Maryland State Laws Case Study

Law case study
Section 9
As laid out in both Federal Rules of Civil Procedure and the Maryland Rules, for a class to be certified, the requirements are that;
· The class should have numerous members such that it would be impractical, to sue or be sued one by one. In such a case, it would take only one to act as a representative for all. The suggested number for probable class action is 40. Numerosity is determined based on the total number of customers/clients/members/employees the defendant serves and the resources that would be needed by all the involved parties to run all the cases to completion. Ordinarily, for a case that doesn’t satisfy the numerosity requirement, and the “others” can be included as interested parties.
· The law questions involved or the facts presentable ought to be common to the entire persons involved in the class. Commonality requirement means that the claims or the defenses involved should at least be similar.
· The representative of the parties involved in a class action ought to have typical defenses or claims of the entire class. This requirement is essential because, if the representative fails, then the entire class loses, regardless of the strength of their claims or defenses. To avoid losing a class action suit on the basis of special defenses, it is important that the member representing the class is unblemished with common legal issues that can dent their credibility before the court.
· Lastly, the party or parties representing a class action suit ought to adequately and fairly protect the interests of the entire class members. It should be noted that this requirement ought to be based on interests of the class and the suitability of the representative. It is important that the adequacy requirement should be determined primarily on the basis of interests only. Other skills and features like eloquence, cleverness, and public-spiritedness should be secondary if at all needed.
In the current case, Al Fare has the adequacy of interests, typical claims to qualify to be a class action representative in the case against Dodgy Dodge. It is noted that AL Fare is divorced, poorly educated, and has two Driving Under the Influence (DUI) convictions from a few years back. In addition, Al Fare has a minimum wage job with means he is probably among the poorest 5% of Dodgy Dodge clients. In this case, there are numerous opportunities for the defendant can raise special defenses unique to the case of Al Fare regarding among other, DUI, to challenge Al Fare’s case. Therefore, on this basis, it is considered that Al Fare wouldn’t be best suited to be a class representative despite satisfying the adequacy and typicality requirements. There are other two persons with a similar claim of the $500 fee, which satisfies the commonality requirements. However, the numerosity requirement in this court case is considered to be unsatisfactory. Dodgy Dodge has about 200 clients, and so far, only 3 of the clients have a similar claim. A class action suit, in this case, would be disqualified.
In addition, Dodgy Dodge has an Arbitration clause and class action waiver in the contract signed by clients. To this end, it would be advised that clients should first seek arbitration avenues to solve the matter; however, if such effort is in vain, then the intervention of the court can be sought. Even though the current case is determined to not qualify for a class action, this doesn’t mean a class action suit cannot be brought against Dodgy Dodge. The law requires that contracts and agreements that are contrary to the law, the law takes preceded to the extent of the contradiction. If arbitration fails to solve the $500 fee issues, a court case is inevitable, and if the number of cases meets the class action requirements, then a class action is inevitable despite the class action waiver – in any case, it would be the best option even for Dodgy Dodge.
Section 10
a. Compliance with Maryland Interest & Usury law
The interest and usury (I&U) law for Maryland is contained in the annotated code of Maryland common law section 12-101-127. According to section 12-103 which determines I&U, there are varying requirements that are used to determine the interests cap. For loans that are in writing and set forth the rate, the rate cap is 8% and 2% minimum. For loans that are in writing and set out the rate but are not secured by a saving account, the rate cap is at 18%. For loans that are in writing and they have a rate set forth they have no rate cap. For loans in writing and the rate is set forth but are not secured with a real property, they are to be repaid in installments and with an established fee structure and a schedule for repayment, the rate cap is at 18%. From a broader perspective of the Investor Approved Extended Facility loan offered by TCC, it is considered to be within the state required rate cap of 18% for the interest charged ranges from 10-15%.
The above are the possible categories the provided case would lay. The loan extended to customer A has a rate set forth, it has a clear repayment structure of six months, and it is secured by saving or investment. It is therefore concluded that the loans lie under the 18% rate cap. Based on this, the loan is considered to be not in violation of Maryland I&U laws for its rate are set at 12%. The usury law that applies to this loan is common law section 12-103(c)(2).
b. Compliance with federal Truth in Lending Act
The federal Truth In Lending Act (TILA) requires that lenders should make known to consumers what they are getting when borrowing money. TILA is a federal mandatory disclosure law that has set out clear and standard disclosure requirements with special focus to the Annual Percentage Rate (APR). This knowledge allows consumers to compare the various loan terms based on cost. The law doesn’t fix interest rates but it is mainly meant to create a level and standard market for all and for the free market to control the market.
