Archives for July 2019

As we reported extensively back in June, the FCC recently adopted a rule allowing carriers to opt consumers using their networks into call-blocking tools by default. This means that carriers can use “reasonable analytics” to choose which calls do and do not connect with consumers based upon their analysis of whether the call is likely to be wanted or unwanted.

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Although the FCC’s ruling enabling default call blocking suggested that a redress mechanism with the carriers would be created to allow callers to dispute that their calls were legitimate and wanted, there is not yet a clear path to development of such a mechanism (although the Stopping Bad Robocalls Act—if passed—would require the creation of such redress channels.) Accordingly, businesses looking to assure that their calls will yet connect when the carriers begin deploying default call blocking have begun commenting to the FCC in the hopes of having their calls deemed “critical” and unblockable by the carriers in the first place.

The FCC opened the door to these comments last month when it issued a Third Notice of Proposed Rulemaking regarding a safe harbor to be provided to carriers for blocking potentially wanted calls. To take advantage of that safeharbor the carriers would have to implement technology to avoid blocking so-called “critical calls”—and the FCC sought public assistance defining what calls merit the critical designation.

In a joint-trade filing submitted by organizations representing banks, finance companies, retailers, credit unions and utilities one recent comment sought to clarify that a wide range of commercial calls should be deemed “critical” and unblockable, including: “fraud alerts, data breach notifications, remediation messages, electric utility outage notifications, product safety recall notices, healthcare reminders, and prescription notices, and mortgage servicing calls required by Federal or State law.” The comment can be found here: 7-24-19 Joint Trades Letter to FCC on Third Further Notice of Proposed Rulemaking_final

In seeking an expansion of the critical calls list, the comment largely tracks the analysis used to afford TCPA exemptions to certain similar categories of calls in its 2015 Omnibus ruling. Notably—and although a major creditor trade group is signed on to the comment—the comment does NOT request that the FCC deem debt collection calls “critical” except with respect to mortgage servicing calls that are required by law.

The comment also asks the Commission to require carriers to delay rolling out default call blocking until after the SHAKEN/STIR authentication protocol has been fully implemented. This request seems to make sense since the FCC’s rules allow the carriers to block unauthenticated calls—but the authentication technology has not yet been completed, leading some to suggest that the call blocking rules put the cart before the horse.

Finally, the comment seems to ask the FCC to reconsider portions of its ruling enabling default call blocking by suggesting that carriers should only be permitted to block unauthenticated calls or those that are made illegally. As mentioned above, the current rule authorizes carriers to block calls that “reasonable analytics” suggest may be unwanted—even if the call is perfectly legal. The joint-trade comment, however, urges the Commission to determine that only illegal calls may be blocked and also encourages the FCC to adopt a rule preventing carriers from labeling servicing calls as belonging to a “debt collector” for fear that consumers will not receive important messages regarding their account status.

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Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved. 

NEW YORK, N.Y. — The leading nonprofit that relieves medical debt for Americans in need,  RIP Medical Debt, announced that Jim and Sharen Branscome have wiped out $8 million of medical debt for individuals in  Appalachia, one of the poorest and least healthy areas of the US. 

 The donation will wipe out most of the currently reported medical debt in Eastern Kentucky, Southwest Virginia and portions of southern West Virginia. Those areas cover most of the highly depressed coalfields and the most distressed counties identified by the Appalachian Regional Commission. 

 Jim is a native of mountain Virginia and both he and Sharen have spent portions of their careers working on/solving major issues in the region. Jim’s family members worked in the coalfields and his grandfather died of black lung disease. The couple is hopeful this donation will spur others to join them in wiping out medical debt for disabled coal miners, those living below the poverty levels of the region, and those families and individuals struggling to deal with the devastating consequences of opioid addiction, which  is the worst in the nation. 

RIP Medical Debt is a nonprofit that buys large portfolios of bundled debt from medical providers and debt sellers on the debt market (for pennies on the dollar) and forgives it. As little as $1 donated to RIP can alleviate $100 of medical debt. The debt is removed from credit reports and can no longer be collected on. At this time RIP cannot locate a specific person’s medical debt, but instead buys those debts, which are the least likely to be paid. 

