Lesher v. Law Offices of Mitchell N. Kay

Decision Date21 June 2011
Docket NumberNo. 10–3194.,10–3194.
Citation650 F.3d 993
PartiesDarwin LESHERv.LAW OFFICES OF MITCHELL N. KAY, PC; Mitchell N. KayLaw Offices of Mitchell N. Kay, PC, Appellant.
CourtU.S. Court of Appeals — Third Circuit

OPINION TEXT STARTS HERE

Joann Needleman, Esq., (Argued), Maurice & Needleman, Philadelphia, PA, for Appellant.Cary L. Flitter, Esq., Theodore E. Lorenz, Esq., (Argued), Andrew M. Milz, Esq., Lundy, Flitter, Beldecos & Berger, Narberth, PA, Lawrence J. Rosen, Esq., Krevsky & Rosen, Harrisburg, PA, Deanna L. Saracco, Esq., Enola, PA, for Appellee.Tomio B. Narita, Esq., Simmonds & Narita, San Francisco, CA, for National Association of Retail Collection Attorneys, Amicus Appellant.Richard J. Perr, Esq., Fineman, Krekstein & Harris, Philadelphia, PA, for ACA International, Amicus Appellant.Before: FISHER, JORDAN, and COWEN, Circuit Judges.

OPINION

COWEN, Circuit Judge.

Darwin Lesher filed a complaint in the United States District Court for the Middle District of Pennsylvania alleging that debt-collection letters he received from the Law Offices of Mitchell N. Kay (the Kay Law Firm) were deceptive under the Fair Debt Collection Practices Act (the “FDCPA” or the Act). The District Court agreed and granted Lesher's motion for summary judgment. The Kay Law Firm now appeals from the District Court's order. For the reasons that follow, we will affirm.

I. Background

The Kay Law Firm is a law firm that acts as a debt collector. On January 11, 2009, the Kay Law Firm sent a letter to Lesher seeking to recover a debt he owed to Washington Mutual on a home equity loan. The letter was presented on the Kay Law Firm's letterhead, which displays the words “Law Offices of Mitchell N. Kay, P.C. in large characters at the top of the page. (A040.) The letter, after referencing Lesher's account with Washington Mutual, states as follows:

Please be advised that your account, as referenced above, is being handled by this office.

We have been authorized to offer you the opportunity to settle this account with a lump sum payment, equal to 75% of the balance due—which is $9,080.52!

Unless you notify this office within 30 days after receiving this notice that you dispute the validity of this debt or any portion thereof, this office will assume this debt is valid.

If you notify this office in writing within 30 days from receiving this notice that you dispute the validity of this debt or any portion thereof, this office will: Obtain verification of the debt or obtain a copy of a judgment and mail you a copy of such judgment or verification.

If you request this office in writing within 30 days after receiving this notice, this office will provide you with the name and address of the original creditor, if different from the current creditor.

You are invited to visit our website www. lawofmnk. com to resolve this debt privately, or to write to us or to update your personal information.

( Id.) 1 After a large blank space, the letter directs Lesher to “PLEASE ADDRESS ALL PAYMENTS TO” the “Law Offices of Mitchell N. Kay, P.C. at their New York address. ( Id.) Immediately below the address, the letter states: “Notice: Please see reverse side for important information.” ( Id.) A box surrounds this notice, below which is a detachable payment stub.

On the back, the letter sets forth four “notices,” including the following two:

This communication is from a debt collector and is an attempt to collect a debt. Any information obtained will be used for that purpose.

At this point in time, no attorney with this firm has personally reviewed the particular circumstances of your account.

(A041.) 2

On February 15, 2009, the Kay Law Firm sent a second letter to Lesher. This letter was not printed on the same letterhead, but instead stated in smaller characters at the top that it was from the “Law Offices of Mitchell N. Kay, P.C. (A042.) The letter offers the choice of a six-month repayment plan or a settlement, and again instructs the reader to “see reverse side for important information.” ( Id.) The back of the letter sets forth the same disclaimers as the first letter. (A043.)

In March 2009, shortly after receiving these letters, Lesher filed a complaint in the District Court against the Kay Law Firm. In the complaint, Lesher alleged that the letters violated, inter alia, section 1692e of the FDCPA, 15 U.S.C. § 1692e (1996), by misleading him to believe that an attorney was involved in collecting his debt, and that the attorney could, and would, take legal action against him.3

Following discovery, the parties filed cross-motions for summary judgment. Upon review, the District Court found that the January 11 and February 15, 2009 letters plainly implied that an attorney was involved in the collection, and implicitly threatened legal action, in violation of § 1692e.4 Viewing the letters from the perspective of the “least sophisticated debtor,” the District Court rejected the Kay Law Firm's contention that the disclaimers on the back of the letters mitigated the impression of potential legal action. The District Court awarded Lesher $1,000 in damages. See 15 U.S.C. § 1692k(a)(2)(A).

