tag:blogger.com,1999:blog-71474419723287274132024-03-19T03:48:19.063-05:00Financial Services Law DevelopmentsFINANCIAL SERVICES LAW DEVELOPMENTS: An Industry PerspectiveRalph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comBlogger2210125tag:blogger.com,1999:blog-7147441972328727413.post-90545613831238827612024-03-08T13:37:00.001-06:002024-03-08T13:37:22.833-06:00FYI: New Hampshire Enacts Comprehensive Consumer Data Privacy Law<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">New Hampshire Governor Chris Sununu recently signed into law <a href="https://www.gencourt.state.nh.us/bill_status/billinfo.aspx?id=865&inflect=2">Senate Bill 255</a>, making New Hampshire the 14th state to enact a comprehensive consumer data privacy law, following California, Virginia, Colorado, Utah, Connecticut, Iowa, Indiana, Tennessee, Montana, Texas, Oregon, Delaware, and New Jersey. The law will go into effect Jan. 1, 2025.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the legislation is available at: <a href="https://www.gencourt.state.nh.us/bill_status/billinfo.aspx?id=865&inflect=2">Link to SB255</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">APPLICABILITY</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Act applies to persons that conduct business in New Hampshire or persons that produce products or services that are targeted to residents of New Hampshire that during a one-year period:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><ul style="margin-top:0in" type="disc"><li class="MsoListParagraph" style="margin-left:0in"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Controlled or processed the personal data of not less than 35,000 unique consumers, excluding personal data controlled or processed solely for the purpose of completing a payment transaction; or</span></li></ul><p class="MsoNormal" style="text-indent:.05in"> </p><ul style="margin-top:0in" type="disc"><li class="MsoListParagraph" style="margin-left:0in"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Controlled or processed the personal data of not less than 10,000 unique consumers and derived more than 25 percent of their gross revenue from the sale of personal data.</span></li></ul><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">EXEMPTIONS</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Exemptions include, but are not limited to:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A financial institution or data subject to Title V of the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801, et seq.;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Protected health information under the Health Insurance Portability and Accountability Act of 1996;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The collection, maintenance, disclosure, sale, communication, or use of any personal information to the extent that such activity is regulated by and authorized under the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq.</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">CONSUMER RIGHTS</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Consumers have the right to:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Confirm whether a controller is processing their personal data and access such personal data;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Correct inaccuracies in their personal data;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Delete personal data provided by, or obtained about, the consumer;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Obtain a copy of their data processed by the controller in a portable and, to the extent technically feasible, readily usable format;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Opt-out of the processing of the personal data for purposes of targeted advertising, the sale of personal data (subject to exceptions), or profiling in furtherance of solely automated decisions that produce legal or similarly significant effects concerning the consumer.</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">SENSITIVE DATA</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A controller may not process sensitive data concerning a consumer without obtaining the consumer's consent or, in the case of the processing of sensitive data concerning a known child, without processing such data in accordance with the Children's Online Privacy and Protection Act.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">"Sensitive data" means personal data that includes data revealing:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Racial or ethnic origin;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Religious beliefs;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Mental or physical health condition or diagnosis;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Sex life or sexual orientation;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Citizenship or immigration status;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Genetic or biometric data processed for the purpose of uniquely identifying an individual;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Personal data collected from a known child;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Precise geolocation data.</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">CONTRACT REQUIREMENTS</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A contract between a controller and a processor must set forth instructions for processing data, the nature and purpose of processing, the type of data subject to processing, the duration of processing and the rights and obligations of both parties. The contract shall also require that the processor:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Ensure that each person processing personal data is subject to a duty of confidentiality with respect to the data;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">At the controller's direction, delete or return all personal data to the controller as requested at the end of the provision of services, unless retention of the personal data is required by law;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Upon the reasonable request of the controller, make available to the controller all information in its possession necessary to demonstrate the processor's compliance with the obligations in this chapter;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">After providing the controller an opportunity to object, engage any subcontractor pursuant to a written contract that requires the subcontractor to meet the obligations of the processor with respect to the personal data; and</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Allow, and cooperate with, reasonable assessments by the controller or the controller's designated assessor, or the processor may arrange for a qualified and independent assessor to conduct an assessment of the processor's policies and technical and organizational measures in support of the obligations under this chapter, using an appropriate and accepted control standard or framework and assessment procedure for such assessments. The processor must provide a report of such assessment to the controller upon request.</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">DATA PROTECTION ASSESSMENTS</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A controller must conduct and document a data protection assessment for each of the controller's processing activities that presents a heightened risk of harm to a consumer, including:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The processing of personal data for the purposes of targeted advertising;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The sale of personal data;</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The processing of personal data for the purposes of certain profiling; and</span><span style="color:#1f3864"></span></p><p class="MsoListParagraph" style="margin-left:1.0in"><span style="font-size:10.0pt;font-family:Symbol;color:#1f3864"><span style="mso-list:Ignore">·<span style="font:7.0pt "Times New Roman""> </span></span></span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The processing of sensitive data.</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">ENFORCEMENT</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Act does not create a private right of action. A violation that is not cured within 60 days of notice from the Attorney General is an unfair method of competition or an unfair or deceptive act or practice in the conduct of any trade or commerce under N.H. Rev. Stat. Ann. § 358-A:2 which provides for injunctive relief and civil penalties up to $10,000 for each violation.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">IMPRESSION</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">This law follows the pattern of many post-California comprehensive data privacy laws and should not present overly burdensome compliance challenges for those complying with those other laws. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">For a chart comparing the state comprehensive data privacy acts, and more information and insight from Maurice Wutscher on data privacy and security laws and legislation, <a href="https://mauricewutscher.com/data-privacy-and-security/">click here</a>.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEh0pI_JASr7S8JGv8LxL_vAxWuHYT_Lpyxy5efwGndLvkhV6UbauAi4z0hfJmcaw_pfAMVZQ5Z8FM0-XkijC47Z8Lw4-38NutIE1OkNwKPudndXJwKlKevnAPEJ6qXbAugUREEzEOJHhQsjwow5GEX-dV9OUnkHMh2ajCXHoOARyQgtJXrt5bFsoCgvYcXh"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEh0pI_JASr7S8JGv8LxL_vAxWuHYT_Lpyxy5efwGndLvkhV6UbauAi4z0hfJmcaw_pfAMVZQ5Z8FM0-XkijC47Z8Lw4-38NutIE1OkNwKPudndXJwKlKevnAPEJ6qXbAugUREEzEOJHhQsjwow5GEX-dV9OUnkHMh2ajCXHoOARyQgtJXrt5bFsoCgvYcXh=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7344079018068586594" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. 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Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-43919600186973817122024-02-24T15:57:00.001-06:002024-02-24T15:57:19.652-06:00FYI: Texas Sup Ct Holds Foreclosure Statute of Limitation Reset by Rescission Sent With Reacceleration Notice<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Supreme Court of Texas recently held that, when a lender or loan servicer rescinds its acceleration of a loan in compliance with Texas Civil Practice and Remedies Code Section 16.038, the rescission resets the statute of limitation even if it is combined with a notice of reacceleration.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://www.txcourts.gov/media/1458106/230525.pdf">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In 2004, two borrowers obtained a loan secured by a deed of trust on their home. The deed of trust provided that "all sums secured by this Security Instrument and accrued interest thereon shall at once become due and payable at the option of Lender without prior notice, except as otherwise required by applicable law, and regardless of any prior forbearance." It also waived any notice of intent to accelerate, but upon acceleration, borrower could reinstate the loan "as if no acceleration had occurred" by paying all sums due plus costs.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The borrowers defaulted on the loan, and the loan servicer issued a notice of intent to accelerate in October 2015, followed by written notice that the loan had been accelerated in February 2016. However, no foreclosure sale ever occurred.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Over the next several years, the borrowers filed for bankruptcy on numerous occasions, all of which the bankruptcy court dismissed. During this period of time, the loan servicer sent the borrowers a "Notice of Acceleration of Maturity" that rescinded its earlier acceleration of the note, and reaccelerated the debt. The loan servicer's final notice also stated: "Any acceleration of the Note made prior to sending this Notice is hereby rescinded in accordance with the Texas Practice and Remedies Code § 16.038."</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The borrower filed a lawsuit in state court, asserting that the limitations period had run four years after the first acceleration in February 2016, and requesting any foreclosure be barred. The loan owner and servicer removed the case to federal court, and eventually moved for summary judgment. The federal trial court ruled in favor of the loan owner and servicer, and borrowers appealed to the U.S. Court of Appeals for the Fifth Circuit. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Fifth Circuit certified the question of whether a lender could simultaneously rescind a prior acceleration and re-accelerate a loan under Tex. Civ. Prac. & Rem. Code § 16.038 to the Texas Supreme Court. This opinion followed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Texas Supreme Court first recounted that, in Texas, a mortgagee must bring suit to foreclose on a real property lien "not later than four years after the day the cause of action accrues." See Tex. Civ. Prac. & Rem. Code § 16.035(a). Although the accrual date is usually the maturity date of the loan, when the loan documents include an acceleration clause, the statute of limitations on the foreclosure claim accrues at the time of acceleration.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In addition, the Court noted, Texas Civil Practice and Remedies Code Section 16.038 allows a mortgagee to rescind a prior acceleration "by a written notice of a rescission or waiver served . . . on each debtor who . . . is obligated to pay the debt." The notice must be served "by first class or certified mail and is complete when the notice is deposited in the United States mail, postage prepaid and addressed to the debtor at the debtor's last known address." Rescission under this section "does not affect a lienholder's right to accelerate the maturity date of the debt in the future nor does it waive past defaults." Id. § 16.038(d).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The borrowers did not dispute that the notices were properly sent. Instead, they argued that "the limitations period did not reset because these letters further informed them that their loan was reaccelerated." Relying on Swoboda v. Ocwen Loan Servicing, 579 S.W.3d 628, 632–33 (Tex. App.—Houston [14th Dist.] 2019, no pet.), the borrowers asserted that reacceleration will not reset the statute of limitations unless the earlier acceleration was abandoned. In addition, the borrowers argued that Section 16.038 refers to a mortgagee's right to accelerate "in the future", and therefore "that a notice rescinding an earlier acceleration is ineffective if it is accompanied by a notice that the loan is reaccelerated."</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Agreeing with the loan owner and servicer, the Texas Supreme Court held that the statute "does not require that the rescission notice be distinct or separate from other notices that a lender might send to borrowers with a loan in default." In the absence of any such requirement in the statute, the Court held that none should be read into the statute.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Court also rejected the borrower's common-law abandonment argument. The Texas Supreme Court noted that, in Swoboda, "the court of appeals held that an abandonment of acceleration must be clear enough to 'justify the borrower in believing and acting upon the belief that the effect of the failure to pay an installment was to be disregarded, and that the contract should stand as if there had been no default.'" </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">On the other hand, a rescission under Section 16.038, "'is complete' upon the lender's depositing the notice in the mail, addressed to the "the debtor's last known address." The statute expressly states that a rescission "does not affect a lienholder's right to accelerate the maturity date of the debt in the future", and does not create a waiting period between rescission and reacceleration of specific duration. "It is the very nature of rescission to remove the earlier acceleration, paving the way for a new one to follow, whether in the same letter or by separate notice."</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Supreme Court of Texas held a mortgagee's "simultaneous reacceleration does not nullify a rescission that complies with Civil Practice and Remedies Code Section 16.038."</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#000099"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEgrde4Utlmr_0ulf0VD1akmOvrfyO3wTTBUXQKkcdp0QJ8e8pH330K_7A4bUJTO0OU4DO_DDFxZV1R0NztvGGVBdtBvSLvo8g8k_A_h81VbENjsoA-eVpT1dNMQGoP0ioMSma8Ilo0Uc5FWB2H4UMmGLrk_Vdfb-bKx2eUhQ1YHQUAxr0gFzbvzs0wpIBbX"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEgrde4Utlmr_0ulf0VD1akmOvrfyO3wTTBUXQKkcdp0QJ8e8pH330K_7A4bUJTO0OU4DO_DDFxZV1R0NztvGGVBdtBvSLvo8g8k_A_h81VbENjsoA-eVpT1dNMQGoP0ioMSma8Ilo0Uc5FWB2H4UMmGLrk_Vdfb-bKx2eUhQ1YHQUAxr0gFzbvzs0wpIBbX=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7339290970881214322" /></a></span></a><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#000099"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#000099"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#022f88"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#003399"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-26553842492907045162024-01-23T12:24:00.001-06:002024-01-23T12:24:51.839-06:00FYI: New Jersey Enacts Comprehensive Consumer Data Privacy Law<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">New Jersey Governor Phil Murphy on Jan. 16, 2024 signed into law <a href="https://www.njleg.state.nj.us/bill-search/2022/S332">Senate Bill 332</a>, making New Jersey the thirteenth state to enact a comprehensive consumer data privacy law, following California, Virginia, Colorado, Utah, Connecticut, Iowa, Indiana, Tennessee, Montana, Texas, Oregon and Delaware. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The <a href="https://www.njleg.state.nj.us/bill-search/2022/S332">new law</a> will go into effect Jan. 16, 2025.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">For a chart comparing the state comprehensive data privacy acts, and more information and insight from Maurice Wutscher on data privacy and security laws and legislation, <a href="https://mauricewutscher.com/data-privacy-and-security/">click here</a>.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">APPLICABILITY</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Act applies to controllers that conduct business in New Jersey or produce products or services that are targeted to New Jersey residents, and that during a calendar year either:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> control or process the personal data of at least 100,000 consumers, excluding personal data processed solely for the purpose of completing a payment transaction; or</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> control or process the personal data of at least 25,000 consumers and the controller derives revenue or receives a discount on the price of any goods or services, from the sale of personal data.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">EXEMPTIONS</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Exemptions include, but are not limited to:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> A financial institution, data, or affiliate of a financial institution that is subject to Gramm-Leach-Bliley Act and implementing rules;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Protected health information collected under the Health Insurance Portability and Accountability Act of 1996;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Personal data collected, processed, sold, or disclosed by a consumer reporting agency as authorized by the Fair Credit Reporting Act.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">CONSUMER RIGHTS</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Consumers have the right to:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Confirm a controller's processing of their personal data;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Correct inaccuracies in their personal data;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Delete their personal data;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Obtain a copy of their personal data held by the controller;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Opt out of the processing of their personal data if the processing is for the purpose of targeted advertising, sale of their personal data, or certain profiling.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">SENSITIVE DATA</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A controller may not process sensitive data concerning a consumer without first obtaining the consumer's consent, or, in the case of the processing of personal data concerning a known child, without processing such data in accordance with the Children's Online Privacy and Protection Act.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">"Sensitive data" means personal data revealing:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Racial or ethnic origin;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Religious beliefs;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Mental or physical health condition, treatment, or diagnosis;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Financial information, which shall include a consumer's account number, account log-in, financial account, or credit or debit card number, in combination with any required security code, access code, or password that would permit access to a consumer's financial account;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Sex life or sexual orientation;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Citizenship or immigration status;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Status as transgender or non-binary;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Genetic or biometric data that may be processed for the purpose of uniquely identifying an individual;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Personal data collected from a known child; or</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Precise geolocation data.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">CONTRACT REQUIREMENTS</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A contract between a controller and processor must clearly set forth:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> The processing instructions to which the processor is bound, including the nature and purpose of the processing;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> The type of personal data subject to the processing, and the duration of the processing;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> That the processor ensures each person processing the personal data is subject to a duty of confidentiality;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> That any subcontractor engaged by the processor is subject to the same contractual obligations as between the controller and the processor;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> That the controller and processor implement appropriate technical and organizational measures to ensure a level of security appropriate to the risk;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> That the processor deletes or returns all personal data to the controller as requested at the end of the provision of services;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> That the processor makes available to the controller all information necessary to demonstrate compliance; and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> That the processor allows for, and contributes to, reasonable assessments and inspections by the controller.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">DATA PROTECTION ASSESSMENTS</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A controller must conduct a data protection assessment for processing that presents a heightened risk of harm to a consumer, including:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Processing personal data for the purposes of targeted advertising or certain profiling;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Selling personal data;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Processing sensitive data.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">ENFORCEMENT</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Act does not create a private right of action. A violation that is not cured within 30 days of notice is an unlawful practice under N.J. Stat. § 56:8-1, et seq., and the Attorney General may seek injunctive relief, costs, and penalties of not more than $10,000 for the first offense and not more than $20,000 for the second and each subsequent offense.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">RULEMAKING</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Attorney General, through the Division of Consumer Affairs, is charged with promulgating rules and regulations.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">IMPRESSIONS</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">This legislation, which was introduced in 2022, is a good example of legislators listening to stakeholders and making appropriate changes in response. The bill was amended six times, with the next to the last gutting the bill and replacing it with provisions akin to those in laws adopted by most other states, which will be a relief to those incorporating the requirements into a compliance program. