1 Negotiating a Settlement on Behalf of a Law Firm or Other ClientCFPB INVESTIGATIONS Negotiating a Settlement on Behalf of a Law Firm or Other Client Manny Newburger Barron & Newburger, P.C. (512) , Ext. 216

2 DISCLAIMER This presentation is not intended to be legal advice. It may not be substituted for legal advice as specific circumstances of each case warrants tailored legal advice and analysis. Do not use this presentation to replace the counsel of your attorney.

3 CFPB Investigative AuthoritySection 1052 the Dodd-Frank Act (12 USC § 5562) authorizes the Bureau to conduct investigations. The Bureau may issue a civil investigative demand requiring: Production of documentary material and tangible things for inspection and copying ; written reports or answers to questions; oral testimony concerning documentary material, tangible things, or other information; or any combination of such material, answers, or testimony.

4 A CID Must: State the nature of the conduct constituting the alleged violation which is under investigation; State the provision of law applicable to such violation. Prescribe a return date or dates which will provide a reasonable period of time within which the material so demanded may be assembled and made available for inspection and copying or reproduction; and Identify the custodian to whom such material shall be made available.

5 12 CFR § 1080.6 Civil investigative demands.General requirements for CIDs. Requirements for the Meet and Confer. Required participants for the Meet and Confer. Petition for order modifying or setting aside demand. Request for Extension of time. Public disclosure of petitions.

6 12 CFR § 1080.7(a) Investigational hearings"Investigational hearings, as distinguished from hearings in adjudicative proceedings, may be conducted pursuant to a civil investigative demand for the giving of oral testimony in the course of any Bureau investigation, including inquiries initiated for the purpose of determining whether or not a respondent is complying with an order of the Bureau."

7 12 CFR § 1080.7 Investigational hearings"(b) Investigational hearings shall be conducted by any Bureau investigator for the purpose of hearing the testimony of witnesses and receiving documentary material, tangible things, or other information relating to any subject under investigation. Such hearings shall be under oath or affirmation and stenographically reported, and a transcript thereof shall be made a part of the record of the investigation. The Bureau investigator conducting the investigational hearing also may direct that the testimony be recorded by audio, audiovisual, or other means, in which case the recording shall be made a part of the record of the investigation as well."

8 12 CFR § 1080.7(c) Investigational hearings“In investigational hearings, the Bureau investigators shall exclude from the hearing room all persons except the person being examined, his or her counsel, the officer before whom the testimony is to be taken, any investigator or representative of an agency with which the Bureau is engaged in a joint investigation, and any individual transcribing or recording such testimony. At the discretion of the Bureau investigator, and with the consent of the person being examined, persons other than those listed in this paragraph may be present in the hearing room.”

9 12 CFR § 1080.8 Withholding requested materialDeadline to assert privilege. Privilege log. Inadvertent disclosures and waivers.

10 12 CFR § 1080.9(a) Rights of witnesses in investigations.“Any person compelled to submit documentary material, tangible things, or written reports or answers to questions to the Bureau, or to testify in an investigational hearing, shall be entitled to retain a copy or, on payment of lawfully prescribed costs, request a copy of the materials, things, reports, or written answers submitted, or a transcript of his or her testimony. The Bureau, however, may for good cause deny such a request and limit the witness to inspection of the official transcript of the testimony. Upon completion of transcription of the testimony of the witness, the witness shall be offered an opportunity to read the transcript of his or her testimony. Any changes by the witness shall be entered and identified upon the transcript by the Bureau investigator with a statement of the reasons given by the witness for making such changes.”

11 12 CFR § 1080.9(a) Rights of witnesses in investigations – (cont.)“The transcript shall then be signed by the witness and submitted to the Bureau unless the witness cannot be found, is ill, waives in writing his or her right to signature, or refuses to sign. If the signed transcript is not submitted to the Bureau within 30 calendar days of the witness being afforded a reasonable opportunity to review it, the Bureau investigator, or the individual transcribing the testimony acting at the Bureau investigator's direction, shall sign the transcript and state on the record the fact of the waiver, illness, absence of the witness, or the refusal to sign, together with any reasons given for the failure to sign.”

