Jen Ngai Lavellee, Staff Attorney

As a result of Legal Aid’s advocacy, a plaintiff debt collector recently agreed to dismiss a case against one of our clients that sought in excess of $10,000 in alleged debt, fees, and interest from credit card charges she allegedly made many years prior.

Ms. B came to Legal Aid because she had been sued for over $10,000 by a company that she did not recognize. The complaint stated that the lawsuit was based on her nonpayment of an old credit card debt and sought to collect that balance plus interest and attorney’s fees. Ms. B did not dispute having owned the credit card at issue, and she admitted that she had fallen behind on her payments several years ago after suffering a stroke. But she was not sure of the actual balance on the account, nor did she did not recognize the plaintiff as the same company that had issued the credit card to her decades ago. Because Ms. B’s only sources of income were social security and her small pension, she could not afford to pay anything on the debt. Ms. B. came to Legal Aid fearful of what would happen to her as a result of the lawsuit.

Legal Aid entered the case and asked the plaintiff — a debt-buyer company that purchases bad debts — for proof that it was the owner of Ms. B’s credit card account. In response, the plaintiff produced a series of documents intended to show that Ms. B’s credit card debt had been assigned or sold three different times in order to get from the original creditor to the plaintiff. However, the documentation did not identify Ms. B’s account, but instead showed only that hundreds or thousands of unidentified accounts were sold at once. It also contained dates that did not make sense with the alleged chronology of sales, and the plaintiff refused to include any of the actual assignment agreements.

Legal Aid argued to the Court that the problems with plaintiff’s documentation showed that it could not in fact prove it was the true owner of Ms. B’s credit card account and therefore lacked the legal standing to sue her on the debt. Legal Aid explained that ownership of the account was a critical issue, because if Ms. B paid the plaintiff to settle or otherwise satisfy the debt and a different company revealed itself as the true owner, Ms. B would suffer duplicate liability on the same debt. Legal Aid argued that allowing the plaintiff to move forward with the case and try to recover from Ms. B under the circumstances would be both unfair and legally incorrect.

At a pre-trial hearing before the judge, Legal Aid stressed in particular that the plaintiff’s documents presented serious reliability issues and that the plaintiff would not be able to present sufficient evidence at trial to prove its case. Both parties and the judge agreed that a decision in the case could have a significant impact on the standards of proof required of debt-buyer companies in the District of Columbia. After oral arguments in front of the judge were complete, the plaintiff opted to dismiss the case against Ms. B rather than proceed to trial, and it promised never to sue her on the same debt again.

Jen Ngai Lavelle, Staff Attorney

Last week, justice became real for a Legal Aid client whose daily life had been derailed by a company using highly illegal and abusive tactics to attempt to collect on a debt of less than $500.

Ms. H had originally come to Legal Aid because she was receiving multiple calls from debt collectors purporting to be law enforcement officials and threatening to throw her in jail over two checks — written for $150 and $300 — which had bounced.  The callers falsely identified themselves as investigators or police detectives and told her that she was guilty of committing check fraud.  Faced with the fear of imprisonment, Ms. H provided one caller with her personal bank account information so his company could withdraw the funds they claimed necessary to satisfy the debt.  She came to Legal Aid fearful of what would happen when the company learned she did not have enough funds in her bank account to cover the full amount.

In the span of only two months, Ms. H had received approximately 120 calls from the collection company, many of which included variations of the same threats of criminal prosecution.  The repeated and abusive behavior caused Ms. H, who was already disabled, to become depressed and anxious.  She developed insomnia and lost her ability to continue working at her part-time job.

Legal Aid filed a lawsuit on behalf of Ms. H against the company for violation of various local and federal debt collection and consumer protection laws.  At Ms. H’s court hearing, Legal Aid presented evidence of the abusive collection practices to the judge in the form of various witness testimony and tape recordings of sample collection calls.

After hearing the evidence, the judge found that the company had violated multiple provisions of local and federal consumer protection and debt collection laws and entered a judgment in favor of Ms. H for over $35,000, which included actual, statutory, and punitive damages.  The judge also ordered payment of almost $7,000 in attorney’s fees to Legal Aid, which does not charge any fees to its clients but may be awarded compensation in certain cases for the value of the legal services it provides. 

Legal Aid congratulates Ms. H for her victory in this case and thanks her for her role in helping to achieve a measure of justice for others in the District facing similar abuses in debt collection.

Jen Ngai

Chief Operations Officer

Director, Barbara McDowell Appellate Advocacy Project

This week, Legal Aid submitted an amici curiae brief to the Supreme Court of the United States in AT&T Mobility LLC v. Concepcion (No. 09-893), in support of the respondents, AT&T customers Vincent and Liza Concepcion.

The case has the potential to be a blockbuster for consumer rights.  The Supreme Court will address whether businesses can ban class actions as part of mandatory arbitration clauses they have adopted in their standard form contracts with consumers (as well as employees).  It has become an increasingly common practice both for businesses to include mandatory arbitration clauses within these standard form contracts—often offered to consumers on a take-it-or-leave-it basis—and to embed within these arbitration clauses a provision that bars consumers from pursuing relief as a class, whether in court or in arbitration.  Courts across the country, applying the laws of twenty states, have held these class-action bans unconscionable when prohibiting class actions would effectively permit businesses to escape accountability for widespread misconduct, especially when individual losses are too small for it to be feasible for individuals to pursue separate claims.

