Chicago Business Litigation Lawyer Blog

Our Chicago, Naperville, Wheaton and Oak Brook business trial lawyers won an important procedural victory in a business dispute involving a closely held business. In short, we were able to convince an Illinois trial court that an attorney's appearance should be stricken after being added to a case, we argued, because it appeared the new attorney could have been added to force the recusal of the judge, the attorney's former law partner.

The underlying case was a high-stakes financial dispute in a closely held business. It had been litigated for six years, but was delayed when the defendants added a new lawyer to their team. This lawyer was the former law partner of the judge assigned to the case, who had already put substantial time and effort into the matter. However, to avoid any appearance of impropriety, the judge immediately recused himself when the new lawyer, the former partner, was added. Our position was that it could appear that this was precisely what the defense had intended. In fact, the new lawyer was added two days after three rulings on motions that the new judge called "hotly contested," including rulings unfavorable to the defense.

Another attorney for the defense was a recognized expert in legal ethics, we argued, so the defense clearly must have known that the judge might recuse himself. Furthermore, the defense admitted that it had discussed the possibility of recusal with the client. And finally, the new lawyer had chosen what we alleged was a non-standard way to notify the court of his addition. Rather than asking for leave of court to move for the addition, which would have allowed the parties to discuss the addition in open court, he simply sent his appearance directly to the judge. The trial court held this was contrary to both the rules of court and the usual practice. All of this showed that it appeared that the attorney might have been added to force a change of judges, we argued. For those reasons, we moved to disqualify the new attorney.

In response to our motion, the Presiding Judge of the Cook County Chancery Division struck the new attorneys appearance in a detailed decision explaining that it was important to protect the Cook County Chancery Court from the stain of even the appearance of improriety. The Judge wrote:

The fact remains that [the new lawyer's] filing of his appearance for the defendants two days after rulings on three hotly contested motions (including significant rulings adverse to defendants), the filing of that appearance without leave of court and without prior notice to the plaintiffs, and the sending of the appearance by messenger directly to [the first judge] when the next court date was scheduled within a few weeks, with the result being the immediate recusal of the judge, just simply looks bad.

You can view the full opinion by clicking here.

As business trial attorneys in Naperville, Oak Brook, Wheaton and throughout the Chicago area, we have found that Illinois judges have a low tolerance for even the appearance of impropriety. If you are part of a business dispute where you feel "pushed around" by the other side's discovery violations or other behavior that appears intended to slow justice, DiTommaso * Lubin can help. Please contact us to learn more about your rights.

To see more about our firm and the cases we have handled click here.

Posted by Peter S. Lubin and Vincent L. DiTommaso | Permalink | Email This Post

Posted In: Breach of Fiduciary Duty , Closely Held Businesses , Shareholder Freeze Out

Bookmark:

A consumer fraud case here in Chicago met an interesting end in late September. In Trujillo v. Apple Computer, No. 07 C 4946, 2008 WL 4368937 (N.D.Ill., Sept. 22, 2008) lead plaintiff Jose Trujillo filed a proposed class action against Apple and AT&T Mobility, the iPhone's service provider. Trujillo contended that Apple and AT&T did not disclose a de facto service fee of $79 plus shipping for the iPhone's battery, which must be replaced after 300 charges. That claim failed when the U.S. District Court for the Northern District of Illinois granted summary judgment to Apple and AT&T on Sept. 23 on the merits of Trujillo's claims. However, as Chicago, Naperville and Oak Brook consumer rights and consumer fraud attorneys, we are very interested in a decision from the same court on the day before handing a victory to consumers. The court decided to not compel the mandatory binding arbitration required in Trujillo's contract with AT&T, finding that contract procedurally unconscionable under Illinois state law.

According to court documents, AT&T was the only wireless phone carrier for the iPhone when Trujillo purchased the phone in 2007. (Without a service provider, the iPhone's telephone function will not work.) Trujillo activated a service plan with AT&T online, through Apple's iTunes software, which directs the user to AT&T's Web site. In order to sign up, the user must click a box indicating that he or she has read and agrees to AT&T's service agreement. The service agreement is many pages, and in fact, displays as multiple separate pages on AT&T's Web site. If the user does not check the box indicating that he or she has read this agreement, that user cannot sign up and will not have access to all of the iPhone's functions.

