However, the Third Circuit did issue a few key opinions covering a range of issues that are of note to those in the consumer protection litigation field. Most remarkable was the resolving of the circuit split that the Third Circuit had created almost 30 years ago in Graziano v. Harrison. The following is a chronological report of the Third Circuit’s opinions in FDCPA and TCPA cases.
Tabb v. Ocwen Loan Servicing, LLC, 798 Fed. Appx. 726 (3d Cir. 2020)
The Third Circuit reversed the dismissal of a complaint filed under the FDCPA by a debtor who had been discharged in bankruptcy based on the sending of correspondence and monthly mortgage statements.
All the letters and statements contained a bankruptcy disclaimer, and the district court dismissed the complaint based on the disclaimer finding that the communications were not sent for debt collection purposes. The district court also dismissed the claims related to the monthly statements based upon the provisions of the Truth in Lending Act (TILA) that required a mortgage servicer to send monthly statements to borrowers.
In reversing, the Third Circuit first held that while TILA does require the sending of the statements, Regulation X clarifies that TILA does not require the sending of mortgage statements to borrowers who had been discharged in bankruptcy. The Third Circuit further found that the bankruptcy disclaimers were buried within fine print on the back of the statements where the front contained due dates, balances due, reinstatement amounts and other information indicative of collection thus stating a claim under the FDCPA.
Destefano v. Udren Law Offices, PC, 802 Fed. Appx. 688 (3d Cir. 2020)
The Third Circuit affirmed the dismissal of an FDCPA complaint based upon the filing of a foreclosure lawsuit as being barred by the FDCPA’s one-year statute of limitations. The complaint was filed within one year of service of the foreclosure complaint but more than one year after the foreclosure complaint had been filed.
Riccio v. Sentry Credit, Inc., 954 F.3d 582 (3d Cir. 2020)
Nearly 30 years after authoring an opinion that has been rejected by the Second, Fourth and Ninth Circuits and ignored by the First, Fifth, Sixth and Seventh Circuits, the Third Circuit finally acknowledged that its original interpretation of 15 U.S.C. 1692g(a)(3) was wrong.
Long before the growth of the cottage industry of litigation under the FDCPA, the Third Circuit held in Graziano v. Harrison that “given the entire structure of section 1692g, subsection (a)(3) must be read to require that a dispute, to be effective, must be in writing.” For years, most courts outside of the Third Circuit simply read the statute as it was written and did not require a debtor to dispute a debt in writing under 1692g(a)(3).
Finally, the Third Circuit decided to revisit Graziano when Riccio was presented on appeal. The court succinctly explained that the plain reading of 1692g(a)(3) confirmed that disputes did not have to be in writing unlike 1692(g)(4) and (5) which specifically have “in writing” requirements. The court noted that the Second, Fourth and Ninth Circuits previously split with the Third Circuit and its holding in Graziano in finding that there was no requirement for disputes to be in writing and also that the First, Fifth, Sixth and Seventh Circuits did not require a written dispute either.
With the “in writing” debate resolved once and for all, the Third Circuit also added a footnote that any collector who had previously sent “Graziano-compliant letters” should not be liable based on today’s decision because they had relied upon then existing case law. ‘opinion is amended, rescinded, or’ judicially invalidated, § 1692k(e), collectors should not be penalized for good faith compliance with then-governing caselaw.”
Physicians Healthsource, Inc. v. Cephalon, Inc., 954 F.3d 615 (3d Cir. 2020)
In a “junk fax” case under the TCPA, the Third Circuit addressed both prior express consent and opt-out language. The faxes at issue were sent to a doctor from a prescription drug representative.
There was no dispute that the plaintiff provided its fax number to the defendant by way of business cards to the defendant’s representatives. At issue was whether this provision of the fax number constituted prior express consent. The plaintiff argued that express consent was different from express invitation and permission, the former of which only relates to telephone calls while the latter relates to faxes.
The Third Circuit disagreed finding that the two terms are interchangeable and applied its precedent on express consent finding that the providing of the fax number to the defendant constituted consent. With regard to the opt-out language because the faxes at issue were solicited faxes, there was no need for such language based on the text of the statute.
Dotson v. Nationwide Credit, Inc., 2020 U.S. App. LEXIS 30732 (3d Cir. Sep. 28, 2020)
The Third Circuit affirmed the dismissal of a complaint based upon a collection letter that included the language “as of the date of this letter” when referring to the account balance where the balance was not accruing interest. The court rejected the plaintiff’s argument that a consumer could be confused as to the actual balance due because the letter incorrectly implied that the balance could increase.
A Mixed Bag for the Industry
So, it was a mixed bag for the industry from the Third Circuit as is often the case. In Tabb, the Third Circuit warned mortgage servicers that a bankruptcy disclaimer needs to be prominent in any post-discharge communications including monthly statements in order to shield them from liability. In Destefano it confirmed that the statute of limitations on a lawsuit runs from the date of filing and not the date of service.
Riccio finally put an end to lawsuits that were unique to Third Circuit collections and Dotson sided with the Second Circuit and others who have been clamping down on interest accrual claims that are more lawyer’s cases than those involving deceptive communications. Finally, the Dotson opinion bolstered the prior consent defense for defendants who still send faxes.