A Sway from Suesz?

The Seventh Circuit Court of Appeals is revisiting whether creditors will be required to file collection cases in the suburban districts where a defendant resides.

Last summer, we reported the July 2014 decision in Suesz v. Med-1 Solutions, LLC, 757 F.3d 626 (7th Cir. 2014). In that case, the Seventh Circuit held that the Fair Debt Collection Practices Act (FDCPA) requirement that consumer debt collectors file suit in the “judicial district or similar legal entity” where either the consumer resides or the contract was executed should be interpreted to mean that the lawsuit must be filed in “the smallest geographic area that is relevant for determining venue.” The court thus overturned 18 years of precedent established by Newsom v. Friedman, 76 F.3d 813 (7th Cir. 1996), where the court opined that the circuit courts in each Illinois county constitute “judicial districts” within the meaning of the FDCPA.

Under Newsom, creditors could file suit in any of Cook County’s six municipal districts, including the First Municipal District, which includes all cases filed at the Daley Center. Suesz overturned Newsom, forcing creditors to transfer hundreds of cases, to one of Cook County’s suburban district courts. As a result, resolution of these cases has been delayed considerably, and many were dismissed altogether, where refiling proved more expeditious.

Additionally, many creditors were required to defend against lawsuits brought on behalf of consumers, which alleged abusive collection practices in violation of the FDCPA for filing lawsuits in the incorrect venue. In fact, FDCPA lawsuits nationwide have increased 14.5% as of November 2015 over the same time period in 2014. The Northern District of Illinois leads the nation with the most lawsuits filed pursuant to the FDCPA and similar consumer-protection statutes.

One such lawsuit, Ronald Oliva v. Blatt Hasenmiller Leibsker & Moore, LLC, was filed on behalf of a debtor against a Chicago-based law firm, claiming the law firm violated the FDCPA when it filed a credit card collection action against Oliva in a judicial district where he neither resided nor signed the contract. The District Court ruled in favor of the creditor and Oliva appealed the ruling. Oral arguments were heard in early November 2015, at which time the court itself referred to the Suesz decision as an “administrative nightmare.” Click here to listen to the oral argument in the 7th Circuit.

We await the opinion of the Circuit Court in Olivia which could come down in a matter of weeks. To the relief of creditors and their attorneys, Suesz may be short-lived precedent. Gomberg Sharfman P.C. remains committed to keeping its clients informed and up-to-date on statutory changes and case law that impact their lines of business. We will keep you updated, as Oliva and similar cases are decided.