In court papers filed earlier in the case, AT&T argued that Trujillo had the opportunity to read the service agreement when he signed up for service through iTunes. It also said he had access to the service agreement before this, in two separate ways: in paper booklets at the Apple store and online, on the AT&T Wireless Web site. But in later supplementary papers, it admitted that neither of those statements was true. The paper booklets, it turned out, were not available in the Apple store, though they may have been available in an AT&T store that Trujillo later visited to have a credit check done. The court's opinion also noted that a footnote in the new papers said the applicable terms of service were not available online after all, though an obsolete version was available through the Web site's search function. The true terms of service were available when Trujillo signed up through iTunes, it said, but in a small window, with the language relevant to arbitration about two-thirds of the way through.

For those reasons, the court dismissed AT&T's arguments that Trujillo had access through the paper booklets or through the obsolete terms of service on its Web site, noting that he had no way of knowing to search for the terms of service online or how to find them. Thus, the terms of service were not available to Trujillo until after he had bought the iPhone, and he could not have returned it for a full refund. Under Illinois law governing unconscionability and its interpretation in Razor v. Hyundai Motor Am., 222 Ill.2d 75, 99, 854 N.E.2d 607, 622 (2006), this made the service agreement, including its mandatory binding arbitration clause, procedurally unconscionable under Illinois law. The court found this sufficient under Razor to make the entire agreement unenforceable, regardless of the parties' claims on substantive unconscionability.

As we said, we believe this decision is significant for consumers. By refusing to uphold an arbitration clause that the plaintiff never saw before making his purchase and did not have a significant chance to renegotiate or turn down, the court removed a substantial barrier to many Illinois consumer rights lawsuits. If this type of arbitration agreement is unenforceable, many more Illinois consumers will be allowed full access to the justice system.

It should be noted that the court seemed extremely upset with the conduct of AT&T and a particular in-house lawyer for the company, who swore in the original papers to personal knowledge of their truth. When it later turned out that those papers had two major misrepresentations, and the lawyer had no personal knowledge of some of the facts at issue, Judge Matthew F. Kennelly pointed out that sanctions would be appropriate. However, he declined to impose them.

To learn abour our Chicago, Naperville and Oak Brook consumer rights and business litigation practice and the cases we have handled, including cases where we have defeated unfair arbitration provisions click here.

Posted by Peter S. Lubin and Vincent L. DiTommaso | Permalink | Email This Post

Posted In: Breach of Contract , Chicago Consumer Attorneys , Class-Action , Consumer Fraud/Consumer Protection , Consumer Protection Laws

Bookmark:

Chicago and Oak Brook-based DiTommaso-Lubin has recently been working on a proposed class action consumer protection case with national reach, in tandem with colleagues in Maryland. Our case alleges violations of the Fair Credit Reporting Act, a federal law regulating when and how credit reporting agencies may provide information about consumers to third parties like marketing companies. The FCRA requires that credit agencies may only give out consumers' information if they have written permission or to companies that will extend a "firm offer of credit" to the consumers.

Our proposed lead plaintiff received a flyer offering him an automotive loan from a company that turned out to allegedly have nothing to do with the offer. That is, there was no firm offer of credit, in violation of the FCRA. It's important that our plaintiff suffered no actual financial damage due to this privacy violation, fortunately. However, under the FCRA, he doesn't need to if the violation of the law was "willful." Instead, he may sue for "statutory damages," an amount of money set by law, as well as the cost of attorneys' representation and any punitive damages the court decides to impose to punish illegal or very unethical behavior by the defendant.

The statutory damages authorized by the FCRA are very small by the standards of modern litigation -- $100 to $1,000 per person. In fact, this amount is so small that it might discourage both plaintiffs and their lawyers from pursuing a case, given the small reward. However, a proposed class action changes that landscape dramatically. In a class action, plaintiffs with the same complaint share the same lawyers, in essence pooling their resources. In doing so, they also pool the money they stand to win, from which the lawyers are paid. This allows them to move forward with a claim they might otherwise have had to abandon -- giving them greater access to justice.

In fact, even though a case with small damages might seem inappropriate for class-action status, it is actually one of the most appropriate cases for that status. We were able to make that argument to the court, citing multiple cases from around the United States federal courts, including cases from here in the Seventh Circuit and the greater Chicago area. The case is still pending, but we are confident about the facts and the quality of the legal work on our side of this case.

