In Donohue v. Quick Collect, Inc. 2010 WL 103653 (9th Cir. 2010), the Court of Appeals for the Ninth Circuit held that a complaint in a collection lawsuit is a debt collection “communication” to the debtor which, if false, may violate the FDCPA. The complaint alleged pre-assignment interest at 18%, which was not an illegal charge in violation Washington state’s usury law because pre-assignment, the charge was not for a forbearance. Rather, it was a merchant’s charge for a bill not paid within 90 days. Though the complaint mislabeled the pre- and post-assignment interest charges, this misstatment did not amount to a false communication actionable under the FDCPA because the misstatement was not material. In finding litigation pleadings to be a ‘communication’, the Court of Appeals explained:
The Supreme Court reasoned that “the plain language of the [FDCPA] itself says nothing about” an “exemption [for lawyers] in respect to litigation.” Id. at 297. Nor did it make sense to differentiate between lawyers acting in the capacity of debt collectors and those litigating: “The line … between ‘legal’ activities and ‘debt collection’ activities was not necessarily apparent to those who debated the legislation, for litigating, at first blush, seems simply one way of collecting a debt.” Id. ¶ We have recognized a limited exception to this rule. In Guerrero, we concluded that communications sent only to a debtor’s attorney are not actionable under the FDCPA. 499 F.3d at 935-36. We reasoned that Heintz only addressed the question of whether the FDCPA applies to lawyers collecting debts through litigation, but Heintz did not address how the identity of the recipient of the communication impacts FDCPA liability. Id. at 937-38. When the recipient of the communication is solely a debtor’s attorney, the FDCPA’s purpose of protecting unsophisticated consumers is not implicated. Id. at 939. Thus, we there concluded that a letter directed “to counsel, and not to his client-‘the consumer’-was not a prohibited collection effort.” Id. at 934. But the limited exception that we outlined in Guerrero is inapplicable here. Donohue was personally served with the Complaint. Therefore, Donohue herself, not her lawyer, was the recipient of the communication. Because the complaint was communicated to the consumer, the requirements of the FDCPA apply. ¶ While the communication at issue in Heintz was a letter, not a legal pleading as here, the logic of Heintz controls our analysis. Quick Collect caused Donohue to be served with the Complaint to further Quick Collect’s effort to collect the debt through litigation. The Supreme Court in Heintz stated clearly that the FDCPA “applies to attorneys who ‘regularly’ engage in consumer-debt-collection activity, even when that activity consists of litigation.” 514 U.S. at 299 (emphasis added). To limit the litigation activities that may form the basis of FDCPA liability to exclude complaints served personally on consumers to facilitate debt collection, the very act that formally commences such a litigation, would require a nonsensical narrowing of the common understanding of the word “litigation” that we decline to adopt.
In finding that the FDCPA requires materiality in order for there to be a false or misleading statement, the Court of Appeals explained:
In Hahn v. Triumph Partnerships LLC, 557 F.3d 755 (7th Cir.2009), Chief Judge Easterbrook concluded for a panel of the Seventh Circuit that a false or misleading statement is not actionable under § 1692e unless it is material. With reasoning that we consider persuasive, Chief Judge Easterbrook observed that “[m]ateriality is an ordinary element of any federal claim based on a false or misleading statement.” Id. at 757 (citing Carter v.. United States, 530 U.S. 255 (2000); Neder v. United States, 527 U.S. 1 (1999)). There is no “reason why materiality should not equally be required in an action based on § 1692e.” Id. . . . ¶ . . . The reason for applying the materiality requirement is also implicated by the facts of this case. In assessing FDCPA liability, we are not concerned with mere technical falsehoods that mislead no one, but instead with genuinely misleading statements that may frustrate a consumer’s ability to intelligently choose his or her response.