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Legal Precedents
Jerman v. Carlisle , McNellie, Rini, Kramer & Ulrich,
L.P.A., 130 S. Ct. 1605 (2010)
U.S. Supreme Court
In only its second FDCPA opinion, the U.S. Supreme Court addressed the “bona fi de error defense” (“BFED”), which immunizes a debt collector if it can show “by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error.” The Court held that the BFED does not apply to a debt collector’s legal errors when interpreting the FDCPA.


Hartman v. Great Seneca Financial Corp ., 569 F.3d 606 (6th Cir. 2009)
U.S. Court of Appeals, Sixth Circuit
The U.S. Court of Appeals for the Sixth Circuit considered whether an attorney debt collector’s exhibit attached to a state court complaint violated 15 U.S.C. §§ 1692e and 1692f. The exhibit resembled a credit card statement, including spaces for “credit limit, credit available, amount past due, statement closing date, and a summary of transactions.” State law required including “a copy of the account or written instrument” evidencing a “claim or defense” to the pleadings. The court held that whether the least sophisticated consumer could be misled by the exhibit raised a fact question, and reversed summary judgment for the defendants. The court also held that the defendants had not met the BFED’s equirements, and rejected the defendants’ various arguments about the constitutionality of the FDCPA.


Donohue v. Quick Collect, Inc., 592 F.3d 1027 (9th Cir. 2010)
U.S. Court of Appeals, Ninth Circuit
The plaintiff was served in a lawsuit on a credit card debt while there were two weeks remaining in the Act’s thirty-day validation period. While FDCPA amendments specifically clarify that collection activities may continue during the thirty-day validation period, subsequent pleadings must not overshadow the validation notice. The Second Circuit’s opinion encourages debt collectors to wait until the thirty-day validation period has run before fi ling suit. Otherwise, the court stated that the debt collector “must” provide the debtor with an “explanation of the lawsuit’s impact” on the rights set out in the validation notice. The court also noted that the “explanation should be set forth in either the validation notice itself, or in a notice provided with the summons and complaint . . . , [but] [t]he best practice is to provide an explanation in both.”

 
Ellis v. Solomon & Solomon, P.C ., 591 F.3d 130 (2d Cir. 2010)
U.S. Court of Appeals, Second Circuit
The plaintiff was served in a lawsuit on a credit card debt while there were two weeks remaining in the Act’s thirty-day validation period. While FDCPA amendments specifically clarify that collection activities may continue during the thirty-day validation period, subsequent pleadings must not overshadow the validation notice. The Second Circuit’s opinion encourages debt collectors to wait until the thirty-day validation period has run before fi ling suit. Otherwise, the court stated that the debt collector “must” provide the debtor with an “explanation of the lawsuit’s impact” on the rights set out in the validation notice. The court also noted that the “explanation should be set forth in either the validation notice itself, or in a notice provided with the summons and complaint . . . , [but] [t]he best practice is to provide an explanation in both.”

 
Rouse v. Law Offices of Rory Clark, 603 F.3d 699 (9th Cir. 2010)
U.S. Court of Appeals, Ninth Circuit
The Court considered the meaning of the Act’s civil liability provisions, which allow “the court [upon finding] that an action under this section was brought in bad faith and for the purpose of harassment . . . [to] award to the defendant attorney’s fees reasonable in relation to the work expended and costs.” Tthe district court had awarded the defendant costs in accord with Rule 54 of the Federal Rules of Civil Procedure (“FRCP”), which allow for costs to the prevailing party unless disallowed by another federal statute or court order. The district court held that the wording of the FDCPA required a finding of bad faith and harassment only in relation to the award of attorney’s fees, and the language “work expended and costs” related only to the calculation of that award. The district court therefore reasoned that its award of costs under the FRCP was not disallowed by the FDCPA.


Schlacher v. Law Offices of Phillip J. Rotche & Associates,
574 F.3d 852 (7th Cir. 2009)
U.S. Court of Appeals, Seventh Circuit
The Seventh Circuit upheld the district court’s reduction of an attorney’s fee award to the plaintiffs’ lawyers to an amount mirroring the offers of judgment accepted by the two plaintiffs. The plaintiffs-appellants argued it was an abuse of the district court’s discretion to equate the attorney’s fee award with the plaintiffs’ damage awards. In response, the Seventh Circuit noted that while “there is no rule requiring proportionality between damages and attorney’s fees, a district court may consider proportionality as one factor in determining a reasonable fee.” Here, through a series of referrals and the retention of an FDCPA specialist, the plaintiffs had a total of four lawyers working on what the district court had characterized as a “one-lawyer lawsuit . . . settled within three months of filing and without discovery.” The Seventh Circuit also noted that while “efficiency can sometimes be increased through collaboration, . . . overstaffing cases inefficiently is common, and district courts are therefore encouraged to scrutinize fee petitions for duplicative billing when multiple lawyers seek fees.”