In addition to regulating how your information is disclosed to marketers and companies, the Fair Credit Reporting Act lays down rules for how credit reporting agencies should handle disputes, errors and negative information on your credit. Based in Oak Brook and Chicago, and serving people in Naperville, Wheaton, greater Chicago and throughout Illinois, our class action lawyers handle both FCRA lawsuits and consumer class actions and other types of class actions. To learn more about how you can fight for your rights please contact us for a free evaluation of your case.

To see more about our firm and the cases we have handled click here.

Posted by Peter S. Lubin and Vincent L. DiTommaso | Permalink | Email This Post

Posted In: Chicago Consumer Attorneys , Class-Action , Consumer Fraud/Consumer Protection , Consumer Protection Laws , FCRA (Fair Credit Reporting Act)

Bookmark:

A recent case of ours includes a motion to disqualify attorneys for the defense under Rule 3.7 of the Illinois Rules of Professional Conduct. Part (b) of that rule states that a lawyer may not represent a client in a case where he or she may be called as a witness to give testimony prejudicial to the client. We moved for an evidentiary hearing on this subject, because our underlying contentions included the contention that the lawyers for the defense witnessed the intentional torts that underlay the case.

Illinois law takes a motion to disqualify an attorney very seriously. Disqualifying a lawyer is considered drastic under state law, because it touches on basic rights by destroying the client's relationship with the lawyer of his or her choosing. Schwartz v. Cortelloni, 177 Ill.2d 166 (1997). For that reason, an evidentiary hearing to determine what evidence is relevant and admissible is generally either necessary or wise. City of Kalamazoo v. Michigan Disposal Service, 125 FSupp2d 219 (WD Mich 2000). In fact, some appeals courts have found that a lack of an evidentiary hearing is sufficient to allow them to question a trial court's decision.

However, Illinois and federal courts have held that an evidentiary hearing is unnecessary when the facts are not disputed, or when investigation is unlikely to provoke an admission that one side has ulterior motives. Robinson v. Boeing Co., 79 F3d 1053 (11th Cir 1996). The Eleventh Circuit's decision in In Re BellSouth Corp., 334 F3d 941, 962 (11th Cir 2003), supporting Robinson, laid down factors for judges to consider when considering disqualifying an attorney for alleged "judge shopping." These include "the fundamental right to counsel, the court’s docket, the injury to the plaintiff, the delay in reaching decision, the judicial time invested, the expense to the parties objecting and the potential for manipulation or impropriety."

The underlying case is related to a shareholder freeze-out lawsuit, in which we represented a 50% shareholder in a closely held corporation.

Our Chicago, Oak Brook and Naperville commercial trial attorneys, DiTommaso * Lubin, represent clients in greater Chicago and throughout Illinois involved in commercial disputes. In addition to shareholder freeze-out and squeeze-out litigation, we handle a variety of business, commercial and corporate litigation for both large corporations and closely held companies. If you have a similar dispute and you would like to discuss it with us confidentially, please contact us through our Web site or by phone.

Posted by Peter S. Lubin and Vincent L. DiTommaso | Permalink | Email This Post

Posted In: Breach of Fiduciary Duty , Closely Held Businesses , Shareholder Freeze Out

Bookmark:

In a Chicago breach of contract and breach of fiduciary duty case, the Illinois First District Court of Appeal has ruled that an insurance company may sue a bank for allowing embezzlement from one of the insurer's clients. Continental Casualty Company v. American National Bank and Trust Company of Chicago, No. 1-07-0627 (Sept. 25, 2008).

Continental Casualty Company is the assignee of General Automation, Inc. GAI was the victim of $1.32 million worth of embezzlement by an accountant, Lawrence Cohn, who deposited $370,000 of the stolen money into his own account at American National Bank. (He also embezzled by paying his client's money directly to the IRS to cover his own taxes.) The checks drew on GAI's corporate account, also at ANB. After Cohn was caught, his former accounting firms settled with GAI, but the bank did not. Continental Casualty, the insurer for one of Cohn's former firms, sued ANB as GAI's assignee for allowing the fraudulent deposits, for breach of contract and violation of the Illinois Fiduciary Obligations Act.

