On July 4, 2017, W. Va. Code § 46A-5-108 went into effect, requiring West Virginia consumers to send a written “Notice of Right to Cure” to a creditor or debt collector prior to instituting any action under Articles 2, 3, or 4 of the West Virginia Consumer Credit and Protection Act (the WVCCPA).  The full text of the current statute can be accessed here. 

After receipt of the Notice of Right to Cure, creditors and debt collectors are provided 45 days to send a cure offer to the consumer.  If the consumer accepts the cure offer and the offer is performed, it is a complete bar to recovery if a consumer later files a cause of action for the alleged violation.  Likewise, if the court finds that a cure offer is timely delivered and above the judgment that a consumer receives, the consumer’s counsel is barred from collecting attorneys fees and costs incurred following delivery of the cure offer. 

Implementation of the pre-suit notice requirement has raised multiple questions for courts and creditors alike.  Although intended to add clarity and to enable creditors to address any potential errors or violations of the WVCCPA, the provision has created more questions than answers, and it remains to be seen if the intent to allow creditors and consumers to avoid costly and time-consuming litigation will be realized. 

First, the statute is silent on whether a consumer can first file suit and then send the Notice of Right to Cure, requiring the creditor to then send a cure offer in 20 days under the provisions set forth in subsection (a) of § 5-108.  It appears that the legislature only intended this provision to apply when the creditor has filed a suit and the consumer is the would-be defendant.  However, as § 5-108 currently reads, the lack of clarity in the statute has been seen as an invitation for the consumer to engage in such conduct. 

Second, the effect the statute will have on individual claims for potential class representatives is still unknown.  Can the consumer demand a settlement on behalf of a class prior to class certification?  What is the effect of a rejected cure offer to a class representative’s claim if he or she does not individually recover a judgment above the individual cure offer amount?  Are creditors and/or debt collectors required to address potential class claims in a cure offer?  Once a class is certified, does the creditor or debt collector have an opportunity to send a classwide cure offer to all potential class members?  To date, these questions remain unanswered. 

Third, internal compliance procedures for companies conducting business in West Virginia should be updated to ensure that consumer notices are being addressed by either their legal departments or by referring the potential claim to their outside counsel to address and make recommendations to evaluate and respond to § 5-108 correspondence from consumers. 

The Financial Services Litigation group at Troutman Sanders has handled hundreds of contested matters in West Virginia, including class action cases, and arbitrations through appeal to the Fourth Circuit.  We will continue to monitor the effects of § 5-108 in West Virginia federal and state courts to identify and advise on new compliance risks and strategies.

On September 19, the Eleventh Circuit Court of Appeals issued an opinion illustrating the importance of careful drafting of arbitration agreements.

Following the holdings of many other courts, the Eleventh Circuit panel held that if an agreement is silent regarding the ability to arbitrate claims on a class basis, then it is up to courts to decide whether the action may proceed to arbitration.

Despite its unremarkable holding on the legal issue, the Court nevertheless found that the agreement at issue was not silent as to arbitrability of claims on a class basis, but instead indicated an agreement to submit the issue to the arbitrator. Thus, the general presumption was defeated and the question of arbitrability should be decided by the arbitrator. The agreement’s multiple references to the American Arbitration Association, its statement that “[t]he ability to arbitrate the dispute, claim or controversy shall likewise be determined in the arbitration,” and the fact that the agreement was written in broad terms with respect to what type of disputes were arbitrable, all signaled to the Court that the parties intended that questions of arbitrability be submitted to the arbitrator.

The case is JPay, Inc. v. Kobel, No. 17-13611 (11th Cir. 2018).

The underlying dispute arose out of allegations that JPay, a company that provides services to the family and friends of prison inmates, including electronic money transfers, was charging excessive fees and then using those funds to provide kickbacks to correctional facilities. Claimants Cynthia Kobel and Shalanda Houston served a demand for class-wide arbitration on JPay in October of 2015. JPay responded by filing a complaint in Florida state court that sought to defeat the ability of the claimants to pursue class-wide arbitration and instead compel bilateral arbitration. The matter was eventually removed to the Southern District of Florida, where the district court found that “the availability of class arbitration is a substantive ‘question of arbitrability,’ presumptively for the court to decide, and that the Terms of Service did not clearly and unmistakably evince an intent to overcome this presumption and send the question to arbitration.”

