Common Sense Prevails 3rd Circuit FDCPA Case

A favorable decision for the ARM industry was decided and published last week. The case, Jenson v. Pressler & Pressler and Midland Funding, LLC, 14-2808, 2015 WL 3953754, —F.3d— (3rd Cir., June 30, 2015) involved an incorrect statement in a post-judgment subpoena issued by the Pressler & Pressler law firm (the firm was representing Midland Funding in the collection action).

The plaintiffs alleged that the Pressler & Pressler law firm violated section 1692(e) of the Fair Debt Collection Practices Act (FDCPA) because the subpoena incorrectly stated the name of the Clerk of Court for the Superior Court. In bringing the action plaintiff relied on section 1692(e) of the FDCPA. Section 1692(e) prohibits the use of any “false, deceptive, or misleading representation or means in connection with the collection of any debt.”

The facts of the case were not in dispute.  The law firm sent a post-judgment subpoena to the consumer that incorrectly listed the name “Terrence Lee” as the Clerk of Court for the Superior Court in Warren County. Terrence Lee was not the Clerk of Court (and, in fact, never was the Clerk of Court). Plaintiff argued that use of the incorrect name was false and misleading and therefore a violation of the FDCPA.

The Court of Appeals for the Third Circuit rendered a well-reasoned, succinct opinion (a mere 16 pages).

The court discussed and employed the “least sophisticated debtor” standard that has traditionally governed FDPCA claims.  However, the linchpin of the opinion is the court’s recognition and adoption of a “materiality” requirement in conjunction with the “least sophisticated debtor” standard.  In essence the court stated that any misstatement must be material to be a violation of section 1692(e). The court held that listing the wrong name for the Clerk of Court was not a material misstatement.

It should be noted that the Third Circuit now follows the Fourth, Sixth, Seventh and Ninth Courts of Appeals in adopting the materiality requirement as a prerequisite for establishing liability under the portions of the statute concerning “false, deceptive, or misleading representations.”

insideARM Perspective

The Plaintiff in this case was represented by Sergei Lemberg, a very active and vocal consumer rights attorney. Mr Lemberg is well-known in the industry.

The decision is a positive for collection law firms, debt buyers, and the entire ARM industry.

Anyone who has been involved in FDCPA litigation recognizes and understands the risks associated with any litigation.  The decision to settle or to defend is challenging and multi-faceted. Risk/reward is often difficult to predict. Kudos to the Pressler & Pressler firm and Midland Funding for their efforts in defending this action.