Huebner v. Midland Credit Mgmt., Inc.
897 F.3d 42
2d Cir.2018Background
- In Oct. 2013 Huebner (an experienced FDCPA litigator) called Midland to dispute a $131 debt and secretly recorded the call; he repeatedly described the debt as “nonexistent” but declined to explain further.
- Midland’s agent (Elliott) asked follow-up questions about the nature of the dispute to attempt resolution; Midland coded the account “289” that day, deleted the account, notified credit reporting agencies, and sent Huebner a deletion letter.
- Huebner sued under the FDCPA alleging (a) Elliott’s questioning misled/deterred him from disputing the debt (§ 1692e, § 1692e(8), § 1692e(10)), and (b) Midland failed to report the debt as disputed to credit reporting agencies and sent a false letter (§ 1692e(2)(A)).
- At an initial status conference, counsel (Poltorak) misrepresented the recorded call (claiming Elliott said disputes must be in writing); the court sanctioned Poltorak for lack of good-faith participation and later sanctioned Huebner for violating a protective order.
- The district court granted summary judgment for Midland (no genuine issue that the agent’s questions were misleading or that Midland failed to report the debt as disputed) and imposed limited fee sanctions against Huebner and Poltorak PC under § 1692k(a)(3), 28 U.S.C. § 1927, Rule 16, and the court’s inherent authority.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether collector’s follow-up questions about the nature of a dispute violate § 1692e (including §1692e(8), §1692e(10)) | Elliott’s questions misled/deterred consumers into believing they could not dispute orally and improperly extracted information | Questions were reasonable efforts to identify and resolve the dispute; not deceptive or harassing here | Questions were not misleading to the least sophisticated consumer; summary judgment for Midland affirmed |
| Whether Midland failed to report the debt as "disputed" to credit reporting agencies | Midland did not report the debt as disputed and sent a false letter | Midland coded account 289, deleted account, notified CRAs, and sent deletion letter to plaintiff | Record showed Midland instructed CRAs to delete the debt; no material factual dispute; summary judgment for Midland affirmed |
| Sanction under Rule 16(f)(1)(B) against counsel Poltorak for initial status-conference misrepresentation | Misstatement was inadvertent; theory unchanged | Counsel misled the court by asserting the recording showed a no-oral-disputes statement, then shifted theory, delaying proceedings | District court did not abuse discretion in imposing $500 sanction for failure to participate in good faith |
| Sanction under Rule 16(f)(1)(C) against Huebner for violating protective order | Sanctioned without opportunity to withdraw; unfair | Huebner filed protected material on open docket and ignored procedural steps; court warned parties earlier | Sanction upheld; Huebner had been warned and violated protective-order procedures |
| Sanction under 28 U.S.C. § 1927 against Poltorak PC for multiplying proceedings | Novel legal question; not frivolous | Multiple frivolous tactics, misrepresentations, improper motions, and willful violations of orders | § 1927 award affirmed: claims were without color and pursued in bad faith or vexatiously |
| Sanction under § 1692k(a)(3) and inherent authority against Huebner for bad-faith litigation | Case not brought in bad faith; no abuse | As experienced FDCPA lawyer, Huebner engineered evasive call to “test” Midland and pursued meritless suit | Sanctions affirmed: conduct found without color and motivated by improper purpose |
Key Cases Cited
- Eades v. Kennedy, PC Law Offices, 799 F.3d 161 (2d Cir. 2015) (least-sophisticated-consumer standard for §1692e analysis)
- Ellis v. Solomon & Solomon, P.C., 591 F.3d 130 (2d Cir. 2010) (clarifies limits of least-sophisticated-consumer—protects gullible but not unreasonable constructions)
- Jacobson v. Healthcare Fin. Servs., Inc., 516 F.3d 85 (2d Cir. 2008) (construes §1692e and rejects bizarre/idiosyncratic interpretations)
- Chambers v. NASCO, Inc., 501 U.S. 32 (1991) (district courts’ inherent authority to sanction bad-faith litigation conduct)
- Enmon v. Prospect Capital Corp., 675 F.3d 138 (2d Cir. 2012) (standards for sanctions under § 1927 and firm liability)
- Kim v. Kimm, 884 F.3d 98 (2d Cir. 2018) (§ 1927 requires claims entirely without color and brought in bad faith)
- Sheppard v. Beerman, 317 F.3d 351 (2d Cir. 2003) (standard for reviewing summary judgment)
- Link v. Wabash R.R. Co., 370 U.S. 626 (1962) (courts’ authority to manage docket and sanction for failure to prosecute)