AT&T’s wireless service agreement requires that its customers arbitrate any dispute they may have with AT&T (rather than file an action in court).  The agreement prohibits customers from proceeding as a class against AT&T in any forum.  The agreement also contains a “blow up” clause that specifies that if the class-action ban is held unenforceable, the entire arbitration clause would be “null and void” and any class action litigated in court.  In this case, AT&T customers Vincent and Liza Concepcion filed a lawsuit alleging that AT&T had violated California consumer-protection laws by advertising wireless phones as “free” without disclosing the $30.22 fee for sales tax added to their bill.  AT&T moved to compel arbitration.  The Concepcions challenged the class-action ban as unconscionable.

Applying California law, the U.S. Court of Appeals for the Ninth Circuit held the class-action ban unconscionable, as effectively exculpating AT&T of liability for any possible wrongdoing.  AT&T filed a petition for certiorari asking the Supreme Court to hear the case, and the Court granted it.  The question before the Supreme Court is whether the Federal Arbitration Act of 1925 precludes courts from declining to enforce class-action bans when they are embedded in arbitration agreements.

The case is critically important to consumers.  Legal Aid and its fellow amici are gravely concerned that if the Court accepts AT&T’s position, businesses could effectively strip consumers of their right to pursue small claims in any forum because, for small individual claims, classwide proceedings often offer the only effective means for consumers to obtain redress and to force businesses to halt illegal practices.  As the amicus brief argues, class-action bans are properly held unconscionable or unfairly exculpatory where they make important contractual and statutory rights unenforceable—a circumstance that may arise when businesses have engaged in wrongful conduct that inflicts modest damages on individual consumers unlikely to have the knowledge, incentive, or effective means to obtain redress.  

Joining Legal Aid on the brief were AARP, the Center for Responsible Lending, the Center for Science in the Public Interest, Consumer Action, Consumer Federation of America, the National Association of Consumer Advocates, the National Consumer Law Center, the National Consumers League, the National Legal Aid and Defender Association, Public Good, and U.S. PIRG (Public Interest Research Group).

The argument will be held on November 9 in the Supreme Court.

To see Legal Aid’s amicus brief, click here.

For a full collection of briefs and key documents in the case, see http://pubcit.typepad.com/clpblog/concepcion/.

Chief Operations Officer

The Legal Aid Society’s Consumer Unit continues to work to preserve affordable and sustainable housing despite the most difficult situations.  One area that Wendy Weinberg, Supervising Attorney of the Unit, and Jennifer Ngai, Equal Justice AmeriCorps Fellow, both focus on are foreclosures that result from fraudulent and/or predatory lending.  Jen shares the story of client with whom our Consumer Unit has successfully intervened on behalf of to prevent a foreclosure. 

Unfortunately, stories like the one shared here are all too common in the District of Columbia.  Funding cuts proposed in the District’s budget threaten to further limit the ability for legal services programs to continue at their current levels let alone grow the program to meet the increasing need.  Legal Aid is grateful to the opportunities provided by organization like Equal Justice / AmeriCorps program as it has allowed us to expand our staffing in this unit.

Jennifer Ngai Equal Justice/AmeriCorps Fellow

Legal Aid’s EJW AmeriCorps Fellow Attends Obama and Biden Address at the White House

Yesterday, amidst a string of phone calls with banks and trustee’s attorneys, one call caught me by surprise in the best of ways – an invitation to come to the White House to hear President Obama and Vice President Biden give an address on the nation’s progress so far under the economic stimulus package.  When?  Today — the one-year anniversary of the Recovery Act.

David Stern, CEO of Equal Justice Works, Cole McMahon, EJW’s AmeriCorps Senior Program Manager and Jennifer Ngai

Through funding provided by the Recovery Act, I was able to join Legal Aid’s Consumer Law Program in October 2009 as an Equal Justice Works AmeriCorps Recovery Fellow.  My particular fellowship was created by a partnership between Equal Justice Works, the Institute for Foreclosure Legal Assistance (IFLA) and the Corporation for National and Community Service (CNCS) to increase legal representation to homeowners at risk of foreclosure.  I attended today’s White House event with David Stern, CEO of Equal Justice Works, and Cole McMahon, EJW’s AmeriCorps Senior Program Manager.

President Obama & Vice President Biden

During his address, President Obama hailed the one-year anniversary of the passage of the economic stimulus and recovery package, acknowledging at first that the measure had not necessarily been politically popular, but then proceeding to highlight the benefits and successes of the package one after another.  From widespread tax breaks for working Americans, to job creation, to investment in progressive technology and infrastructure, the president noted the many ways in which Recovery Act funds have been used to address the deep economic trouble facing the country when he took office.  President Obama stated that the Recovery Act is largely responsible for the country averting a second Great Depression, noting that the economy has gone from shrinking by 6 percent to growing by about that same figure.  Vice President Biden’s remarks conveyed a consistent message – the Recovery Act is working.

Here at Legal Aid, we have seen some of the benefits of the Recovery Act first-hand, most notably with the dramatic expansion of our Consumer Law Program, which launched in September 2008 with the addition of Wendy Weinberg as supervising attorney.  Thanks in large part to the Equal Justice Works AmeriCorps Recovery Fellowship program, Legal Aid’s foreclosure practice is now able to serve low-income homeowners not only through litigation, but also through mediation with servicer banks to obtain mortgage modifications and through extensive community education and outreach.