Law Firm Must Face Debt Collection Class Action Lawsuit
By Courtney Coren
A Texas federal judge ruled Monday that law firm Dover & Fox, P.C. must face a class action lawsuit accusing the firm of employing unfair debt collection practices, saying it failed to sufficiently plead its argument that it is not a debt collector as defined under federal law.
U.S. District Judge Keith Ellison did not find Dover & Fox’s argument sufficient in showing that they should not be held to the collections standards under the Fair Debt Collection Practices Act (FDCPA).
According to the FDCPA, a debt collector is by definition a person or company that is “regularly” engaging in debt collection and debt collecting is the primary function of the business. Dover & Fox argue that debt collecting is not the main purpose of the practice and that only five percent of their business is devoted to debt collection.
Therefore, the law firm argues, the class action lawsuit filed against them does not fall under the FDCPA.
Judge Ellison cited the Fifth Circuit Court of Appeals that the Texas federal court is bound to, saying that the appellate court defined “regularly” as any person or business that collects debts regularly whether or not debt collection is the primary function of that person or business.
“Central to the FDCPA definition of ‘debt collector’ is the ‘regularly’ and ‘principle purpose’ language, and the Fifth Circuit has determined that those terms are not equivalent,” Judge Ellison wrote.
Judge Ellison cited a couple of instances in which the Fifth Circuit explained what it means to “regularly” collect debts.
“‘[A] person may ‘regularly’ collect debts even if debt collection is not the principle purpose of his business,'” the Fifth circuit wrote. “‘If the volume of a person’s debt collection services is great enough, it is irrelevant that these services only amount to a small fraction of his total business activity; the person still renders them ‘regularly.””
The fact that Dover & Fox do not have a full-time employee may prove that its primary function is not debt collection, but does not prove either the frequency or volume of debt collecting the firm is engaged in, Judge Ellison explained.
The judge also added that while both sides agree so far that only 38 debt collecting letters were sent out in 2012, the discovery process has not yet been done to determine if there is more debt collecting than what was initially revealed.
The fair debt collection lawsuit was filed against Dover & Fox by Lynn and Deborah Kirkpatrick after they received two debt collection letters in 2012 from Dover & Fox saying they owed money to City of Deer Park Federal Credit Union, which they allege were in violation of the FDCPA and the Texas Debt Collection Act.
The two letters said that the debt had to be paid within 14 days or face a collection lawsuit. However, both federal and state laws say that consumers are supposed to be given 30 days to pay or dispute a debt.
The Kirkpatricks filed their class action lawsuit against Dover & Fox in January 2013 believing that they weren’t the only ones who had received such letters.
The plaintiffs are represented by Marshall Meyers and Noah Daniel Radbil of Weisberg & Meyers LLC.
The Fair Debt Collection Lawsuit is Kirkpatrick et al v. Dover & Fox PC et al., Case No. 4:13-cv-00123, in the U.S. District Court for the Southern District of Texas.
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