12 12 CFR § 1080.9(b) Rights of witnesses in investigations.“Any witness compelled to appear in person at an investigational hearing may be accompanied, represented, and advised by counsel as follows: (1) Counsel for a witness may advise the witness, in confidence and upon the initiative of either counsel or the witness, with respect to any question asked of the witness where it is claimed that a witness is privileged to refuse to answer the question. Counsel may not otherwise consult with the witness while a question directed to the witness is pending.”

13 12 CFR § 1080.9(b) Rights of witnesses in investigations (cont.)“(2) Any objections made under the rules in this part shall be made only for the purpose of protecting a constitutional or other legal right or privilege, including the privilege against self-incrimination. Neither the witness nor counsel shall otherwise object or refuse to answer any question. Any objection during an investigational hearing shall be stated concisely on the record in a nonargumentative and nonsuggestive manner. Following an objection, the examination shall proceed and the testimony shall be taken, except for testimony requiring the witness to divulge information protected by the claim of privilege or work product.”

14 12 CFR § 1080.9(b) Rights of witnesses in investigations (cont.)“(3) Counsel for a witness may not, for any purpose or to any extent not allowed by paragraphs (b)(1) and (2) of this section, interrupt the examination of the witness by making any objections or statements on the record. Petitions challenging the Bureau's authority to conduct the investigation or the sufficiency or legality of the civil investigative demand shall be addressed to the Bureau in advance of the hearing in accordance with § (e). Copies of such petitions may be filed as part of the record of the investigation with the Bureau investigator conducting the investigational hearing, but no arguments in support thereof will be allowed at the hearing.”

15 12 CFR § 1080.9(b) Rights of witnesses in investigations (cont.)“(4) Following completion of the examination of a witness, counsel for the witness may, on the record, request that the Bureau investigator conducting the investigational hearing permit the witness to clarify any of his or her answers. The grant or denial of such request shall be within the sole discretion of the Bureau investigator conducting the hearing.”

16 12 CFR § 1080.9(b) Rights of witnesses in investigations (cont.)“(5) The Bureau investigator conducting the hearing shall take all necessary action to regulate the course of the hearing to avoid delay and to prevent or restrain disorderly, dilatory, obstructionist, or contumacious conduct, or contemptuous language. Such Bureau investigator shall, for reasons stated on the record, immediately report to the Bureau any instances where an attorney has allegedly refused to comply with his or her obligations under the rules in this part, or has allegedly engaged in disorderly, dilatory, obstructionist, or contumacious conduct, or contemptuous language in the course of the hearing. The Bureau will thereupon take such further action, if any, as the circumstances warrant, including actions consistent with those described in 12 CFR (c) to suspend or disbar the attorney from further practice before the Bureau or exclude the attorney from further participation in the particular investigation.”

17 12 CFR § Disposition. When the facts disclosed by an investigation indicate that an enforcement action is warranted, further proceedings may be instituted in Federal or State court or pursuant to the Bureau's administrative adjudicatory process. Where appropriate, the Bureau also may refer investigations to appropriate Federal, State, or foreign governmental agencies. When the facts disclosed by an investigation indicate that an enforcement action is not necessary or would not be in the public interest, the investigational file will be closed. The matter may be further investigated, at any time, if circumstances so warrant. The Assistant Director of the Office of Enforcement and the Deputy Assistant Directors of the Office of Enforcement are authorized to close Bureau investigations.

18 12 CFR § 1080.10 Noncompliance with civil investigative demands.In cases of failure to comply in whole or in part with a CID "appropriate action" may be initiated by the Bureau, including actions for enforcement. The Director, the Assistant Director of the Office of Enforcement, and the General Counsel of the Bureau are authorized to: institute, an enforcement proceeding; and seek civil contempt or other appropriate relief in cases where a court order enforcing a civil investigative demand has been violated.

