Banking and Business Monthly – June 2017

COOK COUNTY, ILLINOIS PUBLISHES FINAL RULES FOR SICK LEAVE ORDINANCE; U.S. SUPREME COURT REFUSES TO APPLY FDCPA TO PURCHASERS OF DEBT

First, please note our new suburban address. We moved our Palatine office to Schaumburg this month. On with the show….

A. COOK COUNTY, ILLINOIS PUBLISHES FINAL RULES FOR SICK LEAVE ORDINANCE

On July 1, 2017, the Cook County Earned Sick Leave Ordinance goes into effect. It provides certain employees with paid sick time benefits. Employers located in Cook County municipalities that have not opted out of the ordinance should be prepared to offer these benefits. Click here to access the Cook County Commission on Human Rights’ website to review the ordinance and the implementing rules, and to download a copy of the model notice for employers to post advising employees of their rights under the ordinance.

In general, employers with at least one covered employee (an employee who works within Cook County for at least 2 hours within any two-week period subject to certain exceptions) and who have at least one place of business within Cook County are covered by the ordinance, unless the municipality where the employee works has opted out. The ordinance is not limited to just full-time employees but also covers part-time, temporary and seasonal employees. Employees earn one hour of sick leave for every 40 hours worked, and employers can limit accrual to 40 hours of earned sick leave per year. Review the ordinance and rules for further details.

B. U.S. SUPREME COURT REFUSES TO APPLY FDCPA TO PURCHASERS OF DEBT

On June 12, 2017, in a unanimous decision delivered by Justice Gorsuch, the U.S. Supreme Court ruled that companies that purchase and collect defaulted debts for their own account are not “debt collectors” subject to the Fair Debt Collection Practices Act (FDCPA). Henson v. Santander Consumer USA Inc., 582 U.S. ___ (2017).

The petitioners were consumers who obtained auto loans from CitiFinancial Auto. When they defaulted on the loans, CitiFinancial repossessed the vehicles and sold the defaulted loans to Santander Consumer USA Inc. (Santander). The petitioners received notices they owed a balance to cover the difference between the agreed purchase price and the amount of money for which CitiFinancial sold their debts. In November 2012, the petitioners filed a putative class action lawsuit that alleged that Santander violated the FDCPA in its communications with them. Santander moved to dismiss the action and claimed that it was not a “debt collector” under the FDCPA, because it bought the debts from another institution and attempted to collect them for its own account. The district court agreed with Santander and dismissed the case. The U.S. Court of Appeals for the Fourth Circuit affirmed and declined to rehear the case en banc.

The issue before the Supreme Court was how to classify individuals and entities that regularly purchase debts originated by someone else, but then seek to collect those debts for their own account. As the Supreme Court asked, “Does the [FDCPA] treat the debt purchaser like the repo man or the loan originator?” The FDCPA defines the term “debt collector” to “embrace anyone who ‘regularly collects or attempts to collect … debts owed or due … another.’” (15 U.S.C. §1692a(6)). In addressing the issue, the Supreme Court noted that it need look no further than the plain terms of the FDCPA which focuses on third party collection agents working for a debt owner—not on a debt owner seeking to collect debts for itself. The Supreme Court further noted that the FDCPA does not suggest that how a debt owner came to be a debt owner—whether through origination or purchase—was relevant. All that matters is whether the target of the lawsuit regularly seeks to collect debts for its own account or does so for “another.” Given that statutory interpretation, the Supreme Court found that a debt purchaser can collect debts for its own account without triggering the statutory definition of “debt collector” and becoming subject to liability under the FDCPA.

If you would like to speak with the author, he can be contacted at (847) 705-7555 and smigala@lavellelaw.com. Steven A. Migala is a partner at Lavelle Law and possesses over 20 years of providing excellent representation to banks, businesses and individuals in a variety of matters.