A federal lawsuit alleges that the debt-collection company hired by the Iowa Judicial Branch has been paid millions of dollars in fees while violating state and federal laws through deceptive, high-pressure tactics.
The lawsuit also alleges that Iowans in rural areas of the state are at a financial disadvantage when it comes to fees for court-appointed attorneys and debt collection.
Iowa Legal Aid, along with a California public-interest group called Public Justice and the Terrell Marshall Law Group of Seattle, are suing the law firm of Linebarger, Googan, Blair & Sampson, which is one of the nation’s largest collectors of debt owed to governmental entities, on behalf of two Iowans.
With at least 2,300 governmental clients nationwide, Linebarger reportedly collects more than $1 billion in government debt each year, but has come under scrutiny for debt-collection tactics and been accused of threatening debtors with arrest and jail.
Leslie A. Bailey, an attorney with Public Justice, said that as far as her organization knows, this lawsuit is the first case of its kind in the United States.
“This is certainly not the first time Linebarger has been sued for something,” she said, “but to my knowledge this is the first time they have been sued for Fair Debt Collection Practices Act violations that arise from their collection of criminal-justice debt.”
She said it’s possible the number of plaintiffs in the case could grow beyond two individuals, but added that “we’re not planning on bringing a class-action case at this point … What we’re trying to accomplish here should benefit everyone, even with us suing just on behalf of these two people. It’s a test case, so we’ll see how the court responds to our arguments and take it from there.”
Linebarger has yet to file a response to the lawsuit. The firm did not immediately respond Wednesday to calls and emails regarding the lawsuit’s allegations.
Linebarger has collected nearly $12 million in fees
In 2010, the Iowa Judicial Branch hired Linebarger to collect outstanding court debt for the state. That contract, which has been renewed on a month-to-month basis, is expected to remain in effect through December 2020.
Under its contract with the Iowa Judicial Branch, the state is to pay Linebarger a collection fee of 25% of all debt that is collected. However, when Linebarger sends collection notices to Iowans, the firm allegedly adds 25% onto the debt, characterizes the total amount as the court-ordered debt, and then instructs the debtors to pay that amount to the state or face contempt-of-court action and the possible revocation of their driver’s licenses.
Between 2012 and 2018, Linebarger allegedly collected more than $58.6 million in court debt from Iowans pursuant to the company’s contract with the Judicial Branch. During the same time period, Linebarger — which employs just two attorneys licensed in Iowa — received nearly $12 million in collection fees, according to the lawsuit.
The Iowa Judicial Branch is not a defendant in the lawsuit. But according to the lawsuit, the tactics Linebarger used to collect the debt on behalf of the state violate both the federal Fair Debt Collection Practices Act and the Iowa Debt Collection Practices Act in several respects:
- Linebarger’s letters to debtors fail to itemize the debts that are owed.
- The letters mischaracterize the amounts owed and contain false and misleading statements, including threats that failure to pay may result in driver’s license revocation or court action that can result in arrest and jail.
- Linebarger’s letters allegedly seek to collect fees for such expenses as transportation to jail, even when no court has ever entered the required judgment ordering the payment of such fees.
The lawsuit also alleges that in Iowa’s urban counties, people needing court-appointed attorneys are often represented by public defenders who tend to charge a minimal amount for their services, and court debt is typically collected by county attorneys, who do not charge fees for their collection efforts.
But low-income Iowans living in rural counties that are outside the jurisdiction of Iowa’s public defender offices are often represented by contracted attorneys, who typically charge significantly more than their public defender colleagues.
Because the higher costs of the contract attorneys’ services are passed onto the defendants, Iowans in rural areas are allegedly more likely to owe significant debt related to court-appointed attorneys.
That debt is also more likely to be assigned to Linebarger for collection, resulting in even greater financial burdens due to the company’s 25% fee.
