FYI: 2020 Review: 3rd Cir FDCPA and TCPA Opinions

Not unlike many other circuits in 2020, the U.S. Court of Appeals for the Third Circuit did not publish a large number of opinions covering the federal Fair Debt Collection Practices Act (FDCPA) or the Telephone Consumer Protection Act (TCPA).

 

However, a few key opinions are of note to those in the consumer protection litigation field. Most remarkable was the resolving of the circuit split that the Third Circuit had created almost 30 years ago in Graziano v. Harrison.

 

The following is a chronological summary of the Third Circuit's key opinions in FDCPA and TCPA cases.

 

Tabb v. Ocwen Loan Servicing, LLC, 798 Fed. Appx. 726 (3d Cir. 2020)

 

The Third Circuit reversed the dismissal of a complaint filed under the FDCPA by a debtor who had been discharged in bankruptcy based on the sending of correspondence and monthly mortgage statements.

 

All the letters and statements contained a bankruptcy disclaimer, and the district court dismissed the complaint based on the disclaimer finding that the communications were not sent for debt collection purposes. The district court also dismissed the claims related to the monthly statements based upon the provisions of the Truth in Lending Act (TILA) that required a mortgage servicer to send monthly statements to borrowers.

 

In reversing, the Third Circuit first held that while TILA does require the sending of the monthly statements, the implementing regulations clarify that TILA does not require the sending of mortgage statements to borrowers who had been discharged in bankruptcy.

 

The Third Circuit further found that the bankruptcy disclaimers were buried within fine print on the back of the statements where the front contained due dates, balances due, reinstatement amounts and other information indicative of collection, thus stating a claim under the FDCPA.

 

Destefano v. Udren Law Offices, PC, 802 Fed. Appx. 688 (3d Cir. 2020)

 

The Third Circuit affirmed the dismissal of an FDCPA complaint based upon the filing of a foreclosure lawsuit as being barred by the FDCPA's one-year statute of limitations. The complaint was filed within one year of service of the foreclosure complaint but more than one year after the foreclosure complaint had been filed.

 

Riccio v. Sentry Credit, Inc., 954 F.3d 582 (3d Cir. 2020)

 

Nearly 30 years after authoring an opinion that has been rejected by the Second, Fourth and Ninth Circuits and ignored by the First, Fifth, Sixth and Seventh Circuits, the Third Circuit finally acknowledged that its original interpretation of 15 U.S.C. 1692g(a)(3) was wrong.

 

Long before the growth of the cottage industry of litigation under the FDCPA, the Third Circuit held in Graziano v. Harrison that "given the entire structure of section 1692g, subsection (a)(3) must be read to require that a dispute, to be effective, must be in writing."  For years, most courts outside of the Third Circuit simply read the statute as it was written and did not require a debtor to dispute a debt in writing under 1692g(a)(3).

 

Finally, the Third Circuit decided to revisit Graziano when Riccio was presented on appeal. The Court succinctly explained that the plain reading of 1692g(a)(3) confirmed that disputes did not have to be in writing unlike 1692(g)(4) and (5) which specifically have "in writing" requirements.

 

The Court noted that the Second, Fourth and Ninth Circuits previously split with the Third Circuit and its holding in Graziano in finding that there was no requirement for disputes to be in writing and also that the First, Fifth, Sixth and Seventh Circuits did not require a written dispute either.

 

With the "in writing" debate resolved once and for all, the Third Circuit also added a footnote that any collector who had previously sent "Graziano-compliant letters" should not be liable based the Riccio decision because they had relied upon then existing case law.

 

Physicians Healthsource, Inc. v. Cephalon, Inc., 954 F.3d 615 (3d Cir. 2020)

 

In a "junk fax" case under the TCPA, the Third Circuit addressed both prior express consent and opt-out language. The faxes at issue were sent to a doctor from a prescription drug representative.

 

There was no dispute that the plaintiff provided its fax number to the defendant by way of business cards to the defendant's representatives. At issue was whether this provision of the fax number constituted prior express consent. The plaintiff argued that express consent was different from express invitation and permission, the former of which only relates to telephone calls while the latter relates to faxes.

 

The Third Circuit disagreed finding that the two terms are interchangeable and applied its precedent on express consent finding that the providing of the fax number to the defendant constituted consent. With regard to the opt-out language because the faxes at issue were solicited faxes, there was no need for such language based on the text of the statute.

 

Dotson v. Nationwide Credit, Inc., 2020 U.S. App. LEXIS 30732 (3d Cir. Sep. 28, 2020)

 

The Third Circuit affirmed the dismissal of a complaint based upon a collection letter that included the language "as of the date of this letter" when referring to the account balance where the balance was not accruing interest.

