Archive for June 2013

SCOTUS Takes Recess Appointments Case – Is Cordray’s Appointment as CFPB Director Valid?

The U.S. Supreme Court has granted certiorari in NLRB v. Noel Canning 1,  a case from the U.S. Court of Appeals of the District of Columbia which held that President Obama’s recess appointment of three members to the National Labor Relations Board was unconstitutional.  The decision found that a president could not exercise his power to make recess Scotusappointments during a period when the Senate was not between sessions of Congress.

The Court’s decision to hear Noel Canning has direct implications for Richard Cordray, Director of the Consumer Financial Protection Bureau, who was appointed on the same day as the three NLRB commissioners whose appointments were declared unconstitutional. The Court’s order granting certiorari directs the parties to brief and argue one question: “Whether the President’s recess-appointment power may be exercised when the Senate is convening every three days in pro forma sessions.”

The Constitution provides that the President may appoint Offices of the United States, like Director Cordray and the three NLRB commissioners, “With the Advice and Consent of the Senate.” 2. Neither Director Cordrary nor the three NLRB appointments were made made “With the Advice and Consent of the Senate.” All four appointments were made by the President utilizing his Constitutional power to make appointments to fill vacancies “during the Recess of the Senate.” 3 It all comes down to whether the Senate was in session on Jan. 4, 2012, when the President made all these recess appointments.

On Dec. 17, 2011, the Senate passed a unanimous consent agreement providing that the Senate would meet in pro forma sessions every three business days from Dec. 20, 2011, to Jan. 23, 2012. 4 The Constitution provides that neither body of Congress may adjourn for more than three days without consent of the other. 5 By agreeing to meet every three business days, the Senate avoids a recess and remains in session, even though those sessions may be for just a few minutes. 6

The argument in Noel Canning  focused on the “during the Recess of the Senate” language contained in the President’s recess appointment power. The NLRB argued this means any recess of the Senate, like an adjournment, triggers the President’s recess appointment power. The Noel Canning company argued that the power only arises when the Senate is in “the Recess,” which it described as the period when the Senate is between sessions — that is, when one session of Congress has ended and the other has not yet convened.

The U.S. Court of Appeals agreed with Noel Canning, finding that the NLRB’s interpretation could be construed to allow a president to make recess appointments even during short adjournments. Under this interpretation, even if the Senate has not convened during a three-day period, within an ongoing session, it is not in “the Recess” period between two sessions of Congress, which according to the decision, is the only time a president can exercise the recess appointment power.

And this is where the timing of Director Cordray’s appointment is critical.

On Jan. 3, 2012, during a pro forma session, the Senate convened the second session of the 112th Congress, which it is required to do every Jan. 3rd. 7. President Obama appointed the three NLRB commissioners and Richard Cordray as Director of the CFPB on Jan. 4, 2012, the first day following the start of the second session of the 112th Congress.

Had the appointments been made between the time the Senate went into pro forma sessions on Dec. 20, 2011, and before the Jan. 3, 2012, start of the 111th Congress, the Noel Canning decision might have turned out different. The timing here couldn’t be worse for this test of the breadth of the Executive’s recess appointment power, because it occurred during a session of Congress. Although other presidents have made recess appointments during sessions of Congress (as opposed to between sessions), this historical fact had little sway on the Court of Appeals’ decision.

The Supreme Court, having framed the question as it did, will consider whether a president has the power to make a recess appointment when the Senate is not in “the Recess,” but is rather simply meeting, albeit pro forma, during a session of Congress.

The implications for the CFPB are extraordinary if the Court affirms the decision below. If the CFPB did not have a validly appointed Director, all of its rule making, enforcement actions and other activities requiring the approval of a director may very well be invalid.


  1. 705 F.3d 490 (D.C. Cir. 2013)
  2. Constitution, Article II, Section 2, Clause 2
  3. Constitution, Article II, Section 2, Clause 3
  4. 157 Cong. Rec. S8,783–84 (dailyed. Dec. 17, 2011)
  5. Constitution, Article I, Section 5, Clause 4
  6. A pro forma session of the Senate is described by the Senate’s website as “a brief meeting of the Senate (sometimes only a few minutes in duration).”
  7. 158 Cong. Rec. S1 (daily ed. Jan. 3, 2012); see U.S. Const. amend. XX, § 2

Breaking Down the Second Circuit’s Recent Decision Re Disclosure Disputes Under FDCPA’s 1692g(a)(3): What Debt Collectors Need to Know

The Second Circuit’s recent decision in Hooks v. Forman 1 has received quite a bit of attention since it was handed down May 29.  The case held that a disclosure made pursuant to 1692g(a) violated the Fair Debt Collection Practices Act when it instructed the recipient of the letter that if she wished to dispute the debt, she could only do so in writing. The decision recognized that under section 1692g, some disputes can be verbal. It also recognized that under other sections (particularly sections 1692g(a)(4) and 1692g(b), a dispute must be in writing to be effective.US-CourtOfAppeals-2ndCircuit-Seal

Most debt collectors have 1692g disclosures that closely track the language of the statute. Hooks  provides an example of the bad things that can happen when a debt collector makes 1692g disclosures that do not track the statutory disclosures.

