Author Archives: Jordan

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.

Oregon Joins State Attorneys General in Submitting Comments Regarding Small-Dollar Loans to FDIC

In November 2018, the Federal Deposit Insurance Corporation (“FDIC”) published a request for information on small-dollar loans, such as payday loans.  On January 22, 2019, Oregon’s Attorney General, Ellen Rosenblum, joined the attorneys general of twelve other states and the District of Columbia in submitting a letter to the FDIC addressing some of the risks associated with such loans.   A copy of the letter is found here.

In the letter, the AGs state that the “short-term credit needs of [the unbanked and underbanked] households are largely met by the fringe financial sector” which are “‘often usurious,  sometimes  predatory,  and  almost  always  worse  for  low-income  individuals  than  the services offered by traditional banks to their customers.’” The borrowers of such loans can become trapped in an endless cycle of debt since they are often unable to pay the loans when they become due and have to take out new loans (and pay additional fees) to pay of the previous loans.   The letter outlined several legal risks for state-chartered banks seeking to enter the small-dollar loan sector.

I.    Evasion of State  Laws

While noting that “[m]any states have enacted laws to protect consumers from abuses associated with high-cost small dollar credit offered by fringe lenders” the AG’s letter recommends that the  FDIC discourage state-chartered banks from entering into relationships with fringe lenders that are structured to evade state rate caps in any guidance it issues on small-dollar lending.

One way in which fringe  lenders  have  attempted  to evade state restrictions is by  associating with traditional banks to take advantage of the fact that traditional banks are generally not subject to state interest rate caps.  As asserted in the letter, “this method became known as ‘rent-a-bank’ lending  because  the  bank  participated  only  by  lending  its  name  and  charter  to  the  transaction. Payday lenders would claim the bank was the lender, allowing it to take advantage of the bank’s ability to export its home state’s interest rate and evade the usury and other interest rate caps in the state where the borrower resides.” Recently, payday lenders have attempted to evade state restrictions by turning to Native  American tribes in an attempt  to take  advantage  of their tribal  sovereign immunity.

II.    Ability to Repay

The AG also recommended that the FDIC discourage banks from extending small-dollar loans without considering the consumer’s ability to repay.  In particular, the Ags recommended that  “the FDIC suggest that banks consider a consumer’s monthly expenses such as recurring debt obligations and necessary living expenses in evaluating ability to repay and take into account a consumer’s ability to repay the entire balance of  the  proposed  loan  at  the  end  of  the  term  without  re-borrowing.”  The AGS “also  recommend  that  the FDIC suggestthat banks at least consider the consumer’s capacity to absorban  unanticipated financial event –for instance, in the unexpected event of a loss of income or the added expense of a medical emergency–and, nonetheless, still be able to meet the payments as they become due.”

 

5 THINGS OREGON CAR BUYERS SHOULD KNOW ABOUT “ADD-ONS” & 3 CAR BUYING TIPS

By: Jeremiah Ross

You spent days looking for the perfect vehicle. You finally find it, and the $280.00 per month payment is just what you were looking for. The dealer then offers you more than expected for your barely running trade in. Things are going great! The car buying process is taking forever, but you don’t mind because the dealer seems so nice. He is talking about the weekend he had with his kids and his young family. The dealer is in and out of the office. He blames the delay on a a back-log in financing. Hours later he walks in with a stack of “routine” documents that need to be signed so you can purchase and finance the vehicle.

The dealer says that the lender requires that you purchase a warranty and GAP insurance. He explains this is required, and that because you are getting such a great price on the car it will have little effect on the monthly payment. The dealer then starts to present each document and points out where you should sign while keeping one hand on the document and talking about his recent trip to Mt. Hood. The dealer apologizes for the delay and shakes your hand. You drive off the lot with a big grin on your face.

