attorney has reviewed the particular circumstances of the account, does not mention any potential legal action, and is not signed by an attorney. 10. The demand letter template, used to generate the demand letters sent by Weitman reads as follows:
Please be advised that the above referenced account has been placed with us to collect the outstanding balance due and owing on this account to the cunent creditor referenced above. As of the date of this letter you owe the amount listed above. Therefore, it is imp01tant that you contact us at [phone number] to discuss an appropriate resolution for this matter. This communication is from a debt collector attempting to collect this debt for the current creditor and any information obtained will be used for that pmpose. Unless you dispute the validity of this debt, or any portion -16-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 17 of 23. PageID #: 3380 thereof, within thirty (30) days after receipt of this letter, we will assume the debt is valid. If you notify us in writing within the thirty (30) day period that the debt, or any portion thereof, is disputed, we will obtain verification of the debt or a copy of a judgment and a copy of such verification or judgment will be mailed to you. If you request in writing within the thirty (30) day period, we will provide you with the name and address of the orginal creditor if different from the current creditor. Thank you for your attention to this matter.
Sincerely, Weitman, Weinberg & Reis Co., L.P.A.
11. Most of the content of the letter follows the language of the FDCP A. The first two sentences provide the infonnation required by 15 U.S.C. §1692g(a)(l) and (2). The disclosure in the next paragraph that the communication is from a debt collector is nearly identical to the language of 15 U.S.C. §1692e(l I), and the rest of that paragraph contains the exact language required by 15 U.S.C. §1692g(a)(3)-(5).
12. Weitman is not practicing law when they send demand letters. 13. Weltman's demand letters can be interpreted to imply that an attorney is "meaningfully involved" in the debt collection process. 14. Weitman does not require an attorney to review every individual consumer account before a demand letter is sent, and Weitman attorneys do not form a professional judgment about the validity of a debt or the appropriateness of sending a demand letter before the letters are sent. 15. Weitman obtains infmmation from creditor clients about consumer accounts, and data is loaded into Weltman's compnter system. Attorneys are involved in bringing clients to the firm, drafting client contracts, checking their reputation, interacting with the client, and -17-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 18 of 23. PageID #: 3381 discussing the available data and documentation, the history of their portfolio and types accounts, which consumers are represented by attorneys, any asset reviews that have occurred, and arbitration or bankruptcy information, reviewing the clients procedures and policies, and evaluating whether the client is a trustworthy and legally compliant creditor. This takes place before demand letters are sent.
16. Attorneys obtain warranties as to the validity of the debts put forth for collection; sampling documentation and tenns from collection accounts, including calculation of interest rates, analyzing default provisions, reviewing statutes of limitations, and determining when arbitration is required; reviewing for responsible parties; debtor asset review; and the validity of fees.
17. The data provided by Weltman's clients is "scrubbed." Scrubbing is a process by which outside vendors use criteria established by Weltman's lawyers to flag consumers who should not be sent collection letters. Attorneys, using their legal knowledge create procedures and criteria for analysis that can be taught to non-attorney employees or programmed for automated implementation or programming of the "scrubbing" criteria. This takes place before demand letters are sent.
18. Weitman has a fonnal compliance program that is developed and approved by attorneys, including the shareholders and the Board.
19. Weitman has hundreds of policies and procedures for collecting debts, as well as educating, and supervising staff.
20. Weltman's policies and procedures are drafted by attorney shareholders, go through several layers of attorney review, and are eventually approved by attorney Board members. They -18-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 19 of 23. PageID #: 3382 are also enforced by attorneys.
21. Weitman conducts routine audits for compliance across the business units and ensures compliance with client's processes and procedures as well as Wellman's internal processes and procedures.
22. Attorneys assess issues that may arise with statutes oflimitations, arbitration clauses, choice of law issues, how interest is calculated, last date of payment, deceased debtors and other legal questions. Many of these issues must be addressed by an attorney before a demand letter is sent.
23. Attorneys draft the demand letter templates, and they are approved by the attorneys in \Veltman's Compliance Audit Department.
