Thursday, December 20, 2007


Debt collectors often use a simple method in the collection of debts – scare the debtor enough and the bill will be paid. However, these “simple methods” are often illegal, unethical and abusive, and more importantly, may very well violate the Fair Debt Collection Practice Act (FDCPA), irrespective of whether the debt is legitimate. In passing the FDCPA, Congress held hearings, took evidence and made specific findings that ‘[t]’here [was] an abundant of evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors. Abusive debt collection practices contribute to the number of personal bankruptcies, to marital instability, to the loss of jobs, and to invasions of individual privacy.” Thus, the FDCPA was meant to protect you, the consumer, even if you, for whatever reason, fail to pay certain debt. Keep in mind that the FDCPA was not meant to get rid of your debts, but only abuse behaviors in the collection of your debt.

Under the Fair Debt Collection Practice Act, a “debt collector” is anyone who regularly collects debts owed to others. This includes all collection agencies and attorneys who collect debts on a regular basis. In most instances, it does not include a creditor (department stores, for example) attempting to collect debts directly from customers. The debts covered include personal, family and household debts, including purchases/charges for automobile, medical care, credit cards, etc.

The following practices are illegal, unethical and/or abusive under the Fair Debt Collection Practice Act:

Contacting You or Third Parties

• A debt collector may not contact you before 8:00 am or after 9:00 pm any day, unless you agree.

• A debt collector may not contact you at work if the collector knows that your employer disapproves of such contact. Thus, you should fax a letter over to the collection agency or lawyer telling her/him that your employer disapproves of such calls.

• If you send a letter (preferably by fax, email or certified mail) to the debt collector not to contact you anymore, they MUST stop all such contacts. However, this does not make the debt go away, as they can pursue the debt in court.

• If the debt collector knows that you are represented by an attorney, they cannot contact you directly.

• The debt collector is not permitted to contact a third party (other than you or your attorney) unless to find out where you live, work and your telephone number, and may not do so more than once.

• The debt collector may not tell anyone (other than you or your attorney) that you owe money.

Required Notices

• Within 5 days after your initial contact with the debt collector, they must send you a written notice of the amount of money you owe, the name of the creditor, a statement that “unless you within 30 days of receipt of this notice, disputes the validity of the debt, or any portions thereof, the debt will be assumed to be valid.”

• The debt collector must provide to you a written statement that if you notify the debt collector in writing within the 30-day period that the debt, of any portions, is disputed, the debt collector will obtain verification of the debt and will mail it to you.

• The debt collector must provide you with a written notice in the initial communication that the debt collector is “attempting to collect a debt and that any information obtained will be used for that purpose.”

Harassing or Abusive Conducts

A debt collector may not …

• Use or threaten to use violence or other criminal means to harm you’re your reputation or property of you or other persons, in the collection of a debt, whether or not the debt is valid.

• Use obscene or profane language in order to abuse you into paying your debt.

• Publish a list of customers who refuse to pay their debts, except to a consumer reporting agency.

• Advertise any debt for sale to coerce payment.

• Make telephone calls constantly to annoy or harass you.

• Contact you by telephone and not disclose their identity.

False, Deceptive or Misleading Statements

A debt collector may not …

• Falsely represent or imply that the debt collector is affiliated with the US government or any state.

• Falsely represent the character, amount, or legal status of any debt.

• Falsely represent or imply that any individual is an attorney or that the communication is from an attorney.

• Represent or imply that nonpayment will result in the arrest or imprisonment of any person, or the seizure, garnishment, attachment, or sale of any property or wages unless such action is lawful and the debt collector intends to take such action.

• Threaten to take any action that cannot be legally taken or that is not intended to be taken. For example, accusing you of committing a crime, and falsely telling you that you will be prosecuted, unless they actually go through with such a threat. If the debt collector is an attorney, that attorney may not threaten to prosecute you criminally in order to convince you to pay your debt as this would be a violation of attorneys’ ethical codes.

• Falsely represent or imply that you have committed a crime or other conduct to disgrace you.

• Communicating or threatening to communicate to any person your credit information which is known (or should be known) to be false.

• Use any false representation or deceptive means to collect or attempt to collect a debt or to obtain information concerning you. Like, for example, contacting a third party and falsely representing that the caller is calling to conduct a survey.

• Fail to disclose in the initial communication (oral or written) that the “communication is from a debt collector” and they are “attempting to collect a debt and any information obtained will be used for that purpose.”

• Falsely represent or imply that documents are legal process, or sending actual legal process and falsely representing or implying that they are not legal process and do not require any action – in order to encourage a judgment of default, for example.

