False Statement Under Fair Debt Collection Practices Act Must be Material to be Actionable

Jensen v. Pressler & Pressler, 791 F.3d 413 (3d Cir. 2015).  Plaintiff defaulted on a credit card debt.  The debt was sold, and the buyer attempted to collect on it.  After obtaining a default judgment, the buyer served plaintiff with an information subpoena.  That subpoena was issued in the name of the Clerk of the Court, as is New Jersey practice.  But the subpoena bore the name of a person who was not in fact the Superior Court Clerk.  Plaintiff contacted the attorneys for the debt buyer and asserted that the subpoena was “fraudulent” due to the use of the wrong name.  Nonetheless, she responded to the questions in the information subpoena.

After thereafter seeking unsuccessfully to vacate the default judgment, plaintiff filed a class action case against the debt buyer and its counsel, contending that the misstatement of the clerk’s name was a “false, deceptive, or misleading representation or means” of collecting a debt, in violation of the Fair Debt Collection Practices Act, 15 U.S.C. §1692e (“FDCPA”).  The District Court granted summary judgment to defendants, on the ground that the misstatement was not material.  Plaintiff appealed, but the Third Circuit, applying plenary review, affirmed in an opinion by Chief Judge McKee.

The Third Circuit had never decided whether section 1692e of the FDCPA contains a materiality requirement.  There is no express language regarding the need for materiality.  Nonetheless, the panel found that materiality is a requirement for a misstatement to be actionable under section 1692e.  Other Circuits had so ruled, and Chief Judge McKee found that a materiality requirement was implicit in the “least sophisticated debtor” test (that is, whether the “least sophisticated debtor” would be misled by a misstatement) that governs the analysis in FDCPA cases and is the law in the Third Circuit and is “almost universally employed” elsewhere.  “The materiality requirement functions as a corollary inquiry into whether a statement is likely to mislead an unsophisticated consumer.”  Thus, engrafting a materiality requirement was “consistent with Congress’s intent in this regard.”

Chief Judge McKee concluded that the insertion of the wrong name for the Clerk was not material.  “It could not possibly have affected the least sophisticated debtor’s ability to make intelligent decisions.”  Nor did the use of the wrong name make the information subpoena a document “falsely represented to be a document authorized, issued, or approved by any court [or] official,” which is a separate violation of the FDCPA.  “New Jersey courts have repeatedly declined to invalidate similar documents based on hypertechnical errors.”  Compliance with technical requirements, Chief Judge McKee said, has become important in New Jersey cases only where failing to do so created prejudice, and there was no such prejudice here.