Credit One was sued by a Class Action lawsuit in a New York state federal court by two consumers claiming that the credit card firm improperly charges exorbitant fees when prepaid direct payments are made directly on their credit cards. The suit further claims that Credit One has engaged in numerous deceptive and illegal practices, which have deprived Class members of their rights to freely choose the credit card provider they use. Class members contend that they have suffered a loss or damages as a result of Credit One’s violation of FDCPA (Federal Trade Commission) statues and Articles of Uniform Commercial Code. Credit One is challenging the legality of these practices in this court.
Credit One Class Action Lawsuit
As described in the complaint, the defendant (Credit One) created and marketed an online lending program called “e- Cards” in late 2006 or early 2007. Plaintiffs claim that Credit One violated the Fair Debt Collection Practices Act (FDCPA) when it first marketed its e- cards, which require consumers to make “an express payment” for purchases, before the consumer obtains credit. The express payment requirement in the FDCPA, together with a prohibition against debt collection activities, makes the act a “blank check” for any person, including the credit card provider, to engage in debt collection activities. A class action lawsuit cannot force a plaintiff to pay an alleged debt without any involvement of the defendant. In this case, Plaintiffs contend that Credit One’s e- cards violated the FDCPA when they require consumers to make an express payment or incur prepaid indirect expenses for purchases they may not actually make. This is the underlying basis of the current case.
The District Court granted partial summary judgment in favor of plaintiffs.
On appeal, the Court of Appeals affirmed the dismissal of the complaint. According to the Court of Appeals, the plaintiff did not establish a viable claim for a class action lawsuit relief. Pursuant to our precedent, if a plaintiff has established a triable claim, such as violations of FDCPA, the plaintiff must develop a case against at least one defendant for violation of the statute. Otherwise, he cannot succeed on a class-action lawsuit. This rule is consistent with our longstanding statutory case law and with our well-settled case law.
Accordingly, the Court of Appeals held that plaintiffs’ complaint against defendants did not meet the requirements required by the Class Action Lawsuit Clause.
Specifically, the complaint failed to allege that defendants were parties to the lawsuit and, therefore, there was no lawful reason for the lawsuit. Plaintiffs argue that it is obvious that defendants were parties to the suit because they provided financing for the litigation. According to plaintiffs, defendants could have reasonably believed that they were parties to the lawsuit if they had designed the debt collection scheme that they used to collect the debts. Further, defendants could have reasonably foreseen that they would face liability for their conduct, if they had intentionally designed the debt collection scheme that they used to collect the debts.
Accordingly, plaintiffs must file a separate credit one class action lawsuit against each defendant that is the subject of the complaint.
Plaintiffs contend that this is an imperative step required to ensure that the statute of limitations on credit one class action lawsuit does not run out. Although the Court of Appeals erred in holding that plaintiffs’ complaint met the requirements required by the Class Action Lawsuit Clause, the plaintiff can still proceed with her claims against each defendant under the theories that the complaint alleges are legally sufficient to establish a triable credit one class action lawsuit. Accordingly, the Court of Appeals must vacate its holding that the Class Action Lawsuit Clause entitles a credit one class action lawsuit to a longer period of time than it would the other classes of lawsuits.
Plaintiffs argue that they should not be held enjoined from pursuing their claims against the named defendant, unless the Court of Appeals wrongfully assumes that each defendant is a party to the complaint. Plaintiffs contend that if the Court of Appeals were to presume that each defendant was a party to the complaint, it would apply the rules of equity to each defendant and therefore render its decisions inappropriate in light of the defendant’s refusal to join the lawsuit. Specifically, plaintiffs argue that defendant owes ex-parte notice of the lawsuit. Defendant fails to acknowledge any such duty and is not entitled to any relief on the basis that it has failed to notice the lawsuit. Pursuant to the principles of equity, a party that is not a party to a lawsuit is not entitled to relief from liability unless it is parties to the lawsuit.
Assuming for the sake of argument that a defendant is a party to the lawsuit, plaintiffs’ claim for relief is likely to succeed on the basis that they have met their burden of proof in this case.
Accordingly, they seek damages from all defendants. Assuming that they prevail in their case, the defendant-dockets are then entitled to pay the costs of the case. Assuming that they do not prevail in their case, plaintiffs have no other case against the named defendant.
Plaintiffs argue that they were properly served with the complaint and discovery, but that defendant failed to appear at the court date and did not respond to the complaint by the date scheduled. Because defendant failed to appear and its failure to timely respond to plaintiffs’ complaint violates Rule 11(b) of the Securities Exchange Act, plaintiffs argue that defendant waived its right to respond. Plaintiffs contend that defendants’ failure to appear in the court is evidence of breach of the covenant of quiet enjoyment. Accordingly, they seek a declarant of default. If the Court deems that defendant did violate the covenant of quiet enjoyment, plaintiffs will be able to reinstate their complaint. This case is Bross v. Evans, Case No. 3-CV-1315.