Jim & Sharen share, “We have been donors to many organizations in Appalachia–from providing scholarships to talented poor students from the region to support for economic development–but we view this effort with RIP Medical Debt to be the most effective way we have found to have direct impact on improving the lives of people in the mountains.  Health statistics in Appalachia are among the worst in the country, and medical debt prevents people from getting the care they need to improve their lives. For just a penny on the dollar, RIP Medical Debt can wipe out debts and clear the credit history for thousands with our donation.”  

 “Financing healthcare is a major crisis in the U.S. This extraordinary act will bring hope to so many people at a time when they need it most and let them know they aren’t facing the burden of medical debt alone”, said RIP’s co-founders, Craig Antico & Jerry Ashton. 

The average debt level the couple is wiping out in the targeted counties is $850. Each individual will receive a yellow envelope the weekend of July 26th from RIP Medical Debt advising that their debt has been paid off. Based on the Appalachian Regional Commission’s  map of the region, $240 million of medical debt exists in the area. Jim and Sharen are encouraging other Americans to donate to help even more people in the region. Friends of the couple, journalists William Bishop (author of “The Big Sort“) and his wife Julie Ardery donated $20K to jump-start their fundraising campaign.  Bill and Julie were the cofounders of the rural news site, https://www.dailyyonder.com/.  Bill and Jim both wrote on the mountains for the Mountain Eagle of Whitesbury, KY, a weekly famous for its hard-hitting journalism about Appalachia.   

To give, visit: https://secure.qgiv.com/event/revivingappalachia/ 

Medical Debt Statistics 

• 1 in 5 people living in the U.S. are grappling with medical debt; 
• Medical debt contributes to 60% of all bankruptcies in America; and 
• More than 40% of Americans wouldn’t be able to cover an emergency expense of $400. 

About the Branscomes

Jim and Sharen met and married when both of them were working at the Appalachian Regional Commission in 1970. Sharen worked on recruiting health professionals to the region, and Jim developed the agency’s youth programs.  Jim retired as a Managing Director of Standard&Poor’s Investment Advisory Services in NYC.  Sharen retired from UPS management where she worked on its international expansion.  Jim has written and published extensively on Appalachia, including in the New York Times and the Washington Post. 

About RIP

RIP Medical Debt is a nonprofit that buys and forgives medical debt across America. RIP works with individual donors, philanthropists and organizations to purchase medical debt for pennies on the dollar to provide financial relief for those burdened by impossible medical bills. Founded in 2014 by two former collections industry executives, Craig Antico & Jerry Ashton, RIP rose to national prominence on an episode of HBO’s “Last Week Tonight” with John Oliver in which RIP facilitated the abolishment of $15M in medical debt. To learn more visit:  www.ripmedicaldebt.org  

More information on the health data for Appalachia compiled by the Appalachian Regional Commission:   

https://www.arc.gov/images/appregion/fact_sheets/HealthDisparities2017/AppRegionHealthDisparitiesKeyFindings8-17.pdf

New York’s Attorney General and the CFPB have filed proposed settlements with debt collectors Douglas MacKinnon and Mark Gray; and their companies, Northern Resolution Group; LLC, Enhanced Acquisitions, LLC; Delray Capital, LLC.

Under the proposed settlement with MacKinnon, Northern Resolution Group, and Enhanced Acquisitions, they will be banned from the industry and must pay $60 million.

