Eighth Circuit Update: Non-Consumers Cannot Bring Action against Debt Collector for Violations of Section 1692c(b)
In its recent Opinion in Magdy, the Eighth Circuit Court of Appeals rejected an attorney's claim arising out of a debt collector's mistake in contacting the attorney, who did not represent the debtor, regarding a debt. The statutory right of action for FDCPA violations involving communications with third parties remains exclusive to the consumer.
The Eighth Circuit has held that §1692c(b), which prohibits unauthorized communications from debt collectors to third parties, cannot give rise to a non-consumer’s cause of action. The facts in Magdy are simple and straightforward. Magdy, a bankruptcy attorney, was contacted by a debt collection agency in regard to an account for a debtor. Magdy had to sift through old files and wasted valuable time and resources only to discover that, not only was Magdy not representing the consumer in this current dispute, but he had never represented the consumer in any capacity. Magdy then filed suit in Missouri state court, after which I.C. Systems properly removed the case to federal court.
The primary issue addressed by the Eighth Circuit was whether §1692b(c) grants standing to non-consumers for statutory violations. The district court granted judgment on the pleadings in favor of ICS for lack of statutory standing. The Eighth Circuit upheld the opinion, aligning itself with other circuits deciding similar issues.
The district court determined that Magdy had no statutory standing to sue on the statute. The court of appeals affirmed. Applying the “zone of interests test,” the Court reasoned that the plaintiff in this action did not fall within the intended zone of interests the statute was intended to protect. This decision aligns with the decisions of several other courts of appeals, in the eleventh and sixth districts.
Contrarily, in his dissent, Judge Stras reasoned the opposite, using the same “zone of interest” test. In so doing, he commented “Sometimes a title really does say it all,” referencing the title of the statutory subsection in question, “Communications with third parties.” Judge Stras further reasoned that § 1692k(a) of the FDCPA provides redress where a debt collector fails to comply with the statute with respect to any person.” (emphasis added).
For those wondering why Magdy would pursue protracted litigation in this case, see the footnote at page 2 of the Opinion, indicating that although only one letter was the subject of the opinion, Magdy allegedly received approximately 160 similar letters from ICS over the course of the relevant period.