The U.S. Court of Appeals for the Seventh Circuit has ruled that because the plaintiff’s attorney had not yet filed a written appearance or pleading with the Illinois state court where the defendant law firm had filed a collection action against her, the law firm did not violate the Fair Debt Collection Practices Act (FDCPA) by mailing notice of a motion for default judgment to the plaintiff instead of only to her attorney.

In Holcomb v. Freedman Anselmo Lindberg, LLC, the plaintiff initially appeared pro se in the defendant's state court lawsuit seeking to collect a credit card debt she owed. The plaintiff subsequently retained an attorney from a legal clinic, who sent a letter to the defendant with notice that the clinic was representing the plaintiff, and also appeared for the plaintiff at two hearings. At both hearings, the court entered a form “trial court order” with a checkbox indicating that the plaintiff’s counsel was “present before the court” but which did not identify the individual attorney or the clinic by name. Later, the law firm moved for default judgment and, because the plaintiff’s attorney had not yet filed a written appearance or pleading with the state court, mailed notice of the motion to both the plaintiff and her attorney.

In her lawsuit filed in an Ohio federal district court, the plaintiff alleged that by mailing notice of the motion to her, the law firm had violated Section 1692c(a)(2) of the FDCPA, which prohibits a debt collector from communicating with a consumer about collection of a debt when it knows the consumer is represented by counsel. An exception to the prohibition permits direct contact with a represented debtor with the “express permission of a court of competent jurisdiction.” Relying on this exception, the law firm moved for summary judgment and argued that it had the court’s express permission to serve the plaintiff because it was required to do so under court rules. Specifically, the law firm pointed to Rule 11 of the Illinois Supreme Court Rules, which provides that “[i]f a party is represented by an attorney of record, service shall be made upon the attorney” and “[o]therwise service shall be made upon the party.” The district court rejected the law firm’s argument as “hyper-technical” and entered summary judgment for the plaintiff.

In reversing the district court and remanding for entry of judgment in the law firm’s favor, the Seventh Circuit rejected the plaintiff’s argument that her attorney had become an “attorney of record” when he appeared for her at two hearings and the state court “issued orders” indicating that her counsel was present. Relying on several Illinois state court decisions, the Seventh Circuit concluded that Rule 11 established “a bright-line rule” under which a lawyer could become an attorney of record only by filing a written appearance or other pleading with the court.

The Seventh Circuit also rejected the plaintiff’s argument that if Rule 11 were understood to require service on a represented party whose attorney had not yet filed a written appearance, it conflicted with FDCPA Section 1692c(a)(2) and was therefore preempted. Calling plaintiff’s preemption argument one “that verges on frivolous,” the Seventh Circuit concluded that because Rule 11 “fits comfortably” within the exception to Section 1692c(a)(2) that allows a debt collector to communicate with a represented debtor if permitted to do so by a court of competent jurisdiction, Rule 11 “operates in harmony with Section 1692c(a).”

Finally, the Seventh Circuit rejected the plaintiff’s argument that when an attorney has not yet filed a written appearance, Rule 11 allows its requirement for service on the party to be satisfied by serving the attorney as the party’s “agent.” According to the Seventh Circuit, the plaintiff’s argument rested on “an unsound reading of the rule,” which clearly required service on “the party himself, not to his (non-record attorney) as agent” when there was no attorney of record.

Attorneys in Ballard Spahr's Consumer Financial Services Group regularly advise clients on compliance with the FDCPA and state debt collection laws and defend clients in FDCPA lawsuits and enforcement matters. The Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws throughout the country, and its skill in litigation defense and avoidance.


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