Under the proposed settlement with Delray Capital and Gray, they will be banned from the industry and a judgment for civil money penalties and redress will be entered against them.

insideARM has previously written about MacKinnon and Gray over several articles:

• FTC and New York AG Team Up in Actions Against Two Buffalo Debt Collection Scams (2015)
• CFPB and NY Attorney General Take Action Against Network of Sham Collection Companies (2016)

Per a CFPB press release,

“The Bureau and the New York Attorney General alleged that Northern Resolution Group and Enhanced Acquisitions are debt collection companies created and operated by Douglas MacKinnon, and that Delray Capital is a debt collection company created and operated by MacKinnon with Gray. The complaint alleged that since at least 2009, the companies together purchased millions of dollars’ worth of consumer debt, inflated those consumer debts, and relied on illegal tactics to extract as much money as possible from consumers for their debts. MacKinnon also set up a network of at least 60 additional debt collection firms to collect on the debt owned or placed by Northern Resolution Group, Enhanced Acquisitions, and Delray Capital. The Bureau and the New York Attorney General alleged that MacKinnon, Gray, and their network of debt collection companies misrepresented to consumers that they owed sums they did not owe, were not obligated to pay, or that the companies did not have a legal right to collect; falsely threatened consumers with legal action that the collectors had no intention of taking; and impersonated law enforcement officials, government agencies, and court officers.”

Under the terms of the proposed settlement with MacKinnon, Northern Resolution Group, and Enhanced Acquisitions, those defendants also would pay $40 million in redress to consumers and a $10 million civil money penalty to both the Bureau and New York, for a total penalty of $20 million.

• The joint stipulation for entry of proposed stipulated final judgment and order for MacKinnon, Northern Resolution Group, and Enhanced Acquisitions can be found here.
• The stipulated final judgment and order for MacKinnon, Northern Resolution Group, and Enhanced Acquisitions can be found here.
• The joint stipulation for entry of proposed stipulated final judgment and order for Gray and Delray Capital can be found here.
• The stipulated final judgment and order for Gray and Delray Capital can be found here.

insideARM Perspective

If the allegations in the complaint are true, the CFPB is making the right decision, both in the amount of the settlement it’s enforcing, and also in banning bad actors from the industry entirely for their fraudulent and harmful behavior. Bad faith players do nothing to foster a culture of compliance within the industry. In fact, one could argue that bad actors are not part of the industry, but instead exploit it for personal gain — and, in some cases, for quite some time — before finally being caught.

The four orders included by the CFPB in their statement about the settlement would definitely be worth reading as a gap analysis in your own policies and procedures.

BUFFALO, N.Y. — Northwood Asset Management Group (NAMG), a nationally licensed third-party debt collection company delivering professional and reliable debt recovery solutions, today announced that Jason Collins has been named as Director of Operations. In this role, Mr. Collins will be overseeing all aspects of business operations. 

“We are exceptionally pleased to welcome Jason to the Northwood Asset Management team. He has a broad knowledge of every essential service within collections such as compliance, communication, workforce development, and leadership,” says President Andrew Fanelli. “Jason’s vast expertise in building meaningful connections makes him a natural fit for our executive team. His deep understanding of operations combined with his experience overseeing various teams and organizations will contribute to the continued growth of Northwood Asset Management Group.” 

In his role as Director of Operations, Collins will oversee all aspects of the Company’s operations including hiring, training, client and vendor relationships, team building, leadership development, business growth strategies, business process improvement, and portfolio management. 

“I am very excited to join Northwood Asset Management Group,” says Mr. Collins. “Joining the leadership team is an exciting opportunity to contribute to and further develop not only the company’s current growth in revenue but also its current business strategies. I look forward to partnering with the NAMG staff, clients, and partners to achieve goals and overall profitable growth.” 

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Mr. Collins joins the company with a wealth of experience having spent more than 24 years in the collections industry including a decade in executive managerial roles. Collins began his career as a Collection Specialist has grown/progressed into positions of increasing responsibility within the collections industry including Manager, Director, and Owner. Notably, Mr. Collins has overseen business operations in 7 offices across 5 states, including Canadian operations. He directly supervised up to 300 employees and the collection of up to $800 million annually. Mr. Collins also has extensive experience maintaining strict compliance with industry laws and regulations, streamlining processes for increased efficiency and profitability, and has proven himself as a respected leader throughout his career. 

About Northwood Asset Management Group

Located in Buffalo, N.Y., Northwood Asset Management Group is a nationally licensed third-party debt collection company that strives to deliver professional and reliable debt recovery solutions that assist consumers and creditors with achieving a favorable resolution. The company is committed to delivering services with professionalism, respect, and complete compliance. 