When you get home that big grin quickly turns to a frown once you review the paperwork. It is at that time that you notice the dealer charged you $3,000.00 for the required GAP insurance. You don’t know what GAP insurance is, but he said it was required. You also notice that the car is under factory warranty but you paid $2,000.00 for a service contract that covers the same thing as the warranty. This $15,000.00 car has now become $20,000.00. You also notice the increased monthly payments were the agreed $315.00, but instead of a 48-month loan you have a 60-month loan. You call the dealer and he says that he will look into it and call you back. After that first call, the dealer won’t take your calls anymore. Unfortunately, this unlawful scenario is all too common. However, consumers can mitigate their chances of being ripped off if they educate themselves about “add-ons.” Here are five things Oregon consumers should know about add-ons before they buy a car:

1) What are Vehicle Add-Ons: Vehicle add-ons are the extra goods, services, and accessories the dealer sells you in addition to the vehicle. Common add-ons include service contracts, pre-paid maintenance plans, extended warranties, GAP insurance, rust proofing, VIN etching, anti-theft devices, fabric protection, nitrogen in tires, window tinting, chrome-plated wheels, all-season floor mats, splash guards, wheel locks, cargo trays and alarm systems. These add-ons will almost always increase the price of the vehicle.

2) Dealers Can Make a Significant Profit on Add Ons: Dealers do not typically make a large profit on selling a vehicle. Dealers can substantially increase their profit if they are able to sell you add-ons. This is why they may be willing to substantially drop the asking price of the vehicle or increase your trade in value. This gives the illusion that you are getting a great deal when in reality you are being over-charged for the add-ons. For example, the dealer may charge you $2,500.00 for GAP insurance. The dealer then only pays GAP insurance company $500.00 for your GAP insurance policy. The dealer keeps the $2,000.00 as profit. Because of this profit, there is usually room to negotiate with the dealer if you want to buy an add-on.

3) Dealers Cannot Charge an Unconscionable Price for Add-Ons: Oregon law prevents the dealer from making false or misleading representations about the amount charged for add-ons that are sold with the vehicle by selling them at a price which is unconscionably higher than the price at which they are typically sold to customers. See OAR 137-020-0020 (3)(f). This means that the dealer cannot sell VIN etching to one customer for $50.00 and then sell the same product/service to you for $1,500.00.

4) Dealers Cannot Require You to Purchase Add-Ons in Order to Finance the Vehicle: Oregon law prohibits dealers from informing consumers that the dealer won’t sell the vehicle or obtain financing for the vehicle unless the consumer purchases add-ons, accessories, or insurance. See OAR 137-020-0020 (3)(L)&(v). The dealer can ensure that the consumer has liability insurance that is required by law, but cannot condition the sale based on the consumer purchasing that insurance from the dealer, GAP insurance, or other products or services. To put it another way, you do not have to buy any add-ons in order to buy the car.

5) The Dealer Must Be Up Front About the Cost of the Add-Ons and the Price of the Vehicle: Dealers often try and pack add-ons into the price of the vehicle. This enables them to conceal the actual price of the add-ons. This is called “packing” and it is unlawful. The law requires that during negotiations the dealer cannot quote monthly payments or the total sale price of the vehicle with the add-ons included unless the dealer clearly and separately delivers in writing, during negotiations and prior to any purchase order, the individual price of the add-ons, and the total costs without the items included. See OAR 137-020-0020 (3)(m).  This means that during negotiations the dealer should provide you something in writing noting the total cost of the vehicle and the monthly payments without any of the add-ons included. The dealers should also provide you the individual price of each add on.

How Can You Protect Yourself from a Car Dealer?

1) Read the Documents: It is a no-brainer that you should read what you are signing. However, dealers use tactics to prevent this. Dealers are trained to keep their hands on the documents and point where to sign while engaging in conversation with you. You can protect yourself by asking the dealer to step out of the office or away from the desk and give you time to read the documents. You can also politely ask the dealer to stop talking as you are going through the documents, and remind them that you are trying to focus. There is never enough time to read all of the small print. However, before you sign the documents you should have an understanding of the major aspects of the deal.

