A Chicago attorney who has filed at least six federal class-action lawsuits alleging collections companies engaged in “forum shopping” in Marion County Small Claims Courts said the practice appears to be continuing despite township court reforms announced last year.
Daniel Edelman of Edelman Combs Latturner & Goodwin LLC has brought the suits in the U.S. District Court for the Southern District of Indiana. The suits allege that collections companies engaged in practices of filing actions in a particular township court against defendants who neither lived in the township nor signed contracts in the townships where the collections actions were filed.
New small-claims court rules were announced in October and take effect in March, though courts have already implemented some of the changes.
“I have been informed of instances (of forum shopping) by various local attorneys,” Edelman said. He said it wasn’t clear whether new rules for township courts have had an impact on forum shopping.
“Our viewpoint was forum shopping could have been prohibited all along. All that was necessary was to enforce the federal restriction,” Edelman said.
The suits filed by Edelman are brought under the Fair Debt Collection Practices Act. The act allows class-action suits that may recover a maximum of actual damages suffered by class members plus the lesser amount of 1 percent of the net worth of defendants or $500,000. Individual litigants may recover up to $1,000 plus actual damages.
Settlements are pending court approval in two suits. Under terms of one proposed settlement, allegations of forum shopping would cost one set of defendants $43,000 in damages plus payment of plaintiffs’ legal fees. Another collections defendant would pay just over $2,700 in damages and $7,000 in attorney fees and costs.
The more sizeable proposed settlement is in Richard O. Bovey v. Medshield Inc., Jacob, Hammerle & Johnson, LLC, Derek F. Johnson, Jeffrey S. Jacob and Christopher Hammerle, 1:12-CV-728-DML. Richard Bovey’s suit alleges he is a Lawrence Township resident who incurred a medical debt in that township but was sued in Decatur Township.
The proposed settlement filed Jan. 17 calls for payment to anyone sued by any of the defendants in this case in a Marion County Small Claims Court from May 25, 2011, to June 8, 2012. According to the proposed settlement, Bovey will receive $4,500; four additional plaintiffs will receive $1,000 each; and $21,000 will be paid to a class fund. The settlement stipulates that the class fund represents 88 percent of the possible recoverable amount.
Defendants in Bovey identified about 7,100 class members. Plaintiff’s counsel estimates 10 percent of class members will submit a claim, in which case the payment per claimant would be about $30. The settlement includes plaintiff’s attorney fees and costs totaling $13,500.
In Theon C. Parker v. Inland Collection Services, 1:12-CV-924-TAB, the defense proposes to settle with 29 class members defined as those Inland Collection Services sued in a Marion County Small Claims Court between July 8, 2011, and Oct. 5, 2012. Theon Parker’s suit alleges that he is a resident of Hendricks County who was sued for a medical debt incurred in Pike Township, but the matter was filed in Decatur Township.
Under the proposed settlement filed Jan. 16, Parker and another named plaintiff would receive $1,000 each and the class members would be mailed checks in the amount of about $27 from a class fund of $729. The proposed class fund represents 100 percent of the possible recoverable amount under FDCPA. Defendants also would pay $7,000 in attorney fees and costs.
Edelman has brought similar actions involving collections filings in Franklin, Perry and Pike township courts.
Attorney Peter Velde of Kightlinger & Gray LLP in Indianapolis defended both suits in which settlement offers are pending as well as two other FDCPA actions brought by Edelman’s firm. Velde declined to comment on the pending settlements or similar litigation.
Defendants in both settlement proposals deny liability.•