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Ruling may expedite demise of Marion County township venues

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Marion County’s unique township small claims courts may be on the verge of extinction, hastened by a game-changing ruling this month by the full 7th Circuit Court of Appeals.

“The message here is that venue abuse and forum shopping are something the federal courts take seriously, and it can get expensive if you don’t comply,” said Daniel Edelman, a Chicago attorney who successfully challenged dismissal of a federal lawsuit over Marion County’s township courts.

At issue is the jurisdiction of those courts – whether the township courts may hear debt-collection disputes arising anywhere in Marion County or whether the dispute must have a basis to be heard in a particular township court.

SmallClaims-1-15col.jpg A case from Pike Township Small Claims Court in Marion County was at the center of a 7th Circuit Court of Appeals decision that aimed to discourage “forum shopping” by debt collectors. (IL Photo/Eric Learned)

The 7th Circuit ruled en banc in Mark Suesz v. Med-1 Solutions LLC, 13-1821, that “judicial districts” for Marion County small claims matters are the designated township courts under the Fair Debt Collection Practices Act. The result was a reversal of a prior three-judge panel ruling in this case, and the full court also overturned its precedent of Newsom v. Friedman, 76 F.3d 813 (7th Cir. 1996).

In a holding applying to thousands of pending cases, the 7th Circuit majority found the intent of the FDCPA would not be served unless the township courts were recognized as judicial districts. That means collections suits must either name defendants who live in the township or be filed in the township where transactions occurred.

Critics said large-volume debt-collection filers brought their cases in township courts deemed friendlier to collectors, putting defendants at a disadvantage. The 7th Circuit largely agreed. Jeff Boulden, a former legal aid attorney who documented abusive practices in some of the township courts, called the ruling “a clear victory for debtors” protected by the FDCPA.

Attorneys representing debt collectors say the ruling is likely to accelerate a shift they’ve already seen, with more matters filed directly in Marion Superior Court despite higher filing fees.

“There’s a big risk to an attorney by filing in the wrong township,” said Fred Pfenninger of Pfenninger & Associates in Indianapolis. Suits filed in the wrong township court now could expose attorneys to fines of $1,000 per violation under the FDCPA.

Allegations of forum abuse were at the center of a 2012 report issued by a task force that studied Marion County’s small claims courts and recommended reforms. Court of Appeals Judge John Baker co-chaired the task force and said he will ask lawmakers to overhaul the system.

rosenberg-louis-mug Rosenberg

Baker said the 7th Circuit’s ruling was coincidental to the work he’s been doing on small claims reform. “The 7th Circuit has judicially recognized the same shortcomings we have discovered,” he said, noting the opinion repeatedly cited the task force report co-authored by Court of Appeals Senior Judge Betty Barteau.

“We’re at the point in time where anybody who looks at this even from within has to take notice of the deficiencies that were discovered and the inequities,” he said.

Baker said Indiana Chief Justice Brent Dickson asked him to prepare legislation for the upcoming session of the General Assembly that would incorporate the township courts into Marion Superior Court – “Option A” from the task force report. Though details are still being developed, Baker said the proposal, if adopted, would essentially do away with township small claims courts.

He predicts that the proposal will be forwarded to Dickson in the next couple of weeks and then be submitted to Judiciary Committee leaders at the Statehouse. “We’re not going to hide the ball,” Baker said, though he acknowledged the likelihood that township judges and officials will resist changing a system that delivers millions of dollars annually to the nine localities within Marion County. Those fees instead would go to the county if small claims cases were moved to Superior Court.

In Suesz v. Med-1, the 7th Circuit remanded to the federal court in Indianapolis, where Edelman will seek class certification for as many as 3,633 plaintiffs who may have been sued in the wrong judicial district. The lead plaintiff was a Hancock County resident sued for a debt owed in Marion County’s Lawrence Township. The suit was filed in Pike Township.

Pike Township Judge A. Douglas Stephens said the ruling was surprising because it overturned so much precedent. Nevertheless, he said, “Most filers changed their practices at the first of the year and they are consistent with what this opinion says anyway.”

