A Pro-Plaintiff Fair Debt Collection Practices Act Decision From the Third Circuit

Caprio v. Healthcare Revenue Recovery Group, LLC, 709 F.3d 142 (3d Cir. 2013).  The Fair Debt Collection Practices Act, 15 U.S.C. §1692g (“FDCPA”), requires debt collectors to include in collection letters a “debt validation notice” that advises the debtor of the right to dispute the debt in writing.  Upon the submission of such a writing, debt collection efforts must cease until the debt collector has verified the debt to the debtor in writing.  The debt validation notice must be conveyed to the debtor in an effective manner, however, and it cannot be overshadowed or minimized by other language in a collection letter.  The determination of whether the validation notice is adequately conveyed is made from the perspective of the “leaset sophisticated debtor.”  In this opinion, written by Judge Cowen, the Third Circuit reversed a grant of a motion for judgment on the pleadings, and held that the language and format of the validation notice could be found to have been overshadowed by other aspects of the collection letter.

The standard of review of a grant of judgment on the pleadings under Federal Rule of Civil Procedure 12(c) is plenary.  Additionally, since defendant’s motion asserted that plaintiff had failed to state a claim, under Rule 12(b)(6), the standard of review applicable to Rule 12(b)(6) motions– whether the Complaint contained sufficient factual matter to state a facially plausible claim for relief– applied.

Plaintiff’s attack on the collection letter focused on a paragraph on the front of the letter that stated “If we can answer any questions, or if you feel you do not owe this amount, please call us toll free at 800-984-9115 or write us at the above address” (bolded material in original).  Judge Cowen determined that the “least sophisticated debtor” could believe that he or she could validly dispute the debt by calling the debt collector, when in fact only a written communication suffices under the FDCPA to require validation of the debt and to halt collection efforts until validation occurs.  The opinion observed that the reference to a telephone call, and the number to call, appear in bold, while the reference to writing to the debt collector does not.  The debt collector’s phone number also appeared in a large font on the letterhead of the letter, while its mailing address was printed in smaller type.  Moreover, though there was a validation notice on the back of the collection letter, and the front of the letter said “NOTICE:  SEE REVERSE SIDE FOR IMPORTANT INFORMATION”), this “relegat[ion]” of the validation notice to the reverse side, combined with the emphasis on calling the debt collector rather than writing, could be found to result in the validation notice being improperly overshadowed.

Judge Cowen then canvassed decisions from other courts, carefully analyzing the font and placement of language in those collection letters as compared to the letter at issue in this case.  A Fourth Circuit case in which a demand that a debtor “PHONE US AT [telephone number] TODAY” was closer to the facts here than a Ninth Circuit case on which the district court relied.

Much of the FDCPA background law cited in this opinion was drawn from Wilson v. Quadramed Corp., 225 F.3d 350 (3d Cir. 2000), in which the Third Circuit affirmed a dismissal under Rule 12(b)(6).  [Disclosure:  I argued the appeal for the plaintiff in Wilson].  Judge Cowen rightly distinguished the facts of Wilson in reaching the result here.  While each FDCPA validation notice is different, based on the nuances (even including fonts) of a particular collection letter, this case goes at least part of the way toward limiting the damage that was done in the Third Circuit’s unfortunate ruling in Wilson.