- Lesher: One Step Too Far? Third Circuit Rejects the “Greco” Disclaimer in FDCPA Case
- July 7, 2011 | Author: Andrew M. Schneiderman
- Law Firm: Hinshaw & Culbertson LLP - Boston Office
Plaintiff debtor challenged defendant law firm’s use of two debt collection correspondences, claiming they were unfair and deceptive in violation of Section 1692e of the Fair Debt Collection Practices Act (FDCPA). See 15 U.S.C. § 1692e. The debtor specifically took issue with the law firm’s attorney disclaimer on the back of the correspondences which indicated that “[a]t this point in time, no attorney with this firm has personally reviewed the particular circumstances of your account.” The debtor claimed that the placement and context of the statement misled him to believe that an attorney was involved in collecting his debt, and that the attorney could, and would, take legal action against him. The District Court agreed that the letters violated Section 1692e, and granted the debtor’s motion for summary judgment. The U.S. Court of Appeals for the Third Circuit affirmed. The Third Circuit determined that the correspondences were unfair and deceptive insofar as they could cause the least sophisticated debtor to reasonably believe that an attorney had reviewed his file and determined that he was a candidate for legal action. Although the use of this disclaimer was deemed not misleading by the U.S. Court of Appeals for the Second Circuit in Greco v. Trauner, Cohen & Thomas, LLP, 412 F. 3d 360 (2d Cir. 2005), the Third Circuit held that the disclaimer “[did] little to clarify the  [l]aw [f]irm’s role in collecting the debt because it completely contradicts the message sent on the front of the letters—that the creditor retained a law firm to collect the debt.” Furthermore, unlike the letter in Greco, the disclaimer here was printed on the back of the letter, not the front, thereby further contributing to its deceptiveness.
In Gonzales v. Kay, 577 F. 3d 600 (5th Cir. 2009), the reasoning of which was relied upon by the Third Circuit in the case at issue, the U.S. Court of Appeals for the Fifth Circuit considered the legality of the exact disclaimer at issue in the underlying matter. The Court opined that there were three categories of letters: (1) those that are not deceptive based on the language and placement of a disclaimer; (2) those at the other end of the spectrum that do not contain any disclaimer regarding an attorney’s involvement; and (3) those in the middle that include contradictory messages, which present closer calls. The Fifth Circuit held that the disclaimer at issue in Gonzales fell into the third category of letters (close call), and remanded the matter to the District Court for further consideration. The Third Circuit seems to have taken the reasoning of Gonzales one step further by holding that the placement and use of the disclaimer on the back of a collection letter is unfair and deceptive as a matter of law, thereby presumably falling into the second category of cases established by Gonzales—those that clearly violate the FDCPA as a matter of law.
The dissent in Lesher adopted the reasoning of the dissent in Gonzales. Specifically, Judge Kent Amos Jordan opined that the foregoing disclaimer was not unfair and deceptive insofar as it did not contain one word of “legalese.” Furthermore, it is unreasonable to presume that the least sophisticated debtor would not follow the express instructions on the front of the letter advising that there were further important notices on the back (including the disclaimer at issue).