18th Annual Workplace Class Action Report - 2022 Edition

Annual Workplace Class Action Litigation Report: 2022 Edition 591 making class certification inappropriate. The Court ruled that Defendant was correct in asserting that the relevant period to examine bankruptcy filings was the period before the statute of limitations ran on the accounts, but it held that doing so would not overwhelm the common questions of law and fact present among the class members. For these reasons, the Court granted Plaintiffs’ motion for class certification. Hopkins, et al. v. Collecto, Inc., 2021 U.S. App. LEXIS 10359 (3d Cir. April 12, 2021) . Plaintiff, a debtor, filed a class action alleging that Defendant’s debt collection letter it sent to him contained misleading amounts listed as costs and fees in violation of the Fair Debt Collection Practices Act (“FDCPA”). The District Court granted Defendant’s motion to dismiss. On appeal, the Third Circuit affirmed the District Court’s ruling. Plaintiff asserted that by itemizing interest and collection fees of “$0.00” in the letter for a debt that could not accrue such fees, the itemizations falsely implied that interest and fees could accrue and increase the amount of his debt over time. The District Court found that Plaintiff failed to state a claim because his complaint failed to plausibly allege that Defendant’s debt itemization violated the FDCPA, as it neither "leave[s] the least sophisticated consumer in doubt of the nature and legal status of the underlying debt" nor "impede[s] the consumer’s ability to respond to or dispute collection." Id . at *3. The District Court declined to require assurances by debt collectors that itemized amounts "will not change in the future," reasoning that doing so would lead to "complex and verbose debt collection letters" that would confuse consumers. Id . at *3-4. The Third Circuit opined that in applying the least sophisticated debtor standard, it must affirm the dismissal of Plaintiff’s complaint. The Third Circuit reasoned that being an unsophisticated debtor was not akin to having "bizarre or idiosyncratic interpretations of collection notices." The Third Circuit explained that even if the interest and collection fees were listed on the balance as separate line items, the amounts accrued explicitly reflected $0.00," and would not mislead "the least sophisticated consumer.” Id . at *4. The Third Circuit ruled that the simple fact that Defendant used a form letter that contained items that might not apply to Plaintiff’s debt was not against the law. Kaiser, et al. v. Cascade Capital, LLC, 2021 U.S. App. LEXIS 6754 (9th Cir. March 9, 2021). Plaintiff brought a putative class action alleging that Defendants violated the Fair Debt Collection Practices Act (“FDCPA”) by sending him a collection letter threatening litigation over a time-barred debt and filing a lawsuit seeking to collect the time-barred debt. Plaintiff purchased a car under a retail installment sale contract. After he defaulted on his payments, and his car was repossessed and sold, Defendant, the creditor, hired a law firm to collect that deficiency balance. The law firm sent Plaintiff a letter that stated the firm had been retained with the authority to file a lawsuit against him and demanded payment of the outstanding debt. Plaintiff failed to pay, and Defendant sued him in Oregon state court. The collection attempts – both the letter and the lawsuit – occurred between four and six years after Plaintiff’s default. The Oregon state court ruled in favor of Plaintiff and found that the debt was time-barred under Oregon’s four year statute of limitations for sale-of-goods contract claims. Plaintiff then instituted a putative class action alleging that Defendants violated the Fair Debt Collection Practices Act (“FDCPA”). The District Court dismissed Plaintiff’s complaint for failure to state a claim pursuant to Defendant’s Rule 12(b)(6) motion on the grounds that Defendant did not violate the FDCPA because the state statute of limitations had been unclear when Defendant attempted to collect the debt. On Plaintiff’s appeal, the Ninth Circuit reversed and remanded. The Ninth Circuit held that Plaintiff had stated an actionable claim under the FDCPA because his complaint alleged that a law firm attempted to collect on a debt that was time-barred under the applicable state statute of limitations. Joining other federal circuits, the Ninth Circuit ruled that because the FDCPA prohibited debt collection practices that were misleading, unfair, or unconscionable, this included filing or threatening to file suit to collect debts that were outside the applicable statute of limitations. Because Plaintiff’s debt was time-barred under Oregon’s four-year statute of limitations, the Ninth Circuit held that Plaintiff’s complaint stated a viable claim for relief under the FDCPA. The Ninth Circuit explicitly determined that the FDCPA’s prohibitions regarding time-barred debts applied even if it was unclear at the time a debt collector sued or threatened suit whether a lawsuit was time-barred under state law because the FDCPA took a strict liability approach to prohibiting misleading and unfair debt collection practices. Accordingly, the Ninth Circuit held that Plaintiff did not have to plead or prove that a debt collector knew or should have known that the suit was time-barred to show prohibited conduct. In its ruling, the Ninth Circuit emphasized that debt collectors can avoid liability by successfully asserting the FDCPA’s affirmative defense for bona fide errors. Because a mistake about the time-barred status of a debt under state law could be such an error, the Ninth Circuit left it to the District Court to consider in the first instance on remand whether a bona fide error defense could succeed in this case.