Author Archives: Jordan

OREGON HOMEOWNERSHIP STABILIZATION INITIATIVE COVID-19 MORTGAGE SUPPORT PROGRAM

By Hope Del Carlo

Homeowners who’ve experienced a financial hardship during the COVID-19 pandemic may be eligible for help from the Oregon Homeownership Stabilization Initiative (OHSI). OHSI distributed the U.S. Treasury’s Hardest Hit funds that were allocated to Oregon homeowners in the wake of the Great Recession. Those programs have ended, however the new COVID-19 Mortgage Support program is open.

Borrowers who qualify receive forgivable assistance, as long as they don’t sell the home or refinance for cash for at least five years.

In order to be eligible to receive COVID-19 Mortgage Relief, the applicant must:

  • Have experienced a financial hardship due to unemployment, reduced hours, decline in self-employment earnings, divorce, death, medical costs or disability.
  • Own and occupy a 1- to 4-unit home in Oregon as your principal residence.
  • Be a borrower who is obligated on a mortgage of not more than $491,050, secured by    your principal residence (some exceptions apply).
  • Be less than $40,000 behind on mortgage payments.
  • Have been current on the mortgage until January 1, 2020.
  • Have a current monthly housing expense to income ratio of not more than 45%.
  • Not be in an active bankruptcy.
  • Meet OHSI’s annual income limitations (generally, not more than 160% of the state median income).
  • Not have been convicted of certain finance-related crimes within the last ten years.

For more information on the program and how to apply, visit oregonhomeownerhelp.org.

District of Oregon Court Ruling Confirms That Reliance Is Not Required For Diminished Value Ascertainable Loss Under the UTPA

By Emily Templeton, Lewis & Clark Law School, 2021.

It’s been over two years since Oregon class action lawyers Michael Fuller and Kelly Jones filed a false advertising lawsuit against national food retailer Fred Meyer. Class members allege Fred Meyer violated Oregon’s Unlawful Trade Practices Act (UPTA) by charging customers hidden bottle deposit fees on exempt beverages that could not be refunded under Oregon law.

Specifically, the lawsuit alleges Fred Meyer made false misrepresentations and
omissions when it charged customers more than certain beverage items were
actually worth in violation of Oregon’s consumer protection laws.

In its motion to dismiss, Fred Meyer argued that (1) the district court lacked subject
matter jurisdiction; and (2) plaintiffs failed to state a claim upon which relief can be
granted. In support of the latter, Fred Meyer urged the court to require plaintiffs to
establish reliance in order to prove they incurred an ascertainable loss.

U.S. District Court Judge Michael Mosman made two important findings in his
opinion issued on November 20, 2020:

(1) The court found jurisdiction was proper in federal court because plaintiffs
were not seeking to “enjoin, suspend, or restrain” the collection of any state
“tax”; and
(2) The court found plaintiffs were not required to establish reliance when
alleging ascertainable loss under a diminished value theory.

Fred Meyer had argued that plaintiffs must demonstrate subjective reliance on a
representation, act, or omission that violates the UTPA in order to prove they
incurred an ascertainable loss.

In Pearson v. Philip Morris, Inc., 361 P.3d 3 (2015), the Oregon Supreme Court’s
majority opinion left open the question of whether a diminished value theory
requires “reliance to establish the requisite causal connection.” Judge Mosman,
citing Justice Walter’s concurrence in Pearson, affirmed plaintiffs’ assertion that
reliance is not required under a diminished value theory of liability.

Backed by the UPTA’s plain language and Justice Walter’s concurrence, the court
determined plaintiffs had adequately established ascertainable loss by showing
Fred Meyer had charged customers a price over and above the objective market
value of certain beverage items such that reliance was irrelevant. The court
reiterated, however, that a plaintiff may be required to show reliance to prove
ascertainable loss under a “refund of the purchase price” theory.

