FCRA Class Action Review – 2025

dismiss the breach of contract claim, asserting that it did not authorize Nationstar to charge the fees, that it is a government entity protected by the Merrill doctrine established in Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380 (1947), which shields federal instrumentalities from liability for the actions of their agents, and that the plaintiffs failed to adequately plead a breach of contract claim. Freddie Mac argued that the Merrill doctrine prevented it from being vicariously liable for the alleged illegal fees charged by Nationstar, as it did not directly approve the charges. The plaintiffs asserted that the Merrill doctrine was not applicable, as it is limited to equitable estoppel claims, and therefore did not apply because they did not voluntarily enter into a contract with Freddie Mac. The plaintiffs also argued that Freddie Mac ratified Nationstar’s actions by not preventing the fees or responding to complaints. The court agreed with Freddie Mac’s argument and concluded that the Merrill doctrine applied. The court found that the plaintiffs had not adequately pleaded facts to show that Freddie Mac authorized the charges or that its inaction amounted to ratification. For these reasons, the court granted Freddie Mac’s motion to dismiss. Two widowed octogenarians in Calogero, et al. v. Shows, Cali & Walsh, L.L.P., 95 F.4th 951 (5th Cir. 2024), filed a class action alleging that the defendant law firm violated the FDCPA by sending them unlawful collection letters. The district court granted summary judgment to the defendant. On appeal, the Fifth Circuit reversed and remanded the district court’s ruling. The plaintiffs’ allegations concerned the “Road Home” grant program, which was established to aid homeowners affected by Hurricanes Katrina and Rita. Id. at 955. The plaintiffs applied for and received Road Home grants in 2007 after their homes were devastated by Hurricane Katrina in 2005. They allegedly failed to disclose repair benefits they received from the FEMA and private insurance carriers in 2005, which allegedly resulted in overpayments. The defendant thereafter sent letters demanding repayment of the alleged overpayments from the Road Home program and threatened legal action if the debts were not repaid within 90 days. The plaintiffs alleged that the letters violated the FDCPA by attempting to collect time-barred debts, mischaracterizing the debts, and threatening to assess attorneys’ fees without a lawful basis. The Fifth Circuit agreed that the letters misrepresented the judicial enforceability of the time-barred debts by threatening legal action without acknowledging the potential limitations period. The Fifth Circuit also found that the letters mischaracterized one of the plaintiff’s debts by inaccurately presenting the amount owed and including an unjustified penalty. Finally, the Fifth Circuit determined that the letters threatened to collect attorneys’ fees without a lawful basis, as the relevant contracts did not authorize fee-shifting against the widows. For these reasons, the Fifth Circuit held that these a reasonable jury could find that the plaintiffs did have Article III standing under the FDCPA. Id. at 959. Therefore, the Fifth Circuit reversed and remanded the district court’s ruling for further proceedings. In Velez-Ortiz, et al. v. Del Valle Rodriguez Law Offices, 2024 U.S. Dist. LEXIS 18269 (D.P.R. Jan. 25, 2024), the plaintiff filed a class action alleging that the defendant, a law office, sent her a debt collection letter that violated the FDCPA. The defendant filed a motion to dismiss pursuant to Rule 12(b)(1) for lack of standing. The plaintiff contended that she endured tangible and intangible injuries from the defendant’s actions, including medical expenses, loss of work days, late fees, reputational harm, and emotional distress. The defendant stated that the plaintiff did not establish standing because she had not paid any debt or suffered specific damages. The court ultimately found that the plaintiff had sufficiently alleged both tangible and intangible injuries to establish standing. The court reasoned that the plaintiff’s alleged economic losses, including medical expenses and loss of work days, were recognized as concrete injuries sufficient to establish standing. Additionally, the court found that intangible harms like reputational damage and invasion of privacy also conferred standing if they were closely related to economic harms. For these reasons, the court concluded that the plaintiff had standing to bring her claims, and denied the defendant’s motion to dismiss. IX. Key Class Certification Rulings Under The FDCPA And FACTA The plaintiffs in Vanderkodde, et al. v. Elliott, P.C., 2024 U.S. Dist. LEXIS 39000 (W.D. Mich. Mar. 1, 2024), filed a class action alleging that the defendant, acting on behalf of debt buyers LVNV Funding, LLC and Midland Funding, LLC, violated consumer protection laws when it engaged in its debt collection processes. Specifically, the plaintiffs contended that the defendants improperly calculated post-judgment interest rates when filing writs of garnishment in state courts, which led to collection proceedings from the plaintiffs that exceeded what was legally owed under Michigan law. The plaintiffs filed a motion for class certification. Specifically, the plaintiffs asserted that by seeking and collecting excess interest, the defendants violated the FDCPA and related Michigan state laws. The plaintiffs sought certification of two classes and two sub-classes. The first class was

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