Stephens said the decision won’t entail greater scrutiny of filings by clerks to ensure proper venue – that’s a risk plaintiffs take when they file.

baker-john-g-mug Baker

As for potentially doing away with township courts, Stephens said, “We’ve heard that the last six years,” and that any such move would necessarily entail a comprehensive discussion of township government.

Meanwhile, Edelman believes the ruling also will apply to other forum-shopping cases in which he’s pursuing a certification of classes on behalf of Marion County small claims litigants.

Marion Circuit Judge Louis Rosenberg, who has statutory authority to oversee the small claims courts, thinks the U.S. Supreme Court might review the 7th Circuit’s ruling in Suesz.

“It’s a pretty divided Circuit,” Rosenberg said of the majority opinion co-authored by Circuit Judges David Hamilton and Richard Posner and joined by five jurists, along with a concurring opinion from Judge Diane Sykes. Judges Joel Flaum and Michael S. Kanne dissented.

Rosenberg said the concurring opinion takes the position that the majority may have gone too far in terms of remedies available under the FDCPA. The ruling also presents the issue of how the Supremacy Clause relates to state statutes concerning jurisdiction and venue. Federal courts typically have been deferential to state statutes governing jurisdiction, he said.

“That may be the issue on which the case will be appealed,” he said.

Med-1 didn’t rule out seeking an appeal to the U.S. Supreme Court. “We continue to review all our available appellate options. Unfortunately, we cannot comment more, as this case is still ongoing,” Med-1 attorney and chief compliance officer Francis R. Niper said in a statement.

“We are disappointed that the 7th Circuit has decided to reverse itself in its recent decision. We have, of course, abided by this change in the law, and will continue to do so going forward. We note that this decision creates additional confusion and conflicts with the Marion County Small Claims rules, as they were recently amended.”

But anecdotal evidence suggests filers already may have decided to change venue. Rosenberg said that through March of this year, total filings across all small claims courts were down about 20 percent, though it’s difficult to assess whether that’s due to a shift in where debt cases are filed. He noted the decline is an acceleration of a reduction in filings in recent years.

Pfenninger said the ruling will create a hardship for lawyers who filed collections cases in a particular court for reasons of convenience. “The (7th Circuit) seeks to impose a problem that many collections attorneys familiar with the system don’t believe exists,” he said.

He noted that a similar situation exists in Lake County, where 10 city and town courts hear small claims matters that may arise anywhere in the county. “The question is, how is that different?”

It may not be. In the opening paragraphs of Suesz, the majority held that its ruling “has significant consequences not only for consumer debtors and debt collectors in Marion County but also for parties to debt-collection suits in other court systems that, depending on the answer to the interpretive (jurisdiction) question, may be vulnerable to abusive forum-shopping by debt collectors.”

Rosenberg said one result of the ruling will be increased paranoia among debt collectors as to how courts will interpret jurisdiction. “The paranoia may be justified,” he said.•

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  • Significant Victory For Consumers!
    The 7th Circuit's decision in Suesz is not just a key win for consumers who live in and/or transact business in Marion (and Cook County, IL). As I publicized in "The Poplicola Report On The Marion County Small Claims Courts" (published July, 2013) thousands of consumers from across the nation have, over the years, been sued in Marion County Small Claims Courts, despite the fact that they never lived, nor signed contracts in Marion County. Thousands of consumers who were unable to travel to Indianapolis to defend themselves had Default Judgments entered against them. Many were then subjected to Proceedings Supplemental that frequently saw wages garnished and/or bank accounts frozen. Suesz will likely put an end to these abusive practices as well. This decision is a vindication of consumers' rights to have an 'opportunity to be heard' in suits filed against them.

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  1. Applause, applause, applause ..... but, is this duty to serve the constitutional order not much more incumbent upon the State, whose only aim is to be pure and unadulterated justice, than defense counsel, who is also charged with gaining a result for a client? I agree both are responsible, but it seems to me that the government attorneys bear a burden much heavier than defense counsel .... "“I note, much as we did in Mechling v. State, 16 N.E.3d 1015 (Ind. Ct. App. 2014), trans. denied, that the attorneys representing the State and the defendant are both officers of the court and have a responsibility to correct any obvious errors at the time they are committed."

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  3. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  4. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  5. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

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