 

The Court rejected the plaintiff's argument that a consumer could be confused as to the actual balance due because the letter incorrectly implied that the balance could increase.

 

A Mixed Bag for the Industry

 

In sum, it was a mixed bag for the industry from the Third Circuit as is often the case.

 

In Tabb, the Third Circuit warned mortgage servicers that a bankruptcy disclaimer needs to be prominent in any post-discharge communications including monthly statements in order to shield them from liability. In Destefano it confirmed that the statute of limitations on a lawsuit runs from the date of filing and not the date of service.

 

Riccio finally put an end to lawsuits that were unique to Third Circuit collections and Dotson sided with the Second Circuit and others who have been clamping down on interest accrual claims that are more lawyer's cases than those involving deceptive communications. Finally, the Dotson opinion bolstered the prior consent defense for defendants who still send faxes.

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, Suite 603
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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FYI: 2020 Review: FDCPA and TCPA Opinions from the 2nd Circuit

The U.S. Court of Appeals for the Second Circuit was relatively quiet when it came to the Fair Debt Collection Practices Act (FDCPA) and the Telephone Consumer Protection Act (TCPA) in 2020, but when it did issue opinions, several were quite impactful.

 

Most significant was its decision to side with the Ninth Circuit and its broad interpretation of an automatic telephone dialing system which likely helped set the stage for the Supreme Court to resolve the split in 2021. 

 

The following is a chronological report of the Second Circuit's opinions in FDCPA and TCPA cases.

 

Isaac v. NRA Grp., LLC, 798 Fed. Appx. 693 (2d Cir. 2020)

 

The Second Circuit affirmed the judgment of the district court that found that collection letters were not required to include the disclosures required by 15 U.S.C. 1692g(a) because they were not the initial communications sent to the debtors by the debt collector.

 

Bryan v. Credit Control, LLC, 954 F.3d 576 (2d Cir. 2020)

 

The Second Circuit reversed the dismissal of an FDCPA complaint based upon the alleged failure to identify the creditor to whom the debt is owed as required by 15 U.S.C. 1692g(a)(2).

 

The letter in issue identified the creditor as Kohl's, the department store who has private label credit cards that are issued in partnership with Capital One Bank. Even though Kohl's serviced the accounts and issued all billing statements in their name, the cardmember agreement provided that Capital One was the "creditor and issuer" of the account.

 

Based upon the language of the cardmember agreement, the Second Circuit held that Capital One was actually the creditor to whom the debt was owed and that the letter should have identified it as such.

 

Duran v. La Boom Disco, Inc., 955 F.3d 279 (2d Cir. 2020)

 

In a text messaging case, the Second Circuit threw its hat into the ring to define automatic telephone dialing system (ATDS) under the TCPA. Since the opinion opened by defining the TCPA as having been enacted to "cure America of that 'scourge of modern civilization': telemarketing," one could see where this opinion was headed and the Second Circuit joined the Ninth Circuit in holding that an ATDS need only have the capacity to store or produce telephone numbers to be called, using a random or sequential number generator.

 

Thus, in the Second Circuit, a predictive dialer is an ATDS. On the human intervention prong, the court took a narrow view and reasoned that click to send was not sufficient human intervention because the system still dials the numbers.

 

Chaperon v. Sontag & Hyman, PC, 819 Fed. Appx. 61 (2d Cir. 2020)

 

The Second Circuit affirmed the dismissal of a complaint based on a claim that an initial letter did not quote the language of 15 U.S.C. 1692g(a) verbatim. Specifically, the plaintiff challenged the failure to quote that portion of 1692g(a)(3) and (4) which permits a debtor to dispute "any portion" of a debt when the collection letter did not include the "any portion" language.

 

Citing to its own prior precedent as well as an opinion from the Sixth Circuit on this very issue, the Second Circuit held that there is no requirement that letters quote the statute verbatim so long as the notices are given effectively.

 

Wagner v. Chiari & Ilecki, LLP, 973 F.3d 154 (2d Cir. 2020)

 

In a wrong debtor case, the Second Circuit reversed a district court's granting of summary judgment based on a bona fide error defense finding that a reasonable jury could find that the defendant did not maintain proper procedures to avoid the specific error that occurred in this case.