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#000099"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEjjrta0PAisSWgKJFsaxwwP4o2r1Rr6tvpYwK228ngO2Mj_ex3zDHRn-IC1E9dn-6LMFi-QVw7lf-kRixeZvlmlxkFQmLQ0aUpn_zdFeUrMnVwVh8-su2f-BMJuikmG0i_hFZSi1NpqFwpOurvOdGYVziwEkvubX-H5xcRurc7gBrtvaYCZ7wTTo_gne7bF"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEjjrta0PAisSWgKJFsaxwwP4o2r1Rr6tvpYwK228ngO2Mj_ex3zDHRn-IC1E9dn-6LMFi-QVw7lf-kRixeZvlmlxkFQmLQ0aUpn_zdFeUrMnVwVh8-su2f-BMJuikmG0i_hFZSi1NpqFwpOurvOdGYVziwEkvubX-H5xcRurc7gBrtvaYCZ7wTTo_gne7bF=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7327361495402256994" /></a></span></a><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#000099"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#000099"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. 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Thank you. </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#022f88"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#003399"> </span><span style="color:#1f3864"></span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-35340175881792682862024-01-04T08:00:00.001-06:002024-01-04T08:00:43.597-06:00FYI: Data Privacy & Security Roundup: New Laws, Regulations and Important Dates in 2024<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The upward trend in data privacy legislation continued in 2023. According to the <a href="https://www.ncsl.org/technology-and-communication/2023-consumer-data-privacy-legislation">National Conference of State Legislatures</a>, "[a]t least 40 states and Puerto Rico introduced or considered at least 350 consumer privacy bills in 2023," a significant increase from the <a href="https://www.ncsl.org/about-state-legislatures/2022-consumer-privacy-legislation">200 bills in 2022</a>. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Many of these bills were limited in scope, relating to, for example, biometric, genetic and geolocation data, data brokers, and internet service providers.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">STATE COMPREHENSIVE CONSUMER DATA PRIVACY LAWS</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Narrowing the focus to legislation that conveys certain rights to consumers and restricts the use of personal information, more than 60 bills were considered in almost 30 states. A comparison chart of those bills can be accessed here.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In 2023, seven states joined <a href="https://consumerfsblog.com/2018/07/california-enacts-consumer-privacy-act-of-2018/">California</a>, <a href="https://consumerfsblog.com/2021/03/in-no-time-at-all-virginia-consumer-data-protection-act-becomes-law/">Virginia</a>, <a href="https://consumerfsblog.com/2021/07/colorado-enacts-comprehensive-consumer-data-privacy-legislation/">Colorado</a>, <a href="https://consumerfsblog.com/2022/03/utah-speedily-becomes-fourth-state-to-enact-consumer-data-privacy-legislation/">Utah</a> and <a href="https://consumerfsblog.com/2022/05/fifth-state-in-the-union-becomes-fifth-state-to-enact-data-privacy-legislation/">Connecticut</a> in passing comprehensive data privacy legislation.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="https://consumerfsblog.com/2023/03/iowa-becomes-sixth-state-to-enact-comprehensive-consumer-data-privacy-law/">Iowa SF 262</a> was enacted March 28 and goes into effect Jan. 1, 2025.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="https://consumerfsblog.com/2023/05/indiana-enacts-comprehensive-consumer-data-privacy-law/">Indiana SB 5</a> was enacted May 1 and goes into effect Jan. 1, 2026.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="https://consumerfsblog.com/2023/05/tennessee-information-protection-act-with-nist-security-standards-enacted/">Tennessee HB 1181</a> was enacted May 11 and goes into effect July 1, 2024.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="https://consumerfsblog.com/2023/05/montana-enacts-comprehensive-consumer-data-privacy-law/">Montana SB 384</a> was enacted May 19 and goes into effect Oct. 1, 2024.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="https://consumerfsblog.com/2023/06/texas-enacts-data-privacy-and-security-act-with-small-business-exception/">Texas HB 4</a> was enacted June 18 and goes into effect July 1, 2024.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="https://consumerfsblog.com/2023/07/oregon-enacts-comprehensive-consumer-data-privacy-act-with-limited-glba-exemption/">Oregon SB 619</a> was enacted July 18 and goes into effect July 1, 2024.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="https://consumerfsblog.com/2023/09/delaware-enacts-personal-data-privacy-act/">Delaware HB 154</a> was enacted Sept. 11 and goes into effect Jan. 1, 2025.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Although there are differences worth attention, these laws are very similar to those enacted after the California Consumer Protection Act, and most include:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Right to access</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Right to correct (except Iowa)</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Right to delete</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Right to obtain</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Right to opt-out of certain processing</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Data and entity-level Gramm-Leach-Bliley Act exemptions (Oregon is data-level only but includes an entity-level exemption for financial institutions as defined in Rev. Stat. Ann. § 706.008)</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Requirements for contracts between controllers and processors</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Risk assessments for processing certain data (except Iowa)</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> No private right of action</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A chart comparing the comprehensive data privacy laws is available <a href="https://mauricewutscher.com/wp-content/uploads/2023/09/MauriceWutscherComparisonChartStatePrivacyLaws2023-09-12.pdf">here</a>. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">STATE DATA BREACH NOTIFICATION LAWS</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Utah</span></b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="https://le.utah.gov/~2023/bills/static/SB0127.html">SB 127</a> was enacted March 23 and went into effect May 3. Amendments include:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Creation of the Utah Cyber Center tasked with, among other things, developing a cybersecurity plan for government agencies, identifying, assessing, and mitigating cyber threats, and promoting cybersecurity best practices;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Requiring notification to the attorney general and the Utah Cyber Center.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Texas</span></b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="https://consumerfsblog.com/2023/05/texas-amends-data-breach-notification-law/">SB 768</a> was enacted May 27 and went into effect Sept. 1. Amendments include:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Shortening the time to notify the attorney general from 60 days to 30;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Requiring notification be submitted electronically using a form provided on the attorney general's website.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Nevada</span></b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="https://consumerfsblog.com/2023/07/nevada-installment-loan-companies-subject-to-significant-new-data-security-requirements/">SB 355</a> was enacted June 15 and went into effect Oct. 1. The law amends Nevada's data breach notification statutes (Nev. Rev. Stat. Ann. § 603A.300, et seq.) by exempting installment loan companies and making them subject to different data breach notification provisions, including:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Determination whether notice is required is based in part on an analysis of the risk of harm to affected residents;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> The notice deadline is 30 days, as opposed to "in the most expedient time possible and without unreasonable delay";</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Breach notification by email is prohibited if a breach involves a username, password or other login credentials to an email account furnished by the licensee;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> The law specifies information that must be included in a breach notification;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Notice must be made to the attorney general if there are more than 500 affected residents;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> There is no safe harbor for data controllers subject to and compliant with the privacy and security provisions of the Gramm-Leach-Bliley Act;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Notice must be provided to consumer reporting agencies if the breach affects more than 1,000 persons.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Connecticut</span></b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="https://www.cga.ct.gov/asp/cgabillstatus/cgabillstatus.asp?selBillType=Bill&bill_num=SB01058&which_year=2023">SB 1058</a> was enacted June 26 and went into effect Oct. 1. Amendments include:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Adding "precise geolocation data" to the definition of "personal information";</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Depositing civil penalties into a "privacy protection guaranty and enforcement account";</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Designating a violation as an unfair trade practice under Conn. Gen. Stat. § 42-110b.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Rhode Island</span></b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> <a href="http://webserver.rilegislature.gov/BillText/BillText23/HouseText23/H5684.pdf">SB 5684</a> was enacted June 27 and went into effect upon passage. Amendments include:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Adding definitions for "classified data" and "cybersecurity incident";</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Shortening the notification period to individuals from 45 days to 15;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Requiring notification to the state police within 24 hours;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Specifying what must be included in a notification.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">STATE REGULATION</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">California</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In March, the California Privacy Protection Agency received approval of its first substantive <a href="https://cppa.ca.gov/regulations/pdf/20230329_final_regs_text.pdf">rulemaking</a> implementing the California Consumer Protection Act as amended by the California Privacy Rights Act. The regulations became effective March 29, but enforcement of some provisions has been <a href="https://content.mlex.com/Attachments/2023-06-29_4745C8U6094V3K3O%2fCU_34-2023-80004106-CU-WM-GDS_10a66e19-7726-4167-bfca-5c1591881c5f8.pdf">delayed until March 29, 2024</a>. The regulations include:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Methods for allowing consumers to exercise the right to correct personal information;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Required terms that must be included in contracts between businesses and the service providers and third parties with whom personal information is shared or disclosed;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Modified notice requirements;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Additional guidance on what constitutes a "dark pattern";</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Expectations regarding opt-out preference signals.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">New York</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In November, <a href="https://www.dfs.ny.gov/system/files/documents/2023/10/rf_fs_2amend23NYCRR500_text_20231101.pdf">amendments to New York's cybersecurity regulations</a> were adopted by the Department of Financial Services with staggered implementation dates for <a href="https://www.dfs.ny.gov/system/files/documents/2023/11/cybersecurity_implementation_timeline_covered_entities.pdf">covered entities</a>, <a href="https://www.dfs.ny.gov/system/files/documents/2023/11/cybersecurity_implement_timeline_small_business.pdf">small businesses</a>, and <a href="https://www.dfs.ny.gov/system/files/documents/2023/11/cybersecurity_implementation_timeline_class_a.pdf">Class A companies</a>. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The amendments include:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Creation of a category for "Class A companies" based on revenue in New York, and number of employees or global revenue;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Heightened security measures for Class A companies;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Annual penetration testing by a qualified internal or external party;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Automated or manual scans of information systems;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Risk assessments reviewed and updated annually, or as necessary;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Multi-factor authentication for any individual accessing any information system;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Notification to the Superintendent of any cybersecurity incident within 72 hours;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Annual certification of compliance, or acknowledgment of noncompliance;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Notice and explanation of extortion payments made in connection with a cybersecurity incident.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">FEDERAL REGULATION</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Safeguards Rule</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In September, the Federal Trade Commission announced its approval of an <a href="https://consumerfsblog.com/2023/11/ftc-amends-safeguards-rule-nonbank-financial-institutions-must-report-data-breaches-to-the-ftc/">amendment to the Gramm-Leach-Bliley Act Safeguards Rule</a> requiring nonbank financial institutions to report to the FTC the unauthorized acquisition of unencrypted customer information involving at least 500 consumers (a "notification event"). The amendment, which becomes effective May 13, 2024, also provides:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Notification must be made as soon as possible, and no later than 30 days after discovery of the event;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> Notice must be provided through an online form that will be available on the FTC's website;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> The notice must include:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> the name and contact information of the reporting financial institution;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> a description of the types of information that were involved in the notification event;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> if the information is possible to determine, the date or date range of the notification event;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> the number of consumers affected or potentially affected by the notification event;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> a general description of the notification event; and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> whether any law enforcement official provided a written determination that notifying the public of the breach would impede a criminal investigation or cause damage to national security, and a means for the Federal Trade Commission to contact the law enforcement official.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">CONCLUSION</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">2024 will undoubtedly be a remarkable year with respect to data privacy and security legislation and regulation and we expect an increased focus on issues related to the use of artificial intelligence. For more information and insight from Maurice Wutscher on data privacy and security laws and how to stay compliant <a href="https://mauricewutscher.com/data-privacy-and-security/">click here</a>.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEg6aYox4IWpHeyZZny4tWzCkOZOgXlPmXqcWWEEc1iW2vQt3-o6jCOWtwXOxjOw78ivPmbJUfZCGZeRCkiEYdVPNI7aXtfgXa_bWKlAIygQaQRj5m9npZngKubgDbvluxMdmJpVdqDnsfoXIC4JuIeSxIwgkLfKT5kidIe80VaOtodLfue2V_OZlM2GZc3R"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEg6aYox4IWpHeyZZny4tWzCkOZOgXlPmXqcWWEEc1iW2vQt3-o6jCOWtwXOxjOw78ivPmbJUfZCGZeRCkiEYdVPNI7aXtfgXa_bWKlAIygQaQRj5m9npZngKubgDbvluxMdmJpVdqDnsfoXIC4JuIeSxIwgkLfKT5kidIe80VaOtodLfue2V_OZlM2GZc3R=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7320242813571092946" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-56832140111800128862023-12-09T16:57:00.001-06:002023-12-09T16:57:42.563-06:00FYI: ❄️ Warm wishes for a magical holiday season ❄️<div class="WordSection1"><div><div><div align="center"><table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="100%" style="width:100.0%;background:white;border-collapse:collapse"><tr><td style="padding:0in 0in 0in 0in"><div align="center"><table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="600" style="width:6.25in;border-collapse:collapse"><tr><td style="padding:0in 0in 0in 0in"><div><div><table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="100%" style="width:100.0%;border-collapse:collapse"><tr><td width="100%" valign="top" style="width:100.0%;background:white;padding:11.25pt 15.0pt 7.5pt 15.0pt"><div><div align="center"><table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="100%" style="width:100.0%;border-collapse:collapse"><tr><td style="padding:0in 0in 0in 0in"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span><a href="https://clicks.aweber.com/y/ct/?l=GrBe_&m=3fA52mY4j8t0zga&b=Zyp77u57PDCxU._C3scQmg"><span style="text-decoration:none"><img border="0" width="560" height="104" style="width:5.8333in;height:1.0833in" id="_x0000_i1028" src="https://hostedimages-cdn.aweber-static.com/NzcwMDU0/original/acc55d0cfa1646cda948a973aa689afb.png" alt="Maurice Wutscher LLP -"></span></a></p></td></tr></table></div></div><div align="center"><table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="100%" style="width:100.0%;border-collapse:collapse"><tr><td style="padding:0in 0in 0in 0in"><p class="MsoNormal" align="center" style="text-align:center"><a href="https://clicks.aweber.com/y/ct/?l=GrBe_&m=3fA52mY4j8t0zga&b=VT7co5pilsnTNY8OHXrl1A"><span style="text-decoration:none"><img border="0" width="560" height="400" style="width:5.8333in;height:4.1666in" id="_x0000_i1027" src="https://hostedimages-cdn.aweber-static.com/NzcwMDU0/optimized/827190c6a255449e92baa5e80ddade19.png"></span></a></p></td></tr></table></div></td></tr></table><p class="MsoNormal" style="line-height:18.0pt"> </p><table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="100%" style="width:100.0%;border-collapse:collapse;border-spacing:0px"><tr style="border-spacing:0px"><td width="100%" style="width:100.0%;background:white;padding:15.0pt 15.0pt 15.0pt 15.0pt;border-radius:0px;border-spacing:0px"><div><div><div><div><p class="MsoNormal" style="mso-line-height-alt:18.0pt"><strong><i><span style="font-size:27.0pt;font-family:"Open Sans",sans-serif;color:#d4b930">F</span></i></strong><i><span style="font-size:13.5pt;font-family:"Open Sans",sans-serif;color:#372f2f">rom all of us at Maurice Wutscher, sending you our heartfelt thanks for your continued support and partnership.</span></i></p></div><div><p class="MsoNormal" style="line-height:18.0pt"><span style="color:black"> </span></p></div><div><p class="MsoNormal" style="line-height:18.0pt"><i><span style="font-size:13.5pt;font-family:"Open Sans",sans-serif;color:#372f2f">And wishing you and yours the joys of the season and all good things in the new year.</span></i></p></div></div></div></div><table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" align="left" width="100%" style="width:100.0%;border-collapse:collapse;border-spacing:0px;float:none"><tr style="border-spacing:0px"><td style="padding:0in 0in 0in 0in;border-spacing:0px"></td></tr></table></td><td style="padding:0in 0in 0in 0in"><div><div><div><p class="MsoNormal" style="line-height:18.0pt"><span style="color:black"> </span></p></div><div><p class="MsoNormal" style="line-height:18.0pt"><span style="font-size:13.5pt;font-family:"Open Sans",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal" style="line-height:18.0pt"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal" style="line-height:18.0pt"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal" style="line-height:18.0pt"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal" style="line-height:18.0pt"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p></div></div></div></td></tr></table></div></div></td></tr></table></div><p class="MsoNormal" align="center" style="text-align:center;line-height:18.0pt"><span style="color:black"> </span></p><div align="center"><table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="100%" style="width:100.0%;border-collapse:collapse;border-spacing:0px"><tr style="border-spacing:0px"><td width="100%" valign="top" style="width:100.0%;background:white;padding:0in 0in 0in 52.5pt;border-radius:0px;border-spacing:0px"><div><div><table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="100%" style="width:100.0%;border-collapse:collapse;border-spacing:0px"><tr style="border-radius:0px;border-spacing:0px"><td style="padding:0in 0in 0in 0in;border-spacing:0px"></td></tr></table></div></div></td></tr></table></div></td></tr></table></div><p class="MsoNormal" align="center" style="text-align:center"> </p><div align="center"><table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="100%" style="width:100.0%;border-collapse:collapse"><tr><td width="100%" valign="top" style="width:100.0%;background:white;padding:0in 0in 0in 0in"></td></tr></table></div></div></div><div><p class="MsoNormal"> </p></div><div id="aweber_rem"><div align="center"><table class="MsoNormalTable" border="0" cellspacing="0" cellpadding="0" width="600" style="width:6.25in;border-collapse:collapse"><tr><td style="padding:6.0pt 6.0pt 6.0pt 6.0pt"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com">rwutscher@MauriceWutscher.com</a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEg7cLGIXhIn5DjmF1uF0Y24IyxRXaPvqODrLMQq2Qbd_Evl06kNTf4lWoOsmAzmfzorwJDpjza3SDwIPvfShUH8GrdyUMtdikZgE8DCMVDSnyLRUVQw-rhD_ODodj9h4MVfg_twNrFL6yixwCV7_8HDRPt67mfwEBPE7bqT8bleQeP2n-QcOxxeNYe_r8yH"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEg7cLGIXhIn5DjmF1uF0Y24IyxRXaPvqODrLMQq2Qbd_Evl06kNTf4lWoOsmAzmfzorwJDpjza3SDwIPvfShUH8GrdyUMtdikZgE8DCMVDSnyLRUVQw-rhD_ODodj9h4MVfg_twNrFL6yixwCV7_8HDRPt67mfwEBPE7bqT8bleQeP2n-QcOxxeNYe_r8yH=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7310732972636177826" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/">Financial Services Law Updates</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/">The Consumer Financial Services Blog</a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/">Webinars</a></span></p></td></tr></table></div></div><p class="MsoNormal"><img border="0" width="1" height="1" style="width:.0083in;height:.0083in" id="_x0000_i1025" src="https://openrate.aweber.com/y/o/?l=GrBe_&m=3fA52mY4j8t0zga"></p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-3368677426165200402023-12-02T12:05:00.001-06:002023-12-02T12:05:38.072-06:00FYI: Cal App Ct (4th Dist) Rejects Borrowers' Claims Arising Out of Regulator's Unlicensed Lending Action<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The California Court of Appeal, Fourth District, recently held two borrowers' allegations that their lender was not properly licensed were insufficient to establish an actual economic injury, necessary for standing under California Business and Professions Code section 17200, and that there was no private right of action under California Financial Code sections 22100 and 22751. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=13175279001330259043&q=lagrisola+v+north+american+financial&hl=en&as_sdt=400006">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In 2020, California regulators entered into a settlement agreement with a mortgage lender to address its unlicensed lending activity. Pursuant to the settlement agreement, included as exhibit B to the original complaint, the lender was ordered to "refrain from violating Financial Code section 22100, subdivision (a), by engaging in the business of a finance lender without obtaining a license" and to pay an administrative penalty of $75,000. The parties acknowledged the settlement agreement was "intended to constitute a full, final, and complete resolution of the violations." The settlement was the first public revelation of the lender's unlicensed lending activity, and the impetus for the current litigation.