State Ex Rel. Hatch v. Cross Country Bank, Inc.

703 N.W.2d 562, 2005 Minn. App. LEXIS 749, 2005 WL 2208538
CourtCourt of Appeals of Minnesota
DecidedSeptember 13, 2005
DocketA05-205
StatusPublished
Cited by16 cases

This text of 703 N.W.2d 562 (State Ex Rel. Hatch v. Cross Country Bank, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State Ex Rel. Hatch v. Cross Country Bank, Inc., 703 N.W.2d 562, 2005 Minn. App. LEXIS 749, 2005 WL 2208538 (Mich. Ct. App. 2005).

Opinion

OPINION

STONEBURNER, Judge.

Respondent State of Minnesota sued appellants, a bank that issues credit cards *566 and the company that collects payment on the cards, alleging violations of the Uniform Deceptive Trade Practices Act, Consumer Fraud Act, Automatic Dialing-Announcing Devices Act, and the tort of invasion of privacy by intrusion upon seclusion. In this appeal, appellants challenge the district court’s denial of their motion to compel arbitration of the tort claim and grant of a temporary injunction governing collection procedures. We affirm in part and reverse in part.

FACTS

Appellant Cross Country Bank (CCB) is a Delaware-based, state-chartered bank that issues credit cards to consumers in the “subprime” market, i.e., people with a poor credit rating or low income. Appellant Applied Card Systems, Inc. (ACS) is a Delaware corporation that performs credit-card-servicing functions for CCB, including collection of delinquent accounts.

Respondent, the Minnesota Attorney General (the state), sued CCB and ACS, alleging that ACS’s collection procedures violate the Deceptive Trade Practices Act (Minn.Stat. § 325D.44, subd. 1 (2004)) (DTPA); Prevention of Consumer Fraud Act (Minn.Stat. § 325F.69, subd. 1 (2004)) (CFA); and Automatic Dialing-Announcing Devices Act (Minn.Stat. § 325E.26 (2004)) (ADADA). The state also asserted a tort claim of invasion of privacy, specifically, intrusion upon seclusion.

The state requested relief in the form of: (1) a declaratory judgment that appellants violated the statutory provisions and committed tortious invasions of privacy on multiple occasions; (2) an injunction preventing appellants from engaging in the acts described in the complaint and/or otherwise violating the statutes invoked or committing further tortious invasions of privacy; (3) judgment for civil penalties under Minn.Stat. § 8.31, subd. 3 (2004), for each violation of the statutes and for each tortious invasion of the privacy of a Minnesota citizen; (4) “restitution under the par-ens patriae doctrine, Minn.Stat. § 8.31, the general equitable powers of this court ... and any other authority for all persons injured by [appellants’] acts”; and (5) costs and attorney fees.

The state moved for a temporary injunction enjoining appellants’ further violations of Minnesota statutes and acts of intrusion upon seclusion. 1 The state submitted affidavits of CCB credit-card holders; card holders’ family members, acquaintances, employers, and colleagues; people who assert that they received collections calls for CCB card holders whom they did not know, and former ACS employees. The affidavits describe a variety of allegedly unfair, deceptive or fraudulent, abusive, illegal, and intrusive practices by ACS debt collectors, including:

• calling consumers multiple times per day or multiple times within a very short period of time;
• calling consumers on holidays such as Easter and Labor Day;
• referring to consumers as “idiot,” “assh-,” “thief,” “b-,” or “liar” and telling a consumer that the collector was “more important than your f — ing child” or that the consumer “talk[s] like a black person”;
• ignoring or claiming not to have received multiple requests to stop calling for consumers unknown to the person answering the telephone or to stop calling card holders at their workplaces;
*567 • tying up workplace phones in a hospital and a group home by making multiple calls in a short space of time;
• providing personal financial information to card holders’ colleagues and work supervisors;
• calling homes as early as 6:30 a.m. and as late as 11:00 p.m.;
• using an auto-dialing machine to give consumers pre-recorded messages without first obtaining permission to send such messages;
• threatening legal action that was never taken;
• threatening to foreclose on card holders’ homes and/or repossess all their possessions;
• threatening to report card holders to immigration authorities;
• identifying themselves by aliases or misleading titles, such as “Adam Dunn, Director of Federal Fraud Investigations”;
• adopting misleading tones of voice to “trick” phone answerers into believing it was a friend calling or that an emergency had occurred;
• engaging in a practice called “assumptive pay-by-phone,” which involves hurriedly giving a consumer a confirmation number while falsely asserting that the customer has permitted payment of a balance, and if the customer accepts the confirmation number, withdrawing funds from the customer’s account;
• withdrawing money from customer bank accounts without any prior authorization, by using bank routing numbers from checks tendered for previous payments;
• agreeing to accept a certain amount as payment to bring an account out of delinquency status or settle an account, but later asserting that the amount paid was not enough, assessing additional late fees and over-limit penalties, and attempting to collect an additional balance;
• deliberately withholding information about the actual payoff balance of an account, so that customers would pay only the balance due as of the date of the inquiry, believe they were paying in full, and would be charged additional late fees for the balance of accrued interest that was not paid off.

Some affidavits allege physical and emotional harm from such practices, including increased stress and exacerbated or potential exacerbation of heart disease, diabetes, and other pre-existing health problems. A number of affidavits from ACS employees relate that they engaged in these practices or witnessed other collectors doing so, and that ACS management either explicitly required the use of such tactics or tacitly encouraged it, such as by ignoring or not investigating employee complaints.

Appellants moved (1) for partial dismissal on the grounds that the state did not have proper parens patriae standing to bring a tort claim for invasion of privacy, (2) to compel arbitration of the state’s “parens patriae” elaim(s), 2 and (3) to strike an affidavit of appellants’ former general counsel. 3

Appellants submitted affidavits from current and former ACS employees. *568 These affidavits state that the allegations from former ACS employees are false, that the alleged activities were prohibited by ACS’s policies and that any collector caught violating the policy would be terminated.

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Cite This Page — Counsel Stack

Bluebook (online)
703 N.W.2d 562, 2005 Minn. App. LEXIS 749, 2005 WL 2208538, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-hatch-v-cross-country-bank-inc-minnctapp-2005.