On Monday, the Ninth Circuit Court of Appeals issued an order certifying a question to the Nevada Supreme Court. What did the Ninth Circuit inquire about? Whether or not, under Nevada law, a Fair Debt Collection Practices Act (FDCPA) claim is a compulsory counterclaim in a collection lawsuit. If Nevada answers in the affirmative, debt collection law firms might see a drop in FDCPA suits, at least in Nevada.

Background: What Spurred the Question?

It all started with a medical debt owed by the consumer. In the agreement for medical services, the consumer agreed to be financially responsible for amounts not covered by insurance and, if the service provider needs to place the account with a collection agency, he would be responsible for any collection/legal fees.

Eventually, the consumer’s debt became delinquent and the medical service provider placed the account with a debt collector. The debt collector filed a suit against the consumer in Nevada state court to collect the amount owed, including the collection/legal fees. The consumer failed to appear in the action so the court entered a default judgment against him. 

Five months later, the consumer filed an FDCPA suit against both the debt collector and the doctor in federal court. The consumer alleged three violations of the statute: the addition of collection fees; that the affidavit submitted by the doctor misrepresented the amount due because it included the collection fees; and that the debt collector failed to provide him a compliant validation letter. 

The district court dismissed the FDCPA suit, finding that the consumer’s claims were barred by claim preclusion because they “bore a logical relationship to the transaction underlying the state court debt collection action, making them compulsory counterclaims in the state court action.” 

The consumer appealed and the Ninth Circuit stayed the matter to ask the Nevada Supreme Court if, under Nevada law, the FDCPA claim was a compulsory counterclaim.

So What, Exactly, is a Compulsory Counterclaim?

Before we discuss compulsory counterclaims, let’s go back a little and discuss counterclaims in general. This is best explained with an example. Let’s say John sues Jane. If Jane has any claims that she can bring against John, she can bring these claims within the same court case in order to get all of these matters resolved at once. This prevents Jane from having to file a separate lawsuit against John.

While not all counterclaims are compulsory, a compulsory counterclaim must be brought within that same action. This occurs when the two claims are so interweaved—arising from the same transaction or occurrence, meaning they share a lot of the same facts—that, for the sake of judicial economy, the courts require the parties to litigate both claims at the same time. If the defendant does not bring the compulsory counterclaim in the same action, it is deemed waived and the defendant will not be allowed to bring the claim again in a future lawsuit. This is a legal doctrine called claim preclusion, or res judicata.

What This Means for the ARM Industry

If Nevada finds that FDCPA claims are not compulsory counterclaims in a collection lawsuit, then everything goes on as usual. However, if Nevada states that an FDCPA claim is a compulsory counterclaim, this could restrict some litigation liability for debt collection firms. In other words, if the consumer does not bring the FDCPA issue as a counterclaim in the collection lawsuit, then that FDCPA claim would be barred by claim preclusion. Since this is state-specific, this decision will only impact Nevada. Depending on each state’s civil litigation procedures for claim preclusion, this may or may not apply elsewhere as well.

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Want to search for other cases where claim preclusion/res judicata applies for FDCPA suits? You can do so through iA’s Case Law Tracker, which allows you to conduct incisive and quick legal research in less time than it takes to pour your morning cup of coffee.

This afternoon, by a vote of 429-3, the House of Representatives overwhelming approved the Stopping Bad Robocalls Act, H.R. 3375, as reported by the House Energy and Commerce Committee. The House acted by voting on a motion to suspend the House rules and pass the bill. Prior to the vote, Chairman Frank Pallone (D-NJ) and various other Members supporting the bill participated in a 40-minute session filling the record with the reasons why the Members of the House should vote in favor of the bill.

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Next step is a conference with the US Senate, which earlier this year passed the narrower-in-scope TRACED Act, S. 151. Senator John Thune (R-SD), lead sponsor of that effort, reportedly indicated today he sees “a path forward for a ‘fairly straightforward conference’ now that the ‘bills are starting to get closer.’”

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Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved. 

