Samuels v. Midland Funding, LLC

Midland Funding, LLC (Midland) (defendant) was a debt collector that purchased consumer debts in bulk. The information that Midland received about each debt it purchased was insufficient to establish the validity of the debts. Midland’s business model was to attempt to collect the unverifiable debts through state-court litigation, with the aim of either receiving a default judgment after a debtor failed to defend himself or settling the case out of court. Midland obtained default judgment or settlement in 90 percent of its lawsuits and lost the 10 percent of lawsuits that were actually litigated because it had no evidence to support its claims. Midland filed a debt-collection lawsuit against Eric Samuels (plaintiff) in Alabama state court. After a trial at which Midland presented no admissible evidence or witnesses, Midland lost the case. Samuels subsequently filed a lawsuit against Midland in federal district court, alleging that Midland violated the Fair Debt Collection Practices Act (FDCPA) and state law by initiating debt-collection lawsuits in state court knowing it lacked evidence to support its claims. Samuels argued that Midland’s lawsuit was an unfair method of collecting debt and involved misrepresentations about the nature and legal status of his purported debt. Midland moved to dismiss Samuels’s FDCPA claim, arguing that its actions did not violate the FDCPA and that, if its actions were a violation of state law, it could not also be liable under the FDCPA.