A couple of weeks ago, Bankruptcy Judge Wise wrote an opinion
holding that the Fair Debt Collection Practices Act was
inapplicable to representations made in bankruptcy proofs of claim.
In Mallard v. Wynn-Singer, the claimant
filed a proof of claim and included a host of unredacted medical
billing documents containing highly-sensitive information about the
The debtor filed an adversary proceeding against the claimant
asserting seven causes of action: (1) a proof of claim
objection; (2); contempt of court for violation of court policies;
(3) contempt of court for violation of FRBP 9037; (4) a state law tort claim for
violation of privacy; (5) violation of the FDCPA; (6) violation of
the KY Consumer Protection Act; and (7) disclosure of a specific
medical diagnosis in violation of a Kentucky statute.
Judge Wise partially granted summary judgment, but allowed
Counts 6-7 to go to trial. The claimant withdrew its proof of
claim, and Judge Wise granted summary judgment on the contempt
claims, holding that no private right of action for violating the
redaction rules existed. Judge Wise also granted summary
judgment on the violation of privacy claim, holding that there was
insufficient evidence of "publicity," as required by
For Kentucky bankruptcy lawyers, the most important
takeaway is Judge Wise's grant of summary judgment on the
FDCPA claim. In reaching that conclusion, Judge Wise held
that, as a matter of law, the FDCPA does not apply to
representations made in a proof of claim. This is the
majority rule, but it had not been addressed by the Sixth Circuit,
and was somewhat in doubt after the Sixth Circuit's ruling in
Glazer v. Chase Home Finance.
In Glazer, the Sixth Circuit held that the FDCPA did apply
to representations made by a creditor in judicial foreclosure
pleadings. According to Judge Wise, this "implicitly
rejected arguments that either the mere supervision of a court or
the availability of non-FDCPA remedies in the litigation context
obviate the need for protections of the FDCPA."
Judge Wise refused to extend that logic to the proof of claim
context. She noted:
The Sixth Circuit's broad interpretation of the FDCPA's
applicability should not extend to the mere filing of a proof of
claim. In the Sixth Circuit, 'for a communication to be
in connection with the collection of a debt, an animating purpose
of the communication must be to induce payment by the
debtor.' [citation omitted] Filing a proof of claim
is not a demand for payment from a debtor. At most, it is a
request to participate in the claims allowance process of the
Claimants should obviously strive to avoid disclosures in proofs
of claim that would violate court policies or FRCP 9037, and
indeed, at least two of the claims asserted by the debtors in
Mallard survived summary judgment. However, it is
nice to have some clarity from the Kentucky courts on the proof of
claim/FDCPA issue in light of Glazer.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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