As a result, the lawsuit alleges, Iowans in rural counties tend to be “saddled with significantly higher debt — in both appointed-counsel fees and collection fees — than similarly-situated people living in Iowa’s urban counties.”
Even when criminal defendants are acquitted or all of the charges against them are dismissed, they may still be required to reimburse the state for the cost of their court-appointed attorney “to the extent the person is reasonably able to pay,” according to Iowa law. But without a conviction, the state cannot launch contempt proceedings for nonpayment of the fees.
The lawsuit seeks unspecified damages for violation of due process, alleging that “Linebarger has a custom or policy of collecting court debt from Iowa defendants that no court has ordered them to pay.”
It also seeks damages for the alleged violation of the federal Fair Debt Collection Practices Act by Linebarger’s indirect suggestion that nonpayment of court debt can result in arrest or the driving privileges being revoked.
In Iowa, the contempt-of-court proceedings that were being mentioned by Linebarger can lead to arrest and imprisonment, but Iowans can’t be arrested and jailed for nonpayment of court debt absent a finding that the nonpayment was willful.
And under Iowa law, the state cannot revoke a debtor’s driver’s license for nonpayment of a court debt, and can‘t suspend those privileges unless the debt is tied to driving-related offenses.
Iowa woman charged hundreds for transportation fees not approved by the court
One of the two plaintiffs in the case is Brooke Champagne, a 45-year-old Iowan who lives in Des Moines and works in a Hy-Vee grocery store’s deli department for roughly $14 an hour.
The lawsuit details the way in which her arrest on minor simple misdemeanor charges allegedly resulted in illegal collection efforts by Linebarger.
According to the lawsuit, Champagne was walking down the street in Jasper County in October 2013 when she was stopped and detained by a police officer. Although she passed a breathalyzer, she was arrested and charged with “simulated public intoxication,” a simple misdemeanor.
She was later sentenced to pay a $100 fine plus an additional $155 in court costs, fees, and surcharges.
In 2014, a charge of $138 for court-appointed legal counsel fees was added to her debt, bringing the total to $396.
By February 2015, she had paid $85, with $311 in debt still outstanding, and the state assigned the debt to Linebarger for collection.
Linebarger added a 25% collection fee of $78, bringing Champagne’s debt up to $389. She made a $25 payment in March 2015.
In September 2019, Champagne received a letter from Linebarger that did not itemize the debt or Linebarger’s collection fee, stating only that the “amount due” related to the 2013 Jasper County case was $364.
The letter instructed Champagne to pay the full amount “immediately” and warned that until “the court” received full payment,” the state might bring “enforcement actions” including “contempt of court proceedings” and “driver license revocation.”
In 2015, in Humboldt County, Champagne was convicted of violating a protective order by making a phone call to her mother and although she faced no fine, she was required to pay for her court-appointed attorney and court costs totaling $286.
In February 2016, with the debt still unpaid, prosecutors obtained a warrant for Champagne’s arrest so she would serve the remainder of a 48-hour jail sentence.
Champagne was arrested in Des Moines County, then transported to the Humboldt County Jail, where she was held overnight and released the following day.
She was charged $50 for “room and board” in the jail and $475 for the cost of transportation to the Humboldt County Jail – although there is no record of the court approving the transportation fee, and the court never entered a judgment Champagne requiring her to pay that amount.
Even so, the Iowa Courts Online docket shows that the $475 fee was added to Champagne’s court debt.
That and other fees brought her total debt in the case to $826, onto which Linebarger added a 25% collection fee of $206.
As with the Jasper County case, Champagne was threatened with “contempt of court proceedings” and “driver license revocation” if she did not immediately pay the full amount.
On June 25, Gov. Kim Reynolds signed into law Senate File 457, which made major changes to the way Iowa imposes and collects court debt.
Under the new law, in January 2021, court debt that would have been assigned to Linebarger for collection will be collected by the Iowa Department of Revenue.
However, it’s not clear whether Linebarger will continue to collect the debt already assigned to the firm.