JACKSON, Miss. (Legal Newsline) – The plaintiffs firm Motley Rice will take more than $100,000 from a settlement recently reached between Mississippi Attorney General Lynn Fitch and Credit Acceptance Corp.
Filed in 2019 by Fitch’s predecessor Jim Hood, the case alleged CAC, a Michigan subprime auto lender, used unfair and deceptive trade practices. But the company fought the allegations, hiring Skadden Arps to make the argument Hood was trying to use litigation to “legislate new regulations governing the entire subprime auto lending industry.”
"Specifically, the complaint asserts that it is 'unfair' and 'deceptive' to lend to consumers with impaired or limited credit histories or use lawful means to collect amounts concededly owed on contracts,” the company argued.
Even though more than two years passed, Jackson federal judge Henry Wingate and two separate magistrate judges assigned to the case never ruled on CAC’s motion to dismiss or Mississippi’s motion to remand the case to state court.
On Dec. 30, the sides dismissed the case. Fitch’s office says the value of the settlement will be $450,000, and Motley Rice is entitled to 25% ($112,500) under the terms of its contingency fee agreement to represent the State.
CAC has faced litigation in Arkansas and Massachusetts, as well as probes into its business practices by New York and Maryland.
Allegations against CAC’s in Mississippi stem mostly from a subpoena served on the lender in October 2017 about CAC’s loan organization and collection practices. Earlier that year, the Federal Trade Commission looked into CAC’s use of "kill switches," physical devices used to track down delinquent borrowers' vehicles, remotely disable their automobiles prior to repossession and make noises to remind them to pay up.
Motley Rice lawyers Mimi Liu and Eliabeth Paige Boggs represented Mississippi, as did lawyers with the Jackson firm Gadow Tyler. They recently pointed to a decision in Massachusetts Attorney General Maura Healy’s case that denied the company’s motion to dismiss.
CAC said that decision did not address the issue of federal subject matter jurisdiction and thus, did not apply to the Mississippi case.