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11th Circuit interprets FDCPA statute of limitations
On March 31, the U.S. Court of Appeals for the Eleventh Circuit partially affirmed a district court’s dismissal of federal and state law claims against a loan servicer, concluding that while a 1099-A form sent to the plaintiff was not an attempt to collect a debt under the FDCPA, the district court erred in determining that the claim was time-barred. The plaintiff filed suit alleging violations of the FDCPA, the Florida Consumer Collection Practices Act, the Florida Deceptive and Unfair Trade Practices Act, and the Florida Mortgage Brokerage and Lending Laws (MBBL). After the district court dismissed her initial and amended complaints, the plaintiff appealed, arguing, among other things, that the district court erred when it (i) determined that the defendant’s mailing of IRS form 1099-A was not an attempt to collect a debt under the FDCPA; (ii) dismissed her FDCPA claim as time-barred because the statute of limitations had expired; (iii) found that the defendant was not involved in the original loan transaction and therefore could not be liable for damages under the MBLL; and (iv) declined “to exercise supplemental jurisdiction” over the other state law claims after dismissing the FDCPA claims with prejudice.
On appeal, the 11th Circuit agreed that the form 1099-A “was not a communication in connection with debt collection” because it did “not demand payment, state that it was an attempt to collect a debt, or state to whom or how to make a payment of the debt.” The appellate court also agreed that the district court properly dismissed the plaintiff’s MBLL claim because she failed to plead that the defendant made her mortgage loan as required under the MBLL. The district court’s decision to dismiss the remainder of the state-law claims was also affirmed. However, the 11th Circuit disagreed with whether the plaintiff’s FDCPA claim was time-barred, concluding that while the one-year statute of limitations under the FDCPA begins to run on the date the communication is mailed, the appellate court has “never held that, when the date of mailing is in dispute and a plaintiff alleges receipt of a letter on a certain date, a court could presume a mailing date based on the date of receipt and the parties’ addresses.” (Emphasis in the original.) According to the 11th Circuit, “the district court erred in dismissing [the plaintiff’s] FDCPA claims as untimely when her complaint did not allege a date of mailing of the February mortgage statement, and it was not apparent from the face of her complaint whether her claim was time-barred.”
11th Circuit reverses dismissal of “shotgun” FDCPA, FCRA, TCPA pleadings
On March 16, the U.S. Court of Appeals for the Eleventh Circuit partially reversed a district court’s dismissal of a lawsuit against several defendants for alleged violations of the FDCPA, the FCRA, and the TCPA, holding that the plaintiff’s third amended complaint was not filled with “shotgun pleadings.” The matter revolves around several statutory and common-law claims arising from the defendants’ allegedly-unlawful debt collection attempts, which were dismissed multiple times by the district court as “shotgun pleadings.” In her third amended complaint—which alleged 10 causes of action—the plaintiff contended, among other things, that the defendants failed to respond to letters she sent to dispute the alleged debt and failed to notify credit reporting agencies (CRA) of the dispute. The plaintiff also alleged that certain defendants called her cell phone multiple times using an automatic telephone dialing system. The district court entered final judgment in favor of all the defendants, minus the CRA defendant, stating, among other things, that the plaintiff continued to “‘lump the defendants together. . .and provide generic and general factual allegations as if they applied to all defendants.’”
On appeal, the 11th Circuit concluded that the district court erred in dismissing six of the 10 counts as shotgun pleadings. “While not at all times a model of clarity, [the third amended complaint] is reasonably concise, alleges concrete actions and omissions undertaken by specific defendants, and clarifies which defendants are responsible for those alleged acts or omissions,” the appellate court wrote. However, the appellate court agreed that the district court correctly dismissed two counts for failing to state a claim related to claims concerning one of the defendant’s alleged attempts to collect delinquent tax payments owed to the IRS. According to the appellate court, since “tax obligations do not arise from business dealings or other consumer transactions they are not ‘debts’ under the FDCPA.’”
Supreme Court vacates as moot 11th Circuit’s FHA decision
On March 2, the U.S. Supreme Court vacated as moot a 2019 judgment of the U.S. Court of Appeals for the Eleventh Circuit, which had held that the City of Miami plausibly alleged that two national banks’ lending practices violated the Fair Housing Act (FHA) and led to defaults, foreclosures, and vacancies, eventually reducing property values and corresponding property tax revenues. (Covered by InfoBytes here.) This follows the City’s voluntarily dismissal in January of fair housing lawsuits brought against four national banks (covered by InfoBytes here).
