The New Mexico Supreme Court recently confirmed consumer standing to pursue state law claims against a credit union after it pursued debt collection lawsuits against its members in the New Mexico magistrate courts. Several members filed a class action lawsuit against the credit union for the unauthorized practice of law and under the Unfair Practices Act (UPA), but the trial court dismissed the case, finding the plaintiffs lacked standing. The court of appeals reversed and the Supreme Court affirmed, finding the plaintiffs had standing to bring claims under both the statute prohibiting the unlicensed practice of law and the UPA.

According to the allegations in Salas. v. Guadalupe Credit Union, the defendant credit union had non-attorney employees file lawsuits against members in magistrate court, using the lawsuits to obtain payment in full, payment arrangements, or judgments against the plaintiffs and then enforce the judgments through garnishments. The defendant responded to the complaint by arguing that non-attorneys are allowed to practice law in magistrate courts, because its employees were representing the credit union’s interests, it was a pro se litigant, its employees were only filling in blanks in a form, and corporations are allowed to appear through a shareholder or member in certain circumstances.

The Supreme Court disagreed, unequivocally stating that only licensed attorneys can practice law at any level of the court system and that the defendant’s employees improperly initiated legal proceedings, constituting an unauthorized practice of law. The court also discounted the defendant’s characterization that it was a pro se litigant through its employees — the employees were not representing their own interests but those of the credit union itself, and corporations can appear unrepresented only in limited circumstances not relevant to debt collection suits. Once the court held the defendant could not have a non-attorney represent it in the lawsuits, the rest of the defendant’s arguments failed.

The court then determined the plaintiffs had standing both for their claims of the unauthorized practice of law and violation of the UPA because they sufficiently pled an injury in fact and they were within the zone of interest protected by the relevant statutes. Injury from the unauthorized practice of law merely requires showing a loss of money or other property because of the unauthorized practice of law; there is no requirement for the complainant to be a client. Obtaining payment or judgments and garnishments clearly led to a loss of money or property. The court also found that the defendant falsely holding itself out, through its employees, as able to file, prosecute, and enforce the collection lawsuits was false and misleading and an unfair trade practice. The plaintiffs adequately alleged harm from the defendant’s actions, and the court found the plaintiffs were the consumers both laws are intended to protect.

The New Mexico Supreme Court specifically noted the need to protect the public “from risks associated with unqualified and unsupervised practitioners.” The case was thus remanded to the district court with directions to vacate its order of dismissal and reinstate the complaint.