Small claims court is supposed to be a fair way to achieve rough justice between two parties who represent themselves. Oregon laws have been proposed to restore that goal and improve fairness. This post explains how the laws can help the process and how you can help enact the laws.
Level the Playing Field
“Small claims” – up to $10,000 – can have huge consequences. Many people summoned to court barely make ends meet. A judgment and garnishment can drain take-home pay so much that people cannot pay rent, leading to eviction and homelessness.
These people cannot afford attorneys to represent them. In theory, that’s not a problem because attorneys are not allowed in small claims court for either side. BUT, there’s a loophole. Collection agents can pursue claims on behalf of others, even when they do not own the claim. Collection agents are in court every day and become as adept at mediating and presenting claims as any attorney. In effect, creditors have “an attorney” against someone who might have zero acquaintance with legal proceedings.
In theory, even when it is pro vs. newbie, the judge should ensure that justice is done. BUT, more often than not, the parties never get to a judge. Some counties, including Multnomah and Clackamas, summon people to mediation. Parties may not see the judge unless mediation fails to settle the lawsuit.
Mediation has many wonderful benefits. I’ve mediated a ton of cases. The opportunity to exchange information and negotiate a payment plan, for example, is great. Other times, mediation is less-than-fair because the pro states positions with authority, and the newbie does not have the experience, knowledge or, frankly, the smarts to question what the pro states. Ethics prevent mediators from taking sides. Mediators cannot ensure a just settlement. Simplified, a mediator’s job is to make sure the process is voluntary, without bullying, for example. If a professional negotiator makes a sharp bargain, that’s his or her job. By contrast, would a judge permit the continuation of 33% interest on a 200,000-mile car that broke down within 60 days? Maybe not.
More importantly, when the alleged debtor truly disputes the bill, the professional negotiator often claims he or she does not have the client’s authority to negotiate. (Q. “Can you budge on the amount due or interest?” A. “No.”) And when the consumer thinks the quality of work or product was subpar or constituted malpractice, the clinic or true party is not in the room to listen and evaluate the concern. I truly believe if some charitable organizations who use collection agents WERE in the room, sometimes, they would act pursuant to their mission and do charity. Would they force a garnishment to pay a $1,500 debt when it might result in eviction and homelessness to a middle-aged couple?
No Secret Courts / Secret Parties
Who are the faceless entities using professional negotiators with no authority to actually negotiate? Who are the repeat players? Can a newspaper do an expose’ on a business or charity? No, because the claims are pursued in the name of the collection agent. In every lawsuit other than small claims, the claim must proceed in the name of the “real party in interest.” It is time to clarify that small claims, too, must, be pursued in the name of the “real party in interest.”
Senator Lew Frederick and Representative Mitch Greenlick introduced bills to address these issues. SB 358 and HB 2734 would require creditors and others to file suit in their own names. The amendments also require the actual party to show up for mediation and trial, closing the loophole that permits only one side the benefits of a professional representation in court.
One Spouse is Enough.
The law addresses another important issue. Often, spouses are jointly responsible for a debt or jointly want to sue someone. Often, they have child care issues or cannot afford to take time from work. The proposed law permits one spouse to appear on behalf of both. This seems like a common sense clarification.
Legal Rate of Interest.
The “legal rate of interest” in Oregon is 9% per year. Many who volunteer to help in small claims court see how that can crush people, especially when creditors wait several years to file their claim. For example, a young person who moved frequently never learned that her medical insurance had not paid the medical bill in full until she received a lawsuit 5 years later. By then, her $900 balance had ballooned to $1,385.
Federal courts use a market rate standard. SB 362 and HB 2733 would make the legal rate of interest the greater of 1% or the market rate.
How you can support these reforms.
- Thank Senator Frederick and Representative Greenlick.
- Share your stories with them and offer to testify if there is a hearing.
- Contact members of the assigned committees, state your support, and ask them to hold a hearing on the bills. The “SB”and “HB” numbers above will take you to the Legislative Assembly’s page that lists committee members. Subscribe at the top to receive notice if the committees schedule hearings, which often occur on very short notice.
Update – Hearing Set for 3/2 at 1:00 p.m.
The House Committee on the Judiciary scheduled a hearing on HB 2733 and 2734 for March 2, 2017 at 1:00 pm in Hearing Room 343.
Please share your input on one or both bills in writing or in person or both. Why is it a needed? What could improve it?
Submitting written materials is easy. Just write your thoughts and send them to [email protected] They do the rest. No need to make many copies.
Testifying is a very fulfilling way to perform a civic duty; and it is easy. Just go to Salem, sign up, and speak to your representatives face-to-face. The state encourages and coaches us on how to testify here.
See you in Salem!
Jeff Merrick, Mediator