McWilliams v. Advanced Recovery Systems, Inc.

176 F. Supp. 3d 635, 2016 U.S. Dist. LEXIS 43961, 2016 WL 1298617
CourtDistrict Court, S.D. Mississippi
DecidedMarch 31, 2016
DocketCAUSE NO. 3:15-CV-70-CWR-LRA
StatusPublished
Cited by4 cases

This text of 176 F. Supp. 3d 635 (McWilliams v. Advanced Recovery Systems, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McWilliams v. Advanced Recovery Systems, Inc., 176 F. Supp. 3d 635, 2016 U.S. Dist. LEXIS 43961, 2016 WL 1298617 (S.D. Miss. 2016).

Opinion

MEMORANDUM OPINION AND PROTECTIVE ORDER

Carlton W. Reeves, UNITED STATES DISTRICT JUDGE

Before the Court is the plaintiff and defendants’ joint motion for protective order. A hearing was held with all involved and the matter is ready for adjudication.

I. Factual and Procedural History

This is a class action in which Wendy McWilliams claims Advanced Recovery Systems and the Young Wells Williams law firm violated the Fair Debt Collection Practices Act (FDCPA). See 15 U.S.C. §§ 1692 et seq. The Court previously heard and resolved a substantial motion to dismiss. McWilliams v. Advanced Recovery Sys., Inc., 108 F.Supp.3d 456 (S.D.Miss.2015). Now pending are cross-motions for summary judgment. While the summary judgment motions- were pending, the class was certified on November 3, 2015. McWilliams v. Advanced Recovery Sys., Inc., 310 F.R.D. 337 (S.D.Miss.2015).

After certification, counsel for plaintiff and defendants — both experienced class action litigators — notified the Court of an unexpected development. On December 14, 2015, attorney Kristi McHale had sent a solicitation letter to named plaintiff and class representative McWilliams. It stated, in relevant part,

Our investigation has revealed that the Young Wells Williams law firm may have violated several portions of the Fair Debt Collection Practices Act (FDCPA) in their attempt to collect on these accounts. In fact, a class action has been certified in the United States District Court of Mississippi for all peo-pie sued between February 4, 2014 and February 4,2015.

The letter went on to propose a contingency fee arrangement in which McHale Law, PLLC would represent McWilliams against ARS and YWW, A blank contingency fee contract and new client intake form were enclosed. McHale concluded, “I look forward to working for you in protecting your rights.”

Counsel for McWilliams responded on December 21, advising McHale that she had communicated with a represented party and also communicated with class members, allegedly in violation of the Federal Rules of Civil Procedure. Counsel requested an accounting of the solicitations.

On December 23, McHale responded directly to McWilliams, copying counsel, to “apologize for any confusion this letter [639]*639may have caused concerning your representation of your cause of action.” She did not describe her other solicitations or send a separate response to McWilliams’ attorney addressing his concerns about other class members.

The present motion followed. In it, the plaintiff and defendants initially sought a protective Order preventing third-party attorneys from soliciting or communicating with class members. McHale did not respond to the motion, but she attended a hearing held on the motion and permitted her attorney, Robert Compton, to present argument on her behalf. Attorney Chris Falgout of the Jordan & Falgout firm also participated in the hearing since, as it became clear, he had sent similar solicitations to class members located in his area of Mississippi.

The hearing revealed several facts of interest. McHale’s counsel represented that she had sent solicitation letters to approximately 120 residents of Hinds County. Falgout stated that he had sent approximately 90 such letters to residents of Lauderdale County. Falgout then argued that his solicitations were justified because he was presently defending an existing client, George Clayton, in an ARS debt collection suit pending in Lauderdale County. McHale and Falgout also disclosed that in January 2016, they sent the class members they had retained a “curative letter” which attempted to clarify the situation and offered clients a 10-day window in which to cancel their representation agreement. A copy was provided to the Court for in camera inspection that day.

All of the involved attorneys conferred several days later. McHale and Falgout shared a copy of their January 2016 “cura-five letter” with counsel for plaintiff and defendants. McHale and Falgout also revealed that their solicitations had resulted in them signing up approximately 50 class members as clients.

Aggrieved by these developments, counsel for plaintiff filed a supplemental brief requesting an Order invalidating McHale and Falgout’s representation agreements with the 50 or so class members. McHale and Falgout subsequently responded with a brief on the merits.

Having considered all of the arguments made at the hearing and in the papers, the Court is ready to rule.

II. Legal Standard

“Class actions serve an' important function in our system of civil justice.” Gulf Oil Co. v. Bernard, 452 U.S. 89, 99, 101 S.Ct. 2193, 68 L.Ed.2d 693 (1981). “The judicial system benefits by efficient resolution in one proceeding of common issues of law and fact arising from the same alleged [unlawful] activity.” Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 170, 110 S.Ct. 482, 107 L.Ed.2d 480 (1989).

Class actions, however, also present “opportunities for abuse.” Bernard, 452 U.S. at 100, 101 S.Ct. 2193. The Supreme Court has noted the potential for “heightened susceptibilities of nonparty class members to solicitation amounting to bar-ratry.” Id. at 100 n.12, 101 S.Ct. 2193 (quotation .marks and citation omitted). That is a polite way of saying that attorneys who want to cut into the class action may try to steal away class members and then bring separate, wasteful lawsuits.1 Another potential problem the Supreme Court flagged is how “unapproved communications to class members that misrepre[640]*640sent the status or effect of the pending action also have an obvious potential for confusion and/or adversely affecting the administration of justice.” Id. (quotation marks, citation, and brackets omitted).

“Because of the potential for abuse, a district court has both the duty and the broad authority to exercise control over a class action and to enter appropriate orders governing the conduct of counsel and parties.” Id. at 100, 101 S.Ct. 2193; see Deposit Guar. Nat. Bank, Jackson, Miss. v. Roper, 445 U.S. 326, 331, 100 S.Ct. 1166, 63 L.Ed.2d 427 (1980) (district courts have the responsibility to protect absent class members). This common-sense principle is also reflected in Federal Rule of Civil Procedure 23, which in its current form provides the following:

In conducting an action under this rule, the court may issue orders that: (A) determine the course of proceedings or prescribe measures to prevent undue repetition or complication in presenting evidence or argument; (B) require — to protect class members and fairly conduct the action — giving appropriate notice to some or all class members of: (i) any step in the action; ... (C) impose conditions on the representative parties or on intervenors; ...

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Cite This Page — Counsel Stack

Bluebook (online)
176 F. Supp. 3d 635, 2016 U.S. Dist. LEXIS 43961, 2016 WL 1298617, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcwilliams-v-advanced-recovery-systems-inc-mssd-2016.