In affirming the district court’s decision that availability of class arbitration is a question of arbitrability for the court to decide, the Eleventh Circuit reasoned that class availability is a gateway-to-arbitration question because it “determines what type of proceeding will determine the parties’ rights and obligations.” Further, due to the stark differences between bilateral and class arbitration, the court concluded that “contracting parties would expect a court to decide whether they will arbitrate bilaterally or on a class basis.” However, the Court disagreed with the lower court’s decision that the parties’ agreement did not clearly express an intent to submit questions of arbitrability the arbitrator.

The Eleventh Circuit’s decision is in line with that of the Sixth, Third, Fourth, and Eighth Circuits. However, the Supreme Court of California and the Fifth Circuit Court of Appeals have noted contrary opinions.

We will continue to monitor and report on developments in this area of the law.

Illinois’ Biometric Information Protection Act (“BIPA”) requires entities collecting, using, and storing biometric data (such as face scans, retina scans, and fingerprint scans) to, among other things, inform and obtain consent from the owners of the data. Private entities storing an individual’s biometric information must also use a “reasonable standard of care” and treat the information in the same manner as they treat other confidential and sensitive information.

In past articles, we identified a trend involving Article III standing in cases brought under BIPA. Courts were drawing lines between cases where the plaintiff willingly submitted her biometric information (despite the defendant’s technical violation of BIPA), see, e.g., Santana v. Take-Two Interactive Software, No. 17-303, 2017 U.S. App. LEXIS 23446 (2d Cir. Nov. 21, 2017), and cases where the plaintiff’s biometric information was not given knowingly, see, e.g., Patel v. Facebook Inc., No. 3:15-cv-03747-JD, 2018 U.S. Dist. LEXIS 30727 (N.D. Cal. Feb. 26, 2018). Most courts were finding Article III standing only in the latter category of cases. This created a hurdle for plaintiff-employees suing their employers for BIPA violations based on the collection of their biometric information for time-keeping purposes (a common activity for employers) because in such situations, employees provide their biometric information willingly.

However, a creative way has been found to clear the Article III hurdle. In Dixon v. Washington & Jane Smith Cmty., No. 17-cv-8033, 2018 U.S. Dist. LEXIS 90344 (N.D. Ill. May 31, 2018), the court found Article III standing because the complaint included allegations that plaintiff Cynthia Nixon’s employer disclosed her fingerprint information to Kronos, a third-party biometric timeclock vendor, without her notice or consent. “The allegation that [the employer] disclosed [the employee’s] fingerprint data to Kronos without informing her distinguishes this case from others in which alleged violations of BIPA were determined insufficiently concrete to constitute an injury in fact for standing purposes.” The court added, “this alleged violation of the right to privacy in and control over one’s biometric data, despite being an intangible injury, is sufficiently concrete to constitute an injury in fact that supports Article III standing.” The court employed the same logic to deny the defendants’ motions to dismiss under Fed. R. Civ. P. 12(b)(6). “Even though this may not be a tangible or pecuniary harm, it is an actual and concrete harm that stems directly from the defendants’ alleged violations of BIPA.”

Employees are apparently gaining insight from Dixon, as some have begun to amend their complaints to add allegations that their biometric information was disclosed to third parties, often the company supplying and maintaining the employer’s fingerprint scanner, as in Barnes v. Arytza, No. 2017-CH-11312, Cameron v. Polar Tech Indus., Inc. (co-defendant ADP Inc.), No. 2018-CH-10001, Edmond v. DPI Specialty Foods, Inc. et al. (co-defendant Ceridian HCM Holding Inc.), No. 2018-CH-9573, and Battles v. Southwest Airlines Co. (co-defendant Kronos Inc.), No. 2018-CH-9376, all filed in the Chancery Division of the Circuit Court of Cook County.

It will be interesting to see if these additional allegations of third-party disclosure are enough to avoid dismissal in Illinois state courts for a lack of standing. Third parties, like Kronos or ADP, may not necessarily have accessed, or even had the ability to access, employees’ biometric data, but instead likely merely host the servers that retain the data. We have yet to see any actions alleging the selling or theft of biometric data, but at least in Dixon, the mere allegation of third-party disclosure, however minor, was enough to find Article III standing.