ReportFraud.FTC.gov – the Federal Trade Commission’s New Consumer Fraud Reporting Tool

By Colin D. A. MacDonald

On October 22, the Federal Trade Commission launched ReportFraud.FTC.gov, the Commission’s new consumer fraud reporting portal. The new site replaces the FTC Complaint Assistant and provides a more user-friendly, informative, and visually appealing experience for consumers. From government imposter scams to phony weight loss claims, from abusive debt collection to deceptive auto sales, and all sorts of unwanted phone calls, text messages, and emails – we want to hear about all of them. Please help us spread the word and keep Oregonians safe from scams.

After making a report, consumers will be given tailored educational information about next steps that they can take to protect themselves. These materials will be specific to the kind of report that consumers make. If consumers wish to update a report later, they will be given a report number to do so.

The system gives consumers plenty of options for how to report scams that they are concerned about. Consumers can make reports in Spanish at ReporteFraude.FTC.gov. Reports can also be made in French, German, Korean, Japanese, Polish, Spanish, or Turkish at the Commission’s econsumer.gov website. If consumers have questions, the system has a live chat feature or consumers can still call the FTC Consumer Response Center at 877-FTC-HELP (877-382-4357) to make reports by phone. Consumers who prefer to make their report anonymously can do so (but they won’t be able to update the report later).

What happens with your reports? Like its predecessor, ReportFraud.FTC.gov sends reports into the FTC’s Consumer Sentinel Network. The FTC and its more than 3,000 law enforcement partners across the country and around the world use Consumer Sentinel to fight back against scams that hurt consumers and businesses who play by the rules. We don’t publicly post the reports and we don’t contact businesses about individual reports. We use them to build larger law enforcement actions to put an end to the fraud.

Who is reporting fraud to the FTC? Between the old FTC Complaint Assistant and our partner organizations, we gathered more than 3.2 million reports of consumer fraud in 2019 alone. Oregonians accounted for more than 33,000 of those reports, with government imposter scams and identity theft by far the most common reports from the state. You can learn more about the most common reports in the country, state, or metro area on the FTC’s website.

Protecting Oregonians – particularly the most vulnerable consumers – is a team sport. Filing a report with the FTC and seeking help from a private attorney are not mutually exclusive. This new tool in our shared toolbox will help us fight back against scammers and unscrupulous businesses. If you or an organization you are involved with have a website or social media, please consider linking to ReportFraud.FTC.gov using some of the images, videos, and social media badges available at ReportFraud.FTC.gov/Partners.

Colin D. A. MacDonald is a consumer protection attorney for the Federal Trade Commission’s Seattle-based Northwest Region. The views expressed in this article are his own and do not necessarily reflect those of the Commission or of any individual Commissioner.

Award of Merit & Lifetime Achievement Award Recipients Announced: Congratulations to Kyle Iboshi, Craig Colby & Michael Baxter

Every year the OSB Consumer Law Section considers nominations for three distinct awards: the Award of Merit, Lifetime Achievement, and Professionalism Award. These awards are only given to nominees who meet the highest standards and each award is not given every year. For 2020, Kyle Iboshi, Investigative Reporter at KGW news will receive the Award of Merit, Craig Colby, now retired attorney at law, will receive the Lifetime Achievement Award, and Michael Baxter of Baxter & Baxter LLP will also receive the lifetime achievement award.

About the Awards:

The Oregon State Bar Consumer Law Section’s Award of Merit recognizes an individual’s or entity’s recent efforts that have significantly advanced consumer rights in Oregon. These efforts could include a case, advocacy initiative, program or any other work that attempts to advance consumer protections. Particular attention is paid to such achievements which required the recipient to overcome adversity and/or which improved access to justice. It may be awarded to both legal professionals and members of the public.

The Oregon State Bar Consumer Law Section’s Lifetime Achievement Award recognizes an outstanding individual who has dedicated their career to consumer protection and made a significant and sustained impact on the practice of consumer law.