The trial court dismissed the case on statute-of-limitations and insufficiency grounds. The appeals court reversed and remanded, but the trial court again stopped the case, granting summary judgment to ANB because the Illinois Joint Tortfeasor Contribution Act bars settlement requests from a settling party to a nonsettling party. This was the subject of the instant appeal.

On appeal, ANB argued that it was jointly liable with MCW, one of Cohn's former accounting firms, for the applicable amount of Cohn's embezzlement. Because Continental Casualty insured MCW, ANB argued that both it and Continental Casualty are jointly liable for the embezzlement. And by gaining an assignment of GAI's claims, ANB argued, Continental Casualty sought an indirect contribution against ANB. This violates the Contribution Act, which says a settling defendant may not seek payment from a non-settling defendant. Continental Casualty replied that Cohn was not employed by MCW when he embezzled the $370,000, meaning the injury in the instant suit is not the same as the injury to MCW from Cohn's other embezzlement schemes.

On review, the appeals court could not find evidence in the settlement with GAI as to whether the embezzlement was considered one scheme or more. However, it noted, the settlement did say Cohn was involved in "embezzlements," which took place in different ways and while Cohn was at two different firms. This raises a genuine issue of material fact as to whether the injury to MCW is the same as the injury that has been assigned to Continental Casualty, which in turn raises doubts about whether the Contribution Act applies.

Because there is a genuine issue of material fact -- the bar for denying summary judgment -- the appeals court reversed and remanded the trial court's summary judgment decision. It also dismissed various arguments that the claim is time-barred by pointing to facts in the record, some of which suggest that there are also genuine issues of fact on when and how the embezzlement should have been discovered.

The Oak Brook business litigation firm of DiTommaso * Lubin handles breach of fiduciary duty, breach of contract and other business disputes in Naperville and throughout Illinois. To speak to us about your case, please contact us online or via telephone.

To see more about our firm and the cases we have handled click here.

Posted by Peter S. Lubin and Vincent L. DiTommaso | Permalink | Email This Post

Posted In: Breach of Contract , Breach of Fiduciary Duty , Illinois Appellate Courts

Bookmark:

Our Chicago business litigation firm recently handled a case in which one 50% shareholder allegedly tried to freeze out the other using lawyers hired by the companies owned equally by both. When our clients filed a shareholder freeze-out and breach of fiduciary duty claim and began discovery, the defendants balked, citing the attorney-client privilege to explain why they should not be required to turn over important and incriminating information.

As experienced business litigators know, this is no defense at all. Because our clients were equal shareholders in the business, we argued they were entitled to access to certain attorney communications. Furthermore, there is well-established law showing that the attorney-client privilege cannot be misused to deny discovery when the company or its officer is accused of breaching its fiduciary duty to stockholders. In other words, fiduciary duty trumps the privilege. Caselaw says a corporation may not use the privilege to shield relevant communications from discovery in an action by its own stockholders, unless there is good cause. The multipart test for good cause developed by the courts takes into account the nature of the communication, the seriousness of the allegations and other factors. Garner v. Wolfinbarger, 430 F2d 1093 (5th Cir. 1970).

The attorney-client privilege also cannot be raised when the disputed communications were made after the date the attorney and client began a fraudulent or criminal scheme that was part of the lawsuit. That is, communications about crime, fraud or torts are excepted from the attorney-client privilege. Cleveland Hair Clinic, Inc. v. Puig, 968 FSupp 1227, 1241 (ND Ill 1996). Unfortunately, we believed this to be the situation in our case.

Other exceptions to the privilege include:
• Communications to multiple clients who hired the same attorney, but who later have a legal dispute on the same matter
• Cases of legal malpractice
• Certain cases where a lawyer acts as a witness
• Cases where multiple parties make claims through the same deceased client

Of course, "piercing the veil" of corporate attorney-client privilege is not always easy; those attempting it will likely have to fight for their discovery rights. But in a freeze-out case, in which one shareholder or group of shareholders is unfairly trying to control another, this fight is essential to proving the case. DiTommaso * Lubin handles shareholder freeze-outs and squeeze-out lawsuits for both plaintiffs and defendants in Chicago, Naperville, Wheaton, Oak Brook and throughout Illinois. If you would like to discuss how we can help you, please contact us today.

