On November 10, the Supreme Court declined to review an appeal by debt collection law firm Phelan Hallinan & Shmieg LLP over a Third Circuit decision in a class action that held that debtors are not required to dispute a debt under the Fair Debt Collection Practices Act before filing an FDCPA lawsuit.
On June 26, 2014, the United States Court of Appeals for the Third Circuit reversed a district court’s dismissal of a class action brought against the firm on the grounds that Plaintiff Timothy McLaughlin had not asked the firm to validate the debt before he filed suit. The district court dismissed McLaughlin’s FDCPA lawsuit without leave to amend, holding that he could not file a civil lawsuit under the FDCPA without first disputing the debt under the FDCPA’s debt validation procedure contained in 15 U.S.C. § 1692g. On appeal, the Third Circuit reversed the district court’s decision, saying there was no indication that Congress intended to require debtors to dispute their debts under § 1692e of the FDCPA before filing suit under the same section of the law.
The Supreme Court’s decision to decline review is noteworthy in that there is no current split of authority among the courts of appeal holding that a debtor is required to invoke his or her procedural rights under the FDCPA prior to filing a civil lawsuit under the statute. Troutman Sanders LLP will continue to monitor any develops in the law in this regard.