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In 2017, the borrowers applied for and obtained a loan with the lender secured by a mortgage on their residence. In 2021, the borrowers sued the lender, individually and on behalf of a class of similarly situated persons, alleging that the lender was not licensed to engage in lending in the state of California between 2014 and 2018 and asserting violations of California Business and Professions Code section 17200 and Financial Code sections 22100 and 22751. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The trial court sustained the lender's demurrer to the borrowers' complaint without leave to amend, concluding that the borrowers could not establish injury in fact by alleging that they suffered an injury in fact or lost money or property as a result of the lender's licensing status. The borrowers timely appealed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Business and Professions Code section 17200 (commonly referred to as the Unfair Competition Law, or the "UCL") defines unfair competition as "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising and any act prohibited by Chapter 1 (commencing with Section 17500)." Section 17204 further provides, in relevant part, that "[a]ctions for relief pursuant to this chapter shall be prosecuted exclusively in a court of competent jurisdiction by . . . a person who has suffered injury in fact and has lost money or property as a result of the unfair competition." Bus. & Prof. Code § 17204.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Proposition 64 amended Section 17204 and imposed narrower standing requirements. A party must (1) establish a loss or deprivation of money or property sufficient to qualify as injury in fact, i.e., economic injury, and (2) show that that economic injury was the result of, i.e., caused by, the unfair business practice or false advertising that is the gravamen of the claim." Kwikset Corp. v. Superior Court (2011) 51 Cal. 4th 310, 320-322; accord California Medical Assn. v. Aetna Health of California Inc. (2023) 14 Cal.5th 1075, 1086.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The lender contended on appeal, as it did in the trial court, that the complaint failed to adequately allege that the borrowers suffered an injury in fact or lost money or property as a result of its licensing status.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Here, the Fourth District noted that the borrowers did not allege that the lender made an affirmative representation about its licensing status or, more importantly, that the borrowers relied on any statements the lender made about its licensing status when choosing to enter into the loan transaction. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Thus, even if an omission could fall into the Kwikset framework, as the borrowers asserted, the Fourth District concluded that the borrowers still had not established causation, the second element required for standing under the UCL. Kwikset noted that "a plaintiff 'proceeding on a claim of misrepresentation as the basis of his or her UCL action must demonstrate actual reliance on the allegedly deceptive or misleading statements' " and show that " 'the misrepresentation was an immediate cause of the injury-producing conduct.' " Kwikset, supra, 51 Cal.4th at pp. 326–327.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Instead, the borrowers attempted to establish causation by alleging that they would not have obtained the loan had they known the lender was unlicensed, a fact they only discovered three years later because of a public settlement. The Fourth District reasoned that this subjective assertion of an intangible harm falls short of establishing the elements for standing under the UCL. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">As the Kwikset court pointed out, whereas federal standing may be based on "intangible" injury that does not involve lost money or property, UCL standing is more stringent. Kwikset, supra, 51 Cal.4th at p. 324. The Court did not believe that the Kwikset court intended to expand Proposition 64 to include standing to plaintiffs based on their intangible distaste for a lender's failure to complete the licensing process in California.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Thus, the Fourth District held that the borrowers did not establish that they suffered an economic injury caused by an unfair or unlawful business practice of the lender. Therefore, they lacked standing to assert the UCL claims, and the trial court did not err in dismissing the first and second causes of action.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In the third cause of action in complaint, the borrowers also asserted violations of California Finance Code sections 22100 and 22751 based on the allegation that the lender lacked a license to lend money to California borrowers. They alleged that the law specifically commands that an unlicensed lender is to forfeit all interest and finance charges made on any unlicensed loan.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">California Financial Code section 22100, subdivision (a) provides, "[n]o person shall engage in the business of a finance lender or broker without obtaining a license from the commissioner." Section 22751, subdivision (a) provides, "[i]f any amount other than or in excess of the charges permitted by this division is charged or contracted for, or received, for any reason other than a willful act of the licensee, the licensee shall forfeit all interest and charges on the loan and may collect or receive only the principal amount of the loan." And related section 22752, subdivision (a) likewise provides that the licensee shall forfeit all interest and charges on the loan "[i]f any provision of this division is violated in the making or collection of a loan."</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">However, the Fourth District observed that a violation of a state statute does not automatically give rise to a right of recovery by a private individual. Courts will allow a private right of action only where a statute allows one. Mayron v. Google LLC (2020) 54 Cal.App.5th 566, 571. The statute must contain " ' " 'clear, understandable, unmistakable terms,' " which strongly and directly' indicate a private right of action is allowed." Ibid., citing Lu v. Hawaiian Gardens Casino, Inc. (2010) 50 Cal.4th 592, 596–597. If the statue "does not contain an unmistakable directive," the court may consider the legislative history of the statute to determine whether the Legislature intended to create a private right of action. Mayron, supra, at p. 571.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">As relevant here, Financial Code section 22713 specifically provides that the commissioner may bring an action or request that the Attorney General bring an action in the name of the people of the State of California. Fin. Code § 22713, subd. (a). The violator may then be liable for civil penalties, as the lender was here. (Fin. Code § 22713, subd. (b).) Moreover, "[i]f the commissioner determines that it is in the public interest," the commissioner may include "a claim for restitution, disgorgement, or damages." Fin. Code § 22713, subds. (b) & (c). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Here, the Fourth District reviewed the record and found it undisputable that the commissioner resolved such an action against the lender through a settlement in December 2020. Despite the final resolution of that matter, the borrowers sought to pursue damages for the lender's alleged Financial Code violations in addition to those recovered by the commissioner. But the Court held that, when regulatory statutes, like the Financial Code, " ' "provide a comprehensive scheme for enforcement by an administrative agency, the courts ordinarily conclude that the Legislature intended the administrative remedy to be exclusive unless the statutory language or legislative history clearly indicates an intent to create a private right of action." ' " See Noe v. Superior Court (2015) 237 Cal. App. 4th 316, 337.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Fourth Appellate District also concluded that the provisions of the Financial Code do not provide "clear, understandable, unmistakable terms" for a private cause of action, but instead provide for enforcement of violations via an action by the commissioner, which is what occurred in this case. Thus, the Court affirmed the decision of the trial court.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEgPpfU9KRV-Y-yTvcaJdAnp858QWGpQftyWSSSzYFBW78kXkStUf_Kuyvni0cSb6GdGZYFKdQWODKXMVj6rZZMIvyAZeU7un_WAvUKAvohChfbZbSe2s_DgtupfKExhVen4COl4ebA_CrkqT4gcrkwEoBaqjhxYpbelIMvHCeNXsnIYtfFibiqJ4dCYeoO5"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEgPpfU9KRV-Y-yTvcaJdAnp858QWGpQftyWSSSzYFBW78kXkStUf_Kuyvni0cSb6GdGZYFKdQWODKXMVj6rZZMIvyAZeU7un_WAvUKAvohChfbZbSe2s_DgtupfKExhVen4COl4ebA_CrkqT4gcrkwEoBaqjhxYpbelIMvHCeNXsnIYtfFibiqJ4dCYeoO5=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7308060111816119442" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. 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Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-71938621444914916622023-11-26T10:09:00.001-06:002023-11-26T10:09:32.745-06:00FYI: 8th Cir Rejects Challenge to Advertised Discounts as "Deceptive"<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The U.S. Court of Appeals for the Eighth Circuit recently upheld the dismissal of a putative class action challenging an advertised discount as supposedly deceptive.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In so ruling, the Eighth Circuit held that the named plaintiff's allegations failed to meet the "ascertainable loss" requirement under the Missouri Merchandising Practices Act ("MMPA"). Furthermore, the Court held that an unjust enrichment claim based on the same facts as that of the MMPA claim fails for the same reasons.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=7547885348058397195&q=Hennessey+v.+The+Gap,+Inc&hl=en&as_sdt=400006&as_ylo=2023">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A consumer brought a putative class action under the Class Action Fairness Act against a retailer and its wholly-owned subsidiary. The consumer alleged that she purchased numerous products at physical stores and online at discount prices that were deceptively advertised because the defendants allegedly did not sell a substantial quantity of these products at the advertised "regular" prices prior to selling them at the advertised "sale" prices. The consumer sought class-wide compensatory damages under the MMPA, along with the price she paid the defendants under the equitable doctrine of unjust enrichment.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The trial court granted the defendants' motion to dismiss the consumer's amended complaint with prejudice. The consumer timely appealed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">To recover damages under the MMPA, a private plaintiff must allege and prove that she "(1) purchased merchandise . . . from [the defendant]; (2) for personal, family, or household purposes; and (3) suffered an ascertainable loss of money or property; (4) as a result of an act declared unlawful under the [MMPA]." Goldsmith v. Lee Enter., Inc., 57 F.4th 608, 615 (8th Cir. 2023). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Furthermore, Missouri courts generally apply the common-law "benefit of the bargain" rule to determine whether an MMPA plaintiff has suffered an ascertainable loss. Vitello v. Natrol, LLC, 50 F.4th 689, 693 (8th Cir. 2022). "The 'benefit of the bargain rule' awards a prevailing party the difference between the value of the product as represented and the actual value of the product as received." Id. The Supreme Court of Missouri adopted the rule in Kendrick v. Ryus, 123 S.W. 937, 939-40 (Mo. 1909).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Therefore, as the consumer had not alleged a deficiency in the quality of the clothing she purchased compared to the quality the retailers' advertising represented, the Eighth Circuit held that the consumer has the right to sue for rescission in a common law fraud action, but there was no ascertainable loss under the MMPA. Goldsmith v. Lee Enter., Inc., 57 F.4th 608, 610 (8th Cir. 2023). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Thus, the Court agreed with the trial court's decision to "join[] a growing number of courts, in finding that complaints based solely on a plaintiff's disappointment over not receiving an advertised discount at the time of purchase has not suffered an ascertainable loss." Robey v. PVH Corp., 495 F. Supp. 3d 311, 321 (S.D.N.Y. 2020).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Regarding the consumer's second cause of action, a claim for unjust enrichment under Missouri law requires the plaintiff to plead and prove three elements, "a benefit conferred by a plaintiff on a defendant; the defendant's appreciation of the fact of that benefit; and the acceptance and retention of the benefit by the defendant in circumstances that would render that retention inequitable." Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843, 854 (8th Cir. 2014). Only the third element was in dispute here on appeal.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Eighth Circuit found that the consumer's unjust enrichment claim was based on the same facts as her MMPA claim and that it failed for the same reason -- she received the products she intended to purchase and paid the advertised sale price. "[T]here can be no unjust enrichment if the parties receive what they intended to obtain." Howard v. Turnbull, 316 S.W.3d 431, 436 (Mo. App. 2010). Moreover, the Court concluded that the existence of an express contract precluded a claim of unjust enrichment. Topchian, 760 F.3d at 854. "[A] contract for the sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract." Dean Mach. Co. v. Union Bank, 106 S.W.3d 510, 520 (Mo. App. 2003). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Eighth Circuit affirmed the judgment of the trial court and held that the trial court did not err in dismissing the customer's MMPA and unjust enrichment claims.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEiKmQ9Jkeq9veHoOlfhWsYOdHhDGjs-w8N-ZsgtnyGhw__a5igiy-csW1dno17ordB-zqoFDRLIu-viPgvn9avp0NaFn9FaAoDNaVzVI2sgdhZHE_iojafUwIe3MWARDIXlawKPBHQfKJG-BJAoLn56Nb72f1pyLm7T9gtMOBVuZpTXlw-AkeKpYf4a7T5g"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEiKmQ9Jkeq9veHoOlfhWsYOdHhDGjs-w8N-ZsgtnyGhw__a5igiy-csW1dno17ordB-zqoFDRLIu-viPgvn9avp0NaFn9FaAoDNaVzVI2sgdhZHE_iojafUwIe3MWARDIXlawKPBHQfKJG-BJAoLn56Nb72f1pyLm7T9gtMOBVuZpTXlw-AkeKpYf4a7T5g=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7305803685890268306" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-14706881013214473092023-11-20T16:35:00.001-06:002023-11-20T16:35:48.965-06:00FYI: CFPB's Annual Report on FDCPA Spotlights 'Continued Concerns' About Medical Debt<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Consumer Financial Protection Bureau on Nov. 16, 2023 released its annual report regarding its activities taken in 2023 to administer the Fair Debt Collection Practices Act, spotlighting, among other topics, the collection of medical debt.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the Report is available at: <a href="https://consumerfsblog.com/wp-content/uploads/2023/11/cfpb_fdcpa-annual-report_2023-11.pdf">Link to Report</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Emphasizing the "significant actions" taken by the CFPB concerning the collection of medical debt, the Report highlights the CFPB's "continued concerns" about the "medical collection ecosystem." The Report specifies that the collection of medical debt that is either inaccurate or not owed raises significant concerns under the FDCPA and the Fair Credit Reporting Act, statutes that are enforced by the CFPB. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Specifically, the Report notes that roughly 15% of all collection complaints the CFBP sent to industry members for review and response involved medical debt, with consumers primarily complaining of the inaccuracy of medical debt being sought and the quality of information being provided during the medical debt collection process.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Report goes on to note the "commonly" reported complaints as:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> - The medical bill being collected has already been paid or should have been paid by someone else.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> - Medical bills are collected long after services are provided.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> - Medical bills that patients have no prior knowledge of appear on their credit reports.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Report includes concerns the CFPB had with debt collector's responses to complaints. It notes many medical debt collectors were quick to cut bait by closing the account in issue and deleting the account from a consumer credit report in response to a dispute of the accuracy of the information being reported. The CFPB suggests that this behavior raises questions as to whether there are deficiencies in the quality and quantity of information medical collectors receive at placement or at sale of the medical debt. The CFPB also said it suggests that medical debt collectors may not have confidence in the data and information provided to them regarding a medical debt's accuracy.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Citing the challenging nature of medical billing, including consumers being faced with "multiple bills from different providers, confusing procedure codes, opaque pricing, and uncertain insurance coverage" as well as emergency medical services that fail to provide up-front service costs, the CFPB concludes that many medical debts sought for collection may not be owed or may be seeking to collect the wrong amount due to:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> - Prior payment of the bill.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> - Insurance or financial assistance being responsible for the bill.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> - The services provided are being billed at a higher billing code.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> - State laws may provide for a bill to not be owed or to be owed in an amount different from that which is billed and sought for collection.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> - Federal laws may provide that the bill is not owed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In this regard, the Report reminds the industry that collection of debts, medical or otherwise, that are not owed or are in the wrong amount may violate the FDCPA, specifically under 1692f(1), which the CFPB explains permits the collection of a debt only where (1) expressly permitted by the underlying agreement creating the debt and no law prohibits its collection or (2) where a law expressly permits the charge.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The CFPB's Report highlights "contexts" where the collection of medical debt runs afoul of certain federal or state laws:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> - The bill may be prohibited by the federal No Surprises Act.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> - The bill may be prohibited under the federal Nursing Home Reform Act.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> - State law may prohibit recovery of a medical bill above a "reasonable amount" for the medical services provided.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Considering this, the Report advises state and federal regulators, as well as private litigants, to pay careful attention to whether medical debt collectors are collecting debts not owed or are in the wrong amount and, if state law provides, whether the bills sought do not reflect "reasonable" amounts for the medical services provided.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Report also suggests that a debt may be invalid or inaccurate for any number of reasons and invites consumers and regulators to routinely challenge medical debt collectors on the accuracy of the debts they collect only on the assumption that the debt may be invalid or inaccurate. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Report concludes with the CFPB's stated intention of taking further action regarding medical debt collection and working with states to further consumer protection. Given the CFPB's posture towards medical debt, the accuracy and propriety of medical debt balances being collected will continue to face heightened scrutiny from state and federal regulators.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEiF6L4rk42hSLHriYeQVMU-eUReAqxOyPWc7oW06Cr_pb0QZqB7ntwb4fnisHCWT3As6ytBmE9HhMxWxU_Fp_mVavUIO8iM3aDRGjkq2rGu_WdZEtzvn8iZLgJdaorBcMD98Fgn62uTToa8R4AivwzbW0FIu1HH1zwurK-ijb-5zUgxL5wxQxZ7RHPs5HPg"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEiF6L4rk42hSLHriYeQVMU-eUReAqxOyPWc7oW06Cr_pb0QZqB7ntwb4fnisHCWT3As6ytBmE9HhMxWxU_Fp_mVavUIO8iM3aDRGjkq2rGu_WdZEtzvn8iZLgJdaorBcMD98Fgn62uTToa8R4AivwzbW0FIu1HH1zwurK-ijb-5zUgxL5wxQxZ7RHPs5HPg=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7303676714739542802" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-820463122355006302023-11-17T13:22:00.001-06:002023-11-17T13:22:52.373-06:00FYI: 11th Cir Holds "Actual Damages" Not Required for "Willful" Violations of FCRA<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The U.S. Court of Appeals for the Eleventh Circuit recently held that a trial court's denial of a motion for class certification was an abuse of discretion because the trial court's analysis of Rule 23(b)(3)'s predominance requirement was based on its erroneous interpretation of the second option in section 1681n(a)(1)(A) of the federal Fair Credit Reporting Act ("FCRA") as requiring a showing of actual damages.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In so ruling, the Eleventh Circuit concluded that a consumer alleging a willful violation of the FCRA does not need to prove actual damages to recover "damages of not less than $100 and not more than $1,000." </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=3509221737549903061&q=santos+v+experian&hl=en&as_sdt=400006&as_ylo=2023&as_vis=1">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A group of consumers filed a putative class action complaint, seeking to represent a class of individuals whose tradelines reported by a specific debt collector had been wrongly "re-aged" by a credit reporting agency. They alleged that the credit reporting agency "willfully" violated its obligation under the FCRA to "follow reasonable procedures" to ensure consumer credit reports were prepared with "maximum possible accuracy" when it allowed credit reports to reflect allegedly inaccurate status dates. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The trial court denied the credit reporting agency's summary judgment motion. After the close of discovery, the consumers moved to certify a class of all consumers whose credit reports had an account or accounts reported by the debt collector with an inaccurately displayed "Date of Status" and were viewed by one or more third parties. The trial court adopted the magistrate judge's recommendation and denied class certification. The consumers then petitioned for permission to appeal the trial court's class certification order under Rule 23(f), which was granted.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">As you may recall, where a consumer reporting agency willfully fails to comply with the requirements imposed on it under the FCRA, a consumer has two options to recover damages. The first option allows a consumer to recover "any actual damages sustained by the consumer as a result of the failure." 15 U.S.C. § 1681n(a)(1)(A). And the second option allows a consumer to recover "damages of not less than $100 and not more than $1,000." Id. The issue in this case was whether, under the second option, the consumer could recover "damages of not less than $100 and not more than $1,000" without proving actual damages caused by the agency's willful violation of the FCRA. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">To answer this question, the Eleventh Circuit decided that it must determine the "ordinary meaning" of "damages" as used in the second option. See Wis. Cent. Ltd. v. United States, 138 S. Ct. 2067, 2070 (2018). Ultimately, the Court reasoned that the FCRA caselaw led to the conclusion that the second option does not require a consumer to prove they suffered actual damages. