Court Allows FDCPA Suit Against Midland's Collection Law FIrm

May 27, 2012

The U.S. District Court in Oregon recently decided that a law office working for Midland Credit Management, Inc. may be a debt collector, and thus would have to abide by the Fair Debt Collection Practices Act. Watters v. Midland Credit Management, Inc. and Bennett Law, PLLC, 2012 U.S. Dist. LEXIS 65268 (D. OR. 2012). The U.S. District Court in Oregon is within the Ninth Circuit, which also governs other states including California and Washington.
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The consumer alleged that Bennett Law, PLLC, violated several sections of the Fair Debt Collection Practices Act, including: 15 U.S.C. §§ 1692e(2)(A)(making false, deceptive or misleading statements in an attempt to collect a debt, including the false representation of the character, amount or legal status of any debt), 1692e(10)( use any false, deceptive, or misleading representation or means in connection with the collection of any debt., and 1692f (using any unfair or unconscionable means in an attempt to collect a debt).

One of the major points the Court had to decide was whether the consumer sufficiently alleged that Bennett Law was a "debt collector" under the Fair Debt Collection Practices Act (FDCPA).

Defendant Bennett Law is a "debt collector" pursuant to 15 U.S.C. § 1692a(6)

The Court noted that in its answer to the consumer's complaint, Bennett Law denied the allegation that it is a "debt collector", saying it "is without sufficient information or belief to respond to this allegation." However, the Court stated, "facts in the record indicate that Bennett Law is, in fact, a debt collector."

To be a debt collector, a person or organization must (1) use an instrumentality of interstate commerce or the mails, (2) for the principal or regular purpose of attempting to collect debts, (3) asserted to be owed to another.

Interstate Commerce

The Court stated that using a telephone to attempt to collect debts was using an instrumentality of interstate commerce.


The Court then reasoned that in interpreting the term "regular," one court held that an attorney was "regularly engaged in debt collection practices under the FDCPA by consistently accepting at least 10 debt collection matters every year." Silva v. Mid-Atlantic Mgmt. Corp., 277 F. Supp. 2d 460, 466 (E.D. Pa. 2003).That same court also held that "'debt collection services may be rendered "regularly" even though these services may amount to a small fraction of the firm's total activity.'"

Similarly, another court held that even though a law firm's debt collection activity made up less than four percent of the firm's total business, it satisfied the "regularly" standard set forth in the statute. Stojanovski v. Strobl & Manoogian, P.C., 783 F. Supp. 319, 322 (E.D. Mich. 1992).

The Court concluded:

"As corporate counsel for Midland, and as debt collection counsel for Wal-Mart, Shopko, and Target, and as evinced by Bennett Law's business structure, it is evident that Bennett Law is "regularly" engaged in the collection of debts, whether through litigation or over the telephone. Certainly Bennett Law is "regularly" engaged in the collection of debts if an entire group of the firm is devoted to the collection of debts via telephone, while the other group is engaged in the collection of debts via litigation. Indeed, the court is unaware that Bennett Law practices anything other than debt collection law."

The Court also added, the U.S. Supreme Court has unanimously held that the term "debt collector" "applies to a lawyer who 'regularly,' through litigation, tries to collect consumer debts" on behalf of a client. Heintz v. Jenkins, 514 U.S. 291, 292, 115 S. Ct. 1489, 131 L. Ed. 2d 395 (1995).

Get Help Now

Our San Jose law office protects consumers from being harassed by debt collectors. We are investigating claims against Ocwen for allegedly violating the federal and California Fair Debt Collection Practices Acts.

If you are being contacted by Midland Credit or any other creditors or debt collectors, give us a call at 408-296-0400.