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A New Jersey federal district court has held that neither debt-collection activities by an out-of-state attorney, nor a debt-collection firm’s communication with an arbitral forum regarding a claim against a debtor, violate the FDCPA.
In Cohen v. Wolpoff & Abramson, LLP, Civ. A. No. 08-1084 (SRC), 2008 WL 4513569 (D.N.J. Oct. 2, 2008), Wolpoff contacted the National Arbitration Forum (FORUM) on behalf of FIA in order to commence contractual arbitration of a debt collection dispute with cardholder Cohen. After an arbitration award was issued in favor of FIA, Cohen brought suit against Wolpoff, alleging that its communication with the FORUM violated the Fair Debt Collection Practices Act (FDCPA) and that certain misrepresentations regarding the debt violated the FDCPA and the New Jersey Consumer Fraud Act (NJCFA).
The Court found that Wolpoff’s communication with FORUM did not violate the FDCPA. 15 U.S.C. § 1692b (prohibiting communication “with any person other than the consumer, his attorney, a consumer reporting agency,… the creditor, the attorney of the creditor, or the attorney of the debt collector”). While a literal reading might suggest that the provision bars communication with an arbitral administrator regarding a cardholder’s debt, the Court decided this literal reading would “divest creditors of their right to pursue remedies allowed under the contract between creditor and debtor.”
Citing the Supreme Court’s decision in Heintz v. Jenkins, the Court found “it would be odd to construe the FDCPA so as to empower a debt-owing consumer to cause an ordinary debt-collecting lawsuit to grind to a halt” by prohibiting a party from seeking ordinary relief from the appropriate forum – whether judicial or arbitral. 514 U.S. 291, 296 (1995). Moreover, the Court explained that “such an interpretation conflicts with the language of § 1692c, which implies an exception to the restrictions of the FDCPA to allow the pursuit of the ordinary remedies that debt collectors pursue.”
The Court acknowledged that this portion of the Heintz opinion was dicta, but found it “persuasive” and “ultimately more sensible than the position [Cohen] advocate[d],” which would prohibit any contact with a forum that could resolve the debt dispute.
The Court also held that debt collection activities by attorneys licensed outside the state where collection takes place does not violate the FDCPA. As the Court noted, the express language of the statute only requires that the person be an attorney in some jurisdiction to avoid the FDCPA prohibition on such false representations. 15 U.S.C. § 1692e(3). Licensing matters regarding the practice of law are left to the states, according to the Court.
Finally, the Court determined that Cohen’s NJCFA claim was unsupported by the facts or law, and dismissed all of Cohen’s claims with prejudice.
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