Last week, the Consumer Financial Protection Bureau (CFPB) issued a report on the collection practices of third-party debt collectors. The report outlines the rise and fall of debt collection tradelines on credit reports over the past 15 years.

Categories: Buyer and Non-Buyer Tradelines

The report breaks down third-party collections tradelines into two categories: non-debt buyer third-party debt collection (in other words, collecting on behalf of the original creditor) and debt buyer third-party collections. One primary difference noted in the report about these two categories is the type of debt that underlies the reported tradelines. Debt buyers primarily reported on banking, retail, and financial debt, while a majority (although just barely) of non-buyer reporting was on medical debt.

Trends in Third-Party Debt Collection Credit Reporting

Overall, the number of debt collection tradelines saw a steep rise between 2004 and 2009 and remained at a high level until about 2014. After that, the trend saw a sharp decline through Q2-2018, the end of the report’s sample period.

Breaking this data into the two categories (buyer and non-buyer third-party collection tradelines), the chart looks as follows:

The CFPB’s explanation:

These data may reflect changes in the number of collection accounts being handled by buyers and non-buyers; the increases observed through 2012 for non-buyers and 2009 for buyers is consistent with the fact that during and after the Great Recession, an increasing share of consumers fell behind on their bills. These data may also reflect changes in the practice of furnishing information on such accounts.

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insideARM Perspective

Let’s stew on that final sentence—that these trends may reflect changes in the practice of furnishing information by third-party debt collectors. This could be due to multiple factors, which just so happen to have occurred right around when the trends in credit reporting began falling. The steady increase in FCRA lawsuits since 2011 increases the legal liability to debt collectors for furnishing data. Notice that around 2011 is where the buyer trend starts to fall. In 2016, the credit bureaus issued process changes for furnishing data, including prohibitions on reporting medical debt accounts less than 180 days old. Not surprisingly, the trend for non-buyer third party collection tradelines, which are two-thirds healthcare accounts, began its decline right around then.

And, of course, how can we talk about trends in debt collection credit reporting without discussing the issue of credit repair organizations like Lexington Law sending mass disputes to debt collectors? The credit repair practice of mass disputes significantly increases the compliance and investigation costs of credit reporting to third party debt collectors. Since credit reporting is not required, some collectors are opting out of furnishing data. 

While some might tout the decline in reported debt collection accounts, it causes a larger issue in the consumer finance lifecycle and, ultimately, will impact access to credit.

Sometimes losing summary judgment comes with a silver lining.  Last August, the court in Tillman v. Hertz Corp., 2018 U.S. Dist. LEXIS 147945 (N.D. Ill. Aug. 29, 2018) denied defendant’s motion for summary judgment, but in doing so, the court noted that it was “highly unlikely” that a class could be certified because of the predominance of individual issues of fact concerning consent and revocation.  Notwithstanding plaintiff’s efforts to amend her complaint and revise her class definition, this past week, the court granted defendant’s motion to strike the class allegations, finding that plaintiff had not rectified the individual issues of fact previously identified by the court as precluding class certification.

This case involved calls made by the defendant rental car company when plaintiff’s mother failed to timely return the car.  Plaintiff claimed, among other things, that the defendant continued to call her after she had revoked consent.   Defendant moved for summary judgment, which the court denied finding that taking plaintiff’s version of the facts as true at the summary judgment stage, plaintiff’s revocation was reasonable.  However, the court was skeptical about whether a class could be certified because of the individual issues of fact regarding consent and revocation.  In response to the court’s skepticism, plaintiff amended her complaint and class definition to include only noncustomers who received calls from defendant after a request to stop calling was made by the noncustomer.  Defendant then moved to strike the class allegations.

The court granted defendant’s motion.  First, the court found that “[n]umerous contested facts peculiar to this case destroy any notion of adequacy and typicality,” including the type of agreement executed in connection with the rental, the type of calls made, and whether and how plaintiff revoked the consent given by her mother.  In addition, the court found a lack of predominance of common questions of fact.  “Whether a ‘request to stop calling’ was made is a question of fact that will need to be litigated with respect to each class member in the class.”  Further, the court found that the prospect of conducting mini-trials for each class member destroyed any notion that a class action is superior.