19 12 CFR § 1080. 14 Confidential treatment of demand material and non-public nature of investigations.Documentary materials, written reports, answers to questions, tangible things or transcripts of oral testimony the Bureau receives in any form or format pursuant to a civil investigative demand are subject to the requirements and procedures relating to the disclosure of records and information set forth in part 1070 of this title. Bureau investigations generally are non-public. Bureau investigators may disclose the existence of an investigation to potential witnesses or third parties to the extent necessary to advance the investigation. Requests by Congress.

20 RECENT FDCPA CASES Prescott v. Seterus Kaymark v. Bank of AmericaBock v. Pressler & Pressler.

21 Prescott v. Seterus, Inc. , 635 Fed. Appx. 640, 2015 U. S. AppPrescott v. Seterus, Inc., 635 Fed. Appx. 640, 2015 U.S. App. LEXIS (11th Cir. 2015) Seterus took over servicing two months after Prescott’s default. In response to a request to reinstate Seterus sent Prescott a letter showing the total amount required. The letter stated that the reinstatement balance — $15, — was “good through 9/27/2013.” That balance included $165 in incurred property inspection fees, $15 in "estimated" property inspection fees, $1,125 in incurred attorney's fees, and $3,175 in “estimated” attorney's fees. The estimated fees were marked "estimated" and were listed in a separate section of the letter labeled “Estimated Charges Through 9/27/2013.” (The law firm charged $1,125 for the first step and would have charged $3,175 for the second.)

22 Prescott v. Seterus, Inc. (Cont’d)Prescott paid the full reinstatement balance on September 26, 2013, and Seterus reinstated his mortgage loan. On November 14, 2013, Seterus refunded Prescott the $3,175 in estimated legal fees because those fees were not incurred before the reinstatement. Seterus did not refund the estimated property inspection fees because those fees were incurred before reinstatement

23 Prescott v. Seterus, Inc. (Cont’d)About a week after his loan was reinstated, Prescott filed a lawsuit against Seterus in state court, asserting that the inclusion of estimated attorney's fees in his reinstatement balance violated 15 U.S.C. §§ 1692e(2) and 1692f(1) and § (9) of the FCCPA. Seterus removed the case to federal court, and the parties filed motions for summary judgment. The district court granted summary judgment for Seterus on all of Prescott's claims. He appealed

24 Section 9 provided, in pertinent part, that[i]f [] Borrower fails to perform the covenants and agreements contained in this Security Instrument, ... then Lender may do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and rights under this Security Instrument, including ... (c) paying reasonable attorneys' fees to protect its interest in the Property and/or rights under this Security Instrument, including its secured position in a bankruptcy proceeding ... Any amounts disbursed by Lender under this [section] shall become additional debt of Borrower secured by this Security Instrument. These amounts shall bear interest at the Note rate from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment.

25 Prescott v. Seterus, Inc. (Cont’d)Section 14 of the security instrument provided that Lender may charge Borrower fees for services performed in connection with Borrower's default, for the purpose of protecting Lender's interest in the Property and rights under this Security Instrument, including, but not limited to, attorneys' fees, property inspection and valuation fees. In regard to any other fees, the absence of express authority in this Security Instrument to charge a specific fee to Borrower shall not be construed as a prohibition on the charging of such fee. Lender may not charge fees that are expressly prohibited by this Security Instrument or by Applicable Law.

26 Prescott v. Seterus, Inc. (Cont’d)Under Section 19 of the security instrument, Prescott was entitled to reinstatement if he satisfied "certain conditions," including (a) pay[ing] Lender all sums which then would be due under this Security Instrument and the Note as if no acceleration had occurred; (b) cur[ing] any default of any other covenants or agreements; (c) pay[ing] all expenses incurred in enforcing this Security Instrument, including, but not limited to, reasonable attorneys' fees, property inspection and valuation fees, and other fees incurred for the purpose of protecting Lender's interest in the Property and rights under this Security Instrument; and (d) tak[ing] such action as Lender may reasonably require to assure that Lender's interest in the Property and rights under this Security Instrument, and Borrower's obligation to pay the sums secured by this Security Instrument, shall continue unchanged...