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">For instance, in Levine v. World Financial Network National Bank, the plaintiff sued a consumer reporting agency for willfully violating the FCRA. 437 F.3d 1118, 1123 (11th Cir. 2006). The trial court dismissed the suit because the plaintiff's complaint hadn't sought damages under the second option and his claimed injuries were "too amorphous" to recover actual damages under the first option. Id. at 1120. The Eleventh Circuit reversed, determining that, contrary to the trial court's reading, the plaintiff's complaint had sought "damages of not less than $100 and not more than $1,000." Id. at 1123–25. And because the plaintiff stated a prima facie claim under section 1681n(a)(1)(A) and sought damages under the second option, there was no need to examine the plaintiff's alleged injuries since the plaintiff's allegation of willful noncompliance with the FCRA was itself an injury that section 1681n "clearly recognize[d] as compensable." Id. at 1124– 25; see also Harris v. Mexican Specialty Foods, Inc., 564 F.3d 1301, 1309 (11th Cir. 2009).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Furthermore, the Eleventh Circuit noted that its reading was consistent with how the other circuits have read section 1681n(a)(1)(A). Specifically, the Court determined that every circuit to address the same issue has agreed that "the plain language of the provision permits recovery of statutory damages in the absence of actual damages." Hammer v. Sam's E., Inc., 754 F.3d 492, 499–500 (8th Cir. 2014); see also Beaudry, 579 F.3d at 705–06.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Eleventh Circuit held that the denial of the consumers' motion for class certification was an abuse of discretion because the trial court's analysis of Rule 23(b)(3)'s predominance requirement was based on its contrary interpretation of the second option in section 1681n(a)(1)(A). Thus, the Appellate Court vacated the trial court's denial of the motion for class certification and remanded for further proceedings.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEiBpSqHKizeqXLCRtchb7EZ-3iWQ-MbXGesmBHh_LqaL1oyMUJjNmxT1Bkny-7LogmPZcWLI4zK_eJumOU_97mjlJgyzEpduEUUfZzap7wxydgd9zSI48hJd133XeFpXVX4Oy3qEiHLEIwJqufZyQ745IWI8ywArxTBnjw8ig0MMP4gKhhjEL9yYcEol4gU"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEiBpSqHKizeqXLCRtchb7EZ-3iWQ-MbXGesmBHh_LqaL1oyMUJjNmxT1Bkny-7LogmPZcWLI4zK_eJumOU_97mjlJgyzEpduEUUfZzap7wxydgd9zSI48hJd133XeFpXVX4Oy3qEiHLEIwJqufZyQ745IWI8ywArxTBnjw8ig0MMP4gKhhjEL9yYcEol4gU=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7302513737945570850" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-60005666652461945452023-11-10T15:47:00.001-06:002023-11-10T15:47:48.913-06:00FYI: FTC Amends Safeguards Rule; Nonbank Financial Institutions Must Report Data Breaches to the FTC<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Federal Trade Commission <a href="https://www.ftc.gov/news-events/news/press-releases/2023/10/ftc-amends-safeguards-rule-require-non-banking-financial-institutions-report-data-security-breaches">recently announced</a> approval of an amendment to the <a href="https://www.ecfr.gov/current/title-16/chapter-I/subchapter-C/part-314">federal Gramm-Leach-Bliley Act Safeguards Rule</a> to require nonbank financial institutions to report to the FTC the unauthorized acquisition of unencrypted customer information involving at least 500 consumers (a "notification event"). The amendment becomes effective May 13, 2024.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the Final Rule is available at: <a href="https://www.govinfo.gov/content/pkg/FR-2023-11-13/pdf/2023-24412.pdf">Link to Final Rule</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The amendment also provides:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><ul style="margin-top:0in" type="disc"><li class="MsoListParagraph" style="color:#1f3864;margin-left:0in"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Notification must be made as soon as possible, and no later than 30 days after discovery of the event.</span></li><li class="MsoListParagraph" style="color:#1f3864;margin-left:0in"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">Notice must be provided through an online form that will be available on the FTC's website.</span></li><li class="MsoListParagraph" style="color:#1f3864;margin-left:0in"><span style="font-size:12.0pt;font-family:"Arial",sans-serif">The notice will include:</span></li></ul><p class="MsoNormal" style="margin-left:.5in;text-indent:.5in"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">+ the name and contact information of the reporting financial institution;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> + a description of the types of information that were involved in the notification event;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> + if the information is possible to determine, the date or date range of the notification event;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> + the number of consumers affected or potentially affected by the notification event;</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> + a general description of the notification event; and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> + whether any law enforcement official provided a written determination that notifying the public of the breach would impede a criminal investigation or cause damage to national security, and a means for the Federal Trade Commission to contact the law enforcement official.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The three remaining FTC commissioners voted unanimously in favor of the amendment.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">"Companies that are trusted with sensitive financial information need to be transparent if that information has been compromised. The addition of this disclosure requirement to the Safeguards Rule should provide companies with additional incentive to safeguard consumers' data," the Director of the FTC's Bureau of Consumer Protection said.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEg5Bu5mhW2EG7yAk-Ep3ppoeR-hZwoV-UKZafnTwx_0JfLT9Rca0lN_1PZkC7r1K0b6nXehuMXvcS8iZCEhacwCmDFzprTAEv_cNgow5s1sgQSy9I7gp9ZFdBSZIFKt2KIyy5PsxcyEK9BUmfYMa8SZDMKw2kJgarZtNLdRd6GuIPnV3kifDxTK5Zc6HFMs"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEg5Bu5mhW2EG7yAk-Ep3ppoeR-hZwoV-UKZafnTwx_0JfLT9Rca0lN_1PZkC7r1K0b6nXehuMXvcS8iZCEhacwCmDFzprTAEv_cNgow5s1sgQSy9I7gp9ZFdBSZIFKt2KIyy5PsxcyEK9BUmfYMa8SZDMKw2kJgarZtNLdRd6GuIPnV3kifDxTK5Zc6HFMs=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7299953488636314338" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-21214861288639895612023-11-05T21:12:00.001-06:002023-11-05T21:12:12.414-06:00FYI: Ill App Ct (1st Dist) Upholds Dismissal of Putative Class Action for Lack of Standing<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Appellate Court of Illinois, First Judicial District, recently affirmed the dismissal of a putative class action for lack of standing because the named plaintiffs suffered no injury in fact to a legally cognizable interest.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In so ruling, the First District acknowledged that, in Illinois, a plaintiff need not allege actual injury from a violation a statute in order to have standing to sue under the statute, and need not prove actual damages if the plaintiff suffered the injury sought to be redressed by the statute. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Nevertheless, the Appellate Court held that providing the required disclosure at issue here would in essence force the defendant to perform a "useless act," because the required disclosure related to matters that did not apply under the circumstances alleged.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://ilcourtsaudio.blob.core.windows.net/antilles-resources/resources/6972d37f-3d70-4045-a47c-cbdf10e60af9/Hundley%20v.%20WPD%20Management,%202023%20IL%20App%20(1st)%20230075.pdf">Link to Opinion</a> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Tenants entered into rental agreements with a landlord and were not required to pay a security deposit. The rental agreements included a general summary of the tenants' rights and obligations but did not include a summary of rights regarding security deposits or their relevant interest rates. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">One of the tenants filed a class action complaint on behalf of himself and others similarly situated, alleging that the landlord failed to attach the summaries required by Chicago's Residential Landlord and Tenant Ordinance (RTLO), Chicago Municipal Code § 5-12- 170, including both the general summary and the summary regarding the security deposit interest rates. The tenant then filed an amended class action complaint to add additional plaintiffs.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The landlord moved to dismiss, arguing that the tenants failed to state a claim for an RLTO violation because the leases contained the RLTO summary, which had an express section entitled "SECURITY DEPOSITS AND PREPAID RENT {MUN. CODE CH. 5-12-080 AND 5-12-081}." In response, the tenants argued that the RLTO requires landlords to include the general RLTO summary and security deposit summary with all rental agreements, even if no security deposit is required. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The trial court dismissed the tenants' complaint for lack of standing because it concluded the tenants suffered no injury. The tenants timely appealed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">On appeal, the tenants argued that the language of the RLTO does not require tenants to allege actual damages beyond the violation of the statute and, thus, the violation alone confers standing. In response, the landlord argued that the RLTO general summary was attached to the leases, as required, and the only additional information not included was the separate security deposit summary regarding the interest rates. The landlord contended that, because the tenants were not required to pay a security deposit, the failure to attach the security deposit summary was immaterial.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The RLTO requires the Commissioner of the Chicago Department of Planning and Development to prepare a summary of the Chicago Municipal Code "describing the respective rights, obligations, and remedies of landlords and tenants" and then distribute the summary for public inspection and copying. Chicago Municipal Code § 5-12-170. The Commissioner must also prepare a separate summary of landlords' and tenants' respective rights, obligations, and remedies concerning security deposits, as well as the applicable interest rate to be paid thereon, and then disseminate the summary through radio and television outlets broadcasting in Chicago. Id. Based on these requirements, section 5-12-170 imposes an additional duty on landlords to attach "[a] copy of such summary *** to each written rental agreement." Id. Landlords must include both the general RLTO summary and the security deposit summary. Kopnick v. JL Woode Management Co., LLC, 2017 IL App (1st) 152054, ¶ 28.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Although the RLTO is to be "liberally construed and applied to promote its purposes and policies," Chicago Municipal Code § 5-12-010, the First District determined that reading it as broadly as the tenants urged strains the text and purpose of the ordinance. Specifically, the Court reasoned that holding a defendant liable for statutory damages ($100 per violation) for failing to provide a summary regarding security deposit interest rates with a rental agreement that does not require a security deposit would in essence require a defendant to perform a "useless act." Sylva, LLC v. Baldwin Court Condominium Ass'n, 2018 IL App (1st) 170520, ¶ 22. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Furthermore, under Illinois law, in order to establish standing, a plaintiff must "demonstrate some injury in fact to a legally cognizable interest." Flynn v. Ryan, 199 Ill. 2d 430, 436 (2002). The First District concluded that the tenants could never allege an injury here because they never paid security deposits. The landlord's failure to provide the interest rate information could in no way harm the tenants.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the First Judicial District held that permitting a party to prevail on a claim absent an injury allows a "regulation designed as a shield to be used as a sword." PNC Bank, National Ass'n v. Wilson, 2017 IL App (2d) 151189, ¶ 26. Thus, the Court affirmed the trial court's dismissal of the complaint for lack of standing.</span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEiKYuVMeiw8ep1RyzxcOjCiGhlxCH56XhCf0cHWUxuhrauNSGfWtYWZI8A9KmLXmdTjmVJdv-I1RwrBR6xZMNSlWqIJ2v9MaEmw86vMOmw7ofQkCAFpxj7sLBfT3MRpw552GIt0619CzGPDnsjXGL758grg0aHYgAvbXg0EvzaaYWu8z4KhuMfiRAgiOFfn"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEiKYuVMeiw8ep1RyzxcOjCiGhlxCH56XhCf0cHWUxuhrauNSGfWtYWZI8A9KmLXmdTjmVJdv-I1RwrBR6xZMNSlWqIJ2v9MaEmw86vMOmw7ofQkCAFpxj7sLBfT3MRpw552GIt0619CzGPDnsjXGL758grg0aHYgAvbXg0EvzaaYWu8z4KhuMfiRAgiOFfn=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7298181659192174162" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-65481040714382379812023-11-03T15:59:00.001-05:002023-11-03T16:20:06.638-05:00FYI: 8th Cir Rejects Conversion Claims by Decedent's Estate Against Bank for Lack of Standing<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The U.S. Court of Appeals for the Eighth Circuit recently affirmed the dismissal of several conversion claims brought by the estate of a deceased account holder against a bank, holding that one of the conversion claims was time-barred, and that the estate did not have standing to pursue the remaining conversion claims as the alleged injury was not fairly traceable to the bank.</span><span style="font-size:12.0pt;font-family:"Arial",sans-serif"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=8654959966187610003&hl=en&as_sdt=6&as_vis=1&oi=scholarr">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">After the death of his wife, the wife's son began to take care of his stepfather ("decedent"). The stepson began taking care of his elderly stepfather by managing the decedent's personal affairs. In doing so, the stepson initiated a scheme to defraud the decedent of his life savings. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Decedent maintained numerous bank accounts including two individual accounts, a business account, and a farm account. The decedent also owned an IRA. Ultimately, the stepson stole over $280,000 from decedent's IRA and also fraudulently endorsed checks from the business and farm accounts at other banks then transferred the funds into accounts that he controlled. All told, the step son stole over $770,000 from the decedent. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In 2018, the decedent's family notified the bank about the potentially fraudulent activity. The bank placed a hold on the relevant accounts. Ultimately, the stepson pled guilty to fraud and was sentenced to serve over 10 years in prison and ordered to pay restitution. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In December 2020, decedent's estate filed a lawsuit in Iowa state court, asserting three common-law conversion claims against the bank. The first claim asserted a theory of conversion based on the stepson's use of forged endorsements of the IRA checks that were deposited into decedent mother and father's account at the bank. The second claim asserted a theory of conversion based on decedent's fraudulent transfer of funds from the business and farm accounts into the stepsons control. The third claim asserted a theory of conversion based on the stepson/decedent mother's account at the bank. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The bank removed the case to federal court. The Estate unsuccessfully moved for leave to amend their complaint twice. The bank moved for summary judgment. For the first claim, the trial court held that the claim was barred by the statute of limitations. For the second claim, the trial court held the estate lacked standing to bring this claim against the bank because the Estate admitted the accounts were located at different banks. For the third claim, the trial court held that since fact that stepson and decedent mother held the account in joint tenancy with a right of survivorship, any rights of decedent husband were extinguished upon the death of decedent wife and the Estate lacked standing. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Thus, the trial court granted the bank summary judgment on all claims. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Estate appealed. The Eighth Circuit first held that the trial court did not abuse its discretion in denying the Estate leave to amend its Complaint because the Estate did not comply with the local rules by attaching a proposed amended complaint to its motion for leave. The Court of Appeals next reviewed the trial court's summary judgment rulings in favor of the bank. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Initially, the trial court rejected the conversion claim based on the forged IRA checks deposited by stepson into the decedent husband and wife's joint account at the bank because it failed to state a claim, was barred by the statute of limitation and barred by the language of the account agreement. The Eighth Circuit concurred that this claim was barred by the statute of limitations. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Iowa law imposes a three-year statute of limitations for all actions brought "to enforce an obligation, duty, or right arising under" Article 4 of Iowa's UCC. The Estate attempted to argue that the discovery rule applied and should extend the statute of limitations. However, the Iowa Supreme Court already addressed this issue and in a prior ruling by holding that the discovery rule does not apply to commercial conversion actions based on forged endorsements under the UCC. See Husker News Co. v. Mahaska State Bank, 460 N.W.2d 476, 476-77 (Iowa 1990).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Because the stepson deposited the last IRA check at the Bank on September 8, 2017 and the lawsuit was not filed until December 17, 2020 the statute of limitations barred this claim. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Eighth Circuit held that the second claim was also fatally flawed because the business and farm account were accounts located at different banks than defendant bank. Because the business and farm accounts were not controlled by the defendant bank, the Appellate Court held that any injury to those accounts under a theory of conversion was not traceable to the bank. See Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016). Thus, the Eighth Circuit held, the Estate did not have standing the bring this claim, and the Appellate Court noted that the claim should have been dismissed for lack of jurisdiction and not on summary judgment. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">For the third claim, the Estate argued that its interest in the joint account of decedent-mother was not extinguished on the death of the mother. Specifically, the Estate argued that the death of the mother resulted in a constructive trust and that stepson's fraud violated the fiduciary duty he owed to his mother under this arrangement. The Eighth Circuit disagreed and held the Estate had no interest or claim in the property. As a result, the Court of Appeals held that this claim should have also been dismissed for lack of standing because any alleged injury was not traceable to the bank. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Eighth Circuit affirmed the dismissal as to claim 1 and vacated the summary judgment as to claims 2 and 3 with instructions to dismiss Counts 2 and 3 without prejudice for lack of jurisdiction.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>20 N. Clark Street, Suite 3300<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEgwU8vXJLevg4POBWAk0CYo2FmjYsrzhNmmBIHPfzs6LfsoNebr5Jb5CMWYxGqqG3CjKSOCciMwLWWMKH2JyF3jUUS8ALXge481comRGt2WlpwGtv6NwdSPquscmS3l8RGkR6chE9D6HCN64KaQEYitUzYgKs4n1aBqb31B6LDyJo8XrThJcVA8hX0f8eWj"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEgwU8vXJLevg4POBWAk0CYo2FmjYsrzhNmmBIHPfzs6LfsoNebr5Jb5CMWYxGqqG3CjKSOCciMwLWWMKH2JyF3jUUS8ALXge481comRGt2WlpwGtv6NwdSPquscmS3l8RGkR6chE9D6HCN64KaQEYitUzYgKs4n1aBqb31B6LDyJo8XrThJcVA8hX0f8eWj=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7297343410648125538" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-60972148855847064122023-10-28T06:39:00.001-05:002023-10-28T06:39:05.732-05:00FYI: Indiana Sup Ct Rules Silence and Inaction Not Enough for Enforceable Arbitration Agreement<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Indiana Supreme Court recently reversed the judgment of a trial court granting a credit union's motion to compel individual arbitration and finding an enforceable agreement to arbitrate between the parties.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In so ruling, the Indiana Supreme Court held that a consumer's silence and inaction did not amount to acceptance of the arbitration agreement.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=5203076912960975851&q=land+v+IU+credit+union&hl=en&as_sdt=400006&as_ylo=2023">Link to Opinion</a>. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">When the consumer, who maintained at least two checking accounts with the credit union, registered for online banking for one of her accounts, she received by email an agreement permitting the credit union to modify the terms and conditions to its services and send any notice to the consumer via email. Under the terms of the notice, the consumer was deemed to have received any such notice three days after it was sent. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The credit union later sent to its customers a proposed modification to the agreement, the addendum. The terms of this addendum (1) permitted either party to require arbitration to resolve disputes without the other party's consent and (2) prohibited members from initiating or joining a class-action lawsuit. The addendum also specified, under a heading in bold and in all-capital letters, the member's "right to opt out" of the arbitration addendum if he or she so informed the credit union within 30 days of receiving notice. Otherwise, according to its terms, the addendum became binding on the member.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The consumer received the addendum by email and regular U.S. mail. The subject line of the email indicated only that a "New eStatement" was available "in Online Banking," and the body mentioned nothing about the addendum. But a link in the email would have directed the consumer to her five-page monthly account statement, the first page of which referenced the addendum in bold, all-capital letters and directed her to review the updated terms "at the end of [the] statement." </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The document the consumer received by regular U.S. mail consisted of a two-page monthly account statement, the first page of which likewise noted the addendum in bold, all-capital letters and directed her to review the updated terms "included in this mailing." The consumer claimed to have seen neither version of the addendum, and she never notified the credit union of her preference to opt out.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The consumer later filed a putative class action complaint alleging breach of contract and other related claims. The credit union moved to compel individual arbitration, which the trial court granted. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">On discretionary interlocutory appeal, the appellate court reversed, holding that the credit union failed to provide reasonable notice to the consumer by either email or regular mail. The credit union petitioned for transfer, which the Indiana Supreme Court granted, thus vacating the appellate court's opinion.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The credit union first argued on appeal that the appellate court unjustifiably adopted a heightened standard for what constitutes sufficient notice under a contract. The Indiana Supreme Court disagreed and held that the question was not whether a pure reasonableness standard always governs notice. Instead, a court will "defend the freedom of contract by enforcing parties' agreed terms," whether those terms call for notice by email, regular U.S. mail, or other means. See Care Grp. Heart Hosp., LLC v. Sawyer, 93 N.E.3d 745, 758 (Ind. 2018). Thus, insofar as the contracting parties agreed on what constitutes effective notice, their agreement controls. But to the extent an agreement fails to define notice, the court will apply a reasonableness standard as an exercise in contract interpretation.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Here, the Indiana Supreme Court held that the agreement did not define what constitutes "written notice," other than saying it is effective once properly mailed. Therefore, in analyzing whether the credit union complied with the agreement's terms of notice by mail, the Court applied an "objective theory" of contract interpretation. See Akin v. Simons, 180 N.E.3d 366, 377 (Ind. Ct. App. 2021). In other words, it became a question of reasonableness for the courts to decide as a matter of law. See Indiana Farm Bureau Ins. Co. v. Harleysville Ins. Co., 965 N.E.2d 62, 68 (Ind. Ct. App. 2012).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The consumer received two notices of the addendum in the account statements sent to her from the credit union—one by email and one by regular U.S. mail. The email notice contained an inconspicuous subject line, and the body of the email itself said nothing of the addendum. However, even if the email notice did not qualify as effective notice as defined in the agreement, the Indiana Supreme Court concluded that the notice sent to her by regular U.S. mail did constitute reasonable notice.