About the Recipients:

Kyle Iboshi is an award-winning investigative news reporter with KGW who dedicates a substantial amount of his coverage to consumer protection issues. Last year, Iboshi’s in depth consumer protection reporting helped cause positive changes in the lives of Oregon’s most economically vulnerable citizens. His 2019-2020 series of reports titled “The Cost of Collections” examined the aggressive tactics used by the City of Portland to force people to pay up. Specifically, Iboshi’s reporting shed light on how Professional Credit Service sued an Oregon consumer twice to collect on a debt, at least a portion of which was never owed in the first place. https://www.kgw.com/article/news/investigations/city-of-portland-sent-evicted-homeowner-to-collections-then-sued-him-twice-for-water-he-never-used/283-b3aa1d5f-31f6-4f23-9a69-ce9aa7ef417b Thanks to Iboshi’s consumer protection reporting, the City of Portland actually changed the way it collects debt from Oregon’s most vulnerable consumers. Iboshi also operates as a public watchdog for consumer fraud scams. In November 2019 he dedicated an episode of his program Straight Talk to sharing some of the most common consumer complaints he gets, including the “grandparent scam.” He has helped countless Oregon consumers through his investigative reporting, and makes the job we do as consumer advocates easier by informing the public of the work we do.

Michael Baxter: Throughout his career as a trial lawyer Baxter was a champion of consumer protection in Oregon. Baxter is responsible for the landmark Oregon Supreme Court case, Parrott v. Carr Chevrolet, Inc., 331 Or 537 (2001) that assists attorneys trying UTPA cases or seeking punitive damages in a consumer protection case. Baxter is also responsible for the single largest individual consumer protection verdict in Oregon history, Miller v. Equifax Info. Servs., LLC, No. 3:11-CV-01231-BR, 2014 US Dist LEXIS 70885 (D Or May 23, 2014), which garnered him recognition by The New York Times and other newspapers. In addition to being an incredible advocate for his clients, Baxter has also always been generous to younger lawyers, and has always been happy to share his knowledge with the consumer protection bar. Baxter, along with other consumer protection stalwarts, was responsible for reviving the Oregon Consumer League in the 1990s, an organization that continues to help Oregon consumers to this day. Baxter retired this year. Congratulations on his well-deserved retirement.

Craig Colby: For the last thirty years Craig has contributed substantially in the area of landlord tenant law. For years Colby  maintained hundreds of pages of Annotations to the Residential Landlord and Tenant Act which he provided for free to legal aid and related organizations to make it possible for more lawyers to represent tenants successfully and increase access to justice. Three decades ago lawyers for tenants settled eviction cases by conceding judgments of eviction to the landlords in return for delays in enforcement and tenants then had eviction judgments in the public record that blocked them from finding new rental housing. Colby created the idea of dismissing the eviction cases in return for tenant promises to move out by some agreed date down the line, coupled with stipulations for reinstatement of the case and immediate judgment that landlords could file if tenants didn’t vacate on time. The legislature adopted Colby’s scheme in ORS 105.145(2) – 105.165.  Congratulations on his well-deserved retirement.

Kyle Iboshi & Craig Colby will be presented with their awards, remotely, over the lunch hour at the “Law of Landlords and Tenants” CLE on Friday, October 16, 2020. Michael Baxter will be presented with his award sometime in the future when in-person gatherings become possible again.

Oregon Attorney General Sets Up Special Hotline for Price Gouging Complaints Related to COVID-19

On Tuesday, March 17, 2020 Oregon Governor Kate Brown issued an executive order declaring an “abnormal disruption of the market,” triggering additional protections for consumers against price gouging for “essential consumer goods or services.”  See ORS 401.960 – 401.970.

You can read the executive order at: https://www.oregon.gov/gov/Documents/executive_orders/eo_20-06.pdf

The statute, generally, prohibits charging unconscionably excessive prices and makes charging such excessive prices subject to regulation as an unlawful trade practice.  With some exceptions, prices are presumed to be unconscionably excessive if they exceed 15% above of the price prior to the abnormal disruption of the market.