Posted by Peter S. Lubin and Vincent L. DiTommaso | Permalink | Email This Post

Posted In: Closely Held Businesses , Shareholder Freeze Out

Bookmark:

In a business trademark dispute, the Seventh Circuit has ruled that large auto parts retailer AutoZone may proceed with its trademark infringement lawsuit against a two-store automotive services business in Naperville and Wheaton, Illinois, called Oil Zone and Wash Zone. AutoZone, Inc. v. Michael Strick, No. 07-2136 (7th. Cir. Sept. 11, 2008).

AutoZone sells auto parts and products, and has been well-known in the Chicago area since the early 1990s, according to the opinion. In that decade, defendant Michael Strick opened his Oil Zone stores outside Chicago, in Wheaton and Naperville. These stores sold automotive services such as oil changes, not parts or products; the Naperville location also offered car washes under the name "Wash Zone."

AutoZone learned of Strick's businesses in 1998, but did not contact him until sending a letter in February of 2003. It filed a lawsuit against Strick and his businesses near the end of that year, alleging service mark, trademark and trade name infringement and trademark dilution under the federal Lanham Act, federal unfair competition law, the Illinois Trademark Registration and Protection Act and Illinois common law. Both sides sought summary judgment, which was granted to Strick only, on his claim that there was no reasonable likelihood of confusion between his trademark and AutoZone's. Strick's defense of laches -- that AutoZone had waited too long to sue -- was not addressed. AutoZone appealed on the likelihood of confusion issue.

In its analysis, the Seventh Circuit noted that summary judgment in trademark cases is only appropriate when "the evidence is so one-sided that there can be no doubt about how the question should be answered." Packman v. Chicago Tribune Co., 267 F.3d 628, 642 (7th Cir. 2001). That case also laid down a series of seven factors courts must analyze to decide whether to grant summary judgment, which include questions of similarity, geography, consumer confusion and the intent of the parties. The court in this case concluded that six of those factors applied, including the similarity of the marks, the similarity of the products and their geographic proximity.

There was enough likelihood of confusion in this case for the case to survive summary judgment, the court concluded. It also left the issue of latches -- the time between AutoZone noticing Oil Zone and when it filed suit -- up to the district court. Thus, the district court's decision was reversed and remanded to the U.S. District Court for the Northern District of Illinois.

DiTommaso-Lubin's Chicago, Naperville and Oak Brook business litigation attorneys handle trademark disputes, franchise disputes and other Illinois business litigation from their Oak Brook and Chicago law offices. To speak one of our commercial litigation lawyers about representing your business, please contact us through our Web site or via telephone.

To learn more about our firm and the cases we have handled click here.

Posted by Peter S. Lubin and Vincent L. DiTommaso | Permalink | Email This Post

Posted In: Closely Held Businesses , Seventh Circuit , U.S. District Courts in Illinois

Bookmark:

We have watched with dismay as report after report rolls in with bad financial news. Just like other Americans, many individuals and families here in the Chicago area are having more trouble making ends meet right now and may be at risk of losing their homes. Because our consumer rights and debt collection abuse prevention lawyers handle consumer litigation in Chicago, Oak Brook, Naperville and other parts of Illinois, we are particularly concerned about unfair and abusive practices by bill collectors, who many people may be hearing from more and more these days. Many consumers don't realize it, but we are actually protected under federal law from some of the worst excesses of collection agencies by the Fair Debt Collection Practices Act.

The FDCPA prohibits abusive and deceptive conduct by companies that collect debts. This covers a wide variety of practices, including misleading statements and outright lies, threats, abusive or foul language, attempts to embarrass the consumer publicly, bypassing the consumer's lawyer and tacking on fees or interest the consumer never agreed to. Under the law, debt collectors may not harass you with repeated unnecessary phone calls, call you names, use a raised voice or curse words, or call you at work after you've explained in writing that your employer does not allow it. If they threaten lawsuits, wage garnishments or other legal actions, those actions must be possible and they must follow through.

In addition, the law requires debt collectors to follow certain rules, including:
• Identifying themselves as debt collectors.
• Explaining that anything you say to them may be used to collect the debt.
• Limit contact with you to between 8 a.m. and 9 p.m., your time, unless you agree to more
• Providing information about the original debt, including the name and address of the company you originally owed and a written validation of the debt if you request one.
• Notifying you of your right to dispute the debt within 30 days of receiving written information on it.
• Suing you only in the proper court -- usually, this is either the court where you live or in the area where you originally incurred the debt.