• False represent that they are associated or employed by a consumer credit reporting agency.
Unfair and Unconscionable Practices
Debt collectors may not:

• Collect any amount greater than your debt, including principal, interest, collection costs, etc, unless such amounts are permitted by agreement or your state’s law.

• Solicit from you a postdated check for the purpose of threatening or instituting criminal proceedings (for bounced check, for example).

• Depositing or threatening to deposit post dated checks prematurely.

• Causing you to pay for telephone charges to you by concealing the true nature of the call.

• Threatening to seize your property or garnish your wages without court action or legal authority.

Civil Liability for violation of the FDCPA

• Sue in state or federal court. You may file a lawsuit against the debt collector in either state or federal court within 1 year for violation of any part of the FDCPA. You can recover money for the actual damages you suffered plus an additional amount up to $1000 for each violation. You may also recover attorneys’ fees and costs. In case of a few or more individuals, all of you may be able to sue as a class (class action), and if successful, could recover money for damages up to $500,000, or one percent of the collector’s net worth, whichever is less.

• Report abuse to your state’s attorney general’s office or to the Federal Trade Commission.

Saturday, November 17, 2007

Offer of Judgment Rule Should Not be Applied to Consumer Fraud Claims -By Jay Chatarpaul

A few weeks ago, a defense counsel served upon us an offer of judgment for a specific sum of money to settle a plaintiff’s claim. One of the plaintiff’s causes of actions includes a claim made under the Consumer Fraud Act (CFA). Since I have never received an offer of judgment with respect to a CFA claim, I was compelled to do a little research. After having done so, I remain ever more convinced that the September 2006 amendments did not cure the confusion regarding the applicability of the Offer of Judgment Rule in the context of CFA claims, and there exist a need for a bright line rule to guide attorneys and litigants alike.

Rule 4:58 (the Offer of Judgment Rule)(hereinafter the “Rule”) permits a party to serve upon the other an offer of judgment to take monetary judgment against the offer or in favor of the offeree for a sum stated, including costs. Rule 4:58-1(a). The offeree has either 90 days after the making of the offer, or 10 days prior to the actual trial date, which ever comes first, to accept the offer. Rule 4:58-1(b). If the offer was made by a claimant (refer to as the “plaintiff” for simplicity) and rejected by the non-claimant (refer to as the “defendant”), the plaintiff is entitled to the recovery of all reasonable attorneys fees, actual costs, prejudgment interest for a specific time period, following the expiration of 90 days after the making of the offer, or 10 days before trial, whichever comes first, where the plaintiff’s recovery at trial is at least 120% of the offer. Where the offer is made by the defendant, R. 4:58-3 permits the defendant to recover their actual costs and reasonably attorneys fees incurred following either 90 days after the making of the offer, or 10 days prior to actual trial, whichever comes first, where the plaintiff’s recovery at trial is 80% or less than the defendant’s offer. However, when the offer is made by a defendant, the offer of judgment rule, among other exclusions, specifically precludes the granting of an allowance where a “ … fee allowance would conflict with the policies underlying a fee-shifting statute of rule of court…”R.4:58-3(c)(4).

R.4:58-3(c)(4) was added to the Offer of Judgment Rule in July 27, 2006 and became effective on September 1, 2006. See, 2006 Supplemental Report of the Supreme Court Civil Practice Committee, Proposed Amendments to R. 4:58 — offer of judgment, p78.

The New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 et seq., (hereinafter the “CFA” or the “Act”) in pertinent parts, prohibits the unlawful practice of “[t]he… act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby ….” N.J.S.A. 56:8-2.

The CFA specifically mandates the imposition of treble damages of a plaintiff’s ascertainable loss, plus reasonable attorneys’ fees and costs, where there was a finding of an unlawful practice under the Act. N.J.S.A.56:8-19. Even if a plaintiff cannot prove an ascertainable loss, she is still entitled to the recovery of attorneys’ fees and costs. Id.; Cox v. Sears Roebuck & Co., 138 N.J. 2, (1994).