The Kay Law Firm now appeals from the District Court's order.5

II. Jurisdiction and Standard of Review

The District Court had jurisdiction over this matter pursuant to 28 U.S.C. § 1331 and 15 U.S.C. § 1692k(d). We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. We review a District Court's order granting summary judgment de novo. EBC, Inc. v. Clark Bldg. Sys., Inc., 618 F.3d 253, 262 (3d Cir.2010).6

III. Discussion
A. FDCPA Background

Congress enacted the FDCPA in 1977 in response to the “abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.” 15 U.S.C. § 1692(a). At that time, Congress was concerned that [a]busive debt collection practices contribute to the number of personal bankruptcies, to material instability, to the loss of jobs, and to invasions of individual privacy.” Id. Congress explained that the purpose of the Act was not only to eliminate abusive debt collection practices, but also to “insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged.” Id. § 1692(e). After determining that the existing consumer protection laws were inadequate, id. § 1692(b), Congress gave consumers a private cause of action against debt collectors who fail to comply with the Act. Id. § 1692k.

Because the FDCPA is a remedial statute, we construe its language broadly so as to effect its purpose. Brown v. Card Serv. Ctr., 464 F.3d 450, 453 (3d Cir.2006) (citations omitted). Accordingly, we analyze communications from lenders to debtors from the perspective of the “least sophisticated debtor.” Id. at 454. “The basic purpose of the least-sophisticated [debtor] standard is to ensure that the FDCPA protects all consumers, the gullible as well as the shrewd. This standard is consistent with the norms that courts have traditionally applied in consumer-protection law.” Id. at 453 (quoting Clomon v. Jackson, 988 F.2d 1314, 1318 (2d Cir.1993)). ‘Laws are made to protect the trusting as well as the suspicious.’ Brown, 464 F.3d at 453 (quoting Federal Trade Comm'n v. Standard Educ. Soc'y, 302 U.S. 112, 116, 58 S.Ct. 113, 82 L.Ed. 141 (1937)).

Bearing this in mind, we note that although the “least sophisticated debtor” standard is a low standard, it “prevents liability for bizarre or idiosyncratic interpretations of collection notices by preserving a quotient of reasonableness and presuming a basic level of understanding and willingness to read with care.” Wilson v. Quadramed Corp., 225 F.3d 350, 354–55 (3d Cir.2000) (internal quotation marks and citation omitted). “Even the least sophisticated debtor is bound to read collection notices in their entirety.” Campuzano–Burgos v. Midland Credit Mgmt., 550 F.3d 294, 299 (3d Cir.2008)

B. Section 1692e of the FDCPA

Lesher claims that the January 11 and February 15, 2009 letters that he received from the Kay Law Firm violate section 1692e of the FDCPA, which prohibits the use of “false, deceptive, or misleading representation or means in connection with the collection of any debt.” 15 U.S.C. § 1692e. The sixteen subsections of section 1692e set forth a non-exhaustive list of practices that fall within this ban. These subsections include:

(3) The false representation or implication that any individual is an attorney or that any communication is from an attorney.

...

(5) The threat to take any action that cannot legally be taken or that is not intended to be taken.

15 U.S.C. § 1692e. Because the list of the sixteen subsections is non-exhaustive, a debt collection practice can be a “false, deceptive, or misleading” practice in violation of section 1692e even if it does not fall within any of the subsections. See Clomon, 988 F.2d at 1318.C. Section 1692e Case Law

To determine whether the District Court properly construed section 1692e of the FDCPA, we look to both our own prior opinions, and to opinions from our sister circuits, discussing section 1692e of the FDCPA.

Although we have not had occasion to consider whether the precise type of debt-collection letters at issue in this case violates section 1692e, 7 we have considered whether other debt-collection letters comply with this subsection of the Act. For example, in Brown v. Card Service Center, 464 F.3d 450 (3d Cir.2006), we considered whether a letter from a debt collection agency that warned the debtor of potential legal action violated section 1692e. In that case, Card Service Center (“CSC”) sent the plaintiff a letter informing her that, unless she made arrangements to pay her debt within five days, the matter “could” result in referral of the account to CSC's attorney, and “could” result in “a legal suit being filed.” Id. at 451–52. The plaintiff sued, claiming that because CSC had no intention of referring her account to an attorney,...

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