Additional information, including a link to submit written complaints, can be found on the DOJ website at: https://www.doj.state.or.us/consumer-protection/sales-scams-fraud/price-gouging/

The Oregon Department of Justice, at the request of AG Ellen Rosenblum, has also set up a dedicated hotline specifically to handle complaints related to price gouging.  The hotline number is: 503-378-8442.

Despite the existence of a dedicated hotline, the Department of Justice encourages people to submit written complaints whenever possible, as written complaints often help streamline the review process allowing DOJ to prioritize the most pressing complaints.

While complaints relating to price gouging are important, the Department of Justice is treating complaints of all kinds related to COVID-19 as a priority in order to stay on top of rapidly developing trends.  See, for example, action taken against a Portland CBD store with misleading advertising claiming their products could boost immunity against COVID-19:

https://www.kgw.com/article/news/health/coronavirus/oregon-attorney-general-coronavirus-cbd-store-claims-covid-19-immunity/283-f2d6abbc-2f02-439b-8e36-310b2aa03ea7

A Look Back at 2019

Now that we are firmly in 2020 it is safe to start looking back at the year that was 2019.

Each year, the Federal Trade Commission releases its Sentinel Data Book, summarizing the information it has received.

The 2019 Data Book can be found here: https://www.ftc.gov/reports/consumer-sentinel-network-data-book-2019.

During 2019, the FTC gathered over 3.2 million reports nationwide.  These reports are unverified and are comprised of consumer reports made directly to the FTC, along with “reports filed with other federal, state, local, and international law enforcement agencies, as well as other organizations, like the Better Business Bureau and Publishers Clearing House.”

The Data Book does not contain information regarding do-not-call violations, which are compiled in a separate report, available here: https://www.ftc.gov/reports/national-do-not-call-registry-data-book-fiscal-year-2019.

According to the Data Book Oregonians made 32,716 reports and suffered $15.5 million in total fraud losses.  The median loss for Oregonians was $250.

Oregon accounted for the 7th highest number of fraud reports per 100k population behind only Nevada, Florida, Delaware, Maryland, Georgia and Arizona.

Oregon had 3 Metropolitan Areas in the top 50 for fraud reports with Albany OR coming in at number 42, Eugene, OR at number 49 and the Portland-Vancouver-Hillsboro area at number 50 per 100k population.

Florida, by contrast, accounted for 16 of the top 50 metropolitan areas for fraud reports including 4 of the top 6 per 100k population.

Fairing a little better, Oregon had only the 31st highest number of reports of identity theft per 100k population and did not place any metropolitan areas in the top 50 for identity theft reports.

“Imposter Scams” were the largest reported complaint in Oregon accounting for 27% of the total number of complaints followed by “Identity Theft at 12%.”  Reports regarding “Telephone and Mobile Services,” “Prizes, Sweepstakes and Lotteries,” and “Online Shopping and Negative Reviews” rounded out Oregon’s top 5 report categories, each coming in at 6-7%.

“Identity Theft” and “Imposter Scams” also led the list of complaints nationally, each accounting for just over 20% of all reports, significantly ahead of the third highest reported complaint, “Telephone and Mobile Services,” at just under 6%.

The Data Book contains a wealth of fascinating information going back over three years which allows practitioners to get a sense of changes in national trends affecting consumers.  For example, while “Debt Collection” reports accounted for over 21% of all reports in 2017 and was the top reported issue for that year, they accounted for less than 5% of all reports in 2019.  “Identity Theft,” by contrast, has risen from under 13% in 2017 to over 20% of all reports in 2019.

