Class Action

FDCPA Class Action Defense Cases–Campuzano-Burgos v. Midland Credit: Third Circuit Reverses FDCPA Class Action Ruling In Favor Of Plaintiffs Holding Dunning Letters Underlying Class Action Did Not Violate FDCPA

By Michael J. Hassen

As Matter of First Impression, Dunning Letters/Settlement Offer Letters Sent by Debt Collector over Signatures of Corporate Officers who did not Write, Sign or Personally Authorize Letters did not Violate FDCPA because Letters were Plainly Sent on Behalf of Corporation and not Individuals Third Circuit Holds

Plaintiffs filed a class action against various defendants, including Midland Credit Management, alleging violations of the federal Fair Debt Collection Practices Act (FDCPA); the class action complaint asserted that defendants sent “false, misleading, or deceptive collection notices in contravention of §§ 1692e and 1692e(9) of the Act.” Campuzano-Burgos v. Midland Credit Management, Inc., 550 F.3d 294, 296 (3d Cir. 2008). The main question presented by the FDCPA class action, and the question the district court ultimately certified to the Third Circuit, was “whether a senior officer of a collection company violates the Act by signing ‘dunning letters’ sent to debtors.” Id. The parties filed cross motions for summary judgment on the issue of liability; the district court rejected the defense motion holding that a debt collector violates the FDCPA “by sending debtors settlement offers that bear the name of one of the company's senior executives.” Id. The Third Circuit accepted the certified question and concluded that defendants did not violate the FDCPA; accordingly, it remanded the class action to the district court with instruction to enter judgment in favor of the defendants.

The debt collection letters sent by defendants to collect unpaid debts were “nearly identical in content and form.” Campuzano-Burgos, at 296. The letters were signed by corporate officers of Midland Credit, and accurately reflected their titles and positions with the company, id., at 297. But while the officers were deemed to have authorized the letters, they were not attorneys they did not actually write or sign the letters, and the letters were sent without the officers’ knowledge. Id. The district court concluded that case law “expresse[d] a general concern with debt collectors' practice of falsely implying that someone in a position of real authority [wa]s supervising the collection of [a] debt.” Campuzano-Burgos v. Midland Credit Mgmt., Inc., 497 F.Supp.2d 660, 664 (E.D.Pa. 2007). The district court held that the letters violated the FDCPA because “the use of top executives of the company as signatories is likely meant to impress upon debtors the seriousness of the communication and will almost certainly have such an effect on at least some debtors.” 550 F.3d at 298 (quoting 497 F.Supp.2d at 665). Moreover, because the officers “had no ‘actual involvement in the decision to send the letter[s] to a particular debtor ... the letters ... are deceptive and misleading within the meaning of Section 1692e.’” Id. (citation omitted). On appeal, defense attorneys argued that the letters were not deceptive and clearly conveyed that they were sent on behalf of “the company as a whole” rather than the individual officers, id. The Third Circuit agreed.

Full post as published by Class Action Defense Blog on January 29, 2009 (boomark / email).