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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

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.

The Third Circuit explained that the purpose of the FDCPA was to address the “abusive, deceptive, and unfair debt collection practices by many debt collectors.” Campuzano-Burgos, at 298 (citing 15 U.S.C. § 1692(a)). In relevant part, it provides that “A debt collector may not use any false, deceptive or misleading representation or means in connection with the collection of any debt. Without limiting the general application of the foregoing, the following conduct is a violation of this section.” 15 U.S.C. § 1692e. The Circuit Court further explained that while the debt collector’s conduct is viewed through the eyes of the least sophisticated debtor, “the standard does not go so far as to provide solace to the willfully blind or non-observant.” Id., at 299. More specifically, “Even the least sophisticated debtor is bound to read collection notices in their entirety.” Id. (citations omitted). Thus, the Third Circuit held at page 299, “Rulings that ignore these rational characteristics of even the least sophisticated debtor and instead rely on unrealistic and fanciful interpretations of collection communications that would not occur to even a reasonable or sophisticated debtor frustrate Congress’s intent to ‘insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged.’” (Citation omitted.)

The certified question before the Circuit Court is “Does it violate the FDCPA for a senior officer of the debt collector, who had no personal involvement in the collection of the debts, to sign dunning letters addressed to putative debtors?” Campuzano-Burgos, at 299-300. The Third Circuit noted that the letters at issue simply provided plaintiffs with an opportunity to settle their claims for less than the full amount owed, an offer which may be extended by debtor collectors without violating the FDCPA. Id. The Court held that the district court’s ruling was in error because the letters were not deceptive and plainly suggested that they were written on behalf of Midland Credit, as a company, rather than on behalf of the corporate officers, as individuals. Id., at 300. The Third Circuit held it to be “immaterial” that the officers did not personally write or authorize their staff to send the specific letters to plaintiffs” because the letters were plainly authorized by the company, on whose behalf the letters were sent. Id., at 301. In short, the Circuit Court found that the letters were simply “honest attempts to extend a settlement proposal that cannot, even by the least sophisticated debtor, be interpreted as coming from anyone other than Midland Credit, the corporation.” Id. Accordingly, the Circuit Court held that the letters sent by defendants “were not deceptive or otherwise actionable.” Id., at 302. The Court therefore remanded the class action to the district court with instructions to enter summary judgment in favor of the defendants. Id.

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