The Court of Appeals for the Third Circuit has affirmed a ruling sanctioning a pair of plaintiff’s attorneys who were found to have been behind intentionally vague dispute letters that were allegedly written by consumers and sent to the defendant.
The background: The case stems from lawsuits alleging a debt buyer violated the Fair Debt Collection Practices Act by failing to mark accounts as disputed. Attorneys representing the plaintiffs created handwritten dispute letters, supposedly written and signed by the consumers themselves, and then used them to support claims. The letters were intentionally confusing, containing nonsensical statements like complaints about someone trying to sell a “crazy XR 65A80K thing,” while burying vague language disputing the debt.
- The scheme, the court noted, was designed not to help consumers successfully dispute debts, but rather to fail, thereby giving the attorneys grounds to file FDCPA claims and collect statutory damages and fees.
- Evidence at a district court hearing revealed that the letters were actually drafted and signed by law firm staff without meaningful consumer involvement.
- A District Court judge ordered the attorneys to pay all of the defendant’s attorney’s fees, expenses and costs, called out the attorneys for engaging in a “campaign of deception designed to line their own pockets,” ordered them to write apology letters to the plaintiffs they were representing, and attach her ruling to every case filed by the attorneys that directly or indirectly related to their debt defense and consumer protection practice.
The ruling: The Third Circuit upheld the district court’s decision to sanction the attorneys, agreeing that the complaints were based on “misrepresentations and half-truths” filed for an improper purpose.
- “At root, the complaints were not what they purported to be — claims by frustrated debtors who had tried unsuccessfully to dispute their debts. The letters’ real goal was just the opposite: to fail at disputing those debts, teeing up § 1692e violations to benefit the firm.”
- The Third Circuit also rejected arguments that Rule 11 did not apply because the cases were first filed in state court, noting that the lawyers “later advocate[d]” the same pleadings in federal court.
- “Actions have consequences,” the opinion concluded. “We expect more from members of the bar, and we will affirm the sanctions.”