As anyone who has ever interacted with one of these companies knows, violations of these rules and other despicable conduct by debt collectors is sadly common. As consumer lawyers, we have witnessed some outrageous conduct by these companies and their representatives. Fortunately, consumers have the right to sue debt collectors who break the FDCPA outright. Furthermore, the FDCPA is a "strict liability" law, which means you need not prove that the bill collector was careless or had a bad intent in order to collect financial compensation; you only need to prove that it broke the law.

At DiTommaso-Lubin, we are proud of our FDCPA practice and the efforts of our Chicago, Naperville and Oak Brook trial lawyers to stop debt collector abuse. Our FDCPA practice is part of our broader Illinois consumer rights litigation practice. If you believe your rights under this law have been violated in Illinoisor near by states, you are welcome to contact us for help getting fair compensation and stopping the abuse.

Posted by Peter S. Lubin and Vincent L. DiTommaso | Permalink | Email This Post

Posted In: Chicago Consumer Attorneys , Consumer Fraud/Consumer Protection , Consumer Protection Laws , FDCPA (Fair Debt Collection Practices Act)

Bookmark:

A federal breach of warranty case of ours IWOI v. Monaco Couch recently survived a motion to dismiss in U.S. District Court for the Northern District of Illinois. Our client, a limited liability company formed in Montana, bought a motor home in Illinois and allegedly discovered that it had a twisted frame causing it to list to one side, requiring constant steering corrections. On discovering this alleged defect, the individual owning the LLC brought it back to the dealership the very next day for the first of three unsuccessful repair attempts. Per the manufacturer's warranty, he submitted his complaints in writing to the manufacturer, Monaco Coach after these three repair attempts. The alleged defects remain, and we alleged in our filings that neither the manufacturer nor the dealer has agreed to accept the motor home for return or fixed the problems.

Our client sued both the manufacturer and the dealer under the federal Magnuson-Moss Warranty Act, the Illinois Consumer Fraud Act and other state claims. In defense, the defendants argued that our client was not a "consumer" within the meaning of federal law; this claim was flatly denied by the Court, which found no allegations in the Complaint to support it. On the Illinois Consumer Fraud Act issues, the Court also identified several alleged facts suggesting that Monaco Coach may well have known of the problems before the RV was sold, as we alleged. Thus, those claims also survived.

Furthermore, the trial court decided that our client could revoke its acceptance of the dealer's "AS IS" condition and the dealer's disclaimer of all implied warranties, a claim under the Illinois Commercial Code. The Seventh Circuit has addressed this issue in Priebe v. Autobarn, Ltd., 240 F.3d 584, 588 (7th Cir. 2001), in which it adopted an earlier ruling stating that consumers may revoke their acceptance even when the dealer has properly disclaimed implied warranties, if the evidence is clear that the vehicle's substantial defects clearly impair its value to the plaintiff. This allowed our client's Magnuson-Moss Act and state conversion claims to survive as well.

Although this case is at the trial court level, we believe the judge's interpretation of Seventh Circuit and Illinois precedent on Magnuson-Moss and the Illinois Consumer Fraud Act is good news for consumers. As auto and RV dealer fraud lawyers in Chicago, Naperville and Oak Brook, Ill., we believe automotive dealers take advantage of consumers' lack of education about their rights far more often than they are caught. When they are caught, they should not be allowed to wiggle out of liability for their actions with an unfair, high-pressure contract that the consumer has little room to renegotiate. Both the Magnuson-Moss Act (which governs how warranties may be offered) and the Illinois Consumer Fraud Act were specifically intended to help consumers fight this behavior.

If you believe you may be a victim of automotive dealer fraud or another type of consumer fraud and you're ready to fight back, please contact DiTommaso-Lubin online, via telephone or at our offices near or in Naperville, Wheaton, Oak Brook or Chicago.

To see more about our firm and the consumer rights, consumer fraud, lemon law and class action cases we have handled click here.