In a case of first impression, the United States District Court for the Western District of Michigan held that direct-to-voicemail messages qualify as a “call” under the Telephone Consumer Protection Act.  The Court’s opinion thus subjects another modern technology to the requirements of express consent and other strictures of the TCPA.

Defendant debt collector Dyck-O’Neal, Inc. delivered 30 messages to plaintiff consumer Karen Saunders’ voicemail using VoApp’s “DirectDROP” voicemail service.  The service did what it was supposed to do by delivering the voicemail messages through the telephone service provider’s voicemail server without actually calling Saunders’ phone number.  Saunders sued under the TCPA, and Dyck-O’Neal filed for summary judgment on the grounds that “ringless voicemails” are not subject to the TCPA.

The Court began its analysis by drawing predictable parallels to traditional voicemails and text messages which are subject to the TCPA.  The Court quoted from the FCC’s infamous 2015 Order, stating that Congress intended to protect consumers from “unwanted robocalls as new technologies emerge” (emphasis added).  The Court examined the technology behind the ringless voicemails, which included the fact that the technology did not call a telephone number assigned to a cell phone account – the statutory prerequisite for applying the TCPA provision at issue.  Nevertheless, the Court gave credence to the calls’ “effect on Saunders” rather than the fact that no call was made to a cell phone number.  According to the Court, that effect was “the same whether the phone rang with a call before the voicemail is left, or whether the voicemail is left directly in her voicemail box.”  The Court reasoned that Dyck-O’Neal did nothing other than reach Saunders on her cell phone through a “back door,” and failure to regulate this “back door” through application of the TCPA would be an “absurd result.”

Many collection agencies and marketing companies have been successfully using the direct-to-voicemail messages, and many others have considered following suit.  The Court’s decision is part of the risk-benefit analysis but, in the age of a quickly-evolving TCPA jurisprudence, another court may reach a different result.  This decision, facially at odds with the statutory text, could turn out to be an outlier or could mark the beginning of a trend.  Troutman Sanders will continue to monitor this line of cases.

On July 13, 2018, in Dutta v. State Farm Mutual Automobile Insurance Company, the Ninth Circuit affirmed the district court’s decision granting summary judgment to State Farm in a putative Fair Credit Reporting Act class action. The decision presents another helpful application of the U.S. Supreme Court’s 2016 Spokeo decision. The Dutta decision highlights the importance of continuing to challenge standing at all stages of a case even in the face of a statutory violation.


In Dutta v. State Farm, the plaintiff Bobby S. Dutta alleged that State Farm violated section 1681b of the FCRA, by failing to provide him with a copy of his consumer report, notice FCRA rights and an opportunity to challenge inaccuracies in the report before State Farm denied his employment application. As background, Dutta applied for employment with State Farm through the company’s Agency Career Track, or ACT, hiring program. State Farm examines the 24-month credit history of every ACT applicant, and if an applicant’s credit report indicates a charged-off account greater than $1,000, the applicant is automatically disqualified.

View full article published on Law360.

On June 21, 2018, the U.S. District Court for the District of Oregon dismissed a putative class action complaint alleging that a potential employer violated the disclosure and pre-adverse action notification requirements of the Fair Credit Reporting Act in Walker v. Fred Meyer Inc.[1] The Walker decision highlights several key lessons associated with FCRA class actions, particularly related to the disclosures employers must provide to prospective employees.


Daniel Walker applied for a job with Fred Meyer Inc. As part of the application process, Fred Meyer provided Walker with separate disclosure and authorization forms regarding its intent to procure a background report on Walker. Fred Meyer presented the disclosure and authorization forms together, each in separate documents. The disclosure form mentioned both a general consumer report and an investigative consumer report.

View full article published on Law360.

On May 31, the Fourth Circuit Court of Appeals affirmed a $150,000 sanctions award against three consumer attorneys and their law firms for bad faith conduct and misrepresentations.

The opinion reads like a detective story and lays out, in the Court’s own words, “a mosaic of half-truths, inconsistencies, mischaracterizations, exaggerations, omissions, evasions, and failures to correct known misimpressions created by [consumer attorneys’] own conduct that, in their totality, evince lack of candor to the court and disrespect for the judicial process.”

