An estimated 31,000 consumers nationwide are poised to receive more than $1 million from proposed settlements in a Montana lawsuit that accused companies of violating laws in collecting old credit card debts.
The federal class-action case filed last year by a Billings lawyer on behalf of a Hill County resident and others accused the defendants of civil racketeering and violating the Fair Debt Collection Practices Act.
The plaintiff, Jeannie Cole, alleged that debt collectors used false affidavits to win judgments. The affidavits, which are sworn and notarized documents, were signed with the name of a woman who had died years before, the suit said. The complaint called the defendants’ conduct “a complete affront to the legal system.”
The Cole case is one of three debt-collection lawsuits filed by Billings attorney John Heenan in federal court in Montana. The Cole suit, along with two filed in Billings, alleged unfair, deceptive and illegal practices against consumers.
In the debt collection industry, corporations buy bundles of old credit card debt for pennies on the dollar from banks, which write off the losses. Collection companies try to collect against people for the face value of the debt, plus interest and attorney fees.
In the Cole case, three of the defendants, all out-of-state firms, have reached preliminary agreements. Class members could receive from $25 to more than $500.
The case named as defendants the Denver-based CACV of Colorado; Portfolio Recovery Associates, of Norfolk, Va.; Johnson, Rodenburg and Lauinger, a North Dakota debt-collection law firm, and the now-bankrupt Washington Mu-tual Bank and two bank employees.
CACV, Portfolio and the Johnson firm have reached preliminary agreements. The proposals are awaiting approval by U.S. Magistrate Judge Keith Strong in Great Falls.
The attorneys in the Cole case could not be reached or declined to comment. The companies deny any wrong doing or liability in the agreements.
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The proposed settlements’ highlights are:
• CACV would pay $5,000 to two of the plaintiffs, including one to be added to the case, and to forgive the debt against a third plaintiff. Payments between $25 and $555 would be paid and credit given to at least 15,000 class members. CACV would pay $212,500 in attorney fees.
• Portfolio Recovery Associates’ settlement is nearly $1 million, with the company agreeing to pay from $25 to $200 to more than 16,000 class members. Cole would get $2,000. Portfolio also would pay attorney fees, which have not yet been determined.
• The Johnson firm would pay $1,000 to three of the plaintiffs and to 22 class members, for an estimated total of $25,000. The firm also would pay $20,000 to Montana Legal Services Association for use in representing low-income consumers or in education. The Johnson firm would pay $130,000 in attorney fees.
The Cole case grew from a state case. Portfolio, through the Johnson firm, sued Cole, alleging she owed a debt on a Providian National Bank Credit card. Portfolio tried to prove the debt by filing an affidavit provided by a Martha Kunkle, who purported to be Providian’s agent.
When Heenan tried to verify Kunkle’s affidavit, he learned Martha Kunkle had died in 1995. Kunkle’s daughter, Lorraine Kunkle, a Washing ton Mutual employee in Texas, authorized other employees to sign her late mother’s name on thousands of affidavits, the complaint said.
Cole alleged that Portfolio and CACV bought debt from Washington Mutual and that the bank operated “a false affidavit factory.”
In the Billings cases, Chief U.S. District Judge Richard Cebull recently approved a final settlement in a class-action suit filed by Billings resident Kerri Henan, no relation to attorney Heenan, against Portfolio and the Johnson firm. She alleged the companies illegally charged attorney fees. The companies will pay Henan $4,500; about 27 class members each will receive $500.
In the third case, a federal jury in April awarded Billings resident Tim McCollough $311,000 in damages after a magistrate judge ruled that the Johnson firm violated state and federal laws. The firm is appealing.