Thursday, August 4, 2016

FYI: DC Cir Rejects FDCPA "Meaningful Involvement" and Related State-Law Claims

The U.S. Court of Appeals for the District of Columbia recently held that, under the federal Fair Debt Collection Practices Act (FDCPA), a collection letter from a law firm did not misrepresent any meaningful involvement by an attorney. 


Because the letter clearly stated that the law firm was acting as a debt collector, and that no attorney with the law firm had reviewed the debtor's account, the D.C. Circuit held the letter was not deceptive as a matter of law.


A copy of the opinion is available at:  Link to Opinion


A borrower owed a debt to a bank.  The bank sold the debt to a third party.  The debt buyer hired a law firm to help collect the debt. 


The law firm sent a one-page letter to the borrower.  The letterhead had the name of the law firm.  The letter informed the borrower that the debt buyer had retained the law firm to collect the outstanding debt. 


The letter informed the borrower of the amount owed and warned that the debt would be assumed to be valid unless the borrower disputed the debt within thirty days.  Furthermore, the letter stated that the borrower could remit payment to the law firm. 


The signature block titled the sender of the letter as an attorney.  After the signature block, the letter included the following language:


Please be advised that we are acting in our capacity as a debt collector and at this time, no attorney with our law firm has personally reviewed the particular circumstances of your account.


The letter also stated that it was an attempt to collect a debt and any information obtained would be used for that purpose. The text of the letter, including disclaimers, were in the same readable font and size. 


The borrower filed suit against the law firm and the debt buyer arguing that the letter was deceptive under the FDCPA and two analogous District of Columbia statutes.  


On a motion for judgment on the pleadings, the lower court found that the letter did not misrepresent the extent of the law firm's involvement.  The borrower appealed. 


On appeal, the D.C. Circuit analyzed section 1692e of the FDCPA, which prohibits debt collectors from using "any false, deceptive, or misleading representations or means in connection with the collection of any debt." 15 U.S.C. § 1692e.  


Following the Second Circuit, the D.C. Circuit held that if an attorney is acting only as a debt collector and has not formed a legal opinion about the case, then the attorney cannot send a letter implying otherwise.  Greco v. Trauner, Cohen & Thomas, LLP, 412 F.3d 360, 364 (2d Cir. 2005).


The D.C. Circuit rejected the borrower's argument that using the title of attorney in the letterhead and signature block impermissibly implies that the law firm evaluated the case from a legal standpoint.  In support, the Court pointed to the letter's conspicuous disclaimer regarding the law firm's involvement. 


The Court also held that the letter did not threaten any improper legal action under 15 U.S.C. § 1692e(5) because the letter did not reference any legal action and stated that the law firm had not reviewed the case at the time of transmission.


The Court noted that the collection letter in the original Greco action stated: "At this time, no attorney with this firm has personally reviewed the particular circumstances of your account.  However if you fail to contact this office, our client may consider additional remedies to recover the balance due.  Greco, 412 F.3d at 364. 


The D.C. Circuit reasoned that many circuits have agreed that the Greco disclaimer makes clear that an attorney sending the letter was not, at the time of the letter's transmission, acting as an attorney.  The Court did not find anything in the law firm's disclaimer that made it unclear that the law firm was acting only as a debt collector, despite the fact that the disclaimer came after the signature block.  


The Court also rejected the borrower's claim under the District of Columbia statutes on similar grounds.  Specifically, the Court held that the D.C. Debt Collection Law largely mirrors the language of the FDCPA and consequently the borrower's claim under this D.C. statute also failed.  Furthermore, the Court held that the letter did not violate the D.C. Consumer Protection Act because the letter did not threaten a lawsuit. 


The Court also held the lower court did not abuse its discretion in an ancillary discovery matter.


Accordingly, the D.C. Circuit affirmed the lower court's ruling that the letter did not misrepresent the extent of the law firm's involvement. 




Ralph T. Wutscher
Maurice Wutscher LLP
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Chicago, Illinois 60602
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