Judge Issues Order Denying Defendant’s Motion to Dismiss in CFPB v. Hanna Debt Collection Litigation

As insideARM reported last month, oral arguments on the Defendant’s Motion to Dismiss the Consumer Financial Protection Bureaus (CFPB) action against the Georgia collection law firm Frederick J Hanna & Associates P.C. were held on June 3^rd in Atlanta.

On May 8, 2015 we posted an article which provided the procedural history of the case.

Briefly, in the initial Complaint the CFPB alleged that the Hanna law firm filed large numbers of lawsuits without “significant attorney involvement” and as a result violated section 807(3) of the FDPCA by falsely representing or implying that the communication was from an attorney and violated the Consumer Financial Protection Act (CFPA) for the same reasons.

The primary argument raised by Hanna was that the CFPA expressly prohibits the CFPB from enforcing the CFPA “with respect to activity performed by a lawyer as part of the practice of law.” The Hanna position is that states have exclusive authority to regulate the practice of law. In this instance, Hanna alleges that the Supreme Court for the State of Georgia has the exclusive jurisdiction.

The CFPB acknowledges that the CFPA has a “practice of law” exclusion, but that the exclusion covers only attorneys providing legal advice or services to consumers, not in this instance where Hanna provides services to banks or debt buyers and initiates litigation against consumers.

As I concluded in the article on June 9, 2015, this case is going to be proceeding for some time. Indeed, today the court issued an order denying the Hanna motion to dismiss the lawsuit. The order is available here.

Mark Dobosz, Executive Director of the National Association of Retail Collection Attorneys (NARCA) offered, “We are definitely disappointed in the motion to dismiss and will be more thoroughly reviewing the decision in the coming days.”

insideARM will publish analysis on the decision in the coming days.