24. Attorneys and non-attorney staff work together on a daily basis, and interact in weekly meetings. Weitman attorneys oversee all departments and are responsible for the training and oversight of all non-attorney staff.
25. Weitman reviews cases for litigation and litigates collection actions in the states where its attorneys are licensed.
26. There has never been a finding in any jurisdiction that Weltman's letters or any other of its statements contain falsehoods or misrepresentations. 27. Weitman collected debts for the State of Ohio using substantially similar demand letters to the ones at issue in this case, and following the same processes and procedures it follows for all other debt collection clients. The Ohio Attorney General, Richard Cordray, approved of these letters and with full knowledge of their content approved the use of these letters for the State of Ohio's collection effo1ts.
-19-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 20 of 23. PageID #: 3383 28. Despite requiring similar indications and disclosures of attorney involvement in the debt collection letters used on behalf of the State of Ohio, Richard Cordray, when he became head of the CFPB, authorized this lawsuit against Weitman for trnthfully identifying themselves as a lav,,finn and as attorneys, and for signing their demand letters with the firm name. 29. Plaintiff offered no evidence to show that any consumer was harmed by Weitman' s practice of identifying itself as a law firm in their demand letters. 30. Plaintiff offered no evidence to show that any consumer did or would be inclined to prioritize payment for the debts referenced in Wellman's demand letters over any other debt they may have owed.
31. Plaintiff offered no evidence to show that any consumer did or would be inclined to pay the amount sought in Weltman's demand letters even if they did not owe the debt. 32. Plaintiffs expert witness did not present credible evidence from which the fact finder could infer that any consumer's were misled by Weltman's demand letter. 33. The expert testified that his research showed that 40% of the people who read the letter would think that a lawyer had "reviewed " the account. 34. His testimony also showed, however, that 20% of people thought a lawyer "reviewed" the account even when no mention of a law firm, or attorney was made in the letter. 35. His survey did not ask what a consumer meant when they said a lawyer "reviewed" the account; did not ask whether a consumer could have been biased based on collection actions they may have experienced or other criteria; did not ask whether consumers would have felt misled or confused if they knew an attorney was involved in the debt collection process to the same extent that Weitman attorneys were shown to have been involved; and, did not ask whether -20-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 21 of 23. PageID #: 3384 a perceived attorney review would have influenced their decisions about whether and when to pay the debt reference in the letter.
36. The FDCP A prohibits a debt collector from using "any false, deceptive, or misleading representation or means in connection with the collection of any debt." 15 U.S.C. § I 692e. This includes using any "false representation or deceptive means to collect or attempt to collect any debt," and making "false representation or implication that ... any communication is from an attorney." 15 U.S.C. § 1692e(3), (10).
37. This determination must be made from the point of view of the "least sophisticated consumer." Kistner v. Law Offices of A1ichael P. Mwgalefsky LLC, 518 F.3d 433, 438 (6th Cir. 2008).
38. The CFPA prohibits any violation of the FDCPA, as well as "any unfair, deceptive, or abusive practice" in connection with consumer products or services. 12 U.S.C. §§ 5481(12)(H), (14); 553 l(a); 5536(a)(l)(A), (B). The standard under the CFPA is the same as the standard under the FDCP A, but is viewed from the perspective of reasonable consumers. 39.
If there is no violation under the FDCP A in this case, there can be no violation under the CFP A.
40. Comts have held that when an attorney signs a letter on law firm letterhead, the least sophisticated consumer may believe that the attorney was involved in the debt collection process. Thus, they have concluded that if the attorney is not meaningfully involved in that process, the letter may be deceptive or misleading under the FDCP A. 41. Weltman's demand letters were truthful on their face. 42. Weitman attorneys were meaningfully and substantially involved in the debt -21-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 22 of 23. PageID #: 3385 collection process both before and after the issuance of the demand letters. 43. Plaintiff did not prove by a preponderance of the evidence that Weltman's letters were false, misleading, or deceptive.
