The U.S. Court of Appeals, in its published opinion, Warren v. Sessoms & Rogers, P.A., No. 10-2105, 2012 WL 76053 (4th Cir. Jan. 11, 2012), analyzes the materiality and knowledge requirements under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq. The decision is significant for consumer attorneys, as it involves an interpretation in favor of consumers by a court that has a conservative reputation.
The pertinent facts are straightforward. The law firm of Sessoms & Rogers, P.A. (the “law firm”) was retained by Branch Banking & Trust Co. (“BB&T”) to collect a credit card debt allegedly owed by the consumer, Margaret Warren. The law firm made a first attempt to contact Ms. Warren by leaving a phone message in February 2009. However, the law firm did not disclose in the message “that the communication” was “from a debt collector.”
Thereafter, on March 7, 2009, Ms. Warren wrote a letter to the law firm in which she directed the law firm to communicate with her attorney. Nevertheless, the law firm sent a letter directly to Ms. Warren on March 17, 2009. Importantly, the law firm’s letter stated, “Thank you for your recent letter …”
Based on these facts, Ms. Warren filed a lawsuit against the law firm in federal district court under the FDCPA. The lawsuit alleged that the law firm’s February 2009 initial telephone message violated 15 U.S.C. § 1692e(11) because it failed to disclose that the communication was from a debt collector. The lawsuit further alleged that the law firm violated § 1692c(a)(2) by sending a letter directly to Ms. Warren after it had notice that Ms. Warren was represented by an attorney.
The law firm argued that the district court properly dismissed the lawsuit because the February 2009 telephone message did not involve a “material” misrepresentation. The law firm further argued that there was no sufficient evidence that it actually knew Ms. Warren was represented by an attorney when it sent the March 17, 2009 letter directly to Ms. Warren. Lastly, the law firm argued that dismissal was appropriate because the FDCPA contained a “bona fide error” defense, and there was no evidence that the law firm ”willfully” violated the FDCPA.
In reversing the district court, the Fourth Circuit began its analysis by recognizing that, even under the FDCPA, an action based on a misrepresentation must involve a “material” misrepresentation. However, the Court then held that the rule did not apply to Ms. Warren’s lawsuit because it was not based on a misrepresentation. The Court reasoned that the law firm’s February 2009 telephone message did not involve a false statement, but rather involved the failure to disclose information. Since the action was based on a § 1692e(11) failure to disclose information, and not a misrepresentation, the Court concluded that there was no “materiality” requirement, and held that dismissal was not appropriate.
Concerning the law firm’s March 17, 2009 letter to Ms. Warren, the Fourth Circuit recognized that § 1692c(a)(2) does contain a knowledge requirement. However, the Court held that there was sufficient evidence to generate a jury issue as to whether the law firm “knew” Ms. Warren was represented by an attorney when it sent the letter. The Court first observed that Ms. Warren had previously sent a letter to the law firm on March 7, 2009, which stated that Ms. Warren was represented by counsel. The Court then reasoned that a jury could find that the law firm received the letter, and thereby knew Ms. Warren was represented by counsel, because the law firm’s March 17, 2009 letter stated, “Thank you for your recent letter …”
The Fourth Circuit then turned its attention to the law firm’s “bona fide error” argument. The Court recognized that § 1692k(c) does contain a “bona fide error” defense. However, the Court held that the defense is an “affirmative defense”. As a result, the Court held that Ms. Warren was not required to allege in her lawsuit that the law firm willfully violated the FDCPA, because the burden to plead and prove any bona fide error rested on the law firm.
For the above reasons, the Fourth Circuit reversed the district court, and allowed Ms. Warren to continue prosecuting her lawsuit.