27 Prescott v. Seterus, Inc. (Cont’d)“Prescott first contends that Seterus violated §§ 1692e(2) and 1692f(1) of the FDCPA by including estimated attorney's fees in his reinstatement balance. We agree.”

28 Prescott v. Seterus, Inc. (Cont’d)“Section 1692f of the FDCPA provides that "[a] debt collector may not use unfair or unconscionable means to collect or attempt to collect any debt," including "[t]he collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law." 15 U.S.C. § 1692f(1). Prescott contends that he was not expressly obligated under the security agreement to pay for estimated attorney's fees. We agree.”

29 Prescott v. Seterus, Inc. (Cont’d)“The security agreement does obligate Prescott to pay for attorney's fees and other expenses that Seterus actually incurred as a result of his default, but nothing in it explicitly states that Prescott must pay estimated fees for future legal services. The question is whether the least sophisticated consumer would have nonetheless understood the agreement to obligate Prescott to pay such fees. See LeBlanc, 601 F.3d at The answer is no.”

30 Prescott v. Seterus, Inc. (Cont’d)In granting summary judgment to Seterus on that claim, the district court focused on the fact that Seterus had not misrepresented the nature of the estimated fees in the reinstatement letter. It is true that Seterus clearly separated the estimated fees from those already incurred and conspicuously marked those charges as "estimated." Even the least sophisticated consumer would have understood that the estimated fees were just that — estimates. See Elyazidi v. Suntrust Bank, 780 F.3d 227, 235 (4th Cir. 2015). So it is clear that Seterus did not falsely misrepresent the character of those fees as prohibited by § 1692e(2)(A).

31 Prescott v. Seterus, Inc. (Cont’d)§ 1692e(2) also prohibits the false representation of any "compensation which may be lawfully received by any debt collector for the collection of a debt." 15 U.S.C. § 1692e(2)(B). Seterus violated that provision when it demanded that Prescott pay estimated attorney's fees before it would reinstate his loan, because Seterus could not "lawfully receive" those fees under the terms of the security agreement. That is true even if Seterus believed it was entitled to those fees. See Wise v. Zwicker & Assocs., P.C., 780 F.3d 710, 713 (6th Cir. 2015) (noting that, under § 1692e, "if a debt collector seeks fees to which it is not entitled, it has committed a prima facie violation of the Act, even if there was no clear prior judicial statement that it was not entitled to collect the fees"); Stratton v. Portfolio Recovery Assocs., LLC, 770 F.3d 443, 449 (6th Cir. 2014) (describing the FDCPA as "plac[ing] the risk of penalties on the debt collector that engages in activities which are not entirely lawful, rather than exposing consumers to unlawful debt-collector behavior without a possibility for relief"). We therefore reverse the district court's grant of summary judgment to Seterus on Prescott's § 1692e(2) claim.

32 Prescott v. Seterus, Inc. (Cont’d)Is there a way out of the trap?

33 Miller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L. L. CMiller v. McCalla, Raymer, Padrick, Cobb, Nichols, & Clark, L.L.C., 214 F.3d 872 (7th Cir. 2000) The dunning letter said that the "unpaid principal balance" of the loan (emphasis added) was $ 178,844.65, but added that "this amount does not include accrued but unpaid interest, unpaid late charges, escrow advances or other charges for preservation and protection of the lender's interest in the property, as authorized by your loan agreement. The amount to reinstate or pay off your loan changes daily. You may call our office for complete reinstatement and payoff figures." An 800 number is given.