Gastineau v. Wright , 592 F.3d 747 (7th Cir. 2010)
U.S. Court of Appeals, Seventh Circuit
The Seventh Circuit noted that district courts have “the flexibility to adjust . . . [the lodestar] figure to reflect various factors including the complexity of the legal issues involved, the degree of success obtained, and the public interest advanced by the litigation.” The district court had reduced both the lawyer’s hourly rate and the hours billed. In affirming the district court’s reduction of both, and rejecting the lawyer’s argument that this constituted “an impermissible double penalty,” the Seventh Circuit agreed that “it was inappropriate that a substantial portion of the hours billed were to compensate . . . [the lawyer] for learning this area of law.”

LeBlanc v. Unifund CCR Partners, 601 F.3d 1185 (11th Cir. 2010)
U.S. Court of Appeals, Eleventh Circuit
The Eleventh Circuit reversed a motion for summary judgment in favor of the plaintiff who had alleged violations of FDCPA §§ 1692e(5) and § 1692f in relation to the collection of a credit card debt, and remanded the case for a jury trial. The collection letter sent to the plaintiff indicated that legal action would be considered after thirty-five days if the debt was not paid. The plaintiff had argued that this statement constituted a threat “to take action that cannot legally be taken” since the debt collector was not licensed as required under Florida law, which the plaintiff had asserted was a necessary prerequisite to bringing litigation. On appeal, the defendants argued that, since the relevant Florida law did not provide for a private right of action, allowing the FDCPA action would create inconsistencies between the two laws. The Eleventh Circuit disagreed.


Gburek v. Litton Loan Servicing LP, 614 F.3d 380 (7th Cir. 2010)
U.S. Court of Appeals, Seventh Circuit
The U.S. Court of Appeals for the Seventh Circuit considered whether communications from a loan servicer and that servicer’s agent attempting to work out alternatives to foreclosure proceedings with the plaintiff constituted FDCPA “communications.” The district court, in a class action lawsuit, previously held in favor of the defendant on a motion to dismiss, stating that because the letters sent to the plaintiff from the loan servicer and its agent did not demand payment for the debt, the FDCPA did not apply. The Seventh Circuit reversed.

Gonzalez v. Kay, 577 F.3d 600 (5th Cir. 2009)
U.S. Court of Appeals, Fifth Circuit
The U.S. Court of Appeals for the Fifth Circuit reversed the district court’s ruling in favor of the defendants on a motion to dismiss. The debt collector sent an unsigned letter to the plaintiff using law firm letterhead directing the plaintiff to “see [the] reverse side for important information.” On the reverse side, in the same font and typeface, was the following disclaimer: “At this point in time, no attorney with this firm has personally reviewed the particular circumstances of your account.” Despite the disclaimer, the plaintiff alleged, among other claims, that this language violated § 1692e(3)’s prohibition on falsely representing that an attorney was involved in the collection of the debt. The court held that the issue of whether a consumer would be misled by the disclaimer required further consideration by the district court, since “reasonable minds can differ,” and remanded the case. The court also “caution[ed] lawyers who send debt collection letters” to use a conspicuous disclaimer clearly characterizing their role in the process.
 
Thies v. Wyman, 969 F. Supp. 604 (S.D. Calf. 1997).
U.S. Court of Appeals, Ninth Circuit
A condominium home owners' association was obligated by covenant to improve and maintain common areas within the development. When it failed to do so, the homeowners withheld dues for two months. As used in the FDCPA, "debt" is not limited to credit extensions. In addition, because the services provided by the HOA in exchange for dues are primarily for personal, family, or household purposes, the HOA dues constitute "consumer debt."


Allen v. LaSalle Bank, N.A., No. 09-1466 (3rd Cir. 2011)
U.S. Court of Appeals, Third Circuit
The case began when Dorothy Rhue Allen failed to make the final payment on her 30 year mortgage. LaSalle Bank retained Fein, Such, Kahn & Shephard, P.C. ("FSKS") to file a foreclosure action. At the request of Allen's attorney, FSKS provided a payoff letter. Less than three weeks later, Allen filed a class action counterclaim and third party complaint asserting that FSKS's response violated 15 U.S.C. §1692f(1), which prohibits "the collection of any amount (including any interest, fee, charge, or expense incidental to the principal obligation) unless such amount is expressly authorized by the agreement creating the debt or permitted by law." The District Court held that a communication from a debt collector to a consumer's attorney can form the basis for a FDCPA claim, but should be analyzed under the standard of a competent attorney.
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