Collection Law Firm Victorious Against State in Supreme Court Case

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The Georgia Supreme Court recently upheld a lower court ruling that the state’s attorney general’s office, acting on behalf of the Governor’s Office of Consumer Affairs, overstepped constitutional bounds in demanding documents from a law firm practicing debt collection in the state.

Georgia’s Office of Consumer Affairs (OCA) was investigating Frederick J. Hanna & Associates (FJH), based in Marietta, Ga., following consumer complaints about the firm’s debt collection practices. OCA requested files from FJH in their investigation, which FJH refused to hand over. OCA then had the state attorney general file a lawsuit against the company to compel them to cooperate.

Fred Hanna, CEO of the company, said that his firm had offered to turn over all files for cases in which there was a consumer complaint, but the OCA had requested all files, which would include thousands of cases.

“They were taking the shield law used to protect consumers and turning it into a sword to attack me,” Hanna said. “There are already enough laws to protect debtors.”

A lower court agreed and denied the state’s request for the files, stating that because FJH’s day-to-day operation directly involves the practice of law, and because the investigative demand directly impacts their practice of law, that demand is an attempt by the OCA to regulate the practice of law and constitutes an impermissible interference by the executive branch into the exclusive jurisdiction of the Court in violation of the separation of powers doctrine.

On June 7, the Georgia Supreme Court upheld the ruling. The seven-justice panel was split on the decision 4-3.

Even with the success his firm had against the state, Hanna expects lawsuits against collection firms to continue to multiply as plaintiff attorneys look for cases that are difficult to fight. Many law firms that pursue collections do so throughout the country, Hanna explained.

He noted that it is very costly to fight a case filed in a different jurisdiction, like Hawaii. These cases would dry up quickly if laws were changed to require filing of cases wherever the collection firm is domiciled, Hanna said.

Hanna doesn’t expect a further appeal of the case because he doesn’t see any federal implications. Yet he says that other debt collection law firms in other states, if they have similar laws to Georgia, might be able to cite this case if they face similar circumstances.

“Every lawyer in state of Georgia should be thanking Fred Hanna for taking on the state government on behalf of law-abiding lawyers,” said John H. Bedard, Jr., managing partner of Bedard Law Group PC, Duluth, Ga. “He did not yield to the tremendous pressure that a state can put on a defendant.”

It’s very easy to sensationalize the behavior of “a few bad actors” in the industry, Bedard added. “Fred is not one of them. The state court has vindicated Fred. Every lawyer in the state owes him a debt of gratitude.”

Even though Hanna won the case in the state’s highest court, Bedard expects state officials to continue aggressively pursuing cases against collection firms, because such cases make good political press.

“There is no need for more regulation of law-abiding collection firms, but unfortunately, politicians get a lot of mileage out of reporting to their constituencies that they’ve taken on a wrong-doer and collection agencies are erroneously targeted. It makes a lot of headlines.”

The coverage tends to be one-sided, according to Bedard. “The articles paint us all with the same sort of brush. No one reports about the good collection firms do for consumers. Law-abiding firms help consumers dig out of their financial problems. They help consumers save their homes, save their automobiles protect their credit and get their financial affairs in order. The public needs to know all of the good that the industry does – helping keep children in school, clothes on their backs and food in their mouths. The industry delivers an estimated $39 billion back to the economy. That benefits everyone in the country.”


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Posted in Collection Law Firms, Collection Laws and Regulations, Debt Collection .

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  • avatar R Jones says:

    Finally – one for the good guys!

  • avatar Sarah Maxwell says:

    John Bedard gives us nice spin: “The state court has vindicated Fred.” But, Bedard, the Georgia Supreme Court just stated Fred doesn’t have to turn over all his records. They did not decide on the merits of the complaints against Fred. Your spin should be disregarded with respect to Fred’s debt collection practices. Maybe Fred is a bad apple. We don’t know yet.

  • avatar Michael Springfield says:

    Thanks, Fred!

  • avatar Chris Livingston says:

    I agree with the result. Demanding ALL files to investigate a complaint on ONE file is off the chain, by quite a bit.

    But now Mr. Hanna wants to make people sue collectors only in their home states. Sure, if the same law makes collectors collect only in their home state too.

  • avatar Brian Bowers says:

    We’d end alot of this nonsense if plaintiff’s and the plaintiff’s attorney were on the hook for defense costs when they lost a frivolous case. The rules are unilaterally interpreted and enforced in favor of the plaintiff and plaintiff’s attorney right now. It makes a mockery of our legal system. Perhaps then we’d see less frivolous cases.

  • avatar Chris Livingston says:

    Actually, Anonymous, FDCPA already provides for that. Read the second half of 15 U.S.C. � 1692k(a)(3). The fact that these awards are rare, but FDCPA damages awards are not, should tell you something. Plus, if you read the opinion, or even the news story, it wasn’t a “frivolous lawsuit” but a state investigation.

    Also, now that I read the GASC opinion, I might agree with the result (prohibiting what looks like an unreasonable search) but not the reasoning (which had nothing to do with unreasonable search). All GASC did was stop the Office of Consumer Affairs from investigating the Hanna firm because it is a law firm (10 lawyers + 440 nonlawyers = law firm?) and GASC decided to read an imaginary exemption for lawyers into the state Fair Business Practices Act, and therefore Hanna gets to violate GAFBPA however and whenever it feels like, without penalty, unless either the State Bar or (right) FTC can be bothered to look into them.

    This is a wonderful decision for Georgia collection lawyers, because now they’re exempt from state regulation, but nonlawyer collectors in Georgia are not. So I don’t know why the latter are writing all these deliriously happy comments.

  • avatar ryon gambill says:

    “We’d end alot of this nonsense if plaintiff’s and the plaintiff’s attorney were on the hook for defense costs when they lost a frivolous case.”

    couldnt agree more. The Krohn and Moss crowd would be bankrupt if the firm was on the hook for costs in a loss.

    I would love to see an undercover operation on some of these “consumer advocate attorneys” with video documentation of their baiting and lies to get a case going.

    Hell, id kick in a few thousand bucks to the investigator willing to do so.

  • avatar tammy varholdt says:

    Way to go Hanna two thumbs up! Every time the media airs the “bad collection agencies” I get frustrated. I’ve been licensed since 1988 with an impeccable record with all reg agencies and get thrown into the same category of basement collectors who brow beat and should be cited. I wish the media would present a fair sided story once in a while!

  • avatar Susann Bouchillon says:

    Fred had no other option but to
    mount a vigorous defence. This ruling was not vindication…it was survival!

    I don’t care who you are, if the State is allowed the right to demand your records in mass without cause…they will find the noose to hang you. Sadly, this Supreme Court ruling will not help collection agencies, only collection law firms.

    Might be a good time to form a defense fund. I suspect that it is going to get much worse before it gets better. No one is immune in this climate of escalating tensions.

    Susann Bouchillon

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