Fabec v. Debt Management Partners, LLC
1:18-cv-01537
| N.D. Ohio | Dec 23, 2019Background
- Fabec sued Debt Management Partners (DMP) and Capital Management Holdings (CMH) asserting FDCPA, TCPA, Ohio CSPA, invasion of privacy, and civil conspiracy claims as a putative class action. DMP removed the case to federal court.
- Plaintiff moved for class certification; the motion was denied on May 29, 2019. The court left the certification issue open pending further discovery.
- Court-ordered mediation occurred on September 10, 2019; the parties did not settle at mediation.
- After mediation, a CMH principal contacted Fabec (through her husband), offered $10,000, and provided a check with a handwritten release on its back. Fabec endorsed and cashed the check on September 13, 2019 and discharged her attorneys.
- Defendants moved to dismiss with prejudice asserting the settlement mooted the case; plaintiff’s former counsel moved for sanctions alleging improper contact and inducement; CMH cross-moved for sanctions alleging plaintiff’s counsel withheld settlement offers.
- The court granted defendants’ joint motion to dismiss for lack of a live case or controversy, denied both sanctions motions, and denied remaining discovery motions as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Fabec’s voluntary settlement and discharge of counsel moot the case? | Settlement by the named plaintiff should not necessarily moot the action; plaintiff’s counsel sought to substitute a new representative and preserve class claims. | Fabec’s voluntary settlement of her individual claims (and discharge of counsel) moots the case because no certified class exists and no live controversy remains. | Dismissed: settlement and counsel discharge rendered the case moot; court lacks jurisdiction. |
| Does the “picking off” (buy-off) exception to mootness apply? | Counsel asserted defendants improperly "picked off" the named plaintiff and prevented class relief; exception should apply. | Settlement occurred after class certification was denied; timing and facts do not show an attempt to frustrate class objectives. | Rejected: counsel waived/failed to adequately brief the exception; alternatively, facts do not support it here. |
| May discharged plaintiff’s former counsel pursue sanctions on plaintiff’s behalf? | Former counsel moved for sanctions alleging defendants induced client to settle and severed attorney-client relationship. | Former counsel had been discharged and therefore lacked authority to prosecute motions on Fabec’s behalf. | Denied: former counsel lacked authority to pursue sanctions as they no longer represented a party; no basis to allow unilateral prosecution. |
| Are sanctions warranted against either side for misconduct (CMH contacting plaintiff or counsel withholding offers)? | Counsel alleged CMH surreptitiously contacted Fabec and induced settlement without counsel — seeking fees, discovery, substitution. | CMH contended counsel withheld prior settlement offers causing unnecessary fees; sought sanctions and attorneys’ fees. | Denied: court found insufficient evidence of egregious misconduct by CMH and insufficient proof to support sanctions against counsel; factual assertions were speculative. |
Key Cases Cited
- Pettrey v. Enterprise Title Agency, Inc., 584 F.3d 701 (6th Cir. 2009) (federal jurisdiction requires a live case or controversy throughout the litigation)
- Hrivnak v. NCO Portfolio Management, Inc., 719 F.3d 564 (6th Cir. 2013) (Article III mootness principles apply throughout a case’s life)
- Fialka–Feldman v. Oakland Univ. Bd. of Tr., 639 F.3d 711 (6th Cir. 2011) (‘‘cradle-to-grave’’ requirement for case-or-controversy)
- Brunet v. City of Columbus, 1 F.3d 390 (6th Cir. 1993) (settlement of a plaintiff’s claims generally moots the action)
- Unan v. Lyon, 853 F.3d 279 (6th Cir. 2017) (discussing class-action mootness and exceptions)
- Wilson v. Gordon, 822 F.3d 934 (6th Cir. 2016) (application of picking-off doctrine in class-action context)
- Deposit Guar. Nat'l Bank v. Roper, 445 U.S. 326 (1980) (picking-off exception developed to prevent strategic buys of named plaintiffs)
- Montgomery v. Kraft Foods Global, 822 F.3d 304 (6th Cir. 2016) (treatment of mootness where named plaintiff’s claim is resolved before certification)