 

Mizrachi v. Wilson, 2020 U.S. App. LEXIS 35189 (2d Cir. Nov. 5, 2020)

 

The Second Circuit reversed the dismissal of a complaint based on a letter that allegedly overshadowed the validation notice of 1692(g)(a). Specifically, the letter which advised that the matter had been referred to the law firm to file suit stated, in all capital letters "THERE MAY BE NO FURTHER NOTICE OR DEMAND IN WRITING FROM [WILSON] PRIOR TO THE FILING OF SUIT."

 

The Second Circuit held that even though there was no date restriction on the filing of the suit or the debtor's ability to dispute the debt, the threat of the suit and its consequences could mislead a debtor into believing that immediate payment was the only way to avoid these consequences thus overshadowing the debtor's validation rights.

 

SUMMARY:

 

The Second Circuit definitely did not make any new friends among defendants with its bombshell TCPA opinion in Duran.

 

However, the Court offered a few helpful opinions under the FDCPA with Isaac, holding that the requirements of 1692g only apply to the initial communication and not subsequent letters, as well as Chaperon, which held that one need not quote 1692g verbatim in collection letters so long as the validation notice is still conveyed effectively.

 

But Bryan will make collectors check the fine print with their clients to make sure they know the correct legal entity for whom they are collecting. Mizrachi is another in a long line of threatened suit overshadowing cases that should cause concern for collection attorneys. Finally Wagner may make summary judgment on a bona fide error defense very difficult and make all such cases jury questions.

 

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, Suite 603
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

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FYI: 11th Cir Rejects TCPA "Revocation of Consent" Claim Because Borrower Re-Consented

The U.S. Court of Appeals for the Eleventh Circuit recently affirmed entry of summary judgment in favor of a student loan servicer against claims raised by a customer for purported violations of the federal Telephone Consumer Protection Act, 47 U.S.C. § 227, et seq. ("TCPA").

 

In so ruling, the Eleventh Circuit held that, although the consumer revoked his prior consent to receive automatic telephone dialing system (ATDS) and prerecorded calls from the servicer, he subsequently "re-consented" to such calls by executing an online demographic form that contained his cell phone number and a clear, unambiguous consent provision.

 

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

 

A now-attorney ("Consumer") took out student loans to attend law school.  Years after graduating, he consolidated his loans, and a servicer serviced the consolidated loan, while its affiliate performed default aversion services (collectively, the "Servicer").

 

The Consumer was a class member of a putative class action lawsuit filed against the Servicer in 2010 alleging that the Servicer and its affiliates violated the TCPA by calling class members' cell phones without consent between October 27, 2005, and September 14, 2010. 

 

The Consumer does not dispute that he was a class member and that he was sent an e-mail notice of the class action settlement agreement. By the terms of the settlement, class members who failed to submit revocation request forms were "deemed to have provided prior express consent" to receiving the Servicer's calls. The Consumer does not dispute that he did not submit a revocation request form.

 

In July 2012, two months before the class action settlement was approved, the Consumer faxed the Servicer's affiliate an Automatic (Electronic) Debit Authorization form that included his cell phone number.  The form expressly consented to allow the Servicer and its affiliates to call him concerning his student loan.

 

In June 2014, the Consumer called the Servicer to discuss a proposed settlement offer for his consolidated loan.  During the recorded call, he confirmed his cell phone number to the Servicer's representative and authorized the Servicer and its affiliates to contact him on his cell phone.  When the representative further asked if the Consumer could be contacted "using an auto-dialer or pre-recorded messages regarding your current or future accounts[?]" the Consumer responded "no." 

 

After this part of the conversation — while still on the phone with the Servicer representative — the Consumer visited the Servicer's website to fill out an automatic debit agreement to make payments on his delinquent student loan. When he logged on, a form titled "Edit Your Contact Information" (the "Demographic Form") popped up, that was auto-filled, in part, from information in the Servicer's records. 

 

The Consumer's cell phone number was not marked as a "required field" on the Demographic Form, and the auto-filled information could be deleted. The Demographic Form contained the language, in the same sized font as the rest of the form, above the "submit" button on the bottom of the form, that in providing a telephone number, the Consumer expressly authorized the Servicer and its affiliates to contact him at the number by "any means of communications" including calls to his cellular phone using an automated dialing device (ATDS), calls using prerecorded messages and/or SMS text messages, regarding his student loan. 

 

The Consumer does not dispute that this language was on the Demographic Form, and remembered completing the Demographic Form while still speaking to the Servicer's representative. After the phone call, the Consumer did not attempt to revoke his consent again for the Servicer or its affiliates to call him on his cell phone.

 

As the Consumer fell behind on his student loan payments, the Service began calling his cell phone.  The Consumer filed suit alleging that the Servicer violated the TCPA by calling his cell phone using an ATDS and prerecorded messages without his prior express consent. 

