Tuesday, August 4, 2009

Law Firm Letterhead Should Not Be Used For Debt Collection Letter

The U.S. Court of Appeals for the Fifth Circuit yesterday issued an opinion that should serve as a warning to lawyers involved in debt collection:  be careful what stationery you use.  Here is a nice summary (with permission) from the always-handy Fifth Circuit Civil News (its daily update by email), produced by Robert E. McKnight, Jr:

      Gonzalez v. Kay, No. 08-20544 (5th Cir. Aug. 3, 2009) (Jolly, Prado and Southwick): Gonzalez sued Kay's law firm and Kay for sending him a debt collection letter that, Gonzalez alleged, deceptively represented the law firm's handling of the debt as a legal matter, rather than simply as a collection matter, in violation of the Fair Debt Collection Practices Act. The FDCPA prohibits "a debt collector sending a collection letter that is seemingly from an attorney." The district court [S.D. Tex.] dismissed on the defendants' FRCP 12(b)(6) motion, concluding that the letter, though on law firm letterhead, sufficiently informed Gonzalez that none of the firm's attorneys had yet become involved in the matter and that the firm was simply acting as a debt collection agency. Holding: Reversed and remanded. "Because the 'least sophisticated consumer' reading this letter might be deceived into thinking that a lawyer was involved in the debt collection ["[a] letter from a lawyer implies that the lawyer has become involved in the debt collection process, and the fear of a lawsuit is likely to intimidate most consumers"], the district court prematurely dismissed Gonzalez's complaint." Judge Jolly dissented.

And Judge Prado wrote the majority opinion, reversing the dismissal.  [Alan Childress]

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