2) Shop Based on Total Sale Price: Many people purchase cars solely based on the monthly payments. Focusing on monthly payments puts the consumer at a disadvantage because the dealer can tweak the financing and price of add-ons to keep the monthly payments roughly the same, while the actual amount financed of the vehicle is substantially higher. You can protect yourself by shopping based on the “Total Sale Price” of the vehicle. That price is located on the truth in lending act disclosures that the dealer requires you to sign.

3) Don’t Be Afraid to Walk Away If Something Doesn’t Feel Right: If you think the dealer is trying to take advantage of you then walk away. Dealers use long delays to exhaust buyers so that the dealer can get them to rush through signing the paperwork. You can combat this by giving them a certain amount of time to prepare the documents or you walk. You can also walk out if you get the sense that the dealer is trying to pull a fast one or take advantage of you.

Add-ons may be a good deal for some people, but buyers should beware. Selling add-ons is a fertile area where dealers can increase their profits on a deal substantially. That means the consumer will end up paying more unless they understand what they are purchasing and the amount they are paying.

Jeremiah Ross is a Portland based attorney that represents clients in consumer matters and personal injury matters throughout the state of Oregon.

 

An Explanation of Overbiffing

By: Joel Shapiro
Consumer lawyers should be aware of an emerging unfair debt collection practice known as “overbiffing.”  The term derives from the acronym BIF, which stands for “balance in full.”  Overbiffing occurs when a debt collector inflates the balance actually owed by a consumer and instructs the consumer to pay the excessive amount.  Debt collectors often combine overbiffing with abusive, fraudulent tactics by threatening consumers with false legal consequences if they fail to pay the inflated balance.  In all inquiries from consumers involving debt collection, attorneys should investigate to determine whether the amount being collected is inaccurate.
NOV 7, 2018 
BY KATHY KRISTOF / MONEYWATCH
 
Overstating a debtor’s balance — also called “overbiffing” — is the latest outrage in unfair debt collection.
In a recent case, regulators allege a New York debt collector may have tricked thousands of consumers into paying far more than they actually owed by fraudulently inflating consumer balances and using profane, abusive and illegal tactics to collect the fabricated bills. The term is called “overbiffing” because the scammers overstate a person’s “balance in full,” which is sometimes shortened to BIF.
Slapping a temporary restraining order on a half-dozen companies affiliated with a Buffalo debt collector named Robert Heidenreich, also known as “Bobby Rich,” regulators maintain that Heindenreich’s bill collectors chronicled just how much they “overbiffed” by using forms showing the actual balance due as well as the inflated amount that they told consumers was owed.
In many cases, this false “balance given” was hundreds, even thousands, of dollars more than the consumer actually owed. “This is really egregious,” says John Heath, directing attorney at Lexington Law, a credit repair firm. “Unfortunately this is something that happened enough that the FTC had to involve itself in filing an action.”
In addition to artificially inflating debt balances, Heidenreich directed his employees to mislead debtors about who was calling — encouraging his debt collectors to pose as lawyers or members of law enforcement, according to complaints filed by the Federal Trade Commission and the New York Attorney General’s office.
The debt collectors would warn the consumer had committed a crime and was about to be arrested, sued or served with legal papers because of a failure to pay an alleged debt.  When the frantic consumer would ask how to stop the legal proceedings, the debt collectors would direct them to “attorneys” — actually just additional debt collectors — who would allow them to pay over the phone with a debit card.
When consumers balked at paying the bill, the debt collectors turned abusive, according to the complaint, engaging in threatening expletive-filled rants, sometimes threatening to call the debtor’s employer or relatives. Heidenreich’s attorney failed to return calls for comment.
Illegal behavior
The Fair Debt Collection Practices Act prohibits all of these actions. Debt collectors are not allowed to use abusive language, or contact anyone other than the debtor in their attempt to collect. Misrepresenting who collectors are, lying about the consequences of not repaying a debt and fabricating debt amounts are also prohibited under FDCPA, as well as other fraud statutes.
Anyone who is contacted by a debt collector has the right to demand that the collector “validate” the debt in writing, showing how much is owed and to whom. Consumers should be able to verify these numbers against the numbers on their own credit reports, which they can get for free at www.annualcreditreport.com.
If a debt collector is abusive or is harassing you with multiple phone calls, you also have the right to bar them from further telephone communication, says Heath. The collector would then be forced to only contact you in writing. If a collector violates these rules, you can report the abuse to your state attorney general’s consumer affairs division or to the FTC.
A federal judge issued a temporary restraining order on Heidenreich and his companies and employees on Thursday, barring them from further violations of the law, as well as from destroying documents or moving company assets.
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2018 Annual Meeting Notice