Let’s break down the court’s decision.

First, the decision is addressing whether a disclosure violated only section 1692g(a)(3)That section requires a debt collector to disclose within five days of its initial communication with the consumer the following:

a statement that unless the consumer, within 30 days after receipt of the notice, disputes the validity of the debt, or any portion thereof, the debt will be assumed to be valid by the debt collector.

Looking at the text of section 1692g(a)(3), there is no mention that a dispute must be in writing to prevent a debt collector from  presuming a debt to valid, so long as the dispute is made within the 30-day period. Because there is no writing requirement, a disclosure which states that a 1692g(a)(3) dispute must be in writing, the Second Circuit held, violates the FDCPA. This holding interprets section 1692g(a)(3) similar to the Ninth Circuit’s rationale in Camacho v. Bridgeport 2  and, as the Hooks decision noted, in a manner consistent with interpretations by district courts within the Second Circuit.

Contained within section 1692g(a) is another type of dispute, one made under section 1692g(a)(4), which requires the debt collector to provide the consumer with:

a statement that if the consumer notifies the debt collector in writing within the 30-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector [emphasis added].

Under section 1692g(a)(4), to obtain verification of a debt, a consumer must dispute a debt in writing within 30 days. If the debtor disputes the debt in writing within that 30-day period, it triggers section 1692g(b), requiring a debt collector to provide verification of the debt before it continues its debt-collection efforts.

The  Hooks decision does not change the writing requirements of section 1692(a)(4) or 1692g(b) and debt collectors should continue to make the 1692g(a)(4) disclosure as requiring a written dispute. Several courts have held that removing the writing requirement from the section 1692g(a)(4) disclosure is a violation of the FDCPA. 3

It does seem strange that section 1692g allows one type of dispute to be made either verbally or in writing, while another can only be made by a writing. The Third Circuit, in Graziano v. Harrison  4, found this odd and held that all disputes under section 1692g must be in writing. But, no other Circuit Court of Appeals has adopted Grazianothe Ninth and now the Second have rejected it, and many district courts outside the Third Circuit do not follow it.

Hooks, like Camacho from the Ninth Circuit, explains that the difference between the two section 1692g disputes reflects the different protections 1692g(a)(3) and 1692g(a)(4) afford debtors, as well as the different requirements they impose on debt collections. A writing is required under section 1692g(a)(4) because only a writing can trigger section 1692g(b) and cause a cessation of collection efforts until verification is provided. That is a powerful protection.  A verbal dispute will not stop debt-collection efforts, and does not require verification to continue collection. But, if timely made, a verbal dispute (and, of course, a written dispute) prevents a debt collector from assuming a debt is valid under section 1692g(a)(3).

The section 1692g disclosure made by the defendant in Hooks would probably be found compliant by a court within the Third Circuit. The defendant law firm was based in New Jersey, which lies within the Third Circuit, and offers an explanation as to why they made this type of disclosure in the first place. It also underscores the terrible state of conflicting decisional law construing the FDCPA. 5 The close proximity of the Defendant law firm to New York (which is within the Second Circuit and is where the collection activity was directed), ultimately led to a bad day for this debt collector. Hooks may ultimately be certified as a class.

The lesson here is that no matter where you might be located, make sure your 1692g disclosures closely track the language of the statute. 6





  1. Hooks v. Forman, Holt, Eliades and Ravin, LLC, 12-3639 (2nd. Cir. May 29, 2013). A copy of the decision is available here.
  2. Camacho v. Bridgeport Financial Inc., 430 F.3d 1078, 1081 (9th Cir. 2005)
  3. Camacho v. Bridgeport Financial Inc., 430 F.3d at 1081 ; McCabe v.Crawford & Co., 272 F. Supp. 2d 736, 743 (N.D. Ill. 2003); Bicking v. Law Offices of Rubenstein & Cogan, 783 F. Supp. 2d 841, 845 (E.D. Va. 2011)
  4. Graziano v. Harrison, 950 F.2d 107, 112 (3d Cir. 1991)
  5. The Circuit split was recognized by the Supreme Court in Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich LPA,     U.S.    , 130 S. Ct. 1605, 1610, & nn.2-3, 176 L. Ed. 2d 519 (2010), but the issue was not before it. Also, the defendant in Jerman had made the same disclosure as the defendant in Hooks – requiring all disputes to be in writing. Even though the error was made on a good-faith mistaken interpretation of the FDCPA (since the law firm relied upon Graziano in fashioning its disclosure), an error of that type did not protect the law firm from liability under the FDCPA’s bona fide error provision.
  6. See, Riggs v. Prober & Raphael, 681 F.3d 1097 (9th Cir. 2012) where although the disclosures were provided in an order different than that laid out in the statute, the disclosures were still compliant because they closely tracked the statutory text.

