CHICAGO — A Chicago debt collection law firm that sued consumers based on a former interpretation of the Fair Debt Collection Practices Act (FDCPA) will have to pay attorney fees and costs to a former debtor, a Chicago federal judge has declared.
Blatt, Hasenmiller, Leibsker & Moore must pay almost $69,394 in attorney fees and about $773 in costs to Iwona Portalatin, who they sued to collect a debt, according to an Oct. 25 order from U.S. District Judge Matthew F. Kennelly.
"Litigation of this type serves an important public purpose of cabining unfair activities by debt collectors, a purpose recognized by Congress in the express findings it made when it adopted the FDCPA," Kennelly said in the order. "The court declines to reduce Portalatin's fee award based on her purported 'limited' success."
Blatt Hasenmiller had been "shooting for a zero award" in the case, the opinion said. The debt collection law firm is winding down its practice and is no longer accepting new matters and currently is transferring ongoing matters to new counsel, according to the law firm’s website.
Portalatin had sued Blatt Hasenmiller, who had previously filed suit against her on behalf of Midland Funding, her creditor, according to the district court order and other court documents. Midland Funding describes itself as "one of the nation’s largest buyers of unpaid debt".
Portalatin has since settled her dispute with Midland Funding.
Portalatin successfully claimed that Blatt Hasenmiller brought their suit in the wrong venue, as they filed the action in the Cook County Circuit Court's First Municipal District in downtown Chicago, rather than at the county's courthouse in Maywood in the circuit's Fourth Municipal District, where Portalatin lived.
That, Portalatin claimed, violated the FDCPA.
Blatt Hasenmiller has consistently claimed it committed a "bona fide error" by relying on previous legal precedent, a 1996 appeals court ruling, which the law firm maintained should render it not liable for suing a consumer in the wrong municipal district.
In August 2015, the district court granted Portalatin's motion for summary judgment, overruling Blatt Hasenmiller's defense. In February 2016, the court denied the law firm’s motion to alter or amend the judgment or grant relief from the judgment. That order also was penned by Kennelly.
The FDCPA limits where debt collectors may file collection lawsuits. Debt collectors may file in the judicial district or similar legal entity where the debtor resides at the time the case is filed or where the debtor signed the contract or agreement that forms the basis for the lawsuit attempting to recover the debt.
In 1996, in Newsom v. Friedman, the U.S. Seventh Circuit Court of Appeals ruled that all of Cook County made up a single judicial district and that a debtor living anywhere in that county could be sued in any of the county's six municipal districts.
That changed in 2014 with another Seventh Circuit case, Suesz v. Med-1 Solutions, in which the court ruled that the "judicial district or similar legal entity" is the "smallest geographic area relevant for venue purposes in the court system in which the case is filed." Specifically in Cook County, a debtor then could only be sued in the municipal district in which the debtor resided when the case was filed.
The Suesz case itself relied on the 2010 U.S. Supreme Court decision in Jerman v. Carlisle, that the FDCPA’s bona fide error defense does not apply to "mistakes of law." Under both Suesz and Jerman, a debt collector cannot avoid wrong venue liability based on Newsome.
The Portalatin case is not the only litigation against Blatt Hasenmiller filed by a former debtor. In July, the Seventh Circuit vacated a district court ruling granting the firm summary judgment after finding it had relied on Newsom in good faith and was therefore immune from liability under the FDCPA’s bona fide error defense. The Seventh Circuit, which initially had affirmed the district court ruling, held on rehearing that Blatt's reliance on the Newsom decision was not protected by the defense.
Portalatin was represented in the action by the Sulaiman Law Group Ltd., of Lombard, and Whiteside & Goldberg Ltd., of Chicago.
Blatt Hassenmiller was defended by the firm of McGuireWoods LLP, of Chicago.