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In addition to providing the consumer with a detailed list of account transactions (both debits and credits), the Court determined that a monthly account statement provides important contact information for member service, the account's beginning and ending balance, the total number of withdrawals, the amount of fees she incurred (including overdraft fees and returned-item fees), the total dividends paid to her (if any), her balance due on any outstanding loans, the annual percentage rate for those loans, and the payments she's made toward those loans. Additionally, it may help a customer discover unauthorized transactions that require further action. Thus, the Court concluded that it made sense for the credit union to have included its proposed modification to the agreement among this information.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Turning next to the question of acceptance, the Indiana Supreme Court observed that the credit union explicitly notified the consumer that the failure to opt out of the arbitration addendum within 30 days of receiving notice would bind her to the addendum. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">However, the Court held that the "mere fact that an offeror states that silence will constitute acceptance does not deprive the offeree of his privilege to remain silent without accepting." Restatement (Second) of Contracts § 69 cmt. c. Instead, the credit union must have shown that the consumer "in remaining silent and inactive intend[ed] to accept the offer." See id. § 69(1)(b). Under the Restatement, the "case for acceptance is strongest" when the offeree's "reliance is definite and substantial" or when the offeree's "intent to accept is objectively manifested though not communicated to the offeror." Id. § 69 cmt. c. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Here, even assuming the consumer was aware of the offer to arbitrate, the Indiana Supreme Court found no evidence of her "definite and substantial" reliance on the arbitration addendum. Furthermore, the Court saw no objective manifestation of intent to accept through the consumer's continued use of her checking accounts. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">First, nothing in the agreement or the disclosure suggested that silence and continued use of the accounts would result in acceptance of any future modification to those original contracts. Cf. Heiges v. JP Morgan Chase Bank, N.A., 521 F. Supp. 2d 641, 647 (N.D. Ohio 2007). Second, nothing in the credit union's offer to amend those original contracts conditioned continued use of the accounts on acceptance of the addendum.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Indiana Supreme Court held that, although the credit union provided the consumer with reasonable notice of its offer to amend the agreement, the consumer's subsequent silence and inaction did not amount to acceptance of the addendum. Thus, with no enforceable agreement to arbitrate, the Court reversed the trial court and remanded for further proceedings.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. Madison Street, 6<sup>th</sup> Floor<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEji-E0wPmuZUkUtIJmU8M8A6EUKuoDFk80abygAM08vLdFA6yUpkNK3yo1JMkf4Pgz0TBpr0rX552tm4gx3JmOaCwldjbFIY86rcwDCZmrFTuepiwEKOP9BavLzfKOCpNKDgvOjAO3OA1fGvzqBZiqoHD0xKFEBoitdHxJXxBP1JF5in7Wr3tH3OSa5VhJN"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEji-E0wPmuZUkUtIJmU8M8A6EUKuoDFk80abygAM08vLdFA6yUpkNK3yo1JMkf4Pgz0TBpr0rX552tm4gx3JmOaCwldjbFIY86rcwDCZmrFTuepiwEKOP9BavLzfKOCpNKDgvOjAO3OA1fGvzqBZiqoHD0xKFEBoitdHxJXxBP1JF5in7Wr3tH3OSa5VhJN=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7294972515321283234" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. 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Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-50206845630222018862023-10-24T08:42:00.001-05:002023-10-24T08:42:30.614-05:00FYI: 10th Cir Rejects Warehouse Lenders' Attempt to Split Claims Under Auditor's Policy<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In an action brought by two warehouse lenders, the U.S. Court of Appeals for the Tenth Circuit recently held that multiple negligent audits of the mortgage lender borrower were "interrelated" under an auditor's insurance policy and that the claim of one warehouse lender was "interrelated" with the claim of the other warehouse lender when they arose from the same audit.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://www.ca10.uscourts.gov/sites/ca10/files/opinions/010110936386.pdf">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Two warehouse lenders (creditors) loaned money to a mortgage lender (company), and the creditors' auditor audited the company's finances each year for three years. The auditor's annual reports failed to note that the company was committing fraud. The creditors sued the auditor, and the auditor's insurer defended the suit. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The insurance policy at issue would pay up to $1,000,000 per individual claim and up to $3,000,000 in the aggregate. Under the policy's terms, "interrelated claims" were considered one claim and the per-claim $1,000,000 limit applied regardless of the number of interrelated claims or claimants. The insurance policy defined "interrelated claims" as "all claims arising out of a single act or omission or arising out of interrelated acts or omissions in the rendering of professional services." Additionally, the policy described "interrelated acts or omissions" as "all acts or omissions in the rendering of professional services that are logically or causally connected by any common fact, circumstance, situation, transaction, event, advice or decision."</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The trial court held that each negligently conducted audit report was not "interrelated" to each other, and that both creditors' claims on each audit in the same year were "interrelated." Both sides timely appealed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The first question on appeal here was whether the audit reports were "interrelated acts" as defined under the insurance policy. In other words, the Tenth Circuit needed to determine whether the different audit reports were "logically or causally connected by any common fact, circumstance, situation, transaction, event, advice or decision." Furthermore, because of the use of the word "or", the Court reasoned that it could resolve this question by exclusively exploring what it means to be "logically connected." </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Tenth Circuit concluded that "logically connected" means "connected by an inevitable or predictable interrelation or sequence of events." Berry & Murphy, P.C. v. Carolina Cas. Ins. Co., 586 F.3d 803, 811–12 (10th Cir. 2009). To find a logical connection between each act, the Court looked at whether the acts inevitably or predictably flowed from each other. Id. at 811. And what determined whether the acts flowed from one another is whether each act shared "any common fact, circumstance, situation, transaction, event, advice or decision." </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Within that framework, the Tenth Circuit held that the "relevant act or omission" here was the failure to identify the absence of security interests in each of the three audit reports. Moreover, the Court held that each audit report was logically related because the same common facts and circumstances tied the recurring negligent acts together. Specifically, each audit report "flow[ed] from the other" as a result of one common circumstance: the Auditor's negligence. Berry & Murphy, P.C., 586 F.3d at 811. The Court explained that the common facts and circumstances underlying the recurring negligence here made it "predictable" that the Auditor may make the same mistake—just as he did. Id. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Because the multiple audits here were logically connected by common facts and circumstances, the Tenth Circuit reversed the trial court's decision. All the audits should have been considered one "claim" under the policy, which means that the creditors could only have received up to $1,000,000 for the individual claim.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Tenth Circuit also concluded that the trial court did not err when it decided that the claims from both creditors stemming from the same audit were interrelated because the policy clarified as much, irrespective of the number or type of claimants. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Specifically, the policy stated that "[t]he limits of liability shown in the Declarations and subject to the provisions of this Policy is the amount we will pay as damages and claim expenses regardless of the number of you, claims made or persons or entities making claims." Thus, the Court also noted that, even if multiple parties made separate claims of liability, the policy limited the amount among all parties by treating the separate claims as "interrelated claims" if they arose from the same act.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Tenth Circuit reversed the trial court in part and held that each negligent audit was interrelated. However, the Court also affirmed the trial court in part and held that one creditor's claim arising from an audit was interrelated to the other creditor's claim arising from the same audit.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. Madison Street, 6<sup>th</sup> Floor<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEgd29BhByCrAgAfzQZt4BMB_R-g_R5x4ej2V3R_NZWFQtpqCIEEjRDP9BMRD_07JZ5gUChjYiKJPUdY8S5MV466hmfIQDi7FzR15PRZfSlTxRyNN_8jNi335kmKV0oNj9offb_Qd7T-7bdVkCup5P02udw_8f9Ns883yRBziF-0reyyU0v1RTf0KLStAX0s"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEgd29BhByCrAgAfzQZt4BMB_R-g_R5x4ej2V3R_NZWFQtpqCIEEjRDP9BMRD_07JZ5gUChjYiKJPUdY8S5MV466hmfIQDi7FzR15PRZfSlTxRyNN_8jNi335kmKV0oNj9offb_Qd7T-7bdVkCup5P02udw_8f9Ns883yRBziF-0reyyU0v1RTf0KLStAX0s=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7293519986162865586" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. 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Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-71605370480884800332023-10-19T08:47:00.001-05:002023-10-19T08:55:28.688-05:00FYI: 7th Cir Rules Dispute Sent Through Wrong Channel Gave Rise to Valid FDCPA "Bona Fide" Error Defense<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The U.S. Court of Appeals for the Seventh Circuit recently affirmed a trial court's summary judgment ruling in favor of a debt collector asserting a bona fide error defense to an action under the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. (FDCPA).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Here, the plaintiff disputed the debt by emailing two officers of the debt collector company, and not by following the dispute procedures described in the written instructions provided by mail to the plaintiff.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=10552264323633128743&hl=en&as_sdt=6&as_vis=1&oi=scholarr">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A debtor defaulted on a debt then later married his spouse. Debtor and spouse shared a phone plan and office. In an attempt to collect the debt, a debt collection company initially mailed the debtor a letter. Debtor did not follow the dispute process as outlined in the letter and he separately emailed the Chief Executive Officer and Vice President of Operations of the collection company to dispute the debt. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The officers of the company did not recall seeing the debtor's dispute email. As a result, the company took no action to address the debtor's dispute letter. Therefore, the company did not follow its standard policy of stopping collection activity and proceeded to contact debtor's spouse via telephone. The company contacted debtor's spouse twelve times in an attempt to reach to debtor to collect the debt. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Debtor's spouse (Plaintiff) ultimately sued the debt collector (Defendant) alleging the calls violated the FDCPA. Plaintiff asserted that defendant violated § 1692g(b) by continuing debt collection activities after debtor disputed the debt and without first providing verification of the debt. Plaintiff further alleged that defendant violated § 1692d and 1692d(5) because (1) defendant continued to call plaintiff after debtor disputed the debt, (2) defendant continued to call plaintiff after she notified defendant that plaintiff does not use her phone, and (3) defendant disconnected calls with plaintiff after she answered. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Plaintiff alleged that the twelve unwanted phone calls were illegal and caused her to experience stress, which physically manifested in crying and difficulty sleeping. Plaintiff and defendant both moved for summary judgment. The trial court held that plaintiff could not bring a claim under § 1692g(b) because she is not a "consumer" for the purposes of that provision. The trial court also concluded that a reasonable jury could not infer that defendant violated § 1692d and 1692d (5), and even if it could, the trial court found that defendant would prevail under the affirmative defense of bona fide error under § 1692k(c). Plaintiff appealed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">On appeal, plaintiff argued that the trial court erred by finding that she was not a "consumer" under 15 U.S.C. § 1692g(b). As you may recall, the statute provides that if the consumer notifies the debt collector in writing that the debt is disputed within thirty days after receipt of the notice, the debt collector must cease collection of the debt until the debt collector mails verification to the consumer. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Here, the Seventh Circuit assumed without deciding the plaintiff has a cause of action in order that it could address the merits of the trial court's decision addressing defendant's bona fide error defense. See Knopick v. Jayco, Inc., 895 F.3d 525, 529–30 (7th Cir. 2018); Dunnet Bay Constr. Co. v. Borggren, 799 F.3d 676, 689 (7th Cir. 2015). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The bona fide error defense requires a debt collector to show that (1) the violation was not intentional, (2) the violation resulted from a bona fide error, and (3) the debt collector-maintained procedures reasonably adapted to avoid any such error. Kort v. Diversified Collection Servs., Inc., 394 F.3d 530, 537 (7th Cir. 2005). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Notably, this defense does "not require debt collectors to take every conceivable precaution to avoid errors; rather, it only requires reasonable precaution." Kort, 394 F.3d at 539; see also Hyman v. Tate, 362 F.3d 965, 968 (7th Cir. 2004). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Plaintiff did not properly dispute the first two elements, and the only question concerned the third element -- that is, whether or not defendant-maintained procedures reasonably adapted to avoid any such error. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The plaintiff argued they did not because the Vice President of Operations' deleted e-mail showed that defendant did not maintain procedures reasonably adapted to avoid the error and did not have procedures to detect deviations from the prescribed dispute procedures. Plaintiff's argument relied on the case of Morris v. Choice Recovery, Inc., No. 18-cv-05548, 2020 WL 6381926 (N.D. Ill. Oct. 30, 2020). In Morris, the plaintiff faxed a dispute to the administrative team in charge of forwarding all disputes to a particular individual who logged the disputes in an internal database. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">However, the record on appeal showed that training was not the only procedure that defendant had in place, and the type of error here was different than Morris because defendant set up specific procedures to dispute a debt. Additionally, defendant mailed a letter with instructions to dispute a debt that directs consumers to its website or standard mailing address and sought to avoid communications to corporate officers whose day-to-day duties seldom include consumer communications. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Notably, in emailing the CEO and VP of Operations, the debtor circumvented defendant's instructions for how to dispute his debt outlined in the letter. Specifically, the debtor pulled a Massachusetts registration document to uncover the email addresses of defendant's employees. Although the officers of the company receive training to forward dispute emails to client services department, they are normally not involved in day-to-day communications with debtors. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Moreover, unlike Morris where the plaintiff properly disputed the debt and the error occurred while executing a routine procedure, the plaintiff here invented an alternative channel to dispute the debt and thus no one at the debt collector company noticed the dispute, which would have started its procedure. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">As a result, the Seventh Circuit held that the defendant took reasonable steps to avoid the bona fide errors caused by debtor's behavior, and even assuming plaintiff is a "consumer" under § 1692g(b) and that defendant violated that provision, the bona fide error defense shields defendant from liability under § 1692g(b).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Next, plaintiff argued the trial court erred by finding that a reasonable jury could not infer that defendant intended to annoy plaintiff, in contravention of 15 U.S.C. § 1692d. Section 1692d provides: "A debt collector may not engage in any conduct the natural consequence of which is to harass, oppress, or abuse any person in connection with the collection of a debt." </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Seventh Circuit dismissed this argument and noted that same facts and logic shield the defendant from liability through the bona fide error defense because if defendant's procedures had been followed, plaintiff's number would have been immediately placed on a do-not-call list. Therefore, plaintiff would not have continued to receive calls and Plaintiff ultimately complied with the requirements of the bona-fide error defense.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Lastly, plaintiff argued that defendant intended to annoy her by calling and then hanging up on her twice, in violation of § 1692d (5). The Seventh Circuit rejected this argument based on the bona fide error defense because defendant had policies and procedures that should have prevented these calls from going out to plaintiff in the first place.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Seventh Circuit affirmed the trial court's grant of summary judgment in favor of the defendant debt collector.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. Madison Street, 6<sup>th</sup> Floor<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEicw_MrndTHY6qHQIv67N_8uBkemspY0WBSGZ178DjTOa_DOv8G0yPzUvZQ20zHfomfnun3rXCXp-wQ27lXU-oc2R59-CQojvU0R95L6Uf7eoZmvliu6HUh7sY388HStW44bX7ap2MYNeW5MAn5sreNQNBlpR_PB1q-1tn8X3OccD9WK1Cs060hcZYC_PIn"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEicw_MrndTHY6qHQIv67N_8uBkemspY0WBSGZ178DjTOa_DOv8G0yPzUvZQ20zHfomfnun3rXCXp-wQ27lXU-oc2R59-CQojvU0R95L6Uf7eoZmvliu6HUh7sY388HStW44bX7ap2MYNeW5MAn5sreNQNBlpR_PB1q-1tn8X3OccD9WK1Cs060hcZYC_PIn=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7291665776167378226" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. 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Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-50097083764974341872023-10-17T07:29:00.001-05:002023-10-17T07:29:19.900-05:00FYI: 8th Cir Upholds Lodestar Reduction of Attorney Fee Award in FDCPA Case by 50%<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The U.S. Court of Appeals for the Eighth Circuit recently affirmed the ruling of a trial court that followed the lodestar method and reduced an attorneys' fees award by 50%.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In so ruling, the Eighth Circuit held that there is a "strong presumption" that the lodestar method represents a reasonable fee and the trial court here did not abuse its substantial discretion in finding that fifty hours of work was unreasonable for the "factually and legally straightforward" federal Fair Debt Collection Practices Act (FDCPA) claim at issue.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=12005280605807687877&hl=en&as_sdt=6&as_vis=1&oi=scholarr">Link to Opinion</a> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A debt collector called a consumer to collect an alleged $900 debt to her former landlord. Afterward, without sending the relevant documents to the consumer, the debt collector reported her debt to a credit reporting agency, failing to tell the agency that the debt was disputed. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The consumer commenced an action against the debt collector, alleging that it violated the FDCPA. The consumer requested an award of $18,810 in attorneys' fees for work by two attorneys and a paralegal. The debt collector challenged the fees requested by both attorneys, who submitted sworn declarations and detailed billing records. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The trial court, applying the lodestar method of calculating an attorneys' fees award, found that the attorneys' claimed hourly rates were reasonable, but the hours expended on the case were excessive. The trial court reduced the claimed attorney hours by fifty percent, exclusive of paralegal work, and awarded the consumer $9,480 in attorneys' fees. The consumer appealed, accusing the trial court of departing from the lodestar calculation by imposing a "cap" that violates FDCPA policies and deprives counsel of full compensation.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">"The starting point for determining attorneys' fees is the 'lodestar,' which is calculated by multiplying the number of hours reasonably expended by the reasonable hourly rate." Orduno v. Pietrzak, 932 F.3d 710, 719 (8th Cir. 2019). The trial court must "exclude from a fee request hours that are excessive, redundant, or otherwise unnecessary." Hensley v. Eckerhart, 461 U.S. 424, 434 (1983). The Eighth Circuit determined that the trial court here did exactly this.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Eighth Circuit found that the trial court thoroughly reviewed the question of attorney hourly rates, finding that the claimed hourly rates were reasonable and consistent with the rates in the community for similar services by lawyers of comparable experience. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">It then conducted a detailed review of hours performed on specific tasks by the two attorneys, concluding that many hours spent on pre-complaint research and communicating with each other and the client were excessive or redundant. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Additionally, the Eighth Circuit reasoned that it should show "substantial deference" to a trial court's determination that fees were excessive. Fox v. Vice, 563 U.S. 826, 838 (2011). Furthermore, the Appellate Court noted that there is a "strong presumption" that the lodestar method represents a reasonable fee. Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 478 U.S. 546, 565 (1986). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Despite the consumer's attempts to paint the FDCPA claims as complex and cutting edge, the Eighth Circuit agreed with the trial court that the case was factually and legally straightforward. Thus, the Court concluded that the trial court did not abuse its substantial discretion in finding that fifty hours was unreasonable for such a claim. See Orduno, 932 F.3d at 720. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Nor did the trial court abuse its discretion by focusing on the reasonableness of the time two attorneys spent on legal research and communicating with each other, and in finding that a fifty percent reduction was appropriate. See Quigley v. Winter, 598 F.3d 938, 958-59 (8th Cir. 2010). Moreover, the Court held that "[a] request for attorneys' fees should not result in a second major litigation." Hensley, 461 U.S. at 437. "The essential goal in shifting fees (to either party) is to do rough justice, not to achieve auditing perfection." Fox, 563 U.S. at 838.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Eighth Circuit affirmed the ruling of the trial court.