For the current case, Customer A is required to pay $100 referred to as credit check fee. According to the TILA, this fee is considered to be part of the finance charge. In addition, in case a customer defaults in loan payment, a 10% fee and a $5 charge are added. As described in the TILA, these fall within the finance charge and should be clearly disclosed to the customer. In addition to disclosure, they are to be factored in the repayment calculations. However, after paying $300 for the first three months, Customer A’s balance is more than $640. Based on calculations and factoring in the finance charge and the APR of 12.1%, it is determined that the outstanding balance cannot be more than $640. It is therefore determined that, TCC has their calculation wrong, or there are additional hidden charges. Based on the second assumption, it would be concluded that TCC is in contravention of TILA and has not disclosed all the charges for the loan to Customer A.
The other assumption would be, because it is not expressly stated when customer A enquired about his balance immediately after the first three months, then the more than $640 balance would have accumulated over time, for a period of about four additional months on the basis of the 10% and $5 extended fee and late fee respectively.
Working on the assumption that the $640 balance was after the three first months, it is concluded that TCC is in contravention of the TILA.
Section 11
The first issue concerning the phrase “Pay Now To Avoid More Serious Action” is considered to be bordered on the First Amendment. To determine the legality of the phrase, it must be measured against the tenets of the first amendment. For commercial speech to be covered by the first amendment, the law requires that it should be lawful and not misleading. For these two tenets, it is considered that the law on lawful because debt collection is a legal activity in both federal and state laws. It is, therefore, the qualification of the phrase edges on whether it is misleading or not. On its defense, CAI argues that the phrase is effective and accurate as it describes the further action from CAI. The phrase definitely suggests further action from CAI would follow, but it is the nature of this further action that comes into question, and the word “MORE” as used in the phrase would be used to determine the nature of this further action. More, in this case, would be taken to indicate ‘additional’ or ‘severe.’ However, the phrase in its completeness doesn’t seem to suggest additional action as CAI argues, but rather, is meant to indicate a severe further action, thus inducing fear in customers and ‘forcing’ them to pay their debt. It is concluded that the phrase is misleading and CAI should abandon the phrase altogether or rephrase it to convey the intended communiqué.
The second legal challenge borders on first amendment rights on petitions – which gives CAI the right to seek redress from the courts. Additionally, under the first amendment right to petition, CAI has a right to sue the two consumers for failure to pay money due to the company. Based on this right, CAI is immune to any antitrust liability for the efforts undertaken in bring the petition to the courts. Even though attorney liability might be brought against CIA by the defendant, this doesn’t hold as CIA has not violated any of the laws on Fair Debt Collection Practices Act (FDCPA). Given the fact that the consumers are victims of identity theft, presenting the issue for redress by the government is considered to be the right thing to do, as at the moment, the identity theft issue curtains CIA debt collection efforts. Based on common law and specifically on precedence by Hemmingsen v. Messerli & Kramer, P.A., 674 F.3d 814, 819 (8th Cir.2012), it is evident that the two consumers are liable for the debt therefore, CIA should follow through with the case.
The third legal issue touches on article III of the U.S. Constitution that requires that courts only adjudicate controversies and cases. For the specific case, the plaintiff argues that the sent postcards were a violation of the FDCPA and they bore the risk of exposing their private information. Article III requires that courts hear, in fact, they have jurisdiction only where there exists a controversy. In the current case, it is purely hypothetical because, even though CIA sent a potentially-exposing postcard, there was no damage done. None of the members of the class action has their postcards end-up where they were not intended i.e. each of the class action members received their postcard.
The case presented by these customers is their moot, and not yet ripe. The plaintiffs are simply asking the court to make speculative pronouncements based on the hypothesis that, harm would have been done had the postcards ended up in the wrong hands. Moreover, there is not any clear abuse of the FDCPA which has been violated with respect to injuring customers. Through printing customers private information might have been a wrong action, it is purely a management issue and doesn’t warrant a court case. All that would be required is an apology by CIA to the affected customers. It is therefore recommended that this case lack merit and it would probably be struck out by the judge.


References
“Class 9: Consumer Litigation: Class Actions”
“Session 10: Borrowing Money”
“Class 11: Constitutional Defenses in Consumer Protection Action”