44. A misleading representation is only actionable under the FDCPA if it is material. See FTC v. E.A1.A. Nationwide, Inc., 767 F.3d 61 L. 630-31 (6th Cir. 2014). 45. A representation is material under the FDCPA if it would influence the least sophisticated consumer's decision on whether and when to pay a debt. See, e.g., Boucher v. Fin. Sys. Of Green Bay, Inc. , 880 F.3d 362, 366 (7th Cir. 2018). Under the CFPA, a false representation is material if it is likely to influence a reasonab)e consumer to pay a debt. See Fanningv. FT.C., 821 F.3d 164,173 (] st Cir. 2016).
46. Even ifWeltman's letters had misrepresented the level of attorney involvement, Plaintiff could not prevail because there is no evidence that any consun1er's decision on when and whether to pay a debt was influenced by the inclusion of the attorney identifiers in \Veltman' s demand letters.
4 7. In light of the above factual findings and conclusions of Jaw, the Court finds that Plaintiff has failed to prove its case by a preponderance of the evidence. CONCLUSION For the foregoing reasons this Court finds that Plaintiff failed to prove by a preponderance of the evidence its claims in Counts One, Two, and Three of the Complaint. Therefore,judgment is entered in favor of the Defendant, \Veltman, Weinberg & Reis Co., LP.A. and against Plaintiff, Consumer Financial Protection Bureau, on all of its remaining -22-
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Case: 1:17-cv-00817-DCN Doc #: 87 Filed: 07/25/18 23 of 23. PageID #: 3386 claims. All costs are assessed to the Plaintiff. This case is hereby tem1inated. IT IS SO ORDERED.
DATED:
-23-
Memorandum ()
PDF of this document (5 pages)
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Case: 1:17-cv-00817-DCN Doc #: 96 Filed: 10/22/18 1o0f5. PagelD #: 3664
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO
EASTERN DIVISION CONSUMER FINANCIAL, CASE NO. 1:17 CV 817 PROTECTION BUREAU, Plaintiff, JUDGE DONALD C. NUGENT
V.
WELTMAN, WEINBERG & REIS CO., L.P.A.,
) ) ) ) MEMORANDUM OPINION ) AND ORDER
)
)
)
Defendant.
This matter is before the Court on Defendant, Weltman, Weinberg & Reis Co., L.P.A’s (“Weltman”) Motion for Award of Attorneys’ Fees. (ECF #89). Plaintiff, the Consumer Financial Protection Bureau (“CFPB” of “the Bureau”) filed an opposition to this motion, (ECF #91), and Defendant, Weltman filed a Reply brief in support of its request (ECF # 94). The
matter is now fully briefed and ripe for the Court’s consideration.
LEGAL STANDARD Defendant seeks an award of $1,207,481.25 for attorneys fees under 28 U.S.C. §2412(b), alleging that the CFPB brought this action in bad faith. The Equal Access to Justice Act
(“EAJA”) waives the government’s sovereign immunity allowing it be held liable for payment of
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attorney’s fees and costs under certain circumstances. 28 U.S.C. §2412. Subsection (b) of the EAJA permits a court to award “reasonable fees and expenses of attorneys” to a prevailing defendant in a civil suit brought by an agency of the United States “to the same extent that any other party would be liable under the common law or under the terms of any statute which specifically provides for such an award.” 28 U.S.C. §2412(b).
In this case, the Defendant claims that this case falls within the “bad faith” exception to the American Rule that each party bears its own attorneys fees. Courts have inherent authority to impose sanctions, including an award of attorneys fees, when a party litigates “in bad faith, vexatiously, wantonly, or for oppressive reasons.” United States ex rel. Tingley v. PNC Fin. Serv. Grp., Inc., 705 F.App’x 342, 344 (6 Cir. 2017). In order to impose attorney fees as a bad faith sanction, a court must find that “ (1) the claims advanced were meritless, (2) counsel knew or should have known that the claims were meritless, and (3) the suit was brought for an improper purpose.” Jd. at 344-45. A court should exercise restraint when considering the imposition of such sanctions, but should not “shrink from exercising [their power] when sanctions are justified by the circumstances.” Stalley v. Methodist Healthcare, 517 F.3d 911, 920 (6" Cir. 2008). A claim is colorable, and not “meritless” when “it has some legal and factual support, considered in the light of the reasonable beliefs of the individual making the claim.”