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. Madison Street, 6<sup>th</sup> Floor<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEjaZC17xNiaTSUF-8AstnorZp-x6aabzzPqufg8Rzwu-C21SG1_Vb5cb3FD1lwnCE31eRPUbdAmXUvuCxCv-QEWZiEvFFKPjIkRNewW3uG9IyRcUTJFk0uNM19qDmQ9gM8v4uJbL6rN5P6zT2D3qDkGTVHV6UXRmn30bTNzJLldhcViPts4Tcq0fiSYAs2p"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEjaZC17xNiaTSUF-8AstnorZp-x6aabzzPqufg8Rzwu-C21SG1_Vb5cb3FD1lwnCE31eRPUbdAmXUvuCxCv-QEWZiEvFFKPjIkRNewW3uG9IyRcUTJFk0uNM19qDmQ9gM8v4uJbL6rN5P6zT2D3qDkGTVHV6UXRmn30bTNzJLldhcViPts4Tcq0fiSYAs2p=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7290903527832764322" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-70474548521547686292023-10-12T17:45:00.001-05:002023-10-12T17:45:32.587-05:00FYI: Ill App Ct (5th Dist) Rejects Borrower's Challenge to Foreclosure Based on Error in Prior Foreclosure<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Appellate Court of Illinois, Fifth District, recently held that, because the defendant borrowers failed to file their petition for relief from a foreclosure judgment in the same proceeding in which the allegedly void order was entered, as required under Illinois procedural rules, the petition should have been dismissed without prejudice.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://ilcourtsaudio.blob.core.windows.net/antilles-resources/resources/4a8940f6-9920-466c-b05c-c63eb09eb956/First%20Midwest%20Bank%20v.%20Allen,%202023%20IL%20App%20(5th)%20220143-U.pdf">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A mortgagee filed a foreclosure action against the borrowers in Illinois state court. The mortgagee previously filed a foreclosure action against the same borrowers in the same court, but that case was dismissed and the foreclosure judgment vacated on the mortgagee's motion after the borrowers became current on their monthly payments.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">During the course of the second foreclosure action, the borrowers filed a petition for relief from an allegedly void order entered in the first action. The order in question vacated the foreclosure judgment in the first action. The borrowers alleged that the vacation order was void because the previous foreclosure judgment included a finding that there was no just reason to delay enforcement or appeal of the judgment; that the judgment became final and immediately appealable upon the denial of the borrowers' motion to reconsider; and that the trial court in the first action lost jurisdiction to amend or vacate the judgment.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The trial court denied the borrowers' petition, finding that Illinois law, 735 ILCS 5/2-1401(b) ("Section 2-1401"), requires such a petition to be filed in the same proceeding in which the challenged order was entered. In its written order, the trial court went on to hold that, even if the borrowers' arguments were considered on the merits, the ultimate conclusion was that the order from the prior action was not void. The borrowers timely appealed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Section 2-1401 provides a comprehensive statutory procedure for obtaining relief from a final order or judgment more than 30 days after it was entered. 735 ILCS 5/2-1401; Warren County Soil & Water Conservation District v. Walters, 2015 IL 117783, ¶ 31. Furthermore, a section 2-1401 petition may be brought to attack a judgment as void. 735 ILCS 5/2-1401(f); Sarkissian v. Chicago Board of Education, 201 Ill. 2d 95, 104 (2002). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">However, the Fifth District noted that subsection 2-1401(b) provides that section 2-1401 petitions for relief, including petitions brought on voidness grounds, "must be filed in the same proceeding in which the order or judgment was entered." 735 ILCS 5/2-1401(b). Moreover, the Appellate Court observed that Illinois courts have long held that section 2-1401 requires that a postjudgment petition be filed in the same proceeding in which the challenged judgment was entered and, when possible, heard by the same judge who rendered the judgment. See, e.g., Price v. Philip Morris, Inc., 2015 IL 117687, ¶¶ 35-37.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Here, the Fifth District agreed with the trial court that the borrowers erroneously failed to file their section 2-1401 petition for relief in the same proceeding in which the allegedly void order was entered. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">However, the Appellate Court held that the trial court should have dismissed the petition without prejudice on this basis, instead of denying the petition and coming to the ultimate conclusion that the order was not void. The Appellate Court reasoned that this extra step was improper because the trial court did not have the complete record of proceedings in the prior action. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Fifth District vacated the trial court's order denying the borrowers' section 2-1401 petition with prejudice, and remanded the case to the trial court with instructions to dismiss the petition without prejudice.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. Madison Street, 6<sup>th</sup> Floor<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEgDJ_fovF6wSWNbrkIi5gHVqFsOgj4aAglicFwtQ4XbUvtpB32LEoosla1zxy8EDoS4-GOAncV_FUBH4lrLqWtskhpWD3z_vXZi8WSbBPkq4QFwlN5DxSHlgIabjFwkIJlARaSDk0Gf4O5m6Hp7MElqUpeh4wt61pXpWR5rknhYcsmNrUuGb6bL1TmZnQFW"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEgDJ_fovF6wSWNbrkIi5gHVqFsOgj4aAglicFwtQ4XbUvtpB32LEoosla1zxy8EDoS4-GOAncV_FUBH4lrLqWtskhpWD3z_vXZi8WSbBPkq4QFwlN5DxSHlgIabjFwkIJlARaSDk0Gf4O5m6Hp7MElqUpeh4wt61pXpWR5rknhYcsmNrUuGb6bL1TmZnQFW=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7289206895244797010" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-79053550583302671492023-10-10T13:17:00.001-05:002023-10-10T13:17:58.976-05:00FYI: 7th Cir Rejects CAFA Removal Under "Internal Affairs" and "Home State Controversy" Exceptions<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The U.S. Court of Appeals for the Seventh Circuit recently held that a putative class action removed to federal court under the Class Action Fairness Act lacked federal jurisdiction because it fell within CAFA's "internal-affairs" and "home-state controversy" exceptions.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=3454653653227219946&hl=en&as_sdt=6&as_vis=1&oi=scholarr">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Current and former policyholders filed a class action lawsuit in Illinois against a mutual insurance company and 46 of its current and former officers and directors. Every member of the proposed class was an Illinois citizen under the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d)(2), as were the insurer and 45 of the individuals. The 46th individual defendant was a resident of Massachusetts.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The policyholders alleged that the company accumulated and retained an excess surplus of over $3.5 billion from premium revenues exceeding the cost of claims and thereby failed to supply those policies at cost. They claimed breach of contract, violations of the Illinois UDAP statute, unjust enrichment, and breach of fiduciary duty. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Based on putative class size, the amount in controversy, and the minimal diversity created by the 46th individual defendant, the insurer removed the case to federal court. The policyholders then moved to remand, contending that the action satisfied at least one of three exceptions to the federal jurisdiction otherwise supplied by CAFA: the internal-affairs exception in § 1332(d)(9)(B), the home-state controversy exception in § 1332(d)(4)(B), and the local controversy exception in § 1332(d)(4)(A).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The federal trial court denied the motion to remand, concluding that no exception applied. The policyholders timely appealed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">On appeal, all parties agreed that the class action brought by the policyholders satisfied CAFA's general requirements for federal jurisdiction. The question therefore was whether the action fit within either of two exceptions -- the internal-affairs exception, or the home-state controversy exception -- thereby requiring a remand to Illinois state court (the ruling on the local controversy exception was not appealed).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">By its terms, the internal-affairs exception in § 1332(d)(9) requires determining whether the class action "solely involves a claim" pertaining to a corporation's "internal affairs or governance." § 1332(d)(9), (d)(9)(B). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Seventh Circuit determined that the "solely involves" limitation means that, for the exception to apply, the class action cannot include a claim that does not "relate to" internal affairs or corporate governance. The Court reasoned that the exception encompasses claims concerning the governance of a corporate enterprise by directors and officers through the exercise of their fiduciary duties.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Seventh Circuit concluded that the policyholders' complaint "solely involves" claims that "relate to" the insurer's "internal affairs" or "corporate governance"—that directors and officers exercised the discretion they have to set capital levels and determine dividend distributions in impermissible ways that benefited themselves and harmed policyholders. § 1332(d)(9)(B). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Therefore, because the internal-affairs exception applied, the Court held that federal jurisdiction was lacking and the case must return to Illinois state court.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Additionally, the Seventh Circuit determined that the home-state controversy exception also provided an independent reason for remanding the suit to Illinois state court.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Under § 1332(d)(4), a federal court "shall decline to exercise jurisdiction" when "two-thirds or more of the members of all proposed plaintiff classes in the aggregate, and the primary defendants, are citizens of the State in which the action was originally filed." § 1332(d)(4), (d)(4)(B).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">All parties agreed that more than two-thirds of the members of the proposed class were citizens of Illinois. The point of contention was whether the 46th individual defendant, a citizen of Massachusetts and the defendant who supplied the minimal diversity for the insurer's invocation of CAFA jurisdiction in federal court—was a "primary defendant" within the meaning of the home-state controversy exception. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Seventh Circuit saw the spotlight of the complaint as shining foremost on the insurer. The insurer was the named defendant in three of the complaint's four claims and the party alleged to have accumulated over $3.5 billion in excess surplus. Also, the Court reasoned that the insurer was the party from which the policyholders sought the lion's share of any recovery. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Moreover, the Seventh Circuit was persuaded that the 46 directors and officers did not stand as equal defendants alongside the insurer when considering the plain objective of the class action—to exact a material financial recovery of billions of dollars of surplus alleged to be wrongfully withheld by a mutual insurance company from distribution to policyholders. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Therefore, the Court concluded that the 46th individual defendant was not a "primary defendant," so the home-state controversy exception did apply.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Seventh Circuit held that this case fit within both the internal-affairs and home-state controversy exceptions of CAFA. Thus, the Court reversed the trial court's denial of the policyholders' motion to remand and remanded to the trial court with instructions to remand the case to state court.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. 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Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-70661341823691402962023-10-06T13:42:00.000-05:002023-10-06T13:43:07.146-05:00FYI: Ill App Ct (1st Dist) Holds Defects in Summons Allowed Borrower to Vacate Two Different Foreclosure Judgments<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Appellate Court of Illinois, First District, recently held that a trial court should not have rejected a borrower's attempt to vacate two different foreclosure judgments against him on the grounds of defects in service of process in those actions.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In so ruling, the First District held that:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">-1 The summonses at issue violated Illinois law because they were not specifically directed to the defendant, and because they did not name all defendants in the caption; and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">-2 The lists of persons to be served that were included with each summons were not acceptable replacements for a proper summons, because the service lists did not clearly identify that defendant was a party to the lawsuit; and </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">-3 Illinois law does not allow the "et al." abbreviation on summonses. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=10131409667893176639&hl=en&as_sdt=6&as_vis=1&oi=scholarr">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">During 2012-2013, a mortgagee filed three separate foreclosure actions against three separate properties and numerous co-defendants. An individual defendant ("defendant") was named as a defendant in each foreclosure action along with limited liability companies and other parties. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The record from the first foreclosure action indicated a summons was personally served on the individual borrower as registered agent of an LLC and individually. The record from the second foreclosure action contained no summons being issued but an affidavit from a process server indicating that the borrower was personally served. The record from the third foreclosure action included an affidavit from a process server indicating the defendant was served by leaving a copy with his 13-year-old son and by mailing him a copy. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The defendant did not appear in any of the foreclosure actions and three separate default judgments were entered against him and the other defendants in each action. In 2021, The borrower filed petitions for relief from the judgments in all three cases arguing that summonses did not include his name on their faces, the trial court never obtained jurisdiction over him because the court did not approve the use of a special process server, there were no summonses whatsoever in the court file and he was not actually served. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In support of his petition, defendant filed an affidavit stating he was never served with the summonses. The trial court denied defendant's petition and held in all three cases that the mortgagee's failure to refer to the service list on the summonses was a technical defect that did not warrant or justify granting the petition. The defendant appealed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">On appeal, defendant argued that the trial court lacked personal jurisdiction over him in all three cases because he was not validly served with process in any of those cases. He further argued the trial court should have granted his petitions and vacated all judgments against him as void due to lack of jurisdiction. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Illinois law (735 ILCS 5/2-1401) allows a party to seek relief from a final judgment more than 30 days after judgment has been entered if the petition sets forth specific factual allegations supporting each of the following elements: (1) the existence of a meritorious defense; (2) due diligence in presenting this defense or claim to the circuit court in the original action; and (3) due diligence in filing the section 2- 1401 petition for relief." Warren County Soil and Water Conservation District v. Walters, 2015 Nos. 1-22-1204, 1-22-1205, 1-22-1206. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In addition, Illinois law provides that: "[a] court's jurisdiction is not affected by a technical error in format of a summons if the summons has been issued by a clerk of the court, the person or entity to be served is identified as a defendant on the summons, and the summons is properly served. This subsection is declarative of existing law." 735 ILCS 5/2-201(c) (West 2018).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Appellate Court noted that, in the first and third foreclosure action, the summonses did not contain the defendant's name anywhere on the 5-page summons. As a result, the Appellate Court held that the summonses violated Illinois law because they were not specifically directed to the defendant, and because they did not name all defendants in the caption. See Ill. S. Ct. R. 101(a), (d) (eff. May 30, 2008). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Appellate Court further noted that the service lists are not acceptable replacements for a proper summons because they did not clearly identify that defendant was a party to the lawsuit. The Appellate Court held that plaintiffs should not assume that lay defendants will understand that "et al." includes them, and Illinois law does not allow the "et al." abbreviation on summonses. See Ill. S. Ct. R. 131(c) (eff. Nov. 15, 1992). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Next, the Appellate Court addressed the laches argument raised by the mortgagee. Generally, laches, precludes a litigant from asserting a claim when the litigant's unreasonable delay in raising the claim prejudice the opposing party. Federal National Mortgage Association v. Altamirano, 2020 IL App (2d) 190198. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Appellate Court declined to resolve the case on the grounds of laches because it would be inequitable to the defendant, because the procedural history of the case indicated the defendant took action as soon as the mortgagee sought to revive the judgments against him. Since the defendant was not properly served, and the Appellate Court found that the trial court was without personal jurisdiction over him in the first and third foreclosure action and reversed the denial of defendant's petitions and vacated the judgments against him, and remand these matters. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">However, the Appellate Court reached a different conclusion as to the second foreclosure action. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In Illinois, a process server's return affidavit is prima facie evidence of proper service, and the affidavit of service should not be set aside unless impeached by 'clear and convincing evidence.'" Illinois Service Federal Savings and Loan Ass'n of Chicago v. Manley, 2015 IL App (1st) 143089, ¶ 37 (quoting Paul v. Ware, 258 Ill. App. 3d 614, 617-18 (1994)). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Because the record in the second foreclosure action contained a copy of the special process server's affidavit, which stated that he personally served defendant with the "summons and a copy of the complaint" at an address in Skokie, Illinois on June 20, 2012. Additionally, the affidavit also included the defendants purported gender, race, and age as required by 735 ILCS 5/2-203(b). As defendant did not present affirmative evidence beyond his own affidavit to contest the validity of service, the Appellate Court noted that defendant did not demonstrate the clear and convincing evidence needed to overcome the validity of the process server's affidavit. Accordingly, the judgment of the trial court in the second foreclosure action was confirmed. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In conclusion, the Appellate Court reversed the denial of defendant's petitions and vacated the judgments against him in the first and third foreclosure action and remanded back to the trial court. However, the Appellate Court affirmed the judgment denying defendant's petition in the second foreclosure action.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. Madison Street, 6<sup>th</sup> Floor<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEhF_fWYDohDHyzN3_T1aMKWpaFINOnkPRaFypIO5fWcXkkNl9BXTJagxNeMYns9N7GaHcyv09SsqoXYqvo147B7v7c9RNfVZHixq5_sLAUuE_4kcyBwgeIgZ4AQenlMYuBSAA4DCsckUCGXFWN1FfWjH1D7aotu_e2Pigc5Fr96b0cxut8FcO-6E-WV2oY9"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEhF_fWYDohDHyzN3_T1aMKWpaFINOnkPRaFypIO5fWcXkkNl9BXTJagxNeMYns9N7GaHcyv09SsqoXYqvo147B7v7c9RNfVZHixq5_sLAUuE_4kcyBwgeIgZ4AQenlMYuBSAA4DCsckUCGXFWN1FfWjH1D7aotu_e2Pigc5Fr96b0cxut8FcO-6E-WV2oY9=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7286917916721469058" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. 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Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-55656225532725209222023-10-03T13:01:00.001-05:002023-10-03T13:01:19.108-05:00FYI: Ill App Ct (2d Dist) Upholds Dismissal of FDCPA Claims as Demand Letter Indicated Debt Was Commercial<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Appellate Court of Illinois, Second District, recently affirmed the dismissal of a claim for supposed violations of the federal Fair Debt Collections Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., where the consumer plaintiff failed to allege facts that the money sought to be collected was a "debt" as defined by section 1692a(5), and the demand letter from the defendant law firm indicated that the debt was commercial in nature. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=18267447728004700459&hl=en&as_sdt=6&as_vis=1&oi=scholarr">Link to Opinion</a> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A consumer filed a complaint against a law firm alleging violations of the FDCPA. Specifically, the consumer alleged that the law firm was "regularly engaged in the business of collecting debts," making it a "debt collector" as defined by section 1692a(6) of the FDCPA, that the law firm sent him a letter to collect on a purported debt arising from an automobile transaction, but that no attorney was meaningfully involved in the matter, and that the defendant "falsely raised the specter of potential legal action that it never intended to take."</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">On the law firm's motion, the trial court dismissed the complaint with prejudice. The consumer timely appealed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Second District began its analysis by determining that it need not consider the consumer's arguments as to the procedural propriety of the dismissal, because the complaint failed to state a cause of action, making dismissal appropriate.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A cause of action should not be dismissed unless it is clearly apparent that no set of facts can be proved that would entitle the plaintiff to recover. Paul v. County of Ogle, 2018 IL App (2d) 170696, ¶ 34. A court will consider all facts apparent from the face of the complaint, including any attached exhibits. Id. Matters contained in such exhibits that conflict with allegations of the complaint negate any contrary allegations of the complaint. Tucker v. Soy Capital Bank & Trust Co., 2012 IL App 103303, ¶ 23.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Here, the Appellate Court noted that the FDCPA protects debtors in connection with the collection of certain debts, but not others. To recover under the FDCPA, a plaintiff must make a threshold showing that the money being collected qualifies as a "debt" pursuant to the FDCPA. Oppenheim v. I.C. Sys., Inc., 627 F. 3d 833, 836-37 (11th Cir. 2010). The FDCPA defines "debt" as "any obligation or alleged obligation of a consumer to pay money arising out of a transaction in which the money [or] property… are primarily for personal, family, or household purposes." Aurora Loan Services, LLC v. Kmiecik, 2013 IL App (3d) 121700, ¶ 31. Therefore, the FDCPA does not cover actions arising out of commercial debts. Goldman v. Cohen, 445 F. 3d 152, 154 n.1 (2d Cir. 2006).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Here, the consumer argued that the transaction at issue fell within the definition of "debt" for the purposes of section 1692a(5). However, the Second District held that the consumer's assertion was not supported by specific facts, only conclusory assertions. See Ash v. PSP Distribution, LLC, 2023 IL App (1st) 220151, ¶ 19. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">More specifically, the consumer contended that the debt did not involve a commercial transaction because the law firm sent the demand letter to his home address. But the Court reasoned that an alleged debt collector's treatment of an obligation is irrelevant to an inquiry regarding the nature of the obligation itself. Slenk v. Transworld System, Inc., 236 F.3d 1072, 1076 (9th Cir.2001). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Furthermore, the Second District concluded that the actual demand letter, attached to the consumer's complaint, negated any allegation that the debt qualified as a "debt" under section 1692a(5) of the FDCPA. Specifically, the letter was addressed to the consumer and "your company." It then discussed a contract to "deliver loads" and payment of "50% of gross revenue receipts." Thus, the Court reasoned that, according to the letter, the consumer's purported obligation arose out of a transaction that was primarily for commercial or business purposes and not "primarily for personal, family, or household purposes." Aurora Loan Services, LLC, 2013 IL App (3d) 121700, ¶ 31 (quoting 15 U.S.C. § 1692a(5)). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Second District held that the law firm's demand letter belied the allegations contained in the consumer's FDCPA claim and that the trial court properly dismissed the consumer's complaint. Thus, the Court affirmed the decision of the trial court.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. Madison Street, 6<sup>th</sup> Floor<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEhWdruPBCXzpuxXyO5aUSL2bWCBrnaHrhecUCL-abX1jBReaqH75EeY-Hb4graxXsYfpXiqlYn364_RUtP69vnTS4S4Bw1S800onsnjTxIyR0ch_TYVffjfjMjun2_fAxdlID5dmpM-3oHskJMETQnvD3NGkoy0jVKSUAaUN_fPyQjN-inzxQT2Wemmn62t"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEhWdruPBCXzpuxXyO5aUSL2bWCBrnaHrhecUCL-abX1jBReaqH75EeY-Hb4graxXsYfpXiqlYn364_RUtP69vnTS4S4Bw1S800onsnjTxIyR0ch_TYVffjfjMjun2_fAxdlID5dmpM-3oHskJMETQnvD3NGkoy0jVKSUAaUN_fPyQjN-inzxQT2Wemmn62t=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7285793890106902402" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-7451561438111587742023-09-28T11:31:00.001-05:002023-09-28T11:31:28.304-05:00FYI:: NJ App Ct Holds Debt Purchaser Not Liable Under NJ Consumer Fraud Act for Failing to Obtain State License<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A recent decision from the New Jersey Appellate Division comes as welcome relief for purchasers of defaulted debt. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The decision (<a href="https://www.njcourts.gov/system/files/court-opinions/2023/a1996-21.pdf">Link to Opinion</a>) concerns the New Jersey Consumer Finance Licensing Act (CFLA), and whether a debt buyer who failed to have such a license could be liable under the state's consumer protection law.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">After she defaulted on two credit-card accounts with the original creditors, the plaintiff's accounts were charged-off and sold to a third-party debt purchaser who then placed the accounts with a law firm debt collector for servicing. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Thereafter the plaintiff paid one of the debts in full to the debt collector and no other entity sought to collect that account. On the other account the law firm sued the plaintiff and the parties entered into a consent judgment pursuant to which the plaintiff made payments on the account.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Over three and a half years later, the plaintiff filed suit against the debt buyer as it was not licensed under the CFLA and sought a declaratory judgment that her consent judgment was "void." The plaintiff also sought damages under the New Jersey Consumer Fraud Act (NJCFA) again based on collecting the accounts without having the CFLA license. The plaintiff also had a count for unjust enrichment based on collecting the accounts without the CFLA license. The plaintiff's complaint was filed on behalf of a putative class and sought damages, including disgorgement of all funds collected from proposed class members.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Regarding the account that had the consent judgment, the trial court previously found that res judicata and the entire controversy doctrine barred the plaintiff's claims. However, since the other account was settled without a judgment, neither res judicata nor the entire controversy doctrine applied.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The trial court granted summary judgment to the debt purchaser on all of the plaintiff's claims, finding that the debt buyer was not a consumer lender and thus did not require the CFLA license. The trial court also held that the plaintiff's claims were not covered by the NJCFA because the purchaser did not offer to sell the plaintiff any services or merchandise and because she had not suffered the requisite "ascertainable loss."</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Appellate Division affirmed the CFLA dismissal but for reasons other than those found by the trial court. As the Appellate Division saw it, the CFLA does not provide for a private right of action, and the plaintiff cannot use the Uniform Declaratory Judgments Act to circumvent that lack of a private right of action. Instead, violations of the CFLA are enforceable only by the Commissioner of Banking and Insurance.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Regarding the NJCFA, the Appellate Division agreed with the trial court that the statute did not apply to the debt purchaser. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">To state a claim under the NJCFA, the offending conduct must be "in connection with the sale or advertisement of merchandise and real estate." The New Jersey Supreme Court has also held that the NJCFA applies to "the provision of credit." Ultimately, the offending misrepresentation must be material to the transaction and "made to induce the buyer to make the purchase." </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif"></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">There was no allegation that the debt purchaser sold credit or offered anything to the plaintiff. Instead, the offending conduct was misrepresenting "that it had the legal right to collect on the account when it lacked the proper license to do so." However, as this conduct was not made in connection with the origination of the debt, it could not constitute a violation of the NJCFA.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In addition, the Appellate Division found that the plaintiff did not sustain an ascertainable loss, another prerequisite to recovery under the NJCFA. Here, the plaintiff acknowledged that she owed the debt to the original creditor, and her payment of that valid debt to the debt purchaser did not constitute an ascertainable loss.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. Madison Street, 6<sup>th</sup> Floor<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEh8UOfCz1-LbXs9EtcFVVDxFEuNWJH1spUTrlXRme477LbBCt1V6A-2lfbU5cPHmIa_Vxho6GaUCYJTTkdBSMLKmZLhxdshcN56pChD8_GPAA5p5_k8qoiIgJqeuH-iTFN26dgOWwaDGdKLlPU07VZITvqfPnAbAWR-qRoKKBtmlxUbL98BaitSX58j0Nzc"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEh8UOfCz1-LbXs9EtcFVVDxFEuNWJH1spUTrlXRme477LbBCt1V6A-2lfbU5cPHmIa_Vxho6GaUCYJTTkdBSMLKmZLhxdshcN56pChD8_GPAA5p5_k8qoiIgJqeuH-iTFN26dgOWwaDGdKLlPU07VZITvqfPnAbAWR-qRoKKBtmlxUbL98BaitSX58j0Nzc=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7283915311053942162" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-28096340666158856332023-09-24T07:28:00.001-05:002023-09-24T07:28:31.916-05:00FYI: CFPB Announces Rulemaking on Use of Medical Debt in Credit Reporting<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Continuing on its mission to curb "abusive" collection efforts related to medical debt that began to take life in 2022, the CFPB recently announced its initiation of a rulemaking process to remove medical bills from credit reports entirely.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Motivated by "research" which the CFPB identifies as showing that "medical bills have little predictive value in credit decisions" the agency outlined several proposals under consideration "that would help families financially recover from medical crises, stop debt collectors from coercing people into paying bills they may not even owe, and ensure that creditors are not relying on data that is often plagued with inaccuracies and mistakes."</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the CFPB's proposal is available at: <a href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-kicks-off-rulemaking-to-remove-medical-bills-from-credit-reports/">Link to Proposal</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Under consideration for the CFPB's rulemaking are the following proposals:</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Remove medical bills from consumers' credit reports:</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Consumer reporting companies would be prohibited from including medical debts and collection information on consumer reports that creditors use in making underwriting decisions.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Stop creditors from relying on medical bills for underwriting decisions:</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The proposal would narrow the 2005 exception under the federal Fair Credit Reporting Act, and prohibit creditors from using medical collections information when evaluating borrowers' credit applications. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">As you may recall, the FCRA restricts creditors' ability to use medical information in making credit decisions and places limits on the inclusion of medical information on credit reports. The FCRA granted financial regulators authority to create regulatory exemptions to this restriction. In 2005, an exception was created to allow creditors to rely on medical data if it could be characterized as "financial information."</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><b><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Stop coercive collection practices:</span></b></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">As unpaid medical bills would no longer appear on consumers' credit reports used by creditors in making underwriting decisions, debt collectors would no longer be able to use the credit reporting system as leverage to pressure consumers into paying questionable debts.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Importantly, the CFPB notes, the proposals would not prohibit creditors from obtaining medical billing information for other purposes, such as evaluating loan applications intended to fund medical services and for determining if a consumer qualifies for medical forbearance programs available.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The proposed rulemaking comes on the tails of the CFPB identifying medical debt, and specifically its credit reporting, as a priority beginning in 2022. Specifically, and as a refresher, early 2022 saw the CFPB issue its bulletin regarding the collection and credit reporting of medical debt which concluded that medical debt posed a "special risk" to consumers because medical debt is typically an unanticipated indebtedness, consumers are not always advised of the costs of medical services in advance, there is no real "marketplace" for medical services where consumers can shop around for the best value, and there exists a lack of education among consumers regarding the insurance process and how to identify potential billing errors.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Next, in March of 2022, the CFPB issued its "official report" regarding the burden on consumers created by medical debt. The report's key findings were that there was approximately $88 billion in medical debt reflected on consumer credit records as of June 2021 with most of the related tradelines being $500 or less and that 58% of all consumer tradelines as of 2021 were medical debt. The CFPB concluded that the current practices related to the collections and credit reporting of medical debt can cause "significant harm" to consumers.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Relatedly, also in March of 2022, the CRAs responded to the CFPB's official report, by identifying certain consumer-conscious changes they were implementing. Specifically, beginning July 1, 2022, defaulted medical debt placed for collections and which had subsequently been paid no longer appears on a consumer credit report, and defaulted medical debt is not reported until one year after default. Beginning March 30, 2023, the CRAs also ceased placing medical debts with furnished balances below $500 on a consumer report.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Given the CFPB's posture towards medical debt and its presence on consumer credit reports, the proposed rulemaking is simply the culmination of its efforts to limit the impact of medical debt on consumers while also limiting available remedies for industry members who work with medical debt. The frustration for the industry most certainly lies with the CFPB's repeated labeling of medical debt as "questionable" and "inaccurate," although failing to present data to support these claims save for reliance upon consumer complaints received and summarized in the CFPB's complaint bulletin in April of 2022 which concluded that the nature of the consumer complaints being received in relation to medical debt "strongly suggest that many medical bills reported on credit reports are disputed, inaccurate, or not owed."</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Regardless of whether some or all the proposals ultimately result in rulemaking, the accuracy and propriety of medical debt balances being collected upon will continue to face heightened scrutiny from state and federal regulators.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">As we progress towards the end of 2023 and into 2024, the attorneys at Maurice Wutscher LLP will continue to monitor and provide updates on all developments in the medical debt space.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. Madison Street, 6<sup>th</sup> Floor<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEgrCFNUFquPvRTT2bWoEE3shkorfbtm2UDDLI60mhW2UtMMH6bjcepByojvfhHQmS_xBPxiGTFzKTIyGzA9cQbqsQ4GjFxdNlDS01VyStg7U47EIRWcwu7c6lZkahH1DARdvi-B1mmdvJcsydGfqLA3Q7grCIScSCujfHkblcjYxIbkssp9kVr83naqTzSc"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEgrCFNUFquPvRTT2bWoEE3shkorfbtm2UDDLI60mhW2UtMMH6bjcepByojvfhHQmS_xBPxiGTFzKTIyGzA9cQbqsQ4GjFxdNlDS01VyStg7U47EIRWcwu7c6lZkahH1DARdvi-B1mmdvJcsydGfqLA3Q7grCIScSCujfHkblcjYxIbkssp9kVr83naqTzSc=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7282368366023651010" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-53894120380872998012023-09-21T08:43:00.001-05:002023-09-21T08:43:21.257-05:00FYI: 2nd Cir Reverses Class Settlement Citing Various Errors Under Rule 23 and CAFA<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The U.S. Court of Appeals for the Second Circuit, recently reversed a trial court's approval of a settlement in a class action case, because the trial court presumed the fairness, adequacy, and reasonableness of the proposed settlement on the grounds the settlement was negotiated to at arm's-length, failed to assess the fairness, adequacy, and reasonableness of the agreed to attorney's fees and incentive payment, and erred in determining the class relief did not constitute "coupons" under the federal Class Action Fairness Act ("CAFA").</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=12832502994872741459&q=moses+v+new+york+times+second+circuit&hl=en&as_sdt=400006&as_ylo=2023">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A group of California subscribers for an online and print newspaper filed a class action suit in the United Stated District Court of the Southern District of New York claiming a national newspaper automatically renewed subscriptions without providing the disclosures and authorizations required by California's Automatic Renewal Law, Cal. Bus. & 12 Prof. Code § 17600, et seq. (the "CARL"). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Following a mediation, a settlement was reached between the parties whereby the class members would drop their claims in exchange for one-month subscriptions or pro rata cash payments. The settlement agreement also provided for the payments of substantial attorney's fees to class counsel, amounting to 76% of the cash settlement funds, and an incentive award to the class representative. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">One of the class members objected to the proposed settlement, arguing that the settlement was unfair, the attorneys' fees calculation improperly exceeded limits set by the coupon settlement provisions of CAFA, and the incentive award was not authorized by law. The trial court disagreed, and certified the class for settlement purposes and approved the settlement. The objecting class member then filed an appeal. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">On appeal, the objecting class member argued that the trial court erred by (1) misapplying Federal Rules of Civil Procedure Rule 23(e)'s legal standard in its review of the proposed settlement, (2) awarding $1.25 million in attorneys' fees based on a conclusion that the one-month subscriptions are not "coupons" under CAFA, and (3) awarding the class representative an incentive award of $5,000 and concluding she provided adequate representation. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In assessing whether the trial court misapplied Rule 23(e)'s legal standard, the Second Circuit determined the trial court erred when it imposed a presumption of fairness, adequacy, and reasonableness to the parties proposed settlement on the ground that it was negotiated between the settling parties at arm's-length. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">By way of background, prior to Rule 23(e)(2)'s codification, courts applied a presumption of fairness to settlement agreements resulting from arm's-length negotiations. See McReynolds v. Richards-Cantave, 588 F.3d 790, 803 (2d Cir. 2009); Wal-Mart Stores, Inc. v. Visa U.S.A., Inc., 396 F.3d 96, 116 (2d Cir. 2005). The codification of the arm's-length negotiation as one of the procedural factors that courts must consider when approving proposed settlements supplants its historical role as a presumption. The Second Circuit agreed with the Ninth Circuit's opinion in Roes, 1-2 v. SFBSC Mgmt., LLC, where the Ninth Circuit held that applying a presumption of fairness is inappropriate under the codified Rule 23(e)(2) because the rule does not suggest that an affirmative answer to one factor creates a favorable presumption on review of the others. 944 F.3d 1035, 1049 n.12 (9th Cir. 2019).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In addition, the Second Circuit held that the trial court erred when it imposed a presumption of fairness, adequacy, and reasonableness in light of the attorneys' fees awarded and incentive award. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">As stated above, the codification of Rule 23(e)(2) changed the analysis courts must undertake when evaluating a settlement for approval in class actions. Rule 23(e)(2) now requires the trial court to expressly consider two factors when reviewing the substantive fairness of a settlement: (1) the adequacy of the relief provided to a class and (2) the equitable treatment of a class member. See Fed. R. Civ. P. 23(e)(2)(C)-(D). In assessing the adequacy of class relief, the court must take in into account the terms and any proposed award of attorneys' fees. The reasoning behind this, as was the case under the previous examination of awards of attorney's fees, is to prevent unwarranted windfalls for attorneys. See Goldberger v. Integrated Res., Inc., 209 F.3d 43, 47 (2d Cir. 2000). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The trial court is therefore required to look at both the terms of the settlement and any fee award encompassed in a settlement agreement together. See Fresno County Employees' Ret. Ass'n v. Isaacson/Weaver Fam. Tr., 925 F.3d 63, 72 (2d Cir. 2019); see also McKinney-Drobnis v. Oreshack, 16 F.4th 594, 607 (9th Cir. 2021). This same analysis is also applied to incentive payments. See Murray v. Grocery Delivery E-Servs. USA Inc., 55 F.4th 340, 353 (1st Cir. 2022). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Here, the Second Circuit held that the trial court reviewed the appropriateness of the attorneys' fee and incentive awards separately from its consideration of the fairness, reasonableness and adequacy of the settlement. In essence, the trial court again incorrectly applied the old test for examining the appropriateness of the settlement. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Appellate Court noted that this error did not automatically require reversal of the settlement's approval; however, in the present case, this error could not be seen as harmless. The attorneys' fees awarded in this case were $1.25 million, while the total cash settlement fund was $1.65 million. As discussed below, the trial court calculated the total amount of attorneys' fees by adding the value of the one-month subscriptions to the cash set aside for pro rata distribution to class members that opt for cash. This too was in error as it violated CAFA's coupon settlement requirements as the one-month subscriptions were in fact coupons. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Second Circuit next held that the trial court erred by failing to apply CAFA's coupon settlement provision when calculating the attorneys' fee awards because the one-month subscriptions are in fact coupons. A finding that the one-month subscriptions are in fact coupons therefore undermines any determination that the evaluation of the attorneys' fees awarded in the settlement was harmless error. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">By way of background, CAFA was enacted to address concerns surrounding class actions where settlements included coupons to purchase more products from the defendants, which incentivizes attorneys to pursue settlements that provide class members with low-benefit coupons while fattening the pockets of class action attorneys who inflate their fees based on unrealistic face value of non-monetary relief. In re: Lumber Liquidators Chinese-Manufactured Flooring Prod. Mktg., Sales Pracs. & Prod. Liab. Litig., 952 F.3d 471, 488 (4th Cir. 2020). CAFA directs courts to calculate attorneys' fee awards in "coupon" settlements based on the redemption value of the coupons, rather than the face value. See 28 U.S.C. ' 1712(a). In the present case, the trial court incorrectly declined to do so because it concluded the one-month subscriptions were not coupons. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In examining whether the one-month subscriptions were coupons, the Appellate Court set to define what a coupon is. The Court looked to the dictionary definition of coupon, the legislative history of CAFA, and several cases that have dealt with similar issues. The New Oxford American Dictionary defines coupon as an item that entitles its user to free or discounted products or services, while the Mariam-Webster Dictionary defined it as a form surrendered in order to obtain an article, service, or accommodation. New Oxford American Dictionary 389 (2d ed. 2005); Merriam-Webster's Third New International Dictionary 266 (2002). The legislative history makes it clear that CAFA's coupon settlement provisions apply to settlements where the non-cash relief provided to class members entitles them to free or discounted products or services. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The Second Circuit noted that the Ninth Circuit previously looked at three non-dispositive factors in weighing whether a settlement term is a coupon under CAFA: (1) whether class members have to hand over more of their own money before they can take advantage of' a credit, (2) whether the credit is valid only for select products or services,' and (3) how much flexibility the credit provides, including whether it expires or is freely transferrable. In re Easysaver Rewards Litig., 906 F.3d 747, 755 (9th Cir. 2018), quoting In re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 951 (9th Cir. 2015).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Here, the Appellate Court found that the one-month subscriptions at issue fell under the plain definition of the word "coupon," and even met the definition under the more restrictive Ninth Circuit evaluation. The coupons at issue are digital vouchers surrendered in order to obtain a one-month subscription to a newspaper. Under the Ninth Circuit evaluation, the Court found that in order for the class members to take advantage of the one-month subscriptions, they were required to do business with the defendants again in order to redeem the benefit provided; the one-month subscription restricts the universe of products that class members are entitled to obtain based on their subscription status; and although the subscriptions did not expire and were transferable, their low value of $3-5 means that a potential transferee has little incentive to buy the subscription from a class member rather than purchase it from the defendant newspaper directly. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Finally, the Appellate Court found that the incentive award did not create a conflict of interest between the class representative and other class members. The Second Circuit relied on prior precedent stating that incentive payments to class representatives, by themselves, do not create an impermissible conflict between class members and their representative. See In re Online DVD-Rental Antitrust Litig., 779 F.3d 934, 951 (9th Cir. 2015). To prevail on this issue, a claimant will need to show that something exists, outside of the payment itself, to create a conflict between the class representative and other class members as to invalidate a settlement in a class action. In addition, the Second Circuit found extensive support in its sister circuits permitting the payment of incentive payments for class representatives. In re Apple Inc. Device Performance Litig., 50 F.4th at 785-86; Jones v. Singing River Health Servs. Found., 865 F.3d 285 (5th Cir. 2017); Caligiuri v. Symantec Corp., 855 F.3d 860, 867 (8th Cir. 2017).