$49.9 Million TCPA Settlement Approved

The United States District Court for the Northern District of Illinois granted final approval of a $49.9 million Telephone Consumer Protection Act class action settlement against US Coachways, Inc on November 9. 

The plaintiffs filed the original Complaint against US Coachways on July 29, 2014, alleging that the motor coach leasing company sent out thousands of unlawful text messages to whom they hoped were potential customers in violation of the TCPA. The lead plaintiff allegedly received more than 20 unsolicited text message advertisements.   

The class consists of “all persons within the United States who received one or more text advertisements on behalf of US Coachways, Inc. at any time in the four years prior to the filing of the Complaint continuing through the date of the Settlement Agreement.”  There were no requests for exclusion and no objections from the class, which consists of more than 85,000 individuals. 

US Coachways cannot fund the settlement and tendered a claim for coverage to its insurer for defense and indemnity, but the insurance company denied coverage.  US Coachways has now  assigned its rights against the insurer to Plaintiff and the class, and agreed to contribute $50,000 which was applied toward the cost of notice to the class.  Plaintiff and his counsel will next pursue an action against the insurer to collect on the $49.9 million judgment.

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Supreme Court to Decide if Filing Proof of Claim in Bankruptcy Violates FDCPA

The Consumer Financial Protection Bureau has filed an amicus brief in the U.S. Supreme Court in support of the respondent/consumer in Midland Funding, LLC v. Aleida Johnson, a decision of the Eleventh Circuit that held Midland’s filing of an accurate proof of claim in the consumer’s bankruptcy case on a time-barred debt violated the FDCPA.

In its brief, the CFPB argues that the Supreme Court should reject Midland’s arguments that the filing of a proof of claim that is accurate (i.e. provides correct information about an unpaid debt) but is for a debt that is time-barred does not violate the FDCPA, and even if the filing does violate the FDCPA, the Bankruptcy Code (Code) would preclude such application of the FDCPA.  According to the CFPB, nothing in the Code allows a creditor to legitimately file a proof of claim that it knows is subject to disallowance under the Code because it is time-barred.  The CFPB also argues that because a debt collector implicitly represents that it has a good faith basis to believe its claim is enforceable in bankruptcy when it files a proof of claim, the filing is misleading and unfair in violation of the FDCPA when the collector knows the claim is time-barred and therefore unenforceable in bankruptcy.

With respect to Midland’s preclusion argument, the CFPB argues that Code does not preclude an FDCPA action based on the filing of a proof of claim for a time-barred debt.  According to the CFPB, treating Midland’s alleged conduct as an FDCPA violation would not penalize Midland for conduct the Code authorizes and would not otherwise create any conflict between the FDCPA and the Code.

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