Saturday, November 24, 2012

FYI: 11th Cir Dismisses Def's FDCPA Appeal in Overshadowing Case As Moot, Even Though Offer of Judgment Reserved Right to Appeal

The U.S. Court of Appeals for the Eleventh Circuit recently dismissed an appeal involving a claim under the federal Fair Debt Collection Practices Act, concluding that the case was moot due to an earlier settlement whereby the defendant debt collector consented to judgment but reserved its right to appeal.   Notwithstanding the defendant's reservation of rights to appeal, the Court of Appeals ruled that there no longer was a live case or controversy to decide and that a post-settlement decision on the merits of the FDCPA claim would constitute an improper advisory opinion.
A copy of the opinion is available at:
Plaintiff debtor ("Debtor") filed a complaint against a debt collection company ("Debt Collector"), alleging that Debt Collector violated the federal Fair Debt Collections Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA") and the Florida Consumer Collection Practices Act, Fla. Stat. § 559.72 ("FCCPA").  Debtor claimed, among other things, that Debt Collector's dunning letter demanding immediate payment of amounts owed overshadowed and violated the requirement under Section 1692g of the FDCPA to disclose that Debtor had 30 days to dispute the debt.
Debt Collector moved for summary judgment, arguing in part that because the debt consisted entirely of unpaid highway tolls, the amount owed was not a "debt" covered under the FDCPA or the FCCPA.  In response, Debtor moved for summary judgment on his FDCPA claims. 
Granting summary judgment in Debtor's favor, the lower court ruled that Debt Collector's dunning letter violated Section 1692g, because the letter's language suggesting a need for immediate payment was inconsistent with and overshadowed the notification regarding the 30-day dispute period.  Debt Collector moved for reconsideration, which the lower court denied. 
Shortly after the lower court's ruling on the motion for reconsideration, Debtor accepted Debt Collector's settlement offer to agree to a judgment against it on the FDCPA claims and to pay Debtor damages plus attorneys' fees and costs.  The offer expressly reserved Debt Collector's right to appeal the lower court's rulings, including the grant of summary judgment in Debtor's favor.  The parties also stipulated to dismissal of the state-law FCCPA claim. 
The lower court accordingly dismissed that state-law claim with prejudice, and entered a final judgment in favor of Debtor on the FDCPA claims.  Debt Collector appealed, challenging the lower court's denial of its motion for reconsideration and seeking a ruling from the Eleventh Circuit that its dunning letter did not violate Section 1692g. 
Moreover, on the issue whether the settlement of Debtor's claims rendered the case moot, Debt Collector argued that the case was not moot because Debt Collector had expressly reserved its right to appeal and still had a stake in the outcome of the appeal.  Debtor on the other hand argued that the settlement mooted the litigation and that Debt Collector had waived its right to appeal by consenting to the final judgment.
As you may recall, Section 1692g provides that a debt collector must notify the consumer in writing that he has 30 days to dispute the debt and that "[a]ny collection activities and communication during the 30-day period may not overshadow or be inconsistent with the disclosure of the consumer's right to dispute the debt."  15 U.S.C. § 1692g(a),(b).
In addition, federal court jurisdiction is limited to actual cases and controversies under the U.S. Constitution, which requires that there be an actual injury that could be redressed by a favorable court decision.  See U.S. Const. Art. III; Crown Media, LLC v. Gwinnett County, GA, 380 F.3d 1317, 1324(11th Cir. 2004).  
Noting that settlement between parties generally renders a case moot, the Eleventh Circuit explained that no exceptions to this principle applied in this case because Debtor and Debt Collector settled all the FDCPA claims.  See U.S. Fire Ins. Co. v. Caulkins Indiantown Citrus Co., 931 F.2d 744, 748 (11th Cir. 1991)(settlement renders a case moot except where:  (1) one issue has become moot, but other issues have not; (2) one party "unilaterally alters its conduct to terminate the dispute"; and (3) a controversy is "capable of repetition, yet evade[es] review.").
Mindful that, as part of the settlement, Debt Collector reserved its right to appeal,  the Court ultimately concluded nevertheless that there was no justiciable controversy, because neither party had a continuing financial stake in the litigation.  In ruling that settlement of the FDCPA claims left no actual case or controversy between Debt Collector and Debtor, the Eleventh Circuit rejected Debt Collector's argument that the court should rule on the merits of the Section 1692g claim and conclude that the dunning letter did not violate section 1692g.  See Electrical Fittings Corp. v. Thomas & Betts Co., 307 U.S. 241, 59 S. Ct. 860 (1939)(exercising jurisdiction over appeal only to correct district court's procedural error but not to rule on the merits of the claim).
The Court also recognized that if it were to rule on the merits in this case, any decision would be a constitutionally prohibited advisory opinion concerning circumstances that may never arise.   See Bank West, Inc. v. Baker, 446 F.3d 1358, 1367 (11th Cir. 2006). 
Accordingly, the Eleventh Circuit dismissed the appeal for lack of jurisdiction due to mootness.

Ralph T. Wutscher
McGinnis Wutscher LLP
The Loop Center Building
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Chicago, Illinois 60602
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