Posted by Peter S. Lubin and Vincent L. DiTommaso | Permalink | Email This Post

Posted In: Auto Fraud , Breach of Contract , Consumer Fraud/Consumer Protection , Consumer Protection Laws , Lemon Law , Motions to Dismiss , RV Fraud , U.S. District Courts in Illinois

Bookmark:

Given all of the more recent high-profile financial failures, it might be easy to forget the fall of Bear Stearns, the first investment bank to go down in our current economic downturn. But we were interested to read recently that the firm recently settled charges that it violated the Fair Debt Collection Practices Act, a federal law our Chicago, Naperville and Oak Brook debt collection abuse prevention lawyers work with often in our Chicago consumer rights litigation practice. According to the Chicago Tribune, Bear Stearns and its mortgage debt collection subsidiary, EMC Mortgage, settled multiple FDCPA charges with the Federal Trade Commission for $28 million in September, and also agreed to change its loan servicing policies.

As with so much other economic news in 2008, the problem started with subprime and other non-standard mortgages. Bear Stearns was heavily invested in these (by buying them from the original lenders), a choice that is largely blamed for its failure. EMC serviced those mortgages, and according to the FTC, committed multiple violations of the FDCPA in its dealings with mortgage holders. The FTC complaint charged EMC with failing to check into the information provided by the original lenders on the mortgages, which led to incorrect charges and incorrect reports to credit bureaus that hurt the homeowners' credit. EMC was also charged with:
• Charging fees homeowners never authorized, including a $500 fee for "loan modification"
• Failing to report to the credit reporting agencies that homeowners disputed the incorrect debts
• Fabricating "property inspections" to gain access to private homes

All of these are violations of the Fair Debt Collection Practices Act, which was designed to protect consumers from just this kind of unfair and predatory lending. As consumer attorneys, we applaud the FTC for protecting homeowners' rights and hope this settlement helps more of them keep their homes under realistic terms.

The FDCPA applies to any type of debt collector -- not just mortgage servicing companies. It prohibits these and other types of lies and deception, as well as harassment, foul language and threats by collection agencies. If you are a victim of these unfair and abusive practices, the law allows you to sue the collection agency for damages and attorneys' fees. DiTommaso-Lubin handles a variety of Fair Debt Collection Practices Act lawsuits for clients in Chicago, Naperville, Oak Brook and throughout Illinois. If you believe you're a victim of harassment, incorrect charges or outright lies by a mortgage company or any other debt collector and you want to fight back, please contact our firm to learn more about how we can protect your rights.

Posted by Peter S. Lubin and Vincent L. DiTommaso | Permalink | Email This Post

Posted In: Chicago Consumer Attorneys , Consumer Fraud/Consumer Protection , Consumer Protection Laws , FDCPA (Fair Debt Collection Practices Act)

Bookmark:

With our economy on the scids, debt collection abuse is on the rise. You can contact our Chicago area debt collection abuse prevention attorneys for a free consultation to advise you if you can stop debt collection abuse by filing suit. You can click here to see a copy of the Fair Debt Collection Practices Act, the federal law which prohibits debt collection abuse.

The FTC offers the following advice on preventing Debt Collector Harassment:

Fair Debt Collection

If you use credit cards, owe money on a personal loan, or are paying on a home mortgage, you are a "debtor." If you fall behind in repaying your creditors, or an error is made on your accounts, you may be contacted by a "debt collector."
You should know that in either situation, the Fair Debt Collection Practices Act requires that debt collectors treat you fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debt you owe.
This brochure answers commonly asked questions about your rights under the Fair Debt Collection Practices Act.

What debts are covered?

Personal, family, and household debts are covered under the Act. This includes money owed for the purchase of an automobile, for medical care, or for charge accounts.

Who is a debt collector?

A debt collector is any person who regularly collects debts owed to others. This includes attorneys who collect debts on a regular basis.

How may a debt collector contact you?

A collector may contact you in person, by mail, telephone, telegram, or fax. However, a debt collector may not contact you at inconvenient times or places, such as before 8 a.m. or after 9 p.m., unless you agree. A debt collector also may not contact you at work if the collector knows that your employer disapproves of such contacts.

Can you stop a debt collector from contacting you?

You can stop a debt collector from contacting you by writing a letter to the collector telling them to stop. Once the collector receives your letter, they may not contact you again except to say there will be no further contact or to notify you that the debt collector or the creditor intends to take some specific action. Please note, however, that sending such a letter to a collector does not make the debt go away if you actually owe it. You could still be sued by the debt collector or your original creditor.

May a debt collector contact anyone else about your debt?