Oregon DOJ Consumer Protection Section Settlement and Litigation Highlights

STUDENT LOANS AND EDUCATION

Career Education Corp. Multistate (January 2019)
Oregon helped lead a 49-state investigation into deceptive recruiting and advertising practices by for-profit education company Career Education Corp. CEC operated schools across the nation, including Le Cordon Bleu in Oregon. The $493.7 million settlement included $6.1 million in debt relief for 2,200 former students in Oregon and imposed heightened disclosure requirements.
https://www.opb.org/news/article/student-debt-career-education-corporation-oregon/

ITT/CUSO Multistate (June 2019)
Oregon helped lead an investigation by 43 states and D.C. into predatory loans made to ITT students. Under the settlement, CUSO will forgive $168 million in debt owed by former ITT students, including $2.2 million in relief for 242 Oregonians.
https://www.oregonlive.com/education/2019/06/justice-department-settlement-enables-former-itt-tech-students-to-shed-college-debt.html

The College Network (January 2019)
The College Network, a for-profit provider of online study programs for nursing students, went bankrupt after making predatory loans to students. Oregon negotiated a settlement with one of the credit unions that financed the debt. We Florida Credit Union agreed to cancel all remaining debt, approximately $400,000, for 91 Oregon students. The credit union also agreed to request that credit reporting agencies delete negative information and may not sell or assign the loans.

DATA PRIVACY/SECURITY

Premera Multistate (July 2019)
Oregon, Washington and California led a 30-state investigation into violations of HIPAA and unfair and deceptive practices by Premera Blue Cross, the largest health insurer in the Northwest. Due to lax security practices, the personal information of 10.5 million consumers was breached after a phishing attack. The breach went undiscovered for nearly a year. Oregon will receive $1.3 million of the $10 million settlement. The settlement is the largest multistate HIPAA settlement since attorneys general gained authority to enforce HIPAA.
https://www.oregonlive.com/politics/2019/07/premera-blue-cross-agrees-to-pay-104-million-to-oregon-29-states-after-massive-data-breach.html

Uber Multistate (December 2018)
Oregon helped lead an investigation by 49 states and D.C. into a data breach and attempted cover up by ride share company Uber. Over 600,000 drivers had personal information breached. Uber agreed to pay $148 million, the largest multistate privacy settlement at the time.
https://www.seattletimes.com/business/uber-reaches-148-million-settlement-over-its-2016-data-breach-which-affected-57-million-globally/

AUTO

Fiat Chrysler and Robert Bosch (January 2019)
Oregon helped lead an investigation by 49 states, DC and Guam into deceptive practices and environmental violations by Fiat Chrysler and Robert Bosch. The companies advertised environmentally friendly cars but used defeat devices to cheat emissions tests. The companies paid a combined $171 million, including $7.23 million to Oregon.

Oregon Plays Key Role in $171 Million Settlement with Fiat Chrysler and Robert Bosch for Environmental Breaches

Courtesy Ford Settlement (December 2018)
Oregon’s investigation found that Courtesy Ford misrepresented MSRP on their website and deceived consumers into spending hundreds of dollars on a theft deterrent product that they did not want. As part of the settlement, Courtesy Ford agreed to refund 6 consumers a total of $55,000 in restitution and refunded $438,000 to an additional 1,300 consumers who purchased the theft deterrent system.
https://www.kgw.com/article/news/investigations/check-your-mailbox-4000-oregonians-will-get-refunds-after-state-settles-with-local-ford-dealership/283-57830d7c-9080-4f2a-a26f-7919d9e95f18

CONSUMER FINANCE

Wells Fargo Multistate (December 2018)
50 states and D.C. resolved multiple investigations into Wells Fargo with a single settlement that addressed unfair or deceptive practices by Wells Fargo, including: opening over 3.5 million accounts without authorization, wrongfully charging mortgage rate-lock extension fees, and failing to refund unearned portions of auto GAAP insurance. Oregon received $9.7 million of the $575 million settlement, which to date is the most significant investigation of a national bank by attorneys general without a federal partner.
https://www.statesmanjournal.com/story/news/2018/12/28/wells-fargo-fake-accounts-settlement/2436451002/

Future Income Payments Litigation
The Attorney General and the Director of DCBS jointly sued Future Income Payments for making unlicensed, usurious loans deceptively marketed as “pension advances.” The court entered judgment in the amount of $5.9 million against the company, declared void all outstanding loans and prohibited the company from selling, assigning or collecting the loans. Since the suit, the principal, Scott Kohn, has been indicted on federal fraud charges.
https://www.nbcrightnow.com/news/future-income-payments-llc-fined-million-for-targeting-pensions-of/article_7291c456-70f3-11e9-850a-1b8b5ebab40a.html