34 Miller v. McCalla, Raymer (Cont’d)The statement does not comply with the Act The unpaid principal balance is not the debt; it is only a part of the debt; the Act requires statement of the debt. The requirement is not satisfied by listing a phone number unless the number is recorded, to authorize debt collectors to comply orally would be an invitation to just the sort of fraudulent and coercive tactics in debt collection that the Act aimed (rightly or wrongly) to put an end to. It is no excuse that it was "impossible" for the defendants to comply when as in this case the amount of the debt changes daily. What would or might be impossible for the defendants to do would be to determine what the amount of the debt might be at some future date if for example the interest rate in the loan agreement was variable. What they certainly could do was to state the total amount due--interest and other charges as well as principal--on the date the dunning letter was sent. We think the statute required this.

35 Miller v. McCalla, Raymer (Cont’d)We hold that the following statement satisfies the debt collector's duty to state the amount of the debt in cases like this where the amount varies from day to day: "As of the date of this letter, you owe $ [the exact amount due]. Because of interest, late charges, and other charges that may vary from day to day, the amount due on the day you pay may be greater. Hence, if you pay the amount shown above, an adjustment may be necessary after we receive your check, in which event we will inform you before depositing the check for collection. For further information, write the undersigned or call [phone number]." A debt collector who uses this form will not violate the "amount of the debt" provision, provided, of course, that the information he furnishes is accurate and he does not obscure it by adding confusing other information (or misinformation).

36 Kaymark v. Bank of Am., N.A., 783 F.3d 168 (3d Cir. 2015)Udren, on behalf of BOA, filed a verified Foreclosure Complaint against Kaymark . The body of the Foreclosure Complaint included an itemized list of the total debt, stating that the following items were due and owing as of July 12, 2012: Unpaid Principal Balance $213,224.26 Accumulated Interest (07/01/ /12/2012) $13,452.47 Accumulated Late Charges $177.74 Escrow Deficit / (Reserve) $1,935.45 Title Report $325.00 Attorney Fees $1,650.00 Property Inspection $75.00 Grand Total $230,839.92

37 Kaymark v. Bank of Am. , N. A. , 783 F. 3d 168 (3d CirKaymark v. Bank of Am., N.A., 783 F.3d 168 (3d Cir. 2015), cert denied, 2016 U.S. LEXIS 258 (U.S., Jan. 11, 2016) Kaymark alleged that the $1,650 in attorneys' fees, $325 in title report fees, and $75 in property inspection fees (or $2,050 total) were not actually incurred as of July 12, two months before the foreclosure action was filed on September 13. Kaymark also alleged that the fees were improperly calculated on a fixed basis. Appellees retort that fixed fees are contemplated under the FNMA servicing guide, which sets the maximum foreclosure fee, or cap, for attorneys' fees at $1,650.

38 Kaymark v. Bank of Am., N.A. (Cont’d)Kaymark contested the foreclosure action, which is still pending. Kaymark has never paid the disputed fees. The parties do not dispute that these fees were ultimately incurred in the course of the foreclosure action or that the fees were ultimately reasonable

39 Kaymark v. Bank of Am., N.A. (Cont’d)BOA and Udren again moved to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). The Magistrate Judge issued a Report and Recommendation to grant the motions on December 11, It reasoned that Kaymark's FDCPA claim that Appellees were not authorized to list not-yet-incurred flat fees in the Foreclosure Complaint was "rather hypertechnical," and that "nowhere do the loan documents or any state or federal law prohibit listing attorneys' fees and other fixed costs at the time of filing the complaint, but are reasonably expected to be incurred," It also explained that Kaymark "pled himself out of the state causes of action" because he did not show any actual loss or damage. The District Court adopted the R&R and granted the motions to dismiss in their entirety, with prejudice.

40 Kaymark v. Bank of Am., N.A. (Cont’d)Kaymark alleged that, by attempting to collect fees for legal services not yet performed Udren violated 15 U.S.C. §§ 1692e(2)(A), (5), and (10) and § 1692f(1) by attempting to collect "an[] amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law."