There is a well-established principle, recognized by the courts all across the State, that the CFA’s fee shifting policy is the driving force behind the advancement of the goal of the CFA- to retain competent counsel in assisting consumers in eradicating fraud in the marketplace. See for ex., Performance Leasing Corp. v. Irwin Lincoln-Mercury, 262 N.J. Super. 23. 33 (App. Div. 1993)([“W]we have no doubt that there is a strong legislative policy in favor of fees both to make whole the victims of consumer fraud and to deter unconscionable practices.”); Wisser v. Kaufman Carpet Co. Inc., 188 N.J. Super. 574, 579 (App. Div. 1983)(the strong legislative policy of awarding attorneys fees under the CFA “…has the salutary purpose of promoting representation and therefore court access for consumer claims involving a minor loss to the individual plaintiff but a major gain to the community through ridding the marketplace of fraudulent and deceitful conduct.”) Furst v. Einstein Moomjy, Inc. 82 N.J. 1, 24 (2004)(“The Legislature undoubtedly was aware that in consumer fraud cases involving minor losses, attorneys' fees frequently would exceed the damages suffered. Nevertheless, the Legislature intended plaintiffs to have access to the court system to pursue relatively small claims against deceptive retailers. In that respect, the provision for attorneys' fees is one of the deterrent aspects of the legislation, and therefore, fraudulent retailers should beware… Fee-shifting provides an incentive to competent counsel to undertake high-risk cases and to represent victims of fraud who suffer relatively minor losses.” )

Based on the above, it would appear that an allowance for attorneys’ fees and costs against a plaintiff in a CFA case, where the plaintiff’s recovery is 80% or less than the defendant’s offer “… would conflict with the policies underlying a fee-shifting statute or rule of court….” (i.e., the CFA).

However, the question remains, in a context of CFA cases, should the trial court, as a matter of law, based on the wording of the CFA itself and/or or well-established case law, as indicated above, reject any application for fees and costs by a defendant, or would the trial court be required to hear arguments whether the granting of a defendant’s application for fees and costs would ‘conflict with the policies underlying [the CFA’s] fee-shifting statute…”?

It would seem to me based on the wording of the Rule and the CFA, as interpreted by the courts, that the Rule cannot be applied in the context of a CFA claim. Additionally, the Rule cannot and should not be interpreted to apply to CFA claims because the goal of the Rule in promoting settlement (a rule of convenience) should not trump the goal of the CFA in retaining competent counsel to assist consumers in eradicating fraud in the marketplace in the State of New Jersey. However, reasonable minds can differ, and that’s precisely why we need a clear-cut, bright line rule, specifically excluding the application of the Rule to CFA claims, and perhaps to other claims which permits a plaintiff to reasonable attorneys’ fees and costs, such as the Law Against Discrimination.

Another reason why a bight-line rule should be adopted to specifically exclude the Rule’s application to CFA claims is the very incongruity of its application to such claims. For instance, the defense attorney’s offer of judgment I received specifically stated that the offer was made for all claims as to “damages.” However, the CFA, unlike other statutes, does not refer to “damages,” but “ascertainable loss.” The CFA requires a court, in addition to reasonable attorneys’ fees and costs, to treble a plaintiff’s ascertainable loss where there was finding of an unlawful practice. Thus, where a plaintiff’s ascertainable loss is $5000, a court must treble that ascertainable loss and award the plaintiff $15,000, plus reasonable attorneys fees. Suppose now, for example, a few weeks prior to trial, a defendant offers the plaintiff $20, 000 to settle her “entire claim” and all “damages asserted in the complaint.” Suppose for example, at the time of the making of the offer, plaintiff’s counsel has exhausted 150 reasonable hours on the case, accumulating attorneys’ fees in the amount of $30,000 (at $200 per hour, for ex.). The $15,000 offer is then rejected, and at trial, having exhausted another 50 hours, plaintiff recovers $5000, when trebled totals $15,000. Obviously, if the Rule were to be applied there, since plaintiff’s recovery was only 75% of defendant’s offer (($15000), she would be required to pay the reasonable attorneys’ fees and costs of the defendant. But what about plaintiff’s counsel legal fees? Since the CFA mandates attorneys’ fees where there is a finding of an unlawful practice, even if there was no showing of ascertainable loss, how should this provision apply in the context of the Offer of Judgment Rule? Should or should not the plaintiff’s reasonable attorneys’ fees of $40,000 (200 hours at $200 p/hr) be counted as part of her in her award for purpose of the Offer of Judgment Rule? A party with greater superior financial power could easily take advantage of a plaintiff in a CFA context where the plaintiff sustained a minor ascertainable loss and a few weeks before the trial, the defendant makes an offer to pay the plaintiff her trebled damages and makes no mention of attorneys’ fees. If the Rule were interpreted in this matter, the CFA as a powerful too invoked by victims of market place fraud would cease to exist for all practical purpose in favor of a convenient rule to settle cases, as there will be few private attorneys willing to exhaust their often limited time and resources in pursuit of CFA claims given such a scenario.

