Appeals Court Ruling in Debt Buying FDCPA Case ?All Over the Map?

In a decision that further clouds where a violation of state law may also constitute a violation of the federal Fair Debt Collection Practices Act (FDCPA), the Eleventh Circuit Court of Appeals recently issued an opinion that affirmed some of the rulings in the district court’s findings in LeBlanc v. Unifund CCR Partners, but reversed some others.

The Circuit Court affirmed the district court’s holding that a violation of Florida’s Consumer Collection Practices Act (FCCPA) (Fla. Stat. Chapter 559) may support a federal cause of action under the FDCPA. The court, however, limited its decision by noting that not all violations of state law constitute per se violations of the FDCPA because “the conduct or communication at issue must also violate the relevant provision of the FDCPA.”

Additionally, the Eleventh Circuit also reversed the district court’s finding on partial summary judgment for the plaintiff that Unifund had violated the FDCPA because it had failed to register as an “out-of-state consumer collection agency” with the State of Florida, as required by the FCCPA before sending the plaintiff a “dunning letter” in an effort to collect on his charged off credit card debt.

The plaintiff alleged that because Unifund had sent the dunning letter before registering with the State of Florida, the defendant had violated two provisions of the FDCPA. The district court found that the dunning letter was a threat to take legal action.

Barbara Sinsley, general counsel for debt buying trade group DBA International, said that previous rulings had held that collection firms didn’t necessarily need to be licensed with the state in order to make collection contacts, so the district court’s ruling would represent a change in the law.

“This could open the door to findings of other violations of Florida law,” Sinsley said. The issue of licensure prior to suit could also open the door to other lawsuits involving other debt buyers following similar practices.

What impact the Eleventh Circuit’s findings will have is difficult to determine because there have been a handful of cases like this with decisions “all over the map,” according to Valerie Hayes, general counsel and vice president, legal and government affairs for ACA International.

Hayes added that the Circuit Court’s findings mean the case will return to a lower court for a jury trial to determine if FDCPA violations actually occurred.

Hayes also pointed to the disparity in the findings in other cases:

• Scott v. J. Anthony Cambece Law Office, P.C. The consumer alleged a law firm violated the FDCPA by failing to obtain a license as required under the New York City Administrative Code § 20-490. The law firm argued it was exempt from the licensing requirements because they were attorneys. The court did not ultimately decide if the attorneys were exempt from the New York City requirements. However, the court denied the law firm’s motion to dismiss finding the consumer had stated a claim under the FDCPA.
• Evans v. Midland Funding LLC. It is a violation of the FDCPA for a foreign corporation not licensed with the Ohio Secretary of State to pursue a court action in Ohio. 
• Goray v. Unifund CCR Partners. The court determined the collector’s attempts to collect a debt while being an unlicensed collection agency constituted a violation of § 807(5), as it threatened to take action that it could not legally take. 
• Fausset v. Mortgage First, LLC. A collection agency that files a lawsuit in a state they are not licensed does not in itself constitute a misrepresentation.

The court’s full decision can be read at http://www.ca11.uscourts.gov/opinions/ops/200816031.pdf.