41 Kaymark v. Bank of Am., N.A. (Cont’d)After the district court ruled the Third Circuit decided McLaughlin v. Phelan Hallinan & Schmieg, LLP, 756 F.3d 240 (3d Cir. 2014), holding that nearly-indistinguishable conduct in a debt collection demand letter, rather than a foreclosure complaint, violated the FDCPA. The Court of Appeals in Kaymark reversed the district court, concluding that McLaughlin's holding extends to foreclosure complaints.

42 Kaymark v. Bank of Am., N.A. (Cont’d)“The facts in McLaughlin are virtually indistinguishable from the case at bar. Here, the Foreclosure Complaint also plainly ‘inform[ed] the reader of the specific amounts due for specific items as of a particular date,’ id., two months prior to the date the Foreclosure Complaint was filed. Udren also did not convey that the disputed fees were estimates or imprecise amounts. Thus, pursuant to McLaughlin, the Foreclosure Complaint conceivably misrepresented the amount of the debt owed, forming a basis for violations of § 1692e(2)(A) and (10).”

43 Kaymark v. Bank of Am., N.A. (Cont’d)By extension, it follows that Kaymark has sufficiently alleged that Udren's attempt to collect those misrepresented fees was not "expressly authorized" by the mortgage contract or permitted by law. § 1692f(1). To be sure, Kaymark expressly agreed to the collection of certain fee categories, such as "attorneys' fees, property inspection and valuation fees." But the contract also specified that BOA could only charge for "services performed in connection with" the default and collect "all expenses incurred" in pursuing authorized remedies.. While such language is arguably capable of more than one meaning, we must view the Foreclosure Complaint through the lens of the least-sophisticated consumer and in the light most favorable to Kaymark. In this perspective, the most natural reading is that Udren was not authorized to collect fees for not-yet-performed legal services and expenses, forming a basis for a violation of §1692f(1).

44 Kaymark v. Bank of Am., N.A. (Cont’d)This conclusion is not a departure from our sister Circuits, which have held that demanding fees in the collection of debts in a way contrary to the underlying agreement is actionable under the FDCPA. See Kojetin v. C U Recovery, Inc., 212 F.3d 1318 (8th Cir. 2000) (per curiam) (finding FDCPA violation where the debt collector charged a collection fee based on a percentage of the principal balance of the debt due rather than the "actual cost[]" of collection as stipulated in the loan agreement); Bradley v. Franklin Collection Serv., Inc., 739 F.3d 606, 610 (11th Cir. 2014) (finding § 1692f(1) violation where debtor "agreed to pay the actual costs of collection," not "a percentage above the amount of his outstanding debt that was unrelated to the actual costs to collect that debt") (per curiam). Likewise, Kaymark agreed to pay attorneys' fees and other expenses that were actually incurred in connection with the default, not fees that might eventually be incurred.

45 Kaymark v. Bank of Am., N.A. (Cont’d)We conclude that a communication cannot be uniquely exempted from the FDCPA because it is a formal pleading or, in particular, a complaint. This principle is widely accepted by our sister Circuits. See, e.g., Currier v. First Resolution Inv. Corp., 762 F.3d 529, 535 (6th Cir. 2014) ("The fact that the [alleged violation] appears in a lawsuit or other court filing does not diminish the threatening nature of the communication for purposes of the FDCPA."); James v. Wadas, 724 F.3d 1312, 1316 (10th Cir. 2013) ("[T]he FDCPA 'applies to the litigating activities of lawyers,' which, as other circuits have held, may include the service upon a debtor of a complaint to facilitate debt collection efforts ") (quoting Heintz, 514 U.S. at 294)); Donohue v. Quick Collect, Inc., 592 F.3d 1027, 1032 (9th Cir. 2010) ("To limit the litigation activities that may form the basis of FDCPA liability to exclude complaints served personally on consumers to facilitate debt collection, the very act that formally commences such a litigation, would require a nonsensical narrowing of the common understanding of the word 'litigation' that we decline to adopt."); Sayyed, 485 F.3d at 229 (subjecting interrogatories and summary judgment motions to the FDCPA); Gearing v. Check Brokerage Corp., 233 F.3d 469, 472 (7th Cir. 2000) (finding § 1692e(2) and (10) violations where debt collector's "allegation in its state court complaint gave a false impression as to the legal status it enjoyed").