The Supreme Court first addressed the underlying case in 2017, holding that municipal plaintiffs may be “aggrieved persons” authorized to bring suit under the FHA against lenders for injuries allegedly flowing from discriminatory lending practices. (Covered by a Buckley Special Alert.) However, the Court held that such injuries must be proximately caused by, rather than simply the foreseeable result of, the alleged misconduct. On remand, the 11th Circuit found “a logical and direct bond between discriminatory lending as a pattern and practice applied to neighborhoods throughout the City and the reduction in property values,” but also noted that the City’s allegations fell short of establishing a direct relationship between the alleged misconduct and the City’s purported increase in its municipal services expenditures. The banks subsequently filed petitions (see here and here) last November, asking the Supreme Court to review “[w]hether proximate cause in private litigation about the [FHA] requires more than a ‘logical bond’ between the alleged statutory violation and the plaintiff’s injury.”
7th Circuit: Dialing system that cannot generate random or sequential numbers is not an autodialer under the TCPA
On February 19, the U.S. Court of Appeals for the Seventh Circuit affirmed a district court’s ruling that a dialing system that lacks the capacity to generate random or sequential numbers does not meet the definition of an automatic telephone dialing system (autodialer) under the TCPA. According to the 7th Circuit, an autodialer must both store and produce phone numbers “using a random or sequential number generator.” The decision results from a lawsuit filed by a consumer alleging a company sent text messages without first receiving his prior consent as required by the TCPA. However, according to the 7th Circuit, the company’s system—the autodialer in this case—failed to meet the TCPA’s statutory definition of an autodialer because it “exclusively dials numbers stored in a customer database” and not numbers obtained from a number generator. As such, the company did not violate the TCPA when it sent unwanted text messages to the consumer, the appellate court wrote.
Though the appellate court admitted that the wording of the provision “is enough to make a grammarian throw down her pen” as there are at least four possible ways to read the definition of an autodialer in the TCPA, the court concluded that while its adopted interpretation—that “using a random or sequential number generator” describes how the numbers are “stored” or “produced”—is “admittedly imperfect,” it “lacks the more significant problems” of other interpretations and is thus the “best reading of a thorny statutory provision.”
The 7th Circuit’s opinion is consistent with similar holdings by the 11th and 3rd Circuits (covered by InfoBytes here and here), which have held that autodialers require the use of randomly or sequentially generated phone numbers, as well as the D.C. Circuit’s holding in ACA International v. FCC, which struck down the FCC’s definition of an autodialer (covered by a Buckley Special Alert here). However, these opinions conflict with the 9th Circuit’s holding in Marks v. Crunch San Diego, LLC, (covered by InfoBytes here), which broadened the definition of an autodialer to cover all devices with the capacity to automatically dial numbers that are stored in a list.
11th Circuit: Guaranty agency collecting nonexistent DOE loans is not a debt collector
On February 7, the U.S. Court of Appeals for the Eleventh Circuit issued a split opinion holding that a student loan guaranty agency that mistakenly attempted to collect nonexistent student loans cannot be sued under the FDCPA because, as a guaranty agency operating on behalf of the Department of Education (Department), it does not qualify as a “debt collector” under the Act. According to the opinion, the plaintiff alleged that during a scheduled deferment period, the agency notified the plaintiff that it had paid a default claim on the loans and demanded full repayment. The plaintiff alleged that she called to dispute the demand and was told the agency had no record of her debt. Subsequently, the agency ordered the plaintiff’s employer to garnish her wages, and the plaintiff filed a complaint alleging, among other things, that the defendant violated the FDCPA by making false or misleading representations and failing to validate the debt. The plaintiff also alleged that the defendant engaged in fraudulent business practices. The district court granted summary judgment in favor of the defendant, ruling that the defendant was not a debt collector subject to the FDCPA because it was acting “incidental to a bona fide fiduciary obligation” to the Department. While the plaintiff conceded that a guaranty agency’s actions are incidental to a fiduciary obligation when it attempts to collect valid defaulted student loans, she argued that the exemption does not apply when the guaranty agency attempts to collect debts that do not exist.
On appeal, the majority agreed with the district court, holding that determining whether the defendant was a debt collector subject to the FDCPA did not depend on the validity of the claimed debt. The majority held that as long as the defendant was acting in good faith, its collection efforts would be incidental to its fiduciary obligation to the Department and exempted from the definition of “debt collector.” Specifically, the majority referenced language from the FDCPA establishing that the fiduciary obligation exemption applies when an agency attempts to collect a debt that is “owed or due or asserted to be owed or due another,” holding that such language must apply to efforts to collect debts that do not exist or that phrase would have no meaning. According to the majority, “Congress easily could have written the [FDCPA] to impose liability on persons who attempt to collection nonexistent debts pursuant to a fiduciary obligation,” but Congress chose not to.