The litigation arose from a payday loan that plaintiff James Dillon obtained from online lender Western Sky.  Later, Dillon engaged attorneys Stephen Six and Austin Moore of Stueve Siegel Hanson LLP and Darren Kaplan of Kaplan Law Firm, PC who filed a putative class action against several non-lender banks that processed loan-related transactions through the Automatic Clearing House network.  Defendant Generations Community Federal Credit Union promptly moved to dismiss Dillon’s lawsuit on the basis of the loan agreement’s arbitration clause.  In response, Dillon challenged authenticity of the loan agreement and a two-year-long dispute ensued during which the district court refused to send the case to arbitration based on Dillon’s authenticity challenge; Generations appealed the district court’s decision; and the Fourth Circuit vacated it and remanded the case for further proceedings on the arbitration issue.  Significantly, when questioned by both the district court and the Fourth Circuit, Six maintained authenticity challenge and represented that he had drafted the complaint without the loan agreement and that Dillon’s claims do not rely on the loan agreement.

Six’s representations regarding the contents of the complaint were problematic given the complaint specifically referenced the loan agreement and its terms.  Evidence uncovered during arbitration-related discovery showed that Dillon possessed the loan agreement all along and, crucially, that he supplied his counsel with a copy of the agreement a week before the complaint was filed.  The latter piece of evidence was discovered only as a result of forensic examination of Dillon’s computer.  Once this evidence came to light, Dillon responded to Generations’ requests for admissions that the loan agreement was authentic.

Generations moved for sanctions against Dillon’s attorneys.  Instead of admitting their wrongdoing, Kaplan argued that there was never any challenge to authenticity, and Six argued that he still doubted authenticity even though he signed Dillon’s admissions that the loan agreement was authentic.  Invoking its inherent authority to punish bad faith behavior, the district court sanctioned Six, Kaplan, and their law firms jointly, ordering them to pay the defendants $150,000 in attorneys’ fees.  Moore was held liable jointly for only $100,000 of the total amount due to his lesser role in the bad-faith conduct.  The lawyers appealed.

The Fourth Circuit summarily rejected their arguments that neither the rules of ethics nor the Federal Rules of Civil Procedure required them to disclose the copy of the loan agreement before discovery commenced.  “These arguments miss the point.  Counsel are not being sanctioned for their failure to disclose the Dillon copy of the Western Sky loan agreement.  Rather, counsel are being sanctioned for raising objections in bad faith—simultaneously questioning (and encouraging the district court to question) the authenticity of a loan agreement without disclosing that the Plaintiff provided them a copy of that loan agreement before the complaint was filed.”

Discovery in consumer litigation is often asymmetrical and focuses on defendants’ obligations.  This opinion is a good reminder that the rules apply to plaintiffs too and that the courts will not condone a “crusade to suppress the truth to gain a tactical advantage.”

On May 29, the Ninth Circuit ruled that an end-user’s misuse of reported information does not render a credit reporting agency’s report inaccurate for purposes of liability under the Fair Credit Reporting Act.  The Court affirmed the district court’s grant of summary judgment in the putative class action case brought against a national credit reporting agency (“CRA”). 

The action centered on the CRA’s reporting of short sales and foreclosures.  In reporting a short sale, the CRA coded the account with a “9-68.”  The lead code of “9” indicated “Settled” and the “68” indicates “Acct legally paid in full for less than the full balance.”  In reporting a foreclosure, the CRA coded the account with an “8-94,” indicating “Creditor Grantor reclaimed collateral to settle defaulted mortgage.” 

Although the CRA reported the two types of accounts distinctly, Fannie Mae’s software, Desktop Underwriter, treated the codes the same.  Desktop Underwriter identified a mortgage account as a foreclosure if it included a lead code of either 8 or 9.  Fannie Mae “knew from the instructions [the CRA] had provided that code 9 did not represent a foreclosure, and that it was ‘necessarily capturing accounts there were not actually foreclosures.’”  Merging the two codes had significant adverse consequences, as consumers with a short sale were subject to a seven-year waiting period for another mortgage, rather than a two-year waiting period that normally applies to short sales. 

