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On June 15, the U.S. Court of Appeals for the Sixth Circuit reversed and remanded a district court’s summary judgment ruling in favor of a defendant-appellee law firm, holding that it did not first exhaust all of its efforts to collect from the actual debtor. According to the opinion, the plaintiff’s husband was convicted of embezzlement and willful failure to pay taxes and was sent invoices for his legal fees by another law firm, which he did not pay. The law firm hired the defendant to collect on the debt. The defendant filed a lawsuit against the plaintiff and her husband, arguing under the Ohio’s Necessaries Statute that the husband was liable to third parties for necessaries, such as food, shelter, and clothing that were provided to his wife. An Ohio state court ruled in favor of the plaintiff, and an interlocutory appeal by the defendant was denied. The plaintiff then filed suit against the defendant, alleging that defendant’s underlying suit violated the FDCPA by attempting to collect under the claim that she was liable for her spouse’s debt. The district court granted the defendant’s summary judgment motion, which the plaintiff appealed.
On the appeal, the 6th Circuit found that the defendant did not follow the express commands of the Ohio Supreme Court's 2018 decision in Embassy Healthcare v. Bell, which held that spouses who are not debtors are liable only if the debtor does not have the assets to pay the debt themselves. The 6th Circuit found that the defendant did not satisfy those prerequisites to collect from the plaintiff when it filed a joint-liability suit against her and her husband. Thus, the collection efforts against the spouse who incurred the debt must be exhausted “before attempting to collect from a spouse.” The 6th Circuit reversed the district court’s judgment and remanded for further proceedings with instructions to enter judgment in favor of the plaintiff.
District Court allows state claims concerning the use of individuals’ likenesses in online ads to proceed
On April 19, the U.S. District Court for the Northern District of California denied a motion to dismiss in a putative class action alleging a California-based website operator violated various Ohio, Indiana, and California state laws by appropriating individuals’ names and likenesses and using this information in online teaser profile advertisements. Plaintiffs contended that the “teasers” violated their rights of publicity, and that memberships give users access to data including location history, family members, court records, employment information, and more. Plaintiffs further stated that “they ‘did not consent to the commercial use of their personal information and personas to promote subscriptions to a website with which they have no relationship.’” Defendant moved to dismiss on numerous grounds, including lack of standing.
In denying the motion to dismiss, the court ruled that plaintiffs have Article III standing to sue and that plaintiffs sufficiently pleaded a cognizable injury in “that their names, likenesses, and related information have commercial value and were being used for a commercial purpose.” The court also reviewed the adequacy of pleadings with respect to the alleged state violations and concluded, among other things, that the defendant’s teasers “are not subject to statutory exceptions for newsworthiness or public interest information.” As to the defendant’s alleged violations of California’s Unfair Competition Law (UCL), the court considered whether the California Consumer Privacy Act (CCPA) “immunizes [defendant’s] behavior from UCL liability.” According to the defendant, the CCPA generally obligates businesses to notify California residents when personal information is being used, it also “contains an express exemption for the use of publicly available data.” Because this conduct is allegedly permitted by the CCPA, the defendant argued, it cannot violate the UCL. The court disagreed, writing that “all that these provisions of the CCPA do are exempt publicly available data from special notification and disclosure rules that the statute itself imposes on companies that collect Californians’ data. . . . They do not expressly or impliedly set aside privacy-based tort claims or related UCL claims.”
On December 1, Ohio’s governor signed into law SB 54, which, under most circumstances, prohibits companies from knowingly transmitting Caller ID information that is either misleading or inaccurate through a telecommunication service or voiceover Internet protocol service. Among other things, the bill creates additional penalties for inaccurate caller ID, provides the Ohio attorney general the authority to file civil actions in state or federal court, provides state criminal penalties in certain instances, and requires entities that use a telephone number that is identified as “unknown” or “blocked” to leave voicemail messages and include the person's identity. The law is effective March 2, 2022.
On April 13, Ohio Attorney General Dave Yost issued a notice that Ohio law exempts CARES Act payments from garnishment, attachment, and execution. Yost noted that, in the event of an execution against a CARES Act payment, his office may intervene to enforce Ohio law.
On April 8, the Ohio Department of Commerce, Division of Financial Institutions issued updated guidance for credit union operations during Covid-19. Among other things, the guidance addresses accommodations for annual and board meetings, branch closures, filing deadlines for call reports, liquidity challenges, and conducting supervisory examinations.
On April 1, Ohio Governor Mike DeWine signed an executive order calling for a moratorium on small business evictions and foreclosures as part of the state’s Covid-19 emergency measures. The order requests that landlords suspend rent payments and evictions for financially distressed small businesses for a period of at least 90 days. DeWine also requested forbearance for commercial real estate borrowers in the state for the same duration. The order also notes that the Supreme Court of Ohio provided guidance to local courts to temporarily continue the execution of foreclosure judgments, eviction filings, eviction proceedings, and scheduled move-outs.
Ohio Department of Commerce, Division of Financial Institutions issues guidance regarding branch closures
The Ohio Department of Commerce, Division of Financial Institutions issued guidance to assist financial institutions when making the decision to limit branch operations or to close a branch. The Division advised that temporary closures of banking office locations for 48 hours or less must be reported to the Division and closures lasting longer than 48 hours must receive advance permission.
On March 22, the Ohio Department of Health issued a stay home order for all persons not engaged in essential businesses and operations, which include, among others, financial and insurance institutions such as banks, currency exchanges, consumer lenders, including but not limited to pawnbrokers, consumer installment lenders and sales finance lenders, credit unions, appraisers, title companies, financial markets, trading and futures exchanges, payday lenders, affiliates of financial institutions, entities that issue bonds, related financial institutions, and institutions selling financial products. Essential businesses and operations also include insurance companies, underwriters, agents, brokers, and related insurance claims and agency services. The order became effective at 11:59 PM on March 23, 2020, and will remain in force until 11:59 PM on April 6, 2020.
Ohio Division of Financial Institutions issues FAQ for mortgage loan originators and installment lenders during Covid-19 crisis
On March 23, Ohio’s Department of Commerce Division of Financial Institutions published an FAQ pertaining to telework and other operational changes for mortgage loan originators and installment lenders during the Covid-19 crisis. Among other things, the FAQs clarify the types of activities that may be conducted remotely and the applicability of Ohio’s Stay-At-Home Order to financial institutions.
The Ohio Department of Commerce, Division of Financial Institutions sent out an email reminding Ohio bankers that temporary emergency closures of banking locations must be reported and closures lasting longer than two consecutive days must receive advance approval.
- Jedd R. Bellman to discuss “The CFPB’s crackdown on collection junk fees and the growing anti-CFPB rhetoric” at an Accounts Recovery webinar
- Benjamin W. Hutten to discuss “Latest on AML regulations and impact of economic sanctions” at a Mortgage Bankers Association webinar
- Benjamin W. Hutten to discuss “Fundamentals of financial crime compliance” at the Practicing Law Institute
- Benjamin W. Hutten to discuss “Ongoing CDD: Operational considerations” at NAFCU’s Regulatory Compliance & BSA Seminar