 The annual meeting of the Consumer Law Section will be held on Wednesday, November 28, 2018 at noon at the Oregon Department of Justice, 100 Market Street, Hawthorne conference room, 1st floor, Portland, OR 97201.

 During the annual meeting the following nominations will be made for 2019 Executive Committee positions.  Additional nominations will be accepted from the floor.

 Officers

Terms ending December 31, 2019

Chair:                    Matthew S. Kirkpatrick

Chair-Elect:         Christopher J. Mertens

Past-Chair:          Jeremiah Vail Ross

Secretary:           Colin D. A. MacDonald

Treasurer:           Young Walgenkim

Member-at-Large

Terms ending December 31, 2020

 Bret A. Knewtson

April Kusters

Eva H. Novick

Jordan M. Roberts

 Members previously elected to the executive committee and continuing through December 31, 2019, include Michael Fuller, Kelly Donovan Jones, Kevin A. Mehrens and Joel D. Shapiro.

 The Section’s fund balance as of December 31, 2017 was $18,096. All Section financial statements can be found at http://www.osbar.org/sections/financials.html.

Ascertainable Loss Under the Unlawful Trade Practice

By: Jordan Roberts

Earlier this year the Oregon Court of Appeals decided Simonsen v. Sandy River Auto, LLC 290 Or App 80 (2018), making it the most recent appellate case to discuss the meaning of “ascertainable loss” under Oregon’s Unlawful Trade Practices Act (the “UTPA”).

Under the UTPA: “a person that suffers an ascertainable loss of money or property, real or personal, as a result of another person’s willful use or employment of a method, act or practice declared unlawful under ORS 646.608, may bring an individual action in an appropriate court to recover actual damages or statutory damages of $200, whichever is greater.  The court or the jury may award punitive damages and the court may provide any equitable relief the court considers necessary or proper.”  ORS 646.638(1).

In Simonsen, the plaintiff purchased a used car from a dealership.  Among other things, the dealer represented that various repairs had been made, that the car was “in good running order,” that it would “not need any major fixes soon” and that plaintiff was getting a “really good deal” and “a great price.”

Two days after purchase a third-party mechanic notified plaintiff that the timing belt on the vehicle needed to be replaced, that the valve cover gaskets leaked, that the exhaust system and undercarriage were severely rusted and that the muffler was beginning to “flake apart.”  In addition, plaintiff learned that the car had been in a previous, undisclosed, accident.

Plaintiff brought a single UTPA action and sought rescission of the purchase pursuant to the UTPA or, in the alternative, actual or statutory damages.  The rescission case was tried to the judge and the damage case to a jury.

The jury returned a verdict finding that the vehicle had one or more material defects, that the dealer knew or should have known of those defects and that defendant willfully failed to disclose those defects to the plaintiff.  The jury also found that plaintiff’s economic damages, measured by the “reduction in the fair market value of the vehicle; and the out of pocket expenses incurred by plaintiff” were $0.