46 Kaymark v. Bank of Am., N.A. (Cont’d)And, while we have not directly decided the issue, this Court has extended the FDCPA to state court complaints, see Glover v. F.D.I.C., 698 F.3d 139, 152 n.8 (3d Cir. 2012) (explaining that the law firm, "[i]n filing the Foreclosure Complaint against Glover," indisputably met the definition of "debt collector" under the FDCPA), and so has the Supreme Court, see Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA, 559 U.S. 573, 130 S. Ct. 1605, 176 L. Ed. 2d 519 (2010) (deciding the scope of the FDCPA's bona fide error defense on the basis of a notice attached to mortgage foreclosure complaint).

47 Kaymark v. Bank of Am., N.A. (Cont’d)Udren contends that a complaint, because it is directed to the court, is not a communication to the consumer subject to §§ 1692e and 1692f. This argument cannot be sustained. The statute defines a "communication" under the FDCPA as "the conveying of information regarding a debt directly or indirectly to any person through any medium." 15 U.S.C. § 1692a(2). Interpreting this provision in Allen ex rel. Martin v. LaSalle Bank, N.A., where we decided whether a communication made to a consumer's attorney was governed by § 1692f, we held that "[i]f an otherwise improper communication would escape FDCPA liability simply because that communication was directed to a consumer's attorney, it would undermine the deterrent effect of strict liability." 629 F.3d 364, 368 (3d Cir. 2011); see also id. at n.6 (noting that the Heintz Court also referred to a communication from a debt collector to a consumer's attorney, though it did not directly decide that question).

48 Kaymark v. Bank of Am., N.A. (Cont’d)So too for pleadings filed with the court and served on the consumer. Because the Foreclosure Complaint was served on Kaymark (directly or indirectly through his attorney), he was the intended recipient of the communication. See Donohue, 592 F.3d at (holding that a complaint served on the debtor is a communication subject to the FDCPA). Courts have only held that a complaint misleads the judge, rather than the consumer, when, for instance, the plaintiff specifically pled that a materially-false attachment to a complaint "would mislead the Cook County judge handling his case." O'Rourke v. Palisades Acquisition XVI, LLC, 635 F.3d 938, 941 (7th Cir. 2011); see id. at 939 (noting that this allegation was "[u]nlike most lawsuits under the [FDCPA]"). This is not that case. Here, the Foreclosure Complaint was unquestionably a communication directed at Kaymark in attempt to collect on his debt.

49 Bock v. Pressler & Pressler, LLP, 30 F. Supp. 3d 283 (D.N.J. 2014)The record: Four second review “Gulko reviewed 673 complaints that day, approving 663 and rejecting 10.” It was undisputed that Bock was the correct debtor, sued by the correct creditor, on a debt that he owed and settled.

50 Bock v. Pressler & Pressler, LLP (Cont’d)Arguments on Appeal: I. The FDCPA regulates traditional collection activities in which attorneys and law firms compete with collection agencies but not those activities that constitute the practice of law and that are exclusively the province of attorney II. Regulation of the practice of law is a matter exclusively for the states. III. The FDCPA does not regulate communications with Courts. IV. The doctrine of meaningful attorney involvement, as created by the courts under the FDCPA, does not apply to the filing and service of a collection lawsuit. V. Compliance with the judicially-created duty of meaningful attorney review under the FDCPA encompasses ethical delegation of tasks. VI. The Noerr-Pennington doctrine and U.S. Const. amend. I bar the imposition of liability under the FDCPA based on the “meaningful attorney involvement” theory. VII. A Violation of N.J.R.Ct. 1:4-8 is not a violation of the FDCPA