 

In ruling on the parties' respective motions for summary judgment the trial court rejected the Consumer's argument that he revoked any prior consent during the June 2014 call with the Servicer's representative, and determined (1) that the Consumer could not unilaterally revoke his consent to be called by the Servicer because his consent was given as consideration in a valid bargained-for contract (the class action settlement), and, alternatively (2) even if the Consumer could have revoke his consent to be called, he nonetheless reconsented when he submitted the Demographic Form during the June 2014 call. 

 

The Consumer appealed the order entering summary judgment in the Servicer's favor.

 

On appeal, the Eleventh Circuit was tasked with determining whether or not the Consumer gave or revoked his prior express consent to receive calls from the Servicer.  To interpret whether a party gave — or revoked — their "prior express consent" to receive calls under the TCPA, the court uses common law principles. Osorio v. State Farm Bank, F.S.B., 746 F.3d 1242, 1255 (11th Cir. 2014). 

 

At common law, common law, even if a person does not intend to consent, their "words or conduct [that] are reasonably understood by another to be intended as consent . . . constitute apparent consent and are as effective as consent in fact." See RESTATEMENT (SECOND) OF TORTS § 892(2). And consent is revoked "when the actor knows or has reason to know that the other is no longer willing for him to continue the particular conduct." Schweitzer v. Comenity Bank, 866 F.3d 1273, 1278 (11th Cir. 2017) (quoting RESTATEMENT (SECOND) OF TORTS § 892A cmt. i).

 

The Consumer's first argument on appeal was that the Servicer should have known that he did not intend to "change his mind" and "reconsent" so soon after revoking his consent on the phone with the Servicer's representative.  The Eleventh Circuit noted that under common law, consent is effective regardless of whether a party "intended" to consent if his words or conduct are "reasonably understood by another to be intended as consent." See RESTATEMENT (SECOND) OF TORTS § 892(2).

 

Thus, the Court concluded that it was reasonable for the Servicer to understand the Consumer's submission of the online demographic form that contained his cell phone number and a clear, unambiguous consent provision as his consent to the calls and rejected this argument. See Murphy v. DCI Biologicals Orlando, LLC, 797 F.3d 1302, 1308 (11th Cir. 2015) (providing a phone number on a form, even without an express consent provision, constitutes consent under the TCPA).

 

Next, the Consumer argued that by submitting the Demographic Form right answering "no" to the Servicer representative's question, that the Servicer knew or should have known that he did not want to receive the calls, and the "knew or should have known" standard used by the Eleventh Circuit to determine whether consent was revoked should be applied.  See Schweitzer, 866 F.3d at 1278. 

 

Although the Court noted the close temporal proximity between the Consumer orally revoking prior consent and submitting the Demographic For, the Consumer offered no authority supports his argument that the Court should consider these actions as a "lumped together" interaction to stretch the revocation of consent standard to apply to his later reconsent to the Servicer.

 

The Consumer further rejected the Consumer's argument that the Demographic Form was ineffective because the form and its instructions were deceptive and misleading, as its review of the Demographic Form concluded that the consent provision was not "fine print," his cell phone number was not a "required field" and could have been removed prior to submission, and the only reason it was "auto-filled" was because the Consumer previously provided the Servicer with his number.

 

Lastly, the Eleventh Circuit rejected the Consumer's argument that the case presents genuine issues of material fact that preclude summary judgment and should go to a jury, finding that all facts material to determining whether the Consumer reconsented are undisputed.

 

Because the Eleventh Circuit agreed with the trial court that the Consumer reconsented to the Servicer's calls when he submitted the Demographic Form, it declined to address whether the class action settlement made the Consumer's initial consent unilaterally irrevocable.

 

Accordingly, the trial court's entry of summary judgment in the Servicer's favor was affirmed.

 

 

 

Ralph T. Wutscher
Maurice Wutscher LLP
The Loop Center Building
105 W. Madison Street, Suite 603
Chicago, Illinois 60602
Direct:  (312) 551-9320
Fax: (312) 284-4751

Mobile:  (312) 493-0874
Email: rwutscher@MauriceWutscher.com

 

Admitted to practice law in Illinois

 

 

 

Alabama   |   California   |   Florida   |   Georgia  |   Illinois   |   Massachusetts   |   New Jersey   |   New York   |   Ohio   |   Pennsylvania   |   Tennessee   |   Texas   |   Washington, DC

 

 

NOTICE: We do not send unsolicited emails. If you received this email in error, or if you wish to be removed from our update distribution list, please simply reply to this email and state your intention. Thank you.

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