Cook County Record

Monday, October 21, 2019

Federal judge: Banks can be vicariously liable for debt collectors' calls to cell phones


By Scott Holland | Jul 19, 2019

CHICAGO — A federal judge has determined banks can be sued for the debt collection calls initiated on their behalf by a third party. But the banks can only be held vicariously liable, not directly liable, the judge said.

After years of negotiations and court proceedings, plaintiffs Keith Snyder, Susan Mansanarez and Tracee A. Beecroft reached a settlement this year with Ocwen Loan Servicing, which they said violated the federal Telephone Consumer Protection Act through calls to nearly 1.7 million cell phones. They alleged unwanted calls were made to loan clients and others who were not Ocwen customers, and said the company ignored verbal requests to stop the calls because they allegedly lacked sufficient systems to track who should and should not be called.

As part of that settlement, the plaintiffs were allowed to continue class action against US Bank, Wilmington Trust and Deutsche Bank National Trust, alleging the banks also violated the TCPA because they owned mortgages on which Ocwen attempted to collect through the use of autodialers.

Alexander Burke | Burke Law Offices

Judge Matthew Kennelly, who approved the Ocwen settlement, issued an opinion July 14 on the banks’ motion for summary judgment. Kennelly said at a June 19 status hearing lawyers for both Ocwen and the banks said they thought the settlement would extinguish claims against the banks, while the plaintiffs’ attorneys said they believed “the court’s numerous, conspicuous and frequent references to the amended settlement preserving the claims against the banks were legally ineffective.” As such, he ordered accelerated briefing on the motion for summary judgment as the settlement will be final July 30.

Kennelly said the three questions affecting his summary judgment opinion were if the settlement ended the claims against the banks, if that settlement precludes the claim against the banks and if the banks can be directly liable for Ocwen’s actions.

He also noted ”with some incredulity" that the banks and the plaintiffs spent large amounts of time shaping their arguments under Illinois state law rather than the federal TCPA in “briefs filed nearly five years after the class’ initial federal claims against Ocwen.” 

Kennelly noted the banks argued they should be protected from the lawsuits by Illinois law. But Kennelly said both parties' reliance on state law was incorrect, and the federal law should control in this case.

Illinois law provides such protections to protect an agent, such as Ocwen, that would gain nothing from a direct settlement if a plaintiff obtained a judgment against a principal, such as the banks, which could then pursue the agent.

Kennelly detailed the many ways in which he said the banks acquiesced to splitting the plaintiffs’ claim against them from the Ocwen allegations, which he said caused them to now forfeit attempts to argue they should be shielded from the plaintiffs' continued claims. He further said his earlier orders expressly reserved the plaintiffs’ right to sue the banks.

The judge, however, said the plaintiffs can't hold the banks directly liable for the phone calls at the heart of the case.

“The plaintiffs have pointed to no evidence from which a reasonable jury could conclude that the banks themselves initiated the disputed phone calls,” Kennelly wrote. “Without such evidence, the only sort of liability that could possible attach to the banks is vicarious.”

The plaintiffs are represented in the case by attorneys Alexander H. Burke and Daniel J. Marovitch, of Burke Law Offices LLC, of Chicago; Mark L. Heaney, of the Heaney Law Firm LLC, of Minnetonka, Minn.; Mark D. Ankcorn, of Ankcorn Law Firm PLLC, of Orlando, Fla.; Guillermo Cabrera, of the The Cabrera Firm Apc, of San Diego; and Adrienne D. McEntee, Beth Ellen Terrell and Jennifer R. Murray, of Terrell Marshall Law Group PLLC, of Seattle.

The bank defendants are represented by attorneys Kenneth M. Kliebard, Michael S. Kraut and William J. Kraus, of Morgan Lewis & Bockius LLP, of Chicago and New York; Jennifer L. Majewski, of Pilgrim Christakis LLP, of Chicago; and Frank A. Hirsch Jr. and Kelsey L. Kingsbery, of Alston & Bird LLP, of Raleigh, N.C. 

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Organizations in this Story

Alston & Bird LLP Burke Law Offices, LLC Deutsche Bank National Trust Company Morgan Lewis & Bockius Ocwen Loan Servicing LLC Terrell Marshall Law Group PLLC U.S. District Court for the Northern District of Illinois US Bank National Association Wilmington Trust

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