</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the Second Circuit held that the trial court erred when: it imposed a presumption of fairness, adequacy, and reasonableness to the parties proposed settlement on the ground that it was negotiated between the settling parties at arm's-length; it imposed a presumption of fairness, adequacy, and reasonableness in light of the attorneys' fees award and incentive award; and it determined that the one-months subscriptions were not coupons under CAFA. Thus, the Appellate Court vacated the trial court's approval of the settlement award and attorneys' fees and remanded the case for further proceedings.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. 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Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-87061444468391846572023-09-19T08:41:00.001-05:002023-09-19T08:41:13.796-05:00FYI: Ill App Ct (1st Dist) Rejects Borrowers' Allegations of Fraudulent Reverse Mortgage Scheme<div class="WordSection1"><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In an action by a group of borrowers who alleged a fraudulent reverse mortgage scheme, the Appellate Court of Illinois, First District, recently affirmed the trial court's judgment against the borrowers, and held that neither the discovery rule nor the continuing violation rule tolled the five-year statute of limitations for the borrowers' declaratory judgment claims, making them untimely.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">In so ruling, the First District also rejected the borrowers' argument that their declaratory judgment claims were "preemptive affirmative defenses" to foreclosure actions that the lender would inevitably file against them.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A copy of the opinion is available at: <a href="https://scholar.google.com/scholar_case?case=16867266418662396444&hl=en&as_sdt=6&as_vis=1&oi=scholarr">Link to Opinion</a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">A group of borrowers brought a declaratory judgment action and alleged that a mortgage lender and one of its agents engaged in a fraudulent reverse mortgage scheme to take the borrowers' homes. Specifically, the borrowers alleged that the agent offered to renovate their homes at no cost, purportedly pursuant to a federal program that would help pay for the renovations. The borrowers signed documents that the agent claimed were necessary to participate in the program. One of these documents was a reverse mortgage with the lender. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">According to the borrowers, when the lender issued reverse mortgage payment checks, the agent demanded that they sign them over to him. The borrowers signed the checks over to the agent because the agent claimed that they would have to pay for the home renovations themselves if they refused. The borrowers alleged that the agent did not complete renovations to their homes, and they later learned that the home renovation reimbursement program did not exist.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Therefore, the borrowers argued that their reverse mortgages were void because they were fraudulently procured. They also requested an order directing the defendants to return the titles to their homes.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The lender moved to dismiss the borrowers' complaint, arguing that the five-year statute of limitations for fraud applied to the borrowers' declaratory judgment claims premised on allegations of fraud. The trial court granted the lender's motion to dismiss and held that "ample Illinois case law" applied the five-year statute of limitations for general civil actions to declaratory judgment actions, citing Toushin v. Ruggiero, 2015 IL App (1st) 143151, ¶ 47. The borrowers timely appealed.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">On appeal, the borrowers first argued that their declaratory judgment claims were "preemptive affirmative defenses" to foreclosure actions that the lender would inevitably file against them, such that the statute of limitations did not apply at all.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">However, the First District found that the borrowers' declaratory judgment claims were not affirmative defenses because they sought relief beyond defeating the lender's anticipated foreclosure actions. See Carmichael v. Union Pacific R.R. Co., 2019 IL 123853, ¶ 26. The Court reasoned that the borrowers' claims were essentially claims for fraud and rescission of contract because they asked the trial court to find that the lender committed fraud and to rescind the reverse mortgages on that basis. See 23-25 Building Partnership v. Testa Produce, Inc., 381 Ill. App. 3d 751, 757 (2008). Civil fraud claims are subject to a five-year statute of limitations in Illinois, 735 ILCS 5/13–205; DeSantis v. Brauvin Realty Partners, Inc., 248 Ill. App. 3d 930, 933-34 (1993), so the Court concluded that this was the statute of limitations applicable to the borrowers' claims in this case.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Therefore, having concluded that the borrowers' claims were subject to a five-year statute of limitations, the First District next addressed whether the limitations period had expired when the borrowers filed their initial complaint. A plaintiff must file a civil claim of fraud within five years of when the plaintiff knew or reasonably should have known that she was defrauded. 735 ILCS 5/13–205; see also DeSantis, 248 Ill. App. 3d at 933-34. Furthermore, a plaintiff knows or reasonably should know of wrongdoing when she possesses sufficient information concerning her loss and its cause to put a reasonable person on notice to inquire further. Hermitage Corp. v. Contractors Adjustment Co., 166 Ill. 2d 72, 85-86 (1995). </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The First District reasoned that the borrowers should have known they were defrauded when they each signed their reverse mortgage documents. The borrowers filed their initial complaint more than five years after they signed their mortgage documents, and the Court therefore concluded that their claims were untimely. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Nevertheless, the borrowers contended that the discovery rule and the continuing violation rule tolled the start of the limitations period on their claims. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The discovery rule provides that the statute of limitations does not begin running until a plaintiff knows or reasonably should know that she has suffered a loss and that her loss was wrongfully caused. Hermitage Corp., 166 Ill. 2d at 77. A plaintiff asserting the discovery rule has the burden of proving the date of discovery and "must provide enough facts to avoid application of the statute of limitations." Id. at 84-85. Although the determination of when the statute of limitations begins to run is usually a question of fact, the court may rule on it as a question of law if the facts are undisputed. Id. at 85. The lender did not dispute the dates pled in the borrowers' complaint, and the First District reasoned that this analysis was a question of law. See id.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">After reviewing the record, the First District found that there were no specific facts alleged regarding when the borrowers knew or should have known of their injuries. Additionally, the Court observed that the lender's motion to dismiss did not dispute any of the relevant dates in the borrowers' complaint and its statute of limitations argument was based entirely on the dates of events as the borrowers alleged them. Thus, the Court held that the borrowers did not meet their burden in establishing that the discovery rule applied.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Finally, the borrowers contended that the continuing violation rule tolled the statute of limitations. Under the continuing violation rule, the statute of limitations does not begin to run until the date of the last injury or when the tortious acts cease. Feltmeier v. Feltmeier, 207 Ill. 2d 263, 278 (2003). However, a "single overt act" causing "continual ill effects" is not a continuing tort. Id.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">The First District determined that the borrowers each only alleged a single overt act: the agent fraudulently inducing them into signing a reverse mortgage with the lender. The fact that the reverse mortgages still existed and may, at some point in the future, result in foreclosure were merely "continual ill effects" resulting from the agent's initial "single overt act." See id. Thus, to the extent the borrowers argued that the agent's initial act was part of an ongoing fraudulent scheme to obtain their homes, the Court held that the borrowers failed to plead any specific facts describing such an ongoing scheme.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864">Accordingly, the First District affirmed the trial court's judgment and held that the borrowers' declaratory judgment claims were barred by the general civil five-year statute of limitations.</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. Madison Street, 6<sup>th</sup> Floor<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEiIiJ35qKPZPiezu4UMeObt62o-x69JbMsrg2pxpY503QHur0HZgEtjg2Sm6rfoBnyfIpVMOhcfhneVnu-K5b8az0IFhOMRxdRKpgO00-9hJtnVZuRcxtpGEOUir49KU-RXJm2a4-4pChxDiJya9nz7ESS6uMOS0-U3K_dKVBe8cN3cTKKoKDcbZkV04zRf"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEiIiJ35qKPZPiezu4UMeObt62o-x69JbMsrg2pxpY503QHur0HZgEtjg2Sm6rfoBnyfIpVMOhcfhneVnu-K5b8az0IFhOMRxdRKpgO00-9hJtnVZuRcxtpGEOUir49KU-RXJm2a4-4pChxDiJya9nz7ESS6uMOS0-U3K_dKVBe8cN3cTKKoKDcbZkV04zRf=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7280531672454224162" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. 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Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.comtag:blogger.com,1999:blog-7147441972328727413.post-13485483779072879772023-09-14T05:02:00.001-05:002023-09-14T05:02:54.239-05:00FYI: Delaware Enacts Personal Data Privacy Act<div class="WordSection1"><p style="margin-bottom:.25in;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Delaware Governor John Carney on Sept. 11 signed into law <a href="https://legis.delaware.gov/BillDetail?LegislationId=140388" target="_blank"><span style="color:#222a35">House Bill 154</span></a>, the Delaware Personal Data Privacy Act. This makes Delaware the 12th state to enact a comprehensive consumer data privacy law, following <a href="https://consumerfsblog.com/2018/07/california-enacts-consumer-privacy-act-of-2018/" target="_blank"><span style="color:#222a35">California</span></a>, <a href="https://consumerfsblog.com/2021/03/in-no-time-at-all-virginia-consumer-data-protection-act-becomes-law/" target="_blank"><span style="color:#222a35">Virginia</span></a>, <a href="https://consumerfsblog.com/2021/07/colorado-enacts-comprehensive-consumer-data-privacy-legislation/" target="_blank"><span style="color:#222a35">Colorado</span></a>, <a href="https://consumerfsblog.com/2022/03/utah-speedily-becomes-fourth-state-to-enact-consumer-data-privacy-legislation/" target="_blank"><span style="color:#222a35">Utah</span></a>, <a href="https://consumerfsblog.com/2022/05/fifth-state-in-the-union-becomes-fifth-state-to-enact-data-privacy-legislation/" target="_blank"><span style="color:#222a35">Connecticut</span></a>, <a href="https://consumerfsblog.com/2023/03/iowa-becomes-sixth-state-to-enact-comprehensive-consumer-data-privacy-law/" target="_blank"><span style="color:#222a35">Iowa</span></a>, <a href="https://consumerfsblog.com/2023/05/indiana-enacts-comprehensive-consumer-data-privacy-law/" target="_blank"><span style="color:#222a35">Indiana</span></a>, <a href="https://consumerfsblog.com/2023/05/tennessee-information-protection-act-with-nist-security-standards-enacted/" target="_blank"><span style="color:#222a35">Tennessee</span></a>, <a href="https://consumerfsblog.com/2023/05/montana-enacts-comprehensive-consumer-data-privacy-law/" target="_blank"><span style="color:#222a35">Montana</span></a>, <a href="https://consumerfsblog.com/2023/06/texas-enacts-data-privacy-and-security-act-with-small-business-exception/" target="_blank"><span style="color:#222a35">Texas</span></a>, and <a href="https://consumerfsblog.com/2023/07/oregon-enacts-comprehensive-consumer-data-privacy-act-with-limited-glba-exemption/" target="_blank"><span style="color:#222a35">Oregon</span></a>. </span></p><p style="margin-bottom:.25in;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">The new Delaware law will go into effect Jan. 1, 2025.</span></p><p style="margin-bottom:.25in;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">For a chart comparing the state comprehensive data privacy acts, and more information and insight from Maurice Wutscher on data privacy and security laws and legislation, click <a href="https://mauricewutscher.com/data-privacy-and-security/" target="_blank"><span style="color:#222a35">here.</span></a></span></p><h5 style="margin:0in;background:white"><strong><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">APPLICABILITY</span></strong></h5><p style="margin-bottom:.25in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">The Act applies to persons that conduct business in Delaware or persons that produce products or services that are targeted to residents of Delaware and that during the preceding calendar year did any of the following:</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Controlled or processed the personal data of not less than 35,000 consumers, excluding personal data controlled or processed solely for the purpose of completing a payment transaction.</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Controlled or processed the personal data of not less than 10,000 consumers and derived more than 20 percent of their gross revenue from the sale of personal data.</span></p><p class="MsoNormal" style="margin-right:.25in;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><h5 style="margin:0in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><strong><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">EXEMPTIONS</span></strong></h5><p style="margin-bottom:.25in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Exemptions include, but are not limited to:</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Any financial institution or affiliate of a financial institution, all as defined in 15 U.S.C. 6809, to the extent that the financial institution or affiliate is subject to Title V of the Gramm Leach Bliley Act and the rules and implementing regulations promulgated thereunder;</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Data subject to the Gramm Leach Bliley Act and the rules and implementing regulations promulgated thereunder;</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Protected health information under HIPAA;</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Activities regulated by the Fair Credit Reporting Act.</span></p><p class="MsoNormal" style="margin-right:.25in;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><h5 style="margin:0in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><strong><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">CONSUMER RIGHTS</span></strong></h5><p style="margin-bottom:.25in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Consumers have the right to:</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Confirm processing of their personal data and access such data;</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Correct inaccuracies, taking into account the nature of the personal data and the purposes of the processing of the consumer's personal data;</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Delete personal data provided by, or obtained about, the consumer;</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Obtain a copy of the consumer's personal data processed by the controller;</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Obtain a list of the categories of third parties to which the controller has disclosed the consumer's personal data;</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Opt out of processing if for the purpose of targeted advertising, sale, or profiling.</span></p><p class="MsoNormal" style="margin-right:.25in;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><h5 style="margin:0in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><strong><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">SENSITIVE PERSONAL INFORMATION</span></strong></h5><p style="margin-bottom:.25in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Sensitive personal data may not be processed without the consumer's consent or, in the case of a known child, without first obtaining consent from the child's parent or lawful guardian and otherwise complying with the Delaware Online Privacy and Protection Act, specifically Del. Code Ann. tit. 6, § 1204C.</span></p><p style="margin-bottom:.25in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Sensitive Data means personal data that includes any of the following:</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Data revealing racial or ethnic origin, religious beliefs, mental or physical health condition or diagnosis (including pregnancy), sex life, sexual orientation, status as transgender or nonbinary, citizenship status, or immigration status.</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Genetic or biometric data.</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Personal data of a known child.</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Precise geolocation data.</span></p><p class="MsoNormal" style="margin-right:.25in;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><h5 style="margin:0in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><strong><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">CONTRACT REQUIREMENTS</span></strong></h5><p style="margin-bottom:.25in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">A contract between a controller and processor must clearly set forth instructions for processing data, the nature and purpose of processing, the type of data subject to processing, the duration of processing and the rights and obligations of both parties and:</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Ensure that each person processing personal data is subject to a duty of confidentiality with respect to the data.</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">At the controller's direction, delete or return all personal data to the controller as requested at the end of the provision of services, unless retention of the personal data is required by law.</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Upon the reasonable request of the controller, make available to the controller all information in its possession necessary to demonstrate the processor's compliance with the obligations in this chapter.</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">After providing the controller an opportunity to object, engage any subcontractor pursuant to a written contract that requires the subcontractor to meet the obligations of the processor with respect to the personal data.</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Allow, and cooperate with, reasonable assessments by the controller or the controller's designated assessor.</span></p><p class="MsoNormal" style="margin-right:.25in;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#1f3864"> </span></p><h5 style="margin:0in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><strong><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">DATA PROTECTION ASSESSMENTS</span></strong></h5><p style="margin-bottom:.25in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">A controller that controls or processes the data of not less than 100,000 consumers must conduct and document on a "regular basis" a data protection assessment for processing activities that presents a heightened risk of harm to a consumer, including:</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Processing for the purpose of targeted advertising;</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Processing for the purpose of selling personal data;</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Processing for the purpose of certain profiling; and</span></p><p class="MsoNormal" style="margin-right:.25in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;background:white"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">Processing sensitive data.</span></p><p style="margin-bottom:.25in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">The "100,000 consumers" threshold excludes data controlled or processed solely for the purpose of completing a payment transaction.</span></p><h5 style="margin:0in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><strong><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">ENFORCEMENT</span></strong></h5><p style="margin-bottom:.25in;background:white;box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#222a35">The Act does not create a private right of action. A violation is an unlawful practice under Del. Code Ann. tit. 6, § 2513 and can be enforced solely by the Attorney General pursuant to Del. Code Ann. tit. 6, § 2522. Provided a person cannot cure a violation within 60 days, the Attorney General may seek injunctive relief and a civil penalty of not more than $10,000 for each willful violation. The opportunity to cure provision expires Dec. 31, 2025.</span></p><p class="MsoNormal" style="box-sizing:border-box;font-variant-ligatures:normal;font-variant-caps:normal;text-align:start;text-decoration-style:initial;text-decoration-color:initial;word-spacing:0px"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Ralph T. Wutscher<br><b>Maurice Wutscher LLP</b><br>The Loop Center Building <br>105 W. Madison Street, 6<sup>th</sup> Floor<br>Chicago, Illinois 60602 <br>Direct: (312) 551-9320<br>Fax: (312) 284-4751 </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Mobile: (312) 493-0874<br>Email: <a href="mailto:rwutscher@MauriceWutscher.com"><span style="color:blue">rwutscher@MauriceWutscher.com</span></a></span><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><i><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">Admitted to practice law in Illinois</span></i></p><p class="MsoNormal"><span style="font-size:10.0pt;font-family:"Courier New";color:black"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><a href="http://mauricewutscher.com/"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:blue;text-decoration:none"><a href="https://blogger.googleusercontent.com/img/a/AVvXsEh5aGm_IyzVQuhzTJNHXgNJcWLHEUM1poYVBCcBhn7oddqWhVIu0cHzU3XNGlJYC2g_hzk_p_Oylhwxi7byL9Mi2M7mzDJbi-0KH3HaA5fZiEqDtrqVbaZH9GAgLb3ZYWDi1HU1-4LCRgZGUETdy-PMJ3WLeBNmxFvGbLb65gopeiybNqvecBe1OeLU2J6w"><img src="https://blogger.googleusercontent.com/img/a/AVvXsEh5aGm_IyzVQuhzTJNHXgNJcWLHEUM1poYVBCcBhn7oddqWhVIu0cHzU3XNGlJYC2g_hzk_p_Oylhwxi7byL9Mi2M7mzDJbi-0KH3HaA5fZiEqDtrqVbaZH9GAgLb3ZYWDi1HU1-4LCRgZGUETdy-PMJ3WLeBNmxFvGbLb65gopeiybNqvecBe1OeLU2J6w=s320" border="0" alt="" id="BLOGGER_PHOTO_ID_7278619980852048242" /></a></span></a></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Times New Roman",serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:9.0pt;font-family:"Arial",sans-serif;color:black">Alabama | California | Florida | Illinois | Massachusetts | New Jersey | New York | Ohio | Pennsylvania | Tennessee | Texas | Washington, DC</span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">NOTICE: We do not send unsolicited emails. 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Thank you. </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><br>Our updates and webinar presentations are available on the internet, in searchable format, at: </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://updates.mwbllp.com/"><span style="color:blue">Financial Services Law Updates</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"><a href="http://consumerfsblog.com/"><span style="color:blue">The Consumer Financial Services Blog</span></a>™</span></p><p class="MsoNormal"><span style="color:#022f88"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black">and</span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"> </span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:#000099"><a href="http://consumerfsblog.com/presentations/"><span style="color:blue">Webinars</span></a></span></p><p class="MsoNormal"><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:black"> </span><span style="font-size:12.0pt;font-family:"Arial",sans-serif;color:blue"> </span></p><p class="MsoNormal"><span style="color:#003399"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"><span style="color:#1f3864"> </span></p><p class="MsoNormal"> </p></div>Ralph T. Wutscherhttp://www.blogger.com/profile/06301100810916886818noreply@blogger.com