Despite Fannie Mae’s alleged misuse of the reported information, plaintiffs John Shaw, Kenneth Coke, and Raymond Rydman brought a putative class action against the CRA.  They alleged the CRA violated § 1681e(b) in failing to follow reasonable procedures to ensure maximum accuracy, § 1681i in failing to conduct a reasonable investigation, and § 1681g in failing to fully disclose their files. 

In a well-reasoned opinion, the Ninth Circuit refused to impose liability on the CRA for Fannie Mae’s supposed misuse of its report.  The Court first disposed of the §§ 1681e(b) and 1681i claims by concluding the reports were not inaccurate.  In doing so, the Court examined whether the report was “misleading in such a way and to such an extent it could be expected to adversely affect credit decisions.”  Noting the CRA’s technical manuals “unambiguously” stated the coding referred to a short sale, Fannie Mae’s treatment of the codes “does not render [the CRA’s] reporting misleading.”  Any inaccuracy was due to Fannie Mae’s mistreatment, not the CRA’s own inaccuracies. 

Likewise, the Court flatly rejected the plaintiffs’ argument that the CRA could be held liable because it knew Fannie Mae misused the data.  The Court found no support for the suggestion that a CRA “must amend its reporting system when a subscriber disregards its technical manuals in order to avoid liability.”   

The plaintiffs’ failuretodisclose claim under § 1681g met a similar fate.  The plaintiffs’ chief complaint with the CRA’s file disclosure to its consumers was that it displayed information differently than it did when reporting to customers.  However, as the Court found, the CRA fulfilled its duties under § 1681g to make a clear disclosure.  Use of its proprietary coding system would have run afoul of that requirement by confusing the consumer. 

This decision shows that even in the plaintiff-friendly Ninth Circuit, a CRA’s liability has bounds.  It also demonstrates the importance of a CRA clearly explaining its coding system to its customers.  The CRA’s clear explanations within its technical manuals allowed it to escape liability for its customer’s misinterpretation of the coding system.        


On May 21, the U.S. Supreme Court, in a 5-4 decision penned by Justice Neil Gorsuch, held that employers can include a clause in their employment contracts that requires employees to arbitrate their disputes individually and to waive the right to resolve those disputes through class actions and other joint proceedings. The Court ruled such requirements are enforceable under the Federal Arbitration Act (“FAA”).

The decision is a major victory for employers, as arbitration can be a tool to funnel employee disputes into out-of-court resolution and away from class actions. The ruling, moreover, takes its place in a lengthy and growing list of rulings by the Supreme Court enforcing arbitration agreements and the pro-arbitration policies of the FAA over the resistance of some lower federal courts and state courts.

The court addressed three cases in this decision:

  • A class action from the Fifth Circuit against Murphy Oil USA Inc. under the Fair Labor Standards Act (“FLSA”);
  • A wage and hour class from the Seventh Circuit against Epic Systems, a healthcare software company, alleging that it violated the FLSA; and
  • A class action from the Ninth Circuit claiming Ernst & Young violated the FLSA and California labor laws by misclassifying employees to deny them overtime wages.

According to the majority decision, the FAA mandates enforcing the terms of an agreement to arbitrate, given that the FAA was enacted “in response to a perception that courts were unduly hostile to arbitration.” The FAA thus instructed courts to “respect and enforce the parties’ chosen arbitration procedures” – such as the agreement to “use individualized rather than class or collective action procedures.”

The appellee-employees argued that the National Labor Relations Act (“NLRA”), passed in 1935, rendered class action and other joint-proceeding waivers unenforceable in arbitration agreements because the NLRA gives workers the right to organize “and engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” The Supreme Court rejected that position, stating, “The NLRA secures to employees rights to organize unions and bargain collectively, but it says nothing about how judges and arbitrators must try legal disputes that leave the workplace and enter the courtroom or arbitral forum.”

“The policy may be debatable but the law is clear: Congress has instructed that arbitration agreements like those before us must be enforced as written,” wrote Justice Gorsuch.

Further, the majority refused to defer to the conclusion of the National Labor Relations Board (“NLRB”) that the NLRA trumps the FAA. The Court found such Chevron deference was inappropriate since the NLRB was interpreting the NLRA “in a way that limits the work of” the FAA. The majority also declined to defer to the NLRB’s prior conclusion that the NLRA trumps the FAA.

