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Supreme Court Gives Consumers a Rare Win

CommLiti

It is not often lately that there is news of the United States Supreme Court making a decision that is in favor of consumers. Recently, however, the court did just that, putting limits on big business’ and banks’ ability to try to make class action cases more difficult for consumers.

A Common Scenario in Debt Collection Cases

Here is a common scenario, which is the exact situation the Supreme Court case dealt with: A consumer is sued on a routine debt in state court, since that’s where routine debt collection cases are properly heard. The consumer attacks back by counterclaiming (counter-suing the plaintiff/debt collector in the same case).

The consumer’s counterclaim may have to do with FDCPA violations, violations of other consumer statutes, or allegations of unfair business practices by the creditor or debt collector. Because many consumers have the same problem, or have been hurt the same way as the consumer in the case, the consumer’s counterclaim is often filed as a class action case.

The creditor, now having to defend a class action, becomes what is known as a “third party defendant.” The creditor/third party defendant then opts to move the case to federal court.

Why Big Business Likes Federal Court

Big businesses and banks tend to prefer federal court when they are being sued, because federal courts are seen as more business-friendly, and federal court is more expensive for plaintiffs to try cases. Poorer consumers may not have the money to retain and pay an attorney to litigate a case in federal court, which generally requires more time and paperwork.

Law Was Not Clear as to Whether Transfer Was Proper

However, there are laws as to when cases can be transferred to federal court once they have been filed in state court, and the laws are not clear if third party defendants can do so. The Class Action Fairness Act allows “any defendant” to transfer a case, but prior cases have interpreted that language, used in a different statute, to mean only the originally sued defendant—not a plaintiff that becomes a defendant as a result of a counterclaim. Whether such a third party defendant can also remove a case to federal court was the exact issue in the case before the Supreme Court.

In a surprising decision the court held that the law did not specifically give these third party defendants the right to transfer cases to federal court. Congress could always amend the law to allow it to happen, but as it is written, the court held that transfer was not allowed.

Consumer advocates have lauded the decision as one that will prevent banks, creditors, and big business from “having their cake and eating it too,” when they choose state court at first, and then later when they are sued in a class action counterclaim, they then decide they would prefer federal court. It also may reduce big business’ ability to use the threat of transfer to federal court as a “weapon” to combat or discourage counterclaims.

Don’t be a victim to banks, foreclosures, or big business. Assert your rights, even if you are the one being sued. Contact the Miami consumer rights attorneys at Jacobs Legal to help you enforce your rights under every consumer protection statute.

Resource:

law.com/nationallawjournal/2019/05/28/justice-thomas-recruiting-liberal-wing-leads-pro-consumer-ruling-against-home-depot/

https://www.jakelegal.com/proposed-rule-will-limit-how-many-times-a-debt-collector-can-call-you/

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