By Chris Villani

Law360 (April 30, 2020, 4:35 PM EDT) -- Massachusetts Attorney General Maura Healey on Thursday defended her emergency regulation restricting debt collection activities during the coronavirus pandemic, pushing back against a trade group's lawsuit claiming the measure is unconstitutional and harmful to businesses.

Healey argued ahead of a Friday motion hearing that ACA International Inc., a trade association of debt collectors, is unlikely to succeed in its claim that a temporary moratorium on filing new debt collection suits runs afoul of state law. The emergency regulation is properly tailored to advance specific government interests, her office said in a brief.

Those interests include "shielding consumers from aggressive debt collection practices that wield undue influence in view of the coronavirus pandemic; protecting residential tranquility while citizens have largely had to remain at home during the coronavirus pandemic; and temporarily vouchsafing citizens' financial wellbeing during the coronavirus pandemic," the AG's brief states.

The temporary moratorium does not permanently deprive a debt collector of any of its substantive rights, the AG argued, and keeping the regulation in effect without interruption serves a vital public interest.

Healey noted how life has been completely upended in the commonwealth by the pandemic, with more than 650,000 new unemployment claims, or roughly 18% of the state's workforce. But debt collectors have not changed tack, she argued.

"Even as the coronavirus pandemic descended on everyday life in Massachusetts, debt collectors continued to utilize intrusive and high-pressure collection tactics," the brief argues. "Between March 13 and March 26, debt collectors filed at least 2,069 collection lawsuits in small claims sessions of the Massachusetts District Courts. Debt collectors also continued to use aggressive calling tactics to demand payment from consumers, many of whom were already under significant financial distress."

Healey also argued that the Eleventh Amendment does not give federal courts jurisdiction over claims for prospective injunctive relief against state officials accused of violating state laws, as in this case.

Counsel for ACA declined to comment, and Healey's office also declined to comment.

A hearing over ACA's bid for a temporary restraining order blocking the regulation is set for Friday morning before U.S. District Judge Richard G. Stearns.

In its complaint, filed a little more than a week ago, ACA argued that the emergency measure was confusing and costing its members business. The suit says third-party collection agencies, law firms, creditors, asset-buying or debt-buying companies, and vendor affiliates with Massachusetts operations have reported dips in revenue of 20% to 50%, forcing some to lay off employees.

The group also argued Healey's regulation is harming debt holders, many of whom, it claims, want to use the stimulus money they received from the federal government to help pay down debt. In addition to the regulation, Healey's office warned debt collectors that the $1,200 stimulus payments sent to many Americans are "off limits" to collectors.

The credit group says it has had to expend personnel hours trying to help members decipher regulations that they say are confusing and riddled with exceptions. ACA members are also more than capable of handling debt collection during hard economic times and times of crisis, the suit argues.

ACA is represented by David M. Bizar and Robert J. Carty Jr. of Seyfarth Shaw LLP.

Healey is represented by Eric A. Haskell and Jennifer E. Greaney of the state attorney general's office.

The case is ACA International v. Healey, case number 1:20-cv-10767, in the U.S. District Court for the District of Massachusetts.

--Editing by Adam LoBelia.

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