Debt Collector Has the Burden of Proving Its Right to Invoke an Exception to the FDCPA

Evankavitch v. Green Tree Servicing, LLC, 793 F.3d 355 (3d Cir. 2015).  “[A]bsent compelling reasons to the contrary, a party seeking shelter in an exception to the statute has the burden of proving it.”  So stated Judge Krause in the third-from-last sentence of this opinion involving the jury charge in a case under the Fair Debt Collection Practices Act, 15 U.S.C. §1692 et seq. (“FDCPA”).  The panel upheld the jury charge and affirmed a verdict in favor of the FDCPA plaintiff.

The FDCPA makes a debt collector liable to a consumer for contacting third parties as part of debt collection efforts, with certain exceptions.  The exception that was at issue here was one that allows communication with a third party “for the purpose of acquiring location information about the consumer.”  But that exception is limited to only one contact with the third party “unless the debt collector reasonably believes that the earlier response of such person is erroneous or incomplete and that such person now has correct or complete location information.”  15 U.S.C. §1692b.

There was no dispute that defendant contacted two third parties, plaintiff’s daughter and a neighbor, multiple times in the course of debt collection efforts.  The District Court ruled in limine, and later charged the jury, that defendant had the burden of proving that those multiple contacts fell within the “location information” exception in order to avoid liability.  The jury ruled for plaintiff.

Defendant appealed, asserting that the District Court had erred in placing the burden of proof on defendant and should instead have required plaintiff to disprove that the contacts with third parties satisfied the location information exception.  Observing that this was “a matter of first impression among the Courts of Appeals,” and that District Courts had taken “divergent approaches,” the Third Circuit affirmed.

Judge Krause stated that the de novo standard of review applied to both the jury charge issue and the in limine ruling.  The FDCPA is silent on the issue, and defendant asked the panel to begin and end with “the ordinary default rule that plaintiffs bear the risk of failing to prove their claims.”  Judge Krause declined to do so.  Instead, drawing on decisions of the Supreme Court and other Courts of Appeals, she looked to five factors: “(1) whether the defense is framed as an exception to a statute’s general prohibition or an element of a prima facie case; (2) whether a statute’s general structure and scheme indicate where the burden should fall; (3) whether a plaintiff will be unfairly surprised by the assertion of a defense; (4) whether a party is in particular control of information necessary to prove or disprove the defense; and (5) other policy or fairness considerations.”  After a detailed analysis of each factor, Judge Krause concluded that they all pointed toward imposing the burden of proof on the debt collector.

Finally, Judge Krause rejected defendant’s argument that the fact that Congress had established two express affirmative defenses in the FDCPA meant that no others could be implied.  That principle is only a guide, and it does not apply where it would not advance the intent of Congress.  Because there was no evidence that Congress intended to bar allocation of the burden of proof to debt collectors regarding the location information exception, defendant’s contention did not succeed.