11th Circuit offers new autodialer definition under TCPA
On January 27, the U.S. Court of Appeals for the Eleventh Circuit issued a split opinion on the definition of an automatic telephone dialing system (autodialer) within the context of the TCPA. The TCPA defines an autodialer as “equipment which has the capacity—(A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such numbers.” According to the 11th Circuit, “to be an auto-dialer, the equipment must (1) store telephone numbers using a random or sequential number generator and dial them or (2) produce such numbers using a random or sequential number generator and dial them.”
In the first case, a Florida plaintiff filed the putative class action complaint alleging a hotel chain used an autodialer to call her cell phone without her consent. (Previously covered by InfoBytes here.) The hotel moved for summary judgment, arguing that the system did not qualify as an autodialer under the TCPA because it required a hotel agent to click “Make Call” before the system dialed the number. The court agreed, concluding that the defining characteristic of an autodialer is “the capacity to dial numbers without human intervention,” which the court noted remains unchanged even in light of the D.C. Circuit decision in ACA International v. FCC (covered by a Buckley Special Alert here). In the second case, a plaintiff contended a loan servicer placed 35 calls to her cell phone about unpaid student loans. However, in this instance, the district court ruled that the company used an autodialer because the system did not require human intervention and had the capacity to automatically dial a stored list of numbers. Additionally, the court ruled that 13 of the 35 calls were willful violations of the TCPA.
On appeal, the appellate court affirmed the district court’s ruling in the first case, concluding that the hotel calling system, which required human intervention before a call was placed and “used randomly or sequentially generated numbers,” did not qualify as an autodialer under the TCPA. The appellate court, however, partially affirmed and partially reversed the district court’s ruling in the second case, holding that while 13 of the calls received by the plaintiff were placed using an artificial or prerecorded voice (a separate violation of the TCPA), the phone system used in this case did not qualify as an autodialer because it did not use random or sequentially generated numbers. One of the judges stated in a partial dissent, however, that she read the TCPA to cover equipment that only has the capacity to dial and not produce random numbers, similar to the phone system used by the loan servicer. The 11th Circuit’s opinion is consistent with the D.C. Circuit’s holding in ACA International, which struck down the FCC’s definition of an autodialer; however it conflicts with the 9th Circuit’s holding in Marks v. Crunch San Diego, LLC (InfoBytes coverage here), which broadened the definition of an autodialer to cover all devices with the capacity to automatically dial numbers that are stored in a list.
11th Circuit vacates class certification in TCPA action against satellite TV provider
On November 15, the U.S. Court of Appeals for the Eleventh Circuit vacated the district court’s certification order of a class action alleging a national satellite TV company violated the TCPA by contacting individuals who had previously asked to not be contacted. According to the opinion, a consumer filed a class action against the company alleging that the company failed to maintain an “internal do-not-call list,” which allowed the company and its telemarketing service provider to contact him eighteen times after he repeatedly asked to not be contacted. The consumer sought certification “of all persons who received more than one telemarketing call from [the telemarketing service provider] on behalf of [the company] while it failed to maintain an internal do-not-call list.” The district court certified the class and the company appealed.
On appeal, the 11th Circuit disagreed with the district court, concluding the court incorrectly determined that issues common to the class predominated over issues individual to each member. Specifically, the appellate court noted that the class consisted of unnamed class members who may not have asked the company to stop calling and therefore, would never have been on an internal do-not-call list, had one been properly maintained. Thus, these members were not injured by the company’s failure to comply and their injuries are then “not fairly traceable to [the company’s] alleged wrongful conduct,” resulting in a lack of Article III standing to sue. The appellate court emphasized that recertification is still possible, but the district court would need to determine which of the class members made the request to not be contacted. However, if “few made [the] request[], or if it will be extraordinarily difficult to identify those who did, then the class would be overbroad” and individualized issues may “overwhelm issues common to the class.”
11th Circuit reinstates FCRA suit, addresses “false pretenses”
On November 12, the U.S. Court of Appeals for the Eleventh Circuit issued an order reversing in part and affirming in part a district court’s dismissal of claims brought by a consumer who claimed a bank violated the Fair Credit Reporting Act (FCRA) and the FDCPA when it allegedly provided debt information using a “false name” to a credit reporting agency and requested the consumer’s credit report without a proper purpose. In 2016, the consumer filed a lawsuit asserting the bank (i) violated the FDCPA by using a name other than its true name in connection with the collection of debt; and (ii) violated the FCRA when it failed to investigate the accuracy of the information provide to the credit reporting agency, and requested his credit report without a permissible purpose. The district court dismissed the complaint for failure to state a claim.