Tuesday, May 15, 2007

Race Discrimination Case Against International Shipping Company in Newark

A large customs broker with offices all across the globe, including right here in Newark, New Jersey, was the subject of a civil rights lawsuit filed by our office on behalf of 3 African-American females. The plaintiffs, formerly employed at the Newark location, were all fired at the same time on the same day by the company. The Company claimed that the terminations were because of costs reductions. That is, reduction of the labor costs at its Newark office. However, no other employees were terminated or fired from their positions at the same time as the plaintiffs, and the company placed job listings in newspapers and on the internet right after plaintiffs' terminations.

The allegations set forth in plaintiffs’ lawsuit, together with documents obtained in discovery, were sufficient to defeat any summary judgment motion filed by the defendant. The matter was settled prior the case reaching summary judgment.

Jury Found that Bank of America Committed Consumer Fraud

In March, 2007, a jury in Jersey City, after a two-day trial, found that Bank of America violated the New Jersey Consumer Fraud Act when it lost the records of a customer's $26,000 deposit in two separate CDs, and then refused to return the customer's interest and principal when the customer appeared at the bank with the two original certificates to redeem them.

In 1995, the plaintiff, a retired grandmother, deposited $26,000 in two CDs (automatically renewable every 7 months) with Bank of America predecessor bank. In late 2002, the plaintiff appeared at Bank of America predecessor bank to redeem her CDs, which had then increased to more than $40,000 in principal and interest. The bank refused to honor the plaintiff’s request contending that they could not find any records of her deposits.

A banking law in New Jersey requires that if a customer presents a genuine CD (or a passbook savings account) along with an affidavit that she did not redeem the CD, a bank must pay the customer the value of that CD (principal plus interest) unless the bank finds evidence that payment was already made. Despite having no records of payment on the CD, Bank of America continued to refuse to honor the CDs. Despite Plaintiff's 6-months efforts in trying to obtain her money, the bank refused to honor the CDs. Plaintiff told a bank employee that she will obtain a lawyer, and the bank employee’s response was (in paraphrase) “do what you have to do.”

Plaintiff then sued the bank for breach of contract and violation of the New Jersey Consumer Fraud Act, which makes it unlawful for a business to commit an "unconscionable commercial practice" against a consumer.

Bank of America, through their attorneys, first denied all allegations of the plaintiff, even the existence of the CDs. Then a few months later, changed its mind, and admitted that they breached their contract with the plaintiff. But then alleged that the CDs paid interest rates of less than 7% -as low as 1% in some years! Obviously, a judge did not buy that defense. The judge ruled that Bank of America (as a successor in interest) breached its contract with the plaintiff and ordered the Bank to pay the customer the full value of the CDs, which had grown to nearly $45,000. Bank of America did not comply (or refused to) with that order until 30 days later, and paid only after plaintiff's attorney threatened to file a motion in court. The Bank then paid the money - albeit reluctantly.

Plaintiff's consumer fraud claim remained. The bank refused to settle with the plaintiff despite plaintiff's attorney offer of a modest settlement. The bank then somehow obtained a dismissal of plaintiff's consumer fraud claim. However, an appellate court reversed that dismissal finding that a lower court judge made wrong to dismiss the case. The case was then sent for trial.

At trial, a former employee was called to testify on behalf of Bank of America. He testified that he received no training from Bank of America when a customer comes in with a passbook savings account or CD and the bank does not have any records of that customer’s deposit. That is, all he can do in such as situation is say to the customer "sorry, we can't help you." This is in direct opposite to a New Jersey Banking law (the Record Retention Statute) which states that in such a situation, the bank is required to obtain an affidavit from the customer, and if the bank cannot find proof of payment, the bank MUST pay the customer. Period.!!

After a 2-day trial, the jury found that Bank of America committed an UNCONSCIONABLE COMMERICAL PRACTICE in violation of the New Jersey Consumer Fraud Act by refusing to pay the plaintiff on her CDs and requiring her to sue them just to collect her own money.

While the jury did not find that plaintiff suffered an ascertainable loss, a Judge ruled that Bank of America must reimburse plaintiff all her reasonable counsel fees and costs.

Dragging a poor retired woman through the mud of litigation for over 4+ years is not just unconscionable commercial practice, but simply immoral. This not just a bad business decision, but a horrible conduct on the part of a bank and those who promote their interest.

Jay Chatarpaul was plaintiff’s trial counsel. Thomas Monroe, Meyer and Landis LLP, tried the case for Bank of America.