Kerin v. U.S. Postal Serv., 218 F.3d 185, 190 n. 2 (2d Cir. 2000).
ANALYSIS Weltman argues that it is entitled to attorney’s fees because, as an investigative
governmental agency, the CFPB knew or should have know its claims were meritless. Although
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this court found that the CFPB ultimately did not prove that Weltman’s attorneys were not “meaningfully involved” in the collection of debts, and consequently the statement and representations made in their demand letters were not misleading or otherwise actionable, it does not follow that the claims were “meritless.” The CFPB had sufficient evidence to survive summary judgment, as well as motions for judgment on the pleadings. Further, an advisory jury did make a finding that Weltman’s communications contained “false, deceptive, or misleading representations or means in connection with the collection of a debt.” (ECF #87 at 3). As stated in the Court’s Findings of Fact and Conclusions of Law, there was some evidence presented that could support a finding that Weltman’s letters could be misleading to certain consumers. The Court did not ultimately adopt that finding because the evidence that could have supported the finding came exclusively from an expert that the Court deemed not credible. (ECF #87).' The fact that the Court did not find him credible, does not suggest that his testimony was false, or that the CFPB did not have a good faith belief in the validity of his testimony. Further, there is no accepted specific test for determining when a lawyer is “meaningfully involved” in the process of debt collection. The CFPB did present evidence that attorneys had not directly reviewed and exercised their own professional judgment as to the validity of each debt before the collection
letters were sent out, and the case law they referenced in their briefing relied heavily on this
The advisory jury’s findings were also inconsistent in that the Complaint alleged the letters were misleading because they overstated the involvement of lawyers in the debt collection process. The jury, and this Court, however both found that the evidence ultimately supported a finding that Weltman’s lawyers were meaningfully involved in the process, disproving the only asserted basis for finding that the letters contained false, deceptive, or misleading. (ECF #87).
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factor in determining the ultimate question of “meaningful involvement.” That case law, although it came from other circuits, supported the CFPB’s theory that a demand letter can be misleading under the relevant laws if it indicates that it comes “from an attorney” or law firm, even if every statement in the letter is literally true.
Although this Court found that the totality of the evidence clearly showed that Weltman’s attorneys were meaningfully involved in the debt collection process, in a variety of ways, and at every stage of the process, there is no evidence that would indicate that the CFPB’s position was completely meritless. Further, even if the case were meritless, in retrospect, there is no indication in the record that the CFPB believed or should have believed it to be so. The CFPB did have some legal and factual support for its position, and there is no indication that their pursuit of the lawsuit was wholly unreasonable considering the beliefs and purpose of the agency, as well as the body of case law established in similar cases throughout the country.
Finally, there is absolutely no indication that the CFPB brought this case against Weltman for an improper purpose. Even if the Court were to agree with Weltman that this litigation was an overreach based on the facts, or that the Bureau was attempting to expand consumer protection laws past their useful purpose, there is no evidence to suggest that Weltman was targeted or otherwise pursued in bad faith. The CFPB is tasked with protecting consumers and there is no reason to believe that this litigation, albeit unsuccessful, was aimed at anything other than a vigorous pursuit of this goal. Different agency leaders may have differing approaches as to how far to push the limits of the consumer protection laws but these differences have no bearing on whether each position is being executed in good faith. Although it may well be unjust
that Weltman has suffered reputational harm and has had to expend significant resources
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Case: 1:17-cv-00817-DCN Doc #: 96 Filed: 10/22/18 5 of 5. PagelD #: 3668
defending itself from disproved charges in this action, the Bureau’s actions do not rise to a level that would permit the Court to award attorney fees, as claimed by Weltman, under the law that
applies in this case.
CONCLUSION
For the reasons set forth above, Defendant’s Motion for Attorney’s Fees is DENIED.
(ECF #89). ITIS SO ORDERED.
Nilace a NUGE NT UNITED STATES Oe TRICT JUDGE
DATED: U Choe (9