Fourth Circuit: No common-law litigation immunities under FDCPA for debt-collection law firms.

by David Arkush

David Arkush is a Fellow at Georgetown University Law Center's Appellate Litigation Program and a new contributor to the blog.

In a forceful opinion issued today, Sayyed v. Wolpoff & Abramson, No. 06-1458 (May 9, 2007), the Fourth Circuit rejected a debt-collection law firm’s argument that it enjoys common-law immunity from FDCPA claims that arise out of statements made in the course of litigation.

Farid Sayyed alleged in federal district court that the law firm Wolpoff & Abramson (W & A) had filed, in a state-court debt-collection action, interrogatories and a summary judgment motion that contained false statements. W & A argued that it was absolutely immune from FDCPA claims arising from statements made in litigation, and the district court agreed and dismissed.

The Fourth Circuit reversed.  First, it concluded broadly that "The statutory text makes clear that there is no blanket common law litigation immunity from the requirements of the FDCPA." It is settled law that FDCPA covers attorneys, the court noted, and FDCPA’s exception for formal pleadings in a legal action—that they need not disclose that they are from a debt collector—illustrates that such pleadings are subject to all other FDCPA requirements.  Otherwise, there would be no need for an exception.

The court also addressed the more specific arguments that (1) FDCPA liability cannot attach to communications made to a debtor’s counsel, and (2) because common-law immunities exist under 42 U.S.C. § 1983, they also exist under FDCPA. The court rejected the first argument because it contradicts FDCPA’s expansive definition of a "communication" as "the conveying of information regarding a debt directly or indirectly to any person through any medium." More important, the court rejected the second argument by reasoning that recognizing common-law immunities under FDCPA would defeat the Act’s very purpose:

Congress meant not to incorporate common law immunities in this area, such as they may be, but to overwrite them, defining the scope of liability and immunity entirely by statute.

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The FDCPA aims "to eliminate abusive debt collection practices by debt collectors, to insure that those debt collectors who refrain from using abusive debt collection practices are not competitively disadvantaged, and to promote consistent State action to protect consumers against debt collection abuses." 15 U.S.C. § 1692(e). Adopting the sweeping immunities urged by appellee would stop the statute in its tracks.

(The court also held that the district court erred when it concluded in the alternative that dismissal was proper because W & A asserted that it relied on representations of its client. The court held that the proper time for considering a § 1692k(c) bona fide error defense is at summary judgment, not on a 12(b)(6) motion.)

Comments

[Bob]

The FDCPA is a LAW and NO ONE should have immunity, in my opinion.