En banc review of Riccio v. Sentry Credit presents clarity on disputes in court’s jurisdiction. Editor’s note: This article is available for members only
4/7/2020 9:00
By Sean Flynn
Partner, Gordon Rees Scully Mansukhani
On March 30, 2020, the United States Court of Appeals for the 3rd Circuit issued its decision on the en banc review of Riccio v. Sentry Credit. The questions before the en banc panel were:
- "Does 15 U.S.C. § 1692g(a)(3) allow debtors to orally dispute a debt’s validity?" and
- "Should [the] en banc Court resolve a circuit conflict by overturning a three-decades-old panel decision which has been eroded by intervening Supreme Court authority?"
The 3rd Circuit answered both questions in the affirmative.
Those who have been following the Riccio v. Sentry Credit case will recall the District Court of New Jersey granted ACA International member Sentry Credit Inc.’s Motion to Dismiss the plaintiff’s complaint asserting a violation of the Fair Debt Collection Practices Act’s initial validation notice because the notice did not state that a dispute must be in writing pursuant to the 3rd Circuit opinion in Graziano v. Harrison, 950 F.2d 107 (3rd Cir. 1991).
Sentry Credit, represented by ACA member Gordon Rees Scully Mansukhan LLP (GRSM), argued the statue was clear on its face, and did not require that the initial validation notice include a statement that the dispute must be in writing. Plaintiff, represented by frequent plaintiffs’ counsel Jones, Wolf & Kapasi, LLC, appealed.
The March 30, 2020 decision concluded that Graziano was no longer good law in the 3rd Circuit and, in doing so, fell in line with the 2nd, 4th and 9th circuits. The en banc panel resorted to a contextual reading of Section 1692g, as a whole, and reached the conclusion consistent with its fellow circuits, that Section 1692g permits both oral and written disputes.
The 3rd Circuit acknowledged that the holding in Graziano ran afoul of this interpretive canon, the rule against surplusage. As the Graziano decision rendered Section 1692g(a)(3) meaningless (a trivial "amuse-bouche" for 1692g(a)(4)).
Ultimately, the 3rd Circuit determined that the plain meaning of Section 1692g(a)(3) does not require a debtor to dispute a debt in writing.
Importantly, the court rejected plaintiff’s request to curb the retroactive application of the en banc holding, and allow claims already filed to proceed under the Graziano precedent. Further, in footnote five, the 3rd Circuit provided an "out" for those debt collectors that followed the Graziano holding for any currently pending or future filed claims.
Finally, during the en banc argument, GRSM argued that the least sophisticated consumer standard was an anomaly that did not fit within the contours of the FDCPA. While the en banc panel did not address this issue, footnote six 6 sets the stage for this fundamental fight – whether the least sophisticated consumer standard comports with the ordinary meaning of the FDCPA. A fight for another day.
Additionally, in footnote six of the opinion, the court appears to be inviting a review of whether the "least sophisticated consumer" standard is the appropriate standard to be used in these FDCPA type cases.
Sean Flynn is a partner with Gordon & Rees Scully Mansukhani and member of ACA International.