HEALTH CARE

Opioids Litigation (Ongoing)
Oregon filed suit against Purdue Pharma in September 2018 for deceptively promoting OxyContin and violating a 2007 stipulated judgment with the Department of Justice. Trial is set for late 2020. Oregon filed a second suit in May 2019 against Purdue Pharma and the owners, the Sackler family, alleging fraudulent conveyance and seeking to hold the Sacklers personally liable for any unsatisfied financial claim Oregon has against Purdue.
https://www.oregonlive.com/crime/2019/05/oregon-sues-purdue-pharma-again-says-owners-unlawfully-marketed-opioids.html

Pfizer Drug Coupon Settlement (March 2019)
Oregon’s investigation found that Pfizer distributed deceptive marketing materials and coupons claiming consumers would pay no more than a certain amount for drugs when they actually paid much more. The settlement requires Pfizer to pay $975,000, refund money to 371 Oregon customers, and provides for grants to two Oregon charitable organizations to subsidize prescription drug costs for uninsured and underinsured residents.

AG Rosenblum Announces Large Settlement with Pfizer for Misleading Drug Pricing Coupons

U.S. Supreme Court Leaves State Court Door Open to Class Action Counterclaims Against Third Parties

By Colin D. A. MacDonald

In May, the U.S. Supreme Court ruled that third parties named in class action counterclaims in a state court action cannot remove that action to federal court. The ruling leaves open an avenue for consumers who are sued in a state court debt collection action to sue third parties about the underlying transaction without facing removal to federal court.

In 2016, Citibank sued George Jackson in North Carolina state court for sums it claimed he owed on a Citibank-issued credit card account that Jackson had with Home Depot. Jackson, in turn, filed third-party counterclaims against Home Depot and a local seller of water treatment systems under the state’s unfair and deceptive trade practices law. Jackson sought class certification for these claims and damages in excess of $5 million on behalf of the class. Citibank then dropped its underlying action, leaving only the third-party counterclaim before the court. At that point, Home Depot removed the case to federal court and Jackson challenged the removal.

In a 5-4 vote, the high court concluded that neither the Class Action Fairness Act (CAFA), nor the general federal court removal statute provided a basis for removal of the case. Writing for the majority, Justice Clarence Thomas wrote that the clear text of the statutes address the ability of defendants in “civil actions” to remove cases, not defendants to “claims.” As a result, although a party might be defending against a claim, that party is not a “defendant” with power to remove the case. Justice Thomas, though generally known for his conservative judicial leaning, was joined by the court’s four traditionally liberal justices in his opinion.

CAFA permits defendants in many large class action suits to remove the case to federal court, even if the case raises only state law claims and regardless of whether the defendant is based in the state where it is sued. The 2005 law was based on a view among its supporters that state courts were likely to favor classes of individuals over large corporations and that federal courts could more fairly adjudicate the dispute.

Justice Alito penned a sharp dissent, arguing that Home Depot was clearly a “defendant” in any ordinary meaning of the term. Indeed, he noted that by the time the retailer sought removal, the only claims before the court were those that Jackson brought against Home Depot. Alito’s dissent contended that the majority would permit use of third party counterclaims as a “tactic” to keep a class action in state court that CAFA would otherwise allow to be removed.

The opinion builds upon decades-old precedent holding that an original plaintiff defending against counterclaims may not remove the case, even if a federal court would have had jurisdiction had the counterclaim been filed first. In that case, however, a party could ostensibly avoid facing counterclaims in state court by not filing the initial action. The dissent argued that Home Depot had no such option, and thus Congress could not possibly have intended for CAFA to close the doors of federal courts to those defending against counterclaims only in this unique posture.

To that, Thomas’s majority opinion responded: “that result is a consequence of the statute Congress wrote.” If Congress dislikes what the law says, the majority concludes, the solution is for Congress – not the courts – to change it.

