January 11, 2014

JPMorgan Fails to Dismiss California Debt Collection Case

JPMorgan Chase & Co. (JPM) lost a bid to throw out a lawsuit by the California attorney general alleging that the largest U.S. bank by assets illegally tried to collect debt from about 100,000 credit-card borrowers.

California Superior Court Judge Jane L. Johnson in Los Angeles yesterday rejected the bank’s argument that the attorney general’s unfair competition claims were precluded by California legal authority.

“I can’t find any case that is just slam-dunk there for you,” Johnson told JPMorgan’s lawyer, David Schrader.

Schrader said at the hearing that he will ask the judge to certify her decision for immediate appeal to the California Court of Appeals. Deputy Attorney General Bernard Eskandari said he will oppose an immediate appeal.

“The case has been pending for eight months,” Eskandari told the judge. “The people will want to move it along.”

California Attorney General Kamala Harris sued New York-based JPMorgan in May, alleging that the bank’s Chase unit engaged in “wide-spread and illegal robo-signing” and other unlawful practices against credit-card borrowers. Chase used the judicial system as a mill to obtain default judgments, according to the attorney general.
‘Cut Corners’

“At nearly every stage of the collection process, defendants cut corners in the name of speed, cost savings, and their own convenience, providing only the thinnest veneer of legitimacy to their lawsuits,” according to the attorney general’s complaint.

Both Schrader and Eskandari declined to comment on the judge’s ruling after yesterday’s hearing.

The state seeks civil penalties of $2,500 for each violation of California law and an additional $2,500 for each violation against a senior citizen or a disabled person.

Mississippi filed a similar complaint in December, alleging that as credit-card lending and delinquencies rose with the recession, the bank pushed for faster collections “and accuracy took a back seat.”

The case is People v. JPMorgan Chase & Co., BC508466, California Superior Court (Los Angeles County).