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Headline: Specific evidence is required to show express consent to receive collection calls on cell phone; bona fide error defense to FDCPA claims not applicable to mistake of law

Area of Law: Telephone consumer protection, debt-collection.

Issues Presented:
Does the mere possibility a called-party provided his cell phone number to his creditor - raise a genuine issue of fact as to whether he expressly consented to collection calls?
Is good-faith reliance upon persuasive legal authority sufficient for the bona fide error defense to excuse an FDCPA?

Brief Summary:

Daubert sued NRA for FDCPA violations because there was a barcode used to identify him printed on a collection letter's envelope, and for TCPA violations because he never consented to automated phone calls. NRA asserted an affirmative defense, the bona fide error defense, to the FDCPA claim and argued that Daubert's prior express consent as a defense to the TCPA claim.

The Third Circuit affirmed the grant of summary judgment to Daubert on the TCPA claim, because no direct evidence of Daubert's prior consent existed on the record and NRA failed to show a genuine issue of material fact. Further, the court affirmed the lower court's decision to exclude an affidavit about automated dialing submitted by NRA because it flatly contradicted prior testimony and lacked support from the record.

The Third Circuit reversed the district court's ruling on the FDCPA violations, and remanded with instructions that judgment be entered for Daubert. NRA admitted to the violations when it invoked the bona fide error defense, but it cited the authority of two district courts to excuse its mistake of law. The Third Circuit ruled that the bona fide error defense does not apply to mistakes of law.

Extended Summary:

NRA attempted to collect a $25 debt from Daubert, which he originally owed to a hospital, by sending him a collection letter and calling him sixty-nine times in ten months. The collection letter was sent with a unique identifier barcode, which was plainly visible through the window of the envelope. The sixty-nine phone calls were made using some form of automated phone calling software.

Barcodes fall into a grey area for liability under FDCPA, with precedent on both sides of the question. NRA believed barcodes printed on envelopes were not a violation, a belief supported by two Eastern District court opinions finding no FDCPA violation for printing barcodes to identify the debtor on the envelopes of collection letters. The Third Circuit reversed the grant of judgment as a matter of law to NRA, holding that reliance on precedent shows that NRA made a mistake of law, not fact. The Supreme Court has held that the defense does not apply to mistakes of law.

The sixty-nine phone calls were the basis for TCPA violations. This statute was enacted to shield consumers from unwanted phone calls and other forms of harassment through telecommunications. Collectors may not contact people using automated dialing systems unless the called-party has given prior express consent. Daubert claimed he never consented, the district court found the calls constituted violations, and the Third Circuit affirmed.

The Court rejected NRA's argument that Daubert consented when he gave his phone number to the hospital. Daubert established an absence of direct support for NRA's claim, meeting his burden of proof as the moving party. NRA failed to meet its burden as the non-moving party because it did not do more than "show that there is some metaphysical doubt." There was nothing in the evidence, depositions, interrogatories, and admissions on file that NRA used - beyond its own pleadings and affidavits - to show a genuine dispute of material fact existed relating to the TCPA claim.

The Court also held that the District Court was within its discretion in refusing to admit an affidavit NRA submitted to show the phone calls were not automated. The original testimony regarding the automated system came from a deposition, in which NRA selected an employee to speak on its behalf. The employee testified that some level of automation existed in the phone system, but months later NRA submitted an affidavit saying there was no automation in the process.

The sham-affidavit doctrine provides for the court's discretion in such situations, which the lower court properly exercised under the circumstances. NRA never cited specific evidence nor gave a satisfactory explanation as to the duress or incompetency that compromised the deposition. The court is supposed to consider the totality of the circumstances when using its discretion to admit or reject a sham-affidavit, and this scenario there was nothing on the record that supported the validity of the affidavit over the deposition.

Find the full opinion at: http://www2.ca3.uscourts.gov/opinarch/163613p.pdf

Panel: Circuit Judges Hardiman, Roth, and Fisher

Argument Date: May 23, 2017

Date of Issued Opinion: July 3, 2017

Docket Number: Nos. 16-3613 and 16-3629

Decided: Affirmed in part, reversed in part

Case Alert Author: Kevin P. McGilloway

Counsel
Richard J. Perr, Counsel for Cross-Appellant

Brett M. Freeman, Carlo Sabatini, Counsel for Appellant

Author of Opinion: Judge Fisher

Circuit: Third Circuit

Case Alert Supervisor: Professor Susan L. DeJarnatt