If you have an attorney, the debt collector must contact the attorney, rather than you. If you do not have an attorney, a collector may contact other people, but only to find out where you live, what your phone number is, and where you work. Collectors usually are prohibited from contacting such third parties more than once. In most cases, the collector may not tell anyone other than you and your attorney that you owe money.

What must the debt collector tell you about the debt?

Within five days after you are first contacted, the collector must send you a written notice telling you the amount of money you owe; the name of the creditor to whom you owe the money; and what action to take if you believe you do not owe the money.
May a debt collector continue to contact you if you believe you do not owe money?
A collector may not contact you if, within 30 days after you receive the written notice, you send the collection agency a letter stating you do not owe money. However, a collector can renew collection activities if you are sent proof of the debt, such as a copy of a bill for the amount owed.

What types of debt collection practices are prohibited?

Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, debt collectors may not:
• use threats of violence or harm;
• publish a list of consumers who refuse to pay their debts (except to a credit bureau);
• use obscene or profane language; or repeatedly use the telephone to annoy someone

False statements. Debt collectors may not use any false or misleading statements when collecting a debt. For example, debt collectors may not:
• falsely imply that they are attorneys or government representatives;
• falsely imply that you have committed a crime;
• falsely represent that they operate or work for a credit bureau;
• misrepresent the amount of your debt;
• indicate that papers being sent to you are legal forms when they are not; or
• indicate that papers being sent to you are not legal forms when they are.

Debt collectors also may not state that:
• you will be arrested if you do not pay your debt;
• they will seize, garnish, attach, or sell your property or wages, unless the collection agency or creditor intends to do so, and it is legal to do so; or
• actions, such as a lawsuit, will be taken against you, when such action legally may not be taken, or when they do not intend to take such action.

Debt collectors may not:
• give false credit information about you to anyone, including a credit bureau;
• send you anything that looks like an official document from a court or government agency when it is not; or
• use a false name.

Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, collectors may not:
• collect any amount greater than your debt, unless your state law permits such a charge;
• deposit a post-dated check prematurely;
• use deception to make you accept collect calls or pay for telegrams;
• take or threaten to take your property unless this can be done legally; or
• contact you by postcard.

What control do you have over payment of debts?

If you owe more than one debt, any payment you make must be applied to the debt you indicate. A debt collector may not apply a payment to any debt you believe you do not owe.
What can you do if you believe a debt collector violated the law?
You have the right to sue a collector in a state or federal court within one year from the date the law was violated. If you win, you may recover money for the damages you suffered plus an additional amount up to $1,000. Court costs and attorney' s fees also can be recovered. A group of people also may sue a debt collector and recover money for damages up to $500,000, or one percent of the collector' s net worth, whichever is less.

Where can you report a debt collector for an alleged violation?

Report any problems you have with a debt collector to your state Attorney General's office and the Federal Trade Commission. Many states have their own debt collection laws, and your Attorney General' s office can help you determine your rights.

Our Chicago class action and consumer lawyers may also be able to help you if you have been the victim of any of the improper debt collection practices described by the FTC. At Nationwide Consumer Rights our Chicago, Naperville, Aurora, Waukegan and Joliet consumer rights and class-action attorneys file individual and class-action lawsuits against debt collectors that violate your rights. If you have been the victim of debt collection abuse, contact us by phone, email or fax for a free consultation.

Posted by Peter S. Lubin and Vincent L. DiTommaso | Permalink | Email This Post

Posted In: Chicago Consumer Attorneys , Class-Action , Consumer Fraud/Consumer Protection , FDCPA (Fair Debt Collection Practices Act)

Bookmark:

Illinois Attorney General Lisa Madigan and 32 other states' attorneys general scored a victory for consumers Oct. 7 when they reached a $62 million settlement with drug maker Eli Lilly over claims of unfair and deceptive marketing. The Associated Press reported that states sued Lilly for marketing its drug Zyprexa for off-label uses not approved by the Food and Drug Administration. They also alleged that Lilly failed to fully disclose the drug's side effects to doctors and patients. In announcing the settlement, Madigan's office reported that Illinois will receive about $3.6 million.

Zyprexa (olanzapine) is an antipsychotic approved for patients with schizophrenia and manic depression. The FDA gives doctors the discretion to prescribe drugs for off-label uses, but requires that drug makers market their drugs only for the approved uses. According to th