Defendant claimed that the $0 damage verdict meant it had prevailed and that the court was bound by the jury’s $0 damage verdict when deciding rescission.  Plaintiff argued that he was still entitled to rescind the transaction because he suffered an “ascertainable loss” when he received a vehicle that was materially different than what had been represented and, in the alternative, was entitled to statutory damages.  The trial court ruled for Plaintiff on his rescission claim and awarded plaintiff his attorney’s fees.  Defendant appealed and the Court of Appeals affirmed the judgment.

After reviewing the history of the phrase “ascertainable loss” in Oregon case law, the Court of Appeals reaffirmed the principle that “ascertainable loss can be more than a quantified measurement of diminished market value.”  In other words, “ascertainable loss” under the UTPA is not synonymous with “damages.”  Any time that a consumer receives something that is different than that which they were promised or bargained for, that consumer may have a viable UTPA claim to recover the purchase price of the goods or services even if they have suffered no diminished value.

Wells Fargo Bank, N.A., provokes fresh outrage

By David Koen

In the past decade, Wells Fargo Bank, N.A., has repeatedly shocked and awed consumers and regulators with a variety of unlawful practices. Revelations of the bank’s misdeeds – admitted and alleged – continue.

In a regulatory filing on August 3, 2018, Wells Fargo disclosed that a software mistake miscalculated eligibility for home loan modifications, causing about 625 homeowners to be denied relief. Approximately 400 of such customers then lost their homes to foreclosure. The errors occurred between April 2010 and October 2015.

Wells Fargo has created an $8 million compensation fund for affected homeowners. That’s an average of $12,800 for each such homeowner.

The bank also allowed that “[t]his effort to identify other instances in which customers may have experienced harm is ongoing, and it is possible that we may identify other areas of potential concern.”

Wells Fargo’s announcement that more of its customers may been harmed follows a similar statement the bank made after a previous scandal in which it was embroiled. In 2016, the bank’s own analysis initially revealed that it had created more than 2 million accounts that may not have been authorized by consumers. A year later, Wells Fargo revealed that it had created up to 1.4 million more potentially fake accounts.

Responding to the mortgage modification mishap, U.S. Senator Elizabeth Warren of Massachusetts tweeted, “Because of an error @WellsFargo made, 400 of its customers lost their homes. What’s the bank doing to make it right? Setting aside a few thousand dollars for each of the people affected. Pathetic. The execs who oversaw this – including CEO Tim Sloan – should be fired.”

Wells Fargo spokesman Tom Goyda said that “customers are receiving what Wells believes is appropriate given the circumstances.

Banking while Black

Two black Florida residents have sued Wells Fargo for racial discrimination in recent months following incidents in which the bank allegedly either threatened to or did call the police on its customers.

In one incident, 78-year-old Barbara Carroll alleged she tried to cash a check for $140 at a Wells Fargo branch. Bank employees then refused to cash her check or return her driver’s license, asked what she did for the money and told her they had called police. Carroll said the employees suspected that Carroll was guilty of forgery, even after the man who wrote the check confirmed its legitimacy. On July 18, Carroll sued Wells Fargo in the U.S. District Court for the Southern District of Florida, Case No. 0:18-cv-61646.

The other suit was brought by Jean Romane Elie. Elie has alleged that after trying to withdraw money for rent, a teller called the Palm Beach County Sheriff’s Office. According to Elie, he was handcuffed, detained, and accused of committing a felony. The case is pending in Palm Beach County, Florida, Circuit Court.

A Wells Fargo spokeswoman told The Washington Post that the bank “opposes discrimination of any kind.”

The cities of Sacramento, Philadelphia, Baltimore, Miami and Memphis have also sued Wells Fargo for racial discrimination. In 2012, Wells Fargo entered into a $175 million settlement with the U.S. Department of Justice after Baltimore alleged the bank had steered minorities into subprime loans and gave them less favorable rates than white borrowers. The bank has also settled Memphis’ suit against it.