Knowing When to Walk Away
The Sixth Circuit Court of Appeals issued a new FDCPA opinion this week affirming dismissal for failing to state a claim but remanding to allow a plaintiff to amend his complaint against a law firm for threatening or misleading statements the firm allegedly made in a collection letter. In Walker v. Shermeta, Adams, Von Allmen, PC, 2015 U.S. App. LEXIS 14200 (6th Cir. Aug. 10, 2015) (not recommended for full-text publication), the defendant was a law firm tasked with collecting on overdue student loan accounts. One of the letters the firm mailed to the plaintiff stated that interest and other charges "may" continue to accrue, a statement the plaintiff alleged was deceptive because the firm did not have the legal right to add interest or other charges. Relying on a reported Seventh Circuit case, Taylor v. Cavalry Inv., L.L.C., 365 F.3d 572 (7th Cir. 2004), the district court dismissed the claim, ruling that "[e]ven if Defendants cannot lawfully charge interest and other fees on behalf of [the creditor], the statement that interest and other fees may be charged is not (1) a threat or (2) false and misleading."
The Court of Appeals disagreed, opining that "[t]he district court's bright-line application of Taylor and its characterization of Plaintiff's claim as frivolous is an oversimplification." If the plaintiff could amend his complaint to show that interest or charges could truly never accrue, then he could state an adequate FDCPA claim that the letter was threatening or materially misleading. The case was remanded to allow the plaintiff leave to amend his complaint.