Last month’s 11th Circuit Court of Appeals decision that allowed a Fair Debt Collection Practices Act (FDCPA) claim to be made against a bankruptcy proof of claim filed on out-of-statute debt will get a rehearing if a petition filed by LVNV Funding, LLC is granted.
Crawford v. LVNV Funding caused a stir when it was issued a few weeks ago because it upset a well-settled body of law that prohibited such FDCPA claims. And although en banc requests are often denied, when a decision conflicts with an established body of law there is a better chance it will be granted. That may be what happens here.
Need for Consistency in the Law
Crawford highlights the inconsistent treatment of the FDCPA that is applied to the same conduct. Had the same proof of claim been filed in New York or California instead of Alabama, there would be no violation. The “abusive” debt collection practice admonished by the 11th Circuit would be a lawful act anywhere else.
Except in a few jurisdictions, the lapse of the statute of limitations does not extinguish the underlying claim. The bankruptcy code contemplates that any entitlement to a sum can be made in a proof of claim. And so, the rest of the nation’s courts would likely find the proof of claim filed in Crawford entirely permissible.
Tough Times in the 11th Circuit
Crawford’s departure from well-settled law could very well be a mistaken interpretation of the Bankruptcy Code and the FDCPA. Courts sometimes make mistakes and do correct them. And it already happened in the 11th Circuit this year.
On June 5, it issued its decision in Breslow v. Wells Fargo, a Telephone Consumer Protection Act case examining the legality of certain calls to cell phones. Breslow held that a “called party” under the TCPA refers to either the cell phone subscriber or the cell phone’s “user.” Four days later, it vacated the decision realizing it conflicted with a stricter definition of “called party” it established in Osorio v. State Farm. Osorio, a TCPA decision decided just a few months before Breslow, defined the called party as only the “subscriber” to the cell phone and not persons who also used the cell phone.
Maybe Crawford is simply a mistake waiting to be fixed.
This post originally appeared on the Consumer Financial Services Blog, run by ARM defense firm Maurice & Needleman.