The case now returns to North Carolina state courts for further proceedings on the merits of Jackson’s claims against Home Depot.

Case citation: Home Depot U. S. A., Inc. v. Jackson, 587 U.S. ____ (2019).

Colin D. A. MacDonald is a Seattle-based consumer protection attorney for the Federal Trade Commission. The views expressed in this article are his own and do not necessarily reflect those of the Commission or of any individual Commissioner.

LITIGATION SHENANIGANS & THE ATTORNEY FEE MULTIPLIER-WHAT YOU NEED TO KNOW

By: Jeremiah Ross

Most consumer and personal injury lawyers represent clients based on a contingency fee agreement. That means that the attorney will not get paid unless the client receives a settlement, award, or judgment in their favor. Many firms and attorneys defending lawsuits charge by the hour. They are then paid monthly by the corporate defendant or insurance company. This can often result in defense lawyers using tactics that are meant to drain the plaintiff’s attorney’s time, money, and resources in an effort to force the plaintiff to settle or divert the plaintiff’s lawyer’s attention from the critical issues in the case. These tactics can come at a price though, and an unpublished Ninth Circuit opinion sheds some light on the remedy available to a party who is subjected to litigation shenanigans.

In Beck v. Metro. Prop. & Cas. Ins. Co., 727 F. App’x 330 (9th Cir. 2018), the Ninth Circuit upheld a District of Oregon court award of an attorney fee multiplier of 2.0 due to the defendant’s litigation tactics. What this means is that the plaintiff lawyer’s attorney fee claim of $597,669.25 was doubled to $1,195,398.50 “due to the nature of this case and the conduct of Metropolitan and its Counsel.” Beck v. Metro. Prop. & Cas. Ins. Co., No. 3:13-cv-00879-AC, 2016 WL 4978411, 2016 U.S. Dist. LEXIS 126335, at *68 (D. Or. Sep. 16, 2016).

You are probably wondering how was the plaintiff was able to force the defendant Insurance company to pay double the amount of her attorney fees. Thankfully, John Acosta, United States Magistrate Judge, drafted a 56-page order that provides a clear road map for lawyers who are seeking an attorney fee multiplier in Oregon. In this breach of insurance contract case, Judge Acosta found the plaintiff had satisfied the proof of loss requirement under ORS 742.061. As a result the defendant was forced to pay plaintiff’s reasonable attorney fees. The question then became: what is the reasonable amount of fees?

The Judge used the ORS 20.075(1) and (2) factors to determine what was reasonable. First, the Judge rejected defendant Metropolitan’s argument that the ORS 20.075(1) factors apply only to the court’s determination whether to award fees and not the amount of fees, and not to the reasonableness of the fees. In doing so, the court provided clear guidance that both ORS 20.075(1) and ORS 20.075(2) factors are to be used to determine the reasonable amount of attorney fees to award.

The court then delved into the factors under ORS 20.075(1). The court evaluated the parties’ respective pre-litigation conduct and did not look kindly at Metropolitan’s attempts to resolve the case on unilaterally established terms. The court also looked at the objective reasonableness of the claims and defenses asserted by the parties under ORS 20.075(1)(b). In addressing that factor the court acknowledged that the case was a simple breach of contract case. However, the defense asserted unreasonable defenses in its answer, and advanced unreasonable arguments to use as the equivalent of defenses. For example, the defense asserted a merit-less “Fraud” defense. This is a common defense tactic in consumer cases, and the court did not take kindly to it. The court then delved into the various other ORS 20.075(1) factors and found they either weighed in plaintiff’s favor or they did not apply.

The court then turned to the ORS 20.075(2) factors. On review, the Ninth Circuit found that “the district court thoughtfully, carefully, and thoroughly considered each of the factors set forth in Oregon Revised Statutes §§ 20.075(1), (2) in light of the record as a whole. Beck, 727 F. App’x at 330-31. In doing so, the court addressed the prevailing market rates for legal services in the relevant community. In this case the plaintiff’s attorneys submitted expert declarations as expert evidence of the plaintiff’s attorneys’ skill and experience in insurance law and to support the hourly rates she requested. The court used the expert opinions and the 2017 Oregon State Bar Economic Survey to assist in establishing the attorneys’ respective hourly rates.