On appeal, the 11th Circuit affirmed the dismissal of the FDCPA claim, concluding that, while the false-name exception stipulates that the FDCPA applies to a creditor that uses any name other than its own when collecting its own debts (which may indicate a third party was collecting or attempting to collect the debt), the exception does not apply in this instance because “even the least sophisticated consumer” would understand that the bank and the entity named in the consumer report were related. However, the appellate court held that the district court erred in dismissing the FCRA claims. According to the opinion, the consumer stated three plausible claims for relief, including that the bank failed to investigate the accuracy of the information it sent, as required when a dispute arises, and that it unlawfully obtained his credit report. The 11th Circuit noted that while it has never addressed the meaning of “false pretenses” under the FCRA, it now joins other courts in holding that “intentionally obtaining a credit report under the guise of a permissible purpose while intending to use the report for an impermissible purpose can constitute false pretenses.” Moreover, the appellate court noted that while the bank may have obtained the consumer’s credit report for proper purposes, or that it may have disclosed the true purpose to the credit reporting agency, “this fact question cannot be resolved on a motion to dismiss.”
11th Circuit: District Court erred in denying class certification over bankruptcy preemption defense
On October 29, the U.S. Court of Appeals for the Eleventh Circuit vacated a district court decision denying class certification, concluding the court erred in its determination that each FDCPA and Florida Consumer Collection Practices Act (FCCPA) claim’s individualized inquiries predominated over issues common to the proposed class. According to the opinion, two plaintiffs filed a class action against their mortgage servicer alleging the servicer violated the FDCPA and the FCCPA by sending monthly mortgage statements after the debt was discharged in a Chapter 7 bankruptcy and they moved out of the home. The servicer objected to class certification that included both consumers who vacated their homes and those who remained in their homes because the Bankruptcy Code treats the two groups differently, thus requiring an individualized review to decide how the rules would be applied. Additionally, the servicer argued that the court would be required to decide whether the Bankruptcy Code precluded or preempted the claims for only class members who chose to remain in their homes. The district court denied class certification, concluding that individualized claims predominated over common issues, because “the question of ‘whether the Bankruptcy Code precluded and/or preempted the FDCPA and FCCPA’ presented an individualized rather than a common issue.”
On appeal, the 11th Circuit disagreed. The appellate court noted that the district court erred when it concluded that the question of whether the Bankruptcy Code precluded or preempted the FDCPA only applied to those consumers who chose to remain in their homes, because the preemption defense “potentially barred every class member’s FDCPA claim,” thus requiring the court to treat it as a common issue. The appellate court made a similar determination for the FCCPA claims. The appellate court cautioned that its conclusion was not an opinion about whether the servicer’s “defense is meritorious,” but was “limited to the conclusion that [the] defense raises questions common to all class members.” The appellate court, therefore, vacated and remanded the case back to district court.
11th Circuit: Payday lenders’ agreements unenforceable under Georgia policy
On August 28, the U.S. Court of Appeals for the 11th Circuit held that a district court did not err when it denied a group of lenders’ motion to dismiss class action claims alleging that their loan agreements violated Georgia’s Payday Lending Act (PLA), the Georgia Industrial Loan Act (GILA), and state usury laws. According to the opinion, the plaintiffs entered into agreements for loans generally amounting to less than $3,000 that were to be repaid from recoveries received by the plaintiffs in their individual personal injury lawsuits. The defendants moved to dismiss the complaint and strike the class allegations, arguing that the loan agreements’ forum-selection clause required the borrowers to bring their lawsuit in Illinois, and that the class action waiver provision in the agreements prevented the plaintiffs from being able to file any class action against them. The plaintiffs maintained, however, that these provisions in the loan agreements were unenforceable because they violated Georgia public policy, and the district court agreed.
On appeal, the 11th Circuit affirmed the district court because it also concluded that the loan agreements’ forum-selection and class action waiver provisions were unenforceable as against Georgia public policy. Regarding the forum-selection clause, the appellate court held that the PLA “establish[es] a clear public policy against out-of-state lenders using forum selection clauses to avoid litigation in Georgia courts.” Regarding the class action waiver, the appellate court noted that both the PLA and the GILA specifically authorize class action suits; that the district court did not consider whether the waivers were procedurally or substantively unconscionable did not matter because the fact that the waivers violate public policy is an independent and sufficient basis to hold them unenforceable. The defendants also noted that the statutes did not prohibit class action waivers or create a statutory right to pursue class actions, but a contractual provision “need not literally conflict with Georgia law to contravene public policy.” (Citing Langford v. Royal Indemnity Co.) Instead, the appellate court agreed with the district court that “enforcement of the class action waivers in this context would eliminate a remedy contemplated by the Georgia legislature and undermine the purpose of the PLA and the GILA.”