It seems at least one judge in the Eastern District of Wisconsin appears to be tired of reviewing repeated meritless claims. On March 29th, in two strongly worded Orders, Judge Brett H. Ludwig dismissed two cases filed on behalf of consumers by the Law Office of Paul Strouse against Enhanced Recovery Company, LLC (ERC) and other defendants. Further, the consumer’s Counsel has been ordered to show the court in each case why he should not be sanctioned. The cases are Herron v. Credit One Bank, et al., case #20-cv-0844 (E.D. WI) which can be found here, and Butler vs. 1st Franklin Financial Corporation, et al., Case #20-cv-0842 (E.D. WI) which can be found here


Each case alleged that ERC and other defendants violated the FCRA by failing in their respective duties to correct and report accurate credit information to the Credit Bureaus. However, according to Judge Ludwig, both the initial and amended complaints were “sparse on details” and mere “threadbare recitals.”  

In each case, the Court allowed the plaintiff a second opportunity to amend their complaints but ultimately found the “rather cryptic” amendments were insufficient as they did not describe any particularized or concrete harm. In dismissing the cases, the Court stated, “bare procedural violations, divorced from any concrete harm, [] do not satisfy the injury in fact requirement of Article III.”

Before dismissing the cases, however, Judge Ludwig probed the plaintiff’s Counsel in detail about the methodology he used to pursue his clients’ claims, which is where it gets fascinating. Judge Ludwig did not just dismiss the cases and call it a day. Instead, he took the time to issue a scathing rebuke to the plaintiff’s Counsel stating,

“Counsel’s description of his pre-lawsuit conduct also raises questions about whether this litigation was filed for a proper purpose. The record suggests Counsel was not trying to remedy a legitimate client problem but was instead interested in setting up defendants for “technical” violations of a consumer protection statute in order to obtain attorney’s fees. Counsel chose to send opaque, nonspecific complaint letters to the credit reporting agencies and declined to forward even those vague letters to defendants. If Counsel was concerned about remedying the accuracy of his client’s credit reports, providing prompt and proper notice to both the credit agencies and the defendants would have made sense. Of course, if Counsel was concerned about ginning up an FCRA lawsuit to coerce settlements or secure fees, on the other hand, it made perfect sense to use a nonspecific complaint letter and to delay the forwarding of that letter to defendants, who would have less time to address any potential issues and would be more likely to exceed the FCRA’s tight 30-day time limit for response."

Now that the Court has made clear that it does not appreciate meritless filings, and certainly not those predicated on the pursuit of attorney’s fees, it remains to be seen whether Judge Ludwig will issue sanctions against the plaintiff’s Counsel.

Regarding the outcome of the Herron and Butler matters, Shelly Gensmer, VP of Legal and Compliance, EJD Candidate, CCCO, stated, “Article III standing is starting to get the spotlight it deserves, finally. ERC is very pleased with the Court’s orders, and we expect the trend of pushing plaintiffs to actually show harm will grow and continue.”

insideARM Perspective:

In light of the avalanche of dismissals the 7th circuit issued for lack of standing in 2020, the dismissal of these cases isn’t all that surprising.  However, what is surprising is the Court’s willingness to probe the plaintiff’s Counsel’s pre-filing practices and the strongly-worded rebuke of these practices. If the Court ultimately enters an order sanctioning the plaintiff’s Counsel, it would send a clear message that at least some courts are tired of cookie-cutter complaints which lack substance. Whether decisions like this will impact the number of complaints filed remains to be seen. 

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