The court also addressed whether the fee is fixed or contingent factor under ORS 20.075(2)(h). The plaintiff’s lawyer initially worked under an hourly fee and then transferred to a contingency fee. The Beck case is similar to many consumer cases, because the defense used tactics which made it impossible for the plaintiff to pay the lawyer an hourly rate. However, the firm representing Ms. Beck continued to be able to do so under a contingency fee agreement. The court noted that the defense’s litigation strategy increased the risk to Beck’s attorneys that they might not be fully compensated for their time, and that factor weighed in favor of an attorney fee award.

The court then addressed the attorney fee multiplier. The court noted, “Oregon law permits an enhancement of fees when it is supported by the facts and circumstances of the case. See Griffin v. TriMet, 112 Or. App. 575, 585 (1992) aff’d in part and rev’d in part, 318 Or. 500 (1994) (approving trial court award of 2.0 multiplier).” The court then spent significant time addressing the facts leading up to the litigation and the defense’s litigation tactics. The court noted that the defense’s efforts to attempt to obtain irrelevant evidence through the discovery process, using theories that lacked any relevance, and the defenses disorganized or deliberately untimely approach to raising various issues resulted in the plaintiff incurring fees for having to respond to both the substance of the issues and their “procedural infirmity.”

However, the court limited the 2.0 multiplier to the fees the plaintiff only incurred during the litigation. The court concluded that pre-litigation fees that were incurred were not subject to the multiplier because the defense’s litigation counsel played no role in the parties’ negotiations.

Judge Acosta provided the legal road map to guide future litigants facing a defendant who desires to engage in litigation shenanigans in a fee shifting case. Hopefully the opinion will have a deterrent effect and help litigants combat such litigation tactics. The opinion is also a fantastic example of the various issues a fee petition should address and the arguments a fee seeking party may face. Lastly, the opinion is an excellent example of the facts and factors the court looks to when deciding if a fee multiplier is appropriate in a particular case.

 

 

Zabriskie v. Federal National Mortgage Association

By Michael Fuller

In Zabriskie v. Federal National Mortgage Association (9th Cir. 2019), a divided Ninth Circuit panel decided that Fannie Mae was not a “consumer reporting agency” under the Fair Credit Reporting Act. Accordingly, the opinion reversed the trial court and ruled against the Zabriskie family. The dissent determined that Fannie Mae was in fact a credit reporting agency, and would have ruled in favor of the Zabriskie family.

The case started when the Zabriskie family sued Fannie Mae under the Fair Credit Reporting Act. The Zabriskie family claimed that Fannie Mae’s Desktop Underwriter software falsely reported that the Zabriskie family had a foreclosure on their record, which interfered with their ability to get a home loan.

Judges J. Clifford Wallace and Susan P. Graber decided that Fannie Mae was not a credit reporting agency because it did not regularly assemble or evaluate consumer information. Instead, Judges Wallace and Graber found that Fannie Mae merely provided software that allowed lenders to assemble and evaluate consumer information. Judges Wallace and Graber also found that Fannie Mae was not a consumer reporting agency because the purpose of its Desktop Underwriter software was not to furnish consumer reports to third parties. Instead, the majority decided that the purpose of Fannie Mae’s software was to facilitate transactions between lenders and Fannie Mae.

In his dissent, Judge Lasnik pointed out that Fannie Mae knew its software was programmed in error to unfairly harm the Zabriskie family’s credit and Fannie Mae did nothing to correct the error. Judge Lasnik noted that the purpose of the Fair Credit Reporting Act was to “protect consumers against inaccurate and incomplete credit reporting”. Given the real world consequences of Fannie Mae’s credit reporting activities, the dissent determined that Congress did not intend to exclude Fannie Mae from liability under these circumstances.