51 Bock v. Pressler & Pressler, LLP (Cont’d)Present status of case: Argued in November, 2012 Spokeo hold Supplemental briefing

52 Rule 1.1: Competence A lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.

53 Rule 1.2: Scope of Representation & Allocation of Authority Between Client & Lawyer(a) Subject to paragraphs (c) and (d), a lawyer shall abide by a client's decisions concerning the objectives of representation and, as required by Rule 1.4, shall consult with the client as to the means by which they are to be pursued. A lawyer may take such action on behalf of the client as is impliedly authorized to carry out the representation. A lawyer shall abide by a client's decision whether to settle a matter. In a criminal case, the lawyer shall abide by the client's decision, after consultation with the lawyer, as to a plea to be entered, whether to waive jury trial and whether the client will testify.

54 Rule 1.2: Scope of Representation & Allocation of Authority Between Client & Lawyer* * * (c) A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.

55 Rule 1.2: Scope of Representation & Allocation of Authority Between Client & Lawyer(d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good faith effort to determine the validity, scope, meaning or application of the law.

56 Rule 3.1: Meritorious Claims & ContentionsA lawyer shall not bring or defend a proceeding, or assert or controvert an issue therein, unless there is a basis in law and fact for doing so that is not frivolous, which includes a good faith argument for an extension, modification or reversal of existing law. A lawyer for the defendant in a criminal proceeding, or the respondent in a proceeding that could result in incarceration, may nevertheless so defend the proceeding as to require that every element of the case be established.

57 Rule 5.1: Responsibilities of a Partner or Supervisory Lawyera) A partner in a law firm, and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm, shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that all lawyers in the firm conform to the Rules of Professional Conduct. (b) A lawyer having direct supervisory authority over another lawyer shall make reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct.

58 Rule 5.1: Responsibilities of a Partner or Supervisory Lawyerc) A lawyer shall be responsible for another lawyer's violation of the Rules of Professional Conduct if: (1) the lawyer orders or, with knowledge of the specific conduct, ratifies the conduct involved; or (2) the lawyer is a partner or has comparable managerial authority in the law firm in which the other lawyer practices, or has direct supervisory authority over the other lawyer, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action

59 Rule 5.2: Responsibilities of a Subordinate Lawyera) A lawyer is bound by the Rules of Professional Conduct notwithstanding that the lawyer acted at the direction of another person. (b) A subordinate lawyer does not violate the Rules of Professional Conduct if that lawyer acts in accordance with a supervisory lawyer's reasonable resolution of an arguable question of professional duty.

60 Rule 5.3 Responsibilities Regarding Nonlawyer AssistanceWith respect to a nonlawyer employed or retained by or associated with a lawyer: (a) a partner, and a lawyer who individually or together with other lawyers possesses comparable managerial authority in a law firm shall make reasonable efforts to ensure that the firm has in effect measures giving reasonable assurance that the person's conduct is compatible with the professional obligations of the lawyer;

61 Rule 5.3 Responsibilities Regarding Nonlawyer Assistance(b) a lawyer having direct supervisory authority over the nonlawyer shall make reasonable efforts to ensure that the person's conduct is compatible with the professional obligations of the lawyer; and (c) a lawyer shall be responsible for conduct of such a person that would be a violation of the Rules of Professional Conduct if engaged in by a lawyer if:

62 Rule 5.3 Responsibilities Regarding Nonlawyer Assistance(1) the lawyer orders or, with the knowledge of the specific conduct, ratifies the conduct involved; or (2) the lawyer is a partner or has comparable managerial authority in the law firm in which the person is employed, or has direct supervisory authority over the person, and knows of the conduct at a time when its consequences can be avoided or mitigated but fails to take reasonable remedial action.

63 THANK YOU. Manny Newburger Barron & Newburger, P.C.1212 Guadalupe, Suite 104 Austin, TX 78701 (512) , Ext. 216