FDCPA Case Analysis

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That the majority opinion is erroneous is amply demonstrated by the dissent of Judge Evans, and further elaboration is unnecessary.

Nevertheless, the decision of the en banc majority represents a vast improvement upon the original decision of the majority in the three-judge panel issued on Jan. 13, 2004.

In that opinion, the majority failed to even recognize the havoc and unwarranted liability that its opinion was going to create for attorneys just trying to do their jobs.

With this opinion, the court has created safe harbors, so attorneys can at least practice their professions without running afoul of the majority’s interepretation of the statute.

First, the court acknowledges that consumers can potentially halt the prosecution of a lawsuit merely by asking for verification of a debt, and may even do so "strategically … just before a court filing deadline."

To solve this difficulty, the majority advised, "A debt collector need not make the summons and complaint its first communication with the debtor; rather, it can have its initial communication with the debtor upwards of 30 days before it intends to initiate litigation. After the thirty-day verification period has expired, the debt collector can then initiate litigation without fear that the debtor will ‘interfere’ with the suit by seeking verification of the debt."

Second, the court acknowledges that, in some cases, attorneys must sue immediately to adequately protect their clients’ interests, and don’t have time to wait out the debtor’s 30-day verification period.

The court wrote, "there may be instances when a debt collector believes delay in initiating a lawsuit is unwise, such as when it fears the debtor will dissolve assets.

Given the potential for confusion, a debt collector who chooses to send the validation notice either with the summons and complaint or shortly thereafter should take care to phrase its notice so as to not mislead. It should make clear that the advice contained in the sec. 1692g validation notice in no way alters the debtor’s rights or obligations with respect to the lawsuit, emphasizing that courts set different deadlines for filings."

The court included the following explanatory language for attorneys to include in the validation notice when that notice accompanies the summons and complaint, stating that this language, if included, would comply with the FDCPA:

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"This advice pertains to your dealings with me as a debt collector. It does not affect your dealings with the court, and in particular it does not change the time at which you must answer the complaint. The summons is a command from the court, not from me, and you must follow its instructions even if you dispute the validity or amount of the debt. The advice in this letter also does not affect my relations with the court. As a lawyer, I may file papers in the suit according to the court’s rules and the judge’s instructions."

Finally, the majority acknowledged that, because sec. 1692c(a)(2) prohibits debt collectors from "communicating" with a debtor that it knows to be represented by counsel, debtors can exempt themselves from being sued merely by hiring an attorney and informing the debt collector of that fact.

To avoid this difficulty, the court advised attorneys, "sec. 1692c(a) permits communication with debtors represented by attorneys with the express permission of the court. Court rules permitting service could be interpreted as granting such express permission."

Thus, the decision has its good points and bad points for attorneys. While the ultimate holding may be just as plainly wrong as the original, at least it does not obstruct the honest practice of law, as the original opinion had, but advises attorneys what they need to do to in order to both comply with the FDCPA and file routine collection actions.

– David Ziemer

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David Ziemer can be reached by email.