In a short, straightforward opinion, the Eighth Circuit Court of Appeals joined its sister circuits that have applied a materiality standard to consumer claims of falsity and deception under the Fair Debt Collection Practices Act.
Consumer Paul Hill incurred a medical debt, and the creditor hired Accounts Receivable Services, LLC to collect the debt. In the collections process, Accounts Receivable unsuccessfully filed a lawsuit against Hill to recover the debt. The state court ruled that Accounts Receivable was not entitled to prevail in the collection lawsuit because it had not established that the documents purporting to show the assignment of debt were authentic. Hill then sued Accounts Receivable under the FDCPA, claiming false and misleading representations in violation of 15 U.S.C. § 1692e, including threats "to take any action that cannot legally be taken ... ." 15 U.S.C. § 1692e(5). The United States District Court for the District of Minnesota dismissed Hill's claims and he appealed, arguing that the Court erred in applying a materiality standard to these provisions.
To decide whether a materiality threshold applies, the Eighth Circuit Court of Appeals examined decisions from its sister circuits on the issue, found their reasoning persuasive, and adopted the view that a violation requires a showing of materiality. The FDCPA was enacted to require that debt collectors provide information which helps consumers choose intelligently their actions with respect to their debts. As the Seventh Circuit had explained, "immaterial information neither contributes to that objective (if the statement is correct) nor undermines it (if the statement is incorrect)." An immaterial statement cannot mislead and, therefore, even if technically false, it is not actionable.
Applying the materiality requirement, the Eighth Circuit concluded that, even if Accounts Receivable had misrepresented authenticity of the debt assignment documents, such misrepresentations were immaterial because Hill did not deny that he incurred the debt and owed it. Just because the debt collection lawsuit was unsuccessful does not automatically establish a violation of the FDCPA, as the Court previously held in Hemmingsen v. Messerli & Kramer, P.A., 674 F.3d 814, 820 (8th Cir. 2012). "Accounts Receivable's inadequate documentation of the assignment did not constitute a materially false representation, and the other alleged inaccuracies in the exhibits are not material."
The Eighth Circuit's decision is a welcome addition to the growing line of cases adopting the materiality threshold.
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