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Impact of 7th Cir decision in Med-1 case
The following is from the Indiana Law Blog:
Monday, July 14, 2014
IND. COURTS – “JUDGES CALL FOR AN END TO MARION COUNTY’S SMALL CLAIMS COURT SYSTEM”
The heading is from a story by Marisa Kwiatkowski in the Sunday Indianapolis Star. She writes that a:
… long-standing perception of bias resulted in numerous lawsuits and caused the Indiana Supreme Court to step in in January to ban some common practices allowed in the tiny township courts.
“Some creditors have an unhealthy close relationship in the courts where they could file without restriction,” said Marion Circuit Court Judge Louis Rosenberg, who supervises the county’s nine township-based small claims courts. “They no longer enjoy that cozy relationship.”
Now, a task force appointed by the Supreme Court has recommended Marion County’s township courts be abolished, which would be a financial hit to township government.
Defenders of township government in Marion County consider the idea “preposterous.” And the small claims judges vehemently deny special treatment for debt collectors, saying companies chose to file in their courts because they are efficient and fair. * * *
Over one three-year period, Driver Solutions accounted for nearly 19 percent of the cases filed in Franklin and Warren townships’ small-claims courts, a Star review found. The number of claims filed in Warren Township had been so high that Judge Garland Graves had dedicated Mondays to hearing only the company’s cases.
A Star investigation published last year examined whether defendants, some of whom lived thousands of miles from Marion County, were properly notified they were being sued before judgments were ordered against them.
But Driver Solutions is not the only company to file large numbers of cases in particular courts. Debt collectors for hospitals also have been high-volume filers, raising questions about “cozy relationships” with the courts.
At least one township judge bristles at such allegations. “Cozy relationships? I am so sick and tired of those words being thrown around,” said John Kitley Jr., the Franklin Township small claims court judge. “That would violate every oath I’ve ever taken.”
But recent attempts to reform the system only added to the notion that companies might be shopping for friendly courts.
On Jan. 1, the Supreme Court began requiring debt collectors in Marion County to file their cases in the township where the person accused of owing money lives, works or signed the contract.
The result was dramatic. The number of new cases filed in Franklin Township Small Claims Court between Jan. 1 and April 30 dropped 83.7 percent from the same time period the year before. In Decatur Township, the number of new cases declined 70.7 percent. * * *
a recent federal appellate court opinion exposes debt collectors that operated under the old rules to potential liability.
The appellate court opinion relates to the federal case filed by Hancock County resident Mark Suesz.
Suesz sued debt collector Med-1 Solutions in 2012, claiming the company violated the Fair Debt Collection Practices Act by filing a small-claims suit against him in a place where he didn’t live and hadn’t signed the contract. The case was filed in Pike Township, while the hospital where Suesz allegedly owed money is in Lawrence Township.
U.S. District Court Judge William Lawrence dismissed Suesz’s lawsuit based on a federal appellate court opinion from 1996, which said township courts were part of the Marion County judicial district and were not districts of their own. That distinction matters because, under the Fair Debt Collection Practices Act, consumers must be sued in the judicial district in which they live or signed the contract.
Suesz appealed and, on July 2, the Seventh Circuit Court of Appeals agreed with him, ruling that each township is its own judicial district. Now his case against Med-1 Solutions can move forward, and his lawyer is seeking class-action status. If Suesz’s suit succeeds, that could add up to millions of dollars in damages.
The [7th Circuit] also made its decision retroactive, meaning debt collectors that had relied on the older opinion could be challenged.
Re Suesz, see this July 2nd post from the ILB, headed “Ind. Decisions – 7th Circuit holds Marion County Small Claims Courts are judicial districts for the purposes of the FDCPA – this is big.” See also this July 9th ILB post and the questions it asks.
More from the Star story:
Indiana Appellate Court Judge John Baker said he hopes the federal opinion may be the final push needed to reform Marion County’s small-claims system.
The Marion County Small Claims Task Force, which was set up to study issues in the courts, said it is time to abolish Marion County’s township courts.
“The evidence is becoming pretty overwhelming that reform is required,” said Baker, who serves on the task force with Senior Judge Betty Barteau.
On Wednesday, Baker and Barteau sent a letter to Supreme Court Chief Justice Brent Dickson that proposes the General Assembly shift jurisdiction of small-claims cases to the Marion Superior Courts. Such a plan would require additional judges, clerks and hearing officers, they said.
A preliminary report by the Court Consulting Division of the National Center for State Courts makes a similar recommendation.
[The ILB is attempting to obtain copies of the letter and the report.]
The Star story ends with the township judges and the attorneys who practice before it defending the present system. In addition, Marion County legislators from both parties are quoted defending it:
Sen. Brent Waltz, R-Greenwood, said he isn’t convinced the courts need reform that would require legislative action.
“This is classic case of chopping off an arm because you have a hangnail,” Waltz said. “It’s become very clear to me that the township courts provide a tremendous value to the taxpayer. If we abolish small claims courts and add additional superior courts in Marion County, the additional expense taxpayers would have to incur would be significant. And I’m not convinced they would receive any better justice in the superior court than they would in the small claims court.”
State Rep. Ed DeLaney, D-Indianapolis, said the problem with reforming the system is figuring out how to do it without losing the benefit of multiple locations and low expenses in those courts.
“The bottom line is if the public and the courts themselves and the supervising courts, if they all want change, there’s going to have to be discussion of that in the (House Judiciary) committee,” DeLaney said. “I’d welcome discussion of how we improve these things.”
ILB: Finally, recall that in the 2014 session, the only bill considered concerning the Marion County small claims court, SB 366, would have, as I wrote then:
… attempt[ed] to address the myriad problems reported with the small claims courts over the past several years simply by eliminating any supervision of these courts, other than from the small claims judges themselves.”