Mr. H signed up for a Discover credit card in September, 2002, married Ms. H in October, 2002, and called Discover in November, 2002 to add Ms. H to the Discover credit card.
Three years later Mr. and Mrs. H were history (divorced). In the divorce decree, it was agreed that Mr. H would be responsible for the $3,286.17 on the Discover card.
Two years later, the Twin Cities law firm of Messerli & Kramer went after ex-Ms. H on the debt, suing her in state court on the Discover card debt — and losing. Ms. H had moved for summary judgment, arguing that she had nothing at all to do with this card or any of the debt related to it.
Then the other shoe dropped when the ex-Ms. H, represented by well-known Twin Cities consumer rights plaintiff’s lawyer, Thomas J. Lyons, Sr., sued M&K in federal court for a violation of the Fair Debt Collection Practices Act for allegedly having pled false allegations against Ms. H in the state court action (that is, for arguing in state court, supposedly falsely, that Ms. H knew of the Discover card, incurred debts on it, and so on.)
Judge James B. Loken for the U.S. Court of Appeals for the Eighth Circuit first noted that the state court may have gotten it wrong. Ms. H may indeed have used the Discover card, shared in the benefits of it, and did write (and sign) Discover a check at one point to pay it down.
But, in essence, the Eighth Circuit held that lawyer/debt collector may lose a state court debt collection action, that is, may make factual allegations that are not persuasive to the judge or jury and thus, implicitly, may make “false statements in connection with the collection of a debt.” This fact, by itself, cannot amount to a violation of the Fair Debt Collection Practices Act (“FDCPA”).
In doing so, the Eighth Circuit did not adopt the analysis of U.S. District Court Sr. Judge David S. Doty (D. Minn.). Judge Doty had held that false statements to third parties (that is, for example, the state court judge) are not actionable under the FDCPA. That, the 8th Circuit held, goes to far. Rather,
the diverse situations in which potential FDCPA claims
may arise during the course of litigation, and the U.S. Supreme Court’s caution…that careful crafting may be required in applying the statute’s prohibitions to attorneys engaged in litigation, counsel against anything other than a case-by-case approach, at least in this, our first case requiring us to address these issues.