Court Vacates Opinion Finding Preview Dialers Within Scope of TCPA

Some relief has come to those using preview dialers to make telemarketing or informational calls to cell phones. The court in Nelson v. Santander 1 vacated its opinion of March 8, which held that preview dialers were automatic telephone dialing systems subject to regulation by the Telephone Consumer Protection Act 2.

The order was entered on June 7, on a joint motion and stipulation made by the parties. The case was dismissed, with prejudice, that same day. The order vacating the March 8 opinion is here.

While the March 8 opinion of Nelson v. Santander is no more, it provides a frightening lesson in how easily a seemingly compliant telephone system can be still construed as falling within the scope of the TCPA.



  1. Nelson v. Santander Consumer USA, Inc., 2013 U.S. Dist. LEXIS 40799 (W.D. Wis. Mar. 8, 2013)
  2. 47 U.S.C. 227

City of Boston to Forward Citizen Calls on Financial Matters to CFPB

The City of Boston will be forwarding calls from residents to the Consumer Financial Protection Bureau when the callers have questions or complaints about financial products Golden Sunset over Bostonand services, the city announced yesterday.

Those who call the city’s 24-hour hotline at (617) 635-4500 with questions about such matters as credit cards, mortgages and loans will be connected with the CFPB, who will provide answers and process complaints. The CFPB screens complaints and contacts companies on behalf of consumers, requesting feedback from companies within 15 days and a resolution within 60 days.

A Slice With Sausage, Peppers and Prior Express Consent: The Papa John’s TCPA Class Action

Yesterday, reported that Papa John’s, the national pizza chain, had reached an agreement to settle for $16.5 million a Telephone Consumer Protection Act class-action claim. If approved by the court, the settlement will put an end to an interesting lawsuit involving the TCPA’s prior express consent requirements.

slice of pizzaThe TCPA proscribes the use of an “Automatic Telephone Dial System” to call a person’s cell phone, without first obtaining the called party’s “prior express consent” to receive such a call. Enacted in 1991, many courts, including the Ninth Circuit Court of Appeals, have found that the sending of  text messages to cell phones using an ATDS also requires the recipient’s prior express consent to receive such messages. 1 We’ve been following this litigation closely because of the issues it raises concerning  the manner in which prior express consent might be demonstrated (or not) under the TCPA.Promo

The Papa John’s website contained a registration form allowing a consumer to enter her cell phone number. The form also contained a check-box which asked for the registrant’s consent to send text messages to her cell phone. The sauce began to thicken when the Plaintiff here registered and provided her cell phone number, but did not check the check-box. Papa John’s subsequently sent text messages to her cell phone. Plaintiff sued, claiming the text messages were sent to her cell phone (presumably through the means of an “automatic telephone dialing system”), without first obtaining her consent to receive such messages.

Papa John’s sought summary judgment dismissing the claim, arguing that because the Plaintiff provided her cell phone number as part of the registration, she gave her permission to be contacted at that number. In May, the court denied the request, writing that since the Plaintiff did not mark the check-box, it remained a disputed material fact whether the failure to elect to receive the promotional texts was “an instruction to the contrary” — that is, by not checking the box, had Plaintiff advised she was not agreeing to receive promotional text messages? In a footnote to its decision, the court suggested that the registration form reasonably suggested to the general public that by not marking the check-box, you were not agreeing to receive text messages on your cell phone.

Papa John’s is one of several decisions this year addressing the content of “prior express consent” under the TCPA.  The decision and the subsequent settlement underscore the need to carefully consider the content of forms seeking to obtain “prior express consent” under the TCPA.


  1. As a general proposition, telemarketing calls require written consent, but for informational calls, like debt collection calls, it can be verbal. Here, the case did not address whether the web page registration was a writing. The decision suggests, though, that the text messages were telemarketing.

ABA Offering Free CLE Ethics Webinar on Monday June 17, 2013

webinarIf you are a member of the American Bar Association, check out its CLE Premier Speaker Series at Every month the series provides ABA members a  free  CLE seminar. This Monday has a pretty special presentation Ethical Tools to Diffuse Incivility. According to the registration page, the ABA is requesting 1.5 of Ethics CLE Credits in many states. It’s a great topic and a good way to fulfill your Ethics CLE.