U.S. District Court Preliminarily Approves Class Action Settlement in Action Against Debt Collector

The U.S. District Court for the Southern District of Ohio granted preliminary approval to a class action settlement for unlawful debt collection practices by a law firm based in Lebanon, Ohio. The class action lawsuit was brought by the law firm of Minnillo & Jenkins, Co. LPA on behalf of Zachary Langendorfer.

The complaint alleges that the Lebanon law firm of Kaufman & Florence filed collection suits in the Lebanon Municipal Court on behalf of Lebanon Citizens National Bank and against consumers who lived in other counties, which violates the Fair Debt Collection Practices Act (“FDCPA”) and a parallel state law requiring consumer collection actions to be brought in the county where the consumer resides or where they signed the contract sued on. The defendants deny liability but have agreed to a settlement under which each individual who was sued or had other legal action taken against them in the wrong county during the two years prior to the filing of the class action will receive $600.00.

Because the case was settled, the court did not determine the full extent of the defendants’ liability, however, the court did issue a significant preliminary ruling holding that an FDCPA violation occurs when a debt collector takes any legal action against a consumer (including filing motions for summary judgment, seeking to conduct a debtor examination or pursuing garnishment) in the wrong jurisdiction, and not just when the debt collector first files a collection lawsuit.

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This ruling is important because the FDCPA has a short, one-year, statute of limitations and consumers sued in the wrong jurisdiction like the affected individuals in this case often do not learn they have been sued for months or even years, sometimes more than a year after the debt collection was filed. The FDCPA is a federal law that applies to debt collectors who are collecting consumer debts.