Court of Appeals Case Addresses Debt Collection Class Actions


Can debtors file class action lawsuits against debt collection companies for fraudulent or abusive debt collection practices? It is a question that has not yet been settled, but a recent case out of the federal U.S. Court of Appeals for the Third Circuit Court suggests that class actions may be appropriate for certain claims. While residents of Oak Park and other parts of Illinois are not directly affected by a Third Circuit decision—Illinois courts are bound by the U.S. Court of Appeals for the Seventh Circuit Court—the recent case could prove to be persuasive for other federal courts in Illinois and across the country. As such, it is important for anyone in Chicagoland to learn more about the case and its implications for consumer rights.
Federal Court Revives Proposed Class Action
According to a recent report from Reuters, the Third Circuit “revived a proposed class action accusing Portfolio Recovery Associates LLC (PRA), a large debt buyer, of waiting too long to collect debts from people who live outside Delaware.” A lower court previously ruled against the debtors seeking to file a class action lawsuit, but the federal appeals court overturned that ruling.
What are the details of the case? An article in the New Jersey Law Journal explains that the case concerned a Delaware statute of limitations provisions and it application to out-of-state debtors. Specifically, PRA argued that the Delaware tolling statute should apply to residents of other states who agreed to Delaware law in contracts with creditors. The underlying question here was whether a debt collector could still attempt to collect from consumers based on one state’s tolling statute (which stopped the statute of limitations period from running) when those consumers live outside that state. The consumers in this case argue that, as residents from another state, the statute of limitations had run on the debts and PRA was not permitted to continue to attempt to collect.
According to Judge Luis Felipe Restrepo, who wrote the Third Circuit opinion, “for decades, the Delaware tolling statute has abrogated the state’s statute of limitations only as to defendants not otherwise subject to service of process.” Restrepo went on to explain that the Court “heard no evidence that the Delaware Legislature intended to export the state’s tolling statute into out-of-state forums so as to substantially limit the application of the Delaware statute of limitations.”
Understanding the Implications of the Ruling and Class Action Claims
As we mentioned, while the Third Circuit ruling is not binding outside the region, it nonetheless may set the tone for other courts considering issues of tolling statutes and class action lawsuits. Other federal courts could consider this ruling to be persuasive and could decide similarly in other related cases.
The ruling is a powerful one for consumers. In addition, given that class action lawsuits allow many consumers who have been harmed to file a claim against a debt collector, the ruling also underscores the importance of class action lawsuits for consumer protection. As a quick introduction to class action lawsuits, the Cornell Legal Information Institute (LII) defines a class action as “a procedural device that permits one or more plaintiffs to file and prosecute a lawsuit on behalf of a larger group, or ‘class.’” Through class action claims, hundreds of plaintiffs can seek relief in court, which they might otherwise be unable to do but for being a member of the class.
Seek Advice from an Oak Park Consumer Protection Lawyer
If you believe a debt collection company has harmed you through unfair and unlawful debt collection practices, you should speak with an Oak Park consumer protection attorney about your case. Contact the Emerson Law Firm to get started.
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