Justice Ruth Bader Ginsburg penned a strongly-worded dissent, deeming the majority’s decision an attack on “statutes designed to advance the well-being of vulnerable workers.”

Going Forward

The Epic Systems decision is good news for employers nationwide as it enhances their ability to limit exposure to employee claims in class arbitration, class actions, and other joint proceedings.

Moving forward, we see several potential developments:

  1. Undoubtedly, more employers will include class and joint-proceeding waivers in their arbitration agreements, and will make those agreements mandatory for new hires. This will become the norm for employers.
  2. Defenders of the decision point to an overall reduction in costs for all parties, as arbitration of individual disputes may allow for more efficient and quicker resolution of claims.
  3. Democrats in Congress likely will push to pass legislation to reduce the overall impact on employees from the Epic Systems decision. The passage of any such legislation, however, will be difficult in the Republican-controlled Congress.
  4. The logical underpinnings and reasoning in the Epic Systems decision have ramifications beyond the employment context. Pro-employee advocates have long argued that employment law or the relationship between employer and employee somehow justified different treatment than other contractual relationships meaning that the FAA did not apply or these special circumstances trumped the FAA. Likewise, in the consumer context, many pro-consumer advocates have raised a host of similar arguments that the relationship between consumer and businesses (such as credit card companies, auto finance entities, and debt collectors) provides justification for courts to disregard plainly worded arbitration provisions embedded in applicable contracts under supposed public policy rationales. Epic Systems reiterates the Supreme Court’s view that the FAA will govern the interpretation of arbitration provisions, including in the class action context, by reviewing the plain language used by the parties and will reject arguments that amount to a rewriting or failure to enforce the clear language in arbitration provisions.

Employers who do not have an arbitration program, or a program that has not been recently refreshed, might now consider adding or updating arbitration clauses to their agreements. Indeed, consumer-facing companies of all types can take additional comfort in the efficacy of arbitration agreements in designing and implementing arbitration programs for consumer claims.

Troutman Sanders advises clients in developing and administering consumer arbitration agreements, and has a nationwide defense practice representing employers in many types of class actions and individual claims. We will continue to monitor these developments.

In Echlin v. PeaceHealth, the U.S. Court of Appeals for the Ninth Circuit held that a debt collection agency meaningfully participated in collection efforts even if it did not have authority to settle the account, did not receive payments, and was not involved in collection beyond sending two collection letters.  Accordingly, the collection agency did not violate the Fair Debt Collection Practices Act by sending the letters on its own letterhead.

Michelle Echlin incurred a debt in the form of medical bills owed to PeaceHealth.  After Echlin ignored multiple requests for payment, PeaceHealth referred her account to ComputerCredit, Inc. (“CCI”).  CCI sent Echlin two collection letters on its letterhead but Echlin did not respond.  In accordance with its agreement with PeaceHealth, CCI returned the account back to PeaceHealth.  Echlin later filed a purported class action alleging that CCI’s letters created a false or misleading belief that CCI was meaningfully involved in the collection of her debt—a practice known as flat-rating.  CCI and PeaceHealth moved for summary judgment.  The district court granted PeaceHealth’s and CCI’s motions for summary judgment, and Echlin appealed.

The Ninth Circuit found that CCI had meaningfully participated in collection of Echlin’s debt because it controlled the content of collection letters it sent and did not seek PeaceHealth’s approval prior to mailing.  While CCI did not have authority to process or negotiate payments from PeaceHealth, CCI handled correspondence and phone inquiries from debtors.  In addition, CCI personnel returned consumers’ calls if requested.  In rejecting Echlin’s claims that CCI could not have meaningfully participated if it had not handled payments or taken further action in collecting on the account, the Court noted that “[m]eaningful participation in the debt-collection process may take a variety of forms,” as shown by a long, non-exhaustive list of factors considered by courts across the country.

Notably, the Ninth Circuit distinguished cases that addressed the meaningful involvement by attorneys because those cases reflect concerns regarding the “unique sort of participation that is implied by letters that indicate the creditor has retained an attorney to collect its debts.”  The higher standard of involvement required of attorneys and law firms collecting a debt did not apply to non-attorneys.