By Eva Novick and JD Moore; Oregon Department of Justice Attorney General, Financial Fraud/Consumer Protection Section
Since 2002, the Oregon Department of Justice has received complaints surrounding the debt collection practices of Daniel N. Gordon, P.C. (“Gordon”), an Oregon law firm that works with creditors and debt collectors. After being the subject of a subsequent DOJ investigation, Gordon brought a declaratory action against the DOJ. Specifically, Gordon sought declarations providing that the Unlawful Trade Practices Act (“UTPA”) and the Unlawful Debt Collection Practices Act (“UDCPA”) did not apply to Gordon’s debt collection activities as those laws are codified in ORS 646.607(1), ORS 646.608(1)(b), and ORS 646.607(6). The trial court ultimately found in favor of Gordon, and permanently enjoined the DOJ from enforcing the UTPA and UDCPA against Gordon with respect to Gordon’s debt collection litigation. The DOJ then appealed.
On appeal, the court affirmed that Gordon’s debt collection activities did not fall under the UDCPA. The court applied precedent and found that the UDCPA simply did not apply to Gordon’s practice of collecting debt through litigation. However, the DOJ prevailed with respect to the UTPA provisions. Specifically, the court held that ORS 646.607(1) applied to Gordon’s debt collection activities because the statute’s text does not require any sort of transactional or contractual relationship between Gordon and the debtor. That is, even though the statute requires “a customer”, the consumer in question does not have to be Gordon’s customer. The court also held that ORS 646.608(1)(b) applied to Gordon’s debt collection activities because the statute’s text also does not require a transactional or contractual relationship between Gordon and the debtor. The court found Raudebaugh v. Action Pest Control, Inc., 59 Or. App. 166 (1982) instructive and reasoned that no direct relationship would be necessary so long as the debtor could demonstrate detrimental reliance on Gordon’s misrepresentations.
While the Gordon decision predominantly affects the work of the Attorney General’s office, the court’s ORS 646.608(1)(b) holding also affects the work of consumer protection attorneys in the private sector. Gordon provides additional support for a valid cause of action under ORS 646.608(1) with no direct or transactional relationship between the consumer and the violator. Simply showing that the consumer detrimentally relied on the violator’s misrepresentations is sufficient to apply the UTPA to the violator’s actions. The plaintiffs in Gordon even anticipated this reality and argued that such a holding would “dramatically broaden the UTPA” to unintended contexts. However, the Court of Appeals explained that Gordon was not being held accountable for the lender’s mistakes. Rather, Gordon was being held accountable for the misrepresentations that Gordon made directly to the debtors. Thus, Gordon allows for recovery from third parties under the UTPA without making the UTPA unfairly broad, provided that the consumer was harmed as a result of a third party’s misrepresentations.