As those of us here at TCPAWorld know all too well, issues of consent and revocation often create disputed issues of fact that preclude summary judgment.  But it is those same disputed issues of fact that help defeat class certification.  Thus, in those cases, you sometimes lose the summary judgment battle, only to win the class certification war. 

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Editor’s note: This article is provided through a partnership between insideARM and Squire Patton Boggs LLP, which provides a steady stream of timely, insightful and entertaining takes on TCPAWorld.com of the ever-evolving, never-a-dull-moment Telephone Consumer Protection Act. Squire Patton Boggs LLP—and all insideARM articles—are protected by copyright. All rights are reserved. 

Editor’s Note: This article was originally published on the Maurice Wutscher blog and is republished here with permission.

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In determining the legal standard for holding a creditor in civil contempt for attempting to collect a debt in violation of a bankruptcy discharge order, the Supreme Court of the United States adopted an “objectively reasonable” standard, and held that a court may hold a creditor in civil contempt if there is “no fair ground of doubt” as to whether the order barred the creditor’s conduct.

Accordingly, the Supreme Court reversed the Ninth Circuit’s ruling, which had applied a subjective standard for civil contempt.

A copy of the opinion in Taggart v. Lorenzen is available here. 

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What Happened: Procedural Back-and-Forth Between Courts

The bankruptcy debtor formerly owned an interest in an Oregon company.  The company brought a lawsuit in Oregon state court claiming that the debtor had breached its operating agreement.

Before trial, the debtor filed for bankruptcy under Chapter 7 of the Bankruptcy Code.  Thereafter, the bankruptcy court issued a discharge order stating that the debtor “shall be granted a discharge under § 727.”

As you will recall, Section 727 provides that a discharge relieves a debtor “from all debts that arose before the date of the order for relief,” “[e]xcept as provided in section 523.”  Section 523 then lists in detail the debts that are exempt from discharge.

After the discharge order was issued, the Oregon state court proceeded to enter judgment against the debtor.  The company then filed a petition in state court seeking attorney’s fees that were incurred after the debtor filed his bankruptcy petition.

All parties agreed that under the Ninth Circuit’s decision in In re Ybarra, 424 F.3d 1018 (2005), a discharge order would normally discharge postpetition attorney’s fees stemming from prepetition litigation unless the discharged debtor “returned to the fray” after filing bankruptcy.

The company argued that the debtor had “returned to the fray” postpetition and was therefore liable for the postpetition attorney’s fees that the company sought to collect.  The state court agreed and awarded the company its postpetition attorney’s fees.

The debtor then returned to the bankruptcy court and argued that he had not returned to the “fray” under Ybarra, and that the discharge order therefore barred the company from collecting postpetition attorney’s fees.  The debtor requested that the court hold the company in civil contempt for violating the discharge order.

However, finding no violation of the discharge order, the bankruptcy court refused to hold the company in civil contempt.

The debtor appealed to the district court, which held that he had not returned to the fray, and therefore concluded that the company had violated the discharge order by trying to collect attorney’s fees.  The district court then remanded the matter back to the bankruptcy court.

On remand, the bankruptcy court held the company in civil contempt.  In doing so, it applied a standard likened to strict liability.  Specifically, the bankruptcy court determined that civil contempt sanctions were appropriate because the company had been “aware of the discharge” order and “intended the action which violate[d]” it.  The court awarded the debtor approximately $105,000 in attorney’s fees and costs, $5,000 in damages for emotional distress, and $2,000 in punitive damages.

The company appealed, and the Bankruptcy Appellate Panel vacated the sanctions, and the Ninth Circuit affirmed the panel’s decision.  In reaching its decision, the Ninth Circuit applied a different standard from the bankruptcy court, concluding that a “creditor’s good faith belief” that the discharge order “does not apply to the creditor’s claim precludes a finding of contempt, even if the creditor’s belief is unreasonable.”

Because the company had a “good faith belief” that the discharge order did not apply to its claims, the Ninth Circuit held that the civil contempt sanctions were improper.

The debtor then filed a petition for certiorari, which was granted.

U.S. Supreme Court Decision

Initially, the Supreme Court noted that “[t]he question before us concerns the legal standard for holding a creditor in civil contempt when the creditor attempts to collect a debt in violation of a bankruptcy discharge order.”

In determining the answer to the question, the Court analyzed two bankruptcy code provisions.  First, section 524, which provides that a discharge order “operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset” a discharged debt.  Second, section 105, which authorizes a court to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.”

After reviewing these provisions, the Court determined that they “authorize a court to impose civil contempt sanctions when there is no objectively reasonable basis for concluding that the creditor’s conduct might be lawful under the discharge order.”

The Court further observed that in cases outside the bankruptcy context, it has said that civil contempt “should not be resorted to where there is [a] fair ground of doubt as to the wrongfulness of the defendant’s conduct.”

Moreover, this standard reflects that civil contempt is a “severe remedy,” and that principles of “basic fairness requir[e] that those enjoined receive explicit notice” of “what conduct is outlawed” before being held in civil contempt.

Thus, “[t]his standard is generally an objective one.”  However, subject intent is not always irrelevant, and “civil contempt sanctions may be warranted when a party acts in bad faith.”

After analyzing these traditional civil contempt principles, the Court noted they “apply straightforwardly to the bankruptcy discharge context.”  Thus, “[u]nder the fair ground of doubt standard, civil contempt . . . may be appropriate when the creditor violates a discharge order based on an objectively unreasonable understanding of the discharge order or the statute that govern its scope.”

The Court, therefore, held: “[A] court may hold a creditor in civil contempt for violating a discharge order if there is no fair ground of doubt as to whether the order barred the creditor’s conduct.  In other words, civil contempt may be appropriate if there is no objectively reasonable basis for concluding that the creditor’s conduct might be lawful.”

Because the Ninth Circuit erred in applying a subjective standard for civil contempt, its judgment was vacated and the matter was remanded.

MINNEAPOLIS, Minn.―In recognizing the outstanding organizations and individuals who have demonstrated excellence in the accounts receivable management industry, ACA International awarded Wendy Badger, vice president, corporate compliance and chief compliance officer with ECMC Group in Minneapolis, with the James K. Erickson Continuous Service Award. The award was presented during ACA International’s 2019 Convention & Expo in San Diego. 

The James K. Erickson Continuous Service Award is presented to a distinguished ACA member who has made significant contributions to the association in each of the last 10 consecutive years. 

“As a world-class trade association representing the accounts receivable management industry, ACA international relies heavily on the volunteer spirit and dedication of members like Wendy Badger,” ACA International CEO Mark Neeb said.  “Our annual awards celebration is aimed at recognizing association members who have embraced our mission to educate, advocate and promote the accounts receivable management industry as a necessary part of a healthy economy. Wendy embodies all of these qualities and represents the best of the industry.” 

Badger is a nationally acclaimed authority on the Fair Debt Collection Practices Act, the Fair Credit Reporting Act, the Health Insurance Portability and Accountability Act, the Gramm-Leach Bliley Act and their implementing regulations.  She has been recognized with numerous honors and awards, such as the Members’ Attorney Program Designation, twice listed in the “Most Influential Collection Professionals” by Collection Advisor magazine and received the ACA International Charles F. Lindemann Certified Instructor of the Year award.  Badger is a Certified Compliance and Ethics Professional (CCEP). She is a regular presenter at industry events, has conducted continuing education seminars, and published numerous articles. 

“I am honored to accept the James K. Erickson Continuous Service Award. It is humbling to be nominated and recognized by my industry peers; I am grateful for and indebted to all those who have helped and guided me throughout my career,” Badger said. 

Badger’s peers frequently praise her passion for mentoring others and helping them enhance their compliance programs. In addition, she has helped craft talking points and draft language for ACA members to present to their state and federal representatives on issues of industry-wide significance. 

She earned her BA (magna cum laude) in political science from the University of St. Thomas and a Juris Doctorate (cum laude) from Mitchell Hamline School of Law.